EX-10.3 Second Amended and Restated Stock Pledge A



 





Exhibit 10.3




SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT




     THIS SECOND AMENDED AND RESTATED STOCK PLEDGE AGREEMENT (this “Agreement”) is made and entered
into as of December 28, 2007, between the Pledgors identified below (individually referred to as a
“Pledgor” and collectively as the “Pledgors”), and BANK OF AMERICA, N.A., a national banking
association, in its capacity as collateral and administrative agent (in such capacity, together
with its successors in such capacity, the “Agent”) for each of the financial institutions (the
“Lenders” and collectively with the Agent, the “Secured Parties”) now or hereafter party to the
Credit Agreement (as defined below).



Recitals:




     Agent, Lenders, Applica Incorporated, a Florida corporation (“Applica”), Salton, Inc.,
a Delaware corporation (“Parent”), APN Holding Company, Inc., a Delaware corporation and
successor-by-merger to SFP Merger Sub, Inc., a Delaware corporation (“APN”), Applica Consumer
Products, Inc., a Florida corporation (“ACP”), Applica Americas, Inc., a Delaware
corporation (“Applica Americas”), HP Delaware, Inc., a Delaware corporation (“HP
Delaware”), 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., 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”; Applica, Parent,
APN, ACP, Applica Americas, HP Delware, HPG, Applica Mexico, Sonex, HCD, SHI, Icebox, Toastmaster,
Family Products, One Coffee and STL being hereinafter referred to individually as a “Borrower” and
collectively as “Borrowers”), and certain other entities are parties to a Third Amended and
Restated Credit Agreement dated as of December 28, 2007 (as at any time amended, modified, restated
renewed or extended, the “Credit Agreement”), which amends and restates a certain Second Amended
and Restated Credit Agreement dated as of December 23, 2005 among certain of the parties (as
amended, restated, modified or supplemented prior to the date hereof the “Prior Credit Agreement”).
Pursuant to the Credit Agreement, Lenders have agreed to make loans and other extensions of credit
to or for the benefit of Borrowers on the terms and subject to all of the conditions set forth in
the Credit Agreement. Capitalized terms used in these Recitals and elsewhere in this Agreement,
unless otherwise defined, shall have the meanings ascribed to them in the Credit Agreement.



     Pursuant to an Amended and Restated Stock Pledge Agreement dated as of December 23, 2005 (as
amended restated, modified or supplemented prior to the date hereof, the “Existing Stock Pledge”),
certain Pledgors pledged certain capital stock and equity interests to Agent, for the benefit of
Secured Parties, to secure the payment of all liabilities and obligations of Applica to Agent and
Lenders under the Prior Credit Agreement and related documents.



     As a condition to their extension of any credit to Borrowers under the Credit Agreement,
Secured Parties have required that Applica and the other Pledgors agree to amend and restate the
Existing Stock Pledge so that, as so amended and restated, the Existing Stock Pledge will read as
hereinafter set forth. To induce each of the Secured Parties to extend credit to Borrowers under
the Credit Agreement in accordance with the terms thereof (which extensions of credit inure to the
direct and indirect benefit of all Pledgors), Pledgors have agree to execute and deliver this
Agreement.



 









 





     Each Pledgor acknowledges that it will materially benefit from the loans and advances to be
made and the letters of credit to be issued under the Credit Agreement;



Agreement:




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



     1. Pledge and Grant of Security Interest.



          1.1. As collateral security for the payment and performance of all debts, obligations or
liabilities under the Guaranty and of all of the Obligations under (and as defined in) the Credit
Agreement (collectively, the “Secured Obligations”), and subject to Section 10 hereof, each
Pledgor hereby pledges and collaterally assigns to the Agent for the benefit of Secured Parties,
and grants to the Agent, for the benefit of the Secured Parties, a security interest in all of such
Pledgor’s right, title and interest in and to the following:





     (a) all of the issued and outstanding shares of common stock now or hereafter owned by
such Pledgor with respect to each of its Domestic Subsidiaries and 65% of all issued and
outstanding shares of stock of each of such Pledgor’s current and future Direct Foreign
Subsidiaries, all such Domestic Subsidiaries and Direct Foreign Subsidiaries as of the date
hereof (and outstanding shares) being identified on Schedule I hereto (collectively
referred to as the “Pledged Interests”);




     (b) all cash, securities, dividends, rights, interests and other property at any time
and from time to time declared or distributed in respect of or in exchange for any or all of
the Pledged Interests; and




     (c) all other property hereafter delivered to the Agent in substitution for or in
addition to any of the foregoing, all certificates and instruments representing or
evidencing such property and all cash, securities, interest, dividends, rights, and other
property at any time and from time to time declared or distributed in respect of or in
exchange for any or all of the Pledged Interests.


