<PAGE>   1
                                                                   Exhibit 10.21


                              as of April 13, 2001


The Holmes Group, Inc. (formerly known as Holmes Products Corp.),
The Rival Company,
Holmes Products (Far East) Limited,
Esteem Industries Limited,
Raider Motor Corporation,
Holmes Products (Europe) Limited,
Bionaire International B.V.,
Patton Electric (Hong Kong), Ltd.,
The Holmes Group Canada Ltd.
One Holmes Way
Milford, Massachusetts 01757

Attention: President

     Re:  Forbearance Agreement and Third Amendment
          -----------------------------------------

Ladies and Gentlemen:

     Reference is hereby made to the Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of February 5, 1999 (as amended and in effect from
time to time, the "Credit Agreement"), among The Holmes Group, Inc. (the
"Company"), a Massachusetts corporation, The Rival Company ("Rival"), a Delaware
corporation, Holmes Products (Far East) Limited ("Holmes Far East"), a Bahamas
corporation, Esteem Industries Limited ("Esteem"), a corporation organized under
the laws of Hong Kong, Raider Motor Corporation ("Raider"), a Bahamas
corporation, Holmes Products (Europe) Limited ("Holmes UK"), a corporation
organized under the laws of the United Kingdom, Bionaire International B.V.
("Bionaire B.V."), a private company with limited liability incorporated under
the laws of the Netherlands, Patton Electric (Hong Kong) Ltd. ("Patton HK"), a
corporation organized under the laws of Hong Kong, The Holmes Group Canada Ltd.
("Holmes Canada", and, collectively with the Company, Rival, Holmes Far East,
Esteem, Raider, Holmes UK, Bionaire B.V. and Patton HK, the Borrowers and each
individually a "Borrower"), Fleet National Bank (formerly known as BankBoston,
N.A.), a national banking association and the other lending institutions listed
on SCHEDULE 1 to the Credit Agreement (collectively, the "Banks"), Fleet
National Bank (formerly known as BankBoston, N.A.) as administrative agent for
itself and the Banks (in such capacity, the "Agent"), Lehman Commercial Paper
Inc. as documentation agent for the Banks and Lehman Brothers Inc. as
co-arranger for the Banks. All


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capitalized terms used herein without definition shall have the same meanings
herein as in the Credit Agreement.

     The Borrowers have notified the Agent and the Banks that as of December 31,
2000, the Borrowers have failed to comply with the covenants contained in
ss.ss.10.1 and 10.3 of the Credit Agreement as of such date and, in addition,
the Borrowers have failed to comply with the financial covenant contained in
ss.10.2 of the Credit Agreement for the fiscal quarter ended December 31, 2000,
each of which failure constitutes an Event of Default under ss.13.1 of the
Credit Agreement. The Borrowers acknowledge that the Borrowers are in default of
the financial covenants contained in ss.ss.10.1 and 10.3 of the Credit Agreement
as of such date, and continue to be in default of such financial covenants as of
the date hereof. In addition, the Borrowers also acknowledge that the Borrowers
are in default of ss.10.2 of the Credit Agreement for the fiscal quarter ended
December 31, 2000. These Events of Default set forth in the immediately
preceding three sentences are hereinafter referred to as the "SPECIFIED
DEFAULTS", and the Borrowers acknowledge and agree that the Agent and the Banks
have not waived any of the Specified Defaults. The Borrowers also acknowledge
and agree that as a result of the Specified Defaults the Agent and the Banks
have no further commitment to lend to the Borrowers and to issue, extend or
renew any Letters of Credit, and the Agent and the Banks are entitled to proceed
to enforce any and all of their rights and remedies under the terms of the Loan
Documents. The Borrowers have now requested that the Agent and the Banks
continue to advance Revolving Credit Loans to support the Borrowers' working
capital needs, and to forbear from making demand upon the Notes issued under the
Credit Agreement and to forbear from exercising and pursuing their rights and
remedies under the Credit Agreement and the other Loan Documents until the
Forbearance Termination Date (as hereinafter defined) under the following terms
and conditions contained herein. In consideration for the Agent and the Banks'
agreeing to continue to advance Revolving Credit Loans, subject to the
conditions and limitations contained herein, and to forbear from making demand
upon the Obligations under the Credit Agreement, the Notes and the other Loan
Documents and pursuing the Agent's and the Banks' rights and remedies under the
Credit Agreement and the other Loan Documents, all upon the terms and subject to
the conditions contained in this Agreement, the Borrowers hereby agree with the
Agent and the Banks as follows.

     SS.1. DEFINITIONS. All capitalized terms used herein without definition
that are defined in the Credit Agreement, as amended and in effect on the date
hereof, shall have the same meanings herein as therein. All accounting terms
used herein and not otherwise defined shall be used in accordance with generally
accepted accounting principles.

     SS.2. RATIFICATION OF EXISTING AGREEMENTS. Each of the Borrowers and the
Guarantors hereby adopts again, ratifies and confirms in all respects, as its
own act and deed, all of the Obligations, except as otherwise expressly modified
in this Agreement upon the terms set forth herein. All of the Borrowers' and the
Guarantors' obligations to the Banks and the Agent under the Credit Agreement
and the other Loan Documents, and any and all other obligations at any time and
from time to time owed by any


