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Published: 2008-03-26

Commitment Letter - Salton/Maxim Housewares Inc. and Lehman Brothers Inc.




LEHMAN BROTHERS INC.                              LEHMAN COMMERCIAL PAPER INC.
3 WORLD FINANCIAL CENTER                          3 WORLD FINANCIAL CENTER
NEW YORK, NEW YORK 10285                          NEW YORK, NEW YORK  10285



                                                        July 1, 1998


                        Salton/Maxim Housewares, Inc.
                      Senior Secured Credit Facilities
                              Commitment Letter



Salton/Maxim Housewares, Inc.
550 Business Center Drive
Mt. Prospect, IL  60056

Attention:  Mr. William Rue

Ladies and Gentlemen:

     You have advised Lehman Commercial Paper Inc. ('LCPI') and Lehman Brothers
Inc. ('LBI') that Salton/Maxim Housewares, Inc., a Delaware corporation (the
'Borrower'), intends to purchase (the 'Stock Repurchase') from Windmere-Durable
Holdings, Inc. (the 'Seller') (i) the 6,535,072 shares of the Borrower's common
stock (the 'Stock') owned by the Seller for consideration consisting of $12.00
in cash per share of Stock plus a $15,000,000 subordinated promissory note of
the Borrower and (ii) options owned by the Seller to purchase 458,500 shares of
Stock at $7.17 per share for consideration consisting of $3,287,445 in cash.
In that connection, you have requested that LBI agree to structure, arrange and
syndicate senior secured credit facilities in an aggregate amount of up to
$215,000,000 (the 'Credit Facilities'), and that LCPI commit to provide the
entire principal amount of the Credit Facilities.  It is understood that the
Borrower may, at its option, refinance a portion of the loans under the Credit
Facilities with the proceeds of at least $100,000,000 in senior subordinated
notes to be issued by the Borrower after the closing under the Credit
Facilities.

     LBI is pleased to advise you that it is willing to act as exclusive
advisor and arranger for the Credit Facilities.

     Furthermore, LCPI is pleased to advise you of its commitment to provide
the entire amount of the Credit Facilities upon the terms and subject to the
conditions set forth or 



                                                                              2

referred to in this commitment letter (the 'Commitment Letter') and in the
Summary of Terms and Conditions attached hereto as Exhibit A (the 'Term
Sheet').

     It is agreed that LBI will act as the sole and exclusive advisor and
arranger for the Credit Facilities and that LBI will, in such capacity, perform
the duties and exercise the authority customarily performed and exercised by it
in such role.  You agree that no other agents, co-agents or arrangers will be
appointed, no other titles will be awarded and no compensation (other than (i)
that expressly contemplated by the Term Sheet and the Fee Letter referred to
below and (ii) a $250,000 fee payable by the Borrower to Andrew Glashow) will 
be paid in connection with the Credit Facilities unless you and we shall so 
agree.

     We intend to syndicate the Credit Facilities to a group of financial
institutions (together with LCPI, the 'Lenders') identified by us in
consultation with you; provided, that syndication of the Credit Facilities is
not a condition to LCPI's obligation to make the Credit Facilities available.
LBI may commence syndication efforts at any time after the execution of this
Commitment Letter, and you agree actively to assist LBI in completing a
syndication satisfactory to it.  Such assistance shall include (a) your using
commercially reasonable efforts to ensure that the syndication efforts benefit
materially from your existing lending relationships, (b) direct contact between
senior management and advisors of the Borrower and the proposed Lenders, (c)
assistance in the preparation of a Confidential Information Memorandum and
other marketing materials to be used in connection with the syndication and (d)
the hosting, with LBI, of one or more meetings of prospective Lenders.  You
also agree that, at your expense, you will work with LBI and LCPI to procure a
rating for the Credit Facilities by Moody's Investors Service, Inc. and
Standard & Poor's Ratings Group; provided that procuring such a rating is not a
condition to LCPI's obligation to make the Credit Facilities available.

     LBI, in consultation with the Borrower, will manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders.  To assist LBI in its syndication efforts, you agree promptly to
prepare and provide to LBI and LCPI all information with respect to the
Borrower, the Stock Repurchase and the other transactions contemplated hereby,
including all financial information and projections (the 'Projections'), as we
may reasonably request in connection with the arrangement and syndication of
the Credit Facilities.  You hereby represent and covenant that (a) all
information other than the Projections (the 'Information') that has been or
will be prepared by or under the direction of the Borrower and made available
to LBI and LCPI by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which
such statements are made and (b) the Projections that have been or will be made
available to LBI and LCPI by you or any of your




                                                                             3


been or will be prepared in good faith based upon reasonable assumptions.  You
understand that in arranging and syndicating the Credit Facilities we may use 
and rely on the Information and Projections without independent verification 
thereof.

     As consideration for LCPI's commitment hereunder and LBI's agreement to
perform the services described herein, you agree to pay to LCPI the
nonrefundable fees set forth in Annex I to the Term Sheet and in the Fee Letter
dated the date hereof and delivered herewith (the 'Fee Letter').