All such Pledged Interests, certificates, instruments, cash, securities, interest, dividends,
rights and other property referred to in this Section 1 are herein collectively referred to
as the “Collateral.” All of the Pledged Interests are owned by the respective Pledgors and
represented by the stock certificates listed on Schedule I hereto. There have been
delivered to the Agent with respect to all the certificated Pledged Interests existing on the date
hereof, certificates evidencing such Pledged Interests, together with undated stock powers or other
transfer instruments duly executed in blank by the Pledgor.




     1.2. The Pledgor agrees to deliver all the Collateral to the Agent at such location as the
Agent shall from time to time designate by written notice pursuant to Section 19 hereof for
its custody at all times until termination of this Agreement, together with such instruments of
assignment and transfer as requested by the Agent.



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     1.3. All advances, charges, costs and expenses, including, without limitation, reasonable
attorneys’ fees, incurred or paid by the Agent or any Lender in exercising any right, power
or remedy conferred by this Agreement, or in the enforcement thereof, shall become a part of
the Secured Obligations secured hereunder and shall be paid to the Agent for the benefit of Secured
Parties by each Pledgor immediately upon demand therefor, with interest thereon until paid in full
at the Base Rate.



     2. Status of Pledged Interests.



     Each Pledgor hereby represents and warrants to the Secured Parties that (a) all of the shares
of the Pledged Interests are validly issued and outstanding, fully paid and nonassessable and
constitute (i) all the issued and outstanding shares of voting stock of each Domestic Subsidiary,
and (ii) 65% of all of the issued and outstanding voting stock of the Direct Foreign Subsidiaries,
all as set forth on Schedule I hereto, (b) each Pledgor is the registered and record and
beneficial owner of its Pledged Interests, free and clear of all Liens, charges, equities,
encumbrances and restrictions on pledge or transfer (other than the pledge hereunder and under the
Loan Documents and the pledge under the Additional Debt Documents and applicable restrictions
pursuant to federal and state securities laws), (c) such Pledgor has full corporate power, legal
right and lawful authority to execute this Agreement and to pledge, assign and transfer its Pledged
Interests in the manner and form hereof, and (d) the pledge, assignment and delivery of its Pledged
Interests to the Agent for the benefit of Secured Parties pursuant to this Agreement creates a
valid and perfected first priority security interest in such Pledged Interests (subject only to
those Permitted Liens, if any, permitted under the Loan Documents to have priority over Agent’s
security interest), securing the payment of the Secured Obligations, assuming continuous and
uninterrupted possession thereof by the Agent. Except as otherwise expressly provided herein or in
the Credit Agreement, none of the Pledged Interests (nor any interest therein or thereto) shall be
sold, transferred or assigned without the Agent’s prior written consent, which may be withheld for
any reason. Each Pledgor covenants with the Agent for the benefit of the Secured Parties that it
shall at all times cause its Pledged Interests (other than the partnership interests) to be
represented by the certificates now and hereafter delivered to the Agent in accordance with
Section 1 hereof and that it shall cause each of its Subsidiaries not to issue any capital
stock, or securities convertible into capital stock, at any time during the term of this Agreement
other than to a Borrower or Guarantor who shall immediately pledge such additional capital stock to
the Agent on substantially identical terms as are contained herein. Each Pledgor hereby agrees not
to enter into any agreement requiring that the voting rights associated with the Pledged Interests
be exercised in any particular manner nor grant any interest in or permit to exist any Lien,
charge, or encumbrance (other than Permitted Liens) or restriction with respect to the Pledged
Interests (other than applicable restrictions pursuant to federal and state securities laws).



     3. Preservation and Protection of Collateral.



          3.1. No Secured Party shall be under any duty or liability with respect to the collection,
protection or preservation of the Collateral, or otherwise, beyond the use of reasonable care in
the custody and preservation thereof while in its possession.




          3.2. Each Pledgor agrees to pay when due all taxes, charges, Liens and assessments against the
Collateral, unless being contested in good faith by appropriate proceedings diligently conducted
and against which adequate reserves have been established in accordance with GAAP. Upon the
failure of any Pledgor to so pay or contest such taxes, charges, Liens or assessments, the Agent at
its option may pay or contest any of them (the Agent having the sole right to determine the
legality or validity and the amount necessary to discharge such taxes, charges, Liens or
assessments).




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     4. Default.



          If any of the Secured Obligations are not paid as of the end of the Business Day on which such
Secured Obligations become due and payable and after the expiration of all grace or cure periods,
if any, and all extensions or waivers, if any, and should such failure to pay continue, or should
any other Event of Default set forth in the Credit Agreement occur and be continuing, or should any
Pledgor fail otherwise to comply with the terms hereof (any of the foregoing an “Event of
Default”), the Agent is given full power and authority, then or at any time thereafter, to sell,
assign and deliver or collect the whole or any part of the Collateral, or any substitute therefor
or any addition thereto, in one or more sales, with or without any previous demands or demand of
performance or, to the extent permitted by law, notice or advertisement, in such order as the Agent
may elect; and any such sale may be made either at public or private sale at the Agent’s place of
business or elsewhere, either for cash or upon credit or for future delivery, at such price as the
Agent may reasonably deem fair; and the Agent may be the purchaser of any or all Collateral so sold
and hold the same thereafter in its own right free from any claim of a Pledgor or right of
redemption. Demands of performance, advertisements and presence of property and sale and notice of
sale are hereby waived to the extent permissible by law. Any sale hereunder may be conducted by an
auctioneer or any officer or agent of the Agent. Pledgors recognize that the Agent may be unable
to effect a public sale of the Collateral by reason of certain prohibitions contained in the
Securities Act of 1933, as amended (the “Securities Act”), and applicable state law, and may be
otherwise delayed or adversely affected in effecting any sale by reason of present or future
restrictions thereon imposed by Governmental Authorities, and that as a consequence of such
prohibitions and restrictions the Agent may be compelled (i) to resort to one or more private sales
to a restricted group of purchasers who will be obliged to agree, among other things, to acquire
the stock for their own account, for investment and not with a view to the distribution or resale
thereof, (ii) to seek regulatory approval of any proposed sale or sales, or (iii) to limit the
amount of Collateral sold to any Person or group. Each Pledgor agrees and acknowledges that
private sales so made may be at prices and upon terms less favorable to Pledgors than if such
Collateral was sold either at public sales or at private sales not subject to other regulatory
restrictions, and that the Agent has no obligation to delay the sale of any of the Collateral for
the period of time necessary to permit the issuer of such Collateral to register or otherwise
qualify them, even if such issuer would agree to register or otherwise qualify such Collateral for
public sale under the Securities Act or applicable state law. Each Pledgor further agrees, to the
extent permitted by applicable law, that the use of private sales made under the foregoing
circumstances to dispose of the Collateral shall be deemed to be dispositions in a commercially
reasonable manner. Each Pledgor hereby acknowledges that a ready market may not exist for the
Pledged Interests if such Pledged Interests is not traded on a national securities exchange or
quoted on an automated quotation system and in such event the Pledged Interests may be sold for an
amount less than a pro rata share of the fair market value of the issuer’s assets minus its
liabilities. In addition to the foregoing, the Secured Parties may exercise such other rights and
remedies as may be available under the Loan Documents, at law (including, without limitation, the
UCC) or in equity.




     5. Proceeds of Sale.



          The proceeds of the sale of any of the Collateral and all sums received or collected from or
on account of such Collateral shall first be applied to the payment of expenses incurred or paid by
the Agent in connection with any sale, transfer or delivery of the Collateral, then to the payment
of any other costs, charges, reasonable attorneys’ fees or expenses mentioned herein, and then in
accordance with Section 3.9 of the Credit Agreement. The Agent shall, upon satisfaction in full of
all such Secured Obligations (including cash collateralization of all Letters of Credit) and
termination of the Commitments, promptly pay any balance to Pledgors.




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     6. Presentments, Etc.



          The Agent shall not be under any duty or obligation whatsoever to make or give any
presentments, demands for performances, notices of nonperformance, protests, notice of protest or
notice of dishonor in connection with any obligations or evidences of indebtedness held thereby as
collateral, or in connection with any obligations or evidences of indebtedness which constitute in
whole or in part the Secured Obligations.




     7. Attorney-in-Fact.



          Each Pledgor hereby appoints the Agent as such Pledgor’s attorney-in-fact for the purposes of
carrying out the provisions of this Agreement and taking any action and executing any instrument
which the Agent may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest; provided that the Agent shall have
and may exercise rights under this power of attorney only upon the occurrence and during the
continuance of an Event of Default. Without limiting the generality of the foregoing, upon the
occurrence and during the continuance of an Event of Default, the Agent shall have the right and
power to receive, endorse and collect all checks and other orders for the payment of money made
payable to such Pledgor representing any dividend, payment, or other distribution payable or
distributable in respect to the Collateral or any part thereof and to give full discharge for the
same.




     8. Absolute Rights and Obligations.



          All rights of the Agent and the other Secured Parties, and all obligations of the Pledgors
hereunder, shall be absolute and unconditional irrespective of:




          8.1. any lack of validity or enforceability of the Credit Agreement, the Guaranty, any other
Loan Document or any other agreement or instrument relating to any of the Secured Obligations;




          8.2. any change in the time, manner or place of payment of, or in any other term of, all or
any of the Obligations, or any other amendment or waiver of or any consent to any departure from
the Credit Agreement, the Guaranty, any other Loan Document or any other agreement or instrument
relating to any of the Secured Obligations;




          8.3. any exchange, release or non-perfection of any other collateral, or any release or
amendment or waiver of or consent to departure from the Guaranty, any guaranty, or any other
security for all or any of the Secured Obligations; or




          8.4. any other circumstances which might otherwise constitute a defense available to, or a
discharge of, any Pledgor in respect of the Secured Obligations or of this Agreement.




