EX-10.4 Term Loan Agreement



 





Exhibit 10.4




TERM LOAN AGREEMENT

Dated as of December 28, 2007

among

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders

and

HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.

as the Administrative and Collateral Agent

and

SALTON, INC.,

APPLICA INCORPORATED,

APPLICA CONSUMER PRODUCTS, INC.,

APPLICA AMERICAS, INC.,

APN HOLDING COMPANY, INC.,

HP DELAWARE, INC.,

HPG LLC,

APPLICA MEXICO HOLDINGS, INC.,

SONEX INTERNATIONAL CORPORATION,

HOME CREATIONS DIRECT LTD.,

SALTON HOLDINGS INC.,

ICEBOX LLC,

TOASTMASTER INC.,

FAMILY PRODUCTS INC.,

ONE:ONE COFFEE LLC, and

SALTON TOASTMASTER LOGISTICS LLC

as the Borrowers

and

APPLICA ASIA LIMITED and

APPLICA CANADA CORPORATION

as Guarantors




 









 








	 	 	 	 	 	 	 	 	 	 	 
	ARTICLE 1 TERM LOAN	 	 	2	 
	 

	 	 	1.1	 	 	Term Loan
	 	 	2	 
	 

	 	 	1.2	 	 	Procedure for Term Loan
	 	 	3	 
	 

	 	 	1.3	 	 	Making of Term Loan
	 	 	3	 
	 

	 	 	1.4	 	 	Multi-Borrower Provisions
	 	 	4	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 2 INTEREST AND FEES	 	 	6	 
	 

	 	 	2.1	 	 	Interest
	 	 	6	 
	 

	 	 	2.2	 	 	Continuation and Conversion Elections
	 	 	7	 
	 

	 	 	2.3	 	 	Maximum Interest Rate
	 	 	8	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 3 PAYMENTS AND PREPAYMENTS	 	 	9	 
	 

	 	 	3.1	 	 	Mandatory Payments of Term Loan
	 	 	9	 
	 

	 	 	3.2	 	 	Early Termination Fee
	 	 	9	 
	 

	 	 	3.3	 	 	Reserved
	 	 	10	 
	 

	 	 	3.4	 	 	Reserved
	 	 	10	 
	 

	 	 	3.5	 	 	LIBOR Loan Prepayments
	 	 	10	 
	 

	 	 	3.6	 	 	Payments by the Loan Parties
	 	 	10	 
	 

	 	 	3.7	 	 	Reserved
	 	 	10	 
	 

	 	 	3.8	 	 	Apportionment, Application and Reversal of Payments
	 	 	10	 
	 

	 	 	3.9	 	 	Indemnity for Returned Payments
	 	 	11	 
	 

	 	 	3.10	 	 	Agent’s and Lenders’ Books and Records; Monthly Statements
	 	 	11	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	12	 
	 

	 	 	4.1	 	 	Taxes
	 	 	12	 
	 

	 	 	4.2	 	 	Illegality
	 	 	13	 
	 

	 	 	4.3	 	 	Increased Costs and Reduction of Return
	 	 	14	 
	 

	 	 	4.4	 	 	Funding Losses
	 	 	14	 
	 

	 	 	4.5	 	 	Inability to Determine Rates
	 	 	15	 
	 

	 	 	4.6	 	 	Certificates of Agent
	 	 	15	 
	 

	 	 	4.7	 	 	Obligation to Mitigate
	 	 	15	 
	 

	 	 	4.8	 	 	Survival
	 	 	16	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES	 	 	16	 
	 

	 	 	5.1	 	 	Books and Records
	 	 	16	 
	 

	 	 	5.2	 	 	Financial Information
	 	 	16	 
	 

	 	 	5.3	 	 	Notices to the Lenders
	 	 	19	 
	 

	 	 	5.4	 	 	Revisions or Updates to Schedules
	 	 	21	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS	 	 	22	 
	 

	 	 	6.1	 	 	Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents
	 	 	22	 
	 

	 	 	6.2	 	 	Validity and Priority of Security Interest
	 	 	22	 
	 

	 	 	6.3	 	 	Organization and Qualification
	 	 	22	 
	 

	 	 	6.4	 	 	Reserved
	 	 	23	 
	 

	 	 	6.5	 	 	Subsidiaries
	 	 	23	 
	 

	 	 	6.6	 	 	Financial Statements and Projections
	 	 	23	 
	 

	 	 	6.7	 	 	Reserved
	 	 	24	 
	 

	 	 	6.8	 	 	Solvency
	 	 	24	 
	 

	 	 	6.9	 	 	Debt
	 	 	24	 






 









 






	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	6.10	 	 	Distributions
	 	 	24	 
	 

	 	 	6.11	 	 	Real Estate; Leases
	 	 	24	 
	 

	 	 	6.12	 	 	Proprietary Rights
	 	 	24	 
	 

	 	 	6.13	 	 	Trade Names
	 	 	25	 
	 

	 	 	6.14	 	 	Litigation
	 	 	25	 
	 

	 	 	6.15	 	 	Labor Disputes
	 	 	25	 
	 

	 	 	6.16	 	 	Environmental Laws
	 	 	25	 
	 

	 	 	6.17	 	 	No Violation of Law
	 	 	26	 
	 

	 	 	6.18	 	 	No Default
	 	 	26	 
	 

	 	 	6.19	 	 	Plan Compliance
	 	 	27	 
	 

	 	 	6.20	 	 	Taxes
	 	 	27	 
	 

	 	 	6.21	 	 	Regulated Entities
	 	 	27	 
	 

	 	 	6.22	 	 	Margin Regulations
	 	 	28	 
	 

	 	 	6.23	 	 	Copyrights, Patents, Trademarks and Licenses, etc.
	 	 	28	 
	 

	 	 	6.24	 	 	Material Agreements
	 	 	28	 
	 

	 	 	6.25	 	 	Bank Accounts
	 	 	28	 
	 

	 	 	6.26	 	 	Governmental Authorization
	 	 	28	 
	 

	 	 	6.27	 	 	Capitalization
	 	 	28	 
	 

	 	 	6.28	 	 	No Material Adverse Change
	 	 	29	 
	 

	 	 	6.29	 	 	Full Disclosure
	 	 	29	 
	 

	 	 	6.30	 	 	Common Enterprise
	 	 	29	 
	 

	 	 	6.31	 	 	Anti-Terrorism Laws
	 	 	29	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS	 	 	30	 
	 

	 	 	7.1	 	 	Taxes and Other Obligations
	 	 	30	 
	 

	 	 	7.2	 	 	Legal Existence and Good Standing
	 	 	31	 
	 

	 	 	7.3	 	 	Compliance with Law and Agreements; Maintenance of Licenses
	 	 	31	 
	 

	 	 	7.4	 	 	Maintenance of Property; Inspection of Property
	 	 	31	 
	 

	 	 	7.5	 	 	Insurance
	 	 	31	 
	 

	 	 	7.6	 	 	Insurance and Condemnation Proceeds
	 	 	32	 
	 

	 	 	7.7	 	 	Environmental Laws
	 	 	32	 
	 

	 	 	7.8	 	 	Compliance with ERISA
	 	 	32	 
	 

	 	 	7.9	 	 	Asset Dispositions, Mergers, Dissolutions
	 	 	32	 
	 

	 	 	7.10	 	 	Distributions; Capital Change; Restricted Investments
	 	 	34	 
	 

	 	 	7.11	 	 	Acquisitions
	 	 	34	 
	 

	 	 	7.12	 	 	Third Party Guaranties
	 	 	34	 
	 

	 	 	7.13	 	 	Debt
	 	 	34	 
	 

	 	 	7.14	 	 	Payments; Prepayments
	 	 	35	 
	 

	 	 	7.15	 	 	Transactions with Affiliates
	 	 	35	 
	 

	 	 	7.16	 	 	[Reserved]
	 	 	35	 
	 

	 	 	7.17	 	 	[Reserved]
	 	 	35	 
	 

	 	 	7.18	 	 	[Reserved]
	 	 	35	 
	 

	 	 	7.19	 	 	[Reserved]
	 	 	35	 
	 

	 	 	7.20	 	 	Investment Banking and Finder’s Fees
	 	 	35	 
	 

	 	 	7.21	 	 	Business Conducted
	 	 	35	 
	 

	 	 	7.22	 	 	Liens
	 	 	36	 
	 

	 	 	7.23	 	 	[Reserved]
	 	 	36	 
	 

	 	 	7.24	 	 	New Subsidiaries
	 	 	36	 
	 

	 	 	7.25	 	 	Fiscal Year
	 	 	36	 
	 

	 	 	7.26	 	 	[Reserved]
	 	 	36	 
	 

	 	 	7.27	 	 	[Reserved]
	 	 	36	 






ii









 






	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	7.28	 	 	Use of Proceeds
	 	 	37	 
	 

	 	 	7.29	 	 	[Reserved]
	 	 	37	 
	 

	 	 	7.30	 	 	Anti-Terrorism Laws
	 	 	37	 
	 

	 	 	7.31	 	 	[Reserved]
	 	 	37	 
	 

	 	 	7.32	 	 	Blocked Accounts
	 	 	37	 
	 

	 	 	7.33	 	 	Additional Debt Documents
	 	 	39	 
	 

	 	 	7.34	 	 	Applica Asia Covenants
	 	 	39	 
	 

	 	 	7.35	 	 	Post-Closing Covenants
	 	 	40	 
	 

	 	 	7.36	 	 	Further Assurances
	 	 	41	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 8 CONDITIONS OF LENDING	 	 	41	 
	 

	 	 	8.1	 	 	Conditions Precedent to Making of Term Loan
	 	 	41	 
	 

	 	 	8.2	 	 	Limited Waiver of Conditions Precedent
	 	 	45	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 9 DEFAULT; REMEDIES	 	 	45	 
	 

	 	 	9.1	 	 	Events of Default
	 	 	45	 
	 

	 	 	9.2	 	 	Remedies
	 	 	48	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 10 TERM AND TERMINATION	 	 	48	 
	 

	 	 	10.1	 	 	Term
	 	 	48	 
	 

	 	 	10.2	 	 	Termination by Agent
	 	 	48	 
	 

	 	 	10.3	 	 	Effect of Termination
	 	 	48	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS	 	 	49	 
	 

	 	 	11.1	 	 	Amendments and Waivers
	 	 	49	 
	 

	 	 	11.2	 	 	Assignments; Participations
	 	 	50	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 12 THE AGENT	 	 	52	 
	 

	 	 	12.1	 	 	Appointment and Authorization
	 	 	52	 
	 

	 	 	12.2	 	 	Delegation of Duties
	 	 	53	 
	 

	 	 	12.3	 	 	Liability of Agent
	 	 	53	 
	 

	 	 	12.4	 	 	Reliance by Agent
	 	 	53	 
	 

	 	 	12.5	 	 	Notice of Default
	 	 	53	 
	 

	 	 	12.6	 	 	Credit Decision
	 	 	54	 
	 

	 	 	12.7	 	 	Indemnification
	 	 	54	 
	 

	 	 	12.8	 	 	Agent in Individual Capacity
	 	 	55	 
	 

	 	 	12.9	 	 	Successor Agent
	 	 	55	 
	 

	 	 	12.10	 	 	Withholding Tax
	 	 	55	 
	 

	 	 	12.11	 	 	Collateral Matters
	 	 	57	 
	 

	 	 	12.12	 	 	Restrictions on Actions by Lenders; Sharing of Payments
	 	 	58	 
	 

	 	 	12.13	 	 	Agency for Perfection
	 	 	58	 
	 

	 	 	12.14	 	 	Payments by Agent to Lenders
	 	 	58	 
	 

	 	 	12.15	 	 	Settlement
	 	 	59	 
	 

	 	 	12.16	 	 	Reserved
	 	 	60	 
	 

	 	 	12.17	 	 	Concerning the Collateral and the Related Loan Documents
	 	 	60	 
	 

	 	 	12.18	 	 	Field Audit and Examination Reports; Disclaimer by Lenders
	 	 	61	 
	 

	 	 	12.19	 	 	Reserved
	 	 	61	 
	 

	 	 	12.20	 	 	Relation Among Lenders
	 	 	61	 
	 

	 	 	12.21	 	 	The Register
	 	 	62	 






iii









 






	 	 	 	 	 	 	 	 	 	 	 
	ARTICLE 13 JUDGMENT CURRENCY; SERVICE OF PROCESS	 	 	62	 
	 

	 	 	13.1	 	 	Judgment Currency
	 	 	62	 
	 

	 	 	13.2	 	 	Agent for Service of Process
	 	 	63	 
	 
	 	 	 	 	 	 	 	 	 	 
	ARTICLE 14 MISCELLANEOUS	 	 	63	 
	 

	 	 	14.1	 	 	No Waivers; Cumulative Remedies
	 	 	63	 
	 

	 	 	14.2	 	 	Severability
	 	 	63	 
	 

	 	 	14.3	 	 	Governing Law; Choice of Forum; Service of Process
	 	 	63	 
	 

	 	 	14.4	 	 	WAIVER OF JURY TRIAL
	 	 	64	 
	 

	 	 	14.5	 	 	Survival of Representations and Warranties
	 	 	65	 
	 

	 	 	14.6	 	 	Other Security and Guaranties
	 	 	65	 
	 

	 	 	14.7	 	 	Fees and Expenses
	 	 	65	 
	 

	 	 	14.8	 	 	Notices
	 	 	66	 
	 

	 	 	14.9	 	 	Waiver of Notices
	 	 	67	 
	 

	 	 	14.10	 	 	Binding Effect
	 	 	67	 
	 

	 	 	14.11	 	 	Indemnity of the Agent and the Lenders by the Borrowers
	 	 	68	 
	 

	 	 	14.12	 	 	Amendment and Restatement of Second Amended Credit Agreement; Release
	 	 	 68	 
	 

	 	 	14.13	 	 	Final Agreement
	 	 	69	 
	 

	 	 	14.14	 	 	Counterparts
	 	 	69	 
	 

	 	 	14.15	 	 	Captions
	 	 	69	 
	 

	 	 	14.16	 	 	Right of Setoff
	 	 	69	 
	 

	 	 	14.17	 	 	Confidentiality
	 	 	70	 
	 

	 	 	14.18	 	 	Conflicts with Other Loan Documents
	 	 	71	 
	 

	 	 	14.19	 	 	Agency of the Borrowers for Each Other Loan Party
	 	 	71	 
	 

	 	 	14.20	 	 	Express Waivers By Loan Parties In Respect of Cross Guaranties and
Cross Collateralization
	 	 	72	 
	 

	 	 	14.21	 	 	USA PATRIOT Act Notice
	 	 	73	 
	 

	 	 	14.22	 	 	Intercreditor Agreement
	 	 	73	 






iv









 






ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 
	ANNEX A

	 	DEFINED TERMS
	ANNEX B

	 	COMMITMENTS
	 
	 	 
	EXHIBIT A

	 	RESERVED
	EXHIBIT B

	 	NOTICE OF BORROWING
	EXHIBIT C

	 	NOTICE OF CONTINUATION/CONVERSION
	EXHIBIT D

	 	ASSIGNMENT AND ACCEPTANCE AGREEMENT
	 
	 	 
	SCHEDULE 6.3

	 	ORGANIZATION AND QUALIFICATIONS
	SCHEDULE 6.5

	 	SUBSIDIARIES AND AFFILIATES
	SCHEDULE 6.9

	 	DEBT
	SCHEDULE 6.11

	 	REAL ESTATE; LEASES
	SCHEDULE 6.12

	 	PROPRIETARY RIGHTS
	SCHEDULE 6.13

	 	TRADE NAMES
	SCHEDULE 6.14

	 	LITIGATION
	SCHEDULE 6.15

	 	LABOR DISPUTES
	SCHEDULE 6.16

	 	ENVIRONMENTAL LAW
	SCHEDULE 6.19

	 	PLAN COMPLIANCE
	SCHEDULE 6.24

	 	MATERIAL AGREEMENTS
	SCHEDULE 6.25

	 	BANK ACCOUNTS
	SCHEDULE 6.27

	 	CAPITALIZATION
	SCHEDULE A-1

	 	PERMITTED LIENS
	SCHEDULE A-2

	 	RESTRICTED INVESTMENTS







v











 





TERM LOAN AGREEMENT




          TERM LOAN AGREEMENT (the “Agreement”) is made as of December 28, 2007, by and among SALTON,
INC., a Delaware corporation (“Parent”), APPLICA INCORPORATED, a Florida corporation (“Applica”),
APN HOLDING COMPANY, INC., a Delaware corporation (“APN”), APPLICA CONSUMER PRODUCTS, INC., a
Florida corporation (“ACP”), APPLICA AMERICAS, INC., a Delaware corporation (“AAI”), HP DELAWARE,
INC., a Delaware corporation (“HP”), HPG LLC, a Delaware limited liability company (“HPG”), APPLICA
MEXICO HOLDINGS, INC., a Delaware corporation (“Applica Mexico”), SONEX INTERNATIONAL CORPORATION,
a Delaware corporation (“Sonex”), HOME CREATIONS DIRECT LTD., a Delaware corporation (“HCD”),
SALTON HOLDINGS INC., a Delaware corporation (“SHI”), ICEBOX LLC, an Illinois limited liability
company (“Icebox”), TOASTMASTER INC., a Missouri corporation (“Toastmaster”), FAMILY PRODUCTS INC.,
a Delaware corporation (“Family Products”), ONE:ONE COFFEE LLC, a Delaware limited liability
company (“One Coffee”), and SALTON TOASTMASTER LOGISTICS LLC, a Delaware limited liability company
(“STL”; Parent, Applica, APN, ACP, AAI, HP, HPG, Applica Mexico, Sonex, HCD, SHI, Icebox,
Toastmaster, Family Products, One Coffee and STL, being sometimes referred to herein individually
as a “Borrower” and collectively as “Borrowers”), and APPLICA ASIA LIMITED, a Hong Kong company
(“Applica Asia”), and APPLICA CANADA CORPORATION, a Nova Scotia company (“Applica Canada”); the
financial institutions listed on the signature pages hereof and their respective successors and
permitted assigns which become “Lenders” as provided herein; HARBINGER CAPITAL PARTNERS MASTER FUND
I, LTD., in its capacity as administrative agent and collateral agent for the Lenders pursuant to
ARTICLE 12 hereof (together with its successors in such capacity, “Agent”). Capitalized
terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed
thereto in Annex A, which is attached hereto and incorporated herein. The rules of
construction contained in Annex A shall govern the interpretation of this Agreement, and
all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference.




          Recitals:




          Parent, certain other Loan Parties, Agent, certain financial institutions (“Original
Lenders”), and the other parties named therein were parties to a certain Reimbursement and Senior
Secured Credit Agreement dated October 1, 2007 (as at any time amended, modified, supplemented or
restated, the “Original Credit Agreement”), pursuant to which the Original Lenders agreed to
reimburse certain obligations and make term loans and other financial accommodations to Parent and
its Subsidiaries. In connection with the Original Credit Agreement, certain subsidiary guarantors
of the Parent (the “Original Guarantors”) executed the Subsidiary Guaranty, dated as of October 1,
2007 (as at any time amended, modified, supplemented or restated, the “Original Guarantee”), in
favor of the Agent pursuant to which the Original Guarantors guaranteed the obligations of Parent
and its Subsidiaries under the Original Credit Agreement.




          Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special
Situations Fund, L.P. (collectively, the “Equity Investors”) have formed APN which




 









 







owns all of the equity interests of Applica. SFP Merger Sub, Inc., a Delaware corporation
(“SFP”) and wholly-owned subsidiary of Parent, will be merged with and into APN, with APN being the
surviving corporation of such merger. After giving effect to such merger, all of the issued and
outstanding shares of common stock of APN will be owned by Parent. As used in this Agreement, the
foregoing series of transactions shall be referred to as the “Merger.”




          In connection with the Merger, Parent and the other Loan Parties have requested that Lenders
provide a credit facility to Borrowers to finance their mutual and collective business enterprise
and have requested that the Original Credit Agreement and the Original Guarantee be amended and
restated in their entirety to become effective and binding on the Loan Parties pursuant to the
terms hereof, and the Agent and the Lenders (including the Original Lenders that are parties
hereto) have agreed, subject to the terms of this Agreement, to amend and restate the Original
Credit Agreement and the Original Guarantee in their entirety to read as set forth herein, and it
has been agreed by the parties hereto that (a) the commitments which the Original Lenders that are
parties hereto agreed to extend to Parent under the Original Credit Agreement and the commitments
of new Lenders that become parties hereto shall be extended or advanced upon the amended and
restated terms and conditions contained in this Agreement, (b) the Loans and other Obligations
outstanding under the Original Credit Agreement shall be governed by and deemed to be outstanding
under the amended and restated terms and conditions contained herein and (c) the guarantees
provided pursuant to the Original Guaranty by the Original Guarantors that are parties hereto and
the guarantees of new Guarantors that became party hereto shall be governed by the amended and
restated terms and conditions contained in this Agreement.




          All Obligations incurred pursuant hereto shall be secured by, among other things, the Security
Agreement, the Applica Canada Security Agreement and the other Loan Documents and shall be
guaranteed pursuant to the Applica Asia Guaranty and the Applica Canada Guaranty. In addition, all
existing Obligations (and all Obligations incurred pursuant hereto) shall be secured by, among
other things, Liens on a portion of the assets of certain Persons that, prior to the effective date
of the Merger, constituted Consolidated Applica Parties.




          NOW, THEREFORE, the parties hereto hereby agree to amend and restate the Original Credit
Agreement and the Original Guaranty, and the Original Credit Agreement and the Original Guaranty
are hereby amended and restated, in their entirety as follows:




ARTICLE 1

TERM LOAN




     1.1 Term Loan. Subject to all of the terms and conditions of this Agreement, each Lender severally, but
not jointly, agrees to make a loan to Borrowers on the Closing Date, in an amount not to exceed
such Lender’s Pro Rata Share of the original principal amount of $110,000,000 (each, a “Loan” and,
together, the “Term Loan”). Amounts paid or prepaid in respect of the Term Loan may not be
reborrowed.



2









 





     1.2
Procedure for Term Loan.



          (a)





          (1) The Term Loan shall be made upon the Borrower Agent’s written notice delivered to
the Agent in the form of a notice of borrowing (“Notice of Borrowing”), which must be
received by the Agent prior to 1:00 p.m. (New York time) on the Closing Date, specifying
the duration of the initial Interest Period for the Term Loan (and if not specified, it
shall be deemed a request for an Interest Period of one month).




          (2) In lieu of delivering a Notice of Borrowing, a Responsible Officer may give Agent
telephonic notice of such request for advances to a Designated Account on or before the
deadline set forth in clause (1) above and the Agent at all times shall be entitled to rely
on such telephonic notice in making the Term Loan, regardless of whether any written
confirmation is received.



          (b) Reliance upon Authority. Prior to the Closing Date, the Borrowers shall deliver
to the Agent a notice setting forth an account (“Designated Account”) to which the Agent is
authorized by the Borrowers to transfer the proceeds of the Term Loan. The Designated Account must
be reasonably satisfactory to the Agent. The Agent is entitled to rely conclusively on any
individual’s request for the Term Loan on behalf of the Borrowers, so long as the proceeds thereof
are to be transferred to a Designated Account. The Agent has no duty to verify the identity of any
individual representing himself or herself as a person authorized by the Borrowers to make such
requests on their behalf.




          (c) No Liability. The Agent shall not incur any liability to the Loan Parties as a
result of acting upon any notice referred to in Sections 1.2(b) and (c), which the Agent
believes in good faith to have been given by an officer or other person duly authorized by the
Borrowers to request the Term Loan on its behalf. The crediting of the Term Loan to the Designated
Account or to such Persons as the Borrowers may direct shall conclusively establish the obligation
of the Borrowers to repay such Term Loan as provided herein.




          (d) Notwithstanding the foregoing, each Loan Party authorizes Agent and Lenders to extend,
convert or continue Loans, effect selections of interest rates, and transfer funds to or on behalf
of the Loan Parties based on telephonic or e-mailed instructions. If requested to do so by Agent,
the Loan Parties shall confirm each such request by prompt delivery to Agent of a Notice of
Borrowing or Notice of Continuation/Conversion, if applicable, but if it differs in any material
respect from the action taken by Agent or Lenders, the records of Agent and Lenders shall govern.
Neither Agent nor any Lender shall have any liability for any loss suffered by a Loan Party as a
result of Agent or any Lender acting upon its understanding of telephonic or e-mailed instructions
from a person believed in good faith by Agent or any Lender to be a person authorized to give such
instructions on a Loan Party’s behalf.




     1.3 Making of Term Loan. Promptly after receipt of the Notice of Borrowing (or telephonic notice in lieu thereof) on
the Closing Date, the Agent shall notify the Lenders by telecopy, telephone or
e-mail of the requested Term Loan. Each Lender shall transfer its Pro Rata Share of the Term
Loan to the Agent in immediately available funds, to the account from time to time designated by
Agent, not later than 2:00 p.m. (New York time) on the Closing Date. After



3









 




the Agent’s receipt of
all proceeds of such Term Loan, the Agent shall make the proceeds of such Term Loan available to
the Borrowers on the Closing Date by transferring same day funds as directed by the Borrowers.




     1.4
Multi-Borrower Provisions.



          (a) Each Borrower hereby designates ACP (“Borrower Agent”) as its representative and agent for
all purposes under the Loan Documents, including requesting the Term Loan, designation of any
Interest Period, delivery or receipt of communications, preparation and delivery of financial
reports, receipt and payment of Obligations, requests for waivers, amendments or other
accommodations, actions under the Loan Documents (including in respect of compliance with
covenants), and all other dealings with Agent or any Lender. Borrower Agent hereby accepts such
appointment. Agent and Lenders shall be entitled to rely upon, and shall be fully protected in
relying upon, any notice or communication (including the Notice of Borrowing) delivered by Borrower
Agent on behalf of any Borrower. Agent and Lenders may give any notice or communication with a
Borrower hereunder to Borrower Agent on behalf of such Borrower. Each of Agent and Lenders shall
have the right, in its discretion, to deal exclusively with Borrower Agent for any or all purposes
under the Loan Documents. Each Borrower agrees that any notice, election, communication,
representation, agreement or undertaking made on its behalf by Borrower Agent shall be binding upon
and enforceable against it.




          (b) Each Borrower agrees that it is jointly and severally liable for, and absolutely and
unconditionally guarantees to Agent and Lenders the prompt payment and performance of, all
Obligations and all agreements under the Loan Documents. Each Borrower agrees that its guaranty of
obligations hereunder constitutes a continuing guaranty of payment and performance and not of
collection, that such obligations shall not be discharged until full payment of the Obligations,
and that such obligations are absolute and unconditional, irrespective of (a) the genuineness,
validity, regularity, enforceability, subordination or any future modification of, or change in,
any Obligations or Loan Document, or any other document, instrument or agreement to which any
Obligor is or may become a party or liable; (b) the absence of any action to enforce this Agreement
(including this Section) or any other Loan Document, or any waiver, consent or indulgence of any
kind by Agent or any Lender with respect thereto; (c) the existence, value or condition of, or
failure to perfect a Lien or to preserve rights against, any security or guaranty for the
Obligations or any action, or the absence of any action, by Agent or any Lender in respect thereof
(including the release of any security or guaranty); (d) the insolvency of any Loan Party; (e) any
election by Agent or any Lender in an insolvency proceeding for the application of Section
1111(b)(2) of the Bankruptcy Code; (f) any borrowing or grant of a Lien by any other Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code or otherwise; (g) the disallowance
of any claims of Agent or any Lender against any Loan Party for the repayment of any Obligations
under Section 502 of the Bankruptcy Code or otherwise; or (h) any other action or circumstances
that might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor,
except full payment of all Obligations.




          (c) Each Borrower expressly waives all rights that it may have now or in the future under any
statute, at common law, in equity or otherwise, to compel Agent or Lenders to marshal assets or to
proceed against any Loan Party, other Person or security for the payment or performance of any
Obligations before, or as a condition to, proceeding against such Borrower. It is agreed among
each Borrower, Agent and Lenders that the provisions of this Section 1.6 are of the essence
of the transaction contemplated by the Loan Documents and that, but for such provisions, Agent and
Lenders would decline to make the Term Loan. Notwithstanding anything




4









 







to the contrary in any Loan
Document, and except as set forth in this Section 1.6, each Borrower expressly waives all
rights at law or in equity to subrogation, reimbursement, exoneration, contribution,
indemnification or set off, as well as all defenses available to a surety, guarantor or
accommodation co-obligor. Each Borrower acknowledges that its guaranty pursuant to this Section is
necessary to the conduct and promotion of its business, and can be expected to benefit such
business.




          (d) Agent and Lenders may, in their discretion, pursue such rights and remedies as they deem
appropriate, including realization upon Collateral by judicial foreclosure or non judicial sale or
enforcement, without affecting any rights and remedies under this Section 1.6. If, in
taking any action in connection with the exercise of any rights or remedies, Agent or any Lender
shall forfeit any other rights or remedies, including the right to enter a deficiency judgment
against any Borrower or other Person, whether because of any Applicable Laws pertaining to
“election of remedies” or otherwise, each Borrower consents to such action and waives any claim
based upon it, even if the action may result in loss of any rights of subrogation that any Borrower
might otherwise have had. Any election of remedies that results in denial or impairment of the
right of Agent or any Lender to seek a deficiency judgment against any Borrower shall not impair
any other Borrower’s obligation to pay the full amount of the Obligations. Each Borrower waives
all rights and defenses arising out of an election of remedies, such as nonjudicial foreclosure
with respect to any security for the Obligations, even though that election of remedies destroys
such Borrower’s rights of subrogation against any other Person. Agent may bid all or a portion of
the Obligations at any foreclosure or trustee’s sale or at any private sale, and the amount of such
bid need not be paid by Agent but shall be credited against the Obligations. The amount of the
successful bid at any such sale, whether Agent or any other Person is the successful bidder, shall
be conclusively deemed to be the fair market value of the Collateral, and the difference between
such bid amount and the remaining balance of the Obligations shall be conclusively deemed to be the
amount of the Obligations guaranteed under this Section 1.6, notwithstanding that any
present or future law or court decision may have the effect of reducing the amount of any
deficiency claim to which Agent or any Lender might otherwise be entitled but for such bidding at
any such sale.




          (e) Notwithstanding anything herein to the contrary, each Borrower’s liability under this
Section 1.6 shall be limited to the greater of (i) all amounts for which such Borrower is
primarily liable, as described below, and (ii) such Borrower’s Allocable Amount. The “Allocable
Amount” for any Borrower shall be the maximum amount that could then be recovered from such
Borrower under this Section 1.6 without rendering such payment voidable under Section 548
of the Bankruptcy Code or under any applicable state fraudulent transfer or conveyance act, or
similar statute or common law.




          (f) If any Borrower makes a payment under this Section 1.6 of any Obligations (other
than amounts for which such Borrower is primarily liable) (a “Co-Borrower Payment”) that, taking
into account all other Co-Borrower Payments previously or concurrently made by any other Borrower,
exceeds the amount that such Borrower would otherwise have paid if each Borrower had paid the
aggregate Obligations satisfied by such Co-Borrower Payments in
the same proportion that such Borrower’s Allocable Amount bore to the total Allocable Amounts
of all Borrowers, then such Borrower shall be entitled to receive contribution and indemnification
payments from, and to be reimbursed by, each other Borrower for the amount of such excess, pro rata
based upon their respective Allocable Amounts in effect immediately prior to such Co-Borrower
Payment.




5









 








          (g) Nothing contained in this Section 1.6 shall limit the liability of any Borrower to
pay the Term Loan made directly or indirectly to that Borrower (including portions thereof advanced
to any other Borrower and then re-loaned or otherwise transferred to, or for the benefit of, such
Borrower), and all accrued interest, fees, expenses and other related Obligations with respect
thereto, for which such Borrower shall be primarily liable for all purposes hereunder.




          (h) Each Borrower has requested that Agent and Lenders make this credit facility available to
Borrowers on a combined basis, in order to finance Borrowers’ business most efficiently and
economically. Borrowers’ business is a mutual and collective enterprise, and Borrowers believe
that consolidation of their credit facility will enhance the borrowing power of each Borrower and
ease the administration of their relationship with Lenders, all to the mutual advantage of
Borrowers. Borrowers acknowledge and agree that Agent’s and Lenders’ willingness to extend credit
to Borrowers and to administer the Collateral on a combined basis, as set forth herein, is done
solely as an accommodation to Borrowers and at Borrowers’ request.




          (i) Each Borrower hereby subordinates any claims, including any right of payment, subrogation,
contribution and indemnity, that it may have at any time against any other Loan Party, howsoever
arising, to the full payment of all Obligations.




