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As filed with the Securities and Exchange Commission on May 1, 2003June 3, 2005

Registration No. 333-            



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933


UNITED INDUSTRIES CORPORATION*
SPECTRUM BRANDS, INC.

(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Charter)

Wisconsin369222-2423556
DELAWARE
(State or other jurisdictionOther Jurisdiction of
incorporationIncorporation or organization)Organization)
 2879
(Primary Standard Industrial
Classification Code Number)
 43-1025604
(I.R.S. Employer
Identification No.)

2150 SCHUETZ ROAD
ST. LOUIS, MISSOURI 63146
TELEPHONE: (314) 427-0780
Number)
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

DANIEL J. JOHNSTON
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
2150 SCHUETZ ROAD
ST. LOUIS, MISSOURI 63146
TELEPHONE: (314) 427-0780
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Six Concourse Parkway, Suite 3300

Atlanta, Georgia 30328

(770) 829-6200

(Address, Including Zip Code, and Telephone Number, Including

Area Code, of Registrant’s Principal Executive Offices)


SEE TABLE OF ADDITIONAL REGISTRANTS


James T. Lucke, Esq.

Spectrum Brands, Inc.

Six Concourse Parkway, Suite 3300

Atlanta, Georgia 30328

(770) 829-6200

(Name, Address, Including Zip Code, and Telephone Number,

Including Area Code, of Agent For Service)


Copies of all communications, including communications sent to agent for service, should be sentCommunications to:

Margaret A. Brown, Esq.

Skadden, Arps, Slate, Meagher & Flom LLP

One Beacon Street

Richard W. Porter, P.C.
Robert M. Hayward
Christopher A. Ziebarth
Kirkland & Ellis
200 E. Randolph Drive
Chicago, IL 60601
Telephone: (312) 861-200031st Floor

Boston, Massachusetts 02108

(617) 573-4800


        * The co-registrants listed on the next page are also included in this Form S-4 Registration Statement as additional registrants. The co-registrants are all of the existing subsidiaries of the registrant and the guarantors of the notes to be registered hereby.

Approximate date of commencement of proposed sale to the public:As soon as practicable after this Registration Statement becomes effective.


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

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

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


CALCULATION OF REGISTRATION FEE


Title of Each Class of
Securities to be Registered

 Amount to
be Registered

 Proposed Maximum
Offering Price
Per Unit

 Proposed Maximum
Aggregate
Offering Price(1)

 Amount of
Registration Fee


97/8% Series D Senior Subordinated Notes due 2009 $235,000,000 100% $235,000,000 $19,012

Guarantees on Senior Subordinated Notes(2) $235,000,000   (3)

(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2)
All subsidiary guarantors are subsidiaries of the registrant and have each guaranteed, on a joint and several basis, the notes being registered.
(3)
Pursuant to Rule 457(n), no separate fee is payable with respect to the guarantees being registered hereby.




Title of Each Class of
Securities To Be Registered
  Amount To
Be
Registered
  Proposed
Maximum
Offering Price
Per Unit(1)
   Proposed
Maximum
Aggregate
Offering Price(1)
  Amount of
Registration
Fee
 

7 3/8% Senior Subordinated Notes due 2015

  $700,000,000  100%  $700,000,000  $82,390 

Guarantees of the 7 3/8% Senior Subordinated Notes due 2015

   —    —      —     —  (2)


(1)Estimated pursuant to Rule 457(f) solely for the purpose of calculating the registration fee.
(2)Pursuant to Rule 457(n), no separate fee is payable with respect to the guarantees of the notes being registered.

 

The registrant and the co-registrants hereby amend this Registration Statementregistration statement on such date or dates as may be necessary to delay its effective date until the registrant and the co-registrants shall file a further amendment which specifically states that this Registration Statementregistration statement shall thereafter become effective in accordance with Sectionsection 8(a) of the Securities actAct of 1933 or until this Registration Statementthe registration statement shall become effective on such date as the Commission, acting pursuant to said Sectionsection 8(a), may determine.





TABLE OF ADDITIONAL REGISTRANTS
Table of Co-Registrants

Exact Name of Co-Registrants*
Additional Registrants


Jurisdiction of

Incorporation


Primary Standard

Industrial

Classification

Code Number


Jurisdiction of Incorporation

I.R.S. Employer

Identification No.Number


ROV Holding, Inc.*

Delaware55111222-2423555

Rovcal, Inc.*

California33590052-2068284

United Industries Corporation, 2150 Schuetz

Road, St. Louis, Missouri 63146, (314) 427-0780

Delaware32590043-1025604

AQ Holdings, Inc.**

Delaware55111204-3429328

Aquaria, Inc.**

California33990095-2556867

Aquarium Systems, Inc.**

Delaware33990034-1820457

DB Online, LLC**

HawaiiN/AN/A1

Ground Zero, Inc.

2879**

  Missouri  Inactive43-1807196
Schultz Company

IB Nitrogen, Inc., 10 Craig Street, Brantford,

Ontario N3R7J1, (519) 757-0077

  2879Delaware32530052-2115627

JungleTalk International, Inc.**

Delaware32190034-1839601

Nu-Gro US Holdco Corporation***

Delaware55111220-0971051

Nu-Gro America Corp. ***

Delaware55111298-0191327

Nu-Gro Technologies, Inc.***

Delaware32530014-1817561

Perfecto Holding Corp. **

Delaware55111259-3380422

Perfecto Manufacturing, Inc.**

Delaware33990059-3380419

Pets ‘N People, Inc.**

California45391095-3603453

Schultz Company**

  Missouri  32530043-0625762

Southern California Foam, Inc.**

California33990095-4236597

Sylorr Plant Corp.

2879**

  Delaware  32590002-0644834

United Pet Group, Inc.**

Delaware31111011-2392851

WPC Brands, Inc.

2879**

  Wisconsin  32590039-1786169

Tetra Holding (US), Inc., 3001 Commerce Street,

Blacksburg, Virginia 24060, (540) 951-5400

Delaware31111942-1560545

Willinger Bros., Inc.****

Delaware31111913-2847371

*Address and telephone number of principal executive offices are the same as those of Spectrum Brands, Inc.
**Address and telephone number of principal executive offices are the same as those of United Industries Corporation.
***Address and telephone number of principal executive offices are the same as those of IB Nitrogen, Inc.
****Address and telephone number of principal executive offices are the same as those of Tetra Holding (US), Inc.
1Single member LLC disregarded for US tax purposes.

*The address for each of the co-registrants is c/o United Industries Corporation, 2150 Schuetz Road, St. Louis, Missouri 63146, telephone (314) 427-0780. The name and address, including zip code, of the agent for service for each of the co-registrants is Daniel J. Johnston, Vice President and Director, 2150 Schuetz Road, St. Louis, Missouri 63146. The telephone number, including area code, of the agent for service for each of the co-registrants is (314) 427-0780.



SUBJECT TO COMPLETION, DATED MAY 1, 2003

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED JUNE 3, 2005

PROSPECTUS

LOGO

UNITED INDUSTRIES CORPORATION
Spectrum Brands, Inc.

operating asOffer to Exchange

LOGO$700,000,000 7 3

Offer to Exchange 97/8% Series D Senior Subordinated Notes due 2009
For All Outstanding 97/8% Series B2015

for $700,000,000 Senior Subordinated Notes due 2009
and 97/8% Series C Senior Subordinated Notes due 2009
2015


Material Terms of the Exchange Offer

The Exchange Offer will expire at 5:00 P.M., New York City time, on                  , 2003, unless extended.

We are offering to exchange our Series D notes, whichthat have been registered under the Securities Act of 1933 for up to 100% of our Series B


We are offering, upon the terms and C notes. The terms of the Series D notes we will issue in the exchange offer are substantially similarsubject to the Series B and C notes except for the differencesconditions set forth in this prospectus and the "Exchange Offer—accompanying letter of transmittal, to exchange an aggregate principal amount of up to $700,000,000 of our new 7 3/8% Senior Subordinated Notes due 2015 (which we refer to as the “exchange notes”), for a like amount of the outstanding 7 3/8% Senior Subordinated Notes due 2015 issued by us under our former name, Rayovac Corporation (which we refer to as the “original notes”), in a transaction registered under the Securities Act of 1933, as amended (the “Securities Act”). The exchange offer will expire at 5:00 p.m., New York City time, on             , 2005, unless extended.

Terms of the Exchange Offer" and "Summary of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes" sections of this prospectus. You should read these sections of the prospectus carefully.

All Series B and Cexchange offer:

We will exchange all original notes that are validly tendered and not validly withdrawn will be exchanged.

Theprior to the expiration of the exchange offer is not subjectoffer.

You may withdraw tenders of original notes at any time prior to any condition other thanthe expiration of the exchange offer.

We believe that the exchange offer not violate applicable law or any applicable interpretation of the Staff of the Securities and Exchange Commission.

We will not receive any proceeds from theoriginal notes for exchange offer.

All of our existing and certain of our future domestic restricted subsidiaries will guarantee the Series D notes on an unsecured senior subordinated basis. The Series D notes and the guarantees rank junior in right of payment to all of our and the guarantors' current and future senior indebtedness and equal in right of payment to all of our and the guarantors' current and future senior subordinated indebtedness. As of April 23, 2003, we had $203.2 million of senior debt outstanding, including a capital lease.

The exchange of notes will not be a taxable event for U.S. federal income tax purposes.

We will not receive any proceeds from the exchange offer.

The form and terms of the exchange notes are identical in all material respects to the form and terms of the original notes, except that (i) the exchange notes are registered under the Securities Act; (ii) the transfer restrictions and registration rights applicable to the original notes do not apply to the exchange notes; and (iii) the exchange notes will not contain provisions relating to liquidated damages relating to our registration obligations.

There is no existing market for the Series Dexchange notes to be issued and we are offering in the exchange offer. We do not intend to list the Series D notesapply for their listing on any national securities exchange or seek approval for quotation through any automated trading system.


on the Nasdaq Stock Market.

 

For a discussion of certain factors that you should consider before participatingbe considered by holders prior to tendering their original notes in the exchange offer, see "Risk Factors"Risk Factors beginning on page 12 of this prospectus.18.


 

Neither the SECSecurities and Exchange Commission nor any state securities commission has approved or disapproved of the notes to be distributed inthese securities or determined if this exchange offerprospectus is truthful or passed upon the accuracy of this prospectus.complete. Any representation to the contrary is a criminal offense.

 

The date of this prospectus is                     , 20032005


This prospectus incorporates by reference documents that contain important business and financial information about Spectrum Brands, Inc. that is not included in or delivered with this prospectus. These documents are available without charge to holders of the notes upon written or oral request to Spectrum Brands, Inc., Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328, Attention: James T. Lucke, Senior Vice President, General Counsel and Secretary, telephone number (770) 829-6200. To obtain timely delivery, note holders must request the information no later than five business days before the expiration date. The expiration date is                     , 2005.

 


TABLE OF CONTENTS

Page

Forward-Looking Statements

iii

Prospectus Summary

1

Risk Factors

18

Recent Developments

33

Use of Proceeds

35

Industry

36

Business

37

Description of Certain Indebtedness

51

Description of Notes

63

U.S. Federal Income Tax Considerations

104

Certain ERISA Considerations

104

Plan of Distribution

106

Legal Matters

107

Experts

107

Incorporation by Reference

108

Available Information

108


You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other personanyone to provide you with different or additionalany other information. If anyone provides you with different or additionalreceive any other information, you should not rely on it. This prospectus is not an offer to sell, or a solicitation of an offer to buy, any of the securities to any person or by anyone in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so or to any person who cannot legally be offered the securities. You should not assume that the information included in this prospectus, including any information incorporated by reference, is accurate as of any date other than the date of this prospectus or the date of the document incorporated by reference.

i



MARKET, RANKING AND OTHER DATA

The data included in or incorporated by reference into this prospectus regarding markets and ranking, including the size of certain markets and our position and the position of our competitors within these markets, are based on a variety of sources, including company research, third-party studies and surveys, industry and general publications and estimates based on our management’s knowledge and experience in the markets in which we operate. Our estimates have been based on information obtained from our customers, suppliers, trade and business organizations and other contacts in the markets in which we operate. We believe these estimates to be accurate as of the date of this prospectus or the document incorporated by reference, as applicable. However, this information may prove to be inaccurate because of issues relating to the methodology employed in formulating such estimates or because this information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. As a result, you should be aware that market, ranking and other similar data included in or incorporated by reference into this prospectus, and estimates and beliefs based on that data, may not be reliable. We cannot guarantee the accuracy or completeness of such information contained in or incorporated by reference into this prospectus.

Unless otherwise indicated, all our market share estimates are based on these sources of market data and reflect number of units sold, except for United Industries Corporation, where such estimates reflect dollar amounts.


INTELLECTUAL PROPERTY

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: RAYOVAC®, VARTA®, REMINGTON®, MAXIMUM®, MAXIMUM PLUS, I-C3, RENEWAL®, LOUD ‘N CLEAR®, PRO LINE®, RAYOVAC ULTRA®, WORKHORSE®, ROUGHNECK®, SPORTSMAN®, AIR 4000®, XCELL®, EXTRA®, PRODIGY®, MICROSCREEN®, MICROFLEX®, PRECISION®, REMINGTON TITANIUM, SMOOTH & SILKY®, SPECTRACIDE®, TRIAZICIDE®, TRIPLESTRIKE, SPECTRACIDE TERMINATE®, SPECTRACIDE PRO®, HOT SHOT®, GARDEN SAFE®, SCHULTZ, RID-A-BUG®, BAG-A-BUG®, REAL-KILL®, NO-PEST®, REPEL®, VIGORO®, STA-GREEN®, BANDINI®, WILSON®, SO-GREEN®, GREENLEAF®, GREEN EARTH®, IB NITROGEN®, NITROFORM®, NUTRALENE®, S.C.U.®, ORGANIFORM®, CUTTER®, MARINELAND®, PERFECTO®, INSTANT OCEAN®, REGENT®, 8-IN-1®, NATURE’S MIRACLE®, DINGO®, WILD HARVEST®, ONE EARTH®, LAZY PET®, JUNGLETALK®, TETRA®, TETRAMIN®, TETRAFIN®, TETRAPOND®, WHISPER® and AQUASAFE®. The Rayovac, Remington, VARTA and Tetra trademarks are also registered in countries outside the U.S., including in Europe, Latin America and Asia. We also license the PETERS and PETERS PROFESSIONAL trademarks from The Scotts Company, CIL trademarks from ICI Canada Inc., PLANT-PROD trademarks from Plant Products Co. Ltd. and PICKSEED trademarks from Pickseed Canada Inc. This prospectus and the documents incorporated by reference also include trademarks, service marks and trade names of other companies.


PRESENTATION OF FINANCIAL AND OTHER INFORMATION

We report our consolidated financial statements in U.S. dollars and prepare our consolidated financial statements in accordance with U.S. GAAP. Financial statements and financial and other information concerning United contained or incorporated by reference in this prospectus have been derived from publicly filed annual and interim reports prepared by United or otherwise provided by United in U.S. dollars in accordance with U.S. GAAP. Financial statements and other information concerning Nu-Gro contained or incorporated by reference in this prospectus have been derived from annual and interim reports prepared by Nu-Gro or otherwise provided by Nu-Gro in Canadian dollars in accordance with U.S. GAAP. Financial statements and other information concerning Tetra contained or incorporated by reference in this prospectus have been derived from annual and interim reports prepared by Tetra or otherwise provided by Tetra in euros in accordance with International Financial Reporting Standards.

ii


In this prospectus and the documents incorporated by reference, except where otherwise indicated, all references to “$,” “dollars” or “U.S. dollars” are to the lawful currency of the United States, all references to “euro” or “€” are to the common currency of certain participating member countries of the European Union and all references to “Canadian $” are to Canadian dollars. The noon buying rate in The City of New York for cable transfers as certified for customs purposes by the Federal Reserve Bank of New York on June 2, 2005 was $1.2266 to €1.00 and $0.8017 to Canadian $1.00.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated, may not be the arithmetic aggregation of the percentages that precede them.


FORWARD-LOOKING STATEMENTS

We have made or implied certain forward-looking statements in this prospectus and the documents incorporated by reference in this prospectus. All statements other than statements of historical facts included or incorporated by reference in this prospectus, including the statements under “Prospectus Summary,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” regarding our business strategy, future operations, financial position, estimated revenues, projected costs, projected synergies, prospects, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements. When used in this prospectus the words “anticipate,” “intend,” “plan,” “estimate,” “believe,” “expect,” “project,” “could,” “will,” “should,” “may,” “strategy,” “indicate,” “determine” and similar expressions are also intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

Since these forward-looking statements are based upon current expectations of future events and projections and are subject to a number of risks and uncertainties, many of which are beyond our control, actual results or outcomes may differ materially from those expressed or implied herein, and you should not place undue reliance on these statements. Important factors that could cause our actual results to differ materially from those expressed or implied herein include, without limitation:

competitive promotional activity or spending by competitors or price reductions by competitors;

the loss of, or a significant reduction in, sales to a significant retail customer;

difficulties or delays in the integration of operations of acquired businesses and our ability to achieve anticipated synergies and efficiencies with respect to those acquisitions;

the introduction of new product features or technological developments by competitors and/or the development of new competitors or competitive brands;

the effects of general economic conditions, including inflation, labor costs and stock market volatility or changes in trade, monetary or fiscal policies in the countries where we do business;

our ability to develop and successfully introduce new products, protect our intellectual property and avoid infringing the intellectual property of third parties;

our ability to successfully implement, achieve and sustain manufacturing and distribution cost efficiencies and improvements, and fully realize anticipated cost savings;

the impact of unusual items resulting from the implementation of new business strategies, acquisitions and divestitures or current and proposed restructuring activities;

the cost and effect of unanticipated legal, tax or regulatory proceedings or new laws or regulations (including environmental, public health and consumer protection regulations);

iii


public perception regarding the safety of our products, including the potential for environmental liabilities, product liability claims, litigation and other claims;

changes in accounting policies applicable to our business;

interest rate, exchange rate and raw materials price fluctuations;

government regulations;

the seasonal nature of sales of our products;

weather conditions, primarily during the peak lawn and garden season; and

the effects of political or economic conditions, terrorist attacks, acts of war or other unrest in international markets.

Some of the above-mentioned factors are described in further detail in “Risk Factors” beginning on page 18. You should assume the information appearing in or incorporated by reference into this prospectus is accurate only as of the date on the front cover of this prospectus or the date of the document incorporated by reference. Ourreference, as applicable, as our business, financial condition, results of operations and prospects may have changed since then. We are not making an offer to sellthat date. Except as required by applicable law, including the securities offered by this prospectuslaws of the United States and the rules and regulations of the Securities and Exchange Commission, or SEC, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in any jurisdiction where the offerfactors or sale is not permitted. See the "Where You Can Find More Information" section of this prospectus.assumptions affecting such forward-looking statement.


iv


PROSPECTUS SUMMARY

 

Until                       , 2003, all dealers that buy, sell or trade the Series D notes, whether or not participating inThe following summary highlights selected information about our business and the exchange offer, may be requiredbut it does not include all the information you should consider before deciding whether to deliver a prospectus. This requirement is in addition toexchange your original notes for the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments and subscriptions.



TABLE OF CONTENTS

Prospectus Summary1
Risk Factors12
Special Note Regarding Forward-Looking Statements22
Use of Proceeds23
Capitalization24
Unaudited Pro Forma Financial Data25
Selected Historical Financial Data27
Management's Discussion and Analysis of Financial Condition and Results of Operations30
Business49
Management58
Certain Relationships and Related Transactions66
Security Ownership of Certain Beneficial Owners and Management68
Description of Certain Indebtedness69
The Exchange Offer72
Summary of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes81
Description of the Notes84
Material U.S. Federal Income Tax Considerations126
Plan of Distribution130
Legal Matters131
Experts131
Where You Can Find More Information131
Index to Financial StatementsF-1

        Spectracide®, Spectracide Triazicide™, Spectracide Terminate®, Hot Shot®, Garden Safe™, Schultz®, Expert Gardener®, Rid-a-Bug®, Bag-a-Bug®, Real-Kill®, No-Pest®, Repel®, Gro Best®, Vigoro®, Sta-Green® and Bandini® are our trademarks and trade names. We also license certain Cutter® trademarks from Bayer A.G. and certain Peters® and Peters Professional® trademarks from The Scotts Company. Other trademarks and trade names used in this prospectus are the property of their respective owners.

i




PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus.exchange notes. You should read thethis entire prospectus carefully,in its entirety, including the "Risk Factors" sectiondocuments incorporated by reference, the information set forth under “Risk Factors” and the financial statements and related notes, before you decide whether to exchange your original notes for the exchange notes. Except asUnless specified otherwise required byor the context referencesrequires, information in this prospectus gives effect to "United,"our acquisition of all of the "company," "we," "us"equity interests of United Industries Corporation on February 7, 2005 and "our" eachall of the equity interests of Tetra Holding GmbH on April 29, 2005. Effective May 2, 2005, we changed our corporate name from Rayovac Corporation to Spectrum Brands, Inc. In this prospectus, unless specified otherwise or the context requires, “Spectrum” and “Rayovac” refer to Spectrum Brands, Inc. together with its subsidiaries, “United” refers to United Industries Corporation together with its subsidiaries, “Tetra” refers to Tetra Holding GmbH together with its subsidiaries, and the terms “we,” “us,” “our” and other similar terms refer to Spectrum and its consolidated subsidiaries.subsidiaries, giving effect to the acquisitions of United and Tetra and, therefore, include United and Tetra. While “Rayovac” and “Spectrum” refer to the same entities, Rayovac may be used in this prospectus to refer to the company in relation to periods prior to the name change. The acquisition of Tetra and the amendment of our senior credit facilities (and the borrowing thereunder to finance the acquisition of Tetra as described herein) are collectively referred to in this prospectus as the “Tetra transactions.” The description of our business, competitive strengths and strategies gives effect to the Tetra transactions. “You” refers to prospective investors in the exchange notes. “Original notes” refers to our existing 7 3/8% Senior Subordinated Notes due 2015; “exchange notes” refers to the 7 3/8% Senior Subordinated Notes due 2015 offered for exchange pursuant to this prospectus; and “notes” refers collectively to the exchange notes and the original notes. References to “fiscal” with respect to us refer to the results of operations for the twelve months ended September 30 of the applicable year.


Our Business
Company Overview

 Operating as Spectrum Brands, we

We are thea global branded consumer products company with leading market positions in our seven major product categories: consumer batteries; pet supplies; lawn and garden; electric shaving and grooming; household insect control; electric personal care products; and portable lighting. We are a leading worldwide manufacturer and marketer of value-orientedalkaline, zinc carbon and hearing aid batteries, a leading worldwide designer and marketer of rechargeable batteries and battery-powered lighting products and a leading worldwide designer and marketer of electric shavers and accessories, grooming products and hair care appliances. We are also a leading North American manufacturer and marketer of lawn fertilizers, herbicides, aquariums, pet health and beauty aid products and insecticides and repellents and a global leader in water life products and fish foods.

We sell our products in approximately 120 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and original equipment manufacturers (“OEMs”) and enjoy strong name recognition in our markets under the Rayovac, VARTA and Remington brands, each of which has been in existence for more than 80 years, the consumerSpectracide, Cutter and 8-in-1 brands, which were acquired through our acquisition of United, and various Tetra brands, which were acquired through our acquisition of Tetra. We have 54 manufacturing and product development facilities located in the United States, Europe, China and Latin America. We manufacture alkaline and zinc carbon batteries, zinc air hearing aid batteries, lawn fertilizers, herbicides, pet supplies and insecticides and repellents in our company operated manufacturing facilities. Substantially all of our rechargeable batteries and chargers, electric shaving and grooming products, electric personal care products and portable lighting products are manufactured by third party suppliers, primarily located in China and Japan.

During fiscal 2004, we completed two acquisitions. On March 31, 2004, we completed the acquisition of an 85% equity interest in Ningbo Baowang (“Ningbo”), a Chinese producer of alkaline and zinc carbon batteries,

thereby gaining a Chinese presence and low-cost manufacturing capabilities. In March 2005, we signed an agreement to purchase the remaining 15% equity interest in Ningbo. On May 28, 2004, we completed the acquisition of 90.1% of the outstanding capital stock of Microlite S.A. (“Microlite”), a Brazilian producer of alkaline and zinc carbon batteries and battery-operated lighting products. As a result, we now own the rights to the Rayovac brand name in each of the countries where we do business.

On February 7, 2005, we completed our acquisition of all of the equity interests of United, which completed its acquisition of The Nu-Gro Corporation (“Nu-Gro”), a Canadian lawn and garden products company, and United Pet Group, Inc. (“United Pet Group”), a privately owned manufacturer and marketer of branded pet supplies, on April 30, 2004 and July 30, 2004, respectively.

On April 29, 2005, we completed our acquisition of all of the equity interests of Tetra, a German manufacturer, distributor and marketer of foods, equipment and care products for fish and reptiles, and accessories for home aquariums and ponds.

Our existing consumer battery, electric shaving and grooming, electric personal care and insect controlportable lighting business is organized and managed according to three geographic regions: (i) North America, (ii) Europe/Rest of World (“Europe/ROW”) and (iii) Latin America. We currently operate United and Tetra as separate business units.

Spectrum Brands, Inc. is a Wisconsin corporation. Our principal executive offices are located at Six Concourse Parkway, Suite 3300, Atlanta, Georgia, 30328 and our telephone number is (770) 829-6200. Our website address is www.spectrumbrands.com. Information contained on our website, or on any website referred to therein, is not part of this prospectus and is not incorporated by reference into this prospectus.

Industry Overview

We primarily compete in the following seven major consumer product categories:

Consumer Batteries

In 2003, the global consumer battery market generated approximately $24.0 billion in retail sales. Since 1990, the industry’s growth percentage has been in the mid-single digits. The consumer battery industry consists of alkaline batteries, zinc carbon batteries and specialty batteries, which include rechargeable batteries, hearing aid batteries, photo batteries and watch/calculator batteries. The majority of battery consumption comes from industrialized nations, with the U.S. accounting for roughly one-third of global consumption. As personal incomes grow, the markets in less industrialized countries continue the United States. Undergradual transition from zinc carbon batteries, which still account for a varietymajority of unit sales in such markets, to the better performing and higher-priced alkaline batteries, similar to the transition that occurred in North America over the past generation. Most branded consumer batteries are marketed under the following brand names,names: Rayovac, Duracell (a Gillette brand), Energizer and Panasonic (a Matsushita brand). In addition, batteries are also often marketed under retailers’ private label brands, particularly in Europe.

Pet Supplies

Within the overall $30 billion U.S. pet industry, we manufactureestimate that the pet supplies segment represented an $8.0 billion market in 2004 based on retail sales. Within the overall $20 billion European pet industry, we estimate that the pet supplies segment represented a $4.0 billion market in 2004 based on retail sales. This highly fragmented segment is comprised of pet treats and market one ofpet supplies for dogs, cats, birds, fish and other small

animals, including stain and odor removal products, grooming aids, bedding and lounging products, medications and vitamin supplements. In addition, pet supplies include aquarium kits, stand-alone tanks and stands, filtration systems, heaters, pumps, sea salt, aquarium hoods and lights and other aquatic supplies and accessories. According to management estimates, the broadest lines of pesticidespet supplies segment in the U.S. has grown approximately 6-8% annually since 1994. We believe that the recent market expansion has been driven by increasing pet ownership and the “humanization” of pets, which results in higher levels of spending, and the industry’s relative insensitivity to economic cycles, combined with innovative product development, increased retailer sophistication (i.e., pet superstores) and growth in dedicated retail square footage for pet supplies. We expect comparable market growth over the next several years due to the continuation of these trends. The industry including herbicidesis highly fragmented with, for example, over 500 manufacturers competing in the U.S. market, consisting primarily of small companies with limited product lines. Name brands in the pet supplies market include: Tetra, 8-in-1, Marineland, Nature’s Miracle, Vitakraft and indoor and outdoor insecticides, as well as insect repellents, fertilizers, growing media and soils. Our value brands are targeted toward consumers who want products and packaging that are comparable or superior to, and at lower prices than, premium-priced brands, while our opening price point brands are designed for cost conscious consumers who want quality products. Our products are marketed to mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers. Our three largest customers are The Home Depot, Lowe's and Wal*Mart, which are leading and fast growing retailers in our larger segments.Hartz.

 During the third quarter of 2002, we began reporting operating results using three reportable segments:

        We compete in the $2.8 billion consumer lawn and garden retail market and are benefiting from a shifting of consumer preferences toward value-oriented products. We believe a key growth factor in the lawn and garden retail market is the aging of the United States population, as consumers over the age of forty-five represent the largest segment of lawn and garden care product users and typically have more leisure time and higher levels of discretionary income than the general population. We also believe the growth in the home improvement center and mass merchandiser channels has increased the popularity of do-it-yourself activities, including lawn and garden projects.


Competitive Strengths

        Our success is based on the following competitive strengths:

        Strong Relationships with Leading and Fast Growing Retailers.    Through our ability to add value for our retail customers, we have developed strong relationships with a number of leading national home centers and mass merchandisers. Three such retailers are our three largest customers—Wal-Mart, Carrefour, Target, The Home Depot, Lowe'sLowe’s and Wal*Mart. TheseGigante to continue the concentration of industry distribution. Furthermore, as global retailers each hold significant positionscontinue to reduce their number of suppliers, the ability to service these retailers with diverse product offerings and provide products globally through an expansive distribution system is increasingly important.

Competitive Strengths

The following strengths serve as a foundation for our business strategy:

Strong Diversified Global Brand Portfolio

We have a global portfolio of well-recognized consumer product brands. In the consumer battery and portable lighting categories, we use the Rayovac brand name principally in North America and Latin America and we primarily market these products in Europe under the VARTA brand. In the electric shaving and grooming and electric personal care products categories, we use the Remington brand in North America, the United Kingdom, Australia and select European countries. United historically marketed its products in the lawn and garden and household categories ininsect control segments as Spectrum Brands, which we competeincludes brand names such as Spectracide, Vigoro, Hot Shot and have together opened over 1,100 new stores

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in the last three years. AsCutter. We also sell our pet supplies under a result, we have been able to significantly increase our sales as these retailers have added new storeswide range of brands, including Tetra, 8-in-1, Dingo and captured greater market share.

        "One-Stop" Supplier.    We offer a broad product line of the value-oriented products that consumers demand as an alternative to premium-priced products. This product breadth, enhanced by our ability to create innovative products and to acquire and integrate products and businesses, improves our ability to be a "one-stop" supplier of branded, value-oriented products in both theMarineland. Our lawn and garden and household insect control brands are marketed primarily in North America. Our pet supply products are marketed primarily in North America and Europe. Many of these brands are well recognized in their categories, with market leading positions, and several of these brands have been used for our customers.

        In-Store Category Management.over 50 years. We believe that each of our one-stepmajor brands generates strong brand awareness. We attribute the longevity and strong consumer awareness of our brand names to the high-quality and consistent value of our products and to the success of our marketing and merchandising initiatives. We believe that the strength of our brands positions us to extend our product lines and provide our retail customers with strong sell-through to consumers.

Strong Global Retail Relationships

We have well-established business relationships with many of the top global retailers, distributors and wholesalers, which have enabled us to expand our overall market penetration and promote sales. With the acquisitions of United and Tetra, we have further diversified our customer base and strengthened our existing relationships with important mass merchandisers, home centers and pet superstores, such as Wal-Mart, The

Home Depot, Lowe’s, PETsMART, Canadian Tire and PetCo. We intend to leverage cross-selling opportunities with both our new and existing customers. We have built and maintained strong retailer relationships by providing our customers with global sourcing, high quality and innovative products and attractive margins. In addition, these relationships are reinforced by our exclusive brand arrangements with leading retailers, including our Vigoro brand at The Home Depot and our Sta-Green brand at Lowe’s, as well as our position as the exclusive supplier for Wal-Mart’s Expert Gardener brand. On a pro forma basis, we rank among the top 50 current suppliers to Wal-Mart in the United States based on consumer purchases.

Expansive Distribution Network and Global Sourcing

We distribute our products in approximately 120 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and OEMs. Our state-of-the-art battery packaging and distribution process,centers in which most shipments are made directly fromNorth America and Europe provide package-to-order capability for our facilitiesbattery products as well as rapid and cost-effective services to retail stores,customers for such products. We have an established global sourcing system for raw materials and product components for our direct in-store sales force enableproduct offerings, including maintaining an Asian sourcing organization located in Hong Kong, which is responsible for purchasing logistics and quality assurance for our products purchased from third party vendors. By moving production to Asia, we have been successful in reducing labor and material costs for consumer battery, electric shaving and grooming, electric personal care and portable lighting products. We distribute our lawn and garden, pet supplies and household insect control products in North America through a variety of trade channels, including retailers, wholesalers and distributors. The distribution network for our lawn and garden, pet supplies and household insect control businesses are designed to provide package-to-order capability. We plan to undertake initiatives to consolidate and streamline the United, Tetra and Spectrum distribution networks to achieve greater customer service capabilities and cost savings.

Innovative New Products, Packaging and Technologies

We have a long history of product and packaging innovations that have helped position us as an industry leader in each of our seven product categories. We have leading battery technologies in zinc air, consumer rechargeable and lithium coin cells. We have continued to improve the performance of our alkaline batteries, which has enabled us to manage customer relationships on a store-by-store basis better than other suppliers and help us compete aggressively with premium-priced suppliers for shelf space. Our sales representatives visit most home center locations on a weekly basisperform at levels comparable to merchandise shelf space, collect market data and educate in-store personnel about our products. This process facilitates regionally appropriate, real-time marketing and promotional decisions, helping to maximize store-level sales and profitability for categories whichmajor competitors without increasing consumer prices. We also have a high degreediverse portfolio of sensitivitycontrolled-release nitrogen technology and have been able to local weather patterns. In addition,offer customized fertilizer formulas to our sales force helps usleading customers. Our innovative packaging includes the first resealable alkaline battery multi-pack, the easy-open spin-and-lock dial hearing aid battery packaging and a handheld battery-operated spray system for use in lawn and garden, the first in its category. We continually seek to identify emerging trendsintroduce new products both as extensions of existing product lines and develop products to meet consumers' needs.as new product categories. For example, we recently introduced the Remington Titanium Smart System shaving system, Spectracide TripleStrike Grass & Weed Killer and the Remington Wet 2 Straight Professional Straightener hair straightener.

        BroadWorld Class Information Technology Portfolio.Platform

We have close relationships with key global active ingredient suppliers and have access to a broad portfolio of chemistry due to our significant presenceinvested in the pesticide market. This broad-based access to technologyan SAP enterprise resource planning system, which enables us to developmore effectively manage manufacturing planning and execution, demand planning, the supply procurement to payment cycle, the customer order to cash collection cycle and the financial planning and reporting functions. The majority of our businesses utilize this system, which significantly enhances transactional processing and detailed analysis and reporting. The SAP platform provides information system standardization throughout our company, which has allowed for the integration and consolidation of past acquisitions with minimal additional capital investment, and which we expect will similarly assist in our integration of United and Tetra. Our IT system has proved to be an effective and efficient platform to support our business. We anticipate further cost savings and operational synergies from the transition of United to our IT platform.

Proven Integration Track Record

We have a long history of successfully integrating significant acquisitions. In 1999, we acquired and successfully assimilated the Latin American operations of ROV Limited, where we reduced costs by closing three zinc carbon manufacturing facilities and implementing new raw material purchasing programs. In fiscal 2003, in conjunction with the acquisition of VARTA, we announced a series of cost savings initiatives. We fully integrated VARTA within 12 months and realized annual cost savings of approximately $43.7 million. The Remington integration resulted in annual cost savings of approximately $35 million. These savings were the result of combining sales organizations, consolidating administrative functions and integrating the production and distribution of Remington products that differentiate betweeninto our various opening-price point offeringsexisting manufacturing facilities and distribution network. The integration plan was substantially completed in nine months. We will continue to apply our nationally distributed value brands while offering product efficacy that is competitiveexperience with premium-priced products.previous acquisitions in connection with the integration of United and Tetra.

        StrongExperienced Management Team.Team

Our senior management team has extensive industrysubstantial consumer products experience and a proven track record of operations success and brand management. On average, senior management has more than 20 years of experience at Spectrum, VARTA, United and other branded consumer product companies such as General Electric, Gillette, Braun, Procter & Gamble and S.C. Johnson. Our management team has grown our business by developing and introducing new products, expanding our distribution channels, and acquiring new brands and products, while improving our operating efficiencies.operational efficiencies and making strategic acquisitions.


Business Strategy

 

Our long-term strategic plan is to be a diversified global consumer products company that competes in high growth markets. We intend to accomplish this via a combination of organic growth and strategic acquisitions. With our acquisitions of ROV Limited in August 1999, VARTA in October 2002, Ningbo in March 2004 and Microlite in May 2004, we have become a global manufacturer and marketer of consumer batteries. These acquisitions provided us with battery manufacturing capabilities in Europe, Latin America and Asia. The Ningbo acquisition provided us with low-cost manufacturing capacity in China, and access to a growing Chinese market.

The Remington acquisition in September 2003 was the first step in diversifying our consumer product offerings. With this acquisition, we entered the electric shaving and grooming and electric personal care categories. During the current year, we are expanding distribution of these products in Europe and Latin America. Our acquisitions of United and Tetra continued our product diversification and extended our presence into the lawn and garden, pet supplies and household insect control categories. In addition, we expect that the acquisitions of United and Tetra will reduce the seasonality of our historic business, which, prior to the acquisitions, was weighted towards the Christmas season (our first quarter in its fiscal year), while demand for lawn and garden products typically peaks during the first six months of the calendar year. We believe all of these categories are in markets that represent attractive growth opportunities.

To further enhance our position in the branded consumer products market, we plan to build on our strengths and favorable industry trends to enhance our competitive position by implementingimplement the following key elements of our business strategy:

        EnhanceIncrease Sales Through Expanded Customer Relationships with Leading Retailers.and Leveraging Our Distribution Network

We intend to increase our sales as a result of the broader product offering that resulted from the combinations of Spectrum, United and Tetra. We intend to capture incremental sales by leveraging strong customer relationships, which will facilitate the cross-selling of our full line of products. For example, we intend to leverage United’s more extensive relationships with home centers and pet stores in North America to increase sales of our branded products through these distribution channels. In addition, we will seek to leverageimprove the

utilization of our strong value brand positionexisting distribution channels to increase sales of United and operational expertiseTetra branded products. We believe we will strengthen existing relationships with overlapping customers, such as Wal-Mart, and will be able to serve these customers more efficiently. We also believe that we are well positioned to capitalize on the trend of global retail merchants who are continuing to consolidate their vendor base and focus on a reduced number of suppliers that can (1) provide high-value products, (2) efficiently and consistently fulfill logistical requirements and volume demands and (3) provide comprehensive product support from design to point of sale and after-market customer service.

Continue New Product Development and Packaging Innovation

We intend to continue our strategy of increasing sales through the introduction of new products and packaging designs in each of our seven product categories. Our research and development strategy is focused on new product development, performance improvements of our existing products and cost reductions in, and enhancements of, our products and packaging. We plan to continue to deliver more value to leading retailers thanuse our competitors. We focus on enhancing retailers' profitability in selling our products by being a low-cost provider and leveraging our one-step distribution process. We are able to compete as a low-cost provider due to our efficient marketing programs, high level of vertical integrationstrong brand names, established customer relationships and significant distribution leverage. We currently manufactureresearch and market opening price point brands for leading retailers such as Ace Hardware, Albertsons, Dollar General, The Home Depot, Lowe's, Target, Tru*Serv, Walgreens and Wal*Mart. We also believe our relationship as a supplier of "house brands" provides a basis for broadening our product offerings and we intend to seek out new strategies for enhancing our position with key customers.

        Leverage Our Operating Model.    We continually seek to build the strength of our distribution network and relationships with retailers. We have increased our sales and improved operating leverage by supplying complementary product lines to retailers. Our strategy is to continue to add new products either through new product development or by acquiring product lines.

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        Maintainboard for as long as Holdings maintains certain ownership percentages of our common stock outstanding, restrict the ability of Holdings, THL and Enhance Technological Strength.    We plancertain of its affiliates and certain of United’s former stockholders to continue to focus on building and maintaining a broad technology portfolio to enhance product differentiation and to maintain product efficacy. By increasing scale, we seek to leveragesell or transfer shares of our relationships with global active ingredient suppliers to maintain and expand our technologically advanced product offerings, with a focus on exclusive chemistry and new technology.

        Focus and Coordinate Sales Efforts.    We have established four customer-focused platform teams that are comprised of dedicated executive, sales, marketing, supply chain and finance personnel. Three of these teams are locatedcommon stock they receive in the citiesacquisition of United and restrict the ability of THL and certain of its affiliates to acquire a percentage ownership of our largest customers' headquarters while the fourth is based at our corporate headquarters to serve ourcapital stock outstanding in excess of 28% on a fully-diluted basis or engage in certain other accounts.activities. In addition, we have reorganized our direct retail sales forceagreed to improve serviceprovide the former stockholders of United with certain rights to key customers. This realignment, completed in 2002, allowsrequire us to provide separate, dedicated, individually tailored customer serviceprepare and file with the SEC a registration statement to permit the public offering and resale under the Securities Act of 1933 of shares of our key customerscommon stock received by those former stockholders in connection with the acquisition of United. On January

14, 2005, Holdings merged with and should position usinto United. Pursuant to respond more quicklythe terms of the applicable ancillary agreement referred to above, Holdings assigned its rights and proactivelyobligations under that agreement to their specific needs.THL and its affiliates.

The Tetra Acquisition

        Increase Supply Chain Efficiency.    We

On April 29, 2005, we acquired all of the equity interests of Tetra for total consideration of approximately $536 million, including estimated working capital and net of cash acquired as provided under the terms of the acquisition agreement. The acquisition of Tetra reflects our long-term strategic plan to leveragediversify our greater purchasing powerproduct categories, enter complementary categories and reduce our concentration in existing product categories. In connection with the acquisition of Tetra, we amended our credit agreement to provide for raw materials and active ingredients resulting from our organic growth and acquisitions to seek improved prices and terms from suppliers. In addition, we intend to selectively in-source or out-source products, based onborrowings of $500 million under an incremental term facility under the cost, quality and reliabilitycredit agreement.

See “Description of available alternatives. Toward that end, we recently improved costs and reliability by acquiring one fertilizer manufacturing plant and leasing another plant, which allows us to manufacture muchCertain Indebtedness” for a more detailed description of our granular fertilizer product, as opposed to relying on outsourcing arrangements.amended senior credit facilities.


Recent Acquisitions
The Exchange Offer

 Over the last two years,

On February 7, 2005, we have broadened our product offerings through several acquisitions. These acquisitions have enhanced our ability to be a "one-stop" supplierissued $700,000,000 principal amount of branded value-oriented products in our categories.

        In December 2001, we advanced our strategic plan for growth in the consumer lawn and garden category by acquiring leading consumer fertilizer brands Vigoro, Sta-Green and Bandini, as well as acquiring licensing rights to the Best® line of fertilizer products. These brands, which were formerly owned by or licensed to Pursell Industries, Inc., complement our consumer lawn, garden and insect control products.

        In May 2002, we acquired Schultz, a manufacturer of horticultural products and specialty items and a distributor of potting soil, soil conditioners and charcoal. Schultz products are distributed primarily to retail outlets throughout the United States and Canada. The merger was executed to enhance our position in the garden fertilizer and soil product lines and to strengthen our presence at major customers.

        In December 2002, we acquired WPC Brands, a manufacturer and distributor of various leisure-time consumer products, including a full line of insect repellents, institutional healthcare products and other proprietary and private label products. The acquisition was executed to enhance our insect repellent product lines and to strengthen our presence at major customers.

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Corporate Information

        We are a corporation organized under the laws of the State of Delaware and operate as Spectrum Brands. Our principal executive offices are located at 2150 Schuetz Road, St. Louis, Missouri 63146, and our telephone number is (314) 427-0780. Our website is/www.spectrumbrands.com.8 The information contained on or connected to our website is not part of this prospectus and is not incorporated in this prospectus by reference.



Industry and Sales Data

        Unless otherwise indicated, all lawn and garden pesticide and household insecticide industry data and statistics contained in this prospectus are estimates contained in or derived from the National Gardening Survey, an independent survey conducted by Harris Interactive for The National Gardening Association, and The U.S. Lawn and Garden Market, an independent survey conducted by The Freedonia Group. Unless otherwise indicated, sales data relating to our products used throughout this prospectus were obtained from AC Nielsen Company and Triad Systems Corporation. Industry and sales publications generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We have not independently verified this industry and sales data.


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The Initial Offering

        On March 27, 2003, we privately placed $85,000,000 of our 97/8% Series C Senior Subordinated Notes due 2009. We2015, the original notes to which the exchange offer applies, to a group of initial purchasers in reliance on exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable securities laws. In connection with the sale of the original notes to the initial purchasers, we entered into a registration rights agreement with the initial purchasers in the private offering inpursuant to which we agreed, among other things, to deliver this prospectus to you, to commence this exchange offer and to use our commercially reasonable best efforts to file a registration statementcomplete the exchange offer within 45270 days of the March 27, 2003 issue date, have the registration statement declared effective within 165 daysissuance of the issue dateoriginal notes. The summary below describes the principal terms and complete thisconditions of the exchange offer. Some of the terms and conditions described below are subject to important limitations and exceptions. See “The Exchange Offer” for a more detailed description of the terms and conditions of the exchange offer within 210 days after the issue date. We must pay liquidated damages to the holdersand “Description of the Series C notes if we do not meet these deadlines.Exchange Notes” for a more detailed description of the terms of the exchange notes.


The Exchange Offer


The Exchange Offer

We are offering to exchange up to $235,000,000$700,000,000 aggregate principal amount of our 9new 77 3/8% Series D Senior Subordinated Notes due 2009,2015, which have been registered under the Securities Act, in exchange for your original notes. The form and terms of 1933, for up to:these exchange notes are identical in all material respects to the original notes. The exchange notes, however, will not contain transfer restrictions and registration rights applicable to the original notes.





$150,000,000 of our outstanding 97/8% Series B Senior Subordinated Notes due 2009; and





$85,000,000 of our outstanding 97/8% Series C Senior Subordinated Notes due 2009.



To exchange your original notes, you must properly tender them, and we must accept them. We will accept both Series B and Cexchange all original notes that you validly tender and do not validly withdraw. We will issue registered exchange notes promptly after the expiration of the exchange offer.
Resale of Original NotesBased on interpretations by the staff of the SEC as detailed in a series of no-action letters issued to third parties, we believe that, as long as you are not a broker-dealer, the exchange notes offered in the exchange offer may be offered for resale, resold or otherwise transferred by you without compliance with the registration and prospectus delivery requirements of the Securities Act as long as:

•      you are acquiring the exchange notes in the ordinary course of your business;

•      you are not participating, do not intend to participate in and have no arrangement or understanding with any person to participate in a “distribution” of the exchange notes; and

•      you are not an “affiliate” of ours within the meaning of Rule 405 of the Securities Act.

If any of these conditions is not satisfied and you transfer any exchange notes issued to you in the exchange offer without delivering a proper prospectus or without qualifying for a registration exemption, you may incur liability under the Securities Act. Moreover, our belief that transfers of exchange notes would be permitted without registration or prospectus delivery under the conditions described above is based on SEC interpretations given to other, unrelated issuers in similar exchange offers. We cannot assure you that the SEC would make a similar interpretation with respect to our exchange offer. We will not be responsible for or indemnify you against any liability you may incur under the Securities Act.
Any broker-dealer that acquires exchange notes for its own account in exchange for original notes must represent that the original notes to be exchanged for the exchange notes were acquired by it as a single seriesresult of Series D notes in order to increasemarket-making activities or other trading activities and acknowledge that it will deliver a prospectus meeting the liquidity of both series of our outstanding notes. The Series D notes are substantially similar to the Series B and C notes, except that:





certain transfer restrictions relating to the Series C notes do not apply to the Series B and D notes;





registration rights relating to the Series C notes do not apply to the Series B and D notes; and





somerequirements of the provisions containedSecurities Act in connection with any offer to resell, resale or other retransfer of the Series D indenture, which also governsexchange notes. However, by so acknowledging and by delivering a prospectus, such participating broker-dealer will not be deemed to admit that it is an “underwriter” within the Series C notes, andmeaning of the definitions related thereto, are different thanSecurities Act. During the provisions inperiod ending 180 days after the Series B indenture, as described in the "Summaryconsummation of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes" section of this prospectus.



You may tender your Series B and C notes for exchange by following the procedures described under "The Exchange Offer—Procedures for Tendering."

Conditions to the Exchange Offer


The exchange offer is not subject to any condition other than that the exchange offer, not violate applicable lawsubject to extension in limited circumstances, a participating broker-dealer may use this prospectus for an offer to sell, a resale or any applicable interpretationother retransfer of the Staff of the SEC.exchange notes received in exchange for original notes which it acquired through market-making activities or other trading activities.

Expiration Date



The exchange offer will expire at 5:00 P.M.p.m., New York City time, on             , 2003, unless extended.





5



Closing Date


The closing of the exchange offer will be as promptly as practicable afterwe extend the expiration date.

Withdrawal Rights


Tenders of outstanding notes may be withdrawn any time prior to 5:00 p.m, New York City time,

Accrued Interest on the expiration date of the exchange offer.


Procedures for Tendering Series B
and C Notes


If you are a holder of Series B or C notes who wishes to participate in the exchange offer, you must either:





Complete, sign and date the accompanying Letter of Transmittal, or a facsimile thereof, and mail or otherwise deliver such documentation, together with your Series B or C notes, to the exchange agent at the address set forth under "The Exchange Offer—Exchange Agent;" or





Arrange for the Depository Trust Company to transmit certain required information to the exchange agent for this exchange offer in connection with a book-entry transfer.

Material U.S. Federal Income Tax Consequences


The exchange of the Series B and C notes for Series D notes will not be a taxable event for U.S. federal income tax purposes. You should read "Material U.S. Federal Income Tax Consequences" for a discussion of the significant U.S. federal income tax consequences of exchanging your Series B or C notes. You should consult your own tax advisor as to the consequences of the exchange to you.

Consequences of Failure to Exchange


Series C notes that are not tendered will be subject to the existing transfer restrictions on such notes after the exchange offer. We will have no further obligation to register the Series C notes. If you do not participate in the exchange offer, the liquidity of your Series B or C notes could be adversely affected.

Procedures for Beneficial Owners


If you are the beneficial owner of Series B or C notes registered in the name of a broker, dealer or other nominee and you wish to tender your notes, you should contact the person in whose name your notes are registered and promptly instruct such person to tender on your behalf.

Guaranteed Delivery Procedures


If you wish to tender your Series B or C notes and time will not permit your required documents to reach the exchange agent by the expiration date, or the procedure for book-entry transfer cannot be completed on time, or the certificate for your notes cannot be delivered on time, you may tender your notes pursuant to the guaranteed delivery procedures. See "The Exchange Offer—Guaranteed Delivery Procedures."





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Acceptance of Series B and C Notes; Delivery of Series D Notes


Subject to certain conditions, we will accept Series B and C notes which are properly tendered in the exchange offer and not withdrawn, prior to 5:00 P.M., New York City time, on the expiration date of the exchange offer. The Series D notes will be delivered as promptly as practicable following the expiration date.

Use of Proceeds


We will not receive any proceeds from the issuance of Series D notes pursuant to the exchange offer. We will pay all of our expenses incident to the exchange offer.

Exchange Agent


U.S. Bank National Association is serving as the exchange agent in connection with the exchange offer. U.S. Bank National Association also serves as trustee under the indentures that govern the Series B, C and D notes.


The 97/8% Series D Senior Subordinated Notes due 2009

IssuerUnited Industries Corporation, a Delaware corporation.

Securities Offered


Up to $235,000,000 principal amount of 97/8% Series D Senior Subordinated Notes due 2009.

General


The terms of the Series B, C and D notes are substantially similar, except that:





certain transfer restrictions relating to the Series C notes do not apply to the Series B and D notes;





registration rights relating to the Series C notes do not apply to the Series B and D notes; and





some of the provisions contained in the Series D indenture, which also governs the Series C notes, and the definitions related thereto, are different than the provisions contained in the Series B indenture, as described in the "Summary of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes" section of this prospectus.

Maturity Date
Original Notes



April 1, 2009.

Interest Rate


97/8% per annum.

Interest Payment Dates


Every April 1 and October 1. Interest on the Series D

The exchange notes will accruebear interest from the most recent date to which interest has been paid.paid on the original notes. If your original notes are accepted for exchange, then you will receive interest on the exchange notes and not on the original notes. Any original notes not tendered will remain outstanding and continue to accrue interest according to their terms.


Ranking

Conditions

The exchange offer is subject to customary conditions. We may assert or waive these conditions in our sole discretion. If we materially change the terms of the exchange offer, we will resolicit

tenders of the original notes. See “The Exchange Offers—Conditions to the Exchange Offer” for more information regarding conditions to the exchange offer.

Procedures for Tendering Original Notes

Each holder of original notes that wishes to tender their original notes must either:

•      complete, sign and date the accompanying letter of transmittal or a facsimile copy of the letter of transmittal, have the signatures on the letter of transmittal guaranteed, if required, and deliver the letter of transmittal, together with any other required documents (including the original notes), to the exchange agent; or

•      if original notes are tendered pursuant to book-entry procedures, the tendering holder must deliver a completed and duly executed letter of transmittal or arrange with Depository Trust Company, or DTC, to cause an agent’s message to be transmitted with the required information (including a book-entry confirmation) to the exchange agent; or

•      comply with the procedures set forth below under “—Guaranteed Delivery Procedures.”

Holders of original notes that tender original notes in the exchange offer must represent that the following are true:

•      the holder is acquiring the exchange notes in the ordinary course of its business;

•      the holder is not participating in, does not intend to participate in, and has no arrangement or understanding with any person to participate in a “distribution” of the exchange notes; and

•      the holder is not an “affiliate” of us within the meaning of Rule 405 of the Securities Act.

Do not send letters of transmittal, certificates representing original notes or other documents to us or DTC. Send these documents only to the exchange agent at the appropriate address given in this prospectus and in the letter of transmittal. We could reject your tender of original notes if you tender them in a manner that does not comply with the instructions provided in this prospectus and the accompanying letter of transmittal. See “Risk Factors—There are significant consequences if you fail to exchange your original notes” for further information.

Special Procedures for Tenders by Beneficial Owners of Original Notes

If

•      you beneficially own original notes;

•      those notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee; and

•      you wish to tender your original notes in the exchange offer;

please contact the registered holder as soon as possible and instruct it to tender on your behalf and comply with the instructions set forth in this prospectus and the letter of transmittal.

Guaranteed Delivery Procedures

If you hold original notes in certificated form or if you own original notes in the form of a book-entry interest in a global note deposited with the trustee, as custodian for DTC, and you wish to tender those original notes but

•      your original notes are not immediately available;

•      time will not permit you to deliver the required documents to the exchange agent by the expiration date; or

•      you cannot complete the procedure for book-entry transfer on time;

you may tender your original notes pursuant to the procedures described in “The Exchange Offer—Procedures for Tendering Original Notes—Guaranteed Delivery.”

Withdrawal Rights

You may withdraw your tender of original notes under the exchange offer at any time before the exchange offer expires. Any withdrawal must be in accordance with the procedures described in “The Exchange Offer—Withdrawal Rights.”

Effect on Holders of Outstanding Original

Notes

As a result of making this exchange offer, and upon acceptance for exchange of all validly tendered original notes, we will have fulfilled our obligations under the registration rights agreement. Accordingly, there will be no liquidated damages payable under the registration rights agreement if original notes were eligible for exchange, but not exchanged, in the exchange offer.

If you do not tender your original notes or we reject your tender, your original notes will remain outstanding and will be entitled to the benefits of the indenture governing the notes. Under such circumstances, you would not be entitled to any further registration rights under the registration rights agreement, except under limited circumstances. Existing transfer restrictions would continue to apply to the original notes.
Any trading market for the original notes could be adversely affected if some but not all of the original notes are tendered and accepted in the exchange offer.

Material U.S. Federal Tax Consequences

Your exchange of original notes for exchange notes will not be treated as a taxable event for U.S. federal income tax purposes. See “Material U.S. Federal Tax Consequences.”

Use of Proceeds

We will not receive any proceeds from the exchange offer or the issuance of the exchange notes. The net proceeds from the issuance of the original notes, together with borrowings under our new senior credit facilities, were used to finance the acquisition of United, to retire United’s existing indebtedness and Rayovac’s existing senior credit facilities and to pay related fees and expenses.

Acceptance of Original Notes and Delivery of Original Notes

We will accept for exchange any and all original notes properly tendered prior to the expiration of the exchange offer. We will complete the exchange offer and issue the exchange notes promptly after the expiration date.

Exchange Agent

U.S. Bank, National Association, is serving as exchange agent for the exchange offer. The address and telephone number of the exchange agent are provided in this prospectus under “The Exchange Offer—Exchange Agent” and in the letter of transmittal.

Summary of Terms of the Exchange Notes

The form and terms of the exchange notes will be identical in all material respects to the form and terms of the original notes, except that the exchange notes:

will have been registered under the Securities Act;

will not bear restrictive legends restricting their transfer under the Securities Act;

will not be entitled to the registration rights that apply to the original notes; and

will not contain provisions relating to an increase in the interest rate borne by the original notes under circumstances related to the timing of the exchange offer.

The exchange notes represent the same debt as the original notes and are governed by the same indenture, which is governed by New York law. A brief description of the material terms of the exchange notes follows:

IssuerSpectrum Brands, Inc.
Securities
$700.0 million in principal amount of 7 3/8% senior subordinated notes due 2015.

MaturityFebruary 1, 2015.
InterestAnnual rate: 7 3/8%.
Payment frequency: every six months on February 1 and August 1.
First payment: August 1, 2005.
RankingThe Series Dexchange notes will be our unsecured senior subordinated obligations. Accordingly, they will rank:

•      behind any of our existing and future senior indebtedness, including borrowings under our new senior credit facilities;

•      equally with any of our current and future senior subordinated indebtedness, including our existing senior subordinated notes;

•      ahead of any of our future debt that expressly provides that it is subordinated to the notes; and

•      effectively subordinated to any existing and future indebtedness and other liabilities of our subsidiaries that are not guaranteeing the notes.

As of May 1, 2005, we had $1.444 billion of senior debt which will be senior to the exchange notes, and $350 million of senior subordinated notes other than the guaranteesoriginal notes, which will rank equally with the exchange notes. As of April 3, 2005, our non-guarantor subsidiaries had approximately $349.6 million of indebtedness and other liabilities (excluding intercompany liabilities and excluding the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated. As of January 3, 2005, our non-guarantor subsidiaries had approximately $614.8 million of indebtedness and other liabilities (excluding intercompany liabilities and including the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated. In addition, as of May 1, 2005, we would have been permitted to borrow an additional $148 million of senior debt under our senior credit facilities (excluding outstanding letters of credit of $27.0 million).
GuaranteesOur existing and future domestic subsidiaries will be generalguarantors of the notes on a senior subordinated basis.

The guarantees of the exchange notes are unsecured senior subordinated obligations of us and each guarantor.the guarantors. Accordingly, they will rank juniorbehind all existing and future senior debt of the guarantors, including the guarantors’ guarantees of our new senior credit

facilities, equal to all future senior subordinated indebtedness of the guarantors, including guarantees of our and each guarantor's senior debt, but will rank equally with our and each guarantor's otherexisting senior subordinated debt.notes, and ahead of all future debt of the guarantors that expressly provides that it is subordinated to the guarantees.




  


7





As of April 23, 2003, we had $203.2 millionMay 1, 2005, the guarantees would have been subordinated to approximately $1.390 billion of senior debt outstanding, including $199.1 millionof the guarantors, $1.386 billion of which would have been guarantees of indebtedness under our senior credit facilityfacilities, and a $4.1would have ranked equally with $350 million capital lease, and we had $85.2 million available under our revolving credit facility.of existing senior subordinated notes.

Guarantees


The Series D notes will be unconditionally guaranteed on a senior subordinated basis by all of our existing and certain of our future domestic restricted subsidiaries.

Optional Redemption


We cannotmay redeem the Series Dexchange notes, until April 1, 2004. Atin whole or in part, at any time on or after that date,February 1, 2010 at the redemption prices described in the “Description of Notes—Optional Redemption,” plus accrued and unpaid interest. In addition, on or before February 1, 2008, we canmay redeem some or allup to 35% of the Series Dexchange notes with the net cash proceeds from certain equity offerings at pricesthe redemption price listed under "Descriptionin “Description of the Notes—Optional Redemption."

Change of Control Offer

If we experience a changespecific kinds of changes in control, we must give holders ofoffer to purchase the Series D notes the opportunity to sell us their Series Dexchange notes at 101% of their principal amount, plus accrued interest. We might not be able to pay you the required price for Series D notes you present to us at the time of a change of control, because:





we might not have sufficient funds at that time; or





the terms of our other debt may prevent us from paying the required price.

Asset Sale Proceeds


We may have to use the cash proceeds from assets we sell to offer to buy back Series D notes at their principal amount, plus accruedand unpaid interest.

Certain Indenture ProvisionsCovenants

TheWe issued the original notes, and will issue the exchange notes, under an indenture governing the Series D notes will limit what we may do. The provisions of the indenture will limitwhich, among other things, limits our ability and the ability of our restricted subsidiaries to:





incur more debt;



      borrow money or sell preferred stock;


 

•      create liens;

•      pay dividends and make distributions;on or redeem or repurchase stock;






issue stock of subsidiaries;





make certain types of investments;






repurchase stock;





create      sell stock in our restricted subsidiaries;






create liens;



      restrict dividends or other payments from restricted subsidiaries;


 

•      enter into transactions with affiliates;






enter into sale and leaseback transactions;





merge or consolidate;      issue guarantees of debt; and






transfer and sell assets.



•      sell assets or merge with other companies.

These covenants are subject to a numbercontain important exceptions, limitations and qualifications. For more details, see “Description of important exceptions.Notes.”





8



Absence of aan Established Public Market

for the Exchange Notes



There

The original notes are presently eligible for trading through the PORTAL® Market of the Nasdaq Stock Market, Inc., but the exchange notes will be new securities for which there is currently no established market for the Series D notes. Accordingly, there can be no assurance as to the development or liquidity of any market for the Series D notes.market. We do not intend to listapply for a listing of the Series Dexchange notes on any securities exchange or seek approval for quotation through any automated trading system.on the Nasdaq National Market. Accordingly, we cannot assure you that a liquid market for the exchange notes will develop or be maintained.

 For more information about

You should refer to “Risk Factors” beginning on page 18 for an explanation of certain risks before deciding whether to participate in the Series D notes, see the "Descriptionexchange offer.

Summary Financial Data—Rayovac

The following table sets forth summary financial data of Rayovac. The condensed consolidated financial data as of September 30, 2002, 2003 and 2004 and for each of the Notes" sectionfiscal years then ended have been derived from Rayovac’s audited consolidated financial statements incorporated by referenced into this prospectus. The condensed consolidated data as of and for the six month periods ended March 28, 2004 and April 3, 2005 have been derived from Rayovac’s unaudited consolidated financial statements incorporated by reference in this prospectus. The historical results included below and elsewhere in this prospectus should not be viewed as indicative of our future performance. This information is only a summary and should be read in conjunction with our historical consolidated financial statements and the notes thereto incorporated by referenced into this prospectus.

   Fiscal Year Ended
September 30,


  Six Months Ended

 
   2002(1)

  2003(2)(3)

  2004(4)

  March 28,
2004(5)


  April 3,
2005(6)


 
   ($ in millions except per share data) 

Statement of Operations Data:

                     

Net sales

  $572.7  $922.1  $1,417.2  $732.0  $1,025.3 

Cost of goods sold

   334.1   549.5   811.9   417.3   637.4 

Restructuring and related charges-cost of goods sold

   1.2   21.1   (0.8)  (1.1)  —   

Gross profit

   237.4   351.5   606.1   315.9   387.9 

Operating expenses

   174.4   280.4   437.7   237.7   290.8 

Restructuring and related charges-operating expenses

   —     11.5   12.2   6.0   0.2 

Operating income

   63.0   59.6   156.2   72.2   96.9 

Income before income taxes(7)

   45.7   23.0   90.5   40.5   41.2 

Loss from discontinued operations

   —     —     0.4   0.3   —   

Net income

   29.2   15.5   55.8   24.8   26.0 

Income from continuing operations per common share

   0.90   0.48   1.62   0.75   0.64 

Other Financial Data:

                     

Net cash provided by operating activities

  $66.8  $76.2  $104.9  $82.5  $11.1 

Capital expenditures

   15.6   26.1   26.9   9.6   20.7 

Depreciation and amortization (excluding amortization of debt issuance costs)

   19.0   31.6   35.3   22.8   16.9 

Book value per share

   5.39   6.20   9.13   7.75   20.56 

Ratio of earnings to fixed charges(8)

   3.9x  1.6x  2.4x  2.2x  1.7x

Balance Sheet Data (at fiscal year end):

                     

Cash and cash equivalents

  $9.9  $107.8  $15.8  $34.3  $44.3 

Working capital(9)

   140.5   269.8   251.9   239.8   585.5 

Total assets

   520.9   1,545.3   1,636.0   1,483.8   3,474.4 

Total debt

   201.9   943.4   829.9   791.6   1,940.6 

Total shareholders’ equity

   174.8   202.0   316.0   261.0   828.8 

(1)Fiscal 2002 includes restructuring and related charges—cost of goods sold of $1.2 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

(2)Fiscal 2003 includes a net sales reduction of approximately $6.1 million related to North American retailer inventory repricing programs associated with the launch of our comprehensive new alkaline pricing program announced in 2003. These programs were launched in response to Duracell’s price reduction in the U.S. market on certain AA and AAA batteries.

Fiscal 2003 includes restructuring and related charges—cost of goods sold of $21.1 million, and restructuring and related charges—operating expenses of $11.5 million. Fiscal 2003 also includes a non-operating expense of $3.1 million discussed in note (5) below. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

(3)Fiscal 2003 is impacted by two acquisitions completed during the fiscal year. The VARTA acquisition was completed on October 1, 2002 and the Remington acquisition was completed on September 30, 2003. See further discussion of these acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included in our Annual Report on Form 10-K and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 included therein incorporated herein by reference.

(4)Fiscal 2004 is impacted by two acquisitions completed during the fiscal year. The Ningbo acquisition was completed on March 31, 2004 and the Microlite acquisition was completed on May 28, 2004. See further discussion of these acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included in our Annual Report on Form 10-K and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 included therein incorporated herein by reference.

Fiscal 2004 includes restructuring and related charges—cost of goods sold of $(0.8) million, and restructuring and related charges—operating expenses of $12.2 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

(5)The six month period ended March 28, 2004 is impacted by two acquisitions completed during the period. The Ningbo acquisition was completed on March 31, 2004 and the Microlite acquisition was completed on May 28, 2004. See further discussion of these acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included in our Annual Report on Form 10-K and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 included therein incorporated herein by reference.

The six month period ended March 28, 2004 includes restructuring and related charges—cost of goods sold of $(1.1) million, and restructuring and related charges—operating expenses of $6.0 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

(6)The six month period ended April 3, 2005 is impacted by the United acquisition completed on February 7, 2005. See “Recent Developments” for further discussion.

The six month period ended April 3, 2005 includes a charge to Cost of goods sold of $27.7 million related to the fair value adjustment, required under generally accepted accounting principles in the United States of America, that was applied to United’s acquired inventory. The six month period ended April 3, 2005 also includes $12.0 million in debt issuance costs written off in connection with the debt refinancing that occurred at the time of the United acquisition.

(7)SFAS 145, which addresses, among other things, the income statement presentation of gains and losses related to debt extinguishments, requires such expenses to no longer be treated as extraordinary items, unless the items meet the definition of extraordinary per Accounting Principles Board (“APB”) Opinion No. 30. We adopted this statement on October 1, 2002. As a result, in fiscal 2003, we recorded a non-operating expense of $3.1 million for the write-off of unamortized debt issuance costs associated with the replacement of our previous credit facility in October 2002.

(8)For purposes of calculating the ratio of earnings to fixed charges, (i) earnings is defined as income before income taxes plus fixed charges and (ii) fixed charges is defined as interest expense (including capitalized interest and amortization of debt issuance costs) and the portion of operating rental expense which management believes is representative of the interest component of rent expense.

(9)Working capital is defined as current assets less current liabilities.


Risk Factors
RISK FACTORS

 

Investing in the notes involves a number of risks. You should carefully consider the information set forth under "Risk Factors" as well asfollowing risk factors in addition to the other information contained in and data included inincorporated by reference into this prospectus before tendering your Series B or C notesand in exchange for Series D notes.

9



Summary Historical and Pro Forma Financial Data

        In the table below,any other documents to which we providerefer you with selected historical financial data from our audited consolidated financial statements, as well as unaudited pro forma financial data. When you read this historical and pro forma financial data, it is important that you read along with it the financial statements and related notes, "Unaudited Pro Forma Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are contained elsewhere in this prospectus. Our unaudited pro forma as adjusted statement of operations data set forth below is based on our historical audited consolidated financial statements adjusted to give effect to our acquisitions of Schultz and WPC Brands and the offering of our Series C notes and the application of the proceeds therefrom, as if each occurred on January 1, 2002. The as adjusted balance sheet data set forth below is based on our historical consolidated balance sheet adjusted to give effect to the offering of our Series C notes and the application of the proceeds therefrom, as if each occurred on December 31, 2002.

 
 Year Ended December 31,
 
 
  
 Historical
 
 
 Pro Forma
As Adjusted
2002

 
 
 2002
 2001
 2000
 
 
 (dollars in thousands)

 
Statement of Operations Data:             
Net sales before promotion expense $598,944 $521,286 $297,776 $288,618 
Promotion expense  42,468  41,296  24,432  22,824 
Net sales  556,476  479,990  273,344  265,794 
Cost of goods sold(1)  360,159  305,644  148,371  146,229 
Selling, general and administrative expenses  126,207  113,162  74,689  69,099 
Operating income  70,110  61,184  44,734  42,466 
Interest expense, net  39,237  32,410  35,841  40,973 
Net income  24,884  25,336  6,726  1,359 

Other Financial Data:

 

 

 

 

 

 

 

 

 

 

 

 

 
Cash flows from operating activities    $37,858 $25,035 $10,793 
Cash flows used for investing activities     (68,250) (45,416) (3,950)
Cash flows used for financing activities     40,710  20,381  (6,843)
EBITDA(2) $81,825  71,424  49,652  47,727 
Depreciation and amortization  11,715  10,240  4,918  5,261 
Capital expenditures(3)  10,450  10,450  7,916  3,950 

 


 

As of December 31, 2002


 
 
 As Adjusted(4)
 Actual
 
 
 (dollars in thousands)

 
Balance Sheet Data:       
Cash and cash equivalents $40,264 $10,318 
Working capital(5)  50,149  50,149 
Total assets  418,140  386,003 
Total debt, including capital lease  437,073  404,936 
Stockholders' deficit  (96,236) (96,236)

(1)
Cost of goods sold for the year ended December 31, 2002 includes the impact of a $1.5 million inventory write-up for inventory recorded at fair value in connection with our merger with Schultz in May 2002.

10


(2)
EBITDA represents income from continuing operations before interest expense, net, income tax expense, depreciation and amortization. We have included information concerning EBITDA as a measure of liquidity because we believe certain investors use it as one measure of historical ability to fund operations and meet financial obligations. However, EBITDA is not presented to represent cash flow from operations as defined by accounting principles generally accepted in the United States, nor does management recommend that it be used as an alternative to, or superior measure of, operating income or income from continuing operations as an indicator of our operating performance or cash flow as a measure of liquidity or our ability to repay our debt obligations. We have provided below a reconciliation of EBITDA to cash flows from operating activities since we deem that it is the most directly comparable GAAP measure. In addition, our definition of EBITDA may not be comparable to that reported by other companies. EBITDA and the reconciliation to cash flows from operating activities is as follows:

 
 Year Ended December 31,
 
 
 Pro
Forma
As Adjusted
2002

 Historical
 
 
 2002
 2001
 2000
 
Net income $24,884 $25,336 $6,726 $1,359 
Interest expense, net  39,237  32,410  35,841  40,973 
Income tax expense  5,989  3,438  2,167  134 
Depreciation and amortization  11,715  10,240  4,918  5,261 
  
 
 
 
 
EBITDA $81,825 $71,424 $49,652 $47,727 
  
 
 
 
 
 Interest expense less amortization    $(29,130)$(33,150)$(38,553)
 Change in current assets and liabilities     (4,436) 8,533  2,801 
 Non-cash reduction of capital lease         (1,182)
     
 
 
 
Cash flows from operating activities    $37,858 $25,035 $10,793 
     
 
 
 
(3)
Capital expenditures presented for 2002 include $4.0 million in payments for certain assets purchased from Pursell. Capital expenditures presented for 2000 exclude the execution of a capital lease for $5.3 million. The execution of such capital lease is considered a capital expenditure but is reflected in the supplemental noncash financing activities section in the our consolidated statements of cash flows presented elsewhere in this prospectus.

(4)
As adjusted to give effect to the offering of our Series C notes and the use of proceeds therefrom. Stockholders' deficit has not been adjusted to reflect the writeoff of deferred financing costs of $2.4 million to be recorded in connection with the repayment of borrowings under the senior credit facility from the net proceeds of the offering of our Series C notes.

(5)
Working capital is defined as current assets, excluding cash and cash equivalents, less current liabilities, excluding short-term borrowings and current portion of long-term debt including a capital lease.

11



RISK FACTORS

You should carefully consider each of the following factors and all of the other information set forth in this prospectus before deciding whether to participateexchange your original notes for exchange notes in the exchange offer. Any of the following risks could materially and adversely affect our business, financial condition, or results of operations.operations and liquidity and the risks described below are not the only risks that we may face. Additional risks and uncertainties not currently known to us or that we currently deemview as immaterial may also materially and adversely affect our business, operations.financial condition, results of operations or liquidity. In such case, we may not be able to make principal and interest payments on the notes, and you may lose all or part of your investment.

Risks Associated with the Exchange Offer


Risks Relating to Exchange Offer

Your voting interest may be diluted as a result of theThere are significant consequences if you fail to exchange offer.

        If all of the Series B and C notes are exchanged for the Series D notes, $235,000,000 aggregate principal amount of Series D notes will be outstanding following consummation of the exchange offer, and the Series D notes will be deemed to be a single series of notes outstanding under the indenture governing the Series D notes. In such case, any actions requiring the consent of each holder or the holders of a majority in outstanding principal amount of Series D notes under such indenture will therefore require the consent of each holder of Series D notes or the holders of a majority in aggregate principal amount of such outstanding Series D notes, as applicable, and the individual voting interest of each holder will accordingly be diluted.

Because there is no public market for the Series D notes, you may not be able to resell your original notes.

 The Series D notes will be registered under the Securities Act, but will constitute a new issue of securities with no established trading market and will be subject to risks relating to:

    the liquidity of any trading market that may develop;

    the ability of holders to sell their Series D notes; or

    the price at which the holders would be able to sell their Series D notes.

        If a trading market were to develop, the Series D notes might trade at higher or lower prices than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar debentures and our financial performance.

        We understand that the initial purchasers currently intend to make a market in the Series D notes. However, they are not obligated to do so, and any market-making activity with respect to the notes may be discontinued at any time without notice. In addition, any market-making activity will be subject to the limits imposed by the Securities Act and the Securities Exchange Act of 1934, and may be limited during the exchange offer or the pendency of an applicable shelf registration statement. An active trading market may not exist for the Series D notes and any trading market that does develop may not be liquid.

        In addition, any outstanding note holder who tenders in the exchange offer for the purpose of participating in a distribution of the Series D notes may be deemed to have received restricted securities, and if so, will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. For a description of these requirements, see "The Exchange Offer."

Holders of Series C notes that fail to exchange their notes may be unable to resell their notes.

We did not register the Series Coriginal notes under the federalSecurities Act or any state securities laws, nor do we intend to followingafter the exchange offer. As a result, the Series Coriginal notes may only be transferred in limited circumstances under the securities laws. If the holders of Series C notesyou do not exchange their

12



your original notes in the exchange offer, theyyou will lose theiryour right to have the Series Coriginal notes registered under the federal securities laws,Securities Act, subject to certain limitations. As a result, a holder of Series CIf you continue to hold original notes after the exchange offer, you may be unable to sell the original notes. Original notes that are not tendered or otherwise transfer their notes.are tendered but not accepted will, following the exchange offer, continue to be subject to existing restrictions.

YourYou cannot be sure that an active trading market for the exchange notes will develop.

While the original notes are presently eligible for trading in the PORTALsm Market, there is no existing market for the exchange notes. We do not intend to apply for a listing of the exchange notes on any securities exchange. We do not know if an active public market for the exchange notes will develop or, if developed, will continue. If an active public market does not develop or is not maintained, the market price and liquidity of the exchange notes may be adversely affected. We cannot make any assurances regarding the liquidity of the market for the exchange notes, the ability of holders to sell their exchange notes or the price at which holders may sell their exchange notes. In addition, the liquidity and the market price of the exchange notes may be adversely affected by changes in the overall market for securities similar to the exchange notes, by changes in our financial performance or prospects and by changes in conditions in our industry.

You must follow the appropriate procedures to tender your original notes or they will not be accepted for exchange if you fail to follow the exchange offer procedures.exchanged.

 

The Series Dexchange notes will be issued to you in exchange for your Series B or Cthe original notes only after timely receipt by the exchange agent of:

    your Series Bof the original notes or C notes; and

    a book-entry confirmation related thereto, a properly completed and executed Letterletter of Transmittaltransmittal or an agent’s message and all other required documentation; or

    a book-entry delivery by transmittal of an agent's message through Depository Trust Company.

documentation. If you want to tender your Series B or Coriginal notes in exchange for Series Dexchange notes, you should allow sufficient time to ensure timely delivery.

Neither we nor the exchange agent nor our company isare under any duty to give you notification of defects or irregularities with respect to tenders of Series B or Coriginal notes for exchange. Series COriginal notes that are not tendered or are tendered but not accepted will, following the exchange offer, continue to be subject to the existing transfer restrictions on such notes.restrictions. In addition, if you tender your Series B or Cthe original notes in the exchange offer to participate in thea distribution of Series Dthe exchange notes, you will be required to comply with the registration and prospectus delivery requirements of the federal securities lawsSecurities Act in connection with any resale transaction. For additional information, please refer to "Thethe sections entitled “The Exchange Offer"Offer” and "Plan“Plan of Distribution" sections ofDistribution” later in this prospectus.


Risks Relating to the Series D Notes
Our Business

We may be unable to service our debt, including the Series D notes, as a result of our high level of indebtedness.

        As shown below,participate in very competitive markets and we have now and will continue to have a significant amount of indebtedness.

 
 As of April 23, 2003
 
 (dollars in millions)

Indebtedness senior to the notes, including a capital lease $203.2
Total indebtedness, including a capital lease $438.2

        Our substantial indebtedness could have important consequences to you. For example, it could:

    make it more difficult for us to satisfy our obligations with respect to the Series D notes;

    increase our vulnerability to general adverse economic and industry conditions;

    limit our ability to fund future working capital, capital expenditures, research and development costs and other general corporate requirements;

    require a substantial portion of our cash flow from operations for debt payments;

    limit our flexibility to plan for, or react to, changes in our business and the industry in which we operate;

    place us at a competitive disadvantage compared to our competitors that have less debt; and

    limit our ability to borrow additional funds.

13


            Any of the above listed factors could materially adversely affect us. See "Description of the Notes" and "Description of Certain Indebtedness."

    We may incur more debt senior to the Series D notes, which could further increase the risks described above.

            We may incur substantial additional indebtedness in the future. As of April 23, 2003, we had $3.0 million of borrowings and $1.8 million in letters of credit outstanding under our revolving credit facility. We have approximately $85.2 million of availability under our revolving credit facility and all of those borrowings under our senior credit facility would be senior to the Series D notes. If new debt is added to our current debt level, the related risks that we now face could increase. See "Capitalization," "Selected Historical Financial Data," "Description of the Notes" and "Description of Certain Indebtedness."

            In addition to permitted indebtedness, as defined in our indenture, we can incur additional indebtedness so long as our consolidated fixed charge coverage ratio, as defined in our indenture, is at least 2:1. As of April 23, 2003, our consolidated fixed charge coverage ratio was in excess of 2:1.

    To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

            Our ability to make payments on and to refinance our indebtedness, including the Series D notes, and to fund planned capital expenditures will depend on our ability to generate cash in the future. Our ability to generate cash is subject to some factors beyond our control, such as general economic, financial and industry conditions, competitive challenges, weather patterns and government regulations. We believe our cash flow from operations and available borrowings under our senior credit facility will be adequate to meet our future liquidity needs for at least the next eighteen months. We cannot assure you, however, that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us under our senior credit facility in a sufficient amount to enable us to pay our indebtedness, including the Series D notes, or to fund our other liquidity needs. We are likely to need to refinance all or a portion of our indebtedness on or before maturity. However, we might not be able to refinance any or all of our indebtedness on commercially reasonable terms, which would limit our flexibility to react to changes in general economic, financial and industry conditions, competitive challenges, pressures and adverse changes in government regulation and our ability to capitalize on significant business opportunities.

    You may lose part of your investment because the Series D notes are subordinated to our senior debt.compete successfully.

     Your right

    The markets in which we participate are very competitive. In the consumer battery market, our primary competitors are Duracell (a brand of Gillette), Energizer and Panasonic (a brand of Matsushita). In the lawn and

    garden and household insect control markets, our principal national competitors are The Scotts Company, Central Garden & Pet Company, The Clorox Company, Bayer A.G. and S.C. Johnson. In the electric shaving and grooming and electric personal care product markets, our primary competitors are Braun (a brand of Gillette), Norelco (a brand of Philips), Vidal Sassoon, Revlon and Hot. In the pet supplies market, our primary competitors are The Hartz Mountain Corporation and Central Garden & Pet Company. In each of our markets, we also compete with numerous other competitors.

    We and our competitors compete for consumer acceptance and limited shelf space based upon brand name recognition, perceived quality, price, performance, product packaging and design innovation, as well as creative marketing, promotion and distribution strategies. Our ability to receive paymentscompete in these consumer product markets may be adversely affected by a number of factors, including, but not limited to, the following:

    We compete against many well established companies that may have substantially greater financial and other resources, including personnel and research and development resources, greater overall market share and fewer regulatory burdens than we do.

    In some key product lines, our competitors may have lower production costs and higher profit margins than we do, which may enable them to compete more aggressively in offering retail discounts and other promotional incentives.

    Product improvements or effective advertising campaigns by competitors may weaken consumer demand for our products.

    Consumer preferences may change to products other than those we market.

    Consolidation of retailers and our dependence on these Series D notesa small number of key customers for a significant percentage of our sales may negatively affect our profits.

    During the past decade, retail sales of the consumer products we market have been increasingly consolidated into a small number of regional and national mass merchandisers and warehouse clubs. This trend towards consolidation is junior to our senior debt under our senior credit facility and capital lease obligations. We have $203.2 million of senior debt outstanding, includingoccurring on a capital lease, as of April 23, 2003. In addition, the Series D notes may rank behind our future borrowings, including debt under our senior credit facility and capital leases.worldwide basis. As a result upon any distributionof this consolidation, a significant percentage of our sales are attributable to a very limited group of retailer customers, including Wal-Mart, The Home Depot, Carrefour, Target, Lowe’s, PETsMART, Canadian Tire, PetCo and Gigante. Prior to our creditors in a bankruptcy or similar proceeding relating to us, the holdersacquisition of Tetra, Wal-Mart Stores, Inc., our largest retailer customer, accounted for approximately 18% of our senior debt will be entitled to be paidpro forma consolidated net sales in full in cash before any payment may befiscal 2004. Our sales generally are made through the use of individual purchase orders, consistent with respect to the Series D notes.

            In addition, all payments on the Series D notes will be blocked in the event of a payment default on senior debt and may be prohibited for up to 179 consecutive days in the event of some specified non-payment defaults on senior debt.

            In the event of bankruptcy, liquidation or reorganization or similar proceeding relating to us or any guarantor, the holders of the notes will participate with all other holders of our subordinated indebtedness in the assets remaining after we have paid all of our senior debt. Because the indenture requires that amounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding

    14



    be first paid to holders of senior debt, holders of the notes may receive less, ratably, than holders of trade payables. In any of these cases, we may not have sufficient assets or funds to pay all of our creditors, and holders of the Series D notes may receive less, ratably, than the holders of senior debt.

    The terms of our indebtedness impose operational and financial restrictions on us which, if breached, could result in an acceleration of indebtedness.

            Our senior credit facility and the indentures for the Series B, C and D notes restrict our ability to:

      incur additional indebtedness
      pay dividends and make distributions
      enter into sale and leaseback transactions
      make investments and capital expenditures
      repurchase stock
      create subsidiaries
      create liens
      enter into transactions with affiliates
      issue common and preferred stock of subsidiaries
      merge or consolidate our company
      transfer and sell assets

            In addition, we must maintain minimum debt service and maximum leverage ratios under our senior credit facility. A failure to comply with the restrictions contained in our senior credit facility or the indentures could lead to an event of default which could result in an acceleration of indebtedness. See "Description of Certain Indebtedness." There are a number of important exceptions to the covenants in our indentures, including, for example, our ability to make a significant amount of restricted payments. See "Description of the Notes."

    If there is a change of control, we may not have the ability to raise the funds necessary to finance the change of control offer required by the Series D indenture. These requirements could delay or prevent a change of control of our company.

            We will be required to offer to repurchase all outstanding Series D notes upon the occurrence of the following events:

      an unaffiliated person gains 50% of the voting power of our common stock;

      a merger in which we are not the surviving corporation or our common stock is converted into other property and the holders of our common stock and certain of our affiliates immediately prior to the merger cease to hold a majority of the common stock of the surviving corporation; or

      if during any two-year period, the directors at the beginning of the period and new directors who were approved by a majority of directors then in office cease to constitute a majority.

            These events involving a change of control may result in an event of default under our senior credit facility or other indebtedness that we may incur in the future. However, it is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of the Series D notes or that restrictions in our senior credit facility will not allow such repurchases. In addition, important corporate events, such as leveraged stock purchases that would increase the level of our indebtedness, may not constitute a change of control under the indenture. Our senior credit facility currently would prohibit a repurchase of the Series D notes. All or some of our obligations under our indenture or senior credit facility could delay, deter or prevent a sale of our company which might otherwise be advantageous to you and other holders of the Series D notes. See "Description of the Notes—Change of Control Offer."

    15



    The guarantees of the Series D notes could be voided or subordinated to our guarantors' other debt if the guarantees constituted a fraudulent conveyance.

            Under applicable provisions of the U.S. Bankruptcy Code or comparable provisions of state fraudulent transfer or conveyance laws, if any of our guarantors, at the time we issued the Series D notes:

      (1)
      incurred its guarantee with intent to hinder, delay or defraud creditors; or

      (2)
      received less than reasonably equivalent value or fair consideration for incurring its guarantee; and was insolvent at the time of incurrence, was rendered insolvent by reason of such incurrence, and the application of the proceeds thereof, was engaged or was about to engage in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its businesses, or intended to incur, or believed it would incur, debts beyond its ability to pay such debts as they mature,

    then, in each case, a court of competent jurisdiction could void, in whole or in part, the guarantee, or, in the alternative, subordinate such guarantee to existing and future indebtedness of the guarantor. The measure of insolvency for purposes of the foregoing will vary depending upon the law applied in such case. Generally, however, a company would be considered insolvent if the sum of its debts, including contingent liabilities, was greater than all of its assets at fair valuation or if the present fair saleable value of its assets was less than the amount that would be required to pay the probable liability on its existing debts, including contingent liabilities, as they become absolute and matured.

            We believe that, for purposes of the U.S. Bankruptcy Code and state fraudulent transfer or conveyance laws, the guarantees were issued without the intent to hinder, delay or defraud creditors and for proper purposes and in good faith and that the guarantors are not insolvent, will have sufficient capital for carrying on our business and will be able to pay their debts as they mature. This belief is not based on an opinion of counsel and we cannot assure you that a court passing on such questions would agree with our view.

    The holders of a majority of the Series D notes may waive defaults under or modify the indenture in a manner adverse to noteholders who do not approve of such actions.

            Subject to limitations specified in the indenture, the holders of a majority in principal amount of the Series D notes then outstanding will have the right to:

      waive existing defaults or events of default;

      waive compliance with provisions of the indenture or the notes;

      modify or supplement the indenture; and

      direct the time, method and place of conducting any proceeding for any remedy available to the Trustee under the indenture.

            These provisions of the indenture could allow actions affecting the Series D notes to be taken without the approval of all of the holders of the Series D notes and thus may have an adverse effect on the holders of the Series D notes who do not approve of such actions. See "Description of the Notes—Events of Default" and "—Modification of Indenture."

    16




    Risks Relating to Our Business

    industry practice. Because of the concentrationimportance of our sales to threethese key customers, thedemands for price reductions or promotions by such customers, reductions in their purchases, changes in their financial condition or loss of one or more of our top customers could adversely affect our financial results.

            Our top three customers, The Home Depot, Lowe's and Wal*Mart, together accounted for approximately 74% (33%, 23% and 18%, respectively) of our 2002 net sales and approximately 62% of our outstandingtheir accounts receivable as of December 31, 2002. These customers hold significant positions in the retail lawn and garden market. The loss of, or reduction in orders from, The Home Depot, Lowe's, Wal*Mart or any other significant customer could have a material adverse effect on our business, financial condition and results of operations. In addition, as a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among them to purchase our financial results, asproducts on a “just-in-time” basis. This requires us to shorten our lead-time for production in certain cases and more closely anticipate demand, which could customer disputes regarding shipments, fees, brand usein the future require us to carry additional inventories and positioning, merchandise condition orincrease our working capital and related matters. Our inability to collect accounts receivable from any of these customers could also have a material adverse effect.financing requirements. Furthermore, we do not have long-term purchase agreements or other contractual assurances as to future sales with any of our major retail customers.

    Bankruptcy ofprimarily sell branded products and a major customer, supplier or party with whom we have a strategic relationship could have a material adverse effect on our financial condition.

            Bankruptcy or a significant deterioration in the financial condition ofmove by one of our major customers suppliers or parties whom we have strategic relationshipsto sell significant quantities of private label products which directly compete with could have a material adverse effect on our sales, profitability, collections of receivables and cash flow. We continually monitor and evaluate the credit status of our customers and parties whom we have strategic relationships with and attempt to adjust terms as appropriate and permissible. Despite these efforts, a bankruptcy filing by a key customer, supplier or a party whom we have strategic relationships withproducts could have a material adverse effect on our business, financial condition and results of operations.

    We cannot assure you that United and Tetra will be successfully integrated.

    If we cannot successfully integrate the operations of United, including the operations of United Pet Group and Nu-Gro, and Tetra, we may experience material adverse consequences to our business, financial condition and results of operations. The integration of separately-managed companies operating in distinctly different markets involves a number of risks, including, but not limited to, the following:

    the risks of entering markets in which we have no prior experience;

    the diversion of management’s attention from the management of daily operations to the integration of operations;

    demands on management related to the significant increase in our size after the acquisitions of United and Tetra;

    difficulties in the assimilation and retention of employees;

    difficulties in the assimilation of different corporate cultures and practices, and of broad and geographically dispersed personnel and operations;

    difficulties in the integration of departments, information technology systems, accounting systems, technologies, books and records and procedures, as well as in maintaining uniform standards and controls, including internal accounting controls, procedures and policies; and

    expenses of any undisclosed or potential legal liabilities.

    Prior to the acquisitions of United and Tetra, Spectrum, United and Tetra operated as separate entities. In addition, United Pet Group and Nu-Gro operated as separate entities until acquired by United in 2004. We may not be able to maintain the levels of revenue, earnings or operating efficiency that any one of these entities had achieved or might achieve separately. The unaudited pro forma condensed consolidated financial results of operations of Rayovac and United presented in or incorporated by reference into this prospectus cover periods during which they were not under the same management and, therefore, may not be indicative of our future financial condition collectionsor operating results. Successful integration of receivableseach company’s operations will depend on our ability to manage those operations, realize opportunities for revenue growth presented by strengthened product offerings and cash flow.expanded geographic market coverage and, to some degree, eliminate redundant and excess costs. The anticipated savings opportunities are based on projections and assumptions, all of which are subject to change. We may not realize any of the anticipated benefits or savings to the extent or in the time frame anticipated, if at all, or such benefits and savings may require higher costs than anticipated.

    WeatherWe may fail to identify suitable acquisition candidates, our acquisition strategy may divert the attention of management and our acquisitions may not be successfully integrated into our existing business.

    We intend to pursue increased market penetration and expansion of our current product offerings through additional strategic acquisitions. We may fail to identify suitable acquisition candidates, and even if we do, acquisitions may not be completed on acceptable terms or successfully integrated into our existing business. Any acquisition we make could be of significant size and involve either domestic or international parties. The acquisition and integration of a separate organization would divert management attention from other business activities. Such a diversion, together with other difficulties we may encounter in integrating an acquired business, could have a material adverse effect on our business, financial condition and results of operations. In addition, we may borrow money or issue additional stock to finance acquisitions. Such funds might not be available on terms as favorable to us as our current borrowing terms and could increase our leveraged position.

    If we are unable to improve existing products and develop new, innovative products, or if our competitors introduce new or enhanced products, our sales and market share may suffer.

    Our future success will depend, in part, upon our ability to improve our existing products and to develop, manufacture and market new innovative products. If we fail to successfully introduce, market and manufacture new products or product innovations, our ability to maintain or grow our market share may be adversely affected, which in turn could materially adversely affect our business, financial condition and results of operations.

    Both we and our competitors make significant investments in research and development. If our competitors successfully introduce new or enhanced products that eliminate technological advantages our products may have in a certain market segment or otherwise outperform our products, or are perceived by consumers as doing so, we may be unable to compete successfully in market segments affected by these changes. In addition, we may be

    unable to compete if our competitors develop or apply technology which permits them to manufacture products at a lower relative cost. The fact that many of our principal competitors have substantially greater resources than us increases this risk. The patent rights or other intellectual property rights of third parties, restrictions on our ability to expand or modify manufacturing capacity or constraints on our research and development activity may also limit our ability to introduce products that are competitive on a performance basis.

    Our foreign operations may expose us to a number of risks related to conducting business in foreign countries.

    Our international operations and exports and imports to and from foreign markets are subject to a number of special risks. These risks include, but are not limited to:

    economic and political destabilization, governmental corruption and civil unrest;

    restrictive actions by foreign governments (e.g., duties, quotas and restrictions on transfer of funds);

    changes in foreign labor laws and regulations affecting our ability to hire and retain employees;

    changes in U.S. and foreign laws regarding trade and investment;

    changes in the economic conditions in these markets; and

    difficulty in obtaining distribution and support.

    In many of the developing countries in which we operate, there has not been significant governmental regulation relating to the environment, occupational safety, employment practices or other business matters routinely regulated in the United States. As such economies develop, it is possible that new regulations may increase the expense of doing business in such countries. In addition, social legislation in many countries in which we operate may result in significantly higher expenses associated with labor costs, terminating employees or distributors and with closing manufacturing facilities.

    We may face a number of risks related to foreign currencies.

    Our foreign sales and certain of our expenses are transacted in foreign currencies. With the exception of purchases of Remington products, which are denominated entirely in U.S. dollars, substantially all third-party materials purchases are transacted in the currency of the local operating unit. In fiscal 2004, on a pro forma basis, after giving effect to the acquisition of United (but excluding Tetra’s net sales), approximately 38% of our net sales and 33% of our operating expenses were denominated in currencies other than U.S. dollars. Our recent results benefited from increases in the value of the Euro against the U.S. dollar. Significant increases in the value of the U.S. dollar in relation to foreign currencies could have a material adverse effect on our business, financial condition and results of operations. While we generally hedge a portion of our foreign currency exposure, we are still vulnerable to the effects of currency exchange rate fluctuations. Changes in currency exchange rates may also affect our sales to, purchases from and loans to our subsidiaries as well as sales to, purchases from and bank lines of credit with our customers, suppliers and creditors that are denominated in foreign currencies. We expect that the amount of our revenues and expenses transacted in foreign currencies will increase as our Latin American, European and Asian operations grow and our exposure to risks associated with foreign currencies could increase accordingly.

    Sales of our products are seasonal and may cause our quarterly operating results and working capital requirements to fluctuate; adverse business or economic conditions could adversely affect our business.

    Sales of our battery, electric shaving and grooming, lawn and garden and household insect control products are seasonal. A large percentage of net sales for our battery and electric personal care products occur during the fiscal quarter ending on or about December 31, due to the impact of the December holiday season, and a large percentage of our net sales for our lawn and garden and household insect control products occur during the spring

    and summer. As a result of this seasonality, our inventory and working capital needs relating to these businesses fluctuate significantly during the year. In addition, orders from retailers are often made late in the period preceding the applicable peak season, making forecasting of production schedules and inventory purchases difficult. Furthermore, adverse business or economic conditions during those applicable periods could materially adversely affect our business, financial condition and results of operations.

    We may not be able to adequately establish and protect our intellectual property rights.

    To establish and protect our intellectual property rights, we rely upon a combination of patent, trademark and trade secret laws, together with licenses, confidentiality agreements and other contractual covenants. The measures we take to protect our intellectual property rights may prove inadequate to prevent misappropriation of our technology or other intellectual property. We may need to resort to litigation to enforce or defend our intellectual property rights. If a competitor or collaborator files a patent application claiming technology also invented by us, or a trademark application claiming a trademark, service mark, or trade dress also used by us, in order to protect our rights, we may have to participate in an expensive and time consuming interference proceeding before the United States Patent and Trademark Office or any similar foreign agency. In addition, our intellectual property rights may be challenged by third parties. Even if our intellectual property rights are not directly challenged, disputes among third parties could lead to the weakening or invalidation of our intellectual property rights. Furthermore, competitors may independently develop technologies that are substantially equivalent or superior to our technology. Obtaining, protecting and defending intellectual property rights can be time consuming and expensive, and may require us to incur substantial costs, including the diversion of management and technical personnel. Moreover, the laws of certain foreign countries in which we operate or may operate in the future do not protect intellectual property rights to the same extent as do the laws of the U.S. which may negate our competitive or technological advantages in such markets. Also, some of the technology underlying our products is the subject of nonexclusive licenses from third parties. As a result, this technology could be made available to our competitors at any time. If this technology were licensed to a competitor, it could have a material adverse effect on our business, financial condition and results of operations.

    Third-party intellectual property infringement claims against us could adversely affect our business.

    From time to time we have been subject to claims that we are infringing upon the intellectual property of others and it is possible that third parties will assert infringement claims against us in the future. For example, we are a defendant in a patent infringement lawsuit in which Braun, a subsidiary of Gillette, has alleged our “Smart System” shaving system infringes two of Braun’s U.S. patents and we are also involved in a number of legal proceedings with Philips with respect to trademarks owned by Philips relating to the shape of the head portion of Philips’ three-head rotary shaver. An adverse finding against us in these or similar trademark or other intellectual property litigations may have a material adverse effect on our business, financial condition and results of operations. For more information, see “Business—Legal Proceedings.” Any such claims, with or without merit, could be time consuming and expensive, and may require us to incur substantial costs, including the diversion of management and technical personnel, cause product delays, or require us to enter into licensing or other agreements in order to secure continued access to necessary or desirable intellectual property. Our business will be harmed if we cannot obtain a necessary or desirable license, can obtain such a license only on terms we consider to be unattractive or unacceptable, or if we are unable to redesign or re-brand our products or redesign our processes to avoid actual or potential intellectual property infringement. In addition, an unfavorable ruling in an intellectual property litigation could subject us to significant liability, as well as require us to cease developing, manufacturing or selling the affected products or using the affected processes or trademarks. There can be no assurance that we would prevail in any intellectual property infringement action, will be able to obtain a license to any third party intellectual property on commercially reasonable terms, successfully develop non-infringing alternative technology, trademarks, or trade dress on a timely basis, or license non-infringing alternatives, if any exist, on commercially reasonable terms. Any significant intellectual property impediment to our ability to develop and commercialize our products could have a material adverse effect on our business, financial condition and results of operations.

    Our dependence on a few suppliers located in Asia and one of our U.S. facilities for many of our electric shaving and grooming and electric personal care products makes us vulnerable to a disruption in the supply of our products.

    Substantially all of our electric shaving and grooming and electric personal care products are manufactured by suppliers located in China and Japan. Although we have long-standing relationships with many of these suppliers, we do not have long-term contracts with them. Any adverse change in any of the following could have a material adverse effect on our business, financial condition and results of operations:

    relationships with our suppliers;

    the financial condition of our suppliers;

    the ability to import outsourced products; or

    our suppliers’ ability to manufacture and deliver outsourced products on a timely basis.

    If our relationship with one of our key suppliers is adversely affected, we may not be able to quickly or effectively replace such supplier and may not be able to retrieve tooling and molds possessed by such supplier.

    In addition, we manufacture the majority of our foil cutting systems for our shaving product lines, using specially designed machines and proprietary cutting technology, at one of our facilities. Damage to this facility, or prolonged interruption in the operations of this facility for repairs or other reasons, would have a material adverse effect on our ability to manufacture and sell our shaving products.

    Our dependence on, and the price of, raw materials may adversely affect our profits.

    The principal raw materials used to produce our products—including zinc powder, electrolytic manganese dioxide powder, steel and granular urea—are sourced on a global or regional basis, and the prices of those raw materials are susceptible to price fluctuations due to supply/demand trends, energy costs, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. We regularly engage in forward purchase and hedging transactions in an attempt to effectively manage our raw materials costs for the next six to twelve months. These efforts may not be effective and, if we are unable to pass on raw materials price increases to our customers, our future profitability may be materially adversely affected.

    In addition, we have exclusivity arrangements and minimum purchase requirements with certain of our suppliers for our lawn and garden business, which increases our dependence upon and exposure to those suppliers. Also, certain agreements we have with our suppliers for our lawn and garden business are scheduled to expire in 2005 and 2006. Some of those agreements include caps on the price we pay for our supplies from the relevant supplier. In certain instances, these caps have allowed us to purchase materials at below market prices. Any renewal of those contracts may not include or reduce the effect of those caps and could even impose above market prices in an attempt by the applicable supplier to make up for any below market prices it had received from us prior to the renewal of the agreement. Any failure to timely obtain suitable supplies at competitive prices could materially adversely affect our business, financial condition and results of operations.

    Adverse weather conditions during our peak selling season for our lawn and garden and household insecticide and repellent products could adversely impacthave a material adverse effect on our business, financial results.condition and results of operations.

     

    Weather conditions in North America have a significant impact on the timing of sales of certain of our household products in the spring selling season and our overall annual sales. Periods of dry, hot weather can decrease insecticide sales, while periods of cold and wet weather can slow sales of herbicides and fertilizers. In addition, an abnormally cold spring throughout North America could adversely affect both fertilizer and pesticideinsecticide sales and therefore our business, financial results.condition and results of operations.

    Our seasonalityWe depend on key personnel and quarterly fluctuations could impair our abilitymay not be able to make interest payments on the notes.retain those employees or recruit additional qualified personnel.

     Our products

    We are used primarilyhighly dependent on the continuing efforts of our current executive officers and we will likely depend on the senior management of any business we acquire in the springfuture. Our business, financial condition and summer, so our business is highly seasonal. During 2002, approximately 69%results of our net sales occurred inoperations could be materially adversely affected by the first and second quarters. Our working capital needs, and correspondingly our borrowings, begin to peak at the beginningloss of the second quarter. If cash on hand is insufficient to cover payments due on the notes andany of these persons or if we are also unable to drawattract and retain qualified replacements.

    Class action lawsuits, regardless of their merits, could have an adverse effect on our senior credit facility or obtain other financing, this seasonality could adversely affect our ability to make interest payments as required by the notes.

            Our quarterlybusiness, financial condition and results of operationsoperations.

    Spectrum and certain of its officers and directors have been named in the past, and may also fluctuate significantlybe named in the future, as adefendants of class action lawsuits. Regardless of their subject matter or the merits, class action lawsuits may result in significant cost to us, which may not be covered by insurance, divert the attention of a variety of factors, including, among other things:

      weather conditions during peak gardening seasons;

      shifts in demand for lawn and garden products;

      changes in product mix, service levels and pricing by us and our competitors;

    17


        themanagement or otherwise have an adverse effect of acquisitions, including the costs of acquisitions that are not completed; and

        economic stability of retail customers.

