1 EXHIBIT 10.34 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

1
EXHIBIT 10.34

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AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

BY AND BETWEEN

SALTON/MAXIM HOUSEWARES, INC.

AND

FOOTHILL CAPITAL CORPORATION

DATED AS OF JUNE 30, 1997

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TABLE OF CONTENTS
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1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.5 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.1 Revolving Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.2 Letters of Credit and Letter of Credit Guarantees. . . . . . . . . . . . . . . . . . . . . . . 15
2.3 Overadvances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Interest: Rates, Payments, and Calculations . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5 Crediting Payments; Application of Collections . . . . . . . . . . . . . . . . . . . . . . . . 18
2.6 Statements of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.7 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

3. CONDITIONS; TERM OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Conditions Precedent to Initial Advance, L/C, or L/C Guaranty . . . . . . . . . . . . . . . . . 19
3.2 Conditions Precedent to All Advances, L/Cs, or L/C Guarantees . . . . . . . . . . . . . . . . . 21
3.3 Term; Automatic Renewal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.5 Early Termination by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Termination Upon Change of Ownership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.7 Termination Upon Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Negotiable Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Collection of Accounts, General Intangibles, Negotiable Collateral. . . . . . . . . . . . . . . 23
4.4 Delivery of Additional Documentation Required . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.6 Right to Inspect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

5. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 No Prior Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.2 Eligible Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 Eligible Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.4 Location of Inventory and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.5 Inventory Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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5.6 Location of Chief Executive Office; FEIN . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.7 Due Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8 Due Authorization; No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 No Material Adverse Change in Financial Condition . . . . . . . . . . . . . . . . . . . . . . 26
5.11 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.13 Environmental Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.14 Agreement Enforcable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15 Reliance by Foothill; Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Accounting System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Collateral Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Schedules of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Financial Statements, Reports, Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.6 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.7 Designation of Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.8 Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.9 Title to Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Maintenance of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.13 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.14 No Setoffs or Counterclaims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.15 Location of Inventory and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.16 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.17 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.18 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Restrictions on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.4 Extraordinary Transactions and Disposal of Assets . . . . . . . . . . . . . . . . . . . . . . 34
7.5 Change Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.6 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.7 Restructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.8 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.9 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.10 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.11 Consignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

7.12 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.13 Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.14 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.15 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.16 Suspension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.17 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.18 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.19 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.20 Payment of Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.13 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

9. FOOTHILL'S RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1 Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

10. TAXES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

11. WAIVERS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Demand; Protest; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Foothill's Liability for Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.3 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

12. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

14. DESTRUCTION OF BORROWER'S DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

15. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.1 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.3 Section Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.5 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.6 Amendments in Writing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.7 Counterparts; Telefacsimile Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
15.8 Revival and Reinstatement of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.9 Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15.11 Amended and Restated Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

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EXHIBITS

Exhibit A Collateral Patent and Trademark Assignment; First Amendment to
Collateral Patent and Trademark Assignment; and Second Amendment
to Collateral Patent and Trademark Assignment
Exhibit B Revolving Loan Note
Exhibit C LIBOR Supplement

AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT

This AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Agreement"), is
entered into as of June 30, 1997, between FOOTHILL CAPITAL CORPORATION, a
California corporation ("Foothill"), with a place of business located at 00
Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxxxxxxx 00000, and SALTON/MAXIM
HOUSEWARES, INC., a Delaware corporation ("Borrower"), with its chief executive
office located at 000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx Xxxxxxxx, Xxxxxxxx 00000.

The parties agree as follows:

1. DEFINITIONS AND CONSTRUCTION.

1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following definitions:

"Account Debtor" means any Person who is or who may become obligated under,
with respect to, or on account of an Account.

"Accounts" means all currently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to Borrower arising
out of the sale of goods by Borrower, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or security
therefor.

"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" as applied to any Person
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that Person, whether through
the ownership of voting securities, by contract, or otherwise.

"Agreement" means this Amended and Restated Loan and Security Agreement and
any extensions, riders, supplements, notes, amendments, or modifications to or
in connection with this Amended and Restated Loan and Security Agreement.

"Authorized Officer" means any officer of Borrower.

"Average Unused Portion of Maximum Amount" means (a) the Maximum Amount;
less (b) the sum of: (i) the average Daily Balance of advances made by
Foothill under Section 2.1 that were outstanding during the immediately
preceding month, plus (ii) the average Daily Balance of the undrawn L/Cs and
L/C Guarantees issued by Foothill under Section 2.2 that were outstanding
during the immediately preceding month.

"Bankruptcy Code" means the United States Bankruptcy Code (11 U.S.C. Section
101 et seq.), as amended, and any successor statute.

"Borrower" has the meaning set forth in the preamble to this Agreement.

"Borrower's Books" means all of Borrower's books and records including:
ledgers; records indicating, summarizing, or evidencing Borrower's properties
or assets (including the Collateral) or liabilities; all information relating
to Borrower's business operations or financial condition; and all computer
programs, disc or tape files, printouts, runs, or other computer prepared
information.

"Borrowing Base" has the meaning set forth in Section 2.1.

"Business Day" means any day which is not a Saturday, Sunday, or other day
on which national banks are authorized or required to close.

"Capitalized Lease" means any lease which is or should be capitalized on the
balance sheet of the Borrower in accordance with GAAP.

"Change of Ownership" shall be deemed to have occurred at such time as a
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Securities Act of 1934) directly or indirectly of more
than 50% of the total voting power of all classes of stock then outstanding of
Borrower normally entitled to vote in the election of directors.

"Change of Ownership Premium" has the meaning set forth in Section 3.6.

"Closing Date" means the date of the execution of this Agreement.

"Closing Fee" has the meaning set forth in Section 2.7.

"Code" means the California Uniform Commercial Code.

"Collateral" means each of the following: the Accounts; Borrower's Books;
the Equipment; the General Intangibles; the Inventory; the Negotiable
Collateral; any money, or other assets of Borrower which now or hereafter come
into the possession, custody, or control of Foothill the Windmere Common Stock,
the Windmere Note and the Windmere Collateral; and the proceeds and products,
whether tangible or intangible, of any of the foregoing including proceeds of
insurance covering any or all of the Collateral, and any and all Accounts,
Borrower's Books, Equipment, General Intangibles, Inventory, Negotiable
Collateral, money, deposit accounts, or other tangible or intangible property
resulting from the sale, exchange, collection, or other disposition of any of
the foregoing, or any portion thereof or interest therein, and the proceeds
thereof.

"Collateral Management Fee" has the meaning set forth in Section 2.7.

"Concentrated Account" means the Highly Concentrated Accounts and the
Accounts identified as Concentrated Accounts on Schedule E-1.

"Consolidated Current Assets" means, as of any date of determination, the
aggregate amount of all current assets of Borrower and its subsidiaries
calculated on a consolidated basis that would, in accordance with GAAP, be
classified on a balance sheet as current assets.

"Consolidated Current Liabilities" means, as of any date of determination,
the aggregate amount of all current liabilities of Borrower and its
subsidiaries, calculated on a consolidated basis that would, in accordance with
GAAP, be classified on a balance sheet as current liabilities excluding
Subordinated Debt. For purposes of this definition, all advances outstanding
under this Agreement shall be deemed to be current liabilities without regard
to whether they would be deemed to be so under GAAP.

"Daily Balance" means the amount of an Obligation owed at the end of a given
day.

"Default Rate" has the meaning set forth in Section 2.4(c).

"Designated Deposit Account" has the meaning set forth in Section 2.1(d).

"Early Termination Premium" has the meaning set forth in Section 3.5.

"EBITDA" means, for any period, for the Borrower, determined in accordance
with GAAP, the sum of (a) the net income (or net loss) for such period plus (b)
all amounts deducted from net income (or net loss) for such period for
depreciation or amortization, plus (c) interest expense deducted from net
income (or net loss) for such period, minus (d) interest actually paid in cash
for such period, plus (e) all accrued taxes on or measured by income to the
extent included in the determination of such net income (or loss); plus (f) to
the extent included in net income (or net loss) for such period, any
extraordinary losses or losses from discontinued operations.

"Eligible Accounts" means those Accounts created by Borrower in the ordinary
course of business that arise out of Borrower's sale of goods or rendition of
services, that strictly comply with all of Borrower's representations and
warranties to Foothill, and that are and at all times shall continue to be
reasonably acceptable to Foothill in all respects; provided, however, that
standards of eligibility may be fixed and revised from time to time by Foothill
in Foothill's reasonable credit judgment. Eligible Accounts shall not include
the following:

(a) Accounts that the Account Debtor has failed to pay within (i) one
hundred twenty (120) days of invoice date for Accounts with selling terms of
thirty (30) days or (ii) Accounts which the Account Debtor has failed to pay
within one hundred eighty (180) days of invoice date for Accounts with selling
terms of more than thirty (30) days but not more than one hundred eighty (180)
days and all Accounts owed by an Account Debtor that has failed

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to pay fifty percent (50%) or more of its Accounts owed to Borrower within the
periods set forth in subprovisions (i) and (ii) as applicable;

(b) Accounts with respect to which the Account Debtor is an officer,
employee, Affiliate, or agent of Borrower;

(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, sale or return, sale on approval, xxxx and hold, or other
terms by reason of which the payment by the Account Debtor may be conditional;

(d) Accounts with respect to which the Account Debtor is not a resident
of the United States, and which are not either (i) covered by credit insurance
in form and amount, and by an insurer, satisfactory to Foothill, or (ii)
supported by one or more letters of credit that are assignable by their terms
and have been delivered to Foothill in an amount, of a tenor, and issued by a
financial institution, acceptable to Foothill;

(e) Accounts with respect to which the Account Debtor is the United
States or any department, agency, or instrumentality of the United States
except for Accounts not subject to the Armed Services Procurement Regulations
or any other government regulation either prohibiting the assignment of
Accounts or requiring special procedures for perfection of the assignment of
Accounts;

(f) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account Debtor to
Borrower but excluding cooperative advertising between Borrower and an Account
Debtor;

(g) Accounts with respect to an Account Debtor (other than Concentrated
Accounts) whose total obligations owing to Borrower exceed ten percent (10%) of
all Eligible Accounts, to the extent the obligations owing by such Account
Debtor are in excess of such percentage; Accounts with respect to a
Concentrated Account whose total obligations owing to Borrower exceed twenty
percent (20%) of all Eligible Accounts, to the extent the obligations owing by
such Concentrated Accounts are in excess of such percentage, except that any
one (1) of the following may be true at any time: total obligations owing to
Borrower with respect to any two (2) Concentrated Accounts may exceed twenty
percent (20%) at any time but shall not exceed thirty percent (30%), or total
obligations with respect to one (1) of the Highly Concentrated Accounts may
exceed twenty percent (20%) at any time but shall not does not exceed thirty
percent (30%) at any time, or Accounts with respect to any two (2) of the
Highly Concentrated Accounts may exceed twenty percent (20%) at any time but
shall not, aggregated together, exceed fifty percent (50%) at any time;

(h) Accounts with respect to which the Account Debtor disputes liability
or makes any Material claim with respect thereto, or is subject to any
Insolvency Proceeding, or becomes insolvent, or goes out of business;

(i) That portion of Accounts which have been rebilled to Account Debtors
as a result of the failure of the Account Debtor to pay invoices representing
the Account in full.

(j) Accounts the collection of which Foothill, in its reasonable credit
judgment, believes to be doubtful by reason of the Account Debtor's financial
condition;

(k) Accounts that are payable in other than United States Dollars; and

(l) Accounts that represent progress payments or other advance xxxxxxxx
that are due prior to the completion of performance by Borrower of the subject
contract for goods or services.

"Eligible Inventory" means Inventory (net of reserves for slow moving
inventory in an amount acceptable to Foothill) consisting of finished goods
held for sale in the ordinary course of Borrower's business, that are located
at Borrower's premises or such other locations as identified on Schedule 6.15
and replacement parts and accessories inventory located at Borrower's premises
or such other locations as identified on Schedule 6.15, or "In Transit
Inventory," which is acceptable to Foothill in all respects, and strictly
comply with all of Borrower's representations and warranties to Foothill.
Eligible Inventory shall not include obsolete items, restrictive or custom
items, work- in-process, components that are not part of finished goods,
estimated defects located in warehouse Z and net warehouse Y returns in transit
outside the United States, spare parts, packaging and shipping materials,
supplies used or consumed in Borrower's business, Inventory at any location
other than those set forth on Schedule 6,15, Inventory subject to a security
interest or lien in favor of any third Person, xxxx and hold goods, Inventory
that is not subject to Foothill's perfected security interests, defective
goods, "seconds," and Inventory acquired on consignment. Eligible Inventory
shall be valued at the lower of Borrower's cost on a Landed Cost basis or
market value. As of the date hereof the amount acceptable to Foothill as a
reserve for slow moving inventory is two and two tenths percent (2.2%) of the
Borrower's Eligible Inventory.