ARTICLE 2

INTEREST AND FEES




     2.1
Interest.



          (a) Interest Rates. The Term Loan shall bear interest on the unpaid principal amount
thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the
date made until paid in full in cash at a rate determined by reference to the Base Rate or the
LIBOR Rate plus the Applicable Margin, but not to exceed the Maximum Rate. Any of the Loans may be
converted into, or continued as LIBOR Loans, subject to and in the manner provided in Section
2.2. If at any time Loans are outstanding with respect to which the Borrowers have not
delivered to the Agent a notice specifying the basis for determining the interest rate applicable
thereto, those Loans shall bear interest at a rate determined by reference to the Base Rate until
notice to the contrary has been given to the Agent in accordance with this Agreement and such
notice has become effective. Except as otherwise provided herein, the outstanding Obligations
shall bear interest as follows:





     (i) For all Base Rate Loans, at a fluctuating per annum rate equal to the Base
Rate plus the Applicable Margin; and




     (ii) For all LIBOR Loans, at a per annum rate equal to the LIBOR Rate plus the
Applicable Margin.


Each change in the Base Rate shall be reflected in the interest rate applicable to Base Rate Loans
as of the effective date of such change. All interest charges shall be computed on the basis of a
year of 360 days and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). The Borrowers shall pay to the Agent, for the ratable
benefit of Lenders, interest accrued on all Base Rate Loans in arrears on the first day of each
month hereafter and on the Termination Date. The Borrowers shall pay to the Agent, for the ratable
benefit of Lenders, interest on all LIBOR Loans in arrears on each LIBOR Interest Payment Date.
For the purposes of the Interest Act (Canada), (i) whenever any interest or fee under this
Agreement or any other Loan Document is calculated using a rate based on a year of




6









 







360 days, the
rate determined pursuant to each calculation, when expressed as an annual rate, is equivalent to
(x) the applicable rate, (y) multiplied by the actual number of days in the calendar year in which
the period for which such interest is payable (or compounded) ends, and (z) divided by 360, (ii)
the principle of deemed reinvestment of interest does not apply to any interest calculation under
this Agreement or any other Loan Document, and (iii) the rates of interest stipulated in this
Agreement or any other Loan Document are intended to be nominal rates and not effective rates or
yields.




          (b) Default Rate. If an Event of Default occurs and is continuing and the Agent or
the Required Lenders in their discretion so elect, then, while any such Event of Default is
continuing, all of the Obligations shall bear interest at the Default Rate applicable thereto.




     2.2
Continuation and Conversion Elections.



          (a) The Borrowers may:





     (i) elect, as of any Business Day, in the case of Base Rate Loans to convert
any Base Rate Loans (or any part thereof in an amount not less than $2,500,000, or
that is in an integral multiple of $500,000 in excess thereof) into LIBOR Loans; or




     (ii) elect, as of the last day of the applicable Interest Period, to continue
any LIBOR Loans having Interest Periods expiring on such day (or any part thereof
in an amount not less than $2,500,000, or that is in an integral multiple of
$500,000 in excess thereof);


provided, that if at any time the aggregate amount of LIBOR Loans in respect of any Borrowing is
reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such
LIBOR Loans shall automatically convert into Base Rate Loans; provided further that
if the notice shall fail to specify the duration of the Interest Period, such Interest Period shall
be one month.




          (b) The Borrower Agent shall deliver an irrevocable notice of continuation/conversion (“Notice
of Continuation/Conversion”) to the Agent not later than 11:00 a.m. (New York time) at least two
(2) Business Days in advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Loans and specifying:





     (i) the proposed Continuation/Conversion Date;




     (ii) the aggregate amount of Loans to be converted or renewed;




     (iii) the type of Loans resulting from the proposed conversion or
continuation; and




     (iv) the duration of the requested Interest Period, provided,
however, the Borrowers may not select an Interest Period that ends after
the Stated Termination Date.



          (c) If upon the expiration of any Interest Period applicable to LIBOR Loans, the Borrowers
have failed to select timely a new Interest Period to be applicable to LIBOR Loans




7









 







or if any
Default or Event of Default then exists, the Borrowers shall be deemed to have elected to convert
such LIBOR Loans into Base Rate Loans effective as of the expiration date of such Interest Period.




          (d) The Agent will promptly notify each Lender of its receipt of a Notice of
Continuation/Conversion. All conversions and continuations shall be made ratably according to the
respective outstanding principal amounts of the Loans with respect to which the notice was given
held by each Lender.




          (e) There may not be more than three (3) different LIBOR Loans in effect hereunder at any
time.




     2.3
Maximum Interest Rate.



          In no event shall any interest rate provided for hereunder exceed the maximum rate legally
chargeable by any Lender under applicable law for such Lender (including any laws of the United
States, Canada, Hong Kong or Puerto Rico or any state, division, territory or province thereof)
with respect to loans of the type provided for hereunder (the “Maximum Rate”). If, in any month,
any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest
rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate
until such time as the amount of interest paid hereunder equals the amount of interest which would
have been paid if the same had not been limited by the Maximum Rate. In the event that, upon
payment in full of the Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would, but for this Section
2.3, have been paid or accrued if the interest rate otherwise set forth in this Agreement had
at all times been in effect, then the Borrowers shall, to the extent permitted by applicable law,
pay the Agent, for the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate had, at all times,
been in effect or (ii) the amount of interest which would have accrued had the interest rate
otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest
actually paid or accrued under this Agreement. If a court of competent jurisdiction determines
that the Agent and/or any Lender has received interest and other charges hereunder in excess of the
Maximum Rate, such excess shall be deemed received on account of, and shall automatically be
applied to reduce, the Obligations other than interest, in the inverse order of maturity, and if
there are no Obligations outstanding, the Agent and/or such Lender shall refund to the Borrowers
such excess. Without limiting the generality of this Section 2.3, if any
provision of any of the Loan Documents would obligate Applica Canada, Applica Asia or any
other Foreign Subsidiary to make any payment of interest with respect to any Obligations in an
amount calculated at a rate that would be prohibited by applicable law or would result in the
receipt of interest with respect to any Obligations at a criminal rate (as such terms are construed
under the Criminal Code (Canada) or other applicable law), then such provision shall be deemed to
be adjusted solely with respect to Applica Canada, Applica Asia or such other Foreign Subsidiary
with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not
be prohibited by applicable law with respect to Applica Canada, Applica Asia or such other Foreign
Subsidiary or result in any Lender’s receipt of interest with respect to any sums paid by Applica
Canada at a criminal rate.




8









 








ARTICLE 3

PAYMENTS AND PREPAYMENTS




     3.1
Mandatory Payments of Term Loan.



          (a) The Borrowers shall repay the aggregate principal balance of the Term Loan, together with
all accrued and unpaid interest thereon as follows: (i) thirteen (13) equal installments of
$5,000,000 each, on the last day of each September, December, March and June, commencing on
September 30, 2009; and (ii) on the Termination Date, a final payment in an amount equal to the
outstanding amount of all principal and accrued interest thereon. All payments required to be made
hereunder or under any of the other Loan Documents shall be made in Dollars.




          (b) Subject to the Additional Debt Intercreditor Agreement, all proceeds of any Asset
Disposition with respect to any Collateral by a Loan Party received by a Loan Party (other than
Applica Canada, in which event the Loan Parties shall transfer an amount equal to such Net Proceeds
to Agent for application to the Obligations to the extent required hereunder and after the date on
which Applica Canada is required hereunder or by the Applica Canada Security Agreement or otherwise
following the occurrence and during the continuance of an Event of Default, Applica Canada shall
remit proceeds of its Collateral to the Agent) shall be paid to the Agent, promptly upon the
receipt thereof by such Loan Party, for application to the Term Loan, except as provided in
Section 7.9. Notwithstanding the foregoing and provided no Event of Default has occurred
and is continuing, such prepayment shall not be required to the extent the Borrower reinvests such
proceeds of such Asset Disposition, or a portion thereof, in assets of a kind then used or usable
in the business of the Borrowers, within three hundred sixty-five (365) days after the date of such
Asset Disposition or enters into a binding commitment thereof within said three hundred sixty-five
(365) day period and subsequently makes such reinvestment. No provision contained in this
Section 3.1 shall constitute a consent to any Asset Disposition that is not otherwise
permitted by the express terms of this Agreement.




     3.2 Early Termination Fee.



          In the event that the Borrowers shall prepay the Obligations at any time, in whole or in part,
or the Termination Date occurs, for any reason, prior to the Stated Termination Date, the Borrowers
shall pay to the Agent, for the ratable benefit of the Lenders, a fee (the “Early
Termination Fee”) in respect of amounts which are paid or become payable by reason thereof
equal to the following: (i) 6.5% of the amount of Term Loan prepaid if the Termination Date shall
occur at any time on or before December 28, 2008; (ii) 5.2% of the amount of Term Loan prepaid if
the Termination Date shall occur at any time on or after December 29, 2008 but on or before
December 28, 2009; (iii) 3.9% of the amount of Term Loan prepaid if the Termination Date shall
occur at any time on or after December 29, 2009 but on or prior to December 28, 2010; (iv) 2.6% of
the amount of Term Loan prepaid if the Termination Date shall occur at any time on or after
December 29, 2010; and (v) 1.3% of the amount of Term Loan prepaid if the Termination Date shall
occur at any time on or after December 29, 2011 but on or prior to the Termination Date. All
parties to this Agreement agree and acknowledge that the Lenders will have suffered damages on
account of the early termination of this Agreement and that, in view of the difficulty in
ascertaining the amount of such damages, the Early Termination Fee constitutes reasonable
compensation and liquidated damages to compensate the Lenders on account thereof.




9









 








     3.3
Reserved.



     3.4
Reserved.



     3.5 LIBOR Loan Prepayments.



          Except as otherwise expressly provided in this Agreement, in connection with any prepayment,
if any LIBOR Loans are prepaid prior to the expiration date of the Interest Period applicable
thereto, the Borrowers shall pay to the Agent on behalf of the Lenders the amounts described in
Section 4.4.




     3.6
Payments by the Loan Parties.



          (a) All payments to be made by the Loan Parties shall be made without set off, recoupment or
counterclaim. Except as otherwise expressly provided herein, all payments by the Loan Parties
shall be made to the Agent for the account of the Lenders at the Payment Account or such other
account designated by the Agent in writing and shall be made in Dollars and in immediately
available funds, no later than 12:00 noon (New York time) on the date such payment is due and shall
be deemed to have been received (subject to final collection) on the Business Day that Agent
receives such items in immediately available funds for purposes of calculating the amount of
interest accrued thereon. Any payment received by Agent after 12:00 noon (New York time) shall be
deemed to have been received on the next Business Day thereafter and any applicable interest and
other charges shall continue to accrue for such period.




          (b) Subject to the provisions set forth in the definition of “Interest Period,” whenever any
payment is due on a day other than a Business Day, such payment shall be due on
the following Business Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be.




     3.7 Reserved.



     3.8 Apportionment, Application and Reversal of Payments.



          Principal and interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Term Loan to which such payments relate held by each Lender)
and payment of the fees shall, as applicable, be apportioned ratably among the Lenders, except for
fees payable solely to Agent. All payments shall be remitted to the Agent and all such payments
not relating to principal or interest of the Term Loan, or not constituting payment of specific
fees, and all proceeds of Accounts or other Collateral received by the Agent, shall be applied,
ratably, subject to the provisions of this Agreement, first, to pay any fees, indemnities or
expense reimbursements then due to the Agent from the Borrowers; second, to pay any fees,
indemnities or expense reimbursements then due to the Lenders from the Borrowers; third, to pay
interest due in respect of the Term Loan; fourth, to pay or prepay principal of the Term Loan; and
fifth, to the payment of any other Obligations. Notwithstanding anything to the contrary contained
in this Agreement, neither Agent nor any Lender shall apply any payments which it receives to any
LIBOR Loan, unless (a) so directed by the Borrowers, (b) an Event of Default has occurred and is
continuing or (c) such payments are applied on the expiration date of the Interest Period
applicable to any such LIBOR Loan. For so long as an Event of Default has




10









 







occurred and is
continuing, the Agent and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of the Obligations.




     3.9 Indemnity for Returned Payments.



          If after receipt of any payment which is applied to the payment of all or any part of the
Obligations, the Agent, any Lender, or any Affiliate of the Agent or a Lender is for any reason
compelled to surrender such payment or proceeds to any Person because such payment or application
of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not been received by the
Agent or such Lender and the Borrowers shall be liable to pay to the Agent and the Lenders, and
hereby do indemnify the Agent and the Lenders and hold the Agent and the Lenders harmless for the
amount of such payment or proceeds surrendered. The provisions of this Section 3.10 shall
be and remain effective notwithstanding any contrary action which may have been taken by the Agent
or any Lender in reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent’s and the
Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such
payment or application of proceeds having become final and irrevocable. The provisions of this
Section 3.10 shall survive the termination of this Agreement.




     3.10 Agent’s and Lenders’ Books and Records; Monthly Statements.



          The Agent shall record the principal amount of the Loans owing to each Lender from time to
time on its books. In addition, each Lender may note the date and amount of each payment or
prepayment of principal of such Lender’s Loans in its books and records. Failure by Agent or any
Lender to make such notation shall not affect the obligations of the Borrowers with respect to the
Loans. The Loan Parties agree that the Agent’s and each Lender’s books and records showing the
Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute rebuttably
presumptive proof thereof, irrespective of whether any Obligation is also evidenced by a promissory
note or other instrument. The Agent will provide to the Borrowers a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Loan Parties and an account stated (except for corrections of
errors discovered by the Agent), unless the Borrowers notify the Agent in writing to the contrary
within thirty (30) days after such statement is rendered. In the event a timely written notice of
objections is given by the Borrowers, only the items to which exception is expressly made will be
considered to be disputed.




11









 








ARTICLE 4

TAXES, YIELD PROTECTION AND ILLEGALITY




     4.1 Taxes.



          (a) Any and all payments by any Loan Party to a Lender or the Agent under this Agreement and
any other Loan Document shall be made free and clear of, and without deduction or withholding for
any Indemnified Taxes. If a Loan Party shall be required by law to deduct or withhold any
Indemnified Taxes from or in respect of any sum payable hereunder to any Lender or Agent, then:





     (i) the sum payable shall be increased as necessary so that after making all
required deductions and withholdings (including deductions and withholdings
applicable to additional sums payable under this Section) such Lender or Agent, as
the case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made;




     (ii) the Loan Parties shall make such deductions and withholdings;




     (iii) the Loan Parties shall pay the full amount deducted or withheld to the
relevant taxing authority or other authority in accordance with applicable law or,
if being contested in good faith, set up adequate reserves for such Indemnified
Taxes; and




     (iv) the Loan Parties shall also pay to each Lender or Agent for the account
of such Lender, at the time interest is paid, all additional amounts which the
respective Lender documents (in reasonable detail) as being necessary to preserve
the after-tax yield such Lender would have received if such Taxes had not been
imposed.



          (b) In addition, the Loan Parties shall pay all Other Taxes.




          (c) The Loan Parties agree to indemnify and hold harmless each Lender and the Agent for the
full amount of Indemnified Taxes and Other Taxes (including any Taxes imposed by any jurisdiction
on amounts payable under this Section) paid by any Lender or Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto.
Payment under this indemnification shall be made within thirty (30) days after the date such Lender
or Agent makes written demand therefor.




          (d) Without limiting the generality of the foregoing provisions of this Section 4.1,
with respect to each payment under any of the Loan Documents by Applica Canada or Applica Asia to
any Lender that is not, in respect of such payment, a resident of Canada for the purposes of the
Tax imposed pursuant to Part XIII of the ITA, or a resident of Hong Kong for any similar applicable
law of Hong Kong, including any fees or charges payable pursuant to this Agreement, such amount
shall be increased as necessary so that after all required deductions or withholdings of such Tax
are made (including deductions or withholdings applicable to additional sums paid under this
Section), the Agent and such Lender receive an amount equal to the sum that it would have received
had no such Tax been required and Applica Canada or Applica Asia (as applicable) shall forthwith on
written demand by the Agent to be accompanied by reasonable substantiation thereof,or any Lender
remit to the Agent or such Lender, as the case may be, the full amount of the aforesaid increase.




12









 








          (e) At the Agent’s written request, within thirty (30) days after the date of any payment by
the Loan Parties of Taxes or Other Taxes, the Loan Parties shall furnish the Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory
to the Agent.




          (f) If the Loan Parties are required to pay additional amounts to any Lender or the Agent
pursuant to subsections (b) or (c) of this Section, then such Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its
lending office so as to eliminate any such additional payment by the Loan Parties which may
thereafter accrue, if such change in the judgment of such Lender is not otherwise disadvantageous
to such Lender.




          (g) In respect of amounts paid or credited by a Loan Party that is resident in Canada for
purposes of the ITA to or for the benefit of a particular Lender that is an “authorized foreign
bank” for purposes of the ITA, the obligations under this Section 4.1 to pay an additional
amount shall apply where the particular Lender is liable for tax under Part XIII of the ITA in
respect of such payment, even if the Loan Party is not required under the ITA to deduct or withhold
an amount in respect of Taxes on such payment and this Section 4.1 shall apply, mutatis
mutandis, as if the Loan Party was required to deduct or withhold an amount in respect of such
Taxes.




          (h) Without prejudice to the survival of any other agreement contained herein, the agreements
and obligations contained in this Section 4.1 shall survive the payment in
full of principal, interest, fees and any other amounts payable hereunder and the termination
of this Agreement and any other Loan Document.




     4.2 Illegality.



          (a) If any Lender determines, based upon advice from legal counsel, that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its applicable lending
office to make LIBOR Loans, then, on notice thereof by that Lender to the Borrowers through the
Agent, any obligation of that Lender to make LIBOR Loans shall be suspended until that Lender
notifies the Agent and the Borrowers that the circumstances giving rise to such determination no
longer exist.




          (b) If a Lender determines that it is unlawful to maintain any LIBOR Loan, the Borrowers
shall, upon receipt of notice of such fact and demand from such Lender (with a copy to the Agent),
prepay in full such LIBOR Loans of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 4.4, either on the last day of the Interest
Period thereof, if that Lender may lawfully continue to maintain such LIBOR Loans to such day, or
immediately, if that Lender may not lawfully continue to maintain such LIBOR Loans. In the event
such Lender shall have determined that it is no longer unlawful for it to maintain a LIBOR Loan, it
shall promptly give notice to the Borrowers and Agent. If the Borrowers are required to so prepay
any LIBOR Loans, then concurrently with such prepayment, the Borrowers shall borrow from the
affected Lender, in the amount of such repayment, a Base Rate Loan. Notwithstanding anything to
the contrary in this Agreement, the Borrowers shall not be liable for any losses, or be required to
reimburse an Lender as set forth in Section 4.4 to the extent a LIBOR Loan has been prepaid
in accordance with this Section 4.2.




13









 








     4.3 Increased Costs and Reduction of Return.



          (a) If any Lender determines, based upon advice from legal counsel, that due to either (i) the
introduction of or any change in the interpretation of any Requirement of Law or (ii) the
compliance by that Lender with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining any LIBOR Loans, then the Borrowers
shall be liable for, and shall from time to time, upon demand (with a copy of such demand to be
sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are
sufficient to compensate such Lender for such increased costs or, alternatively, in the case where
the increased costs are material to Borrowers or are in excess of the cost of a Base Rate Loan, the
Borrowers may choose to prepay such LIBOR Loan and concurrently with such prepayment, the Borrowers
shall borrow from the affected Lender, a Base Rate Loan in the amount of such repayment;
provided, however, that no Lender shall be entitled to claim any additional amount
hereunder with respect to the period which is more than thirty (30) days prior to the date the
Lender actually became aware of such additional amounts; provided, further, that
notwithstanding anything to the contrary in this Agreement, the Borrowers shall not be liable for
any losses, or be required to reimburse any Lender as set forth in Section 4.4 to the
extent a LIBOR Loan has been prepaid in accordance with this Section 4.3(a).




          (b) If any Lender shall have determined, based upon advice from legal counsel, that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any corporation or other entity
controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of
capital required or expected to be maintained by such Lender or any corporation or other entity
controlling such Lender and (taking into consideration such Lender’s or such corporation’s or other
entity’s policies with respect to capital adequacy and such Lender’s desired return on capital)
determines that the amount of such capital is increased as a consequence of its Commitments, loans,
credits or obligations under this Agreement, then, upon written demand of such Lender to the
Borrowers through the Agent and submission of reasonable substantiation thereof, the Borrowers
shall pay to such Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such non-material increase; provided,
however, that no Lender shall be entitled to claim any such additional amount with respect
to the period which is more than thirty (30) days prior to the date the Lender actually became
aware of such additional amounts.




     4.4 Funding Losses.



          The Borrowers shall reimburse each Lender and hold each Lender harmless from any loss or
expense which such Lender may sustain or incur as a consequence of:




          (a) the failure of the Borrowers to make on a timely basis any payment of principal of any
LIBOR Loan;




          (b) the failure of the Borrowers to borrow, continue or convert a Loan after the Borrowers
have given (or is deemed to have given) a Notice of Borrowing or a Notice of
Continuation/Conversion; or




14









 








          (c) the prepayment or other payment (including after acceleration thereof) of any LIBOR Loans
on a day that is not the last day of the relevant Interest Period;



excluding any such loss of anticipated profit but including any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR Loans or from fees
payable to terminate the deposits from which such funds were obtained. Borrowers shall also pay
any customary administrative fees charged by any Lender in connection with the foregoing.




     4.5 Inability to Determine Rates.



          If the Agent determines that for any reason adequate and reasonable means do not exist for
determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Loan,
or that the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Loan does
not adequately and fairly reflect the cost to the Lenders of funding such Loan, the Agent will
promptly so notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders to
make or maintain LIBOR Loans hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such notice, the Borrowers may
revoke any Notice of Continuation/Conversion then submitted by it. If the Borrowers do not revoke
such Notice, the Lenders shall make, convert or continue the Loans, as proposed by the Borrowers,
in the amount specified in the applicable notice submitted by the Borrowers, but such Loans shall
be made, converted or continued as Base Rate Loans instead of LIBOR Loans.




     4.6 Certificates of Agent.



          If any Lender claims reimbursement or compensation under this Article 4, Agent shall deliver
to the Borrowers (with a copy to the affected Lender) a certificate setting forth in reasonable
detail the amount payable to the affected Lender, and such certificate shall be conclusive and
binding on the Borrowers in the absence of manifest error.




     4.7 Obligation to Mitigate.



          (a) Subject to Section 4.7(b) below, each Lender and the Agent agrees that, as
promptly as practicable after the officer of such Lender or Agent responsible for administering the
Loans of such Lender or the Agent, as the case may be, becomes aware of the occurrence of any event
or the existence of a condition that would cause such Lender to receive increased payments from the
Borrowers under Section 4.1, Section 4.2 or Section 4.3, it will, to the
extent not inconsistent with the formal internal policies of such Lender or the Agent and any
applicable Requirement of Law, use reasonable efforts (i) to make, issue, fund or maintain the
Commitment of such Lender or the affected Loans of such Lender or the Agent through another lending
office of such Lender or the Agent or (ii) take such other actions as such Lender or the Agent may
deem reasonable to cause the additional amounts that the Borrowers would be required to pay the
Lender or the Agent under Section 4.1, Section 4.2 or Section 4.3 to be
reduced.




          (b) The Borrowers may, in their sole discretion, on ten (10) Business Days prior written
notice to the Agent and the applicable Lender, cause a Lender who has (i) incurred increased costs
or is unable to make LIBOR Loans, or (ii) made any claim for taxes under Section 4.1
hereof, (and such Lender shall) to assign, pursuant to Section 11.2 hereof, all of its
rights and obligations under this Agreement to an Eligible Assignee designated by the Borrowers and
reasonably acceptable to the Agent which is willing to become a Lender for a purchase price




15









 







equal
to the outstanding principal amount of the Loans payable to such Lender plus any accrued but unpaid
interest on such Loans, and any accrued but unpaid fees with respect to such Agreement;
provided, however, that any expenses or other amounts which would be owing to such
Lender pursuant to any indemnification provision hereof (including, if applicable, Section
4.4 hereof) shall be payable by the Borrowers as if the Borrowers had prepaid the Loans of such
Lender rather than such Lender having assigned its interest hereunder. The Borrowers or such
assignee shall pay the applicable processing fee under Section 11.2 hereof.




     4.8 Survival.



          The agreements and obligations of the Borrowers in this Article 4 shall survive the payment of
all other Obligations.




ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES




     5.1 Books and Records.



          The Borrowers shall maintain, at all times, correct and complete books, records and accounts
in which complete, correct and timely entries are made of its transactions in accordance with GAAP
applied consistently with the audited Financial Statements required to be delivered pursuant to
Section 5.2(a). The Borrowers shall, by means of appropriate entries, reflect in such
accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper
provision for depreciation and amortization of property and bad debts, all in accordance with GAAP.
The Loan Parties shall maintain at all times books and records pertaining to the Collateral in
such detail, form and scope as required under the Security Agreement as to the Borrowers party
thereto, as required under the Applica Canada Security Agreement as to Applica Canada, and as
required under the Applica Asia Security Agreement as to Applica Asia.




     5.2 Financial Information.



          The Loan Parties shall promptly furnish to the Agent all such financial information regarding
any Loan Party’s or other Consolidated Member’s financial and business affairs as the Agent shall
reasonably request. Without limiting the foregoing, the Loan Parties will furnish to the Agent, via
electronic notice or otherwise, in sufficient copies for distribution by the Agent to each Lender
(and upon receipt, the Agent shall promptly distribute to the Lenders), in such reasonable detail
as the Agent or the Lenders shall request, the following:




          (a) As soon as available, and in any event within ninety (90) days after the close of each
Fiscal Year, audited consolidated balance sheets, income statements, cash flow statements and
changes in stockholders’ equity and unaudited consolidating balance sheets and income statements
for the Consolidated Members for such Fiscal Year, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial
position and the results of operations of the Consolidated Members as at the date thereof and for
the Fiscal Year then ended, and prepared in accordance with GAAP. Such statements shall be
examined in accordance with generally accepted auditing standards and be accompanied by a report
thereon that is not subject to an Impermissible Qualification by independent certified public
accountants selected by the Loan Parties and reasonably




16









 







satisfactory to the Agent. Such
statements also shall be accompanied by a report regarding the Loan Parties prepared in accordance
with special procedures reasonably required by the Agent in connection with such audit. Each Loan
Party hereby authorizes the Agent to communicate, together with a representative of the Loan
Parties, directly with its certified public accountants and, by this provision, authorizes those
accountants to disclose to the Agent any and all financial statements and other supporting
financial documents and schedules relating to the Consolidated
Members and to discuss directly with the Agent and a representative of the Loan Parties the
finances and affairs of the Consolidated Members.




          (b) As soon as available, and in any event within forty-five (45) days after the end of each
Fiscal Quarter (other than the fourth Fiscal Quarter of each Fiscal Year), consolidated unaudited
balance sheets of the Consolidated Members as at the end of such Fiscal Quarter, and consolidated
unaudited income statements and cash flow statements for the Consolidated Members for such Fiscal
Quarter and for the period from the beginning of the Fiscal Year to the end of such quarter, all
in reasonable detail, fairly presenting the financial position and results of operations of the
Consolidated Members as at the date thereof and for such periods, and, in each case, in comparable
form, figures for the corresponding period in the prior Fiscal Year and prepared in accordance
with GAAP applied consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Loan Parties shall certify by a certificate signed by
their chief financial officer that all such statements have been prepared in accordance with GAAP
and present fairly the financial position of the Consolidated Members as at the dates thereof and
its results of operations for the periods then ended.




          (c) As soon as available, and in any event within forty-five (45) days after the end of each
Fiscal Quarter other than the fourth Fiscal Quarter of each Fiscal Year (but within sixty (60)
days after the end of the Fiscal Quarter ending December 31, 2007), consolidated unaudited balance
sheets of the Reporting Loan Parties as at the end of such Fiscal Quarter, and consolidated
unaudited income statements for the Reporting Loan Parties for such Fiscal Quarter and for the
period from the beginning of the Fiscal Year to the end of such quarter, all in reasonable detail,
fairly presenting the financial position and results of operations of the Reporting Loan Parties
as at the date thereof and for such periods, and, in each case, in comparable form, figures for
the corresponding period in the prior Fiscal Year and the Latest Projections for the then current
Fiscal Year, and prepared in accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to Section 5.2(a). The Reporting Loan
Parties shall certify by a certificate signed by their chief financial officer that all such
statements have been prepared in accordance with GAAP and present fairly the financial position of
the Reporting Loan Parties as at the dates thereof and its results of operations for the periods
then ended.




          (d) As soon as available, and in any event within thirty (30) days after the end of each
month commencing with the month of January 2008, consolidated unaudited balance sheets of the
Reporting Loan Parties as at the end of such month, and consolidated unaudited income statements
for the Reporting Loan Parties for such month and for the period from the beginning of the Fiscal
Year to the end of such month, all in reasonable detail, fairly presenting the financial position
and results of operations of the Reporting Loan Parties as at the date thereof and for such
periods, including an itemization of depreciation, amortization and Unfinanced Capital
Expenditures, and, in each case, in comparable form, figures for the corresponding period in the
prior Fiscal Year and the Latest Projections for the then current Fiscal Year, and prepared in
accordance with GAAP applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a). The Reporting Loan Parties shall certify by a
certificate signed by their chief financial officer that all such statements




17









 







have been prepared in
accordance with GAAP and present fairly the financial position of the Reporting Loan Parties as at
the dates thereof and its results of operations for the periods then ended, subject to normal
year-end adjustments and the absence of footnotes.




          (e) With each of the audited Financial Statements delivered pursuant to Section
5.2(a), a certificate of the independent certified public accountants that examined such
statement to the effect that they have reviewed and are familiar with this Agreement and
that, in examining such Financial Statements, they did not become aware of any fact or condition
which then constituted a Default or Event of Default with respect to a financial covenant, except
for those, if any, described in reasonable detail in such certificate.




          (f) Within thirty (30) days after the end of each month, a certificate of the chief financial
officer of the Loan Parties (i) setting forth in reasonable detail the calculations required to
establish that the Reporting Loan Parties were in compliance with the covenant set forth in
Section 7.27 during the period covered in such Financial Statements and as at the end
thereof irrespective of whether compliance with the covenant set forth in Section 7.27 was
required during such period, and (ii) stating that, except as explained in reasonable detail in
such certificate, (A) all of the representations and warranties of the Loan Parties contained in
this Agreement and the other Loan Documents are correct and complete in all material respects as
at the date of such certificate as if made at such time, except for those that speak as of a
particular date, (B) the Loan Parties are, at the date of such certificate, in compliance in all
material respects with all covenants and agreements in this Agreement and the other Loan
Documents, and (C) no Default or Event of Default then exists or existed during the period covered
by the Financial Statements for such month. If such certificate discloses that a representation
or warranty is not correct or complete, or that a covenant has not been complied with, or that a
Default or Event of Default existed or exists, such certificate shall set forth what action the
Borrowers have taken or propose to take with respect thereto.




          (g) As soon as available, and in any event within forty-five (45) days after the end of each
Fiscal Quarter, a certificate of the chief financial officer of the Loan Parties (i) describing
and analyzing in reasonable detail all material trends, changes, and developments in the business
of the Loan Parties and (ii) explaining the variances of the figures in the corresponding budgets
and prior Fiscal Year financial statements. The Loan Parties’ obligation to deliver to Agent a
certificate of the type contemplated by this Section 5.2(g) shall be satisfied by filings by the
Loan Parties with the Securities and Exchange Commission under the Exchange Act (including
sections of such filings entitled “Management’s Discussion and Analysis”) so that the Loan Parties
shall be obligated to deliver such a certificate to Agent only if they no longer are required to
file applicable financial information with the Securities and Exchange Commission under the
Exchange Act.




          (h) No later than forty-five (45) days after the Fiscal Year beginning July 1, 2008, and no
later than the beginning of each Fiscal Year thereafter, annual forecasts (to include forecasted
consolidated balance sheets, income statements and cash flow statements) for the Reporting Loan
Parties as at the end of and for each month of such Fiscal Year.




          (i) Promptly after filing with the PBGC, the IRS or other applicable Governmental Authority,
a copy of each annual report or other filing filed with respect to each Plan of the Loan Party.




          (j) Promptly upon the filing thereof, copies of all reports, if any, to or other documents
filed by any Consolidated Member with the Securities and Exchange Commission




18









 







under the Exchange
Act, and all material reports, notices, or statements sent by the Borrowers to holders of any
equity interests of Parent (other than routine non-material correspondence sent by the trustee
under any indenture under which the same is issued).