              These seasonal and quarterly fluctuations could negatively impacton our business, including our ability to pay our obligations on the notes or otherwise, as they come due.financial condition and results of operations.

      We may be adversely affected by trends in the retail industry.exposed to significant product liability claims which our insurance may not cover and which could harm our reputation.

       With the growing trend towards retail trade consolidation, we are increasingly dependent upon key retailers whose bargaining strength is growing. To the extent such concentration continues to occur, our net sales and operating income may be increasingly sensitive to a deterioration in the financial condition of, or other adverse developments involving our relationships with, one or more of our retailer customers. Our business may also be negatively affected by changes in the policies of our retailer customers, such as limitations on our direct in-store sales force, inventory destocking, limitations on access to shelf space, price demands and other conditions. In addition, as a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among retailers to make purchases on a "just-in-time" basis. This requires us to shorten our lead time for production in certain cases and more closely anticipate demand, which could in the future require the carrying of additional inventories and increase our working capital and related financing requirements.

      We may be unable to compete successfully in our highly competitive industry.

              We compete against a number of large national and regional brands. Our principal national competitors include: The Scotts Company, which markets products under the Scotts®, Ortho®, Roundup®, Miracle-Gro® and Hyponex® brand names; S.C. Johnson & Son, Inc., which markets products under the Raid® and OFF!® brand names; The Clorox Company, which markets products under the Combat® and Black Flag® brand names; Central Garden & Pet Company, which markets products under the AMDRO® and IMAGE® brand names; Bayer A.G., which markets lawn and garden products under the Bayer Advantage® brand name; and The Servicemaster Company, which markets lawn care, tree and shrub services under the TruGreensm, ChemLawnsm and BareFootsm service marks. Some of our competitors are larger, have longer operating histories and have greater financial resources, market recognition and research departments than us. We cannot assure you that we will be able to compete successfully.

      Volatility in interest rates and in the prices of some of the raw materials we use could have a negative impact on us.

      In the normalordinary course of business, we are exposed to fluctuations in interest rates and raw materials prices. We have established policies and procedures that govern the management of these exposures through the use of derivative hedging instruments, including swap agreements. Our objective in managing our exposure to such fluctuations is to decrease the volatility of earnings and cash flows associated with changes in interest rates and certain raw materials prices. To achieve this objective, we periodically enter into swap agreements with values that change in the opposite direction of anticipated cash flows. Derivative instruments related to forecasted transactions are considered to hedge future cash flows, and the effective portion of any gains or losses is included in accumulated other comprehensive income until earnings are affected by the variability of cash flows. Any remaining gain or loss is recognized currently in earnings.

              During the first half of each year, the price of granular urea, a critical raw material component used in the production of fertilizer, tends to increase significantly in correlation with natural gas prices. The costs of granular urea have generally, but not always, declined during the second half of the year. As of December 31, 2002, we had hedged nearly 50%, and had purchase agreements to effectively fix an additional 23%, of our 2003 urea purchases. While we expect these instruments and agreements to

      18



      manage our exposure to price fluctuations, we cannot assure that they will be effective in fully mitigating our exposure to these risks, nor can we assure that we will be successful in passing pricing increases on to our customers. In addition, our inability to effectively manage our exposure could cause our costs to be greater than our competitors, which may adversely affect our business.

      The growth of our business, we may make it more difficultbe named defendants in lawsuits involving product liability claims. In some of these proceedings, plaintiffs may seek to manage.

              Rapid growth may strain our ability to manage our businessrecover large and will strain our operational and financial resources and accounting controls. We have invested substantial time, money and resources in implementing an enterprise resource planning, or ERP, system. If the implementationsometimes unspecified amounts of the ERP system is not successful or does not result in the benefits and efficiencies we anticipate, it could adversely affect our business. In addition, our continued growth will require an increase in personnel, particularly in our sales force. There can be no assurance that we will be able to continue to attract, train, develop and retain the personnel necessary to pursue our growth strategy.

      We could be adversely affected if we lose our key personnel.

              If we were to lose the services of Robert L. Caulk, Daniel J. Johnston, Kent J. Davies, John F. Timony or Robert S. Rubin or if one or more additional members of our management were to depart and subsequently compete with us, it could have a material adverse effect on our business. The loss of key personnel could have a material adverse effect on us. In addition, our future performance depends on our ability to attract and retain skilled employees. We cannot assure you that we will be able to retain our existing personnel or attract additional qualified employees in the future. See "Management—Employment Agreements."

      The interests of the holders of the notes may conflict with our controlling shareholders.

              Thomas H. Lee Equity Fund IV, L.P. and its affiliates beneficially own approximately, through UIC Holdings, L.L.C., 84% of our fully diluted common stock, and accordingly, they have the power to elect a majority of our directors, appoint new management and approve any action requiring the approval of the holders of our common stock, including adopting amendments to our charter and approving mergers or sales of substantially all of our assets. Our directors elected by Thomas H. Lee Equity Fund IV, L.P. and its affiliates will have the authority to make decisions affecting our capital structure, including the issuance of additional capital stock, the implementation of stock purchase programsdamages and the declaration of dividends. Certain decisions concerning our operations or financial structurematters may present conflicts of interest between the holders of our equity and the holders of the notes. For example, equity investors may have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment could enhance their equity interest, even though such transactions might involve risk to the holders of the notes.

      Our acquisition strategy involves a number of risks.

              We have completed a number of acquisitions and strategic transactions since 1999 and intend to grow through the acquisition of additional companies. We are regularly engaged in acquisition discussions with a number of companies and anticipate that one or more potential acquisition opportunities, including those that could be material, may become available in the near future. If and when appropriate acquisition opportunities become available, we intend to pursue them actively. Further, acquisitions involve a number of special risks, including:

        failure of the acquired business to achieve expected results;

        diversion of management's attention;

        failure to retain key personnel or customers of the acquired business;

      19


          additional financing that, if available, could increase leverage;

          successor liability, including with respect to environmental matters;

          the high cost and expenses of completing acquisitions and risks associated with unanticipated events or liabilities; and

          failure to successfully integrate our acquired businesses into our internal controls.

        remain unresolved for several years. These risksmatters could have a material adverse effect on our business, results of operations and financial condition if we are unable to successfully defend against or settle these matters or if our insurance coverage is insufficient to satisfy any judgments against us or settlements relating to these matters. Although we have product liability insurance coverage and cash flow.

                We expect to face competition for acquisition candidates, which may limit the number of opportunities and may lead to higher acquisition prices. Wean excess umbrella policy, we cannot assure you that weour insurance policies will provide coverage for any claim against us or will be ablesufficient to cover all possible liabilities. Moreover, any adverse publicity arising from claims made against us, even if the claims were not successful, could adversely affect the reputation and sales of our products.

        We may incur material capital and other costs due to environmental liabilities.

        Because of the nature of our operations, our facilities are subject to a broad range of federal, state, local and foreign laws and regulations relating to the environment. These include laws and regulations that govern:

        discharges to the air, water and land;

        the handling and disposal of solid and hazardous substances and wastes; and

        remediation of contamination associated with release of hazardous substances at our facilities and at off-site disposal locations.

        Risk of environmental liability is inherent in our business. As a result, material environmental costs may arise in the future. In particular, we may incur capital and other costs to comply with increasingly stringent environmental laws and enforcement policies. Although we believe that we are substantially in compliance with applicable environmental regulations at our facilities, we may not be in compliance with such regulations in the future, which could have a material adverse effect upon our business, financial condition and results of operations.

        From time to time, we have been required to address the effect of historic activities on the environmental condition of our properties, including without limitation, the effect of the generation and disposal of wastes such as manganese, cadmium and mercury, which are or may be considered hazardous, and releases from underground storage tanks. We have not conducted invasive testing to identify acquire,all potential environmental liability risks. Given the age of our facilities and the nature of our operations, there can be no assurance that material liabilities will not arise in the future in connection with our current or manage profitably additional businessesformer facilities. If previously unknown

        contamination of property underlying or in the vicinity of our manufacturing facilities is discovered, we could be required to integrate successfully any acquired businesses into our existing business without substantial costs, delays or other operations or financial difficulties. In future acquisitions, we also could incur additional indebtedness or pay consideration in excess of fair value, which couldmaterial unforeseen expenses. If this occurs, it may have a material adverse effect on our business, results of operations, financial condition and cash flow.

        Public perceptions that the products we produce and marketresults of operations. We are not safe could adversely affect us.

                We manufacture and marketcurrently engaged in investigative or remedial projects at a numberfew of complex chemical products, such as fertilizers, growing media, herbicides and pesticides, bearing our brands. On occasion, customers and some current or former employees have alleged that some products failed to perform up to expectations or have caused damage or injury to individuals or property. Public perceptionfacilities. There can be no assurance that our productsliabilities in respect of investigative or remedial projects at our facilities will not be material.

        We have been, and in the future may be, subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are not safe, whether justifiedresponsible as a result of our relationship with such other parties. These proceedings are under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) or not, could impair our reputation, damage our brand namessimilar state laws that hold persons who “arranged for” the disposal or treatment of such substances strictly liable for costs incurred in responding to the release or threatened release of hazardous substances from such sites, regardless of fault or the lawfulness of the original disposal. Liability under CERCLA is typically joint and materially adversely affect our business.several, meaning that a liable party may be responsible for all of the costs incurred in investigating and remediating contamination at a site. As a practical matter, liability at CERCLA sites is shared by all of the viable responsible parties. While we currently have no pending CERCLA or similar state matters, we may be named as a potentially responsible party at sites in the future and the costs and liabilities associated with these sites may be material.

        Compliance with environmentalvarious public health, consumer protection and other public health regulations applicable to our products and facilities could increase our costscost of doing business and expose us to additional requirements with which we may be unable to comply with.comply.

         Local,

        Certain of our products and facilities are regulated by the United States Environmental Protection Agency (the “EPA”), the United States Food and Drug Administration (the “FDA”) or other federal consumer protection and product safety regulations, as well as similar registration, approval and other requirements under state federal and foreign laws and regulations relating to environmental, health and safety matters affect usregulations. For example, in several ways. In the United States, all products containing pesticides must be registered with the United States Environmental Protection Agency (U.S. EPA)EPA and, in many cases, similar state and foreign agencies before they can be manufactured or sold. The inability to obtain or the cancellation of any registration could have an adverse effect on our business.business, financial condition and results of operations. The severity of the effect would depend on which products were involved, whether another product could be substituted and whether our competitors were similarly affected. We attempt to anticipate regulatory developments and maintain registrations of, and access to, substitute chemicals.chemicals and other ingredients. We may not always be able to avoid or minimize these risks.

         

        The Food Quality Protection Act establishesestablished a standard for food-use pesticides, which is that a reasonable certainty of no harm will result from the cumulative effect of pesticide exposures. Under the Act, the U.S. EPA is evaluating the cumulative effects from dietary and non-dietary exposures to pesticides. The pesticides in certain of our products continue to be evaluated by the U.S. EPA as part of this exposure. It is possible that the U.S. EPA or a third party active ingredient registrant may decide that a pesticide we use in our products will be limited or made unavailable to us. For example, in 2000, Dow AgroSciences L.L.C., an active ingredient registrant, voluntarily agreed to a withdrawal of virtually all residential uses of chlorpyrifos, an active ingredient weUnited used in ourits lawn and garden products under the name Dursban until January 2001. This had a material adverse effect on ourUnited’s operations resulting in a charge of $8.0 million in 2001. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." We cannot predict the outcome or the severity of the effect of the U.S. EPA'sEPA’s continuing evaluations of active ingredients used in our products.

        20



        In addition, to the regulations already described,use of certain pesticide and fertilizer products may be regulated by various local, state, federal and foreign agencies regulate the disposal, handling and storage of hazardous substances and hazardous waste, air and water discharges from our facilities and the remediation of contamination. If we do not fully comply with environmental regulations, or if a release of hazardous substances occurs at or from one of our facilities, we may be subject to penalties and/or held liable for the costs of remedying the condition.

                We do not anticipate incurring material capital expenditures for environmental control facilities during 2003 or 2004. We currently estimate that the costs associated with compliance with environmental, health and safety regulations could total approximately $0.2 million annually for the next several years. The adequacy of our anticipated future expenditures is based on our operating in substantial compliance with applicable environmental and public health lawsagencies. These regulations may require that only certified or professional users apply the product or that certain products be used only on certain types of locations (such as “not for use on sod farms or golf courses”), or that users post notices on properties to which products have been or will be applied, notification to individuals in the vicinity that products will be applied in the future, may provide that the product cannot be applied for aesthetic purposes, or may ban the use of certain ingredients. Compliance with public health regulations could increase our cost of doing business and regulationsexpose us to additional requirements with which we may be unable to comply.

        Public perceptions that some of the products we produce and the assumption that theremarket are not significant conditionssafe could adversely affect us.

        We manufacture and market a number of potential contaminationcomplex chemical products bearing our brands relating to our lawn and garden and household insecticide and repellent products, such as fertilizers, growing media, herbicides and pesticides. On occasion, customers and some current or former employees have alleged that some products failed to perform up to expectations or have caused damage or injury to individuals or property. Public perception that our products are unknown to us. If there is a significant change in the factsnot safe, whether justified or not, could impair our reputation, damage our brand names and circumstances surrounding this assumption, or if we are found not to be in substantial compliance with applicable environmental public health laws and regulations, it could have a material impactadverse effect on future environmentalour business, financial condition and results of operations.

        Risks Relating to the Notes

        Our substantial indebtedness could adversely affect our business, financial condition and results of operations and prevent us from fulfilling our obligations under the notes.

        We have, and we will continue to have, a significant amount of indebtedness. As of May 1, 2005 we would have had total outstanding indebtedness of approximately $2.5 billion (of which $700 million would have consisted of the notes, $1.386 billion would have consisted of borrowings under our senior credit facilities, $350 million would have consisted of other existing senior subordinated notes and $58 million would have consisted of other debt).

        Our substantial indebtedness could have important consequences to you. For example, it could:

        make it more difficult for us to satisfy our obligations with respect to the notes;

        require us to dedicate a large portion of our cash flow to pay principal and interest on the notes, our new senior credit facilities and our other debt, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities;

        increase our vulnerability to general adverse economic and industry conditions;

        limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

        restrict us from making strategic acquisitions or exploiting business opportunities;

        place us at a competitive disadvantage compared to our competitors that have less debt; and

        limit our ability to borrow additional funds (even when necessary to maintain adequate liquidity) or dispose of assets.

        In addition, a substantial portion of our debt bears interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which would adversely affect our cash flow. While we may enter into agreements limiting our exposure to higher debt service requirements, any such agreements may not offer complete protection from this risk.

        We will require a significant amount of cash to service our indebtedness. Our ability to generate cash depends on many factors beyond our control.

        Our ability to make payments on and to refinance our indebtedness, including the notes, and to fund planned capital expenditures and research and development efforts, will depend on our ability to generate cash in the future. This is subject to general economic, financial, competitive, legislative, regulatory and other environmental expenses and our results of operations, financial position and cash flows.

        Wefactors that may be exposed to significant product liability claims whichbeyond our insurance may not cover and which could harm our reputation.

                Although we have product liability insurance coverage in the aggregate amount of $2.0 million per occurrence, subject to a $500,000 per occurrence self-insured retention, and an umbrella policy for occurrences exceeding $2.0 million in the amount of $15.0 million, wecontrol. We cannot assure you that this insuranceour business will provide coverage for any claim against usgenerate sufficient cash flow from operations or that future borrowings will be available to us under our new senior credit facilities or otherwise in an amount sufficient to coverenable us to pay our debt, including the notes, or to fund our other liquidity needs. We may need to refinance all possible liabilities. Moreover, any adverse publicity arising from claims made against us, even if the claims were not successful, could adversely affect the reputation and salesor a portion of our products. See "Business—Litigation."

        If we are unable to use and protect our trademarksdebt, including the notes, on or product formulations, we may be exposed to modification and licensing costs.

                Our ability to successfully compete in our markets depends significantly on our ability to use and protect our trademarks. There can be no assurance that our trademarks will be enforceable or adequately protect us from others using similar marks.before maturity. We therefore may not be able to maintain our proprietary position. In addition to trademarks, we also rely on a combination of patents, trade secrets, nondisclosure agreements and other contractual provisions and technical measures to protect our intellectual property rights. There can be no assurancecannot assure you that we will be able to maintainrefinance any of our proprietary position,debt, including our new senior credit facilities, our existing senior subordinated notes or the notes, on commercially reasonable terms or at all.

        Your right to receive payments on the notes will be junior to our existing and future senior indebtedness and the guarantees of the notes will be junior to all of the guarantors’ existing and future senior indebtedness.

        The notes and the guarantees rank behind all of our and the guarantors’ existing and future senior indebtedness. As of May 1, 2005, the notes and the guarantees would have been subordinated to approximately $1.390 billion of senior debt, $1.386 billion of which would have represented borrowings and guarantees under our senior credit facilities. In addition, our senior credit facilities would have permitted up to approximately $148 million of additional borrowings, subject to compliance with the covenants and conditions to borrowing under the new senior credit facilities, which borrowings would be senior to the notes and the guarantees. We will be permitted to borrow substantial other senior indebtedness in the future.

        As a result of this subordination with respect to our senior indebtedness upon any distribution to our creditors or the creditors of the guarantors in a bankruptcy, liquidation or reorganization or similar proceedings relating to us or the guarantors of our or the guarantors’ property, the holders of our senior debt and the senior debt of the guarantors will be entitled to be paid in full in cash before any payment may be made with respect to the notes or the guarantees. In addition, all payments on the notes and the guarantees will be blocked in the event of a payment default on senior debt and may be blocked for up to 179 consecutive days in the event of certain non-payment defaults on designated senior debt. In the event of a bankruptcy, liquidation or reorganization or similar proceeding relating to us or the guarantors, the indenture relating to the notes requires that thirdamounts otherwise payable to holders of the notes in a bankruptcy or similar proceeding be paid to holders of senior debt instead until the holders of senior debt are paid in full. As a result, holders of the notes may not receive all amounts owed to them and may receive less, ratably, than holders of trade payables and other unsubordinated indebtedness in any such proceeding.

        We may incur additional indebtedness, which could increase the risks associated with our substantial indebtedness.

        We may be able to incur substantial additional indebtedness in the future. Although the terms governing our senior credit facilities and the indentures governing our existing senior subordinated notes and the notes contain restrictions on the incurrence of additional indebtedness, debt incurred in compliance with these restrictions could be substantial. As of May 1, 2005, our senior credit facilities would have permitted additional borrowing of up to $148 million. If new indebtedness is added to our and our subsidiaries’ current indebtedness levels, the related risks that we face would be magnified. In addition, the indentures governing our existing senior subordinated notes and the notes do not prevent us from incurring obligations that do not constitute indebtedness.

        The notes and the guarantees will be unsecured and effectively subordinated to our existing and future secured debt.

        In addition to being contractually subordinated to all existing and future senior debt, holders of our secured debt will have claims that are prior to your claims as holders of the notes up to the value of the assets securing the secured debt. Notably, we and the guarantors are parties to the new senior credit facilities, which are secured by substantially all of our domestic assets and certain of our foreign assets. In the event of any distribution or payment of our assets in any foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, holders of secured debt will have a prior claim to those assets that constitute their collateral. In any of the foregoing events, we cannot assure you that there will be sufficient assets to pay amounts due on the notes. As a result, holders of notes may receive less, ratably, than holders of secured debt.

        We depend in part on the cash flow from our non-guarantor subsidiaries to meet our obligations, and your right to receive payment on the notes will be structurally subordinate to the obligations of these non-guarantor subsidiaries.

        Our non-guarantor subsidiaries are separate and distinct legal entities with no obligation to pay any amounts due pursuant to the notes or the subsidiary guarantees or to provide us or the guarantors with funds for our payment obligations. Our cash flow and our ability to service our debt, including the notes, depends in part on the

        earnings of our non-guarantor subsidiaries and on the distribution of earnings, loans or other payments to us by these subsidiaries. The non-guarantor subsidiaries, not circumventincluding those non-guarantor subsidiaries acquired in connection with the Tetra acquisition (which include all of our foreign subsidiaries), represented approximately 41% and 31% of our pro forma total net sales and assets, respectively, in fiscal 2004. In addition, the ability of these non-guarantor subsidiaries to make any proprietary protectiondividend, distribution, loan or other payment to us or a guarantor subsidiary could be subject to statutory or contractual restrictions. Payments to us or a guarantor subsidiary by these non-guarantor subsidiaries will also be contingent upon their earnings and their business considerations. Because we have. Althoughdepend in part on the cash flow of these non-guarantor subsidiaries to meet our obligations, these types of restrictions may impair our ability to make scheduled interest and principal payments on the notes.

        Each of our domestic subsidiaries is a guarantor of our obligations under the notes. However, our foreign subsidiaries are not required by the indenture to guarantee the notes. The notes are structurally subordinated to all future liabilities, including trade payables, of our subsidiaries that do not guarantee the notes, and the claims of creditors of those subsidiaries, including trade creditors, have priority as to the assets and cash flows of those subsidiaries. In the event of a bankruptcy, liquidation, dissolution, reorganization or similar proceeding of any of the non-guarantor subsidiaries, holders of their liabilities, including their trade creditors, are generally entitled to payment on their claims from assets of those subsidiaries before any assets are made available for distribution to us. As of April 3, 2005, our non-guarantor subsidiaries had approximately $349.6 million of indebtedness and other liabilities (excluding intercompany liabilities and excluding the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated. As of January 3, 2005, our non-guarantor subsidiaries had approximately $614.8 million of indebtedness and other liabilities (excluding intercompany liabilities and including the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated. Our non-guarantor subsidiaries are permitted to borrow substantial other indebtedness and incur liabilities in the future.

        The terms of our indebtedness impose restrictions on us that may affect our ability to successfully operate our business and our ability to make payments on the notes.

        The agreement governing our new senior credit facilities, the indentures governing our existing senior subordinated notes and the notes contain covenants that, among other things, limit our ability to:

        borrow money or sell preferred stock;

        create liens;

        pay dividends on or redeem or repurchase stock;

        make certain types of investments;

        sell stock in our restricted subsidiaries;

        restrict dividends or other payments from restricted subsidiaries;

        enter into transactions with affiliates;

        issue guarantees of debt; and

        sell assets or merge with other companies.

        Our new senior credit facilities also require us to comply with specified financial ratios and tests, including, but not limited to, minimum interest coverage ratio, maximum leverage ratio and minimum fixed charge coverage ratio.

        These covenants could materially and adversely affect our ability to finance our future operations or capital needs and to engage in other business activities that may be in our best interest. These covenants may also restrict our ability to expand or pursue our business strategies. Our ability to comply with these covenants may be affected by events beyond our control, such as prevailing economic conditions and changes in regulations, and if such events occur, we believecannot be sure that we will be able to comply. A breach of these covenants could result in a default under the indentures governing the notes and the existing senior subordinated notes and/or the agreement governing our new senior credit facilities. If there were an event of default under the indenture for the notes, the indenture for our existing senior subordinated notes and/or the agreement governing our new senior credit facilities, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately.

        Additionally, if we fail to repay the debt under the new senior credit facilities when it becomes due, the lenders under the senior credit facilities could proceed against certain of our assets and capital stock which we have pledged to them as security. We cannot assure you that our products doassets or cash flow will be sufficient to repay borrowings under the outstanding debt instruments, including the notes, in the event of a default thereunder.

        We may not violatehave the patents, trademarks, trade dress or other proprietary rightsability to raise the funds necessary to finance any change of third parties,control offer required by the indenture governing the notes.

        Upon the occurrence of certain specific kinds of change of control events, we will be required to offer to repurchase all outstanding notes at 101% of the principal amount thereof plus accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. However, it is possible that competitorswe will not have sufficient funds at the time of the change of control to make the required repurchase of notes or others could claim this. Ifthat restrictions in our products are foundnew senior credit facilities will not allow such repurchases. The indenture governing our existing senior subordinated notes imposes a similar obligation on us to infringe onmake an offer to repurchase all of our outstanding existing senior subordinated notes if a change of control occurs. In addition, certain important corporate events, such as leveraged recapitalizations that would increase the rightslevel of competitorsour indebtedness, would not constitute a “change of control” under the indenture governing our existing senior subordinated notes or others, we couldthe indenture governing the notes. See “Description of Notes—Repurchase at the Option of Holders—Change of Control.”

        Federal and state laws permit a court to void the guarantees under certain circumstances.

        Our payment of consideration to finance a portion of the transactions (including the issuance of a guarantee of the notes by our subsidiary guarantors) may be subject to review under federal or state fraudulent transfer laws. While the relevant laws may vary from state to state, under such laws the issuance of a guarantee will be a fraudulent conveyance if (i) any of our subsidiaries issued guarantees, with the intent of hindering, delaying or defrauding creditors or (ii) any of the guarantors received less than reasonably equivalent value or fair consideration in return for issuing their respective guarantees, and, in the case of (ii) only, one of the following is also true:

        any of the guarantors was insolvent, or became insolvent, when it paid the consideration;

        issuing the guarantees left the applicable guarantor with an unreasonably small amount of capital; or

        the applicable guarantor intended to, or believed that it would, be unable to pay debts as they matured.

        Generally, an entity will be considered insolvent if:

        the sum of its debts is greater than the fair value of its property;

        the present fair value of its assets is less than the amount that it will be required to modifypay on its existing debts as they become due; or

        it cannot pay its debts as they become due.

        If the payment of the consideration or the issuance of any guarantee were a fraudulent conveyance, a court could, among other things, void any of the guarantors’ obligations under their respective guarantees and require the repayment of any amounts paid thereunder.

        We believe, however, that immediately after issuance of the notes and the guarantees, each of the guarantors will be solvent, will have sufficient capital to carry on its respective business and will be able to pay its respective debts as they mature. We cannot be sure, however, as to what standard a court would apply in making such products, pay fordeterminations or that a licensecourt would reach the same conclusions with regard to these issues.

        The market price for the manufacture and sale of such products, which licensenotes may not be available on reasonable terms, or stop selling such products.

        Terrorist attacks, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, and other acts of violence or war may affect the markets in which the Series D notes trade, the markets in which we operate, our operations, profitability and cash flow.volatile.

         Terrorist attacks or other acts

        Historically, the market for non-investment grade debt has been subject to disruptions that have caused substantial volatility in the prices of violence or warsecurities similar to the notes offered hereby. The market for the notes, if any, may negativelybe subject to similar disruptions. Any such disruptions may adversely affect our operationsthe value of your notes.

        SELECTED FINANCIAL DATA—RAYOVAC

        The following table sets forth selected historical consolidated financial data of Rayovac. The selected historical consolidated financial data as of September 30, 2002, 2003 and your investment. There can be no assurance that there will2004 of the three fiscal years then ended have been derived from Rayovac’s audited consolidated financial statements incorporated herein by reference. The selected historical consolidated financial data as of September 30, 2000 and 2001 and for the each of the two fiscal years then ended have been derived from Rayovac’s audited financial statements. The condensed consolidated data as of and for the six month periods ended March 28, 2004 and April 3, 2005 have been derived from Rayovac’s unaudited consolidated financial statements incorporated by reference in this prospectus. The historical results included below and elsewhere in this prospectus should not be further terrorist attacks against the United States or U.S. businesses. These attacks may directly impact our physical facilities or thoseviewed as indicative of our suppliers or customers. Furthermore, these attacks may make travelfuture performance. The following selected financial data should be read in conjunction with the information contained elsewhere in this prospectus and the transportation of our suppliesconsolidated financial statements and products more difficult and more expensive and ultimately affect our operating results.

        21



        Also as a result of terrorismthe notes thereto and other hostilities,financial information incorporated herein by reference.

          Fiscal Year Ended September 30,

          Six Months Ended

         
          2000

          2001(1)

          2002(2)

          2003(3)(4)

          2004(5)

          March 28,
        2004(6)


          April 3,
        2005(7)


         
          ($ in millions except per share data) 

        Statement of Operations Data:

                                    

        Net sales(8)

         $630.9  $616.2  $572.7  $922.1  $1,417.2  $732.0  $1,025.3 

        Cost of goods sold

          371.5   361.2   334.1   549.5   811.9   417.3   637.4 

        Restructuring and related charges—cost of goods sold

          —     22.1   1.2   21.1   (0.8)  1.1   —   

        Gross profit(8)

          259.4   232.9   237.4   351.5   606.1   315.9   387.9 

        Operating expenses

          170.1   178.3   174.4   280.4   437.7   237.7   290.8 

        Restructuring and related charges—operating expenses

          —     0.2   —     11.5   12.2   6.0   0.2 

        Operating income(9)

          89.3   54.4   63.0   59.6   156.2   72.2   96.9 

        Income before income taxes(10)

          58.0   17.5   45.7   23.0   90.5   40.5   41.2 

        Loss from discontinued operations

          —     —     —     —     0.4   0.3   —   

        Net income

          38.4   11.5   29.2   15.5   55.8   24.8   26.0 

        Income from continuing operations per common share

          1.32   0.39   0.90   0.48   1.62   0.75   0.64 

        Other Financial Data:

                        ��           

        Net cash provided by operating activities

         $32.8  $18.0  $66.8  $76.2  $104.9  $82.5  $11.1 

        Capital expenditures

          19.0   19.7   15.6   26.1   26.9   9.6   20.7 

        Depreciation and amortization (excluding amortization of debt issuance costs)(9)

          19.9   21.1   19.0   31.6   35.3   22.8   16.9 

        Book value per share

          2.78   5.31   5.39   6.20   9.13   7.75   20.56 

        Ratio of earnings to fixed charges(11)

          2.9x  1.7x  3.9x  1.6x  2.4x  2.2x  1.7x

        Balance Sheet Data (at end of specified period):

                                    

        Cash and cash equivalents

         $9.8  $11.4  $9.9  $107.8  $15.8  $34.3  $44.3 

        Working capital(12)

          104.7   158.5   140.5   269.8   251.9   239.8   585.5 

        Total assets(6)

          549.6   566.5   520.9   1,545.3   1,636.0   1,483.8   3,474.4 

        Total debt

          317.6   258.0   201.9   943.4   829.9   791.6   1,940.6 

        Total shareholders’ equity

          80.7   157.6   174.8   202.0   316.0   261.0   828.8 

        (1)Fiscal 2001 includes restructuring and related charges—cost of goods sold of $22.1 million, and restructuring and related charges—operating expenses of $0.2 million. Fiscal 2001 also includes a non-operating expense of $8.6 million discussed in note (10) below.

        (2)Fiscal 2002 includes restructuring and related charges—cost of goods sold of $1.2 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

        (3)Fiscal 2003 includes a net sales reduction of approximately $6.1 million related to North American retailer inventory repricing programs associated with the launch of our comprehensive new alkaline pricing program announced in 2003. These programs were launched in response to Duracell’s price reduction in the U.S. market on certain AA and AAA batteries.

        Fiscal 2003 includes restructuring and related charges—cost of goods sold of $21.1 million, and restructuring and related charges—operating expenses of $11.5 million. Fiscal 2003 also includes a non-operating expense of $3.1 million discussed in note (10) below. See Note 15 in the United States has entered into,Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

        (4)Fiscal 2003 impacted by two acquisitions completed during the fiscal year. The VARTA acquisition was completed on October 1, 2002 and the Remington acquisition was completed on September 30, 2003. See further discussion of acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included elsewhere in this prospectus and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference.

        (5)Fiscal 2004 and the three month period ended January 2, 2005 are impacted by two acquisitions completed during the fiscal year. The Ningbo acquisition was completed on March 31, 2004 and the Microlite acquisition was completed on May 28, 2004. See further discussion of acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included elsewhere in this prospectus and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference.

        Fiscal 2004 and may enter into additional, armed conflicts which could havethe three month period ended January 2, 2005 include restructuring and related charges—cost of goods sold of $(0.8) million, and restructuring and related charges—operating expenses of $12.2 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

        (6)The six month period ended March 28, 2004 is impacted by two acquisitions completed during the period. The Ningbo acquisition was completed on March 31, 2004 and the Microlite acquisition was completed on May 28, 2004. See further discussion of these acquisitions in “Management’s Discussion of Financial Condition and Results of Operations—Rayovac” included in our Annual Report on Form 10-K and in Note 16 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 included therein incorporated herein by reference.

        The six month period ended March 28, 2004 includes restructuring and related charges—cost of goods sold of $(1.1) million, and restructuring and related charges—operating expenses of $6.0 million. See Note 15 in the Notes to Rayovac’s Consolidated Financial Statements for the fiscal year ended September 30, 2004 incorporated herein by reference for further discussion.

        (7)The six month period ended April 3, 2005 is impacted by the United acquisition completed on February 7, 2005. See “Recent Developments” for further discussion.

        The six month period ended April 3, 2005 includes a further impact on our sales, our supply chain, and our abilitycharge to deliver productCost of goods sold of $27.7 million related to our customers. Political and economic instability in some regions of the world may also result and could negatively impact our business. The consequences of any of these armed conflicts are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business or your investment. Morefair value adjustment, required under generally any of these events could cause consumer confidence and spending to decrease or result in increased volatilityaccepted accounting principles in the United States of America, that was applied to United’s acquired inventory. The six month period ended April 3, 2005 also includes $12.0 million in debt issuance costs written off in connection with the debt refinancing that occurred at the time of the United acquisition.

        (8)Certain reclassifications have been made to reflect the adoption of the Emerging Issues Task Force (“EITF”) No. 01-09 for periods prior to adoption in fiscal 2002. EITF 01-09 addresses the recognition, measurement and income statement classification of various types of sales incentives, either as a reduction to revenue or as an expense. Concurrent with the adoption of EITF 01-09, we reclassified certain accrued trade incentives as a contra-receivable versus our previous presentation as a component of accounts payable.

        (9)Pursuant to Statement of Financial Accounting Standards (“SFAS”) No. 142,Goodwill and Other Intangible Assets, we ceased amortizing goodwill on October 1, 2001. Upon initial application of SFAS 142, we reassessed the useful lives of our intangible assets and deemed only the trade name to have an indefinite useful life because it is expected to generate cash flows indefinitely. Based on this, we ceased amortizing the trade name on October 1, 2001. Goodwill and trade name amortization expense for 2000 and 2001 included in depreciation and amortization in operating income are as follows:

           2000

          2001

           (in millions)

        Goodwill amortization

          $1.2  $1.1

        Trade name amortization

           2.3   2.3
           

          

        Total

          $3.5  $3.4
           

          

        (10)SFAS 145, which addresses, among other things, the income statement presentation of gains and losses related to debt extinguishments, requires such expenses to no longer be treated as extraordinary items, unless the items meet the definition of extraordinary per APB Opinion No. 30. We adopted this statement on October 1, 2002. As a result, we recorded non-operating expenses within income before income taxes as follows during the fiscal years ended September 30, 2003 and 2001:

        In fiscal 2003, a non-operating expense of $3.1 million was recorded for the write-off of unamortized debt issuance costs associated with the replacement of our previous credit facility in October 2002.

        In fiscal 2001, a non-operating expense of $8.6 million was recorded for the premium on the repurchase of $65.0 million of our senior subordinated notes and worldwide financial marketsrelated write-off of unamortized debt issuance costs in connection with a primary offering of our common stock in June 2001.

        (11)For purposes of calculating the ratio of earnings to fixed charges, (i) earnings is defined as income before income taxes plus fixed charges and (ii) fixed charges is defined as interest expense (including capitalized interest and amortization of debt issuance costs) and the portion of operating rental expense which management believes is representative of the interest component of rent expense.

        (12)Working capital is defined as current assets less current liabilities.

        RECENT DEVELOPMENTS

        The Acquisition of United

        On February 7, 2005, we acquired all of the equity interests of United for a purchase price, excluding fees and economy. They also could resultexpenses, of $70 million in economic recessioncash, 13.75 million shares of our common stock and the assumption of approximately $911.5 million of outstanding United indebtedness. The acquisition of United followed our long-term strategic plan to diversify our product categories, enter complementary categories and reduce our concentration in existing product categories.

        For more information regarding the purchase agreement between Rayovac and United, please refer to our Current Report on Form 8-K filed with the SEC on January 4, 2005, which is incorporated by reference in this prospectus.

        The United Financing

        In connection with the acquisition of United, we entered into a credit agreement consisting of a total of $1.03 billion in senior secured credit facilities, made up of aggregate term loan facilities of $730 million, of which $540 million is denominated in dollars, $140 million is denominated in Euros and $50 million is denominated in Canadian dollars, and a revolving credit facility of $300 million. See “Description of Certain Indebtedness” for a more detailed description of our credit facilities.

        Also, in connection with the acquisition of United, we privately placed $700,000,000 of our 7 3/8% Senior Subordinated Notes due 2015. The proceeds from the offering of the original notes, together with the borrowings under our senior credit facilities, were used to finance the acquisition of United, retire United’s existing indebtedness and Rayovac’s existing senior credit facilities and pay related fees and expenses. The original notes are, and the exchange notes we are offering in the United States or abroad. Any of these occurrences could have a significant impact onexchange offer will be, guaranteed by our operating results, revenues, costs and cash flow and may result indomestic subsidiaries. Simultaneously with the volatilityprivate placement of the market price fororiginal notes, the subsidiary guarantors and Rayovac Corporation entered into a registration rights agreement with the initial purchasers of the original notes. Under the registration rights agreement, we must file the registration statement on or before June 7, 2005, use our securitiescommercially reasonable efforts to cause such registration statement to become effective no later than October 5, 2005, and, on the future price of our securities.


        SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

                This prospectus contains forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements other than statements of historical facts included inwhen such registration statement is effective, deliver this prospectus includingto the statementsholders of the original notes. We must use our commercially reasonable efforts to complete the exchange offer on or before the date that is 30 business days after the effective date of such registration statement. If we do not meet our obligations under the headings "Prospectus Summary," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and elsewhere regarding our strategy, future operations, financial position, estimated revenues, projected costs, projections, plans and objectives of management, are forward-looking statements. When used in this prospectusregistration statement, we must pay liquidated damages to the words "will," "believe," "plan," "may," "strategies," "goals," "anticipate," "intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only asholders of the date they were made. Neitheroriginal notes until we norhave cured our default. Pursuant to the guarantors ofexchange offer, you may exchange your original notes for exchange notes, which have substantially the Series D notes undertake any obligation to update or revise publicly any forward-looking statements, whethersame terms as a result of new information, future events or otherwise. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this prospectus are reasonable, we can give no assurance that such plans, intentions or expectations will be achieved.

        original notes. You should read carefully the factors describeddiscussion under the heading “Summary—The Original Notes” and “Description of the Original Notes” for further information regarding the exchange notes.

        Retirement of United Notes

        On January 5, 2005, in connection with the "Risk Factors" sectionacquisition of United, we commenced a tender offer to purchase for cash all outstanding United Notes. As of January 5, 2005, approximately $231.9 million aggregate principal amount of United Notes were outstanding. In connection with the tender offer, we also solicited consents to amend the indenture governing the United Notes to remove substantially all of the restrictive covenants thereunder. By January 19, 2005, we received the valid tenders and consents from holders representing approximately 94% of the aggregate principal amount of the United Notes, thereby permitting amendment of the indenture governing the United Notes. On April 1, 2005, we redeemed all United Notes not tendered pursuant to the tender offer in accordance with the terms and conditions of the amended indenture governing the United Notes.

        The total consideration paid to holders that tendered their notes and delivered their consents prior to 5 p.m. (New York City time) on January 19, 2005, was equal to $1,053.13 per $1,000 principal amount of United Notes, which includes a consent payment of $30.00 per $1,000 principal amount, plus accrued but unpaid interest. Holders that tendered their notes after 5 p.m. (New York City time) on January 19, 2005, but prior to the expiration of the tender offer, received $1,023.13 per $1,000 principal amount of United Notes, plus accrued but unpaid interest.

        The Acquisition of Tetra

        On April 29, 2005, we acquired all of the equity interests of Tetra for total consideration of approximately $536 million, including estimated working capital and net of cash acquired as provided under the terms of the acquisition agreement. The acquisition of Tetra furthers our long-term strategic plan to diversify our product categories, enter complementary categories and reduce our concentration in existing product categories.

        For more information regarding the purchase agreement between Rayovac and Tetra, please refer to our Current Report on Form 8-K filed with the SEC on March 17, 2005, which is incorporated by referenced in this prospectusprospectus.

        The Tetra Financing

        In connection with the acquisition of Tetra, we entered into an amendment to our credit agreement that provided for a $500 million incremental term facility under the credit agreement. See “Description of Certain Indebtedness” for a more detailed description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. Accordingly, you should not place undue reliance on forward-looking statements.our credit facilities.

        22



        USE OF PROCEEDS

        We will not receive any proceeds from the exchange offer. Because the exchange notes have substantially identical terms as the original notes, the issuance of the exchange notes will not result in any increase in our indebtedness. The exchange offer is intended to satisfy our obligations under the registration rights agreement relating to the Series C notes. We will not receive any cashagreement. Gross proceeds from the issuance of the Series D notes.

                We used the gross proceeds of approximately $86,275,000 from the offering of the Series Coriginal notes in March 2003 to reduce our outstanding indebtedness under our senior credit facility as follows (dollars in thousands):

        Repayment of revolving credit facility $29,946
        Repayment of Term Loan A(1)  28,250
        Repayment of Term Loan B(2)  25,888
        Fees and expenses  2,191
          
         Total Uses $86,275
          

        (1)
        Term Loan A, which was repaid in full, had an interest rate of 4.67% as of December 31, 2002.

        (2)
        Term Loan B, which matures in January 2006, had an interest rate of 5.42% as of December 31, 2002. Some of the borrowings under Term Loan B were used to finance a portion of the Schultz merger and WPC Brands acquisition.

                Some of the lenders under our senior credit facility were affiliates of the initial purchasers of the Series C notes. As of April 23, 2003, we had $3.0 million of borrowings and $1.8 million in letters of credit outstanding under our revolving credit facility. After the offering of the Series C notes and giving effect to the application of the proceeds therefrom, we had approximately $85.2 million of availability under our revolving credit facility. In the future we could re-borrow under our revolving credit facility to consummate acquisitions, repurchase our capital stock and for general corporate purposes. We are regularly engaged in acquisition discussions with a number of companies, although we have no definitive agreements at this time. We cannot guarantee that any acquisitions will be consummated. If we do consummate any acquisitions it could be material to our business and require us to incur additional debt under our revolving credit facility or otherwise.



        CAPITALIZATION

        $700 million. The following table sets forth our cash and cash equivalents and capitalization as of December 31, 2002, on an actual basis and as adjusted to give effect to the offering of the Series C notes in March 2003 and to the use of proceeds therefrom, as if each had occurred on December 31, 2002. The information in this table should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and related notes, all of which are included elsewhere in this prospectus.

         
         As of December 31, 2002
         
         
         Actual
         As Adjusted
         
         
         (dollars in thousands)

         
        Cash and cash equivalents $10,318 $40,264 
          
         
         
        Debt and capital lease, including current maturities:       
         Revolving credit facility(1) $ $ 
         Term Loan A  28,250   
         Term Loan B  222,465  196,577 
         Capital lease obligation  4,221  4,221 
         97/8% Series B Senior Subordinated Notes  150,000  150,000 
         97/8% Series C Senior Subordinated Notes    86,275 (2)
          
         
         
          Total debt  404,936  437,073 
        Total stockholders' deficit  (96,236) (96,236)
          
         
         
         Total capitalization $308,700 $340,837 
          
         
         

        (1)
        Our revolving credit facility provides for borrowings of up to $90.0 million for working capital and general corporate purposes. As of April 23, 2003, we had $3.0 million of borrowings and $1.8 million in letters of credit under our revolving credit facility.

        (2)
        Includes the $85.0 million principal amount and $1.275 million in premium proceeds resulting from the Series C notes sold in March 2003 at 101.500% of face value.

        24



        UNAUDITED PRO FORMA FINANCIAL DATA

                Our unaudited pro forma consolidated statement of operations which follows is based on our historical audited financial statements and is adjusted on a pro forma basis to illustrate the estimated effects of the following transactions as if they had occurred on January 1, 2002:

          (1)
          the merger of a wholly-owned subsidiary with and into Schultz in May 2002;

          (2)
          the acquisition of WPC Brands in December 2002; and

          (3)
          the issuance and sale of the Series C notes and the application of the proceeds therefrom to reduce the outstanding indebtedness under our senior credit facility.

                The unaudited pro forma consolidated statement of operations reflects the application of the principles of purchase accounting to the merger of Schultz and acquisition of WPC Brands in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations." Accordingly, the unaudited pro forma consolidated statement of operations was adjusted on a pro forma basis to illustrate the estimated effects of additional amortization expense on the acquired and allocated amortizable intangible assets, an adjustment to cost of goods sold as described in the notes below, interest expense for borrowings to finance the merger of Schultz and acquisition of WPC Brands, interest expense associated with the Series C notes, elimination of historical interest expense related to the debt repaid with the proceeds of the offering of the Series C notes and associated income tax effects.

                The allocations of purchase price related to the merger and acquisition are based, in part, on preliminary information, which are subject to adjustment upon obtaining complete valuation information of intangible assets and are subject to post-closing purchase price adjustments. We believe that the finalization of the allocations of purchase price will not have a material impact on our results of operations or financial position. The allocation of purchase price of Schultz is expected to be completed by May 15, 2003 and the allocation of purchase price of WPC Brands is expected to be completed by June 30, 2003.

                Our unaudited pro forma consolidated statement of operations for the year ended December 31, 2002 has been combined below with the unaudited statements of operations data of Schultz and WPC Brands for the period from January 1, 2002 through to the date of the respective transactions in 2002, for purposes of providing the pro forma combined statements of operations after giving effect to the transactions as if they had occurred on January 1, 2002. We provide the unaudited pro forma consolidated statement of operations for informational purposes only. The unaudited pro forma consolidated statement of operations do not purport to represent what our results of operations would actually have been if the transactions had, in fact, occurred on January 1, 2002 or which may be obtained in the future. The unaudited pro forma consolidated statement of operations should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and notes thereto, all of which are included elsewhere in this prospectus.

        25



        Unaudited Pro Forma Consolidated Statement of Operations

        For the Year Ended December 31, 2002

         
         United
        Industries
        Historical
        (1)

         Schultz
        Company
        Historical
        (2)

         Pro Forma
        Schultz
        Adjustments

         WPC Brands
        Historical
        (3)

         Pro Forma
        WPC Brands
        Adjustments

         Series C
        Notes
        Offering
        Adjustments

         Total
         
         (dollars in thousands)

        Net sales before promotion expense $521,286 $55,603 $ $22,055 $ $ $598,944
        Promotion expense  41,296  841    331      42,468
          
         
         
         
         
         
         
        Net sales  479,990  54,762    21,724      556,476
          
         
         
         
         
         
         
        Operating costs and expenses:                     
         Cost of goods sold  305,644  41,200    13,315      360,159
         Selling, general and administrative expenses  113,162  7,412  294(4) 5,036  303(4)   126,207
          
         
         
         
         
         
         
         Total operating costs and expenses  418,806  48,612  294  18,351  303    486,366
          
         
         
         
         
         
         
        Operating income  61,184  6,150  (294) 3,373  (303)   70,110
        Interest expense, net  32,410  259  740(5) 266  1,258(5) 4,304(6) 39,237
          
         
         
         
         
         
         
        Income before income tax expense  28,774  5,891  (1,034) 3,107  (1,561) (4,304) 30,873
        Income tax expense  3,438  2,620  (196)(7) 1,253  (298)(7) (828)(7) 5,989
          
         
         
         
         
         
         
        Net income $25,336 $3,271 $(838)$1,854 $(1,263)$(3,476)$24,884
          
         
         
         
         
         
         

        (1)
        Our historical operating results for the year ended December 31, 2002 include the operating results of Schultz from May 9, 2002, the date of merger, and WPC Brands from December 6, 2002, the date of acquisition. Our historical results include a $1.5 million charge associated with the write-up of inventory acquired from Schultz to fair value.

        (2)
        Reflects operating results of Schultz from January 1, 2002 through May 8, 2002, which reflect similar seasonal characteristics as our operating results given the similarity of products and sales seasons.

        (3)
        Reflects operating results of WPC Brands from January 1, 2002 through December 5, 2002, which reflect similar seasonal characteristics as our operating results given similarity of products and sales seasons.

        (4)
        Represents amortization expense of intangible assets acquired in the Schultz merger and WPC Brands acquisition. Intangible assets are being amortized over periods ranging from 25 to 40 years.

        (5)
        Represents incremental interest expense related to additional borrowings of $60.0 million under our Term Loan B to finance the Schultz merger and WPC Brands acquisition. An effective interest rate of 5.5% was used. If the interest rate used in the calculation of incremental interest expense changed 125 basis points, interest expense would have changed by less than $0.1 million.

        (6)
        The offering adjustment of $4.3 million represents additional interest expense on the Series C notes which consists of the following (dollars in thousands):

        Add interest incurred on the Series C notes:    
         97/8% Series C Senior Subordinated Notes $8,394 
         Amortization of debt issuance costs  375 
         Amortization of premium on Series C notes  (213)
         Commitment fee on unused revolving credit facility  450 
          
         
           9,006 
          
         
        Less interest expense on indebtedness repaid:    
         Term Loan A  (1,861)
         Term Loan B  (1,761)
         Revolving credit facility  (1,080)
          
         
          Total interest expense on indebtedness repaid  (4,702)
          
         
           Total interest expense adjustment $4,304 
          
         

        The above adjustment does not include the write-off of deferred financing costs of $1.3 million associated with the borrowings repaid from net proceeds from the offering of the Series Coriginal notes were approximately $679.7 million, after deducting the initial purchasers’ discount and certain offering expenses, and, together with the proceeds from our new senior credit facilities, were used to finance the acquisition of United, to retire United’s existing indebtedness and to repay amounts outstanding under our existing senior credit facilities.

        INDUSTRY

        We primarily compete in the following seven major consumer product categories:

        Consumer Batteries

        In 2003, the global consumer battery market generated approximately $24.0 billion in retail sales. Since 1990, the industry’s growth percentage has been in the mid-single digits. The consumer battery industry consists of alkaline batteries, zinc carbon batteries and specialty batteries, which include rechargeable batteries, hearing aid batteries, photo batteries and watch/calculator batteries. The majority of battery consumption comes from industrialized nations, with the U.S. accounting for roughly one-third of global consumption. As personal incomes grow, the markets in less industrialized countries continue the gradual transition from zinc carbon batteries, which still account for a majority of unit sales in such markets, to the better performing and higher-priced alkaline batteries, similar to the transition that occurred in North America over the past generation. Most branded consumer batteries are marketed under the following brand names: Rayovac, Duracell (a Gillette brand), Energizer and Panasonic (a Matsushita brand). In addition, batteries are also often marketed under retailers’ private label brands, particularly in Europe.

        Pet Supplies

        Within the overall $30 billion U.S. pet industry, we estimate that the pet supplies segment represented an $8.0 billion market in 2004 based on retail sales. Within the overall $20 billion European pet industry, we estimate that the pet supplies segment represented a $4.0 billion market in 2004 based on retail sales. This highly fragmented segment is comprised of pet treats and pet supplies for dogs, cats, birds, fish and other small animals, including stain and odor removal products, grooming aids, bedding and lounging products, medications and vitamin supplements. In addition, pet supplies include aquarium kits, stand-alone tanks and stands, filtration systems, heaters, pumps, sea salt, aquarium hoods and lights and other aquatic supplies and accessories. According to management estimates, the pet supplies segment in the U.S. has grown approximately 6–8% annually since 1994. We believe that the recent market expansion has been driven by increasing pet ownership and the “humanization” of pets, which results in higher levels of spending, and the industry’s relative insensitivity to economic cycles, combined with innovative product development, increased retailer sophistication (i.e., pet superstores) and growth in dedicated retail square footage for pet supplies. We expect comparable market growth over the next several years due to the continuation of these trends. The industry is highly fragmented with, for example, over 500 manufacturers competing in the U.S. market, consisting primarily of small companies with limited product lines. Name brands in the pet supplies market include: Tetra, 8-in-1, Marineland, Nature’s Miracle, Vitakraft and Hartz.

        Lawn and Garden

        We estimate that retail sales of consumer lawn and garden products were approximately $2.9 billion and $335 million in the U.S. and Canada, respectively, in 2003. Over the next several years, we expect the lawn and garden industry to continue to grow at approximately 4% annually due to favorable demographic trends, including the increasing number of persons over the age of 45, a group that typically engages in more lawn and garden activity than the general population, and the increasing shift in the population to areas more conducive to lawn and gardening activities, such as the southern and western regions of the United States. Approximately 85 million, or 80%, of the households in the United States participate in some form of lawn and garden activity. A significant portion of lawn and garden products are marketed under the following brand names: Spectracide, Vigoro and Sta-Green, and Scotts, Miracle-Gro and Ortho (brands of The Scotts Company).

        ��

        Electric Shaving and Grooming

        We estimate that retail sales in the global electric shaving and grooming industry exceeded $3.0 billion in 2003. Industry analysts believe that unit sales in the electric shaving and grooming industry will continue to grow

        at approximately 3% annually over the next several years due to new product and product feature introductions, which also drive higher selling prices. Electric shavers include men’s rotary and foil shavers and women’s foil shavers and are used with electric shaver accessories, such as shaver replacement parts (primarily foils and cutters), pre-shave products and cleaning agents. Electric grooming products include beard and mustache trimmers, nose and ear trimmers and haircut kits and related accessories. Electric shaving and grooming products are marketed primarily under one of the following brands: Remington, Braun (a Gillette brand) and Philips/Norelco.

        Household Insect Control

        According to management estimates, retail sales of household insect control products totaled approximately $1.0 billion in the United States in 2003. We estimate that the household insect control market has experienced recent historical growth of 4% per year and that it will grow at rates in excess of historical rates over the next several years due to the expected increase in demand for insect control products resulting from general economic growth and increasing awareness of insect-spread illnesses such as the West Nile virus in the United States. A significant portion of household insect control products are marketed under the following brand names: Hot Shot, Cutter and Repel, Raid and OFF! (S.C. Johnson brands), Ortho (a Scotts brand) and Combat.

        Electric Personal Care Products

        The electric personal care industry includes hair dryers, hairsetters, curling irons, hair crimpers and straighteners, hot air brushes and lighted mirrors. We estimate that retail sales of global electric personal care products exceeded $2.0 billion in 2003 and unit sales are projected to grow at 3% annually over the next several years. This growth rate is consistent with the industry’s historical growth rate, and is driven by new product and product feature introductions, which result in higher selling prices. A significant portion of electric personal care products are marketed under the following brand names: Remington, Conair, Vidal Sassoon, Revlon and Hot.

        Portable Lighting

        We estimate that the global portable lighting market generated approximately $3.0 billion in retail sales in 2003, of which an estimated 50% is from sales of flashlights. The global portable lighting market is fragmented by region and includes few global branded companies. Recent growth in the portable lighting market has been relatively flat, and we believe that growth opportunities will be driven by product innovation. A few of the brand names in the portable lighting market include Rayovac, Eveready and Maglite.

        Across the consumer products industry, recent differentiation among competitors has been based upon strong retailer relationships. Sales within these markets are driven by well-recognized brand names, as well as consistent new product introductions. As major retailers have rapidly expanded over the last 15 years, the concentration of purchasing power for all consumer products categories has increased significantly. We expect the continued growth of major retailers such as Wal-Mart, Carrefour, Target, The Home Depot, Lowe’s and Gigante to continue the concentration of industry distribution. Furthermore, as global retailers continue to reduce their number of suppliers, the ability to service these retailers with diverse product offerings and provide products globally through an expansive distribution system is increasingly important.

        BUSINESS

        Overview

        We are a global branded consumer products company with leading market positions in our seven major product categories: consumer batteries; pet supplies; lawn and garden; electric shaving and grooming; household insect control; electric personal care products; and portable lighting. We are a leading worldwide manufacturer and marketer of alkaline, zinc carbon and hearing aid batteries, a leading worldwide designer and marketer of

        rechargeable batteries and battery-powered lighting products and a leading worldwide designer and marketer of electric shavers and accessories, grooming products and hair care appliances. We are also a leading North American manufacturer and marketer of lawn fertilizers, herbicides, aquariums, pet health and beauty aid products and insecticides and repellents.

        We sell our products in approximately 120 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and original equipment manufacturers (“OEMs”) and enjoy strong name recognition in our markets under the Rayovac, VARTA and Remington brands, each of which has been in existence for more than 80 years, the Spectracide, Cutter and 8-in-1 brands, which we acquired through our acquisition of United, and various Tetra brands, which were acquired through our acquisition of Tetra. We have 54 manufacturing and product development facilities located in the United States, Europe, China and Latin America. We manufacture alkaline and zinc carbon batteries, zinc air hearing aid batteries, lawn fertilizers, herbicides, pet supplies and insecticides and repellents in our company operated manufacturing facilities. Substantially all of our rechargeable batteries and chargers, electric shaving and grooming products, electric personal care products and portable lighting products are manufactured by third party suppliers, primarily located in China and Japan.

        During fiscal 2004, we completed two acquisitions. On March 31, 2004, we completed the acquisition of an 85% equity interest in Ningbo, a Chinese producer of alkaline and zinc carbon batteries, thereby gaining a Chinese presence and low-cost manufacturing capabilities. In March 2005, we signed an agreement to purchase the remaining 15% interest in Ningbo. On May 28, 2004, we completed the acquisition of 90.1% of the outstanding indebtednesscapital stock of Microlite, a Brazilian producer of alkaline and zinc carbon batteries and battery-operated lighting products. As a result, we now own the rights to the Rayovac brand name in each of the countries where we do business.

        On February 7, 2005, we completed our acquisition of all of the equity interests of United, which completed its acquisition of Nu-Gro, a Canadian lawn and garden products company, and United Pet Group, a privately owned manufacturer and marketer of branded pet supplies, on April 30, 2004 and July 30, 2004, respectively.

        On April 29, 2005, we completed our acquisition of all of the equity interests of Tetra, a German manufacturer, distributor and marketer of foods, equipment and care products for fish and reptiles, and accessories for home aquariums and ponds.

        Our existing consumer battery, electric shaving and grooming, electric personal care and portable lighting business is organized and managed according to three geographic regions: (i) North America, (ii) Europe/ROW and (iii) Latin America. We operate United and Tetra as separate business units.

        Competitive Strengths

        The following strengths serve as a foundation for our business strategy:

        Strong Diversified Global Brand Portfolio

        We have a global portfolio of well-recognized consumer product brands. In the consumer battery and portable lighting categories, we use the Rayovac brand name principally in North America and Latin America and we primarily market these products in Europe under the VARTA brand. In the electric shaving and grooming and electric personal care products categories, we use the Remington brand in North America, the United Kingdom, Australia and select European countries. United historically marketed its products in the lawn and garden and household insect control segments as Spectrum Brands, which includes brand names such as Spectracide, Vigoro, Hot Shot and Cutter. We also sell our senior credit facility.pet supplies under a wide range of brands, including Tetra, 8-in-1, Dingo and Marineland. Our lawn and garden and household insect control brands are marketed primarily in North America. Our pet supply products are marketed primarily in North America and Europe. Many of these brands are well recognized in their categories, with market leading positions, and several of these

        brands have been used for over 50 years. We believe that each of our major brands generates strong brand awareness. We attribute the longevity and strong consumer awareness of our brand names to the high-quality and consistent value of our products and to the success of our marketing and merchandising initiatives. We believe that the strength of our brands positions us to extend our product lines and provide our retail customers with strong sell-through to consumers.

        Strong Global Retail Relationships

        (7)
        Represents

        We have well-established business relationships with many of the income tax benefit associatedtop global retailers, distributors and wholesalers, which have enabled us to expand our overall market penetration and promote sales. With the acquisitions of United and Tetra, we have further diversified our customer base and strengthened our existing relationships with important mass merchandisers, home centers and pet superstores, such as Wal-Mart, The Home Depot, Lowe’s, PETsMART, Canadian Tire and PetCo. We intend to leverage cross-selling opportunities with both our new and existing customers. We have built and maintained strong retailer relationships by providing our customers with global sourcing, high quality and innovative products and attractive margins. In addition, these relationships are reinforced by our exclusive brand arrangements with leading retailers, including our Vigoro brand at The Home Depot and our Sta-Green brand at Lowe’s, as well as our position as the exclusive supplier for Wal-Mart’s Expert Gardener brand. On a pro forma basis, we rank among the top 50 current suppliers to Wal-Mart in the United States based on consumer purchases.

        Expansive Distribution Network and Global Sourcing

        We distribute our products in approximately 120 countries through a variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and OEMs. Our state-of-the-art battery packaging and distribution centers in North America and Europe provide package-to-order capability for our battery products as well as rapid and cost-effective services to retail customers for such products. We have an established global sourcing system for raw materials and product components for our product offerings, including maintaining an Asian sourcing organization located in Hong Kong, which is responsible for purchasing logistics and quality assurance for our products purchased from third party vendors. By moving production to Asia, we have been successful in reducing labor and material costs for consumer battery, electric shaving and grooming, electric personal care and portable lighting products. We distribute our lawn and garden, pet supplies and household insect control products in North America through a variety of trade channels, including retailers, wholesalers and distributors. The distribution network for our lawn and garden, pet supplies and household insect control businesses are designed to provide package-to-order capability. We plan to undertake initiatives to consolidate and streamline the United, Tetra and Spectrum distribution networks to achieve greater customer service capabilities and cost savings.

        Innovative New Products, Packaging and Technologies

        We have a long history of product and packaging innovations that have helped position us as an industry leader in each of our seven product categories. We have leading battery technologies in zinc air, consumer rechargeable and lithium coin cells. We have continued to improve the performance of our alkaline batteries, which has enabled us to perform at levels comparable to our major competitors without increasing consumer prices. We also have a diverse portfolio of controlled-release nitrogen technology and have been able to offer customized fertilizer formulas to our leading customers. Our innovative packaging includes the first resealable alkaline battery multi-pack, the easy-open spin-and-lock dial hearing aid battery packaging and a handheld battery-operated spray system for use in lawn and garden, the first in its category. We continually seek to introduce new products both as extensions of existing product lines and as new product categories. For example, we recently introduced the Remington Titanium Smart System shaving system, Spectracide TripleStrike Grass & Weed Killer and the Remington Wet 2 Straight Professional Straightener hair straightener.

        World Class Information Technology Platform

        We have invested in an SAP enterprise resource planning system, which enables us to more effectively manage manufacturing planning and execution, demand planning, the supply procurement to payment cycle, the customer order to cash collection cycle and the financial planning and reporting functions. The majority of our businesses utilize this system, which significantly enhances transactional processing and detailed analysis and reporting. The SAP platform provides information system standardization throughout our company, which has allowed for the integration and consolidation of past acquisitions with minimal additional capital investment, and which we expect will similarly assist in Spectrum’s integration of United and Tetra. Spectrum’s IT system has proved to be an effective and efficient platform to support our business. We anticipate further cost savings and operational synergies from the transition of United to Spectrum’s IT platform.

        Proven Integration Track Record

        We have a long history of successfully integrating significant acquisitions. In 1999, we acquired and successfully assimilated the Latin American operations of ROV Limited, where we reduced costs by closing three zinc carbon manufacturing facilities and implementing new raw material purchasing programs. In fiscal 2003, in conjunction with the adjustments described hereinacquisition of VARTA, we announced a series of cost savings initiatives. We fully integrated VARTA within 12 months and realized annual cost savings of approximately $43.7 million. The Remington integration resulted in annual cost savings of approximately $35 million. These savings were the result of combining sales organizations, consolidating administrative functions and integrating the production and distribution of Remington products into our existing manufacturing facilities and distribution network. The integration plan was substantially completed in nine months. We will continue to arrive atapply our estimated pro forma 2002 effective tax rate of 19.4%.

        26



        SELECTED HISTORICAL FINANCIAL DATA

                The selected historical financial data as of December 31, 2002 and 2001 and for the years ended December 31, 2002, 2001 and 2000 have been prepared from our audited consolidated financial statements included elsewhere in this prospectus. The historical financial data as of December 31, 2000, 1999 and 1998 and for the years ended December 31, 1999 and 1998 have been derived from audited financial statements which do not appear herein. When reading this selected historical financial data, it is important that you read alongexperience with it the financial statements and notes thereto and "Management's Discussion and Analysis of Financial Condition and Results of Operations," all of which are included elsewhere in this prospectus.

         
         Year Ended December 31,
         
         
         2002(1)
         2001
         2000
         1999
         1998
         
         
         (dollars in thousands)

         
        Statement of Operations Data:                
        Net sales before promotion expense $521,286 $297,776 $288,618 $304,048 $282,676 
        Promotion expense  41,296  24,432  22,824  19,572  31,719 
          
         
         
         
         
         
        Net sales  479,990  273,344  265,794  284,476  250,957 
        Operating costs and expenses:                
         Cost of goods sold(2)(3)  305,644  148,371  146,229  150,344  140,445 
         Selling, general and administrative expenses  113,162  74,689  69,099  80,496  61,066 
         Facilities and organizational rationalization(3)    5,550       
         Dursban related expenses(4)      8,000     
         Recapitalization transaction fees(5)        10,690   
         Change of control bonuses(6)        8,645   
         Severance charge(6)        2,446   
         Litigation charges(7)        1,647  2,321 
          
         
         
         
         
         
          Total operating costs and expenses  418,806  228,610  223,328  254,268  203,832 
          
         
         
         
         
         
        Operating income  61,184  44,734  42,466  30,208  47,125 
        Interest expense, net  32,410  35,841  40,973  35,223  1,106 
          
         
         
         
         
         
        Income (loss) before provision for income taxes, discontinued operations and extraordinary item  28,774  8,893  1,493  (5,015) 46,019 
        Income tax expense  3,438  2,167  134  4,257  992 
          
         
         
         
         
         
        Income (loss) from continuing operations, before extraordinary item(8) $25,336 $6,726 $1,359 $(9,272)$45,027 
          
         
         
         
         
         
        Preferred stock dividends $6,880 $2,292 $320 $   
          
         
         
         
         
         
        Net income (loss) available to common stockholders(9) $18,456 $4,434 $1,039 $(11,597)$46,741 
          
         
         
         
         
         

        Other Financial Data:

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         
        Cash flows from continuing operating activities $37,858 $25,035 $10,793 $24,504 $47,615 
        Cash flows used for continuing investing activities  (68,250) (45,416) (3,950) (3,038) (3,628)
        Cash flows used for continuing financing activities  40,710  20,381  (6,843) (21,466) (45,940)
        EBITDA(10)  71,424  49,652  47,727  34,923  50,963 
        Depreciation and amortization(11)  10,240  4,918  5,261  4,715  3,838 
        Capital expenditures(12)  10,450  7,916  3,950  3,038  3,628 
        Ratio of earnings to fixed charges(13)  1.5x  1.2x  1.0x  0.9x  17.6x 

        Balance Sheet Data (end of period):

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         
        Cash and cash equivalents $10,318 $ $ $ $ 
        Working capital(14)  50,149  19,703  29,892  22,938  30,042 
        Total assets  386,003  272,556  234,894  241,878  94,161 
        Total debt, including capital lease  404,936  351,768  354,301  369,255  4,645 
        Stockholders' equity (deficit)  (96,236) (144,417) (170,763) (186,802) 58,257 

        27


        (1)
        Our historical operating results for the year ended December 31, 2002 include the operating results of Schultz from May 9, 2002, the date of the merger, and WPC Brands from December 6, 2002, the date of acquisition.

        (2)
        Cost of goods sold for the year ended December 31, 2002 includes a $1.5 million inventory write-up for inventory recorded at fair valueprevious acquisitions in connection with the Schultz mergerintegration of United and Tetra.

        Experienced Management Team

        Our management team has substantial consumer products experience and a proven track record of operations success and brand management. On average, senior management has more than 20 years of experience at Spectrum, VARTA, United and other branded consumer product companies such as General Electric, Gillette, Braun, Procter & Gamble and S.C. Johnson. Our management team has grown our business by developing and introducing new products, expanding our distribution channels, improving our operational efficiencies and making strategic acquisitions.

        Business Strategy

        Our long-term strategic plan is to be a diversified global consumer products company that competes in high growth markets. We intend to accomplish this via a combination of organic growth and strategic acquisitions. With our acquisitions of ROV Limited in August 1999, VARTA in October 2002, Ningbo in March 2004 and Microlite in May 2002.

        (3)
        2004, we have become a global manufacturer and marketer of consumer batteries. These acquisitions provided us with battery manufacturing capabilities in Europe, Latin America and Asia. The Ningbo acquisition provided us with low-cost manufacturing capacity in China, and access to a growing Chinese market.

        The Remington acquisition in September 2003 was the first step in diversifying our consumer product offerings. With this acquisition, we entered the electric shaving and grooming and electric personal care categories. During the current year, ended December 31, 2001, we recorded an $8.5 million charge,are expanding distribution of these products in Europe and Latin America. Our acquisitions of United and Tetra continued our product diversification and extended our presence into the lawn and garden, pet supplies and household insect control categories. In addition, we expect that the acquisitions of United and Tetra will reduce the seasonality of our historic business, which, $5.6 millionprior to the acquisitions, was recordedweighted towards the Christmas season (our first quarter in facilitiesits fiscal year), while demand for lawn and organizational rationalization, $2.7 million was recorded in cost of goods sold, and $0.2 million was recorded in selling, general and administrative expenses.

        (4)
        Duringgarden products typically peaks during the year ended December 31, 2000, the U.S. EPA and manufacturersfirst six months of the active ingredient chlorpyrifos including Dow AgroSciences L.L.C. which sold chlorpyrifoscalendar year. We believe all of these categories are in markets that represent attractive growth opportunities.

        To further enhance our position in the branded consumer products market, we plan to us underimplement the trademark "Dursban™," entered into a voluntary agreement that provided for withdrawal of virtually all residential uses of chlorpyrifos in pesticide products. Formulation of chlorpyrifos products intended for residential use ceased by December 1, 2000 and formulators discontinued the sale of such products to retailers after February 1, 2001. Retailers were not allowed to sell chlorpyrifos products after December 31, 2001. Accordingly, a charge of $8.0 million was recorded in September 2000 for costs associated with this agreement, including customer markdowns, inventory write-offs and related disposal costs. Allfollowing key elements of our accrued costs associated with this agreementbusiness strategy:

        Increase Sales Through Expanded Customer Relationships and additional amounts totaling under $0.1 million were incurred by December 31, 2002.

        (5)
        During the year ended December 31, 1999, we recorded $31.3 million in fees and expenses associated with the recapitalization. Fees and expenses that were specifically identified as relatingLeveraging Our Distribution Network

        We intend to the issuance of debt were capitalized and are being amortized over the remaining term of the debt as interest expense. The fees and expenses relating to the equity transactions were charged directly to equity. Other transaction fees were allocated between debt and recapitalization transaction fees expense based onincrease our estimate of the related activities.

        (6)
        During the year ended December 31, 1999, we recorded various charges as follows: (i) change of control bonuses paid to certain members of senior management amounting to $8.6 million; and (ii) $2.4 million of severance charges incurredsales as a result of the terminationbroader product offering that resulted from the combinations of Rayovac, United and Tetra. We intend to capture incremental sales by leveraging strong customer relationships, which will facilitate the cross-selling of our former Presidentfull line of products. For example, we intend to leverage United’s more extensive relationships with home centers and Chief Executive Officerpet stores in North America to increase sales of our branded products through these distribution channels. In addition, we will seek to improve the utilization of our existing distribution channels to increase sales of United and Senior Vice President, Sales.

        (7)
        DuringTetra branded products. We believe we will strengthen existing relationships with overlapping customers, such as Wal-Mart, and will be able to serve these customers more efficiently. We also believe that we are well positioned to capitalize on the year ended December 31, 1999,trend of global retail merchants who are continuing to consolidate their vendor base and focus on a reduced number of suppliers that can (1) provide high-value products, (2) efficiently and consistently fulfill logistical requirements and volume demands and (3) provide comprehensive product support from design to point of sale and after-market customer service.

        Continue New Product Development and Packaging Innovation

        We intend to continue our strategy of increasing sales through the introduction of new products and packaging designs in each of our seven product categories. Our research and development strategy is focused on new product development, performance improvements of our existing products and cost reductions in, and enhancements of, our products and packaging. We plan to continue to use our strong brand names, established customer relationships and significant research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality. For example, we recorded $1.5 millionintroduced over 200 new or improved products in the 2004 calendar year. We recently introduced the Remington Titanium Smart System shaving system, Spectracide TripleStrike Grass & Weed Killer and the Remington Wet 2 Straight Professional Straightener hair straightener. We will continue to focus on identifying new technologies and formulations necessary to meet and create consumer and retailer demand within the marketplace.

        Continue to Improve Operating Efficiencies

        We will continue to seek to improve our operational efficiencies and match manufacturing capacity and product costs to market demand. Over the last few years, we have undertaken various initiatives to reduce manufacturing, operating and other costs, such as increasing manufacturing utilization by reducing the number of litigation chargesour facilities, outsourcing the production of certain of our products and updating and centralizing certain packaging and distribution facilities. We believe that we can continue to primarily reserve for the expectedreduce our cost of an adverse judgmentgoods manufactured with continued focus on a counterclaim filed by defendants incost reduction initiatives. These initiatives include cost reductions through global purchasing, finished goods sourcing arrangements and improved productivity. We continue to lower operating costs as duplicative administrative support and sales and marketing functions are consolidated and overlapping functions are eliminated.

        Implement Integration Plan

        We have identified key areas where we expect to achieve cost savings and operational synergies with the caseacquisitions of United Industries Corporation vs. John Allman, Craig Jackman et al. This case was settled in July 1999. In 1998, we recorded litigation charges of $2.3 million relatedand Tetra. These areas include manufacturing, distribution, sales and marketing, IT systems and administrative functions. We intend to two separate lawsuits. In March 1998, a judgment was entered against us in a lawsuit filedrationalize our existing manufacturing plants, reduce freight costs by the spouse of a former employee claiming benefits from a United-owned key man life insurance policy. We recorded a charge of $1.2 million for this case in the first quarter of 1998maximizing full truckloads and an additional $0.1 million in the fourth quarter of 1999. We also incurred costs pertaining to certain litigation concerning the advertisingtaking advantage of our Spectracide Terminate product for which a settlement was negotiated. Costs relatedexisting distribution network, transition United and Tetra to this case amounted to $1.1 million.

        (8)
        Does not reflect the elimination of stockholder salariesour IT platform, consolidate purchasing and certain fringe benefits that were in effect prior to the recapitalizationincrease Asian sourcing, and were reflective of the private ownership structure that existed prior to the recapitalization, offset by the salaryintegrate various selling, general and fringe benefit structure that was implemented with the recapitalization. During the year ended December 31, 1998, we reported discontinued operationsadministrative functions.

        Enhance Earnings and an extraordinary item.

        (9)
        During the year ended December 31, 1999, we incurred an extraordinary loss from early extinguishment of debt, net of a $1.4 million income tax benefit, in the amount of $2.3 million. During the year ended December 31, 1998, we had income from a discontinued operation, net of tax, of $1.7 million.

        (10)
        EBITDA represents income from continuing operations before interest expense, net, income tax expense, depreciation and amortization. Cash Flow

        We have included information concerning EBITDA as a measuregenerated high levels of liquidity because we believe certain investors use it as one measure of historical ability to fund operations and meet financial obligations. However, EBITDA is not presented to represent cash flow from operations as defined by accounting principles generally accepteda result of our earnings, cost reduction efforts and modest capital expenditure requirements. Through our integration efforts with VARTA and Remington we have streamlined our cost structure. Through our integration efforts with United and Tetra, we anticipate further improvements in our cost structure while continuing to introduce new high profit margin products. We intend to continue to focus on improving the efficiency of our organization to maximize earnings and cash flow from operations.

        Pursue Strategic Acquisitions

        Our acquisition strategy focuses on businesses or brands that will strengthen our current product offerings or enable us to expand into complementary categories and geographic regions. In addition, we intend to pursue acquisitions of additional consumer product brands that can benefit from our extensive distribution network and long-term retailer relationships. In particular, we believe that the pet supplies industry presents consolidation opportunities due to its highly fragmented nature, and we expect to pursue opportunities in this market.

        Our Products

        We compete in the United States, nor does management recommend that it be used as an alternative to, or superior measure of, operating income or income from continuing operations as an indicator offollowing seven major product categories:

        consumer batteries;

        pet supplies;

        lawn and garden products;

        electric shaving and grooming products;

        household insect control products;

        electric personal care products; and

        portable lighting products.

        Pro forma net sales data for our operating performance or cash flowproducts as a measurepercentage of liquidity or our ability to repay our debt obligations.pro forma consolidated net sales for fiscal 2004 is set forth below.

        Consumer batteries

        37%

        Lawn and garden

        20

        Pet supplies

        19

        Electric shaving and grooming

        11

        Household insect and control

        6

        Electric personal care products

        4

        Portable lighting

        3
        100%

        Consumer Batteries

        General Batteries. Our general batteries category includes alkaline and zinc carbon. We have provided belowsell a reconciliationfull line of EBITDA to cash flows from continuing operating activities since we deem that it isalkaline batteries (AA, AAA, C, D and 9-volt sizes) for both consumers and industrial customers. Our alkaline batteries are marketed and sold primarily under the most directly comparable measure under generally accepted

        28


          accounting principles. In addition, our definition of EBITDA may not be comparable to that reported by other companies. EBITDARayovac Maximum Plus brand and the reconciliationVARTA Universal, High Energy and MaxiTech brands. We also engage in private label manufacturing of alkaline batteries. Our zinc carbon batteries are designed for low- and medium-drain battery-powered devices such as flashlights.

          Rechargeable Batteries, Chargers and Other. We sell our rechargeable batteries and chargers under the Rayovac and VARTA brands. We sell NiMH and rechargeable alkaline batteries and a variety of chargers, including our 15-minute I-C3 NiMH rechargeable system, introduced in August 2003.

          Our specialty battery products include photo batteries, lithium batteries, silver oxide batteries and keyless entry batteries. We sell coin cells for use in watches, cameras, calculators, communications equipment and medical instrumentation. Our lithium coin cells are high-quality lithium batteries marketed for use in instrumentation, calculators and personal computer clocks and memory back-up systems.

          Hearing Aid Batteries. We are currently the largest worldwide seller of hearing aid batteries. We sell our hearing aid batteries through retail trade channels and directly to cash flows from continuing operating activitiesprofessional audiologists under several brand names and under several private labels, including Beltone, Miracle Ear, Siemens and Starkey.

          Pet Supplies

          Our pet supplies business is as follows:

         
         Years Ended December 31,
         
         
         2002
         2001
         2000
         1999
         1998
         
        Income (loss) from continuing operations $25,336 $6,726 $1,359 $(9,272)$45,027 
        Interest expense, net  32,410  35,841  40,973  35,223  1,106 
        Income tax expense  3,438  2,167  134  4,257  992 
        Depreciation and amortization  10,240  4,918  5,261  4,715  3,838 
          
         
         
         
         
         
        EBITDA  71,424  49,652  47,727  34,923  50,963 
         Interest expense less amortization  (29,130) (33,150) (38,553) (33,232) (1,106)
         Change in current assets and liabilities  (4,436) 8,533  2,801  9,423  (1,250)
         Current income taxes          (992)
         Non-cash reduction of capital lease      (1,182)    
         Deferred compensation plan (grantor trust)        2,700   
         Recapitalization fees charged to equity        10,690   
          
         
         
         
         
         
        Cash flows from continuing operating activities $37,858 $25,035 $10,793 $24,504 $47,615 
          
         
         
         
         
         
        (11)
        Depreciation and amortization for the year ended December 31, 2002 does not include amortization of goodwill in accordance with current accounting standards. Each of the years in the four-year period ended December 31, 2001 includes amortization expense related to goodwill of less than $0.1 million.

        (12)
        Capital expenditures presented for 2000 exclude the executioncomprised of a capital leasenumber of leading premium-branded pet supplies and specialty pet food products for $5.3 million. The executiondogs, cats, birds, fish and other small domestic animals. We sell a variety of such capital lease is consideredspecialty pet products, including treats, stain and odor removal products, grooming aids, bedding and lounging products, premium food, medications and vitamin supplements. Our largest specialty pet brands include Perfect Coat, Nature’s Miracle, One Earth, Dingo, Wild Harvest and Kookamunga. We also have a capital expenditure but is reflected in the supplemental noncash financing activities section in the accompanying consolidated statementsbroad line of cash flows presented elsewhere in this prospectus.

        (13)
        For purposes of this calculation, earnings are defined as income before income tax expense plus fixed charges less pre-tax income required to pay dividends on preferred stock. Fixed chargesconsumer and commercial aquatics pet products, including integrated aquarium kits, standalone tanks and stands, filtration systems, heaters, pumps, sea salt, aquarium hoods and lights and other aquarium supplies and accessories. Our largest aquatics brands include interest expense on all indebtedness, including amortization of deferred financing costs, the portion of operating lease rental expense which management believes is representative of the interest factor of rent expense, approximately 33% of total rent expense,Tetra, Bio-Wheel, Penguin, Eclipse, Magnum, Perfecto and pre-tax income required to pay dividends on preferred stock. For the year ended December 31, 1999, our earnings were insufficient to cover our fixed charges by $5.0 million.

        (14)
        Working capital is defined as current assets, excluding cashASI.

        Lawn and cash equivalents, less current liabilities, excluding short-term borrowings and current maturities of long-term debt.

        29



        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
        AND RESULTS OF OPERATIONS
        Garden Products

         The discussion

        Our lawn and analysisgarden business is comprised of our consolidated financial condition and resultsa number of operations included herein should be read in conjunction with the historical financial information included in the financial statements and the related notes thereto, which are included elsewhere in this prospectus. Future results could differ materially from those discussed below for many reasons, including the risks described in "Risk Factors" and elsewhere in this prospectus.

        Overview

                Doing business as Spectrum Brands, we are majority owned by UIC Holdings, L.L.C. and are the leading manufacturer and marketer of value-oriented products for the consumer lawn and garden care and insect control markets in the United States. Under a variety of brand names, we manufacture and market one of the broadest lines in the industry. Our operations are divided into three business segments: Lawn and Garden, Household and Contract. We believe that the key growth factors for the $2.8 billion consumer lawn and garden retail market include:

          the aging of the United States population because consumers over the age of forty-five represent the largest segment of lawn and garden care product users and typically enjoy more leisure time and higher levels of discretionary income than the general population;

          growth in the home improvement center and mass merchandiser channels; and

          shifting consumer preferences toward value-oriented products.

                We do not believe that our historical financial condition and results of operations are accurate indicators of future results because of certain significant past events. Those events include mergers, acquisitions, strategic transactions and equity and debt financing transactions over the last several years. Furthermore, our sales are seasonal in nature and are susceptible to weather conditions that vary from year to year.

        Critical Accounting Policies

                Our significant accounting policies are described in Note 2 to the consolidated financial statements included elsewhere in this prospectus. While all of the significant accounting policies are important to our consolidated financial statements, some of these policies may be viewed as being critical. Such policies are those that are both most important to the portrayal of our financial condition and require our most difficult, subjective or complex estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and assumptions on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ from these estimates and assumptions. We believe our most critical accounting policies are as follows:

                Revenue Recognition.    Net sales represent gross sales less any applicable customer discounts from list price, customer returns and promotion expense through cooperative programs with retailers. The provision for customer returns is based on historical sales returns and analysis of credit memo and other relevant information. If the historical or other data used to develop these estimates do not properly reflect future returns, net sales may need to be adjusted. Sales reductions related to returns were $7.4 million in 2002, $6.5 million in 2001 and $7.6 million in 2000. Amounts included in the allowance for doubtful accounts were $2.0 million as of December 31, 2002 and $0.4 million as of December 31, 2001.

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                Inventories.    Inventories are reported at the lower of cost or market. Cost is determined using a standard costing system that approximates the first-in, first-out method and includes raw materials, direct labor and overhead. An allowance for potentially obsolete or slow-moving inventory is recorded based on our analysis of inventory levels and future sales forecasts. In the event that our estimates of future usage and sales differ from actual results, the allowance for obsolete or slow-moving inventory may be adjusted. Amounts recorded for potentially obsolete or slow-moving inventory were $5.4 million in 2002, $2.7 million in 2001 and $0.3 million in 2000. The allowance for potentially obsolete or slow-moving inventory was $5.8 million as of December 31, 2002 and $2.7 million as of December 31, 2001.

                Promotion Expense.    We advertise and promote our products through national and regional media. Products are also advertised and promoted through cooperative programs with retailers. Advertising and promotion costs are expensed as incurred, although costs incurred during interim periods are generally expensed ratably in relation to revenues. Management develops an estimate of the amount of costs that have been incurred by the retailers under our cooperative programs based on an analysis of specific programs offered to retailers and historical information. Actual costs incurred may differ significantly from our estimates if factors such as the level of participation and success of the retailers' programs or other conditions differ from our expectations. Promotion expense, including cooperative programs with customers, is recorded as a reduction of sales and was $41.3 million in 2002, $24.4 million in 2001 and $22.8 million in 2000. Accrued advertising and promotion expense was $16.4 million as of December 31, 2002 and $12.1 million as of December 31, 2001. In addition, advertising costs are incurred irrespective of promotions. Such costs are included in selling, general and administrative expenses in our consolidated statements of operations and were $3.3 million in 2002, $1.3 million in 2001 and $2.4 million in 2000.

                Income Taxes.    Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are recovered or settled. The judgment of management is required to determine income tax expense, deferred tax assets and any related valuation allowance and deferred tax liabilities. We have recorded a valuation allowance of $104.1 million as of December 31, 2002 due to uncertainties related to the ability to utilize some of the deferred tax assets, primarily consisting of certain net operating loss carryforwards that were generated in 1999 through 2002 and deductible goodwill recorded in connection with our recapitalization in 1999. The valuation allowance is based on our estimates of future taxable income by jurisdiction in which the deferred tax assets will be recoverable.

                As previously noted, we generated net operating losses for tax purposes for each of the years 1999 through 2002. Our current estimates indicate that we will generate taxable income for 2003. If we achieve such results, 2003 would be the first year that taxable income would be generated since our recapitalization in 1999. In addition, as our budgets for future years indicate that we will continue to generate taxable income, it is possible the valuation allowance will need to be reduced. Any adjustment to the valuation allowance could materially impact our consolidated financial position and results of operations. In addition, we currently anticipate that our effective tax rate beginning in 2003 will be 38%, absent any reduction of the valuation allowance previously described.

                Goodwill and Other Intangible Assets.    We have acquired intangible assets or made acquisitions in the past that resulted in the recording of goodwill or intangible assets, including our acquisition of certain fertilizer brands in December 2001, our merger with Schultz in May 2002 and our acquisition of WPC Brands in December 2002. Under generally accepted accounting principles previously in effect, goodwill and intangibles were amortized over their estimated useful lives, and were tested periodically to determine if they were recoverable from their cash flows on an undiscounted basis over their useful lives.

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                Effective in 2002, goodwill is no longer amortized and is subject to impairment testing at least annually. We evaluate the recoverability of long-lived assets, including goodwill and intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Such events or changes in circumstances could include such factors as changes in technological advances, fluctuations in the fair value of such assets or adverse changes in relationships or vendors. If a review indicates that the carrying value of goodwill and other intangible assets are not recoverable, the carrying value of such asset is reduced to its estimated fair value. While we believe that our estimates of future cash flows are reasonable, different assumptions regarding such cash flows could materially affect our evaluations. Therefore, impairment losses could be recorded in the future.

        Recent Acquisitions

                Schultz Company.    On May 9, 2002, one of our wholly owned subsidiaries completed a merger with and into Schultz, a manufacturer of horticultural products and specialty items and a distributor of potting soil, soil conditioners and charcoal. Schultz products are distributed primarily to retail outlets throughout the United States and Canada. The merger was executed to achieve economies of scale and synergistic efficiencies. As a result of the merger, Schultz became a wholly owned subsidiary. The total purchase price included cash payments of $38.3 million, including related acquisition costs of $5.0 million, issuance of 600,000 shares of Class A voting common stock valued at $3.0 million and issuance of 600,000 shares of Class B nonvoting common stock valued at $3.0 million and the assumption of $20.6 million of outstanding debt which was repaid at closing. In exchange for cash, common stock and the assumption of debt, we received all of the outstanding shares of Schultz. We have preliminarily allocated 50% of the purchase price in excess of the fair value of net assets acquired to intangible assets ($19.7 million) and 50% to goodwill ($19.7 million), which is not deductible for tax purposes. The acquired intangible assets consist of trade names and other intellectual property which are being amortized over 25 to 40 years. In addition, we were required to write-up the value of inventory acquired from Schultz by $1.5 million to properly reflect its fair value.

                This transaction was accounted for using the purchase method of accounting and, accordingly, the results of operations of the assets acquired and liabilities assumed have been included in the consolidated financial statements from the date of acquisition. The purchase price was allocated to assets acquired and liabilities assumed based on estimated fair values. The purchase price allocation is based on preliminary information, which is subject to adjustment upon obtaining complete valuation information. While the final purchase price allocation may differ significantly from the preliminary allocation included in this report, we believe that finalization of the allocation will not have a material impact on the consolidated results of operations or our financial position. Completion of the purchase price allocation is expected by the second quarter of 2003.

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                The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition (dollars in thousands):

        Description

         Amount
        Current assets $40,856
        Equipment and leasehold improvements  3,901
        Intangible assets  20,632
        Goodwill  19,744
        Other assets  811
          
         Total assets acquired  85,944
          

        Current liabilities

         

         

        19,857
        Long-term debt  20,662
        Other liabilities  1,125
          
         Total liabilities  41,644
          
         Net assets acquired $44,300
          

                Our funding sources for the Schultz merger included an additional $35.0 million add-on to Term Loan B of our senior credit facility, an additional $10.0 million add-on to the revolving credit facility, the issuance of 1,690,000 shares of Class A voting common stock to UIC Holdings, L.L.C. for $8.5 million and the issuance of 1,690,000 shares of Class B nonvoting common stock to UIC Holdings, L.L.C. for $8.5 million. The issuance of shares to UIC Holdings, L.L.C. was a condition precedent to the amendment of the senior credit facility. The value of the shares issued was determined using $5 per share, the fair value of our common stock ascribed by an independent third party valuation.

                WPC Brands, Inc.    On December 6, 2002, one of our wholly owned subsidiaries completed the acquisition of WPC Brands, a manufacturer and distributor of various leisure-time consumer products, including, a full line of insect repellents, institutional healthcare products and other proprietary and private label products. The acquisition was executed to enhance our insect repellent product lines and to strengthen our presence at major customers. The total purchase price was $19.5 million in cash in exchange for all of the outstanding shares of WPC Brands. We have preliminarily allocated 75% of the purchase price in excess of the fair value of net assets acquired to intangible assets ($9.7 million) and 25% to goodwill ($3.2 million). The acquired intangible assets consist of trade names and other intellectual property which are being amortized over 25 to 40 years. In addition, we were required to write-up the value of inventory acquired from WPC Brands by $2.0 million to properly reflect its fair value.

                This transaction was accounted for using the purchase method of accounting and, accordingly, the results of operations of the assets acquired and liabilities assumed have been included in the consolidated financial statements from the date of acquisition. The purchase price was allocated to assets acquired and liabilities assumed based on estimated fair values. The purchase price allocation is based on preliminary information, which is subject to adjustment upon obtaining complete valuation information. While the final purchase price allocation may differ significantly from the preliminary allocation included in this report, we believe that finalization of the allocation will not have a material impact on the consolidated results of operations or our financial position. Completion of the purchase price allocation is expected by the third quarter of 2003.

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                The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition (dollars in thousands):

        Description

         Amount
        Current assets $7,987
        Equipment and leasehold improvements  844
        Intangible assets  11,294
        Goodwill  3,222
        Other assets  455
          
         Total assets acquired  23,802
          

        Current liabilities

         

         

        3,286
        Other liabilities  1,016
          
         Total liabilities  4,302
          
         Net assets acquired $19,500
          

                Our funding source for the WPC Brands acquisition was a portion of the proceeds received from an additional $25.0 million add-on to Term Loan B of our senior credit facility.

                In addition, we are currently considering selling certain or all of the non-core product lines received in the acquisition of WPC Brands. Total assets represented by these product lines are approximately $1.6 million with annual net sales in 2002 of approximately $6.2 million.

        Recent Strategic Transactions

                Acquisition of Brands.    On December 17, 2001, we advanced our strategic plan for growth in the consumer lawn and garden category by acquiring leading consumer fertilizer brands Vigoro, Sta-Green and Bandini, as well as acquiring licensing rights to the Best® line of fertilizer products, for a cash purchase price of $37.5 million. The brands, which were formerly owned by or licensed to Pursell, complement our consumer lawn, garden and insect control products. In connection with financing this transaction, we issued 22,600 shares of preferred stock for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, and warrants to purchase 6,300,000 shares of common stock initially to UIC Holdings, L.L.C. for net cash proceeds of $22.0 million.

                Strategic Relationship with Bayer.    On June 14, 2002, we and Bayer consummated a strategic transaction. The strategic transaction allows us to gain access to certain Bayer active ingredient technologies through a Supply Agreement and to perform certain merchandising services for Bayer through an In-Store Service Agreement. In connection with the strategic transaction, Bayer acquired a minority ownership interest, approximately 9.3% of the issued and outstanding shares of our common stock, under the terms of an Exchange Agreement in exchange for promissory notes due to Bayer from Pursell and the execution of the Supply and In-Store Service Agreements.

                We have the right to terminate the In-Store Service Agreement at any time without cause upon 60 days advance notice to Bayer. Following any such termination, we would have 365 days to exercise an option to repurchase all of our stock issued to Bayer. We could repurchase the stock at a price based on equations contained in the Exchange Agreement designed to represent in part the fair market value of the shares at the time such repurchase option is exercised and in part the original cost of such stock. In the event we exercise this repurchase option, Bayer would have the right to terminate the Supply Agreement. Because Bayer is both a competitor and a supplier, we are constantly reevaluating our relationship with Bayer and the value of this relationship to us, and may decide to terminate the In-Store Service Agreement and exercise our repurchase option at any time.

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                In consideration for the Supply and In-Store Service Agreements, and in exchange for the promissory notes of Pursell, we issued to Bayer 3,072,000 shares of Class A voting common stock valued at $15.4 million and 3,072,000 shares of Class B nonvoting common stock valued at $15.4 million and recorded $0.4 million of related issuance costs. We reserved for the entire face value of the promissory notes due to Bayer from Pursell as we did not believe they were collectible and an independent third party valuation did not ascribe any value to them.

                Based on the independent third party valuation, we assigned a fair value of $30.7 million on June 14, 2002 to the transaction components recorded relative to the common stock issued to Bayer as follows:

        Description

         Amount
         
        Common stock subscription receivable $27,321 
        Supply Agreement  5,694 
        Repurchase option  2,636 
        In-Store Services Agreement  (4,931)
          
         
          $30,720 
          
         

                Under the requirements of the agreements, Bayer will make payments to us which total $5.0 million annually through June 15, 2009, the present value of which equals the value assigned to the common stock subscription receivable, which is reflected in the equity section in our accompanying consolidated balance sheet as of December 31, 2002. The common stock subscription receivable will be repaid in 28 quarterly installments of $1.25 million, the first of which was received at closing on June 17, 2002. The difference between the value ascribed to the common stock subscription receivable and the installment payments will be reflected as interest income in our consolidated statements of operations through June 15, 2009.

                Bayer has the right to put the shares received back to us under the terms of the Exchange Agreement. Bayer can terminate the Exchange Agreement within the first 36 months if we fail to meet certain performance guidelines as established in the In-Store Service Agreement. In conjunction with the termination, Bayer can put the shares received back to us within 30 days of the termination of the Exchange Agreement at a price provided for in the Exchange Agreement. We believe that the put price per share would represent in part the fair market value of the shares at the time such put option is exercised and in part the original cost of such shares.

                The value of the Supply Agreement and the liability associated with the In-Store Service Agreement are being amortized over the period in which economic benefits under the Supply Agreement are utilized and the obligations under the In-Store Service Agreement are fulfilled. We are amortizing the asset associated with the Supply Agreement to cost of goods sold and currently anticipate the benefit will be recognized over a three to five-year period. We are amortizing the obligation associated with the In-Store Service Agreement to revenues over the seven-year life of the agreement. In December 2002, we and Bayer amended the In-Store Service Agreement to reduce the scope of services provided by approximately 80%. As a result, we reduced our obligation under the agreement accordingly and reclassified $3.6 million to additional paid-in capital to reflect the increase in value of the original agreement.

                The independent third party valuation obtained by us also indicated that value should be ascribed to the repurchase option we have under the agreements. The repurchase option is reflected as a reduction of equity in the accompanying consolidated balance sheet as of December 31, 2002. This amount will be recorded as a component of additional paid-in capital upon exercise or expiration of the option.

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                Pursell Transaction.    In October 2002, we purchased certain assets from Pursell, which renamed itself U.S. Fertilizer subsequent to the agreement, for a cash purchase price of $12.1 million and forgiveness of the Pursell promissory notes previously obtained from Bayer, as described above. The assets acquired included certain inventory, equipment at two of Pursell's facilities and real estate at one of the two facilities. These facilities, located in Orrville, Ohio and Sylacauga, Alabama, previously fulfilled, and are expected to continue to fulfill, over half of our fertilizer manufacturing requirements.

                Also in October 2002, we signed a tolling agreement with Pursell, whereby Pursell will supply us with fertilizer. The tolling agreement requires us to be responsible for all raw materials, certain capital expenditures and other related costs for Pursell to manufacture and supply us with fertilizer products. The agreement does not require a minimum volume purchase from Pursell, but does provide for a fixed monthly payment of $0.7 million through the term of the tolling agreement, which expires on September 30, 2007. The fixed monthly payment of $0.7 million through the term of the tolling agreement is included in our standard inventory costs and is not expensed monthly as a period cost. In addition, beginning on March 1, 2004 and on each anniversary thereafter, the fixed payment is subject to certain increases for labor, materials, inflation and other reasonable costs as outlined in the tolling agreement. The agreement provides us with certain termination rights without penalty upon a breach of the agreement by Pursell or upon our payment of certain amounts as set forth therein. As a result of our purchase of the Ohio plant and lease of the Sylacauga facility, we expect to be able to produce over one half of our fertilizer requirements. We expect that as a result of manufacturing our fertilizer our cost of goods sold will decrease although the decrease will be partially offset by an increase in selling, general and administrative expenses resulting from operation of these facilities.

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        Results of Operations

                The following table presents amounts and the percentages of net sales that items in the accompanying consolidated statements of operations constitute for the periods presented:

         
         Year Ended December 31,
         
         
         2002
         2001
         2000
         
         
         (dollars in thousands)

         
        Net sales by segment:                
         Lawn and Garden $352,269 73.4%$169,267 61.9%$177,981 67.0%
         Household  108,752 22.7% 101,186 37.0% 82,018 30.9%
         Contract  18,969 4.0% 2,891 1.1% 5,795 2.1%
          
         
         
         
         
         
         
         Total net sales  479,990 100.0% 273,344 100.0% 265,794 100.0%
          
         
         
         
         
         
         
        Operating costs and expenses:                
         Cost of goods sold  305,644 63.7% 148,371 54.3% 146,229 55.0%
         Selling, general and administrative
        expenses
          113,162 23.6% 74,689 27.3% 69,099 26.0%
         Facilities and organizational rationalization   0.0% 5,550 2.0%  0.0%
         Dursban related expenses   0.0%  0.0% 8,000 3.0%
          
         
         
         
         
         
         
         Total operating costs and expenses  418,806 87.3% 228,610 83.6% 223,328 84.0%
          
         
         
         
         
         
         
        Operating income (loss) by segment:                
         Lawn and Garden  38,064 7.9% 24,637 9.0% 24,309 9.1%
         Household  23,159 4.8% 20,280 7.3% 17,814 6.7%
         Contract  (39)0.0% (183)-0.1% 343 0.2%
          
         
         
         
         
         
         
         Total operating income  61,184 12.7% 44,734 16.4% 42,466 16.0%
        Interest expense, net  32,410 6.8% 35,841 13.1% 40,973 15.4%
          
         
         
         
         
         
         
        Income before income tax expense  28,774 5.9% 8,893 3.3% 1,493 0.6%
        Income tax expense  3,438 0.7% 2,167 0.8% 134 0.1%
          
         
         
         
         
         
         
         Net income $25,336 5.2%$6,726 2.5%$1,359 0.5%
          
         
         
         
         
         
         

        Year Ended December 31, 2002 Compared to Year Ended December 31, 2001

                Net Sales.    Net sales represent gross sales less any applicable customer discounts from list price, customer returns and promotion expense through cooperative programs with retailers. Net sales increased $206.7 million, or 75.6%, to $480.0 million for the year ended December 31, 2002 from $273.3 million for the year ended December 31, 2001. The increase, primarily in our Lawn and Garden segment, as well as the change in our sales mix by segment, were due mainly to our expanded product lines resulting from our acquisition of various fertilizer brands and our merger with Schultz in May 2002, coupled with an increase in sales of specific product lines described further below. This increase was partially offset by an increase in promotion expense and retailers maintaining lower inventory levels.

                Net sales in the Lawn and Garden segment increased $183.0 million, or 108.0%, to $352.3 million for the year ended December 31, 2002 from $169.3 million for the year ended December 31, 2001. Net sales of this segment increased $137.4 million as a result of our acquisition of various fertilizer brands and $28.7 million as a result of our merger with Schultz. These increases were partially offset by lower sales volume of various other products in the Lawn and Garden segment. Net sales in the Household segment increased $7.6 million, or 7.5%, to $108.8 million for the year ended December 31, 2002 from $101.2 million for the year ended December 31, 2001. Net sales of this segment increased primarily due

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        to increases in sales of our repellents and insecticides and in our private label products. Net sales in the Contract segment increased $16.1 million to $19.0 million for the year ended December 31, 2002 from $2.9 million for the year ended December 31, 2001. Net sales of this segment increased primarily due to our merger with Schultz.

                Gross Profit.    Gross profit increased $49.3 million, or 39.4%, to $174.3 million for the year ended December 31, 2002 from $125.0 million for the year ended December 31, 2001. The increase in gross profit was primarily due to our acquisition of various fertilizer brands and our merger with Schultz, coupled with favorable materials costs of key ingredients. The increase in gross profit was partially offset by the recognition of a $1.5 million purchase accounting inventory write-up in cost of goods sold related to the merger with Schultz. As a percentage of net sales, gross profit decreased to 36.3% for the year ended December 31, 2002 from 45.7% for the year ended December 31, 2001. The decrease in gross profit as a percentage of net sales was primarily due to our acquisition of various fertilizer brands and our merger with Schultz, which both have lower margins than our other products. Gross profit as a percentage of sales is expected to improve in 2003 as we continue to achieve operational and financial efficiencies resulting from our acquisitions and other strategic transactions in 2002.

                Selling, General and Administrative Expenses.    Selling, general and administrative expenses include all costs associated with the selling and distribution of product, product registrations and administrative functions such as finance, information systems and human resources. Selling, general and administrative expenses increased $38.5 million, or 51.5%, to $113.2 million for the year ended December 31, 2002 from $74.7 million for the year ended December 31, 2001. The increase was primarily due to our acquisition of various fertilizer brands and our merger with Schultz. As a percentage of net sales, selling, general and administrative expenses decreased to 23.6% for the year ended December 31, 2002 from 27.3% for the year ended December 31, 2001. The decrease was primarily due to additional sales related to our acquisition of various fertilizer brands and our merger with Schultz, with a lesser corresponding increase in selling, general and administrative expenses.

                Operating Income.    Operating income increased $16.5 million, or 36.9%, to $61.2 million for the year ended December 31, 2002 from $44.7 million for the year ended December 31, 2001. The increase was due to the factors described above. As a percentage of net sales, operating income decreased to 12.7% for the year ended December 31, 2002 from 16.4% for the year ended December 31, 2001. The decrease was primarily in our Lawn and Garden segment due to lower margins on the products we acquired in our merger with Schultz and our acquisition of various fertilizer brands.

                Operating income in the Lawn and Garden segment increased $13.5 million, or 54.9%, to $38.1 million for the year ended December 31, 2002 from $24.6 million for the year ended December 31, 2001. Operating income of this segment increased primarily due to our acquisition of various fertilizer brands and strong growth in our Spectracide brand. These increases were partially offset by lower sales volume and margins of various other products. Operating income in the Household segment increased $2.9 million, or 14.3%, to $23.2 million for the year ended December 31, 2002 from $20.3 million for the year ended December 31, 2001. Operating income of this segment increased primarily due to increases in sales of our Cutter and Hot Shot brands and in our private label products. Operating loss in the Contract segment decreased $0.2 million for the year ended December 31, 2002 from $0.2 million for the year ended December 31, 2001. Operating loss of this segment decreased primarily due to sales of new products acquired in our merger with Schultz.

                Interest Expense, Net.    Interest expense, net, decreased $3.4 million, or 9.5%, to $32.4 million for the year ended December 31, 2002 from $35.8 million for the year ended December 31, 2001. The decrease in net interest expense was due to a decline in our average variable borrowing rate of 1.68 percentage points to 7.71% for the year ended December 31, 2002 from 9.39% for the year ended December 31, 2001, resulting primarily from the effects of two unfavorable interest rate swaps terminated in 2002 and a general decline in variable borrowing rates. This decrease was also due to

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        interest income recognized on payments received on the common stock subscription receivable from Bayer, coupled with an increase in our average cash balances available for investment during 2002. These decreases were partially offset by an increase in our average debt outstanding during 2002, which resulted from additional borrowings under our senior credit facility to increase liquidity in February 2002, finance our merger with Schultz and finance the acquisition of WPC Brands.

                Income Tax Expense.    For the year ended December 31, 2002, our effective income tax rate was 11.9%. This rate is lower than our statutory rate for federal taxes and state taxes, net of federal benefit, of 38.0% because it reflects our estimated utilization of our goodwill deduction in 2002. The goodwill deduction is related to the step up in tax basis that occurred in conjunction with our recapitalization in 1999.

        Year Ended December 31, 2001 Compared to Year Ended December 31, 2000

                Net Sales.    Net sales increased $7.5 million, or 2.8%, to $273.3 million for the year ended December 31, 2001 from $265.8 million for the year ended December 31, 2000. This increase was driven by a combination of offsetting factors including the increase in demand for insect repellent, increased sales of Spectracide Terminate, increased sales in the hardware channel, decreased sales related to the loss of Kgro private label business for 2001 and decreased sales related to products that contain chlorpyrifos.

                Net sales in the Lawn and Garden segment decreased $8.7 million, or 4.9%, to $169.3 million for the year ended December 31, 2001 from $178.0 million for the year ended December 31, 2000. Net sales of this segment decreased primarily due to lost sales of products that contained chlorpyrifos. During 2000, the U.S. EPA and manufacturers of the active ingredient chlorpyrifos, including Dow AgroSciences L.L.C. which sold the chlorphyrifos under the trademark "Dursban," entered into a voluntary agreement that provided for the withdrawal of virtually all residential uses of Dursban. These decreases were partially offset by increased sales of various other products in the Lawn and Garden segment. Net sales in the Household segment increased $19.2 million, or 23.4%, to $101.2 million for the year ended December 31, 2001 from $82.0 million for the year ended December 31, 2000. Net sales of this segment increased primarily due to increased demand for insect repellents by $11.0 million due to weather conditions and the introduction of new products. Net sales in the Contract segment decreased $2.9 million to $2.9 million for the year ended December 31, 2001 from $5.8 million for the year ended December 31, 2000. Net sales of this segment decreased primarily due to changes in sales mix.

                Gross Profit.    Gross profit increased $5.4 million, or 4.5%, to $125.0 million for the year ended December 31, 2001 compared to $119.6 million for the year ended December 31, 2000. As a percentage of net sales, gross profit increased to 45.7% as compared to 45.0% for the year ended December 31, 2000. The increase in gross profit as a percentage of sales was the result of a change in sales mix to value brands, which are higher margin products, and was partially offset by a $2.7 million inventory rationalization charge recorded during the fourth quarter of 2001.

                Selling, General and Administrative Expenses.    Selling, general and administrative expenses increased $5.6 million, or 8.1%, to $74.7 million for the year ended December 31, 2001 from $69.1 million for the year ended December 30, 2000. As a percentage of net sales, selling, general and administrative expenses increased to 27.3% for the year ended December 31, 2001 from 26.0% for the year ended December 30, 2000. The increase is attributed to increased advertising spending to support the value brands, along with additional spending for in-store sales and support in home centers. Prior year selling, general and administrative expenses also reflect a cost reduction due to the impact of terminating a capital lease.

                Facilities and Organizational Rationalization.    During the fourth quarter of 2001, we recorded a non-recurring charge of $5.6 million. The components of the charge included severance cost of

        39



        $2.1 million related to an early voluntary retirement program for 85 employees, a $3.7 million charge attributed to facility exit costs for warehouse and office consolidation and a $2.7 million charge for inventory rationalization which was recorded in cost of goods sold. There were no similar charges recorded during 2000.

                Dursban Related Expenses.    During 2000, we recorded a non-recurring charge of $8.0 million, including customer markdowns, inventory write-offs and related disposal costs which primarily affected our Lawn and Garden segment results, as a result of the voluntary agreement between the U.S. EPA and manufacturers of Dursban to discontinue inclusion of the active chemical in our products. There were no similar charges recorded during 2001.

                Operating Income.    Operating income increased $2.2 million, or 5.2%, to $44.7 million for the year ended December 31, 2001 from $42.5 million for the year ended December 31, 2000. As a percentage of net sales, operating income increased to 16.4% for the year ended December 31, 2001 from 16.0% for the year ended December 31, 2000. The increase was due to the factors described above.

                Operating income in the Lawn and Garden segment increased $0.3 million, or 1.2%, to $24.6 million for the year ended December 31, 2001 from $24.3 million for the year ended December 31, 2000. Operating income of this segment increased primarily due to increased sales of Spectracide Terminate and increases in sales of various other products in the Lawn and Garden segment, partially offset by lost sales of products that contained chlorpyrifos. Operating income in the Household segment increased $2.5 million, or 15.3%, to $20.3 million for the year ended December 31, 2001 from $17.8 million for the year ended December 31, 2000. Operating income of this segment increased primarily due to increased sales of insect repellents. Operating income in the Contract segment decreased $0.5 million to an operating loss of $0.2 million for the year ended December 31, 2001 from operating income of $0.3 million for the year ended December 31, 2000. Operating income of this segment decreased primarily due to changes in sales mix.

                Income Tax Expense.    For the year ended December 31, 2001, our effective income tax rate was 24.4%. This rate is lower than our statutory rate for federal taxes and state taxes, net of federal benefit, of 38% because it reflects our estimated utilization of our goodwill deduction in 2001. The goodwill deduction is related to the step up in tax basis that occurred in conjunction with our recapitalization in 1999.

        Liquidity and Capital Resources

                Our principal liquidity requirements are for working capital, capital expenditures and debt service under the senior credit facility and the senior subordinated notes.

                Operating Activities.    Operating activities provided cash of $37.9 million during the year ended December 31, 2002 compared to $25.0 million for the year ended December 31, 2001. The increase in cash provided by operations was primarily due to increased profitability, offset by increased inventories of $19.9 million in the year ended December 31, 2002 compared to the year ended December 31, 2001. This increase was partially offset by an increase in our allowance for doubtful accounts of $2.1 million and an increase in our allowance for potentially obsolete and slow-moving inventory of $3.1 million during the year ended December 31, 2002. The seasonal nature of our operations generally requires cash to fund significant increases in working capital, primarily accounts receivable and inventories, during the first half of the year. Accounts receivable and accounts payable also build substantially in the first half of the year in line with increasing sales as the season begins. These balances liquidate over the latter part of the second half of the year as the lawn and garden season winds down. Net of effects from acquisitions, changes in current operating assets resulted in a decline in cash flows from operating activities of $7.2 million compared to 2001. Net of effects from acquisitions, changes in current operating liabilities resulted in a decline in cash flows from operating activities of $20.8 million

        40



        compared to 2001. Operating activities in 2001 provided $14.2 million more cash than in 2000, primarily due to a $13.1 million net increase in current operating liabilities in 2001 over 2000, net of effects from acquisitions.

                Charge for Facilities, Product Line and Organizational Rationalization.    During the fourth quarter of 2001, we recorded an $8.5 million charge related to facilities, product line and organizational rationalization, which primarily affected our Lawn and Garden segment results. The components of the charge included $2.7 million for obsolete inventory primarily related to the discontinuance of our Spectracide Pro® product line and damaged product from the warehouse consolidation and move, which was recorded in costs of goods sold, $2.1 million for severance costs associated with an early voluntary retirement program that was offered to 85 employees during December 2001, a $3.5 million charge during the fourth quarter of 2001 related to the warehouse consolidation project, primarily attributable to facility exit costs and resultant duplicate rent payments in 2002 and $0.2 million was recorded in selling, general and administrative expenses. Approximately $3.1 million of this charge affected cash flows from operating activities during 2001 and $3.5 million affected cash flows from operating activities during 2002. The consolidation resulted in cost savings of approximately $1.8 million in 2002 with a return on investment expected by 2004.

                Dursban Agreement.    During the year ended December 31, 2000, the U.S. EPA and manufacturers of the active ingredient chlorpyrifos, including Dow AgroSciences L.L.C. which sold the chlorphyrifos under the trademark "Dursban," entered into a voluntary agreement that provided for withdrawal of virtually all residential uses of Dursban in pesticide products. Formulation of Dursban products intended for residential use ceased by December 1, 2000 and formulators discontinued the sale of such products to retailers after February 1, 2001. Retailers were not allowed to sell Dursban products after December 31, 2001. Accordingly, a charge of $8.0 million was recorded in September 2000 for costs associated with this agreement, including customer markdowns, inventory write-offs and related disposal costs, which primarily affected our Lawn and Garden segment results. All of our costs associated with this agreement were incurred by December 31, 2002. Approximately $1.9 million of this charge affected cash flows from operating activities during 2000, $6.0 million affected cash flows from operating activities during 2001, and $0.1 million affected cash flows from operating activities during 2002.

                Investing Activities.    Investing activities used cash of $68.3 million during the year ended December 31, 2002 compared to $45.4 million for the year ended December 31, 2001. The increase in cash used in investing activities was primarily the result of an increase in strategic transactions during 2002 compared to 2001. Cash flows associated with these transactions included the merger with Schultz for $38.3 million in May 2002 and the acquisition of WPC Brands for $19.5 million in December 2002. The purchase of fertilizer brands for $37.5 million was the only significant strategic transaction completed during 2001. Also contributing to the increase in cash used for investing activities was an increase of $2.5 million in purchases of equipment and leasehold improvements during the year ended December 31, 2002 compared to the year ended December 31, 2001. Investing activities in 2001 used $41.4 million more cash than in 2000, primarily due to payments for the purchase of fertilizer brands for $37.5 million in 2001 and an increase in purchases of equipment and leasehold improvements of $3.9 million in 2001 over 2000.

                Financing Activities.    Financing activities provided cash of $40.7 million during the year ended December 31, 2002 compared to $20.4 million for the year ended December 31, 2001. The increase in cash from financing activities was primarily due to borrowings of $90.0 million under Term Loan B of our senior credit facility during 2002 and proceeds from the issuance of common stock of $17.5 million, partially offset by repayments on borrowings of $59.0 million exclusive of cash overdrafts. A portion of the borrowings and the net proceeds of the issuance of common stock were used to finance a portion of the merger with Schultz and the acquisition of WPC Brands. Financing activities in 2001 provided $27.2 million more cash than in 2000, primarily due to an increase in the proceeds from the issuance of preferred stock of $7.0 million in 2001 over 2000, the decrease of repayments on borrowings exclusive

        41


        of cash overdrafts of $15.9 million in 2001 over 2000 and the absence of treasury stock redemption costs in 2001 which were $12.2 million in 2000.

                Historically, we have utilized internally generated funds and borrowings under credit facilities to meet ongoing working capital and capital expenditure requirements. As a result of our recapitalization in 1999 and increased borrowings, we have significantly increased cash requirements for debt service relating to our senior subordinated notes and senior credit facility. We had total long-term debt and capital lease obligations outstanding of $404.9 million as of December 31, 2002 and $351.8 million as of December 31, 2001. We will rely on internally generated funds and, to the extent necessary, borrowings under our revolving credit facility to meet liquidity needs. As of December 31, 2002, we had unused availability of $88.1 million under our revolving credit facility.

                We believe that cash flows from operations, together with available borrowings under our revolving credit facility, will be adequate to meet the anticipated requirements for working capital, capital expenditures and scheduled principal and interest payments for at least the next two years. We are regularly engaged in acquisition discussions with a number of companies, although we have no definitive agreements at this time. We cannot guarantee that any acquisitions will be consummated. If we do consummate any acquisitions it could be material to our business and require us to incur additional debt under our revolving credit facility or otherwise.

                We cannot ensure that sufficient cash flow will be generated from operations to repay the notes and amounts outstanding under the senior credit facility at maturity without requiring additional financing. Our ability to meet debt service and clean-down obligations and reduce debt will be dependent on our future performance, which in turn, will be subject to general economic and weather conditions and to financial, business and other factors, including factors beyond our control. Because a portion of our debt bears interest at floating rates, our financial condition is and will continue to be affected by changes in prevailing interest rates.

        Capital Expenditures

                Capital expenditures relate primarily to the enhancement of our existing facilities and the construction of additional capacity for production and distribution, as well as the implementation of our enterprise resource planning, or ERP, system. Cash used for capital expenditures was $10.5 million in 2002, $7.9 million in 2001 and $4.0 million in 2000. The increase in 2002 capital expenditures from 2001 is primarily related to our purchase of fertilizer manufacturing equipment from Pursell in October 2002, coupled with expenditures related to our ERP system. We expect to spend approximately $4.0 million in 2003 on our ERP system. No costs were incurred for the ERP system during 2000. During the year ended December 31, 2000, we executed a capital lease agreement for the lease of our corporate aircraft for $5.3 million.

        Financing Activities

                Senior Credit Facility.    Our senior credit facility, as amended as of December 6, 2002, was provided by Bank of America, N.A. (formerly known as NationsBank, N.A.), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce and consists of (1) a $90.0 million revolving credit facility; (2) a $75.0 million term loan facility (Term Loan A); and (3) a $240.0 million term loan facility (Term Loan B). The revolving credit facility and Term Loan A mature on January 20, 2005 and Term Loan B matures on January 20, 2006. The revolving credit facility is subject to a clean-down period during which the aggregate amount outstanding under the revolving credit facility shall not exceed $10.0 million for 30 consecutive days during the period between August 1 and November 30 in each calendar year. As of December 31, 2002, the clean-down period had been completed and no amounts were outstanding under the revolving credit facility, nor were there any compensating balance requirements.

        42


                On February 13, 2002, the senior credit facility was amended to increase Term Loan B from $150.0 million to $180.0 million and provide additional liquidity and flexibility for capital expenditures subsequent to our purchase of various fertilizer brands in December 2001. We incurred $1.1 million in fees related to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the senior credit facility. The amendment did not change any other existing covenants of the senior credit facility.

                On May 8, 2002, in connection with our merger with Schultz, the senior credit facility was amended to increase Term Loan B from $180.0 million to $215.0 million, increase the revolving credit facility from $80.0 million to $90.0 million and provide additional flexibility for capital expenditures. We incurred $2.2 million in fees related to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the senior credit facility. The amendment did not change any other existing covenants of the senior credit facility.

                On December 6, 2002, in connection with our acquisition of WPC Brands, the senior credit facility was amended to increase Term Loan B from $215.0 million to $240.0 million and provide additional flexibility for capital expenditures. We incurred $1.1 million in fees related to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the senior credit facility. The amendment did not change any other existing covenants of the senior credit facility.

                On March 19, 2003, in connection with the offering of the Series C notes, the senior credit facility was amended to permit us to issue the Series C and D notes. The amendment did not change any other existing covenants of the senior credit facility.

                The principal amount of Term Loan A was scheduled to be repaid in 24 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005. However, the Term A loan was repaid in full with a portion of the proceeds of the offering of our Series C notes. The principal amount of Term Loan B is to be repaid in 28 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006.

                The senior credit facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants place restrictions on, among other things, levels of investments, indebtedness, insurance, capital expenditures and dividend payments. The financial covenants require the maintenance of certain financial ratios at defined levels. As of and during the years ended December 31, 2002 and 2001, we were in compliance with all covenants. While we do not anticipate an event of non-compliance in the foreseeable future, the effect of non-compliance would require us to request a waiver or an amendment to the senior credit facility. Amending the senior credit facility could result in changes to our borrowing capacity or our effective interest rates. Under the agreements, interest rates on the revolving credit facility, Term Loan A and Term Loan B range from 1.50% to 4.00% above LIBOR, depending on certain financial ratios. LIBOR was 1.38% as of December 31, 2002 and 1.88% as of December 31, 2001. Unused commitments under the revolving credit facility are subject to a 0.5% annual commitment fee. The interest rate of Term Loan A was 4.67% and 5.43% as of December 31, 2002 and 2001, respectively. The interest rate of Term Loan B was 5.42% and 5.93% as of December 31, 2002 and 2001, respectively.

                The senior credit facility may be prepaid in whole or in part at any time without premium or penalty. During the year ended December 31, 2002, we made principal payments of $11.0 million on Term Loan A and $2.0 million on Term Loan B, which included optional principal prepayments of $6.3 million on Term Loan A and $1.1 million on Term Loan B. During the year ended December 31, 2001, we made principal payments of $9.2 million on Term Loan A and $1.4 million on Term Loan B, which included optional principal prepayments of $4.1 million on Term Loan A and $0.7 million on Term Loan B. The optional payments were made to remain two quarterly payments ahead of the regular payment schedule. According to the senior credit facility agreement, each prepayment on Term

        43



        Loan A and Term Loan B can be applied to the next principal repayment installments. We paid Term Loan A in full with a portion of the proceeds of the offering of the Series C notes and we intend to pay a full year of principal installments in 2003 under Term Loan B in accordance with the terms of the senior credit facility.

                Substantially all of the properties and assets of our current or future domestic subsidiaries collateralize obligations of the senior credit facility.

                The carrying amount of our obligations under the senior credit facility approximates fair value because the interest rates are based on floating interest rates identified by reference to market rates.

                97/8% Series B Senior Subordinated Notes.    In November 1999, we issued $150.0 million in aggregate principal amount of 97/8% Series B senior subordinated notes due April 1, 2009. Interest accrues at a rate of 97/8% per annum, payable semi-annually on April 1 and October 1. The indenture governing the Series B senior subordinated notes, among other things, (1) restricts our ability and the ability of our subsidiaries to incur indebtedness, create liens, repurchase stock, pay dividends and make distributions or enter into transactions with affiliates and (2) places restrictions on our ability and the ability of our subsidiaries to merge or consolidate all of our assets.

                The fair value of the Series B notes was $151.5 million as of December 31, 2002 and $141.0 million as of December 31, 2001, based on their quoted market price on such dates.

                97/8% Series C Senior Subordinated Notes.    In March 2003, we issued $85.0 million in aggregate principal amount of 97/8% Series C senior subordinated notes due April 1, 2009. Interest accrues at a rate of 97/8% per annum, payable semi-annually on April 1 and October 1. The indenture governing the Series C senior subordinated notes, among other things, (1) restricts our ability and the ability of our subsidiaries to incur indebtedness, create liens, repurchase stock, pay dividends and make distributions or enter into transactions with affiliates and (2) places restrictions on our ability and the ability of our subsidiaries to merge or consolidate all of our assets.

                Stock Issuances.    In connection with our merger with Schultz, the Board of Directors adopted resolutions, which were approved by our stockholders, to amend our Certificate of Incorporation to increase the number of shares of authorized Class A voting common stock from 37,600,000 shares to 43,600,000 shares and increase the number of shares of authorized Class B nonvoting common stock from 37,600,000 shares to 43,600,000 shares. In addition, as part of the purchase price, we issued 600,000 shares of Class A voting common stock valued at $3.0 million and 600,000 shares of Class B nonvoting common stock valued at $3.0 million. In addition, to raise equity to partially fund the merger, we issued 1,690,000 shares of Class A voting common stock to UIC Holdings, L.L.C. for $8.5 million and 1,690,000 shares of Class B nonvoting common stock to UIC Holdings, L.L.C. for $8.5 million.

                In connection with our transaction with Bayer in June 2002, we issued 3,072,000 shares of Class A voting common stock valued at $15.4 million and 3,072,000 shares of Class B nonvoting common stock valued at $15.4 million and recorded $0.4 million of related issuance costs.

        44



                Contractual Cash Obligations.    The following table presents the aggregate amount of future cash outflows of our contractual cash obligations as of December 31, 2002, excluding amounts due for interest on outstanding indebtedness:

         
         Obligations due in:
        Contractual Cash Obligations

         Total
         Less Than
        1 Year

         1-3 Years
         4-5 Years
         After 5
        Years

         
         (dollars in thousands)

        Senior credit facility $250,715 $9,222 $241,493 $ $
        97/8% Series B Senior Subordinated Notes(1)  150,000        150,000
        97/8% Series C Senior Subordinated Notes(1)  85,000        85,000
        Capital lease  4,221  443  3,778    
        Operating leases  62,990  8,872  21,566  10,801  21,751
        Tolling agreement with Pursell(2)  40,419  8,509  25,528  6,382  
        Urea purchase agreements(3)  4,853  4,853      
        Urea hedging agreements(4)  5,994  5,994      
        Services agreements(5)  6,650  2,550  2,600  1,500  
          
         
         
         
         
         Total contractual cash obligations $610,842 $40,443 $294,965 $18,683 $256,751
          
         
         
         
         

        (1)
        The 97/8% Series D Senior Subordinated Notes being offered pursuant to this prospectus will replace those 97/8% Series B Senior Subordinated Notes and 97/8% Series C Senior Subordinated Notes that are exchanged by the holders thereof in the exchange offer described in this prospectus. There can be no assurances that any holders of Series B and C notes will exchange any or all of their notes.

        (2)
        Represents fixed monthly payments of $0.7 million through September 30, 2007 for the purchase of fertilizer products from Pursell.

        (3)
        Represents purchase commitments for granular urea during January and February 2003.

        (4)
        Represents commitments under derivative hedging agreements maturing monthly through April 2003 relating to the purchase of granular urea.

        (5)
        Includes monthly payments of $62,500 for management and other consulting services provided by affiliates of Thomas H. Lee Partners, L.P., which owns UIC Holdings, L.L.C., our majority owner. The associated professional services agreement automatically extends for successive one-year periods beginning January 20 of each year, unless notice is given as provided in the agreement. Also includes $1.8 million due in 2003 and $0.4 million due in 2004 pursuant to a consulting agreement.

                We lease several of our operating facilities from Rex Realty, Inc., a company owned by our stockholders and operated by a former executive and past member of our Board of Directors. The operating leases expire at various dates through December 31, 2010. We have options to terminate the leases on an annual basis by giving advance notice of at least one year. As of December 31, 2002, notice had been given on one such lease. We lease a portion of our operating facilities from the same company under a sublease agreement expiring on December 31, 2005 with minimum annual rentals of $0.7 million. We have two five-year options to renew this lease, beginning January 1, 2006. Management believes that the terms of these leases are arms length. Rent expense under these leases was $2.3 million in 2002, $2.3 million in 2001 and $2.2 million in 2000.

                We are obligated under additional operating leases for other operations and the use of warehouse space. The leases expire at various dates through December 31, 2015. Five of the leases provide for as

        45



        many as five options to renew for five years each. During the years ended December 31, 2002, 2001 and 2000, aggregate rent expense under these leases was $3.8 million, $5.1 million and $5.0 million, respectively.

                In March 2000, we entered into a capital lease agreement for $5.3 million for our aircraft. We are obligated to make monthly payments of $0.1 million, with a balloon payment of $3.2 million in February 2005. We have the option of purchasing the aircraft following the expiration of the lease agreement for a nominal amount.

                Guarantees and Off-Balance Sheet Risk.    In the normal course of business, we are a party to certain guarantees and financial instruments with off-balance sheet risk, such as standby letters of credit and indemnifications, which are not reflected in the accompanying consolidated balance sheets. At December 31, 2002, we had $1.9 million in standby letters of credit pledged as collateral to support the lease of our primary distribution facility in St. Louis, a United States customs bond, certain product purchases and various workers' compensation obligations. These agreements mature at varying dates through October 2003 and may be renewed as circumstances warrant. Such financial instruments are valued based on the amount of exposure under the instruments and the likelihood of performance being required. In our past experience, no claims have been made against these financial instruments nor do we expect any losses to result from them. As a result, we determined the fair value of such instruments to be zero and have not recorded any related amounts in our consolidated financial statements.

                We are the lessee under a number of equipment and property leases, as described in Note 13 of the notes to our consolidated financial statements included elsewhere in this prospectus. It is common in such commercial lease transactions for us to agree to indemnify the lessor for the value of the property or equipment leased should it be damaged during the course of our operations. We expect that any losses that may occur with respect to the leased property would be covered by insurance, subject to deductible amounts. As a result, we determined the fair value of such instruments to be zero and have not recorded any related amounts in our consolidated financial statements.

        Related Party Transactions

                See "Certain Relationships and Related Transactions" for information regarding related party relationships and transactions.

        Recently Issued Accounting Standards

                The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS No. 145 updates, clarifies and simplifies existing accounting pronouncements. We are required to adopt SFAS No. 145 during the first quarter of 2003. Adoption will not have a material impact on our consolidated financial statements. However, SFAS No. 145 could affect how we record certain expenses after December 31, 2002.

                In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred rather than when a company commits to such an activity and also establishes fair value as the objective for initial measurement of the liability. SFAS No. 146 will be adopted for exit or disposal activities that are initiated after December 31, 2002. Adoption will not have a material impact on our consolidated

        46



        financial statements. However, SFAS No. 146 will affect how we recognize exit costs after December 31, 2002.

                In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Certain provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002 and other provisions are effective for fiscal years beginning after December 15, 2002. Unless we elect in the future to change from the intrinsic value method to the fair value method of accounting for stock-based employee compensation, SFAS No. 148 will not have a material impact on our consolidated financial statements.

                In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). The disclosure requirements of FIN 45 are effective for our consolidated financial statements for the year ended December 31, 2002. For applicable guarantees issued after January 1, 2003, FIN 45 requires that a guarantor recognize a liability for the fair value of obligations undertaken in issuing guarantees.

                In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46), which requires the consolidation of variable interest entities, as defined. FIN 46 is applicable to financial statements to be issued after 2002; however, disclosures are required currently if any variable interest entities are expected to be consolidated. The adoption of FIN 46 will not have a material effect on our consolidated financial statements as we do not have any variable interest entities that will be consolidated as a result of FIN 46.

        Interest Rates and Raw Materials Prices

                In the normal course of business, we are exposed to fluctuations in interest rates and raw materials prices. We have established policies and procedures that govern the management of these exposures through the use of derivative hedging instruments, including swap agreements. Our objective in managing our exposure to such fluctuations is to decrease the volatility of earnings and cash flows associated with changes in interest rates and certain raw materials prices. To achieve this objective, we periodically enter into swap agreements with values that change in the opposite direction of anticipated cash flows. Derivative instruments related to forecasted transactions are considered to hedge future cash flows, and the effective portion of any gains or losses is included in accumulated other comprehensive income until earnings are affected by the variability of cash flows. Any remaining gain or loss is recognized currently in earnings.

                We have formally documented, designated and assessed the effectiveness of transactions that receive hedge accounting treatment. The cash flows of the derivative instruments are expected to be highly effective in achieving offsetting cash flows attributable to fluctuations in the cash flows of the hedged risk. Changes in the fair value of agreements designated as derivative hedging instruments are reported as either an asset or liability in the accompanying consolidated balance sheets with the associated unrealized gains or losses reflected in accumulated other comprehensive income. As of December 31, 2002 and 2001, unrealized losses of $32,000 and $0.5 million, respectively, related to derivative instruments designated as cash flow hedges were recorded in accumulated other comprehensive income. Such instruments at December 31, 2002 represent hedges on forecasted purchases of raw materials during the first half of 2003 and are scheduled to mature by May 2003. The

        47



        amounts are subsequently reclassified into cost of goods sold in the same period in which the underlying hedged transactions affect earnings.

                If it becomes probable that a forecasted transaction will no longer occur, any gains or losses in accumulated other comprehensive income will be recognized in earnings. We have not incurred any gains or losses for hedge ineffectiveness or due to excluding a portion of the value from measuring effectiveness. We do not enter into derivatives or other hedging arrangements for trading or speculative purposes.

                The following table summarizes our derivative hedging contracts as of December 31, 2002:

        Number of
        Contracts

         Maturity Date
         Notional Amount
        in Tons

         Weighted
        Average
        Contract
        Price

         Contract Value
        Upon Effective
        Contract Date

         Contract
        Value at
        December 31,
        2002

         Gain (Loss) at
        December 31,
        2002

         
        3 January 30, 2003 14,500 $133.00 $1,928,500 $1,916,465 $(12,035)
        3 February 28, 2003 15,000  135.00  2,025,000  2,010,000  (15,000)
        2 March 28, 2003 10,000  135.50  1,355,000  1,353,300  (1,700)
        1 April 24, 2003 5,000  137.00  685,000  681,650  (3,350)

           
            
         
         
         
        9   44,500    $5,993,500 $5,961,415 $(32,085)

           
            
         
         
         

                In April 2001, we entered into two interest rate swaps that fixed the interest rate as of April 30, 2001 for $75.0 million in variable rate debt under our senior credit facility. The interest rate swaps settled on April 30, 2002 and a derivative hedging loss of $0.5 million was reclassified from accumulated other comprehensive income into interest expense.

                The following table summarizes information about our debt instruments that are sensitive to changes in interest rates as of December 31, 2002. The table presents future principal cash flows and related weighted-average interest rates by expected maturity dates. Weighted average variable rates are based on implied forward rates in the yield curve at December 31, 2002 (dollars in thousands):

        Description

         2003
         2004
         2005
         2006
         2007
         Thereafter
         Total
         Fair Value
        Long-term debt:                        
         Fixed rate debt $ $ $ $ $ $150,000 $150,000 $151,500
          Average interest rate            9.875% 9.875%  
         Variable rate debt $9,222 $18,444 $168,439 $54,610     $250,715 $250,715
          Average interest rate  5.14% 5.60% 6.11% 6.53%        

        Exchange Rates

                International sales during the years 2000 through 2002 comprised less than 1% of total net sales. We do not use derivative instruments to hedge foreign currency exposures as substantially all of our foreign currency transactions are denominated in U.S. dollars.



        BUSINESS

                Operating as Spectrum Brands, we are the leading manufacturer and marketer of value-oriented products for the consumer lawn and garden care and insect control markets in the United States. Under a variety of brand names, we manufacture and market one of the broadest lines of pesticides in the industry, including herbicides and indoor and outdoor insecticides, as well as insect repellents, fertilizers, growing media and soils. Our value brands are targeted toward consumers who want products and packaging that are comparable or superior to, and at lower prices than, premium-priced brands, while our opening price point brands are designed for cost conscious consumers who want quality products. Our products are marketed to mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers. Our three largest customers are The Home Depot, Lowe's and Wal*Mart, which are leading and fast growing retailers in our larger segments.

                During the third quarter of 2002, we began reporting operating results using three reportable segments:

          Lawn and Garden(73% of 2002 net sales). This segment includesothers, dry, granular slow-release lawn fertilizers, lawn fertilizer combined withcombination and lawn control products, herbicides, water-soluble and controlled-release garden and indoor plant foods, plant care products, potting soils and other growing media products and insecticide products. This segment includes, among others, ourgrass seed. Our largest brands include Spectracide, Garden Safe, Sta-Green, Vigoro, Schultz and Bandini. We have exclusive brand arrangements for our Vigoro brand at The Home Depot and our Sta-Green Real-Killbrand at Lowe’s. We also sell our products in Canada where our brands include Wilson, So-Green, Greenleaf and No-Pest brands.

          Household(23% of 2002 net sales). This segment includes household insecticides and insect repellents that allow consumers to repel insects and maintain a pest-free household. This segment includes our Hot Shot, Cutter and Repel brands, as well as a number of private label and other products.

          Contract(4% of 2002 net sales). This segment includes our non-core products and various compounds and chemicals, such as cleaning solutions and other consumer products.

                We compete in the $2.8 billion consumer lawn and garden retail market and are benefiting from a shifting of consumer preferences toward value-oriented products. We believe a key growth factorGreen Earth in the lawn and garden retail market iscategories, and IB Nitrogen, Nitroform, Nutralene, S.C.U. and Organiform in the aging of the United States population, as consumers over the age of forty-five represent the largest segment offertilizer technology category. Our lawn and garden care product users and typically have more leisure time and higher levels of discretionary income than the general population. We also believe the growth in the home improvement center and mass merchandiser channels has increased the popularity of do-it-yourself activities, including lawn and garden projects.

        Competitive Strengths

                Our success is based on the following competitive strengths:

                Strong Relationships with Leading and Fast Growing Retailers.    Through our ability to "add value" for our retail customers, we have developed strong relationships with a number of leading national home centers and mass merchandisers. Three such retailers are our three largest customers—The Home Depot, Lowe's and Wal*Mart. These retailers each hold significant positions in the lawn and garden and household categories in which we compete and have together opened over 1,100 new stores in the last three years. As a result, we have been able to significantly increase our sales as these retailers have added new stores and captured greater market share.

                "One-Stop" Supplier.    We offer a broad product line of the value-oriented products that consumers demand as an alternative to premium-priced products. This product breadth, enhanced by our ability to create innovative products and to acquire and integrate products and businesses, improves our ability to be a "one-stop" supplier of branded, value-oriented products in both the lawn and garden and household categories for our customers.

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                In-Store Category Management.    We believe that our one-step distribution process, in which most shipments are made directly from our facilities to retail stores, and our direct in-store sales force enable us to manage customer relationships on a store-by-store basis better than other suppliers and help us compete aggressively with premium-priced suppliers for shelf space. Our sales representatives visit most home center locations on a weekly basis to merchandise shelf space, collect market data and educate in-store personnel about our products. This process facilitates regionally appropriate, real-time marketing and promotional decisions, helping to maximize store-level sales and profitability for categories which have a high degree of sensitivity to local weather patterns. In addition, our sales force helps us to identify emerging trends and develop products to meet consumers' needs.

                Broad Technology Portfolio.    We have close relationships with key global active ingredient suppliers and have access to a broad portfolio of chemistry due to our significant presence in the pesticide market. This broad-based access to technology enables us to develop products that differentiate between our various opening-price point offerings and our nationally distributed value brands while offering product efficacy that is competitive with premium-priced products.

                Strong Management Team.    Our senior management team has extensive industry experience and has grown our business by developing and introducing new products, expanding our distribution channels and acquiring new brands and products, while improving our operating efficiencies.

        Business Strategy

                We plan to build on our strengths and favorable industry trends to enhance our competitive position by implementing the following key elements of our business strategy:

                Enhance Relationships with Leading Retailers.    We seek to leverage our strong value brand position and operational expertise to continue to deliver more value to leading retailers than our competitors. We focus on enhancing retailers' profitability in selling our products by being a low-cost provider and leveraging our one-step distribution process. We are able to compete as a low-cost provider due to our efficient marketing programs, high level of vertical integration and significant distribution leverage. We currently manufacture and market opening price point brands for leading retailers such as Ace Hardware, Albertsons, Dollar General, The Home Depot, Lowe's, Target, Tru*Serv, Walgreens and Wal*Mart. We also believe our relationship as a supplier of "house brands" provides a basis for broadening our product offerings and we intend to seek out new strategies for enhancing our position with key customers.

                Leverage Our Operating Model.    We continually seek to build the strength of our distribution network and relationships with retailers. We have increased our sales and improved operating leverage by supplying complementary product lines to retailers. Our strategy is to continue to add new products either through new product development or by acquiring product lines.

          Organic Growth: Our new product development strategy is to introduce innovative products that have superior performance, easy-to-understand packaging, value pricing and that are technologically differentiated. Since 1999, we have developed over 200 new products. For example, our introduction of the Spectracide Triazicide products propelled the Spectracide brand to a leading position in the home center channel in 2002.

          Acquisitions: Our brand acquisition strategy is to selectively acquire product lines that can benefit from our position as a "house" supplier, strong distribution network, product development expertise, access to a broad technology portfolio and other competitive strengths. For example, we expect that the products we acquired in our Schultz and WPC Brands acquisitions should benefit from our distribution leverage and certain of the acquired fertilizer brands should help us enhance our existing relationships with key customers.

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                  Maintain and Enhance Technological Strength.    We plan to continue to focus on building and maintaining a broad technology portfolio to enhance product differentiation and to maintain product efficacy. By increasing scale, we seek to leverage our relationships with global active ingredient suppliers to maintain and expand our technologically advanced product offerings, with a focus on exclusive chemistry and new technology.

                  Focus and Coordinate Sales Efforts.    We have established four customer-focused platform teams that are comprised of dedicated executive, sales, marketing, supply chain and finance personnel. Three of these teams are located in the cities of our largest customers' headquarters while the fourth is based at our corporate headquarters to serve our other accounts. In addition, we have reorganized our direct retail sales force to improve service to key customers. This realignment, completed in 2002, allows us to provide separate, dedicated, individually tailored customer service to our key customers and should position us to respond more quickly and proactively to their specific needs.

                  Increase Supply Chain Efficiency.    We plan to leverage our greater purchasing power for raw materials and active ingredients resulting from our organic growth and acquisitions to seek improved prices and terms from suppliers. In addition, we intend to selectively in-source or out-source products, based on the cost, quality and reliability of available alternatives. Toward that end, we recently improved costs and reliability by acquiring one fertilizer manufacturing plant and leasing another plant, which allows us to manufacture much of our granular fertilizer product, as opposed to relying on outsourcing arrangements.

          Industry Overview

                  Retail sales of consumer lawn and garden products in the United States totaled approximately $2.8 billion during the year ended December 31, 2002. We believe that the industry will continue to grow over the next several years due to favorable demographic trends. According to a national, independent gardening survey conducted in 2001, approximately 85 million households in the United States, or 80% of all households in the United States, participate in some form of lawn and garden care activity. Moreover, consumers over the age of forty-five represent the largest segment of lawn and garden care product users and have more leisure time and higher levels of discretionary income than the general population. As the baby boom generation ages, this segment is expected to grow at a faster rate than that of the total population. We believe that this demographic trend is likely to increase the number of lawn and garden care product users which will contribute to continued growth of the industry.

          Our History

                  We were founded in 1969 and incorporated as a Delaware corporation in 1973. On January 20, 1999, UIC Holdings, L.L.C., which is owned by Thomas H. Lee Equity Fund IV, L.P. and its affiliates and some members of the management at that time, acquired substantially all of our capital stock in a recapitalization transaction. UIC Holdings, L.L.C. currently is the beneficial owner of approximately 84% of our capital stock on a fully diluted basis.

                  Acquisition of Brands.    In 1973, we acquired the assets of Spray Chem, a contract manufacturer of liquid and aerosol insecticides and herbicides. In 1985, we acquired Real-Kill and entered into the manufacture and distribution of branded products. In 1988, we formed our core businesses through the acquisition of certain assets of various businesses of Chesebrough-Ponds. The acquired brands included Spectracide, Hot Shot, Rid-a-Bug, Bag-a-Bug and No-Pest. The acquisition of these brands expanded our products to include a wide array of value- oriented indoor and outdoor pesticides. In 1994, we acquired assets and licensing rights relating to Cutter from Miles, Inc. In 1995, we acquired assets from Alljack Company and Celex Corporation, including certain licensing rights and certain manufacturing rights of Kmart's opening price point brands.

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                  On December 17, 2001, we advanced our strategic plan for growth in the consumer lawn and garden category by acquiring leading consumer fertilizer brands Vigoro, Sta-Green and Bandini, as well as acquiring licensing rights to the Best line of fertilizer products. These brands, which were formerly owned by or licensed to Pursell Industries, Inc., complement our consumer lawn, garden and insect control products.

                  Schultz Company.    On May 9, 2002, a wholly owned subsidiary of the company merged with Schultz, a manufacturer of horticultural products and specialty items and a distributor of potting soil, soil conditioners and charcoal. Schultz products are distributed primarily to retail outlets throughout the United States and Canada. The merger was executed to achieve economies of scale and synergistic efficiencies. As a result of the merger, Schultz became a wholly owned subsidiary of ours. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Recent Acquisitions."

                  WPC Brands, Inc.    On December 6, 2002, we acquired WPC Brands, a manufacturer and distributor of various leisure-time consumer products, including a full line of insect repellents, institutional healthcare products and other proprietary and private label products. The acquisition was executed to enhance our insect repellent product lines and to strengthen our presence at major customers. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Recent Acquisitions."

                  Strategic Relationship with Bayer.    On June 14, 2002, we and Bayer Corporation and Bayer Advanced, L.L.C., together referred to herein as Bayer, consummated a strategic transaction. The strategic transaction allows us to gain access to certain Bayer active ingredient technologies through a Supply Agreement and to perform certain merchandising services for Bayer through an In-Store Service Agreement. Because Bayer is both a competitor and a supplier, we are constantly reevaluating our relationship with Bayer and the value of this relationship to us, and may decide to terminate the In-Store Service Agreement at any time. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Recent Strategic Transactions."

                  Pursell Transaction.    On October 3, 2002, we signed an asset purchase agreement to acquire certain assets from Pursell. The assets acquired included certain inventory, equipment at two of Pursell's facilities and real estate at one of the two facilities. These facilities, located in Orrville, Ohio and Sylacauga, Alabama, previously fulfilled, and are expected to continue to fulfill, over half of our fertilizer manufacturing requirements.

                  Also on October 3, 2002, we signed a tolling agreement with Pursell, whereby Pursell will supply us with the remainder of our fertilizer needs. The tolling agreement requires us to be responsible for all raw materials, certain capital expenditures and other related costs for Pursell to manufacture and supply us with fertilizer products. The agreement provides us with early termination rights without penalty upon a breach of the agreement by Pursell or upon our payment of certain amounts as set forth therein. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Recent Strategic Transactions."

          Products

                  Under a variety of brand names, we manufacture and market one of the broadest lines of pesticides in our industry, including herbicides and indoor and outdoor insecticides, as well as insect repellents and fertilizers, growing media and soils. Most of our products are value oriented products, such as value brands and opening price point brands. Our value brands are targeted toward consumers who want products and packaging that are comparable or superior to, and sold at lower prices than, premium-priced brands, while our opening price point brands are designed for cost conscious

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          cost-conscious consumers who want quality products. The following is a description of each of our major products by segment:

          LawnElectric Shaving and GardenGrooming Products

           Our Lawn and Garden segment includes

          We market a broad line of brandselectric shaving and grooming products, including men’s rotary and foil shavers, women’s shavers, beard and mustache trimmers, nose and ear trimmers, haircut kits and related accessories. We market electric shaver accessories consisting of shaver replacement parts (primarily foils and cutters), pre-shave products and cleaning agents. Remington is the only brand of men’s electric shavers to offer both a foil-design product line and a variety of other value and private label products. Below is a description of some of these brands and products:

            Spectracide.    The Spectraciderotary-design product line primarily consists of outdoor insect control products and herbicides, but it also includes indoor insect control products, specialty items such as plant disease control and rose care products and regional products such as fire ant killer and Japanese beetle traps.

            Garden Safe.    Launched in 2002, the Garden Safe brand represents a broad line of lawn and garden products for environmentally conscious consumers.

            Schultz.    The Schultz brand represents a wide array of lawn and garden, plant care, potting soils and other growing media products.

            Vigoro.    Vigoro has a broad line of lawn and garden fertilizers. The product was established in 1924 and has been sold exclusively to The Home Depot since 1996.

            Sta-Green.    Sta-Green has a complete line of lawn and garden fertilizers and value-added soils. The product was established in 1904 and has primarily been sold to Lowe's since 1996 and also to select, typically smaller, lawn and garden distributors.

            Real-Kill.    In 1997, we repositioned Real-Kill by re-launching the brand almost exclusively at The Home Depot as its opening price point brand. It is now also sold at other retailers and consists of various indoor and outdoor pesticide and rodenticide products.

            No-Pest.    In 1997, we introduced No-Pest exclusively at Lowe's as its opening price point brand. The brand consists of various indoor and outdoor pesticide products.

            Other Value Brands.    We also manufacture and market regional value brands and private label products for many other retailers and produce pesticides and other chemicals under contracts for other customers.
          line.

          Household Insect Control

           We sell a broad range

          Our household insect control business is comprised of household insecticides and insect repellents and a number of private labelleading products that allow consumers to repel insects and other products. Below ismaintain a description of these brands and products.

            Hot Shot.    The Hot Shot product line consists ofpest-free household. Such products include household insecticides including items such as spider, roach and ant killers,killer, flying insect killers,killer, insect foggers, wasp and hornet killers,killer, flea and tick control products and roach and ant baits.

            Cutter.    The Cutter product We also manufacture and market a complete line providesof products in the insect repellent category that provide protection from insects, especially mosquitoes, through various aerosolfor the entire family. Such products include both personal repellents, such as application wipes, aerosols and direct application products,pump sprays, and area repellents, such as well asyard sprays, citronella candles torches and coils.torches. Our largest brands in the insect control business include Hot Shot, Cutter and Repel.

            Electric Personal Care Products

            Our hair care products consist of hair dryers, hairsetters, curling irons, hair crimpers and straighteners, hot air brushes and lighted mirrors. Our wellness products consist primarily of paraffin wax hand spas and foot spas.

            Portable Lighting

            We sell our portable lighting products under the Rayovac and VARTA brand names, under other brand names and under licensing arrangements with third parties. We offer a varietybroad line of battery-powered lighting products, including those marketed especiallyflashlights, lanterns and similar portable devices, for use on all members of the family, including children.

            Repel.    The Repel brand was obtained through our acquisition of WPC Brandsretail and offers an array of personal insect repellent products marketed primarily to outdoorsmen.
          industrial markets.

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            ContractSales and Distribution

             The Contract segment includes our non-core products and various compounds and chemicals, such as cleaning solutions and other consumer products.

            Customers

            We sell our products through all major retaila variety of trade channels, including retailers, wholesalers and distributors, hearing aid professionals, industrial distributors and OEMs. Our pro forma sales to Wal-Mart Stores, Inc. for our 2004 fiscal year represented approximately 18% of our pro forma consolidated net sales for fiscal 2004 and no other customer accounted for more than 10% of our consolidated net sales in fiscal 2004.

            North America

            We align our internal sales force in North America by distribution channel. We maintain separate sales forces primarily to service (i) our retail sales and distribution channels, (ii) our hearing aid professionals and (iii) our industrial distributors and OEM sales and distribution channels. In addition, we use a network of independent brokers to service participants in selected distribution channels.

            Europe/ROW

            We maintain a separate sales force in Europe/ROW and utilize an international network of distributors to promote the sale of all of our products. We have sales operations throughout Europe/ROW organized by three sales channels: (i) food/retail, which includes mass merchandisers, discounters, drug and food stores and non-food stores; (ii) special trade, which includes clubs (cash/carry), consumer electronics stores, department stores, photography stores, hearing aid professionals and wholesalers/distributors, and (iii) industrial, government and OEMs.

            Latin America

            We align our internal sales force in Latin America by distribution channel or geographic territory. We sell primarily to large retailers, wholesalers, distributors, food and drug chains, and retail outlets in both urban and rural areas. In some countries where we do not maintain a separate internal sales force, we sell to distributors who sell our products to all channels in their particular market.

            United and Tetra

            We sell our lawn and garden, pet supplies and household insect control products to mass merchandisers, home improvement centers, mass merchandisers, hardware, stores, grocery and drug stores, wholesale clubschains, nurseries and garden centers.centers, pet superstores, independent pet stores and other retailers.

            Manufacturing, Raw Materials and Suppliers

            The principal raw materials used to produce our products—including zinc powder, electrolytic manganese dioxide powder, steel and granular urea—are sourced on a global or regional basis, and the prices of those raw materials are susceptible to price fluctuations due to supply/demand trends, energy costs, transportation costs, government regulations and tariffs, changes in currency exchange rates, price controls, the economic climate and other unforeseen circumstances. We are heavily dependent on The Home Depot, Lowe'sregularly engage in forward purchase and Wal*Marthedging transactions in an attempt

            to effectively manage our raw materials costs for a substantial portionthe next six to twelve months. We believe we will continue to have access to adequate quantities of these materials.

            Substantially all of our sales. The sales to these customers, as a percentage of net sales, were:

             
             Year Ended December 31,
             
             
             2002
             2001
             2000
             
            The Home Depot 33%25%24%
            Lowe's 23%22%19%
            Wal*Mart 18%17%16%
             Total 74%64%59%

                    We manufacturerechargeable batteries and supplychargers, portable lighting products to hundreds of customers representing more than 70,000 retail stores across the United States and in select locations of Canada, Puerto Ricohair care, wellness and the Caribbean. Our strong position in the home improvement centerother personal care products, and mass merchandiser channels is a key element to our pastelectric shaving and future success.

            Seasonality

                    Our business is highly seasonal because ourgrooming products are manufactured by third party suppliers, primarily located in China and Japan. We maintain ownership of tooling and molds used primarily in the spring and summer seasons. For 2002, 2001 and 2000, approximately 69%, 71% and 73%, respectively,by many of our net sales have occurred in the firstsuppliers.

            We continually evaluate our facilities’ capacity and second quarters, resulting in higher net revenues and results of operations during those quarters. Our working capital needs, and correspondingly our borrowings, generally peak in the first and second quarters of each year.

            Backlog

                    Our backlog was $2.5 million as of December 31, 2002 and $0.3 million as of December 31, 2001. However, we do not believe that our backlog is a meaningful indicator of expected sales because of the short lead time between order entry and shipment. We expect our backlog to be filled within each approaching season, but there can be no assurance that backlog at any point in time will translate into sales in any particular subsequent period.

            Sales and Marketing

                    We conduct sales activities through our exclusive direct sales force, which consists of market sales managers and merchandisers and area sales managers. Market sales managers typically visit accounts weekly to merchandise shelves. In addition, we support certain products through employing a seasonal in-store sales force.

                    Our marketing team leads our new product development process and develops consumer support plans to help drive sales through our distribution network. To promote our products to consumers, we advertise using television, radio and print media, develop consumer promotions and engage in market research efforts. We expect our promotion expense in 2003 to be significantly greater than our historical levels asrelated utilization. As a result of new advertising campaignssuch analyses, we have closed a number of manufacturing facilities during the past five years. In general, we believe our existing facilities are adequate for our present and our acquisitions of Schultz and WPC Brands.currently foreseeable needs.

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            Research and Development

             We spent $1.3 million in 2002, $2.4 million in 2001 and $1.0 million in 2000 on research and development activities.

            Our research and development focusesstrategy is focused on applied research using the strength and knowledgenew product development, performance improvements of our active ingredient suppliersexisting products and strategic active ingredient partners.cost reductions in, and enhancements of, our packaging. We plan to continue to use our strong brand names, established customer relationships and significant research and development efforts to introduce innovative products that offer enhanced value to consumers through new designs and improved functionality.

            On a pro forma basis, we invested approximately $19.9 million in product research and development for our 2004 fiscal year. These investments were supplemented by funds received from U.S. government contracts. These contracts enable us to investigate additional development opportunities.

            Patents and Trademarks

            We own or license from third parties a considerable number of patents and patent applications throughout the world for battery and electric personal care product improvements, additional features and manufacturing equipment. We have developed over 200 new products since 1999.a license through March 2022 to certain alkaline battery designs, technology and manufacturing equipment from Matsushita to whom we pay a royalty.

            Raw MaterialsWe also use and Suppliersmaintain a number of trademarks in our business, including RAYOVAC®, VARTA®, REMINGTON®, MAXIMUM®, MAXIMUM PLUS, I-C3, RENEWAL®, LOUD ‘N CLEAR®, PRO LINE®, RAYOVAC ULTRA®, WORKHORSE®, ROUGHNECK®, SPORTSMAN®, AIR 4000®, XCELL®, EXTRA®, PRODIGY®, MICROSCREEN®, MICROFLEX®, PRECISION®, REMINGTON TITANIUM, SMOOTH & SILKY®, SPECTRACIDE®, TRIAZICIDE®, TRIPLESTRIKE, SPECTRACIDE TERMINATE®, SPECTRACIDE PRO®, HOT SHOT®, GARDEN SAFE®, SCHULTZ, RID-A-BUG®, BAG-A-BUG®, REAL-KILL®, NO-PEST®, REPEL®, VIGORO®, STA-GREEN®, BANDINI®, WILSON®, SO-GREEN®, GREENLEAF®, GREEN EARTH®, IB NITROGEN®, NITROFORM®, NUTRALENE®, S.C.U.®, ORGANIFORM®, CUTTER®, MARINELAND®, PERFECTO®, INSTANT OCEAN®, REGENT®, 8-IN-1®, NATURE’S MIRACLE®, DINGO®, WILD HARVEST®, ONE EARTH®, LAZY PET®, JUNGLETALK®, TETRA®, TETRAMIN®, TETRAFIN®, TETRAPOND®, WHISPER® and AQUASAFE®. We rely on both registered and common law trademarks worldwide to protect our trademark rights. The Rayovac, Remington and VARTA trademarks are also registered in countries outside the U.S., including in Europe, Latin America and Asia. As a result of our acquisition of Microlite S.A. in May 2004, we now own the Rayovac trademark in Brazil. We also license the PETERS® and PETERS PROFESSIONAL® trademarks from The Scotts Company, CIL® trademarks from ICI Canada Inc., PLANT-PROD® trademarks from Plant Products Co. Ltd. and PICKSEED® trademarks from Pickseed Canada Inc.

             

            As a result of the October 2002 sale by VARTA AG of substantially all of its consumer battery business to Rayovac and VARTA AG’s subsequent sale of its automotive battery business to Johnson Controls, Inc., we became the owner of the VARTA trademark in the consumer battery category and Johnson Controls acquired

            ownership rights to the trademark in the automotive battery category. VARTA AG and its VARTA Microbatteries subsidiary continue to have ownership rights to use the trademark with travel guides, industrial batteries and micro batteries. The primary componentsfour owners of the VARTA trademark are parties to a Trademark and Domain Names Protection and Delimitation Agreement that governs ownership and usage rights and obligations of the parties relative to the trademark.

            As a result of the common origins of the Remington entity we acquired and Remington Arms Company, Inc., the Remington trademark is owned by us and by Remington Arms, each with respect to its principal products as well as associated products. As a result of our acquisition of Remington, we own the Remington trademark for electric shavers, shaver accessories, grooming products include various specialty chemicals and packaging materials.personal care products, while Remington Arms owns the trademark for firearms, sporting goods and products for industrial use, including industrial hand tools. The terms of a 1986 agreement between Remington and Remington Arms provides for the shared rights to use the Remington trademark on products which are not considered “principal products of interest” for either company. We obtain raw materialsretain the Remington trademark for nearly all products which we believe can benefit from various suppliersthe use of the brand name in our distribution channels.

            On February 12, 2004, United’s largest customer and we currently consider our arrayUnited executed a licensing, manufacturing and supply agreement. Under the agreement, United will license its Vigoro and related trademarks and be the exclusive manufacturer and supplier for certain products branded with such trademarks from January 1, 2004, the effective date of alternative vendorsthe agreement, through December 31, 2008 or such later date as is specified in the agreement. Provided the customer achieves certain required minimum purchase volumes and other conditions during such period, and the manufacturing and supply portion of the agreement is extended for an additional three-year period as specified in the agreement, United will assign the trademarks to be adequate. No single vendor is consideredthe customer not earlier than May 1, 2009, but otherwise within thirty days after the date upon which such required minimum purchase volumes are achieved. The carrying value of such trademarks as of February 12, 2004 was approximately $16.0 million. If the customer fails to be essential to our operationsachieve the required minimum purchase volumes or meet other certain conditions, assignment may occur at a later date, if certain conditions are met. In addition, as a result of executing the agreement, United has modified the trademarks’ initial amortization period of forty years and we have never experiencedwill record amortization in a significant interruption of supply. Several of our agreementsmanner consistent with suppliers provideprojected sales activity over five years, because United believes the customer will achieve all required conditions by May 2009. Amortization expense was $2.7 million for price adjustments and some agreements provide exclusivity rights, subject to certain conditions.the twelve months ended December 31, 2004.

            Competition

             Each

            In our retail markets, companies compete for limited shelf space and consumer acceptance. Factors influencing product sales are brand name recognition, perceived quality, price, performance, product packaging and design innovation, as well as creative marketing, promotion and distribution strategies.

            The battery marketplace is highly competitive. Most consumer batteries manufactured throughout the world are sold by one of our segments operatefour global companies: Spectrum; Energizer, a subsidiary of Energizer Holdings, Inc.; Duracell, a division of The Gillette Company; and Matsushita (manufacturer of the Panasonic brand). We also face competition from the private label brands of major retailers, particularly in highly competitive marketsEurope. The offering of private-label batteries by retailers may create pricing pressure and compete againstmay also increase consumer perceptions that batteries are a numbercommodity product. Typically, private-label brands are not supported by advertising or promotion, and retailers sell these private label offerings at retail prices below competing brands. The main barriers to entry for new competitors are investment in technology research, cost of nationalbuilding manufacturing capacity and regionalthe expense of building retail distribution channels and consumer brands. We believe

            In the principal factors by which we compete are product quality and performance,U.S. alkaline battery category, Rayovac is positioned as a value brand strengthwhile Duracell and marketing. Energizer are positioned as premium brands. In Europe, the VARTA brand has premium positioning. In Latin America where lower disposable incomes prevail and zinc carbon batteries still outsell alkaline, Rayovac is positioned as a value brand.

            Our principal nationalprimary competitors for our Lawnin the lawn and Gardengarden and Householdhousehold segments include: The Scotts Company, which markets lawn and garden products under the Scotts, Ortho, Roundup, Miracle-Gro and Hyponex brand names; Bayer A.G., which markets lawn and garden products under the Bayer Advanced brand name; and Central Garden & Pet Company, which markets garden products under the AMDRO, IMAGE and Pennington Seed brand names.

            Our primary competitors in the electric shaving and grooming market are Koninklijke Philips Electronics NV (“Philips”) (which only sells and markets rotary shavers) and Braun (which only sells and markets foil shavers). Only Remington competes in both the foil and rotary segments.

            The pet supply industry is highly fragmented with over 500 manufacturers in the U.S., consisting primarily of small companies with limited product lines. Some of our largest competitors in this product category are Hartz and Central Garden & Pet Company.

            Our primary competitors in the household insect control market include: S.C. Johnson & Son, Inc., which markets insecticide and repellent products under the Raid and OFF! brand names; Bayer A.G.,The Scotts Company, which markets household insect control products under the Ortho brand name; and The Dial Corporation, which markets products under the Combat brand name.

            Our major competitors in the electric personal care market are Conair, Wahl and Helen of Troy. Companies that are able to maintain or increase the amount of retail shelf space allocated to their respective products can gain competitive advantage.

            Our primary competitors in the portable lighting category are Eveready and Maglite.

            Some of our major competitors have greater financial and other resources and greater overall market share than we do. They have committed significant resources to protect their own market shares or to capture market share from us in the past and may continue to do so in the future. In some key product lines, our competitors may have lower production costs and higher profit margins than we do, which may enable them to compete more aggressively in advertising and in offering retail discounts and other promotional incentives to retailers, distributors, wholesalers, and, ultimately, consumers.

            Seasonality

            We expect that the acquisitions of United and Tetra will reduce the seasonality of our business, which, prior to the acquisitions, was weighted heavily towards the Christmas season (Spectrum’s first quarter in its fiscal year). Demand for lawn and garden products typically peaks during the first six months of the calendar year (Spectrum’s second and third quarters in its fiscal year) and pet supplies sales remain fairly constant throughout the year. More evenly distributed consumer demand will help balance the seasonality in Spectrum’s business and working capital needs.

            Governmental Regulations and Environmental Matters

            Due to the nature of our operations, our facilities are subject to a broad range of federal, state, local and foreign legal and regulatory provisions relating to the environment, including those regulating the discharge of materials into the environment, the handling and disposal of solid and hazardous substances and wastes, and the remediation of contamination associated with the releases of hazardous substances at our facilities. We believe that compliance with the federal, state, local and foreign regulations to which we are subject will not have a material effect upon our capital expenditures, financial position, earnings and competitive position.

            From time to time, we have been required to address the effect of historic activities on the environmental condition of our properties, including without limitation, the effect of the generation and disposal of wastes, which are or may be considered hazardous. We have not conducted invasive testing to identify all potential

            environmental liability risks. Given the age of our facilities and the nature of our operations, there can be no assurance that material liabilities will not arise in the future in connection with our current or former facilities. If previously unknown contamination of property underlying or in the vicinity of our manufacturing facilities is discovered, we could be required to incur material unforeseen expenses. If this occurs, it may have a material adverse effect on our business, financial condition and results of operations. Although we are currently engaged in investigative or remedial projects at a few of our facilities, we do not expect that such projects will cause us to incur material expenditures; however, there can be no assurance that our liability will not be material.

            We have been, and in the future may be, subject to proceedings related to our disposal of industrial and hazardous material at off-site disposal locations or similar disposals made by other parties for which we are held responsible as a result of out relationships with such other parties. These proceedings are under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”) or similar state laws that hold persons who “arranged for” the disposal or treatment of such substances strictly liable for costs incurred in responding to the release or threatened release of hazardous substances from such sites, regardless of fault or the lawfulness of the original disposal. Liability under CERCLA is typically joint and several, meaning that a liable party may be responsible for all costs incurred in investigating and remediating contamination at a site. As a practical matter, liability at CERCLA sites is shared by all of the viable responsible parties. While we currently have no pending CERCLA or similar state matters, we may be named as a potentially responsible party at sites in the future and the costs and liabilities associated with these sites may be material.

            Certain of our products and facilities are regulated by the EPA, the FDA or other federal consumer protection and product safety regulations, as well as similar registration, approval and other requirements under state and foreign laws and regulations. For example, in the United States, all products containing pesticides must be registered with the EPA and, in many cases, similar state and foreign agencies before they can be manufactured or sold. The inability to obtain or the cancellation of any registration could have an adverse effect on our business, financial condition and results of operations. The severity of the effect would depend on which products were involved, whether another product could be substituted and whether our competitors were similarly affected. We attempt to anticipate regulatory developments and maintain registrations of, and access to, substitute chemicals and other ingredients. We may not always be able to avoid or minimize these risks.

            The Food Quality Protection Act established a standard for food-use pesticides, which is that a reasonable certainty of no harm will result from the cumulative effect of pesticide exposures. Under the Act, the EPA is evaluating the cumulative effects from dietary and non-dietary exposures to pesticides. The pesticides in certain of our products continue to be evaluated by the EPA as part of this exposure. It is possible that the EPA or a third party active ingredient registrant may decide that a pesticide we use in our products will be limited or made unavailable to us. For example, in 2000, Dow AgroSciences L.L.C., an active ingredient registrant, voluntarily agreed to a withdrawal of virtually all residential uses of chlorpyrifos, an active ingredient United used in its lawn and garden products under the Bayer Advantage brand name; Central Garden & Pet Company, which markets insecticide and garden products undername Dursban until January 2001. This had a material adverse effect on United’s operations resulting in a charge of $8.0 million in 2001. We cannot predict the AMDRO and IMAGE brand names; The Clorox Company, which markets products underoutcome or the Combat and Black Flag brand names; and The Servicemaster Company, which markets lawn care, tree and shrub services underseverity of the TruGreen, ChemLawn and Barefoot service marks. Ineffect of the EPA’s continuing evaluations of active ingredients used in our Contract segment, we compete against a diverse group of companies. Some of our competitors in each segment have longer operating histories and greater financial resources, market recognition and research departments than we do.

            Intellectual Propertyproducts.

             We own and operate using a substantial number

            Certain of trademarks and trade names including the following: Spectracide, Spectracide Triazicide, Spectracide Terminate, Hot Shot, Garden Safe, Schultz, Rid-a-Bug, Bag-a-Bug, Real-Kill, No-Pest, Repel, Gro Best, Vigoro, Sta-Green and Bandini, as well as the licensing rights to the Best line of fertilizer products. We also license certain Cutter trademarks from Bayer A.G. and certain Peters and Peters Professional trademarks from The Scotts Company. These licenses are royalty-free, perpetual and exclusive.

            Employees

                    As of December 31, 2002, we had approximately 725 full-time employees. Approximately 300 of our employees are covered by a collective bargaining agreement with the Finishers, Maintenance Painters, Industrial and Allied Workers Local Union 980, AFL-CIO which expires in August 2005. We consider our current relationship with our employees, both unionized and non-unionized, to be good.

            Environmental and Regulatory Considerations

                    We are subject to federal, state, local and foreign laws and regulations governing environmental, health and safety matters. Our manufacturing operations are subject to requirements to regulate air emissions, wastewater discharge, waste management and cleanup of contamination. Based on assessments conducted by independent environmental consultants, we believe we are generally and

            55



            materially in compliance with these requirements. We may be subject to fines or penalties if we fail to comply with these requirements. We do not anticipate incurring material capital expenditures for environmental control facilities in 2003 or 2004.

                    Our pesticide products must be reviewed and registered by the U.S. EPA and similar state agencies or, in foreign jurisdictions, by foreign agencies, before they can be marketed. We devote substantial resources to maintaining compliance with these registration requirements. However, if we fail to comply with the regulatory requirements, registration of the affected pesticide could be suspended or canceled, and we could be subject to fines or penalties. Additionally, under the Food Quality Protection Act of 1996, the U.S. EPA is in the process of re-registering all pesticides and is requiring active ingredient suppliers and formulators to supply the U.S. EPA with additional data regarding their pesticides. Where possible, we are coordinating with trade associations and suppliers to reduce the costs of developing this data. While we can not estimate the ultimate costs of these activities nor can we control the scope of information that may be required by the U.S. EPA, we currently estimate that the costs associated with these activities could total approximately $0.2 million annually for the next several years.

                    Our fertilizer products must be reviewed and registered by each state prior to sale. Each state typically reviews the weight of the product and the accuracy of the analysis statement on the packaging. Other consumer products we market are subject to the safety requirements of the Consumer Product Safety Commission. If we fail to comply with any of these requirements, we could be suspended or prohibited from marketing the related product.

                    Our healthcare products and packaging materials are subject to regulations administered by the Food and Drug Administration (FDA).FDA. Among other things, the FDA enforces statutory prohibitions against misbranded and adulterated products, establishes ingredients and manufacturing procedures for certain products, establishes standards of identity for certain products, determines the safety of products and establishes labeling standards and requirements. In addition, various states regulate these products by enforcing federal and state standards of identity for selected products, grading products, inspecting production facilities, and imposing their own labeling requirements.

             As

            It is difficult to quantify with certainty the potential financial impact of December 31, 2002,actions regarding expenditures for environmental matters, particularly remediation, and future capital expenditures for environmental control equipment. Nevertheless, based upon the information currently available, we believe we were substantially in compliance with applicablethat our ultimate liability arising from such environmental and regulatory requirements.

            Litigation

                    We are involved from time to time in routine legal matters, and other claims incidental to the business. When it appears probable in management's judgment that we will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably estimated, liabilities are recorded in the consolidated financial statements and charges are recorded against earnings. We believe that the resolution of such routine matters and other incidental claims, taking into account established reserves and insurance, willaccruals, should not have abe material adverse impact onto our consolidatedbusiness or financial position or results of operations.condition.

            56



            Manufacturing, Distribution and Other FacilitiesProperties

             Our

            The following table lists our primary facilities are as follows:owned or leased manufacturing, packaging, and distribution facilities:

            Location

            Approximate Area of Square Feet
            Lease Expiration
            (or Ownership)

            Primary Business Segment
            Served

            Description

            Facility


            Function


            Square Footage

            North America

            Fennimore, Wisconsin(1)

            Alkaline Battery Manufacturing176,000

            Portage, Wisconsin(1)

            Zinc Air Button Cell & Lithium Coin Cell Battery Manufacturing & Foil Shaver Component Manufacturing101,000

            Dixon, Illinois(2)

            Packaging & Distribution of Batteries and Lighting Devices & Distribution of Electric Shaver & Personal Care Devices576,000

            Nashville, Tennessee(2)

            Distribution of Batteries, Lighting Devices, Electric Shaver & Personal Care Devices266,700

            St. Louis, MO(1)Missouri(2)

            United Corporate Headquarters  79,20012/13/12AllCorporate headquarters.

            Vinita Park, MO—Missouri—Plant I

            32,800Year-to-year through 12/31/05I(2)

              Household and Contract Production Facility32,800

            Vinita Park, Missouri—Plant II(2)

              Production facility.
            Vinita Park, MO—Plant IIFacility  86,000
            Year-to-year through 12/31/10

            Vinita Park, Missouri—Plant III(2)

              AllHousehold Production facility.
            Vinita Park, MO—Plant IIIFacility and Warehouse  88,000
            Year-to-year through 12/31/10

            Vinita Park, Missouri(2)

              HouseholdProduction facility and warehouse.
            Vinita Park, MOWarehouse  86,000
            Year-to-year through 12/31/10

            Vinita Park, Missouri(2)

              AllWarehouse  Warehouse.165,300

            Vinita Park, Missouri(2)

            Storage53,500

            Bridgeton, MO(2)Missouri(2)(3)

            Storage  75,000-150,000
            7/31/03

            Bridgeton, Missouri(2)

              AllTemporary storage.
            Bridgeton, MO(3)Distribution Center  403,20012/31/12AllDistribution center.
            Orrville, OH30,420Own

            Bridgeton, Missouri—Plant IV(2)

              Lawn and Garden Production Facility  Production facility.153,000
            Orrville, OH

            Akron, Ohio (2)

              20,000Distribution Center  Own400,000

            Orrville, Ohio(1)

              Lawn and Garden Production Facility  Distribution center.30,420
            Homesville, OH100,000-260,00011/30/04

            Orrville, Ohio(1)

              Lawn and Garden Distribution Center  Storage.20,000
            Sylacauga, AL

            Cincinnati, Ohio(2)

              35,000United Pet Group Corporate Headquarters  Month-to-month3,800

            Mentot, Ohio(2)

            Aquatics Production Facility88,000

            Noblesville, Indiana(1)

            Aquatics Production Facility400,000

            Hoover, Alabama(2)

              Lawn and Garden Office  Production facility.35,000

            Sylacauga, AL

            71,00010/02/06Alabama(2)

              Lawn and Garden Production Facility and Distribution Center71,000

            Hauppauge, New York(2)

            Specialty Pet Production Facility140,000

            Gainesville, Georgia(2)

              Distribution center.
            Jackson, WICenter  75,000126,000

            Brad, California(2)

              2/28/07Specialty Pet Production Facility  Household and ContractProduction facility.66,000
            Earth City, MO153,0001/31/15Lawn and Garden

            Ontario, California(2)

              Distribution center.
            Allentown, PA40,00010/31/04AllDistribution center.
            Gainesville, GA126,00011/30/06AllDistribution center.
            Ontario, CACenter  61,000
            12/31/05

            Moorpark, California(2)

              AllAquatics Production Facility  Distribution center.177,000

            (1)
            During December 2002 and January 2003, we moved corporate personnel from three local locations into our new corporate headquarters.

            (2)
            Approximate square feet increases from 75,000 square feet during non-peak seasons to 150,000 square feet during peak seasons.

            (3)
            During December 2001, we finalized the consolidation of three local warehouses into this location. We recorded a $3.5 million charge during the fourth quarter of 2001 related to the warehouse consolidation project, primarily attributable to facility exit costs and resultant duplicate rent payments in 2002.

                    We believe our current facilities are generally well maintained and provide adequate production and distribution capacity for future operations. Our facilities primarily manufacture five types of product categories: aerosols, liquids, baits, water-soluble fertilizers, and granular fertilizers. Our typical manufacturing process consists of four stages: batch, fill, label and pack. We currently operate aerosol, liquid, bait, water-soluble fertilizer and granular fertilizer production lines. Our production lines are flexible and can operate at a variety of filling speeds and produce multiple shipping configurations. We also selectively outsource the manufacturing of certain of our products to contract manufacturers. Periodically, we evaluate the need to reposition our portfolio of products and facilities to meet the needs of the changing markets we serve.



            MANAGEMENT

            Directors

                    The following table presents the members of the Board of Directors of United Industries Corporation. All directors are elected annually.

            Directors

            Position(s)
            Robert L. Caulk

            Hazelton, California(2)

              Chairman of the Board of Directors; President and Chief Executive Officer
            Daniel J. JohnstonSpecialty Pet Production Facility  Director; Executive Vice President and Chief Financial Officer88,000
            C. Hunter Boll*

            Brantford, Ontario(1)

              Director
            Charles A. Brizius*United Corporate Headquarters, Warehouse  Director140,000
            John W. Froman

            Woodstock, Ontario(1)

              Director
            David A. JonesSoils and Horticultural Facility  Director100,000
            Gary M. Rodkin*

            Putnam, Ontario(1)

              Director
            Scott A. SchoenBlend, Pack and Warehouse Facility  Director125,000

            *
            Member of the Audit Committee.

                    The following presents biographical information with respect to each of the directors listed above as of March 31, 2003.

                    Robert L. Caulk, 51, joined United Industries in November 1999 as President and Chief Executive Officer. He was elected as Chairman of the Board of Directors during 2001. Prior to joining United Industries, Mr. Caulk spent over four years from 1995 to 1999 as the President and Executive Vice President of Clopay Building Products Company, Inc., a marketer and manufacturer of residential and commercial garage doors. Between 1989 and 1994, Mr. Caulk was President-North America, Vice President/General Manager and Director of Corporate Acquisitions and Planning at Johnson Worldwide Associates, a manufacturer of outdoor recreational products. From 1979 to 1989, Mr. Caulk held various management positions at S.C. Johnson & Son, Inc. Mr. Caulk is also a director of Sligh Furniture Company. Mr. Caulk received a Bachelor of Arts degree from the University of Delaware and an M.B.A. from the Harvard Graduate School of Business Administration.

                    Daniel J. Johnston, 45, became a director in January 1999. He was promoted to Executive Vice President in 2001 and has served as Chief Financial Officer with responsibility over information systems and administration as a Senior Vice President since 1997. Mr. Johnston joined United Industries as Controller in 1994 and has also held various other positions with responsibility over manufacturing, distribution and product supply during his tenure. Prior to joining United Industries, Mr. Johnston spent five years from 1990 to 1994 at Cooper Industries, Inc. in various financial positions at its corporate office and Bussmann Division. Before joining Cooper Industries, Inc., he worked for nine years at Price Waterhouse, LLP from 1982 to 1990. Mr. Johnston received a B.S. in Accountancy from the University of Missouri-Columbia.

                    C. Hunter Boll, 47, became a director in January 1999 in connection with our recapitalization. Mr. Boll is a Managing Director of Thomas H. Lee Partners, L.P., a private equity investment firm, which he joined in 1986. In addition, Mr. Boll is a Principal Managing Director and Member of Thomas H. Lee Advisors, L.L.C., the general partner of Thomas H. Lee Partners, L.P., which controls the general partner of Thomas H. Lee Equity Fund IV, L.P. and Thomas H. Lee Equity Fund V, L.P. He is Vice President of T. H. Lee Mezzanine II, the investment advisor to ML-Lee Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II (Retirement Accounts), L.P. Mr. Boll also serves as a director of Cott Corporation, Metris Companies, Inc., and TransWestern Publishing, L.P. Mr. Boll received a

            58



            B.A. in Economics from Middlebury College and an M.B.A. from Stanford Graduate School of Business.

                    Charles A. Brizius, 34, became a director in January 1999 in connection with our recapitalization. Mr. Brizius is a Vice President of Thomas H. Lee Partners, L.P. a private equity investment firm, where he was employed from 1993 to 1995, and which he rejoined in 1997. Mr. Brizius is also a Member of Thomas H. Lee Advisors, L.L.C., the general partner of Thomas H. Lee Partners, L.P., which controls the general partner of Thomas H. Lee Equity Fund IV, L.P. and Thomas H. Lee Equity Fund V, L.P. From 1991 to 1993, Mr. Brizius worked at Morgan Stanley & Co. Incorporated in the Corporate Finance Department. He is also a director of Eye Care Centers of America, Inc., Houghton Mifflin Company and TransWestern Publishing, L.P. Mr. Brizius received a B.B.A. in Finance and Accounting from Southern Methodist University and an M.B.A. from the Harvard Graduate School of Business Administration.

                    John W. Froman, 49, became a director in November 2002. Mr. Froman has been with Circuit City Stores, a specialty retailer, since 1986 and currently serves as its Executive Vice President and Chief Operating Officer. Prior to joining Circuit City, Mr. Froman was President of The Contempos Division of Craddock-Terry Shoe Corporation and, prior to that, Manager of U.S. Merchandising for Avon Products, Inc.

                    David A. Jones, 53, became a director in January 1999 and served as Chairman of the Board of Directors from June 1999 until 2001. Mr. Jones has been the President, Chief Executive Officer and Chairman of the Board of Directors of Rayovac Corporation, a consumer battery and lighting device company, since March 1996. Between February 1995 and March 1996, Mr. Jones was Chief Operating Officer, Chief Executive Officer and Chairman of the Board of Directors of Thermoscan, Inc. From 1989 to 1994, he served as President and Chief Executive Officer of The Regina Company, a manufacturer of vacuum cleaners and other floor care equipment. Mr. Jones is also a director of Tyson Foods.

                    Gary M. Rodkin, 50, became a director in February 2002. He has served as the Chairman and CEO of PepsiCo Beverages and Foods, a newly created $10 billion division of PepsiCo, Inc. which combines the Pepsi-Cola, Gatorade, Tropicana and Quaker Foods business units in the United States and Canada, since June 2002. Prior positions at PepsiCo include President and CEO Pepsi-Cola North America and President and CEO Tropicana. Before joining Tropicana in 1995, Mr. Rodkin held positions of increasing responsibility at General Mills, Inc. from 1979 to 1995, including President of Yoplait-Colombo.

                    Scott A. Schoen, 44, became a director in January 1999 in connection with our recapitalization. Mr. Schoen is a Managing Director of Thomas H. Lee Partners, L.P., a private equity investment firm, which he joined in 1986. In addition, Mr. Schoen is a Principal Managing Director and Member of Thomas H. Lee Advisors, L.L.C., the general partner of Thomas H. Lee Partners, L.P., which controls the general partner of Thomas H. Lee Equity Fund IV, L.P. and Thomas H. Lee Equity Fund V, L.P. He is Vice President of T. H. Lee Mezzanine II, the investment advisor to ML-Lee Acquisition Fund II, L.P. and ML-Lee Acquisition Fund II (Retirement Accounts), L.P. He is also a director of Affordable Residential Communities, Syratech Corporation, TransWestern Publishing, L.P., Wyndham International Inc., Axis Capital Holdings and several private corporations. Mr. Schoen received a B.A. in History from Yale University, a J.D. from Harvard Law School and an M.B.A. from the Harvard Graduate School of Business Administration.

            59



            Executive Officers

                    The following table presents the executive officers of United Industries Corporation:

            Executive Officers

            Position(s)
            Robert L. Caulk

            Blacksburg, Virginia(1)

              Chairman of the Board of Directors; PresidentPet Supply Manufacturing, Assembly, Warehousing and Chief Executive Officer
            Daniel J. JohnstonShipping  Director; Executive Vice President and Chief Financial Officer180,000
            Kent J. DaviesSenior Vice President, Marketing
            Louis N. LadermanVice President, Secretary and General Counsel
            Robert S. RubinVice President, Corporate Development
            Steven D. SchultzSenior Vice President, Business Development
            Rick K. SpurlockVice President, Human Resources
            John F. TimonySenior Vice President, Operations

                    The following presents biographical information as of March 31, 2003 with respect to each of the executive officers listed above who do not also serve as directors.

                    Kent J. Davies,

            Europe/ROW 39, has served as the Senior Vice President, Marketing since April 2001 and assumed additional responsibilities for the Research & Development and Regulatory Affairs groups in March 2002. Prior to joining United Industries, Mr. Davies spent seven years with Kimberly-Clark Corporation serving in various marketing and general management capacities including General Manager, Global Strategic Marketing from 2000 to 2001, General Manager, Global Surgical Products Business from 1999 to 2000, and General Manager, Professional Heath Care—Europe, while based in Brussels, Belgium, from 1998 to 1999. Prior to joining Kimberly-Clark, Mr. Davies held marketing positions with the 3M Company and various field sales roles with General Mills, Inc. Mr. Davies received a B.A. in History from the University of California at Berkeley and an M.B.A. from the University of Minnesota.

                    Louis N. Laderman, 51, has served as the Vice President, Secretary and General Counsel since 2001. Prior to joining United Industries, from 1996 through 2000, Mr. Laderman was Vice President and General Counsel of Service Experts, Inc., an operator and consolidator of heating, air conditioning and ventilating contractors. Between 1976 and 1996, Mr. Laderman was engaged in the private practice of law in St. Louis, Missouri. Mr. Laderman received a B.S. in Industrial Management, with a minor in Industrial Engineering, from Purdue University and a J.D., cum laude, from St. Louis University.

                    Robert S. Rubin, 36, has served in various capacities since 1995, including Vice President, Corporate Development, responsible for Mergers, Acquisitions and Strategic Alliance efforts; Vice President and General Manager—Strategic Accounts, Retail Sales and Retail Marketing; and Vice President, Marketing, R&D and Regulatory Affairs. Mr. Rubin joined United Industries in 1995 as a Brand Manager. Prior to joining United Industries, Mr. Rubin spent three years from 1992 to 1995 at Ralston Purina in various marketing roles. From 1988 to 1992, Mr. Rubin was employed by the advertising agency DMB&B/St. Louis. Mr. Rubin received a B.S. in Business Administration from Miami University, Oxford, Ohio.

                    Steven D. Schultz, 55, has served as the Senior Vice President, Business Development since 2002. Prior to joining United Industries, Mr. Schultz worked at Schultz Company, where he started his career after college and held various management positions until 1982 when he became the President and Chief Executive Officer. Mr. Schultz maintained that position until Schultz merged with a wholly owned subsidiary of United Industries in May 2002. Mr. Schultz received a B.S. in Journalism from the University of Oklahoma.

                    Rick K. Spurlock, 43, has served as the Vice President, Human Resources since 2002. Prior to joining United Industries, Mr. Spurlock was Vice President of Human Resources at Pursell

            60



            Industries, Inc., a national lawn and garden company, from 2000 to 2002. From 1984 to 2000, Mr. Spurlock had management responsibilities in the areas of human resources, organization development and manufacturing with the Mechanics Tools Division of The Stanley Works, an international manufacturer of hand tools. Prior to joining The Stanley Works, he was employed by Cincinnati Milacron in various roles from 1980 to 1984. Mr. Spurlock received a B.S. in Business Management from Wright State University.

                    John F. Timony, 54, has served as the Senior Vice President, Operations since 2001. Prior to joining United Industries, Mr. Timony was Vice President—Operations for Rexam Medical Packaging from 1994 to 2000. From 1981 to 1994, Mr. Timony worked for Sterling Winthrop, Inc. in various engineering, management and executive positions, most recently as Vice President—Operations. Prior to joining Sterling Winthrop, Inc., Mr. Timony was an engineer for Container Corporation of America from 1978 to 1981 and a Lieutenant in the United States Navy from 1972 to 1978. Mr. Timony received a B.S. in Electrical Engineering from the United States Naval Academy, a Master's Degree in Electrical Engineering from the U.S. Naval Postgraduate School and an M.B.A. from Monmouth University.

            Summary Compensation Table

                    The following table presents information regarding the compensation paid to our Chief Executive Officer and each of the other four most highly compensated executive officers during 2002 (collectively, the Named Executive Officers) for services rendered for the years ended December 31, 2002, 2001 and 2000:



            Annual Compensation
            Long-Term
            Compensation


            Name and Principal Position

            Year
            Ended
            December 31,

            Salary
            ($)

            Bonus
            ($)

            Securities
            Underlying Stock Options (#)

            All Other
            Compensation
            ($)(1)

            Robert L. Caulk
            Chairman of the Board of Directors; President and Chief Executive Officer
            2002
            2001
            2000
            $

            500,000
            400,000
            400,000
            $

            320,000
            292,000
            120,000

            1,600,000
            $

            14,082
            5,100
            101,244
            (2)

            (3)

            Daniel J. Johnston
            Director; Executive Vice President and Chief Financial Officer


            2002
            2001
            2000



            335,000
            325,000
            300,000



            175,205
            259,875



            700,000



            7,091
            5,100
            5,100

            (4)


            Kent J. Davies
            Senior Vice President, Marketing


            2002
            2001
            2000



            205,500
            134,103



            105,995
            51,733



            200,000



            80,972
            66,705

            (5)
            (6)

            John F. Timony
            Senior Vice President, Operations


            2002
            2001
            2000



            229,000
            198,564



            117,172
            78,731



            200,000



            8,656
            15,636

            (7)
            (8)

            Robert S. Rubin
            Vice President, Corporate Development


            2002
            2001
            2000



            202,500
            193,000
            185,500



            103,883
            139,263
            40,588


            100,000
            100,000



            5,904
            5,100
            5,100

            (9)


            (1)
            Unless otherwise indicated, represents matching contributions under our 401(k) plan for each year of employment presented and reimbursement for long-term disability premiums in 2002.

            (2)
            Includes matching contributions under our 401(k) plan of $5,500 and reimbursement for long-term disability premiums of $8,582.

            (3)
            Includes relocation payments of $96,144.

            61


            (4)
            Includes matching contributions under our 401(k) plan of $5,500 and reimbursement for long-term disability premiums of $1,591.

            (5)
            Includes a loan forgiven of $75,000, matching contributions under our 401(k) plan of $5,500 and reimbursement for long-term disability premiums of $472.

            (6)
            Includes relocation payments of $66,705.

            (7)
            Includes matching contributions under our 401(k) plan of $5,500 and reimbursement for long-term disability premiums of $3,156.

            (8)
            Includes relocation payments of $15,636.

            (9)
            Includes matching contributions under our 401(k) plan of $5,500 and reimbursement for long-term disability premiums of $404.

            Stock Option Grants

                    The following table presents individual grants of options to the Named Executive Officers during the year ended December 31, 2002. No stock appreciation rights have been granted or are outstanding under any of our long-term equity plans.

             
             Individual Grants
              
            Name

             Number of Securities
            Underlying
            Options (#)(1)

             % of Total Options Granted to Employees in 2002
             Exercise Price ($/Share)
             Expiration Date
             Grant Date Present Value ($)(2)
            Robert L. Caulk   $  $
            Daniel J. Johnston       
            Kent J. Davies       
            John F. Timony       
            Robert S. Rubin 50,000 5.3% 3.25 1/31/12  55,950
              50,000 5.3% 5.00 8/06/12  64,450

            (1)
            Of the options granted during 2002, one-third vests over a four-year period at a rate of 25% on each anniversary of the grant date. The remaining two-thirds vest based on performance targets over a three to ten year period from the date of grant.

            (2)
            The grant date present value is estimated on the date of grant using the Black-Scholes option-pricing model and the following weighted average assumptions for the year ended December 31, 2002: expected volatility of zero, weighted average risk-free interest rate of 4.61%, dividend yield of zero and an expected life of ten years.

            62


            Aggregated Option Exercises and Option Value Table

                    The following table presents information concerning stock options held by the Named Executive Officers as of December 31, 2002:

            Name

            Shares Acquired Upon Exercise
            (#)(1)

            Value Realized ($)
            Number of Securities Underlying Unexercised Options (#)
            Exercisable/
            Unexercisable

            Value of Unexercised In-the-Money Options ($)
            Exercisable/
            Unexercisable(2)

            Robert L. Caulk$693,361/906,639$1,480,083/$2,119,917
            Daniel J. Johnston   

            Dischingen, Germany(2)

              265,001/434,999Alkaline Battery Manufacturing186,000

            Breitenbach, France(1)

            Zinc Carbon Battery Manufacturing165,000

            Washington, UK(2)

            Zinc Air Button Cell Battery Manufacturing & Distribution63,000

            Melle, Germany(1)

            Pet Food and Pet Care Manufacturing67,000

            Melle, Germany(2)

            Pet Food and Pet Care Distribution64,000

            Facility


            Function


            Square Footage

            Ninghai, China(1)

            Zinc Carbon & Alkaline Battery Manufacturing & Distribution274,000

            Ellwangen, Germany(2)

            Battery Packaging187,000

            Ellwangen, Germany(2)

            Battery Distribution125,000

            Latin America

               795,003/1,304,997
            Kent J. Davies

            Guatemala City, Guatemala(1)

              Zinc Carbon Battery Manufacturing  105,000

            Ipojuca, Brazil(1)

              50,000/150,000Zinc Carbon Battery Component Manufacturing  150,000/450,000100,000
            John F. Timony

            Jaboatoa, Brazil(1)

              Zinc Carbon & Alkaline Battery Manufacturing  516,000

            Manizales, Colombia(1)

              50,000/150,000Zinc Carbon Battery Manufacturing  150,000/450,000
            Robert S. Rubin47,001/152,999105,584/281,91791,000


            (1)
            As
            (1)Facility is owned.
            (2)Facility is leased.
            (3)Approximate square footage increases from 75,000 square feet during non-peak seasons to a maximum of 150,000 square feet during peak seasons.

            We also own, operate or contract with third parties to operate distribution centers, sales offices and administrative offices throughout the world in support of December 31, 2002, no outstanding options had been exercised.

            (2)
            There was no active trading market for our common stockbusiness. We lease our administrative headquarters, located in Atlanta, Georgia, and our primary research and development facility and North America headquarters, located in Madison, Wisconsin.

            Employees

            We have approximately 10,000 full-time employees worldwide on a combined basis as of December 31, 2002, thus fair value was determinedMay 25, 2005. Approximately 16% of our total labor force is covered by collective bargaining agreements. We believe that our Board of Directors, based primarily on valuations obtained from independent appraisals.

            relationship with our employees is good and there have been no work stoppages involving our employees since 1981 in North America and since 1991 in the United Kingdom.

            The 2001 Stock Option PlanLegal Proceedings

             We grant stock options to eligible employees, officers and directors pursuant to the 2001 Stock Option Plan, which is administered by the Compensation Committee of the Board of Directors. The 2001 Stock Option Plan superseded the 1999 Stock Option Plan which was terminated during 2001. Upon termination, all 3,096,000 issued and outstanding options under the 1999 Stock Option Plan were cancelled.

                    The 2001 Stock Option Plan provides for an aggregate of 5,800,000 shares of common stock that may be issued in the form of Class A voting common stock, Class B nonvoting common stock or a combination thereof. The options to purchase shares of common stockWe are subject to litigation from time and performance-based vesting schedules which generally range from four to ten years. Options are generally granted with an exercise price equal to or greater than the estimated fair value of common stock on the grant date and expire ten years thereafter. After termination of employment, unvested options are forfeited immediately, within thirty days or within one year, as provided under the plan agreement.

            Deferred Compensation Plans

                    We sponsor two deferred compensation plans for certain members of our senior management team. The plans are administered by the Compensation Committee of our Board of Directors. The plans provide for the establishment of grantor trusts for the purpose of accumulating funds to purchase shares of our common stock for the benefit of the plan participants. One plan allows participants to contribute an unlimited amount of earnings to the plan while the other provides for contributions of up to 20% of a participant's annual bonus. We do not provide matching contributions to these plans and have the right to repurchase shares held in the grantor trusts under certain circumstances. The common stock held in the grantor trusts was valued at $2.7 million as of December 31, 2002 and 2001.

            63



            Compensation of Directors

                    Messrs. Caulk and Johnston, who were the only directors that served as employees during 2002, did not receive any additional compensation for serving as a director or attending any meeting of the Board of Directors during 2002. During 2002, Mr. Jones received $30,000 in directorship fees and Mr. Rodkin received $25,833 in directorship fees. Messrs. Boll, Brizius and Schoen did not directly receive any directorship fees in 2002, but THL Equity Advisors, IV, LLC, the general partner of Thomas H. Lee Equity Fund IV, L.P., and Thomas H. Lee Capital, L.L.C., entities with whom Messrs. Boll, Brizius and Schoen are affiliated, received fees pursuant to a professional services agreement described below.

            Employment Agreements

                    Each of the Named Executive Officers is employed under a separate employment agreement. With the exception of Mr. Caulk's agreement, which expires on January 1, 2005, none of the agreements are effective for a specified period of time. The following table presents the position, annual salary and stock options received, as well as the maximum potential annual bonus available, to each of the Named Executive Officers, under his employment agreement, as amended:

            Name

             Position(s)
             Annual Base
            Salary

             Stock Options
            Received

             Annual Bonus
            Robert L. Caulk Chairman of the Board of Directors; President and Chief Executive Officer $500,000 1,600,000 Up to $500,000
            Daniel J. Johnston Director; Executive Vice President and Chief Financial Officer  335,000 700,000 Up to $201,000
            Kent J. Davies Senior Vice President, Marketing  205,000 200,000 Up to $123,300
            John F. Timony Senior Vice President, Operations  229,000 200,000 Up to $137,400
            Robert S. Rubin Vice President, Corporation Development  202,500 200,000 Up to $121,500

                    Each agreement provides for base salary and bonus increases at the discretion of the Compensation Committee of the Board of Directors. Annual incentive compensation is determined in accordance with the attainment of certain financial and performance targets. The agreements also provide that the officers are entitled to a monthly automobile allowance and to participate in any disability, pension or other benefit plan generally afforded to employees or executives.

                    Of the options issued to Mr. Caulk, 53,360 options vested immediately upon the grant date, 1,013,307 options vest over four years with 25% vesting on each anniversary after the grant date and the remaining 533,333 options vest based on performance targets through December 31, 2004, or otherwise after ten years from the grant date. Of the options issued to Mr. Johnston, 80,000 options vested immediately upon the grant date, 206,665 options vest over four years with 25% vesting on each anniversary after the grant date and 413,335 options vest based on performance targets through December 31, 2004, or otherwise after ten years from the grant date. Of the options granted to Messrs. Davies and Timony, one-third of the options vest over four years with 25% vesting on each anniversary after the grant date while the remaining two-thirds vest based on performance targets through December 31, 2004, or otherwise after ten years from the grant date. Of the options issued to Mr. Rubin, 4,000 vested immediately upon the grant date, 62,667 vest over four years with 25% vesting on each anniversary after the grant date and 133,333 options vest based on performance targets through December 31, 2004, or otherwise after ten years from the grant date.

            64



                    We may terminate an employment agreement at any time with or without cause. If an employment agreement is terminated by us for cause or by the executive without good reason, the terminated executive will be entitled to any unpaid base salary through the date of termination plus any unpaid incentive compensation. If we terminate the employment agreement without cause or if the executive terminates the employment agreement for good reason or the executive dies or becomes disabled, he will be entitled to any unpaid base salary through the date of termination, any unpaid incentive compensation and, under certain conditions, his base salary for a period subsequent to his termination, which shall in no case be greater than two years from his termination. Each employment agreement includes non-compete, non-solicitation and confidentiality provisions through the later of one year after the executive's date of termination or the last date that severance payments are owed to the executive.

            401(k) Plan

                    We have a 401(k) savings plan for substantially all of our employees with six months or more of continuous service. The 401(k) plan allows participants to defer a portion of eligible compensation on a tax-deferred basis. Under provisions of the plan, we match 50% of each employee's contributions up to 6% of gross earnings. The matching amount generally increases to 75% of such employee's contributions up to 6% of gross earnings after ten years of service. The aggregate matching contribution made by us was $0.7 million in 2002, $0.6 million in 2001 and $0.6 million in 2000.



            CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

            Professional Services Agreement

                    We have a professional services agreement with THL Equity Advisors IV, L.L.C. and Thomas H. Lee Capital, L.L.C., both affiliates of Thomas H. Lee Partners, L.P., which owns UIC Holdings, L.L.C., our majority owner. The professional services agreement has a term of three years, beginning January 20, 1999, and automatically extends for successive one-year periods thereafter, unless either party gives thirty days notice prior to the end of the term. Under the terms of the agreement, THL Equity Advisors IV, L.L.C. receives $62,500 per month for management and other consulting services provided to us and reimbursement of any related out-of-pocket expenses. During each of the years 2000 through 2002, we paid $0.75 million under this agreement, which is included in selling, general and administrative expenses in our consolidated statements of operations included elsewhere in this prospectus.

            Stockholders Agreement

                    We have entered into a stockholders agreement with UIC Holdings, L.L.C. and certain other stockholders. Under the agreement, our Class A common stockholders are required to vote their shares of common stock for any sale or reorganization that has been approved by our Board of Directors or a majority of the stockholders. The stockholders agreement also grants the stockholders the right to effect the registration of their common stock for sale to the public, subject to certain conditions and limitations. If we elect to register any of our equity securities under the Securities Act of 1933, as amended, the stockholders are entitled to notice of such registration, subject to certain conditions and limitations. Under the stockholders agreement, we are responsible to pay costs of the registration effected on behalf of the stockholders, other than underwriting discounts and commissions.

            Recapitalization Agreement

                    The recapitalization agreement with UIC Holdings, L.L.C., which we entered into in connection with our recapitalization in 1999, contains customary provisions, including representations and warranties with respect to the condition and operations of the business, covenants with respect to the conduct of the business prior to our recapitalization closing date and various closing conditions, including the continued accuracy of the representations and warranties. In general, these representations and warranties expired by April 15, 2000. However, representations and warranties with respect to (1) tax matters survive until thirty days after the expiration of the applicable statute of limitations; (2) environmental matters expired December 31, 2002; and (3) ownership of stock do not expire. The total consideration paid to redeem our common stock is subject to adjustments based on the excess taxes of our previous stockholders arising from our Section 338(h)(10) election under the IRS tax code.

                    Pursuant to our recapitalization, we redeemed a portion of our common stock held by certain stockholders and UIC Holdings, L.L.C. which were purchased by certain members of our senior management. In the recapitalization, certain executives collectively received an aggregate of $4.0 million in cash and an additional $2.7 million with which the officers purchased common stock through grantor trusts, which is reflected as a reduction of equity in our consolidated balance sheets included elsewhere in this prospectus.

            Loans to Chief Executive Officer

                    On September 28, 2001, we entered into a loan agreement with Robert L. Caulk, our President, Chief Executive Officer and Chairman of the Board of Directors, for $400,000 which matures on September 28, 2006 (the 2001 loan). On March 8, 2002, we entered into a loan agreement with Mr. Caulk for $51,685 which matures on March 8, 2007 (the 2002 loan). The purpose for both loans

            66



            was to allow Mr. Caulk to purchase shares of our common and preferred stock. Each loan bears interest at LIBOR on its effective date which is subsequently adjusted on each loan's respective anniversary date. The interest rate in effect for the 2002 loan was 1.96% as of December 31, 2002. The interest rate in effect for the 2001 loan was 1.81% as of December 31, 2002 and 2.59% as of December 31, 2001. Interest on both loans is payable annually, based on outstanding accrued amounts on December 31 of each year. Principal payments on both loans are based on 25% of the gross amount of each annual bonus awarded to Mr. Caulk and are immediately payable, except that principal payments on the 2002 loan are immediately payable only if all amounts due under the 2001 loan are fully paid. Any unpaid principal and interest on both loans is due upon maturity. The outstanding principal balance for the 2001 loan was $352,000 as of December 31, 2002 and $400,000 as of December 31, 2001. The outstanding principal balance of the 2002 loan was $51,685 as of December 31, 2002. The loans are reflected as a reduction of equity in the consolidated balance sheets included elsewhere in this prospectus.

            Leases with Stockholder and Former Executive and Member of the Board of Directors

                    We lease several of our operating facilities from Rex Realty, Inc., a company that is owned by stockholders who own, in the aggregate, approximately 5% of our common stock and is operated by a former executive and past member of the Board of Directors. The operating leases expire at various dates through December 31, 2010. We have options to terminate the leases on an annual basis by giving advance notice of at least one year. As of December 31, 2002, notice had been given on one such lease. We lease a portion of our operating facilities from the same company under a sublease agreement expiring on December 31, 2005 with minimum annual rentals of $0.7 million. We have two five-year options to renew this lease, beginning January 1, 2006. We believe that the terms of these leases are similar to those that could be obtained from a non-related party in the ordinary course of business. Rent expense under these leases was $2.3 millionThe amount of any liability with respect to any litigation to which we are now subject cannot currently be determined. Other than the matters set forth below, we are not party to any pending legal proceedings which, in 2002, $2.3 million in 2001 and $2.2 million in 2000.

            Equity Transactions with UIC Holdings, L.L.C.the opinion of management, are material or may be material to our business or financial condition.

             To raise equity to partially fund our merger with Schultz

            We are involved in May 2002, we issued 1,690,000 shares each of Class A voting and Class B nonvoting common stock to UIC Holdings, L.L.C., our majority owner, for $16.9 million.

                    In connection with the Pursell transaction in December 2001, we issued 22,600 shares of Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $22.0 million and stock purchase warrants for a 10-year option to purchase up to 3,150,000 shares each of our Class A voting and Class B nonvoting common stock for $3.25 per share, the fair value of the shares of our common stock at the time the warrants were issued as determined by the Board of Directors using a multiple of cash flows method.

                    In November 2000, we issued 15,000 shares of Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $15.0 million and stock purchase warrants for a 10-year option to purchase up to 1,600,000 shares each of our Class A voting and Class B nonvoting common stock for $2.00 per share, the fair value of the shares of our common stock at the time the warrants were issued as determined by the Board of Directors using a multiple of cash flows method.



            SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                    The following table presents certain information regarding the beneficial ownership of our Class A voting common stock by each of our directors and Named Executive Officers, by all of our directors and executive officers as a group, and by each owner of more than 5% of the outstanding shares of Class A voting common stock as of March 31, 2003. Each director and Named Executive Officer owns a number of shares of Class B nonvoting common stock equal to their number of owned shares of Class A voting common stock. Unless otherwise indicated, the mailing address for each principal stockholder, officer and director is c/o United Industries Corporation, 2150 Schuetz Road, St. Louis, Missouri 63146.

            Name of Beneficial Owner(1)

             Number of
            Class A Common
            Shares Owned

             Number of
            Class A Common
            Shares Receivable
            Upon Exercise of
            Stock Options

             Number of
            Class A Common
            Shares Receivable
            Upon Exercise of
            Stock Warrants

             Number of
            Class A Common
            Shares
            Beneficially
            Owned

             Percent
            of Class

             
            UIC Holdings, L.L.C. 27,158,000  4,673,957 31,831,957 84.2%
            Bayer Corporation(2) 3,072,000   3,072,000 9.3%
            Robert L. Caulk 125,000 800,000 13,938 938,938 2.8%
            C. Hunter Boll(3) 27,158,000  4,673,957 31,831,957 84.2%
            Charles A. Brizius(3) 27,158,000  4,673,957 31,831,957 84.2%
            John W. Froman  5,000  5,000 * 
            Daniel J. Johnston(4)  350,000 27,876 377,876 1.1%
            David A. Jones 100,000 300,000  400,000 1.2%
            Gary M. Rodkin  5,000  5,000 * 
            Scott A. Schoen(3) 27,158,000  4,673,957 31,831,957 84.2%
            Kent J. Davies  100,000 1,394 101,394 * 
            John F. Timony  100,000 4,181 104,181 * 
            Robert S. Rubin 3,500 100,000 2,091 105,591 * 
            All Directors and Executive Officers as a group
            (17 persons)(3)
             27,686,500 1,885,000 4,737,375 34,308,875 86.3%

            *
            Denotes less than one percent.

            (1)
            Beneficial owner as used herein means any person who, directly or indirectly, has or shares voting power or investment powerlegal proceedings with Philips in Europe with respect to a security. Alltrademark or other intellectual property rights Philips claims to have in relation to the appearance of the parties listed above are party to a stockholders agreement, pursuant to which they have agreed to vote their sharesfaceplate of the three-headed rotary shaver. In the first such legal proceeding in Europe, we were successful in having the Philips trademark at issue declared invalid by the High Court of Justice in the electionUnited Kingdom, a decision that was ultimately upheld by the European Court of directorsJustice (“ECJ”) in accordance with the terms2002. The ECJ held that a shape consisting exclusively of the stockholders agreement.shape of a product is unregisterable as a trademark (or is subject to being declared invalid if it has been registered as a trademark) if it is established that the essential functional features of the shape are attributable only to the technical result. Both prior to and following the favorable ECJ decision in 2002, litigation over the Philips trademarks ensued between Rayovac (or one of its distributors) and Philips in each of France, Italy, Spain, Portugal, Germany and again in the U.K. The numberstatus of shares indicatedthese various matters is as follows:

            In each of France (decision of June 13, 2003), Italy (decision of February 26, 2004) and Spain (decision of May 6, 2004), the respective First Instance Courts ordered that the various Philips trademarks be cancelled. The action in France commenced May 17, 2000, the action in Italy commenced May 15, 2000 and the action in Spain commenced March 12, 2003. These decisions have been appealed by Philips. In Portugal, Philips commenced a lawsuit against Rayovac’s distributor on December 12, 2003 seeking only an injunction to prevent the marketing and sale of the Remington shavers. The Commercial Court

            in Portugal (decision of June 23, 2004) denied the request for an injunction. Philips initially appealed this decision in Portugal, but dropped its appeal in April 2005.