"Environmental Laws" means the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, any
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, and
any other federal, state or local statue, law, ordinance, code, rule,
regulation, order or decree or other requirement regulating, relating to, or
imposing liability or standards of conduct (including but not limited to permit
requirements, and emission or effluent restrictions) concerning any Hazardous
Materials or any hazardous, toxic or dangerous waste, substance or constituent,
or any pollutant or contaminant or other substance, whether solid, liquid or
gas, as now or at any time hereafter in effect.

"Environmental Lien" means a Lien in favor of any governmental entity for
(a) any liability under any Environmental Law or (b) damages arising from or
costs incurred by such governmental entity in response to a spillage, disposal
or release into the environment of

any Hazardous Material or other hazardous, toxic or dangerous waste, substance
or constituent, or other substance.

"Equipment" means all of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, (including computer
telecommunication and video equipment) furniture, furnishings, fixtures,
vehicles (including motor vehicles and trailers), tools, parts, dies, jigs,
goods (other than consumer goods, farm products, or Inventory), wherever
located, and any interest of Borrower in any of the foregoing, and all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, wherever located.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, or any predecessor, successor, or superseding laws
of the United States of America, together with all regulations promulgated
thereunder.

"ERISA Affiliate" means any trade or business (whether or not incorporated)
which, within the meaning of Section 414 of the IRC, is: (i) under common
control with Borrower; (ii) treated, together with Borrower, as a single
employer; (iii) treated as a member of an affiliated service group of which
Borrower is also treated as a member; or (iv) is otherwise aggregated with the
Borrower for purposes of the employee benefits requirements listed in IRC
Section 414(m)(4).

"ERISA Event" means any one or more of the following: (i) a Reportable
Event with respect to a Qualified Plan or a Multiemployer Plan; (ii) a
Prohibited Transaction with respect to any Plan; (iii) a complete or partial
withdrawal by Borrower or any ERISA Affiliate from a Multiemployer Plan; (iv)
the complete or partial withdrawal of Borrower or an ERISA Affiliate from a
Qualified Plan during a plan year in which it was, or was treated as, a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (v) a failure
to make full payment when due of all amounts which, under the provisions of any
Plan or applicable law, Borrower or any ERISA Affiliate is required to make;
(vi) the filing of a notice of intent to terminate, or the treatment of a plan
amendment as a termination, under Sections 4041 or 4041A of ERISA; (vii) an
event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Qualified Plan or Multiemployer Plan; (viii) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate; and (ix) a violation of the applicable requirements of Sections 404
or 405 of ERISA, or the exclusive benefit rule under Section 403(c) of ERISA,
by any fiduciary or disqualified person with respect to any Plan for which
Borrower or any ERISA Affiliate may be directly or indirectly liable.

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"Event of Default" has the meaning set forth in Section 8.

"FEIN" means Federal Employer Identification Number.

"Fiscal Month" means any 4 or 5 week period ending on the last Saturday of
each month.

"Fiscal Year" means the 52/53 week period ending on the last Saturday of
June.

"Foothill" has the meaning set forth in the preamble to this Agreement.

"Foothill Expenses" means all: costs or expenses (including taxes,
photocopying, notarization, telecommunication and insurance premiums) required
to be paid by Borrower under any of the Loan Documents that are paid or
advanced by Foothill; documentation, filing, recording, publication, appraisal
(including periodic Collateral appraisals in accordance with Section 2.7(c)),
real estate survey, environmental audit, and search fees assessed, paid, or
incurred by Foothill in connection with Foothill's transactions with Borrower;
costs and expenses incurred by Foothill in the disbursement of funds to
Borrower (by wire transfer or otherwise); charges paid or incurred by Foothill
resulting from the dishonor of checks; costs and expenses paid or incurred by
Foothill to correct any default or enforce any provision of the Loan Documents,
or in gaining possession of, maintaining, handling, preserving, storing,
shipping, selling, preparing for sale, or advertising to sell the Collateral or
any portion thereof, irrespective of whether a sale is consummated; costs and
expenses paid or incurred by Foothill in examining Borrower's Books; costs and
expenses of third party claims or any other suit paid or incurred by Foothill
in enforcing or defending the Loan Documents; and Foothill's reasonable
attorneys fees and expenses incurred in advising, structuring, drafting,
reviewing, administering, amending, terminating, enforcing (including attorneys
fees and expenses incurred in connection with a "workout," a "restructuring,"
or an Insolvency Proceeding concerning Borrower defending, or concerning the
Loan Documents, irrespective of whether suit is brought.

"GAAP" means generally accepted accounting principles as in effect from time
to time in the United States, consistently applied.

"General Intangibles" means all of Borrower's present and future general
intangibles and other personal property (including contract rights, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringements, claims, computer
programs, computer discs, computer tapes, literature, reports, catalogs,
deposit accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.

"Hazardous Materials" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable laws or regulations as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any

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other formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or "EP toxicity"; (b) oil, petroleum,
or petroleum derived substances, natural gas, natural gas liquids, synthetic
gas, drilling fluids, produced waters, and other wastes associated with the
exploration, development, or production of crude oil, natural gas, or
geothermal resources; (c) any flammable substances or explosives or any
radioactive materials; and (d) asbestos in any form or electrical equipment
which contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty (50) parts per million.

"Highly Concentrated Accounts" means the accounts identified as such on
Schedule E-1.

"In Transit Inventory" means Eligible Inventory purchased by Borrower where
Borrower has legal title but the goods have not been received by the Borrower
at one of its locations and entered into its perpetual inventory system.

"Indebtedness" means: (a) all obligations of Borrower for borrowed money;
(b) all obligations of Borrower evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations of Borrower in
respect of letters of credit, letter of credit guaranties, bankers acceptances,
interest rate swaps, controlled disbursement accounts, or other similar
financial products; (c) all obligations under capital leases; (d) all
obligations or liabilities of others secured by a lien or security interest on
any property or asset of Borrower, irrespective of whether such obligation or
liability is assumed; and (e) any obligation of Borrower guaranteeing or
intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or
sold with recourse to Borrower) any indebtedness, lease, dividend, letter of
credit, or other obligation of any other Person.

"Insolvency Proceeding" means any proceeding commenced by or against any
Person under any provision of the Bankruptcy Code or under any other bankruptcy
or insolvency law, including assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with its creditors,
or proceedings seeking reorganization, arrangement, or other similar relief.

"Interest Rate" means the rate or rates set forth in Section 2.4(a).

"Inventory" means all present and future inventory in which Borrower has any
interest, including goods held for sale and all of Borrower's present and
future raw materials (but excluding any Hazardous Materials), work in process,
finished goods, and packing and shipping materials, wherever located, and any
documents of title representing any of the above.

"IRC" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

"Landed Cost" means Borrower's "book cost" (on a "FIFO" basis in accordance
with GAAP) for Eligible Inventory purchased by Borrower from a Person as
opposed to the

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actual amount paid by Borrower to said Person and Borrower's book cost may
include tax, freight and duty.

"L/C" has the meaning set forth in Section 2.2(a).

"L/C Guaranty" has the meaning set forth in Section 2.2(a).

"LIBOR Rate" means the rate set forth in the Libor Supplement.

"LIBOR SUPPLEMENT" means that certain Libor Supplement to this Agreement, a
copy of which is attached hereto as Exhibit C.

"Loan Documents" means this Agreement, the Lockbox Agreements, the Revolving
Loan Note, the Patent Security Agreement, the Libor Supplement, the Pledge
Agreement, any other note or notes executed by Borrower and payable to
Foothill, and any other agreement entered into in connection with this
Agreement.

"Lockbox Accounts" shall mean the depositary account established pursuant to
the respective Lockbox Agreements.

"Lockbox Agreements" means those certain Lockbox Operating Procedural
Agreements and those certain Depository Account Agreements, in form and
substance satisfactory to Foothill, each of which is among Borrower, Foothill,
and one of the Lockbox Banks.

"Lockbox Bank" means LaSalle National Bank.

"Maximum Amount" means at any given time the lesser of (i) Seventy Five
Million Dollars ($75,000,000) and (ii) the sum of (A) Twenty Million Dollars
($20,000,000) plus (B) the aggregate amount of commitments to participate in
Foothill's interest in the financing arrangements hereunder obtained by
Foothill from Participants acceptable to Foothill who have entered into
Participation Agreements with Foothill on terms and conditions satisfactory to
Foothill.

"Maximum Foothill Amount" means that portion of the Maximum Amount for which
Foothill shall be responsible, exclusive of any participations with
Participants, which amount is Twenty Million Dollars ($20,000,000).

"Multiemployer Plan" means a multiemployer plan as defined in Sections 3(37)
or 4001(a)(3) of ERISA or Section 414 of the IRC in which employees of Borrower
or an ERISA Affiliate participate or to which Borrower or any ERISA Affiliate
contribute or are required to contribute.

"Negotiable Collateral" means all of Borrower's present and future letters
of credit, notes, drafts, instruments, certificated and uncertificated
securities (including the shares

of stock of subsidiaries of Borrower), documents, personal property leases
(wherein Borrower is the lessor), chattel paper, and Borrower's Books relating
to any of the foregoing.

"Obligations" means all loans, advances, debts, principal, interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), contingent reimbursement obligations owing to Foothill
under any outstanding L/Cs or L/C Guarantees, premiums (including Early
Termination Premiums), liabilities (including all amounts charged to Borrower's
loan account, including any lease payments made by Foothill on behalf of the
Borrower, pursuant to any agreement authorizing Foothill to charge Borrower's
loan account), obligations, fees, guaranties, covenants, and duties owing by
Borrower to Foothill of any kind and description (whether pursuant to or
evidenced by the Loan Documents, by any note or other instrument (including the
Revolving Loan Note), or pursuant to any other agreement between Foothill and
Borrower, and irrespective of whether for the payment of money), whether direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or obligation owing from
Borrower to others that Foothill may have obtained by assignment or otherwise
excluding the Subordinated Debt held by any stockholders of Borrower and
further including all interest not paid when due and all Foothill Expenses that
Borrower is required to pay or reimburse by the Loan Documents, by law, or
otherwise.

"Overadvance" has the meaning set forth in Section 2.3.

"Participant" means any Person other than Foothill that has committed to
provide a portion of the financing contemplated herein. Borrower shall not be
deemed in privity with any Participant pursuant to this Agreement, and shall
only be required to comply with the terms and conditions of this Agreement.

"Participation Agreement" means an agreement between Foothill and a
Participant.

"Participated Amount" means the lesser of (i) Fifty Five Million Dollars
($55,000,000) or (ii) the amount obtained by Foothill from Participants
acceptable to Foothill who have entered into Participation Agreements with
Foothill on terms and conditions satisfactory to Foothill.

"Patent Security Agreement" means the Collateral Patent and Trademark
Assignment between Foothill and Borrower in form and content acceptable to
Foothill in the form of Exhibit A, with appropriate insertions as it may be
amended, modified or supplemented from time to time.

"PBGC" means the Pension Benefit Guaranty Corporation as defined in Title IV
of ERISA, or any successor thereto.

"Permitted Liens" means: (a) liens and security interests held by Foothill;
(b) liens for unpaid taxes that are not yet due and payable; (c) liens and
security interests set forth on Schedule P-1 attached hereto; (d) purchase
money security interests and liens of lessors under Capital Leases to the
extent that the acquisition or lease of the underlying asset was permitted

under Section 7.10, and so long as the security interest or lien only secures
the purchase price of the asset; (e) easements, rights of way, reservations,
covenants, conditions, restrictions, zoning variances, and other similar
encumbrances that do not materially interfere with the use or value of the
property subject thereto; (f) obligations and duties as lessee under any lease
existing on the date of this Agreement; (g) mechanics', materialmen's,
warehousemen's, or similar liens that arise by operation of law and (h) liens
subject to a Permitted Protest except to the extent that such liens would have
priority over any liens held by Foothill.

"Permitted Protest" means the right of Borrower to protest any lien, tax,
rental payment, or other charge, other than any such lien or charge that
secures the Obligations, provided (i) a reserve with respect to such obligation
is established on the books of Borrower in an amount that is reasonably
satisfactory to Foothill, (ii) any such protest is instituted and diligently
prosecuted by Borrower in good faith, and (iii) Foothill is satisfied that,
while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the liens or security interests
of Foothill in and to the property or assets of Borrower.

"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint ventures, trusts, land trusts,
business trusts, or other organizations, irrespective of whether they are legal
entities, and governments and agencies and political subdivisions thereof.

"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which Borrower or any ERISA Affiliate sponsors or maintains or to which
Borrower or any ERISA Affiliate makes, is making, or is obligated to make
contributions, including any Multiemployer Plan or Qualified Plan.

"Pledge Agreement" means that certain Pledge Agreement of even date from
Borrower pledging the Windmere Note, the Windmere Collateral and the Windmere
Stock.

"Prohibited Transaction" means any transaction described in Section 406 of
ERISA which is not exempt by reason of Section 408 of ERISA, and any
transaction described in Section 4975(c) of the IRC which is not exempt by
reason of Section 4975(c) of the IRC.