          (k) As soon as available, and in any event not later than fifteen (15) days after any Loan
Party’s receipt thereof, a copy of all management reports and final management letters prepared by
any independent certified public accountants of any Loan Party.




          (l) Promptly after their preparation, copies of any and all proxy statements, financial
statements, and reports which the Parent make available to its shareholders.




          (m) If requested by Agent in writing, promptly after filing with the IRS or other applicable
Governmental Authority, a copy of each tax return filed by any Loan Party.




          (n) As soon as available, and in any event within twenty (20) days after the end of the first
and second month of each Fiscal Quarter (in each case, for such month), and within thirty (30)
days after the end of the last month of each Fiscal Quarter (in each case, for such month), a
Borrowing Base Certificate as of the last day of such month, and a report showing the beginning
and ending balances of all intercompany loans, advances or investments (“Intercompany Accounts”)
for such month.




          (o) Such additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of any Loan Party.




          (p) On the last Business Day of each month, duplicate original bank statements for the
preceding month in respect of the Applica Canada Blocked Agreement and the Applica Asia Blocked
Agreement.




     5.3 Notices to the Lenders.



          The Loan Parties shall notify the Agent and the Lenders in writing of the following matters at
the following times:




          (a) Immediately after becoming aware of any Default or Event of Default;




          (b) Immediately after becoming aware of the assertion by the holder of any Debt of any
Borrower or any Subsidiary in a face amount in excess of $1,000,000 that a default exists with
respect thereto or that any Loan Party is not in compliance with the terms thereof, or the threat
or commencement by such holder of any enforcement action because of such asserted default or
non-compliance;




          (c) Immediately after becoming aware of any event or circumstance which could reasonably be
expected to have a Material Adverse Effect;




          (d) Immediately after becoming aware of any pending or threatened action, suit, or proceeding,
by any Person, or any pending or threatened investigation by a Governmental Authority, which could
reasonably be expected to have a Material Adverse Effect;




          (e) Immediately after becoming aware of any pending or threatened strike, work stoppage,
unfair labor practice claim, or other labor dispute affecting any Loan Party in a manner which
could reasonably be expected to have a Material Adverse Effect;




19









 








          (f) Immediately after becoming aware of any violation of any Requirement of Law affecting any
Loan Party which could reasonably be expected to have a Material Adverse Effect;




          (g) Immediately after receipt of any notice of any violation by any Loan Party of any
Environmental Law which could reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that any Loan Party is not in compliance with any
Environmental Law or is investigating any Loan Party where such non-compliance could reasonably be
expected to have a Material Adverse Effect;




          (h) Immediately after receipt of any written notice that any Loan Party is or may be liable to
any Person as a result of the Release or threatened Release or that any Loan Party is subject to
investigation by any Governmental Authority evaluating whether any remedial action is needed to
respond to the Release or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $1,000,000;




          (i) Immediately after receipt of any written notice of the imposition of any Environmental
Lien against any property of any Loan Party for an amount in excess of $1,000,000;




          (j) Any change in any Loan Party’s name as it appears in the state of its incorporation or
other organization, jurisdiction of incorporation or organization, type of entity, organizational
identification number, locations of Collateral other than those set forth in Section 4 of
the Security Agreement, or form of organization, trade names under which a Loan Party sells
Inventory or creates Accounts, or to which instruments in payment of Accounts may be made payable,
in each case at least ten (10) days prior thereto;




          (k) Within ten (10) Business Days after any Loan Party or any ERISA Affiliate knows that an
ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code)
has occurred, which could reasonably be expected to have a Material Adverse Effect, and, when
known, any action taken or threatened by the IRS, the CRA, the DOL, the PBGC, the FSCO or any other
Governmental Authority with respect thereto;




          (l) Upon Agent’s written request, or, in the event that such filing reflects a change with
respect to the matters covered thereby, which could reasonably be expected to have a Material
Adverse Effect within three (3) Business Days after the filing thereof with the PBGC, the DOL, the
IRS, the FSCO or any other applicable Governmental Authority as applicable, copies of the
following: (i) each annual report (form 5500 series), including Schedule B thereto, filed
with the PBGC, the FSCO, the DOL, the IRS or the CRA with respect to each Pension Plan and in the
case of any Pension Plan governed by the PBA, each report, valuation, request for amendment, whole
or partial withdrawal or termination or other variation, (ii) a copy of each funding waiver request
filed with the PBGC, the DOL, the IRS, the CRA, the FSCO or any other applicable Governmental
Authority with respect to any Pension Plan and all communications received by the Borrowers or any
ERISA Affiliate from the PBGC, the CRA, the DOL, the IRS, the FSCO or any other applicable
Governmental Authority with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL, the FSCO, the IRS, the CRA or any other applicable
Governmental Authority, with respect to each Plan by either a Loan Party or any ERISA Affiliate;




          (m) Upon Agent’s written request, copies of each actuarial report for any Pension Plan or
Multi-employer Plan and annual report received for any Multi-employer Plan;





20











 




and within three (3) Business Days after receipt thereof by a Loan Party or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC, the FSCO or any other applicable
Governmental Authority’s intention to terminate a Pension Plan or to have a trustee appointed to
administer such Plan; (ii) any favorable or unfavorable determination letter from the IRS, the FSCO
or any other applicable Governmental Authority regarding the qualification of a Pension Plan under
Section 401(a) of the Code, the PBA or other applicable laws; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability;




          (n) Within three (3) Business Days after the occurrence thereof: (i) any changes in the
benefits of any existing Pension Plan which increase a Loan Parties’ annual costs with respect
thereto by an amount in excess of $1,000,000, or the establishment of any new Pension Plan which
could reasonably be expected to have an annual aggregate cost of $1,000,000 or more, or the
commencement of contributions to any Pension Plan to which the Loan Parties or any ERISA Affiliate
was not previously contributing; or (ii) any material failure by a Loan Party or any ERISA
Affiliate to make a required installment or any other required payment under Section 412 of the
Code, the PBA or other applicable laws on or before the due date for such installment or payment;
or




          (o) Within three (3) Business Days after a Loan Party or any ERISA Affiliate knows or has
reason to know that any of the following events has or will occur: (i) a Multi-employer Plan has
been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan intends
to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multi-employer Plan, or (iv) Reportable Event or
Termination Event in respect of any Pension Plan.




          Each notice given under this Section shall describe the subject matter thereof in reasonable
detail, and shall set forth the action that the Loan Party or any ERISA Affiliate, as applicable,
has taken or proposes to take with respect thereto.




     5.4 Revisions or Updates to Schedules.



          Should any of the information or disclosures provided on any of the schedules originally
attached hereto become outdated or incorrect in any material respect, the Borrowers from time to
time shall deliver to the Agent and the Lenders, together with an officer’s certificate of the type
required pursuant to Section 5.2(h), such revisions or updates to such schedule(s)
whereupon such schedules shall be deemed to be amended by such revisions or updates, as may be
necessary or appropriate to update or correct such schedule(s), provided, however,
that, notwithstanding the foregoing, (a) no such revisions or updates to Schedules 6.5,
6.11-6.16, 6.19, 6.24, 6.25 or 6.27 shall be deemed to have amended, modified, or superseded
any such schedules as originally attached hereto, or to have cured any breach of warranty or
representation resulting from the inaccuracy or incompleteness of any such schedules, unless and
until the Agent shall have received and acknowledged to the Loan Parties in writing such revisions
or updates to any such schedules and (b) no such revisions or updates to Schedule 6.9 shall
be deemed to have amended, modified, or superseded such Schedule as originally attached hereto, or
to have cured any breach of warranty or representation resulting from the inaccuracy or
incompleteness of such schedule, unless and until the Required Lenders shall have received and
acknowledged to the Loan Parties in writing such revisions or updates to such schedule;
provided further, however, that Agent’s receipt and acknowledgment to Loan Parties of any revisions or updates to such





21









 







schedules shall not affect the application of, and obligations of the Loan Parties to comply with,
any relevant provision of Article 7 of this Agreement.




ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS




          To induce Agent and the Lenders to enter into this Agreement and to make available the
Commitments, each Borrower warrants and represents to Agent and each Lender that:




     6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents.



          Each Loan Party has the power and authority to execute, deliver and perform this Agreement and
the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the
Agent Liens upon and security interests in the Collateral. Each Loan Party has taken all necessary
action (including obtaining approval of its stockholders if necessary) to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents to which it is a party.
This Agreement and the other Loan Documents to which it is a party have been duly executed and
delivered by each Loan Party, and, assuming this Agreement and the other Loan Documents constitute
the legal, valid and binding obligations of Agent and each of the Lenders hereto, constitute the
legal, valid and binding obligations of each Loan Party, enforceable against it in accordance with
their respective terms. Each Loan Party’s execution, delivery, and performance of this Agreement
and the other Loan Documents to which it is a party do not and will not conflict with, or
constitute a violation or breach of, or result in the imposition of any Lien upon the property of
an Loan Party or any of its Subsidiaries, by reason of the terms of (a) any contract, mortgage,
lease, agreement, indenture, or instrument to which such Loan Party or any of its Subsidiaries is a
party or which is binding upon it, (b) any Requirement of Law applicable to the such Loan Party or
any of its Subsidiaries, or (c) the certificate or articles of incorporation or by-laws or the
limited liability company or limited partnership agreement of the Loan Parties or any of their
Subsidiaries.




     6.2 Validity and Priority of Security Interest.



          The provisions of this Agreement, and the other Loan Documents create legal and valid Liens on
all the Collateral in favor of the Agent, for the ratable benefit of the Agent and the Lenders, and
such Liens constitute perfected and continuing Liens on all the Collateral, having priority over
all other Liens on the Collateral, except to the extent provided for in the Additional Debt
Intercreditor Agreement and except for those Liens identified in clauses (a), (c), (d), (e), (g),
(h), (i) and (j) of the definition of Permitted Liens securing all the Obligations, and enforceable
against the Loan Parties and all third parties.




     6.3 Organization and Qualification.



          Each Loan Party:




          (a) is duly organized or incorporated and validly existing in good standing under the laws of
the jurisdiction of its organization or incorporation;





22









 








          (b) is qualified to do business and is in good standing in the jurisdictions set forth on
Schedule 6.3 which are the only jurisdictions in which qualification is necessary in order
for it to own or lease its property and conduct its business, except where the failure to so
qualify would have a Material Adverse Effect; and




          (c) has all requisite power and authority to conduct its business and to own its property.




     6.4  Reserved.



     6.5  Subsidiaries.



          Schedule 6.5 is a correct and complete list of the name and relationship to the
Borrowers of each and all of the Borrowers’ Subsidiaries (specifying whether such Subsidiaries are
Domestic Subsidiaries or Foreign Subsidiaries). Each Subsidiary is (a) duly incorporated or
organized and validly existing in good standing under the laws of its jurisdiction of incorporation
or organization set forth on Schedule 6.5, (b) qualified to do business and in good
standing in each jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a Material Adverse Effect and (c) has all requisite power and
authority to conduct its business and own its property.




     6.6 Financial Statements and Projections.



          (a) The Borrowers have delivered to the Agent and the Lenders the audited balance sheet and
related statements of income, retained earnings, cash flows, and changes in stockholders equity for
the Consolidated Applica Parties as of June 30, 2007, and for the six months then ended,
accompanied by the report thereon of the Borrowers’ independent certified public accountants, Grant
Thornton LLP. The Borrowers have also delivered to the Agent and the Lenders the unaudited balance
sheet and related statements of income for the Consolidated Applica Parties as of October 31, 2007.
All such Financial Statements have been prepared in accordance with GAAP and present accurately
and fairly in all material respects the financial position of the Consolidated Applica Parties as
at the dates thereof and their results of operations for the periods then ended.




          (b) The Borrowers have delivered to the Agent and the Lenders the audited balance sheet and
related statements of income, retained earnings, cash flows, and changes in stockholders equity for
the Consolidated Salton Parties as of June 30, 2007, and for the Fiscal Year then ended,
accompanied by the report thereon of the Borrowers’ independent certified public accountants, Grant
Thornton LLP. The Borrowers have also delivered to the Agent and the Lenders the unaudited balance
sheet and related statements of income for the Consolidated Salton Parties as of October 31, 2007.
All such Financial Statements have been prepared in accordance with GAAP and present accurately and
fairly in all material respects the financial position of the Consolidated Salton entities as at the dates thereof and their results of
operations for the periods then ended.




          (c) The Latest Projections when submitted to the Agent as required herein represent the Loan
Parties’ good faith estimate of the future financial performance of the Loan Parties for the
periods set forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Loan Parties believe are fair and reasonable in light of
current and reasonably foreseeable business conditions at the time submitted to the Lenders;





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provided, however, it being recognized by Agent and Lenders that such projections
are not to be viewed as facts and that actual results during the period or periods covered by any
such projections will likely differ from the projected results.




          (d) All Financial Statements hereafter delivered to Agent and Lenders pursuant to this
Agreement shall be prepared in accordance with GAAP and fairly present the financial positions and
results of operations of the Persons described therein at the dates and for the periods indicated.




     6.7 Reserved.



     6.8  Solvency.



          Each Loan Party is Solvent prior to and after giving effect to the Term Loan to be made on the
Closing Date and shall remain Solvent during the term of this Agreement.




     6.9 Debt.



          After giving effect to the making of the Term Loan on the Closing Date, the Loan Parties have
no material Debt, except (a) the Obligations; (b) Debt described on Schedule 6.9 and (c)
other Debt as permitted under Section 7.13.




     6.10 Distributions.



          Except as set forth on Schedule 6.10, since June 30, 2007, no Distribution has been
declared, paid, or made upon or in respect of any Capital Stock of any Borrower or any Capital
Stock of any other Loan Party (unless and to the extent that such Distribution was made to another
Loan Party.




     6.11 Real Estate; Leases.



          Schedule 6.11 sets forth, as of the Closing Date, a correct and complete list of all
Real Estate, all leases and subleases of real property held by each Loan Party as lessee or
sublessee, and all leases and subleases of real property held by each Loan Party as lessor, or
sublessor in excess of $100,000 annually. To the knowledge of each Loan Party, each of such leases
and subleases is valid and enforceable in accordance with its terms and is in full force and
effect, and no default by any party to any such lease or sublease exists. To the knowledge of each
Loan Party or party hereto, each Loan Party has good and marketable title in fee simple to the Real
Estate identified on Schedule 6.11 as owned by such Loan Party, or valid leasehold
interests in all Real Estate designated therein as “leased” by such Loan Party, free of all Liens
except Permitted Liens and those Liens that, when taken as a whole, could not reasonably be expected
to have a Material Adverse Effect.




     6.12 Proprietary Rights.



          Schedule 6.12 sets forth a correct and complete list of all of each Loan Party’s
material Proprietary Rights. None of the material Proprietary Rights is subject to any licensing
agreement or similar arrangement except as set forth on Schedule 6.12. To the knowledge of




24









 







each Loan Party, none of the Proprietary Rights infringes on or conflicts with any other Person’s
property, and no other Person’s property infringes on or conflicts with the Proprietary Rights.
The Proprietary Rights described on Schedule 6.12 constitute all of the property of such
type necessary to the current and anticipated future conduct of the Loan Parties’ business.




     6.13 Trade Names.



          All trade names or styles under which the Loan Parties currently or currently intend to sell
Inventory or create Accounts, or to which Instruments in payment of Accounts may be made payable,
are listed on Schedule 6.13.




     6.14 Litigation.



          Except as set forth on Schedule 6.14, there is no pending, or to the knowledge of any
Loan Party, threatened, action, suit, proceeding, or counterclaim by any Person, or to the
knowledge of any Loan Party, investigation by any Governmental Authority, or any basis for any of
the foregoing, which could reasonably be expected to have a Material Adverse Effect.




     6.15 Labor Disputes.



          Except as set forth on Schedule 6.15 or as required by the laws of a foreign
jurisdiction as a condition to do business in such jurisdiction, as of the Closing Date (a) there
is no collective bargaining agreement or other material labor contract covering employees of any
Loan Party, (b) no such collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) to the knowledge of any Loan Party, no union or other
labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of
employees of any Loan Party or for any similar purpose, and (d) there is no pending or, to the
knowledge of any Loan Party, threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting any Loan Party or its employees which
could be reasonably expected to have a Material Adverse Effect.




     6.16 Environmental Laws.



          Except as otherwise disclosed on Schedule 6.16 or as could not reasonably be expected
to have a Material Adverse Effect:




          (a) The Loan Parties have complied in all respects with all Environmental Laws except as could
not reasonably be expected to have a Material Adverse Effect and no Loan Party nor any of its
presently owned real property or presently conducted operations or any property now or previously
in its charge, management or control to the extent any Loan Party was the non-complying party in connection with any property previously in its charge, management
or control, nor to the knowledge of a Loan Party, its previously owned real property or prior
operations, is subject to any enforcement order from or liability agreement with any Governmental
Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or threatened Release
of a Contaminant.





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          (b) Each Loan Party has obtained all permits necessary for its current operations under
Environmental Laws and all such permits are in good standing and each Loan Party is in compliance
with all material terms and conditions of such permits, except where the failure to obtain or
comply with such permits could not reasonably be expected to have a Material Adverse Effect.




          (c) No Loan Party, nor, to the knowledge of a Loan Party, any of its predecessors in interest,
has been or is in violation of any applicable law relating to the storage, treatment or disposal of
any hazardous waste.




          (d) No Loan Party has received any summons, complaint, order or similar written notice
indicating that it is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.




          (e) To the knowledge of the Loan Party, none of the present or past operations of the Loan
Parties is the subject of any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a Contaminant.




          (f) No Loan Party has filed, within the past five (5) years, any notice under any requirement
of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a
Contaminant into the environment.




          (g) No Loan Party has entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property and any Governmental Authority) imposing material
obligations or liabilities on any Loan Party with respect to any remedial action in response to the
Release of a Contaminant or environmentally related claim.




          (h) None of the products manufactured, distributed or sold by a Loan Party during the period
commencing on the date hereof and ending on the Stated Termination Date contain asbestos containing
material.




          (i) No Environmental Lien has attached to any of the Real Estate.




     6.17 No Violation of Law.



          No Loan Party is in violation of any law, statute, regulation, ordinance, judgment, order, or
decree applicable to it which violation could reasonably be expected to have a Material Adverse
Effect.




     6.18 No Default.



          No Loan Party is in default under any of the Additional Debt Documents or under any other
note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which a Loan Party is
a party or by which it is bound which default that could reasonably be expected to have a Material
Adverse Effect.





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     6.19 Plan Compliance.



          Except as specifically disclosed in Schedule 6.19:




          (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code, the PBA and other federal, provincial, territorial or state law, except where the
lack of such compliance could not reasonably be expected to have a Material Adverse Effect. Each
Pension Plan which is intended to qualify under Section 401(a) of the Code has received a favorable
determination letter or opinion letter from the IRS and to the knowledge of the Loan Parties,
nothing has occurred which would cause the loss of such qualification except where the lack or
absence of such qualification could not reasonably be expected to have a Material Adverse Effect.
The Loan Parties and each ERISA Affiliate has made all required contributions to any Plan when due
other than any contributions that could not reasonably be expected to have a Material Adverse
Effect, and no application for a funding waiver or an extension of any amortization period has been
made with respect to any Pension Plan.




          (b) There are no pending or, to the knowledge of the Loan Parties, threatened claims, actions
or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse Effect. There has been no
prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan
which has resulted or could reasonably be expected to result in a Material Adverse Effect.




          (c) Except as could not reasonably be expected to have a Material Adverse Effect: (i) no ERISA
Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Loan Parties nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Loan
Parties nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v)
neither the Loan Parties nor any ERISA Affiliate has engaged in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.




     6.20 Taxes.



          Each Loan Party has filed all federal, provincial, state and other material Tax returns and
reports required to be filed, and has paid all federal, provincial, state and other material Taxes,
assessments, fees and other governmental charges levied or imposed upon them or their properties,
income, franchises or assets otherwise due and payable unless such unpaid Taxes and assessments
would constitute a Permitted Lien or are being Properly Contested.




     6.21 Regulated Entities.



          No Loan Party nor any Person controlling a Loan Party is an “Investment Company” within the
meaning of the Investment Company Act of 1940. No Loan Party is subject to regulation under the
Federal Power Act, the Interstate Commerce Act, any state public utilities code or law, or any
other federal or state statute or regulation limiting its ability to incur indebtedness.





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     6.22 Margin Regulations.



          No Loan Party is engaged in the business of purchasing or selling Margin Stock or extending
credit for the purpose of purchasing or carrying Margin Stock.




     6.23
Copyrights, Patents, Trademarks and Licenses, etc.



          Each Loan Party owns or is licensed or otherwise has the right to use all of the material
patents, trademarks, service marks, trade names, copyrights, contractual franchises, licenses,
authorizations and other intellectual property rights that are reasonably necessary for the
operation of its businesses, without conflict with the rights of any other Person. To the
knowledge of the Loan Parties, no slogan or other advertising device, product, process, method,
substance, part or other material now employed by the Loan Parties infringes upon any rights held
by any other Person which infringement could reasonably be expected to have a Material Adverse
Effect. No claim or litigation regarding any of the foregoing is pending or, to the knowledge of
any Borrower, threatened, which, in either case, could reasonably be expected to have a Material
Adverse Effect.




     6.24 Material Agreements.



          Schedule 6.24 hereto sets forth all Material Contracts to which any Loan Party is a
party or is bound as of the Closing Date.




     6.25 Bank Accounts.



          Schedule 6.25 contains as of the Closing Date a complete and accurate list of all bank
accounts maintained by each Loan Party with any bank or other financial institution.




     6.26 Governmental Authorization.



          No approval, consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or other Person is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, a Loan Party of this Agreement or
any other Loan Document.




     6.27 Capitalization.



          Schedule 6.27 sets forth, in each case as of the Closing Date (after giving effect to
all of the Transactions), the number of authorized shares of Capital Stock of each of the Loan
Parties and their first tier direct Foreign Subsidiaries, the number of such shares or other
interests that are outstanding and the names of the record and beneficial owners of all such shares of
Parent and each such Subsidiary. All such issued and outstanding shares or other interests are
validly issued, fully paid and non-assessable.





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     6.28 No Material Adverse Change.



          No Material Adverse Effect has occurred since June 30, 2007, except as otherwise disclosed (a)
in the Borrowers’ filings with the Securities and Exchange Commission under the Exchange Act or (b)
to Agent and Lenders in writing prior to the Closing Date.




     6.29 Full Disclosure.



          None of the representations or warranties made by the Loan Party in the Loan Documents as of
the date such representations and warranties are made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of any Loan Party in connection
with the Loan Documents (including the offering and disclosure materials delivered by or on behalf
of the Loan Parties to the Lenders prior to the Closing Date), contains any untrue statement of a
material fact or omits any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are made, not misleading as
of the time when made or delivered.




     6.30 Common Enterprise.



          The successful operation and condition of each of the Loan Parties is dependent on the
continued successful performance of the functions of the group of Loan Parties as a whole and the
successful operation of each Loan Party is dependent on the successful performance and operation of
each of the other Loan Parties. Each of the Loan Parties expects to derive benefit (and its board
of directors or other governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from successful operations of each of the other Loan Parties.
Each Loan Party expects to derive benefit (and the boards of directors or other governing body of
each such Loan Party have determined that it may reasonably be expected to derive benefit),
directly and indirectly, from the credit extended by the Lenders to the Loan Parties hereunder,
both in their separate capacities and as members of a group of companies. Each Loan Party has
determined that execution, delivery, and performance of this Agreement and any other Loan Documents
to be executed by such Loan Party is within its corporate purpose, will be of direct and indirect
benefit to such Loan Party, and is in its best interest.




     6.31 Anti-Terrorism Laws.



          (a) General. No Loan Party or any Consolidated Member is in violation of any
Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law.




          (b)
Executive Order No. 13224.





     (i) No Consolidated Member is any of the following (each a “Blocked Person”):





	 	(1)	 	a Person that is listed in
the Annex to, or is otherwise subject to the provisions of,
Executive Order No. 13224;





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	 	(2)	 	a Person owned or
controlled by, or acting for or on behalf of, any Person that
is listed in the Annex to, or is otherwise subject to the
provisions of, Executive Order No. 13224;
	 
	 	(3)	 	a Person or entity with
which any bank or other financial institution is prohibited
from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law;
	 
	 	(4)	 	a Person or entity that
commits, threatens or conspires to commit or supports
“terrorism” as defined in Executive Order No. 13224;
	 
	 	(5)	 	a Person or entity that is
named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office
of Foreign Asset Control at its official website or any
replacement website or other replacement official
publication of such list; or
	 
	 	(6)	 	a Person or entity who is
affiliated with a Person or entity listed above.





          (c) No Loan Party or any Consolidated Member (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person
or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in
property blocked pursuant to Executive Order No. 13224.




ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS




          Each Loan Party covenants to Agent and each Lender that so long as any of the Obligations
remain outstanding or this Agreement or any of the Commitments are in effect:




     7.1 Taxes and Other Obligations.



          Each Loan Party shall (a) file when due (after taking into account any applicable extensions)
all federal, state, provincial and other material Tax returns and other material reports which it
is required to file; (b) pay, or provide for the payment, when due, of all federal, state,
provincial and other material Taxes, fees, assessments and other material governmental charges
against it or upon its properties, income franchises or assets, make all required Tax withholdings
and other Tax remittances and deposits, and provide to Agent and the Lenders, upon request,
satisfactory evidence of its timely compliance with the foregoing; and (c) pay when due all Debt
owed by it and all valid claims of materialmen, mechanics, carriers, warehousemen, landlords,
contractors, subcontractors, processors and other like Persons, and all other indebtedness owed by it and perform and discharge in a timely manner all other obligations undertaken by it;
provided, however, so long as a Loan Party has notified Agent in writing, no Loan
Party need pay any Tax, fee, assessment, or governmental charge that is being Properly Contested.





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     7.2 Legal Existence and Good Standing.



          Each Loan Party shall maintain its legal existence and its qualification and good standing in
all jurisdictions in which the failure to maintain such existence and qualification or good
standing could reasonably be expected to have a Material Adverse Effect.




     7.3 Compliance with Law and Agreements; Maintenance of Licenses.



          Each Loan Party shall comply in all respects with all Requirements of Law of any Governmental
Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards
Act and all Environmental Laws) except where the failure to comply could not reasonably be expected
to have a Material Adverse Effect. Each Loan Party shall obtain and maintain all licenses,
permits, franchises, and governmental authorizations necessary to own its property and to conduct
its business as conducted on the Closing Date. No Loan Party shall modify, amend or alter its
certificate or articles of incorporation, or its limited liability company operating agreement or
limited partnership agreement, as applicable, other than in a manner which does not adversely
affect the rights of the Lenders or the Agent.




     7.4 Maintenance of Property; Inspection of Property.



          Each Loan Party shall maintain all of its property necessary and useful in the conduct of its
business, in good operating condition and repair in accordance with the standard of the Borrowers’
industry and consistent with such Loan Party’s past conduct, ordinary wear and tear excepted.




     7.5 Insurance.



          (a) Each Loan Party shall maintain with financially sound and reputable insurers, and in the
manner customarily insured by similar businesses owning such properties, insurance against loss or
damage by fire with extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other criminal liability;
business interruption; public liability and third party property damage; and such other hazards or
of such other types as is customary for Persons engaged in the same or similar business.




          (b) Subject to the Additional Debt Intercreditor Agreement, each of the Loan Parties shall
cause Agent, for the benefit of Agent and the Lenders, to be named as secured party and loss payee
or additional insured on all insurance policies covering Collateral. Each policy of insurance
shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days
prior written notice to Agent in the event of cancellation of the policy for any reason whatsoever
and a clause or endorsement in respect of the insured property stating that the interest of Agent
with respect to the Collateral shall not be impaired or invalidated by any act or neglect of the
insured Person or the owner of any premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the Borrowers when due, and certificates
of insurance and, if requested by Agent, photocopies of the policies, shall be delivered to Agent, in each case in sufficient quantity for distribution by the Agent to each
of the Lenders.





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     7.6 Insurance and Condemnation Proceeds.



          Each Loan Party shall promptly upon becoming aware, notify the Agent and the Lenders of any
material loss, damage, or destruction to the Collateral, whether or not covered by insurance.
Subject to the Additional Debt Intercreditor Agreement, Agent is hereby authorized to collect all
insurance and condemnation proceeds in respect of Collateral directly and, after deducting from
such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the Obligations in the
order provided for in Section 3.9. With respect to any such proceeds payable to Applica
Canada, the Borrowers shall transfer an amount equal to such proceeds to the Agent for application
to the Obligations in accordance with Section 3.9.




     7.7 Environmental Laws.



          Each Loan Party shall conduct, and shall cause each Loan Party to conduct its business in
compliance with all Environmental Laws applicable to it, including those relating to the
generation, handling, use, storage, and disposal of any Contaminant, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect. Each Loan Party shall
take, and shall cause each Loan Party to take, prompt and appropriate action to respond to any
non-compliance with Environmental Laws and shall regularly report to the Agent on such response.




     7.8 Compliance with ERISA.



          Except as could not reasonably be expected to have a Material Adverse Effect, each Loan Party
shall and shall cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code, the PBA and other federal,
provincial or state law; (b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; (c) make all required contributions to any Plan subject to Section 412
of the Code; (d) not engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan; and (e) not engage in a transaction that could be
subject to Section 4069 or 4212(c) of ERISA.




     7.9 Asset Dispositions, Mergers, Dissolutions.



     (a) No Loan Party shall transfer, sell, assign, lease as lessor, or otherwise dispose of all
or any part of its property (including any Collateral), except, when no Default or Event of Default
exists and would not result therefrom, for (i) sales of Inventory in the ordinary course of its
business; (ii) a transfer of property (including Proprietary Rights) to a Loan Party by another
Loan Party; (iii) a termination, transfer or other disposition of a lease of Real Estate or
personal property that is not necessary to the conduct of such Loan Party’s business in the
ordinary course, could not reasonably be expected to have a Material Adverse Effect and does not
result from a such Loan Party’s default or failure to perform under such lease; (iv) a disposition
of property that does not constitute Collateral; (v) a sale of Inventory (and Proprietary Rights
related thereto) of a division or line of business of a Loan Party other than in the ordinary
course of business in connection with and as part of the sale by such Loan Party of such division or
line of business, provided that (A) the Loan Parties shall provide to Agent, not less than
5 Business Days prior to the closing of such sale, written notice of such sale (which notice shall
describe in



32









 




detail the division or line of business to be sold, the Inventory (and Proprietary
Rights related thereto) to be sold in connection therewith and as part thereof and the economic and
other material terms of such sale), (B) all Net Proceeds from such sale received by a Loan Party
(other than Applica Canada, in which event the Borrowers shall transfer an amount equal to such Net
Proceeds to Agent for application to the Obligations and after the date on which Applica Canada is
required hereunder or by the Applica Canada Security Agreement or otherwise following the
occurrence and during the continuance of an Event of Default, Applica Canada shall remit proceeds
of its Collateral to Agent) are promptly remitted to Agent for application to the Obligations to
the extent required hereunder, (C) no Default or Event of Default exists at the time of or after
giving effect to such sale; (vi) other sales, transfers or distributions (including Proprietary
Rights) not exceeding $50,000,000 in any year; (vii) the conversion of Cash Equivalents to cash and
the use of such cash to pay any of the Obligations or in the ordinary course of business of a Loan
Party; or (viii) a sale (including a sale of Proprietary Rights) that has been consented to in
writing by the Required Lenders, provided that, to the extent not otherwise provided
hereinabove, in each of the cases described above in this Section 7.9, and subject to the
Additional Debt Intercreditor Agreement, all Net Proceeds (to the extent constituting proceeds of
Collateral) received by a Loan Party (other than Applica Canada, in which event the Borrowers shall
transfer an amount equal to such Net Proceeds to Agent for application to the Obligations to the
extent required hereunder and after the date on which Applica Canada is required hereunder or by
the Applica Canada Security Agreement or otherwise following the occurrence and during the
continuance of an Event of Default, Applica Canada shall remit proceeds of its Collateral to the
Agent) are promptly remitted to the Agent for application to the Obligations.




          (b) No Loan Party shall enter into a transaction of merger, reorganization, consolidation or
amalgamation except: (i) on or about the Closing Date, (A) SFP may merge with and into APN, with
APN as the survivor of such merger, and (B) Applica may merge with and into ACP, with ACP as the
survivor of such merger; and (ii) at any time after the Closing Date, when no Default or Event of
Default exists and would not result therefrom, that (W)(1) Applica Mexico may merge with and into
HP, with HP as the survivor of such merger, and (2) each of One Coffee, Sonex, HCD, SHI, Icebox,
STL, Toastmaster, Family Products and APN may be merged with and into ACP, with ACP as the survivor
of such merger, (X) any Domestic Subsidiary may merge or amalgamate into a Borrower, with such
Borrower as the survivor of such merger; (Y) any Domestic Subsidiary may merge into any other
Domestic Subsidiary, provided that if a Borrower is a party to such merger it shall be the survivor
of such merger; and (Z) any Loan Party that is not a Borrower may merge or amalgamate into another
Person that is not a Subsidiary if the Loan Party is the surviving party to such merger or
amalgamation, provided that the requirements of the Security Agreement and all other Loan Documents
are at all times satisfied and such merger or amalgamation does not violate any other provision of
this Agreement.




          (c) As long as no Default or Event of Default exists or would result therefrom and provided
the Borrowers give the Agent and the Lenders at least five (5) Business Days prior written notice,
a Loan Party, other than a Borrower, may wind up, dissolve, or liquidate if none of the Collateral
(except Collateral having a fair value of $1,000,000 or less, in aggregate) is sold or otherwise
disposed of except on terms acceptable to the Agent (acting at the direction or with the consent of
the Required Lenders or pursuant to this Section 7.9) or if such Collateral is sold or
otherwise disposed of to another Loan Party, any Net Proceeds of Collateral received by a Loan
Party (other than Applica Canada, in which event the Borrowers shall transfer an amount equal to such Net Proceeds to Agent for application to the Obligations and after the
date on which Applica Canada is required hereunder or by the Applica Canada Security Agreement or
otherwise following the occurrence and during the continuance of an Event of




33









 







Default, Applica Canada shall remit proceeds of its Collateral to the Agent) in connection with any such winding up,
dissolution or liquidation are, to the extent required hereunder, promptly remitted to the Agent
for application to the Obligations, and any remaining property not sold or otherwise disposed of is
transferred to the Borrowers or another Loan Party subject to the Agent’s Liens.




     7.10 Distributions; Capital Change; Restricted Investments.



          No Loan Party shall (i) directly or indirectly declare or make, or incur any liability to
make, any Distribution, except for Permitted Distributions, (ii) make any change in its capital
structure which could have a Material Adverse Effect or (iii) make or have any Restricted
Investment;




     7.11
Acquisitions.




          No Loan Party shall make any Acquisition other than a Permitted Acquisition.




     7.12  Third Party Guaranties.



          No Loan Party shall make, issue, or become liable on any Guaranty, except (a) Guaranties of
the Obligations in favor of the Agent, (b) Guaranties in favor of the holders of the Additional
Debt, or (c) unsecured Guaranties of Debt incurred by a Foreign Subsidiary in an aggregate
principal amount at any time outstanding not to exceed $5,000,000.




     7.13 Debt.



          No Loan Party shall incur or maintain any Debt, other than: (a) the Obligations; (b) Debt
described on Schedule 6.9; (c) Capital Leases of Equipment and purchase money secured Debt
incurred to purchase Equipment provided that (i) Liens securing the same attach only to the
Equipment acquired by the incurrence of such Debt, and (ii) the aggregate amount of such Debt
(including Capital Leases) outstanding does not exceed $10,000,000 at any time; (d) Debt consisting
of Permitted Intercompany Advances to the extent consistent with Section 7.28; (e) Debt
evidencing a refinancing, refunding, renewal or extension of the Debt described on Schedule
6.9; provided that (i) the principal amount thereof is not increased, (ii) the Liens, if any,
securing such refunded, renewed or extended Debt do not attach to any assets in addition to those
assets, if any, securing the Debt to be refunded, renewed or extended, (iii) no Person that is not
an obligor or guarantor of such Debt as of the Closing Date shall become an obligor or guarantor
thereof, and (iv) the terms of such refinancing, refunding, renewal or extension are not materially
less favorable to such Loan Party, the Agent or the Lenders than the original Debt; (f) Debt in
respect of Hedge Agreements entered into for non-speculative purposes related to hedging interest
rates, currency values and commodities in connection with the Core Business; (g) the endorsement of
negotiable instruments for deposit or collection or similar transactions in the ordinary course of
business; (h) Debt arising by reason of Guaranties by a Loan Party permitted under Section
7.12(b); (i) the Additional Debt in an amount not to exceed $302,500,000; and (j) other unsecured Debt in an aggregate principal amount at any time outstanding not to exceed
$1,000,000.





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     7.14 Payments; Prepayments.



          No Loan Party shall prepay voluntarily any Subordinated Debt, except as permitted by the terms
of this Agreement or any other Loan Document.




     7.15 Transactions with Affiliates.



          Except as permitted under Section 7.9, Section 7.10, Section 7.12,
Section 7.13(a), Section 7.13(d), Section 7.13(h), Section 7.28 and
except as set forth below, no Loan Party shall sell, transfer, distribute, or pay any money or
property, including, but not limited to, any fees or expenses of any nature (including, but not
limited to, any fees or expenses for management services) to any Affiliate that is not a Loan Party
or lend or advance money or property to any Affiliate that is not a Loan Party, or invest in (by
capital contribution or otherwise) or purchase or repurchase any Capital Stock or indebtedness, or
any property, of any Affiliate that is not a Loan Party, or become liable on any Guaranty of the
indebtedness, dividends, or other obligations of any Affiliate that is not a Loan Party.
Notwithstanding the foregoing, if no Default or Event of Default is in existence or would result
therefrom, any Loan Party may engage in transactions with an Affiliate in the ordinary course of
such Loan Party’s business consistent with past practices and upon terms no less favorable to such
Loan Party than would be obtained in a comparable arm’s-length transaction with a third party who
is not an Affiliate.




     7.16 [Reserved].



     7.17 [Reserved].



     7.18 [Reserved].



     7.19 [Reserved].



     7.20  Investment Banking and Finder’s Fees.



          With the exception of the fees due to the Lead Arranger, no Loan Party shall pay or agree to
pay, or reimburse any other party with respect to, any investment banking or similar or related
fee, underwriter’s fee, finder’s fee, or broker’s fee to any Person in connection with this
Agreement. The Loan Parties shall defend and indemnify the Agent and the Lenders and their
Affiliates against and hold them harmless from all claims of any Person that a Loan Party is
obligated to pay for any such fees, and all costs and expenses (including attorneys’ fees) incurred
by the Agent and/or any Lender and their Affiliates in connection therewith.




     7.21 Business Conducted.



          The Loan Parties shall not and shall not permit any of their Subsidiaries to, engage directly
or indirectly, in any line of business other than the Core Business or those businesses that
reasonably and rationally develop from such Core Business from time to time.




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     7.22 Liens.



          No Loan Party shall create, incur, assume, or permit to exist any Lien on any property now
owned or hereafter acquired by any of them, except (a) Permitted Liens, and (b) Liens securing
Capital Leases and purchase money Debt permitted in Section 7.13.




     7.23 [Reserved].



     7.24  New Subsidiaries.



          The Loan Parties shall not, directly or indirectly, organize, create, acquire, or permit to
exist any Subsidiary except for non first tier level Foreign Subsidiaries and as otherwise
permitted by this Section 7.24. The Loan Parties shall (a) in the event of the acquisition
or creation of any Subsidiary (a “New Subsidiary”) cause to be delivered to Agent, for the benefit
of itself and the Lenders; (b) in the event of the acquisition or creation of any Domestic
Subsidiary, cause to be delivered to Agent, for the benefit of itself and the Lenders, each of the
following, in each case to be duly executed and delivered by such Subsidiary within (30) Business
Days of the acquisition or creation of such Subsidiary (i) a Guaranty with respect to all of the
Obligations, (ii) a security agreement in substantially the form of the Security Agreement, and
(iii) if such Subsidiary has any material leased locations where Inventory is located, a Collateral
Access Agreement with respect thereto; and (c) in the event of the acquisition or creation of any
Subsidiary subject to the provisions of clauses (a) or (b) above, cause to be delivered to Agent
for the benefit of the Lenders each of the following within the time periods indicated therein:
(i) an opinion of counsel to such Subsidiary dated as of the date of the delivery of the other
documents required to be delivered pursuant to this Section 7.24 and addressed to the Agent
and Lenders, in form and substance identical to the opinion of counsel delivered pursuant to
Section 8.1(a)(xviii) hereof on the Closing Date with respect to any Guarantor; and (ii)
current certified copies of the Organizational Documents and Operating Documents of such
Subsidiary, minutes of duly called and conducted meetings (or duly effected consent actions) of the
Board of Directors, or appropriate committees thereof (and, if required by such Organizational
Documents or Operating Documents or by applicable law, of the shareholders), of such Subsidiary
authorizing it to enter into the agreements required under this Section 7.24 and evidence
satisfactory to Agent (confirmation of the receipt of which will be provided by Agent to the
Lenders) that such Subsidiary is Solvent as of such date after giving effect to such Guaranty and
Security Agreement.




     7.25 Fiscal Year.



          Except as set forth on Schedule 7.25, the Borrowers shall not change, and shall not
permit any other Loan Party to change, their Fiscal Year.




     7.26  [Reserved].



     7.27  [Reserved].



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     7.28  Use of Proceeds.



          The Loan proceeds shall be used by the Borrowers solely for one or more of the following
purposes:





     (i) to refinance existing Debt of the Borrowers (the “Refinancing”) and to
finance part of the Merger,




     (ii) to pay fees and expenses related to the Transaction, and




     (iii) to finance the ongoing working capital and other general corporate
purposes of (a) the Loan Parties, and (b) other Subsidiaries. In no event shall
any portion of the Loan proceeds be used by a Loan Party or any Subsidiary,
directly or indirectly, to purchase or carry Margin Stock, to repay or otherwise
refinance indebtedness of a Loan Party or others incurred to purchase or carry
Margin Stock, to extend credit for the purpose of purchasing or carrying any Margin
Stock, or to acquire any security in any transaction that is subject to Section 13
or 14 of the Exchange Act or any other applicable laws, other than a Permitted
Acquisition.



     7.29  [Reserved].



     7.30  Anti-Terrorism Laws.



          No Loan Party shall conduct any business or engage in any transaction or dealing with any
Blocked Person (as defined in Section 6.31(b)), including the making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked Person; deal in, or
otherwise engage in any transaction relating to, any property or interests in property blocked
pursuant to Executive Order No. 13224; or engage in or conspire to engage in any transaction with
the intent to evade, avoid or violate, any of the prohibitions set forth in Executive Order No.
13224 or the USA PATRIOT Act. Loan Parties shall deliver to Agent and Lenders any certification or
other evidence reasonably requested from time to time by Agent or any Lender confirming Loan
Parties’ compliance with this Section 7.30.




     7.31 [Reserved].



     7.32  Blocked Accounts.



          Subject to the Additional Debt Intercreditor Agreement:




          (a) The Borrowers and Applica Canada shall promptly establish and maintain Blocked Accounts,
pursuant to lockbox or other arrangements acceptable to the Agent, with such Blocked Accounts to be
maintained with Bank or such other banks as may be selected by the Borrowers and be reasonably
acceptable to Agent. The Borrowers and Applica Canada shall issue to such banks irrevocable
letters of instruction directing such banks to deposit all payments or other remittances received
in the lockboxes to the Blocked Accounts.




          (b) The Borrowers and Applica Canada shall enter into agreements, in form satisfactory to the
Agent, with the banks at which the Blocked Accounts are maintained. Pursuant to such agreements,
(a) prior to any such bank’s receipt of a Springing Dominion Notice




37









 







from the Agent (or, at any time that Additional Debt is outstanding or commitments under the
Additional Debt Documents exist, the Additional Debt Agent), such bank shall remit all funds
deposited into the Blocked Accounts pursuant to the instructions of the Borrowers or Applica
Canada, as applicable, and (b) after such bank’s receipt of a Springing Dominion Notice, such bank
shall immediately, and without further consent of or notice to Borrowers or any other Loan Party,
transfer to the Agent (or, at any time that Additional Debt is outstanding or commitments under the
Additional Debt Documents exist, the Additional Debt Agent) all monies deposited to such Borrower
Blocked Accounts solely pursuant to the instructions of the Agent (or, at any time that Additional
Debt is outstanding or commitments under the Additional Debt Documents exist, the Additional Debt
Agent) until delivery of further notice by the Agent (or, at any time that Additional Debt is
outstanding or commitments under the Additional Debt Documents exist, the Additional Debt Agent);
provided, that the Agent agrees not to deliver a Springing Dominion Notice until
the commencement of a Springing Period. If a Springing Period subsequently ends, then the Agent
will withdraw the Springing Dominion Notice until the commencement of a subsequent Springing
Period.




          (c) All funds deposited in the Blocked Accounts shall be subject to Liens of the Agent. The
Borrowers and Applica Canada shall obtain the agreements (in favor of and in form and content
satisfactory to the Agent) by the banks at which the Blocked Accounts are maintained to waive any
offset rights against the funds deposited into the Blocked Accounts, except offset rights for
customary administrative charges. No Agent or Lender assumes any responsibility to Borrowers or
any other Loan Party for any such lockbox arrangements or Blocked Accounts, including any claim of
accord and satisfaction or release with respect to deposits accepted by any bank thereunder.




          (d) The Borrowers and Applica Canada shall request in writing that all payments on Accounts or
otherwise relating to Collateral of Borrowers or Applica Canada are made directly to the Blocked
Accounts (or a lockbox relating to the Blocked Accounts). If Borrowers receive, or Applica Canada
receives, cash or payment items with respect to any Collateral, they shall hold the same in trust
for the Agent (or, at any time that Additional Debt is outstanding or commitments under the
Additional Debt Documents exist, the Additional Debt Agent) and promptly (not later than the second
Business Day after receipt) deposit the same into a Blocked Account.




          (e) At any time other than during a Springing Period, the Borrowers and Applica Canada may
retain all cash balances contained in the Blocked Accounts. During a Springing Period, the
Borrowers and Applica Canada shall not retain any such balances, and the Agent (or, at any time
that Additional Debt is outstanding or commitments under the Additional Debt Documents exist, the
Additional Debt Agent) shall have the sole and exclusive right to withdraw funds from time to time
in the Blocked Accounts and all amounts so collected by the Agent shall be remitted to the Payment
Account in accordance with Section 3.7.




          (f) At any time other than during a Springing Period, Applica Americas may retain all cash
balances in the Applica Americas Blocked Account. At any time during a Springing Period, Applica
Americas shall not retain any such balances (other than any portion thereof attributable to
Argentine operations of Applica Americas), and the Agent (or, at any time that Additional Debt is
outstanding or commitments under the Additional Debt Documents exist, the Additional Debt Agent)
shall have the sole and exclusive right to withdraw funds (other than any portion thereof
attributable to Argentine operations of Applica Americas), from time to time in the Applica
Americas Blocked Account and all amounts so collected by the Agent shall be remitted to the Payment
Account in accordance with Section 3.7.




38









 





     7.33 Additional Debt Documents.



          The Borrowers will not: (a) agree or consent to amend or modify any of the Additional Debt
Documents if as a result thereof the holders of the Additional Debt would be in breach of their
covenants in the Additional Debt Intercreditor Agreement or (b) fail to provide prompt written
notice to Agent of any amendment to or modification of any of the Additional Debt Documents,
including any amendment or modification that would have the effect of extending the Termination
Date (as defined in the Additional Debt Documents) for payment of the Additional Debt. The
Borrowers covenant and agree that they will furnish to the Agent prompt written notice of the
occurrence of any Default or Event of Default as defined in and occurring under the Additional Debt
Documents.




     7.34 Applica Asia Covenants.



          (a) Applica Asia may from time to time be requested by Applica Consumer Products and Applica
Canada to collect, or otherwise be in possession of, payments in respect of Accounts of Applica
Consumer Products or Applica Canada owing by certain customers of Applica Consumer Products or
Applica Canada to which goods are sold and delivered from locations outside of the United States
and Canada to a customer in the United States or Canada (each such Account of Applica Consumer
Products or Applica Canada being referred to as an “Applica Asia Serviced Account”). The Borrowers
shall promptly notify the Agent in writing of each Account of Applica Consumer Products or Applica
Canada that is an Applica Asia Serviced Account, to the extent that any such Account is to be
included in the Borrowing Base, at the time that any such Account is included in the Borrowing
Base. Applica Asia shall promptly cause all payments received by it with respect to any Applica
Asia Serviced Accounts to be deposited into one or more depository accounts (with each such
depository account to be subject to the Applica Asia Blocked Account Agreements) and shall cause
each depository bank in which it may deposit any such payments or proceeds to be automatically wire
transferred to the Payment Account or such other bank account as may be designated by the Agent in
writing from time to time. Pending any such remittance to the Agent, Applica Asia shall hold all
such payments (and any other proceeds of Collateral in its possession from time to time) as the
bailee and agent, for Lien perfection purposes, of the Agent and Lenders and in trust for the
benefit of the Agent and Lenders. Applica Asia shall not commingle any other monies with any
payments received in respect of the Applica Asia Serviced Accounts, except other proceeds of
Collateral, and shall promptly remit all such payments and other Collateral proceeds to the Agent
for application to the Obligations in accordance with the terms of this Agreement. Each such
remittance by Applica Asia shall be without setoff, deduction or recoupment. In no event shall
Applica Asia permit any Lien or other encumbrance to exist with respect to any depository account
into which it may deposit such payments or Collateral proceeds. If payments are received by
Applica Asia from any customer of Applica Consumer Products or Applica Canada in a currency other
than Dollars, Applica Asia shall promptly remit to the Agent, in accordance with the foregoing
terms of this Section, the Dollar Equivalent of the currency received by Applica Asia.




          (b) Applica Asia, Applica Consumer Products and Applica Canada acknowledge, represent,
stipulate and agree that (i) all goods sold and delivered by Applica Consumer Products to any
Person, irrespective of the name under which any invoice is rendered for such sale or the identity
of the Loan Party that may collect any amount owing in connection with any such sale, shall be and
constitute Accounts owned solely by Applica Consumer Products and all such invoices shall in any
event indicate on their face that amounts due and payable in connection with such sale shall be due
and owing to Applica Consumer Products or Applica Asia





39









 







on behalf of Applica Consumer Products, whether or not amounts owing in connection therewith
are to be remitted to or are collected by Applica Asia; (ii) all goods sold and delivered by
Applica Canada to any Person, irrespective of the name under which any invoice is rendered for such
sale or the identity of the Loan Party that may collect any amount owing in connection with any
such sale, shall be and constitute Accounts owned solely by Applica Canada and all such invoices
shall in any event indicate on their face that amounts due and payable in connection with such sale
shall be due and owing to Applica Canada or to Applica Asia on behalf of Applica Canada, whether or
not amounts owing in connection therewith are to be remitted to or are collected by Applica Asia;
and (iii) all invoices with respect to any Applica Asia Serviced Account shall show the seller and
payee on the face of the invoice as Applica Canada or Applica Consumer Products, as appropriate, or
Applica Asia “as agent” for either of them.




          (c) Applica Asia hereby subordinates any and all liabilities, claims or Debts at any time or
times owing by Applica Consumer Products or Applica Canada to Applica Asia, whether now owed or
hereafter incurred or arising, whether evidenced by any note, instrument or other agreement and
whether arising under the applicable Agency Agreement or otherwise, to the full and final payment
of the Obligations, provided that, prior to the occurrence of any Event of Default, Applica
Consumer Products and Applica Canada are authorized to make payments to Applica Asia pursuant to
the terms of the applicable Agency Agreement as in effect on the date hereof or as hereafter
amended with the consent of the Agent.




     7.35 Post-Closing Covenants.



          After the Closing Date, the Loan Parties shall cooperate with the Agent and Lenders,
diligently and in good faith, to cause to be executed, delivered or otherwise procured for the
benefit of itself and Lenders, the following documents and agreements:




          (a) From and after the Closing Date, no Loan Parties shall pay to SHK a commission on goods
purchased by such Loan Party from SHK.




          (b) (A) UCC or PPSA financing statements with respect to all Collateral held by Loan Parties
not party to the Original Credit Agreement as may be requested by the Agent, duly executed by the
respective Loan Parties, to the extent any such Liens may be perfected under the UCC or PPSA, and
(B) with respect to any Loan Party not party to the Original Credit Agreement located in, or
organized under the laws of, Canada, all filings and recordations required by Requirements of Law
of Canada (including under the PPSA), as the case may be, in all jurisdictions that the Agent may
deem necessary or desirable in order to perfect the Agent’s Lien in all the Collateral, including
Accounts and Deposit Accounts of such Loan Party.




          (c) Any notices in respect of account control agreements of the Loan Parties under the
Additional Debt Documents to notify depositary banks as to Agent’s lien.




          (d) The execution and delivery of the Applica Canada Security Agreement by Applica Canada.




          (e) The execution and delivery of the Applica Canada Guaranty.




          (f) Any Intellectual Property Notices or other filings or notices required in respect of
patents, trademarks, copyrights and other intellectual property.





40











 





          (g) Not later than January 31, 2008, execute and deliver to Agent, in form and substance
reasonably acceptable to Agent, a deed of trust with respect to Real Estate owned by the Loan
Parties located at (i) 1801 N. Stadium Boulevard, Columbia, Missouri 65202, (ii) 1401 Morgan
Street, Boonville, Missouri, (iii) 708 S. Missouri Street, Macon, Missouri, and (iv) 17160 Plant
Road, Laurinburg, North Carolina 28352.




     7.36 Further Assurances.



          The Loan Parties shall execute and deliver, or cause to be executed and delivered, to the
Agent such documents and agreements, and shall take or cause to be taken such actions as the Agent
may, from time to time, reasonably request to carry out the terms and conditions of this Agreement
and the other Loan Documents.




ARTICLE 8

CONDITIONS OF LENDING




     8.1 Conditions Precedent to Making of Term Loan.



          The obligation of the Lenders to make the Term Loan hereunder on the Closing Date is subject
to the following conditions precedent having been satisfied in a manner satisfactory to the Agent
and each Lender:




          (a) The Agent shall have received each of the following documents, all of which shall be
satisfactory in form and substance to the Agent and the Lenders:





     (i) copies of the certificate of incorporation and organizational document of
each of the Loan Parties, with all amendments, if any, certified by the appropriate
Governmental Authority (provided that upon request by any Loan Party and
with the consent of the Agent, any such certificate, to the extent not provided on
the Closing Date, may be provided within thirty (30) days of the Closing Date, so
long as an uncertified copy thereof has been delivered to the Agent together with a
written statement by a Responsible Officer confirming that such copy is true,
correct, and complete), and the bylaws, regulations, operating agreement, or
similar governing document of each Loan Party, in each case certified by the
corporate secretary, general partner, or comparable authorized representative of
such Loan Party, as being true and correct and in effect on the Closing Date;




     (ii) certificates of incumbency and specimen signatures with respect to each
Person authorized to execute and deliver this Agreement and the other Loan
Documents on behalf of each Loan Party and each other Person executing any
document, certificate, or instrument to be delivered in connection with this
Agreement and the other Loan Documents and, in the case of the Borrowers, to
request the Term Loan;




     (iii) a certificate evidencing the existence of each Loan Party, and
certificates evidencing the good standing of each Loan Party in the jurisdiction of
its organization and in each other jurisdiction in which it is required to be
qualified as a foreign business entity to transact its business as presently
conducted, provided that upon request by any Loan Party and with the
consent of



41









 







the Agent, certificates of good standing for any Loan Party from a
Governmental Authority other than the jurisdiction of its organization, legal
domicile and chief executive office, to the extent not provided on the Closing
Date, may be provided within thirty (30) days of the Closing Date;




     (iv) this Agreement and the other Loan Documents duly executed and delivered
by each Loan Party and each other Person that is a party thereto;




     (v) certified copies of all action taken by each Loan Party to authorize the
execution, delivery, and performance of this Agreement, the other Loan Documents,
and with respect to the Borrowers, the borrowing of the Term Loan;




     (vi) a certificate of each Loan Party signed by a Responsible Officer:




     (A) stating that all of the representations and warranties made or
deemed to be made under this Agreement are true and correct as of the
Closing Date, after giving effect to the Loans to be made at such time and
the application of the proceeds thereof,




     (B) stating that no Default or Event of Default exists,




     (C) specifying the account of the Borrowers which is a Designated
Account, and




     (D) certifying as to such other factual matters as may be reasonably
requested by the Agent;




     (vii) (A) duly executed UCC-3 termination statements or assignments with
respect to the UCC and such other releases or instruments, in each case in form and
substance satisfactory to the Agent, as in each case shall be necessary to
terminate and satisfy all Liens, except Permitted Liens, on the property of the
Loan Parties, to the extent the Agent’s Liens therein may be perfected under the
UCC and (B) releases, terminations or other instruments under the Requirements of
Law of Canada (including under the PPSA and other applicable law), and such other
releases or instruments, in each case in form and substance satisfactory to the
Agent, in each case as shall be necessary to terminate and satisfy all Liens,
except Permitted Liens, on all the Collateral, including the Accounts and Deposit
Accounts of any Loan Party;




     (viii) the amendment and restatement of the Security Agreement and the Pledge
Agreement.




     (ix) payment in immediately available funds of the $1,877,600.00 upfront fee;




     (x) the Additional Debt Intercreditor Agreement duly executed and delivered by
the holders of the Additional Debt;



42









 






     (xi) a certificate, signed by the chief financial officer of the Borrowers,
that, after giving pro forma effect to the Transaction, each Borrower and other
Loan Party is Solvent; and




     (xii) such other documents and instruments as the Agent or any Lender may
reasonably request.



          (b) No Event of Default shall exist or would exist after giving effect to the Transaction,
including the Term Loan to be made;




          (c) Agent shall have received evidence, in form, scope, and substance, reasonably satisfactory
to the Agent, of all insurance coverage as required by this Agreement;




          (d) All proceedings taken in connection with the execution of this Agreement, the other Loan
Documents, and all documents and papers relating thereto shall be reasonably satisfactory in form,
scope, and substance to the Agent and the Lenders;




          (e) Without limiting the generality of the items described above, the Loan Parties and each
Person guaranteeing or securing payment of the Obligations shall have delivered or caused to be
delivered to the Agent (in form and substance reasonably satisfactory to the Agent), the financial
statements, instruments, resolutions, documents, agreements, certificates, opinions and other items
required by the Agent hereunder;




          (f) Agent shall have received: such pro forma financial statements and annual forecasts (to
include forecasted consolidated balance sheets, income statements and cash flow statements) as it
may reasonably request, including, without limitation, annual forecasts for the period commencing
on July 1, 2008 and ending on June 30, 2012, for the Consolidated Members and Loan Parties, with
the 12-month period commencing on January 1, 2008 and ending on December 31, 2008 to be provided on
a month-by-month basis;




          (g) Agent shall have received satisfactory evidence that the Additional Debt facility has been
consummated on terms reasonably acceptable to Agent, and Agent shall have received true, correct
and complete copies of the Additional Debt Documents certified by a Responsible Officer;




          (h) Agent shall have received satisfactory evidence that the Merger has been consummated in
accordance with the Merger Agreement and all applicable law and regulatory approvals and otherwise
on terms reasonably acceptable to Agent, and Agent shall have received true, correct and complete
copies of the Merger Agreement (including all schedules and exhibits thereto) certified by a
Responsible Officer;




          (i) The final material terms and conditions of each aspect of the Transaction, including all
tax aspects thereof, shall be consistent with the description thereof received in writing from
Borrowers prior to the Closing Date and otherwise reasonably satisfactory to Agent and Lenders
(including a determination of the exposure, if any, of taxes owing by the Consolidated Salton
Parties to CRA or any other Governmental Authority in connection with the Consolidated Salton
Parties’ Canadian operations prior to the Closing Date), and Agent shall have received all
agreements, instruments and documents relating to the Transaction certified by a Responsible
Officer;




          (j) [Intentionally Omitted];




43









 








          (k) Agent shall have received satisfactory evidence that at least 92% of the ownership
interest in the Parent shall be owned, directly or indirectly, by Equity Investors, that 100% of
the ownership interest in ACP shall be owned indirectly by Parent, that all Capital Stock of the
Loan Parties shall be owned directly or indirectly by Parent;



          (l) All notices to, or consents, authorizations or approvals of, all Governmental Authorities
and all other Persons (including, without limitation, Hart-Scott-Rodino clearance) necessary in
connection with the Transaction have been provided and received, and all applicable waiting periods
have expired without any action being taken by any Governmental Authority that could restrain,
prevent or impose any material adverse conditions on the Loan Parties or such transactions or that
could threaten any of the foregoing, and no applicable law or regulation shall be applicable which
in the reasonable judgment of Agent could have such effect;



          (m) There shall be no pending or threatened action, suit, or proceeding, by any Person, or any
pending or threatened investigation by a Governmental Authority, which could reasonably be expected
to have a Material Adverse Effect;



          (n) Agent and Lenders shall be reasonably satisfied with the amount, terms, conditions and
holders of all intercompany Debt between the Loan Parties and all Subsidiaries that are not Loan
Parties and all other Debt and material liabilities owing by Loan Parties to other Persons
outstanding on and after the Closing Date;



          (o) Agent and Lenders shall be reasonably satisfied that (i) the Loan Parties will be able to
meet their obligations under all Pension Plans, (ii) except for the employee benefit plans of
Toastmaster, the Pension Plans of the other Loan Parties and their ERISA Affiliates are, in all
material respects, funded in accordance with the minimum statutory requirements, and (iii) no ERISA
Event has occurred or is contemplated as to any such Pension Plan. Agent and Lenders shall also be
reasonably satisfied with the shortfall with respect to the employee benefit plan of Parent and the
impact of any required catch-up payments on the Borrowers.



          (p) Agent and Lenders shall have satisfactory evidence that all Canadian assets and operations
of the Consolidated Salton Parties shall have been assigned, transferred or otherwise conveyed to
Applica Canada, including receipt by Agent and Lenders of (i) a true and correct copy of a bill of
sale and/or other agreement evidencing the conveyance of such assets and operations by the
Consolidated Salton Parties to Applica Canada, and (ii) a true and correct copy of the assignment
of the lease of Real Estate located in Canada under which one or more of the Consolidated Salton
Parties is the tenant and other material agreements relating to the Consolidated Salton Parties’
Canadian operations and any requisite consent to such assignment.



          The acceptance by the Borrowers of the Term Loan shall be deemed to be a representation and
warranty made by the Loan Parties to the effect that all of the conditions precedent to the making
of such Term Loans have been satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer of the Loan Parties, dated the Closing
Date, to such effect. Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) the decision of such Lender to
execute and deliver to the Agent an executed counterpart of this Agreement was made by such Lender
independently and without reliance on the Agent or any other Lender as to the satisfaction of any
condition precedent set forth in this Section 8.1, and (ii) all documents sent to such
Lender for approval, consent, or satisfaction were acceptable to such Lender.



44









 





     8.2 Limited Waiver of Conditions Precedent.



          If Lenders shall make the Term Loan or otherwise extend credit to Borrowers at any time when
any of the conditions precedent set forth in Section 8.1 are not satisfied (regardless of
whether the failure of satisfaction of any such conditions precedent was known or unknown to the
Agent or any Lender), the funding of such Loan or other extension of credit shall not operate as a
waiver of the right of the Agent and Lenders to insist upon the satisfaction of all conditions
precedent with respect to each subsequent Borrowing requested by the Borrowers or a waiver of any
Default or Event of Default as a consequence of the failure of any such conditions to be satisfied,
unless the Agent, with the prior written consent or at the direction of the Required Lenders, in
writing waives the satisfaction of any conditions precedent, in which event such waiver shall only
be applicable for the specific instance given and only to the extent and for the period of time
expressly stated in such waiver.




ARTICLE 9

DEFAULT; REMEDIES




     9.1 Events of Default.



          It shall constitute an event of default (“Event of Default”) if any one or more of the
following shall occur for any reason:




          (a) any failure by the Borrowers to pay the principal of or interest or premium on any of the
Obligations or any fee or other amount owing hereunder when due, whether upon demand or otherwise;




          (b) any representation or warranty made or deemed made by a Loan Party in this Agreement or by
a Loan Party in any of the other Loan Documents, any Financial Statement, or any certificate
furnished by any Loan Party at any time to the Agent or any Lender shall prove to be untrue in any
material respect as of the date on which made, deemed made, or furnished;




          (c) (i) any default shall occur in the observance or performance of any of the covenants and
agreements contained in Sections 5.2(n), 7.9-7.32 of this Agreement or Section 11
of the Security Agreement, or any Loan Party shall fail to remit proceeds of Accounts or Inventory
of a Borrower to the Agent as required by this Agreement or any of the other Loan Documents, (ii)
any default shall occur in the observance or performance of any of the covenants and agreements
contained in Sections 5.2 (a)-(f), 5.3 (a)-(j), or 7.34 (other than a
default of a kind described in clause (i) of this Section 9.1(c)) or any Loan Party shall
fail to remit proceeds of Collateral (other than proceeds of Accounts or Inventory of a Borrower)
to the Agent as required by any of the Loan Documents; and such default shall continue for five (5)
days or more; or (iii) any default shall occur in the observance or performance of any of the other
covenants or agreements contained in any other Section of this Agreement or any other Loan
Document, any other Loan Documents, or any other agreement entered into at any time to which any
Loan Party and the Agent or any Lender are a party and such default shall continue for twenty (20)
days or more;




          (d) any default which has not been waived shall occur with respect to (i) Debt of the
Borrowers evidenced by or arising under the Additional Debt Documents, (ii) Debt of the Borrowers’
Affiliates under the UK Credit Facility or (iii) any Debt (other than the Obligations and Debt
contemplated by clauses (i) or (ii) hereof) of any Loan Party in an




45









 







outstanding principal amount which exceeds $2,500,000, or under any agreement or instrument
under or pursuant to which any such Debt may have been issued, created, assumed, or guaranteed by
any Loan Party, and such default shall continue for more than the period of grace, if any, therein
specified, if the effect thereof (with or without the giving of notice or further lapse of time or
both) is to accelerate, or to permit the holders of any such Debt to accelerate, the maturity of
any such Debt; or any such Debt shall be declared due and payable or be required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;




          (e) any Loan Party shall (i) file a voluntary petition in bankruptcy or file a voluntary
petition or an answer or file any proposal or notice of intent to file a proposal or otherwise
commence any action or proceeding seeking reorganization, arrangement, consolidation or
readjustment of its debts or which seeks to stay or has the effect of staying any creditor or for
any other relief under the Bankruptcy Code, as amended, or under any other bankruptcy, insolvency,
liquidation, winding up, corporate or similar act or law, provincial, territorial state, federal or
foreign (including the BIA or the CCAA), now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, proposal, action or proceeding; (ii) apply for or acquiesce in the
appointment of a receiver, interim receiver, assignee, liquidator, sequestrator, custodian,
monitor, administrator, trustee or similar officer for it or for all or any part of its property;
(iii) make an assignment for the benefit of creditors; or (iv) be unable generally to pay its debts
as they become due;




          (f) an involuntary petition shall be filed or an action or proceeding otherwise commenced
seeking reorganization, arrangement, consolidation or readjustment of the debts of any Loan Party
or for any other relief under the Bankruptcy Code, as amended, or under any other bankruptcy,
insolvency, liquidation, winding up, corporate or similar act or law (including the BIA or the
CCAA), provincial, territorial state, federal or foreign, now or hereafter existing and either such
petition, proposal or proceeding shall not be dismissed within forty-five (45) days after the
filing or commencement thereof or an order of relief shall be entered with respect thereto;




          (g) a receiver, interim receiver, assignee, liquidator, sequestrator, custodian, monitor,
administrator, trustee or similar officer for any Loan Party or for all or any part of its property
shall be appointed or a warrant of attachment, execution, writ of seizure or seizure and sale or
similar process shall be issued against any part of the property of any Loan Party or any distress
or analogous process is levied upon all or any part of any Loan Party;




          (h) any Loan Party shall file a certificate of dissolution or like process under applicable
law or shall be liquidated, dissolved or wound-up or shall commence or have commenced against it
any action or proceeding for dissolution, winding-up or liquidation, or shall take any corporate
action in furtherance thereof, except as permitted under Section 7.9(c);




          (i) all or any material part of the Collateral shall be taken or impaired through condemnation
and Availability on the date of condemnation is less than $30,000,000; or all or any material part
of the property of any Loan Party shall be nationalized, expropriated or otherwise appropriated, or
custody or control of such property or of such Loan Party shall be assumed by any Governmental
Authority or any court of competent jurisdiction at the instance of any Governmental Authority or
any other Person, except where contested in good faith by proper proceedings diligently pursued
where a stay of enforcement is in effect;




          (j) any Loan Document (including the Applica Canada Guaranty, the Applica Asia Guaranty or any
other Guaranty from a Loan Party) shall be terminated, rescinded,




46









 







revoked or declared void or invalid or unenforceable (or any Loan Party shall attempt or
purport to terminate, rescind, revoke or declare void, invalid or unenforceable any Loan Document)
or any material Loan Document is challenged by any Loan Party or any Affiliate;




          (k) one or more judgments, orders, decrees or arbitration awards is entered against any one
or more Loan Parties for $2,500,000 or more in excess of the amount of insurance coverage provided
by independent third party insurers which do not dispute coverage and (whether or not covered by
insurance), any such judgment, order, decree or arbitration award shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of thirty (30) days after the entry thereof;




          (l) payment by a Loan Party under an agreement of Guaranty issued by such Loan Party with
respect to any Debt of a Foreign Subsidiary, or entry of a judgment, order, decree or arbitration
award against a Loan Party with respect to any such agreement of Guaranty, in either case in an
aggregate amount in excess of $10,000,000 during the term of this Agreement;




          (m) any loss, theft, damage or destruction of any item or items of Collateral or other
property of any Loan Party occurs which could reasonably be expected to cause a Material Adverse
Effect and is not adequately covered by insurance;




          (n) there is filed against any Loan Party any action, suit or proceeding under any federal,
state or foreign racketeering, money, laundering or proceeds of crime statute (including the
Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit or proceeding (i) is
not dismissed within one hundred twenty (120) days, and (ii) could reasonably be expected to result
in the confiscation or forfeiture of any material portion of the Collateral;




          (o) for any reason other than the failure of the Agent after the Closing Date to take any
action available to it to maintain perfection of the Agent’s Liens, pursuant to the Loan Documents,
any material Loan Document ceases to be in full force and effect or any Lien with respect to any
material portion of the Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected and prior to all other Liens (other than Permitted Liens) or is terminated, revoked or
declared void;




          (p) (i) an ERISA Event shall occur with respect to a Pension Plan or Multi-employer Plan which
has resulted or could reasonably be expected to result in liability of the Loan Parties or any
ERISA Affiliate under applicable laws in an aggregate amount in excess of $2,500,000; (ii) the
aggregate amount of Unfunded Pension Liability among all Pension Plans (excluding the Salton Europe
Pension and Life Assurance Scheme) at any time exceeds $5,000,000; (iii) the Loan Parties or any
ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period,
any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under
a Multi-employer Plan or any other required amounts, in an aggregate amount in excess of
$2,500,000; or (iv) any Lien (save for contribution amounts not yet due) arises in connection with
any Plan;




          (q) (i) a Change of Control shall occur or (ii) Applica Canada or Applica Asia ceases to be a
Wholly-Owned Subsidiary of Applica (whether directly or indirectly through one or more other
Wholly-Owned Subsidiaries); or




          (r) the Black & Decker License Agreement shall be terminated, revoked or declared void or
invalid or unenforceable for any reason.




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     9.2 Remedies.




     (i) If a Default or an Event of Default has occurred and is continuing, the
Agent may, in its discretion, and shall, at the direction of the Required Lenders,
do one or more of the following at any time or times and in any order, without
notice to or demand on the Borrowers: (A) terminate this Agreement; (B) declare
any or all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of any Event of Default described in
Sections 9.1(e), 9.1(f), 9.1(g), 9.1(h), all Obligations
shall automatically become immediately due and payable without notice or demand of
any kind and (C) pursue its other rights and remedies under the Loan Documents and
applicable law.




     (ii) If an Event of Default has occurred and is continuing: the Agent shall
have for the benefit of the Lenders, in addition to all other rights of the Agent
and the Lenders, the rights and remedies of a secured party under the Loan
Documents, the UCC, the PPSA, and other applicable law.



ARTICLE 10

TERM AND TERMINATION




     10.1 Term.



          The term of this Agreement shall end on the Stated Termination Date unless sooner terminated
by the Borrowers pursuant to Section 3.2 or by the Agent pursuant to Section 10.2.




     10.2 Termination by Agent.



          The Agent may (and, upon direction from the Required Lenders, shall) terminate this Agreement,
without notice, upon or after the occurrence and during the continuance of an Event of Default.
Upon the effective date of any such termination of this Agreement for any reason whatsoever, all
Obligations (including all unpaid principal, and accrued and unpaid interest) shall become
immediately due and payable and shall be paid forthwith by the Borrowers.




     10.3
Effect of Termination. Notwithstanding the termination of this Agreement, until
all Obligations are indefeasibly paid and performed in full in cash, the Loan Parties shall remain
bound by the terms of this Agreement and shall not be relieved of any of their Obligations
hereunder or under any other Loan Document, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including the Agent’s Liens in and all rights and remedies with
respect to all then existing and after-arising Collateral). In no event shall any termination of
this Agreement, whether such termination is made by the Borrowers or the Agent, operate to
terminate or otherwise affect any indemnification liability or obligation of any Loan Party under
this Agreement or any of the other Loan Documents, all of which indemnification liabilities and
obligations shall survive any such termination and continue in full force and effect.



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ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS




     11.1
Amendments and Waivers.



          (a) (i) Subject to clause (ii) of this Section 11.1(a), no amendment or waiver
of any provision of this Agreement or any other Loan Document, and no consent with respect to any
departure by the Loan Parties therefrom, shall be effective unless the same shall be in writing and
signed by the Required Lenders (or by the Agent at the written request of the Required Lenders),
the Loan Parties (except that no consent of the Loan Parties shall be required in the case of
amendments of Article 12 as long as such amendment does not impose any additional, or
change any, obligations on the Loan Parties) and the Borrower Agent and then any such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given; (ii) notwithstanding the foregoing, no such waiver, amendment, or consent shall, unless
consented to in writing by each affected Lender (or the Agent with the consent of each affected
Lender) and the Borrower Agent, do any of the following:





     (A) Increase or extend the Commitment of any Lender (other than as
contemplated in Section 1.5;




     (B) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other
Loan Document;




     (C) reduce the principal of, or the rate of interest specified herein
on any Loan, or any fees or other amounts payable hereunder or under any
other Loan Document;




     (D) change the percentage of the aggregate unpaid principal amount of
the Loans which is required for the Lenders or any of them to take any
action hereunder;




     (E) amend this Section or any provision of this Agreement providing
for consent or other action by all Lenders;




     (F) release any Loan Parties from their obligations under this
Agreement or any of the other Loan Documents, release any Guaranties of
the Obligations, contractually subordinate the priority of Agent’s Liens
or release Collateral other than as permitted by Section 12.11; or




     (G) amend the definition of “Required Lenders” or “Pro Rata Share”.



          (b) If the Agent requests the consent of the Lenders to any proposed amendment, waiver or
consent (a “Proposed Change”) that requires the consent of the Required Lenders, the Supermajority
Lenders or all Lenders and Lenders holding forty percent (40%) or more of the Commitments provide
their consent to such Proposed Change, but the consent of one or more other Lenders is not obtained
(each such Lender whose consent is not obtained as described in this clause (b) being referred to
as a “Non-Consenting Lender”) within a period of




49









 







five (5) Business Days after the date of request for such consent by the Agent, then, so long
as the Agent is not a Non-Consenting Lender, at the Loan Parties’ request, the Agent or an Eligible
Assignee (but no Non-Consenting Lender or group of Non-Consenting Lenders) shall have the right
(but not the obligation), with the Agent’s approval, to purchase from any Non-Consenting Lender,
and each Non-Consenting Lender agrees that it shall sell, such Non-Consenting Lender’s Commitment
for an amount equal to the principal balance thereof and all accrued interest and fees (except any
fees arising in connection with such purchase that would otherwise arise under Section 4.4,
for which the Loan Parties shall not be liable) with respect thereto through the date of sale
pursuant to an Assignment and Acceptance Agreement, without premium or discount.




     11.2 Assignments; Participations.



          (a) Any Lender may, with the written consent of the Agent (which consent shall not be
unreasonably delayed or withheld) and, if no Event of Default exists, the Borrower Agent (which
consent shall not be unreasonably delayed or withheld), assign and delegate to one or more Eligible
Assignees (provided that no consent of the Agent or the Borrower Agent shall be required in
connection with any assignment and delegation by a Lender to another Lender or an Affiliate of, or
a fund managed by, such Lender) (each an “Assignee”) all, or any ratable part of all, of the Loans,
the Commitments and the other rights and obligations of such Lender hereunder, in a minimum amount
of $5,000,000 (provided that, unless an assignor Lender has assigned and delegated all of its Loans
and Commitments, no such assignment and/or delegation shall be permitted unless, after giving
effect thereto, such assignor Lender retains a Commitment in a minimum amount of $5,000,000;
provided, however, that the Loan Parties and the Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Loan Parties and the Agent
by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Loan
Parties and the Agent an Assignment and Acceptance in the form of Exhibit D (“Assignment
and Acceptance”) together with any note or notes subject to such assignment, (iii) except for an
assignment to an Affiliate, the Assignee has paid to the Agent a processing and recordation fee in
the amount of $5,000 and (iv) Agent shall have received any forms required by Section
12.10.




          (b) From and after the date that the Agent notifies the assignor Lender that it has received
an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent that rights and obligations have
been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights to be
indemnified for Indemnified Taxes under Section 4.1(c)) and be released from its
obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).




          (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder
and the Assignee thereunder confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness,




50









 







sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto or
the attachment, perfection, or priority of any Lien granted by the Loan Parties to the Agent or any
Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the Loan Parties or any of
them or the performance or observance by any Loan Party of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that
it has received a copy of this Agreement, together with such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter into such Assignment
and Acceptance; (iv) such Assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents
as are delegated to the Agent by the terms hereof, together with such powers, including the
discretionary rights and incidental power, as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement are required to be performed by it as a Lender.




          (d) Immediately upon satisfaction of the requirements of Section 11.2(a), this
Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee.




          (e) Any Lender may at any time sell to one or more commercial banks, financial institutions,
or other Persons not Affiliates of a Loan Party (a “Participant”) participating interests in any
Loans, the Commitment of that Lender and the other interests of that Lender (the “originating
Lender”) hereunder and under the other Loan Documents; provided, however, that (i)
the originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such obligations, (iii)
the Loan Parties and the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender’s rights and obligations under this Agreement and
the other Loan Documents, and (iv) no Lender shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment to, or any consent or waiver with
respect to, this Agreement or any other Loan Document except the matters set forth in Section
11.1(a) (i), (ii) and (iii), and all amounts payable by the Loan Parties hereunder shall be
determined as if such Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have become due and payable upon the occurrence
of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of
its participating interest in amounts owing under this Agreement to the same extent and subject to
the same limitation as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.




          (f) Notwithstanding any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and interest in this
Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or
security interest in any manner permitted under applicable law.




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ARTICLE 12

THE AGENT




     12.1 Appointment and Authorization.



          Each Lender hereby designates and appoints Harbinger Capital Partners Master Fund I, Ltd. as
its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably
authorizes the Agent to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Each Lender authorizes the Agent to enter into each
of the Loan Documents described herein to which the Agent is to be a party on or after the Closing
Date, and each Lender acknowledges that prior to the Closing Date, Agent entered into certain Loan
Documents as described herein or otherwise made available to Lenders (including the Additional Debt
Intercreditor Agreement), and, to the extent that any Lender is not otherwise a party to any such
Loan Documents, acknowledges and agrees that Agent may bind each Lender to the terms thereof and to
take or refrain from taking all actions authorized or permitted thereunder. The Agent agrees to
act as such on the express conditions contained in this Article 12. The provisions of this
Article 12 are solely for the benefit of the Agent and the Lenders and the Loan Parties
shall have no rights as a third party beneficiary of any of the provisions contained herein, nor
shall anything contained in this Article 12 limit any rights the Loan Parties have or may
have as against Agent, any Lender or any other Agent-Related Person. Notwithstanding any provision
to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the
generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference
to the Agent is not intended to connote any fiduciary or other implied (or express) obligations
arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative relationship between
independent contracting parties. Except as expressly otherwise provided in this Agreement, the
Agent shall have and may use its sole discretion with respect to exercising or refraining from
exercising any discretionary rights or taking or refraining from taking any actions which the Agent
is expressly entitled to take or assert under this Agreement and the other Loan Documents,
including the exercise of remedies pursuant to Section 9.2, and, with respect to any such
action so taken, if exercised in good faith, Agent shall have no liability to the Lenders for any
errors in judgment.




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     12.2 Delegation of Duties.



          The Agent may execute any of its duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys in fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as long as such selection
was made without gross negligence or willful misconduct.




     12.3 Liability of Agent.



          None of the Agent Related Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or willful misconduct), or
(ii) be responsible in any manner to any of the Lenders for any recital, statement, representation
or warranty made by any Loan Party or any other Consolidated Member, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of
any Loan Party or any other Consolidated Member or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent Related Person shall be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of any Loan Party or any other Consolidated Member.




     12.4 Reliance by Agent.



          The Agent shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Loan Parties), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to
take any action under this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate and, if it so requests, it
shall first be indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of the Required
Lenders (or all Lenders if so required by Section 11.1) and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the Lenders.




     12.5 Notice of Default.



          The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, unless the Agent shall have received written notice from a




53









 







Lender or any of the Loan Parties referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a “notice of default.” The Agent will notify the
Lenders of its receipt of any such notice. The Agent shall promptly take such action with respect
to such Default or Event of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until the Agent has received
any such request, the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall deem advisable.




     12.6 Credit Decision.



          Each Lender acknowledges that none of the Agent Related Persons has made any representation or
warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs
of the Loan Parties and their Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and creditworthiness of
the Loan Parties or the other Consolidated Members, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Loan Parties. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and creditworthiness of
the Borrowers. Except for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of any Loan Party or any
other Consolidated Member which may come into the possession of any of the Agent Related Persons.




     12.7 Indemnification.



          Whether or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent Related Persons (to the extent not reimbursed by or on behalf of
the Loan Parties and without limiting the obligation of the Loan Parties to do so), in accordance
with their Pro Rata Shares, from and against any and all Indemnified Liabilities as such term is
defined in Section 14.11; provided, however, that no Lender shall be liable
for the payment to the Agent Related Persons of any portion of such Indemnified Liabilities to the
extent determined in a final, non-appealable judgment by a court of competent jurisdiction to
result from such Person’s gross negligence or willful misconduct or from the breach of any
representation, warranty or covenant contained herein or in another Loan Document by such
Indemnified Person. Without limitation of the foregoing, each Lender shall reimburse the Agent
upon demand for its Pro Rata Share of any costs or out of pocket expenses (including Attorney
Costs) incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification,




54









 







amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Loan Parties. The undertaking in this
Section shall survive the payment of all Obligations hereunder and the resignation or replacement
of the Agent.




     12.8 Agent in Individual Capacity.



          The Agent and its branches and Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the Loan Parties and other
Consolidated Members and their Affiliates as though the Agent were not the Agent hereunder and
without notice to or consent of the Lenders. The Agent or its branches and Affiliates may receive
information regarding the Loan Parties and other Consolidated Members, their Affiliates and Account
Debtors (including information that may be subject to confidentiality obligations in favor of the
Loan Parties and other Consolidated Members) and acknowledge that except as required by the Loan
Documents and applicable law, the Agent shall be under no obligation to provide such information to
them. With respect to its Loans, the Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not the Agent, and the
terms “Lender” and “Lenders” include the Agent in its individual capacity.




     12.9 Successor Agent.



          The Agent may resign as Agent upon at least thirty (30) days prior notice to the Lenders and
the Borrowers, such resignation to be effective upon the acceptance of a successor agent to its
appointment as Agent. In the event the Agent sells all of its Term Loan as part of a sale,
transfer or other disposition by the Agent of substantially all of its loan portfolio, the Agent
shall resign as Agent and such purchaser or transferee shall become the successor Agent hereunder.
Subject to the foregoing, if the Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after
consulting with the Lenders and the Loan Parties, a successor agent from among the Lenders. Upon
the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Agent and the term “Agent” shall mean such
successor agent and the retiring Agent’s appointment, powers and duties as Agent shall be
terminated. After any retiring Agent’s resignation hereunder as Agent, the provisions of this
Article 12 shall continue to inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent under this Agreement. Notwithstanding anything herein to the contrary, the
Borrowers shall have the right to consult with the Agent and the Lenders in the choice of any such
successor Agent so long as no Event of Default exists.




     12.10 Withholding Tax.



          (a) If any Lender is a “foreign corporation, partnership or trust” within the meaning of the
Code and such Lender claims exemption from, or a reduction of, U.S. withholding




55









 







tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of
the Agent, to deliver to the Agent:





     (i) if such Lender claims an exemption from, or a reduction of, withholding
tax under a United States of America tax treaty, properly completed IRS Forms
W-8BEN and W-8ECI before the payment of any interest in the first calendar year and
before the payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;




     (ii) if such Lender claims that interest paid under this Agreement is exempt
from United States of America withholding tax because it is effectively connected
with a United States of America trade or business of such Lender, two properly
completed and executed copies of IRS Form W-8ECI before the payment of any interest
is due in the first taxable year of such Lender and in each succeeding taxable year
of such Lender during which interest may be paid under this Agreement, and IRS Form
W 9; and




     (iii) such other form or forms as may be required under the Code or other laws
of the United States of America as a condition to exemption from, or reduction of,
United States of America withholding tax.



          Such Lender agrees to promptly notify the Agent of any change in circumstances which would
modify or render invalid any claimed exemption or reduction.




          (b) If any Lender claims exemption from, or reduction of, withholding tax under a United
States of America tax treaty by providing IRS Form FW-8BEN and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such
Lender agrees to notify the Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of the Loan Parties to such Lender. To the extent of such percentage amount,
the Agent will treat such Lender’s IRS Form W-8BEN as no longer valid.




          (c) If any Lender claiming exemption from United States of America withholding tax by filing
IRS Form W-8ECI with the Agent sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.




          (d) If any Lender is entitled to a reduction in the applicable withholding tax, the Agent may
withhold from any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.




          (e) If the IRS or any other Governmental Authority of the United States of America or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or
for the account of any Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason)
such Lender shall indemnify the Agent fully for all amounts




56









 







paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent
under this Section, together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the payment of all Obligations and
the resignation or replacement of the Agent. For any period with respect to which a Lender has
failed to provide the Loan Parties and Agent with the appropriate form pursuant to this Section
12.10 (unless such failure is due to a change in treaty, law, or regulation occurring
subsequent to the date on which a form originally was required to be provided), such Lender shall
not be entitled to indemnification under Section 4.1(a), 4.1(b) or 4.1(c) hereof with
respect to Taxes imposed by the United States; provided, however, that should a
Lender, which is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder, the Loan Parties
shall take such steps as such Lender shall reasonably request to assist such Lender to recover such
Taxes at such Lender’s expense.




     12.11 Collateral Matters.



          (a) The Lenders hereby irrevocably authorize the Agent, at its option and in its sole
discretion, to release any Agent’s Liens upon any Collateral (i) upon the payment and satisfaction
in full of all Loans and all other Obligations; (ii) constituting property being sold or disposed
of if the applicable Loan Party certifies to the Agent that the sale or disposition is made in
compliance with Section 7.9 and Section 3.1 (and the Agent may rely conclusively on
any such certificate, without further inquiry); (iii) constituting property in which no Loan Party
owned an interest at the time the Lien was granted or at any time thereafter; or (iv) constituting
property leased to a Loan Party under a lease which has expired or been terminated in a transaction
permitted under this Agreement. Except as provided above, the Agent will not release any of the
Agent’s Liens without the prior written authorization of the Lenders; provided that the
Agent may, in its discretion, release the Agent’s Liens on Collateral valued in the aggregate not
in excess of $2,000,000 during each Fiscal Year without the prior written authorization of the
Lenders and the Agent may release the Agent’s Liens on Collateral valued in the aggregate not in
excess of $4,000,000 during each Fiscal Year with the prior written authorization of Required
Lenders. Upon request by the Agent or the Loan Parties at any time, the Lenders will confirm in
writing the Agent’s authority to release any Agent’s Liens upon particular types or items of
Collateral pursuant to this Section 12.11.




          (b) Upon receipt by the Agent of any authorization required pursuant to Section
12.11(a) from the Lenders of the Agent’s authority to release Agent’s Liens upon particular
types or items of Collateral, and upon at least five (5) Business Days prior written request by the
Loan Parties, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such
documents as may be necessary to evidence the release of the Agent’s Liens upon such Collateral;
provided, however, that (i) the Agent shall not be required to execute any such
document on terms which, in the Agent’s opinion, would expose the Agent to liability or create any
material obligation or entail any material consequence other than the release of such Liens without
recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the
Obligations or any Liens (other than those expressly being released) upon (or obligations of the
Loan Parties in respect of) all interests retained by any Loan Party, including the proceeds of any
sale, all of which shall continue to constitute part of the Collateral.




          (c) The Agent shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by any Loan Party or is cared for, protected or insured or has been
encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or to




57









 







exercise at all or in any particular manner or under any duty of care, disclosure or fidelity,
or to continue exercising, any of the rights, authorities and powers granted or available to the
Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may
deem appropriate, in its sole discretion given the Agent’s own interest in the Collateral in its
capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever
to any Lender as to any of the foregoing.




     12.12 Restrictions on Actions by Lenders; Sharing of Payments.



          (a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders,
and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders,
set off against the Obligations, any amounts owing by such Lender to a Loan Party or any accounts
of a Loan Party now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by the Agent, take or cause to be taken
any action to enforce its rights under this Agreement or against any Loan Party, including the
commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce
any security interest in, any of the Collateral.




          (b) If at any time or times any Lender shall receive (i) by payment, foreclosure, setoff or
otherwise, any proceeds of Collateral or any payments with respect to the Obligations of any Loan
Party to such Lender arising under, or relating to, this Agreement or the other Loan Documents,
except for any such proceeds or payments received by such Lender from the Agent pursuant to the
terms of this Agreement, or (ii) payments from the Agent in excess of such Lender’s ratable portion
of all such distributions by the Agent, such Lender shall promptly (1) turn the same over to the
Agent, in kind, and with such endorsements as may be required to negotiate the same to the Agent,
or in same day funds, as applicable, for the account of all of the Lenders and for application to
the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably as among the
Lenders in accordance with their Pro Rata Shares; provided, however, that if all or
part of such excess payment received by the purchasing party is thereafter recovered from it, those
purchases of participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such purchasing party,
but without interest except to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.




     12.13 Agency for Perfection.



          Each Lender hereby appoints each other Lender as agent for the purpose of perfecting the
Lenders’ security interest in assets which, in accordance with Article 9 of the UCC or the
applicable provisions of the PPSA or other applicable law can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any such Collateral, such Lender
shall notify the Agent thereof, and, promptly upon the Agent’s request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent’s instructions.




     12.14 Payments by Agent to Lenders.



          All payments to be made by the Agent to the Lenders shall be made by bank wire transfer or
internal transfer of immediately available funds to each Lender pursuant to wire




58









 







transfer instructions delivered in writing to the Agent on or prior to the Closing Date (or if
such Lender is an Assignee, on the applicable Assignment and Acceptance), or pursuant to such other
wire transfer instructions as each party may designate for itself by written notice to the Agent.
Concurrently with each such payment, the Agent shall identify whether such payment (or any portion
thereof) represents principal, premium or interest on the Term Loans or otherwise. Unless the
Agent receives notice from the Loan Parties prior to the date on which any payment is due to the
Lenders that the Loan Parties will not make such payment in full as and when required, the Agent
may assume that the Loan Parties has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the amount then due such
Lender. If and to the extent the Loan Parties have not made such payment in full to the Agent, each
Lender shall repay to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to
such Lender until the date repaid.




     12.15 Settlement.



          (a)





     (i) Each Lender’s portion of the Term Loans is intended by the Lenders to be
equal at all times to such Lender’s Pro Rata Share of the outstanding Loans.
Notwithstanding such agreement, the Agent and the other Lenders agree (which
agreement shall not be for the benefit of or enforceable by the Loan Parties or any
other Consolidated Members) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among them as to the Loans shall
take place on a periodic basis reasonably selected by the Agent.




     (ii) All Loans shall be made by the Lenders simultaneously and in accordance
with their Pro Rata Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its obligation to make
any Loans hereunder, nor shall any Commitment of any Lender be increased or
decreased as a result of any failure by any other Lender to perform its obligation
to make any Loans hereunder, (ii) no failure by any Lender to perform its
obligation to make any Loans hereunder shall excuse any other Lender from its
obligation to make any Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.




     (iii) Unless the Agent receives notice from a Lender on or prior to the
Closing Date that such Lender will not make available as and when required
hereunder to the Agent that Lender’s Pro Rata Share of the Term Loan, the Agent may
assume that each Lender has made such amount available to the Agent in immediately
available funds on the Closing Date. Furthermore, the Agent may, in reliance upon
such assumption, make available to the Loan Parties on such date a corresponding
amount. If any Lender has not transferred its full Pro Rata Share to the Agent in
immediately available funds and the Agent has transferred corresponding amount to
the Loan Parties on the Business Day following the Closing Date that Lender shall
make such amount available to the Agent, together with interest at the Federal
Funds Rate for that day. A notice by the



59









 







Agent submitted to any Lender with respect to amounts owing shall be
conclusive, absent manifest error. If each Lender’s full Pro Rata Share is
transferred to the Agent as required, the amount transferred to the Agent shall
constitute that Lender’s Loan for all purposes of this Agreement. If that amount
is not transferred to the Agent on the Business Day following the Closing Date, the
Agent will notify the Loan Parties of such failure to fund and, upon demand by the
Agent, the Loan Parties shall pay such amount to the Agent for the Agent’s account,
together with interest thereon for each day elapsed since the Closing Date, at a
rate per annum equal to the Interest Rate applicable at the time to the Loans
comprising that particular Borrowing. The failure of any Lender to make its Pro
Rata share of the Term Loan on the Closing Date (any such Lender, prior to the cure
of such failure, being hereinafter referred to as a “Defaulting Lender”) shall not
relieve any other Lender of its obligation hereunder to make it Pro Rata Share of
the Term Loan on the Closing Date. No Lender shall be responsible for any other
Lender’s failure to advance such other Lenders’ Pro Rata Share of any Borrowing.



          (b) Retention of Defaulting Lender’s Payments. The Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Loan Parties to the Agent for the Defaulting
Lender’s benefit; nor shall a Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead be paid to or retained by the
Agent. In its discretion, the Agent may loan the amount of all such payments received or retained
by it for the account of such Defaulting Lender. Any amounts so loaned to the Loan Parties shall
bear interest at the rate applicable to Base Rate Loans and for all other purposes of this
Agreement shall be treated as if they were Loans, provided, however, that for
purposes of voting or consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”. This Section shall
remain effective with respect to such Lender until such time as the Defaulting Lender shall no
longer be in default of any of its obligations under this Agreement. The terms of this Section
shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or
excuse the performance by the Loan Parties of their duties and obligations hereunder.




          (c) Removal of Defaulting Lender. At the Borrowers’ request, the Agent or an Eligible
Assignee reasonably acceptable to the Agent and the Borrowers shall have the right (but not the
obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such
request, sell and assign to the Agent or such Eligible Assignee, all of the Defaulting Lender’s
outstanding Commitments hereunder. Such sale shall be consummated promptly after Agent has
arranged for a purchase by Agent or an Eligible Assignee pursuant to an Assignment and Acceptance,
and at a price equal to the outstanding principal balance of the Defaulting Lender’s Loans, plus
accrued interest and fees (except any fees in connection with such sale that would otherwise arise
under Section 4.4 hereof, for which the Borrowers shall not be liable), without premium or
discount.




     12.16 Reserved.



     12.17 Concerning the Collateral and the Related Loan Documents.



          Each Lender authorizes and directs the Agent to enter into the other Loan Documents, for the
ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action
taken by the Agent or Required Lenders in accordance with the terms of




60









 







this Agreement or the other Loan Documents, and the exercise by the Agent or the Required
Lenders, as applicable, of their respective powers set forth therein or herein, together with
such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders.
The Lenders acknowledge that the Term Loan, Hedge Agreements, and all interest, fees and expenses
hereunder constitute one Debt, secured pari passu by all of the Collateral.