            In the second U.K. lawsuit commenced by Philips on February 15, 2000, the U.K. High Court of Justice (decision of October 21, 2004) ordered that Philips’ trademarks at issue be cancelled. Philips has filed an appeal in this table does not includematter.

            In Germany, Philips commenced an action on September 5, 2002 seeking to enjoin the sharessale of Class A voting common stockRemington rotary shavers, money damages and other relief. On April 1, 2004, the court issued a ruling canceling two of the four Philips marks at issue in the case and narrowing the scope of enforceability of the two surviving marks. Each of Rayovac and Philips has appealed the decisions that arewere contrary to their respective positions. Previously, in a related action, the Cologne District Court granted an injunction in August, 2002 prohibiting the marketing and sale by Rayovac of the Remington rotary shavers, which injunction remains in place, and Rayovac has appealed the maintenance of the injunction in light of the April 2004 decision.

            In addition, The Gillette Company and its subsidiary, Braun GmbH, filed a complaint against Remington in the federal district court in Massachusetts on December 2, 2003 alleging that Remington’s “Smart Cleaner” automatic cleaning device on Remington’s Titanium Smart System shaving product infringes United States patent numbers 5,711,328 and 5,649,556 allegedly held by other stockholders subject toBraun (The Gillette Company and Braun GmbH v. Remington Consumer Products Company, LLC., Case No. 03 CV 12428 WGY). The complaint, which seeks injunctive relief and monetary damages, was served on Remington in March 2004. We have answered the stockholders agreement. Unless otherwise indicated,complaint denying all material allegations and we believe that each person has sole voting and investment power with regard to their shares listed as beneficially owned. The calculation of beneficial ownershipare vigorously defending ourselves in this matter. Trial is based on 33,143,000 shares of Class A voting common stock outstanding as of March 31, 2003.

            (2)
            The address for Bayer Corporation is 100 Bayer Road, Pittsburgh, PA 15205.

            (3)
            Includes 31,831,957 shares beneficially owned by UIC Holdings, L.L.C. UIC Holdings, L.L.C. is controlled by the Thomas H. Lee Equity Fund IV, L.P., which may therefore be deemed to be the beneficial owner of the shares held by UIC Holdings, L.L.C. Such shares may be deemed to be beneficially owned by Messrs. Boll, Brizius and Schoen, who are members of Thomas H. Lee Advisors, L.L.C., the general partner of Thomas H. Lee Partners L.P., which in turn is the managing member of THL Equity Advisors IV, L.L.C., which is the general partner of Thomas H. Lee Equity Fund IV, L.P. Each of Messrs. Boll, Brizius and Schoen disclaim beneficial ownership of such shares except to the extent of their pecuniary interest therein.

            (4)
            Deferred compensationtentatively scheduled for the purchasefall of 100,000 shares each of Class A voting and Class B nonvoting common stock for the benefit of Mr. Johnston are held under a grantor trust.

            68


            2005.


            DESCRIPTION OF CERTAIN INDEBTEDNESS

            Senior Credit FacilityFacilities

             Our

            General

            On February 7, 2005, we entered into a credit agreement which provides for senior credit facility, as amended as of March 19, 2003, was provided by Bank of America, N.A. (formerly known as NationsBanc, N.A.facilities (the “Senior Credit Facility”), Morgan Stanleyincluding term loan facilities and a revolving credit facility in an initial aggregate amount of approximately $1.03 billion. The Senior Funding, Inc.Credit Facility includes aggregate term loan facilities of approximately $730 million consisting of an approximately $540 million U.S. Dollar Term Loan B Facility, U.S. $140 million Euro Term Loan B Facility and U.S. $50 million Canadian Imperial Bank of Commerce and consists of (1) our $90.0Dollar Term Loan B Facility. The Senior Credit Facility also includes a $300 million revolving credit facility withwhich will be available until the sixth anniversary of the initial borrowing under the Senior Credit Facility (the “Closing Date”). The revolving facility includes a $10.0 million sublimit for swing line borrowings and a $5.0 million sublimit for the issuance of letters of credit, (2) a $75.0 million Term Loan A and (3) a $240.0 million Term Loan B. The restrictions on indebtedness and the mandatory prepayment obligations imposed by our senior credit facility by its terms do not applyswingline loans (“Swingline Loans”) denominated in U.S. dollars (“Dollars”) or Euros as well as foreign currency sublimits equal to the offeringU.S. dollar equivalent of €25,000,000 for borrowings in Euros, the notes. AsU.S. dollar equivalent of April 23, 2003, we had $199.1 million outstanding£10,000,000 for borrowings in Pounds Sterling and amounts to be determined, if any, for borrowings in Yuan.

            Rayovac (the “Borrower”) is the borrower under the Senior Credit Facility and certain of its subsidiaries, including Varta Consumer Batteries GmbH & Co. KGaA are co-borrowers. The Borrower can request up to five additional incremental term loan facilities in Dollars or, up to a Dollar equivalent sublimit in Euros, in an aggregate principal amount of not more than U.S. $500 million.

            Interest

            The interest rates per annum are calculated on a 360-day basis for London Interbank Offered Rate (“LIBOR”), the Eurocurrency Rate and Sterling LIBOR advances and on a 365-day basis for Base Rate (as defined below) advances. The interest rates per annum applicable to the Senior Credit Facility (other than in

            respect of Swingline Loans) are LIBOR (or the Eurocurrency Rate, Sterling LIBOR or the Canadian Screen Rate in the case of advances made in Euros, Pounds Sterling or Canadian Dollars, respectively) plus the Applicable Margin (as defined below) or, at our senior credit facility, including $196.1 million outstanding onoption in the case of advances made in Dollars, the base rate (which is the higher of (x) the Bank of America prime rate and (y) the Federal Funds rate plus 0.5% (the “Base Rate”)) plus the Applicable Margin. We expect that Applicable Margin will mean, (i) with respect to the U.S. Dollar Term Loan B $3.0 millionFacility and the Canadian Term Loan B Facility (a) for the first six months after the Closing Date, 2.00% per annum in the case of borrowingsEurocurrency Rate advances and $1.8 millionwith respect to U.S. Dollar Term Loan B Facility only, 1.00% per annum in lettersthe case of credit outstandingBase Rate advances and (b) thereafter, a percentage per annum to be determined in accordance with a pricing grid based on debt ratings, (ii) with respect to the Euro Term Loan B Facility, 2.50% per annum, and (iii) with respect to the Revolving Credit Facility, (a) for the first six months after the Closing Date, 2.25% per annum in the case of Eurocurrency Rate advances and in the case of advances made in Dollars only, 1.25% per annum in the case of Base Rate advances and (b) thereafter, a percentage per annum to be determined in accordance with a pricing grid based on the Leverage Ratio. Each Swingline Loan denominated in Dollars bears interest at the Base Rate plus the Applicable Margin for Base Rate advances under our revolving credit facility.the Revolving Credit Facility.

                    Repayment.    Outstanding commitments under our revolving credit, swing line

            We are required to pay a quarterly commitment fee that shall initially be 0.50% and thereafter, to be subject to stepdowns determined in accordance with a pricing performance grid, on the unused portion of the Senior Credit Facility. A quarterly letter of credit terminate andfee equal to the Applicable Margin on Revolving Credit LIBOR Advances is also payable on the stated amount of outstanding letters of credit.

            Maturity

            The term loan facilities are subject to repayment according to a scheduled amortization, with the final payment of all amounts outstanding, thereunder are to repaid in full on January 20, 2005.plus accrued and unpaid interest due seven years after the Closing Date. The revolving credit facility will terminate six years after the Closing Date.

            Prepayments

            The Senior Credit Facility provides for annual mandatory prepayments, over and above the normal amortization as a result of “Excess Cash Flow” (as defined, less certain operating expenditures including scheduled principal payments of long-term debt). The Senior Credit Facility also provides for other mandatory prepayments as a result of issuance of debt (excluding certain permitted indebtedness) and sales of certain assets above an annual threshold.

            Security and Guarantees

            The Senior Credit Facility is also subjectsecured by substantially all of our domestic assets and certain of our foreign assets. The Borrower’s obligations under the Senior Credit Facility are guaranteed by certain of our subsidiaries, including all domestic subsidiaries.

            Covenants

            The Senior Credit Facility contains financial covenants with respect to a clean-down period duringdebt which include maintaining minimum interest and maximum leverage ratios. In accordance with the agreement, the limits imposed by such ratios become more restrictive over time. In addition, the agreement restricts our ability to incur additional indebtedness, create liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures and merge or acquire or sell assets.

            Events of Default

            The Senior Credit Facility contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations,

            certain events of bankruptcy and insolvency, judgment defaults, failure of any guaranty or security document supporting the agreement to be in full force and effect, change of control and customary ERISA defaults.

            Incremental Term Facility

            On April 29, 2005, we entered into an amendment to the Senior Credit Facility pursuant to which the lenders thereunder agreed to increase their commitments by $500 million under an incremental term facility. The increased commitments consisted of: (i) an increase in the U.S. Dollar Term Loan Facility by an aggregate principal amount outstandingnot to exceed U.S. $115 million, (ii) an increase in the Canadian Dollar Term Loan Facility by an aggregate principal amount not to exceed the equivalent in Canadian dollars of $20 million and (iii) an additional Euro Term Loan Facility in an aggregate principal amount not to exceed the equivalent in Euros of U.S. $365 million. Borrowings under the revolving creditincremental term facility shall not exceed $10.0were used to (a) pay the existing holders of the equity interests of the Tetra the cash consideration for their shares, (b) refinance the existing indebtedness of Tetra and its subsidiaries and (c) pay transaction fees and expenses incurred in connection with the acquisition of Tetra.

            Senior Subordinated Notes Due 2013

            We currently have outstanding $350 million for 30 consecutive days during the period between Augustin aggregate principal amount of 8.5% Senior Subordinated Notes due 2013. The notes pay interest semi-annually on April 1 and November 30October 1 of each year and are guaranteed by all of Spectrum’s domestic subsidiaries. The notes are unsecured senior subordinated obligations and rank junior to all of our senior debt. We may redeem the notes in each calendar year. We usedwhole or in part at any time on or after October 1, 2008, at specified redemption prices. In addition, under certain circumstances, we may redeem up to 35% of the notes before October 1, 2006. The terms of the notes restrict or limit our ability to, among other things: (i) pay dividends or make other restricted payments, (ii) incur additional indebtedness and issue preferred stock, (iii) create liens, (iv) incur dividend and other restrictions affecting subsidiaries, (v) enter into mergers, consolidations, or sales of all or substantially all of our assets, (vi) make asset sales, (vii) enter into transactions with affiliates, and (viii) issue or sell capital stock of our wholly owned subsidiaries. In addition, the holders of the notes may require us to repurchase all or a portion of the proceeds of the offering of the Series C notes to repay Term Loan A in full. The principal amount of Term Loan B is $240.0 million. This amount is to be repaid in quarterly installments, with a final installment due January 20, 2006.

                    Security; Guaranty.    Our obligations under our senior credit facility are secured by a first priority lien on substantially all of our properties and assets as well as the properties and assets of our current and future domestic subsidiaries. Future domestic subsidiaries will be required to guarantee our obligations under our senior credit facility, and the stock of future domestic subsidiaries, or a percentage of this stock in the case of foreign subsidiaries, will also be pledged to the lenders as security.

                    Interest.    The interest rate per annum applicable to advances under our senior credit facility is at a fluctuating rate of interest measured, at our option, by reference to (1) the Eurodollar Rate, as defined in our senior credit facility, plus the applicable borrowing margin, or (2) a rate per annum equal to the higher of the published prime rate of Bank of America or the Federal Funds Rate, as defined in our senior credit facility plus1/2 of 1% (the Base Rate) plus the applicable borrowing margin. The applicable borrowing margin for Term Loan B is 2.50-3.00% for the Base Rate advances and 3.50-4.00% for Eurodollar advances. The applicable borrowing margin for our revolving credit facility and Term Loan A is between 1.50% and 2.50% for the Base Rate advances and between 2.50% and 3.50% for the Eurodollar advances, in each case based on our consolidated leverage ratio.

                    Prepayments; Reductions of Commitments.    Subject to certain exceptions set forth in our senior credit facility, Term Loan A and Term Loan B are required to be prepaid and commitments under our revolving credit facility are required to be permanently reduced with:

              50% of the net cash proceeds of any issuance of capital stock;

              100% of the net cash proceeds of any new indebtedness;

              50% of the excess cash flow;

              100% of the net cash proceeds of (a) any asset sale, subject to limited exceptions or (b) proceeds from any insurance claim relating to one of our assets, unless the proceeds are applied to replace or repair the lost of damaged assets; and

              100% of the net cash proceeds of certain other extraordinary receipts.

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                      Our revolving credit facility is subject to a clean-down period during which the aggregate amount outstanding under our revolving credit facility shall not exceed $10.0 million for 30 consecutive days occurring during the period between August 1 and November 30 in each calendar year.

                      Covenants.    Our senior credit facility contains covenants restricting our ability and that of our subsidiaries to, among others:

                incur or suffer to exist indebtedness or liens,

                merge, consolidate or liquidate,

                sell assets or stock,

                pay dividends or repurchase stock,

                make capital expenditures,

                prepay or amend debt and other material agreements and

                transact with affiliates.

                      Events of Default.    Events of default under our senior credit facility include:

                our failure to pay principal or interest when due,

                material breach by us of any representation or warranty contained in any loan document,

                material breach by us of any covenant contained in any loan documents,

                customary cross-default provisions,

                certain adverse events under ERISA plans,

                events of bankruptcy, insolvency or dissolution by us or any of our subsidiaries,

                the levy of certain judgments against us or any of our subsidiaries,

                the actual or asserted invalidity of security documents or guarantees, and

                event we undergo a change of control of our company.
              control.

              97/8% Series B and C Senior Subordinated Notes

                      In March 1999, we issued $150.0 million of our 97/8% Series A Senior Subordinated Notes due 2009. In October 1999, we consummated an exchange offer in which we exchanged all of our Series A notes for our 97/8% Series B Senior Subordinated Notes due 2009, which had been registered pursuant to the Securities Act.

                      In March 2003, we issued $85.0 million of our 97/8% Series C Senior Subordinated Notes due 2009.THE EXCHANGE OFFER

               The principal terms

              Purpose of the Series BExchange Offer

              Simultaneously with the sale of the original notes, we entered into a registration rights agreement with the initial purchasers of the original notes—Banc of America Securities LLC, Citigroup Global Markets, Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and C notes areABN AMRO Incorporated. Under the same as the Series D notes being offered hereby, including the interest rate, the interest payment dates and the maturity date. The indentureregistration rights agreement, we agreed, among other things, to:

              file a registration statement relating to the Series B and C notes contains covenants which are substantially similar to those contained in the indenture governing the Series D notes offered hereby.

              However, certain covenants and definitions in the indenture governing the Series D notes offered hereby, which also governs the Series C notes, are different from the corresponding covenants and definitions in the indenture governing the Series B notes. See "Summary of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes."

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                      In connection with thea registered exchange offer for the Series Doriginal notes we are required to conduct forwith the Series C notes, we are also offering to exchange allSEC no later than 120 days after the date of the outstanding Series B notes in return for Series D notes. If allissuance of the Series B and C notes are exchanged fororiginal notes;

              use our commercially reasonable efforts to cause the Series D notes, $235,000,000 million aggregate principal amountSEC to declare the registration statement effective under the Securities Act no later than 240 days after the date of the Series D notes will be outstanding following consummationissuance of the original notes; and

              commence and use our commercially reasonable efforts to consummate the exchange offer andno later than the Series D notes will be deemed30th business day after the registration statement was declared effective by the SEC.

              We are conducting the exchange offer to be a single series of notes outstandingsatisfy our obligations under the indenture relatingregistration rights agreement. If we fail to the Series D notes. This would dilute your voting interest.

                      We are offering to accept both our Series B and C notes in exchange for the Series D notes in order to increase the liquidity of both series. However, we cannot assure you that all the Series B noteholders will participate in the exchange, in which case the Series B notes not exchanged for the Series D notes will continue as a separate series of notesmeet certain specified deadlines under a separate indenture.



              THE EXCHANGE OFFER

                      This section of this prospectus describes the exchange offer.While we believe that the following description covers the material terms of this exchange offer, this summary may not contain all of the information that is important to you. For a more complete understanding of this exchange offer, you should carefully read the entire prospectus and the other documents to which we refer, including the registration rights agreement, we will be obligated to pay liquidated damages to the holders of the original notes. A copy of the registration rights agreement has been filed with the SEC as Exhibit 4.3 to Rayovac Corporation’s Current Report on Form 8-K dated February 7, 2005, and filed on February 11, 2005, and is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part.

              Purpose

              The form and Effectterms of the Exchange Offer

                      We andexchange notes are the guarantors, referred to herein collectivelysame as the issuers, entered into aform and terms of the original notes, except that the exchange notes:

              will be registered under the Securities Act;

              will not bear restrictive legends restricting their transfer under the Securities Act;

              will not be entitled to the registration rights agreementthat apply to the original notes; and

              will not contain provisions relating to liquidated damages in connection with the original issuance of the Series C notes pursuant to which we will take the following actions at our expense:

                within 45 days after the issue date of the Series C notes, file an exchange offer registration statement with the SEC with respect to a registered offer to exchange the Series B and C notes for Series D notes, which will have terms substantially similarunder circumstances related to the Series B and C notes;

                use our reasonable best efforts to cause the exchange offer registration statement to be declared effective under the Securities Act within 165 days after the issue date of the Series C notes;

                offer the Series D notes in exchange for surrender of the Series B and C notes upon the exchange offer registration statement being declared effective; and

                keep the exchange offer open for not less than 30 days, or longer if required by applicable law, after the date noticetiming of the exchange offer is mailed to the holders of the Series B and C notes.

              offer.

               We are offering to exchange our Series D notes for up to 100% of our Series B and C notes on the terms set forth in this prospectus and in the accompanying letters of transmittal. We are including both the Series B and C notes in the exchange offer in order to increase the liquidity of both series. For each Series B or C note surrendered to us pursuant to the exchange offer, the holder of such note will receive a Series D note having a principal amount at maturity equal to that of the surrendered note.

                      Under existing SEC interpretations, the Series D notes would in general be freely transferable after the exchange offer without further registration under the Securities Act;provided that, in the case of broker-dealers, a prospectus meeting the requirements of the Securities Act be delivered as required. We have agreed for a period of 180 days after consummation of the exchange offer to make available a prospectus meeting the requirements of the Securities Act to any broker-dealer for use in connection with any resale of any such exchange notes acquired as described below. A broker-dealer which delivers such a prospectus to purchasers in connection with such resales will be subject to certain of the civil liability provisions under the Securities Act, and will be bound by the provisions of the registration rights agreement, including certain indemnification rights and obligations

                      Each holder of Series C notes that wishes to exchange such notes for Series D notes in the exchange offer will be required to make certain representations including representations that (1) any Series D notes to be received by it will be acquired in the ordinary course of its business, (2) it has no arrangement with any person to participate in the distribution of the Series D notes and (3) it is not an affiliate, as defined in Rule 405 of the Securities Act, of, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. If the holder is not a broker-dealer, it will be required to represent that it is not engaged in, and does not intend to engage in, the distribution of the Series D notes. If the holder is a broker-dealer that will receive Series D notes for its own account in exchange for Series B or C notes that were acquired as a

              72



              result of market-making activities or other trading activities, it will be required to acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes.

                      In the event that applicable interpretations of the Staff of the SEC do not permit the issuers to effect such an exchange offer, or if for any other reason theThe exchange offer is not consummated within 210 days ofextended to old note holders in any jurisdiction where the issue date of the Series C notes or, under certain circumstances, if the initial purchasers shall so request, we and the guarantors will, (a) as promptly as practicable, file a shelf registration statement covering resales of the Series C notes, (b) use our respective best efforts to cause the shelf registration statement to be declared effective under the Securities Act and (c) use our respective best efforts to keep effective the shelf registration statement until the earlier of the disposition of the Series C notes covered by the shelf registration statement or two years after the issue date of the Series C notes, or such earlier time when the Series C notes are eligible for resale pursuant to Rule 144(k) under the Securities Act. We and the guarantors will, in the event of the shelf registration statement, provide to each holder of the Series C notes copies of the prospectus which is a part of the shelf registration statement, notify each such holder when the shelf registration statement for the Series C notes has become effective and take certain other actions as are required to permit unrestricted resales of the Series C notes. A holder of the Series C notes that sells such notes pursuant to the shelf registration statement generally would be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the registration rights agreement which are applicable to such a holder, including certain indemnification rights and obligations.

                      Although the issuers intend to file the registration statements described above, as necessary, such registration statement mayexchange offer does not be filed or, if filed, it may not become effective. If we fail to comply with the above provisionssecurities or if any such registration statement fails to become effective, the, as liquidated damages, additional interest shall become payable in respectblue sky laws of the Series C notes as follows:

              If: (1)(A) the exchange offer registration statement or shelf registration statement is not filed within 45 days after the issue date of the Series C notes or (B) notwithstanding that we have consummated or will consummate an exchange offer, we are required to file a shelf registration statement and such shelf registration statement is not filed on or prior to the date required by the registration rights agreement;


              (2)


              (A) an exchange offer registration statement or shelf registration statement is not declared effective within 165 days after the issue date of the Series C notes or (B) notwithstanding that we have consummated or will consummate an exchange offer, we are required to file a shelf registration statement and such shelf registration statement is not declared effective by the SEC on or prior to the 120th day following the date such shelf registration statement was filed; or


              (3)


              either (A) we have not exchanged the Series D notes for all Series C notes validly tendered in accordance with the terms of the exchange offer within 210 days of the issue date of the Series C notes or (B) the exchange offer registration statement ceases to be effective at any time prior to the time that the exchange offer is consummated or (C) if applicable, the shelf registration statement has been declared effective and such shelf registration statement ceases to be effective at any time prior to the second anniversary of the issue date of the Series C notes;

              (each such event referred to in clauses (1) through (3) above is a registration default), the sole remedy available to holders of the Series C notes will be the immediate assessment of additional interest as follows: the per annum interest rate on the Series C notes will increase by 0.25% for each 90-day period during which the registration default continues, up to a maximum additional interest rate of 2.00% per annum in excess of the interest rate shown on the cover of this prospectus. All additionalthat jurisdiction.

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              interest will be payable to holders of the Series C notes in cash on each interest payment date, commencing with the first such date occurring after any such additional interest commences to accrue, until such registration default is cured. After the date on which such registration default is cured, the interest rate on the notes will revert to the interest rate originally borne by the notes as shown on the cover of this prospectus. Holders of Series B notes have no right to receive such additional interest.

              Terms of the Exchange Offer

               Upon the terms and subject

              We are offering to exchange up to $700,000,000 aggregate principal amount of exchange notes for a like aggregate principal amount of original notes. The original notes must be tendered properly in accordance with the conditions set forth in this prospectus and the accompanying letter of transmittal on or prior to the expiration date and not withdrawn as permitted below. In exchange for original notes properly tendered and accepted, we will issue a like total principal amount of up to $700,000,000 in exchange notes. This prospectus, together with the letter of transmittal, we will accept any andis first being sent on or about             , 2005, to all Series B and C notes validly tendered and not withdrawn prior to 5:00 P.M., New York City time, on the expiration date of the exchange offer. We will issue $1,000 principal amount of Series D notes in exchange for each $1,000 principal amount of Series B and C notes accepted in the exchange offer. Any holder may tender some or all of its Series B and C notes pursuant to the exchange offer. However, Series B and C notes may be tendered only in integral multiples of $1,000.

                      The form and terms of the Series D notes are substantially similar to the form and terms of the Series B and C notes except that:

                (1)
                the Series D notes bear a Series D designation and a different CUSIP number from the Series B and C notes;

                (2)
                the Series D notes have been registered under the Securities Act and hence will not bear legends restricting the transfer thereof;

                (3)
                the holders of the Series Doriginal notes will not be entitledknown to certain rights under the registration rights agreement, including the provisions providingus. Our obligation to accept original notes for an increaseexchange in the interest rate on the Series C notes in certain circumstances relating to the timing of the exchange offer, all of which rights will terminate when the exchange offer is terminated; and

                (4)
                somesubject to the conditions described below under the heading “—Conditions to the Exchange Offer.” The exchange offer is not conditioned upon holders tendering a minimum principal amount of original notes. As of the provisions containeddate of this prospectus, $700,000,000 aggregate principal amount of original notes are outstanding.

                Original notes tendered in the Series D indenture, which also governsexchange offer must be in denominations of the Series Cprincipal amount of $1,000 and any integral multiple of $1,000 in excess thereof.

                Holders of the original notes anddo not have any appraisal or dissenters’ rights in connection with the definitions related thereto, are different than the provisions contained in the Series B indenture, as described in the "Summary of Key Differences Between the Indenture Governing the Series B Notes and the Indenture Governing the Series D Notes" section of this prospectus.

                      The Series Dexchange offer. If you do not tender your original notes or if you tender original notes that we do not accept, your original notes will evidence the same debt as the tendered Series B and Cremain outstanding. Any original notes and will be entitled to the benefits of the Series D indenture.

                      As of the date of this prospectus, $235,000,000 aggregate principal amount of the Series B and C notes were outstanding. We have fixed the close of business on                , 2003 as the record date for the exchange offer for purposes of determining the personsindenture but will not be entitled to whom this prospectus and the letter of transmittal will be mailed initially.

                      Holders of Series B and C notes do not have any appraisal or dissenters'further registration rights under the General Corporation Law of Delaware, or the indentures relatingregistration rights agreement, except under limited circumstances. Existing transfer restrictions would continue to apply to such original notes. See “Risk Factors—There are significant consequences if you fail to exchange your original notes” for more information regarding original notes in connection with the exchange offer. We intend to conduct the exchange offer in accordance with the applicable requirements of the Exchange Act and the rules and regulations of the SEC thereunder.

                      We will be deemed to have accepted validly tendered Series B and C notes when, as and if we have given oral or written notice thereof to the exchange agent. The exchange agent will act as agent for the tendering holders for the purpose of receiving the Series D notes from us.

                      If any tendered Series B or C notes are not accepted for exchange because of an invalid tender, the occurrence of specified other events set forth in this prospectus or otherwise, the certificates for

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              any unaccepted Series B and C notes will be returned, without expense, to the tendering holder thereof as promptly as practicableoutstanding after the expiration date of the exchange offer.

               Holders who

              After the expiration date, we will return to the holder any tendered original notes that we did not accept for exchange.

              None of us, our board of directors or our management recommends that you tender Series B and Cor not tender original notes in the exchange offer will not be requiredor has authorized anyone to pay brokerage commissions or fees or, subjectmake any recommendation. You must decide whether to the instructionstender in the letterexchange offer and, if you decide to tender, the aggregate amount of transmittal, transfer taxes with respectoriginal notes to the exchange of Series B and C notes pursuant to the exchange offer. We will pay all charges and expenses, other than transfer taxes in certain circumstances, in connection with the exchange offer. See "—Fees and Expenses."

              Expiration Date; Extensions; Amendmentstender.

               

              The term "expiration date" will meanexpiration date is 5:00 P.M.p.m., New York City time, on             , 2003, unless we, in our sole discretion, extend the exchange offer, in which case the term "expiration date" will mean the latest2005, or such later date and time to which we extend the exchange offer.

              We have the right, in accordance with applicable law, at any time:

              to delay the acceptance of the original notes;

              to terminate the exchange offer is extended.

              and not accept any original notes for exchange if we determine that any of the conditions to the exchange offer have not occurred or have not been satisfied;

               In order

              to extend the expiration date of the exchange offer and retain all original notes tendered in the exchange offer other than those notes properly withdrawn; and

              to waive any condition or amend the terms of the exchange offer in any manner.

              If we materially amend the exchange offer, we will makeas promptly as practicable distribute a press release or other public announcement, notifyprospectus supplement to the holders of the original notes disclosing the change and extend the exchange agentoffer.

              If we exercise any of any extension bythe rights listed above, we will as promptly as practicable give oral or written notice of the action to the exchange agent and will mail tomake a public announcement of such action. In the registered holderscase of an extension, an announcement thereof, each prior to 5:will be made no later than 9:00 P.M.a.m., New York City time on the next business day after the previously scheduled expiration date.

               We reserve

              Acceptance of Original Notes for Exchange and Issuance of Original Notes

              As promptly as practicable after the right, in our sole discretion, (1)expiration date, we will accept all original notes validly tendered and not withdrawn, and we will issue exchange notes registered under the Securities Act to delay accepting any Series B or Cthe exchange agent. The exchange agent might not deliver the exchange notes to extendall tendering holders at the same time. The timing of delivery depends upon when the exchange offer oragent receives and processes the required documents.

              We will be deemed to terminate the exchange offer if any of the conditions set forth below under "—Conditions" have exchanged original notes validly tendered and not been satisfied, by givingwithdrawn when we give oral or written notice of any delay, extension or termination to the exchange agent or (2) to amend the termsof our acceptance of the tendered original notes, with written confirmation of any oral notice to be given promptly thereafter. The exchange offer in any manner. Such decision will also be communicated in a press release or other public announcement prior to 9:00 A.M., New York City time on the next business day following such decision. Any announcementagent is our agent for receiving tenders of delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof to the registered holders.

              Interest on the Series D Notesoriginal notes, letters of transmittal and related documents.

               Interest on the Series D

              In tendering original notes, will accrue from the later of (1) the last interest payment date on which interest was paid on the notes surrenderedyou must warrant in exchange therefor or (2) if the notes are surrendered for exchange on a date in a period which includes the record date for an interest payment date to occur on or after the date of such exchange and as to which interest will be paid, the date of such interest payment date.

                      Interest on the exchange notes is payable semiannually in arrears on each of April 1 and October 1.

              Procedures for Tendering

                      Only a registered holder of outstanding Series B or C notes may tender such notes in the exchange offer. To tender in the exchange offer, a holder must complete, sign and date the letter of transmittal or in an agent’s message (described below) that (i) you have full power and authority to tender, exchange, sell, assign and transfer original notes, (ii) we will acquire good, marketable and unencumbered title to the tendered original notes, free and clear of all

              liens, restrictions, charges and other encumbrances and (iii) the original notes tendered for exchange are not subject to any adverse claims or proxies. You also must warrant and agree that you will, upon request, execute and deliver any additional documents requested by us or the exchange agent to complete the exchange, sale, assignment and transfer of the original notes.

              Procedures for Tendering Original Notes

              Valid Tender

              When the holder of original notes tenders, and we accept, original notes for exchange, a facsimile thereof, havebinding agreement between us, on the signatures thereon guaranteed ifone hand, and the tendering holder, on the other hand, is created, subject to the terms and conditions set forth in this prospectus and the accompanying letter of transmittal. Except as set forth below, a holder of original notes who wishes to tender original notes for exchange must, on or prior to the expiration date:

              transmit a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal (including original notes), to the exchange agent, U.S. Bank National Association, at the address set forth below under the heading “—Exchange Agent”;

              if original notes are tendered pursuant to the book-entry procedures set forth below, the tendering holder must deliver a completed and duly executed letter of transmittal or transmitarrange with DTC to cause an agent'sagent’s message in connectionto be transmitted with the required information (including a book-entry transfer, and mail or otherwise deliver the letter of transmittal or the facsimile, together with the Series B and C notes and any other required documents,confirmation), to the exchange agent prior to 5:00 P.M., New York City time, on the expiration date. To be tendered effectively, the Series B and C notes, letter of transmittal or an agent's message and other required documents must be completed and received by the exchange agent at the address set forth below under "Exchange Agent"the heading “—Exchange Agent”; or

              comply with the provisions set forth below under “—Guaranteed Delivery.”

              In addition, on or prior to 5:00 P.M., New York City time, on the expiration date. Deliverydate:

              the exchange agent must receive the certificates for the original notes and the letter of transmittal;

              the Series B and C notes may be made by book-entry transfer in accordance with the procedures described below. Confirmationexchange agent must receive a timely confirmation of the book-entry transfer must be received byof the original notes being tendered into the exchange agent prioragent’s account at DTC, along with the letter of transmittal or an agent’s message; or

              the holder must comply with the guaranteed delivery procedures described below.

              The letter of transmittal or agent’s message may be delivered by mail, facsimile, hand delivery or overnight carrier, to the expiration date.exchange agent.

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              The term "agent's message"“agent’s message” means a message transmitted by a book-entry transfer facility to and received by, the exchange agent forming a part of a confirmation of a book-entry,by DTC which states that the book-entry transfer facilityDTC has received an express acknowledgement from the participant in the book-entry transfer facility tendering the Series B and C notesacknowledgment that the participant has received and agrees: (1) to participate in the Automated Tender Option Program ("ATOP"); (2)tendering holder agrees to be bound by the terms of the letter of transmittal;transmittal and (3) that we may enforce the agreement against the participant.

                      The tender by a holder and our acceptance thereof will constitute agreement between the holder and us in accordance with the terms and subject to the conditions set forth in this prospectus and in the letter of transmittal or agent's message.against such holder.

               The method of delivery of Series B or C

              If you beneficially own original notes and the letter of transmittal or agent's message and all other required documents to the exchange agent is at the election and sole risk of the holder. As an alternative to delivery by mail, holders may wish to consider overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the exchange agent before the expiration date. No letter of transmittal or Series B or C notes should be sent to us. Holders may request their respective brokers, dealers, commercial banks, trust companies or nominees to effect the above transactions for them.

                      Any beneficial owner whose Series B or Cthose notes are registered in the name of a broker, dealer, commercial bank, trust company or other nominee or custodian and who wishesyou wish to tender your original notes in the exchange offer, you should contact the registered holder promptlyas soon as possible and instruct the registered holderit to tender the original notes on your behalf and comply with the beneficial owner's behalf. See "Instructions to Registered Holder and/or Book-Entry Transfer Facility Participant from Beneficial Owner" included withinstructions set forth in this prospectus and the letter of transmittal.

               

              If you tender fewer than all of your original notes, you should fill in the amount of notes tendered in the appropriate box on the letter of transmittal. If you do not indicate the amount tendered in the appropriate box, we will assume you are tendering all original notes that you hold.

              The method of delivery of the certificates for the original notes, the letter of transmittal and all other required documents is at the election and sole risk of the holders. If delivery is by mail, we recommend registered mail with return receipt requested, properly insured, or overnight delivery service. In all cases, you should allow sufficient time to assure timely delivery. No letters of transmittal or original notes should

              be sent directly to us. Delivery is complete when the exchange agent actually receives the items to be delivered. Delivery of documents to DTC in accordance with DTC’s procedures does not constitute delivery to the exchange agent.

              Signature Guarantees

              Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member of the Medallion System unless the Series B or Coriginal notes tendered pursuant to the letter of transmittalsurrendered for exchange are tendered (1) tendered:

              by a registered holder of original notes who has not completed the box entitled "Special Registration Instructions"“Special Issuance Instructions” or "Special“Special Delivery Instructions"Instructions” on the letter of transmittaltransmittal; or (2) 

              for the account of an eligible institution.

              An “eligible institution” is a member firm ofor other entity which is identified as an “Eligible Guarantor Institution” in Rule 17Ad-15 under the Medallion System. In the event thatExchange Act, including:

              a bank;

              a broker, dealer, municipal securities broker or dealer or government securities broker or dealer;

              a credit union;

              a national securities exchange, registered securities association or clearing agency; or

              a savings association.

              If signatures on a letter of transmittal or a notice of withdrawal as the case may be, are required to be guaranteed, the guaranteeguarantor must be by a member firm of the Medallion System.an eligible institution.

               

              If original notes are registered in the lettername of transmittal is signed by a person other than the registered holdersigner of any Series B or Cthe letter of transmittal, the original notes the Series B or C notessurrendered for exchange must be endorsed or accompanied by a properly completed bond power, signedwritten instrument or instruments of transfer or exchange, in satisfactory form as determined by us in our sole discretion, duly executed by the registered holder as the registered holder's name appears on such notes with the holder’s signature thereon guaranteed by a member firman eligible institution.

              Book-Entry Transfers

              For tenders by book-entry transfer of the Medallion System.

                      If the letter of transmittal or any Series B or Coriginal notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, offices of corporations or others acting in a fiduciary or representative capacity, the person signing should so indicate when signing, and evidence satisfactory to us of its authority to so act must be submitted with the letter of transmittal.

                      We understand thatcleared through DTC, the exchange agent will make a request promptly after the date of this prospectus to establish accounts with respect to the Series B and C notesan account at DTC for the purposepurposes of facilitating the exchange offer,offer. Any financial institution that is a DTC participant may make book-entry delivery of original notes by causing DTC to transfer the original notes into the exchange agent’s account at DTC in accordance with DTC’s procedures for transfer. The exchange agent and subject to the establishment thereof,DTC have confirmed that any financial institution that is a participant in DTC's systemDTC may use the Automated Tender Offer Program, or ATOP, procedures to tender original notes. Accordingly, any participant in DTC may make book-entry delivery of the Series B or Coriginal notes by causing DTC to transfer the Series B or Cthose original notes into the exchange agent'sagent’s account with respect to the Series B and C notes in accordance with DTC'sits ATOP procedures for transfer.

              Notwithstanding the transfer. Althoughability of holders of original notes to effect delivery of the Series B and Coriginal notes may be effected through book-entry transfer into the exchange agent's account at DTC, unlesseither:

              the letter of transmittal or a facsimile thereof, or an agent'sagent’s message isin lieu of the letter of transmittal, with any required signature guarantees and any other required documents must be transmitted to and received by the exchange agent prior to the expiration date at the address given below under “—Exchange Agent”; or

              the guaranteed delivery procedures described below must be complied with.

              Guaranteed Delivery

              If a holder wants to tender original notes in compliance with ATOP, an appropriate letter of transmittal properly completedthe exchange offer and duly executed with any required signature guarantee and(1) the certificates for the original notes are not immediately available or all other required documents must in each case be transmittedare unlikely to and received or confirmed byreach the exchange agent at its address set forth below on or prior to the expiration date, or (2) a book-entry transfer cannot be completed on a timely basis, the original notes may be tendered if the holder complies with the following guaranteed

              76



              delivery procedures described below are complied with, within the time period provided under the procedures. Delivery of documents to DTC does not constitute delivery to the exchange agent.procedures:

               All questions as to the validity, form, eligibility, including time of receipt, acceptance of tendered Series B and C notes and withdrawal of tendered Series B and C notes will be determined by us in our sole discretion, which determination will be final and binding. We reserve the absolute right to reject any and all Series B and C notes not properly tendered or any Series B and C notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right in our sole discretion to waive any defects, irregularities or conditions of tender as to particular Series B and C notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Series B and C notes must be cured within the time we determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Series B and C notes, neither we, the exchange agent nor any other person will incur any liability for failure to give the notification. Tenders of Series B and C notes will not be deemed to have been made until the defects or irregularities have been cured or waived. Any Series B and C notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the exchange agent to the tendering holders, unless otherwise provided in the letter of transmittal, as soon as practicable following the expiration date.

              Guaranteed Delivery Procedures

                      Holders who wish to tender their Series B or C notes and (1) whose Series B or C notes are not immediately available, (2) who cannot deliver their Series B or C notes, the letter of transmittal or any other required documents to the exchange agent or (3) who cannot complete the procedures for book-entry transfer, prior to the expiration date, may effect a tender if:

                (A)
                the tender is made by or through a member firm of an eligible institution;

                the Medallion System;

                (B)
                prior to the expiration date, the exchange agent receives from a member firm of the Medallion Systemeligible institution delivers a properly completed and duly executed Noticenotice of Guaranteed Delivery by facsimile transmission, mailguaranteed delivery, substantially in the form provided, to the exchange agent on or hand delivery prior to the expiration date:

                setting forth the name and address of the holder the certificate number(s) of the Series B and Coriginal notes being tendered and the principal amount of Series B and Cthe original notes tendered, being tendered;

                stating that the tender is being made therebymade; and

                guaranteeing that, within three (3) New York Stock Exchange trading days after the expiration date of execution of the notice of guaranteed delivery, the certificates for all physically tendered original notes, in proper form for transfer, or a book-entry confirmation, as the case may be, together with a properly completed and duly executed letter of transmittal, or facsimile thereof togetheran agent’s message, with the certificate(s) representing the Series B and C notes or a confirmation of book-entry transfer of the Series B and C notes into the exchange agent's account at DTC,any required signature guarantees and any other documents required by the letter of transmittal, will be deposited by the member firm of the Medallion Systemeligible institution with the exchange agent; and

                (C)

                the properly completed and executed letter of transmittal of facsimile thereof, as well asexchange agent receives the certificate(s) representing all tendered Series B and Ccertificates for the original notes, in proper form for transfer or a confirmation of book-entry transfer, and a properly completed and duly executed letter of the Series Btransmittal, or an agent’s message in lieu thereof, with any required signature guarantees and C notes into the exchange agent's account at DTC, and allany other documents required by the letter of transmittal are received by the exchange agent within fivethree (3) New York Stock Exchange trading days after the expiration date.
              notice of guaranteed delivery is executed for all such tendered original notes.

               Upon request

              You may deliver the notice of guaranteed delivery by hand, facsimile, mail or overnight delivery to the exchange agent and you must include a Noticeguarantee by an eligible institution in the form described above in such notice.

              Our acceptance of Guaranteed Deliveryproperly tendered original notes is a binding agreement between the tendering holder and us upon the terms and subject to the conditions of the exchange offer.

              Determination of Validity

              We, in our sole discretion, will resolve all questions regarding the form of documents, validity, eligibility, including time of receipt, and acceptance for exchange of any tendered original notes. Our determination of these questions as well as our interpretation of the terms and conditions of the exchange offer, including the letter of transmittal, will be sentfinal and binding on all parties. A tender of original notes is invalid until all defects and irregularities have been cured or waived. Holders must cure any defects and irregularities in connection with tenders of original notes for exchange within such reasonable period of time as we will determine, unless we waive the defects or irregularities. Neither us, any of our affiliates or assigns, the exchange agent nor any other person is under any obligation to holders who wishgive notice of any defects or irregularities in tenders nor will they be liable for failing to give any such notice.

              We reserve the absolute right, in our sole and absolute discretion:

              to reject any tenders determined to be in improper form or unlawful;

              to waive any of the conditions of the exchange offer; and

              to waive any condition or irregularity in the tender their Series B and Cof original notes accordingby any holder, whether or not we waive similar conditions or irregularities in the case of other holders.

              If any letter of transmittal, endorsement, bond power, power of attorney, or any other document required by the letter of transmittal 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, that person must indicate such capacity when signing. In addition, unless waived by us, the person must submit proper evidence satisfactory to us, in our sole discretion, of his or her authority to so act.

              Resales of Original Notes

              Based on interpretive letters issued by the SEC staff to third parties in transactions similar to the guaranteedexchange offer, we believe that a holder of exchange notes, other than a broker-dealer, may offer exchange notes for resale, resell and otherwise transfer the exchange notes without delivering a prospectus to prospective purchasers, if the holder acquired the exchange notes in the ordinary course of business, has no intention of engaging in a “distribution” (as defined under the Securities Act) of the exchange notes and is not an “affiliate” (as defined under the Securities Act) of Spectrum. We will not seek our own interpretive letter. As a result, we cannot assure you that the staff will take the same position on this exchange offer as it did in interpretive letters to other parties in similar transactions.

              By tendering original notes, the holder, other than participating broker-dealers, as defined below, of those original notes will represent to us that, among other things:

              the exchange notes acquired in the exchange offer are being obtained in the ordinary course of business of the person receiving the exchange notes, whether or not that person is the holder;

              neither the holder nor any other person receiving the exchange notes is engaged in, intends to engage in or has an arrangement or understanding with any person to participate in a “distribution” (as defined under the Securities Act) of the exchange notes; and

              neither the holder nor any other person receiving the exchange notes is an “affiliate” (as defined under the Securities Act) of Spectrum.

              If any holder or any such other person is an “affiliate” of Spectrum or is engaged in, intends to engage in or has an arrangement or understanding with any person to participate in a “distribution” of the exchange notes, such holder or other person:

              may not rely on the applicable interpretations of the staff of the SEC referred to above; and

              must comply with the registration and prospectus delivery procedures set forth above.requirements of the Securities Act in connection with any resale transaction.

              77Each broker-dealer that receives exchange notes for its own account in exchange for original notes must represent that the original notes to be exchanged for the exchange notes were acquired by it as a result of market-making activities or other trading activities and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any offer to resell, resale or other retransfer of the exchange notes pursuant to the exchange offer. Any such broker-dealer is referred to as a participating broker-dealer. However, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” (as defined under the Securities Act). If a broker-dealer acquired original notes as a result of market-making or other trading activities, it may use this prospectus, as amended or supplemented, in connection with offers to resell, resales or retransfers of exchange notes received in exchange for the original notes pursuant to the exchange offer. We have agreed that, during the period ending 180 days after the consummation of the exchange offer, subject to extension in limited circumstances, we will use all commercially reasonable efforts to keep the exchange offer registration statement effective and make this prospectus available to any broker-dealer for use in connection with any such resale. See “Plan of Distribution” for a discussion of the exchange and resale obligations of broker-dealers in connection with the exchange offer.



              Withdrawal of TendersRights

               Except as otherwise provided in this prospectus,

              You can withdraw tenders of Series B and Coriginal notes may be withdrawn at any time prior to 5:00 P.M.p.m., New York City time, on the expiration date.

               To withdraw

              For a tender of Series B or C notes in the exchange offer,withdrawal to be effective, you must deliver a telegram, telex, letter or facsimile transmissionwritten notice of withdrawal must be received byto the exchange agent at its address set forth in this prospectus prior to 5:00 P.M., New York City time, on the expiration date of the exchange offer. Anyagent. The notice of withdrawal must:

                (1)

                specify the name of the person having depositedtendering the Series B and Coriginal notes to be withdrawn;

                (2)

                identify the Series B and Coriginal notes to be withdrawn, including the certificate number(s) andtotal principal amount of the Series B and Coriginal notes or, in the case of Series B and Cto be withdrawn;

                where certificates for original notes transferred by book-entry transfer,are transmitted, list the name and number of the account at DTCregistered holder of the original notes if different from the person withdrawing the original notes;

                contain a statement that the holder is withdrawing his election to be credited;

                (3)
                have the original notes exchanged; and

                be signed by the holder in the same manner as the original signature on the letter of transmittal by which the Series B and Coriginal notes were tendered, including any required signature guarantees, or be accompanied by documents of transfer sufficient to have the trustee with respect to the Series B and Coriginal notes register the transfer of the Series B and Coriginal notes intoin the name of the person withdrawing the tender;tender.

                If you delivered or otherwise identified original notes to the exchange agent, you must submit the serial numbers of the original notes to be withdrawn and

                (4)
                the signature on the notice of withdrawal must be guaranteed by an eligible institution, except in the case of original notes tendered for the account of an eligible institution. If you tendered original notes as a book-entry transfer, the notice of withdrawal must specify the name in which any Series B and C notes arenumber of the account at DTC to be registered, if different from thatcredited with the withdrawn original notes and you must deliver the notice of the person depositing the Series B and C notes to be withdrawn.

                      All questions aswithdrawal to the validity,exchange agent. You may not rescind withdrawals of tender; however, original notes properly withdrawn may again be tendered at any time on or prior to the expiration date.

              We will determine all questions regarding the form andof withdrawal, validity, eligibility, including time of receipt, and acceptance of withdrawal notices. Our determination of these questions as well as our interpretation of the notices will be determined by us, which determinationterms and conditions of the exchange offer (including the letter of transmittal) will be final and binding on all parties. Any Series B and CNeither us, any of our affiliates or assigns, the exchange agent nor any other person is under any obligation to give notice of any irregularities in any notice of withdrawal, nor will they be liable for failing to give any such notice.

              In the case of original notes sotendered by book-entry transfer through DTC, the original notes withdrawn or not exchanged will be deemed notcredited to have been validly tendered for purposes of the exchange offer and no Series Dan account maintained with DTC. Withdrawn original notes will be issued with respect thereto unless the Series B and C notes so withdrawn are validly retendered. Any Series B and C notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without costafter withdrawal. The original notes will be returned or credited to the holderaccount maintained with DTC as soon as practicable after withdrawal, rejection of tender or termination of the exchange offer. Any original notes which have been tendered for exchange but which are not exchanged for any reason will be returned to the holder thereof without cost to the holder.

              Properly withdrawn outstanding Series B and Coriginal notes may again be retenderedtendered by following one of the procedures described above under "—“—Procedures for Tendering"Tendering Original Notes” above at any time prior to 5:00 p.m., New York City time, on the expiration date.

              Conditions to the Exchange Offer

               

              Notwithstanding any other termprovision of the exchange offer, we willare not be required to accept for exchange, or to issue exchange notes in exchange for, any Series B or Coriginal notes, and we may prior to the expiration of the exchange offer, terminate or amend the exchange offer, as provided in this prospectus beforeif at any time prior to 5:00 p.m., New York City time, on the acceptanceexpiration date, we determine that the exchange offer violates applicable law or SEC policy.

              The foregoing conditions are for our sole benefit, and we may assert them regardless of the Series Bcircumstances giving rise to any such condition, or we may waive the conditions, completely or partially, whenever or as many

              times as we choose, in our reasonable discretion. The foregoing rights are not deemed waived because we fail to exercise them, but continue in effect, and C notes, if:we may still assert them whenever or as many times as we choose. If we determine that a waiver of conditions materially changes the exchange offer, the prospectus will be amended or supplemented, and the exchange offer extended, if appropriate, as described under “—Terms of the Exchange Offer.”

                (1)

                In addition, at a time when any actionstop order is threatened or proceeding is instituted or threatened in any court or by or before any governmental agencyeffect with respect to the exchange offerregistration statement of which we reasonably believe might materially impair our ability to proceed with the exchange offerthis prospectus constitutes a part or any material adverse development has occurred in any existing action or proceeding with respect to us or any of our subsidiaries; or

                (2)
                any law, statute, rule, regulation or interpretation by the Staff of the SEC is proposed, adopted or enacted, which we reasonably believe might materially impair our ability to proceed with the exchange offer or materially impair the contemplated benefits of the exchange offer to us; or

                (3)
                any governmental approval has not been obtained, which approval we reasonably believe to be necessary for the consummation of the exchange offer as contemplated by this prospectus.

              78


                        If we determine in our sole discretion that any of the conditions are not satisfied, we may (1) refuse to accept any Series B or C notes and return all tendered Series B and C notes to the tendering holders, (2) extend the exchange offer and retain all Series B and C notes tendered prior to the expiration of the exchange offer, subject, however, to the rights of holders to withdraw the Series B and C notes (see "—Withdrawal of Tenders") or (3) waive the unsatisfied conditions with respect to the qualification of the indenture under the Trust Indenture Act of 1939, as amended, we will not accept for exchange any original notes tendered, and no exchange notes will be issued in exchange for any such original notes.

                If we terminate or suspend the exchange offer based on a determination that the exchange offer violates applicable law or SEC policy, the registration rights agreement requires that we, as soon as practicable after such determination, use our commercially reasonable efforts to cause a shelf registration statement covering the resale of the original notes to be filed and accept all properly tendered Series B or C notes which have not been withdrawn.declared effective by the SEC. See “—Registration Rights and Additional Interest on the Original Notes.”

                Exchange Agent

                 

                We appointed U.S. Bank National Association has been appointed as exchange agent for the exchange offer. U.S. Bank National Association also serves as trustee under the indentures for the Series B, C and D notes. QuestionsYou should direct questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for Noticenotices of Guaranteed Delivery should be directedguaranteed delivery to the exchange agent addressedat the address and phone number as follows:

                By Overnight Courier or Registered/Certified Mail:By Hand:

                By Registered or Certified Mail,

                Hand Delivery or Overnight Delivery:

                U.S. Bank National Association
                Corporate Trust Department
                180 East Fifth Street

                EP-MN-WS2N

                60 Livingston Avenue

                St. Paul, MN 55101
                Attention: Specialized Finances Group



                U.S. Bank National Association
                100 Wall Street
                Suite 200
                New York, New York 10005

                Facsimile Transmission:


                For Information 55107

                Telephone:


                (651) 244-1537


                (800) 934-6802


                Confirm Receipt of Facsimile Transmissions

                (651) 495-8158

                or

                (651) 495-8159

                (Eligible Institutions Only)

                Confirmation by Telephone:




                (800) 934-6802


                 Delivery

                If you deliver letters of transmittal and any other required documents to an address or facsimile number other than set forththose listed above, will not constitute a valid delivery.your tender is invalid.

                Fees and Expenses

                 

                The registration rights agreement provides that we will bear all expenses in connection with the performance of our obligations relating to the registration of the exchange notes and the conduct of the exchange offer. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will bearpay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of soliciting tenders. The principal solicitation is being made by mail; however, additional solicitation may be made by telegraph, telecopy, telephoneoriginal notes and for handling or in person by our and our affiliates' officers and regular employees.tendering for such clients.

                 

                We have not retained any dealer-manager in connection with the exchange offer and will not makepay any paymentsfee or commission to brokers, dealersany broker, dealer, nominee or others soliciting acceptances of the exchange offer. We will, however, payother person, other than the exchange agent, reasonable and customary fees for its services andsoliciting tenders of original notes pursuant to the exchange offer.

                Transfer Taxes

                Holders who tender their original notes for exchange will reimburse it for its reasonable out-of-pocket expenses incurrednot be obligated to pay any transfer taxes in connection with these services.

                        We will pay the cash expensesexchange. If, however, exchange notes issued in the exchange offer are to be incurreddelivered to, or are to be issued in the name of, any person other than the holder of the original notes tendered, or if a transfer tax is imposed for any reason other than the exchange of original notes in connection with the exchange offer. Such expenses include fees and expensesoffer, then the holder must pay any such transfer taxes, whether imposed on the registered holder or on any other person. If

                satisfactory evidence of payment of, or exemption from, such taxes is not submitted with the exchange agent and trustee, accounting and legal fees and printing costs, among others.

                Accounting Treatment

                        The Series D notesletter of transmittal, the amount of such transfer taxes will be recorded atbilled directly to the same carrying value as the Series B or C notes, which is face value, as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes as a result of the exchange offer. The expenses of the exchange offer will be expensed over the term of the Series D Notes.tendering holder.

                79



                Consequences of Failure to Exchange Original Notes

                 The Series C

                Holders who desire to tender their original notes in exchange for exchange notes should allow sufficient time to ensure timely delivery. Neither the exchange agent nor Spectrum is under any duty to give notification of defects or irregularities with respect to the tenders of notes for exchange.

                Original notes that are not exchanged for Series D notes pursuant totendered or are tendered but not accepted will, following the consummation of the exchange offer, will remain restricted securitiescontinue to be subject to the provisions in the indenture regarding the transfer and exchange of the original notes and the existing restrictions on transfer set forth in the legend on the original notes and in the offering memorandum dated January 21, 2005, relating to the original notes. Except in limited circumstances with respect to specific types of holders of original notes, we will have no further obligation to registerprovide for the Series C notes. Accordingly, the Series C notes may be resold only:

                  (1)
                  to us upon redemption thereof or otherwise;

                  (2)
                  so long as the Series C notes are eligible for resale pursuant to Rule 144A, to a person inside the United States whom the seller reasonably believes is a qualified institutional buyer within the meaning of Rule 144Aregistration under the Securities Act of such original notes. In general, original notes, unless registered under the Securities Act, may not be offered or sold except pursuant to an exemption from, or in a transaction meetingnot subject to, the requirements of Rule 144A, in accordance with Rule 144Securities Act and applicable state securities laws. We do not currently anticipate that we will take any action to register the original notes under the Securities Act or pursuantunder any state securities laws.

                  Upon completion of the exchange offer, holders of the original notes will not be entitled to another exemption fromany further registration rights under the registration requirementsrights agreement, except under limited circumstances. Holders of the exchange notes and any original notes which remain outstanding after consummation of the exchange offer will vote together as a single class for purposes of determining whether holders of the requisite percentage of the class have taken certain actions or exercised certain rights under the indenture.

                  Consequences of Exchanging Original Notes

                  Under existing interpretations of the Securities Act which other exemption is based upon an opinion of counsel reasonably acceptable to us;

                  (3)
                  outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act; or

                  (4)
                  pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States.

                        Because the Series B notes were registered pursuant to the Securities Act in October 1999, among the potential consequences of not exchanging your Series B notes will be that the liquidity of your Series B notes could be adversely affected.

                Resale of the Series D Notes

                        With respect to resales of Series D notes, based on interpretations by the Staff of the SEC set forthSEC’s staff contained in several no-action letters issued to third parties, we believe that a holderthe exchange notes may be offered for resale, resold or other person who receives Series D notes, whether or nototherwise transferred by holders after the person is the holder,exchange offer other than a person thatby any holder who is one of our affiliate within the meaning of“affiliates” (as defined in Rule 405 under the Securities Act). Such notes may be offered for resale, resold or otherwise transferred without compliance with the registration and prospectus delivery provisions of the Securities Act, inif:

                a. such exchange for Series B or C notes are acquired in the ordinary course of businesssuch holder’s business; and who is not participating, does not intend to participate, and

                b. such holder, other than broker-dealers, has no arrangement or understanding with any person to participate in the distribution of the Series D notes, will be allowed to resellexchange notes.

                However, the Series D notes to the public without further registration under the Securities Act and without delivering to the purchasers of the Series D notes a prospectus that satisfies the requirements of Section 10 of the Securities Act. However, if any holder acquires Series D notes inSEC has not considered the exchange offer forin the purposecontext of distributing or participatinga no-action letter and we cannot guarantee that the staff of the SEC would make a similar determination with respect to the exchange offer as in such other circumstances. Each holder, other than a broker-dealer, must furnish a written representation, at our request, that:

                a. it is not an affiliate of Spectrum;

                b. it is not engaged in, and does not intend to engage in, a distribution of the Series Dexchange notes and has no arrangement or understanding to participate in a distribution of exchange notes; and

                c. it is acquiring the holder cannot rely on the position of the Staff of the SEC expressedexchange notes in the no-action letters or any similar interpretive letters, and must comply with the registration and prospectus delivery requirementsordinary course of the Securities Act in connection with any resale transaction, unless an exemption from registration is otherwise available. Further, eachits business.

                Each broker-dealer that receives Series Dexchange notes for its own account in exchange for Series B or Coriginal notes where the Series B or Cmust acknowledge that such original notes were acquired by thesuch broker-dealer as a result of market-making activities or other trading activities must acknowledgeand that it will deliver a prospectus in connection with any resale of such exchange notes. See “Plan of Distribution “for a discussion of the exchange notes.

                Appraisal Rights

                        You will not have any right to dissent and receive appraisalresale obligations of your Series B or C notesbroker-dealers in connection with the exchange offer.



                SUMMARY OF KEY DIFFERENCES BETWEEN THE INDENTURE GOVERNING THE
                SERIES B NOTES AND THE INDENTURE GOVERNING THE SERIES D NOTES

                        While the Series B indenture and Series D indenture are substantially similar, and the Series C and D notes are pursuant to the same indenture, the Series D indenture differs in some respects from the Series B indenture.While we believe that the following summary of the key differences between the Series B indenture and the Series D indenture is complete, this summary may not contain all of the information that is important to you.For a more complete understanding of the differences summarized below, you should read the Series B indenture and the Series D indenture. You can find definitions of certain capitalized terms used in the following summary under the applicable indentures and, with respect to the Series D notes only, under "Description of the Notes—Certain Definitions."

                        Amount of Notes.    The Series B indenture limits the amount of notes issuable under such indenture to an aggregate principal amount of $150,000,000. There is no such limit under the Series D indenture. Any notes, including any outstanding Series C and D notes, previously issued or issued in the future under the Series D indenture will be treated as a single class for all purposes under the Series D indenture. All notes issued under the Series D indenture vote together as one series of notes under the indenture.

                        Optional Redemption.    The Series B indenture provides that we could redeem in the aggregate up to 40% of the original principal amount of Series B notes at any time and from time to time prior to April 1, 2002 out of the net proceeds of one or more Qualified Public Offerings. As the April 1, 2002 deadline has passed, this section and the definition of Qualified Public Offering has been deleted from the Series D indenture.

                        Limitation of Preferred Stock of Restricted Subsidiaries.    The Series B indenture prohibits any Restricted Subsidiary from (1) issuing any Preferred Stock or (2) permitting any person to hold any such Preferred Stock, except to or by us or to or by another Restricted Subsidiary, unless we or such Restricted Subsidiary would be entitled to incur or assume Indebtedness under the Series B indenture in an aggregate principal amount equal to the aggregate liquidation value of the Preferred Stock to be issued. The Series D indenture carves out acquired Guarantors from the prohibition in (2) above.

                        Limitation on Restricted Payments.    We clarified the treatment of the common stock issued to Bayer in June 2002 under the Limitation on Restricted Payments in the Series D indenture. Under certain circumstances, we may repurchase the Bayer Stock (a newly defined term in the Series D indenture), and in limited circumstances we may be required to repurchase the Bayer Stock, in exchange for both cash or a note and for cancelling our rights under certain agreements. The Series D indenture provides that, if a portion of the Bayer Stock would qualify as "Disqualified Stock" at the time we are repurchasing the Bayer Stock, then, for purposes of that repurchase only, the threshold for the Limitation on Restricted Payments is nonetheless increased by an amount equal to the Net Proceeds or fair market value of securities or other property received by us from the issue and sale of that portion of the Bayer Stock. Also, the definition of "Disqualified Capital Stock" in the Series D indenture clarifies that from and after the date on which the Bayer Stock is no longer redeemable at the option of the holder, no portion of the Bayer Stock shall be considered Disqualified Capital Stock for purposes of calculating the threshold for the Limitation on Restricted Payments.

                        Asset Sale.    In the Series B indenture, "Asset Sale" is defined to mean the sale, transfer or other disposition, including any Sale and Lease-Back Transaction, other than to us or any of our Restricted Subsidiaries, in any single transaction or series of related transactions having a fair market value in excess of $1,500,000 of (1) our Capital Stock or other equity interest in any of our Restricted Subsidiaries or (2) any other property or assets of us or of any of our Restricted Subsidiaries. In the Series D indenture, the threshold for the fair market value of such transaction or series of related transactions is in excess of $2,000,000.

                81



                        Change of Control.    The definition of a Change of Control in the Series D indenture changes the definition contained in the Series B indenture by excluding a transaction from being a change in control if it is a merger or consolidation of us in which a THL Group Member holds, directly or indirectly, at least a majority of the Common Stock of the surviving corporation immediately after such consolidation or merger. In the Series D indenture, "THL" includes Thomas H. Lee Partners, L.P. and Thomas H. Lee Equity Fund V, L.P. in addition to Thomas H. Lee Equity Fund IV, L.P.

                        Consolidated Fixed Charges.    The calculation to determine the Consolidated Fixed Charges in the Series B indenture is equal to the sum of (1) Consolidated Interest Expense (excluding amortization or write-off of debt issuance costs relating to the Recapitalization and the financing therefore or relating to retired or existing Indebtedness and amortization or write-off of customary debt issuance costs relating to future Indebtedness incurred in the ordinary course of business), plus (2) without duplication, the product of (a) the amount of all dividend payments on any series of Preferred Stock of such Person or any Restricted Subsidiary, determined on a consolidated basis (other than dividends paid in Capital Stock (other than Disqualified Capital Stock)) paid, accrued or scheduled to be paid or accrued during such period times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current effective consolidated federal, state and local tax rate of such Person, expressed as a decimal. In the Series D indenture, the exclusion in (2)(a) above of dividends paid in Capital Stock is expanded to include dividends that accumulate and compound as if paid in kind. As a result, accumulating dividends on the preferred stock issued to UIC Holdings, L.L.C. are not Consolidated Fixed Charges.

                        Foreign Subsidiary.    Under the Series B indenture, a "Foreign Subsidiary" means a Restricted Subsidiary (1) that is organized in a jurisdiction other than the United States of America or a state thereof or the District of Columbia and (2) with respect to which at least 90% of its sales (as determined in accordance with GAAP) are generated by operations located in jurisdictions outside the United States of America. Under the Series D indenture, a "Foreign Subsidiary" means a Restricted Subsidiary that is organized in a jurisdiction other than the United States of America or a state thereof or the District of Columbia, provided that for purposes of the Limitation on Creation of Subsidiaries contained in the Series D indenture, if a Restricted Subsidiary guarantees, grants a lien or enters into a similar agreement for the benefit of any of our Indebtedness or any other Restricted Subsidiary (other than a Foreign Subsidiary), such Restricted Subsidiary will not be deemed a Foreign Subsidiary.

                        Indebtedness.    The Series B indenture includes in the definition of "Indebtedness" any Disqualified Capital Stock of such Person or any Restricted Subsidiary thereof. In the Series D indenture, any Bayer Stock that may be Disqualified Capital Stock is excluded from the definition of "Indebtedness."

                        Permitted Investments.    In the Series B indenture, the definition of "Permitted Investments" definition includes Investments by us, or by a Restricted Subsidiary thereof, in us or a Restricted Subsidiary. In the Series D indenture, a proviso has been added that that investments in Foreign Subsidiaries shall not exceed $10,000,000 in the aggregate.

                        The Series B indenture also allows investments as "Permitted Investments" in an aggregate amount, as valued at the time each such Investment is made, not exceeding $10,000,000 for all such Investments from and after March 24, 1999. This amount is increased from time to time (1) to the extent any return of capital is received by us or a Restricted Subsidiary on an Investment previously made in reliance on this clause after March 24, 1999, in each case, up to, but not exceeding, the amount of the original Investment but only to the extent such return of capital is excluded from Consolidated Net Income and (2) by 100% of the aggregate net proceeds of any equity contribution received after March 24, 1999 by us (other than in return for Disqualified Capital Stock) from a holder of our Capital Stock, net of any amounts thereof used to calculate amounts available for Restricted Payments or previously relied upon to make any Permitted Investments pursuant to this clause. In the Series D indenture, clause (2) above also includes 100% of the aggregate net proceeds of any issuance

                82



                or sale of Capital Stock (other than Disqualified Capital Stock). The Series D indenture clarifies that equity contributions and stock issuances are the same by providing that clause (2) above also increases by 100% of the aggregate net proceeds of any issuance or sale of Capital Stock (other than Disqualified Capital Stock).

                In addition to the differences described above, there are a number of technical differences between the Series B indenture and the Series D indenture and certain of the definitions in the Series D indenture have been updated.

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                DESCRIPTION OF THE NOTES

                 

                We issued the Series Coriginal notes, and will issue the Series Dexchange notes under an indenture dated March 27, 2003Indenture (the "Indenture"“Indenture”), among us,Rayovac Corporation, the Initial Subsidiary Guarantors and U.S. Bank National Association, as trustee (the "Trustee"“Trustee”). The followingA copy of the Indenture has been filed with the SEC as Exhibit 4.1 to our Current Report on Form 8-K dated February 7, 2005, and filed on February 11, 2005, and is incorporated by reference as an exhibit to the registration statement of which this Prospectus is a summary of the material terms and provisions of the Series D notes. It does not include all of the provisions of the Indenture. We urge you to read the Indenture because it defines your rights.part. The terms of the Series D notesNotes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust“Trust Indenture Act"Act”),. The terms of the exchange notes are the same as the terms of the original notes, except that (i) we registered the exchange notes under the Securities Act, (ii) the exchange notes will not bear restrictive legends restricting their transfer under the Securities Act, (iii) holders of the exchange notes are not entitled to certain rights under the registration rights agreement and (iv) the exchange notes will not contain provisions relating to liquidated damages in effect onconnection with the dateoriginal notes under circumstances related to the timing of the exchange offer.

                The following description is a summary of the material provisions of the Indenture. ToIt does not restate that agreement in its entirety. We urge you to read the Indenture in its entirety because it, and not this description, defines your rights as holders of the Notes. Anyone who receives this Prospectus may obtain a copy of the Indenture referwithout charge by writing to the "Where You Can Find More Information" section of this prospectus. Spectrum Brands, Inc., Six Concourse Parkway, Suite 3300, Atlanta, Georgia 30328, Attention: Chief Financial Officer.

                You can find the definitions of certain capitalized terms used in this description under the following summary under "—subheading “—Certain Definitions" and throughoutDefinitions.” Certain defined terms used in this description. Capitalized terms that are useddescription but not otherwise defined hereinbelow under “—Certain Definitions” have the meanings assigned to them in the IndentureIndenture. In this description, the word “Company” refers only to Spectrum Brands, Inc. and such definitions are incorporated herein by reference. For purposes of this "Description of the Notes," the term "United" means United Industries Corporation, exclusivenot to any of its subsidiaries and except as otherwise required by the context, references“Notes” refers to the "notes" refer toexchange notes.

                Brief Description of the Series D notes offered by this prospectus.

                GeneralNotes

                The notes will beNotes:

                are general unsecured obligations of United, ranking subordinatethe Company;

                are subordinated in right of payment to all existing and future Senior Debt of the Company, including the Indebtedness of United,pari passu with all senior subordinated indebtedness of United,the Company under the Credit Agreement;

                arepari passu in right of payment with all existing and any future senior subordinated Indebtedness of the Company;

                are senior in right of payment to all currentany future subordinated Indebtedness of the Company;

                are guaranteed by the Guarantors as described under “—Note Guarantees;” and

                are effectively subordinated to any existing and future subordinated indebtednessIndebtedness and other liabilities of United.the Company’s Subsidiaries that are not guaranteeing the Notes.

                        The notes will be unconditionally guaranteed, on aAs of May 1, 2005, the Company would have had $1.444 billion of Senior Debt and $350.0 million of other senior subordinated basis, byindebtedness. As of April 3, 2005, the Company’s non-guarantor subsidiaries had approximately $349.6 million of indebtedness and other liabilities (excluding intercompany liabilities and excluding the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated. As of January 3, 2005, the Company’s non-guarantor subsidiaries had approximately $614.8 million of indebtedness and other liabilities (excluding intercompany liabilities and including the impact of the Tetra acquisition), to which the exchange notes would be effectively subordinated.

                As of the date of the Indenture, all of our existing subsidiaries were “Restricted Subsidiaries.” However, under the circumstances described below under the subheading “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” we are permitted to designate certain of our future domestic Restrictedsubsidiaries as “Unrestricted Subsidiaries.” Any Unrestricted Subsidiaries as described underwill not be subject to any of the covenant described under "Limitation on Creation of Subsidiaries."restrictive covenants in the Indenture and will not guarantee the Notes.

                Principal, Maturity Interest and PrincipalInterest

                 United will issue notes in this exchange offer in

                The Indenture provides for the issuance by the Company of Notes with an aggregateunlimited principal amount, of up to $235,000,000.which $700.0 million will be issued in this offering. The notes will mature on April 1, 2009. Subject to the covenants described below under "Covenants," UnitedCompany may issue additional notes (the “Additional Notes”) from time to time after this offering. Any offering of Additional Notes is subject to the covenant described below under the Indenture.caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock.” The notes offered herebyNotes and any additional notesAdditional Notes subsequently issued under the Indenture would be treated as a single seriesclass for all purposes under the Indenture.Indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase. The Company will issue Notes in denominations of $1,000 and integral multiples of $1,000. The Notes will mature on February 1, 2015.

                        The notesInterest on the Notes will bear interestaccrue at athe rate of 977 3/8% per annum whichand will be payable semiannuallysemi-annually in arrears on each AprilFebruary 1 and OctoberAugust 1, commencing Aprilon August 1, 2003,2005. The Company will make each interest payment to holdersthe Holders of record of the notes at the close of business on the immediately preceding MarchJanuary 15 and SeptemberJuly 15.

                Interest on the Notes will accrue from the date of original issuance or, if interest has already been paid, from the date it was most recently paid. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

                Methods of Receiving Payments on the Notes

                If a Holder has given wire transfer instructions to the Company, the Company will pay all principal, interest and premium and Liquidated Damages, if any, on that Holder’s Notes in accordance with those instructions. All other payments on Notes will be made at the office or agency of the Paying Agent and Registrar within the City and State of New York unless the Company elects to make interest payments by check mailed to the Holders at their addresses set forth in the register of Holders.

                Paying Agent and Registrar for the Notes

                The Trustee will initially act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the Holders, and the Company or any of its Subsidiaries may act as Paying Agent or Registrar.

                Transfer and Exchange

                A Holder may transfer or exchange Notes in accordance with the Indenture and the procedures described in “Notice to Investors.” The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company is not required to transfer or exchange any Note selected for redemption. Also, the Company is not required to transfer or exchange any Note for a period of 15 respectively. Interestdays before a selection of Notes to be redeemed.

                The registered Holder of a Note will be treated as the owner of it for all purposes.

                Note Guarantees

                The Notes are guaranteed, jointly and severally, by all of the Domestic Subsidiaries of the Company. Each Note Guarantee:

                is a general unsecured obligation of the Guarantor;

                is subordinated in right of payment to all existing and future Senior Debt of the Guarantor, including the Guarantee by the Guarantor of Indebtedness under the Credit Agreement;

                ispari passu in right of payment with all existing and any future senior subordinated Indebtedness of the Guarantor; and

                is senior in right of payment to any future subordinated Indebtedness of the Guarantor.

                Each Note Guarantee will be subordinated to the prior payment in full of all Senior Debt of that Guarantor. The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent that Note Guarantee from constituting a fraudulent conveyance under applicable law. See “Risk Factors—Federal and state laws permit a court to void the guarantees under certain circumstances.” As of May 1, 2005, the Guarantors would have had $1.390 billion of Senior Debt, of which $1.386 billion would have been guarantees of Indebtedness under the Credit Agreement, and $350.0 million of other senior subordinated indebtedness consisting of Guarantees of the Company’s existing senior subordinated notes due 2013.

                If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary on or after the date of the Indenture, then that newly acquired or created Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee.

                Subordination

                The payment of principal, interest and premium and Liquidated Damages, if any, on the Notes will be subordinated to the prior payment in full of all Senior Debt of the Company, including Senior Debt of the Company incurred after the date of the Indenture.

                The holders of Senior Debt of the Company will be entitled to receive payment in full of all Obligations due in respect of Senior Debt of the Company (including interest after the commencement of any bankruptcy proceeding at the rate specified in the applicable Senior Debt of the Company) before the Holders of Notes will be entitled to receive any payment with respect to the Notes (except that Holders of Notes may receive and retain Permitted Junior Securities and payments made from the trust described under “—Legal Defeasance and Covenant Defeasance”), in the event of any distribution to creditors of the Company in connection with:

                (1)any liquidation or dissolution of the Company;

                (2)any bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property;

                (3)any assignment for the benefit of creditors; or

                (4)any marshaling of the Company’s assets and liabilities.

                The Company also may not make any payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under “—Legal Defeasance and Covenant Defeasance”) if:

                (1)a payment default on Designated Senior Debt of the Company occurs and is continuing; or

                (2)any other default occurs and is continuing on any series of Designated Senior Debt of the Company that permits holders of that series of Designated Senior Debt of the Company to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Company or the holders of such Designated Senior Debt (a “nonpayment default”).

                Payments on the Notes may and shall be resumed:

                (1)in the case of a payment default on Designated Senior Debt of the Company, upon the date on which such default is cured or waived; and

                (2)in case of a nonpayment default on Designated Senior Debt of the Company, the earlier of the date on which such default is cured or waived or 179 days after the date on which the applicable Payment Blockage Notice is received, unless the maturity of such Designated Senior Debt of the Company has been accelerated.

                No new Payment Blockage Notice may be delivered unless and until:

                (1)360 days have elapsed since the delivery of the immediately prior Payment Blockage Notice; and

                (2)all scheduled payments of principal, interest and premium and Liquidated Damages, if any, on the Notes that have come due have been paid in full in cash.

                No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice.

                If the Trustee or any Holder of the Notes receives a payment in respect of the Notes (except in Permitted Junior Securities or from the trust described under “—Legal Defeasance and Covenant Defeasance”) when:

                (1)the payment is prohibited by these subordination provisions; and

                (2)the Trustee or the Holder has actual knowledge that the payment is prohibited;

                the Trustee or the Holder, as the case may be, shall hold the payment in trust for the benefit of the holders of Senior Debt of the Company. Upon the proper written request of the holders of Senior Debt of the Company, the Trustee or the Holder, as the case may be, shall deliver the amounts in trust to the holders of Senior Debt of the Company or their proper representative.

                The Company must promptly notify holders of its Senior Debt if payment of the Notes is accelerated because of an Event of Default.

                As a result of the subordination provisions described above, in the event of a bankruptcy, liquidation or reorganization of the Company, Holders of Notes may recover less ratably than creditors of the Company who are holders of Senior Debt of the Company.

                Payments under the Note Guarantee of each Guarantor will be subordinated to the prior payment in full of all Senior Debt of such Guarantor, including Senior Debt of such Guarantor incurred after the date of the Indenture, on the same basis as provided above with respect to the subordination of payments on the Notes by the Company to the prior payment in full of Senior Debt of the Company. See “Risk Factors—Your right to receive payments on the notes will accrue frombe junior to our existing and future senior indebtedness and the most recent dateguarantees of the notes will be junior to which interest has been paid.all of the guarantors’ existing and future senior indebtedness.”

                “Designated Senior Debt” means:

                (1)any Indebtedness outstanding under the Credit Agreement; and

                (2)after payment in full of all Obligations under the Credit Agreement, any other Senior Debt permitted under the Indenture the principal amount of which is $50.0 million or more and that has been designated by the Company as “Designated Senior Debt.”

                “Permitted Junior Securities” means:

                (1)Equity Interests in the Company or any Guarantor or any other business entity provided for by a plan of reorganization; and

                (2)debt securities of the Company or any Guarantor or any other business entity provided for by a plan of reorganization that are subordinated to all Senior Debt and any debt securities issued in exchange for Senior Debt to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are subordinated to Senior Debt under the Indenture.

                “Senior Debt” means:

                (1)all Indebtedness of the Company or any Guarantor outstanding under Credit Facilities and all Hedging Obligations with respect thereto;

                (2)any other Indebtedness of the Company or any Guarantor permitted to be incurred under the terms of the Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is on a parity with or subordinated in right of payment to the Notes or any Note Guarantee; and

                (3)all Obligations with respect to the items listed in the preceding clauses (1) and (2).

                Notwithstanding anything to the contrary in the preceding paragraph, Senior Debt will not include:

                (1)any liability for federal, state, local or other taxes owed or owing by the Company or any Guarantor;

                (2)any Indebtedness of the Company or any Guarantor to any of their Subsidiaries or other Affiliates;

                (3)any trade payables;

                (4)the portion of any Indebtedness that is incurred in violation of the Indenture;

                (5)any Indebtedness of the Company or any Guarantor that, when incurred, was without recourse to the Company or such Guarantor;

                (6)any repurchase, redemption or other obligation in respect of Disqualified Stock; or

                (7)the 8½% Senior Subordinated Notes due 2013 of the Company.

                Optional Redemption

                 The notes are not redeemable before April

                At any time prior to February 1, 2004. On2008, the Company may redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) at a redemption price of 107.375% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the redemption date, with the net cash proceeds of one or more occasions thereafter, UnitedEquity Offerings;provided that:

                (1)at least 65% of the aggregate principal amount of Notes issued under the Indenture (including any Additional Notes) remains outstanding immediately after the occurrence of such redemption (excluding Notes held by the Company and its Subsidiaries); and

                (2)the redemption occurs within 45 days of the date of the closing of such Equity Offering.

                Except pursuant to the preceding paragraph, the Notes will not be redeemable at the Company’s option prior to February 1, 2010.

                On or after February 1, 2010, the Company may redeem all or a part of the notes, in whole or in part,Notes upon not less than 30 nor more than 60 days’ notice, at the following redemption prices expressed(expressed as a percentagepercentages of principal amount,amount) set forth below plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the applicable redemption date, if redeemed during the twelve-month period beginning on AprilFebruary 1 of each year listedthe years indicated below:

                Year

                 Percentage
                 
                2004 104.938%
                2005 103.292%
                2006 101.646%
                2007 and thereafter 100.000%

                 In addition, United must pay all accrued and unpaid interest on the notes redeemed.

                Year


                  Percentage

                 

                2010

                  103.688%

                2011

                  102.458%

                2012

                  101.229%

                2013 and thereafter

                  100.000%

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                        In the event that United chooses to redeemIf less than all of the notes, selection ofNotes are to be redeemed at any time, the notesTrustee will select Notes for redemption willas follows:

                (1)if the Notes are listed, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or

                (2)if the Notes are not so listed, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate.

                No Notes of $1,000 or less shall be made by the Trustee either:

                  (1)
                  redeemed in compliance with the requirements of the principal national securities exchange, if any, on which such notes are listed; or

                  (2)
                  on a pro rata basis or by lot or by such method as the Trustee shall deem fair and appropriate.

                        Noticepart. Notices of redemption willshall be mailed by first-classfirst class mail at least 30 but not more than 60 days before the redemption date to each holderHolder of Notes to be redeemed at its registered address. On and afterNotices of redemption may not be conditional.

                If any redemption date, interest will cease to accrue on the notes or portions thereof called for redemption unless United fails to redeem any such note.

                Asset Drop-Down

                        The Equity Investor, in its sole discretion, may cause United to form and contribute all or substantially all of its assets to a newly-created Wholly-Owned Subsidiary (the "New Operating Company"), at which time the New Operating Company would assume all or substantially all of the liabilities of United (including the notes) (collectively, the "Asset Drop-Down"). As a result of the Asset Drop-Down, United would become a holding company (as such, the "Holding Company") that directly owns, and the primary asset of which would be, all of the equity interests in the New Operating Company. The New Operating Company would conduct all of the operations that were previously conducted by United and for purposes of this "Description of the Notes" and the indenture, the New Operating Company would be "United." The Asset Drop-Down will be carried out, if at all, in compliance with the "Merger, Consolidation or Sale of Assets" provisions described below, and the notes will continueNote is to be guaranteed by Restricted Subsidiaries of the New Operating Company as described below under "Guarantees."

                Subordination

                        The indebtedness represented by the notes and the Guarantees will be subordinateredeemed in right of payment to the prior payment in full in cash of all existing and future Senior Indebtedness of United and Guarantor Senior Indebtedness, respectively, andpari passu with all other senior subordinated indebtedness of United and the Guarantors, respectively, including the Series B notes and the guarantees thereof. As of April 23, 2003, the principal amount of outstanding Senior Indebtedness of United, on a consolidated basis, was $203.2 million and United could incur substantial additional Indebtedness, which could be Senior Indebtedness.

                        The holders of Senior Indebtedness of United will be entitled to receive payment in full in cash of all amounts due on or in respect of all Senior Indebtedness of United (including Accrued Bankruptcy Interest) and all outstanding Letter of Credit Obligations cash collateralized before the holders of the notes will be entitled to receive any payment with respect to the notes in the event of any distribution to creditors of United:

                  (1)
                  in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to United or to its creditors, as such, or to its assets;

                  (2)
                  in a liquidation or dissolution or other winding-up of United;

                  (3)
                  in an assignment for the benefit of creditors; or

                  (4)
                  in any marshalling of assets or liabilities of United (all of the foregoing referred to herein individually as a "Bankruptcy Proceeding" and collectively as "Bankruptcy Proceedings").

                85


                          For purposes of this section, all Senior Indebtedness now or hereafter existing and all Obligations relating thereto will not be deemed to have been paid in full unless and until all of the Obligations of any holder thereof have been indefeasibly paid in full in cash (including, without limitation, all Accrued Bankruptcy Interest) and all of the commitments thereunder have been terminated and, in the case of Letter of Credit Obligations, such Obligations have been fully drawn and paid in full in cash or 100% cash collateralized.

                          As a result of such subordination, in the event of any Bankruptcy Proceeding, holders of the notes may recover less ratably than creditors of United who are holders of Senior Indebtedness.

                          No payment may be made on the notes following (1) a Payment Default on Designated Senior Indebtedness or (2) a Non-Payment Event of Default on Designated Senior Indebtedness and the acceleration of the maturity of Designated Senior Indebtedness. Any such prohibition shall continue until the Payment Default is cured, waived in writing or ceases to exist or such acceleration has been rescinded or otherwise cured.

                          Upon a Non-Payment Event of Default on Designated Senior Indebtedness, no payment may be made on the notes for a period (a "Payment Blockage Period") beginning on the date the Trustee receives written notice from the Representative of the Non-Payment Event of Default until (subject to any blockage under the preceding paragraph) the earliest of

                    more than 179 days have elapsed since the Trustee received the notice,

                    the Non-Payment Event of Default has been cured or waived in writing or ceased to exist or such Designated Senior Indebtedness has been paid in full or

                    the Payment Blockage Period has been terminated by written notice to United or the Trustee from the Representative.

                          No Payment Blockage Period can extend beyond 179 days from the date the Trustee receivespart only, the notice (the "Initial Blockage Period"). Any number of additional Payment Blockage Periods may be commenced duringredemption that relates to that Note shall state the Initial Blockage Period; provided, that no additional Payment Blockage Period can extend beyond the Initial Blockage Period. After the Initial Blockage Period, no Payment Blockage Period may be commenced until at least 180 days after the Initial Blockage Period. No event of default with respect to Designated Senior Indebtedness (other than a Payment Default) which existed or was continuing on the first day of any Payment Blockage Period can serve as the basis for a second Payment Blockage Period, unless such event of default has been cured or waived for at least 90 days.

                          Each Guarantee will, to the extent set forth in the Indenture, be subordinate in right of payment to the prior indefeasible payment and satisfaction in full in cash of all Guarantor Senior Indebtedness of the respective Guarantor, including obligations of such Guarantor with respect to the Senior Credit Facility (including any guarantee thereof), and will be subject to the rights of holders of Designated Senior Indebtedness of such Guarantor to initiate blockage periods, upon terms substantially comparable to the subordination of the notes to all Senior Indebtedness of United.

                          If United or any Guarantor fails to make any payment on the notes or any Guarantee when due or within any applicable grace period, whether or not on account of payment blockage provisions, such failure would constitute an Event of Default under the Indenture. See "Events of Default."

                          By accepting these notes, each holder agrees to be bound by such provisions and, if any such holder fails to file a proper proof of claim of debt in any Bankruptcy Proceeding with respect to United at least 30 days before the time to file such proofs of claim expires, authorizes the Representative to file an appropriate claim on behalf of such holder. The subordination provisions of the Indenture cannot be amended without the consent of all holders of Senior Indebtedness unless such amendment could not adversely affect such holders.

                  86



                  Certain Covenants

                          The Indenture will contain, among others, the following covenants:

                  Limitation on Additional Indebtedness

                          United will not, and will not permit any Restricted Subsidiary of United to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness and including Disqualified Capital Stock); provided that United or any of the Guarantors may incur Indebtedness (including Acquired Indebtedness or Disqualified Capital Stock) if

                    after giving effect to the incurrence of such Indebtedness and the receipt and application of the proceeds thereof, United's Consolidated Fixed Charge Coverage Ratio is at least 2.0 to 1 and

                    no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of such Indebtedness.

                          Notwithstanding the foregoing, United and its Restricted Subsidiaries may incur Permitted Indebtedness; provided that neither United nor any Guarantor will incur any Permitted Indebtedness that ranks junior in right of payment to the notes or any Guarantee, as the case may be, that has a maturity or mandatory sinking fund payment prior to the maturity of the notes.

                          For purposes of determining compliance with this covenant, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness or is entitled to be incurred pursuant to the first paragraph of this covenant, United will, in its sole discretion, classify such item of Indebtedness in any manner that complies with this covenant and such item of Indebtedness will be treated as having been incurred pursuant to only one of the clauses in the definition of Permitted Indebtedness or pursuant to the first paragraph hereof. Accrual of interest and the accretion of accreted value will not be deemed to be an incurrence of Indebtedness for purposes of this covenant.

                  Limitation on Other Senior Subordinated Debt

                          United will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur, contingently or otherwise, any Indebtedness (other than the notes and the Guarantees, as the case may be) that is both:

                    (1)
                    subordinate in right of payment to any Senior Indebtedness of United or any Guarantor Senior Indebtedness, as the case may be, and

                    (2)
                    senior in right of payment to the notes or the Guarantees, as the case may be.

                          For purposes of this covenant, Indebtedness is deemed to be senior in right of payment to the notes or the Guarantees, as the case may be, if it is notpari passu with or subordinated in right of payment to the notes or such Guarantees.

                  Limitation on Restricted Payments

                          United will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment, unless:

                    (1)
                    no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such Restricted Payment;

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                      (2)
                      immediately after giving pro forma effect to such Restricted Payment, United could incur $1.00 of additional Indebtedness (other than Permitted Indebtedness) under the "Limitation on Additional Indebtedness" covenant; and

                      (3)
                      immediately after giving effect to such Restricted Payment, the aggregate of all Restricted Payments declared or made after March 24, 1999 does not exceed the sum of:

                      (a)
                      50% of the cumulative Consolidated Net Income of United subsequent to March 24, 1999 (or minus 100% of any cumulative deficit in Consolidated Net Income during such period) plus

                      (b)
                      100% of the aggregate Net Proceeds and the fair market value of securities or other property received by United from the issue or sale, after March 24, 1999, of Capital Stock (other than Disqualified Capital Stock or Capital Stock of United issued to any Subsidiary of United) of United or any Indebtedness or other securities of United convertible into or exercisable or exchangeable for Capital Stock (other than Disqualified Capital Stock) of United which have been so converted or exercised or exchanged, as the case may be, net of any amounts thereof previously relied upon or to be relied upon to make any Permitted Investments pursuant to clause (15) of the definition thereof, plus

                      (c)
                      without duplication of any amounts included in clauses (a) and (b) above, 100% of the aggregate net proceeds of any equity contribution received by United (other than in return for Disqualified Capital Stock) from a holder of United's Capital Stock, net of any amounts thereof previously relied upon or to be relied upon to make any Permitted Investments pursuant to clause (15) of the definition thereof, plus

                      (d)
                      to the extent the Bayer Stock is repurchased by United, an amount equal to the Net Proceeds or fair market value of securities or other property received by United from the issue and sale of the Bayer Stock to the extent such Bayer Stock then constitutes Disqualified Capital Stock and is therefor excluded under clause (b) above, plus

                      (e)
                      $7,500,000.

                            For purposes of determining under clause (3) above the amount expended for Restricted Payments, cash distributed shall be valued at the face amount thereof and property other than cash shall be valued at its fair market value determined, in good faith, by the Board of Directors of United.

                            The sum of amounts provided under clauses (3)(a), (b), (c) and (e) above through December 31, 2002 was in excess of $105 million, although United has made no Restricted Payments.

                            The provisions of this covenant will not prohibit:

                        (i)
                        the payment of any distribution within 60 days after the date of declaration thereof, if at such date of declaration such payment would comply with the provisions of the Indenture;

                        (ii)
                        the repurchase, redemption or other acquisition or retirement of any shares of Capital Stock of United or Indebtedness subordinated to the notes by conversion into, or by or in exchange for, shares of Capital Stock (other than Disqualified Capital Stock), or out of the Net Proceeds of the substantially concurrent sale (other than to a Subsidiary of United) of other shares of Capital Stock of United (other than Disqualified Capital Stock);

                        (iii)
                        the redemption or retirement of Indebtedness of United or any Guarantor subordinated to the notes or any Guarantee in exchange for, by conversion into, or out of the Net Proceeds of, a substantially concurrent sale or incurrence of Indebtedness (other than any

                    88


                          Indebtedness owed to a Subsidiary) of United or any Guarantor that is Refinancing Indebtedness;

                        (iv)
                        the retirement of any shares of Disqualified Capital Stock by conversion into, or by exchange for, shares of Disqualified Capital Stock, or out of the Net Proceeds of the substantially concurrent sale (other than to a Subsidiary of United) of other shares of Disqualified Capital Stock;

                        (v)
                        so long as no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such payment, the purchase, redemption or other acquisition for value of shares of Capital Stock of United or, in the event of the Asset Drop-Down, the Holding Company (other than Disqualified Capital Stock) or options on such shares held by United's or its Subsidiaries' (or, in the event of the Asset Drop-Down, the Holding Company's) officers, employees or directors or former officers, employees or directors (or their estates or beneficiaries under their estates) upon the death, disability, retirement or termination of employment of such current or former officers or employees pursuant to the terms of an employee benefit plan or any other agreement pursuant to which such shares of Capital Stock or options were issued or pursuant to a severance, buy-sale or right of first refusal agreement with such current or former officer or employee; provided that the aggregate cash consideration paid, or distributions or payments made, pursuant to this clause shall not exceed $3,000,000 in any fiscal year (provided, that United may carry over and make in a subsequent fiscal year, in addition to the amounts permitted for such fiscal year, the amount of such distributions permitted to have been made, but not made, in any preceding fiscal year) or $15,000,000 in the aggregate from and after March 24, 1999, provided that the foregoing amounts shall be increased by (a) the amount of any payments after March 24, 1999 by officers, employees or directors of the Holding Company, United or a Subsidiary thereof for the purchase of Capital Stock of United (other than in connection with the Recapitalization) or, in the event of the Asset Drop-Down, the Holding Company except to the extent such payments consist of proceeds from loans by United or a Subsidiary thereof and (b) the amount of any cash capital contributions after March 24, 1999 to United by THL or any Affiliate thereof used by United to purchase, redeem or otherwise acquire for value shares of such capital stock;

                        (vi)
                        the payment of THL Fees;

                        (vii)
                        so long as no Default or Event of Default shall have occurred and be continuing, payments not to exceed $100,000 in the aggregate to enable United to make payments to holders of its Capital Stock in lieu of issuance of fractional shares of its Capital Stock;

                        (viii)  Restricted Payments made pursuant to the Recapitalization Agreement;

                        (ix)
                        United or any Restricted Subsidiary from purchasing all (but not less than all), excluding directors' qualifying shares, of the Capital Stock or other ownership interests in a Subsidiary of United which Capital Stock or other ownership interests were not theretofore owned by United or a Subsidiary of United, such that after giving effect to such purchase such Subsidiary becomes a Restricted Subsidiary that is not a Foreign Subsidiary;

                        (x)
                        the payment of distributions (A) to the Equity Investor solely for the purpose of enabling the Equity Investor to pay its reasonable, ordinary course operating and administrative expenses and taxes in any fiscal year in an amount not to exceed $250,000, and (B) in the event of the Asset Drop-Down, to the Holding Company for the purpose of enabling the Holding Company to pay its reasonable, ordinary course operating and administrative

                    89


                          expenses, the amount of which distributions pursuant to subclauses (A) and (B) of this clause (x) in any fiscal year in an amount not to exceed $500,000; and

                        (xi)
                        in the event of the Asset Drop-Down, the payment of distributions to the Holding Company solely for the purpose of enabling the Holding Company to pay taxes attributable to the operations of the New Operating Company and its Subsidiaries to the extent such taxes are actually owed and the Holding Company is permitted or required to make such payments.

                            Notwithstanding the foregoing,

                      the amount of any payments made in reliance on clause (i) and clause (v) above shall reduce the amount otherwise available for Restricted Payments pursuant to subparagraphs (1)-(3) above and

                      in the event of the Asset Drop-Down, the amount of any payments that could otherwise have been made in reliance on clauses (v), (vi), (vii), and (x)(A) may be paid for the respective purposes set forth therein by the New Operating Company as dividends or distributions to the Holding Company.

                            Not later than the date of making any Restricted Payment, United shall deliver to the Trustee an Officers' Certificate stating that such Restricted Payment is permitted and setting forth in reasonable detail the basis upon which the calculations required by this covenant were computed (including without limitation the date, amount and nature of any purchase or contribution referred to in clauses (3)(b) or (c) above), which calculations may be based upon United's latest available financial statements, and, to the extent that the absence of a Default or an Event of Default is a condition to the making of such Restricted Payment, that no Default or Event of Default exists and is continuing and no Default or Event of Default will occur immediately after giving effect to any Restricted Payments.

                    Limitations on Investments

                            United will not, and will not permit any of its Restricted Subsidiaries to, make any Investment other than (1) a Permitted Investment or (2) an Investment that is made as a Restricted Payment in compliance with the "Limitation on Restricted Payments" covenant, after the Issue Date.

                    Limitations on Liens

                            United will not, and will not permit any of its Restricted Subsidiaries to, create, incur or otherwise cause or suffer to exist or become effective any Liens of any kind (other than Permitted Liens) upon any property or asset of United or any Restricted Subsidiary or any shares of stock or debt of any Restricted Subsidiary which owns property or assets, now owned or hereafter acquired, which secures Indebtednesspari passu with or subordinated to the notes or any Guarantee unless:

                      (1)
                      if such Lien secures Indebtedness which ispari passu with the notes or such Guarantee, then the notes or such Guarantee, as the case may be, are secured on an equal and ratable basis with the obligations so secured until such time as such obligation is no longer secured by a Lien or

                      (2)
                      if such Lien secures Indebtedness which is subordinated to the notes or such Guarantee, any such Lien shall be subordinated to the Lien granted to the Holders of the notes in the same collateral as that securing such Lien to the same extent as such subordinated Indebtedness is subordinated to the notes or such Guarantee, as the case may be.

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                      Limitation on Transactions with Affiliates

                              United will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or suffer to exist any transaction or series of related transactions (including, without limitation, the sale, purchase, exchange or lease of assets, property or services) with any Affiliate (including entities in which United or any of its Restricted Subsidiaries owns a minority interest) (an "Affiliate Transaction") or extend, renew, waive or otherwise modify the terms of any Affiliate Transaction entered into prior to the date hereof if such extension, renewal, replacement, waiver or other modification is more disadvantageous to the holders of the notes in any material respect than the original agreement as in effect on the Issue Date unless

                        (1)
                        such Affiliate Transaction is between or among United and/or its Restricted Subsidiaries and/or, in the event of the Asset Drop-Down, the Holding Company; or

                        (2)
                        the terms of such Affiliate Transaction are fair and reasonable to United or such Restricted Subsidiary, as the case may be, and the terms of such Affiliate Transaction are at least as favorable as the terms which could be obtained by United or such Restricted Subsidiary, as the case may be, in a comparable transaction made on an arm's-length basis between unaffiliated parties.

                              In any Affiliate Transaction involving an amount or having a value in excess of $2,000,000 which is not permitted under clause (1) above, United must obtain a resolution of the Board of Directors certifying that such Affiliate Transaction complies with clause (2) above. In any Affiliate Transaction with a value in excess of $10,000,000 which is not permitted under clause (1) above (other than any sale by United of its Capital Stock that is not Disqualified Capital Stock), United must obtain a written opinion as to the fairness of such a transaction from an independent investment banking firm. The limitations set forth in this and the preceding paragraph will not apply to:

                        (1)
                        any Restricted Payment that is not prohibited by the "Limitation on Restricted Payments" covenant or Permitted Investment permitted by the "Limitation on Investments" covenant,

                        (2)
                        any transaction pursuant to an agreement, arrangement or understanding existing on the Issue Date,

                        (3)
                        any transaction, compensation or agreement, approved by the Board of Directors of United, with an officer or director of, or consultant to, United or of any Subsidiary in his or her capacity as officer or director entered into in the ordinary course of business,

                        (4)
                        any transaction permitted by the provisions described under "Merger, Consolidation or Sale of Assets,"

                        (5)
                        any transaction (a) between United and any THL Group Member solely in its capacity as a holder or buyer of United's Capital Stock or (b) in the event of the Asset Drop-Down, between the New Operating Company and the Holding Company, solely in its capacity as a holder or buyer of the New Operating Company's Capital Stock, provided that any such transaction described in this clause (5) is not otherwise prohibited by the Indenture, or

                        (6)
                        in the event of the Asset Drop-Down, any commercially reasonable transaction between the New Operating Company and the Holding Company solely in its capacity as a holder or buyer of the New Operating Company's Indebtedness provided that any such transaction is not otherwise prohibited by the Indenture.

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                        Limitation on Creation of Subsidiaries

                                United will not create or acquire, and will not permit any of its Restricted Subsidiaries to create or acquire, any Subsidiary other than:

                          (1)
                          a Restricted Subsidiary that is acquired or created in connection with an acquisition by United or

                          (2)
                          an Unrestricted Subsidiary;

                        provided, however, that each Restricted Subsidiary that is not a Foreign Subsidiary acquired or created pursuant to clause (1) will at the time it has either assets or stockholder's equity in excess of $200,000 execute a guarantee in the form attached to the Indenture, pursuant to which such Restricted Subsidiary will become a Guarantor, which Guarantee shall be subordinated to all Guarantor Senior Indebtedness of such Restricted Subsidiary to the same extent as the notes are subordinated to United's Senior Indebtedness. Notwithstanding the foregoing, any such Guarantee shall provide by its terms that it shall be automatically and unconditionally released and discharged upon certain mergers, consolidations, sales and other dispositions (including, without limitation, by foreclosure) in accordance with the Indenture.

                        Limitation on Certain Asset Sales

                                United will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

                          (1)
                          United or such Restricted Subsidiary, as the case may be, receives consideration at the time of such sale or other disposition at least equal to the fair market value of the equity interests, property or assets constituting such Asset Sale (as determined in good faith by the Board of Directors of United, and evidenced by a board resolution);

                          (2)
                          not less than 75% of the consideration received by United or such Restricted Subsidiary, as the case may be, is in the form of cash or Temporary Cash Investments; and

                          (3)
                          the Asset Sale Proceeds received by United or such Restricted Subsidiary are applied:

                          (a)
                          first, to the extent United elects, or is required, to prepay, repay or purchase debt or to reduce an unused commitment to lend under any then existing Senior Indebtedness of United or any Restricted Subsidiary within 365 days following the receipt of the Asset Sale Proceeds from any Asset Sale, but only to the extent that any such repayment shall result in a permanent reduction of the commitments thereunder in an amount equal to the principal amount so repaid or be applied to secure Letter of Credit Obligations; and

                          (b)
                          second, to the extent of the balance of Asset Sale Proceeds after application as described above, to the extent United elects, to an investment in assets (including Capital Stock or other securities purchased in connection with the acquisition of Capital Stock or property of another Person) used or useful in businesses similar or ancillary to the business of United or such Restricted Subsidiary as conducted at the time of such Asset Sale, provided that such investment occurs or United or a Restricted Subsidiary enters into contractual commitments to make such investment, subject only to customary conditions (other than the obtaining of financing), on or prior to the 365th day following receipt of such Asset Sale Proceeds (the "Reinvestment Date") and Asset Sale Proceeds contractually committed are so applied within 365 days following the receipt of such Asset Sale Proceeds.

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                                  Pending the final application of any such Available Asset Sale Proceeds, United or such Restricted Subsidiary may temporarily reduce Indebtedness under a revolving credit facility or otherwise invest such Available Asset Sale Proceeds in any manner not prohibited under the Indenture.

                                  If, on the Reinvestment Date with respect to any Asset Sale, the Available Asset Sale Proceeds exceed $10,000,000, United shall apply an amount equal to such Available Asset Sale Proceeds to an offer to repurchase (an "Excess Proceeds Offer") the notes from the holders of notes and all holders of other Indebtedness that ispari passu with the notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase or redeem with the proceeds of asset sales to purchase the maximum principal amount of notes and such otherpari passu Indebtedness that may be purchased out of the Available Asset Sale Proceeds. The offer price in any Excess Proceeds Offer will be equal to 100%portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption.

                          Mandatory Redemption

                          The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

                          Repurchase at the Option of Holders

                          Change of Control

                          If a Change of Control occurs, each Holder of Notes will have the right to require the Company to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of that Holder’s Notes pursuant to a Change of Control Offer on the terms set forth in the Indenture. In the Change of Control Offer, the Company will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date of repurchase and will be payable in cash. If United is required to make an Excess Proceeds Offer, United will mail, withinpurchase. Within 30 days following any Change of Control, the Reinvestment Date,Company will mail a notice to each Holder describing the holderstransaction or transactions that constitute the Change of the notes stating, among other things:

                            (1)
                            that holders of notesControl and such otherpari passu Indebtedness have the right to require United to apply the Available Asset Sale Proceedsoffering to repurchase Notes on the Change of Control Payment Date specified in such notes and otherpari passu Indebtedness at a purchase price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to thenotice, which date of purchase;

                            (2)
                            the purchase date (the "Purchase Date"), which shall be no earlier than 30 days and no later than 60 days from the date such notice is mailed;

                            (3)
                            mailed, pursuant to the instructions, determinedprocedures required by United, that each holder must followthe Indenture and described in ordersuch notice. The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to havethe extent such notes repurchased;laws and

                            (4)
                            the calculations used regulations are applicable in determining the amount of Available Asset Sale Proceeds to be applied toconnection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control provisions of the Indenture by virtue of such notes.
                          compliance.