     The commitments and agreements of LBI and LCPI described herein are
subject to (a) there not occurring or becoming known to us after the date
hereof any event or condition that has had or could reasonably be expected to
have a material adverse effect on the business, operations, property or
condition (financial or otherwise) of the Borrower and its subsidiaries, taken
as a whole, (b) our completion of and satisfaction in all respects with a due
diligence investigation of the Borrower, (c) our not becoming aware after the
date hereof of any information or other matter affecting the Borrower or the
transactions contemplated hereby which is inconsistent in a material and
adverse manner with any such information or other matter disclosed to us prior
to the date hereof, (d) there not having occurred a material disruption of or
material adverse change in financial, banking or capital market conditions
that, in our judgment, could reasonably be expected to materially impair the
syndication of the Credit Facilities, (e) our satisfaction that prior to and
during the syndication of the Credit Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of the Borrower or any affiliate thereof, provided, that the
restrictions of this clause (e) shall in any event cease to apply after the
date which is nine months after the Closing Date (as defined in the Term
Sheet), (f) the negotiation, execution and delivery on or before July 31, 1998
of definitive documentation with respect to the Credit Facilities satisfactory
to LCPI and its counsel and (g) the other conditions set forth or referred to
in the Term Sheet.  LBI, LCPI and the Borrower intend to work diligently to
close the Credit Facilities as promptly as practicable.  Although this
Commitment Letter and the Term Sheet summarize the principal terms and
conditions applicable to the Credit Facilities, the terms and conditions of
LCPI's commitment hereunder and of the Credit Facilities are not limited to
those set forth herein and in the Term Sheet.  Those matters that are not
covered by the provisions hereof and of the Term Sheet are subject to the
approval and agreement of LCPI and the Borrower and shall be consistent with
this Commitment Letter and the Term Sheet.

     You agree (a) to indemnify and hold harmless LBI, LCPI, their respective
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an 'indemnified person') from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the Credit
Facilities, the use of the proceeds thereof, the Stock Repurchase or any
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any indemnified person
is a party thereto, and to reimburse each indemnified person upon demand for
any legal or other expenses incurred in connection with investigating or
defending any of the foregoing, 




                                                                             4


provided that the foregoing indemnity will not, as to any indemnified person,
apply to losses, claims, damages, liabilities or related expenses to the extent
they are found by a final, non-appealable judgment of a court to arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse LBI and LCPI and their affiliates on demand for all reasonable
out-of-pocket expenses (including due diligence expenses, syndication expenses,
travel expenses, and reasonable fees, charges and disbursements of counsel)
incurred in connection with the Credit Facilities and any related documentation
(including this Commitment Letter, the Term Sheet, the Fee Letter and the
definitive financing documentation) or the administration, amendment,
modification or waiver thereof.  No indemnified person shall be liable for any
indirect or consequential damages in connection with its activities related to
the Credit Facilities.

     You acknowledge that LBI and its affiliates (the term 'LBI' being
understood to refer hereinafter in this paragraph to include such affiliates,
including LCPI) may be providing debt financing, equity capital or other
services (including financial advisory services) to other companies in respect
of which you may have conflicting interests regarding the transactions
described herein and otherwise.  LBI will not use confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or their other relationships with you in connection with the performance
by LBI of services for other companies, and LBI will not furnish any such
information to other companies.  You also acknowledge that LBI has no
obligation to use in connection with the transactions contemplated by this
Commitment Letter, or to furnish to you, confidential information obtained from
other companies.

     This Commitment Letter shall not be assignable by any party hereto without
the prior written consent of the other parties hereto (and any purported
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than
the parties hereto.  This Commitment Letter may not be amended or waived except
by an instrument in writing signed by you and LBI and LCPI.  This Commitment
Letter may be executed in any number of counterparts, each of which shall be an
original, and all of which, when taken together, shall constitute one
agreement.  Delivery of an executed signature page of this Commitment Letter by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.  This Commitment Letter and the Fee Letter are the only
agreements that have been entered into among us with respect to the Credit
Facilities and set forth the entire understanding of the parties with respect
thereto.  This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York.

     This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheet or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter, and Centre Partners and its
clients who provide equity financing contemplated hereby or (b) as may be
compelled in a judicial or administrative proceeding or as otherwise required
by 




                                                                             5

law (in which case you agree to inform us promptly thereof), provided, that
the foregoing restrictions shall cease to apply (except in respect of the Fee
Letter and its terms and substance) after this Commitment Letter has been
accepted by you.

     The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force
and effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or LCPI's commitment hereunder.

     LBI also will provide financial advisory services to the Borrower with
respect to the transaction to which this Commitment Letter relates.  The
Borrower agrees that LBI has the right to place advertisements in financial and
other newspapers and journals at its own expense describing its services to the
Borrower, provided that LBI will submit a copy of any such advertisements to
the Borrower for its approval, which approval shall not be unreasonably
withheld. Furthermore, the Borrower agrees to include a reference to LBI's role
as financial advisor in any press release announcing the transaction.

     If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet and the Fee Letter by
returning to LCPI executed counterparts hereof and of the Fee Letter, together
with the amounts agreed upon pursuant to the Fee Letter to be payable upon the
acceptance hereof, not later than 5:00 p.m., New York City time, on July 2,
1998.  The commitments and agreements of LBI and LCPI herein will expire at
such time in the event LCPI has not received such executed counterparts and
such amounts in accordance with the immediately preceding sentence.





                                                                              6



     LBI and LCPI are pleased to have been given the opportunity to assist you
in connection with this financing, and we look forward to working with you.

                                    Very truly yours,

                                    LEHMAN COMMERCIAL PAPER INC.


                                    By:
                                       ----------------------------------------
                                         Title:  Authorized Signatory

                                    LEHMAN BROTHERS INC.


                                    By:
                                       ----------------------------------------
                                         Title:  Authorized Signatory


Accepted and agreed to
as of the date first
written above by:

SALTON/MAXIM HOUSEWARES, INC.


By:
   -------------------------------
     Title:





                                                                      Exhibit A
                                                                      ---------

                        SALTON/MAXIM HOUSEWARES, INC.

                       $215,000,000 CREDIT FACILITIES

                       Summary of Terms and Conditions

                                July 1,  1998

                       -------------------------------


     Salton/Maxim Housewares, Inc., a Delaware corporation (the 'Borrower'),
intends to purchase (the 'Stock Repurchase') from Windmere-Durable Holdings,
Inc. (the 'Seller') (i) the 6,535,072 shares of the Borrower's common stock
(the 'Stock') owned by the Seller for consideration consisting of $12.00 in
cash per share of Stock plus a $15,000,000 subordinated promissory note of the
Borrower (the 'Seller Note') and (ii) options owned by the Seller to purchase
458,500 shares of Stock at $7.17 per share for consideration consisting of
$3,287,445 in cash.  The Stock purchased in the Stock Repurchase will become
treasury stock upon consummation of such purchase.  In order to finance the
Stock Repurchase and to provide for working capital and general corporate needs
following the Stock Repurchase, the Borrower wishes to establish senior secured
credit facilities in an aggregate amount of up to $215,000,000 as described
below in this Summary of Terms and Conditions.  It is understood that the
Borrower may, at its option, refinance the Tranche A Term Loans (as defined
below) with the proceeds of approximately $100,000,000 in senior subordinated
notes to be sold in an offering for which Lehman Brothers Inc. will act as sole
underwriter, initial purchaser and/or placement agent (the 'Senior Subordinated
Notes') which may be issued by the Borrower after the closing under the credit
facilities described below (the date, if any,  on which the Senior Subordinated
Notes are issued and the Tranche A Term Loans are repaid in full, the
'Refinancing Date').

I.  Parties
    -------

  Borrower:                  Salton/Maxim Housewares, Inc., a Delaware 
                             corporation (the 'Borrower').

  Guarantors:                Each of the Borrower's direct and indirect 
                             subsidiaries, if any, other than Salton Hong Kong 
                             Limited (the 'Hong Kong Subsidiary') (the 
                             'Guarantors'; the Borrower and the Guarantors, 
                             collectively, the 'Credit Parties').

  Advisor and Arranger:      Lehman Brothers Inc. (in such capacity, the 
                             'Arranger').

  Syndication Agent:         Lehman Commercial Paper Inc. (the 'Syndication 
                             Agent').


                                                                              2

  Administrative Agent:      An entity selected by the Syndication Agent, in
                             consultation with the Borrower, during the
                             syndication process to serve as
                             administrative agent (the  'Administrative
                             Agent').

  Lenders:                   A syndicate of banks, financial institutions and 
                             other entities arranged by the Syndication
                             Agent, in consultation with the Borrower
                             (collectively, the 'Lenders').

II. Types and Amounts of
    Credit Facilities
    -----------------

1.  Term Loan Facilities
    --------------------

  Types and Amounts of
  Facilities:                Term Loan Facilities (the 'Term Loan Facilities') 
                             in  an aggregate amount of $165,000,000
                             (the loans  thereunder, the 'Term Loans') as
                             follows:

                             Tranche A Term Loan Facility:  A 5 year term loan
                             facility (the 'Tranche A Term Loan Facility') in
                             an aggregate principal amount equal to $90,000,000
                             (the loans thereunder, the 'Tranche A Term
                             Loans').  The Tranche A Term Loans shall be
                             repayable in quarterly installments in amounts set
                             forth below for each year following the Closing
                             Date (as defined below):




                             Year                          Amount
                             ----                          ------
                                                        
                             1                             $5,000,000
                             2                             $5,000,000
                             3                             $25,000,000
                             4                             $25,000,000
                             5                             $30,000,000


                             Delayed Draw Term Loan Facility:  A 5 year term
                             loan facility (the 'Delayed Draw Term Loan 
                             Facility') in an aggregate principal amount
                             equal to $75,000,000 (the loans thereunder, the
                             'Delayed Draw Term Loans').  The Delayed Draw Term
                             Loans shall be repayable in quarterly installments
                             in amounts set forth below for each year following
                             the Closing Date:




                             Year                          Amount
                             ----                          ------
                                                        
                             1                             0




                                                                              3

                                                        
                             2                             $10,000,000
                             3                             $20,000,000
                             4                             $20,000,000
                             5                             $25,000,000;



                             provided, that if less than $75,000,000 in         
                             aggregate principal amount of Delayed Draw Term
                             Loans shall be borrowed, each of the installment
                             amounts set forth above shall be proportionally
                             reduced.

  Availability:              The Tranche A Term Loans shall be made in a single
                             drawing on the Closing Date.  The Delayed Draw Term
                             Loans may be made in up to 10 drawings, in minimum
                             amounts to be determined, during the period
                             commencing on the Closing Date and ending on the
                             date which is 364 days after the Closing Date.

  Purpose:                   The proceeds of the Tranche A Term Loans shall be
                             used to finance the Stock Repurchase and repay the
                             Borrower's existing indebtedness to Foothill
                             Capital and to pay related fees and expenses and
                             for general corporate purposes. The proceeds of the
                             Delayed Draw Term Loans shall be used to finance
                             working capital and other general corporate
                             purposes of the Borrower and its subsidiaries,
                             including permitted acquisitions.

2. Revolving Credit Facility
   -------------------------

  Type and Amount of
  Facility:                  5-year revolving credit facility (the 'Revolving
                             Credit Facility'; together with the Term Loan
                             Facilities, the 'Credit Facilities') in the amount
                             of $50,000,000 (the loans thereunder, the
                             'Revolving Credit Loans').

  Availability:              The Revolving Credit Facility shall be available on
                             a revolving basis during the period commencing on
                             the Closing Date and ending on the fifth
                             anniversary thereof (the 'Revolving Credit
                             Termination Date').

  Letters of Credit:         A portion of the Revolving Credit Facility not in
                             excess of $10,000,000 shall be available for the
                             issuance of letters of credit (the 'Letters of
                             Credit') by one or more Lenders to 


                                                                             4


                             be selected by the Borrower in the syndication
                             process (in such capacity, the 'Issuing Lender'). 
                             No Letter of Credit shall have an expiration date
                             after the earlier of (a) one year after the date
                             of issuance and (b) five business days prior to
                             the Revolving Credit Termination Date, provided
                             that any Letter of Credit with a one-year tenor
                             may provide for the renewal thereof for additional
                             one-year periods (which shall in no event extend
                             beyond the date referred to in clause (b) above).

                             Drawings under any Letter of Credit shall be
                             reimbursed by the Borrower (whether with its own
                             funds or with the proceeds of Revolving Credit
                             Loans).  To the extent that the Borrower does not
                             so reimburse the Issuing Lender, the Lenders under
                             the Revolving Credit Facility shall be irrevocably
                             and unconditionally obligated to reimburse the
                             Issuing Lender on a pro rata basis.

  Maturity:                  The Revolving Credit Termination Date.

  Purpose:                   The proceeds of the Revolving Credit Loans shall be
                             used to finance the working capital needs,
                             including inventory, and for general corporate
                             purposes of the Borrower and its subsidiaries.


III. Certain Payment Provisions
     --------------------------

  Fees and Interest Rates:   As set forth on Annex I.

  Optional Prepayments and
  Commitment Reductions:     Loans may be prepaid and commitments may be reduced
                             by the Borrower in minimum amounts to be agreed
                             upon.  Optional prepayments of the Term Loans shall
                             be applied to the Tranche A Term Loans and the
                             Delayed Draw Term Loans ratably and to the
                             installments thereof ratably in accordance with the
                             then outstanding amounts thereof and may not be
                             reborrowed.

  Mandatory Prepayments and
  Commitment Reductions:     The following amounts shall be applied to prepay
                             the Term Loans and reduce the Revolving Credit
                             Facility:



                                                                             5

                             (a) 100% of the net proceeds of any incurrence     
                             of certain indebtedness (including, without
                             limitation, the Senior Subordinated Notes) after
                             the Closing Date by the Borrower or any of its
                             Restricted Subsidiaries (as defined below);

                             (b) 100% of the net proceeds of any sale or
                             other disposition (including as a result of
                             casualty or condemnation) by the Borrower or any
                             of its Restricted Subsidiaries of any assets
                             (except for the sale of inventory in the ordinary
                             course of business and certain other dispositions
                             to be agreed on); provided, that the definitive
                             credit agreement will provide that proceeds of any
                             such disposition which are reinvested in the
                             Borrower's business within a time period to be
                             agreed upon will not be required to be applied
                             toward prepayment of the Loans and reduction of
                             the Revolving Credit Facility; and

                             (c) 50% of excess cash flow (to be defined in      
                             a mutually satisfactory manner) for each fiscal
                             year of the Borrower (commencing with the fiscal
                             year in which the Closing Date occurs).

                             All such amounts shall be applied, first, to       
                             the prepayment of outstanding Term Loans, second,
                             to the permanent reduction of the undrawn
                             commitments under the Delayed Draw Term Loan
                             Facility and, third, to the permanent reduction of
                             the Revolving Credit Facility; provided, that the
                             excess cash flow amounts described in clause (c)
                             above shall not reduce the Revolving Credit
                             Facility.  Each such prepayment of the Term Loans
                             shall be applied to the Tranche A Term Loans and
                             the Delayed Draw Term Loans ratably and to the
                             installments thereof ratably in accordance with
                             the then outstanding amounts thereof and may not
                             be reborrowed; provided, that prepayments made
                             with the proceeds of the Senior Subordinated Notes
                             shall be applied to prepay ratably the Tranche A
                             Term Loans and any outstanding Delayed Draw Term
                             Loans, and any proceeds remaining after such
                             prepayment shall not be required to be used to
                             prepay Loans or reduce any Credit Facility.  The
                             Revolving Credit Loans shall be prepaid and the
                             Letters of Credit shall be cash collateralized or
                             replaced to the extent such extensions of credit
                             exceed the amount of the Revolving Credit
                             Facility.


                                                                              6


IV.  Collateral              The obligations of each Credit Party in respect 
     ----------              of the Credit Facilities shall be secured by a 
                             perfected first priority security  interest
                             (subject to customary permitted encumbrances) in
                             all of its tangible and intangible assets
                             (including, without limitation, intellectual
                             property, real property (other than the Borrower's
                             existing warehouse leases and other leasehold
                             interests not having material value) and all of
                             the capital stock of each of the Borrower's direct
                             and indirect domestic subsidiaries and 65% of the
                             capital stock of the Borrower's foreign
                             subsidiaries), except for those assets as to which
                             the Syndication Agent shall determine in its sole
                             discretion that the costs of obtaining such a
                             security interest are excessive in relation to the
                             value of the security to be afforded thereby.

V.   Certain Conditions
     ------------------

    Initial Conditions:      The availability of the Credit Facilities shall 
                             be conditioned upon satisfaction of, among other
                             things, the following conditions precedent (the
                             date upon which all such conditions precedent
                             shall be satisfied, the 'Closing Date') on or
                             before July 31, 1998:

                             (a)  The Borrower shall have executed and
                             delivered the definitive credit agreement (the
                             'Credit Agreement'), and each Credit Party, as
                             applicable, shall have executed and delivered the
                             other financing documentation with respect to the
                             Credit Facilities (together with the Credit
                             Agreement, the 'Credit Documentation').

                             (b)  The Borrower shall have received at least
                             $40,000,000 in cash from the issuance of its       
                             convertible preferred stock to Centre Partners or
                             funds managed by Centre Partners, and the terms of
                             such stock shall be satisfactory to the
                             Syndication Agent (it being agreed that such terms
                             shall be satisfactory if they are consistent with
                             the terms described in the term sheet, dated May
                             22, 1998, with respect to such convertible
                             preferred stock).  The Seller Note shall be
                             satisfactory to the Syndication Agent (it being
                             agreed that the Seller Note as set forth in
                             Exhibit A to the Stock Agreement, dated May 6,
                             1998, between the Borrower and 



                                                                              7

                             the Seller is satisfactory).  The capital
                             structure of the Borrower and its subsidiaries
                             after giving effect to the Stock Repurchase shall
                             reflect the Stock Repurchase, the transactions
                             described in this paragraph and the incurrence of
                             the indebtedness contemplated hereby.

                             (c)  The Lenders, the Administrative Agent, the
                             Syndication Agent and the Arranger shall have      
                             received all fees required to be paid, and all
                             expenses for which invoices have been presented,
                             on or before the Closing Date.

                             (d)  All governmental and third party approvals
                             (including any necessary shareholder approvals)    
                             necessary or, in the discretion of the Syndication
                             Agent, advisable in connection with the Stock
                             Repurchase, the financing contemplated hereby and
                             the continuing operations of the Borrower and its
                             subsidiaries shall have been obtained and be in
                             full force and effect.

                             (e)  The Lenders shall be satisfied that the Stock
                             Repurchase and the financing contemplated hereby   
                             will not violate Regulations T, U or X of the
                             Board of Governors of the Federal Reserve System.

                             (f)  The Lenders shall have received (i) audited
                             consolidated financial statements of the Borrower  
                             for fiscal years 1996 and 1997 and (ii)
                             satisfactory unaudited interim consolidated
                             financial statements of the Borrower for each
                             quarterly period ended subsequent to the date of
                             the latest financial statements delivered pursuant
                             to clause (i) of this paragraph as to which such
                             financial statements are available (it being
                             understood that such financial statements for the
                             first three quarters of fiscal year 1998 have been
                             reviewed and found acceptable).

                             (g)  The Lenders shall have received a
                             satisfactory pro forma consolidated balance sheet
                             of the Borrower as at the date of the most
                             recent consolidated balance sheet delivered
                             pursuant to paragraph (f) above, adjusted to give
                             effect to the consummation of the Stock Repurchase
                             and the financings contemplated hereby as if such
                             transactions had occurred on such date.



                                                                             8

                             (h)  The Lenders shall have received a
                             satisfactory business plan for fiscal year 1999.

                             (i)  The Lenders shall have received the results
                             of a recent lien search in each relevant   
                             jurisdiction with respect to the Borrower and its
                             subsidiaries, and such search shall reveal no
                             liens on any of the assets of the Borrower or its
                             subsidiaries except for liens permitted by the
                             Credit Documentation or liens to be discharged on
                             or prior to the Closing Date pursuant to
                             documentation satisfactory to the Administrative
                             Agent.

                             (j)  The Lenders shall have received a
                             satisfactory solvency opinion from Houlihan, Lokey
                             or another independent valuation firm satisfactory
                             to the Syndication Agent which shall document the
                             solvency of the Borrower and its subsidiaries
                             after giving effect to the Stock Repurchase and
                             the other transactions contemplated hereby.

                             (k)  The Lenders shall be satisfied with the
                             environmental affairs of the Borrower and its      
                             subsidiaries.

                             (l)  The Lenders shall have received such legal
                             opinions (including opinions (i) from counsel to
                             the Borrower and its subsidiaries and (ii)
                             from such special and local counsel as may be
                             required by the Syndication Agent), documents and
                             other instruments as are customary for
                             transactions of this type or as they may
                             reasonably request.

  On-Going Conditions:       The making of each extension of credit shall be 
                             conditioned upon (a) the accuracy in all material  
                             respects of all representations and warranties in
                             the Credit Documentation (including, without
                             limitation, the material adverse change and
                             litigation representations) and (b) there being no
                             default or event of default in existence at the
                             time of, or after giving effect to the making of,
                             such extension of credit.  As used herein and in
                             the Credit Documentation a 'material adverse
                             change' shall mean any event, development or
                             circumstance that has had or could reasonably be
                             expected to have a material adverse effect on (a)
                             the Stock Repurchase, (b) the business, assets,
                             property or condition (financial or otherwise) of
                             the Borrower and its Restricted Subsidiaries taken
                             as a whole, or (c) the validity or 


                                                                             9 

                             enforceability of any of the Credit Documentation 
                             or the rights and remedies of the Administrative 
                             Agent and the Lenders thereunder.


VI. Certain Documentation Matters
    -----------------------------

                             The Credit Documentation shall contain
                             representations, warranties, covenants and events
                             of default customary for financings of this type
                             and other terms deemed appropriate by the Lenders,
                             including, without limitation:

  Restricted Subsidiaries/
  Unrestricted Subsidiaries: Initially, all subsidiaries of the Borrower will 
                             be Restricted Subsidiaries.  The Borrower may      
                             designate the Hong Kong Subsidiary as an
                             Unrestricted Subsidiary at any time after the
                             total leverage ratio is less than or equal to 4.00
                             to 1.00 if, after giving pro forma effect to such
                             designation, no Default or Event of Default is in
                             existence.   After the Hong Kong Subsidiary is
                             designated as an Unrestricted Subsidiary, it will
                             be excluded from the financial covenants and from
                             the restrictions of the negative covenants.

  Representations and
  Warranties:                Financial statements (including pro forma financial
                             statements); absence of undisclosed liabilities;
                             no material adverse change; corporate existence;
                             compliance with law; corporate power and
                             authority; enforceability of Credit Documentation;
                             no conflict with law or contractual obligations;
                             no material litigation (other than the
                             Westinghouse Electric Corporation litigation
                             described in the Borrower's Form 10-K for fiscal
                             year 1997); no default; ownership of property;
                             liens; intellectual property; no burdensome
                             restrictions; taxes; Federal Reserve regulations;
                             ERISA; Investment Company Act; subsidiaries;
                             environmental matters; solvency;  accuracy of
                             disclosure; and creation and perfection of
                             security interests.

  Affirmative Covenants:     Delivery of financial statements, reports, 
                             accountants' letters, projections, officers'       
                             certificates and other information requested by
                             the Lenders; payment of other obligations;
                             continuation of business and maintenance of
                             existence and material rights and privileges;
                             compliance 



                                                                            10

                             with laws and material contractual obligations;
                             maintenance of property and insurance; maintenance
                             of books and records; right of the Lenders to
                             inspect property and books and records; notices of
                             defaults, litigation and other material events;
                             compliance with environmental laws; further
                             assurances (including, without limitation, with
                             respect to security interests in after-acquired
                             property); and agreement to issue the Senior
                             Subordinated Notes within 120 days after the
                             Closing Date or to obtain interest rate protection
                             within 120 days after the Closing Date for an
                             amount equal to the principal amount of the
                             Tranche A Term Loans to be agreed upon on terms
                             and conditions satisfactory to the Syndication
                             Agent.

  Financial Covenants:       Financial covenants (including, without 
                             limitation, minimum interest and fixed charge      
                             coverage and maximum total leverage).  Although
                             the permitted levels of the financial covenants
                             will be agreed upon and reflected in the Credit
                             Agreement, the maximum total leverage covenant
                             will in any event not permit total leverage to be
                             greater than 4.75 to 1.00 at any time prior to the
                             Refinancing Date or greater than 5.5 to 1.00 at
                             any time from and after the Refinancing Date
                             (assuming that $100,000,000 in aggregate principal
                             amount of Senior Subordinated Notes are issued on
                             the Refinancing Date).  The Credit Agreement will
                             provide that from and after the Refinancing Date,
                             a maximum senior leverage covenant will be added
                             to the financing covenants describe above, and the
                             financial ratios in all financial covenants will
                             be adjusted to reflect the revised capital
                             structure of the Borrower.


  Negative Covenants:        Limitations (subject to materiality and other 
                             customary exceptions, as appropriate) on:  
                             indebtedness (including preferred stock of
                             subsidiaries issued to persons other than the
                             Borrower); liens; guarantee obligations; mergers,
                             consolidations, liquidations and dissolutions;
                             sales of assets; leases; dividends and other
                             payments in respect of capital stock; capital
                             expenditures; investments, loans and advances;
                             optional payments and modifications of
                             subordinated and other debt instruments;
                             transactions with affiliates; sale and leasebacks;
                             changes in fiscal year; negative pledge clauses;
                             changes in lines of business.  The 


                                                                            11

                             Credit Agreement will provide that from and
                             after the Refinancing Date, certain of the
                             negative covenants described above will be
                             modified to reflect the revised capital structure
                             of the Borrower.

  Events of Default:         Nonpayment of principal when due; nonpayment of 
                             interest, fees or other amounts after a grace
                             period to be agreed upon; material inaccuracy of
                             representations and warranties; violation of
                             covenants (subject, in the case of certain
                             affirmative covenants, to a grace period to be
                             agreed upon); cross-default to other material
                             indebtedness of the Borrower and its subsidiaries;
                             bankruptcy events; certain ERISA events; material
                             judgments; actual or asserted invalidity of any
                             guarantee or security document, subordination
                             provisions or security interest; and a change of
                             control (the definition of which is to be agreed).

  Voting:                    Amendments and waivers with respect to the Credit 
                             Documentation shall require the approval of
                             Lenders holding not less than a majority of the
                             aggregate amount of the Term Loans, Revolving
                             Credit Loans, participations in Letters of Credit
                             and unused commitments under the Credit
                             Facilities, except that (a) the consent of each
                             Lender affected thereby shall be required with
                             respect to (i) reductions in the amount or
                             extensions of the scheduled date of amortization
                             or maturity of any Loan, (ii) reductions in the
                             rate of interest or any fee or extensions of any
                             due date thereof, (iii) increases in the amount or
                             extensions of the expiry date of any Lender's
                             commitment and (iv) modifications to the pro rata
                             provisions of the Credit Documentation and (b) the
                             consent of 100% of the Lenders shall be required
                             with respect to (i) modifications to any of the
                             voting percentages and (ii) releases of all or
                             substantially all of the Guarantors or all or
                             substantially all of the collateral.


  Assignments
  and Participations:        The Lenders shall be permitted to assign and sell 
                             participations in their Loans and  commitments,
                             subject, in the case of assignments (other than
                             assignments (i) by the Syndication Agent or (ii)
                             to another Lender or to an affiliate of a Lender),
                             to the consent of the Syndication Agent, the
                             Administrative Agent, the Issuing Lender and the
                             Borrower (which consent in each case shall not be
                             unreasonably 



                                                                            12


                             withheld).  Non-pro rata assignments shall
                             be permitted.  In the case of partial assignments
                             (other than to another Lender or to an affiliate
                             of a Lender), the minimum assignment amount shall
                             be $5,000,000, and, after giving effect thereto,
                             the assigning Lender shall have commitments and
                             Loans aggregating at least $5,000,000, in each
                             case unless otherwise agreed by the Borrower, the
                             Syndication Agent and the Administrative Agent. 
                             Participants shall have the same benefits as the
                             Lenders with respect to yield protection and
                             increased cost provisions, provided, that no
                             participant shall be entitled to receive any
                             greater amount pursuant to such provisions that
                             the transferor Lender would have received.  
                             Voting rights of participants shall be limited to
                             those matters with respect to which the
                             affirmative vote of the Lender from which it
                             purchased its participation would be required as
                             described under 'Voting' above.  Pledges of Loans
                             in accordance with applicable law shall be
                             permitted without restriction.  Promissory notes
                             shall be issued under the Credit Facilities only
                             upon request.

  Yield Protection:          The Credit Documentation shall contain customary 
                             provisions (a) protecting the Lenders against
                             increased costs or loss of yield resulting from
                             changes in reserve, tax, capital adequacy and
                             other requirements of law and from the imposition
                             of or changes in withholding or other taxes and
                             (b) indemnifying the Lenders for 'breakage costs'
                             incurred in connection with, among other things,
                             any prepayment of a Eurodollar Loan (as defined in
                             Annex I) on a day other than the last day of an
                             interest period with respect thereto.

  Expenses and
  Indemnification:           The Borrower shall pay (a) all reasonable 
                             out-of-pocket expenses of the Administrative
                             Agent, the Syndication Agent and the Arranger 
                             associated with the syndication of the Credit
                             Facilities and the preparation, execution,
                             delivery and administration of the Credit
                             Documentation and any amendment or waiver with
                             respect thereto (including the reasonable fees,
                             disbursements and other charges of counsel) and
                             (b) all out-of-pocket expenses of the
                             Administrative Agent, the Syndication Agent and
                             the Lenders (including the fees, disbursements and
                             other 


                                                                            13

                             charges of counsel) in connection with the
                             enforcement of the Credit Documentation.

                             The Administrative Agent, the Syndication  Agent,
                             the Arranger and the Lenders (and their affiliates
                             and their respective officers, directors,
                             employees, advisors and agents) will have no
                             liability for, and will be indemnified and held
                             harmless against, any loss, liability, cost or
                             expense incurred in respect of the financing
                             contemplated hereby or the use or the proposed use
                             of proceeds thereof (except to the extent
                             resulting from the gross negligence or willful
                             misconduct of the indemnified party).


  Governing Law and Forum:   State of New York.

  Counsel to the
  Administrative Agent,
  the Syndication Agent
  and the Arranger:          Simpson Thacher & Bartlett.






                                                                        Annex I
                                                                        -------


                             Interest and Certain Fees
                             -------------------------

  Interest Rate Options:     The Borrower may elect that the Loans comprising 
                             each borrowing bear interest at a rate per annum 
                             equal to:

                                  the Base Rate plus the Applicable Margin; or

                                  the Eurodollar Rate plus the Applicable 
                                  Margin.


                             As used herein:

                             'Base Rate' means the highest of (i) the rate of
                             interest publicly announced by Citibank, N.A. as
                             its prime  rate in effect at its principal office
                             in New York City (the 'Prime Rate'), (ii) the
                             secondary market rate for three-month certificates
                             of deposit (adjusted for statutory reserve
                             requirements) plus 1% and (iii) the federal funds
                             effective rate from time to time plus 0.5%.