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Borrower, any Guarantor or any Subsidiary to the Banks and the Agent are secured
pursuant to the Security Agreements and the other Security Documents referred to
and as defined in the Credit Agreement, by which the Borrowers and the
Guarantors have granted to the Agent, for the benefit of the Agent and the
Banks, a security interest in the Borrowers' and the Guarantors' assets, whether
now owned or hereafter acquired, and in any and all proceeds thereof, all
pursuant to the terms of the Security Documents to which each such Borrower or
Guarantor is a party. All of the Borrowers' and Guarantors' obligations to the
Banks and the Agent as evidenced by the Credit Agreement, the Notes and the
other Loan Documents, and all of the Borrowers' and Guarantors' obligations to
the Banks and the Agent arising under the Security Documents, and all of the
Borrowers' and Guarantors' obligations to the Banks and the Agent arising under
any other Loan Document or other instrument, agreement or document creating or
evidencing any of the Borrowers', the Guarantors' or any Subsidiary's
obligations to the Banks and the agent are, by the Borrowers' and the
Guarantors' execution of this Agreement, ratified and confirmed in all respects.
Each of the Borrowers, the Guarantors and their Subsidiaries hereby adopts
again, ratifies and confirms in all respects, as its own act and deed, each of
the Credit Agreement and the other Loan Documents to which such Borrower,
Guarantor or any of their Subsidiaries is a party; each of the Borrowers and
Guarantors party to a Security Document hereby adopts again, ratifies and
confirms in all respects, as its own act and deed, the grant of a security
interest under such Security Documents in all of the existing and after-acquired
or arising goods, accounts, chattel paper, investment property, documents,
instruments, general intangibles, inventory, equipment and other personal
property assets in which any of the Borrowers or Guarantors has ownership or
other rights, together with any and all Uniform Commercial Code financing
statements, Patent and Trademark Office recordings, Companies House filing and
other similar recordings and filings and all other instruments or documents
previously executed in connection therewith to create, evidence, perfect or
preserve the priority of such security interest in favor of the Agent for the
benefit of the Agent and the Banks; each Borrower and Guarantor party to a
Mortgage hereby adopts again, ratifies and confirms, as its own act and deed,
the mortgage of real estate assets in which it has an ownership, leasehold or
other rights; each Borrower and Guarantor party to the Share Security Deeds, the
Charges Over Shares, the Stock Pledge Agreement, the Assignments of Interest or
any other pledge agreement hereby adopts again, ratifies and confirms, as its
own act and deed, each pledge granted by such pledgor thereunder; and each
Borrower and Guarantor hereby adopts again, ratifies and confirms, as its own
act and deed, each of the other documents, agreements or instruments delivered
in connection with the Credit Agreement or any of the other Loan Documents and
purported to be executed by it and acknowledges that all of the foregoing Loan
Documents and other instruments, agreements, documents, filings and recordings
shall continue in full force and effect (as the same may be modified by this
Agreement). To the extent it has not already done so, each Borrower and
Guarantor hereby waives all suretyship defenses of whatsoever nature, whether
arising out of the Agent's or any Bank's dealings with any other Borrower or
Guarantor in respect of the Credit Agreement, any other Loan Document, or
otherwise. By its signature below, each Borrower and Guarantor hereby consents
to this Agreement, and after taking into account this Agreement, acknowledges
that, except


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                                      -4-


as expressly set forth herein, this Agreement shall not alter, release,
discharge or otherwise affect any of its obligations under the Credit Agreement
or any Guaranty or otherwise under any Loan Document under which such Borrower
or Guarantor acts as a secondary obligor.

     SS.3. REPRESENTATIONS AND WARRANTIES. Each of the Borrowers and the
Guarantors hereby represents and warrants to the Banks and the Agent as follows:

     (a) Each such Borrower and Guarantor has requisite corporate or other
similar power and authority to execute and deliver this Agreement and to perform
its respective obligations hereunder. This Agreement has been duly authorized,
executed and delivered by each such Borrower and Guarantor and does not
contravene any (i) law, rule or regulation applicable to such Borrower or
Guarantor or (ii) any of the terms of such Borrower's or Guarantor's charter
documents, by-laws, or other governing document or (iii) any other indenture,
agreement or undertaking to which such Borrower or Guarantor is a party. The
obligations of each of the Borrowers and the Guarantors under this Agreement,
the Credit Agreement and the other Loan Documents constitute its legal, valid
and binding obligations enforceable against it in accordance with their
respective terms.

     (b) Other than as expressly set forth and disclosed herein (including,
without limitation, on SCHEDULE 1 hereto), all the representations and
warranties made by the Company and its Subsidiaries in the Loan Documents are
true and correct on the date hereof as if made on and as of the date hereof and
are so repeated herein as if expressly set forth herein or therein, provided
that all references therein to the Credit Agreement shall refer to such Credit
Agreement as amended hereby.

     (c) Other than the Specified Defaults, no Default or Event of Default has
occurred and is continuing on the date hereof.

     SS.4. FORBEARANCE OBLIGATIONS. Subject to the conditions set forth in ss.5
hereof, the Agent and the Banks agree to forbear from enforcing any of their
rights and remedies under the Loan Documents for the purpose of seeking payment
of the Obligations (including, without limitation, any act with respect to any
collateral now or hereafter securing payment of any Obligations or any setoff or
any other application of funds of the Borrowers now or hereafter on deposit with
or otherwise controlled by the Agent or any Bank, other than the application by
the Agent as specifically provided in ss.2.12.3, 2.12.4 and 8.24 of the Credit
Agreement, which is expressly permitted hereunder) until that date (the
"FORBEARANCE TERMINATION DATE") which is the earliest to occur of (a) the
Borrowers' failure to comply with any of the terms and conditions of this
Agreement, including any of the undertakings set forth in ss.ss.5 and 6, (b) an
Event of Default (other than the Specified Defaults) under any of the Loan
Documents, (c) except as set forth on SCHEDULE 1 hereto, any representation or
warranty made by any Borrower or Guarantor herein or in any certificate,
financial statement or other document delivered in connection herewith shall
prove to have been untrue or incorrect in any material respect as of the date as
of which made or deemed to have been made or