                           The Excess Proceeds Offer shall remain open for a period

                          On the Change of 20 Business Days following its commencement.Control Payment Date, the Company will, to the extent lawful:

                          (1)accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

                          (2)deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

                          (3)deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company.

                                  UnitedThe Paying Agent will promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book entry) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any;provided that each such new Note will be in a principal amount of $1,000 or an integral multiple thereof.

                          Prior to complying with any of the provisions of this “Change of Control” covenant, but in any event within 30 days following a Change of Control, the Company will either repay all outstanding Senior Debt or obtain the

                          requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Excess ProceedsChange of Control Offer on or as soon as practicable after the Purchase Date by sending a press release toChange of Control Payment Date.

                          The Credit Agreement prohibits the Dow Jones News Service or similar business news service in the United States. If an Excess Proceeds Offer is not fully subscribed, United may retainCompany from purchasing any Notes, and also provides that portioncertain change of the Available Asset Sale Proceeds not required to repurchase notes and otherpari passu Indebtedness and use such portion for general corporate purposes, and such retained portion shall not be considered in the calculation of "Available Asset Sale Proceeds"control events with respect to any subsequent offerthe Company constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase notes.tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                          The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

                          The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

                          The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

                          Asset Sales

                          The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

                          (1)the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

                          (2)such fair market value is determined by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

                          (3)at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Replacement Assets or a combination of both. For purposes of this provision, each of the following shall be deemed to be cash:

                          (a)

                          any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the

                          transferee of any such assets pursuant to a written novation agreement that releases the Company or such Restricted Subsidiary from further liability; and

                          (b)any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion) within 90 days of the applicable Asset Sale.

                          Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option:

                          (1)to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or

                          (2)to purchase Replacement Assets or make a capital expenditure in or that is used or useful in a Permitted Business.

                          Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

                          Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” Within 10 days after the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that ispari passu with the Notes or any Note Guarantee containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such otherpari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes and such otherpari passu Indebtedness plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of notesNotes and such otherpari passu Indebtedness tendered into such Excess ProceedsAsset Sale Offer exceeds the amount of Available Asset Sale Proceeds required to be applied to such Excess Proceeds, Offer, the notesNotes and such otherpari passu Indebtedness to be purchased willshall be purchased on a pro rata basis.basis based on the principal amount of Notes and such otherpari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

                          The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

                          The Credit Agreement prohibits the Company from purchasing any Notes, and also provides that certain asset sale events with respect to the Company constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event an Asset Sale occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                          Certain Covenants

                          Restricted Payments

                          (A) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

                          (1)declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

                          (2)purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any Restricted Subsidiary of the Company held by Persons other than the Company or any of its Restricted Subsidiaries, other than the purchase, redemption or acquisition or retirement for value of any of (x) all of the Equity Interests in VARTA not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the VARTA Joint Venture Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed €5.0 million; (y) all of the Equity Interests of Ningbo Baowang not held by the Company or any of its Restricted Subsidiaries to the extent the cash purchase price does not exceed $5.0 million; and (z) all of the Equity Interests of Microlite not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the Microlite Purchase Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed $10.0 million;

                          (3)make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or the Note Guarantees, except a payment of interest or principal on or after the Stated Maturity thereof or on Indebtedness permitted to be incurred pursuant to clause (6) of the definition of Permitted Debt; or

                          (4)make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

                          unless, at the time of and after giving effect to such Restricted Payment:

                          (1)no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and

                          (2)the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;” and

                          (3)such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (2), (3) (4) (to the extent such dividends are paid to the Company or any of its Restricted Subsidiaries) and (5) of the next succeeding paragraph (B)), is less than the sum, without duplication, of:

                          (a)50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit),plus

                          (b)100% of the aggregate net cash proceeds received by the Company since the date of the Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company);plus

                          (c)with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the date of the Indenture, an amount equal to the net reduction in Investments (other than reductions in Permitted Investments) in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income, from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary,plus

                          (d)$50.0 million.

                          (B) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

                          (1)the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

                          (2)the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company or any Guarantor in exchange for, or out of the net cash proceeds of a contribution to the common equity of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3) (b) of the preceding paragraph (A);

                          (3)the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

                          (4)the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its common Equity Interests on a pro rata basis;

                          (5)Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company;provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange shall be excluded from clause (3) (b) of the preceding paragraph (A);

                          (6)the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants if such Capital Stock represents all or a portion of the exercise price thereof;

                          (7)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any employee, former employee, director or former director of the Company (or any of its Restricted Subsidiaries) upon the death, disability or termination of employment of any of the foregoing pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in any fiscal year shall not exceed the sum of (x) $5.0 million and (y) the amount of Restricted Payments permitted but not made pursuant to this clause (7) in the immediately preceding fiscal year; or

                          (8)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Company from the minority stockholders (or other holders of minority interest, however designated) of such Restricted Subsidiary for fair market value;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $20.0 million.

                          The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

                          Incurrence of Indebtedness and Issuance of Preferred Stock

                          The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Debt), and the Company will not permit any of its Restricted Subsidiaries to issue any preferred stock;provided, however, that the Company or any Restricted Subsidiary of the Company may incur Indebtedness, if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period.

                          So long as no Default shall have occurred and be continuing or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

                          (1)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness under Credit Facilities (and the incurrence of Guarantees thereof) in an aggregate principal amount at any one time outstanding pursuant to this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $1.6 billion,less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary to permanently repay any such Indebtedness (and, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) pursuant to the covenant “—Repurchase at the Option of Holders—Asset Sales;”

                          (2)the incurrence of Existing Indebtedness;

                          (3)the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of the Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

                          (4)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Guarantor, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed, at any time outstanding, the greater of (a) $50.0 million and (b) 10% of Consolidated Net Tangible Assets of the Company;

                          (5)

                          the incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace

                          Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2) (other than the 9 7/8% Senior Subordinated due 2009 of United Industries Corporation incurred in connection with its acquisition by the Company), (3), (4), (5), or (8) of this paragraph;

                          (6)the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries;provided, however, that:

                          (a)if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;

                          (b)Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and

                          (c)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

                          (7)the Guarantee by the Company or any Restricted Subsidiary of the Company of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant;

                          (8)the incurrence by the Company or any Restricted Subsidiary of the Company of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (8), not to exceed $50.0 million; and

                          (9)the incurrence of Indebtedness by the Company or any Restricted Subsidiary of the Company arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business;provided that such Indebtedness is extinguished within five business days of incurrence.

                          For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to classify at the time of its incurrence such item of Indebtedness in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued under the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. In addition, any Indebtedness originally classified as incurred pursuant to clauses (1) through (9) above may later be reclassified by the Company such that it will be deemed as having been incurred pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to such new clause at the time of such reclassification.

                          Notwithstanding any other provision of this “Limitation on Indebtedness” covenant, the maximum amount of Indebtedness that may be Incurred pursuant to this “Limitation on Indebtedness” covenant will not be deemed to be exceeded, with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.

                          Limitation on Preferred Stock of Restricted SubsidiariesSenior Subordinated Debt

                           United

                          The Company will not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of the Company unless it ispari passu or subordinate in right of payment to the Notes to the same extent. No Guarantor will incur any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor unless it ispari passu or subordinate in right of payment to such Guarantor’s Note Guarantee to the same extent. For purposes of the foregoing, no Indebtedness will be deemed to be subordinate or junior in right of payment to any other Indebtedness of the Company or any Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or created in respect thereof or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.

                          Liens

                          The Company will not, and will not permit any of its Restricted SubsidiarySubsidiaries to, issuecreate, incur, assume or otherwise cause or suffer to exist or become effective any Preferred Stock (except Preferred Stock to United or a Restricted Subsidiary) or, other than with respect to an acquired Guarantor, permitLien of any Personkind securing Indebtedness (other than UnitedPermitted Liens) upon any of their property or a Restricted Subsidiary) to hold any such Preferred Stockassets, now owned or hereafter acquired, unless United or such Restricted Subsidiary would be entitled to incur or assume Indebtednessall payments due under the "LimitationIndenture and the Notes are secured on Additional Indebtedness" covenant in an aggregate principal amount equal to the aggregate liquidation value of the Preferred Stock to be issued.

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                          Limitation on Capital Stock of Subsidiaries

                                  United will not:

                            (1)
                            sell, pledge, hypothecate or otherwise convey or dispose of any Capital Stock of a Subsidiary (other than Liens under the Senior Credit Facility or under the terms of any Designated Senior Indebtedness and Liens not prohibited by the "Limitations on Liens" covenant) other than to United or another Restricted Subsidiary or

                            (2)
                            permit any of its Subsidiaries to issue any Capital Stock (other than director's qualifying shares) other than (a) to United or a Wholly-Owned Subsidiary of United or (b) to any other shareholder of such Subsidiary (including to another Subsidiary) in an amount not to exceed such shareholders' proportionate share of any dividend, distribution or other issuance to all shareholders.

                                  The foregoing restrictions will not apply to an Asset Sale made in complianceratable basis with the "Limitation on Certain Asset Sales" covenant or the issuance of Preferred Stock in compliance with the "Limitation on Preferred Stock of Restricted Subsidiaries" covenant.obligations so secured until such time as such obligations are no longer secured by a Lien.

                          Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

                           United

                          The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or sufferpermit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary of United to:

                            (1)
                            (a)     

                            (1)pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its Restricted Subsidiaries;

                            (2)make loans or advances to the Company or any of its Restricted Subsidiaries; or

                            (3)transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

                            However, the preceding restrictions do not apply to United or any Restricted Subsidiary of United (i) on its Capital Stock or (ii) with respect to any other interest or participation in, or measured by, its profits or

                            (b)
                            repay any Indebtedness or any other obligation owed to United or any Restricted Subsidiary of United,

                            (2)
                            make loans or advances or capital contributions to United or any of its Restricted Subsidiaries or

                            (3)
                            transfer any of its properties or assets to United or any of its Restricted Subsidiaries, except for such encumbrances or restrictions existing under or by reason of

                            (a)
                            encumbrances or restrictions existing on the Issue Date to the extent and in the manner such encumbrances and restrictions are in effect on the Issue Datewith respect to:

                            (1)the Credit Agreement, Existing Indebtedness or any other agreements in effect on the date of the Indenture and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the Indenture;

                            (2)applicable laws, rules, regulations or orders;

                            (3)any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements as in effect on the date of the acquisition;

                            (4)in the case of clause (3) of the first paragraph of this covenant:

                            (a)provisions that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset;

                            (b)restrictions existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture; or

                            (c)restrictions arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary;

                            (5)provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business;

                            (6)any agreement for the sale or other disposition of all or substantially all of the capital stock of, or property and assets of, a Restricted Subsidiary that restricted distributions by that Restricted Subsidiary pending such sale or other disposition; and

                            (7)Indebtedness of a Foreign Subsidiary permitted to be incurred under the Indenture;provided that (a) such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being incurred and (b) such encumbrances or restrictions will not affect the Company’s ability to make principal and interest payments on the Notes, as determined in good faith by the Board of Directors of the Company.

                            Merger, Consolidation or no more restrictive in any material respect (including without limitation pursuant to the Senior Credit FacilitySale of Assets

                            The Company will not, directly or Series B Indenture),

                            (b)
                            the Indenture, the notes and the Guarantees,

                            (c)
                            applicable law,

                            (d)
                            any instrument governing Acquired Indebtedness, which encumbranceindirectly: (1) consolidate or restriction is not applicable to anymerge with or into another Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person (including any Subsidiary of the Person), so acquired,

                            (e)
                            any agreement or instrument governing Indebtedness (whether or not outstanding) of Foreign Subsidiaries,

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                              (f)
                              customary non-assignment provisions in leases, licensesthe Company is the surviving corporation) or other agreements entered in the ordinary course of business and consistent with past practices,

                              (g)
                              Refinancing Indebtedness; provided that such payment restrictions are no more restrictive in any material respect than those contained in the agreements governing the Indebtedness being extended, refinanced, renewed, replaced, defeased(2) sell, assign, transfer, convey or refunded,

                              (h)
                              customary restrictions in security agreements or mortgages or other similar agreements securing Indebtedness of United or a Restricted Subsidiary to the extent such restrictions restrict the transfer of the property subject to such security agreements and mortgages or

                              (i)
                              customary restrictions with respect to a Restricted Subsidiary of United pursuant to an agreement that has been entered into for the sale or dispositionotherwise dispose of all or substantially all of the Capital Stockproperties and assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person or Persons, unless:

                              (1)either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (i) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and (ii) assumes all the obligations of the Company under the Notes, the Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

                              (2)immediately after giving effect to such transaction no Default or Event of Default exists;

                              (3)immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made, will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

                              (4)each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this “Consolidation, Merger or Sale of Assets” covenant, shall have by amendment to its Note Guarantee confirmed that its Note Guarantee shall apply to the obligations of the Company or the surviving Person in accordance with the Notes and the Indenture.

                              In addition, neither the Company nor any Restricted Subsidiary may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Clause (3) above of this “Merger, Consolidation or Sale of Assets” covenant will not apply to any merger, consolidation or sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Restricted Subsidiaries.

                              Transactions with Affiliates

                              The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

                              (1)such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company; and

                              (2)the Company delivers to the Trustee:

                              (a)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this covenant and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors; and

                              (b)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing.

                              The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

                              (1)transactions between or among the Company and/or its Restricted Subsidiaries;

                              (2)payment of reasonable and customary fees and compensation to, and reasonable and customary indemnification arrangements and similar payments on behalf of, directors of the Company;

                              (3)Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Restricted Payments;”

                              (4)any sale of Capital Stock (other than Disqualified Stock) of the Company;

                              (5)loans and advances to officers and employees of the Company or any of its Restricted Subsidiaries for bona fide business purposes in the ordinary course of business consistent with past practice;

                              (6)any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any of its Restricted Subsidiaries with officers and employees of the Company or any of its Restricted Subsidiaries and the payment of compensation to officers and employees of the Company or any of its Restricted Subsidiaries (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), in each case in the ordinary course of business and consistent with past practice; and

                              (7)

                              any agreements or arrangements in effect on the date of the Indenture, or any amendment, modification, or supplement thereto or any replacement thereof, as long as such agreement or

                              arrangement, as so amended, modified, supplemented or replaced, taken as a whole, is not more disadvantageous to the Company and its Restricted Subsidiaries than the original agreement as in effect on the date of the Indenture, as determined in good faith by the Company’s Board of Directors, and any transactions contemplated by any of the foregoing agreements or arrangements.

                              Designation of Restricted and Unrestricted Subsidiaries

                              The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary;provided that:

                              (1)any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated will be deemed to be an incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such incurrence of Indebtedness would be permitted under the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;”

                              (2)the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be a Restricted Investment made as of the time of such designation and that such Investment would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                              (3)such Subsidiary does not own any Equity Interests of, or hold any Liens on any Property of, the Company or any Restricted Subsidiary;

                              (4)the Subsidiary being so designated:

                              (a)is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

                              (b)is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

                              (c)has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation; and

                              (d)has at least one director on its Board of Directors that is not a director or officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or officer of the Company or any of its Restricted Subsidiaries; and

                              (5)no Default or Event of Default would be in existence following such designation.

                              Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the Indenture. If, at any time, any Unrestricted Subsidiary would fail to meet any of the preceding requirements described in clause (4) above, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness, Investments, or Liens on the property, of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary.

                          Subsidiary of the Company as of such date and, if such Indebtedness, Investments or Liens are not permitted to be incurred as of such date under the Indenture, the Company shall be in default under the Indenture.

                          The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;provided that:

                          (1)such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period;

                          (2)all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                          (3)all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the caption “—Certain Covenants—Liens;” and

                          (4)no Default or Event of Default would be in existence following such designation.

                          Limitation on SaleIssuances and Lease-Back TransactionsSales of Equity Interests in Restricted Subsidiaries

                           United shall

                          The Company will not transfer, convey, sell, lease or otherwise dispose of, and shallwill not permit any of its Restricted Subsidiaries to, issue, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the Company to enter into any Sale and Lease-Back Transaction unless:

                            (1)
                            Person (other than the consideration received in such Sale and Lease-Back Transaction is at least equalCompany or a Restricted Subsidiary of the Company or, if necessary, shares of its Capital Stock constituting directors’ qualifying shares or issuances of shares of Capital Stock of foreign Restricted Subsidiaries to foreign nationals, to the fair market valueextent required by applicable law), except:

                            (1)if, immediately after giving effect to such issuance, transfer, conveyance, sale, lease or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the “Restricted Payments” covenant if made on the date of such issuance or sale and the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;” or

                            (2)other sales of Capital Stock of a Restricted Subsidiary by the Company or a Restricted Subsidiary,provided that the Company or such Restricted Subsidiary complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                            Guarantees

                            If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary on or after the date of the property sold, as determined, in good faith, byIndenture, then that newly acquired or created Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the BoardTrustee.

                            The Company will not permit any of Directorsits Restricted Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to secure the payment of United, and

                            (2)
                            Unitedany other Indebtedness of the Company or any Restricted Subsidiary thereof, other than Foreign Subsidiaries, unless such Restricted Subsidiary is a Guarantor or simultaneously executes and delivers a supplemental indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to orpari passu with such Subsidiary’s Guarantee of such other Indebtedness unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the caseNotes are subordinated to such Senior Debt. The form of the Note Guarantee will be attached as an exhibit to the Indenture.

                            A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:

                            (1)immediately after giving effect to that transaction, no Default or Event of Default exists; and

                            (2)either:

                            (a)the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or

                            (b)such sale or other disposition or consolidation or merger complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                            The Note Guarantee of a Guarantor will be could incur the Attributable Indebtedness in respect of such Sale and Lease-Back Transaction in compliance with the "Limitation on Additional Indebtedness" covenant.

                          released:

                          (1)in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) an Affiliate of the Company, if the sale of all such Capital Stock of that Guarantor complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;”

                          (2)if the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under the Indenture; or

                          (3)solely in the case of a Note Guarantee created pursuant to the second paragraph of this covenant, upon the release or discharge of the Guarantee which resulted in the creation of such Note Guarantee pursuant to this covenant “—Certain Covenants—Guarantees,” except a discharge or release by or as a result of payment under such Guarantee.

                          Payments for ConsentChange of Control

                           Neither United nor any of its Subsidiaries will, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any holder of any notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the notes unless such consideration is offered to be paid or agreed to be paid to all holders of the notes which so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

                          Change of Control Offer

                                  In the event ofIf a Change of Control Unitedoccurs, each Holder of Notes will be obligatedhave the right to makerequire the Company to repurchase all or any part (equal to $1,000 or an offerintegral multiple thereof) of that Holder’s Notes pursuant to purchase (the "Changea Change of Control Offer")Offer on the outstanding notes atterms set forth in the Indenture. In the Change of Control Offer, the Company will offer a purchase priceChange of Control Payment in cash equal to 101% of the aggregate principal amount thereof together with anyof Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date of purchase. Within 30 days following any Change of Control, the Company will mail a notice to each Holder describing the transaction or transactions that constitute the Change of Control and offering to repurchase Notes on the Change of Control Payment Date (as hereinafter defined) (such applicable purchase price being hereinafter referred to as the "Change of Control Purchase Price")specified in accordance with the procedures set forth in this covenant.

                                  Within 30 days following the firstsuch notice, which date on which United has knowledge of any Change of Control, United will send by first-class mail, postage prepaid, to the Trustee and to each holder of the notes, at the address appearing in the register maintained by the registrar of the notes, a notice stating:

                            (1)
                            that the Change of Control Offer is being made pursuant to this covenant and that all notes tendered will be accepted for payment, and otherwise subject to the terms and conditions set forth herein;

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                              (2)
                              the Change of Control Purchase Price and the purchase date (which shall be a Business Day no earlier than 20 Business Days30 days and no later than 60 days from the date such notice is mailed, (the "Changepursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Control Payment Date");

                              (3)
                              Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any note not tendered will remain outstanding and continue to accrue interest;

                              (4)
                              that, unless United defaults in the payment ofsecurities laws or regulations conflict with the Change of Control Purchase Price, any notes accepted for payment pursuantprovisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date;

                              (5)
                              that holders accepting the offer to have their notes purchased pursuant to a Change of Control Offer will be required to surrender the notes, with the form entitled "Option of Holder to Elect Purchase" on the reverseprovisions of the note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Change of Control Payment Date;

                              (6)
                              that holders will be entitled to withdraw their acceptance if the Paying Agent receives, not later than the close of business on the Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount of the notes delivered for purchase, and a statement that such holder is withdrawing his election to have such notes purchased;

                              (7)
                              that holders whose notes are being purchased only in part will be issued new notes equal in principal amount to the unpurchased portion of the notes surrendered, provided that each note purchased and each such new note issued shall be in an original principal amount in denominations of $1,000 and integral multiples thereof; and

                              (8)
                              any other procedures that a holder must follow to accept a Change of Control Offer or effect withdrawalIndenture by virtue of such acceptance.
                            compliance.

                             

                            On the Change of Control Payment Date, Unitedthe Company will, to the extent lawful:

                              (1)
                              accept for payment notes

                              (1)accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

                              (2)deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

                              (3)deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company.

                              The Paying Agent will promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Offer;

                              (2)
                              deposit atPayment for such Notes, and the paying office established by United money sufficient to pay the purchase price of all notes or portions thereof so tendered;Trustee will promptly authenticate and

                              (3)
                              deliver or mail (or cause to be deliveredtransferred by book entry) to the Trustee notes so accepted together with an Officers' Certificate stating the notes or portions thereof tenderedeach Holder a new Note equal in principal amount to United.

                                    The Indenture will require that if the Senior Credit Facility is in effect, or any amounts are owing thereunder or in respect thereof, at the timeunpurchased portion of the occurrenceNotes surrendered, if any;provided that each such new Note will be in a principal amount of a Change of Control, prior$1,000 or an integral multiple thereof.

                            Prior to the mailingcomplying with any of the notice to holders described above,provisions of this “Change of Control” covenant, but in any event within 30 days following the first date on which United has knowledge of anya Change of Control, United covenants to

                              (1)
                              the Company will either repay in full all obligations underoutstanding Senior Debt or in respect of the Senior Credit Facility or offer to repay in full all obligations under or in respect of the Senior Credit Facility and repay the obligations under or in respect of the Senior Credit Facility of each lender who has accepted such offer; or

                              (2)
                              obtain the

                              requisite consentconsents, if any, under theall agreements governing outstanding Senior Credit FacilityDebt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the notesresults of the Change of Control Offer on or as described above.

                            soon as practicable after the Change of Control Payment Date.

                             United will be deemed

                            The Credit Agreement prohibits the Company from purchasing any Notes, and also provides that certain change of control events with respect to have knowledge of all filings with the SEC. United must first comply withCompany constitute a default under the covenant described inCredit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the preceding paragraph before it shall be required to purchase notes in

                            96



                            Company becomes a party may contain similar restrictions and provisions. In the event of a Change of Control; providedControl occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that United'scontain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to comply with the covenant described in the preceding paragraph constitutespurchase tendered Notes would constitute an Event of Default described in clause (3) under "Events of Default" below if not cured within 60 days after the notice required by such clause. As a result of the foregoing, a holder of the notes may not be able to compel United to purchase the notes unless United is able at the time to refinance all of the obligations under or in respect of the Senior Credit Facility or obtain requisite consents under the Indenture which would, in turn, constitute a default under such Senior Credit Facility. Failure by UnitedDebt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                            The provisions described above that require the Company to make a Change of Control Offer when required byfollowing a Change of Control will be applicable regardless of whether any other provisions of the Indenture constitutes a default under the Indenture and, if not cured within 60 days after notice, constitutes an Event of Default.

                                    The Indenture will require that:

                              (1)
                              if United or any Subsidiary thereof has issued any outstanding (a) Indebtedness that is subordinate in right of payment to the notes; or (b) Preferred Stock, and United or such Subsidiary is required to make a change of control offer or to make a distributionare applicable. Except as described above with respect to such subordinated Indebtednessa Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or Preferred Stockredeem the Notes in the event of a change of control, United shalltakeover, recapitalization or similar transaction.

                              The Company will not consummate any such offer or distribution with respectbe required to such subordinated Indebtedness or Preferred Stock until such time as United shall have paid the Change of Control Purchase Price in full to the holders of notes that have accepted United'smake a Change of Control Offer and shall otherwise have consummatedupon a Change of Control if a third party makes the Change of Control Offer made to holders of the notes and

                              (2)
                              United will not issue Indebtedness that is subordinate in right of payment to the notes or Preferred Stock with change of control provisions requiring the payment of such Indebtedness or Preferred Stock prior to the payment of the notes in the event of a Changemanner, at the times and otherwise in Control undercompliance with the Indenture.

                                    Inrequirements set forth in the event thatIndenture applicable to a Change of Control occursOffer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

                            The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

                            Asset Sales

                            The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

                            (1)the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

                            (2)such fair market value is determined by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

                            (3)at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Replacement Assets or a combination of both. For purposes of this provision, each of the following shall be deemed to be cash:

                            (a)

                            any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the

                            transferee of any such assets pursuant to a written novation agreement that releases the Company or such Restricted Subsidiary from further liability; and

                            (b)any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion) within 90 days of the applicable Asset Sale.

                            Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option:

                            (1)to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or

                            (2)to purchase Replacement Assets or make a capital expenditure in or that is used or useful in a Permitted Business.

                            Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

                            Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” Within 10 days after the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will make an Asset Sale Offer to all Holders of Notes and all holders of notes exercise their rightother Indebtedness that ispari passu with the Notes or any Note Guarantee containing provisions similar to require Unitedthose set forth in the Indenture with respect to offers to purchase notes,with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such otherpari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes and such otherpari passu Indebtedness plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such purchase constitutesExcess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such otherpari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such otherpari passu Indebtedness shall be purchased on a "tender offer" for purposespro rata basis based on the principal amount of Rule 14e-1 underNotes and such otherpari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the Exchange Actamount of Excess Proceeds shall be reset at that time, Unitedzero.

                            The Company will comply with the requirements of Rule 14e-1 as thenunder the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in effectconnection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

                            The Credit Agreement prohibits the Company from purchasing any Notes, and also provides that certain asset sale events with respect to the Company constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event an Asset Sale occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such repurchase.prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                            Certain Covenants

                            Restricted Payments

                            (A) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

                            (1)declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

                            (2)purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any Restricted Subsidiary of the Company held by Persons other than the Company or any of its Restricted Subsidiaries, other than the purchase, redemption or acquisition or retirement for value of any of (x) all of the Equity Interests in VARTA not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the VARTA Joint Venture Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed €5.0 million; (y) all of the Equity Interests of Ningbo Baowang not held by the Company or any of its Restricted Subsidiaries to the extent the cash purchase price does not exceed $5.0 million; and (z) all of the Equity Interests of Microlite not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the Microlite Purchase Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed $10.0 million;

                            (3)make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or the Note Guarantees, except a payment of interest or principal on or after the Stated Maturity thereof or on Indebtedness permitted to be incurred pursuant to clause (6) of the definition of Permitted Debt; or

                            (4)make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

                            unless, at the time of and after giving effect to such Restricted Payment:

                            (1)no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and

                            (2)the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;” and

                            (3)such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (2), (3) (4) (to the extent such dividends are paid to the Company or any of its Restricted Subsidiaries) and (5) of the next succeeding paragraph (B)), is less than the sum, without duplication, of:

                            (a)50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit),plus

                            (b)100% of the aggregate net cash proceeds received by the Company since the date of the Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company);plus

                            (c)with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the date of the Indenture, an amount equal to the net reduction in Investments (other than reductions in Permitted Investments) in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income, from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary,plus

                            (d)$50.0 million.

                            (B) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit:

                            (1)the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

                            (2)the redemption, repurchase, retirement, defeasance or other acquisition of any subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company or any Guarantor in exchange for, or out of the net cash proceeds of a contribution to the common equity of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3) (b) of the preceding paragraph (A);

                            (3)the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

                            (4)the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its common Equity Interests on a pro rata basis;

                            (5)Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company;provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange shall be excluded from clause (3) (b) of the preceding paragraph (A);

                            (6)the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants if such Capital Stock represents all or a portion of the exercise price thereof;

                            (7)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any employee, former employee, director or former director of the Company (or any of its Restricted Subsidiaries) upon the death, disability or termination of employment of any of the foregoing pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in any fiscal year shall not exceed the sum of (x) $5.0 million and (y) the amount of Restricted Payments permitted but not made pursuant to this clause (7) in the immediately preceding fiscal year; or

                            (8)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Company from the minority stockholders (or other holders of minority interest, however designated) of such Restricted Subsidiary for fair market value;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $20.0 million.

                            The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any assets or securities that are required to be valued by this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

                            Incurrence of Indebtedness and Issuance of Preferred Stock

                            The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Debt), and the Company will not permit any of its Restricted Subsidiaries to issue any preferred stock;provided, however, that the Company or any Restricted Subsidiary of the Company may incur Indebtedness, if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of such four-quarter period.

                            So long as no Default shall have occurred and be continuing or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

                            (1)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness under Credit Facilities (and the incurrence of Guarantees thereof) in an aggregate principal amount at any one time outstanding pursuant to this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $1.6 billion,less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary to permanently repay any such Indebtedness (and, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) pursuant to the covenant “—Repurchase at the Option of Holders—Asset Sales;”

                            (2)the incurrence of Existing Indebtedness;

                            (3)the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of the Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

                            (4)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Guarantor, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed, at any time outstanding, the greater of (a) $50.0 million and (b) 10% of Consolidated Net Tangible Assets of the Company;

                            (5)

                            the incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace

                            Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2) (other than the 9 7/8% Senior Subordinated due 2009 of United Industries Corporation incurred in connection with its acquisition by the Company), (3), (4), (5), or (8) of this paragraph;

                            (6)the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries;provided, however, that:

                            (a)if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;

                            (b)Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and

                            (c)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

                            (7)the Guarantee by the Company or any Restricted Subsidiary of the Company of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant;

                            (8)the incurrence by the Company or any Restricted Subsidiary of the Company of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (8), not to exceed $50.0 million; and

                            (9)the incurrence of Indebtedness by the Company or any Restricted Subsidiary of the Company arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business;provided that such Indebtedness is extinguished within five business days of incurrence.

                            For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to classify at the time of its incurrence such item of Indebtedness in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued under the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. In addition, any Indebtedness originally classified as incurred pursuant to clauses (1) through (9) above may later be reclassified by the Company such that it will be deemed as having been incurred pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to such new clause at the time of such reclassification.

                            Notwithstanding any other provision of this “Limitation on Indebtedness” covenant, the maximum amount of Indebtedness that may be Incurred pursuant to this “Limitation on Indebtedness” covenant will not be deemed to be exceeded, with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.

                            Limitation on Senior Subordinated Debt

                            The Company will not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of the Company unless it ispari passu or subordinate in right of payment to the Notes to the same extent. No Guarantor will incur any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor unless it ispari passu or subordinate in right of payment to such Guarantor’s Note Guarantee to the same extent. For purposes of the foregoing, no Indebtedness will be deemed to be subordinate or junior in right of payment to any other Indebtedness of the Company or any Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or created in respect thereof or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.

                            Liens

                            The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien.

                            Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

                            The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

                            (1)pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its Restricted Subsidiaries;

                            (2)make loans or advances to the Company or any of its Restricted Subsidiaries; or

                            (3)transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

                            However, the preceding restrictions do not apply to encumbrances or restrictions existing under or by reason of or with respect to:

                            (1)the Credit Agreement, Existing Indebtedness or any other agreements in effect on the date of the Indenture and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the Indenture;

                            (2)applicable laws, rules, regulations or orders;

                            (3)any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements as in effect on the date of the acquisition;

                            (4)in the case of clause (3) of the first paragraph of this covenant:

                            (a)provisions that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset;

                            (b)restrictions existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture; or

                            (c)restrictions arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary;

                            (5)provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business;

                            (6)any agreement for the sale or other disposition of all or substantially all of the capital stock of, or property and assets of, a Restricted Subsidiary that restricted distributions by that Restricted Subsidiary pending such sale or other disposition; and

                            (7)Indebtedness of a Foreign Subsidiary permitted to be incurred under the Indenture;provided that (a) such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being incurred and (b) such encumbrances or restrictions will not affect the Company’s ability to make principal and interest payments on the Notes, as determined in good faith by the Board of Directors of the Company.

                            Merger, Consolidation or Sale of Assets

                             United

                            The Company will not, nor will it permit any Guarantor to,directly or indirectly: (1) consolidate with,or merge with or into another Person (whether or not the Company is the surviving corporation) or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person or Persons, unless:

                            (1)either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (i) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and (ii) assumes all the obligations of the Company under the Notes, the Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

                            (2)immediately after giving effect to such transaction no Default or Event of Default exists;

                            (3)immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made, will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

                            (4)each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this “Consolidation, Merger or Sale of Assets” covenant, shall have by amendment to its Note Guarantee confirmed that its Note Guarantee shall apply to the obligations of the Company or the surviving Person in accordance with the Notes and the Indenture.

                            In addition, neither the Company nor any Restricted Subsidiary may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Clause (3) above of this “Merger, Consolidation or Sale of Assets” covenant will not apply to any merger, consolidation or sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Restricted Subsidiaries.

                            Transactions with Affiliates

                            The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

                            (1)such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company; and

                            (2)the Company delivers to the Trustee:

                            (a)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this covenant and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors; and

                            (b)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing.

                            The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

                            (1)transactions between or among the Company and/or its Restricted Subsidiaries;

                            (2)payment of reasonable and customary fees and compensation to, and reasonable and customary indemnification arrangements and similar payments on behalf of, directors of the Company;

                            (3)Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Restricted Payments;”

                            (4)any sale of Capital Stock (other than Disqualified Stock) of the Company;

                            (5)loans and advances to officers and employees of the Company or any of its Restricted Subsidiaries for bona fide business purposes in the ordinary course of business consistent with past practice;

                            (6)any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any of its Restricted Subsidiaries with officers and employees of the Company or any of its Restricted Subsidiaries and the payment of compensation to officers and employees of the Company or any of its Restricted Subsidiaries (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), in each case in the ordinary course of business and consistent with past practice; and

                            (7)

                            any agreements or arrangements in effect on the date of the Indenture, or any amendment, modification, or supplement thereto or any replacement thereof, as long as such agreement or

                            arrangement, as so amended, modified, supplemented or replaced, taken as a whole, is not more disadvantageous to the Company and its Restricted Subsidiaries than the original agreement as in effect on the date of the Indenture, as determined in good faith by the Company’s Board of Directors, and any transactions contemplated by any of the foregoing agreements or arrangements.

                            Designation of Restricted and Unrestricted Subsidiaries

                            The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary;provided that:

                            (1)any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated will be deemed to be an incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such incurrence of Indebtedness would be permitted under the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;”

                            (2)the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be a Restricted Investment made as of the time of such designation and that such Investment would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                            (3)such Subsidiary does not own any Equity Interests of, or hold any Liens on any Property of, the Company or any Restricted Subsidiary;

                            (4)the Subsidiary being so designated:

                            (a)is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

                            (b)is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

                            (c)has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation; and

                            (d)has at least one director on its Board of Directors that is not a director or officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or officer of the Company or any of its Restricted Subsidiaries; and

                            (5)no Default or Event of Default would be in existence following such designation.

                            Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the Indenture. If, at any time, any Unrestricted Subsidiary would fail to meet any of the preceding requirements described in clause (4) above, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness, Investments, or Liens on the property, of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness, Investments or Liens are not permitted to be incurred as of such date under the Indenture, the Company shall be in default under the Indenture.

                            The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;provided that:

                            (1)such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period;

                            (2)all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                            (3)all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the caption “—Certain Covenants—Liens;” and

                            (4)no Default or Event of Default would be in existence following such designation.

                            Limitation on Issuances and Sales of Equity Interests in Restricted Subsidiaries

                            The Company will not transfer, convey, sell, lease or otherwise dispose of, and will not permit any of its Restricted Subsidiaries to, issue, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the Company to any Person (other than the Company or a Restricted Subsidiary of the Company or, if necessary, shares of its Capital Stock constituting directors’ qualifying shares or issuances of shares of Capital Stock of foreign Restricted Subsidiaries to foreign nationals, to the extent required by applicable law), except:

                            (1)if, immediately after giving effect to such issuance, transfer, conveyance, sale, lease or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the “Restricted Payments” covenant if made on the date of such issuance or sale and the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;” or

                            (2)other sales of Capital Stock of a Restricted Subsidiary by the Company or a Restricted Subsidiary,provided that the Company or such Restricted Subsidiary complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                            Guarantees

                            If the Company or any of its Restricted Subsidiaries acquires or creates another Domestic Subsidiary on or after the date of the Indenture, then that newly acquired or created Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the Trustee.

                            The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, to Guarantee or pledge any assets to secure the payment of any other Indebtedness of the Company or any Restricted Subsidiary thereof, other than Foreign Subsidiaries, unless such Restricted Subsidiary is a Guarantor or simultaneously executes and delivers a supplemental indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to orpari passu with such Subsidiary’s Guarantee of such other Indebtedness unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt. The form of the Note Guarantee will be attached as an exhibit to the Indenture.

                            A Guarantor may not sell or otherwise dispose of all or substantially all of its assets (as an entiretyto, or substantially as an entirety in one transaction or a series of related transactions) to, any Person unless (in the case of United or any Guarantor):

                              (1)
                              United or such Guarantor, as the case may be, shall be the continuing Person, or the Person (if other than United or such Guarantor) formed by such consolidation or into which United or such Guarantor, as the case may be, is merged or to which the properties and assets of United or such Guarantor, as the case may be, are transferred shall be a corporation, a limited liability company or a limited partnership organized and existing under the laws of the United States or any State thereof or the District of Columbia and shall expressly assume in writing all of the obligations of United or such Guarantor, as the case may be, under the notes and the Indenture or Guarantee, as applicable, and the obligations under the Indenture shall remain in full force and effect; provided that at any time United or its successor is a limited partnership or limited liability company there shall be a co-issuer of the notes that is a corporation;

                              (2)
                              immediately before and immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

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                                (3)
                                unless the merger or consolidation isconsolidate with or the transfer of all or substantially all its assets is to, a Wholly-Owned Subsidiary, immediately after giving effect to such transaction on a pro forma basis United or such Person could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on Additional Indebtedness" covenant.

                                      Nothing in this "Merger, Consolidation or Sale of Assets" provision will prohibit the consolidation, merger or transfer of all or substantially all the assets of any Guarantor that is otherwise permitted by and conducted in accordance with the other applicable provisions of the Indenture. In connection with any consolidation, merger or transfer of assets contemplated by this provision, United will deliver, or cause to be delivered, to the Trustee, an Officers' Certificate and an opinion of counsel, each stating that such consolidation, merger or transfer and the supplemental Indenture in respect thereof comply with this provision and that all conditions precedent herein provided for relating to such transaction or transactions have been complied with.

                              Guarantees

                                      Payment of the principal of, premium, if any, and interest on, the notes will be unconditionally guaranteed, jointly and severally, on a senior subordinated basis by the Initial Subsidiary Guarantors, which are the only Restricted Subsidiaries of United existing on the Issue Date. In addition, each future Restricted Subsidiary of United other than a Foreign Subsidiary at the time it has either assets or stockholder's equity in excess of $200,000 will unconditionally guarantee, jointly and severally, the payment of the principal of, premium, if any, and interest on, the notes pursuant to the covenant described under "Limitation on Creation of Subsidiaries." On the date of the Indenture, all Subsidiaries of United will be Guarantors.

                                      The Guarantee of a Guarantor:

                                will be a general unsecured obligation of the Guarantor;

                                will be subordinated in right of payment to all existing and future Guarantor Senior Indebtedness of the Guarantor; and

                                ispari passu in right of payment with any future senior subordinated Indebtedness of the Guarantor, including the Guarantor's Guarantee of the Series B notes.

                                      The obligations of each Guarantor are limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor (including, without limitation, any Guarantees of Senior Indebtedness) and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee or pursuant to its contribution obligations under the Indenture, result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor in a pro rata amount based on the Adjusted Net Assets of each Guarantor.

                                      A Guarantor shall be released from all of its obligations under its Guarantee if (a) at least 80% of its Capital Stock is sold (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) a Restricted Subsidiary of United in a transaction in compliance with the covenant described under "Limitation on Certain Asset Sales,"provided that such release shall not be effective unless and until such Guarantor is similarly released from its guarantee under the Senior Credit Facility and the Series B Indenture (if any), (b) the Guarantor mergesmerge with or into or consolidates with United or another Guarantor in a transaction in compliance with "Merger, Consolidation or Sale of Assets," and (c) United properly designates the Guarantor as an Unrestricted

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                              Subsidiary in accordance with the terms of the Indenture, and, in each case, such Guarantor has delivered to the Trustee an Officers' Certificate and an opinion of counsel, each stating that all conditions precedent herein provided for relating to such transaction have been complied with.

                              Events of Default

                                      The following events will be defined in the Indenture as "Events of Default":

                                (1)
                                default in payment of any principal of, or premium, if any, on the notes whether at maturity, upon acceleration or redemption or otherwise (whether or not such paymentGuarantor is prohibited by the subordination provisions ofsurviving Person), another Person, other than the Indenture);

                                (2)
                                default for 30 days (whetherCompany or not such payment is prohibited by the subordination provisions of the Indenture) in payment of any interest on the notes;

                                (3)
                                default by United or anyanother Guarantor, in the observance or performance of any other covenant in the notesunless:

                                (1)immediately after giving effect to that transaction, no Default or Event of Default exists; and

                                (2)either:

                                (a)the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under the Indenture, for 60 days after written notice from the Trustee or the holders of not less than 25% in aggregate principal amount of the notes then outstanding (except in the case of the consummation of a transaction governed by the "Merger, Consolidation or Sale of Assets" provision in violation of the terms thereof, which will constitute an Event of Default with such notice requirement but without such passage of time requirement);

                                (4)
                                default in the payment at final maturity of principal in an aggregate amount of $10.0 million or more with respect to any Indebtedness of United or any Restricted Subsidiary thereof, or the acceleration of any such Indebtedness aggregating $10.0 million or more which default shall not be cured, waived or postponed pursuant to an agreement with the holders of such Indebtedness within 60 days after written notice as provided in the Indenture, or such acceleration shall not be rescinded or annulled within 20 days after written notice as provided in the Indenture;

                                (5)
                                any final judgment or judgments which can no longer be appealed or stayed for the payment of money in excess of $10.0 million (net of amounts covered by insurance for which coverage is not being challenged or denied) is rendered against United or any Restricted Subsidiary thereof, and shall not be discharged, paid or otherwise satisfied for any period of 60 consecutive days during which a stay of enforcement shall not be in effect;

                                (6)
                                certain events involving bankruptcy, insolvency or reorganization of United or any Restricted Subsidiary thereof; and

                                (7)
                                any of the Guarantees ceases to be in full force and effect or any of the Guarantees is declared to be null and void and unenforceable or any of the Guarantees is found to be invalid or any of the Guarantors denies in writing its liability under its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or

                                (b)such sale or other disposition or consolidation or merger complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                                The Note Guarantee (other than by reason of release of a Guarantor in accordance with the terms of the Indenture).

                                      The Indenture will provide that the Trustee may withhold notice to the holders of the notes of any default (except in payment of principal or premium, if any, or interest on the notes) if the Trustee considers it to be in the best interest of the holders of the notes to do so.

                                      The Indenture will provide that if an Event of Default (other than an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization of United) shall have occurred and be continuing, then the Trustee by notice to United or the holders of not less than 25% in aggregate principal amount of the notes then outstanding by written notice to United and the Trustee may declare to be immediately due and payable the entire principal amount of all the notes then outstanding plus accrued but unpaid interest to the date of acceleration and

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                                (1)
                                such amounts shall become immediately due and payable or

                                (2)
                                if there are any amounts outstanding under or in respect of the Senior Credit Facility or any commitments remain in effect under the Senior Credit Facility, such amounts shall become due and payable upon the first to occur of an acceleration of amounts outstanding under or in respect of the Senior Credit Facility or five Business Days after receipt by United and the Representative of notice of the acceleration of the notes;

                              provided, however, that after such acceleration but before a judgment or decree based on such acceleration is obtained by the Trustee, the holders of a majority in aggregate principal amount of outstanding notes may, under certain circumstances, rescind and annul such acceleration if all existing Events of Default, other than nonpayment of accelerated principal, premium, if any, or interest that has become due solely because of the acceleration, have been cured or waived as provided in the Indenture. In case an Event of Default resulting from certain events of bankruptcy, insolvency or reorganization of United shall occur, the principal, premium, if any, and interest amount with respect to all of the notes shall be due and payable immediately without any declaration or other act on the part of the Trustee or the holders of the notes.

                                      The holders of a majority in principal amount of the notes then outstanding shall have the right to waive any existing default or compliance with any provision of the Indenture or the notes and to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, subject to certain limitations specified in the Indenture.

                                      No holder of any note will have any right to institute any proceeding with respect to the Indenture or for any remedy thereunder, unless such holder shall have previously given to the Trustee written notice of a continuing Event of Default and unless also the holders of at least 25% in aggregate principal amount of the outstanding notes shall have made written request and offered indemnity satisfactory to the Trustee to institute such proceeding as a trustee, and unless the Trustee shall not have received from the holders of a majority in aggregate principal amount of the outstanding notes a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days. However, such limitations do not apply to a suit instituted on such note on or after the respective due dates expressed in such note.

                              Defeasance and Covenant Defeasance

                                      The Indenture will provide that United may elect either

                                (1)
                                to defease and be discharged from any and all obligations with respect to the notes (except for the obligations to register the transfer or exchange of such notes, to replace temporary or mutilated, destroyed, lost or stolen notes, to maintain an office or agency in respect of the notes and to hold monies for payment in trust) ("defeasance"); or

                                (2)
                                to be released from their obligations with respect to the notes under certain covenants contained in the Indenture and described above under "Certain Covenants" ("covenant defeasance") upon the deposit with the Trustee (or other qualifying trustee), in trust for such purpose of money and/or U.S. Government Obligations (as defined in the Indenture) which through the payment of principal and interest in accordance with their terms will provide money, in an amount sufficient to pay the principal of, premium, if any, and interest on the notes, on the scheduled due dates therefor or on a selected date of redemption in accordance with the terms of the Indenture. Such a trust may only be established if, among other things, United has delivered to the Trustee an opinion of counsel:

                                (a)
                                to the effect that neither the trust nor the Trustee will be required to register as an investment company under the Investment Company Act of 1940, as amended, and

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                                    (b)
                                    describing either a private ruling concerning the notes or a published ruling of the Internal Revenue Service, to the effect that holders of the notes or persons in their positions will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount and in the same manner and at the same times, as would have been the case if such deposit, defeasance and discharge had not occurred.

                                Modification of Indenturereleased:

                                 From time to time, United, the Guarantors and the Trustee may, without the consent of holders of the notes, amend the Indenture or the notes or supplement the Indenture for certain specified purposes, including providing for uncertificated notes in addition to certificated notes, consummating the Asset Drop-Down, and curing any ambiguity, defect or inconsistency, or making any other change that does not adversely affect the rights of any holder. The Indenture contains provisions permitting United, the Guarantors and the Trustee, with the consent of holders of at least a majority in principal amount of the outstanding notes, to modify or supplement the Indenture or the notes, except that no such modification shall, without the consent of each holder affected thereby,

                                  (1)
                                  reduce the amount of notes whose holders must consent to an amendment, supplement, or waiver to the Indenture or the notes;

                                  (2)
                                  reduce the rate of or change the time for payment of interest on any note;

                                  (3)
                                  reduce the principal of or premium on or change the stated maturity of any note;

                                  (4)
                                  waive a default in the payment of the principal of, interest on, or redemption payment with respect to any note;

                                  (5)
                                  make any note payable in money other than that stated in the note or change the place of payment from New York, New York;

                                  (6)
                                  make any change in provisions of the Indenture protecting the right of each holder of notes to receive payment of principal of and interest on such note on or after the due date thereof or to bring suit to enforce such payment, or permitting holders of a majority in principal amount of notes to waive Defaults or Events of Default;

                                  (7)
                                  amend, change or modify in any material respect the obligation of United to make and consummate a Change of Control Offer in the event of a Change of Control or make and consummate an Excess Proceeds Offer with respect to any Asset Sale that has been consummated or modify any of the provisions or definitions with respect thereto;

                                  (8)
                                  affect the ranking of the notes or the Guarantees in a manner adverse to the holders;

                                  (9)
                                  change any provision of the Indenture relating to the redemption of notes; or

                                  (10)
                                  release any Guarantor from any of its obligations under its Guarantee or the Indenture otherwise than in accordance with the terms of the Indenture.

                                Reports to Holders

                                (1)in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) an Affiliate of the Company, if the sale of all such Capital Stock of that Guarantor complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;”

                                 So long as United is subject to the periodic reporting requirements of the Exchange Act, it will continue to furnish the information required thereby to the SEC and to the holders of the notes. The Indenture will provide that even if United is entitled under the Exchange Act not to furnish such information to the SEC or to the holders of the notes, it will nonetheless continue to furnish such information to the SEC and holders of the notes.

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                                Compliance Certificate

                                (2)if the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under the Indenture; or

                                 United will deliver to the Trustee on or before 100 days after the end of United's fiscal year and on or before 55 days after the end of each of the first, second and third fiscal quarters in each year an Officers' Certificate stating whether or not the signers know of any Default or Event of Default that has occurred. If they do, the certificate will describe the Default or Event of Default and its status.

                                (3)solely in the case of a Note Guarantee created pursuant to the second paragraph of this covenant, upon the release or discharge of the Guarantee which resulted in the creation of such Note Guarantee pursuant to this covenant “—Certain Covenants—Guarantees,” except a discharge or release by or as a result of payment under such Guarantee.

                                The Trustee

                                        The Trustee under the Indenture will be the Registrar and Paying Agent with regard to the notes. The Indenture will provide that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture. During the existence of an Event of Default, the Trustee will exercise such rights and powers vested in it under the Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. The Trustee is also a trustee under the Series B Indenture.

                                Transfer and Exchange

                                        Holders of the notes may transfer or exchange the notes in accordance with the Indenture. The Registrar under the Indenture may require a holder, among other things, to furnish appropriate endorsements and transfer documents, and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar is not required to transfer or exchange any note selected for redemption. Also, the Registrar is not required to transfer or exchange any note for a period of 15 days before selection of the notes to be redeemed.

                                        The registered holder of a note may be treated as the owner of it for all purposes.

                                Certain Definitions

                                        Set forth below is a summary of certain of the defined terms used in the covenants contained in the Indenture. We refer you to the Indenture for the full definition of all such terms as well as any other capitalized terms used herein for which no definition is provided.

                                        "Accrued Bankruptcy Interest" means, with respect to any Indebtedness of any Person, all interest accrued or accruing on such Indebtedness after the commencement of any bankruptcy, reorganization, insolvency, receivership or similar proceeding, whether voluntary or involuntary, against such Person in accordance with and at the contract rate (including, without limitation, any rate applicable upon default) specified in the agreement or instrument creating, evidencing or governing such Indebtedness, whether or not, pursuant to applicable law or otherwise, the claim for such interest is allowed as a claim in such proceeding.

                                        "Acquired Indebtedness" means Indebtedness of a Person (including an Unrestricted Subsidiary) existing at the time such Person becomes a Restricted Subsidiary or assumed in connection with the acquisition of the outstanding equity interests on, or assets from, such Person.

                                        "Adjusted Net Assets" of a Guarantor at any date shall mean the lesser of the amount by which

                                  (1)
                                  the fair value of the property of such Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities), but excluding liabilities under the Guarantee, of such Guarantor at such date and

                                  (2)
                                  the present fair salable value of the assets of such Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Guarantor on its debts (after giving effect to all other fixed and contingent liabilities and after giving effect to any collection from

                                102


                                    any Subsidiary of such Guarantor in respect of the obligations of such Subsidiary under the Guarantee), excluding Indebtedness in respect of the Guarantee, as they become absolute and matured.

                                        "Affiliate" of any specified Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise.

                                        "Asset Acquisition" means

                                  (1)
                                  an Investment by United or any Restricted Subsidiary in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be merged with or into United or any Restricted Subsidiary or

                                  (2)
                                  the acquisition by United or any Restricted Subsidiary of the assets of any Person (other than a Restricted Subsidiary) which constitute all or substantially all of the assets of such Person or comprise any division or line of business of such Person or any other properties or assets of such Person other than in the ordinary course of business.

                                        "Asset Drop-Down" means the transaction described under "Asset Drop-Down" above.

                                        "Asset Sale" means the sale, transfer or other disposition (including any Sale and Lease-Back Transaction), other than to United or any of its Restricted Subsidiaries, in any single transaction or series of related transactions having a fair market value in excess of $2,000,000 of

                                  (1)
                                  any Capital Stock of or other equity interest in any Restricted Subsidiary of United or

                                  (2)
                                  any other property or assets of United or of any Restricted Subsidiary thereof; provided that Asset Sales shall not include:

                                  (a)
                                  sales, leases, conveyances, transfers or other dispositions to United or to a Restricted Subsidiary or to any other Person if after giving effect to such sale, lease, conveyance, transfer or other disposition such other Person becomes a Restricted Subsidiary;

                                  (b)
                                  the contribution of any assets to a joint venture, partnership or other Person (which may be a Subsidiary) to the extent such contribution constitutes a Permitted Investment (other than by operation of clause (4) of the definition thereof);

                                  (c)
                                  the sale, transfer or other disposition of all or substantially all of the assets of United or any Guarantor as permitted under the "Merger, Consolidation or Sale of Assets" provision;

                                  (d)
                                  the sale or discount, in each case without recourse, of accounts receivable arising in the ordinary course of business, but only in connection with the compromise or collection thereof;

                                  (e)
                                  the factoring of accounts receivable arising in the ordinary course of business pursuant to arrangements customary in the industry;

                                  (f)
                                  the licensing of intellectual property;

                                  (g)
                                  disposals or replacements of obsolete equipment in the ordinary course of business;

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                                    (h)
                                    leases or subleases to third persons not interfering in any material respect with the business of United or any of its Restricted Subsidiaries;

                                    (i)
                                    a disposition of Temporary Cash Investments or goods held for sale in the ordinary course of business consistent with past practices of United;

                                    (j)
                                    a disposition that constitutes a Change of Control; and

                                    (k)
                                    any foreclosures on assets.

                                        "Asset Sale Proceeds" means, with respect to any Asset Sale,

                                  (1)
                                  cash received by United or any Restricted Subsidiary from such Asset Sale (including cash received as consideration for the assumption of liabilities incurred in connection with or in anticipation of such Asset Sale), after

                                  (a)
                                  provision for all income or other taxes measured by or resulting from such Asset Sale,

                                  (b)
                                  payment of all brokerage commissions, underwriting and other fees (including legal and accounting fees) and expenses (including relocation expenses) related to such Asset Sale,

                                  (c)
                                  any consideration for an Asset Sale (which would otherwise constitute Asset Sale Proceeds) that is required to be held in escrow pending determination of whether a purchase price adjustment will be made, but amounts under this clause (c) will become Asset Sale Proceeds at such time and to the extent such amounts are released to United or a Restricted Subsidiary,

                                  (d)
                                  repayment of Indebtedness that either (i) is secured by a Lien on the property or assets sold or (ii) is required to be repaid in connection with such Asset Sale (in order to obtain a consent required in connection therewith),

                                  (e)
                                  provision for minority interest holders in any Restricted Subsidiary as a result of such Asset Sale and

                                  (f)
                                  deduction of appropriate amounts to be provided by United or a Restricted Subsidiary as a reserve, in accordance with GAAP, against any liabilities associated with the assets sold or disposed of in such Asset Sale and retained by United or a Restricted Subsidiary after such Asset Sale, including, without limitation, severance, healthcare, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with the assets sold or disposed of in such Asset Sale, and

                                  (2)
                                  promissory notes and other non-cash consideration received by United or any Restricted Subsidiary from such Asset Sale or other disposition upon the liquidation or conversion of such notes or non-cash consideration into cash.

                                        "Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction means, as at the time of determination, the greater of

                                  (1)
                                  the fair value of the property subject to such arrangement (as determined by the Board of Directors) and

                                  (2)
                                  the present value of the total obligations (discounted at the rate borne by the notes, compounded annually) of the lessee for rental payments during the remaining term of the lease included in such Sale and Lease-Back Transaction (including any period for which such lease has been extended).

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                                          "Available Asset Sale Proceeds" means, with respect to any Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in accordance with clauses (3)(a) or (3)(b) of the first paragraph of "Limitation on Certain Asset Sales," and that have not previously been the basis for an Excess Proceeds Offer in accordance with the third paragraph of "Limitation on Certain Asset Sales."

                                          "Bayer Stock" means the 3,072,000 shares of Class A voting common stock and the 3,072,000 shares of Class B nonvoting common stock issued pursuant to that certain Exchange Agreement dated as of June 14, 2002 or Capital Stock (other than Disqualified Capital Stock) issued with respect thereto in a reorganization or recapitalization of United.

                                          "Board of Directors" means

                                    (1)
                                    in the case of a Person that is a corporation, the board of directors of such Person or any committee authorized to act therefor,

                                    (2)
                                    in the case of a Person that is a limited partnership, the board of directors of its corporate general partner or any committee authorized to act therefor (or, if the general partner is itself a limited partnership, the board of directors of such general partner's corporate general partner or any committee authorized to act therefor), and

                                    (3)
                                    in the case of any other Person, the board of directors, management committee or similar governing body or any authorized committee thereof responsible for the management of the business and affairs of such Person.

                                          "Business Day" means any day except a Saturday, Sunday or other day on which (1) commercial banks in the City of New York are authorized or required by law to close or (2) the New York Stock Exchange is not open for trading.

                                          "Capital Stock" means, with respect to any Person, any and all shares or other equivalents (however designated and whether or not voting) of capital stock, partnership interests or any other participation, right or other interest in the nature of an equity interest in such Person or any option, warrant or other security convertible into or exercisable for any of the foregoing.

                                          "Capitalized Lease Obligations" means Indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such Indebtedness shall be the capitalized amount of such obligations determined in accordance with GAAP.

                                          "Change of Control" means, at

                                  If a Change of Control occurs, each Holder of Notes will have the right to require the Company to repurchase all or any time afterpart (equal to $1,000 or an integral multiple thereof) of that Holder’s Notes pursuant to a Change of Control Offer on the Issue Date,terms set forth in the occurrenceIndenture. In the Change of one or moreControl Offer, the Company will offer a Change of Control Payment in cash equal to 101% of the aggregate principal amount of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if any, thereon, to the date of purchase. Within 30 days following events:

                                    (1)
                                    any Person (includingChange of Control, the Company will mail a Person's Affiliatesnotice to each Holder describing the transaction or transactions that constitute the Change of Control and associates), otheroffering to repurchase Notes on the Change of Control Payment Date specified in such notice, which date shall be no earlier than a Permitted Holder, becomes30 days and no later than 60 days from the beneficial owner (directly or indirectly) (as defined underdate such notice is mailed, pursuant to the procedures required by the Indenture and described in such notice. The Company will comply with the requirements of Rule 13d-3 or any successor rule or regulation promulgated14e-1 under the Exchange Act) of 50% or moreAct and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the total voting powerNotes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with the Change of Control provisions of the Common StockIndenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Change of United,

                                    (2)
                                    there shallControl provisions of the Indenture by virtue of such compliance.

                                    On the Change of Control Payment Date, the Company will, to the extent lawful:

                                    (1)accept for payment all Notes or portions thereof properly tendered pursuant to the Change of Control Offer;

                                    (2)deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions thereof so tendered; and

                                    (3)deliver or cause to be delivered to the Trustee the Notes so accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions thereof being purchased by the Company.

                                    The Paying Agent will promptly mail or wire transfer to each Holder of Notes so tendered the Change of Control Payment for such Notes, and the Trustee will promptly authenticate and mail (or cause to be consummatedtransferred by book entry) to each Holder a new Note equal in principal amount to any consolidationunpurchased portion of the Notes surrendered, if any;provided that each such new Note will be in a principal amount of $1,000 or mergeran integral multiple thereof.

                                    Prior to complying with any of Unitedthe provisions of this “Change of Control” covenant, but in which United is notany event within 30 days following a Change of Control, the continuingCompany will either repay all outstanding Senior Debt or surviving corporationobtain the

                                    requisite consents, if any, under all agreements governing outstanding Senior Debt to permit the repurchase of Notes required by this covenant. The Company will publicly announce the results of the Change of Control Offer on or pursuantas soon as practicable after the Change of Control Payment Date.

                                    The Credit Agreement prohibits the Company from purchasing any Notes, and also provides that certain change of control events with respect to the Company constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Common StockCompany becomes a party may contain similar restrictions and provisions. In the event a Change of UnitedControl occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                                    The provisions described above that require the Company to make a Change of Control Offer following a Change of Control will be applicable regardless of whether any other provisions of the Indenture are applicable. Except as described above with respect to a Change of Control, the Indenture does not contain provisions that permit the Holders of the Notes to require that the Company repurchase or redeem the Notes in the event of a takeover, recapitalization or similar transaction.

                                    The Company will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change of Control Offer made by the Company and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

                                    The definition of Change of Control includes a phrase relating to the direct or indirect sale, lease, transfer, conveyance or other disposition of “all or substantially all” of the properties or assets of the Company and its Subsidiaries taken as a whole. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, the ability of a Holder of Notes to require the Company to repurchase such Notes as a result of a sale, lease, transfer, conveyance or other disposition of less than all of the assets of the Company and its Subsidiaries taken as a whole to another Person or group may be uncertain.

                                    Asset Sales

                                    The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

                                    (1)the Company (or the Restricted Subsidiary, as the case may be) receives consideration at the time of such Asset Sale at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of;

                                    (2)such fair market value is determined by the Company’s Board of Directors and evidenced by a resolution of the Board of Directors set forth in an Officers’ Certificate delivered to the Trustee; and

                                    (3)at least 75% of the consideration therefor received by the Company or such Restricted Subsidiary is in the form of cash or Replacement Assets or a combination of both. For purposes of this provision, each of the following shall be deemed to be cash:

                                    (a)

                                    any liabilities (as shown on the Company’s or such Restricted Subsidiary’s most recent balance sheet), of the Company or any Restricted Subsidiary (other than contingent liabilities, Indebtedness that is by its terms subordinated to the Notes or any Note Guarantee and liabilities to the extent owed to the Company or any Affiliate of the Company) that are assumed by the

                                    transferee of any such assets pursuant to a written novation agreement that releases the Company or such Restricted Subsidiary from further liability; and

                                    (b)any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are converted by the Company or such Restricted Subsidiary into cash (to the extent of the cash received in that conversion) within 90 days of the applicable Asset Sale.

                                    Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Company may apply such Net Proceeds at its option:

                                    (1)to repay Senior Debt and, if the Senior Debt repaid is revolving credit Indebtedness, to correspondingly reduce commitments with respect thereto; or

                                    (2)to purchase Replacement Assets or make a capital expenditure in or that is used or useful in a Permitted Business.

                                    Pending the final application of any such Net Proceeds, the Company may temporarily reduce revolving credit borrowings or otherwise invest such Net Proceeds in any manner that is not prohibited by the Indenture.

                                    Any Net Proceeds from Asset Sales that are not applied or invested as provided in the preceding paragraph will constitute “Excess Proceeds.” Within 10 days after the aggregate amount of Excess Proceeds exceeds $20.0 million, the Company will make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that ispari passu with the Notes or any Note Guarantee containing provisions similar to those set forth in the Indenture with respect to offers to purchase with the proceeds of sales of assets, to purchase the maximum principal amount of Notes and such otherpari passu Indebtedness that may be purchased out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount of the Notes and such otherpari passu Indebtedness plus accrued and unpaid interest and Liquidated Damages, if any, to the date of purchase, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use such Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes and such otherpari passu Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds, the Notes and such otherpari passu Indebtedness shall be purchased on a pro rata basis based on the principal amount of Notes and such otherpari passu Indebtedness tendered. Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

                                    The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the Asset Sales provisions of the Indenture, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Asset Sale provisions of the Indenture by virtue of such compliance.

                                    The Credit Agreement prohibits the Company from purchasing any Notes, and also provides that certain asset sale events with respect to the Company constitute a default under the Credit Agreement. Any future credit agreements or other agreements relating to Senior Debt to which the Company becomes a party may contain similar restrictions and provisions. In the event an Asset Sale occurs at a time when the Company is prohibited from purchasing Notes, the Company could seek the consent of its senior lenders to the purchase of Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company will remain prohibited from purchasing Notes. In such case, the Company’s failure to purchase tendered Notes would constitute an Event of Default under the Indenture which would, in turn, constitute a default under such Senior Debt. In such circumstances, the subordination provisions in the Indenture would likely restrict payments to the Holders of Notes.

                                    Certain Covenants

                                    Restricted Payments

                                    (A) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

                                    (1)declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends, payments or distributions payable in Equity Interests (other than Disqualified Stock) of the Company or to the Company or a Restricted Subsidiary of the Company);

                                    (2)purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any Restricted Subsidiary of the Company held by Persons other than the Company or any of its Restricted Subsidiaries, other than the purchase, redemption or acquisition or retirement for value of any of (x) all of the Equity Interests in VARTA not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the VARTA Joint Venture Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed €5.0 million; (y) all of the Equity Interests of Ningbo Baowang not held by the Company or any of its Restricted Subsidiaries to the extent the cash purchase price does not exceed $5.0 million; and (z) all of the Equity Interests of Microlite not held by the Company or any of its Restricted Subsidiaries pursuant to, and in accordance with the terms of, the Microlite Purchase Agreement as in effect on the date of the Indenture to the extent the cash purchase price does not exceed $10.0 million;

                                    (3)make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes or the Note Guarantees, except a payment of interest or principal on or after the Stated Maturity thereof or on Indebtedness permitted to be incurred pursuant to clause (6) of the definition of Permitted Debt; or

                                    (4)make any Restricted Investment (all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”),

                                    unless, at the time of and after giving effect to such Restricted Payment:

                                    (1)no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and

                                    (2)the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described below under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock;” and

                                    (3)such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries after the date of the Indenture (excluding Restricted Payments permitted by clauses (2), (3) (4) (to the extent such dividends are paid to the Company or any of its Restricted Subsidiaries) and (5) of the next succeeding paragraph (B)), is less than the sum, without duplication, of:

                                    (a)50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from the beginning of the first fiscal quarter commencing after the date of the Indenture to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit),plus

                                    (b)100% of the aggregate net cash proceeds received by the Company since the date of the Indenture as a contribution to its common equity capital or from the issue or sale of Equity Interests of the Company (other than Disqualified Stock) or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Company that have been converted into or exchanged for such Equity Interests (other than Equity Interests (or Disqualified Stock or debt securities) sold to a Subsidiary of the Company);plus

                                    (c)with respect to Restricted Investments made by the Company and its Restricted Subsidiaries after the date of the Indenture, an amount equal to the net reduction in Investments (other than reductions in Permitted Investments) in any Person resulting from repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the net cash proceeds from the sale of any such Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Consolidated Net Income, from the release of any Guarantee (except to the extent any amounts are paid under such Guarantee) or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries, not to exceed, in each case, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary,plus

                                    (d)$50.0 million.

                                    (B) So long as no Default has occurred and is continuing or would be converted into cash, securitiescaused thereby, the preceding provisions will not prohibit:

                                    (1)the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of the Indenture;

                                    (2)the redemption, repurchase, retirement, defeasance or other property, other acquisition of any subordinated Indebtedness of the Company or any Guarantor or of any Equity Interests of the Company or any Guarantor in exchange for, or out of the net cash proceeds of a contribution to the common equity of the Company or a substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock); provided that the amount of any such net cash proceeds that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition shall be excluded from clause (3) (b) of the preceding paragraph (A);

                                    (3)the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of the Company or any Guarantor with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness;

                                    (4)the payment of any dividend by a Restricted Subsidiary of the Company to the holders of its common Equity Interests on a pro rata basis;

                                    (5)Investments acquired as a capital contribution to, or in exchange for, or out of the net cash proceeds of a substantially concurrent offering of, Equity Interests (other than Disqualified Stock) of the Company;provided that the amount of any such net cash proceeds that are utilized for any such acquisition or exchange shall be excluded from clause (3) (b) of the preceding paragraph (A);

                                    (6)the repurchase of Capital Stock deemed to occur upon the exercise of options or warrants if such Capital Stock represents all or a portion of the exercise price thereof;

                                    (7)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company held by any employee, former employee, director or former director of the Company (or any of its Restricted Subsidiaries) upon the death, disability or termination of employment of any of the foregoing pursuant to the terms of any employee equity subscription agreement, stock option agreement or similar agreement;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests in any fiscal year shall not exceed the sum of (x) $5.0 million and (y) the amount of Restricted Payments permitted but not made pursuant to this clause (7) in the immediately preceding fiscal year; or

                                    (8)the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of any Restricted Subsidiary of the Company from the minority stockholders (or other holders of minority interest, however designated) of such Restricted Subsidiary for fair market value;provided that the aggregate price paid for all such repurchased, redeemed, acquired or retired Equity Interests shall not exceed $20.0 million.

                                    The amount of all Restricted Payments (other than a merger or consolidation of United in which either a THL Group Member orcash) shall be the holdersfair market value on the date of the Common StockRestricted Payment of United outstanding immediately priorthe asset(s) or securities proposed to be transferred or issued to or by the Company or such Subsidiary, as the case may be, pursuant to the consolidationRestricted Payment. The fair market value of any assets or merger hold,securities that are required to be valued by this covenant shall be determined by the Board of Directors whose resolution with respect thereto shall be delivered to the Trustee. Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this “Restricted Payments” covenant were computed, together with a copy of any fairness opinion or appraisal required by the Indenture.

                                    Incurrence of Indebtedness and Issuance of Preferred Stock

                                    The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Debt), and the Company will not permit any of its Restricted Subsidiaries to issue any preferred stock;provided, however, that the Company or any Restricted Subsidiary of the Company may incur Indebtedness, if the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred would have been at least 2.0 to 1, determined on a majoritypro forma basis (including a pro forma application of the Common Stock ofnet proceeds therefrom), as if the surviving corporation immediately after such consolidation or merger, or

                                  105


                                      (3)
                                      during any period of two consecutive years commencing after the Issue Date, individuals whoadditional Indebtedness had been incurred at the beginning of such period constitutedfour-quarter period.

                                      So long as no Default shall have occurred and be continuing or would be caused thereby, the first paragraph of this covenant will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “Permitted Debt”):

                                      (1)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness under Credit Facilities (and the incurrence of Guarantees thereof) in an aggregate principal amount at any one time outstanding pursuant to this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed $1.6 billion,less the aggregate amount of all Net Proceeds of Asset Sales applied by the Company or any Restricted Subsidiary to permanently repay any such Indebtedness (and, in the case of any revolving credit Indebtedness, to effect a corresponding commitment reduction thereunder) pursuant to the covenant “—Repurchase at the Option of Holders—Asset Sales;”

                                      (2)the incurrence of Existing Indebtedness;

                                      (3)the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of the Indenture and the Exchange Notes and the related Note Guarantees to be issued pursuant to the Registration Rights Agreement;

                                      (4)the incurrence by the Company or any Restricted Subsidiary of the Company of Indebtedness represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of construction or improvement of property, plant or equipment used in the business of the Company or such Guarantor, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (4), not to exceed, at any time outstanding, the greater of (a) $50.0 million and (b) 10% of Consolidated Net Tangible Assets of the Company;

                                      (5)

                                      the incurrence by the Company or any Restricted Subsidiary of the Company of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace

                                      Indebtedness (other than intercompany Indebtedness) that was permitted by the Indenture to be incurred under the first paragraph of this covenant or clauses (2) (other than the 9 7/8% Senior Subordinated due 2009 of United Industries Corporation incurred in connection with its acquisition by the Company), (3), (4), (5), or (8) of this paragraph;

                                      (6)the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness owing to and held by the Company or any of its Restricted Subsidiaries;provided, however, that:

                                      (a)if the Company or any Guarantor is the obligor on such Indebtedness, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor;

                                      (b)Indebtedness owed to the Company or any Guarantor must be evidenced by an unsubordinated promissory note, unless the obligor under such Indebtedness is the Company or a Guarantor; and

                                      (c)(i) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary thereof and (ii) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary thereof, shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

                                      (7)the Guarantee by the Company or any Restricted Subsidiary of the Company of Indebtedness of the Company or a Restricted Subsidiary of the Company that was permitted to be incurred by another provision of this covenant;

                                      (8)the incurrence by the Company or any Restricted Subsidiary of the Company of additional Indebtedness in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (8), not to exceed $50.0 million; and

                                      (9)the incurrence of Indebtedness by the Company or any Restricted Subsidiary of the Company arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business;provided that such Indebtedness is extinguished within five business days of incurrence.

                                      For purposes of determining compliance with this “Incurrence of Indebtedness and Issuance of Preferred Stock” covenant, in the event that any proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (9) above, or is entitled to be incurred pursuant to the first paragraph of this covenant, the Company will be permitted to classify at the time of its incurrence such item of Indebtedness in any manner that complies with this covenant. Indebtedness under Credit Facilities outstanding on the date on which Notes are first issued under the Indenture shall be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. In addition, any Indebtedness originally classified as incurred pursuant to clauses (1) through (9) above may later be reclassified by the Company such that it will be deemed as having been incurred pursuant to another of such clauses to the extent that such reclassified Indebtedness could be incurred pursuant to such new clause at the time of such reclassification.

                                      Notwithstanding any other provision of this “Limitation on Indebtedness” covenant, the maximum amount of Indebtedness that may be Incurred pursuant to this “Limitation on Indebtedness” covenant will not be deemed to be exceeded, with respect to any outstanding Indebtedness due solely to the result of fluctuations in the exchange rates of currencies.

                                      Limitation on Senior Subordinated Debt

                                      The Company will not incur any Indebtedness that is subordinate or junior in right of payment to any Senior Debt of the Company unless it ispari passu or subordinate in right of payment to the Notes to the same extent. No Guarantor will incur any Indebtedness that is subordinate or junior in right of payment to the Senior Debt of such Guarantor unless it ispari passu or subordinate in right of payment to such Guarantor’s Note Guarantee to the same extent. For purposes of the foregoing, no Indebtedness will be deemed to be subordinate or junior in right of payment to any other Indebtedness of the Company or any Guarantor, as applicable, solely by reason of any Liens or Guarantees arising or created in respect thereof or by virtue of the fact that the holders of any secured Indebtedness have entered into intercreditor agreements giving one or more of such holders priority over the other holders in the collateral held by them.

                                      Liens

                                      The Company will not, and will not permit any of its Restricted Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired, unless all payments due under the Indenture and the Notes are secured on an equal and ratable basis with the obligations so secured until such time as such obligations are no longer secured by a Lien.

                                      Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

                                      The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

                                      (1)pay dividends or make any other distributions on its Capital Stock (or with respect to any other interest or participation in, or measured by, its profits) to the Company or any of its Restricted Subsidiaries or pay any liabilities owed to the Company or any of its Restricted Subsidiaries;

                                      (2)make loans or advances to the Company or any of its Restricted Subsidiaries; or

                                      (3)transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

                                      However, the preceding restrictions do not apply to encumbrances or restrictions existing under or by reason of or with respect to:

                                      (1)the Credit Agreement, Existing Indebtedness or any other agreements in effect on the date of the Indenture and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those in effect on the date of the Indenture;

                                      (2)applicable laws, rules, regulations or orders;

                                      (3)any Person or the property or assets of a Person acquired by the Company or any of its Restricted Subsidiaries existing at the time of such acquisition and not incurred in connection with or in contemplation of such acquisition, which encumbrance or restriction is not applicable to any Person or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired and any amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacements or refinancings thereof,provided that the encumbrances and restrictions in any such amendments, modifications, restatements, renewals, extensions, supplements, refundings, replacement or refinancings are no more restrictive, taken as a whole, than those contained in the Credit Agreement, Existing Indebtedness or such other agreements as in effect on the date of the acquisition;

                                      (4)in the case of clause (3) of the first paragraph of this covenant:

                                      (a)provisions that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset;

                                      (b)restrictions existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture; or

                                      (c)restrictions arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary;

                                      (5)provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business;

                                      (6)any agreement for the sale or other disposition of all or substantially all of the capital stock of, or property and assets of, a Restricted Subsidiary that restricted distributions by that Restricted Subsidiary pending such sale or other disposition; and

                                      (7)Indebtedness of a Foreign Subsidiary permitted to be incurred under the Indenture;provided that (a) such encumbrances or restrictions are ordinary and customary with respect to the type of Indebtedness being incurred and (b) such encumbrances or restrictions will not affect the Company’s ability to make principal and interest payments on the Notes, as determined in good faith by the Board of Directors of the Company.

                                      Merger, Consolidation or Sale of Assets

                                      The Company will not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation) or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties and assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person or Persons, unless:

                                      (1)either: (a) the Company is the surviving corporation; or (b) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition shall have been made (i) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and (ii) assumes all the obligations of the Company under the Notes, the Indenture and the Registration Rights Agreement pursuant to agreements reasonably satisfactory to the Trustee;

                                      (2)immediately after giving effect to such transaction no Default or Event of Default exists;

                                      (3)immediately after giving effect to such transaction on a pro forma basis, the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition shall have been made, will, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of the covenant described above under the caption “—Incurrence of Indebtedness and Issuance of Preferred Stock”; and

                                      (4)each Guarantor, unless such Guarantor is the Person with which the Company has entered into a transaction under this “Consolidation, Merger or Sale of Assets” covenant, shall have by amendment to its Note Guarantee confirmed that its Note Guarantee shall apply to the obligations of the Company or the surviving Person in accordance with the Notes and the Indenture.

                                      In addition, neither the Company nor any Restricted Subsidiary may, directly or indirectly, lease all or substantially all of its properties or assets, in one or more related transactions, to any other Person. Clause (3) above of this “Merger, Consolidation or Sale of Assets” covenant will not apply to any merger, consolidation or sale, assignment, transfer, conveyance or other disposition of assets between or among the Company and any of its Restricted Subsidiaries.

                                      Transactions with Affiliates

                                      The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into, make, amend, renew or extend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”), unless:

                                      (1)such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable arm’s-length transaction by the Company or such Restricted Subsidiary with a Person that is not an Affiliate of the Company; and

                                      (2)the Company delivers to the Trustee:

                                      (a)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a resolution of the Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with this covenant and that such Affiliate Transaction or series of related Affiliate Transactions has been approved by a majority of the disinterested members of the Board of Directors; and

                                      (b)with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $25.0 million, an opinion as to the fairness to the Company or such Restricted Subsidiary of such Affiliate Transaction or series of related Affiliate Transactions from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing.

                                      The following items shall not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of the prior paragraph:

                                      (1)transactions between or among the Company and/or its Restricted Subsidiaries;

                                      (2)payment of reasonable and customary fees and compensation to, and reasonable and customary indemnification arrangements and similar payments on behalf of, directors of the Company;

                                      (3)Restricted Payments that are permitted by the provisions of the Indenture described above under the caption “—Restricted Payments;”

                                      (4)any sale of Capital Stock (other than Disqualified Stock) of the Company;

                                      (5)loans and advances to officers and employees of the Company or any of its Restricted Subsidiaries for bona fide business purposes in the ordinary course of business consistent with past practice;

                                      (6)any employment, consulting, service or termination agreement, or reasonable and customary indemnification arrangements, entered into by the Company or any of its Restricted Subsidiaries with officers and employees of the Company or any of its Restricted Subsidiaries and the payment of compensation to officers and employees of the Company or any of its Restricted Subsidiaries (including amounts paid pursuant to employee benefit plans, employee stock option or similar plans), in each case in the ordinary course of business and consistent with past practice; and

                                      (7)

                                      any agreements or arrangements in effect on the date of the Indenture, or any amendment, modification, or supplement thereto or any replacement thereof, as long as such agreement or

                                      arrangement, as so amended, modified, supplemented or replaced, taken as a whole, is not more disadvantageous to the Company and its Restricted Subsidiaries than the original agreement as in effect on the date of the Indenture, as determined in good faith by the Company’s Board of Directors, and any transactions contemplated by any of the foregoing agreements or arrangements.

                                      Designation of Restricted and Unrestricted Subsidiaries

                                      The Board of Directors may designate any Restricted Subsidiary to be an Unrestricted Subsidiary;provided that:

                                      (1)any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of the Subsidiary being so designated will be deemed to be an incurrence of Indebtedness by the Company or such Restricted Subsidiary (or both, if applicable) at the time of such designation, and such incurrence of Indebtedness would be permitted under the covenant described above under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock;”

                                      (2)the aggregate fair market value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary being so designated (including any Guarantee by the Company or any Restricted Subsidiary of any Indebtedness of such Subsidiary) will be deemed to be a Restricted Investment made as of the time of such designation and that such Investment would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                                      (3)such Subsidiary does not own any Equity Interests of, or hold any Liens on any Property of, the Company or any Restricted Subsidiary;

                                      (4)the Subsidiary being so designated:

                                      (a)is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

                                      (b)is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results;

                                      (c)has not Guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries, except to the extent such Guarantee or credit support would be released upon such designation; and

                                      (d)has at least one director on its Board of Directors that is not a director or officer of the Company or any of its Restricted Subsidiaries and has at least one executive officer that is not a director or officer of the Company or any of its Restricted Subsidiaries; and

                                      (5)no Default or Event of Default would be in existence following such designation.

                                      Any designation of a Restricted Subsidiary of the Company as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by the Indenture. If, at any time, any Unrestricted Subsidiary would fail to meet any of the preceding requirements described in clause (4) above, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture and any Indebtedness, Investments, or Liens on the property, of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness, Investments or Liens are not permitted to be incurred as of such date under the Indenture, the Company shall be in default under the Indenture.

                                      The Board of Directors of United (together withthe Company may at any new directors whose election by such Boardtime designate any Unrestricted Subsidiary to be a Restricted Subsidiary;provided that:

                                      (1)such designation shall be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation shall only be permitted if such Indebtedness is permitted under the covenant described under the caption “—Certain Covenants—Incurrence of Indebtedness and Issuance of Preferred Stock,” calculated on a pro forma basis as if such designation had occurred at the beginning of the four-quarter reference period;

                                      (2)all outstanding Investments owned by such Unrestricted Subsidiary will be deemed to be made as of the time of such designation and such Investments shall only be permitted if such Investments would be permitted under the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                                      (3)all Liens upon property or assets of such Unrestricted Subsidiary existing at the time of such designation would be permitted under the caption “—Certain Covenants—Liens;” and

                                      (4)no Default or Event of Default would be in existence following such designation.

                                      Limitation on Issuances and Sales of DirectorsEquity Interests in Restricted Subsidiaries

                                      The Company will not transfer, convey, sell, lease or whose nomination for election by the shareholdersotherwise dispose of, United has been approved by a majorityand will not permit any of its Restricted Subsidiaries to, issue, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Restricted Subsidiary of the directors then still in office who either were directors atCompany to any Person (other than the beginning of such periodCompany or whose election or recommendation for election was previously so approved) cease to constitute a majorityRestricted Subsidiary of the BoardCompany or, if necessary, shares of Directorsits Capital Stock constituting directors’ qualifying shares or issuances of United.

                                            "Commodity Hedge Agreement" shall mean any option, hedge or other similar agreement or arrangement designed to protect against fluctuations in commodity or materials prices.

                                            "Common Stock"shares of any Person means all Capital Stock of such Person that is generally entitledforeign Restricted Subsidiaries to

                                      (1)
                                      vote in the election of directors of such Person or

                                      (2)
                                      if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, managers or others that will control the management and policies of such Person.

                                            "Consolidated Fixed Charge Coverage Ratio" means, with respect to any Person, the ratio of (a) EBITDA of such Person during the four full fiscal quarters (the "Four Quarter Period") ending on or prior foreign nationals, to the extent required by applicable law), except:

                                    (1)if, immediately after giving effect to such issuance, transfer, conveyance, sale, lease or other disposition, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the “Restricted Payments” covenant if made on the date of such issuance or sale and the cash Net Proceeds from such transfer, conveyance, sale, lease or other disposition are applied in accordance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;” or

                                    (2)other sales of Capital Stock of a Restricted Subsidiary by the Company or a Restricted Subsidiary,provided that the Company or such Restricted Subsidiary complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                                    Guarantees

                                    If the transaction giving rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the "Transaction Date") for which financial statements are available to (b) Consolidated Fixed Charges of such Person for the Four Quarter Period. In addition to and without limitation of the foregoing, for purposes of this definition, "EBITDA" and "Consolidated Fixed Charges" shall be calculated after giving effect on a pro forma basis for the period of such calculation to:

                                      (1)
                                      the incurrence or repayment of any Indebtedness of such PersonCompany or any of its Restricted Subsidiaries (andacquires or creates another Domestic Subsidiary on or after the applicationdate of the proceeds thereof) giving riseIndenture, then that newly acquired or created Domestic Subsidiary must become a Guarantor and execute a supplemental indenture and deliver an Opinion of Counsel to the need to make such calculation and any incurrence or repayment of other Indebtedness (and the application of the proceeds thereof), other than the incurrence or repayment of Indebtedness in the ordinary course of business for working capital purposes pursuant to revolving credit facilities, occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such incurrence or repayment, as the case may be (and the application of the proceeds thereof), occurred on the first day of the Four Quarter Period;

                                      (2)
                                      any Asset Sales or Asset Acquisitions (including, without limitation, any Asset Acquisition giving rise to the need to make such calculation as a result of such Person or one of its Restricted Subsidiaries (including any Person who becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring, assuming or otherwise being liable for Acquired Indebtedness and also including any EBITDA (provided that such EBITDA shall be included only to the extent includable pursuant to the definition of "Consolidated Net Income") attributable to the assets which are the subject of the Asset Acquisition during the Four Quarter Period) occurring during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or Asset Acquisition (including the incurrence, assumption or liability for any such Acquired Indebtedness) occurred on the first day of the Four Quarter Period;

                                      (3)
                                      with respect to any such Four Quarter Period commencing prior to the Recapitalization, the Recapitalization, which shall be deemed to have taken place on the first day of such Four Quarter Period; and
                                    Trustee.

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                                        (4)
                                        any asset sales or asset acquisitions (including any EBITDA attributable to the assets which are the subject of the asset acquisition or asset sale during the Four Quarter Period (provided that such EBITDA shall be included only to the extent includable pursuant to the definition of "Consolidated Net Income")) that have been made by any Person that has become a Restricted Subsidiary of United or has been merged with or into United or any Restricted Subsidiary of United during the Four Quarter Period or at any time subsequent to the last day of the Four Quarter Period and on or prior to the Transaction Date that would have constituted Asset Sales or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary of United or subsequent to such Person's merger into United, as if such asset sale or asset acquisition (including the incurrence, assumption or liability for any Indebtedness or Acquired Indebtedness in connection therewith) occurred on the first day of the Four Quarter Period. If such Person or

                                        The Company will not permit any of its Restricted Subsidiaries, directly or indirectly, guaranteesto Guarantee or pledge any assets to secure the payment of any other Indebtedness of a third Person, the preceding sentence shall give effect to the incurrence of such guaranteed Indebtedness as if such PersonCompany or any Restricted Subsidiary thereof, other than Foreign Subsidiaries, unless such Restricted Subsidiary is a Guarantor or simultaneously executes and delivers a supplemental indenture providing for the Guarantee of the payment of the Notes by such Restricted Subsidiary, which Guarantee shall be senior to orpari passu with such Subsidiary’s Guarantee of such other Indebtedness unless such other Indebtedness is Senior Debt, in which case the Guarantee of the Notes may be subordinated to the Guarantee of such Senior Debt to the same extent as the Notes are subordinated to such Senior Debt. The form of the Note Guarantee will be attached as an exhibit to the Indenture.

                                        A Guarantor may not sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person), another Person, other than the Company or another Guarantor, unless:

                                        (1)immediately after giving effect to that transaction, no Default or Event of Default exists; and

                                        (2)either:

                                        (a)the Person acquiring the property in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) is a corporation organized or existing under the laws of the United States, any state thereof or the District of Columbia and assumes all the obligations of that Guarantor under the Indenture, its Note Guarantee and the Registration Rights Agreement pursuant to a supplemental indenture satisfactory to the Trustee; or

                                        (b)such sale or other disposition or consolidation or merger complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales.”

                                        The Note Guarantee of a Guarantor will be released:

                                        (1)in connection with any sale or other disposition of all of the Capital Stock of a Guarantor to a Person that is not (either before or after giving effect to such transaction) an Affiliate of the Company, if the sale of all such Capital Stock of that Guarantor complies with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;”

                                        (2)if the Company properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary under the Indenture; or

                                        (3)solely in the case of a Note Guarantee created pursuant to the second paragraph of this covenant, upon the release or discharge of the Guarantee which resulted in the creation of such Note Guarantee pursuant to this covenant “—Certain Covenants—Guarantees,” except a discharge or release by or as a result of payment under such Guarantee.

                                        Payments for Consent

                                        The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

                                        Reports

                                        Whether or not required by the Commission, so long as any Notes are outstanding, the Company will prepare and furnish to the Holders of Notes, within the time periods specified in the Commission’s rules and regulations:

                                        (1)all quarterly and annual financial information that would be required to be contained in a filing with the Commission on Forms 10-Q and 10-K if the Company were required to file such Forms, including a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and, with respect to the annual information only, a report on the annual financial statements by the Company’s certified independent accountants; and

                                        (2)all current reports that would be required to be filed with the SEC on Form 8-K if the Company were required to file such reports.

                                        In addition, whether or not required by the SEC, the Company will file a copy of all of the information and reports referred to in clauses (1) and (2) above with the SEC for public availability within the time periods specified in the SEC’s rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. In addition, the Company and the Guarantors have agreed that, for so long as any Notes remain outstanding, they will furnish to the Holders and to prospective investors, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

                                        If the Company has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by this covenant shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

                                        Events of Default and Remedies

                                        Each of the following is an Event of Default:

                                        (1)default for 30 days in the payment when due of interest on, or Liquidated Damages with respect to, the Notes whether or not prohibited by the subordination provisions of the Indenture;

                                        (2)default in payment when due (whether at maturity, upon acceleration, redemption or otherwise) of the principal of, or premium, if any, on the Notes, whether or not prohibited by the subordination provisions of the Indenture;

                                        (3)failure by the Company or any of its Restricted Subsidiaries to comply with the provisions described under the captions “—Repurchase at the Option of Holders—Change of Control,” “—Repurchase at the Option of Holders—Asset Sales” or “—Certain Covenants—Merger, Consolidation or Sale of Assets” or the provisions described in the third paragraph under the caption “—Certain Covenants—Guarantees;”

                                        (4)failure by the Company or any of its Restricted Subsidiaries for 60 days after written notice by the Trustee or Holders representing 25% or more of the aggregate principal amount of Notes outstanding to comply with any of the other agreements in the Indenture;

                                        (5)default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Company or any of its Restricted Subsidiaries) whether such Indebtedness or Guarantee now exists, or is created after the date of the Indenture, if that default:

                                        (a)is caused by a failure to make any payment of principal at the final maturity of such Indebtedness (a “Payment Default”); or

                                        (b)results in the acceleration of such Indebtedness prior to its express maturity,

                                        and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $25.0 million or more;

                                        (6)failure by the Company or any of its Restricted Subsidiaries to pay final judgments (to the extent such judgments are not paid or covered by insurance provided by a carrier that has acknowledged coverage in writing and has the ability to perform) aggregating in excess of $25.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

                                        (7)

                                        except as permitted by the Indenture, any Note Guarantee shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect or any Guarantor, or

                                        any Person acting on behalf of any Guarantor, shall deny or disaffirm its obligations under its Note Guarantee; and

                                        (8)certain events of bankruptcy or insolvency with respect to the Company, any Guarantor or any Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary).

                                        In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, any Guarantor or any Significant Subsidiary of the Company (or any Restricted Subsidiaries that together would constitute a Significant Subsidiary), all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

                                        Holders of the Notes may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest or Liquidated Damages) if it determines that withholding notice is in their interest.

                                        The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest or Liquidated Damages on, or the principal of, the Notes. The Holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. A Holder may not pursue any remedy with respect to the Indenture or the Notes unless:

                                        (1)the Holder gives the Trustee written notice of a continuing Event of Default;

                                        (2)the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy;

                                        (3)such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense;

                                        (4)the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and

                                        (5)during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request.

                                        However, such limitations do not apply to the right of any Holder of a Note to receive payment of the principal of, premium or Liquidated Damages, if any, or interest on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right shall not be impaired or affected without the consent of the Holder.

                                        In the case of any Event of Default occurring by reason of any willful action or inaction taken or not taken by or on behalf of the Company with the intention of avoiding payment of the premium that the Company would have had to pay if the Company then had elected to redeem the Notes pursuant to the optional redemption provisions of the Indenture, an equivalent premium shall also become and be immediately due and payable to the

                                        extent permitted by law upon the acceleration of the Notes. If an Event of Default occurs prior to February 1, 2010, by reason of any willful action (or inaction) taken (or not taken) by or on behalf of the Company with the intention of avoiding the prohibition on redemption of the Notes prior to February 1, 2010, then the premium specified in the first paragraph of “—Optional Redemption” shall also become immediately due and payable to the extent permitted by law upon the acceleration of the Notes.

                                        The Company is required to deliver to the Trustee annually within 90 days after the end of each fiscal year a statement regarding compliance with the Indenture. Upon becoming aware of any Default or Event of Default, the Company is required to deliver to the Trustee a statement specifying such Default or Event of Default.

                                        No Personal Liability of Directors, Officers, Employees and Stockholders

                                        No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, shall have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

                                        Legal Defeasance and Covenant Defeasance

                                        The Company may, at its option and at any time, elect to have all of its obligations discharged with respect to the outstanding Notes and all obligations of the Guarantors discharged with respect to their Note Guarantees (“Legal Defeasance”) except for:

                                        (1)the rights of Holders of outstanding Notes to receive payments in respect of the principal of, or interest or premium and Liquidated Damages, if any, on such Notes when such payments are due from the trust referred to below;

                                        (2)the Company’s obligations with respect to the Notes concerning issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

                                        (3)the rights, powers, trusts, duties and immunities of the Trustee, and the Company’s and the Guarantors’ obligations in connection therewith; and

                                        (4)the Legal Defeasance provisions of the Indenture.

                                        In addition, the Company may, at its option and at any time, elect to have the obligations of the Company and the Guarantors released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with those covenants shall not constitute a Default or Event of Default with respect to the Notes. In the event Covenant Defeasance occurs, certain events (not including non-payment, bankruptcy, receivership, rehabilitation and insolvency events) described under “Events of Default” will no longer constitute Events of Default with respect to the Notes.

                                        In order to exercise either Legal Defeasance or Covenant Defeasance:

                                        (1)the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders of the Notes, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, or interest and premium and Liquidated Damages, if any, on the outstanding Notes on the stated maturity or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to maturity or to a particular redemption date;

                                        (2)in the case of Legal Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the date of the Indenture, there has been a change in the applicable federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

                                        (3)in the case of Covenant Defeasance, the Company shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

                                        (4)no Default or Event of Default shall have occurred and be continuing either: (a) on the date of such deposit; or (b) or insofar as Events of Default from bankruptcy or insolvency events are concerned, at any time in the period ending on the 123rd day after the date of deposit;

                                        (5)such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound;

                                        (6)the Company must have delivered to the Trustee an Opinion of Counsel to the effect that, (1) assuming no intervening bankruptcy of the Company or any Guarantor between the date of deposit and the 123rd day following the deposit and assuming that no Holder is an “insider” of the Company under applicable bankruptcy law, after the 123rd day following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, including Section 547 of the United States Bankruptcy Code and (2) the creation of the defeasance trust does not violate the Investment Company Act of 1940;

                                        (7)the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding creditors of the Company or others;

                                        (8)if the Notes are to be redeemed prior to their stated maturity, the Company must deliver to the Trustee irrevocable instructions to redeem all of the Notes on the specified redemption date; and

                                        (9)the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

                                        Amendment, Supplement and Waiver

                                        Except as provided in the next three succeeding paragraphs, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes).

                                        Without the consent of the Holders of at least 75% of the principal amount of the Notes then outstanding (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), an amendment or waiver may not amend or modify any of the provisions of the Indenture or the

                                        related definitions affecting the subordination or ranking of the Notes or any Note Guarantee in any manner adverse to the holders of the Notes or any Note Guarantee.

                                        Without the consent of each Holder affected, an amendment or waiver may not (with respect to any Notes held by a non-consenting Holder):

                                        (1)reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

                                        (2)reduce the principal of or change the fixed maturity of any Note or alter the provisions, or waive any payment, with respect to the redemption of the Notes;

                                        (3)reduce the rate of or change the time for payment of interest on any Note;

                                        (4)waive a Default or Event of Default in the payment of principal of, or interest or premium, or Liquidated Damages, if any, on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the Notes and a waiver of the payment default that resulted from such acceleration);

                                        (5)make any Note payable in money other than U.S. dollars;

                                        (6)make any change in the provisions of the Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium or Liquidated Damages, if any, on the Notes;

                                        (7)release any Guarantor from any of its obligations under its Note Guarantee or the Indenture, except in accordance with the terms of the Indenture;

                                        (8)impair the right to institute suit for the enforcement of any payment on or with respect to the Notes or the Note Guarantees;

                                        (9)amend, change or modify the obligation of the Company to make and consummate an Asset Sale Offer with respect to any Asset Sale in accordance with the “Repurchase at the Option of Holders—Asset Sales” covenant after the obligation to make such Asset Sale Offer has arisen, or the obligation of the Company to make and consummate a Change of Control Offer in the event of a Change of Control in accordance with the “Repurchase at the Option of Holders—Change of Control” covenant after such Change of Control has occurred, including, in each case, amending, changing or modifying any definition relating thereto;

                                        (10)except as otherwise permitted under the “Merger, Consolidation and Sale of Assets” covenant, consent to the assignment or transfer by the Company of any of its rights or obligations under the Indenture; or

                                        (11)make any change in the preceding amendment and waiver provisions.

                                        Notwithstanding the preceding, without the consent of any Holder of Notes, the Company, the Guarantors and the Trustee may amend or supplement the Indenture or the Notes:

                                        (1)to cure any ambiguity, defect or inconsistency;

                                        (2)to provide for uncertificated Notes in addition to or in place of certificated Notes;

                                        (3)to provide for the assumption of the Company’s or any Guarantor’s obligations to Holders of Notes in the case of a merger or consolidation or sale of all or substantially all of the Company’s or such Guarantor’s assets;

                                        (4)to make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights under the Indenture of any such Holder;

                                        (5)to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

                                        (6)to comply with the provisions described under “Certain Covenants—Guarantees;”

                                        (7)to evidence and provide for the acceptance of appointment by a successor Trustee; or

                                        (8)to provide for the issuance of Additional Notes in accordance with the Indenture.

                                        Satisfaction and Discharge

                                        The Indenture will be discharged and will cease to be of further effect as to all Notes issued thereunder, when:

                                        (1)either:

                                        (a)all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company) have been delivered to the Trustee for cancellation; or

                                        (b)all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium and Liquidated Damages, if any, and accrued interest to the date of maturity or redemption;

                                        (2)no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound;

                                        (3)the Company or any Guarantor has paid or caused to be paid all sums payable by it under the Indenture; and

                                        (4)the Company has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

                                        In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

                                        Concerning the Trustee

                                        If the Trustee becomes a creditor of the Company or any Guarantor, the Indenture limits its right to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

                                        The Indenture provides that in case an Event of Default shall occur and be continuing, the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of Notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

                                        Book-Entry, Delivery and Form

                                        Except as set forth below, the exchange notes will be issued in registered, global form in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. Notes will be issued at the closing of the exchange offer only against surrender of original notes.

                                        The exchange notes initially will be represented by one or more notes in registered, global form without interest coupons attached (the “Global Note”). On the date of the closing of the exchange offer, the Global Note will be deposited upon issuance with the Trustee as custodian for The Depository Trust Company (“DTC”), in New York, New York, and registered in the name of DTC or its nominee, in each case for credit to an account of a direct or indirect participant in DTC as described below.

                                        Unless definitive exchange notes are issued, the Global Note may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Note may not be exchanged for Notes in certificated form except in the limited circumstances described below. See “—Exchange of Book-Entry Notes for Certificated Notes.”

                                        Ownership of interests in the Global Note (“Book-Entry Interests”) will be limited to persons that have accounts with DTC, or persons that hold interests through such Participants (as defined below). Except under the limited circumstances described below, beneficial owners of Book-Entry Interests will not be entitled to physical delivery of exchange notes in definitive form.

                                        Book-Entry Interests will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by DTC or DTC’s nominees and Participants. In addition while the exchange notes are in global form, holders of Book-Entry Interests will not be considered the owners or “holders” of exchange notes for any purpose. So long as the exchange notes are held in global form, DTC or its nominees will be considered the sole holders of the Global Note for all purposes under the indenture. In addition, Participants must rely on the procedures of DTC and Indirect Participants (as defined below) must rely on the procedures of DTC and the Participants through which they own Book-Entry Interests to transfer their interests or to exercise any rights of holders under the indenture. Transfers of beneficial interests in the Global Note will be subject to the applicable rules and procedures of DTC and its Participants or Indirect Participants, which may change from time to time.

                                        Depository Procedures

                                        The following description of the operations and procedures of DTC is provided solely as a matter of convenience. These operations and procedures are solely within the control of DTC and are subject to change. Neither we nor the trustee take any responsibility for or are liable for these operations and procedures including the records relating to Book-Entry Interests and we urge investors to contact DTC or its participants directly to discuss these matters.

                                        DTC has advised the Company that DTC is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “Clearing Agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on

                                        behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

                                        DTC has also advised the Company that, pursuant to procedures established by it:

                                        (1)upon deposit of the Global Notes, DTC will credit the accounts of Participants pursuant to the corresponding letters of transmittal with portions of the principal amount of the Global Notes; and

                                        (2)ownership of these interests in the Global Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes).

                                        We understand that under existing industry practice, in the event that we request any action of holders of exchange notes, or an owner of a beneficial interest in the Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take the action and the Participants would authorize beneficial owners owning through the Participants to take the action or would otherwise act upon the instruction of the beneficial owners. Neither we nor the trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to the notes.

                                        All interests in a Global Note may be subject to the procedures and requirements of DTC. The laws of some jurisdictions, including certain states of the United States, require that certain Persons take physical delivery in definitive form of securities that they own. Consequently, the ability to transfer beneficial interests in a Global Note to such Persons will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a Person having beneficial interests in a Global Note to pledge such interests to Persons that do not participate in the DTC system, or otherwise take actions in respect of such interests, may be affected by the lack of a physical certificate evidencing such interests.

                                        Except as described below, owners of interest in the Global Notes will not have Notes registered in their names, will not receive physical delivery of Notes in certificated form and will not be considered the registered owners or “Holders” thereof under the Indenture for any purpose.

                                        Payments in respect of the principal of, and interest and premium on a Global Note registered in the name of DTC or its nominee will be payable to DTC or its nominee in its capacity as the registered Holder of the Global Note under the Indenture. Under the terms of the Indenture, the Company and the Trustee will treat the Persons in whose names the Notes, including the Global Notes, are registered as the owners thereof for the purpose of receiving payments and for all other purposes. Consequently, neither the Company, the Trustee nor any agent of the Company or the Trustee has or will have any responsibility or liability for:

                                        (1)any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or

                                        (2)any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

                                        DTC has advised the Company that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on such payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants

                                        and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Company. Neither the Company nor the Trustee will be liable for any delay by DTC or any of its Participants in identifying the beneficial owners of the Notes, and the Company and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

                                        Transfer between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day Funds.

                                        DTC has advised the Company that it will take any action permitted to be taken by a Holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in the Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which such Participant or Participants has or have given such direction. However, if there is an Event of Default under the Notes, DTC reserves the right to exchange the Global Notes for legended Notes in certificated form, and to distribute such Notes to its Participants.

                                        Although DTC has agreed to the foregoing procedures to facilitate transfers of interests in the Global Note among participants in DTC, DTC is under no obligation to perform or to continue to perform such procedures, and may discontinue such procedures at any time. Neither the Company nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC or its Participants or Indirect Participants of their respective obligations under the rules and procedures governing DTC’s operations.