                             'Applicable Margin' means a percentage determined 
                             in accordance with the pricing grid attached 
                             hereto as Annex I-A.

                             'Eurodollar Rate' means the rate (adjusted for
                             statutory reserve requirements for eurocurrency
                             liabilities) at which eurodollar deposits
                             for one, two, three or six months (as selected by
                             the Borrower) are offered in the interbank
                             eurodollar market.

  Interest Payment Dates:    In the case of Loans bearing interest based upon 
                             the Base Rate ('Base Rate Loans'), quarterly in 
                             arrears.
                         
                             In the case of Loans bearing interest based upon
                             the Eurodollar Rate ('Eurodollar Loans'), on the
                             last day of each relevant interest period and,
                             in the case of any interest period longer than
                             three months, on each successive date three months
                             after the first day of such interest period.

  Commitment Fees:           The Borrower shall pay a commitment fee calculated
                             at the rate determined in accordance with the 
                             pricing grid attached



                                                                             2

                             hereto as Annex I-A on the average daily unused    
                             portion of the Revolving Credit Facility and the
                             Delayed Draw Term Loan Facility, payable quarterly
                             in arrears.

  Letter of Credit Fees:     The Borrower shall pay a commission on all 
                             outstanding Letters of Credit at a per
                             annum rate equal to the Applicable Margin then in
                             effect with respect to Eurodollar Loans, in each
                             case on the face amount of each such Letter of
                             Credit.  Such commission shall be shared ratably
                             among the Lenders participating in the Revolving
                             Credit Facility and shall be payable quarterly in
                             arrears.

                             In addition to letter of credit commission, a
                             fronting   fee calculated at a rate per annum to
                             be agreed upon by the Borrower and the Issuing
                             Bank on the face amount of each Letter of Credit
                             shall be payable quarterly in arrears to the
                             Issuing Lender for its own account.  In addition, 
                             administrative, issuance, amendment, payment and
                             negotiation charges, in amounts agreed upon by the
                             Borrower and the Issuing Lender, shall be payable
                             to the Issuing Lender for its own account.

  Default Rate:              At any time when the Borrower is in default in the
                             payment of any amount of principal due under the
                             Credit Facilities, such amount shall bear
                             interest at 2% above the rate otherwise applicable
                             thereto.  Overdue interest, fees and other amounts
                             shall bear interest at 2% above the rate
                             applicable to Base Rate Loans.

  Rate and Fee Basis:        All per annum rates shall be calculated on the 
                             basis of a year of 360 days (or 365/366 days, in
                             the case of Base Rate Loans the interest rate
                             payable on which is then based on the Prime Rate)
                             for actual days elapsed.





                                                                      Annex I-A
                                                                      ---------


                                Pricing Grid

I.   Prior to the Refinancing Date, the following pricing will be in effect:




     Ratio of Total                                     Applicable 
        Debt to       Applicable Margin-  Commitment    Margin-Base
        EBITDA        Eurodollar Loans*      Fee*       Rate Loans*
        ------        -----------------      ----       -----------
                                                  
     >4.0 to 1.0          2.375%            .50%          1.375%
     -                                                 
     >3.5 to 1.0          2.125%            .50%          1.125%
     -                                                 
     >3.0 to 1.0          1.875%            .40%          .875%
     -                                                 
     >2.5 to 1.0          1.625%            .30%          .625%
     -                                                 
           :  2.5             1.375%            .30%          .375%


II.   From and after the Refinancing Date, the following pricing will be in
      effect:




     Ratio of Total                                     Applicable 
        Debt to       Applicable Margin-  Commitment    Margin-Base
        EBITDA        Eurodollar Loans*      Fee*       Rate Loans*
        ------        -----------------      ----       -----------
                                                  
     >5.0 to 1.0          2.125%            .50%          1.125%
     -
     >4.5 to 1.0          1.875%            .50%           .875%
     -
     >4.0 to 1.0          1.625%            .40%           .625%
     -
     >3.5 to 1.0          1.375%            .30%           .375%
     -    :  3.5             1.125%            .30%           .125%

------------------------
     NOTE:  THE FOREGOING PRICING IS BASED UPON THE ASSUMPTION THAT
$100,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF SENIOR SUBORDINATED NOTES WILL BE
ISSUED ON THE REFINANCING DATE.

*    Notwithstanding the foregoing grids, the Applicable Margin and Commitment
     Fee rate will be (i) from the Closing Date to the earlier of the
     Refinancing Date and the date which is six months after the Closing Date,
     those set forth under 'I' above opposite the higher of (A) the Leverage
     Ratio actually in effect from time to time and (B) the Leverage Ratio of
     $3.5 to 1.0 under and (ii) from the Refinancing Date to the date which is
     six months after the Refinancing Date, those set forth under 'II' above
     opposite the higher of (A) the Leverage Ratio actually in effect from time
     to time and (B) the 




                                                                             2

     Leverage Ratio of $4.0 to 1.0. The pricing as set forth above will be
     adjusted upon delivery of financial statements showing a change in the
     applicable ratios that would require a change in the pricing pursuant to
     the grid set forth above.