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                                      -5-


repeated, (d) if any Borrower, any Subsidiary, or any person or entity claiming
by or through any Borrower or such Subsidiary ever commence, join in, assist,
cooperate or participate as an adverse party or adverse witness in any suit or
other proceeding against the Agent or any Bank relating to the indebtedness
referred to as the Obligations or any amounts owing hereunder, (e) any of the
claims of the Agent or any Bank under this Agreement or with respect to the
Obligations shall be subordinated to the claims of any other creditor of the
Borrowers or any Subsidiary, (f) any Borrower or any Subsidiary shall make a
general assignment for the benefit of creditors, or admit in writing its
inability to pay or generally fail to pay its debts as they mature or become
due, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of any Borrower or such Subsidiary or of any
substantial part of the assets of any Borrower or such Subsidiary or shall
commence any case or other proceeding relating to any Borrower or such
Subsidiary under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to authorize
or in furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against any Borrower or such Subsidiary and any Borrower or such
Subsidiary shall indicate its approval thereof, consent thereto or acquiescence
therein, (g) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating any Borrower or any Subsidiary
bankrupt or insolvent, or approving a petition in any such case or other
proceeding, or forty five (45) days after a decree or order for relief is
entered in respect of any Borrower or any Subsidiary in an involuntary case
under federal bankruptcy laws as now or hereafter constituted, (h) the sum of
the outstanding amount of the Revolving Credit Loans, the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations at any time being greater than
$120,000,000 and (i) May 7, 2001. The period from the effective date of this
Agreement through the Forbearance Termination Date is referred to herein as the
"LIMITED FORBEARANCE PERIOD". Except as expressly provided above in this ss.4,
the Agent and the Banks reserve the right to exercise all of their rights and
remedies under the Loan Documents. Notwithstanding anything to the contrary
contained in this Agreement, the agreement of the Banks and the Agent contained
herein to forbear during the Limited Forbearance Period shall not limit in any
way the Agent's and the Banks' rights to send a Payment Blockage Notice (as
defined in the Subordinated Indenture) to block payments in respect of the
Subordinated Notes as a result of the existence of the Specified Defaults or any
other Events of Default. Upon the Forbearance Termination Date, the Agent and
the Banks shall be free in their sole and absolute discretion to proceed to
enforce any or all of their rights and remedies under or in respect of the Loan
Documents and applicable law, including without limitation, those credit
termination, acceleration, enforcement and other rights and remedies arising by
virtue of the maturity of the Obligations and of the occurrence of the Specified
Defaults. All of the Borrowers', and each Subsidiary's payment and performance
obligations to the Agent and the Banks hereunder, including without limitation,
the obligations set forth in ss.ss.5 and 6 below, shall survive the Forbearance
Termination Date, and all of such obligations shall be secured by the collateral
security granted under the Loan Documents. In addition, the parties hereto
hereby acknowledge and agree that time is of the essence in this Agreement. The
parties


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intend and understand that any failure scrupulously to observe the timing
requirements of this Agreement, including, without limitation, any late payment
made hereunder, will be a material breach giving rise to the remedies set forth
herein. The imposition of such remedies shall not be deemed a penalty, and is of
the essence of the parties' bargain.

     SS.5. CONDITIONS TO EFFECTIVENESS. This Agreement shall become effective
upon satisfaction of the following conditions on or prior to April 13, 2001:

          (a) The Agent, the required Banks, the Borrowers and the Guarantors
     shall have executed and delivered counterparts of this Agreement to the
     Agent;

          (b) The Agent shall have received a certificate executed by the
     Borrowers certifying that (i) no Defaults or Events of Default currently
     exist, other than the Specified Defaults; and (ii) except as set forth on
     SCHEDULE 1 hereto, no changes have been made to each respective Borrower's
     charter documents since the certified copy dated February 5, 1999 and
     previously delivered to the Agent;

          (c) The Borrowers shall have paid to the Agent for the account of the
     Agent's Special Counsel all outstanding legal fees and expenses through the
     date hereof; and

          (d) The Borrowers shall have paid to the Agent for the respective
     accounts of the Banks consenting hereto a forbearance fee for each Bank
     that consents to this Agreement on or prior to 5:00 p.m. (Boston time) on
     April 13, 2001 in an amount equal to fifteen (15) basis points on each such
     consenting Bank's Commitment in effect immediately prior to the occurrence
     of any Default or Event of Default plus the outstanding amount of such
     consenting Bank's Term Loans.

     SS.6. COVENANTS AND AGREEMENTS. Without any prejudice or impairment
whatsoever to any of the rights and remedies of the Agent and the Banks
contained in any of the Loan Documents or in any agreement, document or
instrument executed in connection therewith, the Borrowers covenant and agree
with the Agent and the Banks as follows:

          (a) DISCRETIONARY LENDING. Though the Banks and the Agent have no
     obligation to do so, during the Limited Forbearance Period the Agent and
     the Banks shall continue to advance Revolving Credit Loans to the Borrowers
     and shall continue to issue, extend or renew any Letters of Credit for the
     Borrowers' account provided that (i) notwithstanding the amount of the
     Total Commitment, at no time shall the Agent or the Banks be required to
     advance any Revolving Credit Loans or issue, extend or renew any Letters of
     Credit in excess of an aggregate of $120,000,000 for all Revolving Credit
     Loans and Letters of Credit outstanding at any time and (ii) all conditions
     precedent thereto, other than the


<PAGE>   7
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     non-existence of the Specified Defaults, shall be satisfied. Any advances
     so made and any Letters of Credit so issued shall constitute Obligations
     under the Loan Documents. During the period from the date hereof until the
     Forbearance Termination Date, the Banks and the Agent agree with the
     Borrowers that ss.2.2 of the Credit Agreement shall be temporarily amended
     to replace the reference to "Total Commitment" with a reference to the
     amount "$120,000,000".

          (b) INTEREST. The Borrowers acknowledge and agree that during the
     Limited Forbearance Period interest shall accrue at the rate of interest
     set forth in the Credit Agreement plus an additional .125% per annum.
     Interest shall continue to be payable as set forth in the Credit Agreement.
     The Borrowers hereby acknowledge that nothing contained herein shall
     prevent the Agent and the Banks from charging the default rate of interest
     contained in ss.5.11 of the Credit Agreement on or after the Forbearance
     Termination Date, retroactive to the date the first Specified Default
     occurred.