                                        Exchange of Global Notes for Certificated Notes

                                        A Global Note is exchangeable for definitive Notes in registered certificated form (“Certificated Notes”) if:

                                        (1)DTC (a) notifies the Company that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act, and in each case the Company fails to appoint a successor depositary;

                                        (2)the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or

                                        (3)there shall have occurred and be continuing a Default or Event of Default with respect to the Notes.

                                        In addition, beneficial interests in a Global Note may be exchanged for Certificated Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes delivered in exchange for any Global Note or beneficial interests in Global Notes will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

                                        Exchange of Certificated Notes for Global Notes

                                        Certificated Notes may not be exchanged for beneficial interests in any Global Note unless the transferor first delivers to the Trustee a written certificate (in the form provided in the Indenture) to the effect that such transfer will comply with the appropriate transfer restrictions applicable to such Notes.

                                        Redemption of the Global Note

                                        In the event the Global Note, or any portion thereof, is redeemed, DTC will redeem an equal amount of the Book-Entry Interests in such Global Note from the amount received by it in respect of the redemption of such Global Note. The redemption price payable in connection with the redemption of such Book-Entry Interests will

                                        be equal to the amount received by DTC in connection with the redemption of such Global Note or any portion thereof. We understand that, under existing practices of DTC, if fewer than all of the exchange notes are to be redeemed at any time, DTC will credit its Participants’ accounts on a proportionate basis, with adjustments to prevent fractions, or by lot or on such other basis as DTC deems fair and appropriate; provided, however, that no Book-Entry Interest of $1,000 principal amount or less may be redeemed in part.

                                        Same Day Settlement and Payment

                                        The Company will make payments in respect of the Notes represented by the Global Notes (including principal, premium, if any, and interest) by wire transfer of immediately available funds to the accounts specified by the Global Note Holder. The Company will make all payments of principal, interest and premium with respect to Certificated Notes by wire transfer of immediately available funds to the accounts specified by the Holders thereof or, if no such account is specified, by mailing a check to each such Holder’s registered address. The Notes represented by the Global Notes are expected to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Company expects that secondary trading in any Certificated Notes will also be settled in immediately available funds.

                                        The amount of the Liquidated Damages will increase by an additional one-quarter of one percent (0.25%) per annum on the principal amount of Notes with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of Liquidated Damages for all Registration Defaults of 1.0% per annum.

                                        All accrued Liquidated Damages will be paid by the Company and the Guarantors on each interest payment date to the Global Note Holder by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified.

                                        Following the cure of all Registration Defaults, the accrual of Liquidated Damages will cease.

                                        Holders of Notes will be required to make certain representations to the Company (as described in the Registration Rights Agreement) in order to participate in the Exchange Offer and will be required to deliver certain information to be used in connection with the Shelf Registration Statement and to provide comments on the Shelf Registration Statement within the time periods set forth in the Registration Rights Agreement in order to have their Notes included in the Shelf Registration Statement and benefit from the provisions regarding Liquidated Damages set forth above. By acquiring Notes, a Holder will be deemed to have agreed to indemnify the Company and the Guarantors against certain losses arising out of information furnished by such Holder in writing for inclusion in any Shelf Registration Statement. Holders of Notes will also be required to suspend their use of the prospectus included in the Shelf Registration Statement under certain circumstances upon receipt of written notice to that effect from the Company.

                                        Certain Definitions

                                        Set forth below are certain defined terms used in the Indenture. Reference is made to the Indenture for a full disclosure of all such terms, as well as any other capitalized terms used herein for which no definition is provided.

                                        “Acquired Debt” means, with respect to any specified Person:

                                        (1)Indebtedness of any other Person existing at the time such other Person is merged with or into, or becomes a Subsidiary of, such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and

                                        (2)Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

                                        “Affiliate” of any specified Person means (1) any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person or (2) any executive officer or director of such specified Person. For purposes of this definition, “control,” as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, had directly incurredwhether through the ownership of voting securities, by agreement or otherwise assumedotherwise;provided that beneficial ownership of 10% or more of the Voting Stock of a Person shall be deemed to be control. For purposes of this definition, the terms “controlling,” “controlled by” and “under common control with” shall have correlative meanings;provided further that each of Paula Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs-KG, Mannheim and ROSATA Grundstücksvermietungsgesellschaft mbH & Co. Object Dischingen KG, Düsseldorf, shall not be deemed Affiliates of the Company or any of its Restricted Subsidiaries solely by virtue of the beneficial ownership by the Company or its Restricted Subsidiaries of up to 20% of the Voting Stock of each entity.

                                        “Asset Sale” means:

                                        (1)the sale, lease, conveyance or other disposition of any property or assets;provided that the sale, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by the provisions of the Indenture described above under the caption “—Repurchase at the Option of Holders—Change of Control” and/or the provisions described above under the caption “—Certain Covenants—Merger, Consolidation or Sale of Assets” and not by the provisions of the Asset Sale covenant; and

                                        (2)the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any Restricted Subsidiary of Equity Interests in any of its Subsidiaries.

                                        Notwithstanding the preceding, the following items shall be deemed not to be Asset Sales:

                                        (1)any single transaction or series of related transactions that involves assets having a fair market value of less than $10.0 million;

                                        (2)a transfer of assets between or among the Company and its Restricted Subsidiaries;

                                        (3)an issuance of Equity Interests by a Restricted Subsidiary to the Company or to another Restricted Subsidiary;

                                        (4)the sale, lease or other disposition of equipment, inventory, accounts receivable or other assets in the ordinary course of business;

                                        (5)the sale or other disposition of Cash Equivalents;

                                        (6)a Restricted Payment that is permitted by the covenant described above under the caption “—Certain Covenants—Restricted Payments;”

                                        (7)any sale or disposition of any property or equipment that has become damaged, worn out, obsolete or otherwise unsuitable or no longer required for use in the ordinary course of the business of the Company or its Restricted Subsidiaries;

                                        (8)the licensing of intellectual property in the ordinary course of business;

                                        (9)any sale or other disposition deemed to occur with creating or granting a Lien not otherwise prohibited by the Indenture; and

                                        (10)upon the termination of the VARTA joint venture with VARTA AG, the sale, transfer or other disposition of the Equity Interests in FinanceCo (as defined in the VARTA Joint Venture Agreement) and the forgiveness of any loans owed by VARTA AG, in each case pursuant to, and in accordance with the terms of, the VARTA Joint Venture Agreement as in effect on the date of the Indenture.

                                        “Beneficial Owner” has the meaning assigned to such guaranteed Indebtedness.

                                              Furthermore,term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating "Consolidated Fixed Charges" for purposesthe beneficial ownership of determining the denominator (but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio,"

                                        (1)
                                        interest on outstanding Indebtedness determined on a fluctuating basis asany particular “person” (as that term is used in Section 13(d)(3) of the Transaction Date and which will continue to be so determined thereafterExchange Act), such “person” shall be deemed to have accruedbeneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and “Beneficially Owned” shall have a corresponding meaning.

                                        “Board of Directors” means:

                                        (1)with respect to a corporation, the board of directors of the corporation;

                                        (2)with respect to a partnership, the Board of Directors of the general partner of the partnership; and

                                        (3)with respect to any other Person, the board or committee of such Person serving a similar function.

                                        “Capital Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a fixed rate per annum equalcapital lease that would at that time be required to the rate of interest on such Indebtedness in effect on the Transaction Date; and

                                        (2)
                                        notwithstanding clause (1) above, interest on Indebtedness determinedbe capitalized on a fluctuating basis,balance sheet in accordance with GAAP.

                                        “Capital Stock” means:

                                        (1)in the case of a corporation, corporate stock;

                                        (2)in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

                                        (3)in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and

                                        (4)any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person.

                                        “Cash Equivalents” means:

                                        (1)United States dollars, Euros and British Pounds Sterling;

                                        (2)securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition;

                                        (3)certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of “B” or better;

                                        (4)repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2) and (3) above entered into with any financial institution meeting the qualifications specified in clause (3) above;

                                        (5)commercial paper having the highest rating obtainable from Moody’s Investors Service, Inc. or Standard & Poor’s Rating Services and in each case maturing within nine months after the date of acquisition;

                                        (6)marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof having the highest ratings obtainable from Moody’s or S&P and maturing within six months from the date of acquisition thereof;

                                        (7)money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition; and

                                        (8)in the case of a Foreign Subsidiary, local currency held by such Foreign Subsidiary from time to time in the ordinary course of business and Euros and British Pounds Sterling.

                                        “Change of Control” means the extent such interest is covered by one or more Interest Rate Agreements, shall be deemed to accrue atoccurrence of any of the rate per annum resulting after giving effect to the operation of such agreements.

                                      following:

                                      (1)the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries, taken as a whole, to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act);

                                      (2)the adoption of a plan relating to the liquidation or dissolution of the Company;

                                      (3)any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate Beneficial Owner, directly or indirectly, of 50% or more of the voting power of the Voting Stock of the Company;

                                      (4)the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or

                                      (5)the Company consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into the Company, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Company or such other Person is converted into or exchanged for cash, securities or other property, other than any such transaction where (A) the Voting Stock of the Company outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person (immediately after giving effect to such issuance) and (B) immediately after such transaction, no “person” or “group” (as such terms are used in Section 13(d) and 14(d) of the Exchange Act) becomes, directly or indirectly, the ultimate Beneficial Owner of 50% or more of the voting power of the Voting Stock of the surviving or transferee Person.

                                              "Consolidated Fixed ChargesCash Flow”" means, with respect to any specified Person for any period, the sum of

                                        (1)
                                        Consolidated Interest Expense (excluding amortization or write-off of debt issuance costs relating to the Recapitalization and the financing therefor or relating to retired or existing Indebtedness and amortization or write-off of customary debt issuance costs relating to future Indebtedness incurred in the ordinary course of business), plus

                                        (2)
                                        without duplication, the product of (a) the amount of all dividend payments on any series of Preferred StockNet Income of such Person for such periodplus, without duplication:

                                        (1)provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income;plus

                                        (2)Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that any such Fixed Charges were deducted in computing such Consolidated Net Income;plus

                                        (3)depreciation, amortization (including amortization of goodwill and other intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-cash expenses (excluding any restructuring and related charges referred to in clauses (4), (5), (6) and (7), without giving effect to the provisos, and any such non-cash expense to the extent that it represents an accrual of or reserve for cash expenses in any future period or amortization of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, amortization and other non-cash expenses were deducted in computing such Consolidated Net Income;plus

                                        (4)restructuring and related charges and other non-recurring charges incurred by the Company in the fiscal year ended September 30, 2004, to the extent such charges were deducted in computing Consolidated Net Income for such period;provided that the maximum aggregate amount of such charges shall not exceed $25.0 million;plus

                                        (5)for any period prior to the acquisition of Microlite, any operating losses and non-recurring charges incurred in such period by Microlite, to the extent such operating losses and non-recurring charges were reflected in computing Consolidated Net Income for such period;provided that the maximum aggregate amount of such operating losses and charges shall not exceed $8.1 million;plus

                                        (6)for any period prior to the acquisition of United Industries Corporation, restructuring and related charges incurred in such period by United Industries Corporation related to its acquisition of United Pet Group, Inc. or The Nu-Gro Company, to the extent such charges were deducted in computing Consolidated Net Income for such period;provided that the maximum aggregate amount of such charges shall not exceed $31.1 million;plus

                                        (7)restructuring and related charges related to the acquisition of United Industries Corporation or any other acquisition, incurred during any period after September 30, 2004, and prior to September 30, 2008, to the extent such charges were deducted in computing Consolidated Net Income for such period;provided that the maximum aggregate amount of such charges shall not exceed $100.0 million;minus

                                        (8)non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue consistent with past practice, in each case, on a consolidated basis and determined in accordance with GAAP.

                                        Notwithstanding the preceding, the provision for taxes based on the income or profits of, and the depreciation and amortization and other non-cash expenses of, a Restricted Subsidiary determined onof the Company shall be added to Consolidated Net Income to compute Consolidated Cash Flow of the Company (A) in the same proportion that the Net Income of such Restricted Subsidiary was added to compute such Consolidated Net Income of the Company and (B) only to the extent that a consolidated basis (other than dividends paid in Capital Stock (other than Disqualified Capital Stock) or dividends that accumulate and compound as if paid in kind) paid, accrued or scheduledcorresponding amount would be permitted at the date of determination to be paiddividended or accrued duringdistributed to the Company by such period times (b) a fraction,Restricted Subsidiary without prior governmental approval (that has not been obtained), and without direct or indirect restriction pursuant to the numeratorterms of which is oneits charter and the denominator of which is one minus the then current effective consolidated federal, stateall agreements, instruments, judgments, decrees, orders, statutes, rules and local tax rate of such Person, expressed as a decimal.

                                      governmental regulations applicable to that Subsidiary or its stockholders.

                                              "Consolidated Interest ExpenseNet Income”" means, with respect to any Person, for any period, the aggregate amount of interest which, in conformity with GAAP, would be set forth opposite the caption "interest expense" or any like caption on an income statement for such Person and its Restricted Subsidiaries on a consolidated basis (including, but not limited to, imputed interest included in Capitalized Lease Obligations, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, the net costs associated with hedging obligations, amortization of other financing fees and expenses, the interest portion of any deferred payment obligation, amortization of discount (other than any such discount arising from the issuance of warrants to purchase Common Stock to purchasers of United's debt securities simultaneously with the issuance thereof) or premium, if

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                                      any, and all other non-cash interest expense (other than interest amortized to cost of sales)) plus, without duplication, all net capitalized interest for such period and all interest incurred or paid under any guarantee of Indebtedness (including a guarantee of principal, interest or any combination thereof) of any Person, plus the amount of all dividends or distributions paid on Disqualified Capital Stock (other than dividends paid or payable in shares of Capital Stock of United), less the amortization of deferred financing costs.

                                              "Consolidated Net Income" means, with respect to anyspecified Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP;provided however, that that:

                                        (1)
                                        the Net Income of any

                                        (a)
                                        Person (the "other Person") in which the Person in question or any of its Restricted Subsidiaries has less than a 100% interest (which interest does not cause the net income of such other Person to be consolidated into the net income of the Person in question in accordance with GAAP) and

                                        (b)
                                        Unrestricted Subsidiary

                                          shall be included only to the extent of the amount of dividends or distributions paid to the Person in question or the Restricted Subsidiary,

                                        (2)
                                        the Net Income of any Restricted Subsidiary of the Person in question that is subject to any restriction or limitation on the payment of dividends or the making of other distributions (other than pursuant to the notes or as permitted under "Certain Covenants—Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries") shall be excluded to the extent of such restriction or limitation,

                                        (3)
                                        (a)
                                        (1)the Net Income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or a Restricted Subsidiary thereof;

                                        (2)the Net Income of any Restricted Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its equityholders;

                                        (3)the Net Income of any Person acquired during the specified period for any period prior to the date of such acquisition shall be excluded;

                                        (4)the cumulative effect of a change in accounting principles shall be excluded; and

                                        (5)notwithstanding clause (1) above, the Net Income (but not loss) of any Unrestricted Subsidiary shall be excluded, whether or not distributed to the specified Person or one of its Subsidiaries.

                                        “Consolidated Net Tangible Assets” of any Person acquired in a poolingmeans, as of interests transaction for any period prior todate, the date of such acquisition and (b) any net gain (but not loss) resulting from an Asset Sale by the Person in question or any of its Restricted Subsidiaries other than in the ordinary course of business shall be excluded,

                                        (4)
                                        extraordinary, unusual and non-recurring gains and losses (including any related tax effects on such Person) shall be excluded,

                                        (5)
                                        income or loss attributable to discontinued operations (including without limitation operations disposed of during such period whether or not such operations were classified as discontinued) shall be excluded,

                                        (6)
                                        to the extent not otherwise excludedamount which, in accordance with GAAP, would be set forth under the Net Incomecaption “Total Assets” (or any like caption) on a consolidated balance sheet of such Person and its Restricted Subsidiaries, as of the end of the most recently ended fiscal quarter for

                                        which internal financial statements are available, less (1) all intangible assets, including, without limitation, goodwill, organization costs, patents, trademarks, copyrights, franchises, and research and development costs and (2) current liabilities.

                                        “Continuing Directors” means, as of any Restricted Subsidiary in an amount that corresponds to the percentage ownership interest in the incomedate of such Restricted Subsidiary not owned on the last day of such period, directly or indirectly, by such Person shall be excluded,

                                        (7)
                                        dividends, distributions anddetermination, any other payments constituting return of capital from Investments shall in any event be excluded to the extent used to increase the amount available for Investment under clause (15)member of the definitionBoard of "Permitted Investments"Directors of the Company who:

                                        (1)was a member of such Board of Directors on the date of the Indenture; or

                                        (2)was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election.

                                        “Credit Agreement” means that certain Credit Agreement, dated the date of the Indenture, by and among the Company, certain subsidiaries of the Company, including Varta Consumer Batteries GmbH & Co. KGaA, Bank of America, N.A., as Administrative Agent, and the other Lenders named therein, including any related notes, Guarantees, collateral documents, instruments and agreements executed in accordanceconnection therewith, and in each case as amended, modified, renewed, refunded, replaced or refinanced from time to time, regardless of whether such amendment, modification, renewal, refunding, replacement or refinancing is with the terms thereof,

                                        (8)
                                        non-cash compensation charges, including any arising from existing stock options resulting from any mergersame financial institutions or recapitalization transaction, shall be excluded, and

                                        (9)
                                        otherwise.

                                        “Credit Facilities” means, one or more debt facilities (including, without duplication, any charges related tolimitation, the Recapitalization shall be excluded.

                                      108


                                                "Currency Agreement" means any foreign exchange contract, currency swap agreementCredit Agreement) or commercial paper facilities, in each case with banks or other similar agreementinstitutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or arrangement, which may include the useto special purpose entities formed to borrow from such lenders against such receivables) or letters of derivatives, designedcredit, in each case, as amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to protect against fluctuations in currency values.time.

                                                "

                                        Default“Default”" means any condition or event that is, or with the passingpassage of time or the giving of any notice expressly required under the Indenture (or both)or both would be, an Event of Default.

                                                "

                                        Designated Senior Indebtedness," as to United or any Guarantor, as the case may be, means

                                          (1)
                                          so long as Indebtedness under or in respect of the Senior Credit Facility is outstanding or has commitments for the extension of credit, such Senior Indebtedness and

                                          (2)
                                          any other Senior Indebtedness

                                          (a)
                                          which at the time of determination exceeds $25,000,000 in aggregate principal amount (or accreted value in the case of Indebtedness issued at a discount) outstanding or available under a committed facility,

                                          (b)
                                          which is specifically designated in the instrument evidencing such Senior Indebtedness as "Designated Senior Indebtedness" by such Person, and

                                          (c)
                                          as to which the Trustee has been given written notice of such designation and, so long as there is a Representative with respect to the Senior Credit Facility, such Representative shall have concurred in such designation.

                                                "Disqualified Capital StockStock”" means any Capital Stock of United or a Restricted Subsidiary thereof which,that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder)holder thereof), or upon the happening of any event,

                                          (1)
                                          matures on or prior to the maturity date of the notes, for cash or securities constituting Indebtedness; or

                                          (2)
                                          is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, on or prior to the maturity date of the notes, for cash or securities constituting Indebtedness; or

                                          (3)
                                          is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the notes, for cash or securities constituting Indebtedness;

                                        provided that Capital Stock of United that is held by a current or former employee of United subject to a put option and/or a call option with United triggered by the termination of such employee's employment with United and/or United's performance shall not be deemed to be Disqualified Capital Stock solely by virtue of such call option and/or put option; provided further, for the avoidance of doubt, to the extent the Bayer Stock is Disqualified Capital Stock, from andone year after the date on which the Notes mature, except to the extent such BayerCapital Stock is no longersolely redeemable with, or solely exchangeable for, any Equity Interests of the Company that are not Disqualified Stock. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale shall not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with the covenant described above under the caption “—Certain Covenants—Restricted Payments.” The term “Disqualified Stock” shall also include any options, warrants or other rights that are convertible into Disqualified Stock or that are redeemable at the option of the holder, or required to be redeemed, prior to the maturity date ofthat is one year after the date on which the Notes such Bayer Stock shall be deemed to be converted into Capital Stock that is not Disqualified Capital Stock for purposes of clause 3(b) of the "Limitation on Restricted Payments" covenant. Without limitation of the foregoing, Disqualified Capital Stock will be deemed to include (a)mature.

                                        “Domestic Subsidiary” means any Preferred Stock of a Restricted Subsidiary of United and (b) any Preferred Stock of United, with respect to either of which, under the terms of such Preferred Stock, by agreement or otherwise, United is obligated to pay current dividends or distributions in cash during the period prior to the maturity date of the notes; provided, however, that Capital Stock of United or anyCompany other than a Restricted Subsidiary that is issued with(1) a “controlled foreign corporation” under Section 957 of the benefitInternal Revenue Code or (2) a Subsidiary of provisions requiring (i) a change of control offer or asset sale proceeds offer to be made forany such controlled foreign corporation.

                                        “Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

                                        “Equity Offering” means a public or private offer and sale of common stock (other than Disqualified Stock) of the Company (other than common stock sold to a Subsidiary of the Company).

                                        “Existing Indebtedness” means the aggregate principal amount of Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the event of a change of control of or asset sale by United or such Restricted Subsidiary, which provisions have substantially the same effect as the provisionsdate of the Indenture described under "Change of Control" or "Limitation on Certain Asset Sales," as the case

                                        109



                                        may be or (ii) payment of dividends or redemption only after the notes have been fully paid, shall not be deemed to be Disqualified Capital Stock solely by virtue of such provisions.

                                                "EBITDA" means, for any Person, for any period, an amount equal to

                                          (1)
                                          the sum of

                                          (a)
                                          Consolidated Net Income for such period, plus

                                          (b)
                                          the provision for taxes for such period based on income or profitsgiving effect to the extent such income or profits were included in computing Consolidated Net Incomeacquisition of United Industries and the application of the proceeds of the Notes and any provision for taxes utilizedIndebtedness under the Credit Agreement borrowed on the date of the Indenture, until such amounts are repaid.

                                          “fair market value” means the price that would be paid in computing net lossan arm’s-length transaction between an informed and willing seller under clause (a) hereof, plus

                                          (c)
                                          Consolidated Interest Expense for such period (but only including Redeemable Dividends in the calculation of such Consolidated Interest Expenseno compulsion to the extent that such Redeemable Dividends have not been excluded in the calculation of Consolidated Net Income), plus

                                          (d)
                                          depreciation for such period on a consolidated basis, plus

                                          (e)
                                          amortization of intangibles for such period on a consolidated basis, plus

                                          (f)
                                          any other non-cash items (excluding any such non-cash itemsell and an informed and willing buyer under no compulsion to the extent that it represents an accrual of or a reserve for a cash expense in any period subsequent to the period for which EBITDA is being calculated) reducing or not included in the definition of Consolidated Net Income for such period, plus

                                          (g)
                                          without duplication, all cash and non-cash expenses and restructuring charges arising in connection with the Recapitalization, minus

                                          (2)
                                          all non-cash items increasing Consolidated Net Income for such period,

                                        all for such Person and its Subsidiariesbuy, as determined in accordance with GAAP, except that with respect to United eachgood faith by the Board of the foregoing itemsDirectors, whose determination shall be determined onconclusive if evidenced by a consolidated basis with respect to United and its Restricted Subsidiaries only; provided, however, that, for purposes of calculating EBITDA during any fiscal quarter, cash income from a particular Investment (other than in a Subsidiary which under GAAP is consolidated) of such Person shall be included only

                                          (1)
                                          to the extent cash income has been received by such Person with respect to such Investment, or

                                          (2)
                                          if the cash income derived from such Investment is attributable to Temporary Cash Investments.

                                                "Equity Investor" means UIC Holdings, L.L.C., a Delaware limited liability company.

                                                "Exchange Act" means the Securities Exchange Act of 1934, as amended.Board Resolution.

                                         "fair market value"

                                        “Fixed Charge Coverage Ratio” means with respect to any assetspecified Person for any period, the ratio of the Consolidated Cash Flow of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or property,any of its Subsidiaries incurs, assumes, Guarantees, repays, repurchases or redeems any Indebtedness or issues, repurchases or redeems preferred stock subsequent to the pricecommencement of the period for which couldthe Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio shall be negotiated in an arm's-length, free market transaction,calculated giving pro forma effect to such incurrence, assumption, Guarantee, repayment, repurchase or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom as if the same had occurred at the beginning of the applicable four-quarter reference period.

                                        In addition, for cash, between a willing seller and a willing and able buyer, neitherpurposes of whom is under undue pressurecalculating the Fixed Charge Coverage Ratio:

                                        (1)acquisitions and dispositions of business entities or property and assets constituting a division or line of business of any Person that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date shall be given pro forma effect as if they had occurred on the first day of the four-quarter reference period and Consolidated Cash Flow for such reference period shall be calculated on a pro forma basis in accordance with Regulation S-X under the Securities Act, but without giving effect to clause (3) of the proviso set forth in the definition of Consolidated Net Income;

                                        (2)the Consolidated Cash Flow attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded;

                                        (3)the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, shall be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Subsidiaries following the Calculation Date; and

                                        (4)consolidated interest expense attributable to interest on any Indebtedness (whether existing or being incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Calculation Date (taking into account any interest rate option, swap, cap or similar agreement applicable to such Indebtedness if such agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period.

                                        “Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:

                                        (1)

                                        the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, including, without limitation, amortization of debt issuance costs and original

                                        issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings, and net of the effect of all payments made, received or accrued in connection with Hedging Obligations;plus

                                        (2)the consolidated interest of such Person and its Restricted Subsidiaries that was capitalized during such period;plus

                                        (3)any interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon;plus

                                        (4)the product of (a) all dividends, whether paid or accrued and whether or not in cash, on any series of Disqualified Stock or preferred stock of such Person or any of its Restricted Subsidiaries, other than (i) dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or (ii) dividends to the Company or a Restricted Subsidiary of the Company, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP;

                                        provided that Fixed Charges shall not include any interest expense of, or compulsiondividends paid by, VARTA to completeVARTA AG to the transaction.

                                                "Foreign Subsidiary" meansextent that the Company or a Restricted Subsidiary of United that is organizedthe Company receives interest or dividends in a jurisdictioncash from VARTA AG in connection with the VARTA Joint Venture Agreement as in effect on the date of the Indenture.

                                        “Foreign Subsidiary” means any Restricted Subsidiary of the Company other than the United States of America or a state thereof or the District of Columbia; provided that for purposes of the "Limitation on Creation of Subsidiaries" covenant, if a Restricted Subsidiary guarantees, grants a lien or enters into a similar agreement for the benefit of any Indebtedness of United or any other Restricted Subsidiary (other than a Foreign Subsidiary), such Restricted Subsidiary will not be deemed to be a ForeignDomestic Subsidiary.

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                                                "GAAP“GAAP”" means generally accepted accounting principles consistently appliedset forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight Board and in the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect inon the United States from time to time.

                                                "Guarantee" means, as the context may require, individually, a guarantee, or collectively, any and all guarantees, of the Obligations of United with respect to the notes by each Guarantor, if any, pursuant to the termsdate of the Indenture.

                                                "Guarantor" means each Initial Subsidiary Guarantor and each other U.S. Restricted Subsidiary of United that hereafter becomes a Guarantor pursuant to the Indenture, and "Guarantors" means such entities, collectively.

                                                "Guarantor Representative“Guarantee”" means

                                          (1)
                                          so long as the Senior Credit Facility remains outstanding or any commitments thereunder remain in effect, the agent (or if there is more than one agent therefor, the administrative agent for the lender parties thereunder) and

                                          (2)
                                          thereafter the agent, indenture trustee, other trustee or other representative for any Guarantor Senior Indebtedness.

                                                "Guarantor Senior Indebtedness" means, the principal of and premium, if any, and interest (including, without limitation, Accrued Bankruptcy Interest) on, and any and all other fees, expense reimbursement obligations, indemnities and other amounts and Obligations incurred or owing pursuant to the terms of all agreements, documents and instruments providing for, creating, securing or evidencing or otherwise entered into in connection with,

                                          (1)
                                          any Guarantor's direct incurrence of any Indebtedness or its guarantee of all Indebtedness of United or any of its Subsidiaries, in each case, under the Senior Credit Facility,

                                          (2)
                                          all obligations of such Guarantor with respectas to any Interest Rate Agreement,

                                          (3)
                                          all obligationsPerson, a guarantee other than by endorsement of such Guarantor to reimburse any bank or other person in respect of amounts paid under letters of credit, acceptances or other similarnegotiable instruments

                                          (4)
                                          all other Indebtedness of such Guarantor which does not expressly provide that it is to rankpari passu with or subordinate to its Guarantee and

                                          (5)
                                          all deferrals, renewals, extensions, refinancings, replacements and refundings in whole or in part of, and amendments, modifications, restatements and supplements to, any of the Indebtedness described above.

                                                Notwithstanding anything to the contrary in the foregoing, Guarantor Senior Indebtedness of a Guarantor will not include

                                          (1)
                                          Indebtedness of such Guarantor to United or any of its Subsidiaries (except to the extent such Indebtedness is pledged as security under the Senior Credit Facility),

                                          (2)
                                          Indebtedness represented by the Guarantees,

                                          (3)
                                          Indebtedness represented by such Guarantor's guarantee of the Series B notes and any other Indebtedness which by the express terms of the agreement or instrument creating, evidencing or governing the same is junior or subordinate in right of payment to any other item of Indebtedness of such Guarantor (although this clause (3) shall not apply to the subordination of liens or security interests covering property or assets securing Guarantor Senior Indebtedness),

                                        111


                                            (4)
                                            any trade payable arising from the purchase of goods or materials or for services obtainedcollection in the ordinary course of business, or

                                            (5)
                                            liability for federal, state, localdirect or other taxes owedindirect, in any manner including, without limitation, by way of a pledge of assets or owing by such Guarantor.
                                          through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness of another Person.

                                                  "“Guarantors” means:Holding Company" means

                                          (1)each direct or indirect Domestic Subsidiary of the Company on the date of the Indenture; and

                                          (2)any other subsidiary that executes a Note Guarantee in accordance with the provisions of the Indenture;

                                          and their respective successors and assigns until released from their obligations under their Note Guarantees and the parent companyIndenture in accordance with the terms of the New Operating Company followingIndenture.

                                          “Hedging Obligations” means, with respect to any specified Person, the Asset Drop-Down.obligations of such Person under:

                                                  "

                                          (1)interest rate swap agreements, interest rate cap agreements, interest rate collar agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping interest rate risk;

                                          (2)commodity swap agreements, commodity option agreements, forward contracts and other agreements or arrangements designed for the purpose of fixing, hedging or swapping commodity price risk; and

                                          (3)foreign exchange contracts, currency swap agreements and other agreements or arrangements designed for the purpose of fixing, hedging or swapping foreign currency exchange rate risk.

                                          incur“incur”" means, with respect to any Indebtedness, or other obligation of any Person, to incur, create, issue, incur (by conversion, exchange or otherwise), assume, guaranteeGuarantee or otherwise become directly or indirectly liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness;provided that (1) any Indebtedness of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company will be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the Company and (2) neither the accrual of interest nor the accretion of original issue discount nor the payment of interest in respectthe form of suchadditional Indebtedness with the same terms and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock (to the extent provided for when the Indebtedness or other obligationDisqualified Stock on which such interest or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person (and "incurrence," "incurred," "incurrable" and "incurring"dividend is paid was originally issued) shall have meanings correlative to the foregoing); provided that a change in GAAP that results in an obligation of such Person that exists at such time becoming Indebtedness shall not be deemedconsidered an incurrence of such Indebtedness.Indebtedness;provided that in each case the amount thereof is for all other purposes included in the Fixed Charges and Indebtedness of the Company or its Restricted Subsidiary as accrued.

                                           

                                          "Indebtedness"“Indebtedness” means, (without duplication), with respect to any specified Person, any indebtedness at any time outstanding, secured or unsecured, contingent or otherwise, which is for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person, whether or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or representing the balance deferred and unpaid of the purchase price of any property (excluding, without limitation, any balances that constitute accounts payable or trade payables or liabilities arising from advance payments or customer deposits for goods and services sold by United in the ordinary course of business, and other accrued liabilities and expenses arising in the ordinary course of business) not contingent:

                                          (1)in respect of borrowed money;

                                          (2)evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof), but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the fifth Business Day following receipt by such Person of a demand for reimbursement);

                                          (3)in respect of banker’s acceptances;

                                          (4)in respect of Capital Lease Obligations;

                                          (5)in respect of the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable;

                                          (6)representing Hedging Obligations, other than Hedging Obligations that are incurred in the ordinary course of business for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder; or

                                          (7)representing Disqualified Stock valued at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued dividends;

                                          if and to the extent that any of the foregoing indebtednesspreceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of suchthe specified Person prepared in accordance with GAAP, and shall also include, toGAAP. In addition, the extent not otherwise included:

                                            (1)
                                            any Capitalized Lease Obligations,

                                            (2)
                                            obligationsterm “Indebtedness” includes (x) all Indebtedness of others secured by a Lien to whichon any asset of the property or assets owned or held by suchspecified Person is subject, whether(whether or not such Indebtedness is assumed by the obligation or obligations secured thereby shall have been assumed (provided, however,specified Person),provided that if such obligation or obligations shall not have been assumed, the amount of such Indebtedness shall be deemed to be the lesser of the principal amount of the obligation or(A) the fair market value of such asset at such date of determination and (B) the pledged property or assets),

                                            (3)
                                            guarantees of items of other Persons which would be included within this definition for such other Persons (whether or not such items would appear upon the balance sheet of the guarantor),

                                            (4)
                                            all obligations for the reimbursement of any obligor on any letter of credit, banker's acceptance or similar credit transaction (provided that in the case of any such letters of credit, the items for which such letters of credit provide credit support are those of other Persons which would be included within this definition for such other Persons),

                                            (5)
                                            Disqualified Capital Stockamount of such Person or any Restricted Subsidiary thereof, other than any Bayer Stock that may be Disqualified Capital Stock,Indebtedness, and

                                            (6)
                                            obligations of any such Person under any Interest Rate Agreement applicable to any of the foregoing (if and (y) to the extent such Interest Rate Agreement obligations would appear asnot otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock which does not have a liability upon a balance sheet of such Person preparedfixed repurchase price shall be calculated in accordance with GAAP).
                                          the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or

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                                          measured by, the fair market value of such Disqualified Stock, such fair market value shall be determined in good faith by the Board of Directors of the issuer of such Disqualified Stock.


                                             

                                            The amount of any Indebtedness outstanding as of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided:and shall be:

                                              (1)
                                              that the amount outstanding at any time of any Indebtedness issued with original issue discount is the principal amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP and

                                              (2)

                                              (1)the accreted value thereof, in the case of any Indebtedness issued with original issue discount; and

                                              (2)the principal amount thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness;

                                              providedthat Indebtedness shall not include include:

                                              (i)any liability for federal, state, local or other taxes;

                                              (ii)performance, surety or appeal bonds provided in the ordinary course of business; or

                                              (iii)agreements providing for indemnification, adjustment of purchase price or similar obligations, or Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), so long as the principal amount does not exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition.

                                              “Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans or other taxes.

                                                    Notwithstanding any other provisionextensions of the foregoing definition, any trade payable arising from the purchase of goodscredit (including Guarantees, but excluding advances to customers or materials or for services obtainedsuppliers in the ordinary course of business shall not be deemed to be "Indebtedness" of Unitedthat are, in conformity with GAAP, recorded as accounts receivable, prepaid expenses or any Restricted Subsidiary for purposes of this definition. Furthermore, guarantees of (or obligations with respect to letters of credit supporting) Indebtedness otherwise included indeposits on the determination of such amount shall not also be included.

                                            "Individual Investors" means the Persons who made the Management Contribution and, without duplication, the Persons who hold the Retained Equity as of March 24, 1999.

                                                    "Initial Subsidiary Guarantor" means Schultz Company, a Missouri corporation, Ground Zero Inc., a Missouri corporation, Sylorr Plant Corporation, a Delaware corporation, and WPC Brands, Inc., a Wisconsin corporation, eachbalance sheet of the Company or its Restricted Subsidiaries of United existing on the Issue Date.

                                            "Interest Rate Agreement" shall mean any interestand endorsements for collection or foreign currency rate swap, cap, collar, option, hedge, forward rate or other similar agreement or arrangement designed to protect against fluctuations in interest rates or currency exchange rates.

                                            "Investments" means, directly or indirectly, any advance, account receivable (other than an account receivabledeposit arising in the ordinary course of business or acquired as part of the assets acquired by United in connectionbusiness), advances (excluding commission, travel, payroll and similar advances to officers and employees made consistent with an acquisition of assets which is otherwise permitted by the terms of the Indenture)past practices), loan or capital contribution tocontributions (by means of transfersany transfer of cash or other property to others paymentsor any payment for property or services for the account or use of othersothers), purchases or otherwise), the purchaseother acquisitions for consideration of any stock, bonds, notes, debentures, partnership or joint venture interestsIndebtedness, Equity Interests or other securities, of, the acquisition, by purchasetogether with all items that are or otherwise, of all or substantially all of the business or assets or stock or other evidence of beneficial ownership of, any Person or the making of any investment in any Person. Investments shall exclude extensions of trade creditwould be classified as investments on commercially reasonable termsa balance sheet prepared in accordance with normal trade practices. ForGAAP.

                                            If the purposes of the "Limitation on Restricted Payments" covenant, "Investment" shall include and be valued at the fair market value of the net assets of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary and shall exclude the fair market value of the net assets of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary. If UnitedCompany or any Restricted Subsidiary of Unitedthe Company sells or otherwise disposes of any Common StockEquity Interests of any direct or indirect Restricted Subsidiary of Unitedthe Company such that, after giving effect to any such sale or disposition, Unitedsuch Person is no longer owns, directly or indirectly, greater than 50%a Restricted Subsidiary of the outstanding Common Stock of such Restricted Subsidiary, UnitedCompany, the Company shall be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Common Stock ofInvestment in such Restricted Subsidiary not sold or disposed of.

                                            "Issue Date" meansof in an amount determined as provided in the datefinal paragraph of the notes are first issued by United and authenticatedcovenant described above under the caption “—Certain Covenants—Restricted Payments.” The acquisition by the Trustee under the Indenture.

                                            "Letter of Credit Obligations" means all Obligations in respect of Indebtedness of UnitedCompany or any Restricted Subsidiary of its Restricted Subsidiaries with respect to lettersthe Company of credit issued pursuant to the Senior Indebtedness which Indebtednessa Person that holds an Investment in a third Person shall be deemed to consistbe an Investment by the Company or such Restricted Subsidiary in such third Person only if such Investment was made in contemplation of, (a)or in connection with, the aggregate maximum amount then available to be drawn under all such letters of credit (the determinationacquisition of such maximumPerson by the Company or such Restricted Subsidiary and the amount to assume

                                            113



                                            compliance with all conditions for drawing) and (b)of any such Investment shall be determined as provided in the aggregate amount that has then been paid by, and not reimbursed to,final paragraph of the issuerscovenant described above under such letters of credit.the caption “—Certain Covenants—Restricted Payments.”

                                             

                                            "Lien"“Lien” means, with respect to any property or assets of any Person,asset, any mortgage, or deed of trust,lien, pledge, hypothecation, assignment, deposit arrangement (other than advance payments or customer deposits for goods and services sold by United in the ordinary course of business),charge, security interest lien, charge, easement or encumbrance of any kind in respect of such asset, whether or nature whatsoever onnot filed, recorded or with respect to such property or assets (including, without limitation,otherwise perfected under applicable law, including any Capitalized Lease Obligation, conditional sales,sale or other title retention agreement, having substantiallyany lease in the same economic effect as nature thereof,

                                            any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the foregoing).Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

                                            “Microlite” means Microlite S.A. and its successors or assigns.

                                             

                                            "Moody's"“Microlite Purchase Agreement” means Moody's Investors Service,the Share Purchase Agreement by and among Rayovac Corporation, ROV Holdings, Inc. and its successors.the shareholders of Microlite S.A. dated February 21, 2004.

                                             

                                            "Net Income"Income” means, with respect to any specified Person, for any period, the net income (loss) of such Person, determined in accordance with GAAP.GAAP and before any reduction in respect of preferred stock dividends, excluding, however:

                                             

                                            (1)any gain or loss, together with any related provision for taxes on such gain or loss, realized in connection with: (a) any sale of assets outside the ordinary course of business of such Person; or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; and

                                            (2)any extraordinary gain or loss, together with any related provision for taxes on such extraordinary gain or loss.

                                            "Net Proceeds"Proceeds” means:

                                              (1)
                                              means the aggregate cash proceeds, including payments in respect of deferred payment obligations (to the caseextent corresponding to the principal, but not the interest component, thereof) received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash received upon the sale or other disposition of Capital Stock by any Person,non-cash consideration received in any Asset Sale), net of (1) the aggregate net proceeds received bydirect costs relating to such Person, after payment of expenses,Asset Sale, including, without limitation, legal, accounting and investment banking fees, and sales commissions, and the likeany relocation expenses incurred as a result thereof, (2) taxes paid or payable as a result thereof, in each case, after taking into account any available tax credits or deductions arising therefrom and any tax sharing arrangements in connection therewith, whether such proceeds are in cash(3) amounts required to be applied to the repayment of Indebtedness or in property (valued atother liabilities, secured by a Lien on the fair market value thereof, as determined in good faith byasset or assets that were the Board of Directorssubject of such Person, at the time of receipt) and

                                              (2)
                                              in the case of any exchange, exercise, conversionAsset Sale, or surrender of outstanding securities of any kind for or into shares of Capital Stock of such Person which is not Disqualified Capital Stock, the net book value of such outstanding securities on the date of such exchange, exercise, conversion or surrender (plus any additional amount required to be paid byas a result of such sale, and (4) any reserve for adjustment in respect of the holder tosale price of such Person upon such exchange, exercise, conversionasset or surrender, less any and all payments made to the holders, e.g., on account of fractional shares and less all expenses incurred by Unitedassets established in connection therewith).

                                            "New Operating Company" means the newly-formed Wholly-Owned Subsidiary of United participating in the Asset Drop-Down.accordance with GAAP.

                                             

                                            "Non-Payment Event of Default"“Ningbo Baowang” means Ningbo Baowang Battery Company, Ltd. and its successors or assigns.

                                            “Obligations” means any event (other than a Payment Default) the occurrence of which entitles (or, in the case of certain of the events described in clause (6) under "Events of Default," with the passage of time would entitle) one or more Persons to accelerate the maturity of any Designated Senior Indebtedness.

                                            "Obligations" means, with respect to any Indebtedness, any principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other expenses and liabilities payable under the documentation governing suchany Indebtedness.

                                             

                                            "Officers' Certificate"“Permitted Business” means with respectany business conducted or proposed to any Person, a certificate signedbe conducted (as described in the prospectus) by the Chief Executive Officer,Company and its Restricted Subsidiaries on the President or any Vice President and the Chief Financial Officer or any Treasurer of such Person that shall comply with applicable provisionsdate of the Indenture and delivered to the Trustee.other businesses similar or reasonably related, ancillary or incidental thereto or reasonable extensions thereof.

                                             

                                            "Payment Default"“Permitted Investments” means:

                                            (1)any Investment in the Company or in a Restricted Subsidiary of the Company;

                                            (2)any Investment in Cash Equivalents;

                                            (3)any Investment by the Company or any Restricted Subsidiary of the Company in a Person, if as a result of such Investment:

                                            (a)such Person becomes a Restricted Subsidiary of the Company; or

                                            (b)such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

                                            (4)any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with the covenant described above under the caption “—Repurchase at the Option of Holders—Asset Sales;”

                                            (5)Investments to the extent acquired in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

                                            (6)Hedging Obligations that are incurred in the ordinary course of business for the purpose of fixing, hedging or swapping interest rate, commodity price or foreign currency exchange rate risk (or to reverse or amend any such agreements previously made for such purposes), and not for speculative purposes, and that do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in interest rates, commodity prices or foreign currency exchange rates or by reason of fees, indemnities and compensation payable thereunder;

                                            (7)stock, obligations or securities received in satisfaction of judgments;

                                            (8)Investments in securities of trade debtors or customers received pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers or in good faith settlement of delinquent obligations of such trade debtors or customers or in compromise or resolution of litigation, arbitration or other disputes with Persons who are not Affiliates; and

                                            (9)other Investments in any Person that is not an Affiliate of the Company (other than a Restricted Subsidiary) having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (9) since the date of the Indenture, not to exceed $30.0 million.

                                            “Permitted Liens” means:

                                            (1)Liens on the assets of the Company and any Guarantor securing Senior Debt that was permitted by the terms of the Indenture to be incurred;

                                            (2)Liens in favor of the Company or any Restricted Subsidiary;

                                            (3)Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company;provided that such Liens were in existence prior to the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Company or the Restricted Subsidiary;

                                            (4)Liens on property existing at the time of acquisition thereof by the Company or any Restricted Subsidiary of the Company,provided that such Liens were in existence prior to the contemplation of such acquisition and do not extend to any property other than the property so acquired by the Company or the Restricted Subsidiary;

                                            (5)Liens existing on the date of the Indenture;

                                            (6)Liens securing Permitted Refinancing Indebtedness;providedthat such Liens do not extend to any property or assets other than the property or assets that secure the Indebtedness being refinanced;

                                            (7)Liens incurred in the ordinary course of business of the Company or any Restricted Subsidiary of the Company with respect to obligations that do not exceed $25.0 million at any one time outstanding; and

                                            (8)Liens on the assets of a Foreign Subsidiary securing Indebtedness of a Foreign Subsidiary that was permitted by the terms of the Indenture to be incurred.

                                            “Permitted Refinancing Indebtedness” means any default, whether or not any requirement for the giving of notice, the lapse of time or both, or any other condition to such default becoming an event of default has occurred, in the payment of principal of (or premium, if any) or interest on or any other Obligations payable in connection with Designated Senior Indebtedness.

                                            "Permitted Holders" means, collectively,

                                              (1)
                                              United and, in the eventIndebtedness of the Asset Drop-Down, the Holding Company

                                              (2)
                                              any THL Group Member,

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                                                (3)
                                                the Individual Investors, each of the spouses, children (adoptive or biological) or other lineal descendants of the Individual Investors, the probate estate of any such individual and any trust, so long as one or more of the foregoing individuals retains substantially all of the controlling or beneficial interest thereunder, and

                                                (4)
                                                any underwriter during the course of an underwritten public offering until completion of the initial distribution thereof.

                                              "Permitted Indebtedness" means:

                                                (1)
                                                Indebtedness of United or any Restricted Subsidiary arising under or in connection with the Senior Credit Facility in an amount not to exceed the sum of (a) $225,000,000 plus (b) the greater of (i) $110,000,000 or (ii) the aggregate of 80% of the accounts receivable and 50% of the inventory of United and its consolidated Restricted Subsidiaries, which sum shall be reduced by any mandatory prepayments actually made thereunder required as a result of any Asset Sale or similar sale of assets (to the extent, in the case of payments of revolving credit indebtedness, that the corresponding commitments have been permanently reduced) and any scheduled payments actually made thereunder;

                                                (2)
                                                Indebtedness under the notes and the Guarantees;

                                                (3)
                                                Indebtedness of Foreign Subsidiaries not to exceed $5,000,000 in the aggregate at any one time outstanding;

                                                (4)
                                                Indebtedness represented by the Series B notes and Indebtedness not covered by any other clause of this definition which is outstanding on the Issue Date (including, for purposes of this clause (4), Capitalized Lease Obligations in an amount not to exceed $10,000,000 incurred in the leasing of an aircraft for use by United);

                                                (5)
                                                Indebtedness of United to any Restricted Subsidiary of United and Indebtedness of any Restricted Subsidiary of United to United or another Restricted Subsidiary of United; provided that (a) if United or any Guarantor is the obligor on such Indebtedness, such Indebtedness is unsecured and expressly subordinated to the payment in full to all obligations in respect of the notes and the Guarantee of such Guarantor on terms substantially in the form provided in the Indenture and (b)(i) any subsequent issuance or transfer of equity interests that results in any such Indebtedness being held by a Person other than United or a Restricted Subsidiary of United, and (ii) any sale or transfer of any such Indebtedness to a Person other than United or a Restricted Subsidiary of United, shall be deemed to constitute an incurrence of Indebtedness by United or such Restricted Subsidiary not permitted by this clause (5);

                                                (6)
                                                Interest Rate Agreements;

                                                (7)
                                                Refinancing Indebtedness;

                                                (8)
                                                Indebtedness under Commodity Hedge Agreements and Currency Agreements entered into in the ordinary course of business consistent with reasonable business requirements and not for speculation;

                                                (9)
                                                Indebtedness consisting of guarantees made in the ordinary course of business by United or its Restricted Subsidiaries of obligations of United or any of its Restricted Subsidiaries which obligations are not otherwise prohibited under the Indenture;

                                                (10)
                                                contingent obligations of United or its Subsidiaries in respect of customary indemnification and purchase price adjustment obligations incurred in connection with an Asset Sale; provided that the maximum assumable liability in respect of all such obligations shall at no time exceed the gross proceeds actually received by United and its Subsidiaries in connection with such Asset Sale;

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                                                  (11)
                                                  Indebtedness incurred in respect of performance, surety and other similar bonds and completion guarantees provided by United and the Restricted Subsidiaries in the ordinary course of business, and extensions, refinancings and replacements thereof;

                                                  (12)
                                                  Indebtedness incurred by United or any of its Restricted Subsidiaries constituting reimbursement obligations with respect to letters of credit issued in exchange for, or the ordinary coursenet proceeds of business, including, without limitation, letters of credit in respect of workers' compensation claimswhich are used to extend, refinance, renew, replace,

                                                  defease or self-insurance, orrefund other Indebtedness with respect to reimbursement type obligations regarding workers' compensation or other similar claims;

                                                  (13)
                                                  Purchase Money Indebtedness and Capitalized Lease Obligations of United and its Subsidiaries incurred to acquire, construct or improve property and assets in the ordinary course of business and any refinancings, renewals or replacements of any such Purchase Money Indebtedness or Capitalized Lease Obligation (subject to the limitations on the principal amount thereof set forth in this clause (13)), the principal amount of which Purchase Money Indebtedness and Capitalized Lease Obligations shall not in the aggregate at any one time outstanding exceed $15,000,000; and

                                                  (14)
                                                  additional Indebtedness of UnitedCompany or any of its Restricted Subsidiaries (other than Indebtedness specified in clauses (1) through (13) above) not to exceed $25,000,000 in the aggregate at any one time outstanding.

                                                intercompany Indebtedness);"Permitted Investments"provided that: means, for any Person, Investments made on or after March 24, 1999 consisting of:

                                                  (1)
                                                  Investments by United, or by a Restricted Subsidiary thereof, in United or a Restricted Subsidiary, except that investments in Foreign Subsidiaries under this clause (1) shall not exceed $10,000,000 in the aggregate;

                                                  (2)
                                                  Temporary Cash Investments;

                                                  (3)
                                                  Investments by United, or by a Restricted Subsidiary thereof, in a Person, if as a result of such Investment (a) such Person becomes a Restricted Subsidiary of United, (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, United or a Restricted Subsidiary thereof or (c) such business or assets are owned by United or a Restricted Subsidiary;

                                                  (4)
                                                  an Investment that is made by United or a Restricted Subsidiary thereof in the form of any stock, bonds, notes, debentures, partnership or joint venture interests or other securities that are issued by a third party to United or a Restricted Subsidiary solely as partial consideration for the consummation of an Asset Sale that is otherwise permitted under the covenant described under "Limitation on Certain Asset Sales";

                                                  (5)
                                                  Investments consisting of (a) purchases and acquisitions of inventory, supplies, materials and equipment, or (b) licenses or leases of intellectual property and other assets, in each case in the ordinary course of business;

                                                  (6)
                                                  Investments consisting of (a) loans and advances to employees for reasonable travel, relocation and business expenses in the ordinary course of business not to exceed $2,000,000 in the aggregate at any one time outstanding, (b) loans to employees of United or its Subsidiaries for the sole purpose of purchasing equity of United, (c) extensions of trade credit in the ordinary course of business, and (d) prepaid expenses incurred in the ordinary course of business;

                                                  (7)
                                                  without duplication, Investments consisting of Indebtedness permitted pursuant to clause (5) of the definition of "Permitted Indebtedness";

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                                                    (8)
                                                    Investments existing on the Issue Date;

                                                    (9)
                                                    Investments of United under Interest Rate Agreements;

                                                    (10)
                                                    Investments under Commodity Hedge Agreements and Currency Agreements entered into in the ordinary course of business consistent with reasonable business requirements and not for speculation;

                                                    (11)
                                                    Investments consisting of endorsements for collection or deposit in the ordinary course of business;

                                                    (12)
                                                    Investments in suppliers or customers that are in bankruptcy, receivership or similar proceedings or as a result of foreclosure on a secured Investment in a third party received in exchange for or cancellation of an existing obligation of such supplier or customer to United or a Restricted Subsidiary;

                                                    (13)
                                                    Investments to the extent paid for with Capital Stock (other than Disqualified Capital Stock) of United;

                                                    (14)
                                                    Investments in joint venture arrangements (which may be structured as corporations, partnerships, trusts, limited liability companies or other Persons), or in a Person which as a result of such Investment becomes a joint venture arrangement, in an aggregate amount, as valued at the time each such Investment is made, not exceeding $10,000,000 for all such Investments from and after March 24, 1999; and

                                                    (15)
                                                    Investments (other than Investments specified in clauses (1) through (14) above) in an aggregate amount, as valued at the time each such Investment is made, not exceeding $10,000,000 for all such Investments from and after March 24, 1999; provided that the amount available for Investments to be made pursuant to this clause (15) shall be increased from time to time (a) to the extent any return of capital is received by United or a Restricted Subsidiary on an Investment previously made in reliance on this clause (15) after March 24, 1999, in each case, up to, but not exceeding, the amount of the original Investment but only to the extent such return of capital is excluded from Consolidated Net Income and (b) by 100% of the aggregate net proceeds of any equity contribution received after March 24, 1999 by United (other than in return for Disqualified Capital Stock) from a holder of United's Capital Stock or the issuance or sale of Capital Stock (other than Disqualified Capital Stock) net of any amounts thereof used to calculate amounts available for Restricted Payments pursuant to clause (3) under "Limitation on Restricted Payments" or previously relied upon to make any Permitted Investments pursuant to this clause (15).

                                                          Not later than the date of making of any Permitted Investment made in reliance on clause (15) above that includes proceeds described in clause (b) thereof, United shall deliver to the Trustee an Officers' Certificate stating that such Permitted Investment is permitted and setting forth in reasonable detail the date, amount and nature of the purchase or contribution being relied upon.

                                                   

                                                  (1)the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest thereon and the amount of any reasonably determined premium necessary to accomplish such refinancing and such reasonable expenses incurred in connection therewith);

                                                  (2)such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

                                                  (3)if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded;

                                                  (4)if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded ispari passu in right of payment with the Notes or any Note Guarantees, such Permitted Refinancing Indebtedness ispari passu with, or subordinated in right of payment to, the Notes or such Note Guarantees; and

                                                  (5)such Indebtedness is incurred either by the Company or by the Restricted Subsidiary who is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded.

                                                  "Permitted Liens"“Person” means

                                                    (1)
                                                    Liens on property or assets of, or any shares of stock of or secured debt of, any corporation existing at the time such corporation becomes a Restricted Subsidiary of United or at the time such corporation is merged into United or any of its Restricted Subsidiaries; provided that such Liens are not incurred in connection with, or in contemplation of, such corporation becoming a Restricted Subsidiary of United or merging into United or any of its Restricted Subsidiaries,

                                                    (2)
                                                    Liens securing Refinancing Indebtedness; provided that any such Lien does not extend to or cover any Property, shares or debt other than the Property, shares or debt securing the Indebtedness so refunded, refinanced or extended,

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                                                      (3)
                                                      Liens in favor of United or any of its Restricted Subsidiaries, and

                                                      (4)
                                                      Liens existing on the Issue Date.

                                                    "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government (including any agency or political subdivision thereof).other entity.

                                                     

                                                    "Preferred Stock"“Replacement Assets” means (1) non-current assets that will be used or useful in a Permitted Business or (2) all or substantially all of the assets of a Permitted Business or a majority of the Voting Stock of any Person engaged in a Permitted Business that will become on the date of acquisition thereof a Restricted Subsidiary.

                                                    “Restricted Investment” means an Investment other than a Permitted Investment.

                                                    “Restricted Subsidiary” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

                                                    “sale and leaseback transaction” means, with respect to any Person, any transaction involving any of the assets or properties of such Person whether now owned or hereafter acquired, whereby such Person sells or transfers such assets or properties and then or thereafter leases such assets or properties or any part thereof or any other assets or properties which such Person intends to use for substantially the same purpose or purposes as the assets or properties sold or transferred.

                                                    “Significant Subsidiary” means any Subsidiary that would constitute a “significant subsidiary” within the meaning of Article 1 of Regulation S-X of the Securities Act.

                                                    “Stated Maturity” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which such payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and shall not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

                                                    “Subsidiary” means, with respect to any specified Person:

                                                    (1)any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

                                                    (2)any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or one or more Subsidiaries of such Person (or any combination thereof).

                                                    “Unrestricted Subsidiary” means any Subsidiary of the Company that is designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a Board Resolution in compliance with the covenant described under the caption “—Certain Covenants—Designation of Restricted and Unrestricted Subsidiaries,” and any Subsidiary of such Subsidiary.

                                                    “VARTA” means Varta Geratebatterie GmbH and its successors or assignees.

                                                    “VARTA Joint Venture Agreement” means the agreement among VARTA AG, the Company and ROV German Limited GmbH dated July 28, 2002, as amended.

                                                    The Company conducts its German operations through VARTA, a 51% owned joint venture, which is a Restricted Subsidiary of the Company. The remaining interest is held by VARTA AG. VARTA and another Restricted Subsidiary of the Company, FinanceCo (as defined in the VARTA Joint Venture Agreement) receive interest payments from VARTA AG in connection with loans owed by VARTA AG to such entities. VARTA pays dividends and interest to VARTA AG in amounts that substantially offset the monies received by VARTA AG on an after-tax basis. Pursuant to the VARTA Joint Venture Agreement, the Company can terminate the joint venture from August 1, 2005 to October 31, 2005 and VARTA AG can terminate at any time on or after January 1, 2006 or under certain other circumstances. Upon termination of the joint venture, the Equity Interests of VARTA owned by VARTA AG will be redeemed or exchanged for the shares of FinanceCo and a €1.0 million cash payment. In addition, upon termination all loans between the parties will be forgiven.

                                                    “Voting Stock” of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

                                                    “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

                                                    (1)the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

                                                    (2)the then outstanding principal amount of such Indebtedness.

                                                    “Wholly Owned Restricted Subsidiary” of any specified Person means a Person, however designated, which entitles the holder thereof to a preference with respect to dividends, distributions or liquidation proceedsRestricted Subsidiary of such Person overall of the holders of otheroutstanding Capital Stock issuedor other ownership interests of which (other than directors’ qualifying shares or Investments by such Person.

                                                    "Property" of any Person means all types of real, personal, tangible, intangible or mixed propertyforeign nationals mandated by applicable law) shall at the time be owned by such Person whether or not included in the most recent consolidated balance sheetby one or more Wholly Owned Restricted Subsidiaries of such Person and itsone or more Wholly Owned Restricted Subsidiaries under GAAP.of such Person.

                                                    U.S. FEDERAL INCOME TAX

                                                    CONSIDERATIONS

                                                     "Purchase Money Indebtedness" means

                                                    The following is a summary of the U.S. federal income tax consequences to a holder of original notes who exchanges original notes for exchange notes pursuant to the exchange offer. This summary is based on existing U.S. federal income tax law, which is subject to change, possibly with retroactive effect. This summary does not discuss any Indebtedness incurredstate, local or non-U.S. tax considerations. Each holder of original notes is urged to consult its tax advisor regarding the U.S. federal, state, local and Non-U.S. income and other tax consequences of the exchange offer.

                                                    Exchange of Original Notes for Exchange Notes

                                                    An exchange of original notes for exchange notes pursuant to the exchange offer will be ignored for U.S. federal income tax purposes. Consequently, a holder of original notes will not recognize gain or loss upon the exchange of original notes for exchange notes pursuant to the exchange offer. In addition, (i) the holding period of the exchange notes will be the same as the holding period of the original notes, (ii) the tax basis in the exchange notes will be the same as the adjusted basis in the original notes, in each case as determined at the time of the exchange and (iii) a holder will recognize interest income in respect of the exchange notes in the same amounts and at the same times as such holder would have recognized in respect of the original notes.

                                                    CERTAIN ERISA CONSIDERATIONS

                                                    The following is a summary of certain considerations associated with the acquisition of United and holding of the notes by (a) employee benefit plans that are subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), (b) plans, including individual retirement accounts, Keogh plans and other arrangements, that are subject to Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”), or provisions under any federal, state, local, non-U.S. or other laws or regulations that are similar to such provisions of the Code or ERISA (collectively, “Similar Laws”) and (c) entities whose underlying assets are considered to include “plan assets” of such plans, accounts and arrangements (each of (a), (b) and (c), a “Plan”).

                                                    General Fiduciary Matters

                                                    ERISA and the Code impose certain duties on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section 4975 of the Code and prohibit certain transactions involving the assets of such Plan and its fiduciaries or other interested parties. Under ERISA and the Code, any person who exercises any discretionary authority or control over the administration of such a Plan or the management or disposition of the assets of such a Plan, or who renders investment advice to such a Plan for a fee or other compensation, is generally considered to be a fiduciary of the Plan.

                                                    In considering an investment in the notes, a Plan fiduciary should determine whether the investment is in accordance with the documents and instruments governing the Plan and the applicable provisions of ERISA, the Code or any Similar Law relating to a fiduciary’s duties to the Plan including, without limitation, the prudence, diversification, delegation of control and prohibited transaction provisions of ERISA, the Code or any other applicable Similar Laws.

                                                    Any insurance company proposing to invest assets of its general account in the notes should consider the extent that each investment would be subject to the requirements of ERISA in light of the U.S. Supreme Court’s decision inJohn Hancock Mutual Life Insurance Co. v.Harris Trust and Savings Bank and under any subsequent legislation or other guidance that has or may become available relating to that decision, including the enactment of Section 401(c) of ERISA by the Small Business Job Protection Act of 1996 and the regulations promulgated thereunder.

                                                    Prohibited Transaction Issues

                                                    Section 406 of ERISA and Section 4975 of the Code prohibit Plans subject to Title I of ERISA or Section 4975 of the Code from engaging in specified transactions involving plan assets with persons or entities who are “parties in interest,” within the meaning of ERISA, or “disqualified persons,” within the meaning of Section 4975 of the Code, unless an exemption is available. A party in interest or disqualified person who engages in a non-exempt prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. In addition, the fiduciary of the Plan that engages in such a non-exempt prohibited transaction may be subject to penalties and liabilities under ERISA and the Code. The acquisition and/or holding of notes by a PersonPlan with respect to finance (within 90 dayswhich the issuer is considered a party in interest or a disqualified person may constitute or result in a direct or indirect prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code, unless the investment is acquired and is held in accordance with an applicable statutory, class or individual prohibited transaction exemption. In this regard, the U.S. Department of Labor (the “DOL”) has issued prohibited transaction class exemptions, or PTCEs, that may apply to the acquisition and holding of the notes. These class exemptions include, without limitation, PTCE 84-14 respecting transactions determined by independent qualified professional asset managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE 91-38 respecting bank collective investment trust partnerships, PTCE 95-60 respecting life insurance company general accounts and PTCE 96-23 respecting transactions determined by in-house asset managers, although there can be no assurance that all of the conditions of any such exemptions will be satisfied. Because of the foregoing, the notes should not be acquired or held by any person investing “plan assets” of any Plan, unless such acquisition and holding will not constitute a non-exempt prohibited transaction under ERISA and the Code or similar violation of any applicable Similar Laws.

                                                    Representations

                                                    Accordingly, by acquiring a note, each acquiring person and each subsequent transferee of a note will be deemed to have represented and warranted that either (i) no portion of the assets used by such acquiring person or transferee to acquire the notes constitutes assets of any Plan, including without limitation, as applicable, an insurance company general account, or (ii) the acquisition and holding of the notes by such acquiror or transferee does not and will not constitute or otherwise result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code, or similar violation under any applicable Similar Laws.

                                                    General Investment Considerations

                                                    The foregoing discussion is general in nature and is not intended to be all-inclusive. Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries, or other persons acquiring notes on behalf of, or with the assets of, any Plan, consult with their counsel regarding the potential applicability of ERISA, Section 4975 of the Code and any Similar Laws to the acquisition or holding of the notes and whether an exemption would be applicable to such acquisition or holding. Moreover, each Plan fiduciary should take into account, among other considerations, whether the fiduciary has the authority to make the investment, whether the investment constitutes a direct or indirect transaction with a party in interest or disqualified person, the composition of the Plan’s portfolio with respect to diversification by type of asset, the Plan’s funding objectives, the tax effects of the investment, and whether under the general fiduciary standards of investment prudence and diversification an investment in the notes is appropriate for the Plan, taking into account the overall investment policy of the Plan and the composition of the Plan’s investment portfolio.

                                                    Governmental plans and certain church plans are generally not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code. However, such plans may be subject to substantially similar rules under state or other federal law, and may also be subject to the prohibited transaction rules of Section 503 of the Code.

                                                    The sale of notes to a Plan shall not be deemed a representation by us or the initial purchasers that such an investment meets all relevant legal requirements with respect to Plans generally or any particular Plan.

                                                    PLAN OF DISTRIBUTION

                                                    The exchange offer is not being made to, nor will we accept surrenders of original notes for exchange from, incurrence)holders of original notes in any jurisdiction in which the cost (includingexchange offer or the costacceptance thereof would not be in compliance with the securities or blue sky laws of constructionsuch jurisdiction.

                                                    The distribution of this prospectus and the offer and sale of the exchange notes may be restricted by law in certain jurisdictions. Persons who come into possession of this prospectus or improvement)any of an itemthe exchange notes must inform themselves about and observe any such restrictions. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell the exchange notes or possess or distribute this prospectus and, in connection with any purchase, offer or sale by you of Propertythe exchange notes, must obtain any consent, approval or permission required under the laws and regulations in force in any jurisdiction to which you are subject or in which you make such purchase, offer or sale.

                                                    In reliance on interpretations of the staff of the SEC set forth in no-action letters issued to third parties in similar transactions, we believe that the exchange notes issued in the exchange offer in exchange for the original notes may be offered for resale, resold and otherwise transferred by holders without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that the exchange notes are acquired in the ordinary course of business, the principal amount of which Indebtedness does not exceed the sum of

                                                      (1)
                                                      100% of such cost and

                                                      (2)
                                                      reasonable fees and expenses of such Person incurred in connection therewith.

                                                    "Recapitalization" means the transactions described in the Recapitalization Agreement.

                                                    "Recapitalization Agreement" means the Agreement and Plan of Recapitalization, Purchase and Redemption dated as of December 24, 1998 (as amended by Amendment No. 1 dated January 20, 1999 and Amendment No. 2 dated January 25, 1999) by and among the Sellers named therein, Unitedholders’ business and the Equity Investor.

                                                    "Redeemable Dividend" means, forholders are not engaged in and do not intend to engage in and have no arrangement or understanding with any dividend orperson to participate in a distribution with regard to Disqualified Capital Stock,(within the quotientmeaning of the dividend or distribution divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuerSecurities Act) of such Disqualified Capital Stock.

                                                    "Refinancing Indebtedness" means Indebtedness that is issued in exchange for, or refunds, refinances, renews, replaces, defeases or extends, in whole or in part, any Indebtedness of United or a Restricted Subsidiary outstanding on the Issue Date or other Indebtedness permitted to be incurred by United or its Restricted Subsidiaries pursuant to the terms of the Indenture, but only to the extent that:

                                                      (1)
                                                      the Refinancing Indebtedness ispari passu with or subordinated to the notes or the Guarantees to at least the same extent as the Indebtedness being exchanged for, refunded, refinanced, renewed, replaced, defeased or extended, if at all,

                                                      (2)
                                                      the Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being refunded, refinanced or extended, or (b) after the maturity date of the notes,

                                                      (3)
                                                      the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the notes has a weighted average life to maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the weighted average life to maturity of the portion of the Indebtedness being refunded, refinanced or extended that is scheduled to mature on or prior to the maturity date of the notes,

                                                      (4)
                                                      such Refinancing Indebtedness is in an aggregate principal amount that is equal to or less than the sum of (a) the aggregate principal amount then outstanding under the Indebtedness

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                                                        being refunded, refinanced or extended, (b) the amount of accrued and unpaid interest, if any, and premiums owed, if any, not in excess of preexisting prepayment provisions on such Indebtedness being refunded, refinanced or extended and (c) the amount of customary fees, expenses and costs related to the incurrence of such Refinancing Indebtedness, and

                                                      (5)
                                                      such Refinancing Indebtedness is incurred by the same Person that initially incurred the Indebtedness being refunded, refinanced or extended, except that United or a Wholly-Owned Subsidiary thereof may incur Refinancing Indebtedness to refund, refinance or extend Indebtedness of United or any other Wholly-Owned Subsidiary of United.

                                                    "Representative" means (a) so long as the Senior Credit Facility remains outstanding or any commitments thereunder remain in effect, the agent (or if there is more than one agent therefor, the administrative agent for the lender parties thereunder) and (b) thereafter the agent, indenture trustee, other trustee or other representative for any Senior Indebtedness.

                                                    "Restricted Payment" means any of the following:

                                                      (1)
                                                      the declaration or payment of any dividend or any other distribution or payment on Capital Stock of United or any Restricted Subsidiary of United or any payment made to the direct or indirect holders (in their capacities as such) of Capital Stock of United or any Restricted Subsidiary of United (other than (a) dividends or distributions payable solely in Capital Stock (other than Disqualified Capital Stock) or in options, warrants or other rights to purchase Capital Stock (other than Disqualified Capital Stock) and (b) in the case of Restricted Subsidiaries of United, dividends or distributions payable to United or to a Wholly-Owned Subsidiary of United),

                                                      (2)
                                                      the purchase, redemption or other acquisition or retirement for value of any Capital Stock of United or any of its Restricted Subsidiaries (other than Capital Stock owned by United or a Wholly-Owned Subsidiary of United, excluding Disqualified Capital Stock),

                                                      (3)
                                                      the making of any principal payment on, or the purchase, defeasance, repurchase, redemption or other acquisition or retirement for value, prior to any scheduled maturity, scheduled repayment or scheduled sinking fund payment, of any Indebtedness which is subordinated in right of payment to the notes or any Guarantee other than subordinated Indebtedness acquired in anticipation of satisfying a scheduled sinking fund obligation, principal installment or final maturity (in each case due within one year of the date of acquisition),

                                                      (4)
                                                      the making of any Investment or guarantee of any Investment in any Person other than a Permitted Investment,

                                                      (5)
                                                      any designation of a Restricted Subsidiary as an Unrestricted Subsidiary on the basis of the Investment by United therein and

                                                      (6)
                                                      forgiveness of any Indebtedness of an Affiliate of United (other than a Restricted Subsidiary) to United or a Restricted Subsidiary.

                                                            For purposes of determining the amount expended for Restricted Payments, cash distributed or invested shall be valued at the face amount thereof and property other than cash shall be valued at its fair market value determined by United's Board of Directors.

                                                    "Restricted Subsidiary" means a Subsidiary of United other than an Unrestricted Subsidiary. The Board of Directors of United may designate any Unrestricted Subsidiary or any Person that is to become a Subsidiary as a Restricted Subsidiary if:

                                                      (1)
                                                      immediately after giving effect to such action (and treating any Acquired Indebtedness as having been incurred at the time of such action), United could have incurred at least $1.00 of

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                                                        additional Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on Additional Indebtedness" covenant and

                                                      (2)
                                                      no Default or Event of Default shall have occurred and be continuing.

                                                            United shall deliver an Officers' Certificate to the Holders upon designating any Unrestricted Subsidiary as a Restricted Subsidiary.

                                                    "Sale and Lease-Back Transaction" means any arrangement with any Person providing for the leasing by United or any Restricted Subsidiary of United of any real or tangible personal Property, which Property has been or is to be sold or transferred by United or such Restricted Subsidiary to such Person in contemplation of such leasing.

                                                    "S&P" means Standard & Poor's Corporation and its successors.

                                                    "SEC" means the Securities and Exchange Commission.

                                                    "Securities Act" means the Securities Act of 1933, as amended.

                                                    "Senior Credit Facility" means the Credit Agreement, dated as of January 20, 1999, among United, the banks, financial institutions and other institutional lenders from time to time party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), as the Swing Line Bank and the Initial Issuing Bank thereunder, Bank of America, N.A. (formerly known as NationsBanc), Montgomery Securities LLC and Morgan Stanley Senior Funding, Inc., as the Co-Arrangers therefor, Canadian Imperial Bank of Commerce, as Documentation Agent therefor, Morgan Stanley Senior Funding, Inc., as Syndication Agent thereunder, NationsBanc Montgomery Securities LLC, as Lead Arranger and Book Manager therefor, and NationsBank, N.A., as Administrative Agent for the lender parties thereunder, together with all "Loan Documents" as defined therein and all other documents related thereto (including, without limitation, any notes, guarantee agreements, security documents and Interest Rate Agreements), in each case as such agreements may be amended (including any amendment and restatement thereof), supplemented or otherwise modified from time to time, including any agreement extending the maturity of, refinancing, renewing, replacing or otherwise restructuring (including increasing the amount of available borrowings thereunder or adding Subsidiaries of United as additional borrowers or guarantors thereunder), in whole or in part, all or any portion of the Indebtedness under such agreement or any successor or replacement agreement and whether by the same or any other agent, lender or group of lenders or other party thereto.

                                                    "Senior Indebtedness" means the principal of and premium, if any, and interest (including, without limitation, Accrued Bankruptcy Interest) on, and any and all other fees, expense reimbursement obligations, indemnities and other amounts and Obligations incurred or owing pursuant to the terms of all agreements, documents and instruments providing for, creating, securing or evidencing or otherwise entered into in connection with

                                                      (1)
                                                      all Indebtedness of United under the Senior Credit Facility,

                                                      (2)
                                                      all obligations of United with respect to any Interest Rate Agreement,

                                                      (3)
                                                      all obligations of United to reimburse any bank or other Person in respect of amounts paid under letters of credit, acceptances or other similar instruments,

                                                      (4)
                                                      all other Indebtedness of United whichnotes. This position does not expressly provide that it is to rankpari passu with or subordinate to the notes and

                                                      (5)
                                                      all deferrals, renewals, extensions, refinancings, replacements and refundings in whole or in part of, and amendments, modifications, restatements and supplements to, any of the Indebtedness described above.

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                                                              Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness will not include

                                                        (1)
                                                        Indebtedness of United to any of its Subsidiaries, except to the extent such Indebtedness is pledged as security under the Senior Credit Facility,

                                                        (2)
                                                        Indebtedness represented by the notes,

                                                        (3)
                                                        Indebtedness represented by the Series B notes and any other Indebtedness which by the express terms of the agreement or instrument creating, evidencing or governing the same is junior or subordinate in right of payment to any other item of Indebtedness of United (although this clause (3) shall not apply to the subordination of liens or security interests covering property or assets securing Senior Indebtedness),

                                                        (4)
                                                        any trade payable arising from the purchase of goods or materials or for services obtained in the ordinary course of business or

                                                        (5)
                                                        liability for federal, state, local or other taxes owed or owing by United.

                                                              "Series B Indenture" means an indenture, dated as of March 24, 1999, between United and State Street Bank and Trust Company (n/k/a U.S. Bank National Association).

                                                              "Series B notes" means 97/8% Series B Senior Subordinated Notes due 2009 of United issued under the Series B Indenture.holder that is

                                                       "Subsidiary" of any specified Person means any corporation, partnership, limited liability company, joint venture, association or other business entity, whether now existing or hereafter organized or acquired,

                                                        (1)
                                                        in the case of a corporation, of which more than 50%
                                                        an “affiliate” of the total voting power of the Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, officers or trustees thereof is held by such first-named Person or any of its Subsidiaries; or

                                                        (2)
                                                        in the case of a partnership, limited liability company, joint venture, association or other business entity, with respect to which such first-named Person or any of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise or if in accordance with GAAP such entity is consolidated with the first-named Person for financial statement purposes.

                                                      "Temporary Cash Investments" means

                                                        (1)
                                                        Investments in marketable direct obligations issued or guaranteed by the United States of America, or of any governmental agency or political subdivision thereof, maturing within 365 days of the date of purchase, unless such obligations are deposited by United to defease any Indebtedness of United;

                                                        (2)
                                                        Investments in certificates of deposit and time deposits issued by a lender under the Senior Credit Facility or by a bank (or subsidiary of a bank holding company) organized under the laws of the United States of America or any state thereof or the District of Columbia, in each case having capital, surplus and undivided profits at the time of investment totaling more than $500,000,000 and rated at the time of investment at least A by S&P and A-2 by Moody's maturing within 365 days of purchase;

                                                        (3)
                                                        commercial paper issued by any Person organized under the laws of any state of the United States of America and rated at least "Prime-1" (or the then equivalent grade) by Moody's or at least "A-1" (or the then equivalent grade) by S&P, in each case with a maturity of not more than 180 days from the date of acquisition thereof;

                                                      121


                                                          (4)
                                                          debt securities issued or unconditionally guaranteed by any state, commonwealth or territory of the United States of America or any political subdivision or taxing authority thereof, rated at least "A" by S&P or Moody's; or

                                                          (5)
                                                          Investments not exceeding 365 days in duration in money market funds that invest substantially all of such funds' assets in the Investments described in the preceding clauses (1), (2), (3) or (4).

                                                        "THL" means Thomas H. Lee Partners, L.P., Thomas H. Lee Equity Fund IV, L.P. and Thomas H. Lee Equity Fund V, L.P.

                                                        "THL Fees" means

                                                          (1)
                                                          management fees under the management agreement between United and THL and its Affiliates and successors and assigns that do not exceed $750,000 per year and the reimbursement of expenses pursuant thereto, provided that the amount of such management fees paid per year shall increase to $1,500,000 if at the time of such payment United could incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant to the "Limitation on Additional Indebtedness" covenant and

                                                          (2)
                                                          one time fees to THL in connection with each acquisition of a company or a line of business by United or its Subsidiaries, such fees to be payable at the time of each such acquisition and not to exceed 1% of the aggregate consideration paid by United and its Subsidiaries for any such acquisition.

                                                        "THL Group Member" means THL and any Affiliate thereof (including any equity fund advised by any such Affiliate) (other than any of their portfolio companies).

                                                                "Unrestricted Subsidiary" of any Person means

                                                          (1)
                                                          any Subsidiary of such Person that at the time of determination shall be or continue to be designated an Unrestricted Subsidiary by the Board of Directors of such Person in the manner provided below and

                                                          (2)
                                                          any Subsidiary of an Unrestricted Subsidiary.

                                                                The Board of Directors may designate any Subsidiary (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, United or any other Subsidiary of United that is not a Subsidiary of the Subsidiary to be so designated; provided that

                                                          (1)
                                                          such designation complies with the "Limitation on Restricted Payments" covenant and

                                                          (2)
                                                          each Subsidiary to be so designated and each of its Subsidiaries has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of United or any of its Restricted Subsidiaries (other than guarantees to be released upon such designation).

                                                                The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if

                                                          (1)
                                                          immediately after giving effect to such designation and treating all Indebtedness of such Unrestricted Subsidiary as being incurred on such date, United is able to incur at least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in compliance with the "Limitation on Additional Indebtedness" covenant and

                                                          (2)
                                                          immediately before and immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing.

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                                                                  Any such designation by the Board of Directors shall be evidenced by the board resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions.

                                                                  The Trustee shall be given prompt notice by United of each board resolution of United under this provision, together with a copy of each such resolution adopted.

                                                          "Wholly-Owned Subsidiary" of a specified Person means any Subsidiary (or, if such specified Person is United, a Restricted Subsidiary), all of the outstanding voting securities (other than directors' qualifying shares) of which are owned, directly or indirectly, by such Person.

                                                          Book-Entry, Delivery and Form

                                                          The Global Notes

                                                                  Initially, the notes will be represented by one or more registered notes in global form, without interest coupons (collectively, the "Global Notes"). The Global Notes will be deposited upon issuance with, or on behalf of, The Depository Trust Company ("DTC") and registered in the name of Cede & Co., as nominee of DTC, or will remain in the custody of the Trustee pursuant to the FAST Balance Certificate Agreement between DTC and the Trustee.

                                                                  Except as set forth below, the Global Notes may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Series D notes in physical, certificated form ("Certificated Notes") except in the limited circumstances described below.

                                                                  All interests in the Global Notes, including those held through Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear"), or Clearstream Banking, S.A. ("Clearstream"), may be subject to the procedures and requirements of DTC. Those interests held through Euroclear or Clearstream may also be subject to the procedures and requirements of such systems.

                                                          Certain Book-Entry Procedures for the Global Notes

                                                                  The descriptions of the operations and procedures of DTC, Euroclear and Clearstream set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and, are subject to change by them from time to time. United does not take any responsibility for these operations or procedures, and noteholders are urged to contact the relevant system or its participants directly to discuss these matters.

                                                                  DTC has advised United that it is (1) a limited purpose trust company organized under the laws of the State of New York, (2) a "banking organization" within the meaning of the New York Banking Law, (3) a member of the Federal Reserve System, (4) a "clearing corporation" within the meaning of the Uniform Commercial Code, as amended, and (5) a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participants (collectively, the "Participants") and facilitates the clearance and settlement of securities transactions between Participants through electronic book-entry changes to the accounts of its Participants, thereby eliminating the need for physical transfer and delivery of certificates. DTC's Participants include securities brokers and dealers (including the initial purchasers), banks and trust companies, clearing corporations and certain other organizations. Indirect access to DTC's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Investors who are not Participants may beneficially own securities held by or on behalf of DTC only through Participants or Indirect Participants.

                                                                  United expects that pursuant to procedures established by DTC (1) upon deposit of each Global Note, DTC will credit the accounts of Participants designated by the initial purchasers with an interest

                                                          123



                                                          in the Global Note and (2) ownership of the notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of Participants) and the records of Participants and the Indirect Participants (with respect to the interests of persons other than Participants).

                                                                  The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. Accordingly, the ability to transfer interests in the notes represented by a Global Note to such persons may be limited. In addition, because DTC can act only on behalf of its Participants, who in turn act on behalf of persons who hold interests through Participants, the ability of a person having an interest in notes represented by a Global Note to pledge or transfer such interest to persons or entities that do not participate in DTC's system, or to otherwise take actions in respect of such interest, may be affected by the lack of a physical definitive security in respect of such interest.

                                                                  So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the Global Note for all purposesRule 405 under the Indenture. Except as provided below, owners of beneficial interests in Securities Act; or

                                                          a Global Note will not be entitled to have notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of Certificated Notes, and will not be considered the owners or holders thereof under the Indenture for any purpose, including with respect to the giving of any direction, instruction or approval to the Trustee thereunder. Accordingly, each holder owning a beneficial interest in a Global Note must rely on the procedures of DTC and, if such holder is not a Participant or an Indirect Participant, on the procedures of the Participant through which such holder owns its interest, to exercise any rights of a holder of notes under the Indenture or such Global Note, United understands that under existing industry practice, in the event that United requests any action of holders of notes, or a holder that is an owner of a beneficial interest in a Global Note desires to take any action that DTC, as the holder of such Global Note, is entitled to take, DTC would authorize the Participants to take such action and the Participants would authorize holders owning through such Participants to take such action or would otherwise act upon the instruction of such holders. Neither United nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of notes by DTC, or for maintaining, supervising or reviewing any records of DTC relating to such notes.broker-dealer.

                                                                  Payments with respect to the principal of, and premium, if any, and interest on, any notes represented by a Global Note registered in the name of DTC or its nominee on the applicable record date will be payable by the Trustee to or at the direction of DTC or its nominee in its capacity as the registered holder of the Global Note representing such notes under the Indenture. Under the terms of the Indenture, United and the Trustee may treat the persons in whose names the notes, including the Global Notes, are registered as the owners thereof for the purpose ofAll broker-dealers receiving payment thereon and for any and all other purposes whatsoever. Accordingly, neither United nor the Trustee has or will have any responsibility or liability for the payment of such amounts to owners of beneficial interests in a Global Note (including principal, premium, if any, and interest). Payments by the Participants and the Indirect Participants to the owners of beneficial interests in a Global Note will be governed by standing instructions and customary industry practice and will be the responsibility of the Participants or the Indirect Participants and DTC.

                                                                  Transfers between Participants in DTC will be effected in accordance with DTC's procedures, and will be settled in same-day funds. Transfers between participants in Euroclear or Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures.

                                                                  Subject to compliance with the transfer restrictions applicable to the notes, cross-market transfers between the Participants in DTC, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC's rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions

                                                          124



                                                          will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its respective depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Notes in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositaries for Euroclear or Clearstream.

                                                                  Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant in DTC will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. Cash received in Euroclear or Clearstream as a result of sales of interest in a Global Security by or through a Euroclear or Clearstream participant to a Participant in DTC will be received with value on the settlement date of DTC but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC's settlement date.

                                                                  Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures to facilitate transfers of interests in the Global Notes among participants in DTC, Euroclear and Clearstream, they are under no obligation to perform or to continue to perform such procedures, and such procedures may be discontinued at any time. Neither United nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

                                                          Certificated Notes

                                                                  If (1) United notifies the Trustee in writing that DTC is no longer willing or able to act as a depositary or DTC ceases to be registered as a clearing agency under the Exchange Act and a successor depositary is not appointed within 90 days of such notice or cessation, (2) United, at its option, notifies the Trustee in writing that it elects to cause the issuance of notes in definitive form under the Indenture or (3) upon the occurrence of certain other events as provided in the Indenture, then, upon surrender by DTC of the Global Notes, Certificated Notes will be issued to each person that DTC identifies as the beneficial owner of the notes represented by the Global Notes. Upon any such issuance, the Trustee is required to register such Certificated Notes in the name of such person or persons (or the nominee of any thereof) and cause the same to be delivered thereto. Transfers of Certificated Notes must be made in compliance with any transfer restrictions.

                                                                  Neither United nor the Trustee shall be liable for any delay by DTC or any Participant or Indirect Participant in identifying the beneficial owners of the related notes and each such person may conclusively rely on, and shall be protected in relying on, instructions from DTC for all purposes (including with respect to the registration and delivery, and the respective principal amounts, of the notes to be issued).

                                                          125



                                                          MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

                                                                  The following is a summary of material U.S. federal income tax consequences of the acquisition, ownership and disposition of the Series D notes, but does not purport to be a complete analysis of all the potential tax considerations. Except as otherwise required by the context, references to the "notes" refer to the Series D notes offered by this prospectus. This summary is based upon the Internal Revenue Code of 1986, the Treasury Department regulations promulgated or proposed thereunder and administrative and judicial interpretations thereof, all as of the date hereof and all of which are subject to change, possibly on a retroactive basis. This summary is limited to the tax consequences of those persons who are original beneficial owners of the notes, who purchase notes at their original issue price for cash and who hold such notes as capital assets within the meaning of Section 1221 of the Code ("Holders"). This summary does not purport to deal with all aspects of U.S. federal income taxation that might be relevant to particular Holders in light of their particular investment circumstances or status, nor does it address specific tax consequences that may be relevant to particular persons (including, for example, financial institutions, broker-dealers, insurance companies, tax-exempt organizations and persons that have a functional currency other than the U.S. Dollar or persons in special situations, such as those who have elected to mark securities to market or those who hold notes as part of a straddle, hedge, conversion transaction or other integrated investment). In addition, this summary does not address U.S. federal alternative minimum tax consequences or consequences under the tax laws of any state, local or foreign jurisdiction. We have not sought any ruling from the Internal Revenue Service (the "IRS") with respect to the statements made and the conclusions reached in this summary, and we cannot assure you that the IRS will agree with such statements and conclusions.

                                                                  Because the consequences of holding notes may be impacted by the particular set of facts and circumstances that apply to a noteholder, we recommend that each noteholder consult their tax advisors concerning the U.S. federal income taxation and other tax consequences to them of acquiring, owning, exchanging and disposing of the notes, as well as the application of state, local and foreign income and other tax laws.

                                                          U.S. Federal Income Taxation of U.S. Holders

                                                                  The following summary is limited to the U.S. federal income tax consequences relevant to a Holder that is (1) a citizen or individual resident of the United States; (2) a corporation or other entity taxable as a corporation created or organized under the laws of the United States or any political subdivision thereof; (3) an estate, the income of which is subject to U.S. federal income tax regardless of the source or (4) a trust, if a court within the United States is able to exercise primary supervision over the trust's administration and one or more U.S. persons have the authority to control all its substantial decisions or if a valid election to be treated as a U.S. person is in effect with respect to such trust (a "U.S. Holder").

                                                                  A "Non-U.S. Holder" is a Holder that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

                                                                  A partnership for U.S. federal income tax purposes is not subject to income tax on income derived from holding the notes. A partner of the partnership may be subject to tax on such income under rules similar to the rules for U.S. Holders or non-U.S. Holders depending on whether (1) the partner is a U.S. or a non-U.S. person, and (2) the partnership is or is not engaged in a U.S. trade or business to which income or gain from the notes is effectively connected. If you are a partner of a partnership acquiring the notes, you are encouraged to consult your tax advisor about the U.S. federal income tax consequences of holding and disposing of the notes.

                                                          126



                                                          Payment of Interest

                                                                  The semi-annual payments of interest on the notes will be "qualified stated interest," and will generally be includable in the income of a U.S. Holder in accordance with the U.S. Holder's regular method of accounting for U.S. federal income tax purposes.

                                                          Disposition of Notes

                                                                  Upon the sale, exchange redemption or other disposition of a note, a U.S. Holder generally will recognize taxable gain or loss equal to the difference between (1) the sum of cash plus the fair market value of all other property received on such disposition (except to the extent such cash or property is attributable to accrued but unpaid interest, which is treated as interest as described above) and (2) such Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a note generally will equal the cost of the note to such Holder, less any principal payments received by such Holder.

                                                                  Gain or loss recognized on the disposition of a note generally will be capital gain or loss, and will be long-term capital gain or loss if, at the time of such disposition, the U.S. Holder's holding period for the note is more than 12 months. The maximum federal long-term capital gain rate is 20% for noncorporate U.S. Holders and 35% for corporate U.S. Holders. The deductibility of capital losses by U.S. Holders is subject to limitations.

                                                          Exchange of Notes

                                                                  The exchange of Series B or C notes for Series D notes in the exchange offer will not constitute a taxable event for U.S. Holders. Consequently, a U.S. Holder will not recognize gain upon receipt of a Series D note in exchange for Series B or C notes in the exchange offer, the U.S. Holder's basis in the Series D note received in the exchange offer will be the same as its basis in the corresponding Series B or C note immediately before the exchange and the U.S. Holder's holding period in the Series D note will include its holding period in the Series B or C note.

                                                                  We are obligated to pay additional interest on the Series C notes under certain circumstances described under "The Exchange Offer—Purpose and Effect of the Exchange Offer." Although the matter is not free from doubt, such additional interest should be taxable as ordinary income at the time it accrues or is received in accordance with the U.S. Holder's regular method of accounting for federal income tax purposes. It is possible, however, that the IRS may take a different position, in which case the timing and amount of income inclusion may be different from that described above. U.S. Holders are encouraged to consult their own tax advisors about payments of additional interest.

                                                          U.S. Federal Income Taxation of Non-U.S. Holders

                                                          Payment of Interest

                                                                  Subject to the discussion of backup withholding below, payments of principal and interest on the notes by us or any of our agents to a Non-U.S. Holder will not be subject to U.S. federal withholding tax, provided that:

                                                            (1)
                                                            the Non-U.S Holder does not, directly or indirectly, actually or constructively own 10% or more of the total combined voting power of all classes of our stock entitled to vote;

                                                            (2)
                                                            the Non-U.S. Holder is not a controlled foreign corporation for U.S. federal income tax purposes that is related to us through stock ownership;

                                                            (3)
                                                            the Non-U.S. Holder is not a bank described in Section 881(c)(3)(A) of the Code; and

                                                            (4)
                                                            either (a) the beneficial owner of the notes certifies to us or our agent on IRS Form W-8BEN (or a suitable substitute form or successor form), under penalties of perjury, that it is not a

                                                          127


                                                              "U.S. person" (as defined in the Code) and provides its name and address, or (b) a securities clearing organization, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business (a "financial institution") and holds the notes on behalf of the beneficial owner certifies to us or our agent, under penalties of perjury, that such a statement has been received from the beneficial owner by it or by a financial institution between it and the beneficial owner and furnishes us with a copy thereof (the "Portfolio Interest Exemption").

                                                                  If a Non-U.S. Holder cannot satisfy the requirements of the Portfolio Interest Exemption, payments of interest made to such Non-U.S. Holder will be subject to a 30% withholding tax unless the beneficial owner of the note provides us or our agent, as the case may be, with a properly executed:

                                                            (1)
                                                            IRS Form W-8BEN (or successor form) claiming an exemption from withholding under the benefit of a tax treaty (a "Treaty Exemption"), or

                                                            (2)
                                                            IRS Form W-8ECI (or successor form) stating that interest paid on the note is not subject to withholding tax because it is U.S. trade or business income to the beneficial owner.

                                                                  The certificationprospectus delivery requirement described above also may require a non-U.S. Holder that provides an IRS form, or that claims a Treaty Exemption, to provide its U.S. taxpayer identification number. The applicable regulations generally also require, in the case of a note held by a foreign partnership, that:

                                                            (1)
                                                            the certification described above be provided by the partners, and

                                                            (2)
                                                            the partnership provide certain information, which may include a U.S. taxpayer identification number.

                                                                  Further, a look-through rule will apply in the case of tiered partnerships.

                                                                  We encourage you to consult your tax advisor about the specific methods for satisfying these requirements. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge that the statements on the form are false.

                                                                  If interest on the note is effectively connected with a U.S. trade or business of the beneficial owner, the Non-U.S. Holder, although exempt from the withholding tax described above, will be subject to U.S. federal income tax on such interest on a net income basis in the same manner as if it were a U.S. Holder. In addition, if such Holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% of its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, interest on a note will be included in such foreign corporation's earnings and profits.

                                                          Disposition of Notes

                                                                  No withholding of U.S. federal income tax will be required with respect to any gain or income realized by a Non-U.S. Holder upon the sale, exchange or disposition of a note.

                                                                  A Non-U.S. Holder will not be subject to U.S. federal income tax on gain realized on the sale, exchange or other disposition of a note unless (1) the Non-U.S. Holder is an individual who is present in the United States for a period or periods aggregating 183 or more days in the taxable yearresales of the disposition and certain other conditions are met, (2) the Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law applicable to certain U.S. expatriates or (3) such gain or income is effectively connected with a U.S. trade or business.

                                                          128



                                                          Exchange of Notes

                                                                  The exchange of Series B or C notes for Series D notes in thenotes. Each broker-dealer receiving exchange offer will not constitute a taxable event for a Non-U.S. Holder for U.S. federal income tax purposes.

                                                          Information Reporting and Backup Withholding

                                                          U.S. Holders

                                                                  For each calendar year in which the notes are outstanding, we are required to provide the IRS with certain information, including the beneficial owner's name, address and taxpayer identification number, the aggregate amount of interest paid to that beneficial owner during the calendar year and the amount of tax withheld, if any. This obligation, however, does not apply with respect to certain payments to U.S. Holders, including corporations and tax-exempt organizations, provided that they establish entitlement to an exemption.

                                                                  In the event that a U.S. Holder subject to the reporting requirements described above fails to supply its correct taxpayer identification number in the manner required by applicable law or underreports its tax liability, we, our agents or paying agents or a broker may be required to "backup" withhold a tax at a rate of up to 30% of each payment of interest and principal (and premium or liquidated damages, if any) on the notes. This backup withholding is not an additional tax and may be credited against the U.S. Holder's U.S. federal income tax liability, provided that the required information is furnished to the IRS.

                                                          Non-U.S. Holders

                                                                  Under current Treasury Regulations, U.S. backup withholding tax will not apply to payments on a note to a Non-U.S. Holder if the statement described in "U.S. Federal Income Taxation of Non-U.S. Holders—Payment of Interest" is duly provided by such Holder or the Holder otherwise establishes an exemption, provided that the payor does not have actual knowledge that the Holder is a U.S. person or that the conditions of any claimed exemption are not satisfied. Certain information reporting may still apply to interest payments even if an exemption from backup withholding is established.

                                                                  Generally, information reporting requirements and backup withholding tax will not apply to any payment of the proceeds of the sale of a note effected outside the United States by a foreign office of a "broker" (as defined in applicable Treasury regulations), unless the broker is (1) a U.S. person; (2) a foreign person that derives 50% or more of its gross income for certain periods from activities that are effectively connected with the conduct of a trade or business in the United States; (3) a controlled foreign corporation for U.S. federal income tax purposes; or (4) a foreign partnership more than 50% of the capital or profits of which is owned by one or more U.S. persons or which engages in a U.S. trade or business. Payment of the proceeds of any such sale effected outside the United States by a foreign office of any broker that is described in (1), (2), (3) or (4) of the preceding sentence will generally not be subject to backup withholding tax, but will be subject to information reporting requirements unless such broker has documentary evidence in its records that the beneficial owner is a non-U.S. Holder and certain other conditions are met or the beneficial owner otherwise establishes an exemption. Payment of the proceeds of any such sale to or through the U.S. office of a broker is subject to information reporting and backup withholding requirements, unless the beneficial owner of the note provides the statement described in "U.S. Federal Income Taxation of Non-U.S. Holders—Payment of Interest" or otherwise establishes an exemption.



                                                          PLAN OF DISTRIBUTION

                                                                  Each participating broker-dealer that receives Series D notes for its own account pursuant toin the exchange offer must acknowledgerepresent that it will deliver a prospectus in connection with any resale of such Series D notes. This prospectus, as it maythe original notes to be amended or supplemented from time to time, may be used by a participating broker-dealer in connection with resales ofexchanged for the exchange notes received in exchange for outstanding notes where such outstanding notes were acquired by it as a result of market-making activities or other trading activities.activities and acknowledge that it will deliver a prospectus meeting the requirements of the Securities Act in connection with any offer to resell, resale or other retransfer of the exchange notes pursuant to the exchange offer. However, by so acknowledging and by delivering a prospectus, the participating broker-dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act. We have agreed that, for a period of 180 days after the consummation of the exchange offer, subject to extension under limited circumstances, we will use all commercially reasonable efforts to keep the exchange offer registration statement effective and make this prospectus, as amended or supplemented, available to any participating broker-dealer for use in connection with any such resale.resales. To date, the SEC has taken the position that broker-dealers may use a prospectus such as this one to fulfill their prospectus delivery requirements with respect to resales of exchange notes received in an exchange such as the exchange pursuant to the exchange offer, if the original notes for which the exchange notes were received in the exchange were acquired for their own accounts as a result of market-making or other trading activities.

                                                           

                                                          We will not receive any proceeds from any salessale of the Series Dexchange notes by participating broker-dealers. Series DBroker-dealers acquiring exchange notes received by participating broker-dealers for their own account pursuant toaccounts may sell the exchange offer may be sold from time to timenotes in one or more transactions in the over-the-counter market, in negotiated transactions, through the writing of options on the Series Dexchange notes or a combination of such methods of resale, at market prices prevailing at the time of resale, at prices related to such prevailing market prices or at negotiated prices. Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such participating broker-dealer and/or the purchasers of any such Series Dexchange notes.

                                                          Any participating broker-dealer that resells the Series Dheld original notes that were received by itacquired for its own account pursuant toas a result of market-making activities or other trading activities, that received exchange notes in the exchange offer, and any broker or dealer that participates in a distribution of such Series Dexchange notes may be deemed to be an "underwriter"“underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of the exchange notes. Any profit on any such resalethese resales of Series Dexchange notes and any commissions or concessions received by any such personsa broker-dealer in connection with these resales may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a participating broker-dealer will not be deemed to admit that it is an "underwriter"“underwriter” within the meaning of the Securities Act.

                                                           For a period

                                                          We have agreed to pay all expenses incident to our participation in the exchange offer, including the reasonable fees and expenses of 180 days afterone counsel for the consummationholders of original notes and the initial purchasers, other than commissions or concessions of any broker-dealers and will indemnify holders of the original notes, including any broker-dealers, against specified types of liabilities, including liabilities under the Securities Act. We note, however, that in the opinion of the SEC, indemnification against liabilities under federal securities laws is against public policy and may be unenforceable.

                                                          LEGAL MATTERS

                                                          The validity of the exchange offer we will promptly send additional copies of this prospectusnotes and any amendment or supplement to this prospectus to any participating broker-dealer that requests such documents in the letter of transmittal.



                                                          LEGAL MATTERS

                                                                  Certaincertain legal matters relating to the issuance of the Series D notes and the related guaranteesin connection with this offering will be passed upon on our behalffor us by KirklandJames T. Lucke, General Counsel of Spectrum, and by Cades Schutte LLP, Foley & Ellis, a partnership that includes professional corporations, Chicago, Illinois.Lardner LLP and Thompson Coburn LLP. Certain other legal matters relating to the issuance of the guarantees of the Series D notes by Ground Zero Inc. and Schultz Companyin connection with this exchange offer will be passed upon for us by Thompson CoburnSkadden, Arps, Slate, Meagher & Flom LLP. Certain legal matters relating to the issuance of the guarantees of the Series D notes by WPC Brands, Inc. will be passed upon by Reinhart Boerner Van Deuren S.C.


                                                          EXPERTS

                                                           Our

                                                          The consolidated financial statements of Rayovac Corporation as of December 31, 2002September 30, 2004 and December 31, 2001,2003, and for each of the three years in the three-year period ended September 30, 2004, have been incorporated by reference herein and in the Registration Statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

                                                          The consolidated financial statements incorporated in this Prospectus by reference to Rayovac’s Current Report on Form 8-K/A dated May 28, 2004 of Microlite S.A. for the year ended December 31, 2002, included in this prospectus2003 have been so includedincorporated in reliance on the report (which contains an explanatory paragraph relating to the Company's addition of certain guarantor information as described in Note 25 to the consolidated financial statements) of PricewaterhouseCoopers LLP,Auditores Independentes, an independent accountants,registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

                                                           

                                                          The consolidated financial statements incorporated in this Prospectus by reference to Rayovac’s Current Report on Form 8-K dated April 27, 2005 of the Schultz Company and its subsidiary as of September 30, 2001, andUnited Industries Corporation for the year then ended included in this prospectusDecember 31, 2004 have been so includedincorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent accountants,registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.


                                                          WHERE YOU CAN FIND MORE INFORMATION

                                                          The financial statements incorporated in this Prospectus by reference to Rayovac’s Current Report on Form 8-K/A dated February 7, 2005 of United Pet Group, Inc. for the year ended December 31, 2003 have been so incorporated in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

                                                           We file annual, quarterly

                                                          The financial statements incorporated in this Prospectus by reference to Rayovac’s Current Report on Form 8-K dated April 27, 2005 of The Nu-Gro Corporation for the year ended September 30, 2003 have been so incorporated in reliance on the report of Ernst & Young LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and current reportsaccounting.

                                                          The consolidated financial statements of Tetra Holding (US), Inc. and other information withsubsidiary as of December 31, 2004 and for the SEC. In this document, we "incorporate by reference" the information that we file with the SEC, which means that we can disclose important information to you by referring to that information. The informationyear ended December 31, 2004 have been incorporated by reference is considered to be partherein and in the Registration Statement in reliance upon the report of this prospectus. We incorporateKPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

                                                          INCORPORATION BY REFERENCE

                                                          The following documents listed below as well as all future filings madewhich Rayovac has filed with the SEC under Sectionsthe Exchange Act are incorporated by reference in this prospectus:

                                                          Annual Report on Form 10-K for the fiscal year ended September 30, 2004;

                                                          Quarterly Reports on Form 10-Q for the quarters ended January 2, 2005 and April 3, 2005; and

                                                          Current Reports on Forms 8-K and 8-K/A filed with the SEC on August 10, 2004, October 5, 2004, January 4, 2005, January 6, 2005 (with respect to Item 8.01 thereof only), January 10, 2005 (8-K), January 10, 2005 (8-K/A), January 14, 2005 (with respect to Item 8.01 thereof only) January 24, 2005, February 3, 2005, February 11, 2005, February 15, 2005, February 18, 2005, March 18, 2005, April 7, 2005, April 19, 2005 (8-K), April 19, 2005 (8-K/A), April 27, 2005, April 28, 2005, April 29, 2005, May 5, 2005 (two Current Reports on Form 8-K were filed on May 5, 2005; only the second such report, dated April 29, 2005 and containing items 1.01, 2.01, 2.03, 3.03, 8.01 and 9,01, is incorporated herein by reference), June 2, 2005 and June 3, 2005.