     12.18 Field Audit and Examination Reports; Disclaimer by Lenders.



          (a) By signing this Agreement, each Lender:





     (i) is deemed to have requested that the Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report (each
a “Report” and collectively, “Reports”) prepared by or on behalf of the Agent;




     (ii) expressly agrees and acknowledges that the Agent does not (i) make any
representation or warranty as to the accuracy of any Report, nor (ii) shall it be
liable for any information contained in any Report;




     (iii) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agent or other party performing any audit or
examination will inspect only specific information regarding the Loan Parties and
will rely significantly upon the Loan Parties’ books and records, as well as on
representations of the Loan Parties’ personnel;




     (iv) agrees to keep all Reports confidential and strictly for its internal
use, and not to distribute except to its participants, or use any Report in any
other manner; and




     (v) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may take
or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to the Borrowers, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of the
Borrowers; and (ii) to pay and protect, and indemnify, defend and hold the Agent
and any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses and other amounts (including
Attorney Costs) incurred by the Agent and any such other Lender preparing a Report
as the direct or indirect result of any third parties who might obtain all or part
of any Report through the indemnifying Lender.



     12.19 Reserved.



     12.20 Relation Among Lenders. The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth
herein in case of the Agent) authorized to act for, any other Lender.




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     12.21 The Register. The Agent shall maintain a register (the “Register”), which shall include a master account
and a subsidiary account for each Lender and in which accounts (taken together) shall be recorded
(i) the type of each Loan comprising the Borrowing and any Interest Period applicable thereto, (ii)
the effective date and amount of each Assignment and Acceptance delivered to and accepted by it and
the parties thereto, (iii) the amount of any principal or interest due and payable or to become due
and payable from Borrowers to each Lender hereunder or under the notes payable by the Borrowers to
such Lender, and (iv) the amount of any sum received by the Agent from Borrowers or any other Loan
Party and each Lender’s Pro Rata Share thereof. The Register shall be available for inspection by
Borrowers or any Lender at the offices of Agent at any reasonable time and from time to time upon
reasonable prior notice. Any failure of the Agent to record in the Register, or any error in doing
so, shall not limit or otherwise affect the obligation of Borrowers hereunder (or under any note)
to pay any amount owing with respect to the Loans or provide the basis for any claim against Agent.
The Obligations are registered obligations and the right, title and interest of any Lender and
their assignees in and to such Obligations shall be transferable only upon notation of such
transfer in the Register. Solely for purposes of this Section 12.21 and for tax purposes only, the
Agent shall be Borrowers’ agent for purposes of maintaining the Register (but the Agent shall have
no liability whatsoever to any Borrower or any other Person on account of any inaccuracies
contained in the Register). This Section 12.21 shall be construed so that the Obligations are at
all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and
881(c)(2) of the Internal Revenue Code and any related regulations (and any other relevant or
successor provisions of the Internal Revenue Code or such regulations).



ARTICLE 13

JUDGMENT CURRENCY; SERVICE OF PROCESS




     13.1 Judgment Currency.



          If for the purpose of obtaining judgment in any court it is necessary to convert an amount due
hereunder in the currency in which it is due (the “Original Currency”) into another currency (the
“Second Currency”), the rate of exchange applied shall be that at which, in accordance with normal
banking procedures, the Agent or any Lender could purchase in the New York foreign exchange market,
the Original Currency with the Second Currency on the date on which judgment is given, or the
preceding Business Day if such date is not a Business Day. Each Loan Party agrees that its
obligation in respect of any Original Currency due from it hereunder shall, notwithstanding any
judgment or payment in such other currency, be discharged only to the extent that, on the Business
Day following the date the Agent receives payment of any sum so adjudged to be due hereunder in the
Second Currency, the Agent may, in accordance with normal banking procedures, purchase, in the New
York foreign exchange market, the Original Currency with the amount of the Second Currency so paid;
and if the amount of the Original Currency so purchased or could have been so purchased is less
than the amount originally due in the Original Currency, each Loan Party agrees, as a separate
obligation and notwithstanding any such payment or judgment, to indemnify the Agent or any Lender
against such loss. The term “rate of exchange” in this Section 13.1 means the spot rate at which
Agent or any Lender, in accordance with normal practices, is able on the relevant date to purchase
the Original Currency




62









 







with the Second Currency, and includes any premium and costs of exchange payable in connection with
such purchase.




     13.2 Agent for Service of Process.



          Applica Canada and Applica Asia each hereby irrevocably designates and appoints the Borrower
Agent, at the address for Borrower Agent shown herein, as the Agent of Applica Canada and Applica
Asia to receive service of process in legal actions arising out of or related to this Agreement or
any of the other Loan Documents and expressly agrees that service upon Borrower Agent shall
constitute service upon Applica Canada and Applica Asia.




ARTICLE 14

MISCELLANEOUS




     14.1 No Waivers; Cumulative Remedies.



          No failure by the Agent or any Lender to exercise any right, remedy, or option under this
Agreement or any present or future supplement thereto, or in any other agreement between or among
the Loan Parties and the Agent and/or any Lender, or delay by the Agent or any Lender in exercising
the same, will operate as a waiver thereof. No waiver by the Agent or any Lender will be effective
unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent
or the Lenders on any occasion shall affect or diminish the Agent’s and each Lender’s rights
thereafter to require strict performance by the Loan Parties of any provision of this Agreement.
The Agent and the Lenders may proceed directly to collect the Obligations without any prior
recourse to the Collateral. The Agent’s and each Lender’s rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which the Agent or any Lender may have.




     14.2 Severability.



          The illegality or unenforceability of any provision of this Agreement or any Loan Document or
any instrument or agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.




     14.3 Governing Law; Choice of Forum; Service of Process.



          (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS
PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE
CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK;
PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.




          (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE



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COURTS STATE OR FEDERAL COURTS LOCATED IN THE STATES OF NEW YORK, FLORIDA OR GEORGIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE
FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST THE LOAN PARTIES OR THEIR PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR
THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY
FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE
COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.




          (c) EACH OF THE LOAN PARTIES HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED)
DIRECTED TO THE ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED SEVEN (7) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL
PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.




     14.4 WAIVER OF JURY TRIAL. EACH OF THE LOAN PARTIES, EACH OF THE LENDERS AND THE AGENT IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF
OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE LOAN PARTIES, THE LENDERS AND THE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.



64









 





     14.5 Survival of Representations and Warranties.



          All of the Loan Parties’ representations and warranties contained in this Agreement shall
survive the execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Agent or the Lenders or their respective agents.




     14.6 Other Security and Guaranties.



          The Agent, may, without notice or demand and without affecting any Loan Party’s obligations
hereunder or under any other Loan Document, from time to time: (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part of the Obligations and
exchange, enforce or release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and release or substitute
any such endorser or guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other Person in any way
obligated to pay all or any part of the Obligations.




     14.7 Fees and Expenses.



          Each Loan Party agrees to pay to the Agent, for its benefit, on demand, all costs and expenses
that Agent pays or incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement or any of the other
Loan Documents, including: (a) Attorney Costs incurred by the Agent in connection with the
negotiation, preparation, syndication and consummation of this Agreement or any of the other Loan
Documents; (b) costs and expenses (including attorneys’ and paralegals’ fees and disbursements) for
any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan
Documents and the transactions contemplated thereby; (c) costs and expenses of lien and title
searches; (d) taxes, fees and other charges for filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent’s Liens (including costs and expenses
paid or incurred by the Agent in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of any Loan Party under the Loan Documents
that such Loan Party fails to pay or take; (f) costs of appraisals, inspections, and verifications
of the ABL Collateral, including reasonable travel, lodging, and meals for inspections of the ABL
Collateral and the Loan Parties’ operations by the Agent plus the Agent’s then customary charge for
field examinations and audits and the preparation of reports thereof (such charge is currently $850
per day (or portion thereof) for each Person retained or employed by the Agent with respect to each
field examination or audit), provided, that unless otherwise agreed by the Borrowers and the Agent,
the Borrowers shall not be obligated to the Agent for any expenses set forth in this clause (f) for
travel and visits to Loan Parties’ facilities located outside of the United States or Canada; and
(g) without duplication, costs and expenses of forwarding loan proceeds, collecting checks and
other items of payment, and establishing and maintaining Payment Accounts and lock boxes, and costs
and expenses of preserving and protecting the Collateral. In addition, each Loan Party agrees to
pay costs and expenses incurred by the Agent (including Attorneys’ Costs) to the Agent, for its
benefit, on demand, and to the other Lenders for their benefit, on demand, and all reasonable fees,
expenses and disbursements incurred by such other Lenders, including reasonable attorneys’ fees and
disbursements, in each case, paid or incurred to obtain payment of the Obligations, enforce the



65









 






Agent’s Liens, sell or otherwise realize upon the Collateral, and otherwise enforce the
provisions of the Loan Documents, or to defend any claims made or threatened against the Agent or
any Lender arising out of the transactions contemplated hereby (including preparations for and
consultations concerning any such matters). If, for any reason (including inaccurate reporting by
the Borrowers on financial statements or otherwise), it is determined that a higher Applicable
Margin should have applied to a period than was actually applied, then the proper margin shall be
applied retroactively and the Borrowers shall pay to Agent, on written demand, for the Pro Rata
benefit of Lenders, an amount equal to the difference between the amount of interest and fees that
would have accrued using the proper margin and the amount actually paid. The foregoing shall not
be construed to limit any other provisions of the Loan Documents regarding costs, expenses or other
amounts to be paid by the Loan Parties.




     14.8 Notices.



          (a) Except as otherwise expressly provided herein, all notices, demands and requests that any
party is required or elects to give to any other shall be in writing, or by a telecommunications
device capable of creating a written record, and any such notice shall become effective (a) upon
personal delivery thereof, including delivery by overnight mail and courier service, (b) four (4)
days after it shall have been mailed by United States mail, first class, certified or registered,
with postage prepaid, or (c) in the case of notice by such a telecommunications device, when
properly transmitted, in each case addressed to the party to be notified as follows:



If to the Agent:



Harbinger Capital Partners Master Fund I, Ltd.

c/o Harbinger Capital Partners Offshore Manager, LLC

One Riverchase Parkway South

Birmingham, AL 35244

Attention: John McCullough

Telecopy No.: (205) 987-5505



If to a Loan Party:



Applica Consumer Products, Inc.

3633 Flamingo Road

Miramar, Florida 33027

Attention: Chief Executive Officer

Telecopy No.: (954) 883-1714

Email: terry.polistina@applicamail.com




66









 







with a copy to:



Applica Consumer Products, Inc.

3633 Flamingo Road

Miramar, Florida 33027

Attention: General Counsel

Telecopy No.: (954) 883-1714

Email: lisa.carstarphen@applicamail.com



or to such other address as each party may designate for itself by like notice. Failure or delay
in delivering copies of any notice, demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies shall not adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or other
communication.




          (b) Electronic mail and internet websites may be used only for routine communications, such as
financial statements, Borrowing Base Certificates and other information required by Section
5.2, administrative matters, distribution of Loan Documents for execution, and matters
permitted under Section 1.2(k). Agent and Lenders make no assurances as to the privacy and
security of electronic communications. Electronic mail and voicemail may not be used as effective
notice under the Loan Documents except as otherwise provided herein.




          (c) Agent and Lenders may rely upon any notices purportedly given by or on behalf of any Loan
Party even if such notices were not made in a manner specified herein, were incomplete or were not
confirmed, or if the terms thereof, as understood by the recipient, varied from a later
confirmation. Each Loan Party shall indemnify and hold harmless each Indemnified Person from any
liabilities, losses, costs and expenses arising from any telephonic communication purportedly given
by or on behalf of a Loan Party.




     14.9 Waiver of Notices.



          Unless otherwise expressly provided herein, the Loan Parties waive presentment, and notice of
demand or dishonor and protest as to any instrument, notice of intent to accelerate the Obligations
and notice of acceleration of the Obligations, as well as any and all other notices to which they
might otherwise be entitled. No notice to or demand on a Loan Party which the Agent or any Lender
may elect to give shall entitle the Loan Parties to any or further notice or demand in the same,
similar or other circumstances.




     14.10 Binding Effect.



          The provisions of this Agreement shall be binding upon and inure to the benefit of the
respective representatives, successors, and assigns of the parties hereto; provided,
however, that no interest herein may be assigned by any Loan Party without prior written
consent of the Agent and each Lender. The rights and benefits of the Agent and the Lenders
hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the
Obligations or any part thereof.




67









 








     14.11 Indemnity of the Agent and the Lenders by the Borrowers.



          (a) Each Loan Party agrees to defend, indemnify and hold the Agent-Related Persons, and each
Lender, its Affiliates, and each of their respective officers, directors, employees, counsel,
representatives, agents and attorneys in fact (each, an “Indemnified Person”) harmless from and
against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature
whatsoever which may at any time (including at any time following repayment of the Loans and the
termination, resignation or replacement of the Agent or replacement of any Lender) be imposed on,
incurred by or asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection with any of the
foregoing, including with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement, any
other Loan Document, or the Loans or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”); provided that the Loan Parties shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities determined in a final, non-appealable judgment by a
court of competent jurisdiction to result solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section shall survive termination of the
Commitments and payment of all other Obligations.




          (b) Each Loan Party agrees to indemnify, defend and hold harmless the Agent and the Lenders
and their Affiliates from any loss or liability directly or indirectly arising out of the use,
generation, manufacture, production, storage, release, threatened release, discharge, disposal or
presence of a hazardous substance relating to a Loan Party’s or other Consolidated Member’s
operations, business or property. This indemnity will apply whether the hazardous substance is on,
under or about the Loan Party’s or other Consolidated Members’ property or operations or property
leased to a Loan Party or other Consolidated Member. The indemnity includes but is not limited to
Attorneys Costs. The indemnity extends to the Agent and the Lenders, their Affiliates, and all of
their directors, officers, employees, agents, successors, attorneys and assigns. “Hazardous
substances” means any substance, material or waste that is or becomes designated or regulated as
“toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar designation or regulation under
any federal, state or local law (whether under common law, statute, regulation or otherwise) or
judicial or administrative interpretation of such, including petroleum or natural gas. This
indemnity will survive repayment of all other Obligations.




     14.12 Amendment and Restatement of Second Amended Credit Agreement; Release.



          (a) This Agreement amends and restates, but does not discharge or satisfy any obligation of
any party under, the Original Credit Agreement and the Original Guaranty and nothing herein shall
constitute a novation or accord and satisfaction with respect to the Original Credit Agreement, the
Original Guaranty or any of the Obligations. All “Obligations” under the Original Credit Agreement
(to the extent not paid on or prior to the date hereof) and Original Guaranty, and all security
interests, Liens, and collateral assignments granted to the Agent under the Original Credit
Agreement, Original Guaranty or any of the other “Loan Documents” defined therein (other than the
Pledge Agreements and Intellectual Property Notices), hereby are renewed and continued in full
force and effect, and hereafter shall be governed by this Agreement or, to the extent appropriate,
such other Loan Documents as further amended, restated or modified from



68









 






time to time. All existing “Loan Documents” previously executed in connection with the
Original Credit Agreement and the Original Guaranty (other than the Pledge Agreements and
Intellectual Property Notices), shall continue in full force and effect, except to the extent such
agreement is amended, restated or replaced in connection with this Agreement. Each of the parties
hereto ratifies and reaffirms the Original Credit Agreement and the Original Guaranty as each is
amended and restated hereby, and agrees that this Agreement embodies the entire understanding of
the parties with respect to the subject matter hereof.



          (b) Each Loan Party hereby releases, acquits and forever discharges Agent and each Lender, and
their respective officers, directors, agents, consultants, legal counsel, successors and assigns,
from all claims, demands, suits, actions, causes of action, reckonings, and liabilities of any
nature, whether known or unknown, due or to become due, absolute or contingent, legal or equitable
or disputed or undisputed, that any Loan Party has or may claim to have against Agent or any Lender
and that arises out of or relates to any act, failure to act, transaction or occurrence under, in
connection with or related to the Original Credit Agreement, the Original Guaranty or any of the
other Loan Documents, provided that nothing therein shall operate to release Agent or any Lender
from performing any of their agreements under this Agreement.




     14.13 Final Agreement.



          This Agreement, together with the other Loan Documents, is intended by the Loan Parties, the
Agent and the Lenders to be the final, complete, and exclusive expression of the agreement among
them. This Agreement and the other Loan Documents supersede any and all prior oral or written
agreements relating to the subject matter hereof, except for the Fee Letter. Nothing contained
herein shall be deemed to be or operate as a novation or an accord and satisfaction of any of the
Obligations. No modification, rescission, waiver, release, or amendment of any provision of this
Agreement or any other Loan Document shall be made, except by a written agreement signed by the
Loan Parties and a duly authorized officer of each of the Agent and the requisite Lenders.




     14.14 Counterparts.



          This Agreement may be executed in any number of counterparts, including facsimile copies
thereof, and by the Agent, each Lender and the Loan Parties in separate counterparts, each of which
shall be an original, but all of which shall together constitute one and the same agreement;
signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same document.




     14.15 Captions.



          The captions contained in this Agreement are for convenience of reference only, are without
substantive meaning and should not be construed to modify, enlarge, or restrict any provision.




     14.16 Right of Setoff.



69









 





          In addition to any rights and remedies of the Lenders provided by law, if an Event of Default
exists or the Loans have been accelerated, each Lender is authorized (subject to the terms of
Section 12.12(b)) at any time and from time to time, without prior notice to the Loan
Parties, any such notice being waived by the Loan Parties to the fullest extent permitted by law,
to set off and apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by, such Lender or any
Affiliate of such Lender to or for the credit or the account of the Loan Parties against any and
all Obligations owing to such Lender or its Affiliates, now or hereafter existing, irrespective of
whether or not the Agent or such Lender shall have made demand under this Agreement or any Loan
Document and although such Obligations may be contingent or unmatured. Each Lender agrees promptly
to notify the Loan Parties and the Agent after any such set off and application made by such
Lender; provided, however, that the failure to give such notice shall not affect
the validity of such set off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY
OF A LOAN PARTY HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF
THE LENDERS.




     14.17 Confidentiality.



          The Agent and each Lender (each, a “Lending Party”) agrees to keep Confidential any
information furnished or made available to it by any Loan Party (each, a “Disclosing Party”) that
is marked as confidential or, with respect to verbal information, explicitly identified as
confidential when furnished (“Confidential Information”).




          (a) For purposes of this Agreement, the term “Confidential Information” shall not include
information that (i) is in the Lending Party’s possession prior to it being provided by or on
behalf of the Disclosing Party, provided that such information is not known by the Lending Party to
be subject to another confidentiality agreement with, or other legal or contractual obligation of
confidentiality to, a Disclosing Party (ii) is or becomes publicly available (other than through a
breach of this Agreement by any Lending Party), or (iii) becomes available to the Lending Party on
a non-confidential basis, provided that the source of such information was not known by the Lending
Party to be bound by a confidentiality agreement or other legal or contractual obligation of
confidentiality with respect to such information.




          (b) Notwithstanding the foregoing, a Lending Party may disclose Confidential Information to:
(i) any governmental agency or regulatory body having or reasonably claiming to have authority to
regulate or oversee any aspect of the Lending Party’s business in connection with the exercise of
such authority or claimed authority; (ii) the extent necessary or appropriate to effect or preserve
the Lending Party’s security (if any) hereunder or to enforce any right or remedy provided pursuant
to this Agreement or in connection with any claims asserted by or against the Lending Party or any
Borrower or any other person or entity involved herewith; (iii) its directors, officers, employees,
attorneys, accountants, and auditors (collectively, the “Representatives”) whom it reasonably
determines need to know such information; and the Lending Party agrees inform the Representatives
to whom it discloses Confidential Information of the confidential nature of the Confidential
Information; (iv) pursuant to subpoena or other court process; (v) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (vi) to the extent reasonably
required in connection with any litigation or proceeding (including, but not limited to, any
bankruptcy proceeding) to which



70









 






any Lending Party or their respective Affiliates may be party; and (vii) any bank or financial
institution or other entity to which the Lending Party has sold or desires to sell an interest or
participation in the Commitment and the Loan Documents, provided that any such recipient of such
Confidential Information agrees in writing to keep such Confidential Information confidential as
specified in this Section 14.17; provided, however, in the event a Lending
Party is requested or required (by interrogatory, court order, subpoena, administrative proceeding,
civil investigatory demand, or any similar legal process) to disclose any of the Confidential
Information, the Lending Party, in the absence of a protective order, may disclose such information
without liability. The Lending Party, however, shall, to the extent permitted by law and as
promptly as practicable, make reasonable efforts to notify the Disclosing Party and the Borrowers
prior to such disclosure by the Lending Party so that the Disclosing Party may seek at its sole
expense a protective order or other appropriate remedy.




          (c) Each Lending Party acknowledges that, under certain circumstances, the United States
securities laws may prohibit a person who has received material, non-public information from an
issuer from purchasing or selling securities of such issuer or from communicating such information
to any other person under circumstances in which it is reasonably foreseeable that such other
person is likely to purchase or sell such securities. Each Lending Party further acknowledges that
certain Confidential Information could be considered material non-public information and agrees
that it will not, and it will use reasonable efforts to ensure that its Representatives will not,
trade in the securities of the Parent on the basis of such information or communicate such
information to any other person under circumstances in which it is reasonably foreseeable that such
other person is likely to purchase or sell such securities.




          (d) This Section 14.17 shall survive the termination of this Agreement.




     14.18 Conflicts with Other Loan Documents.



          Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific
reference to the applicable provision contained in this Agreement), if any provision contained in
this Agreement conflicts with any provision of any other Loan Document, the provision contained in
this Agreement shall govern and control.




     14.19 Agency of the Borrowers for Each Other Loan Party.



          Each of the Loan Parties irrevocably appoints the Borrower Agent as its agent for all purposes
relevant to this Agreement, including the giving and receipt of notices and execution and delivery
of all documents, instruments, and certificates contemplated herein (including, without limitation,
execution and delivery to the Agent of Borrowing Base Certificates, Notices of Borrowing, and
Notices of Continuation/Conversion) and all modifications hereto. Any agreement, acknowledgment,
consent, direction, certification, or other action which might otherwise be valid or effective only
if given or taken by all or any of the Loan Parties or acting singly, shall be valid and effective
if given or taken only by the Borrower Agent, whether or not any of the other Loan Parties joins
therein, and the Agent and the Lenders shall have no duty or obligation to make further inquiry
with respect to the authority of the Borrower Agent under this Section 14.19, provided that
nothing in this Section 14.19 shall limit the effectiveness of, or the right of the Agent
and the Lenders to rely upon, any notice (including a Notice of Borrowing or a Notice of
Continuation/Conversion), document, instrument, certificate, acknowledgment,



71









 






consent, direction, certification, or other action delivered by a Borrower or other Loan Party
pursuant to this Agreement.




     14.20 Express Waivers By Loan Parties In Respect of Cross Guaranties and Cross
Collateralization.



          Each Loan Party agrees as follows:




          (a) Each Loan Party hereby waives: (i) notice of acceptance of this Agreement; (ii) notice of
the making of any Loans or any other financial accommodations made or extended under the Loan
Documents or the creation or existence of any Obligations; (iii) notice of the amount of the
Obligations, subject, however, to such Loan Party’s right to make inquiry of the Agent to ascertain
the amount of the Obligations at any reasonable time; (iv) notice of any adverse change in the
financial condition of any other Loan Party or of any other fact that might increase such Loan
Party’s risk with respect to such other Loan Party under the Loan Documents; (v) notice of
presentment for payment, demand, protest, and notice thereof as to any promissory notes or other
instruments among the Loan Documents; and (vii) all other notices (except if such notice is
specifically required to be given to such Loan Party hereunder or under any of the other Loan
Documents to which such Loan Party is a party) and demands to which such Loan Party might otherwise
be entitled;




          (b) Each Loan Party hereby waives the right by statute or otherwise to require the Agent or
any Lender to institute suit against any other Loan Party or to exhaust any rights and remedies
which the Agent or any Lender has or may have against any other Loan Party. Each Loan Party further
waives any defense arising by reason of any disability or other defense of any other Loan Party
(other than the defense that the Obligations shall have been fully and finally performed and
indefeasibly paid) or by reason of the cessation from any cause whatsoever of the liability of any
such Loan Party in respect thereof.




          (c) Each Loan Party hereby waives and agrees not to assert against the Agent or any Lender:
(i) any defense (legal or equitable), setoff, counterclaim, or claim which such Loan Party may now
or at any time hereafter have against any other Loan Party; (ii) any defense, setoff, counterclaim,
or claim of any kind or nature available to any other Loan Party against the Agent or any Lender
arising directly or indirectly from the present or future lack of perfection, sufficiency,
validity, or enforceability of the Obligations or any security therefor; (iii) any right or defense
arising by reason of any claim or defense based upon an election of remedies by the Agent or any
Lender under any applicable law; (iv) the benefit of any statute of limitations affecting any other
Loan Party’s liability hereunder;




          (d) Each Loan Party consents and agrees that, without notice to or by such Loan Party and
without affecting or impairing the obligations of such Loan Party hereunder, the Agent may (subject
to any requirement for consent of any of the Lenders to the extent required by this Agreement), by
action or inaction: (i) compromise, settle, extend the duration or the time for the payment of, or
discharge the performance of, or may refuse to or otherwise not enforce the Loan Documents; (ii)
release all or any one or more parties to any one or more of the Loan Documents or grant other
indulgences to any other Loan Party in respect thereof, (iii) amend or modify in any manner and at
any time (or from time to time) any of the Loan Documents; or (iv) release or substitute any Person
liable for payment of the Obligations, or enforce, exchange, release, or waive any security for the
Obligations or any Guaranty of the Obligations;




72









 








          (e) Each Loan Party represents and warrants to the Agent and the Lenders that such Loan Party
is currently informed of the financial condition of all other Loan Parties and all other
circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of
the Obligations. Each Loan Party further represents and warrants that such Loan Party has read and
understands the terms and conditions of the Loan Documents. Each Loan Party agrees that neither the
Agent nor any Lender has any responsibility to inform any Loan Party of the financial condition of
any other Loan Party or of any other circumstances which bear upon the risk of nonpayment or
nonperformance of the Obligations.




     14.21 USA PATRIOT Act Notice.



          The Agent and Lenders each hereby notifies each Loan Party that, pursuant to the requirements
of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies
such Loan Party, which information includes the name and address of each Loan Party and other
information that will allow the Agent and each Lender to identify such Loan Party in accordance
with the USA PATRIOT Act.




     14.22 Intercreditor Agreement.



          The Loan Parties, Agent and Lenders acknowledge that the exercise of certain of the Agent’s
rights and remedies hereunder may be subject to the provisions of the Additional Debt Intercreditor
Agreement. Each Lender and each other Person party hereto from time to time (other than the Loan
Parties) hereby (A) acknowledges that is has received a copy of the Additional Debt Intercreditor
Agreement, (B) consents to the provisions of the Additional Debt Intercreditor Agreement, (C)
agrees that it will be bound by and comply with the provisions of the Additional Debt Intercreditor
Agreement, including the purchase option provisions contained therein, and (D) authorizes and
instructs the Agent on its behalf to enter into the Additional Debt Intercreditor Agreement as
“Term Agent” thereunder.




[Signatures commence on following page]




73









 








          IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above
written.




	 	 	 	 	 	 	 	 	 
	 	 	“BORROWERS”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SALTON, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Terry Polistina 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Terry Polistina 	 	 
	 

	 	 	 	Title:	 	CEO and President 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APPLICA INCORPORATED, a Florida corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Terry Polistina 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Terry Polistina 	 	 
	 

	 	 	 	Title:	 	CEO and President 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APPLICA CONSUMER PRODUCTS, INC., a Florida
corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Terry Polistina 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Terry Polistina 	 	 
	 

	 	 	 	Title:	 	CEO and President 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APN HOLDING COMPANY, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Terry Polistina 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Terry Polistina 	 	 
	 

	 	 	 	Title:	 	CEO and President 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APPLICA AMERICAS, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	HP DELAWARE, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






1









 






	 	 	 	 	 	 	 	 	 
	 	 	HPG LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APPLICA MEXICO HOLDINGS, INC., a Delaware
corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	SONEX INTERNATIONAL CORPORATION, a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	HOME CREATIONS DIRECT LTD., a Delaware
corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	SALTON HOLDINGS INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	ICEBOX LLC, an Illinois limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






2









 






	 	 	 	 	 	 	 	 	 
	 	 	TOASTMASTER INC., a Missouri corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	FAMILY PRODUCTS INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	ONE:ONE COFFEE LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	SALTON TOASTMASTER LOGISTICS LLC, a Delaware limited liability company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	“GUARANTORS”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	APPLICA CANADA CORPORATION, a Nova Scotia company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Corporate Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	APPLICA ASIA LIMITED, a Hong Kong company	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lisa R. Carstarphen 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lisa R. Carstarphen 	 	 
	 

	 	 	 	Title:	 	Director 
	 	 
	 

	 	 	 	 	 	 
	 	 






3









 






	 	 	 	 	 	 	 	 	 
	 	 	“AGENT”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HARBINGER CAPITAL PARTNERS
MASTER FUND I, LTD.
as Administrative Agent and Collateral Agent	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ William R. Lucas,
Jr. 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	William R. Lucas,
Jr. 	 	 
	 

	 	 	 	Title:	 	Executive Vice President-General
Counsel & Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






4









 






	 	 	 	 	 	 	 	 	 
	 	 	“LENDERS”	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	HARBINGER CAPITAL PARTNERS

MASTER FUND I, LTD.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ William R. Lucas,
Jr. 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	William R. Lucas,
Jr. 	 	 
	 

	 	 	 	Title:	 	Executive Vice President-General
Counsel & Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	HARBINGER CAPITAL PARTNERS

SPECIAL SITUATIONS FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ William R. Lucas,
Jr. 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	William R. Lucas,
Jr. 	 	 
	 

	 	 	 	Title:	 	Executive Vice President-General
Counsel & Secretary 
	 	 
	 

	 	 	 	 	 	 
	 	 







5












 





ANNEX A

to

Credit Agreement




          1. Definitions. Capitalized terms used in the Loan Documents shall have the following
meanings (unless otherwise defined therein), and all Section references in the following
definitions shall refer to Sections of this Agreement:




          “ABL Collateral” means the Revolver Loan Primary Collateral as defined in clause (ii)
of the definition thereof in the Additional Debt Intercreditor Agreement.




          “Account” has the meaning given to the term “account” in the UCC or PPSA, as
applicable, and includes any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.




          “Account Debtor” means each Person obligated in any way on or in connection with an
Account, Chattel Paper or General Intangibles (including a payment intangible).




          “Acquisition” means the acquisition of (i) a controlling equity interest in another
Person (including the purchase of an option, warrant or convertible or similar type security to
acquire such a controlling interest at the time it becomes exercisable by the holder thereof),
whether by purchase of such equity interest or upon exercise of an option or warrant for, or
conversion of securities into, such equity interest, or (ii) assets of another Person which
constitute any material part of the assets of such Person or of a line or lines of business
conducted by such Person.




          “Additional Debt” means the Debt owing under the Additional Debt Documents.




          “Additional Debt Agent” means Bank of America, N.A., as agent under the Additional
Debt Documents, or any successor agent thereunder.




          “Additional Debt Documents” means: (i) the Third Amended and Restated Credit
Agreement dated as of the date hereof, among the Additional Debt Agent, certain Loan Parties party
thereto, the holders of the Additional Debt and certain other parties party thereto; (ii) the
Security Agreement dated as of the date hereof, among certain Loan Parties and the Additional Debt
Agent in favor of certain of their the holders of the Additional Debt; and (iii) all other
agreements, instruments or documents executed or delivered by any Loan Parties thereof in
connection with the foregoing.




          “Additional Debt Intercreditor Agreement” means the Intercreditor Agreement dated as
of the Closing Date among the Additional Debt Agent, the holders of Additional Debt, the Agent and
the Lenders.




          “Affiliate” means, as to any Person, including any Consolidated Member (the
“subject Person”), any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the subject Person or which owns, directly or
indirectly, ten percent (10%) or more of the outstanding equity interest of the subject Person. A
Person shall be deemed to control another Person if the controlling Person possesses, directly or
indirectly, the




A-1









 







power to direct or cause the direction of the management and policies of the other Person,
whether through the ownership of voting securities, by contract, or otherwise.




          “Agency Agreement” means, when used with reference to Applica Consumer Products, the
Agency Agreement in effect between Applica Consumer Products and Applica Asia, pursuant to which
Applica Asia shall furnish to Applica Consumer Products various purchasing and handling services
with respect to the importation of various types of products from various countries as more fully
set forth therein; and, when used with reference to Applica Canada, the Agency Agreement in effect
between Applica Canada and Applica Asia, pursuant to which Applica Asia shall furnish to Applica
Canada various purchasing and handling services with respect to the importation of various types of
products from various countries as more fully set forth therein.