          (c) COMPLIANCE WITH LOAN DOCUMENTS. The Borrowers will, and will cause
     each of their Subsidiaries to, comply and continue to comply will all of
     the terms, covenants and provisions contained in the Loan Documents to
     which each is a party and any other instruments evidencing or creating any
     of the Obligations except as such terms, covenants and provisions are
     expressly modified in this ss.6 or ss.7.

          (d) [OPERATIONAL CONSULTANT].* The Borrowers shall continue to engage
     the services of The Recovery Group (or such other consultant of an
     equivalent recognized standing) as its operational consultant (the
     "Operational Consultant") to, among other things, advise the Company and
     its Subsidiaries on its business, operations and financial condition and
     the viability of the Company's business plan.

          (e) BUSINESS PLAN. The Borrowers shall permit, at the Borrowers' sole
     cost and expense, Ernst & Young and the Operational Consultant to review
     the Borrowers' business plan for the 2001 fiscal year and, in addition, on
     or prior to April 10, 2001, the Borrowers shall deliver to the Agent and
     the Banks a revised business plan for the 2001 fiscal year, which plan
     shall be in form and substance satisfactory to the Agent and the Banks.

          (f) CONSULTING SERVICES. The Borrowers agree that, in connection with
     Bingham Dana LLP's ("BD") representation of the Agent on matters relating
     to the Credit Agreement and the other Loan Documents, BD may retain and
     continue to retain the Carl Marks Consulting Group or any other
     professional consultant (the "Consultant") to, among other things, visit
     the Borrowers' and any Subsidiary's corporate or other offices at such
     times and with such frequency as the Consultant deems appropriate (with the
     Consultant not being in any manner limited in the frequency of visits to
     the facilities of the Company and its Subsidiaries), discuss the Borrowers'
     financial matters with its officers, examine any of the Borrowers' or any
     Subsidiary's books or other financial records and

----------------
* Defined term conformed to Exhibit 10.22 below.
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                                      -8-


     advise the Agent and the Banks as to the business, operations and financial
     condition of the Borrowers and their Subsidiaries and the viability of the
     business plan. The Borrowers and Guarantors shall, and shall cause each
     Subsidiary to, cooperate with the Consultant and provide the Consultant
     with all information reasonably requested by the Consultant in connection
     with its engagement by BD. The Borrowers and Guarantors acknowledge that
     the fees and expenses of the Consultant are for the account of the
     Borrowers and Guarantors. The Borrowers and Guarantors hereby covenant and
     agree to promptly pay all the fees and expenses of the Consultant upon
     receipt of invoices from the Consultant and all such fees and expenses
     shall be included as an Obligation. In addition, each of the Banks
     authorizes BD to engage the Consultant as special advisor to BD in
     connection with BD's representation of the Agent on matters relating to the
     Credit Agreement and the other Loan Documents.

          (g) COMMERCIAL FINANCIAL EXAMINATION. The Borrowers shall permit the
     Banks, through the Agent or the Agent's designated representatives, to
     visit and inspect any of the properties of the Company or any of its
     Subsidiaries, to examine the books of account of the Company and its
     Subsidiaries (and to make copies thereof and extracts therefrom), and to
     discuss the affairs, finances and accounts of the Company and its
     Subsidiaries with, and to be advised as to the same by, its and their
     officers, and to conduct examinations and verifications (whether by
     internal commercial finance examiners or independent auditors) of all of
     the Company's and its Subsidiaries Accounts Receivable and inventory, all
     at such times and intervals as the Agent may request and all at the
     Borrowers' expense. The Agent may participate in or observe any physical
     count of inventory included in the Collateral. In addition, upon the
     request of the Agent, the Borrowers will obtain and deliver to the Agent,
     or, if the Agent so elects, will cooperate with the Agent in the Agent's
     obtaining, a report of an independent collateral auditor satisfactory to
     the Agent (which may be affiliated with one of the Banks) with respect to
     the Borrowers' Accounts Receivable and inventory, (including verification
     with respect to the amount, aging, identity and credit of the respective
     account debtors and the billing practices of the Company or its applicable
     Subsidiary) and inventory (including verification as to the value, location
     and respective types). All such commercial finance examinations, inventory
     counts and collateral value reports shall be conducted and made at the
     expense of the Borrower.

          (h) COLLATERAL. The Borrowers and their Subsidiaries shall provide to
     the Agent such additional security agreements and other security documents
     as the Agent may reasonably request in order to obtain, perfect and
     preserve a first priority perfected security interest in all existing and
     after-acquired assets of the Borrowers and their Subsidiaries for the
     benefit of the Agent and the Banks (subject only to Permitted Liens). This
     shall include, without limitation, a requirement that all cash received by
     the Domestic Borrowers be used to pay down the Loans on a daily basis as
     more fully set forth in ss.2.12 of the Credit


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                                      -9-


     Agreement. Notwithstanding anything to the contrary contained in this
     ss.6(h), nothing contained herein shall require any Foreign Borrower to
     provide any guaranty of the Obligations of any Domestic Borrower not
     otherwise required by the Credit Agreement or the other Loan Documents, nor
     shall it require any Foreign Borrower to provide any security for such
     Domestic Borrower's Obligations not otherwise required by the Credit
     Agreement or the other Loan Documents.

          (i) FURTHER ASSURANCES. The Borrowers shall at any time or from time
     to time execute and deliver such further instruments, and take such further
     action as the Bank may reasonably request, in each case further to effect
     the purposes of this Agreement, the Loan Documents and all documents,
     agreements and instruments executed in connection therewith.