                                                          All documents filed by us with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act untilsubsequent to the date of this exchange offer is completed:

                                                            (a)
                                                            our Annual Report on Form 10-K forprospectus and prior to the fiscal year ended December 31, 2002, as amended on April 17, 2003 and May 1, 2003; and

                                                            (b)
                                                            our Current Reports on Form 8-K filed March 20, 2003 and March 27, 2003.

                                                                  We have agreed that, whether or not we are required to do so by the rules and regulationstermination of the SEC, for so long as any of the Series D notes remain outstanding, we will furnish the holders of the Series D notes and file with the SEC, unless the SEC will not accept the filing, following the consummation of the exchange offer, all annual, quarterly and current reports that we are or wouldoffering shall also be requireddeemed to file with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.

                                                                  You can also inspect, read and copy these reports and other information at the public reference facilities the SEC maintains at: Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. You can obtain information on the operation of the public reference facilities by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site (http://www.sec.gov) that makes available reports and other information regarding companies that file electronically with it.

                                                                  In addition, we will provide you without charge copies of our annual, quarterly and current reportsbe incorporated by reference ininto this prospectus (otherand to be a part hereof from the date of filing of such documents. Any statement herein or in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in any subsequently filed document which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

                                                          We will provide, without charge, to each person to whom a copy of this prospectus is delivered, upon request of such person, a copy of any documents incorporated into this prospectus by reference other than exhibits to such reportsthereto unless such exhibits are specifically incorporated by reference therein)in the document that this prospectus incorporates. Requests for such copies should be directed to Spectrum, care of Vice President, Investor Relations, Spectrum Brands, Inc., our Series D notes and the Series D indenture. You may request copies of these reports and documentsSix Concourse Parkway, Suite 3300, Atlanta, Georgia 30328, via electronic mail atinvestorrelations@spectrumbrands.com, or by contacting us at: United Industries Corporation, 2150 Schuetz Road, St. Louis, Missouri 63146, Attention: Legal Department; (314) 427-0780.the Vice President, Investor Relations at 770-829-6200.

                                                          If you would likeAVAILABLE INFORMATION

                                                          We are subject to request any of these reports or documents, please do so at least five days before you make your decision to exchange your notes.

                                                          131



                                                          INDEX TO FINANCIAL STATEMENTS


                                                          Page
                                                          Consolidated Financial Statements of United Industries Corporation

                                                          Report of Independent Accountants


                                                          F-2
                                                          Consolidated Balance Sheets as of December 31, 2002 and 2001F-3
                                                          Consolidated Statements of Operations and Comprehensive Income for the Years Ended December 31, 2002, 2001 and 2000F-4
                                                          Consolidated Statements of Cash Flows for the Years Ended December 31, 2002, 2001 and 2000F-5
                                                          Consolidated Statements of Changes in Stockholders' Deficit for the Years Ended December 31, 2002, 2001 and 2000F-6
                                                          Notes to Consolidated Financial StatementsF-7
                                                          Report of Independent Accountants on Financial Statement ScheduleF-43
                                                          Schedule II—Valuation and Qualifying AccountsF-44

                                                          Financial Statements of Schultz Company



                                                          Report of Independent Accountants


                                                          F-45
                                                          Balance SheetsF-46
                                                          Statements of OperationsF-47
                                                          Statements of Cash FlowsF-48
                                                          Statement of Changes in Stockholders' EquityF-49
                                                          Notes to Financial StatementsF-50

                                                          F-1


                                                          REPORT OF INDEPENDENT ACCOUNTANTS

                                                          Board of Directorsthe reporting and Stockholders of
                                                          United Industries Corporation and Subsidiaries:

                                                                  In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive income, of cash flows, and of changes in stockholders' deficit present fairly, in all material respects, the financial position of United Industries Corporation and its subsidiaries at December 31, 2002 and 2001, and the results of their operations and their cash flows for eachother information requirements of the three years inExchange Act and file annual, quarterly and current reports, proxy statements and other information with the period ended December 31, 2002 in conformitySEC. Such reports, proxy statements and other information filed by us may be inspected and copied at the public reference facility maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a site on the World Wide Web containing reports, proxy materials, information statements and other information regarding issuers that file electronically with accounting principles generally accepted in the United States of America. These financialSEC at www.sec.gov. Spectrum’s reports, proxy statements areand other information can also be inspected and copied at the responsibilityoffices of the Company's management;New York Stock Exchange, on which our responsibilitycommon stock is to express an opinionlisted (symbol: SPC). We maintain a site on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which requireWorld Wide Web containing information that we plan and performfile with the auditSEC at www.spectrumbrands.com.

                                                          LOGO

                                                          Spectrum Brands, Inc.

                                                          Offer to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.Exchange

                                                           The Company has revised its financial statements to include the information set forth in Note 25 that is required by Rule 3-10 of Securities and Exchange Commission Regulation S-X regarding the guarantee of the Company's

                                                          $700,000,000 7 3/8% Senior Subordinated Notes by the Company's subsidiaries.

                                                          /s/ PricewaterhouseCoopers LLP

                                                          St. Louis, Missouri
                                                          February 12, 2003, except for Note 25 which is as of April 29, 2003

                                                          F-2


                                                          due 2015


                                                          UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES

                                                          CONSOLIDATED BALANCE SHEETS

                                                          (Dollars in thousands, except share data)

                                                           
                                                           December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           
                                                          ASSETS       
                                                          Current assets:       
                                                           Cash and cash equivalents $10,318 $ 
                                                           Accounts receivable, less allowance for doubtful accounts of $3,171 and $1,147, respectively  23,321  21,585 
                                                           Inventories  87,762  49,092 
                                                           Prepaid expenses and other current assets  11,350  6,491 
                                                            
                                                           
                                                           
                                                            Total current assets  132,751  77,168 
                                                            
                                                           
                                                           
                                                          Equipment and leasehold improvements, net  34,218  27,930 
                                                          Deferred tax asset  105,141  112,505 
                                                          Goodwill and intangible assets, net  100,868  43,116 
                                                          Other assets, net  13,025  11,837 
                                                            
                                                           
                                                           
                                                            Total assets $386,003 $272,556 
                                                            
                                                           
                                                           
                                                          LIABILITIES AND STOCKHOLDERS' DEFICIT       
                                                          Current liabilities:       
                                                           Current maturities of long-term debt and capital lease obligation $9,665 $5,711 
                                                           Accounts payable  27,063  23,459 
                                                           Accrued expenses  45,221  34,006 
                                                           Short-term borrowings    23,450 
                                                            
                                                           
                                                           
                                                            Total current liabilities  81,949  86,626 
                                                            
                                                           
                                                           
                                                          Long-term debt, net of current maturities  391,493  318,386 
                                                          Capital lease obligation, net of current maturities  3,778  4,221 
                                                          Other liabilities  5,019  7,740 
                                                            
                                                           
                                                           
                                                            Total liabilities  482,239  416,973 
                                                            
                                                           
                                                           
                                                          Commitments and contingencies       
                                                          Stockholders' deficit:       
                                                           Preferred stock (37,600 shares of $0.01 par value Class A issued and outstanding, 40,000 shares authorized)     
                                                           Common stock (33.1 million shares each of $0.01 par value Class A and Class B issued and outstanding, 43.6 million shares of each authorized at December 31, 2002; 27.7 million shares of each issued and outstanding and 37.6 million shares of each authorized at December 31, 2001)  664  556 
                                                           Warrants and options  11,745  11,745 
                                                           Additional paid-in capital  210,480  152,943 
                                                           Accumulated deficit  (287,592) (306,048)
                                                           Common stock subscription receivable  (25,761)  
                                                           Common stock repurchase option  (2,636)  
                                                           Common stock held in grantor trust  (2,700) (2,700)
                                                           Loans to executive officer  (404) (400)
                                                           Accumulated other comprehensive loss  (32) (513)
                                                            
                                                           
                                                           
                                                            Total stockholders' deficit  (96,236) (144,417)
                                                            
                                                           
                                                           
                                                            Total liabilities and stockholders' deficit $386,003 $272,556 
                                                            
                                                           
                                                           

                                                          See accompanying notes to consolidated financial statements.

                                                          F-3



                                                          UNITED INDUSTRIES CORPORATION AND SUBISIDIARIES

                                                          CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

                                                          (Dollars in thousands)

                                                           
                                                           Years Ended December 31,
                                                           
                                                           2002
                                                           2001
                                                           2000
                                                          CONSOLIDATED STATEMENTS OF OPERATIONS:         
                                                          Net sales before promotion expense $521,286 $297,776 $288,618
                                                          Promotion expense  41,296  24,432  22,824
                                                            
                                                           
                                                           
                                                          Net sales  479,990  273,344  265,794
                                                            
                                                           
                                                           
                                                          Operating costs and expenses:         
                                                           Cost of goods sold  305,644  148,371  146,229
                                                           Selling, general and administrative expenses  113,162  74,689  69,099
                                                           Facilities and organizational rationalization    5,550  
                                                           Dursban related expenses      8,000
                                                            
                                                           
                                                           
                                                           Total operating costs and expenses  418,806  228,610  223,328
                                                            
                                                           
                                                           
                                                          Operating income  61,184  44,734  42,466
                                                          Interest expense, net  32,410  35,841  40,973
                                                            
                                                           
                                                           
                                                          Income before income tax expense  28,774  8,893  1,493
                                                          Income tax expense  3,438  2,167  134
                                                            
                                                           
                                                           
                                                          Net income $25,336 $6,726 $1,359
                                                            
                                                           
                                                           
                                                          Preferred stock dividends $6,880 $2,292 $320
                                                            
                                                           
                                                           
                                                          Net income available to common stockholders $18,456 $4,434 $1,039
                                                            
                                                           
                                                           
                                                          CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME:         
                                                          Net income $25,336 $6,726 $1,359
                                                          Other comprehensive income, net of tax:         
                                                           Income (loss) on interest rate swap  513  (513) 
                                                           Loss on derivative hedging instruments  (32)   
                                                            
                                                           
                                                           
                                                          Comprehensive income $25,817 $6,213 $1,359
                                                            
                                                           
                                                           

                                                          See accompanying notes to consolidated financial statements.

                                                          F-4



                                                          UNITED INDUSTRIES CORPORATION AND SUBISIDIARIES

                                                          CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                          (Dollars in thousands)

                                                           
                                                           Years Ended December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           2000
                                                           
                                                          Cash flows from operating activities:          
                                                           Net income $25,336 $6,726 $1,359 
                                                           Adjustments to reconcile net income to net cash flows from operating activities:          
                                                            Depreciation and amortization  10,240  4,918  5,261 
                                                            Amortization of deferred financing fees  3,280  2,691  2,420 
                                                            Deferred income tax expense  3,438  2,167  134 
                                                            Noncash reduction of capital lease obligation      (1,182)
                                                            Changes in operating assets and liabilities, net of effects from acquisitions:          
                                                             Accounts receivable  26,579  (1,641) (779)
                                                             Inventories  (19,894) (2,085) 6,236 
                                                             Prepaid expenses and other current assets  (3,283) (134) (716)
                                                             Other assets  5,995  9  (137)
                                                             Accounts payable and accrued expenses  (6,162) 11,126  (7,869)
                                                             Facilities and organizational rationalization charge  (3,216) 5,158   
                                                             Dursban related expenses  (82) (5,984) 6,066 
                                                             Other operating activities, net  (4,373) 2,084   
                                                            
                                                           
                                                           
                                                           
                                                              Net cash flows from operating activities  37,858  25,035  10,793 
                                                            
                                                           
                                                           
                                                           
                                                          Cash flows from investing activities:          
                                                           Purchases of equipment and leasehold improvements  (6,450) (7,916) (3,950)
                                                           Purchase of facilities and equipment from Pursell  (4,000)    
                                                           Payments for purchase of fertilizer brands    (37,500)  
                                                           Payments for Schultz merger, net of cash acquired  (38,300)    
                                                           Payments for WPC Brands acquisition, net of cash acquired  (19,500)    
                                                            
                                                           
                                                           
                                                           
                                                              Net cash flows used for investing activities  (68,250) (45,416) (3,950)
                                                            
                                                           
                                                           
                                                           
                                                          Cash flows from financing activities:          
                                                           Proceeds from additional term debt  90,000  8,450  15,000 
                                                           Repayment (borrowings) on cash overdraft  (5,620) 945  4,103 
                                                           Repayment of debt assumed in Schultz merger  (20,577)    
                                                           Repayment of borrowings on term debt  (14,943) (10,983) (26,888)
                                                           Repayments of short-term borrowings  (23,450)    
                                                           Payments for debt issuance costs  (4,700)   (1,883)
                                                           Proceeds from issuance of common stock  17,500     
                                                           Payments received for common stock subscription receivable  2,500     
                                                           Payments for treasury stock redemption costs      (12,175)
                                                           Proceeds from issuance of preferred stock    21,969  15,000 
                                                            
                                                           
                                                           
                                                           
                                                              Net cash flows from (used for) financing activities  40,710  20,381  (6,843)
                                                            
                                                           
                                                           
                                                           
                                                          Net increase in cash and cash equivalents  10,318     
                                                          Cash and cash equivalents, beginning of period       
                                                            
                                                           
                                                           
                                                           
                                                          Cash and cash equivalents, end of period $10,318 $ $ 
                                                            
                                                           
                                                           
                                                           
                                                          Noncash financing activities:          
                                                           Common stock issued related to Schultz merger $6,000 $ $ 
                                                            
                                                           
                                                           
                                                           
                                                           Common stock issued related to Bayer agreements $30,720 $ $ 
                                                            
                                                           
                                                           
                                                           
                                                           Debt assumed in Schultz merger $20,577 $ $ 
                                                            
                                                           
                                                           
                                                           
                                                           Preferred stock dividends accrued $6,880 $2,292 $320 
                                                            
                                                           
                                                           
                                                           
                                                           Execution of capital lease $ $ $5,344 
                                                            
                                                           
                                                           
                                                           

                                                          See accompanying notes to consolidated financial statements.

                                                          F-5


                                                          UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES

                                                          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

                                                          (Dollars in thousands)

                                                           
                                                           Class A Nonvoting
                                                          Preferred Stock

                                                           Class A Voting
                                                          Common Stock

                                                           Class B Nonvoting
                                                          Common Stock

                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                           
                                                           
                                                           Warrants and Options
                                                            
                                                            
                                                           Common
                                                          Stock
                                                          Subscription
                                                          Receivable

                                                           Common
                                                          Stock
                                                          Repurchasing
                                                          Option

                                                           Common
                                                          Stock Held
                                                          Grantor
                                                          Trust

                                                            
                                                           Accumulated
                                                          Other
                                                          Comprehensive
                                                          Loss

                                                            
                                                           
                                                           
                                                           Additional
                                                          Paid-in
                                                          Capital

                                                           Accumulated
                                                          Deficit

                                                           Loans to
                                                          Executive
                                                          Officer

                                                           Total
                                                          Stockholders'
                                                          Deficit

                                                           
                                                           
                                                           Shares
                                                           Amount
                                                           Shares
                                                           Amount
                                                           Shares
                                                           Amount
                                                           Shares
                                                           Amount
                                                           
                                                          Balance at January 1, 2000  $ 27,650,000 $277 27,650,000 $277  $ $126,865 $(311,521)$ $ $(2,700)$ $ $(186,802)
                                                          Net income                1,359            1,359 
                                                          Issuance of preferred stock and common stock warrants 15,000         3,200  2,784  12,216              15,000 
                                                          Preferred stock dividends                (320)           (320)
                                                            
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2000 15,000   27,650,000  277 27,650,000  277 3,200  2,784  139,081  (310,482)     (2,700)     (170,763)
                                                          Net income                6,726            6,726 
                                                          Issuance of common stock    71,000  1 71,000  1     (2)              
                                                          Issuance of common stock options          600  456                456 
                                                          Issuance of preferred stock and common stock warrants 22,600         6,300  8,505  13,464              21,969 
                                                          Preferred stock dividends                (2,292)           (2,292)
                                                          Loan to executive officer              400          (400)    
                                                          Unrealized loss on interest rate swap, net of taxes                          (513) (513)
                                                            
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2001 37,600   27,721,000  278 27,721,000  278 10,100  11,745  152,943  (306,048)     (2,700) (400) (513) (144,417)
                                                          Net income                25,336            25,336 
                                                          Issuance of common stock for Schultz acquisition and related financing    2,290,000  24 2,290,000  24     22,866              22,914 
                                                          Issuance of common stock    60,000   60,000       600              600 
                                                          Issuance of common stock to Bayer    3,072,000  30 3,072,000  30     30,430    (27,321) (2,636)       533 
                                                          Amendment to Bayer agreement              3,641              3,641 
                                                          Proceeds for subscription receivable, net of interest                  1,560          1,560 
                                                          Preferred stock dividends                (6,880)           (6,880)
                                                          Loan to executive officer                        (52)   (52)
                                                          Payment on loan to executive officer                        48    48 
                                                          Realized loss on interest rate swap, net of taxes                          513  513 
                                                          Changes in fair value of derivative hedging instruments                          (32) (32)
                                                            
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2002 37,600 $ 33,143,000 $332 33,143,000 $332 10,100 $11,745 $210,480 $(287,592)$(25,761)$(2,636)$(2,700)$(404)$(32)$(96,236)
                                                            
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           

                                                          See accompanying notes to consolidated financial statements.

                                                          F-6



                                                          UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES

                                                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                                          (Dollars in thousands, except share data)

                                                          Note 1—Description of Business

                                                                  Under a variety of brand names, the Company manufactures and markets one of the broadest lines of pesticides in the industry, including herbicides and indoor and outdoor insecticides, as well as insect repellents, fertilizer, growing media and soils. Our value brands are targeted toward consumers who want products and packaging that are comparable or superior to, and at lower prices than, premium price brands, while our opening price point brands are designed for conscious consumers who want quality products. Our products are marketed to mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers.

                                                                  As described further in Note 18, the Company's operations are divided into three business segments: Lawn and Garden, Household and Contract. The Company's lawn and garden brands include, among others, Spectracide®, Garden Safe®, Real-Kill® and No-Pest® in the controls category, as well as Sta-Green®, Vigoro®, Schultz® and Bandini® brands in the lawn and garden fertilizer and growing media categories. The Company's household brands include, among others, Hot Shot®, Cutter® and Repel®. The Contract segment represents non-core products and includes various compounds and chemicals such as, among others, charcoal, water purification tablets, first-aid kits, barbeque sauce, fish attractant, cleaning solutions and automotive products.

                                                          Note 2—Summary of Significant Accounting Policies

                                                          Basis of Consolidation$700,000,000 Senior Subordinated Notes due 2015

                                                                  The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated during consolidation.

                                                          Use of Estimates

                                                                  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

                                                          Cash Equivalents

                                                                  The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. These investments are recorded at cost which approximates market value.

                                                          Inventories

                                                                  Inventories are reported at the lower of cost or market. Cost is determined using a standard costing system that approximates the first-in, first-out method and includes raw materials, direct labor and overhead. An allowance for potentially obsolete or slow-moving inventory is recorded based on the Company's analysis of inventory levels and future sales forecasts. In the event that estimates of future usage and sales differ from actual results, the allowance for obsolete or slow-moving inventory may be adjusted. For the years ended December 31, 2002, 2001 and 2000, amounts recorded for potentially obsolete or slow-moving inventory were $5.4 million, $2.7 million and $0.3 million, respectively. As of

                                                          F-7



                                                          December 31, 2002 and 2001, the allowance for potentially obsolete or slow-moving inventory was $5.8 million and $2.7 million, respectively.

                                                          Capitalized Software Costs

                                                                  Capitalized software costs are included in equipment and leasehold improvements in the accompanying consolidated balance sheets. Once the underlying assets are placed into service, costs are amortized using the straight-line method over periods of related benefit ranging from three to five years. As of December 31, 2002 and 2001, the Company had $4.4 million and $3.5 million, respectively, in unamortized capitalized software costs related primarily to the Company's enterprise resource planning (ERP) implementation, including capitalized internal costs in 2002 of $0.4 million. No internal costs were capitalized in 2001. The Company expects to place certain modules of the ERP system into service and begin recognizing amortization expense thereon in the fourth quarter of 2003 and finalize the implementation in 2004. Related amortization expense was $0.1 million during each of the years ended December 31, 2002, 2001 and 2000.

                                                          Equipment and Leasehold Improvements

                                                                  Expenditures for equipment and leasehold improvements and those that substantially increase the useful lives of assets are capitalized and recorded at cost. Maintenance, repairs and minor renewals are expensed as incurred. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any related gains or losses are reflected in earnings. Depreciation is recorded using the straight-line method over management's estimate of the useful lives of the related assets. Machinery and equipment are depreciated over periods ranging from three to twelve years. Office furniture and equipment are depreciated over periods ranging from five to ten years. Automobiles and trucks are depreciated over periods ranging from three to seven years. Leasehold improvements are amortized over the shorter of the lease term or the useful life of the related asset which generally ranges from five to thirty-nine years. Property held under capital lease is amortized over the term of the lease.

                                                          Goodwill and Intangible Assets

                                                                  The Company has acquired intangible assets or made acquisitions in the past that resulted in the recording of goodwill or intangible assets. Under generally accepted accounting principles previously in effect, these assets were amortized over their estimated useful lives, and were tested periodically to determine if they were recoverable from operating earnings on an undiscounted basis over their useful lives. Beginning in 2002, the Company ceased to amortize goodwill but evaluates it annually for impairment as part of its annual planning process, or if events or changes in circumstances indicate the carrying amount may not be recoverable. If recovery is not reasonably assured, an appropriate adjustment using current market values, estimates of discounted future cash flows and other methods is made. Prior to 2002, goodwill was amortized using the straight-line method over 40 years and recorded in selling, general and administrative expenses (see Note 7).

                                                          Long-Lived Assets

                                                                  On January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long lived assets to be disposed of and supersedes SFAS

                                                          F-8



                                                          No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." In accordance with SFAS No. 144, the Company periodically evaluates the recoverability of long-lived assets, including equipment and leasehold improvements for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If a review indicates that the carrying value of such asset is not recoverable based on its undiscounted future cash flows, a loss is recognized for the difference between the fair value of the asset and its carrying value. Adoption of SFAS No. 144 did not have a material impact on the Company's consolidated financial statements.

                                                          Derivative Instruments and Hedging Activities

                                                                  The Company periodically uses interest rate and commodity price derivative hedging instruments to reduce fluctuations in cash flows. Using these agreements, the Company agrees to exchange, at specified intervals, the difference between fixed and variable amounts calculated by reference to an agreed-upon notional amount or index. Derivative hedging instruments are recorded in the consolidated balance sheets as assets or liabilities, as applicable, measured at fair value. The Company does not enter into derivatives or other hedging arrangements for trading or speculative purposes.

                                                          Revenue Recognition

                                                                  Net sales represent gross sales less any applicable customer discounts from list price, customer returns and promotion expense through cooperative programs with retailers. The provision for customer returns is based on historical sales returns and analysis of credit memo and other relevant information. If the historical or other data used to develop these estimates do not properly reflect future returns, net sales may need to be adjusted. Sales reductions related to returns were $7.4 million, $6.5 million and $7.6 million for the years ended December 31, 2002, 2001 and 2000, respectively. Amounts included in the allowance for doubtful accounts for product returns were $2.0 million and $0.4 million as of December 31, 2002 and 2001, respectively.

                                                          Promotion Expense

                                                                  The Company advertises and promotes its products through national and regional media. Products are also advertised and promoted through cooperative programs with retailers. Advertising and promotion costs are expensed as incurred, although costs incurred during interim periods are generally expensed ratably in relation to revenues. Management develops an estimate of the amount of costs that have been incurred by the retailers under cooperative programs based on an analysis of specific programs offered to retailers and historical information. Actual costs incurred may differ significantly from estimates if factors such as the level of participation and success of the retailers' programs or other conditions differ from expectations. Promotion expense, including cooperative programs with customers, is recorded as a reduction of sales and was $41.3 million, $24.4 million and $22.8 million for the years ended December 31, 2002, 2001 and 2000, respectively. Accrued advertising and promotion expense was $16.4 million and $12.1 million as of December 31, 2002 and 2001, respectively. In addition, advertising costs are incurred irrespective of promotions. Such costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations and were $3.3 million, $1.3 million and $2.4 million for the years ended December 31, 2002, 2001 and 2000, respectively.

                                                          F-9



                                                          Research and Development

                                                                  Research and development costs are expensed as incurred and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. For the years ended December 31, 2002, 2001 and 2000, research and development costs were $1.3 million, $2.4 million and $1.0 million, respectively.

                                                          Shipping and Handling Costs

                                                                  Certain shipping and handling costs are included in selling, general and administrative expenses in the accompanying consolidated statements of operations. These costs primarily comprise personnel and other general and administrative costs associated with the Company's distribution facilities, and to a lesser extent, some costs related to goods shipped between the Company's facilities. For the years ended December 31, 2002, 2001 and 2000, these costs were $15.7 million, $13.4 million and $12.9 million, respectively. The remaining shipping and handling costs comprise those costs associated with goods shipped to customers and supplies received from vendors and are included in cost of goods sold in the accompanying consolidated statements of operations.

                                                          Stock-Based Compensation

                                                                  The Company accounts for stock options issued to employees in accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees" and applies the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure, an amendment of FASB Statement No. 123." Under APB No. 25 and related interpretations, compensation expense is recognized using the intrinsic value method for the difference between the exercise price of the options and the estimated fair value of the Company's common stock on the date of grant. See Note 19 for information regarding stock option activity during the years ended December 31, 2002, 2001 and 2000.

                                                                  The following table presents net income, as reported, using the intrinsic value method and stock-based compensation included therein, stock-based compensation expense that would have been recorded using the fair value method and pro forma net income that would have been reported had the fair value method been applied:

                                                           
                                                           Years Ended December 31,
                                                           
                                                           2002
                                                           2001
                                                           2000
                                                          Net income, as reported $25,336 $6,726 $1,359
                                                          Stock-based compensation expense includedin net income, as reported, net of tax      
                                                          Stock-based compensation expense using the fair method, net of tax  2,709  251  492
                                                          Pro forma net income  22,627  6,475  867

                                                          Income Taxes

                                                                  Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences

                                                          F-10



                                                          between the financial reporting basis and the tax basis of assets and liabilities at enacted tax rates expected to be in effect when such amounts are recovered or settled. Management judgment is required to determine income tax expense, deferred tax assets and any related valuation allowance and deferred tax liabilities. The Company has recorded a valuation allowance of $104.1 million as of December 31, 2002 due to uncertainties related to the ability to utilize some of the deferred tax assets, primarily consisting of certain net operating loss carryforwards generated in 1999 through 2002 and deductible goodwill recorded in connection with the Company's recapitalization in 1999. The valuation allowance is based on management's estimates of future taxable income by jurisdiction in which the deferred tax assets will be recoverable. In the event that actual results differ from those estimates, or the estimates are adjusted in future periods, the valuation allowance may need to be adjusted, which could materially impact the Company's consolidated financial position and results of operations.

                                                          Earnings Per Share

                                                                  Earnings per share information is not required for presentation as the Company does not have publicly traded stock.

                                                          Concentration of Credit Risk

                                                                  Financial instruments that potentially subject the Company to concentration of credit risk consist principally of trade accounts receivable. The Company performs ongoing credit evaluations of its customers' financial conditions. The Company is dependent on three customers for the majority of its sales, as presented in the following table:

                                                           
                                                           Years Ended December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           2000
                                                           
                                                          The Home Depot 33%25%24%
                                                          Lowe's 23%22%19%
                                                          Wal-Mart 18%17%16%
                                                            
                                                           
                                                           
                                                           
                                                           Total 74%64%59%
                                                            
                                                           
                                                           
                                                           

                                                                  As of December 31, 2002 and 2001, these three customers were responsible for 62% and 60% of accounts receivable, respectively.

                                                          Supplemental Cash Flow Information

                                                                  During the years ended December 31, 2002, 2001 and 2000, the Company paid interest of $32.4 million, $36.0 million and $40.9 million, respectively, and recognized interest income (which is included in interest expense, net in the consolidated statements of operations) of $1.4 million, $0.1 million and $0.2 million, respectively. During the years ended December 31, 2002, 2001 and 2000, the Company paid income taxes of $0.6 million, $0.1 million and $0.2 million, respectively.

                                                          Reclassifications

                                                                  Certain reclassifications have been made to the prior years' amounts to conform to the current year presentation. In addition, the Company has reclassified its borrowing on cash overdrafts to financing activities from operating activities.

                                                          F-11



                                                          Note 3—Acquisitions

                                                          Schultz Company

                                                                  On May 9, 2002, a wholly owned subsidiary of the Company completed a merger with and into Schultz Company (Schultz), a manufacturer of horticultural products and specialty items and a distributor of potting soil, soil conditioners and charcoal. Schultz products are distributed primarily to retail outlets throughout the United States and Canada. The merger was executed to achieve economies of scale and synergistic efficiencies. As a result of the merger, Schultz became a wholly owned subsidiary of the Company. The total purchase price included cash payments of $38.3 million, including related acquisition costs of $5.0 million, issuance of 600,000 shares of Class A voting common stock valued at $3.0 million and issuance of 600,000 shares of Class B nonvoting common stock valued at $3.0 million and the assumption of $20.6 million of outstanding debt, which was immediately repaid by the Company at closing. In exchange for cash, common stock and the assumption of debt, the Company received all of the outstanding shares of Schultz. The Company has preliminarily allocated 50% of the purchase price in excess of the fair value of net assets acquired to intangible assets ($19.7 million) and 50% to goodwill ($19.7 million), which is not deductible for tax purposes. The acquired intangible assets consist of trade names and other intellectual property which are being amortized over 25 to 40 years. In addition, the Company was required to write-up the value of inventory acquired from Schultz by $1.5 million to properly reflect its fair value.

                                                                  This transaction was accounted for using the purchase method of accounting and, accordingly, the results of operations of the assets acquired and liabilities assumed have been included in the consolidated financial statements from the date of acquisition. The purchase price was allocated to assets acquired and liabilities assumed based on estimated fair values. The purchase price allocation is based on preliminary information, which is subject to adjustment upon obtaining complete valuation information. While the final purchase price allocation may differ significantly from the preliminary allocation included in this report, management believes that finalization of the allocation will not have a material impact on the consolidated results of operations or financial position of the Company. Completion of the purchase price allocation is expected by the second quarter of 2003.

                                                                  The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

                                                          Description

                                                           Amount
                                                          Current assets $40,856
                                                          Equipment and leasehold improvements  3,901
                                                          Intangible assets  20,632
                                                          Goodwill  19,744
                                                          Other assets  811
                                                            
                                                           Total assets acquired  85,944
                                                            

                                                          Current liabilities

                                                           

                                                           

                                                          19,857
                                                          Long-term debt  20,662
                                                          Other liabilities  1,125
                                                            
                                                           Total liabilities assumed  41,644
                                                            
                                                           Net assets acquired $44,300
                                                            

                                                          F-12


                                                                  The Company's funding sources for the Schultz merger included an additional $35.0 million add-on to Term Loan B of the Company's Senior Credit Facility (see Note 12), an additional $10.0 million add-on to the Company's Revolving Credit Facility, the issuance of 1,690,000 shares of Class A voting common stock to UIC Holdings, L.L.C. for $8.5 million and the issuance of 1,690,000 shares of Class B nonvoting common stock to UIC Holdings, L.L.C. for $8.5 million. The issuance of shares to UIC Holdings, L.L.C. was a condition precedent to the amendment of the Senior Credit Facility. The value of the shares issued was determined using $5 per share, the fair value of the Company's common stock ascribed by an independent third party valuation.

                                                          WPC Brands, Inc.

                                                                  On December 6, 2002, a wholly owned subsidiary of the Company completed the acquisition of WPC Brands, Inc. (WPC Brands), a manufacturer and distributor of various leisure-time consumer products, including a full line of insect repellents, institutional healthcare products and other proprietary and private label products. The acquisition was executed to enhance the Company's insect repellent product lines and to strengthen its presence at major customers. The total purchase price was $19.5 million in cash in exchange for all of the outstanding shares of WPC Brands. The Company has preliminarily allocated 75% of the purchase price in excess of the fair value of net assets acquired to intangible assets ($9.7 million) and 25% to goodwill ($3.2 million), which is not deductible for tax purposes. The acquired intangible assets consist of trade names and other intellectual property which are being amortized over 25 to 40 years. In addition, the Company was required to write-up the value of inventory acquired from WPC Brands by $2.0 million to properly reflect its fair value.

                                                                  This transaction was accounted for using the purchase method of accounting and, accordingly, the results of operations of the assets acquired and liabilities assumed have been included in the consolidated financial statements from the date of acquisition. The purchase price was allocated to assets acquired and liabilities assumed based on estimated fair values. The purchase price allocation is based on preliminary information, which is subject to adjustment upon obtaining complete valuation information. While the final purchase price allocation may differ significantly from the preliminary allocation included in this report, management believes that finalization of the allocation will not have a material impact on the consolidated results of operations or financial position of the Company. Completion of the purchase price allocation is expected by the third quarter of 2003.

                                                          F-13



                                                                  The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the date of acquisition:

                                                          Description

                                                           Amount
                                                          Current assets $7,987
                                                          Equipment and leasehold improvements  844
                                                          Intangible assets  11,294
                                                          Goodwill  3,222
                                                          Other assets  455
                                                            
                                                           Total assets acquired  23,802
                                                            

                                                          Current liabilities

                                                           

                                                           

                                                          3,286
                                                          Other liabilities  1,016
                                                            
                                                           Total liabilities assumed  4,302
                                                            
                                                           Net assets acquired $19,500
                                                            

                                                                  The Company's funding source for the WPC Brands acquisition was a portion of the proceeds received from an additional $25.0 million add-on to Term Loan B of the Company's Senior Credit Facility.

                                                                  In addition, the Company is currently considering selling certain or all of the non-core product lines received in the acquisition of WPC Brands. Total assets represented by these product lines are approximately $1.6 million with annual net sales in 2002 of approximately $6.2 million.

                                                                  The Company's unaudited consolidated results of operations on a pro forma basis, as if these transactions had occurred on January 1, 2001, include net sales of $556.5 million and $388.3 million for the years ended December 31, 2002 and 2001, respectively, and net income of $28.4 million and $6.8 million for the years ended December 31, 2002 and 2001, respectively. This unaudited pro forma financial information does not purport to be indicative of the consolidated results of operations that would have been achieved had this transaction been completed as of the assumed dates or which may be obtained in the future.

                                                          Note 4—Strategic Transactions

                                                                  On June 14, 2002, the Company and Bayer Corporation and Bayer Advanced, L.L.C. (together referred to herein as Bayer) consummated a strategic transaction. The strategic transaction allows the Company to gain access to certain Bayer active ingredient technologies through a Supply Agreement and to perform certain merchandising services for Bayer through an In-Store Service Agreement. In connection with the strategic transaction, Bayer acquired a minority ownership interest, approximately 9.3% of the issued and outstanding shares of the Company's common stock, under the terms of an Exchange Agreement in exchange for promissory notes due to Bayer from Pursell Industries, Inc. (Pursell) and the execution of the Supply and In-Store Service Agreements.

                                                                  The Company has the right to terminate the In-Store Service Agreement at any time without cause upon 60 days advance notice to Bayer. Following any such termination, the Company would have 365 days to exercise an option to repurchase all of its stock issued to Bayer and could repurchase the stock at a price based on equations contained in the Exchange Agreement designed in part to represent

                                                          F-14



                                                          the fair market value of the shares at the time such repurchase option is exercised and in part to represent the original cost. In the event the Company exercises this repurchase option, Bayer would have the right to terminate the Supply Agreement. Because Bayer is both a competitor and a supplier, the Company is constantly reevaluating its relationship with Bayer and the value of this relationship to it, and may decide to terminate the In-Store Service Agreement and exercise its repurchase option at any time.

                                                                  In consideration for the Supply and In-Store Service Agreements, and in exchange for the promissory notes of Pursell, the Company issued to Bayer 3,072,000 shares of Class A voting common stock valued at $15.4 million and 3,072,000 shares of Class B nonvoting common stock valued at $15.4 million and recorded $0.4 million of related issuance costs. The Company reserved for the entire face value of the promissory notes due to Bayer from Pursell as the Company did not believe they were collectible and an independent third party valuation did not ascribe any significant value to them.

                                                                  Based on the independent third party valuation, the Company assigned a fair value of $30.7 million on June 14, 2002 to the transaction components recorded relative to the common stock issued to Bayer as follows:

                                                          Description

                                                           Amount
                                                           
                                                          Common stock subscription receivable $27,321 
                                                          Supply Agreement  5,694 
                                                          Repurchase option  2,636 
                                                          In-Store Services Agreement  (4,931)
                                                            
                                                           
                                                            $30,720 
                                                            
                                                           

                                                                  Under the requirements of the agreements, Bayer will make payments to the Company which total $5.0 million annually through June 15, 2009, the present value of which equals the value assigned to the common stock subscription receivable, which is reflected in the equity section in the Company's accompanying consolidated balance sheet as of December 31, 2002. The common stock subscription receivable will be repaid in 28 quarterly installments of $1.25 million, the first of which was received at closing on June 17, 2002. The difference between the value ascribed to the common stock subscription receivable and the installment payments will be reflected as interest income in the Company's consolidated statements of operations through June 15, 2009.

                                                                  Bayer has the right to put the shares received back to the Company under the terms of the Exchange Agreement. Bayer can terminate the Exchange Agreement within the first 36 months if the Company fails to meet certain performance guidelines as established in the In-Store Service Agreement. In conjunction with the termination, Bayer can put the shares received back to the Company within 30 days of the termination of the Exchange Agreement at a price provided for in the Exchange Agreement. The Company believes that the put price per share would represent in part the fair market value of the shares at the time such put option is exercised and in part the original cost.

                                                                  The value of the Supply Agreement and the liability associated with the In-Store Service Agreement are being amortized over the period in which economic benefits under the Supply Agreement are utilized and the obligations under the In-Store Service Agreement are fulfilled. The Company is amortizing the asset associated with the Supply Agreement to cost of goods sold and currently anticipates the benefit will be recognized over a three to five-year period. The Company is amortizing the obligation associated with the In-Store Service Agreement to revenues over the

                                                          F-15



                                                          seven-year life of the agreement. In December 2002, the Company and Bayer amended the In-Store Service Agreement to reduce the scope of services provided by approximately 80%. As a result, the Company reduced its obligation under the agreement accordingly and reclassified $3.6 million to additional paid-in capital to reflect the increase in value of the original agreement.

                                                                  The independent third party valuation obtained by the Company also indicated that value should be ascribed to the repurchase option it has under the agreements. The repurchase option is reflected as a reduction of equity in the accompanying consolidated balance sheet as of December 31, 2002. This amount will be recorded as a component of additional paid-in capital upon exercise or expiration of the option.

                                                          Fertilizer Brands

                                                                  On December 17, 2001, the Company advanced its strategic plan for growth in the consumer lawn and garden category by acquiring leading consumer fertilizer brands Vigoro, Sta-Green and Bandini, as well as acquiring licensing rights to the Best® line of fertilizer products, for a cash purchase price of $37.5 million. The brands, which were formerly owned by or licensed to Pursell, complement the Company's consumer lawn, garden and insect control products. Pursell continues to manufacture, warehouse and distribute certain fertilizer products for the Company under a long-term agreement. In connection with financing this transaction, the Company issued 22,600 shares of preferred stock for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, and warrants to purchase 6,300,000 shares of common stock initially to UIC Holdings, L.L.C. for net cash proceeds of $22.0 million.

                                                          Fertilizer Assets

                                                                  On October 3, 2002, the Company purchased certain assets from Pursell, which renamed itself U.S. Fertilizer subsequent to the agreement, for a cash purchase price of $12.1 million and forgiveness of the Pursell promissory notes previously obtained from Bayer, as described above in the discussion of the strategic transaction with Bayer. The assets acquired included certain inventory, equipment at two of Pursell's facilities and real estate at one of the two facilities.

                                                                  Also on October 3, 2002, the Company executed a tolling agreement with Pursell, whereby Pursell supplies the Company with fertilizer. The tolling agreement requires the Company to be responsible for certain raw materials, capital expenditures and other related costs for Pursell to manufacture and supply the Company with fertilizer products. The agreement does not require a minimum volume purchase from Pursell, but provides for a fixed monthly payment of $0.7 million through the term of the tolling agreement, which expires on September 30, 2007. The fixed monthly payment is included in the standard costs of our inventories and is not expensed monthly as a period cost. In addition, beginning on March 1, 2004 and on each anniversary thereafter, the fixed payment is subject to certain increases for labor, materials, inflation and other reasonable costs as outlined in the tolling agreement. The agreement provides the Company with certain termination rights without penalty upon a breach of the agreement by Pursell or upon the Company's payment of certain amounts as set forth therein.

                                                          F-16



                                                          Note 5—Inventories

                                                                  Inventories consist of the following:

                                                           
                                                           December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           
                                                          Raw materials $27,853 $11,104 
                                                          Finished goods  65,750  40,688 
                                                          Allowance for obsolete and slow-moving inventory  (5,841) (2,700)
                                                            
                                                           
                                                           
                                                           Total inventories $87,762 $49,092 
                                                            
                                                           
                                                           

                                                          Note 6—Equipment and Leasehold Improvements

                                                                  Equipment and leasehold improvements consist of the following:

                                                           
                                                           December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           
                                                          Machinery and equipment $39,609 $30,279 
                                                          Office furniture, equipment, and capitalized software  26,299  15,181 
                                                          Automobiles, trucks and aircraft  6,313  6,157 
                                                          Leasehold improvements  9,512  7,405 
                                                          Land and buildings  1,099   
                                                            
                                                           
                                                           
                                                             82,832  59,022 
                                                          Accumulated depreciation and amortization  (48,614) (31,092)
                                                            
                                                           
                                                           
                                                           Total equipment and leasehold improvements, net $34,218 $27,930 
                                                            
                                                           
                                                           

                                                                  For the years ended December 31, 2002, 2001 and 2000, depreciation expense was $7.3 million, $4.7 million and $5.1 million, respectively. As of December 31, 2002 and 2001, the cost of the aircraft held under capital lease was $5.3 million and related accumulated amortization was $3.2 million and $2.0 million, respectively.

                                                          F-17



                                                          Note 7—Goodwill and Intangible Assets

                                                                  Goodwill and intangible assets consist of the following:

                                                           
                                                            
                                                           December 31, 2002
                                                           December 31, 2001
                                                           
                                                           Amortization
                                                          Period

                                                           Gross
                                                          Carrying
                                                          Value

                                                           Accumulated
                                                          Amortization

                                                           Net
                                                          Carrying
                                                          Value

                                                           Gross
                                                          Carrying
                                                          Value

                                                           Accumulated
                                                          Amortization

                                                           Net
                                                          Carrying
                                                          Value

                                                          Intangible assets:                    
                                                           Trade names 25-40 $64,025 $(1,918)$62,107 $37,500 $ $37,500
                                                           Supply
                                                          agreement
                                                           4  5,694  (894) 4,800      
                                                           Other intangible assets 25  5,401  (52) 5,349      
                                                              
                                                           
                                                           
                                                           
                                                           
                                                           
                                                            Total intangible assets   $75,120 $(2,864) 72,256 $37,500 $  37,500
                                                              
                                                           
                                                              
                                                           
                                                             
                                                          Goodwill          28,612        5,616
                                                                    
                                                                 
                                                            Total goodwill and intangible assets, net         $100,868       $43,116
                                                                    
                                                                 

                                                                  On January 1, 2002, the Company adopted SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting and broadens the criteria for recording intangible assets separately from goodwill. SFAS No. 142, among other things, eliminates the amortization of goodwill and indefinite-lived intangible assets and requires them to be tested for impairment at least annually. During 2002, both at adoption and at the end of the year, the Company performed an impairment analysis of its goodwill. No impairment charges resulted from these analyses. Prospectively, the Company will test goodwill for impairment annually, or more frequently as warranted by events or changes in circumstances.

                                                                  For the year ended December 31, 2002, goodwill recorded in connection with acquisitions was $23.0 million. No amounts were recorded during 2001 or 2000. Changes in the carrying value of goodwill, allocated by segment, for the year ended December 31, 2002 are as follows:

                                                           
                                                           Lawn and
                                                          Garden

                                                           Household
                                                           Contract
                                                           Total
                                                          Balance at January 1, 2002 $3,478 $2,079 $59 $5,616
                                                          Goodwill acquired during the year  17,668  4,417  911  22,996
                                                            
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2002 $21,146 $6,496 $970 $28,612
                                                            
                                                           
                                                           
                                                           

                                                          F-18


                                                                  As prescribed by SFAS No. 142, prior period operating results were not restated. However, a reconciliation follows which reflects net income as reported by the Company and adjusted to reflect the impact of SFAS No. 142, as if it had been effective for the periods presented:

                                                           
                                                           Years Ended December 31,
                                                           
                                                           2001
                                                           2000
                                                          Net income, as reported $6,726 $1,359
                                                          Amortization of goodwill, net of tax  46  46
                                                            
                                                           
                                                          Net income, as adjusted $6,772 $1,405
                                                            
                                                           

                                                                  Intangible assets include patents, trade names and other intangible assets, which are valued at acquisition through independent appraisals where material, or using other valuation methods. Patents, trade names and other intangible assets are amortized using the straight-line method over periods ranging from 25 to 40 years. The useful lives of intangible assets were not revised as a result of the adoption of SFAS No. 142.

                                                                  As described in Note 3, on May 9, 2002, a wholly owned subsidiary of the Company completed a merger with and into Schultz. The purchase price included cash payments of $38.3 million, including related acquisition costs of $5.0 million, issuance of 600,000 shares of Class A voting common stock valued at $3.0 million and issuance of 600,000 shares of Class B nonvoting common stock valued at $3.0 million and the assumption of $20.6 million of outstanding debt. The Company has preliminarily allocated 50% of the purchase price in excess of the fair value of net assets acquired to intangible assets and 50% to goodwill. The acquired intangible assets are being amortized over 25 to 40 years.

                                                                  Also as described in Note 3, on December 6, 2002, a wholly owned subsidiary of the Company completed the acquisition of WPC Brands. The purchase price was $19.5 million in cash. The Company has preliminarily allocated 75% of the purchase price in excess of the fair value of net assets acquired to intangible assets and 25% to goodwill. The acquired intangible assets are being amortized over 25 to 40 years.

                                                                  As described in Note 4, on December 17, 2001, the Company acquired the Vigoro, Sta-Green and Bandini brand names, as well as licensing rights to the Best line of fertilizer products from Pursell for $37.5 million. The acquired brand names and licensing rights are being amortized over 40 years.

                                                                  For the years ended December 31, 2002, 2001 and 2000, aggregate amortization expense related to intangible assets was $2.9 million, $0.2 million and $0.2 million, respectively. The following table presents estimated amortization expense for intangible assets during each of the next five years:

                                                          Years Ended
                                                          December 31,

                                                           Amount
                                                          2003 $3,175
                                                          2004  3,175
                                                          2005  3,175
                                                          2006  3,175
                                                          2007  1,850

                                                          F-19


                                                          Note 8—Other Assets

                                                                  Other assets consist of the following:

                                                           
                                                           December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           
                                                          Deferred financing fees $22,432 $18,067 
                                                          Accumulated amortization  (10,382) (7,102)
                                                            
                                                           
                                                           
                                                           Deferred financing fees, net  12,050  10,965 
                                                            
                                                           
                                                           
                                                          Other  975  872 
                                                            
                                                           
                                                           
                                                           Total other assets, net $13,025 $11,837 
                                                            
                                                           
                                                           

                                                          Note 9—Accrued Expenses

                                                                  Accrued expenses consist of the following:

                                                           
                                                           December 31,
                                                           
                                                           2002
                                                           2001
                                                          Advertising and promotions $16,401 $12,125
                                                          Facilities rationalization  1,563  3,500
                                                          Dursban related expenses    82
                                                          Interest  3,777  3,763
                                                          Cash overdraft  1,506  7,126
                                                          Noncompete agreement  1,770  1,060
                                                          Preferred stock dividends  9,492  2,612
                                                          Salaries and benefits  4,357  1,983
                                                          Severance costs  869  1,679
                                                          Other  5,486  76
                                                            
                                                           
                                                           Total accrued expenses $45,221 $34,006
                                                            
                                                           

                                                          Note 10—Charge for Facilities and Organizational Rationalization

                                                                  During the fourth quarter of 2001, the Company recorded a charge of $8.5 million which included $5.6 million related to facilities and organizational rationalization which primarily affected the Company's Lawn and Garden segment results $2.7 million of inventory obsolescense recorded as cost of goods sold and $0.2 million of miscellaneous costs recorded as selling, general and administrative expense. In connection therewith, 85 employees were terminated and provided severance benefits. Approximately $3.5 million of costs associated with the facilities and organizational rationalization, which related primarily to facility exit costs and resultant duplicate rent payments in 2002, were incurred by December 31, 2002. Amounts remaining in the facilities and organizational rationalization accrual as of December 31, 2002 represent duplicate rent payments expected through May 2003 and costs associated with the restoration of leased facilities to their original condition. Such amounts are expected to be incurred by second quarter of 2003.

                                                          F-20



                                                                  The following table presents amounts charged against the facilities and organizational rationalization accrual:

                                                           
                                                           Facilities
                                                          Rationalization

                                                           Severance
                                                          Costs

                                                           Total
                                                          Costs

                                                           
                                                          Balance at January 1, 2001 $ $ $ 
                                                           Provision charged to accrual  3,500  2,050  5,550 
                                                           Charges against the accrual    (392) (392)
                                                            
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2001  3,500  1,658  5,158 
                                                           Charges against the accrual  (1,937) (1,279) (3,216)
                                                            
                                                           
                                                           
                                                           
                                                          Balance at December 31, 2002 $1,563 $379 $1,942 
                                                            
                                                           
                                                           
                                                           

                                                          Note 11—Dursban Related Expenses

                                                                  During the year ended December 31, 2000, the U.S. Environmental Protection Agency (EPA) and manufacturers of the active ingredient chlorpyrifos, including Dow AgroSciences L.L.C. which sold chlorphyrifos to the Company under the trademark "Dursban™," entered into a voluntary agreement that provided for withdrawal of virtually all residential uses of chlorpyrifos. Formulation of chlorpyrifos products intended for residential use ceased by December 1, 2000 and formulators discontinued the sale of such products to retailers after February 1, 2001. Retailers were not allowed to sell chlorpyrifos products after December 31, 2001. Accordingly, a charge of $8.0 million was recorded in September 2000 for costs associated with this agreement, including customer markdowns, inventory write-offs and related disposal costs, which primarily affected the Company's Lawn and Garden segment results. All of the Company's accrued costs associated with this agreement and additional amounts totaling under $0.1 million were incurred by December 31, 2002.

                                                                  The following table presents amounts charged against the Dursban accrual:

                                                           
                                                           2002
                                                           2001
                                                           2000
                                                           
                                                          Balance at beginning of year $82 $6,066 $ 
                                                           Provision charged to accrual      8,000 
                                                           Charges against the accrual  (82) (5,984) (1,934)
                                                            
                                                           
                                                           
                                                           
                                                          Balance at end of year $ $82 $6,066 
                                                            
                                                           
                                                           
                                                           

                                                          F-21


                                                          Note 12—Long-Term Debt

                                                                  Long-term debt, excluding capital lease obligations, consists of the following:

                                                           
                                                           December 31,
                                                           
                                                           
                                                           2002
                                                           2001
                                                           
                                                          Senior Credit Facility:       
                                                           Term Loan A $28,250 $39,205 
                                                           Term Loan B  222,465  134,488 
                                                           Revolving Credit Facility    23,450 
                                                          97/8% Series B Senior Subordinated Notes  150,000  150,000 
                                                            
                                                           
                                                           
                                                             400,715  347,143 
                                                            Less current maturities and short-term borrowings  (9,222) (28,757)
                                                            
                                                           
                                                           
                                                             Total long-term debt, net of current maturities $391,493 $318,386 
                                                            
                                                           
                                                           

                                                          Senior Credit Facility

                                                                  The Senior Credit Facility, as amended as of December 6, 2002, was provided by Bank of America, N.A. (formerly known as NationsBank, N.A.), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce and consists of (1) a $90.0 million revolving credit facility (the Revolving Credit Facility); (2) a $75.0 million term loan facility (Term Loan A); and (3) a $240.0 million term loan facility (Term Loan B). The Revolving Credit Facility and Term Loan A mature on January 20, 2005 and Term Loan B matures on January 20, 2006. The Revolving Credit Facility is subject to a clean-down period during which the aggregate amount outstanding under the Revolving Credit Facility shall not exceed $10.0 million for 30 consecutive days during the period between August 1 and November 30 in each calendar year. As of December 31, 2002, the clean-down period had been completed and no amounts were outstanding under the Revolving Credit Facility, nor were there any compensating balance requirements.

                                                                  On February 13, 2002, the Senior Credit Facility was amended to increase Term Loan B from $150.0 million to $180.0 million and provide additional liquidity and flexibility for capital expenditures subsequent to the acquisition of various fertilizer brands in December 2001. The Company incurred $1.1 million in fees related to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the Senior Credit Facility. The amendment did not change any other existing covenants of the Senior Credit Facility.

                                                                  On May 8, 2002, in connection with the Company's merger with Schultz, the Senior Credit Facility was amended to increase Term Loan B from $180.0 million to $215.0 million, increase the Revolving Credit Facility from $80.0 million to $90.0 million and provide additional flexibility for capital expenditures. The Company incurred $2.2 million in fees related to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the Senior Credit Facility. The amendment did not change any other existing covenants of the Senior Credit Facility.

                                                                  On December 6, 2002, in connection with the Company's acquisition of WPC Brands, the Senior Credit Facility was amended to increase Term Loan B from $215.0 million to $240.0 million and provide additional flexibility for capital expenditures. The Company incurred $1.1 million in fees related

                                                          F-22



                                                          to the amendment which were recorded as deferred financing fees and are being amortized over the remaining term of the Senior Credit Facility. The amendment did not change any other existing covenants of the Senior Credit Facility.

                                                                  The principal amount of Term Loan A is to be repaid in 24 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2005. The principal amount of Term Loan B is to be repaid in 28 consecutive quarterly installments commencing June 30, 1999 with a final installment due January 20, 2006.

                                                                  The Senior Credit Facility agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants place restrictions on, among other things, levels of investments, indebtedness, insurance, capital expenditures and dividend payments. The financial covenants require the maintenance of certain financial ratios at defined levels. As of and during the years ended December 31, 2002 and 2001, the Company was in compliance with all covenants. While the Company does not anticipate an event of non-compliance in the foreseeable future, the effect of non-compliance would require the Company to request a waiver or an amendment to the Senior Credit Facility. Amending the Senior Credit Facility could result in changes to the Company's borrowing capacity or its effective interest rates. Under the agreements, interest rates on the Revolving Credit Facility, Term Loan A and Term Loan B range from 1.50% to 4.00% above LIBOR, depending on certain financial ratios. LIBOR was 1.38% as of December 31, 2002 and 1.88% as of December 31, 2001. Unused commitments under the revolving credit facility are subject to a 0.5% annual commitment fee. The interest rate of Term Loan A was 4.67% and 5.43% as of December 31, 2002 and 2001, respectively. The interest rate of Term Loan B was 5.42% and 5.93% as of December 31, 2002 and 2001, respectively.

                                                                  The Senior Credit Facility may be prepaid in whole or in part at any time without premium or penalty. During the year ended December 31, 2002, the Company made principal payments of $11.0 million on Term Loan A and $2.0 million on Term Loan B, which included optional principal prepayments of $6.3 million on Term Loan A and $1.1 million on Term Loan B. During the year ended December 31, 2001, the Company made principal payments of $9.2 million on Term Loan A and $1.4 million on Term Loan B, which included optional principal prepayments of $4.1 million on Term Loan A and $0.7 million on Term Loan B. The optional payments were made to remain two quarterly payments ahead of the regular payment schedule. According to the Senior Credit Facility agreement, each prepayment on Term Loan A and Term Loan B can be applied to the next principal repayment installments. Management intends to pay a full year of principal installments in 2003 in accordance with the terms of the Senior Credit Facility.

                                                                  The Senior Credit Facility is secured by substantially all of the properties and assets of the Company and its current and future domestic subsidiaries. The borrowings under the Senior Credit Facility are fully and unconditionally guaranteed on a joint and several basis by each of the Company's current subsidiaries and future subsidiaries that may be formed by the Company.

                                                                  The carrying amount of the Company's obligation under the Senior Credit Facility approximates fair value because the interest rates are based on floating interest rates identified by reference to market rates.

                                                          F-23



                                                          Senior Subordinated Notes

                                                                  In November 1999, the Company issued $150.0 million in aggregate principal amount of 97/8% Series B senior subordinated notes (the Senior Subordinated Notes) due April 1, 2009. Interest accrues at a rate of 97/8% per annum, payable semi-annually on April 1 and October 1.

                                                                  The Company's indenture governing the Senior Subordinated Notes contain a number of significant covenants that could adversely impact the Company's business. In particular, the indenture of the Senior Subordinated Notes limit the Company's ability to:

                                                            pay dividends or make other distributions;

                                                            make certain investments or acquisitions;

                                                            dispose of assets or merge;

                                                            incur additional debt;

                                                            issue equity; and

                                                            pledge assets.

                                                                  Furthermore, in accordance with the indenture governing the Senior Subordinated Notes, the Company is required to maintain specified financial ratios and meet financial tests. The ability to comply with these provisions may be affected by events beyond the Company's control. The breach of any of these covenants will result in a default under the applicable debt agreement or instrument and could trigger acceleration of the debt under the applicable agreement. Any default under the Company's indenture governing the Senior Subordinated Notes might adversely affect the Company's growth, financial condition and results of operations and the ability to make payments on the Senior Subordinated Notes.

                                                                  The fair value of the Senior Subordinated Notes was $151.5 million and $141.0 million as of December 31, 2002 and 2001, respectively, based on their quoted market price on such dates.

                                                                  Aggregate future principal payments of long-term debt, excluding capital lease obligation, as of December 31, 2002 are as follows:

                                                          Years Ended December 31,

                                                           Amount
                                                          2003 $9,222
                                                          2004  18,444
                                                          2005  168,439
                                                          2006  54,610
                                                          2007  
                                                          Thereafter  150,000
                                                            
                                                            $400,715
                                                            

                                                          Note 13—Commitments

                                                                  The Company leases several of its operating facilities from Rex Realty, Inc., a company owned by stockholders and operated by a former executive and past member of the Board of Directors of the

                                                          F-24



                                                          Company. The operating leases expire at various dates through December 31, 2010. The Company has options to terminate the leases on an annual basis by giving advance notice of at least one year. As of December 31, 2002, notice had been given on one such lease. The Company leases a portion of its operating facilities from the same company under a sublease agreement expiring on December 31, 2005 with minimum annual rentals of $0.7 million. The Company has two five-year options to renew this lease, beginning January 1, 2006. During the years ended December 31, 2002, 2001 and 2000, rent expense under these leases was $2.3 million, $2.3 million and $2.2 million, respectively.

                                                                  The Company is obligated under additional operating leases for other operations and the use of warehouse space. The leases expire at various dates through December 31, 2015. Five of the leases provide for as many as five options to renew for five years each. During the years ended December 31, 2002, 2001 and 2000, aggregate rent expense under these leases was $3.8 million, $5.1 million and $5.0 million, respectively.

                                                                  In March 2000, the Company entered into a capital lease agreement for $5.3 million for its aircraft. The Company is obligated to make monthly payments of $0.1 million, with a balloon payment of $3.2 million in February 2005. The Company has the option of purchasing the aircraft following the expiration of the lease agreement for a nominal amount.

                                                                  The following table presents future minimum payments due under operating and capital leases as of December 31, 2002:

                                                           
                                                           Operating Leases
                                                            
                                                            
                                                          Years Ended December 31,

                                                           Capital
                                                          Lease

                                                            
                                                           Affiliate
                                                           Other
                                                           Total
                                                          2003 $1,726 $7,146 $818 $9,690
                                                          2004  1,766  6,348  818  8,932
                                                          2005  1,806  5,492  3,343  10,641
                                                          2006  1,847  4,307    6,154
                                                          2007  1,887  3,525    5,412
                                                          Thereafter  10,241  16,899    27,140
                                                            
                                                           
                                                           
                                                           
                                                           Total minimum lease payments $19,273 $43,717  4,979 $67,969
                                                            
                                                           
                                                              
                                                           Less amount representing interest        (758)  
                                                                  
                                                             
                                                            Present value of net minimum lease payments, including current portion of $443       $4,221   
                                                                  
                                                             

                                                          Note 14—Contingencies

                                                                  In the normal course of business, the Company is a party to certain guarantees and financial instruments with off-balance sheet risk, such as standby letters of credit and indemnifications, which are not reflected in the accompanying consolidated balance sheets. At December 31, 2002, the Company had $1.9 million in standby letters of credit pledged as collateral to support the lease of its primary distribution facility in St. Louis, a United States customs bond, certain product purchases and various workers' compensation obligations. These agreements mature at varying dates through October 2003 and may be renewed as circumstances warrant. Such financial instruments are valued based on the amount of exposure under the instruments and the likelihood of performance being required. In the

                                                          F-25



                                                          Company's past experience, no claims have been made against these financial instruments nor does management expect any losses to result from them.

                                                                  The Company is the lessee under a number of equipment and property leases, as described above. It is common in such commercial lease transactions for the Company to agree to indemnify the lessor for the value of the property or equipment leased should it be damaged during the course of the Company's operations. The Company expects that any losses that may occur with respect to the leased property would be covered by insurance, subject to deductible amounts.

                                                                  The Company has entered into certain derivative hedging instruments and other purchase commitments to purchase granular urea during its peak production season in 2003. See Note 16 for information regarding these commitments.

                                                                  The Company is involved from time to time in routine legal matters and other claims incidental to its business. When it appears probable in management's judgment that the Company will incur monetary damages or other costs in connection with such claims and proceedings, and such costs can be reasonably estimated, liabilities are recorded in the consolidated financial statements and charges are recorded against earnings. Management believes that it is remote the resolution of such routine matters and other incidental claims, taking into account established reserves and insurance, will have a material adverse impact on the Company's consolidated financial position, results of operations or liquidity.

                                                          Note 15—Stockholders' Equity

                                                                  In connection with its merger with Schultz in May 2002, the Board of Directors adopted resolutions, which were approved by the Company's stockholders, to amend the Company's Certificate of Incorporation to increase the Company's total authorized Class A voting common stock from 37,600,000 shares to 43,600,000 shares and increase the Company's total authorized Class B nonvoting common stock from 37,600,000 shares to 43,600,000 shares. In addition, as part of the purchase price, the Company issued 600,000 shares of Class A voting common stock valued at $3.0 million and 600,000 shares of Class B nonvoting common stock valued at $3.0 million. In addition, to raise equity to partially fund the merger, the Company issued 1,690,000 shares of Class A voting common stock to UIC Holdings, L.L.C. for $8.5 million and 1,690,000 shares of Class B nonvoting common stock to UIC Holdings, L.L.C. for $8.5 million.

                                                                  In connection with its transaction with Bayer in June 2002, the Company issued 3,072,000 shares of Class A voting common stock valued at $15.4 million and 3,072,000 shares of Class B nonvoting common stock valued at $15.4 million and recorded $0.4 million of related issuance costs.

                                                                  In connection with the Company's December 2001 transaction with Pursell, the Board of Directors adopted resolutions, which were approved by the Company's stockholders, to amend the Company's Certificate of Incorporation to:

                                                            Authorize issuance of 22,600 shares of $0.01 par value Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $22.0 million. Dividends accrue at 15% of liquidation value which equals $1,000 per share. Dividends, to the extent not paid on December 31 of each year, are cumulative. As of December 31, 2002 and 2001, 37,600 shares of preferred stock were outstanding and accrued dividends were $9.5 million and $2.6 million, respectively.

                                                          F-26


                                                              Increase the Company's total authorized Class A voting common stock from 34,100,000 to 37,600,000 shares to accommodate the granting of stock purchase warrants to UIC Holdings, L.L.C., which received a 10-year warrant to purchase up to 3,150,000 shares of Class A voting common stock for $3.25 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method. These stock purchase warrants were issued in conjunction with the preferred stock.

                                                              Increase the Company's total authorized Class B nonvoting common stock from 34,100,000 to 37,600,000 shares to accommodate the granting of stock purchase warrants to UIC Holdings, L.L.C., which received a 10-year warrant to purchase up to 3,150,000 shares of Class B nonvoting common stock for $3.25 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method. These stock purchase warrants were issued in conjunction with the preferred stock.

                                                                    The Company valued the 6,300,000 warrants issued above at $1.35 per warrant using the Black-Sholes option pricing model at the date of grant. Accordingly, $8.5 million of the proceeds received from the preferred stock offering were allocated to the warrants.

                                                                    In November 2000, the Board of Directors adopted resolutions, which were approved by the Company's stockholders, to amend the Company's Certificate of Incorporation to:

                                                              Authorize issuance of 15,000 shares of $0.01 par value Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $15.0 million. Dividends accrue at 15% of liquidation value which equals $1,000 per share. Dividends, to the extent not paid on December 31 of each year, are cumulative.

                                                              Increase the Company's total authorized Class A voting common stock from 32,500,000 to 34,100,000 shares to accommodate the granting of stock purchase warrants to UIC Holdings, L.L.C., which received a 10-year warrant to purchase up to 1,600,000 shares of Class A voting common stock for $2.00 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method. These stock purchase warrants were issued in conjunction with the preferred stock.

                                                              Increase the Company's total authorized Class B nonvoting common stock from 32,500,000 to 34,100,000 shares to accommodate the granting of stock purchase warrants to UIC Holdings, L.L.C., which received a 10-year warrant to purchase up to 1,600,000 shares of Class B nonvoting common stock for $2.00 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method. These stock purchase warrants were issued in conjunction with the preferred stock.

                                                                    The Company valued the 3,200,000 warrants issued at $0.87 per warrant using the Black-Sholes option pricing model at the date of grant. Accordingly, $2.8 million of the proceeds received from the preferred stock offering were allocated to the warrants.

                                                            Note 16—Accounting for Derivative Instruments and Hedging Activities

                                                                    In the normal course of business, the Company is exposed to fluctuations in interest rates and raw materials prices. The Company has established policies and procedures that govern the management of these exposures through the use of derivative hedging instruments, including swap agreements. The

                                                            F-27



                                                            Company's objective in managing its exposure to such fluctuations is to decrease the volatility of earnings and cash flows associated with changes in interest rates and certain raw materials prices. To achieve this objective, the Company periodically enters into swap agreements with values that change in the opposite direction of anticipated cash flows. Derivative instruments related to forecasted transactions are considered to hedge future cash flows, and the effective portion of any gains or losses is included in accumulated other comprehensive income until earnings are affected by the variability of cash flows. Any remaining gain or loss is recognized currently in earnings.

                                                                    During the first half of each year, the price of granular urea, a critical raw material component used in the production of fertilizer, tends to increase significantly in correlation with natural gas prices. The costs of granular urea have generally, but not always, declined during the second half of the year. As of December 31, 2002, the Company had hedged nearly 50%, and had purchase agreements to effectively fix an additional 23%, of its 2003 urea purchases. The average contract price of the Company's derivative hedging instruments as of December 31, 2002, intended to fix the price of forecasted urea prices through April 2003, was approximately $135 per ton. The average purchase price of the Company's purchase agreements as of December 31, 2002 was approximately $130 per ton. While management expects these instruments and agreements to manage the Company's exposure to such price fluctuations, no assurance can be provided that the instruments will be effective in fully mitigating exposure to these risks, nor can assurance be provided that the Company will be successful in passing pricing increases on to its customers.

                                                                    The Company has formally documented, designated and assessed the effectiveness of transactions that receive hedge accounting treatment. The cash flows of the derivative instruments are expected to be highly effective in achieving offsetting cash flows attributable to fluctuations in the cash flows of the hedged risk. Changes in the fair value of agreements designated as derivative hedging instruments are reported as either an asset or liability in the accompanying consolidated balance sheets with the associated unrealized gains or losses reflected in accumulated other comprehensive income. As of December 31, 2002 and 2001, unrealized losses of less than $0.1 million and $0.5 million, respectively, related to derivative instruments designated as cash flow hedges were recorded in accumulated other comprehensive income. Such instruments at December 31, 2002 represent hedges on forecasted purchases of raw materials during the first half of 2003 and are scheduled to mature by May 2003. The amounts are subsequently reclassified into cost of goods sold in the same period in which the underlying hedged transactions affect earnings.

                                                                    If it becomes probable that a forecasted transaction will no longer occur, any gains or losses in accumulated other comprehensive income will be recognized in earnings. The Company has not incurred any gains or losses for hedge ineffectiveness or due to excluding a portion of the value from measuring effectiveness. The Company does not enter into derivatives or other hedging arrangements for trading or speculative purposes.

                                                            F-28



                                                                    The following table summarizes information about the Company's derivative hedging instruments and related gains (losses) as of December 31, 2002 (amounts not in thousands):

                                                            Number of
                                                            Contracts

                                                             Maturity Date
                                                             Notional
                                                            Amount
                                                            in Tons

                                                             Weighted
                                                            Average
                                                            Contract
                                                            Price

                                                             Contract
                                                            Value Upon
                                                            Effective
                                                            Contract Date

                                                             Contract
                                                            Value at
                                                            December 31,
                                                            2002

                                                             Gain (Loss) at
                                                            December 31,
                                                            2002

                                                             
                                                            3 January 30, 2003 14,500 $133.00 $1,928,500 $1,916,465 $(12,035)
                                                            3 February 28, 2003 15,000  135.00  2,025,000  2,010,000  (15,000)
                                                            2 March 28, 2003 10,000  135.50  1,355,000  1,353,300  (1,700)
                                                            1 April 24, 2003 5,000  137.00  685,000  681,650  (3,350)

                                                               
                                                                
                                                             
                                                             
                                                             
                                                            9   44,500    $5,993,500 $5,961,415 $(32,085)

                                                               
                                                                
                                                             
                                                             
                                                             

                                                                    The following table summarizes information about the Company's purchase commitments of granular urea as of December 31, 2002 (amounts not in thousands):

                                                            Number of
                                                            Commitments

                                                             Expected
                                                            Purchase Month

                                                             Commitment
                                                            Amount
                                                            in Tons

                                                             Weighted
                                                            Average
                                                            Purchase
                                                            Price

                                                             Value of
                                                            Purchase
                                                            Commitment on
                                                            Commitment Date

                                                            3 January 2003 18,750 $126.93 $2,380,000
                                                            2 February 2003 18,500  128.20  2,472,550

                                                               
                                                                
                                                            5   37,250    $4,852,550

                                                               
                                                                

                                                                    In April 2001, the Company entered into two interest rate swaps that fixed the interest rate as of April 30, 2001 for $75.0 million in variable rate debt under the Senior Credit Facility. The interest rate swaps settled on April 30, 2002 and a derivative hedging loss of $0.5 million was reclassified from accumulated other comprehensive income into interest expense.

                                                            Note 17—Fair Value of Financial Instruments

                                                                    The Company has estimated the fair value of its financial instruments as of December 31, 2002 and 2001 using available market information or other appropriate valuation methods. Considerable judgment, however, is required in interpreting data to develop estimates of fair value. Accordingly, the estimates presented in the accompanying consolidated financial statements are not necessarily indicative of the amounts the Company would realize in a current market exchange.

                                                                    The carrying amounts of cash, accounts receivable, accounts payable and other current assets and liabilities approximate fair value because of the short maturity of those instruments. The Company's Senior Credit Facility bears interest at current market rates and, thus, carrying value approximates fair value as of December 31, 2002 and 2001. The Company is exposed to interest rate volatility with respect to the variable interest rates of this instrument. The estimated fair values of the Company's Senior Subordinated Notes as of December 31, 2002 and 2001 of $151.5 million and $141.0 million, respectively, are based on quoted market prices.

                                                            F-29


                                                            Note 18—Segment Information

                                                                    During the third quarter of 2002, the Company began reporting its operating results using three reportable segments: Lawn and Garden, Household and Contract. Segments were established primarily by product type which represents the basis upon which management, including the CEO who is the chief operating decision maker of the Company, reviews and assesses the Company's financial performance. The Lawn and Garden segment primarily consists of dry, granular slow-release lawn fertilizers, lawn fertilizer combination and lawn control products, herbicides, water-soluble and controlled-release garden and indoor plant foods, plant care products, potting soils and other growing media products and insecticide products. Products are marketed to mass merchandisers, home improvement centers, hardware chains, nurseries and garden centers. This segment includes, among others, the Company's Spectracide, Garden Safe, Schultz, Vigoro, Sta-Green, Bandini, Real-Kill, and No-Pest brands.

                                                                    The Household segment represents household insecticides and insect repellents that allow consumers to achieve and maintain a pest-free household and repel insects. The Household segment includes the Company's Hot Shot, Cutter and Repel brands, as well as a number of private label and other products.

                                                                    The Contract segment represents mainly non-core products, some of which are private label, and includes various compounds and chemicals such as, among others, charcoal water purification tablets, first-aid kits, barbeque sauce, fish attractant, cleaning solutions and automotive products.

                                                                    The following tables present selected quarterly financial segment information in accordance with SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," for the years ended December 31, 2002, 2001 and 2000. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 2, as applicable. The

                                                            F-30



                                                            segment financial information presented includes comparative periods prepared on a basis consistent with the current year presentation.

                                                             
                                                             Year Ended December 31,
                                                             
                                                             2002
                                                             2001
                                                             2000
                                                            Net sales:         
                                                             Lawn and Garden $352,269 $169,267 $177,981
                                                             Household  108,752  101,186  82,018
                                                             Contract  18,969  2,891  5,795
                                                              
                                                             
                                                             
                                                              Total net sales $479,990 $273,344 $265,794
                                                              
                                                             
                                                             
                                                            Operating income (loss):         
                                                             Lawn and Garden $38,064 $24,637 $24,309
                                                             Household  23,159  20,280  17,814
                                                             Contract  (39) (183) 343
                                                              
                                                             
                                                             
                                                              Total operating income $61,184 $44,734 $42,466
                                                              
                                                             
                                                             
                                                            Operating margin:         
                                                             Lawn and Garden  10.8%  14.6%  13.7%
                                                             Household  21.3%  20.0%  21.7%
                                                             Contract  -0.2%  -6.3%  5.9%
                                                              Total operating margin  12.7%  16.4%  16.0%

                                                                    Operating income represents earnings before net interest expense and income tax expense. Operating income is the measure of profitability used by management to assess the Company's financial performance. Operating margin represents operating income as a percentage of net sales.

                                                                    The majority of the Company's sales are conducted with customers in the United States. The Company's international sales comprise less than 1% of total net sales. In addition, no single item comprises more than 10% of the Company's net sales. For the years ended December 31, 2002, 2001 and 2000, the Company's three largest customers were responsible for 74%, 64% and 59% of net sales, respectively. As of December 31, 2002 and 2001, these three customers were responsible for 62% and 60% of accounts receivable, respectively.

                                                                    As the Company's assets support production across all segments, they are managed on an entity-wide basis at the corporate level and are not recorded or analyzed by segment. Substantially all of the Company's assets are located in the United States.

                                                            Note 19—Stock-Based Compensation

                                                                    The Company grants stock options to eligible employees, officers and directors pursuant to the 2001 Stock Option Plan, which is administered by the Compensation Committee of the Company's Board of Directors. The 2001 Stock Option Plan superseded the 1999 Stock Option Plan which was terminated during 2001. Upon termination, all 3,096,000 issued and outstanding options under the 1999 Stock Option Plan were forfeited. The following table presents a summary of activity for options of the

                                                            F-31



                                                            1999 Stock Option Plan prior to and including the forfeiture of all outstanding options (amounts not in thousands):

                                                             
                                                             Years Ended December 31,
                                                             
                                                             2001
                                                             2000
                                                             
                                                             Number of
                                                            Options

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                             Number of
                                                            Options

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                            Options outstanding, beginning of year 3,096,500 $5.00 2,955,000 $5.00
                                                            Granted    527,500  5.00
                                                            Exercised      
                                                            Forfeited (3,096,500) 5.00 (386,000) 5.00
                                                              
                                                             
                                                             
                                                             
                                                            Options outstanding, end of year  $ 3,096,500 $5.00
                                                              
                                                             
                                                             
                                                             

                                                                    The 2001 Stock Option Plan provides for an aggregate of 5,800,000 shares of the Company's common stock that may be issued in the form of Class A voting common stock, Class B nonvoting common stock or a combination thereof. The options to purchase shares of common stock vest over a period no longer than 10 years. If certain performance targets are met, the vesting period could be shortened to four years. Options are generally granted with an exercise price equal to or greater than the estimated fair value of the Company's common stock on the grant date and expire ten years thereafter. After termination of employment, unvested options are forfeited immediately, within thirty days or within one year, as provided under the 2001 Stock Option Plan.

                                                                    The following table presents a summary of activity for options of the 2001 Stock Option Plan (amounts not in thousands):

                                                             
                                                             Years Ended December 31,
                                                             
                                                             2002
                                                             2001
                                                             
                                                             Number of
                                                            Options

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                             Number of
                                                            Options

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                            Options outstanding, beginning of year  5,036,000 $2.39   $
                                                            Granted  939,000  4.56  5,157,000  2.38
                                                            Exercised        
                                                            Forfeited  (215,000) 2.09  (121,000) 2.00
                                                              
                                                             
                                                             
                                                             
                                                            Options outstanding, end of year  5,760,000 $2.75  5,036,000 $2.39
                                                              
                                                             
                                                             
                                                             
                                                            Weighted average remaining contractual life (years)  8.35     9.15   
                                                              
                                                                
                                                               
                                                            Options exercisable, end of year  1,556,032 $2.54  278,710 $2.00
                                                              
                                                             
                                                             
                                                             
                                                            Weighted average fair value of options granted $1.40    $0.72   
                                                              
                                                                
                                                               

                                                            F-32


                                                                    The following table presents information about stock options outstanding and exercisable under the 2001 Stock Option Plan as of December 31, 2002 (amounts not in thousands):

                                                             
                                                             Options Outstanding
                                                             Options Exercisable
                                                            Range of
                                                            Exercise Prices

                                                             Number
                                                            Outstanding

                                                             Weighted
                                                            Average
                                                            Remaining
                                                            Contractual
                                                            Life (Years)

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                             Number
                                                            Exercisable

                                                             Weighted
                                                            Average
                                                            Remaining
                                                            Contractual
                                                            Life (Years)

                                                             Weighted
                                                            Average
                                                            Exercise
                                                            Price

                                                            $2.00 to $3.25 4,657,500 8.20 $2.26 1,363,949 8.17 $2.21
                                                            $4.00 to $5.00 1,102,500 8.99  4.82 192,083 9.02  4.83
                                                              
                                                                  
                                                                 
                                                              5,760,000 8.35  2.75 1,556,032 8.27  2.54
                                                              
                                                                  
                                                                 

                                                                    As of December 31, 2002, 40,000 shares were available for future grants and 1,566,032 shares were vested and exercisable under the 2001 Stock Option Plan.

                                                                    SFAS No. 123 requires pro forma disclosure of the impact on earnings as if the Company determined stock-based compensation expense using the fair value method. The fair value of options granted is estimated on the date of grant using the Black-Scholes option-pricing model and the following weighted average assumptions for the years ended December 31, 2002 and 2001: expected volatility of zero, risk-free interest rate of 4.61% and 5.35%, respectively, dividend yield of zero and an expected life of ten years. The Company's employee stock options have characteristics different than those of traded options and changes in the input assumptions can materially affect the estimate of fair value. In addition, pro forma amounts are for disclosure purposes only and may not be representative of pro forma net income in the future. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the related vesting periods.

                                                            Note 20—Employee Benefit Plans

                                                                    The Company has a 401(k) savings plan for substantially all of its employees with six months or more of continuous service. The 401(k) plan allows participants to defer a portion of eligible compensation on a tax-deferred basis. Under provisions of the plan, the Company matches 50% of each employee's contributions up to 6% of gross earnings. The matching amount generally increases to 75% of such employee's contributions up to 6% of gross earnings after ten years of service. For the years ended December 31, 2002, 2001 and 2000, the matching contribution amounted to $0.7 million, $0.6 million and $0.6 million, respectively.

                                                                    The Company also sponsors two deferred compensation plans for certain members of its senior management team. The plans are administered by the Compensation Committee of the Board of Directors. The plans provide for the establishment of grantor trusts for the purpose of accumulating funds to purchase shares of the Company's common stock for the benefit of the plan participants. One plan allows participants to contribute an unlimited amount of earnings to the plan while the other provides for contributions of up to 20% of a participant's annual bonus. The Company does not provide matching contributions to these plans and has the right, under certain circumstances, to repurchase shares held in the grantor trusts. As of December 31, 2002 and 2001, the common stock held in the grantor trusts was valued at $2.7 million.

                                                            F-33



                                                            Note 21—Income Taxes

                                                                    Income tax expense consists of the following:

                                                             
                                                             Years Ended December 31,
                                                             
                                                             
                                                             2002
                                                             2001
                                                             2000
                                                             
                                                            Current:          
                                                             Federal $ $ $ 
                                                             State and local       
                                                              
                                                             
                                                             
                                                             
                                                              Total current       
                                                              
                                                             
                                                             
                                                             
                                                            Deferred:          
                                                             Federal  9,252  3,426  1,078 
                                                             State and local  2,321  390  293 
                                                             Valuation allowance reduction  (8,135) (1,649) (1,237)
                                                              
                                                             
                                                             
                                                             
                                                             Total deferred  3,438  2,167  134 
                                                              
                                                             
                                                             
                                                             
                                                             Total income tax expense $3,438 $2,167 $134 
                                                              
                                                             
                                                             
                                                             

                                                                    The following table presents a reconciliation of income tax expense computed using the federal statutory rate of 35% and income tax expense:

                                                             
                                                             Years Ended December 31,
                                                             
                                                             
                                                             2002
                                                             2001
                                                             2000
                                                             
                                                            Computed "expected" tax expense $10,071 $3,113 $523 
                                                            Tax effect of:          
                                                             Nondeductible charitable contributions  57     
                                                             Nondeductible meals and entertainment expenses  84  62  62 
                                                             Valuation allowance reduction  (8,135) (1,649) (1,237)
                                                             State and local taxes, net of federal tax benefit  845  641  786 
                                                             Other, net  516     
                                                              
                                                             
                                                             
                                                             
                                                              Total income tax expense $3,438 $2,167 $134 
                                                              
                                                             
                                                             
                                                             

                                                            F-34


                                                                    The following table presents the components of the net deferred tax asset:

                                                             
                                                             December 31,
                                                             
                                                             
                                                             2002
                                                             2001
                                                             
                                                            Deferred tax assets:       
                                                             Goodwill $172,355 $188,294 
                                                             NOL carryforward  35,920  35,489 
                                                             Co-op advertising  3,566  2,713 
                                                             Inventories  1,547   
                                                             Deferred compensation  1,026  1,027 
                                                             Facilities and organizational rationalization  511  3,081 
                                                             Other, net  2,675  799 
                                                              
                                                             
                                                             
                                                             Gross deferred tax assets  217,600  231,403 
                                                              
                                                             
                                                             
                                                             Valuation allowance  (104,137) (112,272)
                                                              
                                                             
                                                             
                                                            Total deferred tax assets  113,463  119,131 
                                                              
                                                             
                                                             
                                                            Deferred tax liabilities:       
                                                             Equipment and leasehold improvements  (3,013) (3,369)
                                                             Other, net    (1,982)
                                                              
                                                             
                                                             
                                                             Net deferred tax asset $110,450 $113,780 
                                                              
                                                             
                                                             

                                                                    The temporary difference for goodwill represents the step-up in tax basis due to the Company's recapitalization in 1999 while maintaining historical basis for financial reporting purposes. This benefit is available to be utilized through 2014.

                                                                    Based on historical levels of income and the length of time required to utilize its deferred tax assets, the Company originally established a 50% valuation allowance against the tax deductible goodwill deduction that was created in 1999 in connection with the recapitalization of the Company. While the Company experienced an increase in taxable income during 2002 for financial reporting purposes, it continued to experience losses for income tax purposes as it did not generate enough taxable income to utilize the deduction for goodwill. Therefore, despite the increase in taxable income for financial reporting purposes, sufficient evidence does not yet exist for management to conclude it more likely than not that the entire gross amount of the deferred tax assets will be realized in the foreseeable future.

                                                                    The valuation allowance was $104.1 million as of December 31, 2002. For the years ended December 31, 2002, 2001 and 2000, the valuation allowance was reduced by $8.1 million, $1.6 million and $1.2 million, respectively.

                                                                    In addition, as of December 31, 2002, the Company had a net operating loss carryforwards of $94.5 million. If not utilized, the net operating loss carryforwards will begin to expire in 2019.

                                                            F-35



                                                                    The following table presents the current and non-current components of the net deferred tax asset:

                                                             
                                                             December 31,
                                                             
                                                             2002
                                                             2001
                                                            Current (prepaid assets and other) $5,309 $1,275
                                                            Non-current  105,141  112,505
                                                              
                                                             
                                                              $110,450 $113,780
                                                              
                                                             

                                                            Note 22—Unaudited Quarterly Financial Information

                                                                    The following table presents selected historical quarterly financial information for the Company. This information is derived from unaudited quarterly financial statements of the Company and includes, in the opinion of management, only normal and recurring adjustments that the Company considers necessary for a fair presentation of the results for such periods.

                                                             
                                                             Year Ended December 31, 2002
                                                             
                                                             First
                                                             Second
                                                             Third
                                                             Fourth
                                                             Total
                                                            Net sales $136,391 $195,136 $100,677 $47,786 $479,990
                                                            Gross profit  49,228  72,825  35,468  16,825  174,346
                                                            Operating income (loss)  21,989  40,488  7,901  (9,194) 61,184
                                                            Net income (loss)  10,162  26,420  417  (11,663) 25,336
                                                             
                                                             Year Ended December 31, 2001
                                                             
                                                             First
                                                             Second
                                                             Third
                                                             Fourth
                                                             Total
                                                            Net sales $79,919 $114,647 $55,793 $22,985 $273,344
                                                            Gross profit  35,960  53,899  25,689  9,425  124,973
                                                            Operating income (loss)  15,896  31,778  8,719  (11,659) 44,734
                                                            Net income (loss)  4,236  15,753  221  (13,484) 6,726

                                                                    Due to the seasonal nature of the Company's business, net sales in the first and second quarters typically exceed net sales in the third and fourth quarters. In addition, during the fourth quarter of 2001, the Company recorded a $8.5 million charge as discussed in Note 10.

                                                            Note 23—Related Party Transactions

                                                            Professional Services Agreement

                                                                    The Company has a professional services agreement with THL Equity Advisors IV, L.L.C. and Thomas H. Lee Capital, L.L.C., both affiliates of the Thomas H. Lee Partners, LP, which owns UIC Holdings, L.L.C., the majority owner of the Company. The professional services agreement has a term of three years, beginning January 20, 1999, and automatically extends for successive one-year periods thereafter, unless either party gives thirty days notice prior to the end of the term. Under the terms of the agreement, THL Equity Advisors IV, L.L.C. receives $62.5 thousand per month for management and other consulting services provided to the Company and reimbursement of any related out-of-pocket expenses. During each of the years ended December 31, 2002, 2001 and 2000, the Company paid $0.75 million under this agreement, which is included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

                                                            F-36



                                                            Stockholders Agreement

                                                                    The Company has entered into a stockholders agreement with UIC Holdings, L.L.C. and certain other stockholders. Under the agreement, the Class A common stockholders are required to vote their shares of common stock for any sale or reorganization that has been approved by the Board of Directors or a majority of the stockholders. The stockholders agreement also grants the stockholders the right to effect the registration of their common stock for sale to the public, subject to certain conditions and limitations. If the Company elects to register any of its securitiesregistered under the Securities Act of 1933 as amended, the stockholders are entitled to notice of such registration, subject to certain conditions and limitations. Under the stockholders agreement, the Company is responsible to pay costs of the registration effected on behalf of the stockholders, other than underwriting discounts and commissions.

                                                            Recapitalization Agreement

                                                             The recapitalization agreement with UIC Holdings, L.L.C., which the Company entered into in connection with its recapitaization in 1999, contains customary provisions, including representations and warranties with respect to the condition and operations of the business, covenants with respect to the conduct of the business prior to the recapitalization closing date and various closing conditions, including the continued accuracy of the representations and warranties. In general, these representations and warranties expired by April 15, 2000. However, representations and warranties with respect to tax matters will survive until thirty days after the expiration of the applicable statute of limitations; representations with respect to environmental matters expired December 31, 2002. Representations and warranties regarding ownership of stock do not expire. The total consideration paid to redeem common stock is subject to adjustments based on the excess taxes of previous stockholders arising from the Company's Section 338(h)(10) election under the IRS tax code.


                                                            PROSPECTUS


                                                             Pursuant to the recapitalization agreement, and in consideration of payments received thereunder, certain former executives agreed that for a period ending on the fourth anniversary of the recapitalization closing date not to own, control, participate or engage in any line of business in which the Company is actively engaged or any line of business competitive with it anywhere in the United States and any other country in which it conducts business at the date of recapitalization closing. In addition, each of these former executives has agreed that for a period ending on the fourth anniversary of the recapitalization closing date not to contact, approach or solicit for the purpose of offering employment to or hiring any person employed by the Company during the four year period.

                                                             Pursuant to the recapitalization, the Company redeemed a portion of its common stock held by certain stockholders and UIC Holdings, L.L.C. which were purchased by certain members of senior management. In the recapitalization, certain executives collectively received an aggregate of $4.0 million in cash and an additional $2.7 million with which the officers purchased common stock through grantor trusts, which is reflected as a reduction of equity in the accompanying consolidated balance sheets.


                                                            Loans to Chief Executive OfficerPART II

                                                             On September 28, 2001, the Company entered into a loan agreement with Robert L. Caulk, the President, Chief Executive Officer and Chairman of the Board of Directors of the Company, for $0.4 million which matures on September 28, 2006 (the 2001 Loan). On March 8, 2002, the Company entered into a loan agreement with Mr. Caulk for $51.7 thousand which matures on March 8, 2007 (the 2002 Loan). The purpose for both loans was to allow Mr. Caulk to purchase shares of the Company's common and preferred stock. Each loan bears interest at LIBOR on its effective date which is

                                                            F-37



                                                            subsequently adjusted on each loan's respective anniversary date. The interest rate in effect for the 2002 Loan was 1.96% as of December 31, 2002. The interest rate in effect for the 2001 Loan was 1.81% and 2.59% as of December 31, 2002 and 2001, respectively. Interest on both loans is payable annually, based on outstanding accrued amounts on December 31 of each year. Principal payments on both loans are based on 25% of the gross amount of each annual bonus awarded to Mr. Caulk and are immediately payable, except that principal payments on the 2002 Loan are immediately payable only if all amounts due under the 2001 Loan are fully paid. Any unpaid principal and interest on both loans is due upon maturity. The outstanding principal balance for the 2001 Loan was $0.35 million and $0.4 million as of December 31, 2002 and 2001, respectively. The outstanding principal balance of the 2002 Loan was $51.7 thousand as of December 31, 2002. The loans are reflected as a reduction of equity in the accompanying consolidated balance sheets.

                                                            Leases with Stockholder and Former Executive and Member of the Board of Directors

                                                                    As further described in Note 13, the Company leases several of its operating facilities from Rex Realty, Inc., a company that is owned by stockholders who own, in the aggregate, approximately 5% of the Company's common stock and is operated by a former executive and past member of the Board of Directors.

                                                            Equity Transactions with UIC Holdings, L.L.C.

                                                                    As further described in Note 15, during the years ended December 31, 2002, 2001 and 2000, the Company issued common and preferred stock and stock purchase warrants to UIC Holdings, L.L.C. as follows:

                                                              In connection with the Schultz merger in May 2002, the Company issued 1,690,000 shares each of Class A voting and Class B nonvoting common stock to UIC Holdings, L.L.C. for $16.9 million.

                                                              In connection with the Pursell transaction in December 2001, the Company issued 22,600 shares of $0.01 par value Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $22.0 million and a 10-year warrant to purchase up to 3,150,000 shares each of the Company's Class A voting and Class B nonvoting common stock for $3.25 per share, the fair value of the Company's common stock at the time the warrants were issued as determined by the Board of Directors using a multiple of cash flows method.

                                                              In November 2000, the Company issued 15,000 shares of $0.01 par value Class A nonvoting preferred stock to UIC Holdings, L.L.C. for $1,000 per share, the fair value as determined by the Board of Directors using a multiple of cash flows method, for net cash proceeds of $15.0 million and a 10-year warrant to purchase up to 1,600,000 shares each of the Company's Class A voting and Class B nonvoting common stock for $2.00 per share, the fair value of the Company's common stock at the time the warrants were issued as determined by the Board of Directors using a multiple of cash flows method.

                                                            Note 24—Recently Issued Accounting Standards

                                                                    The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements Nos. 4, 44, and 64, Amendment of FASB Statement No. 13 and Technical Corrections." SFAS No. 145 updates, clarifies and simplifies existing

                                                            F-38




                                                            accounting pronouncements. The Company is required to adopt SFAS No. 145 during the first quarter of 2003. Adoption will not have a material impact on the consolidated financial statements of the Company. However, SFAS No. 145 could affect how the Company records certain expenses after December 31, 2002.

                                                                    In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity be recognized when the liability is incurred rather than when a company commits to such an activity and also establishes fair value as the objective for initial measurement of the liability. SFAS No. 146 will be adopted by the Company for exit or disposal activities that are initiated after December 31, 2002. Adoption will not have a material impact on the consolidated financial statements of the Company. However, SFAS No. 146 will affect how the Company recognizes exit costs after December 31, 2002.

                                                                    In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation—Transition and Disclosure—an amendment of FASB Statement No. 123." SFAS No. 148 amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Certain provisions of SFAS No. 148 are effective for fiscal years ending after December 15, 2002 and other provisions are effective for fiscal years beginning after December 15, 2002. Unless the Company elects in the future to change from the intrinsic value method to the fair value method of accounting for stock-based employee compensation, SFAS No. 148 will not have a material impact on its consolidated financial statements.

                                                                    In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45). The disclosure requirements of FIN 45 are effective for the Company's consolidated financial statements for the year ended December 31, 2002. For applicable guarantees issued after January 1, 2003, FIN 45 requires that a guarantor recognize a liability for the fair value of obligations undertaken in issuing guarantees. See Note 13 for disclosures regarding guarantees of the Company.

                                                                    In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46), which requires the consolidation of variable interest entities, as defined. FIN 46 is applicable to financial statements to be issued after 2002; however, disclosures are required currently if any variable interest entities are expected to be consolidated. The adoption of FIN 46 will not have a material effect on the Company's consolidated financial statements as the Company does not have any variable interest entities that will be consolidated as a result of FIN 46.

                                                            F-39


                                                            NOTE 25—FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS

                                                                    The Company's Senior Subordinated Notes are unconditionally and jointly and severally guaranteed by all of the Company's existing subsidiaries. The Company's existing subsidiaries are 100% owned by the Company. The condensed consolidating financial information below is presented as of and for the year ended December 31, 2002 and has been prepared in accordance with the requirements for presentation of such information. The Company did not have any subsidiaries as of or during the years ended December 31, 2001 or 2000. The information is presented in place of complete financial statements for each of the guarantor subsidiaries and is intended to provide sufficient detail to determine the nature of the aggregate financial position, results of operations and cash flows of the subsidiary guarantors.

                                                            BALANCE SHEET

                                                             
                                                             Parent
                                                             Subsidiary
                                                            Guarantors

                                                             Eliminations
                                                             Consolidated
                                                             
                                                            ASSETS             
                                                            Current assets:             
                                                             Cash and cash equivalents $10,191 $127 $ $10,318 
                                                             Accounts receivable, net  18,492  4,829    23,321 
                                                             Inventories  47,678  40,084    87,762 
                                                             Prepaid expenses and other current assets  9,544  1,806    11,350 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total current assets  85,905  46,846    132,751 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Equipment and leasehold improvements, net  26,510  7,708    34,218 
                                                            Investment in subsidiaries  22,777    (22,777)  
                                                            Intercompany assets  63,643    (63,643)  
                                                            Deferred tax asset  104,357  784    105,141 
                                                            Goodwill and intangible assets, net  47,678  53,190    100,868 
                                                            Other assets, net  11,830  1,195    13,025 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total assets $362,700 $109,723 $(86,420)$386,003 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)             
                                                            Current liabilities:             
                                                             Current maturities of long-term debt and capital lease obligation $9,665 $ $ $9,665 
                                                             Accounts payable  11,330  15,733    27,063 
                                                             Accrued expenses  39,345  5,876    45,221 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total current liabilities  60,340  21,609    81,949 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Long-term debt, net of current maturities  391,493      391,493 
                                                            Capital lease obligation, net of current maturities  3,778      3,778 
                                                            Other liabilities  3,325  1,694    5,019 
                                                            Intercompany liabilities    63,643  (63,643)  
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total liabilities  458,936  86,946  (63,643) 482,239 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Commitments and contingencies             

                                                            F-40


                                                            Stockholders' equity (deficit):             
                                                             Preferred stock         
                                                             Common stock  664      664 
                                                             Warrants and options  11,745      11,745 
                                                             Investment from parent    24,317  (24,317)  
                                                             Additional paid-in capital  210,480      210,480 
                                                             Accumulated deficit  (287,592) (1,540) 1,540  (287,592)
                                                             Common stock subscription receivable  (25,761)     (25,761)
                                                             Common stock repurchase option  (2,636)     (2,636)
                                                             Common stock held in grantor trust  (2,700)     (2,700)
                                                             Loans to executive officer  (404)     (404)
                                                             Accumulated other comprehensive income  (32)     (32)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total stockholders' equity (deficit)  (96,236) 22,777  (22,777) (96,236)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                              Total liabilities and stockholders' equity (deficit) $362,700 $109,723 $(86,420)$386,003 
                                                              
                                                             
                                                             
                                                             
                                                             

                                                            STATEMENT OF OPERATIONS

                                                             
                                                             Parent
                                                             Subsidiary
                                                            Guarantors

                                                             Eliminations
                                                             Consolidated
                                                            Net sales before promotion expense $476,297 $54,716 $(9,727)$521,286
                                                            Promotion expense  41,296      41,296
                                                              
                                                             
                                                             
                                                             
                                                            Net sales  435,001  54,716  (9,727) 479,990
                                                              
                                                             
                                                             
                                                             
                                                            Operating costs and expenses:            
                                                             Cost of goods sold  265,928  46,514  (6,798) 305,644
                                                             Selling, general and administrative expenses  105,964  10,127  (2,929) 113,162
                                                             Equity (income) loss in subsidiaries  1,540    (1,540) 
                                                              
                                                             
                                                             
                                                             
                                                             Total operating costs and expenses  373,432  56,641  (11,267) 418,806
                                                              
                                                             
                                                             
                                                             
                                                            Operating income (loss)  61,569  (1,925) 1,540  61,184
                                                            Interest expense, net  32,403  7    32,410
                                                              
                                                             
                                                             
                                                             
                                                            Income (loss) before income tax expense  29,166  (1,932) 1,540  28,774
                                                            Income tax expense (benefit)  3,830  (392)   3,438
                                                              
                                                             
                                                             
                                                             
                                                            Net income (loss) $25,336 $(1,540)$1,540 $25,336
                                                              
                                                             
                                                             
                                                             

                                                            F-41



                                                            STATEMENT OF CASH FLOWS

                                                             
                                                             Parent
                                                             Subsidiary
                                                            Guarantors

                                                             Eliminations
                                                             Consolidated
                                                             
                                                            Cash flows from operating activities:             
                                                             Net income (loss) $25,336 $(1,540)$1,540 $25,336 
                                                            Adjustments to reconcile net income (loss) to net cash flows from operating activities:             
                                                              Depreciation and amortization  7,991  2,249    10,240 
                                                              Amortization of deferred financing fees  3,280      3,280 
                                                              Deferred income tax expense  3,438      3,438 
                                                              Equity (income) loss in subsidiaries  1,540    (1,540)  
                                                            Changes in operating assets and liabilities, net of effects from acquisitions:             
                                                               Accounts receivable  12,726  23,580  (9,727) 26,579 
                                                               Inventories  (5,383) (21,309) 6,798  (19,894)
                                                               Prepaid expenses and other current assets  (3,054) (229)   (3,283)
                                                               Other assets  5,995      5,995 
                                                               Accounts payable and accrued expenses  (4,156) (2,006)   (6,162)
                                                               Facilities and organizational rationalization charge  (3,216)     (3,216)
                                                               Other operating activities, net  (7,384)   2,929  (4,455)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                                Net cash flows from operating activities  37,113  745    37,858 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Cash flows from investing activities:             
                                                              Purchases of equipment and leasehold improvements  (4,965) (5,485)   (10,450)
                                                              Payments for Schultz merger, net of cash acquired  (38,300)     (38,300)
                                                              Payments for WPC Brands acquisition, net of cash acquired  (19,500)     (19,500)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                                Net cash flows used for investing activities  (62,765) (5,485)   (68,250)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Cash flows from financing activities:             
                                                              Proceeds from additional debt  90,000      90,000 
                                                              Repayment of debt  (43,929) (20,661)   (64,590)
                                                              Proceeds from issuance of common stock  17,500      17,500 
                                                              Other financing and intercompany activities  (27,728) 25,528    (2,200)
                                                              
                                                             
                                                             
                                                             
                                                             
                                                                Net cash flows from financing activities  35,843  4,867    40,710 
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Net increase in cash and cash equivalents  10,191  127    10,318 
                                                            Cash and cash equivalents, beginning of year         
                                                              
                                                             
                                                             
                                                             
                                                             
                                                            Cash and cash equivalents, end of year $10,191 $127 $ $10,318 
                                                              
                                                             
                                                             
                                                             
                                                             

                                                            F-42


                                                            REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

                                                            Board of Directors and Stockholders of
                                                            United Industries Corporation and Subsidiaries:

                                                                    Our audits of the consolidated financial statements referred to in our report dated February 12, 2003, except for Note 25, which is as of April 29, 2003, and listed in the index appearing on page F-1 of this prospectus also included an audit of the financial statement schedule listed in the index appearing on page F-1 of this prospectus. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

                                                            /s/ PricewaterhouseCoopers LLP

                                                            St. Louis, Missouri
                                                            February 12, 2003, except for Note 25,
                                                            which is as of April 29, 2003



                                                            UNITED INDUSTRIES CORPORATION

                                                            SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

                                                            (Dollars in thousands)

                                                            Column A

                                                             Column B

                                                             Column C

                                                             Column D

                                                             Column E

                                                            Description

                                                             Balance at
                                                            Beginning of
                                                            Period

                                                             Additions
                                                             Deductions
                                                             Balance at
                                                            End of
                                                            Period

                                                            Year ended December 31, 2002:            
                                                             Allowance for doubtful accounts $1,147 $2,055 $(31)$3,171
                                                             Allowance for obsolete and slow-moving inventory  2,700  5,424  (2,283) 5,841
                                                             Valuation allowance for deferred tax assets  112,272    (8,135) 104,137
                                                             Accrued advertising and promotion expense  12,125  41,296  (37,020) 16,401

                                                            Year ended December 31, 2001:

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                             Allowance for doubtful accounts $777 $568 $(198)$1,147
                                                             Allowance for obsolete and slow-moving inventory  999  2,700  (999) 2,700
                                                             Valuation allowance for deferred tax assets  113,921    (1,649) 112,272
                                                             Accrued advertising and promotion expense  5,520  24,432  (17,827) 12,125

                                                            Year ended December 31, 2000:

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                             Allowance for doubtful accounts $60 $848 $(131)$777
                                                             Allowance for obsolete and slow-moving inventory  822  298  (121) 999
                                                             Valuation allowance for deferred tax assets  115,158    (1,237) 113,921
                                                             Accrued advertising and promotion expense  4,324  22,824  (21,628) 5,520

                                                            F-44


                                                            REPORT OF INDEPENDENT ACCOUNTANTS

                                                            To the Board of Directors and Stockholders of
                                                            Schultz Company:

                                                                    In our opinion, the accompanying consolidated balance sheet and the related statements of operations, of cash flows and of changes in stockholders' equity present fairly, in all material respects, the financial position of the Schultz Company and its subsidiary at September 30, 2001, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

                                                            /s/ PricewaterhouseCoopers LLP
                                                            June 25, 2002

                                                            F-45



                                                            SCHULTZ COMPANY

                                                            BALANCE SHEETS

                                                             
                                                             March 31,
                                                            2002

                                                             September 30,
                                                            2001

                                                             
                                                             
                                                             (Unaudited)

                                                              
                                                             
                                                            ASSETS       
                                                            Current assets:       
                                                             Cash and cash equivalents $2,428 $202,073 
                                                             Accounts receivable (less allowance for doubtful accounts of $592,630 at September 30, 2001 and $572,924 at March 31, 2002)  23,934,220  6,667,321 
                                                             Inventories  15,518,974  9,795,957 
                                                             Prepaid expenses  896,198  664,898 
                                                             Deferred income tax  294,500  221,700 
                                                              
                                                             
                                                             
                                                              Total current assets  40,646,320  17,551,949 

                                                            Equipment and leasehold improvements

                                                             

                                                             

                                                            3,493,546

                                                             

                                                             

                                                            3,461,082

                                                             
                                                            Deferred income tax    147,600 
                                                            Due from related party  346,656  977,480 
                                                            Other assets  438,088  506,967 
                                                              
                                                             
                                                             
                                                              Total assets $44,924,610 $22,645,078 
                                                              
                                                             
                                                             

                                                            LIABILITIES AND STOCKHOLDERS' EQUITY

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                            Current liabilities:       
                                                             Current maturities of long-term debt and capital lease obligations $297,283 $213,885 
                                                             Accounts payable  16,801,784  7,652,451 
                                                             Accrued expenses  5,202,037  1,822,975 
                                                              
                                                             
                                                             
                                                              Total current liabilities  22,301,104  9,689,311 

                                                            Long-term debt

                                                             

                                                             

                                                            14,538,434

                                                             

                                                             

                                                            7,381,309

                                                             
                                                            Capital lease obligations  92,241  23,042 
                                                            Deferred income tax  85,600   
                                                            Due to related party  428,119  1,018,722 
                                                              
                                                             
                                                             
                                                              Total liabilities  37,445,498  18,112,384 

                                                            Stockholders' equity:

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                             Common stock, authorized 500 shares; $100 par value: issued and outstanding 40 shares  4,000  4,000 
                                                             Additional paid-in capital  976,855  976,855 
                                                             Retained earnings  6,698,257  3,751,839 
                                                             Treasury stock (9.85 shares at cost)  (200,000) (200,000)
                                                              
                                                             
                                                             
                                                              Total stockholders' equity  7,479,112  4,532,694 
                                                              
                                                             
                                                             
                                                              Total liabilities and stockholders' equity $44,924,610 $22,645,078 
                                                              
                                                             
                                                             

                                                            See accompanying notes to financial statements.

                                                            F-46



                                                            SCHULTZ COMPANY

                                                            STATEMENTS OF OPERATIONS

                                                             
                                                             For the Six
                                                            Months Ended
                                                            March 31, 2002

                                                             Year Ended
                                                            September
                                                            2001

                                                             
                                                             (Unaudited)

                                                              
                                                            Net sales before promotion expense $48,684,930 $92,963,034
                                                            Promotion expense  759,796  1,767,704
                                                              
                                                             
                                                            Net sales  47,925,134  91,195,330
                                                              
                                                             
                                                            Operating costs and expenses:      
                                                             Cost of goods sold  35,252,009  73,612,779
                                                             Selling, general and administrative expenses  7,763,761  13,670,864
                                                              
                                                             
                                                             Total operating costs and expenses  43,015,770  87,283,643
                                                              
                                                             
                                                            Operating income  4,909,364  3,911,687
                                                            Interest expense  290,065  817,215
                                                              
                                                             
                                                            Income before provision for income taxes  4,619,299  3,094,472
                                                            Income tax expense  1,672,881  1,294,416
                                                              
                                                             
                                                            Net income $2,946,418 $1,800,056
                                                              
                                                             

                                                            See accompanying notes to financial statements.

                                                            F-47



                                                            SCHULTZ COMPANY

                                                            STATEMENTS OF CASH FLOWS

                                                             
                                                             For the
                                                            Six Months
                                                            Ended
                                                            March 31, 2002

                                                             Year Ended
                                                            September
                                                            2001

                                                             
                                                             
                                                             (Unaudited)

                                                              
                                                             
                                                            Cash flows from operating activities:       
                                                             Net income $2,946,418 $1,800,056 
                                                             Adjustments to reconcile net income to net cash provided by operating activities:       
                                                              Depreciation and amortization  610,368  1,126,344 
                                                              Loss on disposal of equipment  11  2,184 
                                                              Amortization of deferred financing fees  21,228  25,326 
                                                              Deferred income tax expense (benefit)  160,400  (87,300)
                                                              Changes in assets and liabilities:       
                                                               (Increase) in accounts receivable  (17,266,899) (872,006)
                                                               (Increase) in inventories  (5,723,017) (2,062,457)
                                                               (Increase) in prepaid expenses  (231,300) (231,760)
                                                               (Increase) in other assets  (334,431) (106,750)
                                                               Increase in accounts payable and accrued expenses  10,367,357  880,281 
                                                              
                                                             
                                                             
                                                                Net cash provided by operating activities  (9,449,865) 473,918 

                                                            Investing activities:

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                             Purchases of equipment and leasehold improvements  (609,208) (1,465,122)
                                                              
                                                             
                                                             
                                                                Net cash used for investing activities  (609,208) (1,465,122)

                                                            Financing activities:

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             

                                                             
                                                             Debt issuance costs  (353) (25,000)
                                                             Borrowing on cash overdraft  2,161,039   
                                                             Borrowing on revolving line-of-credit  7,405,549  1,722,444 
                                                             Repayment of long-term debt  (93,500) (502,243)
                                                             Repayment of capital lease obligations  (35,611) (64,202)
                                                             Advances on note receivable  422,304  (5,821)
                                                              
                                                             
                                                             
                                                                Net cash provided by financing activities  9,859,428  1,125,178 

                                                            Net increase in cash and cash equivalents

                                                             

                                                             

                                                            (199,645

                                                            )

                                                             

                                                            133,974

                                                             
                                                            Cash and cash equivalents—beginning of period  202,073  68,099 
                                                              
                                                             
                                                             
                                                            Cash and cash equivalents—end of period $2,428 $202,073 
                                                              
                                                             
                                                             
                                                            Supplemental disclosure of cash flow information:       
                                                             Interest paid $305,450 $895,000 
                                                             Income taxes paid $ $144,000 
                                                             Noncash financing activity:       
                                                              Execution of capital lease $33,635 $20,278 

                                                            See accompanying notes to financial statements.

                                                            F-48



                                                            SCHULTZ COMPANY

                                                            STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

                                                             
                                                             Class A Voting
                                                            Common Stock

                                                              
                                                              
                                                              
                                                              
                                                              
                                                             
                                                              
                                                              
                                                             Treasury stock
                                                              
                                                             
                                                             Additional
                                                            Paid-in
                                                            Capital

                                                             Retained
                                                            Earnings

                                                             Total
                                                            Stockholders'
                                                            Equity

                                                             
                                                             Shares
                                                             Amount
                                                             Shares
                                                             Amount
                                                            Balance at September 30, 2000 40 $4,000 $976,855 $1,951,783 9.85 $(200,000)$2,732,638
                                                            Net income          1,800,056       1,800,056
                                                              
                                                             
                                                             
                                                             
                                                             
                                                             
                                                             
                                                            Balance at September 30, 2001 40  4,000  976,855  3,751,839 9.85  (200,000) 4,532,694
                                                            Net income (unaudited)          2,946,418       2,946,418
                                                              
                                                             
                                                             
                                                             
                                                             
                                                             
                                                             
                                                            Balance at March 31, 2002 (unaudited) 40 $4,000 $976,855 $6,698,257 9.85 $(200,000)$7,479,112
                                                              
                                                             
                                                             
                                                             
                                                             
                                                             
                                                             

                                                            See accompanying notes to financial statements.

                                                            F-49



                                                            SCHULTZ COMPANY

                                                            NOTES TO FINANCIAL STATEMENTS

                                                            Note—Summary of Significant Accounting Policies

                                                            Nature of Business

                                                                    Schultz company & subsidiary (the "Company") manufactures horticultural products and specialty items, particularly for the indoor houseplant care segment of the market. The Company also distributes charcoal, potting soil and soil conditioners. The Company distributes its products mainly to retail outlets and nurseries throughout the United States and Canada.

                                                            Basis of Presentation of Interim Period Financial Statements

                                                                    The accompanying unaudited interim financial statements have been prepared in accordance with Article 10 of Regulation S-X and do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended March 31, 2002 are not necessarily indicative of the results for any other period or for the full year. These statements should be read in conjunction with the financial statements and notes thereto for Schultz Company for the year ended September 30, 2001.

                                                            Estimates and Assumptions

                                                                    The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.

                                                            Consolidation Policy

                                                                    The consolidated financial statements of the Company include its wholly-owned subsidiary, Ground Zero, Inc. d/b/a American Charcoal, Inc. All material intercompany transactions have been eliminated in consolidation.

                                                            Cash and Cash Equivalents

                                                                    The Company considers all highly liquid investment instruments purchased with an original maturity of three months or less to be cash equivalents.

                                                            Inventories

                                                                    Inventories are stated at the lower of cost or market, with cost being determined using the first-in, first-out method. Cost includes raw materials, direct labor and overhead. Provision for potentially obsolete or slow-moving finished goods and raw materials are made based on management's analysis of inventory levels and future sales forecasts.

                                                            Equipment and Leasehold Improvements

                                                                    Expenditures for equipment and leasehold improvements and those that substantially increase the useful lives of equipment are capitalized. Maintenance, repairs and minor renewals are expensed as incurred. When equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and gains or losses on the dispositions are reflected in

                                                            F-50



                                                            earnings. Depreciation is computed on the straight-line basis by charges to costs or expenses at rates based on the estimated useful lives of the assets. Machinery and equipment are depreciated over periods ranging from three to twelve years. Office furniture and equipment are depreciated over periods ranging from five to ten years. Automobiles and trucks are depreciated over periods ranging from three to seven years. Leasehold improvements are amortized over periods ranging from five to fifteen years. Property under capital lease is amortized over the term of the lease.

                                                            Impairment of Long-Lived Assets

                                                                    The Company continually evaluates whether events and circumstances have occurred that indicate the remaining useful lives of equipment and leasehold improvements may warrant revision or that the remaining balance of equipment and leasehold improvements may not be recoverable. The measurement of possible impairment is based on the ability to recover the balance of the equipment and leasehold improvements from expected future operating cash flows. In the opinion of management, no such impairment existed as of September 30, 2001.

                                                            Intangibles

                                                                    Intangibles are included in other assets and represent the cost of intangible assets acquired and are amortized over a period up to 5 years. The Company continually evaluates whether later events and circumstances have occurred that indicate the remaining useful life of an intangible asset may warrant revision or that the remaining balance of an intangible asset may not be recoverable. The measurement of possible impairment is based on the ability to recover the balance of intangible assets from expected future operating cash flows. In the opinion of management, no such impairment existed as of September 30, 2001.

                                                            Promotion Expense

                                                                    The Company advertises and promotes its products through national and regional media. Products are also advertised and promoted through cooperative programs with retailers. The Company expenses advertising as incurred and records promotion costs as a reduction to its net sales before promotion costs, as incurred.

                                                            Revenue Recognition

                                                                    The Company recognizes revenue in accordance with the shipping terms applicable to each sale. Sales are net of discounts and allowances.

                                                            Comprehensive Income

                                                                    Comprehensive income is defined as the total of net income and all other non-owner changes in equity. The Company has no other items that affect comprehensive income other than net income.

                                                            Income Taxes

                                                                    The Company accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial reporting basis and the tax basis of the Company's assets and liabilities at enacted tax rates expected to be in effect when such amounts are recovered or settled.

                                                            F-51



                                                            Earnings Per Share

                                                                    In accordance with generally accepted accounting principles, earnings per share information is not presented since the Company does not have publicly traded common stock.

                                                            Reclassifications

                                                                    The Company has reclassified its borrowings on cash overdrafts to financing activities from operating activities.

                                                            Recently Issued Accounting Pronouncements

                                                                    The Emerging Issues Task Force (EITF) issued EITF 00-25. This issue addresses when consideration from a vendor to a retailer (a) in connection with the retailer's purchase of the vendor's products or (b) to promote sales of the vendor's products by the retailer should be classified in the vendor's income statement as a reduction of revenue. The Company has adopted EITF 00-25 for the year ended September 30, 2001. The Company has reclassified all trade and co-op promotional expense in the Statements of Operations to net sales.

                                                                    In July 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". SFAS 142 eliminates the amortization of goodwill and instead requires goodwill to be tested for impairment annually. Also, intangible assets are required to be amortized over their useful lives and reviewed for impairment in accordance with SFAS 144, as discussed in the following paragraph. Under SFAS 142, if the intangible asset has an indefinite useful life, it is not amortized until its life is determined to be finite. The Company is required to adopt SFAS 142 no later than fiscal year 2003. The Company does not believe that SFAS 142 will have a material impact on the financial statements.

                                                                    In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 144 (SFAS 144), "Accounting for the Impairment or Disposal of Long-Lived Assets." This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. This Statement supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business (as previously defined in that Opinion). This Statement also amends ARB No. 51, Consolidated Financial Statements, to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The Company does not believe that SFAS 144 will have a material impact on the financial statements. The provisions of this statement are effective for financial statements issued for fiscal years beginning after December 15, 2001 or fiscal year 2003 for the Company.

                                                            F-52



                                                            Note 2—Inventories

                                                                    Inventories are as follows:

                                                             
                                                             Unaudited
                                                            March 31,
                                                            2002

                                                             September 30,
                                                            2001

                                                             
                                                            Raw materials $8,142,236 $6,627,145 
                                                            Finished goods  7,990,880  3,526,372 
                                                            Allowance for obsolete and slow-moving inventory  (614,142) (357,560)
                                                              
                                                             
                                                             
                                                            Total inventories $15,518,974 $9,795,957 
                                                              
                                                             
                                                             

                                                            Note 3—Equipment and Leasehold Improvements

                                                                    Equipment and leasehold improvements are as follows:

                                                             
                                                             Unaudited
                                                            March 31,
                                                            2002

                                                             September 30,
                                                            2001

                                                             
                                                            Machinery and equipment $5,182,955 $4,664,541 
                                                            Office furniture and equipment  2,659,570  2,746,781 
                                                            Automobiles and trucks  127,991  57,991 
                                                            Leasehold improvements  99,029  95,347 
                                                              
                                                             
                                                             
                                                               8,069,545  7,564,660 

                                                            Accumulated depreciation

                                                             

                                                             

                                                            (4,575,999

                                                            )

                                                             

                                                            (4,103,578

                                                            )
                                                              
                                                             
                                                             
                                                              $3,493,546 $3,461,082 
                                                              
                                                             
                                                             

                                                                    Depreciation expense was $1,116,607 in 2001 and $610,366 for the unaudited six month period ending March 31, 2002. Included in machinery and equipment is equipment under capital lease obligations with a cost of $314,430 and accumulated depreciation of $143,073 at September 30, 2001. See note 11 for a summary of capital lease obligations. The net book value of assets under capital lease obligations is $193,895 at March 31, 2002.

                                                            F-53



                                                            Note 4—Other Assets

                                                                    Other assets are as follows:

                                                             
                                                             Unaudited
                                                            March 31,
                                                            2002

                                                             September 30,
                                                            2001

                                                             
                                                            Intangibles $207,375 $190,156 
                                                            Accumulated amortization  (149,080) (140,603)
                                                              
                                                             
                                                             
                                                               58,295  49,553 
                                                              
                                                             
                                                             

                                                            Deferred financing fees

                                                             

                                                             

                                                            192,000

                                                             

                                                             

                                                            192,000

                                                             
                                                            Accumulated amortization  (147,425) (134,674)
                                                              
                                                             
                                                             
                                                               44,575  57,326 
                                                              
                                                             
                                                             

                                                            Cash surrender value of life insurance, net of loans of $18,600

                                                             

                                                             

                                                            284,218

                                                             

                                                             

                                                            284,217

                                                             
                                                            Investment securities held to maturity  51,000  51,000 
                                                            Other assets    64,871 
                                                              
                                                             
                                                             
                                                            Total other assets $438,088 $506,967 
                                                              
                                                             
                                                             

                                                                    See note 9 for a discussion of transactions with related parties.

                                                            Note 5—Accrued Expenses

                                                                    Accrued expenses are as follows:

                                                             
                                                             Unaudited
                                                            March 31,
                                                            2002

                                                             September 30,
                                                            2001

                                                            Advertising and promotional $777,764 $262,054
                                                            Accrued income taxes  1,065,353  533,104
                                                            Cash Overdraft  2,161,039  0
                                                            Other  613,326  472,424
                                                            Compensation Related Accruals  584,555  555,393
                                                              
                                                             
                                                            Total accrued expenses $5,202,037 $1,822,975
                                                              
                                                             

                                                            F-54


                                                            Note 6—Long-Term Debt and Credit Facilities

                                                                    Long-term debt is comprised of the following:

                                                             
                                                             Unaudited
                                                            March 31,
                                                            2002

                                                             2001
                                                             
                                                            Long-term Debt:       
                                                            Term loan A $388,058 $165,750 
                                                            Term loan B  328,125  371,875 
                                                            Term loan C  11,295  13,372 
                                                            Revolving credit facility  14,108,239  6,973,023 
                                                              
                                                             
                                                             
                                                               14,835,717  7,524,020 
                                                            Less portion due within one year  (297,283) (142,711)
                                                              
                                                             
                                                             
                                                            Total long-term debt net of current portion $14,538,434 $7,381,309 
                                                              
                                                             
                                                             

                                                                    The Long-term debt provided by LaSalle Bank, consists of a $25,000,000 revolving credit facility (the "revolving credit facility"), a $255,000 term loan facility ("Term Loan A"); and a $525,000 term loan facility ("Term Loan B"). The revolving credit facility matures in December 2003, Term Loan A matures in December 2002, and Term Loan B matures in December 2004. The revolving credit facility is subject to a clean-down period during which the aggregate amount outstanding under the revolving credit facility shall not exceed $17,250,000 for the months of July through January in each calendar year.

                                                                    The principal amount of Term Loan A is to be repaid in twenty-two consecutive monthly installments commencing January 22, 2000 with a final payment due December 10, 2002. The principal amount of Term Loan B is to be repaid in sixty consecutive monthly installments commencing January 22, 1999 with a final installment due December 22, 2004.

                                                                    The LaSalle long-term debt and revolving credit agreement contains restrictive affirmative, negative and financial covenants. Affirmative and negative covenants put restrictions on levels of investments, indebtedness, insurance and capital expenditures. Financial covenants require the maintenance of certain financial ratios at defined levels. The revolving line-of-credit is subject to a borrowing calculation based upon eligible accounts receivable and inventory, with a cap of $4,000,000 on inventory. The agreement also places a cap on fixed asset additions and a restriction on the payment of dividends. Availability on the revolving line-of-credit at September 30, 2001, was $888,224.

                                                                    Effective September 30, 2001, a waiver was obtained for non-compliance with certain financial covenants. The Company is in compliance with all financial covenants at March 31, 2002

                                                                    Substantially all of the properties and assets of the Company secure the obligations under the long-term debt agreements.

                                                                    There were no compensating balance requirements for the $25,000,000 Revolving Credit Facility at September 30, 2001.

                                                                    The carrying amount of the Company's obligations under long-term debt approximates fair value because the interest rates are based on floating interest rates identified by reference to market rates. Actual interest rates at September 30, 2001, were 7.25% on Term Loans A and B, and 6.75% on the revolving credit facility.

                                                            F-55



                                                                    Aggregate maturities under the long-term debt are as follows:

                                                             
                                                             September 30,
                                                            2001

                                                            2002 $142,711
                                                            2003  339,935
                                                            2004  7,028,624
                                                            2005  12,750
                                                            2006  
                                                            Thereafter  
                                                              
                                                              $7,524,020
                                                              

                                                            Note 7—Income Taxes

                                                                    Income tax expense is as follows for the year ended:

                                                             
                                                             2001
                                                             
                                                            Current:    
                                                             Federal $1,293,073 
                                                             State and local  88,643 
                                                              
                                                             
                                                              Total current  1,381,716 
                                                              
                                                             

                                                            Deferred:

                                                             

                                                             

                                                             

                                                             
                                                             Federal  (76,400)
                                                             State and local  (10,900)
                                                              
                                                             
                                                              Total deferred  (87,300)
                                                              
                                                             
                                                            Total income tax expense $1,294,416 
                                                              
                                                             

                                                                    Income tax expense attributable to the income before the provision for income taxes differed from the amounts computed by applying the U.S. Federal income tax rate of 35% to the income before the provision for income taxes by the following amounts:

                                                             
                                                             2001
                                                            Computed "expected" tax expense (benefit) $1,083,065
                                                            Tax effect of:   
                                                             Non-deductible meals & entertainment expenses  17,099
                                                             Other non-deductible accruals  116,509
                                                             State and local taxes  77,743
                                                              
                                                              Total income tax expense $1,294,416
                                                              

                                                            F-56


                                                                    Deferred income taxes are as follows for the year ended:

                                                             
                                                             2001
                                                             
                                                            Deferred tax assets:    
                                                             Inventories $32,400 
                                                             Deferred compensation  69,300 
                                                             Other accruals, net  527,500 
                                                              
                                                             
                                                             Gross deferred tax assets  629,200 
                                                              
                                                             
                                                             Valuation allowance   
                                                              
                                                             
                                                            Total deferred tax assets  629,200 
                                                              
                                                             
                                                            Deferred tax liabilities:    
                                                             Equipment and leasehold improvements  (259,900)
                                                              
                                                             
                                                             Net deferred tax assets $369,300 
                                                              
                                                             

                                                                    Deferred income tax assets and liabilities are reflected in the balance sheet are as follows:

                                                             
                                                             2001
                                                            Deferred income tax, current $221,700
                                                            Deferred income tax, non current  147,600
                                                              
                                                              $369,300
                                                              

                                                            Note 8—Deferred Compensation Plans

                                                                    The Company has a 401(k) savings plan, which covers substantially all of its employees with six months or more of continuous service. The 401(k) Plan allows participants to defer a portion of eligible compensation on a tax-deferred basis. The plan provides for the Company to match 50% of each employee's voluntary contribution up to 10% of gross earnings. The Company's matching contribution amounted to $121,492 for 2001 and $54,848 for the unaudited six months ended March 31, 2002.

                                                            Note 9—Transactions With Related Parties

                                                                    Other liabilities represent accrued royalty fees due to the current Chairman Emeritus of the Company, the owner of the formula's and processes utilized in the production of the Company's products. The royalty agreement established an annual royalty fee of two percent of gross sales in each year gross sales exceed $1,000,000. The term of the agreement includes the lifetime of the Chairman Emeritus and continues for ten years after his death. Payment of the royalty fees is subordinate to the long-term debt and revolving credit agreement. The Chairman Emeritus waived his right to the royalty fees and related interest for the year ended September 30, 2001. This amount was settled in fiscal year 2002.

                                                                    Included in other assets are notes and interest receivable from the majority stockholders' of the Company. The notes are due on demand and accrue interest at five percent. The notes and interest receivable have been classified as long-term as the Company does not intend to request payment during 2002. The receivable from related party was $977,480 and $346,656 at September 2001 and March 31, 2002 (unaudited), respectively.

                                                            F-57



                                                            Note 10—Concentration of Credit Risks, Exposures and Financial Instruments

                                                                    Financial instruments, which potentially subject the Company to concentration of credit risk, consist principally of trade accounts receivable. The Company is heavily dependent on three customers for a substantial majority of its sales. These three customers accounted for approximately 63% of net sales for 2001. At September 30, 2001, accounts receivable from these three customers were 60% of total accounts receivable.

                                                                    The Company performs ongoing credit evaluations of its customers' financial conditions and generally does not require collateral from its customers. The Company maintains allowances for potential credit losses, and such losses have generally been within management's expectations.

                                                                    The Company does utilize various commodity and specialty chemicals in its production process. The Company does not use derivative commodity instruments to hedge its exposures to changes in commodity prices.

                                                                    The carrying value of cash and short-term financial instruments approximates fair value due to the short maturity of those instruments.

                                                            Note 11—Commitments

                                                                    The Company is obligated under various operating leases for its operating facility, use of warehouse and office space, autos, and equipment. The leases expire at various dates through January 31, 2015. Aggregate rent expense amounted to $1,060,703 for 2001 and $756,501 for the unaudited six month period ended March 31, 2002.

                                                                    The following is a summary of future minimum payments under the operating and capital leases described above that have initial or remaining noncancelable lease terms in excess of one year at September 30, 2001.

                                                             
                                                             Operating Leases
                                                             Capital Leases
                                                             Total
                                                            Year Ended September 30,         
                                                            2002 $1,046,656 $79,061 $1,125,717
                                                            2003  982,618  20,564  1,003,182
                                                            2004  918,341  4,182  922,523
                                                            2005  915,382    915,382
                                                            2006  935,000    935,000
                                                            Thereafter  8,181,250    8,181,250
                                                              
                                                             
                                                             
                                                            Total minimum lease payments $12,979,247  103,807 $13,083,054
                                                              
                                                                
                                                            Less amount representing interest     (9,591)  
                                                                 
                                                               
                                                            Present value of net minimum lease payments    $94,216   
                                                                 
                                                               

                                                            Note 12—Contingencies

                                                                    The Company is involved in litigation and arbitration proceedings in the normal course of business that assert product liability and other claims. The Company is contesting all such claims. When it appears probable in management's judgment that the Company will incur monetary damages or other

                                                            F-58



                                                            costs in connection with such claims and proceedings, and such costs can be reasonably estimated, appropriate liabilities are recorded in the financial statements and charges are made against earnings.

                                                                    Management believes the possibility of a material adverse effect on the Company's consolidated financial position, results of operations and cash flows from the claims and proceedings described above is remote.

                                                            Note 13—Shipping and Handling Cost

                                                                    Shipping and handling costs are included in the selling, general and administrative expense line item on the Company's Statement of Operations. The amount included is $1,159,827 for 2001 and $479,914 for unaudited six month period ended March 31, 2002 and represents internal freight and distribution cost. The remaining shipping and handling cost, which includes out-bound freight and product cost are included in the cost of goods sold.

                                                            Note 14—Subsequent Event

                                                                    On May 9, 2002 the Company merged with United Industries Corporation, a leading manufacturer and marketer of value-oriented products for the consumer lawn and garden care and insect control markets in the United States.

                                                                    The purchase price of the merger was approximately $47,000,000. As a part of the merger, United Industries Corporation paid off the Company's $20,565,791 credit facility with LaSalle Bank.




                                                            United Industries Corporation

                                                            operating as

                                                            LOGO

                                                            Offer to Exchange

                                                            97/8% Series D Senior Subordinated Notes due 2009
                                                            For All Outstanding
                                                            97/8% Series B Senior Subordinated Notes due 2009
                                                            and
                                                            97/8% Series C Senior Subordinated Notes due 2009


                                                            PROSPECTUS
                                                                                     , 2003







                                                            PART II

                                                            INFORMATION NOT REQUIRED IN PROSPECTUS

                                                            Item 20. Indemnification of Directors and Officers.

                                                             

                                                            Item 20.Indemnification of Directors and Officers

                                                            The following summarizessummaries are qualified in their entirety by reference to the indemnification provisions for each registrant under applicable state lawcomplete text of the statutes and each registrant's charterorganizational documents referred to below.

                                                            Spectrum Brands, Inc. and bylaws. The registrants also maintain liability insurance forWPC Brands, Inc.

                                                            Pursuant to the benefit of theirWisconsin Business Corporation Law (“WBCL”), Spectrum Brands, Inc.’s and WPC Brands, Inc.’s directors and officers are entitled to mandatory indemnification from the companies against certain of their officers.

                                                            Registrants Incorporated Under Delaware Law

                                                                    United Industries Corporationliabilities and Sylorr Plant Corp.expenses (i) to the extent the directors or officers are incorporated under the laws of the State of Delaware. Section 145 of the General Corporation Law of the State of Delaware, inter alia provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by orsuccessful in the rightdefense of such corporation), by reason ofa proceeding and (ii) in proceedings in which the factdirector or officer is not successful in the defense thereof, unless (in the latter case only) it is determined that such person isthe director or was an officer director, employeebreached or agent of such corporation,failed to perform his duties to the company and the breach or isfailure constituted (a) a willful failure to deal fairly with the company or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses, such as attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such personits shareholders in connection with such action, suita matter in which the director or proceeding, provided such person acted in good faith and inofficer had a manner hematerial conflict of interest; (b) a violation of the criminal law, unless the director or she reasonably believedofficer had reasonable cause to bebelieve that his or not opposed to the corporation's best interests and, with respect to any criminal actionher conduct was lawful or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Delaware corporationunlawful; (c) a transaction from which the director or officer derived an improper personal profit; or (d) willful misconduct. The WBCL also provides that, subject to certain limitations, the mandatory indemnification provisions do not preclude any additional right to indemnification or allowance of expenses that a director or officer may indemnify any persons who are, werehave under a company’s articles of incorporation, by-laws, a written agreement or are threatened to be made, party to any threatened, pending or completed action or suit by or in the righta resolution of the corporation by reasonscompany’s board of directors or shareholders. Further, the factWBCL specifically states that such person was a director, officer, employeeit is the public policy of Wisconsin to require or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses, including attorneys' fees, actually and reasonably incurred by such personpermit indemnification in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he or she reasonably believed to be in or not opposedproceeding involving securities regulation, as described therein, to the corporation's best interests, provided that no indemnification isextent required or permitted without judicial approval ifas described above. Additionally, under the officer, director, employeeWBCL, directors are not subject to personal liability to a company, its shareholders or agent is adjudgedany person asserting rights on behalf thereof for certain breaches of or failures to be liable to the corporation. Where an officer, director, employee or agent is successful on the merits or otherwiseperform any duty resulting solely from their status as directors, except in circumstances paralleling those in subparagraphs (a) through (d) outlined above. Expenses for the defense of any action referredfor which indemnification may be available may be advanced by the companies under certain circumstances.

                                                            Spectrum Brands, Inc.’s amended and restated articles of incorporation contain no indemnification provisions.

                                                            Spectrum Brands, Inc.’s amended and restated bylaws provide that, to above, the corporation mustfullest extent permitted or required by the WBCL, the company shall indemnify hima director or herofficer against the expenses which such officerall liabilities incurred by or director has actually and reasonably incurred.

                                                                    Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person whosuch director or officer in connection with a proceeding in which the director or officer is a party because he or she is a director or officer. The company shall indemnify a director or officer of an affiliate (who is not otherwise serving as a director or officer) against all liabilities, and shall advance the reasonable expenses, incurred by such director or officer in a proceeding to the same extent hereunder as if such director or officer incurred such liabilities because he or she was a director or officer, if such director or officer is a party thereto because he or she is or was a director or officer of the affiliate. The company’s board may, in its sole and absolute discretion as it deems appropriate, pursuant to a majority vote thereof, indemnify against liabilities incurred by, and/or provide for the allowance of reasonable expenses of, an employee or authorized agent of the corporation, or is or was serving atcompany acting within the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him or her in any such capacity, arising outscope of his or her statusduties as such whetherand who is not otherwise a director or not the corporationofficer.

                                                            Spectrum Brands, Inc. has purchased directors’ and officers’ liability insurance which would otherwise have the power to indemnify himtheir directors and officers against damages arising out of certain kinds of claims which might be made against them based on their negligent acts or her under Section 145.omissions while acting in their capacity as such.

                                                             Article V

                                                            WPC Brands, Inc.’s third amended and restated articles of the By-laws of United provides, among other things,incorporation provide that anyeach person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal,

                                                            II-1


                                                            administrative or investigative by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer, of the corporationcompany or is or was serving at the request of the corporationcompany as a director, officer, employee, fiduciary, or agent of another corporationcompany or of a partnership, joint venture, trust or other enterprise, willshall be indemnified and held harmless by the corporationcompany to the fullest extent which it is empowered to do so unless prohibited from doing so by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment)WBCL against all expense, liability and loss (including attorney'sattorneys’ fees actually and reasonably incurred by such person in connection with such proceeding)

                                                            II-1



                                                            and such indemnification will inure to the benefit of his heirs, executors and administrators; provided, however, that, except in certain circumstances, the corporation will indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation.. The right to indemnification is a contract right and, subject to certain exceptions, includes the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition. The corporation may, by action of its board of directors, provide indemnification to employees and agents of the corporation with the same scope and effect as the foregoing indemnification of directors and officers. In addition, Article V provides that expenses incurred by any person in defending a proceeding will be paid by the corporation in advance of such proceeding's final disposition unless otherwise determined by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately by determined that he or she is not entitled to be indemnified by the corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

                                                                    Article V of the By-Laws of Sylorr Plant Corp. provides that each person who is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director of officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the corporation to the fullest extent to which it is empowered to do so unless prohibited from doing so by Delaware law against all expense, liability and loss (including attorney's fess actually and reasonably incurred by such person in connection with such proceeding) and such indemnification shall inure to the benefit of his heirs, executors and administrators. Except in certain circumstances, the corporationcompany shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the company’s board of directors. The right to indemnification includes having the expenses incurred in defending any such proceeding paid by the corporation in advance of its final disposition. The corporationcompany may, by action of its board of directors, provide indemnification to employees and agents of the corporationcompany with the same scope and effect as the foregoing indemnification of directors and officers.

                                                            WPC Brands, Inc.’s bylaws do not contain any provisions relating to indemnification.

                                                            Registrants Incorporated Under Missouri LawAquaria, Inc., Pets ‘N People, Inc., Rovcal, Inc. and Southern California Foam, Inc.

                                                             Ground Zero

                                                            Aquaria, Inc., Pets ‘N People, Inc., Rovcal, Inc. and Schultz CompanySouthern California Foam, Inc. are incorporated under the lawsempowered by Section 317 of the State of Missouri. Section 351.355California General Corporation Law (“CGCL”) to indemnify any person who was or is a director, officer, employee or other agent of the Generalcompanies, or who is or was serving at the request of the companies as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or who was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation, (other than an action by or in right of the corporation), against expenses (including attorneys’ fees), judgments, fines, settlements and Business Corporation Lawother amounts actually and reasonably incurred by such person in connection with any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative. To be indemnified, such person must have acted (i) in good faith and (ii) in a manner that he or she reasonably believed to be in the best interests of Missouri, referredthe corporation; and, in the case of a criminal proceeding, such person must have acted without reasonable cause to herein as the "Missouri Statute", providesbelieve that his or her conduct was unlawful. In respect of any action by or in right of a Missouri corporationcompany, a company may indemnify any person who was or is an agent of the company against expenses actually and reasonably incurred by such person in connection with the defense or settlement of the action if he or she acted (i) in good faith and (ii) in a partymanner he or she believed to be in the best interests of the corporation and its shareholders.

                                                            Aquaria, Inc.’s second amended and restated articles of incorporation provide that the company is authorized to provide indemnification of agents for breach of duty to the company and its shareholders through bylaw provision or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by the California Corporations Code, subject to the limits on such excess indemnification set forth in such code.

                                                            Aquaria, Inc.’s amended and restated bylaws provide that each of the company’s directors and officers shall be indemnified and held harmless by the company to the fullest extent authorized by the CGCL against any and all expenses, judgments, penalties, fines and amounts reasonably paid in settlement that are incurred by such director or officer or on such director’s or officer’s behalf in connection with any threatened, pending or completed proceeding or any claim, issue or matter therein, which such director or officer is, or is threatened to be made, a party to any proceeding, other than an action by or participant in the right of the corporation, by reason of the fact that he issuch director’s or was serving in an indemnified capacity against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection withofficer’s corporate status, if such proceeding if hedirector or officer acted in good faith and in a manner hesuch director or officer reasonably believed to be in or not opposed to the best interests of the corporation,company and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. SimilarThe company shall indemnify any director or officer seeking indemnification in connection with a proceeding initiated by such director or officer only if such proceeding was authorized by the company’s board of directors, unless such proceeding was brought to enforce an officer or director’s rights to indemnification under the company’s bylaws. Additionally, the company may indemnify non-officer employees. Unless ordered by a court or required by Section 145(c) of the DGCL, no indemnification shall be provided to a director, to an officer or to a non-officer employee unless a determination shall have been

                                                            II-2


                                                            made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the company and, with respect to any criminal proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. The company must advance all expenses incurred by or on behalf of any director, and may advance expenses incurred by an officer or non-officer employee, in connection with any proceeding in which such person is involved.

                                                            Pets ‘N People, Inc.’s amended articles of incorporation and amended bylaws provide that the company is authorized to provide indemnification of agents for breach of duty to the company and its shareholders through bylaw provision or through agreements with the agents, or both, in excess of the indemnification otherwise permitted by the California Corporations Code, subject to the limits on such excess indemnification set forth in such code.

                                                            Neither Rovcal, Inc.’s articles of incorporation nor its by-laws contain any provisions applyrelating to indemnification.

                                                            Southern California Foam, Inc.’s articles of incorporation do not contain any provisions relating to indemnification.

                                                            Southern California Foam, Inc.’s amended bylaws provide that the company may indemnify and director, officer, agent or other employee as to those liabilities and on those terms and conditions as are specified in Section 317 of the CGCL.

                                                            Ground Zero, Inc. and Schultz Company

                                                            Ground Zero, Inc. and Schultz Company are empowered by Section 355 of the General and Business Corporation Law of Missouri (“GBCLM”) to indemnify any person who is party to any action by reason of the fact that such person is or was a director, officer, employee or agent of the companies or who was, at the request of the companies, serving as a director, officer, employee or agent of another company, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action if such person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the companies and, with respect to criminal actions, broughthad no reasonable cause to believe that his or her conduct was unlawful. Such indemnification is permitted in relation to actions by or in the right of the corporation,companies, except that no indemnification shall be made inis permitted with respect of any claim, issue or matterto actions as to which suchthe person has been foundwas adjudged to be liable for negligence or misconduct in the performance of his duty to the corporationor her duties unless and only to the extenta court determines that, the court in which the action or suit was brought determines upon application that, despite the finding of liability and in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Where an officer or director is successful on the merits or otherwise in defense of any proceeding referred to above, the corporation must indemnify him against the expenses which he has actually and reasonably incurred.indemnity.

                                                            II-2



                                                                    The Missouri Statute further provides that its provisions concerning indemnification are not exclusive of any other rights to which a person seeking indemnification may be entitled under a corporation'sGround Zero, Inc.’s articles of incorporation or bylaws ordo not contain any agreement, vote of shareholders or disinterested directors or otherwise. In addition, the Missouri Statute authorizes a corporationprovisions relating to purchase and maintain insurance on behalf of any person who is or was serving in an indemnified capacity against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, regardless of whether the corporation would otherwise have the power to indemnify him under the Missouri Statute.indemnification.

                                                             Article VI of the By-Laws of

                                                            Ground Zero, providesInc.’s bylaws provide that the corporation (1) shallcompany must indemnify, to the fullest extent permitted by Missouri law, any person who was or is a party (other than a party plaintiff suing on his or her own behalf or in the right of the corporation)company) or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (including an action by or in the right of the corporation)company), by reason of the fact that such person is or was or has agreed to become a director or officer of the corporation,company, or is or was serving or has agreed to serve at the request of the corporation,company as a director or officer of another company, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, in the manner set forth by Missouri lawthe GBCLM, against expenses, including attorneys’ fees, judgments, fines, and (2)amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit, or proceeding. In addition, the company may indemnify to the fullest extent permitted by law, any person who was or is a party (other than a party plaintiff suing on his or her own behalf or in the right of the corporation)company) or is threatened to be made a party to such action, suit or proceeding by reason of the fact that such person is or was or has agreed to become an employee or agent of the corporation,company, or is or was serving or has agreed to serve at the request of the corporation

                                                            II-3


                                                            company as an employee or agent of another corporation,company, partnership, joint venture, trust or other enterprise, upon a determination of the company’s board of directors of the corporation that such person should be indemnified, against expenses, including attorney's fees, judgments, fines, and amounts paid in settlement actually and reasonable incurred by him or her in connection with such action, suit or proceeding. Any and all indemnification provided by the corporation shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefitindemnified.

                                                            Schultz Company’s amended articles of the heirs, executors, and administrators of such a person. In addition, such By-Lawsincorporation provide that expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of the action, suit or proceeding as authorized by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director, officer, employee or agent to repay such amount unless it shall ultimately be determined that he or she is lawfully entitled to be indemnified by the corporation.

                                                                    Article X of the Amended Articles of Incorporation of Schultz Company provides, among other things, that anyeach person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer, of the corporationcompany or is or was serving at the request of the corporationcompany as a director, officer, employee, fiduciary, or agent of another corporation or of a partnership, joint venture, trust or other enterprise, willshall be indemnified and held harmless by the corporationcompany to the fullest extent which it is empowered to do so unless prohibited from doing so by the Missouri Statute, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment)GBCLM against all expense, liability and loss (including attorneys'attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding) and such indemnification will inure to the benefit of his heirs, executors and administrators; provided, however, that, except in certain circumstances, the corporation will. The company shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the corporation.company. The company may provide indemnification to employees and agents of the company with the same scope and effect as the foregoing indemnification of directors and officers.

                                                            Schultz Company’s amended bylaws do not contain any provisions relating to indemnification.

                                                            DB Online, LLC

                                                            Pursuant to Section 403 of the Hawaii Uniform Limited Liability Company Act, DB Online, LLC must reimburse its members or managers for payments made and must indemnify them for liabilities incurred by them in the ordinary course of business of the company or for the preservation of the company’s business or property.

                                                            DB Online, LLC’s articles of organization do not contain any provisions relating to indemnification.

                                                            DB Online, LLC’s operating agreement provides that to the fullest extent permitted by law, the company shall indemnify the member and the officers, directors and shareholders of the member, against any and all liability incurred and/or for any act performed by them in good faith and/or for any act in good faith omitted to be performed by them in good faith (including, without limitation, reasonable legal and other professional fees and expenses as the same are incurred) as or on behalf of a member (or affiliate thereof) of the company.

                                                            United Industries Corporation, AQ Holdings, Inc., Aquarium Systems, Inc., IB Nitrogen, Inc., JungleTalk International, Inc., Nu-Gro US Holdco Corporation, Nu-Gro America Corp., Nu-Gro Technologies, Inc., Perfecto Holding Corp., Perfecto Manufacturing, Inc., ROV Holding, Inc., Sylorr Plant Corp., Tetra Holding (US), Inc., Willinger Bros., Inc. and United Pet Group, Inc.

                                                            United Industries Corporation, AQ Holdings, Inc., Aquarium Systems, Inc., IB Nitrogen, Inc., JungleTalk International, Inc., Nu-Gro US Holdco Corporation, Nu-Gro America Corp., Nu-Gro Technologies, Inc., Perfecto Holding Corp., Perfecto Manufacturing, Inc., ROV Holding, Inc., Sylorr Plant Corp. and United Pet Group, Inc. are empowered by Section 145 of the Delaware General Corporation Law (“DGCL”), subject to the procedures and limitations therein, to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reasons of the fact that he or she is or was a director, officer, employee or agent of the companies or is or was serving at the request of the companies as a director, officer, employee or agent of another corporation or other enterprise against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interest of the companies and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action brought by or in the right of the companies, the companies may indemnify a director, officer, employee or agent of the companies (or other entity if such person is serving in such capacity at the companies’ request) against expenses (including attorneys’ fees) actually and

                                                            II-4


                                                            reasonably incurred by him or her if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the companies, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the companies unless a court determines that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expense as the court shall deem proper. In addition, unless limited by its articles of incorporation, a company shall indemnify a present or former director or officer of the company who was successful, on the merits or otherwise, in the defense of any proceeding to which the person was a party because the person is or was a contract rightdirector, officer, employee or agent against expenses actually and subjectreasonably incurred by him or her in connection with the proceeding. A company has the power to certain exceptions, includespurchase and maintain insurance on behalf of any of the rightpersons described above against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the company would have the power to beindemnify such person against such liability under the DGCL.

                                                            United Industries Corporation’s amended and restated certificate of incorporation does not contain any provisions relating to indemnification.

                                                            United Industries Corporation’s bylaws provide that company shall indemnify each person who is or was a director, officer or employee of the company (including the heirs, executors, administrators or estate of such person) or is or was serving at the request of the company as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise to the full extent permitted under Sections 145(a), (b) and (c) of the DGCL or any other provisions of the laws of the State of Delaware. Indemnification is not permitted for any breach of the director’s duty of loyalty to the company or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, under DGCL Section 174, or for any transaction from which the director derived an improper personal benefit.

                                                            AQ Holdings, Inc.’s amended and restated certificate of incorporation provides that if a director or officer of the company is made a party to any civil or criminal action or proceeding in any matter arising from the performance by such director or officer or his or her duties for or on behalf of the company, then, to the full extent permitted by law, the company shall, advance to such director, or upon approval of the board of directors to any officer, all sums necessary and appropriate to enable the director or officer to conduct his or her defense or appeal, in the action or proceeding, and indemnify such director or officer for all sums paid by him or her in the way of judgments, fines, amounts paid in settlement, and reasonable expenses, including attorney’s fees actually and necessarily incurred in connection with the action or proceeding. No indemnification may be made to or on behalf of any director or officer if a judgment or other final adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled. Additionally, no director shall be personally liable to the company or its stockholders for monetary damages for breach of his or her fiduciary duty as a director of the corporation, except for liability for any breach of the director’s duty of loyalty to the company or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, under Section 174 of the DGCL, or for any transaction from which the director derived an improper personal benefit.

                                                            AQ Holdings, Inc.’s bylaws provide that, in addition to the indemnification required under the DGCL, the company shall grant such indemnification to each of its directors and officers with respect to any matter in a proceeding as to which his liability is limited pursuant to the company’s certificate of incorporation. However, such indemnification shall exclude indemnification with respect to any improper personal benefit which a director or officer is determined to have received and the expenses of defending against an improper personal benefit claim unless the director or officer is successful on the merits in said defense, and indemnification of present or former officers, directors, employees or agents of a constituent corporation absorbed in a merger or consolidation transaction with AQ Holdings, Inc. with respect to their activities prior to said transaction, unless

                                                            II-5


                                                            specifically authorized by AQ Holdings, Inc.’s board of directors or stockholders. Such indemnification shall include prompt payment of expenses incurred by a director or officer in defending any sucha proceeding in advance of the final disposition of such proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay such amounts if it shall ultimately be determined that he is not entitled to be indemnified by the corporation, which undertaking shall be an unsecured general obligation of the director or officer and may be accepted without regard to his ability to make repayment. Additionally, the company may grant rights to indemnification and to an advancement of expenses to any person who was or is a party or is threatened to be made a party to or is otherwise involved in any proceeding by reason of the fact that he is or was an employee or agent of the company or is or was serving at the request of the company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

                                                            Aquarium Systems, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            Aquarium Systems, Inc.’s bylaws provide that each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed proceeding by reason of the fact that he or she is or was a director, officer or employee of the company or is or was serving at the request of the company as a director, officer or employee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan shall be indemnified and held harmless by the company to the fullest extent authorized by the DGCL against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith. Such indemnification is only required if such person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the company, and with respect to a criminal action or proceeding, if such person had no reasonable cause to believe his conduct was unlawful. For proceedings by or in the right of the company, no indemnification shall be made in relation to matters as to which it shall be adjudged in such proceeding that such director, officer, employee or agent is liable to the company, unless a court shall determine that, despite such adjudication, such person is fairly and reasonably entitled to indemnification.

                                                            IB Nitrogen, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            IB Nitrogen, Inc.’s bylaws provide that the company shall indemnify any director, officer, or employee, or former director, officer, or employee of the company, or any person who may have served at its request as a director, officer, or employee of another company in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The company may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the board of the directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the company that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct.

                                                            JungleTalk International, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            JungleTalk International, Inc.’s bylaws provide that the company shall indemnify each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed proceeding, by reason of the fact that he or she is or was a director, officer or employee of the company or is or was serving at the request of the company as a director, officer or employee of another

                                                            II-6


                                                            corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding is alleged action in an official capacity while serving as a director, officer or employee or in any other capacity while serving as a director, officer or employee, against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith. Such indemnification is required only if such person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the company, and with respect to a criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. No indemnification shall be made in the case of an action, suit or proceeding by or in the right of the company in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such director, officer, employee or agent is liable to the company, unless a court shall determine that, despite such adjudication, such person is fairly and reasonably entitled to indemnification.

                                                            Nu-Gro US Holdco Corporation’s certificate of incorporation provides that the company shall have the power to indemnify any person who was or is a party or is threatened to be made a party to, or testifies in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that such person is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as a director, officer, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding to the full extent permitted by law, and the company may adopt bylaws or enter into agreements with any such person for the purpose of providing for such indemnification.

                                                            Nu-Gro US Holdco Corporation’s bylaws do not contain any provisions relating to indemnification.

                                                            Nu-Gro America Corp.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            Nu-Gro America Corp.’s bylaws provide that the company shall indemnify any director, officer, or employee, or former director, officer, or employee of the company, or any person who may have served at its request as a director, officer, or employee of another company in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The company may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the board of the directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the company that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct.

                                                            Nu-Gro Technologies, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            Nu-Gro Technologies, Inc.’s bylaws provide that the company shall indemnify any director, officer, or employee, or former director, officer, or employee of the company, or any person who may have served at its request as a director, officer, or employee of another company in which it owns stock, or of which it is a creditor, against expenses actually and necessarily incurred by him and any amount paid in satisfaction of judgments in connection with any action, suit or proceeding whether civil or criminal in nature, in which he is made a party by reason of being or having been such a director, officer or employee (whether or not a director, officer, or

                                                            II-7


                                                            employee at the time such costs or expenses are incurred by or imposed upon him) except in relation to the matters as to which he shall be adjudged in such action, suit, or proceeding to be liable for gross negligence or willful misconduct in the performance of duty. The company may also reimburse to any director, officer, or employee the reasonable costs of settlement of any action, suit or proceeding, if it shall be found by a majority of the board of the directors not involved in the matter in controversy, whether or not a quorum, that it was to the interest of the company that such settlement be made and that such director, officer or employee was not guilty of gross negligence or willful misconduct.

                                                            Perfecto Holding Corp.’s fourth amended and restated certificate of incorporation provides that if a director or officer of the company is made a party to any civil or criminal action or proceeding in any matter arising from the performance by such director or officer or his or her duties for or on behalf of the company, then, to the full extent permitted by law, the company shall advance to such director, or upon approval of the board of directors to any officer, all sums necessary and appropriate to enable the director or officer to conduct his or her defense or appeal, in the action or proceeding, and indemnify such director or officer for all sums paid by him or her in the way of judgments, fines, amounts paid in settlement, and reasonable expenses, including attorney’s fees actually and necessarily incurred, in connection with the action or proceeding, or appeal therein, subject to the proper application of credit for any sums advanced to the director or officer. No indemnification may be made to or on behalf of any director or officer if a judgment or other final disposition.adjudication adverse to the director or officer establishes that his or her acts were committed in bad faith or were the result of active and deliberate dishonesty and were material to the cause of action so adjudicated, or that he or she personally gained in fact a financial profit or other advantage to which he or she was not legally entitled.

                                                            Perfecto Holding Corp.’s amended and restated bylaws provide that the company shall indemnify any person who was or is a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed proceeding, whether civil, criminal, administrative, investigative or otherwise, and whether by or in the right of the corporation, its stockholders, a third party or otherwise, by reason of the fact that he is or was a director or officer of the company, or is or was a director or officer of the corporation serving at its request as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise, against all expense (including, but not limited to, attorneys’ fees), liability, loss, judgments, fines, excise taxes, penalties and amounts paid in settlement actually and reasonably incurred by him in connection with such proceeding, including expenses incurred in seeking such indemnification. In addition, the company shall grant such indemnification to each of its directors and officers with respect to any matter in a proceeding relating to breach of fiduciary duty. However, such indemnification shall exclude indemnification with respect to any improper personal benefit which a director or officer is determined to have received and the expenses of defending against an improper personal benefit claim unless the director or officer is successful on the merits in said defense, and indemnification of present or former officers, directors, employees or agents of a constituent corporation absorbed in a merger or consolidation transaction with this corporation with respect to their activities prior to said transaction, unless specifically authorized by the board of directors or stockholders of this corporation. Such indemnification shall include prompt payment of expenses incurred. In addition, the company may grant rights to indemnification and to an advancement of expenses to any person who was or is a party or is threatened to be made a party to or is otherwise involved in any proceeding by reason of the fact that he is or was an employee or agent of the corporation or is or was serving at the request of the corporation, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

                                                            Perfecto Manufacturing, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            Perfecto Manufacturing, Inc.’s bylaws provide that each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any threatened, pending or completed proceeding by reason of the fact that he or she is or was a director, officer or employee of the company or is or was serving at the request of the company as a director, officer or employee of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, whether the basis of such proceeding

                                                            II-8


                                                            is alleged action in an official capacity while serving as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the company against all expense, liability and loss (including attorneys’ fees, judgments, fines, excise taxes or amounts paid in settlement) reasonably incurred or suffered by such indemnitee in connection therewith. Such indemnification is required only if such person acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the company, and with respect to a criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. No indemnification shall be made in the case of an action, suit or proceeding by or in the right of the company in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such director, officer, employee or agent is liable to the company, unless a court shall determine that, despite such adjudication, such person is fairly and reasonably entitled to indemnification. The company shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) initiated by such indemnitee was authorized by the company’s board of directors.

                                                            ROV Holding, Inc.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            ROV Holding, Inc.’s bylaws provide that any person threatened to be or made party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of the company or was serving at the request of the company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise shall be indemnified in the manner and to the full extent permitted by law. Where required by law, such indemnification shall be made only as authorized in the specific case upon a determination that indemnification is proper in the circumstances. To the extent permitted by law, such indemnification shall include expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement and, in the manner provided by law, any such expenses may be paid in advance of the final disposition of such action, suit or proceeding.

                                                            Sylorr Plant Corp.’s certificate of incorporation does not contain any provisions relating to indemnification.

                                                            Sylorr Plant Corp.’s bylaws provide that each person who was or is made a party or is threatened to be made a party to or is involved in any proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer, of the company or is or was serving at the request of the company as a director, officer, employee, fiduciary, or agent of another company or of a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless by the company to the fullest extent which it is empowered to do so unless prohibited from doing so by the DGCL against all expense, liability and loss (including attorneys’ fees actually and reasonably incurred by such person in connection with such proceeding). The company shall indemnify any such person seeking indemnification in connection with a proceeding initiated by such person only if such proceeding was authorized by the board of directors of the company. The company may, by action of its board of directors, provide indemnification to employees and agents of the corporation

                                                            II-3



                                                            with the same scope and effect as the foregoing indemnification of directors and officers. In addition, Article X provides

                                                            Tetra Holding (US), Inc.’s bylaws provide that expenses incurred by any person in defending a proceeding will be paid by the corporation in advance of such proceeding's final disposition unless otherwise determined by the board of directors in the specific case upon receipt of an undertaking by or on behalf of the director or officer to repay such amount if itcompany shall ultimately be determined that he or she is not entitled to be indemnified by the corporation. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate.

                                                            Registrants Incorporated Under Wisconsin Law

                                                                    WPC Brands, Inc. is incorporated under the laws of the State of Wisconsin. Sections 180.0850 through 180.0859 of the Wisconsin Business Corporation Law, referred to herein as the "Wisconsin Statute", require a corporation to indemnify any director or officerperson who is a party to any threatened, pending or completed proceeding toby reason of the extent thefact that such person was a director or officer has been successful on the merits or otherwise in the defense of the company, and may indemnify any such person who was subject to such proceeding for all reasonable expenses incurred inby reason of the proceeding iffact that such person was an employee or agent of the directorcompany, or officer was a party because he or she isserving at the request of the company as a director, officer, employee or agent of the corporation. If the director or officer is not successful in defense of the proceeding, a corporation must indemnify the director or officer unless the liability wasanother company, against expenses (including attorneys’ fees) judgments, fines and amounts actually and reasonably incurred as a result of the breach or failure to perform a duty which the director or officer owes to the corporation and the breach or failure to perform constitutes: (1) a willful failure to deal fairly with the corporation or its shareholders in connection with such proceeding if such person acted in a mattermanner reasonably believed to be in whichor not opposed to the director or officer had a material conflict of interest; (2) a violationbest interests of the company and, with respect to criminal law, unless the person had reasonable cause to believe his or her conduct was lawful orproceedings, had no reasonable cause to believe that his or her conduct was unlawful; (3)unlawful. Such indemnification is also required with respect to suits brought in the right of the company, provided that no indemnification shall be made with respect to proceedings as to which such person shall have been adjudged to be liable for negligence or misconduct unless a transaction from whichcourt shall determine that, despite the director or officer derived an improper personal profit; or (4) willful misconduct. A corporation's articlesadjudication of liability but in view of all circumstances, such person is fairly and reasonably entitled to indemnity.

                                                            II-9


                                                            Tetra Holding (US), Inc.’s certificate of incorporation may limit its obligation to indemnify under these provisions. The Wisconsin Statute also provides that a corporation may purchasethe company shall indemnify each director and maintain insurance for officers and directors against liabilities incurred while acting in such capacities whether or not the corporation would be empowered to indemnify such persons under the Wisconsin Statute. Expenses for the defense of any action for which indemnification may be available may be advanced by the corporation under certain circumstances. The indemnification provided by the Wisconsin Statute is not exclusive of any other rights of indemnification to which a director or officer of the corporationcompany to the fullest extent permitted by applicable law, except as may be entitled.

                                                            Item 21. Exhibits and Financial Statement Schedules.otherwise provided in the company’s bylaws.

                                                             (a)    Exhibits.

                                                              ReferenceWillinger Bros., Inc.’s bylaws do not contain any provisions relating to indemnification.

                                                              Willinger Bros., Inc.’s certificate of incorporation provides that the company shall have the power to indemnify any person who is madea party to a proceeding, other than a proceeding by or in the right of the company, by reason of the fact that he or she is or was an officer, director, employee or agent of the company, or is or was serving at the request of the company as an officer, director, employee or agent of another company, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred, if such person acted in good faith and in a manner reasonably believed to be in, or not opposed to, the attached Exhibit Index.

                                                            (b)    Financial Statement Schedules.best interests of the company and, with respect to criminal proceedings, had no reasonable cause to believe that his or her conduct was unlawful. The company may also indemnify any such persons against proceedings by or in right of the company, provided that no indemnification is permitted with respect to proceedings under which such person shall have been adjudged to be liable for negligence or misconduct, unless a court shall determine that, despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity.

                                                             The following financial statement schedules are included

                                                            United Pet Group, Inc.’s amended and restated certificate of incorporation provides that the company shall indemnify any person who was or is a party or is threatened to be made a party to, or testifies in, this Registration Statement:

                                                              The financial statement schedule filedany threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative in nature, by reason of the fact that such person is or was a director, officer, employee or agent of the company, or is or was serving at the request of the company as parta director, officer, employee or agent of this Registration Statement is listedanother company, partnership, joint venture, employee benefit plan, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suite or proceeding to the full extent permitted by law, and the company may adopt bylaws or enter into agreements with any such person for the purpose of providing for such indemnification.

                                                              United Pet Group, Inc.’s amended and restated bylaws do not contain any provisions relating to indemnification.

                                                              Item 21.Exhibits and Financial Statement Schedules

                                                              (a) Exhibits.

                                                              See Index to Financial Statements on page F-1. Schedules other than the one listed on such index are omitted since they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.of Exhibits (page E-1).

                                                            Item 22. Undertakings.Undertakings

                                                            (a) The undersigned registrant hereby undertakes:

                                                            (1)

                                                            To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

                                                            (i)

                                                            To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
                                                            1933;

                                                            II-4


                                                                (ii)

                                                                To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the CommissionSEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20%20 percent change in the maximum aggregate offering price set forth in the "Calculation“Calculation of Registration Fee"Fee” table in the effective registration statement.

                                                                statement;

                                                                II-10


                                                                (iii)

                                                                To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

                                                              (2)

                                                              That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

                                                              (3)
                                                              That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.

                                                              (4)

                                                              (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the exchange offer.

                                                              offering.

                                                              (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.

                                                              (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions described under Item 20 or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

                                                              (c)

                                                              (d) The undersigned registrantsregistrant hereby undertakeundertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of the receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

                                                              (d)

                                                              (e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.

                                                              II-5

                                                              II-11



                                                              SIGNATURES

                                                               

                                                              Pursuant to the requirements of the Securities Act, of 1933, United Industries Corporationthe registrant has duly caused this Registration Statement on Form S-4registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouricities and states indicated below on April 30, 2003.June 3, 2005.

                                                              Signed in the city of Atlanta, state of Georgia:

                                                              SPECTRUM BRANDS, INC.
                                                               By:/s/    JAMES T. LUCKE        

                                                              Name:

                                                              James T. Lucke

                                                              Title:

                                                              Senior Vice President–
                                                              General Counsel and Secretary
                                                              ROV HOLDING, INC.
                                                              By:/s/    JAMES T. LUCKE        

                                                              Name:

                                                              James T. Lucke

                                                              Title:

                                                              Secretary
                                                              ROVCAL, INC.
                                                              By:/s/    JAMES T. LUCKE        

                                                              Name:

                                                              James T. Lucke

                                                              Title:

                                                              Secretary

                                                              Signed in the city of St. Louis, state of Missouri:

                                                              UNITED INDUSTRIES CORPORATION
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:


                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President, Secretary and General Counsel
                                                              SCHULTZ COMPANY
                                                              By:
                                                               

                                                              /s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              ROBERT L. CAULK      Louis N. Laderman

                                                              Title:

                                                              Robert L. Caulk
                                                              Chairman of the Board,Vice President and Chief Executive Officer (Principal Executive Officer)Secretary
                                                              WPC BRANDS, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              SYLORR PLANT CORP.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              GROUND ZERO, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary


                                                              NU-GRO US HOLDCO CORPORATION.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Secretary

                                                              NU-GRO AMERICA CORP.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              IB NITROGEN INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              NU-GRO TECHNOLOGIES, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              UNITED PET GROUP, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              DB ONLINE, LLC

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              SOUTHERN CALIFORNIA FOAM, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              AQ HOLDINGS, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              AQUARIA, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary


                                                              PERFECTO HOLDING CORP.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              AQUARIUM SYSTEMS, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              PERFECTO MANUFACTURING, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary
                                                              JUNGLETALK INTERNATIONAL, INC.
                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              PETS ‘N PEOPLE, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Signed in the city of Blacksburg, state of Virginia:

                                                              TETRA HOLDING (US), INC.

                                                              By:/s/    KEVIN BRENNER        

                                                              Name:

                                                              Kevin Brenner

                                                              Title:

                                                              President and CEO

                                                              WILLINGER BROS., INC.

                                                              By:/s/    KEVIN BRENNER        

                                                              Name:

                                                              Kevin Brenner

                                                              Title:

                                                              President and CEO


                                                              POWER OF ATTORNEY

                                                               

                                                              KNOW ALL MENPERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Caulk, Daniel J. Johnston and Louis N. Laderman,James T. Lucke and each of them his, her or its true and lawful attorneys-in-factattorney-in-fact and agents,agent with full power of substitution and resubstitution, for him, her or it and in his, her or its name, place and stead, in any and all capacities, to sign any orand all amendments (including post-effective amendments) to this registration statement, (and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering which this Registration Statement relates), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-factattorney-in-fact and agents, and each of them,agent full power and authority to do and perform each and every act and thing requisite andor necessary to be done in and about the premises, as fully to all intents and purposes as he, she or it might or could do in person, hereby ratifying and confirming all that said attorneys-in-factattorney-in-fact and agents or any of them, or theiragent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

                                                              * * * *

                                                              Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 and Power of Attorney haveregistration statement has been signed by the following persons in the capacities and on the dates indicated:indicated.

                                                              Signatures
                                                              Capacity
                                                              Dates





                                                              ROV HOLDING, INC.

                                                              By:/s/    ROBERT L. CAULK      JAMES T. LUCKE        
                                                              Robert L. Caulk

                                                              Name:

                                                               Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)James T. Lucke

                                                              Title:

                                                               April 30, 2003Secretary

                                                              /s/  
                                                              DANIEL J. JOHNSTON      
                                                              Daniel J. Johnston


                                                              Executive Vice President, Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer)


                                                              April 30, 2003

                                                              Date:    June 3, 2005


                                                              /s/  
                                                              C. HUNTER BOLL      
                                                              C. Hunter Boll


                                                              Director


                                                              April 30, 2003





                                                              II-6

                                                              ROVCAL, INC.



                                                              /s/  
                                                              CHARLES A. BRIZIUS      
                                                              Charles A. Brizius


                                                              Director


                                                              April 30, 2003

                                                              /s/  
                                                              JOHN W. FROMAN      
                                                              John W. Froman


                                                              Director


                                                              April 30, 2003

                                                              /s/  
                                                              DAVID A. JONES      
                                                              David A. JonesBy:


                                                              Director


                                                              April 30, 2003

                                                              /s/  
                                                              GARY M. RODKIN      
                                                              Gary M. Rodkin


                                                              Director


                                                              April 30, 2003

                                                              /s/  
                                                              SCOTT A. SCHOEN      
                                                              Scott A. Schoen


                                                              Director


                                                              April 30, 2003

                                                              II-7


                                                              SIGNATURES

                                                                      Pursuant to the requirements of the Securities Act of 1933, Ground Zero Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri on April 30, 2003.

                                                               GROUND ZERO INC./s/    JAMES T. LUCKE        

                                                              Name:


                                                              James T. Lucke

                                                              Title:

                                                              Secretary

                                                              Date:    June 3, 2005

                                                              UNITED INDUSTRIES CORPORATION

                                                              By:
                                                               

                                                              /s/  
                                                              ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                              Chairman of the Board and President (Principal Executive Officer)

                                                              POWER OF ATTORNEY

                                                                      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Caulk, Daniel J. Johnston and Louis N. Laderman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement (and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering which this Registration Statement relates), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

                                                              * * * *

                                                                      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 and Power of Attorney have been signed by the following persons in the capacities and on the dates indicated:

                                                              Signatures
                                                              Capacity
                                                              Dates





                                                              /s/    ROBERT L. CAULK      LOUIS N. LADERMAN        
                                                              Robert L. Caulk

                                                              Name:

                                                               Chairman of the Board and President (Principal Executive Officer)Louis N. Laderman

                                                              Title:

                                                               April 30, 2003Vice President, Secretary and General Counsel

                                                              Date:    June 3, 2005

                                                              SCHULTZ COMPANY

                                                              By:
                                                              /s/    
                                                              DANIEL J. JOHNSTON      
                                                              Daniel J. JohnstonLOUIS N. LADERMAN        

                                                              Name:


                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Director
                                                              (Principal Financial Officer and
                                                              Principal Accounting Officer)Secretary

                                                              Date:    June 3, 2005

                                                              WPC BRANDS, INC.



                                                              April 30, 2003

                                                              II-8


                                                              SIGNATURES

                                                                      Pursuant to the requirements of the Securities Act of 1933, Schultz Company has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri on April 30, 2003.

                                                              By: SCHULTZ COMPANY/s/    LOUIS N. LADERMAN        


                                                              By:


                                                              /s/  
                                                              ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                              Chairman of the Board and President (Principal Executive Officer)

                                                              POWER OF ATTORNEY

                                                              Name:

                                                                      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Caulk, Daniel J. Johnston and Louis N. Laderman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement (and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering which this Registration Statement relates), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

                                                              * * * *

                                                                      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 and Power of Attorney have been signed by the following persons in the capacities and on the dates indicated:

                                                              Signatures
                                                              Capacity
                                                              Dates





                                                              /s/  ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                               Chairman of the Board and President (Principal Executive Officer)Louis N. Laderman

                                                              Title:

                                                               April 30, 2003

                                                              /s/  
                                                              DANIEL J. JOHNSTON      
                                                              Daniel J. Johnston


                                                              Vice President and Director
                                                              (Principal Financial Officer and
                                                              Principal Accounting Officer)Secretary


                                                              April 30, 2003

                                                              Date:    June 3, 2005

                                                              II-9


                                                              SIGNATURES

                                                                      Pursuant to the requirements of the Securities Act of 1933, Sylorr Plant Corp. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri on April 30, 2003.


                                                              SYLORR PLANT CORP.

                                                              By: SYLORR PLANT CORP./s/    LOUIS N. LADERMAN        


                                                              By:


                                                              /s/  
                                                              ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                              Chairman of the Board and President (Principal Executive Officer)

                                                              POWER OF ATTORNEY

                                                              Name:

                                                                      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Caulk, Daniel J. Johnston and Louis N. Laderman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement (and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering which this Registration Statement relates), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

                                                              * * * *

                                                                      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 and Power of Attorney have been signed by the following persons in the capacities and on the dates indicated:

                                                              Signatures
                                                              Capacity
                                                              Dates





                                                              /s/  ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                               Chairman of the Board and President (Principal Executive Officer)Louis N. Laderman

                                                              Title:

                                                               April 30, 2003

                                                              /s/  
                                                              DANIEL J. JOHNSTON      
                                                              Daniel J. Johnston


                                                              Vice President and Director
                                                              (Principal Financial Officer and
                                                              Principal Accounting Officer)Secretary

                                                              Date:    June 3, 2005

                                                              GROUND ZERO, INC.



                                                              April 30, 2003

                                                              II-10


                                                              SIGNATURES

                                                                      Pursuant to the requirements of the Securities Act of 1933, WPC Brands, Inc. has duly caused this Registration Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Louis, State of Missouri on April 30, 2003.

                                                              By: WPC BRANDS, INC./s/    LOUIS N. LADERMAN        


                                                              By:


                                                              /s/  
                                                              ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                              Chairman of the Board and President (Principal Executive Officer)

                                                              POWER OF ATTORNEY

                                                              Name:

                                                                      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Caulk, Daniel J. Johnston and Louis N. Laderman, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this registration statement (and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, for the offering which this Registration Statement relates), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

                                                              * * * *

                                                                      Pursuant to the requirements of the Securities Act of 1933, this Registration Statement on Form S-4 and Power of Attorney have been signed by the following persons in the capacities and on the dates indicated:

                                                              Signatures
                                                              Capacity
                                                              Dates





                                                              /s/  ROBERT L. CAULK      
                                                              Robert L. Caulk
                                                               Chairman of the Board and President (Principal Executive Officer)Louis N. Laderman

                                                              Title:

                                                               April 30, 2003

                                                              /s/  
                                                              DANIEL J. JOHNSTON      
                                                              Daniel J. Johnston


                                                              Vice President and Director
                                                              (Principal Financial OfficerSecretary

                                                              Date:    June 3, 2005

                                                              NU-GRO US HOLDCO CORPORATION

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Secretary

                                                              Date:    June 3, 2005

                                                              NU-GRO AMERICA CORP.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and
                                                              Principal Accounting Officer) Secretary

                                                              Date:    June 3, 2005

                                                              IB NITROGEN INC.


                                                              By:
                                                              April 30, 2003
                                                              /s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              NU-GRO TECHNOLOGIES, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              UNITED PET GROUP, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              II-11


                                                              DB ONLINE, LLC

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              SOUTHERN CALIFORNIA FOAM, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              AQ HOLDINGS, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              AQUARIA, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              PERFECTO HOLDING CORP.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              AQUARIUM SYSTEMS, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              PERFECTO MANUFACTURING, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005


                                                              JUNGLETALK INTERNATIONAL, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              PETS ‘N PEOPLE, INC.

                                                              By:/s/    LOUIS N. LADERMAN        

                                                              Name:

                                                              Louis N. Laderman

                                                              Title:

                                                              Vice President and Secretary

                                                              Date:    June 3, 2005

                                                              TETRA HOLDING (US), INC.

                                                              By:/s/    KEVIN BRENNER        

                                                              Name:

                                                              Kevin Brenner

                                                              Title:

                                                              President and CEO

                                                              Date:    June 3, 2005

                                                              WILLINGER BROS., INC.

                                                              By:/s/    KEVIN BRENNER        

                                                              Name:

                                                              Kevin Brenner

                                                              Title:

                                                              President and CEO

                                                              Date:    June 3, 2005



                                                              EXHIBIT INDEX

                                                              Exhibit 1.1Purchase Agreement, dated January 21, 2005, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Banc of America Securities LLC, Citigroup Global Markets Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and ABN AMRO (filed by incorporation by reference to Exhibit 1.1 to the Current Report on Form 8-K filed with the SEC on January 24, 2005).
                                                              Exhibit 2.1Agreement and Plan of Merger, dated January 3, 2005, by and among Rayovac Corporation, Lindbergh Corporation and United Industries Corporation (filed by incorporation by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on January 4, 2005).
                                                              Exhibit 3.1  Amended and Restated Certificate of Incorporation of the Company, dated January 13, 1999. (1)
                                                              3.2Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated January 20, 1999. (1)
                                                              3.3Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated November 9, 2000. (3)
                                                              3.4Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated December 13, 2001. (8)
                                                              3.5Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, dated May 7, 2002. (8)
                                                              3.6Articles of Incorporation of Ground Zero Inc.*
                                                              3.7Amendment of Articles of Incorporation of Ground Zero Inc.*
                                                              3.8Certificate of Incorporation of Sylorr Plant Corp.*
                                                              3.9Amended Articles of Incorporation of Schultz Company.*
                                                              3.10Second Amended and Restated Articles of Incorporation of WPCSpectrum Brands, Inc.* (filed by incorporation by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2005 filed with the SEC on May 12, 2005).
                                                              3.11By-laws of the Company. (1)
                                                              3.12By-Laws of Ground Zero Inc.*
                                                              3.13By-Laws of Sylorr Plant Corp.*
                                                              3.14Exhibit 3.2  Amended and Restated By-LawsBy-laws of Schultz Company (f/k/a Chemical Dynamics,Spectrum Brands, Inc.) (filed by incorporation by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2005 filed with the SEC on May 12, 2005).*
                                                              3.15
                                                              Exhibit 3.3*  AQ Holdings, Inc. Amended and Restated Certificate of Incorporation.
                                                              Exhibit 3.4*AQ Holdings, Inc. By-Laws.
                                                              Exhibit 3.5*Aquaria, Inc. Second Amended and Restated Articles of Incorporation.
                                                              Exhibit 3.6*Aquaria, Inc. Amended and Restated By-Laws.
                                                              Exhibit 3.7*Aquarium Systems, Inc. Certificate of Incorporation.
                                                              Exhibit 3.8*Aquarium Systems, Inc. By-Laws.
                                                              Exhibit 3.9*DB Online, LLC Articles of Organization.
                                                              Exhibit 3.10*DB Online, LLC Operating Agreement.
                                                              Exhibit 3.11*Ground Zero Inc. Articles of Incorporation.
                                                              Exhibit 3.12*Ground Zero Inc. By-Laws.
                                                              Exhibit 3.13*IB Nitrogen Inc. Certificate of Incorporation.
                                                              Exhibit 3.14*IB Nitrogen Inc. By-Laws.
                                                              Exhibit 3.15*JungleTalk International, Inc. Certificate of Incorporation.
                                                              Exhibit 3.16*JungleTalk International, Inc. By-Laws.
                                                              Exhibit 3.17*Nu-Gro America Corp. Certificate of Incorporation.
                                                              Exhibit 3.18*Nu-Gro America Corp. By-Laws.
                                                              Exhibit 3.19*Nu-Gro Technologies, Inc. Certificate of Incorporation.
                                                              Exhibit 3.20*Nu-Gro Technologies, Inc. By-Laws.
                                                              Exhibit 3.21*Nu-Gro US Holdco Corporation Certificate of Incorporation.
                                                              Exhibit 3.22*Nu-Gro US Holdco Corporation By-Laws.
                                                              Exhibit 3.23*Perfecto Holding Corp. Fourth Amended and Restated Certificate of Incorporation.
                                                              Exhibit 3.24*Perfecto Holding Corp. Amended and Restated By-Laws.

                                                              Exhibit 3.25*Perfecto Manufacturing, Inc. Certificate of Incorporation.
                                                              Exhibit 3.26*Perfecto Manufacturing, Inc. By-Laws.
                                                              Exhibit 3.27*Pets ‘N People, Inc. Articles of Incorporation.
                                                              Exhibit 3.28*Pets ‘N People, Inc. By-Laws.
                                                              Exhibit 3.29ROV Holding, Inc. Certificate of Incorporation (filed by incorporation by reference to Exhibit 3.3 to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 3.30ROV Holding, Inc. By-Laws (filed by incorporation by reference to Exhibit 3.4 to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 3.31Rovcal, Inc. Articles of Incorporation (filed by incorporation by reference to Exhibit 3.5 to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 3.32Rovcal, Inc. By-Laws (filed by incorporation by reference to Exhibit 3.6 to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 3.33*Schultz Company Amended Articles of Incorporation.
                                                              Exhibit 3.34*Schultz Company By-Laws.
                                                              Exhibit 3.35*Southern California Foam, Inc. Articles of Incorporation.
                                                              Exhibit 3.36*Southern California Foam, Inc. By-Laws.
                                                              Exhibit 3.37*Sylorr Plant Corp. Certificate of Incorporation.
                                                              Exhibit 3.38*Sylorr Plant Corp. By-Laws.
                                                              Exhibit 3.39*Tetra Holding (US), Inc. Certificate of Incorporation.
                                                              Exhibit 3.40*Tetra Holding (US), Inc. By-Laws
                                                              Exhibit 3.41*United Industries Corporation Amended and Restated Certificate of Incorporation.
                                                              Exhibit 3.42*United Industries Corporation By-Laws.
                                                              Exhibit 3.43*United Pet Group, Inc. Amended and Restated Certificate of Incorporation.
                                                              Exhibit 3.44*United Pet Group, Inc. Amended and Restated By-Laws.
                                                              Exhibit 3.45*Willinger Bros., Inc. Certificate of Incorporation.
                                                              Exhibit 3.46*Willinger Bros., Inc. By-Laws.
                                                              Exhibit 3.47*WPC Brands, Inc. (f/k/a Wisconsin Pharmacal Co. Inc.).*Third Amended and Restated Articles of Incorporation.
                                                              Exhibit 3.48*WPC Brands, Inc. By-Laws.
                                                              Exhibit 4.1  Securities Purchase Agreement, dated as of March 19, 1999, among the Company, CIBC Oppenheimer Corp. and NationsBanc Montgomery Securities L.L.C. (1)
                                                              4.2Indenture dated as of March 24, 1999, between the CompanyFebruary 7, 2005 by and State Streetamong Rayovac Corporation, certain of Rayovac Corporation’s domestic subsidiaries and U.S. Bank and Trust Company as Trustee with respectNational Association (filed by incorporation by reference to Exhibit 4.1 to the 97/8% senior subordinated notes due 2009 (includingCurrent Report on Form 8-K filed with the form of 97/8% senior subordinated notes)SEC on February 11, 2005). (1)
                                                              Exhibit 4.2Supplemental Indenture dated as of May 3, 2005 to the Indenture dated as of February 7, 2005 by and among Spectrum Brands, Inc., the Guarantors (as defined in the Indenture), certain of Spectrum Brands, Inc.’s domestic subsidiaries and U.S. Bank National Association (filed by incorporation by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on May 5, 2005).

                                                              Exhibit 4.3Indenture, dated September 30, 2003, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Vestar Shaver Corp., Vestar Razor Corp., Remington Products Company, L.L.C., Remington Capital Corporation, Remington Rand Corporation, Remington Corporation, L.L.C. and U.S. Bank National Association (filed by incorporation by reference to the Current Report on Form 8-K filed with the SEC on October 15, 2003).
                                                              Exhibit 4.4Supplemental Indenture, dated October 24, 2003, by and among Rayovac Corporation, ROV Holding, Inc., Rovcal, Inc., Remington Products Company, L.L.C. and U.S. Bank National Association (filed by incorporation by reference to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 4.5Third Supplemental Indenture dated as of February 7, 2005 to the Indenture dated as of September 30, 2003 by and among Rayovac Corporation, certain of Rayovac Corporation’s domestic subsidiaries and U.S. Bank National Association (filed by incorporation by reference to Exhibit 4.2 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 4.6Fourth Supplemental Indenture dated as of May 3, 2005 to the Indenture dated as of September 20, 2003 by and among Spectrum Brands, Inc., the Guarantors (as defined in the Indenture), certain of Spectrum Brands, Inc.’s domestic subsidiaries and U.S. Bank National Association (filed by incorporation by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on May 5, 2005).
                                                              Exhibit 4.7  Registration Rights Agreement dated as of March 24, 1999, among the Company, CIBC Oppenheimer Corp.February 7, 2005 by and NationsBanc Montgomery Securities L.L.C. (1)
                                                              4.4Securities Purchase Agreement, dated asbetween Rayovac Corporation, certain of March 20, 2003, among the Company, the Guarantors listed therein,Rayovac’s domestic subsidiaries, Banc of America Securities LLC, CIBC WorldCitigroup Global Markets Corp.Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman, Sachs & Co.*ABN AMRO Incorporated (filed by incorporation by reference to Exhibit 4.3 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              4.5
                                                              Exhibit 4.8  Indenture, dated as of March 27, 2003, betweenSpecimen certificate representing the Company, the Guarantors set forth therein and U.S. Bank National Association as trustee with respectcommon stock (filed by incorporation by reference to the 97/8% senior subordinated notes due 2009 (including the form of 97/8% senior subordinated notes)Registration Statement on Form S-l, Registration No. 333-35181).*
                                                              4.6Registration Rights Agreement, dated as of March 27, 2003, the Guarantors set forth therein and Banc of America Securities LLC, CIBC World Markets Corp. and Goldman, Sachs & Co.*
                                                              5.1Exhibit 5.1*  Opinion of KirklandSkadden, Arps, Slate, Meagher & Ellis.**Flom LLP.
                                                              5.2
                                                              Exhibit 5.2*Opinion of James T. Lucke, Senior Vice President, Secretary and General Counsel of  Spectrum Brands, Inc.
                                                              Exhibit 5.3*  Opinion of Thompson Coburn LLP.**
                                                              5.3
                                                              Exhibit 5.4*  Opinion of Reinhart Boerner Van Deuren S.C.**Foley & Lardner LLP.
                                                              Exhibit 5.5*Opinion of Cades Schutte LLP.
                                                              Exhibit 10.1  United Industries Corporation Deferred Compensation Plan. (1)†
                                                              10.2United Industries Corporation 1999 Stock Option Plan. (1)†
                                                              10.3United Industries Corporation 2001 Stock Option Plan. (3)†
                                                              10.4Form of Stock OptionAmended and Restated Employment Agreement, to the Company's 2001 Stock Option Plan. †
                                                              10.5Management Agreement, datedeffective as of January 20, 1999, between the Company and Stephen R. Brian. (1)†
                                                              10.6Management Agreement, dated as of January 20, 1999, between the Company and Richard A. Bender. (1)†
                                                              10.7Management Agreement, dated as of January 20, 1999, between the Company and William P. Johnson. (1)†
                                                              10.8Management Agreement, dated as of January 20, 1999, between the Company and Daniel J. Johnston. (1)†


                                                              10.9Restated Management Agreement, dated as of March 30, 2001, by and among the Company, Daniel Johnston and the Trust established by that certain Trust Agreement dated as of January 20, 1999October 1, 2004, by and between the Company and Stephen R. Brian, as original trustee. (9)†
                                                              10.10Consulting Agreement, dated as of January 20, 1999, between the CompanyRayovac Corporation and David A. Jones. (1)Jones (incorporated by reference to Exhibit 10.1 to the Annual Report on Form 10-K for the fiscal year ended September 30, 2002, filed with the SEC on December 14, 2004).
                                                              10.11Stockholders Agreement, dated as of January 20, 1999, among the Company and the Stockholders (as defined therein). (1)
                                                              10.12Employment Letter Agreement, dated as of January 22, 2001, between the Company and John Timony. (9)†
                                                              10.13Amendment to Employment Letter Agreement, dated as of March 7, 2001, between the Company and John Timony. (9)†
                                                              10.14Second Amendment to Employment Letter Agreement, dated as of June 11, 2001, between the Company and John Timony. (9)†
                                                              10.15Exhibit 10.2  Amended and Restated Employment Agreement, dated as of JanuaryApril 1, 2002,2005, by and between the Company and Robert L. Caulk. (9)†
                                                              10.16Employment Letter Agreement, dated as of March 28, 2001, between the CompanyRayovac Corporation and Kent J. Davies. (9)†Hussey (filed by incorporation by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 7, 2005).
                                                              10.17
                                                              Exhibit 10.3  Amendment toAmended and Restated Employment Letter Agreement, dated as of June 11, 2001, between the Company and Kent J. Davies. (9)†
                                                              10.18Employment Letter Agreement, dated as of February 2, 1995, between the Company and Robert S. Rubin. (9)†
                                                              10.19Amendment to Employment Letter Agreement, dated as of June 11, 2001, between the Company and Robert S. Rubin. (9)†
                                                              10.20Amendment to Employment Letter Agreement, dated as of April 2, 2002,1, 2005, by and between the Company and Robert S. Rubin. (9)†Kenneth V. Biller (filed by incorporation by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 7, 2005).
                                                              10.21
                                                              Exhibit 10.4  Professional ServicesAmended and Restated Registered Director’s Agreement, dated April 1, 2005, by and between Rayovac Europe GmbH and Remy Burel (filed by incorporation by reference to exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on April 7, 2005).

                                                              Exhibit 10.5Separation Agreement and Release between the Company and Lester Lee dated as of January 20, 1999, between THL Equity Advisors IV, L.L.C., Thomas H. Lee Capital, L.L.C. andApril 13, 2005 (filed by incorporation be reference to Exhibit 10.1 to the Company. (1)Current Report on Form 8-K filed with the SEC on April 19, 2005).
                                                              10.22
                                                              Exhibit 10.6  Building Lease between Rayovac Corporation and SPG Partners dated May 14, 1985, as amended June 24, 1986, and June 10, 1987 (filed by incorporation by reference to the Registration Statement on form S-1 filed with the SEC on December 13, 1996).
                                                              Exhibit 10.7Amendment, dated December 31, 1998, between Rayovac Corporation and SPG Partners, to the Building Lease, between Rayovac Corporation and SPG Partners, dated May 14, 1985 (filed by incorporation by reference to Exhibit 10.12 to the Quarterly Report on Form 10-Q for the quarterly period ended January 3, 1999, filed with the SEC on February 17, 1999).
                                                              Exhibit 10.8Real Property Leasing Agreement, dated December 21, 2000, by and between VARTA Gerätebatterie GmbH, as Tenant, and ROSATA Grudstücks-Vermietungsgesellschaft mbH and Co. object Dischingin KG, as Landlord, as amended (filed by incorporation by reference to Exhibit 10.15 to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, filed with the SEC on February 12, 2003).
                                                              Exhibit 10.9Addendum No. 2 to Real Property Leasing Agreement, dated December 21, 2000, by and between VARTA Gerätebatterie GmbH, as Tenant, and ROSATA Grudstücks-Vermietungsgesellschaft mbH and Co. object Dischingin KG, as Landlord, as amended (filed by incorporation by reference to Exhibit 10.16 to the Registration Statement on Form S-4 filed with the SEC on November 6, 2003).
                                                              Exhibit 10.10Fourth Amended and Restated Credit Agreement, dated February 7, 2005 between Rayovac Corporation, the Subsidiary Borrowers named therein, Bank of America, N.A., Citicorp North America, Inc., Merrill Lynch Capital Corporation, the other lenders party thereto, Banc of America Securities LLC, Citigroup Global Markets Inc., and Merrill Lynch, Pierce, Fenner & Smith (filed by incorporation by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 10.11Amendment No.1 dated as of April 29, 2005 to the Fourth Amended and Restated Credit Agreement dated as of March 24, 1999 amongFebruary 7, 2005 (filed by incorporation by reference to Exhibit 10.14 to the Company, NationsBanc Montgomery Securities L.L.C., Morgan Stanley Senior Funding, Inc., Canadian Imperialcurrent report on Form 8-K filed with the SEC on May 5, 2005).
                                                              Exhibit 10.12Security Agreement, dated February 7, 2005, between the Grantors referred to therein and Bank Of America, N.A. (filed by incorporation by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 10.13ROV Guarantee, dated as of Commerce, NationsBank, N.A.,February 7, 2005 from the Initial Lenders (as defined therein), the Swing Line Bank (as defined therein)ROV Guarantors named therein and the Initial Issuing Bank (as defined therein)Additional ROV Guarantors named therein in favor of the Secured Parties referred to in the Credit Agreement referred to therein (filed by incorporation by reference to Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on February 11, 2005). (1)
                                                              10.23
                                                              Exhibit 10.14  Waiver No. 1KGaA Guarantee dated as December 30, 1999of February 7, 2005 from the KGaA Guarantors named therein and the Additional KGaA Guarantors referred to therein in favor of the Lenders referred to in the Credit Agreement referred to therein (filed by incorporation by reference to Exhibit 10.4 to the AmendedCurrent Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 10.15UK Guarantee dated as of February 7, 2005 from the UK Guarantors named therein and Restatedthe Additional UK Guarantors referred to therein in favor of the Lenders referred to in the Credit Agreement referred to therein (filed by incorporation by reference to Exhibit 10.5 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).

                                                              Exhibit 10.16Registration Rights Agreement, dated February 7, 2005, by and among Rayovac Corporation and those Persons listed on Schedule 1 attached thereto, who were, immediately prior to the Effective Time, stockholders of United Industries Corporation (filed by incorporation by reference to Exhibit 10.6 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 10.17Standstill Agreement by and between Rayovac Corporation, Thomas H. Lee Equity Fund IV, L.P., THL Equity Advisors IV, LLC, Thomas H. Lee Partners, L.P., and Thomas H. Lee Advisors, L.L.C. (filed by incorporation by reference to Exhibit 10.7 to the Current Report on Form 8-K filed with the SEC on February 11, 2005).
                                                              Exhibit 10.18Joint Venture Agreement, dated July 28, 2002, by and among Rayovac Corporation, VARTA AG and ROV German Limited GmbH, as amended (filed by incorporation by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on October 16, 2002).
                                                              Exhibit 10.19Technical Collaboration, Sale and Supply Agreement, dated as of March 24, 1999 (as amended)5, 1998, by and among Rayovac Corporation, Matsushita Battery Industrial Co., Ltd. and Matsushita Electric Industrial Co., Ltd. (filed by incorporation by reference to Exhibit 10.15 to the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities LLC (formerly known as NationsBanc Montgomery Securities LLC), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce. (9)Quarterly Report on Form 10-Q for the quarterly period ended March 28, filed with the SEC on May 5, 1998).
                                                              Exhibit 10.20Lease by and between Rex Realty Co., Lessor, and United Industries Corporation, Lessee, effective December 1, 1995 (filed by incorporation by reference to Exhibit 10.16 to the Form S-4 of United Industries Corporation (SEC file # 333-76055) filed with SEC on April 9, 1999).
                                                              Exhibit 10.21Lease and Agreement between LGH Investment, L.L.C., as Landlord, and Chemical Dynamics, Inc. d/b/a Schultz Company, as Tenant, dated January 18, 2000 (filed by incorporation by reference to Exhibit 10.21 to the Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2005 filed with the SEC on May 13, 2005).
                                                              Exhibit 10.22Lease Agreement between Pursell Holdings, LLC, as Lessor, and Sylorr Plant Corp., as Lessee, dated October 3, 2002 (filed by incorporation by reference to Exhibit 10.22 to the Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2005 filed with the SEC on May 13, 2005).
                                                              Exhibit 10.23Trademark License and Manufacturing and Supply Agreement by and between United Industries Corporation and Home Depot U.S.A., Inc. effective as of January 1, 2004 (filed by incorporation by reference to Exhibit 10.50 to the Quarterly Report on Form 10-Q of United Industries Corporation (SEC file # 333-76055) for the quarterly period ended March 31, 2004, filed with the SEC on May 14, 2004).
                                                              Exhibit 10.24  Amendment and Waiver No. 2 dated as January 24, 2000Rayovac Corporation 1996 Stock Option Plan (filed by incorporation by reference to Exhibit 10.11 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongQuarterly Report on Form 10-Q for the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities LLC (formerly known as NationsBanc Montgomery Securities LLC), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce. (9)quarterly period ended June 29, 1997, filed with the SEC on August 13, 1997).
                                                              Exhibit 10.25  Amendment and Waiver No. 3 dated as November 7, 20001997 Rayovac Incentive Plan (filed by incorporation by reference to Exhibit 10.13 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongRegistration Statement on Form S-1 filed with the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities LLC (formerly known as NationsBanc Montgomery Securities LLC), Morgan Stanley Senior Funding, Inc. and Canadian Imperial Bank of Commerce. (9)SEC on October 31, 1997).


                                                              Exhibit 10.26  Amendment No. 4 dated as February 13, 20022004 Rayovac Incentive Plan (filed by incorporation by reference to Exhibit 10.24 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongQuarterly Report on Form 10-Q for the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities LLC (formerly known as NationsBanc Montgomery Securities L.L.C.), Morgan Stanley Senior Funding,  Inc., and Canadian Imperial Bank of Commerce. (4)quarterly period ended June 27, 2004, filed with the SEC on August 11, 2004).
                                                              Exhibit 10.27  Amendment No. 5 dated as May 8, 2002Form of Award Agreements under 2004 Rayovac Incentive Plan (filed by incorporation by reference to Exhibit 10.21 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongAnnual Report on Form 10-K for the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding, Inc., and Canadian Imperial Bank of Commerce. (5)year ended September 30, 2004, filed with the SEC on December 14, 2004).

                                                              Exhibit 10.28  Amendment No. 6 dated as June 14, 2002Form of Restricted Stock Award Agreement under the 2004 Rayovac Incentive Plan (filed by incorporation by reference to Exhibit 10.4 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongCurrent Report on Form 8-K filed with the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding, Inc., and Canadian Imperial Bank of Commerce. (6)SEC on April 7, 2005).
                                                              Exhibit 10.29  Amendment No. 7 dated asForm of September 30, 2002Superior Achievement Program Restricted Stock Award Agreement under the 2004 Rayovac Incentive Plan (filed by incorporation by reference to Exhibit 10.5 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongCurrent Report on Form 8-K filed with the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding,  Inc., and Canadian Imperial Bank of Commerce. (7)SEC on April 7, 2005).
                                                              Exhibit 10.30  Amendment No. 8 dated as of November 4, 2002Rayovac Corporation Supplemental Executive Retirement Plan (filed by incorporation by reference to Exhibit 10.21 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongQuarterly Report on Form 10-Q for the Company, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding,  Inc., and Canadian Imperial Bank of Commerce. (7)quarterly period ended December 29, 2002, filed with the SEC on February 12, 2003).
                                                              Exhibit 10.31  Amendment No. 9 dated as of December 6, 20023 to Rayovac Corporation Supplemental Executive Retirement Plan (filed by incorporation by reference to Exhibit 10.28 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongQuarterly Report on Form 10-Q for the Compa ny, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding,  Inc., and Canadian Imperial Bank of Commerce. (9)quarterly period ended June 27, 2004, filed with the SEC on August 11, 2004).
                                                              Exhibit 10.32Rayovac Corporation Deferred Compensation Plan, as amended (filed by incorporation by reference to Exhibit 10.22 to the Quarterly Report on Form 10-Q for the quarterly period ended December 29, 2002, filed with the SEC on February 12, 2003).
                                                              Exhibit 10.33  Amendment No. 10 dated as of March 14, 20033 and Amendment No. 4 to Rayovac Corporation Deferred Compensation Plan (filed by incorporation by reference to Exhibit 10.25 to the Amended and Restated Credit Agreement dated as of March 24, 1999 (as amended) amongAnnual Report on Form 10-K for the Comp any, certain banks, financial institutions and other institutional lenders party thereto, Bank of America, N.A. (formerly known as NationsBank, N.A.), Banc of America Securities L.L.C. (formerly known as NationsBanc Montgomery Securities L.L.C.) and Morgan Stanley Senior Funding,  Inc., and Canadian Imperial Bank of Commerce. (9)year ended September 30, 2004, filed with the SEC on December 14, 2004).
                                                              10.33
                                                              Exhibit 12.1*  Office Lease, dated asStatement of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran Foods Inc. (2)Computation of Ratio of Earnings to Fixed Charges.
                                                              10.34
                                                              Exhibit 21.1*  First Amendment dated asList of August 31, 1987 to Office Lease, dated assubsidiaries of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran FoodsSpectrum Brands, Inc. (2)
                                                              10.35
                                                              Exhibit 23.1*  Second Amendment dated asConsent of March 2, 1990KPMG LLP (relating to Office Lease, dated as of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran Foods Inc. (2)Rayovac Corporation).
                                                              10.36Third Amendment dated as of April 3, 1992 to Office Lease, dated as of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran Foods Inc. (2)


                                                              10.37Fourth Amendment dated as of June 6, 1994 to Office Lease, dated as of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran Foods Inc. (2)
                                                              10.38Fifth Amendment dated as of October 1, 1996 to Office Lease, dated as of June 15, 1987, between Mid-County Trade Center Investment Company Limited Partnership, Moran Foods and Moran Foods Inc. (2)
                                                              10.39Lease, dated as of December 1, 1995, between Rex Realty Co. and the Company. (1)
                                                              10.40Lease, dated as of November 27, 1989, between Rex Realty Co. and the Company. (1)
                                                              10.41Lease, dated as of October 13, 1995, between First Industrial Financing Partnership LP and Rex Realty Co. (9)
                                                              10.42Sublease, dated as of October 13, 1995, between Rex Realty Co. and the Company. (9)
                                                              10.43Exchange Agreement dated as of June 14, 2002, among Bayer Corporation, an Indiana corporation, Bayer Advanced L.L.C., a Delaware limited liability company, and the Company. (6)(10)
                                                              10.44In-Store Service Agreement dated as of June 7, 2002 among the Company, Bayer Corporation, an Indiana corporation, and Bayer Advanced L.L.C., a Delaware limited liability company. (6)(10)
                                                              10.45Supply Agreement dated as of June 14, 2002 between Bayer Corporation, an Indiana corporation, and the Company. (7)(10)
                                                              21.1Subsidiaries. (8)
                                                              23.1Exhibit 23.2*  Consent of PricewaterhouseCoopers LLP.*Auditores Independentes (relating to Microlite S.A.).
                                                              23.2
                                                              Exhibit 23.3*  Consent of PricewaterhouseCoopers LLP.*LLP (relating to United Industries Corporation).
                                                              23.3
                                                              Exhibit 23.4*  Consent of KirklandPricewaterhouseCoopers LLP (relating to United Pet Group, Inc).
                                                              Exhibit 23.5*Consent of Ernst & Ellis (IncludedYoung LLP (relating to The Nu-Gro Corporation)
                                                              Exhibit 23.6*Consent of KPMG LLP (relating to Tetra Holding (US), Inc. and subsidiary).
                                                              Exhibit 23.7*Consent of Skadden, Arps, Slate, Meagher and Flom LLP (included in Exhibit 5.1)
                                                              Exhibit 23.8*Consent of James T. Lucke, Esq. (included in Exhibit 5.2).
                                                              23.4
                                                              Exhibit 23.9*  Consent of Thompson Coburn LLP (Included in Exhibit 5.2).
                                                              23.5Consent of Reinhart Boerner Van Deuren S.C. (Included(included in Exhibit 5.3).
                                                              24.1
                                                              Exhibit 23.10*  PowersConsent of Foley & Lardner LLP (included in Exhibit 5.4).
                                                              Exhibit 23.11*Consent of Cades Schutte (included in Exhibit 5.5).
                                                              Exhibit 24.1*Power of Attorney (see pages II-6 - II-11)(included on signature page to the registration statement).
                                                              25.1
                                                              Exhibit 25.1*  Form T-1 Statement of Eligibility under the Trust Indenture Act of Trustee on Form T-1.*1939 of U.S. Bank National Association, as Trustee.
                                                              99.1
                                                              Exhibit 99.1*  Form of Series B Letter of Transmittal.*
                                                              99.2
                                                              Exhibit 99.2*  Form of Series B Letter of Notice of Guaranteed Delivery.*
                                                              99.3
                                                              Exhibit 99.3*  Form of Series B Tender Instructions.*Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.
                                                              99.4
                                                              Exhibit 99.4*  Form of Series C Letter of Transmittal.*
                                                              99.5Form of Series C Letter of Notice of Guaranteed Delivery.*
                                                              99.6Form of Series C Tender Instructions.*to Clients.

                                                              *
                                                              Filed herewith.

                                                              **
                                                              To be filed by amendment.

                                                              (†)
                                                              Management contract or compensatory plan.

                                                              (1)
                                                              Previously filed as an Exhibit to Registrant's Registration Statement on Form S-4 (No. 333-76055) filed on April 9, 1999 and incorporated by reference herein.

                                                              (2)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-K filed on March 30, 2000 and incorporated by reference herein.

                                                              (3)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-K filed on April 20, 2001 and incorporated by reference herein.

                                                              (4)
                                                              Previously filed as an Exhibit to the Registrant's Form 8-K filed on February 16, 2002 and incorporated by reference herein.

                                                              (5)
                                                              Previously filed as an Exhibit to the Registrant's Form 8-K filed on May 24, 2002 and incorporated by reference herein.

                                                              (6)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-Q filed on August 14, 2002 and incorporated by reference herein.

                                                              (7)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-Q filed on November 12, 2002 and incorporated by reference herein.

                                                              (8)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-K filed on March 20, 2003 and incorporated by reference herein.

                                                              (9)
                                                              Previously filed as an Exhibit to the Registrant's Form 10-K/A filed on April 17, 2003 and incorporated by reference herein.

                                                              (10)
                                                              Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.


                                                              *Filed herewith


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                                                              Table of Co-Registrants
                                                              TABLE OF CONTENTS
                                                              PROSPECTUS SUMMARY
                                                              Our Business
                                                              Competitive Strengths
                                                              Business Strategy
                                                              Recent Acquisitions
                                                              Corporate Information
                                                              Industry and Sales Data
                                                              The Initial Offering
                                                              The Exchange Offer
                                                              The 9 7/8% Series D Senior Subordinated Notes due 2009
                                                              Risk Factors
                                                              Summary Historical and Pro Forma Financial Data
                                                              RISK FACTORS
                                                              Risks Relating to Exchange Offer
                                                              Risks Relating to the Series D Notes
                                                              Risks Relating to Our Business
                                                              SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
                                                              USE OF PROCEEDS
                                                              CAPITALIZATION
                                                              UNAUDITED PRO FORMA FINANCIAL DATA
                                                              Unaudited Pro Forma Consolidated Statement of Operations For the Year Ended December 31, 2002
                                                              SELECTED HISTORICAL FINANCIAL DATA
                                                              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                                              BUSINESS
                                                              MANAGEMENT
                                                              CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
                                                              SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                                                              DESCRIPTION OF CERTAIN INDEBTEDNESS
                                                              THE EXCHANGE OFFER
                                                              SUMMARY OF KEY DIFFERENCES BETWEEN THE INDENTURE GOVERNING THE SERIES B NOTES AND THE INDENTURE GOVERNING THE SERIES D NOTES
                                                              DESCRIPTION OF THE NOTES
                                                              MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS
                                                              PLAN OF DISTRIBUTION
                                                              LEGAL MATTERS
                                                              EXPERTS
                                                              WHERE YOU CAN FIND MORE INFORMATION
                                                              INDEX TO FINANCIAL STATEMENTS
                                                              UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data)
                                                              UNITED INDUSTRIES CORPORATION AND SUBISIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Dollars in thousands)
                                                              UNITED INDUSTRIES CORPORATION AND SUBISIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands)
                                                              UNITED INDUSTRIES CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share data)
                                                              STATEMENT OF CASH FLOWS
                                                              UNITED INDUSTRIES CORPORATION SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
                                                              SCHULTZ COMPANY BALANCE SHEETS
                                                              SCHULTZ COMPANY STATEMENTS OF OPERATIONS
                                                              SCHULTZ COMPANY STATEMENTS OF CASH FLOWS
                                                              SCHULTZ COMPANY STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                                                              SCHULTZ COMPANY NOTES TO FINANCIAL STATEMENTS
                                                              PART II INFORMATION NOT REQUIRED IN PROSPECTUS
                                                              SIGNATURES
                                                              EXHIBIT INDEX

                                                              E-6