     9. Waivers by Pledgors.



          Each Pledgor waives (to the extent permitted by applicable law) (a) any right to require any
Secured Party or any other obligee of the Secured Obligations to (i) proceed against the Borrower,
any Guarantor or any other Person, (ii) proceed against or exhaust any Collateral as defined in the
Credit Agreement, or (iii) pursue any other remedy in its power and (b) any defense arising by
reason of any disability or other defense of the Borrower, any Guarantor or any other Person, or by
reason of the cessation from any cause whatsoever of the liability of the Borrower, any Guarantor
or any other Person. Until termination of this Agreement, no Pledgor shall have any right



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of subrogation, and each Pledgor waives any right to enforce any remedy which any Secured
Party or any other obligee of the Secured Obligations now has or may hereafter have against any
other Person and waives (to the extent permitted by applicable law) any benefit of and any right to
participate in any collateral or security whatsoever now or hereafter held by the Agent for the
benefit of the Secured Parties. Each Pledgor authorizes any Secured Party and any other obligee of
the Secured Obligations without notice (except notice required by applicable law) or demand and
without affecting such Pledgor’s liability hereunder or under the Loan Documents from time to time
to (i) take and hold security, other than the Collateral herein described, for the payment of such
Secured Obligations or any part thereof, and exchange, enforce, waive and release the Collateral
herein described or any part thereof or any such other security; and (ii) apply such Collateral or
other security and direct the order or manner of sale thereof as the Agent may determine in
accordance with the Credit Agreement.




          The Agent may at any time deliver (without representation, recourse or warranty) the
Collateral or any part thereof to a Pledgor free and clear of all Liens and the receipt thereof by
such Pledgor shall be a complete and full acquittance for the Collateral so delivered, and the
Secured Parties shall thereafter be discharged from any liability or responsibility therefor.




     10. Dividends and Voting Rights.



          10.1. All dividends and other distributions with respect to any of the Pledged Interests shall
be subject to the pledge hereunder except, during any period that no Event of Default exists, for
dividends, if any, permitted to be retained by a Pledgor under the Credit Agreement. So long as no
Event of Default shall have occurred and be continuing, any such dividends may be retained by such
Pledgor free from any Liens hereunder to the extent permitted by the Credit Agreement. Following
the occurrence and during the continuance of any Event of Default, all dividends shall be promptly
delivered to the Agent (together with stock powers or instruments of assignment duly executed in
blank affixed to any capital stock or other negotiable document or instrument so distributed) to be
held, released or disposed of by it hereunder or, at the option of the Agent, to be applied to the
Secured Obligations hereby secured as they become due.




          10.2. So long as no Event of Default shall have occurred and be continuing, the registration
of the Collateral in the name of a Pledgor shall not be changed and such Pledgor shall be entitled
to exercise all voting and other rights and powers pertaining to the Collateral for all purposes
not inconsistent with the terms hereof.




          10.3. Upon the occurrence and during the continuance of any Event of Default, at the option of
the Agent, all rights of each Pledgor to receive and retain dividends upon the Collateral shall
cease and shall thereupon be vested in the Agent for the benefit of the Lenders.




          10.4. Upon the occurrence and during the continuance of an Event of Default, at the option of
the Agent, all rights of each Pledgor to exercise the voting or consensual rights and powers which
it is otherwise authorized to exercise shall cease and the Agent may thereupon (but shall not be
obligated to) cause such Collateral to be registered in the name of the Agent or its nominee or
agent for the benefit of Secured Parties and exercise such voting or consensual rights and powers
as appertain to ownership of such Collateral, and to that end each Pledgor hereby appoints the
Agent as its proxy, with full power of substitution, to vote and exercise all other rights as a
shareholder with respect to such Pledged Interests hereunder upon the occurrence and during the
continuance of an Event of Default, which proxy is coupled with an interest and is irrevocable
prior to termination of this Agreement, and each Pledgor hereby agrees to provide such further
proxies as
the Agent may request; provided, however, that the Agent in its discretion may
from time to time refrain from exercising, and shall not be obligated to exercise, any such voting
or consensual rights or such proxy.




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     11. Power of Sale.



     Until termination of this Agreement, the power of sale and other rights, powers and remedies
granted to the Agent for the benefit of Secured Parties hereunder shall continue to exist and may
be exercised by the Agent at any time and from time to time, upon the occurrence and during the
continuance of an Event of Default, irrespective of the fact that any Secured Obligations or any
part thereof may have become barred by any statute of limitations or that the liability of a
Pledgor may have ceased.



     12. Other Rights.



     The rights, powers and remedies given to the Agent for the benefit of Secured Parties by this
Agreement shall be in addition to all rights, powers and remedies given to any Secured Party by
virtue of any statute or rule of law. Any forbearance or failure or delay by the Agent in
exercising any right, power or remedy hereunder shall not be deemed to be a waiver of such right,
power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall
not preclude the further exercise thereof; and every right, power and remedy of the Secured Parties
shall continue in full force and effect until such right, power or remedy is specifically waived by
the Required Lenders by an instrument in writing.



     13. Further Assurances.



     Each Pledgor agrees at its own expense to do such further acts and things, and to execute and
deliver such additional conveyances, assignments, financing statements, agreements and instruments,
as the Agent may at any time reasonably request in connection with the administration or
enforcement of this Agreement or related to the Collateral or any part thereof or in order better
to assure and confirm unto the Agent its rights, powers and remedies for the benefit of Secured
Parties hereunder. Each Pledgor hereby consents and agrees that the issuers of or obligors in
respect of the Collateral shall be entitled to accept the provisions hereof as conclusive evidence
of the right of the Agent, on behalf of Secured Parties, to exercise its rights hereunder with
respect to the Collateral, notwithstanding any other notice or direction to the contrary heretofore
or hereafter given by such Pledgor or any other Person to any of such issuers or obligors.



     14. Binding Agreement; Assignment.



     This Agreement, and the terms, covenants and conditions hereof, shall be binding upon and
inure to the benefit of the parties hereto, and to their respective successors and assigns, except
that no Pledgor shall be permitted to assign this Agreement or any interest herein or in the
Collateral, or any part thereof, or otherwise pledge, encumber or grant any option with respect to
the Collateral, or any part thereof, or any cash or property held by the Agent as Collateral under
this Agreement. All references herein to a Secured Party shall include any successor of such
party, including, without limitation, any obligees from time to time of the Secured Obligations.



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     15. Severability.



     In case any security interest or other right or Lien of any Secured Party or any provision
hereof shall be held to be invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not affect any other Lien, security interest or other right granted
hereby or provision hereof.



     16. Counterparts.



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



     17. Termination.



     This Agreement and all Liens granted by the Pledgors hereunder shall terminate without
delivery of any instrument or performance of any act by any party on the date that all of the
Secured Obligations have been paid in full (or, in the case of outstanding Letters of Credit, cash
collateralized in accordance with the Credit Agreement) and the Credit Agreement and all
Commitments thereunder have terminated. Upon such termination of this Agreement, the Agent shall,
at the sole expense of the Pledgors, promptly deliver to each Pledgor the certificates evidencing
their respective shares of Pledged Interests (and any other property received as a dividend or
distribution or otherwise in respect of such Pledged Interests), together with any cash then
constituting the Collateral, not then sold or otherwise disposed of in accordance with the
provisions hereof and take such further actions as may be necessary to effect the same. Upon the
written request and at the sole expense of a Pledgor, Agent shall release such Pledgor from its
obligations hereunder in the event that all of the Pledged Interests pledged by such Pledgor
hereunder have been sold, transferred or otherwise disposed of to a person other than another Loan
Party pursuant to a transaction permitted by the Credit Agreement. Notwithstanding any termination
of this Agreement, all of the indemnification provisions of this Agreement and the other Loan
Documents shall survive and continue in full force and effect. Further, notwithstanding the
release of any Loan Party from this Agreement, unless otherwise agreed to by Agent in writing, all
of the indemnification provisions of this Agreement and the other Loan Documents shall survive and
continue in full force and effect with respect to such Loan Party.



     18. Indemnification.



     Each Pledgor hereby covenants and agrees to pay, indemnify, and hold the Agent and each Lender
harmless from and against any and all other out-of-pocket liabilities, costs, expenses or
disbursements of any kind or nature whatsoever arising in connection with any claim or litigation
by any Person resulting from the execution, delivery, enforcement, performance and administration
of this Agreement or the Loan Documents, or the transactions contemplated hereby or thereby, or in
any respect relating to the Collateral or any transaction pursuant to which such Pledgor has
incurred any Secured Obligation (all the foregoing, collectively, the “Indemnified Liabilities”);
provided, however, that the Pledgors shall have no obligation hereunder to a
Secured Party with respect to Indemnified Liabilities arising from the willful misconduct or gross
negligence of such Secured Party. The agreements in this subsection shall survive termination of
this Agreement.



     19. Notices.



     All notices shall be sent in the manner and to the addresses specified in the Credit Agreement
and shall be deemed to have been received and be effective as and when specified in the Credit
Agreement.



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     20. Governing Law; Waivers.



          (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.




          (b) EACH PARTY HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND CONSENTS THAT ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN
MAY BE INSTITUTED IN ANY STATE OR FEDERAL COURT SITTING IN THE STATES OF NEW YORK, FLORIDA OR
GEORGIA, AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY WAIVES ANY OBJECTION THAT
IT MAY HAVE NOW OR HEREAFTER TO THE LAYING OF THE VENUE OR TO THE JURISDICTION OF ANY SUCH SUIT,
ACTION OR PROCEEDING, AND IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.




          (c) EACH PARTY AGREES THAT SERVICE OF PROCESS MAY BE MADE BY PERSONAL SERVICE OF A COPY OF THE
SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY
REGISTERED OR CERTIFIED MAIL (POSTAGE PREPAID) TO THE ADDRESS OF SUCH PARTY SPECIFIED IN
SECTION 19 HEREOF OR BY ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS
IN EFFECT IN THE STATES OF NEW YORK, FLORIDA OR GEORGIA.




          (d) NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL PRECLUDE ANY
PARTY FROM BRINGING ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE OTHER LOAN DOCUMENTS IN THE COURTS OF ANY PLACE WHERE ANY OTHER PARTY OR ANY OF SUCH PARTY’S
PROPERTY OR ASSETS MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY
SUCH JURISDICTION, EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT AND
EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR PROCEEDING, THE JURISDICTION OF ANY OTHER
COURT OR COURTS WHICH NOW OR HEREAFTER, BY REASON OF ITS PRESENT OR FUTURE DOMICILE, OR OTHERWISE,
MAY BE AVAILABLE TO IT.




          (e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER OR RELATED
TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE
FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND
NOT BEFORE A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.




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     21. Amendment and Restatement. This Agreement amends and restates the Existing Stock
Pledge and is not intended to create or result in a novation or accord and satisfaction. The terms
of the Existing Stock Pledge, together with all rights, duties, remedies and covenants thereunder
and the grant of each security interest thereunder, shall continue in full force and effect in this
Agreement, which shall constitute the entire understanding of the parties hereto with respect to
the subject matter hereof. This Agreement is intended to confirm and continue the security
interests granted pursuant to the Existing Stock Pledge in the “Collateral” described therein, all
of which security interests shall continue in full force and effect pursuant to this Agreement, and
this Agreement is not intended to grant a new security interest in any Collateral with respect to
which a security interest was previously granted by Pledgors pursuant to the Existing Stock Pledge.



     22. Additional Shares and Interests.



     If a Pledgor shall acquire or hold (a) any additional shares of capital stock of, or other
partnership, ownership or equity interest in, any Person listed on Schedule I hereto or (b)
any shares of capital stock of, or any other partnership, ownership or equity interest in, any
Subsidiary not listed on Schedule I hereto, which stock or partnership or other ownership
or equity interests are required to be subject to a Pledge Agreement pursuant to the terms of
Section 7.24 of the Credit Agreement (any such shares or other ownership or equity interests
described in clauses (a) or (b) above being referred to herein as the “Additional Interests”), the
Pledgor shall deliver to the Agent for the benefit of the Secured Parties (i) a revised
Schedule I hereto reflecting the ownership and pledge of such Additional Interests and (ii)
a Pledge Agreement Supplement in the form of Exhibit A hereto with respect to such
Additional Interests duly completed and signed by the Pledgor. The Pledgor shall comply with the
requirements of this Section 22 concurrently with the acquisition of any such Additional
Interests in the case of shares and other ownership or equity interests described in clause (a)
above, and within the applicable time periods specified in the Credit Agreement with respect to
shares and other partnership, ownership or equity interests described in clause (b) above.



     23. Delivery of Pledged Interests and Additional Interests; Additional Debt Intercreditor
Agreement.



     Notwithstanding anything to the contrary set forth herein, to the extent that Agent’s security
interest in the Pledged Interests (or any Additional Interests) pledged hereunder is perfected in
favor of, or for the benefit of, Agent by the delivery of any such Collateral to another Person
pursuant to Section 10 of the Additional Debt Intercreditor Agreement, then for so long as such
perfection is maintained thereunder, and such Additional Debt Intercreditor Agreement remains in
effect, no separate delivery to Agent of the Pledged Interests (or Additional Interests) shall be
required hereunder. In addition to the foregoing, all terms, conditions and provisions of this
Agreement shall be subject to the Additional Debt Intercreditor Agreement, so long as the
Additional Debt Intercreditor Agreement remains in effect, and in the event that any of the terms
or provisions of this Agreement conflict with the terms or provisions of the Additional Debt
Intercreditor Agreement, (and at such time the Additional Debt Intercreditor Agreement remains in
effect), then the terms and provisions of the Additional Debt Intercreditor Agreement shall control
pursuant to Section 21 of the Additional Debt Intercreditor Agreement.



10









 





     24. ULC Limitation. Notwithstanding any provisions to the contrary contained in this Agreement, the Credit
Agreement or any other document or agreement among all or some of the parties hereto, HP Delaware
is as of the date of this Agreement the sole registered and beneficial owner of all Pledged
ULC Shares more particularly described in Schedule 1 to this Agreement and will remain so
until such time as such Pledged ULC Shares are fully and effectively transferred into the name of
the Agent or any other person on the books and records of such ULC. Nothing in this Agreement, the
Credit Agreement or any other document or agreement delivered among all or some of the parties
hereto is intended to or shall constitute the Agent or any person other than a Pledgor to be a
member or shareholder of any ULC until such time as written notice is given to the applicable
Pledgor and all further steps are taken so as to register the Agent or other person as holder of
the Pledged ULC Shares. The granting of the pledge and security interest pursuant to this
Agreement does not make the Agent a successor to any Pledgor as a member or shareholder of any ULC,
and neither the Agent, any other Secured Party nor any of their respective successors or assigns
hereunder shall be deemed to become a member or shareholder of any ULC by accepting this Agreement
or exercising any right granted herein unless and until such time, if any, when the Agent or any
successor or assign expressly becomes a registered member or shareholder of any ULC. Each Pledgor
with respect to Pledged ULC Shares shall be entitled to receive and retain for its own account any
dividends or other distributions if any, in respect of such Pledged ULC Shares, and shall have the
right to vote such Pledged ULC Shares and to control the direction, management and policies of the
ULC issuing such Pledged ULC Shares to the same extent as such Pledgor would if such Pledged ULC
Shares were not pledged to the Agent or to any other person pursuant hereto. To the extent any
provision hereof or thereof would have the effect of constituting the Agent or any other Secured
Party to be a member or shareholder of any ULC prior to such time, such provision shall be severed
herefrom and ineffective with respect to the relevant Pledged ULC Shares without otherwise
invalidating or rendering unenforceable this Agreement or invalidating or rendering unenforceable
such provision insofar as it relates to Collateral other than Pledged ULC Shares. Notwithstanding
anything herein to the contrary (except to the extent, if any, that the Agent or any other Secured
Party or any of their successors or assigns hereafter expressly becomes a registered member or
shareholder of any ULC), neither the Agent nor any other Secured Party nor any of their respective
successors or assigns shall be deemed to have assumed or otherwise become liable for any debts or
obligations of any ULC. Except upon the exercise by the Agent or any other Secured Party or other
persons of rights to sell or otherwise dispose of Pledged ULC Shares or other remedies following
the occurrence and during the continuance of an Event of Default, each Pledgor shall not cause or
permit, or enable any ULC in which it holds Pledged ULC Shares to cause or permit, the Agent or
other Secured Party to: (a) be registered as member or shareholder of such ULC; (b) have any
notation entered in its favour in the share register of such ULC; (c) be held out as member or
shareholder of such ULC; (d) receive, directly or indirectly, any dividends, property or other
distributions from such ULC by reason of the Agent or such Secured Party or other person holding a
security interest in the Pledged ULC Shares; or (e) act as a member or shareholder of such ULC, or
exercise any rights of a member or shareholder of such ULC, including the right to attend a meeting
of such ULC or vote the shares of such ULC. For purposes of this Section 24, the term “ULC” shall
mean any unlimited liability company or unlimited liability corporation existing under the laws of
any province or territory of Canada and any successor to any such unlimited liability company or
unlimited liability corporation, and the term “Pledged ULC Shares” shall mean the Pledged Interests
which are shares in the capital stock of a ULC.



11









 





     IN WITNESS WHEREOF, the parties have duly executed this Agreement on the day and year
first written above.



	 	 	 	 	 
	 	PLEDGORS:





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 	 
	 
	 	HP DELAWARE, INC.,

a Delaware corporation

 	 
	 	By:  	/s/
Lisa R. Carstarphen 	 
	 	 	Name:  	Lisa R. Carstarphen 	 
	 	 	Title:  	Corporate Secretary 	 
	 
	 	HPG LLC, a Delaware limited liability company

 	 
	 	By:  	/s/
Lisa R. Carstarphen 	 
	 	 	Name:  	Lisa R. Carstarphen 	 
	 	 	Title:  	Corporate Secretary






(Signatures continue on following page)



12









 






	 	 	 	 	 



	 	 	 	 	 
	 	APN HOLDING COMPANY

a Delaware corporation

(and successor-by-merger to SFP Merger Sub, Inc.)