          “Agent” means Harbinger Capital Partners Master Fund I, Ltd. in its capacity as
administrative and collateral agent for the Lenders, and any successor administrative and
collateral agent.




          “Agent-Related Persons” means Agent, together with its Affiliates, and the officers,
directors, employees, counsel, representatives, agents and attorneys-in-fact of Agent and such
Affiliates.




          “Agent’s Liens” means the Liens in the Collateral granted to the Agent, for the
benefit of the Lenders and the Agent, pursuant to this Agreement and the other Loan Documents.




          “Agreement” means the Agreement to which this Annex A is attached, as from
time to time amended, modified or restated.




          “Allocable Amount” has the meaning specified in Section 1.6(f).




          “Anti-Terrorism Laws” mean any laws relating to terrorism or money laundering,
including Executive Order No. 13224, the USA PATRIOT Act and the Proceeds of Crime Act.




          “Applica Americas Blocked Account” means each blocked account established and
regulated pursuant to the Applica Americas Blocked Account Agreement.




          “Applica Americas Blocked Account Agreement” means each Blocked Account Agreement to
be entered into among Applica Americas, its depository banks and Agent.




          “Applica Asia Blocked Account Agreements” means the Blocked Account Agreements to be
entered into among Applica Asia, its depository bank and Agent.




          “Applica Asia Guaranty” means the Debenture dated the Closing Date, among Applica
Asia, ACP, Applica Canada and Agent, pursuant to which Applica Asia guarantees payment of the
Obligations.




          “Applica Asia Serviced Account” has the meaning specified in Section 7.34(a).




A-2









 








          “Applica Canada Blocked Account” means the blocked account established and regulated
pursuant to the Applica Canada Blocked Account Agreement.




          “Applica Canada Blocked Account Agreement” means the Blocked Account Agreements
entered into among Applica Canada, The Bank of Nova Scotia and the Agent.




          “Applica Canada Guaranty” means the Guarantee executed by Applica Canada on the
Closing Date pursuant to which Applica Canada guarantees the payment of the Obligations.




          “Applica Canada Security Agreement” means the General Security Agreement, dated as of
the Closing Date, executed and delivered by Applica Canada in favor of Agent for the benefit of
itself and the Lenders.




          “Applicable Margin” means, as of the Closing Date,




               (i) with respect to Base Rate Loans, 5.5%; and



               (ii) with respect to LIBOR Loans, 6.5%.



          “Asset Disposition” means, with respect to any Person, the sale, lease or other
disposition of any asset of such Person other than the sale of Inventory or the use of cash in the
ordinary course of business.




          “Assignee” has the meaning specified in Section 11.2(a).




          “Assignment and Acceptance” has the meaning specified in Section 11.2(a).




          “Attorney Costs” means and includes all reasonable fees, expenses and disbursements of
any law firm or other counsel engaged by the Agent or Lead Arranger.




          “Availability” has the meaning specified in the Additional Debt Documents.




          “Bank” means Bank of America, N.A., a national banking association, or any successor
entity thereto.




          “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 et
seq.).




          “Base Rate” means, for any day, the rate of interest in effect for such day as
publicly announced from time to time by Bank of America, N.A. in Atlanta, Georgia as its “prime
rate” (the “prime rate” being a rate set by Bank of America, N.A. based upon various factors
including Bank of America, N.A.’s costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate). Any change in the prime rate announced by Bank of America, N.A. shall
take effect at the opening of business on the day specified in the public announcement of such
change. Each Interest Rate based upon the Base Rate shall be adjusted simultaneously with any
change in the Base Rate.




A-3









 








          “Base Rate Loan” means those portions of the Term Loan during any period which bear
interest based on the Base Rate.




          “BIA” means the Bankruptcy and Insolvency Act (Canada) and all regulations
thereunder.




          “Black & Decker License Agreement” means the Trademark License Agreement, dated as of
June 26, 1998 (as amended or restated), between The Black & Decker Corporation and Parent, as
assignee of Applica.




          “Blocked Account Agreement” means an agreement, including, inter alia, a collection
account agreement, among one or more of the Loan Parties, the Agent and a Clearing Bank, in form
and substance reasonably satisfactory to the Agent, concerning the collection of payments which
represent the proceeds of Accounts or of any other Collateral.




          “Blocked Accounts” means, collectively, the Applica Americas Blocked Account, the
Applica Asia Blocked Account, the Applica Canada Blocked Account and the Borrower Blocked Account.




          “Borrower Agent” has the meaning specified in Section 1.6.




          “Borrower Blocked Account” means each blocked account and lockbox established and
regulated pursuant to a Borrower Blocked Account Agreement, and over which Agent shall have
exclusive control and dominion during a Springing Period.




          “Borrower Blocked Account Agreement” means each agreement specified in Section
7.32(c).




          “Borrowing” means the borrowing hereunder made by the Borrowers on the Closing Date




          “Borrowing Base” has the meaning specified in the Additional Debt Documents.




          “Borrowing Base Certificate” has the meaning specified in the Additional Debt
Documents.




          “Business Day” means (a) any day that is not a Saturday, Sunday, or a day on which
banks in New York are required or permitted to be closed, and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBOR Rate or LIBOR Loans, any day
that is a Business Day pursuant to clause (a) above and that is also a day on which trading in
Dollars is carried on by and between banks in the London interbank market.




          “Capital Adequacy Regulation” means any guideline, request or directive of any central
bank or other Governmental Authority, or any other law, rule or regulation, whether or not having
the force of law, in each case, regarding capital adequacy of any bank or of any corporation
controlling a bank.




A-4









 








          “Capital Expenditures” means all obligations incurred or expenditures made in respect
of any fixed asset or improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including costs arising in connection with the acquisition of
such asset by way of increased product or service charges or in connection with a Capital Lease,
and other items presented in accordance with GAAP.




          “Capital Lease” means any lease of property which, in accordance with GAAP, should be
reflected as a capital lease on a consolidated balance sheet.




          “Capital Stock” means, for any Person, any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights, securities, or other
equivalent evidences of ownership (however designated) issued to such Person.




          “CCAA” means the Companies’ Creditors Arrangement Act (Canada) and the regulations
promulgated thereunder.




          “Change of Control” means (a) if any Person or group of Persons acting in concert,
other than Equity Investors and their Subsidiaries, shall own or control, directly or indirectly,
more than 51% of the outstanding securities of the Parent having voting rights in the election of
directors, determined on a fully diluted basis and taking into account any outstanding securities
or contract rights exercisable, exchangeable or convertible into equity interests, or (b) if Parent
ceases to own and control, directly or indirectly, all of the outstanding securities of APN having
voting rights in the election of directors, determined on a fully diluted basis and taking into
account any outstanding securities or contract rights exercisable, exchangeable or convertible into
equity interests, (c) if APN ceases to own and control, directly or indirectly, all of the
outstanding securities of Applica having voting rights in the election of directors, determined on
a fully diluted basis and taking into account any outstanding securities or contract rights
exercisable, exchangeable or convertible into equity interests, or (d) if Parent or Applica ceases
to own and control, directly or indirectly, all of the outstanding securities of any other Loan
Party having voting rights in the election of directors, determined on a fully diluted basis and
taking into account any outstanding securities or contract rights exercisable, exchangeable or
convertible into equity interests except as otherwise permitted by this Agreement.




          “Chattel Paper” shall have the meaning specified in the Security Agreement.




          “Clearing Bank” means any banking institution with whom a Payment Account has been
established pursuant to a Blocked Account Agreement.




          “Closing Date” means December 28, 2007.




          “Co-Borrower Payment” has the meaning specified in Section 1.6.




          “Code” means the Internal Revenue Code of 1986, as amended.




          “Collateral” has the meaning specified in the Security Agreement.




A-5









 








          “Commitment” means, at any time with respect to a Lender, the principal amount set
forth beside such Lender’s name under the heading “Commitment” on Annex B attached
to the Agreement, or on the signature page of the Assignment and Acceptance pursuant to which such
Lender became a Lender hereunder in accordance with the provisions of Section 11.2, and
“Commitments” means, collectively, the aggregate amount of the Commitments of all of the
Lenders.




          “Confidential Information” has the meaning specified in Section 14.17.




          “Consolidated Applica Parties” means Applica and its Subsidiaries prior to the Closing
Date.




          “Consolidated Members” means the Parent and its Subsidiaries and “Consolidated Member”
means any of the foregoing.




          “Consolidated Salton Parties” means Salton and its Subsidiaries prior to the Closing Date.




          “Contaminant” means any waste, pollutant, hazardous substance, toxic substance,
hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any
form or condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or
waste.




          “Continuation/Conversion Date” means the date on which a Loan is converted into or
continued as a LIBOR Loan.




          “Core Business” means, with respect to the Loan Parties, the business of
manufacturing, distributing and marketing household and outdoor appliances and non-electric
products, personal care products, lighting products, table top products, pet products, water
filtration products and related items consistent with past practices.




          “Cost of Acquisition” means, with respect to any Acquisition, as at the date of
consummation of any such Acquisition, the sum of the following (without duplication): (i) the
value of the capital stock, warrants or options to acquire capital stock of a Loan Party to be
transferred to a seller in connection therewith, (ii) any cash or other property and the unpaid
principal amount of any debt instrument given as consideration, (iii) any Debt assumed by a Loan
Party in connection with such Acquisition, and (iv) out of pocket transaction costs for the
services and expenses of attorneys, accountants and consultants incurred in effecting such a
transaction, and other similar transaction costs so incurred. For purposes of determining the Cost
of Acquisition for any transaction, (A) the capital stock of a Loan Party shall be valued (I) at
its market value as reported on the New York Stock Exchange with respect to shares that are freely
tradable, and (II) with respect to shares that are not freely tradable, as determined by the Board
of Directors of the Borrowers party to such Acquisition and, if requested by Agent, determined to
be a reasonable valuation by the independent public accountants referred to in Section 5.2
hereof, (B) the capital stock of any Subsidiary shall be valued as determined by the Board of
Directors of the Borrowers party to such Acquisition or such Subsidiary and, if requested by Agent,
determined to be a reasonable valuation by the independent public accountants referred to in




A-6









 







Section 5.2 hereof, and (C) with respect to any Acquisition accomplished pursuant to
the exercise of options or warrants or the conversion of securities, the Cost of Acquisition shall
include both the cost of acquiring such option, warrant or convertible security as well as the cost
of exercise or conversion.




          “CRA” means the Canada Revenue Agency.




          “Debt” means, without duplication, with respect any Person (the “subject Person”), all
liabilities, obligations and indebtedness of the subject Person to any other Person, of any kind or
nature, now or hereafter owing, arising, due or payable, howsoever evidenced, created, incurred,
acquired or owing, whether primary, secondary, direct, contingent, fixed or otherwise, consisting
of indebtedness for borrowed money or the deferred purchase price of property, excluding purchases
of property, product, merchandise and services in the ordinary course of business, but including
(a) in the case of the Loan Parties, all Obligations; (b) all obligations and liabilities of any
Person secured by any Lien on the subject Person’s property, even though the subject Person shall
not have assumed or become liable for the payment thereof; (except unperfected Liens incurred in
the ordinary course of business and not in connection with the borrowing of money);
provided, however, that all such obligations and liabilities which are limited in
recourse to such property shall be included in Debt only to the extent of the book value of such
property as would be shown on a balance sheet of the subject Person prepared in accordance with
GAAP; (c) all obligations or liabilities created or arising under any Capital Lease or conditional
sale or other title retention agreement with respect to property used or acquired by the subject
Person, even if the rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property, provided that all such obligations and liabilities which are
limited in recourse to such property shall be included in Debt only to the extent of the book value
of such property as would be shown on a balance sheet of the subject Person prepared in accordance
with GAAP; (d) all obligations and liabilities under Guaranties; (e) the present value (discounted
at the Base Rate) of lease payments due under synthetic leases; and (f) all obligations and
liabilities under any asset securitization or sale/leaseback transaction; provided,
further, however, that in no event shall the term Debt include the capital stock
surplus, retained earnings, minority interests in the common stock of Subsidiaries, lease
obligations (other than pursuant to (c) or (e) above), reserves for deferred income taxes and
investment credits, other deferred credits or reserves.




          “Default” means any event or circumstance which, with the giving of notice, the lapse
of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute
an Event of Default.




          “Default Rate” means a fluctuating per annum interest rate at all times equal to the
sum of (a) the otherwise applicable Interest Rate plus (b) two percent (2%) per annum. Each
Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate.




          “Defaulting Lender” has the meaning specified in Section 12.15(c).




          “Deposit Accounts” shall have the meaning specified in the Security Agreement.




          “Designated Account” has the meaning specified in Section 1.2(c).




A-7









 








          “Direct Foreign Subsidiary” means any Foreign Subsidiary whose outstanding voting
Capital Stock is owned by a Loan Party or a Domestic Subsidiary.




          “Disclosing Party” has the meaning specified in Section 14.17.




          “Distribution” means, in respect of any Person (other than a natural Person): (a) the
payment or making of any dividend or other distribution of property in respect of such Person’s
Capital Stock (excluding any options or warrants for, or other rights with respect to, such stock),
other than distributions in such Person’s Capital Stock of the same class; or (b) the redemption or
other acquisition of any Capital Stock (or any options or warrants for such Capital Stock) of such
Person.




          “Documents” shall have the meaning specified in the Security Agreement, and include
bills of lading, warehouse receipts and other documents of title.




          “DOL” means the United States Department of Labor or any successor department or
agency.




          “Dollars” and “$” means dollars in the lawful currency of the United States.
Unless otherwise specified, all payments under the Agreements shall be made in Dollars.




          “Dollar(Cdn)” and “$(Cdn)” means dollars in the lawful currency of Canada.




          “Dollar Equivalent” means, on any date, with respect to any amount denominated in
Dollars, such amount in Dollars, and with respect to any stated amount in a currency other than
Dollars, the amount of Dollars that the Agent determines (which determination shall be conclusive
and binding absent manifest error) would be necessary to be sold on such date at the applicable
Exchange Rate to obtain the stated amount of the other currency.




          “Domestic Subsidiaries” means the Subsidiaries of the Borrowers organized or
incorporated under the laws of a state in the United States and denominated as a “Domestic
Subsidiary” in Schedule 6.5.




          “Eligible Assignee” means (a) a commercial bank, commercial finance company, financial
institution or other asset based lender, in each case having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature pages of this Agreement; (c) any Affiliate
of, or a fund managed by, any Lender; and (d) if an Event of Default has occurred and is
continuing, any Person reasonably acceptable to the Agent.




          “Environmental Claims” means all claims, however asserted, by any Governmental
Authority or other Person alleging potential liability or responsibility for violation of any
Environmental Law, or for a Release or injury to the environment.




          “Environmental Laws” means all federal, state, provincial, territorial, local or
foreign laws, statutes, common law duties, rules, regulations, ordinances, orders-in-council and
codes, together with all administrative orders, directed duties, licenses, authorizations and
permits




A-8









 







of, and agreements with, any Governmental Authority, in each case relating to environmental,
health, safety and land use matters.




          “Environmental Lien” means a Lien in favor of any Governmental Authority or any other
Person for (a) any liability under Environmental Laws, or (b) damages arising from, or costs
incurred by such Governmental Authority in response to, a Release or threatened Release of a
Contaminant into the environment.




          “Equipment” shall have the meaning specified in the Security Agreement.




          “Equity Contribution” means a net capital contribution to the Borrowers of at least
$100,000,000 in common or preferred equity from Equity Investors and certain other investors.




          “Equity Investors” shall have the meaning given to it in the Recitals hereto.




          “ERISA” means the Employee Retirement Income Security Act of 1974, and regulations
promulgated thereunder.




          “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with a Loan Party within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code). Notwithstanding the foregoing, the term “ERISA Affiliate” shall not include Salton Europe
Limited.




          “ERISA Event” means (a) a Reportable Event and or Termination Event with respect to a
Pension Plan, (b) a withdrawal by a Loan Party or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or
employer under the PBA or a cessation of operations which is treated as such a withdrawal, (c) a
complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multi-employer Plan or
notification that a Multi-employer Plan or plan regulated or governed by the PBA is in
reorganization, (d) the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination or the commencement of proceedings by the PBGC or other applicable
Governmental Authority to terminate a Pension Plan or Multi-employer Plan, (e) the occurrence of an
event or condition which might reasonably be expected to constitute grounds for the termination of,
or the appointment of a trustee to administer, any Pension Plan or Multi-employer Plan, (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA or PBA or other applicable law of any jurisdiction, upon a
Loan Party or any ERISA Affiliate; or (g) failure to make or remit any contribution when due in
respect of any Plan.




          “Event of Default” has the meaning specified in Section 9.1.




          “Exchange Act” means the Securities Exchange Act of 1934, and regulations promulgated
thereunder.




A-9









 








          “Exchange Rate” means on any date, (i) with respect to Canadian dollars or any other
foreign currency in relation to Dollars, the spot rate as quoted by Bank of America, N.A. at its
noon spot rate at which Dollars are offered on such date for Canadian dollars or such other foreign
currency, as applicable, and (ii) with respect to Dollars in relation to Canadian dollars or any
other foreign currency, the spot rate as quoted by Bank of America, N.A. at its noon spot rate at
which Canadian dollars or such other foreign currency, as applicable, are offered on such date for
Dollars.




          “Excluded Taxes” means taxes imposed on or measured by net income or net profits and
franchise taxes of each Lender and the Agent, imposed pursuant to the laws of the jurisdiction
under the laws of which the Lender or Agent is organized, in which such person is resident for tax
purposes or in which the principal office or applicable lending office of such Lender or Agent is
located or in which it is otherwise deemed to be engaged in a trade or business for Tax purposes or
any subdivision thereof or therein, and any branch profits taxes imposed by the United States of
America or any similar tax imposed by any jurisdiction on the Lender or Agent.




          “Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended,
amended or replaced.




          “FDIC” means the Federal Deposit Insurance Corporation, and any Governmental Authority
succeeding to any of its principal functions.




          “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if
necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate
for such day shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to
Bank of America, N.A. on such day on such transactions as determined by the Agent.




          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or
any successor thereto.




          “Financial Statements” means, according to the context in which it is used, the
financial statements referred to in Sections 5.2 and 6.6 or any other financial
statements required to be given to the Agent and the Lenders pursuant to this Agreement.




          “Fiscal Quarter” means, with respect to the Loan Parties, a period ending on March 31,
June 30, September 30, or December 31 of each fiscal year.




          “Fiscal Year” means, with respect to the Loan Parties, their fiscal year for financial
accounting purposes.




A-10









 








          “Foreign Security Document” means a Guaranty, pledge, mortgage, personal property
mortgage, security agreement, assignment, security instrument, hypothecation, charge or other
agreement or document by which any Foreign Subsidiary grants or otherwise conveys to the Agent or
any Affiliate of the Agent for the benefit of the Agent, or any agent or trustee for or on behalf
of the Agent or any such Affiliate, any Guaranty, pledge, lien, security interest, hypothec,
mortgage, charge, collateral assignment or similar interest in property of such Foreign Subsidiary
as security for the Obligations or any portion thereof, and any and all renewals, extensions,
modifications, amendments or restatements thereof.




          “Foreign Subsidiary” means any direct or indirect Subsidiary of the Borrowers other
than the Domestic Subsidiaries, which shall include Applica Canada, Applica Asia and such other
Foreign Subsidiaries as are designated in Schedule 6.5.




          “FSCO” means the Financial Services Commission of Ontario and any Person succeeding to
the functions thereof and includes the Superintendent under such statute and any other Governmental
Authority (succeeding to the functions thereof) and established or appointed by the Financial
Services Commission of Ontario Act, 1997.




          “Funded Debt” of a Loan Party shall mean at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person to pay
the deferred price of property or services, except trade accounts payable arising in the ordinary
course of business, (iv) all obligations of such Person as lessee under Capitalized Leases, (v) all
obligations of such Person to reimburse any bank or other Person in respect of amounts payable
under a banker’s acceptance, and (vi) all obligations of such Person to reimburse any bank or other
Person in respect of amounts paid or to be paid under a letter of credit or similar instrument.




          “Funding Date” means the date on which a Borrowing occurs.




          “GAAP” means generally accepted accounting principles and practices set forth from
time to time in the opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority
within the U.S. accounting profession), which are applicable to the circumstances as of the date of
the report. When the term GAAP is used in the Agreement and the other Loan Documents in respect of
Financial Statements other than annual audited Financial Statements of the Consolidated Members,
such Financial Statements shall be subject to year-end adjustments, shall not be required to
include footnotes, shall not include changes in stockholders’ equity and shall not include certain
other information required by GAAP. However, all adjustments to such Financial Statements
(consisting of normal recurring accruals) that, in the opinion of management of the Loan Parties,
are necessary for a fair presentation of the financial statements have been included. All such
Financial Statements shall be consistent with historical practices of the Consolidated Members or
the Loan Parties, as applicable, and shall present fairly the financial position of the
Consolidated Members or the Loan Parties, as applicable, subject to and in accordance with the
foregoing.




          “General Intangible” shall have the meaning specified in the Security Agreement.




A-11









 








          “Goods” shall have the meaning specified in the Security Agreement.




          “Governmental Authority” means any nation or government; any state, county, province,
territory, municipality, region or other political subdivision thereof; any central bank (or
similar monetary or regulatory authority) thereof; any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to any government or court; any
corporation or other entity owned or controlled, through stock or capital ownership or otherwise,
by any of the foregoing and any department, agency, board, commission, tribunal, committee or
instrumentality of any of the foregoing.




          “Guarantor” means Applica Canada, Applica Asia, and any other Subsidiary or Affiliate
of a Borrower or other Person that hereafter executes and delivers to the Agent an agreement of
Guaranty in respect of all or any part of the Obligations.




          “Guaranty” means, with respect to any Person, all obligations of such Person which in
any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the
payment or performance of any indebtedness, dividend or other obligations of any other Person (the
“guaranteed obligations”), or assure or in effect assure the holder of the guaranteed obligations
against loss in respect thereof, including any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting
security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition; or (c) to lease
property or to purchase any debt or equity securities or other property or services.




          “Harbinger Merger” means the merger between APN Mergersub, Inc. and Applica, with
Applica being the surviving corporation, which occurred on January 23, 2007.




          “Hedge Agreements” means any and all transactions, agreements or documents now
existing or hereafter entered into, which provides for an interest rate, credit, commodity or
equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross
currency rate swap, currency option, or any combination of, or option with respect to, these or
similar transactions, for the purpose of hedging a Person’s exposure to fluctuations in interest or
exchange rates, loan, credit exchange, security or currency valuations or commodity prices.




          “Impermissible Qualification” means any qualification or exception to the opinion or
certification of any independent public accountant as to any financial statement of the Loan
Parties which (i) is of a “going concern” or similar nature, (ii) relates to the limited scope of
examination of matters relevant to such financial statements, or (iii) relates to the treatment or
classification of any item in such financial statement in which, a condition to its removal, would
require an adjustment to such item the effect of which would be to cause the occurrence of an Event
of Default.




          “Indemnified Liabilities” shall have the meaning given to it in Section
14.11(a).




          “Indemnified Taxes” means all Taxes other than Excluded Taxes.




          “Instruments” shall have the meaning specified in the Security Agreement.




A-12









 








          “Intellectual Property Notices” means any Notice of Grant of Security Interest in
patents, trademarks or copyrights executed by a Loan Party in favor of the Agent prior to the
Closing Date.




          “Interest Expense” shall mean, for any period, interest expense (including capitalized
interest) in respect of Indebtedness of Borrowers and the other Loan Parties as determined in
accordance with GAAP.




          “Interest Period” means, as to any LIBOR Loan, the period commencing on the Funding
Date of such Loan or on the Continuation/Conversion Date on which such Loan is converted into or
continued as a LIBOR Loan, and ending on the date one, two, three or six months thereafter as
selected by the Borrowers in their Notice of Borrowing, in the form attached hereto as Exhibit
B, or Notice of Continuation/Conversion, in the form attached hereto as Exhibit C,
provided that:





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




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




               (c) no Interest Period shall extend beyond the Stated Termination Date.



          “Interest Rate” means each or any of the interest rates, including the Default Rate,
set forth in Section 2.1.




          “Inventory” has the meaning specified in the Security Agreement.




          “Investment Property” has the meaning specified in the Security Agreement.




          “IRS” means the Internal Revenue Service and any Governmental Authority succeeding to
any of its principal functions under the Code.




          “ITA” means the Income Tax Act (Canada), as amended from time to time, and the
regulations made thereunder.




          “Latest Projections” means: (a) on the Closing Date and thereafter until the Agent
receives new projections pursuant to Section 5.2(h), the projections of the Reporting Loan
Parties’ balance sheets, income statements and cash flows, for the period commencing on December
31, 2007 and ending on June 30, 2012 and delivered to Agent prior to the Closing Date; and (b)
thereafter, the projections most recently received by Agent pursuant to Section 5.2(h).




A-13









 








          “Lender” and “Lenders” have the meanings specified in the introductory
paragraph hereof.




          “Lending Party” has the meaning specified in Section 14.17.




          “LIBOR Interest Payment Date” means, with respect to a LIBOR Loan, the Termination
Date and the last day of each Interest Period applicable to such Loan or, with respect to each
Interest Period of greater than three months in duration, the last day of the third month of such
Interest Period and the last day of such Interest Period.




          “LIBOR Rate” means, for any Interest Period, with respect to a LIBOR Loan, the rate of
interest per annum determined pursuant to the following formula:




          LIBOR Rate = Offshore Base Rate




               1.00 — Eurodollar Reserve Percentage



          Where,




          “Offshore Base Rate” means, for any Loan bearing interest at the LIBOR Rate the rate
per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the Offshore Base Rate shall be, for any Interest Period, the
rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean of all such rates. If for any reason none of the foregoing rates
is available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum
determined by Agent as the rate of interest at which dollar deposits in the approximate amount of
the LIBOR Loan comprising part of such Borrowing would be offered by the Bank of America, N.A.’s
London Branch to major banks in the offshore dollar market at their request at or about 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.




          “Eurodollar Reserve Percentage” means, for any day during any Interest Period, the
reserve percentage (expressed as a decimal, rounded upward, if necessary, to the next 1/100th of
1%) in effect on such day applicable to member banks under Regulation D or any successor regulation
issued from time to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve requirement)
applicable with respect to Eurocurrency funding (currently referred to as “Eurocurrency
liabilities” under Regulation D). The Offshore Rate for each outstanding LIBOR Loan shall be
adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.




          “LIBOR Loan” means, those portions of the Term Loan during any period which bear
interest based on the LIBOR Rate.




A-14









 








          “Lien” means (a) any interest in property securing an obligation owed to, or a claim
by, a Person other than the owner of the property, whether such interest is based on the common
law, statute, or contract, and including a security interest, security transfer, reservation of
title, hypothec, charge, claim, trust, deemed trust or lien arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for security purposes; and
(b) any contingent or other agreement to provide any of the foregoing.




          “Loan Account” means the loan account of the Borrowers, which account shall be
maintained by the Agent.




          “Loan Documents” means this Agreement, the Security Agreement, the Applica Asia
Documents, the Applica Canada Guaranty, any other Guaranty in favor of the Agent, the Applica
Canada Security Agreement, the Collateral Access Agreements, the Additional Debt Intercreditor
Agreement, the Blocked Account Agreements, the Pledge Agreement and any other agreements,
instruments, and documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement.




          “Loan Party” means each Borrower, each Guarantor, and each other Person that is at any
time from and after the Closing Date liable for the payment of the whole or any part of the
Obligations or that has granted in favor of the Agent a Lien upon any of any of such Person’s
assets to secure payment of any of the Obligations, and “Loan Parties” means any two or
more of the foregoing.




          “Loans” means, collectively, all loans and advances provided for in Article 1.




          “Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the Federal Reserve Board.




          “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties or condition (financial or otherwise) or
prospects of the Loan Parties taken as a whole, or the Collateral; (b) a material impairment of the
ability of any Loan Party to perform under any Loan Document to which it is a party; or (c) a
material adverse effect upon the legality, validity, binding effect or enforceability against any
Loan Party of any material Loan Document to which it is a party.




          “Material Contracts” means an agreement to which a Loan Party is a party (other than a
Loan Document) (i) which would be deemed to be a material contract as provided in Regulation S-K
promulgated by the SEC under the Securities Act of 1933 or (ii) for which breach, termination,
cancellation, non-performance or failure to renew could reasonably be expected to have a Material
Adverse Effect.




          “Maximum Rate” has the meaning specified in Section 2.3.




          “Merger” shall have the meaning given to it in the Recitals hereto.




A-15









 








          “Merger Agreement” means the Agreement and Plan of Merger dated as of October 1,
2007, among Parent, SFP Merger Sub, Inc. and APN.




          “Multi-employer Plan” means a “multi-employer plan” as defined in Section
4001(a)(3) of ERISA which is or was at any time during the current year or the immediately
preceding six (6) years contributed to by any Borrower or any ERISA Affiliate.




          “Net Proceeds” means, in respect of an Asset Disposition of by a Person, all proceeds
received by and/or payable to such Person in consideration thereof, net of (A) commissions and
other reasonable and customary transaction costs, fees and expenses properly attributable to such
transaction and payable by such Person in connection therewith (in each case, paid to
non-Affiliates), (B) transfer taxes, (C) amounts payable to holders of senior Liens (other than the
Agent’s Liens and to the extent such Liens constitute Permitted Liens), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in connection therewith.




          “New Subsidiary” has the meaning specified in Section 7.24.




          “Notice of Borrowing” has the meaning specified in Section 1.1(b).




          “Notice of Continuation/Conversion” has the meaning specified in Section
2.2(b).




          “Obligations” means the following, in each case whether now in existence or hereafter
incurred or arising and whether or not evidenced by any note or other document: (a) the principal
of, and interest (including, without limitation, interest accruing after the maturity of the Term
Loan and interest accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to any Loan Party, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding) and premium, if any,
on the Term Loan; (b) all liabilities and obligations under any indemnity given by any Loan Party
under any of the Loan Documents, including all of the Indemnified Liabilities; and (c) all other
advances, liabilities, obligations, covenants, duties, and debts owing by the Borrowers or any of
the other Loan Parties, or any of them, to the Agent and/or any Lender, arising under or pursuant
to this Agreement or any of the other Loan Documents, whether arising from an extension of credit,
opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether
direct or indirect, absolute or contingent, due or to become due, primary or secondary, as
principal or guarantor, including all principal, interest, charges, expenses, fees, attorneys’
fees, filing fees and any other sums chargeable to the Borrowers or other Loan Parties hereunder or
under any of the other Loan Documents (including fees, expenses and other charges accruing after
the maturity of the Agreement and fees, expenses and other charges accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding,
relating to any Loan Party, whether or not a claim for post-filing or post-petition fees, expenses
and other charges is allowed in such proceeding).




          “Operating Documents” means with respect to any corporation, limited liability
company, partnership, limited partnership, limited liability partnership or other legally
authorized




A-16









 







incorporated or unincorporated entity, the bylaws, operating agreement, partnership
agreement or limited agreement of such entity.




          “Organization Documents” means with respect to any corporation, limited liability
company, partnership, limited liability partnership or other legally authorized incorporated or
unincorporated entity, the articles of incorporation, certificate of incorporation, articles of
organization or certificate of limited partnership of such entity.




          “Other Taxes” means any present or future transfer, mortgage, stamp or documentary
taxes or any other excise or property taxes, charges, financial institutions duties, debits, taxes
or similar levies imposed by the United States or any other jurisdiction that arise from any
payment under this Agreement or any other Loan Document or from the execution, delivery,
enforcement or registration of, or otherwise with respect to, this Agreement or any other Loan
Document.




          “Participant” means any Person who shall have been granted the right by any Lender to
participate in the financing provided by such Lender under this Agreement, and who shall have
entered into a participation agreement in form and substance satisfactory to such Lender.




          “Payment Account” has the meaning specified in the Security Agreement.




          “PBA” means the Pension Benefits Act of Ontario and all regulations thereunder as
amended from time to time, and any successor legislation or other applicable legislation governing
Canadian Plans.




          “PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to the functions thereof.




          “Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA or the
applicable laws of any other jurisdiction including the PBA) subject to Title IV of ERISA or the
applicable laws of any other jurisdiction including the PBA which any Loan Party or any ERISA
Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or has made contributions at any time during the immediately preceding five (5) plan
years.