"Qualified Plan" means a pension plan (as defined in Section 3(2) of ERISA)
intended to be tax-qualified under Section 401(a) of the IRC which Borrower or
any ERISA Affiliate sponsors, maintains, or to which any such person makes, is
making, or is obligated to make, contributions, or, in the case of a
multiple-employer plan (as described in Section 4064(a) of ERISA), has made
contributions at any time during the immediately preceding period covering at
least five (5) plan years, but excluding any Multiemployer Plan.

"Reference Rate" means the highest of the most recent rate of interest, per
annum, most recently announced by NORWEST BANK MINNESOTA, N.A. as its "Prime
Rate" or "Reference Rate," as the case may be, irrespective of whether such
announced rate is the best rate available from such financial institution.
Borrower acknowledges and agrees that the Reference Rate is a reference used in
determining interest rates on certain loans by Foothill and

is not intended to be the lowest rate of interest charged on any extension of
credit. In the event that the Reference Rate is changed from time to time
hereafter, the applicable rate of interest hereunder automatically and
immediately shall be increased or decreased by an amount equal to the Reference
Rate change.

"Renewal Date" has the meaning set forth in Section 3.3.

"Reportable Event" means any event described in Section 4043 (other than
Subsections (b)(7) and (b)(9)) of ERISA.

"Revolving Loan Note" means the Amended and Restated Revolving Loan Note
from Borrower to Foothill in the original amount of Seventy Five Million
Dollars ($75,000,000) in the form of Exhibit B with appropriate insertions, as
the same may be amended or modified from time to time.

"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.

"Subordinated Debt" shall mean the indebtedness set forth on Schedule S-1
attached hereto.

"Tangible Net Worth" means, as of the date any determination thereof is to
be made, the difference of: (a) Borrower's total stockholder's equity; minus
(b) the sum of: (i) all intangible assets of Borrower; and (ii) all amounts
due to Borrower from Affiliates, except the amount due to Borrower from
Windmere - Durable Holdings, Inc. pursuant to the Windmere Note calculated on a
consolidated basis in accordance with GAAP.

"Unfunded Benefit Liability" means the excess of a Plan's benefit
liabilities (as defined in Section 4001(a)(16) of ERISA) over the current value
of such Plan's assets, determined in accordance with the assumptions used by
the Plan's actuaries for funding the Plan pursuant to Section 412 of the IRC
for the applicable plan year.

"Unused Line Fee" has the meaning set forth in Section 2.7.

"Voidable Transfer" has the meaning set forth in Section 15.8.

"Windmere Common Stock" means 748,112 shares of Windmere-Durable Holdings,
Inc. f/k/a Windmere Corporation common stock owned by Borrower and pledged to
Foothill pursuant to the Pledge Agreement or any additional shares of the
common stock of Windmere obtained by Borrower and pledged to Foothill pursuant
to the Pledge Agreement.

"Windmere Collateral" means the assets of Windmere-Durable Holdings, Inc.
f/k/a Windmere Corporation pledged to Borrower to secure payment of the
Windmere Note pursuant to the terms of that certain Security Agreement from
Windmere Corporation as debtor to Borrower as secured party.

"Windmere Guaranty" means those certain Guaranty Agreements from each
domestic subsidiary of Windmere-Durable Holdings, Inc. in favor of Borrower to
guaranty payment of the Windmere Note.

"Windmere Note" means that certain Promissory Note executed by Windmere
Corporation and now known as Windmere-Durable Holdings, Inc. in favor of
Borrower in the original principal amount of $10,847,620.

1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrower" is used in respect of a financial covenant or a related
definition, it shall be understood to mean Borrower on a consolidated basis
unless the context clearly requires otherwise.

1.3 CODE. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise
defined herein.

1.4 CONSTRUCTION. Unless the context of this Agreement clearly requires
otherwise, references to the plural include the singular, references to the
singular include the plural, the term "including" is not limiting, and the term
"or" has, except where otherwise indicated, the inclusive meaning represented
by the phrase "and/or." The words "hereof," "herein," "hereby," "hereunder,"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement. Section, subsection, clause,
schedule, and exhibit references are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the Loan Documents to this
Agreement or any of the Loan Documents shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, and supplements, thereto and thereof, as applicable.

1.5 SCHEDULES AND EXHIBITS. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

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2. LOAN AND TERMS OF PAYMENT.

2.1 REVOLVING ADVANCES. (a) Subject to the terms and conditions of this
Agreement, Foothill agrees to make revolving advances to Borrower in an amount
at any one time outstanding not to exceed the Borrowing Base less forty five
percent (45%) of the undrawn or unreimbursed amount of L/Cs and L/C Guarantees
outstanding hereunder. For purposes of this Agreement, "Borrowing Base", as of
any date of determination, shall mean the sum of: (i) an amount equal to eighty
percent (80%) of the amount of Eligible Accounts plus (ii) an amount equal to
the lowest of: (x) the sum of (A) sixty percent (60%) of the amount of Eligible
Inventory consisting of finished goods inventory and In Transit Inventory or
seventy five percent (75%) of the amount of Eligible Inventory consisting of
finished goods inventory and In Transit Inventory during the months of June,
July, August, September, October, November and December (including up to Eight
Million Dollars ($8,000,000) of In Transit Inventory or Twelve Million Dollars
($12,000,000) of In Transit Inventory in June, July, August, September,
October, November and December) plus (B) twenty five percent (25%) of the
amount of Eligible Inventory consisting of returned inventory up to One Million
Dollars ($1,000,000) plus (C) fifteen percent (15%) of the amount of Eligible
Inventory consisting of replacement parts or accessories inventory up to Five
Hundred Thousand Dollars ($500,000); (y) Thirty Million Dollars ($30,000,000)
or Forty Million Dollars ($40,000,000) during the months of June, July, August,
September, October, November and December plus (iii) an amount equal to the
lowest of Seven Million Five Hundred Thousand Dollars ($7,500,000) or seventy
five percent (75%) of the value from time to time of the Windmere Common Stock
as reflected on the New York Stock Exchange under the symbol "WND".

(b) Anything to the contrary in Section 2.1(a) above notwithstanding,
Foothill may reduce its advance rates based upon Eligible Accounts or Eligible
Inventory or the Windmere Common Stock without declaring an Event of Default if
it determines, in its reasonable discretion, that there is a material impairment
of the prospect of repayment of all or any portion of the Obligations or a
material impairment of the value or priority of Foothill's security interests in
the Collateral.

(c) Foothill shall have no obligation to make advances hereunder to
the extent they would cause the outstanding Obligations, including funds
advanced by any Participant to exceed the Maximum Amount provided however
that it is expressly understood that Foothill shall have no obligation to
individually make advances hereunder in excess of the Maximum Foothill Amount.

(d) Foothill is authorized to make advances under this Agreement based
upon telephonic or other instructions received from anyone purporting to be an
Authorized Officer of Borrower, or without instructions if pursuant to Section
2.4(d). Borrower agrees to establish and maintain a single designated deposit
account (the "Designated Deposit Account") for the purpose of receiving the
proceeds of the advances requested by Borrower and made by Foothill hereunder.
Unless otherwise agreed by Foothill and Borrower, any advance requested by
Borrower and made by Foothill hereunder shall be made to the Designated Deposit
Account.

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Amounts borrowed pursuant to this Section 2.1 may be repaid and, subject to the
terms and conditions of this Agreement, reborrowed at any time during the term
of this Agreement.

2.2 LETTERS OF CREDIT AND LETTER OF CREDIT GUARANTEES.

(a) Subject to the terms and conditions of this Agreement, Foothill
agrees to issue commercial or standby letters of credit for the account of
Borrower (each, an "L/C") or to issue standby letters of credit or guarantees
of payment (each such letter of credit or guaranty, an "L/C Guaranty") with
respect to commercial or standby letters of credit issued by another Person for
the account of Borrower in an aggregate face amount not to exceed the lesser
of: (i) the Borrowing Base less the amount of advances outstanding pursuant to
Section 2.1, and (ii) Five Million Dollars ($5,000,000) or Seven Million
Dollars ($7,000,000) during the months of July, August and September. Borrower
expressly understands and agrees that Foothill shall have no obligation to
arrange for the issuance by other financial institutions of letters of credit
that are to be the subject of L/C Guarantees. Borrower and Foothill
acknowledge and agree that certain of the letters of credit that are to be the
subject of L/C Guarantees may be outstanding on the Closing Date. Each L/C and
each letter of credit that is the subject of an L/C Guaranty shall have an
expiry date no later than twenty (20) days prior to the date on which this
Agreement is scheduled to terminate under Section 3.3 (without regard to any
potential renewal term) and all such L/Cs and letters of credit (and the
applicable L/C Guarantees) shall be in form and substance acceptable to
Foothill in its sole discretion. Foothill shall not have any obligation to
issue L/Cs or L/C Guarantees to the extent that the face amount of all
outstanding L/Cs and L/C Guarantees, plus the amount of advances outstanding
pursuant to Section 2.1, would, including funds advanced by any Participant,
exceed the Maximum Amount provided, however that it is expressly understood
that Foothill shall not have any obligation to individually issue L/Cs or L/C
Guarantees to the extent that the full amount of all outstanding L/Cs or L/C
Guarantees issued by Foothill plus the amount of advances outstanding from
Foothill pursuant to Section 2.1 would exceed the Maximum Foothill Amount. The
L/Cs and the L/C Guarantees issued under this Section 2.2 shall be used by
Borrower, consistent with this Agreement, for its general working capital
purposes or to support its obligations with respect to workers' compensation
premiums or other similar obligations. If Foothill is obligated to advance
funds under an L/C or L/C Guaranty, the amount so advanced immediately shall be
deemed to be an advance made by Foothill to Borrower pursuant to Section 2.1
and, thereafter, shall bear interest at the rates then applicable under Section
2.5.

(b) Borrower hereby agrees to indemnify, save, defend, and hold Foothill
harmless from any loss, cost, expense, or liability including any Foothill
Expenses arising out of or in connection with any L/Cs or L/C Guarantees.
Borrower agrees to be bound by the issuing bank's regulations and
interpretations of any letters of credit guarantied by Foothill and opened to
or for Borrower's account or by Foothill's interpretations of any L/C issued by
Foothill to or for Borrower's account, even though this interpretation may be
different from Borrower's own, and Borrower understands and agrees that
Foothill shall not be liable for any error, negligence, or mistakes, whether of
omission or commission, in following Borrower's instructions or those contained
in the L/Cs or any modifications, amendments, or supplements thereto except for
Foothill's gross negligence. Borrower understands that the L/C Guarantees

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may require Foothill to indemnify the issuing bank for certain costs or
liabilities arising out of claims by Borrower against such issuing bank.
Borrower hereby agrees to indemnify, save, defend, and hold Foothill harmless
with respect to any loss, cost, expense (including attorneys fees), or
liability incurred by Foothill under any L/C Guaranty as a result of Foothill's
indemnification of any such issuing bank except for Foothill's gross negligence
or willful misconduct.

(c) Borrower hereby authorizes and directs any bank that issues a
letter of credit guaranteed by Foothill to deliver to Foothill all instruments,
documents, and other writings and property received by the issuing bank pursuant
to such letter of credit, and to accept and rely upon Foothill's instructions
and agreements with respect to all matters arising in connection with such
letter of credit and the related application. Borrower may or may not be the
"applicant" or "account party" with respect to such letter of credit.

(d) Any and all service charges, commissions, fees, and costs incurred
by Foothill relating to the letters of credit guaranteed by Foothill shall be
considered Foothill Expenses for purposes of this Agreement and immediately
shall be reimbursable by Borrower to Foothill. On the first day of each month,
Borrower shall pay Foothill a fee in arrears equal to one and three quarters
percent (1.75%) per annum times the average Daily Balance of the L/Cs and L/C
Guarantees that were outstanding during the immediately preceding month issued
by Foothill or by another Person at Foothill's direction for the account of
Borrower plus service charges, commissions and costs. Service charges,
commissions, fees, and costs may be charged to Borrower's loan account at the
time the service is rendered or the cost is incurred.

(e) Immediately upon the termination of this Agreement, Borrower agrees
to either: (i) provide cash collateral to be held by Foothill in an interest
bearing account in an amount equal to the maximum amount of Foothill's
obligations under L/Cs plus the maximum amount of Foothill's obligations to any
Person under outstanding L/C Guarantees, or (ii) cause to be delivered to
Foothill releases of all of Foothill's obligations under its outstanding L/Cs
and L/C Guarantees. At Foothill's discretion, any proceeds of Collateral
received by Foothill after the occurrence and during the continuation of an
Event of Default may be held as the cash collateral required by this Section
2.2(e) but said proceeds need not be held in an interest bearing account,
Foothill shall have no obligation upon termination of this Agreement to release
its lien on any of the Collateral until Borrower has complied with the
provisions of this Section 2.2(e).