     SS.7. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is hereby amended
as follows:

     (a) The definition of "Security Documents" contained in Section 1.1 of the
Credit Agreement is hereby amended by inserting immediately after the words "the
Debentures" a comma and the words "the Agency Account Agreements,".

     (b) Section 1.1 of the Credit Agreement is further amended by inserting the
following definitions in the appropriate alphabetical order:

          AGENCY ACCOUNT AGREEMENT. See ss.8.24.1.

          FLEET CONCENTRATION ACCOUNT. See ss.8.24.1.

          INTERIM CONCENTRATION ACCOUNT. See ss.8.24.1.

          LIMITED FORBEARANCE PERIOD. As such term is defined in that certain
     Forbearance Agreement and Third Amendment dated as of April 13, 2001 by and
     among the Borrowers, the Guarantors and the Majority Banks.

          LOCAL ACCOUNT. See ss.8.24.1.

          OPERATING ACCOUNT. See ss.2.6.2.

          SPECIFIED DEFAULT. As such term is defined in that certain Forbearance
     Agreement and Third Amendment dated as of April 13, 2001 by and among the
     Borrowers, the Guarantors and the Majority Banks.

     (c) Section 2.6.2. of the Credit Agreement is hereby amended by deleting
the words "or (b) in an amount as otherwise requested by any of the Domestic
Borrowers, provided, however, that the aggregate amount of all advances made
pursuant to this


<PAGE>   10
                                      -10-


ss.2.6.2. shall not exceed $10,000,000 at any time outstanding (each a "Swing
Line Loan")." and substituting in place thereof the words "or (b) in an amount
as otherwise requested by any of the Domestic Borrowers (each a "Swing Line
Loan")."

     (d) Section 2.12 of the Credit Agreement is hereby amended by inserting
immediately after the end of the text of ss.2.12.2 the following:

          2.12.3. CREDIT FOR FUNDS RECEIVED IN CONCENTRATION ACCOUNT. Prior to
     the occurrence of an Event of Default as to which the account officers of
     the Administrative Agent active upon the Borrower's account have actual
     knowledge, other than a Specified Default during the Limited Forbearance
     Period, (a) all funds and cash proceeds in the form of money, checks and
     like items received in the Fleet Concentration Account as contemplated by
     ss.8.24 shall be credited, on the same Business Day on which the Agent
     determines that good collected funds have been received, and, prior to the
     receipt of good collected funds, on a provisional basis until final receipt
     of good collected funds, and applied as contemplated by ss.2.12.4, (b) all
     funds and cash proceeds in the form of a wire transfer received in the
     Fleet Concentration Account as contemplated by ss.8.24 shall be credited on
     the same Business Day as the Agent's receipt of such amounts (or up to such
     later date as the Agent determines that good collected funds have been
     received), and applied as contemplated by ss.2.12.4, and (c) all funds and
     cash proceeds in the form of an automated clearing house transfer received
     in the Fleet Concentration Account as contemplated by ss.8.24 shall be
     credited, on the next Business Day following the Agent's receipt of such
     amounts (or up to such later date as the Agent determines that good
     collected funds have been received), and applied as contemplated by
     ss.2.12.4. For purposes of the foregoing provisions of this ss.2.12.3, the
     Agent shall not be deemed to have received any such funds or cash proceeds
     on any day unless received by the Agent before 2:30 p.m. (Boston time) on
     such day. The Domestic Borrowers further acknowledge and agree that any
     such provisional credits or credits in respect of wire or automatic
     clearing house funds transfers shall be subject to reversal if final
     collection in good funds of the related item is not received by, or final
     settlement of the funds transfer is not made in favor of, the Agent in
     accordance with the Agent's customary procedures and practices for
     collecting provisional items or receiving settlement of funds transfers.

          2.12.4. APPLICATION OF PAYMENTS PRIOR TO EVENT OF DEFAULT.

          (a) Prior to the occurrence of an Event of Default of which the
     account officers of the Agent active on the Borrowers' account have
     knowledge, other than a Specified Default during the Limited Forbearance
     Period, all funds transferred to the Fleet Concentration


<PAGE>   11
                                      -11-


     Account and for which the Domestic Borrowers have received credits shall be
     applied to the Obligations as follows:

               (i) first, to pay amounts then due and payable under this Credit
          Agreement, the Notes and the other Loan Documents;

               (ii) second, to reduce Revolving Credit Loans made by the Swing
          Line Lender pursuant to ss.2.6.2 and for which Settlement has not then
          been made;

               (iii) third, to reduce other Revolving Credit Loans which are
          Base Rate Loans;

               (iv) fourth, to reduce Revolving Credit Loans which are
          Eurocurrency Rate Loans; and

               (v) fifth, except as otherwise required by ss.4.2(b) and (c), to
          the Operating Account.

          (b) All prepayments of Eurocurrency Rate Loans prior to the end of an
     Interest Period shall obligate the applicable Domestic Borrower to pay any
     breakage costs associated with such Eurocurrency Rate Loans in accordance
     with ss.5.10. Prior to the occurrence of an Event of Default (other than a
     Specified Default during the Limited Forbearance Period), the applicable
     Domestic Borrower may elect to avoid such breakage costs by providing to
     the Agent cash in an amount sufficient to cash collateralize such
     Eurocurrency Rate Loans, but in no event shall such Domestic Borrower be
     deemed to have paid such Eurocurrency Rate Loans until such cash has been
     paid to the Agent for application to such Eurocurrency Rate Loans. The
     Agent may elect to cause such cash collateral to be deposited into either
     (i) a cash collateral account pursuant to the terms of a cash collateral
     agreement executed by the applicable Domestic Borrower and the Agent and in
     form and substance satisfactory to the Agent or (ii) the applicable
     Domestic Borrower's Operating Account with appropriate instructions
     prohibiting such Domestic Borrower's withdrawal of such funds so long as
     they remain cash collateral. In each such case, the applicable Domestic
     Borrower agrees to execute and deliver to the Agent such instruments and
     documents, including Uniform Commercial Code financing statements and
     agreements with any third party depository banks, as the Agent may request.