 	 
	 	By:  	/s/
Terry Polistina 	 
	 	 	Name:  	Terry Polistina 	 
	 	 	Title:  	CEO and President 	 
	 
	 	APPLICA MEXICO HOLDINGS , INC.

a Delaware corporation

 	 
	 	By:  	/s/
Lisa R. Carstarphen 	 
	 	 	Name:  	Lisa R. Carstarphen 	 
	 	 	Title:  	Corporate Secretary
	 
	 	TOASTMASTER INC.,

a Missouri 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
	 
	 	HOME CREATIONS DIRECT LTD.

a Delaware corporation

 	 
	 	By:  	/s/
Lisa R. Carstarphen 	 
	 	 	Name:  	Lisa R. Carstarphen 	 
	 	 	Title:  	Corporate Secretary
	 
	 	AGENT:





BANK OF AMERICA, N. A.,

as Agent for the Secured Parties

 	 
	 	By:  	/s/
Robert B.H. Moore 	 
	 	 	Name:  	Robert B.H. Moore 	 
	 	 	Title:  	SVP 	 
	 




13









 








EXHIBIT A




PLEDGE AGREEMENT SUPPLEMENT




     THIS
PLEDGE AGREEMENT SUPPLEMENT (this “ Supplement”), dated as of __________________, 20___ is
made by and between
__________________, __________________ (the “Pledgor”), and
BANK OF AMERICA, N. A., a national banking association organized and existing under the laws of the
United States, as agent (the “Agent”) for each of the lenders (the “Lenders” and together with the
Agent, the “Secured Parties”) now or hereafter party to the Third Amended and Restated Credit
Agreement dated as of December ___, 2007, among such Lenders, the Agent, Applica Incorporated and
certain of its affiliates (as at any time amended, restated, modified or supplemented, the “Credit
Agreement”). All capitalized terms used but not otherwise defined herein shall have the respective
meanings assigned thereto in the Pledge Agreement (as defined below).



     WHEREAS, the Pledgor is required under the terms of the Credit Agreement and that certain
Second Amended and Restated Stock Pledge Agreement dated as of December ___, 2007, by the Pledgor
and certain affiliates of the Pledgor in favor of the Agent for the benefit of the Secured Parties
(as at any time amended, restated, modified or supplemented the “Pledge Agreement”) to cause
certain shares of capital stock or other equity or ownership interests held by it and listed on
Annex A to this Supplement (the “Additional Interests”) to become subject to the Pledge
Agreement; and



     WHEREAS, a material part of the consideration given in connection with and as an inducement
to the execution and delivery of the Credit Agreement by the Secured Parties was the obligation of
the Pledgor to pledge to the Agent for the benefit of the Secured Parties the Additional Interests,
whether then owned and not required to be subject to a pledge or subsequently acquired or created;
and



     WHEREAS, the Secured Parties have required the Pledgor to pledge to the Agent for the benefit
of the Secured Parties all of the Additional Interests in accordance with the terms of the Credit
Agreement and the Pledge Agreement;



     NOW, THEREFORE, the Pledgor hereby agrees as follows with the Agent, for the benefit of the
Secured Parties:



     1. The Pledgor hereby reaffirms and acknowledges the pledge and collateral assignment to, and
the grant of security interest in, the Additional Interests contained in the Pledge Agreement and
pledges and collaterally assigns to the Agent for the benefit of the Secured Parties, and grants to
the Agent for the benefit of the Secured Parties a first priority lien and security interest in,
the Additional Interests and all of the following (subject only to those Permitted Liens, if any,
permitted under the Loan Documents to have priority over Agent’s security interest):



 









 






	 	(1)	 	all cash, securities, dividends, rights, and other property at
any time and from time to time declared or distributed in respect of or in
exchange for any or all of the Additional Interests, other than cash dividends
or other distributions permitted to be retained by the Pledgor under Section
10 of the Pledge Agreement;
	 
	 	(2)	 	all other property hereafter delivered to the Agent in
substitution for or in addition to any of the foregoing, all certificates and
instruments representing or evidencing such property and all cash, securities,
interest, dividends, rights, and other property at any time and from time to
time declared or distributed in respect of or in exchange for any or all of the
Additional Interests; and
	 
	 	(3)	 	all proceeds of any of the foregoing.





     2. The Pledgor hereby acknowledges, agrees and confirms that, by its execution of this
Supplement, the Additional Interests constitute “Pledged Interests” under and are subject to the
Pledge Agreement. Each of the representations and warranties with respect to Pledged Interests
contained in the Pledge Agreement is hereby made by the Pledgor with respect to the Additional
Interests. A revised Schedule I to the Pledge Agreement reflecting the Additional
Interests and all other Pledged Interests, together with stock certificates representing the
Additional Interests with undated stock powers duly executed in blank by the Pledgor, or, if
applicable, registrar’s pledge certificates, have been delivered herewith to the Agent.



     IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly executed by its
authorized officer as of the day and year first above written.



	 	 	 	 	 
	 	 
	 
	 	 
	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



	 	 	 	 	 
	Acknowledged and accepted:





BANK OF AMERICA, N. A.,

as Agent for the Secured Parties

 	 
	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




2