          “Permitted Acquisition” means an Acquisition effected with the consent and approval of
the board of directors or other applicable governing body of the Person being acquired (“Target”),
and with the duly obtained approval of such shareholders or other holders of equity interests as
such Target may be required to obtain, so long as (i) immediately prior to and after giving effect
to the consummation of such Acquisition, no Event of Default has or would exist; (ii) with respect
to an Acquisition where the Cost of Acquisition exceeds $10,000,000, substantially all of the sales
and operating profits generated by the Target (or its assets) so acquired or invested are derived
from a line or lines of business that are consistent with the Core Business; (iii) pro forma
historical financial statements as of the end of the most recent fiscal quarter for the trailing
twelve-month period giving effect to such Acquisition are delivered to Agent not less than ten (10)
Business Days prior to the consummation of such Acquisition,




A-17









 







together with a certificate of an
Responsible Officer stating that no Default or Event of Default exists before or after giving
effect to such Acquisition; and (iv) if the Target will become a Loan Party in connection with such
Acquisition, the Loan Parties shall cause the Target to become a
Borrower hereunder and grant to the Agent, for the benefit of the Agent and the Lenders, a
perfected, first priority Lien on substantially all of the assets of the Target of a type that
would constitute Collateral under the Loan Documents with respect to which Agent has a first
priority Lien under the Additional Debt Intercreditor Agreement, all pursuant to documentation in
form and substance acceptable to the Agent in its discretion.




          “Permitted Distribution” means (a) a Distribution by a Loan Party to another Loan
Party, (b) an Upstream Payment, (c) the purchase of Capital Stock of Parent by any of the Borrowers
at any time during the period commencing on the Closing Date and ending on June 30, 2008, with all
Distributions to facilitate such purchases not to exceed $3,000,000 in the aggregate,
provided that, at the time of and after giving pro forma effect to any such Distribution
pursuant to this clause (c), each of the Permitted Distribution Conditions is satisfied. For the
purposes of computing the Loan Parties’ compliance with the $3,000,000 cap in clause (c) of the
foregoing definition, there shall be no duplication of the amount of any Distribution made pursuant
to clauses (a) or (b) of the foregoing definition that is then used by the recipient of such
Distribution to effect a purchase of Capital Stock as permitted in clause (c) of the foregoing
definition.




          “Permitted Distribution Conditions” means (a) no Default or Event of Default exists,
(b) the Loan Party making any Distribution is Solvent, and (c) such Distribution does not violate
any Requirement of Law.




          “Permitted Intercompany Advance” shall mean any loan or other advance of money whether
in the form of actual funds advanced or as a credit against or reduction of amounts owing by a Loan
Party to any Subsidiary or Affiliate of a Loan Party that is not a Loan Party, provided
that no Default or Event of Default has occurred and is continuing at the time of, and no Default
or Event of Default would exist after giving pro forma effect to, such loan or advance.




          “Permitted Liens” means:




          (a) Liens for Taxes, fees, assessments or other charges of a Governmental Authority (i) which
are not (A) delinquent, (B) statutory Liens for taxes, fees, assessments or other charges in an
amount not to exceed $500,000 or (ii) the payment of which is being Properly Contested;




          (b) the Agent’s Liens;




          (c) Liens incurred or deposits made in the ordinary course of business in connection with, or
to secure payment of, obligations under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of Debt) or to secure indemnity, performance or other similar bonds for the
performance of bids, tenders or contracts (other than for the repayment of Debt) or to secure
statutory obligations (other than Liens arising under ERISA or the PBA or Environmental Liens) or
other similar obligations or arising as a result of




A-18









 







progress payments under government contracts or
surety or appeal bonds, or to secure indemnity, performance or other similar bonds;




          (d) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons, provided that if any such Lien arises from the nonpayment
of such claims or demands when due, such claims or demands do not exceed $200,000 in the aggregate
or are being Properly Contested;




          (e) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and other similar title exceptions or
encumbrances affecting any Real Estate; provided that they could not reasonably be expected
to have a Material Adverse Effect;




          (f) Liens arising from judgments and attachments in connection with court proceedings provided
that the attachment or enforcement of such Liens would not result in an Event of Default hereunder
and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have
been set aside and no material Property is subject to a material risk of loss or forfeiture and the
claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary
deductibles) and a stay of execution pending appeal or proceeding for review is in effect;




          (g) Liens in respect of purchase-money Debt permitted to be incurred pursuant to Section
7.13(c) hereof in connection with the acquisition of Equipment; provided that (a) the original
principal balance of the Debt secured by such Lien constitutes not more than 100% of the purchase
price of the Equipment acquired and (b) such Lien extends only to the Equipment acquired with the
proceeds of the Debt so secured;




          (h) Liens on real property securing Debt permitted under Section 7.13;




          (i) Liens, if any, which are described in Schedule A-1 on the Closing Date and Liens
resulting from the refinancing of the related Debt, provided that such refinancing is on the same
or substantially similar terms, the Debt secured thereby shall not be increased, and the Liens
shall not cover any additional property of the any Loan Party; and




          (j) Liens to secure the Additional Debt, to the extent permitted pursuant to Section
7.13(i), subject to the Additional Debt Intercreditor Agreement.




          “Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, unincorporated organization, association, corporation, Governmental
Authority, or any other entity.




          “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA or the
applicable laws of any other jurisdiction) which any Borrower or any other Loan Party sponsors or
maintains or to which any Borrower or any other Loan Party makes, is making, or is obligated to
make contributions and includes any Pension Plan.





A-19









 








          “Pledge Agreement” means the Second Amended and Restated Stock Pledge Agreement, dated
as of the date hereof, among the Agent and certain Loan Parties party thereto.




          “PPSA” means, collectively, the Personal Property Security Acts of the Provinces of
Ontario and Nova Scotia (or any other applicable Canadian province or territory), and all
regulations thereunder, as amended from time to time, and any successor legislation.




          “Proceeds of Crime Act” means the Proceeds of Crime (Money Laundering) and Terrorist
Financing Act (Canada) and the regulations promulgated thereunder.




          “Properly Contested” means, with respect to any obligation of a Loan Party, (a) the
obligation is subject to a bona fide dispute regarding amount or the Loan Party’s liability to pay,
(b) the obligation is being properly contested in good faith by appropriate proceedings promptly
instituted and diligently pursued, (c) appropriate reserves have been established in accordance
with GAAP, (d) non-payment could not have a Material Adverse Effect, nor result in a material
forfeiture of any assets of the Loan Party, (e) no Lien (other than a Permitted Lien) is imposed on
assets of the Loan Party, unless bonded and stayed to the satisfaction of Agent, (f) if the
obligation results from entry of a judgment or other order, such judgment or order is stayed
pending appeal or other judicial review and (g) if such contest is abandoned, settled or determined
adversely (in whole or in part) to such Loan Party, such Loan Party pays the obligation (and all
penalties, interest and other amounts due in connection therewith) within 30 days following such
abandonment, settlement or adverse determination.




          “Proposed Change” has the meaning specified in Section 11.1(b).




          “Proprietary Rights” means, for each Loan Party, such Loan Party’s now owned and
hereafter arising or acquired licenses, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to any of the
foregoing, and all other rights under any of the foregoing, all extensions, renewals, reissues,
divisions, continuations, and continuations-in-part of any of the foregoing.




          “Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a
percentage), the numerator of which is such Lender’s Commitment and the denominator of which is the
sum of all of the Lenders’ Commitments, or if no Commitments are outstanding, a fraction (expressed
as a percentage), the numerator of which is the amount of Obligations owed to such Lender and the
denominator of which is the aggregate amount of the Obligations owed to the Lenders.




          “Real Estate” means, with respect to any Person, all of such Person’s now or hereafter
owned or leased estates in real property, including, without limitation, all fees, leaseholds and
future interests, together with all of such Person’s now or hereafter owned or leased interests in
the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.




          “Refinancing” has the meaning specified in Section 7.28.





A-20











 





          “Register” has the meaning specified in Section 12.21.




          “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve
System (or any successor body) as the same may be amended or supplemented from time to time.




          “Release” means a release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor
environment or into or out of any Real Estate or other property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or Real Estate or other
property.




          “Reportable Event” means, any of the events set forth in Section 4043 of ERISA or the
regulations thereunder, other than any such event for which the 30-day notice requirement under
ERISA has been waived in regulations issued by the PBGC.




          “Reporting Loan Parties” means all of the Loan Parties other than Applica Americas and
Applica Asia.




          “Representatives” has the meaning specified in Section 14.16.




          “Required Lenders” means at any time Lenders whose Pro Rata Shares aggregate more than
50%.




          “Requirement of Law” means, as to any Person, any law (statutory or common), treaty,
rule or regulation or determination of an arbitrator declared final and binding by a Governmental
Authority or of a Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.




          “Responsible Officer” means, with respect to any Loan Party, the chief executive
officer, the president, the chief financial officer, the secretary, the treasurer or assistant
treasurer, the controller or any senior vice president or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with financial covenants and
the preparation of Borrowing Base Certificates, the chief financial officer or the treasurer of the
Borrower Agent, or any other officer having substantially the same authority and responsibility.




          “Restricted Investment” means, with respect to any Loan Party, any acquisition of
property by such Loan Party in exchange for cash or other property, whether in the form of an
acquisition of stock, debt, or other indebtedness or obligation, or the purchase or acquisition of
any other property, or a loan, advance, capital contribution, or subscription, except the
following: (a) acquisitions of Equipment to be used in the business of such Loan Party; (b)
acquisitions of Inventory in the ordinary course of business of such Loan Party; (c) acquisitions
of current assets acquired in the ordinary course of business of the Loan Parties; (d) direct
obligations of the United States of America, or any agency thereof, or obligations guaranteed by
the United States of America, provided that such obligations mature within one year from
the date of acquisition thereof; (e) acquisitions of certificates of deposit maturing within one
year from the date of acquisition, bankers’ acceptances, Eurodollar bank deposits, or overnight
bank deposits, in each




A-21









 







case issued by, created by, or with a bank or trust company organized under the laws of the
United States of America or any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of “A2” or better by Standard &
Poor’s Corporation or “P2” or better by Moody’s Investors Service, Inc. and maturing not more than
90 days from the date of creation thereof; (g) Hedge Agreements; (h) investments, loans and
advances existing as of the date hereof and as set forth in Schedule A -2; (i) Accounts
arising and trade credit granted in the ordinary course of business and any securities received in
satisfaction or partial satisfaction thereof in connection with accounts of financially troubled
Persons to the extent reasonably necessary in order to prevent or limit loss; (j) Permitted
Intercompany Advances to the extent funded in a manner consistent with Section 7.29; (k)
Permitted Acquisitions; (l) for so long as no Event of Default exists and the Borrowers have
Availability of not less than $15,000,000 after giving effect thereto, other loans, advances and
investments in an aggregate principal amount at any time outstanding not to exceed $10,000,000; (m)
shares of mutual funds, the shares of which mutual funds are at all times rated “AAA” by Standard &
Poor’s; (n) cash or other cash equivalents owned by the Loan Parties and in the possession or
control of the Agent or an Affiliate of Agent and, except during a Springing Period, invested in
short term vehicles such as repurchase agreements, overnight bank deposits, bankers’ acceptances or
other investments as may be mutually acceptable to the Borrowers and the Agent; and (o) obligations
of any corporation organized under the laws of any state of the United States of America or under
the laws of any other nation, payable in the United States of America, maturing not later than 180
days following the date of issuance thereof and rated in an investment grade category by Standard &
Poor’s and Moody’s; provided, however, that with respect to clauses (d) — (h) and
clauses (m) — (o), such investments are not subject to rights of offset (other than nominal
amounts for brokerage fees and other, similar charges of financial intermediaries) in favor of any
Person other than the Agent or a Lender.




          “Security Agreement” means the Second Amended and Restated Security Agreement dated as
of the Closing Date among the Loan Parties and Agent, for the benefit of the Agent and the Lenders.




          “Solvent” means, when used with respect to any Person, that at the time of
determination:




          (a) the assets of such Person, at a fair valuation, are in excess of the total amount of its
debts (including contingent liabilities); and




          (b) the present fair saleable value of its assets is greater than its liability on its
existing debts as such debts become absolute and matured; and




          (c) it is then able and expects to be able to pay its debts (including contingent debts and
other commitments) as they mature; and




          (d) it has capital sufficient to carry on its business as conducted and as proposed to be
conducted.




          For purposes of determining whether a Person is Solvent, the amount of any contingent
liability shall be computed as the amount that, in light of all the facts and




A-22









 







circumstances existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.




          “Stated Termination Date” means December 31, 2012.




          “Subordinated Debt” means Debt of a Loan Party that is expressly subordinate and junior in
right of payment to the full and final payment of the Obligations on terms (including maturity
date, interest rate, fees, repayment, covenants and subordination) satisfactory to Agent.




          “Subsidiary” of a Person, with respect to any Person (the “subject Person”), means any
corporation, association, partnership, limited liability company, joint venture or other business
entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the
case of Persons other than corporations), is owned or controlled directly or indirectly by the
subject Person, or one or more of the Subsidiaries of the subject Person, or a combination thereof.
Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a
Subsidiary of the Borrower.




          “Supermajority Lenders” means, at any time, Lenders whose Pro Rata Shares aggregate
more than 66-2/3%.




          “Supporting Obligations” shall have the meaning specified in the Security Agreement.




          “Taxes” means any and all present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature and all liabilities with
respect thereto, including any present or future income, receipts, excise, property, sales, use,
transfer, goods and services, license, payroll, withholding, social security, franchise, stamp or
documentary taxes or similar levies imposed or levied at any time by any Governmental Authority,
but excluding, in the case of each Lender and the Agent, Excluded Taxes.




          “Term Loan” has the meaning specified in Section 1.1(a).




          “Termination Date” means the earliest to occur of (i) the Stated Termination Date,
(ii) the date of termination by the Required Lenders pursuant to Section 9.2, and (iii) the
date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this
Agreement.




          “Termination Event” means (a) the whole or partial withdrawal of any Borrower or any
Subsidiary from a Pension Plan or Multi-employer Plan during a plan year; or (b) the filing of a
notice of intent to terminate in whole or in part a Pension Plan or Multi-employer Plan or the
treatment of a Pension Plan or Multi-employer Plan amendment as a termination or partial
termination; or (c) the institution of proceedings by any Governmental Authority to terminate in
whole or in part or have a trustee appointed to administer a Pension Plan or Multi-employer Plan;
or (d) any other event or condition which might constitute grounds for the termination of, winding
up or partial termination or winding up or the appointment of trustee to administer any Pension
Plan or Multi-employer Plan.




A-23









 








          “Transaction” means the Merger, the Equity Contribution, the entering into and funding
of the credit facility under this Agreement, the issuance and sale or provision of the Additional
Debt and all related transactions.




          “UCC” has the meaning specified in the Security Agreement.




          “UK Credit Facility” means the credit facility among Salton Europe Limited, Burdale
Financial Limited, as agent, and certain other lenders named therein.




          “Unfinanced Capital Expenditures” means Capital Expenditures net of purchase money
Debt incurred and Capital Leases entered into in connection therewith.




          “Unfunded Pension Liability” means the sum of (1) the amount by which a Pension Plan
(other than a Multi-employer Plan) fails to satisfy the minimum funding standard pursuant to
Section 412 of the Code for the applicable plan year, exclusive of any waived funding deficiency,
as that term is defined in Section 412(d)(3) of the Code, and (2) with respect to any Pension Plan
regulated or governed by the PBA or applicable laws of any jurisdiction, any unfunded liability or
solvency deficiency as determined under the PBA or other applicable laws.




          “United States” means the United States of America.




          “Upstream Payment” means a Distribution by a Subsidiary of a Loan Party that is not a
Loan Party to such Loan Party.




          “USA PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272
(2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.




          “Wholly-Owned Subsidiary” when used to determine the relationship of a Subsidiary to a
Person, means a Subsidiary all of the issued and outstanding Capital Stock (other than directors’
qualifying shares) of which shall at the time be owned by such Person or one or more of such
Person’s Wholly-Owned Subsidiaries or by such Person and one or more of such Person’s Wholly-Owned
Subsidiaries.




          (2) Accounting Terms. Any accounting term used in the Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and
all financial computations in the Agreement shall be computed, unless otherwise specifically
provided therein, in accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.




          (3) Interpretive Provisions. The meanings of defined terms are equally applicable to
the singular and plural forms of the defined terms.




          (a) The words “hereof,” “herein,” “hereunder” and similar words refer to the Agreement as a
whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule and
Exhibit references are to the Agreement unless otherwise specified.




A-24









 








          (b) The term “documents” includes any and all instruments, documents, agreements,
certificates, indentures, notices and other writings, however evidenced.




          (c) The term “including” is not limiting and means “including without limitation.”




          (d) In the computation of periods of time from a specified date to a later specified date, the
word “from” means “from and including,” the words “to” and “until” each mean “to but excluding” and
the word “through” means “to and including.”




          (e) The word “or” is not exclusive.




          (f) Unless otherwise expressly provided herein, (i) references to agreements (including any of
the Loan Documents) and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto and restatements thereof, but only to the extent such
amendments, other modifications or restatements are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.




          (g) The captions and headings of the Agreement and other Loan Documents are for convenience of
reference only and shall not affect the interpretation of the Agreement.




          (h) The Agreement and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters. All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.




          (i) For purposes of Section 9.1, a breach of the financial covenant contained in
Section 7.27 shall be deemed to have occurred as of any date of determination thereof by
Agent or as of the last day of any specified measuring period, regardless of when the Financial
Statements reflecting such breach are delivered to Agent.




          (j) The Agreement and the other Loan Documents are the result of negotiations among and have
been reviewed by counsel to the Agent, the Borrowers and the other parties, and are the products of
all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely
because of the Agent’s or Lenders’ involvement in their preparation.




          (k) As used in this Agreement, and the other Loan Documents, “knowledge” of the Borrowers
shall mean the actual knowledge (after due inquiry) of any Responsible Officer.




A-25









 








ANNEX B




COMMITMENTS




	 	 	 	 	 	 	 	 	 
	Lender	 	Commitment	 	Pro Rata Share(5 decimals)
	Harbinger Capital Partners
Master Fund I, Ltd.
	 	$	73,333,700	 	 	 	66.66667	%
	Harbinger Capital Partners
Special Situations Fund, L.P.
	 	$	36,666,300	 	 	 	33.33333	%






A-26









 






EXHIBIT B




NOTICE OF BORROWING




Date: December __, 2007





			
	To:	 	Harbinger Capital Partners Master Fund I, Ltd., as Administrative
Agent and Collateral Agent (collectively, the “Agent”) for the
Lenders who are parties to the Term Loan Agreement dated as of
December ___, 2007 (the “Loan Agreement”), among Salton, Inc., and
certain of its affiliates, certain Lenders which are signatories
thereto, the Agent and certain other entities





Ladies and Gentlemen:




               The undersigned, Applica Consumer Products, Inc. (the “Borrower Agent”), refers to the Term
Loan Agreement, the terms defined therein being used herein as therein defined, and hereby gives
you notice irrevocably of the Borrowing specified below:




               (a) The Business Day of the proposed Borrowing is December ___, 2007.




               (b) The aggregate amount of the proposed Borrowing is $[               ].




               (c) The Borrowing is to be comprised of $           of Base Rate and $           of LIBOR Loans.




               (d) The duration of the Interest Period for the LIBOR Loans, if any, included in the Borrowing
shall be ___ months.




               The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the date of the proposed Borrowing, before and after giving effect thereto and
to the application of the proceeds therefrom:




               (a) the representations and warranties contained in this Agreement and the other Loan
Documents are correct in all material respects on and as of the date of such extension of credit as
though made on and as of such date, other than any such representation or warranty which relates to
a specified prior date and except to the extent the Agent and the Lenders have been notified in
writing by the Loan Parties that any representation or warranty is not correct and the Required
Lenders have explicitly waived in writing compliance with such representation or warranty; and




               (b) No Default or Event of Default has occurred and is continuing, or would result from such
proposed Borrowing.




	 	 	 	 	 
	 	APPLICA CONSUMER PRODUCTS, INC., as Borrower Agent

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 



B-1









 






	 	 	 	 	 



EXHIBIT C




NOTICE OF CONTINUATION/CONVERSION




Date:                          , 200_





			
	To:	 	Harbinger Capital Partners Master Fund I, Ltd., as Agent for the
Lenders who are parties to the Term Loan Agreement dated as of
December ___, 2007 (the “Loan Agreement”), among Salton, Inc., and
certain of its affiliates, certain Lenders which are signatories
thereto, as Agent and certain other entities





Ladies and Gentlemen:




               The undersigned, Applica Consumer Products, Inc. (the “Borrower Agent”), refers to the Loan
Agreement, the terms defined therein being used herein as therein defined, and hereby gives you
notice irrevocably of the [conversion] [continuation] of the Loans specified herein, that:




               (a) The Continuation/Conversion Date is                          




               (b) The aggregate amount of the Loans to be [converted] [continued] is $_________.




               (c) The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base Rate] Loans.




               (d) The duration of the Interest Period for the LIBOR Loans included in the [conversion]
[continuation] shall be            months.




               The undersigned hereby certifies that the following statements are true on the date hereof,
and will be true on the proposed Continuation/Conversion Date, before and after giving effect
thereto and to the application of the proceeds therefrom:




               (a) the representations and warranties contained in this Agreement and the other Loan
Documents are correct in all material respects on and as of the date of such extension of credit as
though made on and as of such date, other than any such representation or warranty which relates to
a specified prior date and except to the extent the Agent and the Lenders have been notified in
writing by the Loan Parties that any representation or warranty is not correct and the Required
Lenders have explicitly waived in writing compliance with such representation or warranty; and




               (b) No Default or Event of Default has occurred and is continuing, or would result from such
proposed [conversion] [continuation].




	 	 	 	 	 
	 	APPLICA CONSUMER PRODUCTS, INC., as Borrower Agent

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 



C-1









 






	 	 	 	 	 



EXHIBIT D




[FORM OF] ASSIGNMENT AND ACCEPTANCE AGREEMENT




          This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of
_________, 20___ is made between _________ (the “Assignor”) and
_________ (the “Assignee”).




RECITALS




          WHEREAS, the Assignor is party to that certain Term Loan Agreement dated as of December ___,
2007 (as amended, amended and restated, modified, supplemented or renewed, the “Loan Agreement”)
among Salton, Inc., a Delaware corporation, and certain of its affiliates (the “Borrowers”),
certain of its other subsidiaries and affiliates, the several financial institutions from time to
time party thereto (including the Assignor, the “Lenders”), and Harbinger Capital Partners Master
Fund I, Ltd., as agent for the Lenders (the “Agent”). Any terms defined in the Loan Agreement and
not defined in this Assignment and Acceptance are used herein as defined in the Loan Agreement;




          WHEREAS, as provided under the Loan Agreement, the Assignor has made a Term Loan (the “Term
Loan”) to the Borrowers in the original aggregate principal amount of $_________; and




          WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and
obligations of the Assignor under the Loan Agreement in respect of its Term Loan in an amount equal
to $_________ (the “Assigned Amount”) on the terms and subject to the conditions set forth herein
and the Assignee wishes to accept assignment of such rights and to assume such obligations from the
Assignor on such terms and subject to such conditions;




          NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
the parties hereto agree as follows:




          (a) Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor
hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases,
assumes and undertakes from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance) __% (the “Assignee’s Percentage Share”) of
(A) the Commitment, the Committed Loans and the L/C Obligations of the Assignor and (B) all related
rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection
with the Credit Agreement and the Loan Documents.




          (b) With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee
shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to
perform all of the obligations of a Lender under the Credit Agreement, including the requirements
concerning confidentiality and the payment of indemnification, with a Commitment in an amount equal
to the Assigned Amount. The Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of the Credit Agreement are required to be performed by
it as a Lender. It is the intent of the parties hereto that the Commitment of the Assignor shall,
as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor
shall relinquish its rights and be released from its obligations under the Credit Agreement to the
extent such obligations have been




D-1









 







assumed by the Assignee; provided, however, the Assignor shall not relinquish
its rights under Sections ___ and ___ of the Credit Agreement to the extent such rights relate to the
time prior to the Effective Date.




          (c) After giving effect to the assignment and assumption set forth herein, on the Effective
Date the Assignee’s Commitment will be $_________.




          (d) After giving effect to the assignment and assumption set forth herein, on the Effective
Date the Assignor’s Commitment will be $_________.





     1. Payments.



          (a) As consideration for the sale, assignment and transfer contemplated in Section 1 hereof,
the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an
amount equal to $_________, representing the Assignee’s Pro Rata Share of the principal amount of
all Committed Loans.




          (b) The Assignee further agrees to pay to the Agent a processing fee in the amount specified
in Section 11.2(a) of the Credit Agreement.




     2. Reallocation of Payments.



          Any interest, fees and other payments accrued to the Effective Date with respect to the
Commitment, and Committed Loans and L/C Obligations shall be for the account of the Assignor. Any
interest, fees and other payments accrued on and after the Effective Date with respect to the
Assigned Amount shall be for the account of the Assignee. Each of the Assignor and the Assignee
agrees that it will hold in trust for the other party any interest, fees and other amounts which it
may receive to which the other party is entitled pursuant to the preceding sentence and pay to the
other party any such amounts which it may receive promptly upon receipt.




     3. Independent Credit Decision.



          The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the
Schedules and Exhibits thereto, together with copies of the most recent financial statements of the
Borrowers, and such other documents and information as it has deemed appropriate to make its own
credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees
that it will, independently and without reliance upon the Assignor, the Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the time, continue to
make its own credit and legal decisions in taking or not taking action under the Credit Agreement.




     4. Effective Date; Notices.



          (a) As between the Assignor and the Assignee, the effective date for this Assignment and
Acceptance shall be _________, 200__ (the “Effective Date”); provided that the
following conditions precedent have been satisfied on or before the Effective Date:





          (i) this Assignment and Acceptance shall be executed and delivered by the Assignor and
the Assignee;



D-2









 






          [(ii) the consent of the Agent and the Borrower Agent required for an effective
assignment of the Assigned Amount by the Assignor to the Assignee shall have been duly
obtained and shall be in full force and effect as of the Effective Date;]




          (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this
Assignment and Acceptance;




          [(iv) the Assignee shall have complied with Section 11.2 of the Credit
Agreement (if applicable);]




          (v) the processing fee referred to in Section 2(b) hereof and in Section
11.2(a) of the Credit Agreement shall have been paid to the Agent; and



          (b) Promptly following the execution of this Assignment and Acceptance, the Assignor shall
deliver to the Borrowers and the Agent for acknowledgment by the Agent, a Notice of Assignment in
the form attached hereto as Schedule 1.




     5. [Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]



          (a) The Assignee hereby appoints and authorizes the Assignor to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by
the Lenders pursuant to the terms of the Credit Agreement.




          (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as
Agent under the Credit Agreement.]




          The Assignee (a) represents and warrants to the Lender, the Agent and the Borrowers that under
applicable law and treaties no tax will be required to be withheld by the Lender with respect to
any payments to be made to the Assignee hereunder, (b) agrees to furnish (if it is organized under
the laws of any jurisdiction other than the United States or any State thereof) to the Agent and
the Borrowers prior to the time that the Agent or the Borrowers are required to make any payment of
principal, interest or fees hereunder, duplicate executed originals of either U.S. Internal Revenue
Service Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (wherein the Assignee claims
entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide new Forms W-8ECI or
W-8BEN upon the expiration of any previously delivered form or comparable statements in accordance
with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the
Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.




D-3









 








     6. Representations and Warranties.



          (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any Lien or
other adverse claim; (ii) it is duly organized and existing and it has the full power and authority
to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance
and any other documents required or permitted to be executed or delivered by it in connection with
this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than any already given or
obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and
apart from any agreements or undertakings or filings required by the Credit Agreement, no further
action by, or notice to, or filing with, any Person is required of it for such execution, delivery
or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the
Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy,
insolvency, moratorium, reorganization and other laws of general application relating to or
affecting creditors’ rights and to general equitable principles.




          (b) The Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in connection with the Credit
Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant thereto. The
Assignor makes no representation or warranty in connection with, and assumes no responsibility with
respect to, the solvency, financial condition or statements of the Borrowers, or the performance or
observance by the Borrowers or any of the Loan Parties, of any of their respective obligations
under the Credit Agreement or any other instrument or document furnished in connection therewith.




          (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has
full power and authority to take, and has taken, all action necessary to execute and deliver this
Assignment and Acceptance and any other documents required or permitted to be executed or delivered
by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder;
(ii) no notices to, or consents, authorizations or approvals of, any Person are required (other
than any already given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the
Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it
for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly
executed and delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to
enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general
application relating to or affecting creditors’ rights and to general equitable principles; [and
(iv) it is an Eligible Assignee.]




     7. Further Assurances.



     The Assignor and the Assignee each hereby agree to execute and deliver such other instruments,
and take such other action, as either party may reasonably request in connection with the
transactions contemplated by this Assignment and Acceptance, including the delivery of any notices
or other documents or instruments to the Borrowers or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.



D-4









 





     8. Miscellaneous.



          Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing
and signed by the parties hereto. No failure or delay by either party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach
of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with
respect to any other or further breach thereof.




          All payments made hereunder shall be made without any set-off or counterclaim.




          The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection
with the negotiation, preparation, execution and performance of this Assignment and Acceptance.




          This Assignment and Acceptance may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same instrument.




          THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK. The Assignor and the Assignee each irrevocably submits to the
non-exclusive jurisdiction of any State or Federal court sitting in New York over any suit, action
or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees
that all claims in respect of such action or proceeding may be heard and determined in such New
York State or Federal court. Each party to this Assignment and Acceptance hereby irrevocably
waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding.




          THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT
OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED
DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL
OR WRITTEN).




[Signature Page Follows]




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          IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance
to be executed and delivered by their duly authorized officers as of the date first above written.




	 	 	 	 	 
	 	[ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	Address: 	 	 
	 
	 
	 	[ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	Address: 	 	 



D-6









 






	 	 	 	 	 



SCHEDULE 1




to




Assignment and Acceptance




Effective Date of Assignment:




Legal Name of Assignor:




Legal Name of Assignee:




Assignee’s Address for Notices:




Percentage Assigned of Term Loan:




D-7









 





NOTICE OF ASSIGNMENT AND ACCEPTANCE




_______________, 200_




Harbinger Capital Partners Master Fund I, Ltd.

c/o Harbinger Capital Partners Offshore Manager, LLC

One Riverchase Parkway South

Birmingham, AL 35244

Attention: John McCullough

Telecopy No.: (205) 987-5505




Attn:

Applica Consumer Products, Inc., as Borrower Agent

3633 Flamingo Road

Miramar, Florida 33027

Attention: Treasurer

Telecopy No.: 954-883-1694



Re: Applica Consumer Products, Inc., et al.




Ladies and Gentlemen:




          We refer to the Term Loan Agreement dated as of December ___, 2007 (as amended, restated,
modified, supplemented or renewed from time to time the “Loan Agreement”) among Applica
Incorporated (the “Borrower Agent”) and certain of its affiliates (collectively with the Borrower
Agent, the “Loan Parties”), the Lenders referred to therein and Harbinger Capital Partners Master
Fund I, Ltd. as agent for the Lenders (the “Agent”). Terms defined in the Loan Agreement are used
herein as therein defined.




          1. We hereby give you notice of, and request the consent of the Agent [and Borrower Agent] to,
the assignment by _____________________ (the “Assignor”) to _____________________ (the “Assignee”) of ___%
of the right, title and interest of the Assignor in and to the Term Loan made by Assignor under the
Loan Agreement pursuant to the Assignment and Acceptance Agreement attached hereto (the “Assignment
and Acceptance”).




          2. The Assignee agrees that, upon receiving the consent of the Agent [and Borrower Agent] to
such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to
the same extent as if the Assignee were the Lender originally holding such interest in the Credit
Agreement.




          3. The following administrative details apply to the Assignee:




          (A) Notice Address:




          Assignee name:




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          Address:




          Attention:




          Telephone: (___)




          Telecopier: (___)




          Telex (Answerback):




          (B) Payment Instructions:




          Account No.:




          At:




          Reference:




          Attention:




          4. The Agent is entitled to rely upon the representations, warranties and covenants of each of
the Assignor and Assignee contained in the Assignment and Acceptance.




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          IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and
Acceptance to be executed by their respective duly authorized officials, officers or agents as of
the date first above mentioned.




	 	 	 	 	 
	 	Very truly yours,



[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 
	 	[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 	 
	 	 	 	 
	 


	 	 	 	 	 
	ACKNOWLEDGED AND ASSIGNMENT

CONSENTED TO:




Harbinger Capital Partners Master Fund I, Ltd.,

as Agent

 	 	 
	By:  	 	 	 
	 	Title: 	 	 	 
	 
	Applica Consumer Products, Inc., as Borrower Agent
 

	By:  	 	 	 




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