          (c) All prepayments of the Revolving Credit Loans pursuant to this
     ss.2.12.4 shall be allocated among the Banks making such Revolving Credit
     Loans, in proportion, as nearly as practicable, to the respective


<PAGE>   12
                                      -12-


     unpaid principal amount of such Revolving Credit Loans outstanding, with
     adjustments to the extent practicable to equalize any prior payments or
     repayments not exactly in proportion. Prior to any Settlement Date,
     however, all prepayments of the Revolving Credit Loans shall be applied in
     accordance with this ss.2.12.4, first to outstanding Revolving Credit Loans
     of the Swing Line Bank.

          2.12.5. REPAYMENTS OF REVOLVING CREDIT LOANS AFTER EVENT OF DEFAULT.
     Following the occurrence and during the continuance of an Event of Default
     of which the account officers of the Agent active on the Borrowers' account
     have knowledge (other than a Specified Default during the Limited
     Forbearance Period), all funds transferred to the Fleet Concentration
     Account and for which the applicable Domestic Borrower has received credits
     shall be applied to the Obligations in accordance with ss.13.5.

     (e) Section 8 of the Credit Agreement is hereby amended by inserting
immediately after the end of the text of ss.8.23 the following:

          8.24. BANK ACCOUNTS.

          8.24.1. GENERAL. On or prior to May 4, 2001, the Company will, and
     will cause each other Domestic Borrower and each Guarantor to, (a)
     establish a depository account (the "Fleet Concentration Account") under
     the control of the Agent for the benefit of the Banks and the Agent, in the
     name of the applicable Domestic Borrower or Guarantor (provided, to the
     extent any Domestic Borrower or Guarantor currently does not have any bank
     accounts, such Borrower or Guarantor, as the case may be, shall only be
     required to establish a Fleet Concentration Account if and when such
     Domestic Borrower or Guarantor, as the case may be, needs to establish a
     bank account), (b) instruct all account debtors and other obligors,
     pursuant to notices of assignment and instruction letters in form and
     substance satisfactory to the Agent, to remit all cash proceeds of Accounts
     Receivable to local depository accounts ("Local Accounts") or concentration
     depository accounts ("Interim Concentration Accounts") with financial
     institutions which have entered into agency account agreements and, if
     applicable, lock box agreements (collectively, the "Agency Account
     Agreements") in form and substance satisfactory to the Agent, or the "Fleet
     Concentration Account Agreements"), (c) direct all depository institutions
     with Local Accounts to cause all funds held in each such Local Account to
     be transferred no less frequently than once each day to, and only to, an
     Interim Concentration Account or the Fleet Concentration Account, (d)
     direct all depository institutions with Interim Concentration Accounts to
     cause all funds of the Domestic Borrowers and Domestic Guarantors held in
     such Interim Concentration Accounts to be transferred daily to, and only
     to, the Fleet Concentration Account, and (e)


<PAGE>   13
                                      -13-


     at all times ensure that immediately upon any Domestic Borrowers' or any
     Guarantors' receipt of any funds constituting or cash proceeds of any
     Collateral, all such amounts shall have been deposited in a Local Account,
     an Interim Concentration Account or the Fleet Concentration Account.

          8.24.2. ACKNOWLEDGMENT OF APPLICATION. The Domestic Borrowers and
     Guarantors hereby agrees that all amounts received by the Agent in the
     Fleet Concentration Account will be the sole and exclusive property of the
     Agent, for the accounts of the Banks and the Agent, to be applied in
     accordance ss.2.12.3 and 2.12.4. as applicable.

     (f) Section 9 of the Credit Agreement is hereby amended by inserting
immediately after the end of the text of ss.8.17 the following:

          9.18. BANK ACCOUNTS. The Company will not, and will not permit any of
     the other Borrowers or Guarantors to, (a) establish any bank accounts other
     than those Local Accounts, Interim Concentration Accounts and other
     accounts, all listed on SCHEDULE 7.20, without the Agent's prior written
     consent, (b) violate directly or indirectly any Agency Account Agreement or
     other bank agency or lock box agreement in favor of the Agent for the
     benefit of the Banks and the Agent with respect to such account, or (c)
     deposit into any of the payroll accounts listed on SCHEDULE 7.20 any
     amounts in excess of amounts necessary to pay current payroll obligations
     from such accounts or deposit into the account designated as the "rebate
     account" on Schedule 7.20 hereto any amounts in excess of $15,000.

     (g) SCHEDULE 7.20 of the Credit Agreement is hereby amended by deleting
SCHEDULE 7.20 in its entirety and substituting in place thereof the SCHEDULE
7.20 attached hereto.

     SS.8. EXPENSES. The Borrowers agree to pay to the Agent (a) on demand by
the Agent, an amount equal to any and all out-of-pocket costs or expenses
(including reasonable legal fees and disbursements of counsel to the Agent,
including fees and expenses of in-house counsel to the Agent, consulting,
accounting, appraisal, investment banking and similar professional fees and
charges) incurred or sustained by the Agent in connection with the negotiation
and preparation of this Agreement and all related matters and (b) from time to
time any and all out-of-pocket costs, expenses (including legal fees and
disbursements, consulting, accounting, appraisal, investment banking and similar
professional fees and charges) hereafter incurred or sustained by the Agent in
connection with the administration of credit extended by the Agent and the Banks
to the Borrowers or the preservation of or enforcement of the Agent's and the
Banks' rights under the Loan Documents or in respect of the Borrowers' or any of
their Subsidiaries' other obligations to the Agent and the Banks.


<PAGE>   14
                                      -14-


     SS.9. AMENDMENTS. This Agreement shall not be amended without the written
consent of the Agent and the Majority Banks.