2.3 OVERADVANCES. If, at any time or for any reason, the amount of
Obligations owed by Borrower to Foothill pursuant to Sections 2.1 and 2.2 is
greater than either the dollar or percentage limitations set forth in Sections
2.1 or 2.2 (an "Overadvance"), Borrower immediately shall pay to Foothill, in
cash, the amount of such excess to be used by Foothill first, to repay
non-contingent Obligations and, thereafter, to be held by Foothill as cash
collateral to secure Borrower's obligation to repay Foothill for all amounts
paid pursuant to L/Cs or L/C Guarantees.

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2.4 INTEREST: RATES, PAYMENTS, AND CALCULATIONS.

(a) Interest Rate. Guarantees shall bear interest pursuant to this
Section. Except as provided to the contrary in this Section 2.4(a) and Section
2.4(b) all Obligations, except for undrawn L/Cs and L/C Guarantees shall bear
interest on the average Daily Balance at a per annum rate of one (1%) percentage
point above the Reference Rate except if the Borrower meets projected EBITDA as
of June 30, 1998 of Eleven Million Five Hundred Thousand Dollars ($11,500,000)
as reflected on its audited financial statements, then all obligations, except
for undrawn L/Cs and L/C Guarantees, shall bear interest on the average Daily
Balance at a rate per annum of three quarters of one (0.75%) percentage point
above the Reference Rate. The reduced Interest Rate shall be effective as of
the first Business Day of the first month following the receipt and approval by
Foothill of the audited financial statements of the Borrower reflecting EBITDA
as of June 30, 1998 of $11,500,000.

(b) LIBOR OPTION. Provided there is no Event of Default in existence
hereunder or event which with the passage of time would become an Event of
Default, Borrower shall have the option to have interest calculated on an
amount equal to seventy five percent (75%) of the projected average Daily
Balance in accord with the Libor Supplement.

(c) Default Rate. All Obligations, except for undrawn L/Cs and L/C
Guarantees, shall bear interest, from and after the occurrence and during the
continuance of an Event of Default, at a per annum rate equal to four (4%)
percentage points above the Interest Rate in effect from time to time pursuant
to Section 2.4(a). From and after the occurrence and during the continuance of
an Event of Default, the fee provided in Section 2.2(d) shall be increased to a
fee equal to six percent (6%) per annum times the average Daily Balance of the
undrawn L/Cs and L/C Guarantees that were outstanding during the immediately
preceding month.

(d) Minimum Interest. In no event shall the rate of interest
chargeable hereunder be less than six and three quarters percent (6.75%) per
annum.

(e) Payments. Interest hereunder shall be due and payable, in
on the first day of each month during the term hereof. Borrower hereby
authorizes Foothill, at its option, without prior notice to Borrower, to charge
such interest, all Foothill Expenses (as and when incurred), and all
installments or other payments due under the Revolving Loan Note or any other
note or other Loan Document to Borrower's loan account, which amounts thereafter
shall accrue interest at the rate then applicable hereunder. Any interest not
paid when due shall be compounded by becoming a part of the Obligations, and
such interest shall thereafter accrue interest at the rate then applicable
hereunder.

(f) Computation. The Reference Rate as of the date of this Agreement
is eight and one half percent (8.5%) per annum. In the event the Reference Rate
is changed from time to time hereafter, the applicable rate of interest
hereunder automatically and immediately shall be increased or decreased by an
amount equal to such change in the Reference

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Rate. All interest and fees chargeable under the Loan Documents shall be
computed on the basis of a three hundred sixty (360) day year and charged for
the actual number of days elapsed.

(g) Intent to Limit Charges to Maximum Lawful Rate. In no event shall
the interest rate or rates payable under this Agreement, plus any other amounts
paid in connection herewith, exceed the highest rate permissible under any law
that a court of competent jurisdiction shall, in a final determination, deem
applicable. Borrower and Foothill, in executing this Agreement, intend legally
to agree upon the rate or rates of interest and manner of payment stated within
it; provided, however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceeds
the maximum allowable under applicable law, then, ipso facto as of the date of
this Agreement, Borrower is and shall be liable only for the payment of such
maximum as allowed by law, and payment received from Borrower in excess of such
legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.

2.5 CREDITING PAYMENTS; APPLICATION OF COLLECTIONS. The receipt of any
wire transfer of funds, check, or other item of payment by Foothill (whether
from transfers to Foothill by the Lockbox Banks pursuant to the Lockbox
Agreements or otherwise) immediately shall be applied to provisionally reduce
the Obligations, and thus increase availability pursuant to the Borrowing Base,
but shall not be considered a payment on account unless such wire transfer is
of immediately available federal funds and is made to the appropriate deposit
account of Foothill or unless and until such check or other item of payment is
honored when presented for payment. From and after the Closing Date, Foothill
shall be entitled to charge Borrower for two (2) Business Days of `clearance'
at the Interest Rate set forth in Section 2.4(a)(i), as applicable, on all
collections, checks, wire transfers, or other items of payment that are
received by Foothill (regardless of whether forwarded by the Lockbox Banks to
Foothill, whether provisionally applied to reduce the Obligations, or
otherwise). This across-the-board two (2) Business Day clearance charge on all
receipts is acknowledged by the parties to constitute an integral aspect of the
pricing of Foothill's facility to Borrower, and shall apply irrespective of the
characterization of whether receipts are owned by Borrower or Foothill, and
irrespective of the level of Borrower's Obligations to Foothill. Should any
check or item of payment not be honored when presented for payment, then
Borrower shall be deemed not to have made such payment, and interest shall be
recalculated accordingly. Anything to the contrary contained herein
notwithstanding, any wire transfer, check, or other item of payment shall be
deemed received by Foothill only if it is received into Foothill's Operating
Account (as such account is identified in the Lockbox Agreements) on or before
11:00 a.m. Los Angeles time. If any wire transfer, check, or other item of
payment is received into Foothill's Operating Account (as such account is
identified in the Lockbox Agreements) after 11:00 a.m. Los Angeles time it
shall be deemed to have been received by Foothill as of the opening of business
on the immediately following Business Day.

2.6 STATEMENTS OF OBLIGATIONS. Foothill shall render monthly statements
to Borrower of the Obligations, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Foothill
Expenses owing, and such statements shall be conclusively presumed to be
correct and accurate and constitute an account stated between

Borrower and Foothill unless, within thirty (30) days after receipt thereof by
Borrower, Borrower shall deliver to Foothill by registered or certified mail at
its address specified in Section 12, written objection thereto describing the
error or errors contained in any such statements.

2.7 FEES. Borrower shall pay to Foothill the following fees:

(a) Closing Fee. A one time closing fee of Two Hundred Eighty One
Thousand Two Hundred Fifty Dollars ($281,250) which is earned, in full, on the
Closing Date and is due and payable by Borrower to Foothill as follows: (i)
$70,314 on the Closing Date, (ii) $70,312 on August 1, 1997, (iii) $70,312 on
September 30, 1997 and (iv) $70,312 on December 31, 1997;

(b) Unused Line Fee. On the first day of each month during the term
of this Agreement, a fee in an amount equal to one quarter of one percent
(0.25%) per annum times the Average Unused Portion of the Maximum Amount;

(c) Financial Examination, Documentation, and Appraisal Fees.
Foothill's customary fee of Six Hundred Dollars ($600) per day per examiner,
plus out-of-pocket expenses for each financial analysis and examination of
Borrower performed by Foothill or its agents; Foothill's customary appraisal fee
of One Thousand Dollars ($1,000) per day per appraiser, plus out-of-pocket
expenses for each appraisal of the Collateral performed by Foothill or its
agents; and, on each anniversary of the Closing Date, Foothill's customary fee
of One Thousand Dollars ($1,000) per year for its loan documentation review; and

(d) Collateral Management Fee. On the first day of each month during
the term of this Agreement, and thereafter so long as any Obligations are
outstanding, a collateral management fee in an amount equal to Three Thousand
Dollars ($3,000) per month.

3. CONDITIONS; TERM OF AGREEMENT.

3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE, L/C, OR L/C GUARANTY. The
obligation of Foothill to make advances or to provide L/Cs or an L/C Guaranty
after the Closing Date is subject to the fulfillment, to the satisfaction of
Foothill and its counsel, of each of the following conditions on or before the
Closing Date:

(a) Foothill shall have received searches reflecting the filing of its
financing statements and fixture filings so that the security interest granted
hereunder shall, after payment to the Old Lender and subordination by the Old
Lender, give to Foothill a senior, perfected lien in all of the Collateral
including all trade names, trademarks and patents of Borrower except for
Permitted Liens and except with respect to tooling located outside the United
States.

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(b) In addition to the execution of this Agreement, Foothill shall have
received each of the following documents, duly executed, and each such document
shall be in full force and effect:

i) the Lockbox Agreements;

ii) the Amended and Restated Revolving Loan Note in the amount of
$75,000,000;

iii) Participation Agreements;

iv) the Patent Security Agreement;

(c) Foothill shall have received a certificate from the Secretary of
Borrower attesting to the resolutions of Borrower's Board of Directors
authorizing its execution and delivery of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific officers of
Borrower to execute same;

(d) Foothill shall have received copies of Borrower's By-laws and
Certificate of Incorporation, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of Borrower;

(e) Foothill shall have received ten (10) days prior to the Closing Date
a copy, duly certified by the Secretary of State of Delaware, of Borrower's
Certificate of Incorporation;

(f) Foothill shall have received a certificate of corporate status with
respect to Borrower, dated ten (10) days prior to the Closing Date, by the
Secretary of State of the state of incorporation of Borrower, which certificate
shall indicate that Borrower is in good standing in such state;

(g) Foothill shall have received certificates of corporate status with
respect to Borrower, each dated within fifteen (15) days of the Closing Date,
such certificates to be issued by the Secretary of State of the states in which
its failure to be duly qualified or licensed would have a material adverse
effect on the financial condition or properties and assets of Borrower, which
certificates shall indicate that Borrower is in good standing;

(h) Foothill shall have received the certified copies of the policies of
insurance, together with the endorsements thereto, as are required by Section
6.12 hereof, the form and substance of which shall be satisfactory to Foothill
and its counsel;

(i) Foothill shall have received duly executed certificates of title with
respect to that portion of the Collateral that is subject to certificates of
title;

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(j) Foothill shall have received landlord waivers and, if requested by
Foothill, mortgagee waivers from the lessors and mortgagees of the locations
where the Inventory or Equipment is located;

(k) Foothill shall have received an opinion of Borrower's counsel in form
and substance satisfactory to Foothill in its sole discretion;

(l) Foothill shall have received satisfactory evidence that all returns
required to be filed by Borrower have been timely filed and all taxes upon
Borrower or its properties, assets, income and franchises (including Real
Property taxes and payroll taxes) have been paid prior to delinquency, except
such taxes that are the subject of a Permitted Protest; and

(m) Foothill shall be satisfied that the Borrower is Solvent and shall
remain Solvent following the consummation of the transactions contemplated by
this Agreement.

(n) If not funded from Borrower's loan account, Foothill shall have
received the Closing Fee referred to in Section 2.7(a).

(o) all other documents and legal matters in connection with the
transactions contemplated by this Agreement shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to
Foothill and its counsel.

3.2 CONDITIONS PRECEDENT TO ALL ADVANCES, L/CS, OR L/C GUARANTEES. The
following shall be conditions precedent to all advances, L/Cs, or L/C
Guarantees hereunder:

(a) the representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all respects on and as of
the date of such advance, L/C, or L/C Guaranty, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date);

(b) no Event of Default or event which with the giving of notice or
passage of time would constitute an Event of Default shall have occurred and be
continuing on the date of such advance, L/C, or L/C Guaranty, nor shall either
result from the making thereof; and

(c) no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the making of such advance or the issuance
of such L/C or L/C Guaranty shall have been issued and remain in force by any
governmental authority against Borrower, Foothill, or any of their Affiliates.

3.3 TERM; AUTOMATIC RENEWAL. This Agreement shall become effective upon
the execution and delivery hereof by Borrower and Foothill, and this Agreement
shall continue in full force and effect for a term ending on September 30, 2000
(the "Renewal Date"). Unless sooner terminated pursuant to the terms hereof,
this Agreement shall be renewed for successive one (1) year periods thereafter.
Either party may terminate this Agreement effective on the

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Renewal Date or on any anniversary of the Renewal Date by giving the other
party at least ninety (90) days prior written notice by registered or certified
mail, return receipt requested. The foregoing notwithstanding, Foothill shall
have the right to terminate its obligations under this Agreement immediately
and without notice upon the occurrence and during the continuation of an Event
of Default.

3.4 EFFECT OF TERMINATION. On the date of termination, all Obligations
(including contingent reimbursement obligations under any outstanding L/Cs or
L/C Guarantees) immediately shall become due and payable without notice or
demand. No termination of this Agreement, however, shall relieve or discharge
Borrower of Borrower's duties, Obligations, or covenants hereunder, and
Foothill's continuing security interests in the Collateral shall remain in
effect until all Obligations have been fully and finally discharged and
Foothill's obligation to provide advances hereunder is terminated. If Borrower
has sent a notice of termination pursuant to the provisions of Section 3.3, but
fails to pay all Obligations on the date set forth in said notice, then
Foothill may, but shall not be required to, renew this Agreement for an
additional term of one (1) year.

3.5 EARLY TERMINATION BY BORROWER. The provisions of Section 3.3 that
allow termination of this Agreement by Borrower only on the Renewal Date and
certain anniversaries thereof notwithstanding, Borrower has the option, at any
time upon sixty (60) days prior written notice to Foothill, to terminate this
Agreement by paying to Foothill, in cash, the Obligations (including an amount
equal to the full amount of the L/Cs or L/C Guarantees), together with a
premium (the "Early Termination Premium") equal to (a) One percent (1%) of the
lesser of the Maximum Amount or the Maximum Foothill Amount plus the
Participated Amount if this Agreement is terminated on or prior to September
30, 1998 or (b) One Half percent (0.5%) of the lesser of the Maximum Amount or
the Maximum Foothill Amount plus the Participated Amount if this Agreement is
terminated after the September 30, 1998 but on or before September 30, 1999 or
(c) One quarter of one percent (0.25%) of the lesser of the Maximum Amount or
the Maximum Foothill Amount plus the Participated Amount if this Agreement is
terminated after September 30, 1999 but on or before September 30, 2000.
Notwithstanding the foregoing, in the event that a Participant terminates its
commitment with Foothill and Foothill is unable to find another participant to
advance up to the Participated Amount or Foothill is unwilling to increase the
Maximum Foothill Amount to Twenty Five Million Dollars ($25,000,000), then the
Borrower may, upon fifteen (15) days prior written notice to Foothill,
terminate this Agreement without any Early Termination Premium by paying
Foothill in cash, the Obligations (including an amount equal to the full amount
of the L/Cs or L/C Guarantees).

3.6 TERMINATION UPON CHANGE OF OWNERSHIP. Notwithstanding the provision
of Section 3.5, in the event of a Change of Ownership, excluding a Change of
Ownership to Windmere-Durabable Holdings, Inc., Borrower may upon sixty (60)
days prior written notice to Foothill after the Change of Ownership terminate
this Agreement by paying to Foothill in cash, the Obligations (including an
amount equal to the full amount of the L/Cs or L/C Guarantees) together with a
premium (the "Change of Ownership Premium") equal to (a) One percent (1.%) of
the lesser of the Maximum Amount or the Maximum Foothill Amount plus the

Participated Amount if this Agreement is terminated on or prior to September
30, 1998 or (b) One Half percent (.50%) of the lesser of the Maximum Amount or
the Maximum Foothill Amount plus the Participated Amount if this Agreement is
terminated after September 30, 1998 but on or before September 30, 1999 or (c)
One Quarter percent (.25%) of the lesser of the Maximum Amount or the Maximum
Foothill Amount plus the Participated Amount if this Agreement is terminated
after September 30, 1999, but on or before September 30, 2000.

3.7 TERMINATION UPON EVENT OF DEFAULT. If Foothill terminates this
Agreement upon the occurrence of an Event of Default, including a violation of
Section 7.9, in view of the impracticability and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Foothill's lost profits as a result thereof, Borrower
shall pay to Foothill upon the effective date of such termination, a premium in
an amount equal to the Early Termination Premium. The Early Termination
Premium shall be presumed to be the amount of damages sustained by Foothill as
the result of the early termination and Borrower agrees that it is reasonable
under the circumstances currently existing. The Early Termination Premium
provided for in this Section 3.7 shall be deemed included in the Obligations.

4. CREATION OF SECURITY INTEREST.

4.1 GRANT OF SECURITY INTEREST. Borrower hereby grants to Foothill a
continuing security interest in all currently existing and hereafter acquired
or arising Collateral in order to secure prompt repayment of any and all
Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Foothill's security
interests in the Collateral shall attach to all Collateral without further act
on the part of Foothill or Borrower. Anything contained in this Agreement or
any other Loan Document to the contrary notwithstanding, except for the sale of
Inventory to buyers in the ordinary course of business and the delivery of
tooling to vendors of the Borrower located outside of the United States,
Borrower has no authority, express or implied, to dispose of any item or
portion of the Collateral.

4.2 NEGOTIABLE COLLATERAL. In the event that any Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, Borrower shall,
immediately upon the request of Foothill, endorse and assign such Negotiable
Collateral to Foothill and deliver physical possession of such Negotiable
Collateral to Foothill.

4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, NEGOTIABLE COLLATERAL.
On or before the Closing Date, Foothill, Borrower, and the Lockbox Banks shall
enter into the Lockbox Agreements, in form and substance satisfactory to
Foothill in its sole discretion, pursuant to which all of Borrower's cash
receipts, checks, and other items of payment (including, insurance proceeds,
proceeds of cash sales, rental proceeds, and tax refunds) will be forwarded to
Foothill on a daily basis. At any time after an Event of Default or if
Foothill deems itself insecure (in accordance with Section 1208 of the Code),
Foothill or Foothill's designee may: (a) notify customers or Account Debtors of
Borrower that the Accounts, General

Intangibles, or Negotiable Collateral have been assigned to Foothill or that
Foothill has a security interest therein; and (b) collect the Accounts, General
Intangibles, and Negotiable Collateral directly and charge the collection costs
and expenses to Borrower's loan account. Borrower agrees that it will hold in
trust for Foothill, as Foothill's trustee, any cash receipts, checks, and other
items of payment (including, insurance proceeds, proceeds of cash sales, rental
proceeds, and tax refunds) that it receives and immediately will deliver said
cash receipts, checks, and other items of payment to Foothill in their original
form as received by Borrower.

4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. At any time upon the
request of Foothill, Borrower shall execute and deliver to Foothill all
financing statements, continuation financing statements, fixture filings,
security agreements, chattel mortgages, pledges, assignments, endorsements of
certificates of title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other documents that
Foothill may reasonably request, in form satisfactory to Foothill, to perfect
and continue perfected Foothill's security interests in the Collateral, and in
order to fully consummate all of the transactions contemplated hereby and under
the other the Loan Documents.

4.5 POWER OF ATTORNEY. Borrower hereby irrevocably makes, constitutes,
and appoints Foothill (and any of Foothill's officers, employees, or agents
designated by Foothill) as Borrower's true and lawful attorney, with power to:
(a) if Borrower refuses to, or fails timely to execute and deliver any of the
documents described in Section 4.4, sign the name of Borrower on any of the
documents described in Section 4.4; (b) at any time that an Event of Default
has occurred and is continuing or Foothill deems itself insecure (in accordance
with Section 1208 of the Code), sign Borrower's name on any invoice or xxxx of
lading relating to any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to Account
Debtors; (c) send requests for verification of Accounts; (d) endorse Borrower's
name on any checks, notices, acceptances, money orders, drafts, or other item
of payment or security that may come into Foothill's possession; (e) at any
time that an Event of Default has occurred and is continuing or Foothill deems
itself insecure (in accordance with Section 1208 of the Code), notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Foothill, to receive and open all mail addressed to
Borrower, and to retain all mail relating to the Collateral and forward all
other mail to Borrower; (f) at any time that an Event of Default has occurred
and is continuing or Foothill deems itself insecure (in accordance with Section
1208 of the Code), make, settle, and adjust all claims under Borrower's
policies of insurance and make all determinations and decisions with respect to
such policies of insurance; and (g) at any time that an Event of Default has
occurred and is continuing or Foothill deems itself insecure (in accordance
with Section 1208 of the Code), settle and adjust disputes and claims
respecting the Accounts directly with Account Debtors, for amounts and upon
terms which Foothill determines to be reasonable, and Foothill may cause to be
executed and delivered any documents and releases which Foothill determines to
be necessary. The appointment of Foothill as Borrower's attorney, and each and
every one of Foothill's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and Foothill's obligation to extend credit hereunder is terminated.
Notwithstanding anything to the contrary in this Section 4.5, unless there is
an Event of Default or Foothill deems itself insecure (in accordance with
Section

1208 of the Code), Foothill will only send requests for verification of
Accounts in a fictitious name.

4.6 RIGHT TO INSPECT. Foothill (through any of its officers, employees,
or agents) shall have the right, from time to time hereafter to inspect
Borrower's Books and to check, test, and appraise the Collateral in order to
verify Borrower's financial condition or the amount, quality, value, condition
of, or any other matter relating to, the Collateral provided, however, that
unless there is an Event of Default or Foothill deems itself insecure (in
accord with Section 1208 of the Code), any inspection as aforesaid shall only
be made during Borrower's normal business hours.

5. REPRESENTATIONS AND WARRANTIES.

Borrower represents and warrants to Foothill as follows:

5.1 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible title
to the Collateral, free and clear of liens, claims, security interests, or
encumbrances, except for Permitted Liens.

5.2 ELIGIBLE ACCOUNTS. The Eligible Accounts are, at the time of the
creation thereof and as of each date on which Borrower includes them in a
Borrowing Base calculation or certification, bona fide existing obligations
created by the sale and delivery of Inventory to Account Debtors in the ordinary
course of Borrower's business, unconditionally owed to Borrower without material
defenses, disputes, offsets, counterclaims, or rights of return or
cancellation. The property giving rise to such Eligible Accounts has been
delivered to the Account Debtor, or to the Account Debtor's agent or to a third
party transportation service for immediate shipment to and unconditional
acceptance by the Account Debtor. At the time of the creation of an Eligible
Account and as of each date on which Borrower includes an Eligible Account in a
Borrowing Base calculation or certification, Borrower has not received notice
of actual or imminent bankruptcy, insolvency, or material impairment of the
financial condition of any applicable Account Debtor regarding such Eligible
Account.

5.3 ELIGIBLE INVENTORY. All Eligible Inventory is now and at all
times hereafter shall be of good and merchantable quality, free from defects.

5.4 LOCATION OF INVENTORY AND EQUIPMENT. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party (without Foothill's
prior written consent) and are located only at the locations identified on
Schedule 6.15 or otherwise permitted by Section 6.15 except for tooling located
outside of the United States.

5.5 INVENTORY RECORDS. Borrower now keeps, and hereafter at all
times shall keep, correct and accurate records itemizing and describing the
kind, type, quality, and quantity of the Inventory, and Borrower's cost
therefor.

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5.6 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN. The chief executive office
of Borrower is located at the address indicated in the preamble to this
Agreement and Borrower's FEIN is 00-0000000.

5.7 DUE ORGANIZATION AND QUALIFICATION; NO SUBSIDIARIES. Borrower is duly
organized and existing and in good standing under the laws of the state of its
incorporation and qualified and licensed to do business in, and in good
standing in, any state where the failure to be so licensed or qualified could
reasonably be expected to have a material adverse effect on the business,
operations, condition (financial or otherwise), finances, or prospects of
Borrower or on the value of the Collateral to Foothill. Borrower has no
subsidiaries.

5.8 DUE AUTHORIZATION; NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's corporate powers, have
been duly authorized, and are not in conflict with nor constitute a breach of
any provision contained in Borrower's Articles or Certificate of Incorporation,
or By-laws, nor will they constitute an event of default under any material
agreement to which Borrower is a party or by which its properties or assets may
be bound.

5.9 LITIGATION. There are no actions or proceedings pending by or against
Borrower before any court or administrative agency and Borrower does not have
knowledge or belief of any pending, threatened, or imminent litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving Borrower except for: (a) ongoing collection matters in which
Borrower is the plaintiff; (b) matters disclosed on Schedule 5.9; and (c) and
matters arising after the date hereof that, if decided adversely to Borrower,
would not materially impair the prospect of repayment of the Obligations or
materially impair the value or priority of Foothill's security interests in the
Collateral.

5.10 NO MATERIAL ADVERSE CHANGE IN FINANCIAL CONDITION. All balance
sheets, income statements and cash flow statements relating to Borrower that
have been delivered by Borrower to Foothill have been prepared in accordance
with GAAP and fairly present Borrower's financial condition as of the date
thereof and Borrower's results of operations for the period then ended subject
to normal year end adjustments. There has not been a material adverse change
in the financial condition of Borrower since the date of the latest financial
statements submitted to Foothill on or before the Closing Date.

5.11 SOLVENCY. Borrower is Solvent and will remain Solvent for the
reasonably foreseeable future following the consummation of the transactions
contemplated by this Agreement. No transfer of property is being made by
Borrower and no obligation is being incurred by Borrower in connection with the
transactions contemplated by this Agreement or the other Loan Documents with
the intent to hinder, delay, or defraud either present or future creditors of
Borrower.

5.12 EMPLOYEE BENEFITS. Each Plan is in compliance in all material
respects with the applicable provisions of ERISA and the IRC. Each Qualified
Plan and Multiemployer Plan has been determined by the Internal Revenue Service
to qualify under Section 401 of the

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IRC, and the trusts created thereunder have been determined to be exempt from
tax under Section 501 of the IRC, and, to the best knowledge of Borrower,
nothing has occurred that would cause the loss of such qualification or
tax-exempt status. There are no outstanding liabilities under Title IV of
ERISA with respect to any Plan maintained or sponsored by Borrower or any ERISA
Affiliate, nor with respect to any Plan to which Borrower or any ERISA
Affiliate contributes or is obligated to contribute which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower. No Plan subject to Title IV of ERISA has any Unfunded Benefit
Liability which could reasonably be expected to have a material adverse effect
on the financial condition of Borrower. Neither Borrower nor any ERISA
Affiliate has transferred any Unfunded Benefit Liability to a person other than
Borrower or an ERISA Affiliate or has otherwise engaged in a transaction that
could be subject to Sections 4069 or 4212(c) of ERISA which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower. Neither Borrower nor any ERISA Affiliate has incurred nor reasonably
expects to incur (x) any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, or
(y) any liability under Title IV of ERISA (other than premiums due but not
delinquent under Section 4007 of ERISA) with respect to a Plan, which could, in
either event, reasonably be expected to have a material adverse effect on the
financial condition of Borrower. No application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the IRC has
been made with respect to any Plan. No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan which could reasonably be
expected to have a material adverse effect on the financial condition of
Borrower. Borrower and each ERISA Affiliate have complied in all material
respects with the notice and continuation coverage requirements of Section
4980B of the IRC.

5.13 ENVIRONMENTAL CONDITION. None of Borrower's properties or assets has
ever been used by Borrower or, to the best of Borrower's knowledge, by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials. None of Borrower's properties
or assets has ever been designated or identified in any manner pursuant to any
Environmental Laws as a Hazardous Materials disposal site, or a candidate for
closure pursuant to any Environmental Laws. No Environmental Lien arising
under any Environmental Laws has attached to any revenues or to any real or
personal property owned or operated by Borrower. Borrower has not received a
summons, citation, notice, or directive from the Environmental Protection
Agency or any other federal or state governmental agency concerning any action
or omission by Borrower resulting in the releasing or disposing of Hazardous
Materials into the environment or with respect to the violation of any
Environmental Laws.

5.14 AGREEMENT ENFORCEABLE. This Agreement and the Revolving Loan Note
constitute the legal, valid and binding obligations of the Borrower and are
enforceable against the Borrower in accord with their terms.

5.15 RELIANCE BY FOOTHILL; CUMULATIVE. Each warranty and representation
contained in this Agreement automatically shall be deemed repeated with each
advance or

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issuance of an L/C or L/C Guaranty and shall be conclusively presumed to have
been relied on by Foothill regardless of any investigation made or information
possessed by Foothill. The warranties and representations set forth herein
shall be cumulative and in addition to any and all other warranties and
representations that Borrower now or hereafter shall give, or cause to be
given, to Foothill.

6. AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder
shall be available and until full and final payment of the Obligations, and
unless Foothill shall otherwise consent in writing, Borrower shall do all of the
following:

6.1 ACCOUNTING SYSTEM. Borrower shall maintain a standard and modern
system of accounting in accordance with GAAP with ledger and account cards or
computer tapes, discs, printouts, and records pertaining to the Collateral
which contain information as from time to time may be requested by Foothill.
Borrower also shall keep proper books of account showing all sales, claims, and
allowances on its Inventory.

6.2 COLLATERAL REPORTS. Borrower shall deliver to Foothill, no later
than the tenth (10th) day of each month during the term of this Agreement, a
detailed aging, by total, of the Accounts, a reconciliation statement, and a
summary aging, by vendor, of all accounts payable and any book overdraft.
Original sales invoices evidencing daily sales shall be mailed by Borrower to
each Account Debtor with, at Foothill's request, a copy to Foothill, and, at
Foothill's direction, and after an Event of Default or if Foothill shall deem
itself insecure (in accord with Section 1208 of the Code), the invoices shall
indicate on their face that the Account has been assigned to Foothill and that
all payments are to be made directly to Foothill. Borrower shall deliver to
Foothill, as Foothill may from time to time reasonably require, collection
reports, sales journals, invoices, original delivery receipts, customer's
purchase orders, shipping instructions, bills of lading, and other
documentation respecting shipment arrangements. Absent such a request by
Foothill, copies of all such documentation shall be held by Borrower as
custodian for Foothill. In addition, from time to time, Borrower shall deliver
to Foothill such other and additional information or documentation as Foothill
may request.

6.3 SCHEDULES OF ACCOUNTS. With such regularity as Foothill shall
require, Borrower shall provide Foothill with schedules describing all
Accounts. Foothill's failure to request such schedules or Borrower's failure
to execute and deliver such schedules shall not affect or limit Foothill's
security interests or other rights in and to the Accounts.

6.4 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Borrower agrees to
deliver to Foothill: (a) as soon as available, but in any event within thirty
(30) days after the end of each Fiscal Month during each of Borrower's fiscal
years, except within forty five (45) days after the end of each fiscal quarter,
a company prepared balance sheet, income statement, and cash flow statement
covering Borrower's operations during such period; and (b) as soon as
available, but in any event within ninety (90) days after the end of each of
Borrower's fiscal years, financial statements of Borrower for each such fiscal
year, audited by independent

certified public accountants reasonably acceptable to Foothill and certified,
without any qualifications, by such accountants to have been prepared in
accordance with GAAP, together with a certificate of such accountants addressed
to Foothill stating that such accountants do not have knowledge of the
existence of any event or condition constituting an Event of Default, or that
would, with the passage of time or the giving of notice, constitute an Event of
Default. Such audited financial statements shall include a balance sheet,
profit and loss statement, and cash flow statement, and, if prepared, such
accountants' letter to management. If Borrower is a parent company of one or
more subsidiaries, or Affiliates, or is a subsidiary or Affiliate of another
company, then, in addition to the financial statements referred to above,
Borrower agrees to deliver financial statements prepared on a consolidating
basis so as to present Borrower and each such related entity separately, and on
a consolidated basis.

Together with the above, Borrower also shall deliver to Foothill Borrower's
Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K Current
Reports, and any other filings made by Borrower with the Securities and
Exchange Commission, if any, as soon as the same are filed, or any other
information that is provided by Borrower to its shareholders, and any other
report reasonably requested by Foothill relating to the Collateral, or the
financial condition of Borrower.

Each month, together with the financial statements provided pursuant to
Section 6.4(a), Borrower shall deliver to Foothill a certificate signed by its
chief financial officer to the effect that: (i) all reports, statements, or
computer prepared information of any kind or nature delivered or caused to be
delivered to Foothill hereunder have been prepared in accordance with GAAP and
fairly present the financial condition of Borrower; (ii) Borrower is in timely
compliance with all of its covenants and agreements hereunder; (iii) the
representations and warranties of Borrower contained in this Agreement and the
other Loan Documents are true and correct in all material respects on and as of
the date of such certificate, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date); and (iv) on the date of delivery of such certificate to Foothill there
does not exist any condition or event that constitutes an Event of Default (or,
in each case, to the extent of any non-compliance, describing such
non-compliance as to which he or she may have knowledge and what action
Borrower has taken, is taking, or proposes to take with respect thereto).

Borrower shall have issued written instructions to its independent certified
public accountants authorizing them to communicate with Foothill and to release
to Foothill whatever financial information concerning Borrower that Foothill
may request. Borrower hereby irrevocably authorizes and directs all auditors,
accountants, or other third parties to deliver to Foothill, at Borrower's
expense, copies of Borrower's financial statements, papers related thereto, and
other accounting records of any nature in their possession, and to disclose to
Foothill any information they may have regarding Borrower's financial
statements and financial conditions.

6.5 TAX RETURNS. Borrower agrees to deliver to Foothill copies of each of
Borrower's future federal income tax returns, and any amendments thereto,
within thirty (30) days of the filing thereof with the Internal Revenue
Service.

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6.6 INTENTIONALLY OMMITTED.

6.7 DESIGNATION OF INVENTORY. Borrower shall now and from time to time
hereafter, but not less frequently than monthly, execute and deliver to
Foothill a designation of Inventory specifying the value of Borrower's raw
materials, work in process, and finished goods, at the lower of Landed Cost or
Market Value and further specifying such other information as Foothill may
reasonably request.

6.8 RETURNS. Returns and allowances, if any, as between Borrower and its
Account Debtors shall be on the same basis and in accordance with the usual
customary practices of Borrower, as they exist at the time of the execution and
delivery of this Agreement. If, at a time when no Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to
Borrower, Borrower promptly shall determine the reason for such return and, if
Borrower accepts such return, issue a credit memorandum (with a copy to be sent
to Foothill) in the appropriate amount to such Account Debtor. If, at a time
when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to Borrower, Borrower promptly shall determine the reason
for such return and, if Foothill consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Foothill) in the appropriate amount to such Account Debtor. On a daily basis,
Borrower shall provide Foothill with a copy of its credit memo journal and
shall notify Foothill of any material disputes or claims.

6.9 TITLE TO EQUIPMENT. Upon Foothill's request, Borrower immediately
shall deliver to Foothill, properly endorsed, any and all evidences of
ownership of, certificates of title, or applications for title to any items of
Equipment.

6.10 MAINTENANCE OF EQUIPMENT. Borrower shall keep and maintain the
Equipment in good operating condition and repair (ordinary wear and tear
excepted), and make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any item of Equipment to become a fixture to real
estate or an accession to other property, and the Equipment is now and shall at
all times remain personal property.

6.11 TAXES. All assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Borrower
or any of its property have been paid, and shall hereafter be paid in full,
before delinquency or before the expiration of any extension period. Borrower
shall make due and timely payment or deposit of all federal, state, and local
taxes, assessments, or contributions required of it by law, and will execute
and deliver to Foothill, on demand, appropriate certificates attesting to the
payment thereof or deposit with respect thereto. Borrower will make timely
payment or deposit of all tax payments and withholding taxes required of it by
applicable laws, including those laws concerning F.I.C.A., F.U.T.A., state
disability, and local, state, and federal income taxes, and will, upon request,
furnish Foothill with proof satisfactory to Foothill indicating that Borrower
has made such payments or deposits.

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6.12 INSURANCE.

(a) Borrower, at its expense, shall keep the Collateral and all real
property leased to Borrower insured against loss or damage by fire, theft,
explosion, sprinklers, and all other hazards and risks, and in such amounts, as
are ordinarily insured against by other owners in similar businesses. Borrower
also shall maintain business interruption, public liability, product liability,
and property damage insurance relating to Borrower's ownership and use of the
Collateral as well as insurance against larceny, embezzlement, and criminal
misappropriation.

(b) All such policies of insurance shall be in such form, with such
companies, and in such amounts as may be reasonably satisfactory to Foothill.
All such policies of insurance (except those of public liability and property
damage) shall contain a lender's loss payable endorsement, or an equivalent
endorsement in a form satisfactory to Foothill, showing Foothill as sole loss
payee thereof, and shall contain a waiver of warranties, and shall specify that
the insurer must give at least ten (10) days prior written notice to Foothill
before canceling its policy for any reason. Borrower shall deliver to Foothill
certified copies of such policies of insurance and evidence of the payment of
all premiums therefor. All proceeds payable under any such policy shall be
payable to Foothill to be applied on account of the Obligations.

6.13 FINANCIAL COVENANTS. Borrower shall maintain:

(a) Total Liabilities to Tangible Net Worth Ratio. A ratio of
Borrower's total liabilities divided by Tangible Net Worth of not more than five
to one (5: 1.0), measured on a fiscal quarter-end basis;

(b) Tangible Net Worth. Tangible Net Worth of at least Fifteen
Million Dollars ($15,000,000), measured on a fiscal quarter-end basis; and

(c) EBITDA. EBITDA calculated on a rolling twelve month basis of not
less than Seven Million Five Hundred Thousand Dollars ($7,500,000) measured on a
semi annual and fiscal year end basis.

6.14 NO SETOFFS OR COUNTERCLAIMS. All payments hereunder and under the
other Loan Documents made by or on behalf of Borrower shall be made without
setoff or counterclaim and free and clear of, and without deduction or
withholding for or on account of, any federal, state, or local taxes.

6.15 LOCATION OF INVENTORY AND EQUIPMENT. Except with respect to tooling
in the possession of Borrower's foreign vendors and located outside of the
United States, Borrower shall keep the Inventory and Equipment only at the
locations identified on Schedule 6.15; provided, however, that Borrower may
amend Schedule 6.15 so long as such amendment occurs by written notice to
Foothill not less than thirty (30) days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as such new
location is within the continental United States, and so long as, at the time
of such written notification, Borrower

provides any financing statements or fixture filings necessary to perfect and
continue perfected (in terms of both priority and right) Foothill's security
interests in such assets and also provides to Foothill a landlord's waiver in
form and substance satisfactory to Foothill.

6.16 COMPLIANCE WITH LAWS. Borrower shall comply with the requirements of
all applicable laws, rules, regulations, and orders of any governmental
authority, including the Fair Labor Standards Act and the Americans With
Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not have and
could not reasonably be expected to have a material adverse effect on the
business, operations, condition (financial or otherwise), finances, or
prospects of Borrower or on the value of the Collateral to Foothill.

6.17 EMPLOYEE BENEFITS.

(a) Borrower shall deliver to Foothill a written statement by the chief
financial officer of Borrower specifying the nature of any of the following
events and the actions which Borrower proposes to take with respect thereto
promptly, and in any event within ten (10) days of becoming aware of any of
them, and when known, any action taken or threatened by the Internal Revenue
Service, PBGC, Department of Labor, or other party with respect thereto: (i)
an ERISA Event with respect to any Plan; (ii) the incurrence of an obligation
to pay additional premium to the PBGC under Section 4006(a)(3)(E) of ERISA with
respect to any Plan; and (iii) any lien on the assets of Borrower arising in
connection with any Plan.

(b) Borrower shall also promptly furnish to Foothill copies prepared or
received by Borrower or an ERISA Affiliate of: (i) at the request of Foothill,
each annual report (Internal Revenue Service Form 5500 series) and all
accompanying schedules, actuarial reports, financial information concerning the
financial status of each Plan, and schedules showing the amounts contributed to
each Plan by or on behalf of Borrower or its ERISA Affiliates for the most
recent three (3) plan years; (ii) all notices of intent to terminate or to have
a trustee appointed to administer any Plan; (iii) all written demands by the
PBGC under Subtitle D of Title IV of ERISA; (iv) all notices required to be
sent to employees or to the PBGC under Section 302 of ERISA or Section 412 of
the IRC; (v) all written notices received with respect to a Multiemployer Plan
concerning (x) the imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA, (y) a termination described in Section 4041A of ERISA,
or (z) a reorganization or insolvency described in Subtitle E of Title IV of
ERISA; (vi) the adoption of any new Plan that is subject to Title IV of ERISA
or Section 412 of the IRC by Borrower or any ERISA Affiliate; (vii) the
adoption of any amendment to any Plan that is subject to Title IV of ERISA or
Section 412 of the IRC, if such amendment results in a material increase in
benefits or Unfunded Benefit Liability; or (viii) the commencement of
contributions by Borrower or any ERISA Affiliate to any Plan that is subject to
Title IV of ERISA or Section 412 of the IRC.

6.18 LEASES. Borrower shall pay when due all rents and other amounts
payable under any leases to which Borrower is a party or by which Borrower's
properties and assets are bound, unless such payments are the subject of a
Permitted Protest. To the extent that Borrower fails timely to make payment of
such rents and other amounts payable when due under its leases,

Foothill shall be entitled, in its discretion, and without the necessity of
declaring an Event of Default, to reserve an amount equal to such unpaid
amounts from the loan availability created under Section 2.1 hereof.

7. NEGATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder shall
be available and until full and final payment of the Obligations, Borrower will
not do any of the following without Foothill's prior written consent:

7.1 INDEBTEDNESS. Create, incur, assume, permit, guarantee, or otherwise
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

(a) Indebtedness evidenced by this Agreement;

(b) Indebtedness set forth in the latest financial statements of
Borrower submitted to Foothill on or prior to the Closing Date provided, however
that Borrower shall, until all obligations are paid to Foothill, not make any
payments to any holders of the Subordinated Debt except that regularly scheduled
quarterly interest payments may be made to Allied Capital Corporation pursuant
to the Second Amended and Restated 10% Subordinated Debenture, dated July 28,
1994;

(d) refinancings, renewals, or extensions of Indebtedness permitted
under clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not materially impair the
prospects of repayment of the Obligations by Borrower, (ii) the net cash
proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that
Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Foothill as those applicable to
the refinanced Indebtedness.

7.2 LIENS. Create, incur, assume, or permit to exist, directly or
indirectly, any lien on or with respect to any of its property or assets, of
any kind, whether now owned or hereafter acquired, or any income or profits
therefrom, except for Permitted Liens (including liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is refinanced
under Section 7.1(d) and so long as the replacement liens secure only those
assets or property that secured the original Indebtedness).

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7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES. Enter into any acquisition,
merger, consolidation, reorganization, or recapitalization, or reclassify its
capital stock, or liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or
any substantial part of its business, property, or assets, whether now owned or
hereafter acquired, or acquire by purchase or otherwise all or substantially
all of the properties, assets, stock, or other evidence of beneficial ownership
of any Person.

7.4 EXTRAORDINARY TRANSACTIONS AND DISPOSAL OF ASSETS. Enter into any
transaction not in the ordinary and usual course of Borrower's business,
including the sale, lease, or other disposition of, moving, relocation, or
transfer, whether by sale or otherwise, of any of Borrower's properties or
assets (other than sales of Inventory to buyers in the ordinary course of
Borrower's business as currently conducted or the disposition or moving of any
tooling in the possession of Borrower's foreign vendors and located outside the
United States).

7.5 CHANGE NAME. Change Borrower's name, FEIN, business structure, or
identity, or add any new fictitious name.

7.6 GUARANTEE. Guarantee or otherwise become in any way liable with
respect to the obligations of any third Person except by endorsement of
instruments or items of payment for deposit to the account of Borrower or which
are transmitted or turned over to Foothill.

7.7 RESTRUCTURE. Make any change in Borrower's financial structure, the
principal nature of Borrower's business operations, or the date of its fiscal
year.

7.8 PREPAYMENTS. Except in connection with a refinancing permitted by
Section 7.1(d), prepay any Indebtedness owing to any third Person.

7.9 CHANGE OF OWNERSHIP. Cause, permit, or suffer, directly or
indirectly, any Change of Ownership except a Change of Ownership, to
Windmere-Durable Holdings, Inc.

7.10 CAPITAL EXPENDITURES. Make any capital expenditure, or any commitment
therefor, in excess of Two Million Dollars ($2,000,000) for any individual
transaction or where the aggregate amount of such capital expenditures, made or
committed for in any fiscal year, is in excess of Four Million Dollars
($4,000,000).

7.11 CONSIGNMENTS. Consign any Inventory or sell any Inventory on xxxx and
hold, sale or return, sale on approval, or other conditional terms of sale.

7.12 DISTRIBUTIONS. Make any distribution or declare or pay any dividends
(in cash or in stock) on, or purchase, acquire, redeem, or retire any of
Borrower's capital stock, of any class, whether now or hereafter outstanding.

7.13 ACCOUNTING METHODS. Modify or change its method of accounting or
enter into, modify, or terminate any agreement currently existing, or at any
time hereafter entered into

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with any third party accounting firm or service bureau for the preparation or
storage of Borrower's accounting records without said accounting firm or
service bureau agreeing to provide Foothill information regarding the
Collateral or Borrower's financial condition. Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting
firm or service bureau in connection with any information requested by Foothill
with respect to any financial statements of the Borrower or the Borrower's
financial condition and agrees that Foothill may contact directly any such
accounting firm or service bureau in order to obtain such information provided,
however that Borrower or its agent may attend any meeting between Foothill or
its agent and any accounting firm a service bureau engaged by Borrower.

7.14 INVESTMENTS. Directly or indirectly make or acquire any beneficial
interest in (including stock, partnership interest, or other securities of), or
make any loan, advance, or capital contribution to, any Person.

7.15 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter into or
permit to exist any material transaction with any Affiliate of Borrower except
for transactions that are in the ordinary course of Borrower's business, upon
fair and reasonable terms, that are fully disclosed to Foothill, and that are
no less favorable to Borrower than would be obtained in arm's length
transaction with a non-Affiliate.

7.16 SUSPENSION. Suspend or go out of a substantial portion of its
business.

7.17 COMPENSATION. Increase the annual fee or per-meeting fees paid to
directors during any year by more than fifteen percent (15%) over the prior
year; pay or accrue total cash compensation, during any year, to officers and
senior management employees in an aggregate amount in excess of one hundred
fifteen percent (115%) of that paid or accrued in the prior year other than
payments made pursuant to a bonus program, the terms and conditions of which
shall be acceptable to Foothill in its sole and absolute discretion.

7.18 USE OF PROCEEDS. Use the proceeds of the advances made hereunder for
any purpose other than: (a) on the Closing Date, to repay in full the
outstanding principal, accrued interest, and accrued fees and expenses owing to
Old Lender; (b) to pay transactional costs and expenses incurred in connection
with this Agreement; and (c) thereafter, consistent with the terms and
conditions hereof, for its lawful and permitted corporate purposes.

7.19 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICE; INVENTORY AND EQUIPMENT
WITH BAILEES. Borrower covenants and agrees that it will not, without thirty
(30) days prior written notification to Foothill, relocate its chief executive
office to a new location and so long as, at the time of such written
notification, Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Foothill's security interests and
also provides to Foothill a landlord's waiver in form and substance
satisfactory to Foothill. The Inventory and Equipment shall not at any time
now or hereafter be stored with a bailee, warehouseman, or similar party
without Foothill's prior written consent.

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7.20 PAYMENT OF SUBORDINATED DEBT. Make any payment of any Subordinated
Debt except pursuant to any Subordination Agreement or Standstill Agreement in
form and content acceptable to Foothill and regularly scheduled quarterly
interest payments may be made to Allied Capital Corporation pursuant to the
Second Amended and Restated 10% Subordinated Debenture, dated July 28, 1994.

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an "Event of Default") under this Agreement:

8.1 If Borrower fails to pay when due and payable or when declared due and
payable, any portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts), fees and charges due Foothill,
reimbursement of Foothill Expenses, or other amounts constituting Obligations);

8.2 If Borrower fails or neglects to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in this Agreement, in
any of the Loan Documents, or in any other present or future agreement between
Borrower and Foothill except that the Borrower shall have the time period set
forth opposite the following Sections of this Agreement after notice to cure
any failure to comply with the terms of said Section:

Section 6.2 5 days
6.3 5 days
6.4 15 days
6.5 15 days
6.6 15 days
6.7 5 days

8.3 If there is a material impairment of the prospect of repayment of any
portion of the Obligations owing to Foothill or a material impairment of the
value or priority of Foothill's security interests in the Collateral.

8.4 If any material portion of Borrower's properties or assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon,
or comes into the possession of any third Person;

8.5 If an Insolvency Proceeding is commenced by Borrower;

8.6 If an Insolvency Proceeding is commenced against Borrower and any of
the following events occur: (a) Borrower consents to the institution of the
Insolvency Proceeding against it; (b) the petition commencing the Insolvency
Proceeding is not timely controverted; (c) the petition commencing the
Insolvency Proceeding is not dismissed within forty-five (45) calendar days of
the date of the filing thereof; provided, however, that, during

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the pendency of such period, Foothill shall be relieved of its obligation to
make additional advances or issue additional L/Cs or L/C Guarantees hereunder;
(d) an interim trustee is appointed to take possession of all or a substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower; or (e) an order for relief shall have
been issued or entered therein;

8.7 If Borrower is enjoined, restrained, or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs;

8.8 If a notice of lien, levy, or assessment is filed of record with
respect to any of Borrower's properties or assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a lien,
whether xxxxxx or otherwise, upon any of Borrower's properties or assets and
the same is not paid on the payment date thereof;

8.9 If a judgment or other claim becomes a lien or encumbrance upon any
material portion of Borrower's properties or assets and is not removed within
five (5) days;

8.10 If there is a default in any material agreement with obligations of
One Hundred Thousand Dollars ($100,000) or more to which Borrower is a party
with one or more third Persons resulting in a right by such third Persons,
irrespective of whether exercised, to accelerate the maturity of Borrower's
obligations thereunder, excluding any defaults under those certain Second
Amended and Restated 10% Subordinated Debentures, each dated July 28, 1994,
issued by the Borrower in favor of each of Mesirow Capital Partners III,
Mesirow Capital Partners IV, Mesirow Capital Partners V, and Allied Capital
Corporation or under that certain Third Amended and Restated Promissory Note
executed by the Borrower in favor of Financo Investors Fund, L.P.; provided,
that a Standstill Agreement in form and substance satisfactory to Foothill is
in existence at the time of such default;

8.11 If Borrower makes any payment on account of Indebtedness that has been
contractually subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by the terms of the
subordination provisions applicable to such Indebtedness;

8.12 If any misstatement or misrepresentation exists now or hereafter in
any warranty, representation, statement, or report made to Foothill by Borrower
or any officer, employee, agent, or director of Borrower, or if any such
warranty or representation is withdrawn;

8.13 INTENTIONALLY OMITTED.

8.14 If (a) with respect to any Plan, there shall occur any of the
following which could reasonably be expected to have a material adverse effect
on the financial condition of Borrower: (i) the violation of any of the
provisions of ERISA; (ii) the loss by a Plan intended

to be a Qualified Plan of its qualification under Section 401(a) of the IRC;
(iii) the incurrence of liability under Title IV of ERISA; (iv) a failure to
make full payment when due of all amounts which, under the provisions of any
Plan or applicable law, Borrower or any ERISA Affiliate is required to make;
(v) the filing of a notice of intent to terminate a Plan under Sections 4041 or
4041A of ERISA; (vi) a complete or partial withdrawal of Borrower or an ERISA
Affiliate from any Plan; (vii) the receipt of a notice by the plan
administrator of a Plan that the PBGC has instituted proceedings to terminate
such Plan or appoint a trustee to administer such Plan; (viii) a commencement
or increase of contributions to, or the adoption of or the amendment of, a
Plan; and (ix) the assessment against Borrower or any ERISA Affiliate of a tax
under Section 4980B of the IRC; or (b) the Unfunded Benefit Liability of all of
the Plans of Borrower and its ERISA Affiliates shall, in the aggregate, exceed
One Dollar ($1.00).

9. FOOTHILL'S RIGHTS AND REMEDIES.

9.1 RIGHTS AND REMEDIES. Upon the occurrence, and during the
continuation, of an Event of Default Foothill may, at its election, without
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:

(a) Declare all Obligations, whether evidenced by this Agreement, by
any of the other Loan Documents, or otherwise, immediately due and payable;

(b) Cease advancing money or extending credit to or for the benefit
of Borrower under this Agreement, under any of the Loan Documents, or under any
other agreement between Borrower and Foothill;

(c) Terminate this Agreement and any of the other Loan Documents as
to any future liability or obligation of Foothill, but without affecting
Foothill's rights and security interests in the Collateral and without
affecting the Obligations;

(d) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Foothill considers advisable, and in
such cases, Foothill will credit Borrower's loan account with only the net
amounts received by Foothill in payment of such disputed Accounts after
deducting all Foothill Expenses incurred or expended in connection therewith;

(e) Cause Borrower to hold all returned Inventory in trust for
Foothill, segregate all returned Inventory from all other property of Borrower
or in Borrower's possession and conspicuously label said returned Inventory as
the property of Foothill;

(f) Without notice to or demand upon Borrower make such payments
and do such acts as Foothill considers necessary or reasonable to protect its
security interests in the Collateral. Borrower agrees to assemble the
Collateral if Foothill so requires, and to make the Collateral available to
Foothill as Foothill may designate. Borrower authorizes Foothill to enter the
premises where the Collateral is located, to take and maintain possession of the
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
encumbrance,

charge, or lien that in Foothill's determination appears to conflict with its
security interests and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned premises, Borrower hereby grants
Foothill a license to enter into possession of such premises and to occupy the
same, without charge, for up to one hundred twenty (120) days in order to
exercise any of Foothill's rights or remedies provided herein, at law, in
equity, or otherwise;

(g) Without notice to Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of Section 9505 of the Code), set off and apply
to the Obligations any and all (i) balances and deposits of Borrower held by
Foothill (including any amounts received in the Lockbox Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrower
held by Foothill;

(h) Hold, as cash collateral, any and all balances and deposits of
Borrower held by Foothill, and any amounts received in the Lockbox Accounts, to
secure the full and final repayment of all of the Obligations;

(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for
sale, advertise for sale, and sell (in the manner provided for herein) the
Collateral. Foothill is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Borrower's rights under all licenses and all franchise agreements shall
inure to Foothill's benefit;

(j) Sell the Collateral at either a public or private sale, or both, by
way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrower's premises) as Foothill
determines is commercially reasonable. It is not necessary that the Collateral
be present at any such sale;

(k) Foothill shall give notice of the disposition of the Collateral as
follows:

(1) Foothill shall give Borrower and each holder of a security
interest in the Collateral who has filed with Foothill a written request for
notice, a notice in writing of the time and place of public sale, or, if the
sale is a private sale or some other disposition other than a public sale is
to be made of the Collateral, then the time on or after which the private sale
or other disposition is to be made;

(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower as provided in Section 12, at least five (5) days before
the date fixed for the sale, or at least five (5) days before the date on or
after which the private sale or other disposition is to be made; no notice needs
to be given prior to the disposition of any portion of the Collateral that is
perishable or threatens to decline speedily in value or that is of a type

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customarily sold on a recognized market. Notice to Persons other than Borrower
claiming an interest in the Collateral shall be sent to such addresses as they
have furnished to Foothill;

(3) If the sale is to be a public sale, Foothill also shall give notice
of the time and place by publishing a notice one time at least five (5) days
before the date of the sale in a newspaper of general circulation in the county
in which the sale is to be held;

(l) Foothill may credit bid and purchase at any public sale; and

(m) Any deficiency that exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third Persons, by
Foothill to Borrower.

9.2 REMEDIES CUMULATIVE. Foothill's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Foothill shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Foothill of one
right or remedy shall be deemed an election, and no waiver by Foothill of any
Event of Default shall be deemed a continuing waiver. No delay by Foothill
shall constitute a waiver, election, or acquiescence by it.

10. TAXES AND EXPENSES.

If Borrower fails to pay any monies (whether taxes, rents, assessments,
insurance premiums, or otherwise) due to third Persons, or fails to make any
deposits or furnish any required proof of payment or deposit, all as required
under the terms of this Agreement, then, to the extent that Foothill determines
that such failure by Borrower could have a material adverse effect on
Foothill's interests in the Collateral, in its discretion and without prior
notice to Borrower, Foothill may do any or all of the following: (a) make
payment of the same or any part thereof; (b) set up such reserves in Borrower's
loan account as Foothill deems necessary to protect Foothill from the exposure
created by such failure; or (c) obtain and maintain insurance policies of the
type described in Section 6.12, and take any action with respect to such
policies as Foothill deems prudent. Any such amounts paid by Foothill shall
constitute Foothill Expenses. Any such payments made by Foothill shall not
constitute an agreement by Foothill to make similar payments in the future or a
waiver by Foothill of any Event of Default under this Agreement. Foothill need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance, or lien and the receipt of the usual official notice for
the payment thereof shall be conclusive evidence that the same was validly due
and owing.

11. WAIVERS; INDEMNIFICATION.

11.1 DEMAND; PROTEST; ETC. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Foothill on which Borrower may in any way be
liable.

11.2 FOOTHILL'S LIABILITY FOR COLLATERAL. So long as Foothill complies
with its obligations, if any, under Section 9207 of the Code, Foothill shall
not in any way or manner be liable or responsible for: (a) the safekeeping of
the Collateral; (b) any loss or damage thereto occurring or arising in any
manner or fashion from any cause; (c) any diminution in the value thereof; or
(d) any act or default of any carrier, warehouseman, bailee, forwarding agency,
or other Person. All risk of loss, damage, or destruction of the Collateral
shall be borne by Borrower.

11.3 INDEMNIFICATION. Borrower agrees to defend, indemnify, save, and hold
Foothill and its officers, employees, and agents harmless against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
Person arising out of or relating to the transactions contemplated by this
Agreement or any other Loan Document, and (b) all losses (including attorneys
fees and disbursements) in any way suffered, incurred, or paid by Foothill as a
result of or in any way arising out of, following, or consequential to the
transactions contemplated by this Agreement or any other Loan Document except
this indemnification shall not apply in the event any loss to Foothill was
caused by its gross negligence or wilful misconduct. This provision shall
survive the termination of this Agreement.

12. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by
any party relating to this Agreement or any other Loan Document shall be in
writing and (except for financial statements and other informational documents
which may be sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or by prepaid telex, TWX, telefacsimile, or telegram (with
messenger delivery specified) to Borrower or to Foothill, as the case may be, at
its address set forth below:

If to Borrower: SALTON/MAXIM HOUSEWARES, INC.
000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Attn.: Xxxx Xxxxxxxx

Telefacsimile No. (000) 000-0000

If to Foothill: FOOTHILL CAPITAL CORPORATION
00 Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn.: Business Finance Division Manager

Telefacsimile No. (000) 000-0000

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The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. All notices or demands sent in accordance with this Section 12, other
than notices by Foothill in connection with Sections 9504 or 9505 of the Code,
shall be deemed received on the earlier of the date of actual receipt or three
(3) days after the deposit thereof in the mail. Borrower acknowledges and
agrees that notices sent by Foothill in connection with Sections 9504 or 9505
of the Code shall be deemed sent when deposited in the mail or transmitted by
telefacsimile or other similar method set forth above.

13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT
GIVING EFFECT TO ITS CONFLICT OF LAWS PRINCIPLES. THE PARTIES AGREE THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED
AND LITIGATED ONLY IN THE STATE OR FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA OR, AT THE SOLE OPTION OF FOOTHILL, IN ANY OTHER
COURT IN WHICH FOOTHILL SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH
HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH OF
BORROWER AND FOOTHILL WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13. BORROWER AND FOOTHILL HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS. BORROWER AND FOOTHILL REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

14. DESTRUCTION OF BORROWER'S DOCUMENTS.

All documents, schedules, invoices, agings, or other papers delivered to
Foothill may be destroyed or otherwise disposed of by Foothill four (4) months
after they are delivered to or received by Foothill, unless Borrower requests,
in writing, the return of said documents, schedules, or other papers and makes
arrangements, at Borrower's expense, for their return.

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15. GENERAL PROVISIONS.

15.1 EFFECTIVENESS. This Agreement shall be binding and deemed
effective when executed by Borrower and Foothill.

15.2 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the
benefit of the respective successors and assigns of each of the parties;
provided, however, that Borrower may not assign this Agreement or any rights or
duties hereunder without Foothill's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Foothill
shall release Borrower from its Obligations. Foothill may not sell or assign
the Maximum Foothill Amount without notification to Borrower, provided, however
that nothing contained herein shall prohibit Foothill from assigning this
Agreement and its rights and duties hereunder upon the sale of Foothill or the
sale by Foothill of a material portion of its assets and no consent or approval
by Borrower is required in connection with any such sale or transfer. Foothill
reserves the right to sell, assign, transfer, negotiate, or grant
participations in Foothill's rights and benefits hereunder provided, however,
that after the granting of a participation, unless Foothill shall have sold,
transferred or assigned a majority of its assets, Foothill shall have the
primary obligation for servicing the Obligations of Borrower hereunder. In
connection with any such assignment or participation, Foothill may disclose all
documents and information which Foothill now or hereafter may have relating to
Borrower or Borrower's business. To the extent that Foothill assigns its
rights and obligations hereunder to a third Person, Foothill thereafter shall
be released from such assigned obligations to Borrower and such assignment
shall effect a novation between Borrower and such third Person.

15.3 SECTION HEADINGS. Headings and numbers have been set forth
herein for convenience only. Unless the contrary is compelled by the context,
everything contained in each section applies equally to this entire Agreement.

15.4 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against Foothill or Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.

15.5 SEVERABILITY OF PROVISIONS. Each provision of this Agreement
shall be severable from every other provision of this Agreement for the
purpose of determining the legal enforceability of any specific provision.

15.6 AMENDMENTS IN WRITING. This Agreement can only be amended by a
writing signed by both Foothill and Borrower.

15.7 COUNTERPARTS; TELEFACSIMILE EXECUTION. This Agreement may be
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed

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counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of a manually executed counterpart of this Agreement. Any party
delivering an executed counterpart of this Agreement by telefacsimile also
shall deliver a manually executed counterpart of this Agreement but the failure
to deliver a manually executed counterpart shall not affect the validity,
enforceability, and binding effect of this Agreement.

15.8 REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
payment of the Obligations by Borrower or the transfer by Borrower to Foothill
of any property of Borrower should for any reason subsequently be declared to
be void or voidable under any state or federal law relating to creditors'
rights, including provisions of the Bankruptcy Code relating to fraudulent
conveyances, preferences, and other voidable or recoverable payments of money
or transfers of property (collectively, a "Voidable Transfer"), and if Foothill
is required to repay or restore, in whole or in part, any such Voidable
Transfer, or elects to do so upon the reasonable advice of its counsel, then,
as to any such Voidable Transfer, or the amount thereof that Foothill is
required or elects to repay or restore, and as to all reasonable costs,
expenses, and professional fees (including legal, paralegal and accountants'
fees) fees of Foothill related thereto, which shall without limiting the
generality of the definition of "Foothill Expense" contained in Section 1.1
constitute Foothill Expenses, the liability of Borrower automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.

15.9 RELEASE. Borrower hereby remises, releases, acquits, satisfies and
forever discharges Foothill and its officers, directors and each Participant
and their officers and directors of and from all, and all manner of, action and
actions, cause and causes of action, suits, losses, (including attorneys' fees)
collection costs, expenses, covenants, controversies, promises, damages, and
demands whatsoever in law or in equity that Borrower ever had, now has, or that
any successor or assign can, shall or may have, against Foothill and its
officers and directors and each Participant and their officers and directors
arising under or in connection with any actions taken or actions not taken by
Foothill or any Participant in connection with this Agreement prior to its
amendment and restatement through and including the date hereof, save and
except any obligations of Foothill or any Participant accruing after the date
hereof in connection with this Agreement.

15.10 INTEGRATION. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

15.11 AMENDED AND RESTATED AGREEMENT. This Agreement amends and restates
that certain Loan and Security Agreement entered into on or about July 28, 1994
by and between Foothill and Borrower, as amended from time to time.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in Los Angeles, California.

FOOTHILL CAPITAL CORPORATION,
a California corporation

By: ________________________________
Title: _________________________

SALTON/MAXIM HOUSEWARES, INC.,
a Delaware corporation

By: ________________________________
Title: _________________________

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Table of Contents

1 EXHIBIT 10.34 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

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