     SS.10. NO CLAIMS. Each of the Borrowers and the Guarantors hereby
acknowledge and agree that (a) neither the Borrowers nor any of their
Subsidiaries has any claim or cause of action against any of the Banks or the
Agent (or any of their directors, officers, employees, agents or Affiliates)
arising from any transactions under this Agreement, under the Credit Agreement
or any of the other Loan Documents; (b) neither the Borrowers nor any of their
Subsidiaries has offset rights, counterclaims or defenses of any kind against
any of their Obligations, indebtedness or liabilities to the Agent or the Banks;
and (c) each of the Banks and the Agent has heretofore properly performed and
satisfied in a timely manner all of its obligations to the Borrowers and their
Subsidiaries. The Agent and the Banks wish (and each Borrower and Guarantor
agrees) to eliminate any possibility that any past conditions, acts, omissions,
events, circumstances or matters would impair or otherwise adversely affect any
of the rights, interests, contracts, collateral security or remedies of the
Agent and the Banks. Therefore, the Borrowers and each of their Subsidiaries
unconditionally releases, waives and forever discharges (i) any and all
liabilities, obligations, duties, promises or indebtedness of any kind of any of
the Banks and the Agent to the Borrowers and each of their Subsidiaries, except
the obligations to be performed by the Banks or the Agent for the Borrowers
hereafter as expressly stated in this Agreement and the other Loan Documents,
and (ii) all claims, offsets, causes of action, suits or defenses of any kind
whatsoever (if any), whether known or unknown, which the Borrowers or any
Subsidiary might otherwise have against any of the Banks or the Agent or any of
their directors, officers, employees, agents or Affiliates with respect to the
obligations performed or to be performed by the Agent or any Bank for the
Borrowers as set forth in the Loan Documents, in either case (i) or (ii) above,
on account of any condition, act, omission, event, contract, liability,
obligation, indebtedness, claim, cause of action, defense, circumstance or
matter of any kind whatsoever which existed, arose or occurred at any time prior
to the date hereof or which could thereafter arise as a result of the execution
of (or the satisfaction of any condition precedent or subsequent to) this
Agreement.

     SS.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS AND THEIR SUBSIDIARIES
HEREBY WAIVES ANY RIGHTS THAT IT MAY HAVE TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. Except as prohibited by law,
each of the Borrowers and their Subsidiaries hereby waives any right that it may
have to claim or recover in any litigation referred to in the preceding sentence
any special, exemplary, punitive or consequential damages or any damages other
than, or in addition to, actual damages. Each of the Borrowers and their
Subsidiaries hereby (a) certifies that no representative, agent or attorney of
the Agent or any Bank has represented, expressly or otherwise, that the Agent or
any Bank would not, in the event of litigation, seek to enforce the foregoing


<PAGE>   15
                                      -15-


waivers and (ii) acknowledges that it has been induced to enter into this
Agreement by, among other things, the waivers and certifications herein.

     SS.12. NO WAIVER. Except to the extent expressly set forth herein, nothing
in this Agreement shall extend to or affect iN any way any of the Borrowers' or
their Subsidiaries' obligations or any of the rights and remedies of the Agent
or any Bank in respect of the Credit Agreement or any other Loan Document
arising on account of the occurrence of any Event of Default other than the
Specified Defaults, all of which are expressly preserved, and in addition, the
Agent and each of the Banks hereby expressly reserves all of its rights and
remedies under the Credit Agreement, the other related Loan Documents and
applicable law in respect of any and all Defaults or Events of Default under the
Credit Agreement and the other Loan Documents. Failure of the Agent or any Bank
to exercise any right or remedy shall not constitute a waiver of that or any
other right or remedy.

     SS.13. MISCELLANEOUS. All of the Borrowers' and the Guarantors' payment
obligations to the Agent or any Bank of any naturE arising under or in respect
of this Agreement and all terms, covenants and provisions of the Loan Documents
shall survive the termination of this Agreement. Any and all notices or other
communications required hereunder shall be in writing and shall be delivered by
hand or sent by facsimile or certified or registered mail, postage prepaid and
return receipt requested (a) if to the Agent at 100 Federal Street, Boston,
Massachusetts (Attention: William Clarke), Facsimile No. (617) 434-4929, with a
copy to the Agent at 777 Main Street, Hartford, Connecticut (Attention: Donald
R. Nicholson), Facsimile No. (860) 986-3162 and (b) if to the Borrowers or any
Subsidiary, to One Holmes Way, Milford, Massachusetts 01757 (Attention: Ira
Morgenstern), Facsimile No. (508) 634-8771. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of Massachusetts
and shall take effect as a sealed instrument under such laws.

     SS.14. INDEMNIFICATION. The Borrowers and Guarantors hereby agree to
indemnify the Agent and its affiliates and to hold the Agent and its affiliates
harmless from and against any loss, cost or expense incurred or sustained by the
Agent or such affiliate in providing payroll and other cash management services
to the Company and its Subsidiaries. The parties hereto further hereby agree
that such indemnification obligations shall be Obligations under the Loan
Documents.

     SS.15. COUNTERPARTS. This letter agreement may be executed in any number of
counterparts, but all such counterparts shall together constitute but one
instrument. In making proof of this letter agreement it shall not be necessary
to produce or account for more than one counterpart signed by each party hereto
by and against which enforcement hereof is sought.


<PAGE>   16


     If the foregoing terms are acceptable to you, we request that you indicate
your agreement to these provisions by signing the counterpart of this letter
enclosed herewith and returning such counterpart to us.

                                    Very truly yours,

                                    FLEET NATIONAL BANK (f/k/a BANKBOSTON, N.A.)


                                    By:_________________________________________
                                       Title:


                                    SYNDICATED LOAN FUNDING TRUST
                                    By:  LEHMAN COMMERCIAL PAPER INC., NOT IN
                                         ITS INDIVIDUAL CAPACITY, BUT SOLELY AS
                                         ASSET MANAGER


                                    By:_________________________________________
                                       Title:


                                    HELLER FINANCIAL, INC.


                                    By:_________________________________________
                                       Title:


                                    LASALLE BANK NATIONAL ASSOCIATION


                                    By:_________________________________________
                                       Title:


                                    COMERICA BANK


                                    By:_________________________________________
                                       Title:


<PAGE>   17


                                    KEY CORPORATE CAPITAL INC.


                                    By:_________________________________________
                                       Title:


                                    CITIZENS BANK OF MASSACHUSETTS, A
                                    MASSACHUSETTS BANK


                                    By:_________________________________________
                                       Title:


                                    STAR BANK, NATIONAL ASSOCIATION


                                    By:_________________________________________
                                       Title:


                                    ANTARES CAPITAL CORPORATION


                                    By:_________________________________________
                                       Title:


                                    NATIONAL CITY BANK


                                    By:_________________________________________
                                       Title:


                                    THE PROVIDENT BANK


                                    By:_________________________________________
                                       Title:


                                    FRANKLIN FLOATING RATE TRUST


                                    By:_________________________________________
                                       Title:


<PAGE>   18


                                    THE TRAVELERS INSURANCE COMPANY


                                    By:_________________________________________
                                       Title:


                                    TRAVELERS CORPORATE LOAN FUND INC.
                                    By:  TRAVELERS ASSET MANAGEMENT
                                         INTERNATIONAL COMPANY LLC


                                    By:_________________________________________
                                       Title:


                                    MERRILL LYNCH SENIOR FLOATING RATE FUND,
                                    INC.


                                    By:_________________________________________
                                       Title:


                                    MAGNETITE ASSET INVESTORS LLC


                                    By:_________________________________________
                                       Title:


                                    MERRILL LYNCH PRIME RATE PORTFOLIO


                                    By:_________________________________________
                                       Title:


                                    PILGRIM PRIME RATE TRUST


                                    By:_________________________________________
                                       Title:


                                    PILGRIM AMERICA HIGH INCOME INVESTMENTS LTD.


                                    By:_________________________________________
                                       Title:


<PAGE>   19


                                    SEQUILS-PILGRIM I, LTD.


                                    By:_________________________________________
                                       Title:


                                    CAPTIVA IV FINANCE LTD.
                                    AS ADVISED BY PACIFIC INVESTMENT MANAGEMENT
                                    COMPANY LLC


                                    By:_________________________________________
                                       Title:


                                    PILGRIM CLO 1999 - 1 LTD.


                                    By:_________________________________________
                                       Title:


                                    GREAT POINT CLO 1999 - 1 LTD.


                                    By:_________________________________________
                                       Title:


                                    FIRST MASSACHUSETTS BANK


                                    By:_________________________________________
                                       Title:


                                    SUMMIT BANK


                                    By:_________________________________________
                                       Title:


<PAGE>   20


                                    TRANSAMERICA BUSINESS CREDIT CORPORATION


                                    By:_________________________________________
                                       Title:


                                    CHASE MANHATTAN BANK NOT IN ITS INDIVIDUAL
                                    CAPACITY, BUT SOLELY AS TRUSTEE OF ANTARES
                                    FUNDING TRUST UNDER THE TRUST AGREEMENT
                                    DATED AS OF NOVEMBER 30, 1999 (THE "TRUST
                                    AGREEMENT") BETWEEN ANTARES FUNDING, L.P.
                                    (THE "DEPOSITOR") AND CHASE MANHATTAN BANK
                                    AS TRUSTEE (THE "TRUSTEE")


                                    By:_________________________________________
                                       Title:


                                    VAN KAMPEN SENIOR INCOME TRUST


                                    By:_________________________________________
                                       Title:


                                    VAN KAMPEN PRIME RATE INCOME TRUST


                                    By:_________________________________________
                                       Title:


ACCEPTED AND AGREED
as of April __, 2001

THE HOLMES GROUP, INC.


By:_____________________________
Title:


THE RIVAL COMPANY


By:_____________________________
Title:


<PAGE>   21


HOLMES PRODUCTS (FAR EAST) LIMITED


By:_____________________________
Title:


ESTEEM INDUSTRIES LIMITED


By:_____________________________
Title:


RAIDER MOTOR CORPORATION


By:_____________________________
Title:


BIONAIRE INTERNATIONAL B.V.


By:_____________________________
Title:


HOLMES PRODUCTS (EUROPE) LIMITED


By:_____________________________
Title:


PATTON ELECTRIC (HONG KONG) LTD.


By:_____________________________
Title:


THE HOLMES GROUP CANADA LTD.


By:_____________________________
Title:


<PAGE>   22


                            RATIFICATION OF GUARANTY

     Each of the undersigned guarantors hereby acknowledges and consents to the
foregoing Agreement as of April 13, 2001, and agrees that the Amended and
Restated Guaranty dated as of February 5, 1999 from each of Holmes Manufacturing
Corp., Holmes Air (Taiwan) Corp., Holmes Motor Corporation, Patton Electric
Company, Inc., Patton Building Products Inc. and Rival Consumer Sales
Corporation (collectively, the "Guarantors") in favor of the Agent for the
benefit of the Agent and the Banks and all other Loan Documents to which each of
the Guarantors are a party remain in full force and effect, and each of the
Guarantors confirms and ratifies all of its obligations thereunder.

                                        HOLMES MANUFACTURING CORP.


                                        By:_____________________________________
                                           Title:


                                        HOLMES AIR (TAIWAN) CORP.


                                        By:_____________________________________
                                           Title:


                                        HOLMES MOTOR CORPORATION


                                        By:_____________________________________
                                           Title:


                                        RIVAL CONSUMER SALES CORPORATION


                                        By:_____________________________________
                                           Title: