gen housewares 1995

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<DOCUMENT><TYPE>10-K<SEQUENCE>1<DESCRIPTION>1994 ANNUAL REPORT<TEXT>

SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]For the fiscal year ended December 31, 1994OR[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGEACT OF 1934 [No Fee Required]For the transition period from toCommission file number 1-7117

GENERAL HOUSEWARES CORP.(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of 41-0919772incorporation or organization) (I.R.S. Employer Identification No.)

1536 Beech Street 47804Terre Haute, Indiana (Zip Code)(Address of principal executive offices)Registrant's telephone number, including area code: (812) 232-1000

Securities registered pursuant to Section 12(b) of the Act: Name of each exchange onTitle of each class which registeredCommon Stock, $.33 1/3 par value New York Stock Exchange

Preferred Share Purchase Rights New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item405 of Regulation S-K is not contained herein, and will not be contained, tothe best of registrant's knowledge, in definitive proxy or information

statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K. (X)

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On March 13, 1995, 3,743,414 shares of the registrant's Common Stock, $.33-1/3par value, were outstanding. The aggregate market value of the Common Stock(based upon the closing price of the Common Stock on the New York Stock ExchangeComposite Transactions) held by non-affiliates of the registrant at March 13,



1995 was $52,407,796.

DOCUMENTS INCORPORATED BY REFERENCE

Proxy Statement for 1995 AnnualMeeting of Stockholders, which will be filedon or prior to March 31, 1995, to the extentstated in this report. Part III

-2-<PAGE>PART I

Item 1. Business

General Housewares Corp. (hereinafter referred to as the "Company") manufacturesand markets consumer durable goods. The Company limits itself to productcategories in which, through market share, product innovation or brand image itis considered a leader. Through the acquisition and/or development of productsthat "delight and excite" the consumer, i.e., deliver unexpected value, simplifyand enhance a task or redefine a task, the Company believes that it is able to

establish such a leadership position. The Company currently enjoys such aposition in the following product categories: cookware, cutlery, kitchen toolsand precision cutting tools.

Approximately 70% of the products sold by the Company during 1994 were produceddomestically, primarily in factories owned and operated by the Company. Theremaining products are obtained from foreign sources primarily located in theFar East.

COOKWARE: The Company is one of the country's largest manufacturers andmarketers of cookware, distributing its products throughout the United States,Canada and selected European markets. The Company's collection of leading,brand-name cookware products enables it to deliver, to both retailers and

consumers, products which satisfy a complete range of functional, aesthetic andvalue requirements. The Company competes in four main cookware productcategories, covering a broad range of materials, designs, colors and prices. TheCompany's cookware product categories are:

Cast Aluminum - Through its premium priced polished and black anodized aluminumcookware products sold under the Magnalite(R) and Magnalite Professional(R)brand names, respectively, the Company is a major manufacturer of cast aluminumproducts. In 1993, the Company introduced a line of non-stick cast aluminumcookware called Magnalite Professional(R) with Eclipse(TM) and in 1994 added theEclipse(TM) coating to certain products in its Magnalite(R) line. The productsare sold by mass merchants, department stores, and specialty cookware shops andhave been favorably received by the consumer because of their excellent cooking

performance and styling.

Enamelware - The Company is the only domestic manufacturer of this type ofproduct and has developed a leading market share. Ceramic On Steel(TM) cookwareproducts produced by the Company are sold under the Columbian and Granitewarebrand names. As of September 1, 1994 the Company acquired the Normandy line ofenamelware from National Housewares Corp. Normandy enamelware products, whichare similar to the Company's Ceramic On Steel(TM) cookware products, aremanufactured in Mexico. Enamelware is in demand because of its easy cleanup andpopular price. It is particularly popular for roasting and specialty



top-of-stove uses (e.g., spaghetti cookers and vegetable steamers). Products inthis category are primarily sold in discount stores, mass merchandise outletsand warehouse clubs.

Cast Iron - These medium priced cookware products are sold nationally to allretail channels under the Wagner's(TM) 1891 Original Cast Iron brand. TheCompany is one of two major domestic manufacturers in this product category.Wagner(TM) cast iron is purchased by consumers for its even heating, naturalnon-stick surface and durability. It is particularly useful for skillet andregional style cooking.

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Stamped and Spun Aluminum - These heavy gauge, large capacity products aremarketed under the brand name Leyse Professional(TM) and distributed throughdepartment stores, mass merchants and specialty shops. Leyse products arepurchased from a domestic manufacturer.

During 1993, the Company sold its stainless steel cookware operations. Inconjunction with the sale, the Company entered into a licensing and royaltyagreement pursuant to which the purchaser may continue to use the Magnalite(R)and Magnalite Professional(R) brand names on stainless steel cookware. TheCompany believes that the sale will not have a material impact on its ongoing

cookware operations.

The total United States market for cookware, defined as metal pots and pans usedfor top-of-stove and oven cooking, is estimated by the Cookware ManufacturersAssociation at approximately $1.6 billion in terms of annual sales. Domesticindustry unit sales have remained relatively flat during the past five yearsand, as a result, domestic manufacturers have lost market share to imports,which the Association estimates have grown from 42% of the market in 1990 to 45%in 1994. Imported merchandise, principally from Korea, Taiwan, Mexico and thePeoples Republic of China, has been successful in penetrating the market throughcomparable quality products at lower prices.

Through market research and a better understanding of the American consumer, the

Company believes it has successfully repositioned its product lines todifferentiate them from competing imports.

The cookware industry is highly competitive and fragmented. In addition, it ischaracterized by little product differentiation. The Company believes that knownbrand names, price-value relationships, product design, quality and creativemerchandising programs, as well as responsive, superior customer service, arekey factors contributing to success. While there are a number of manufacturersand marketers of cookware, only a few are larger in the marketplace, or havegreater financial resources than the Company.

CUTLERY: The Company is a manufacturer and marketer of quality kitchen cutlerywith the leading domestic brand name (Chicago Cutlery(R)) and market share in

its industry. The Company markets, under the Chicago Cutlery(R) brand umbrella,three complete lines of kitchen knives for consumers, sharpening tools, storageunits and cutting boards. Its most popular household cutlery line is The WalnutTradition(R), which features a solid American walnut handle with a TaperGrind(R) edge on the blade. The Company manufactures and sells a popular pricedknife under the Cherrywood(TM) brand name. For the consumer that prefers asynthetic handled knife, the Company manufactures and sells the Metropolitan(TM)product line which features a durable high-impact plastic handle and a TaperGrind(R) edge.



All Chicago Cutlery(R) blades are made from high carbon stainless steel thatresists rusting, pitting and staining. The Taper Grind(R) edge provides auniform and smooth taper, thereby facilitating the blade's movement through theobject being cut.

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During 1992, the Company repositioned its cutlery products that had been soldunder the Mendix name as a promotional cutlery category under the banner"Designed and Marketed by Chicago Cutlery(R)". These products compete in boththe fine edge and "never-needs-sharpening" segment of the cutlery industry andare purchased from suppliers in the Far East. Promotional cutlery "Designed andMarketed by Chicago Cutlery(R)" consists of thirteen separate cutlery brands,seven of which are sold exclusively through department stores, and the remaininglines are distributed through department stores, mass merchandisers and catalogshowrooms.

While the overall market for kitchen cutlery in the United States has remainedrelatively unchanged in recent years, foreign products have made significantinroads. The Company believes that imports in 1994 accounted for more than half

of domestic sales in dollars and 75% of domestic sales in units. In general,foreign competition has been concentrated at the lower end and the very high endof the retail price range. As a result of its widely recognized brand name andreputation for high quality at a good price, Chicago Cutlery(R) has gainedmarket share even as the rest of the domestic industry has lost ground.

The Company also manufactures a full line of knives for the commercial poultryprocessing market. These molded handle knives are designed to meet the specialneeds of professionals and have specialized blade shapes for specific cuttingjobs. The handles are textured to be slip-resistant and feature a finger guardfor safety, and in some cases ergonomic handles.

KITCHEN TOOLS: Effective October 1, 1992, the Company purchased all of the

partnership interests in OXO International L.P. ("OXO"), a New York limitedpartnership, marketing a broad line of kitchen tools under the Good Grips(R),Prima(TM) Plus(TM) and Basics(TM) brand names. The products are primarily madeby manufacturers located in the Far East according to OXO's designs andspecifications. The kitchen tools sold by OXO generally utilize a proprietaryhandle which is covered by patents owned by the Company. OXO(R) kitchen toolsare distributed primarily in the United States through department stores,gourmet and specialty outlets and mass merchandisers.

OXO also sells a line of garden tools, under the Sierra Club(TM) name, thatutilizes its proprietary handle. Garden tools are primarily distributed throughspecialty outlets.

CUTTING BOARDS: The Company, under the Idaho Woodworks name, manufactures andmarkets cutting boards made of wood, polyethylene, and combinations of wood andacrylic, marble or polyethylene.

PRECISION CUTTING TOOLS: Effective October 1, 1994, the Company purchasedcertain assets of Walter Absil Company Limited and Olfa Products Corp.,(collective referred to as the "Olfa Products Group"). The Olfa Products Groupis the exclusive distributor, in the United States and Canada, of precisioncutting tools and accessories manufactured by Olfa Corporation of Osaka, Japan.Products of the Olfa Products Group are sold both to distributors and direct to



hobby, craft, hardware and fabric stores.

The North American hobby and craft market is both large and diverse with salesexceeding $10 billion. Products distributed through the Olfa Products Groupcompete in small selected segments in this market. Typically, these productscompete on the basis of performance and value.

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Cookware and cutlery products are sold by the Company to most major retail andwholesale distribution organizations in the United States and Canada through itsdirect sales force and, to a limited degree, through independent commissionedsales representatives. The OXO(R) kitchen tools and Idaho Woodworks(TM) cuttingboards are sold primarily through independent commissioned salesrepresentatives. The Olfa Products Group utilizes a combination of a directsales force and independent commissioned sales representatives. In addition theCompany sells products through a chain of manufacturers' retail outlet storesoperating under the name "Chicago Cutlery etc., Inc."

MAJOR CUSTOMERS

During 1994, the ten largest customers of the Company accounted for 42% of theCompany's net sales. Sales to the Company's largest customer, Wal-Mart Stores,

Inc., were $12.1 million or approximately 13% of total net sales. The Companyhas had good long-term relationships with its major customers.

CUSTOMER SERVICE

The Company believes it has a unique advantage as a supplier of primarilyAmerican-made products which are shipped to its customers typically within fivedays of order, as contrasted to direct retailer imports which typically requirea three to six month lead time.

EMPLOYEES

The Company employs approximately 725 persons, of whom about 575 are involved in

manufacturing with the balance serving in sales, general and administrativecapacities. The Company believes that its relations with employees are good.

Approximately 352 employees are represented by three different labororganizations, which have contracts expiring in February, March and July of1996.

EXPORT SALES

Exports account for less than 7% of the Company's total sales.

RAW MATERIALS

The principal raw materials used in manufacturing the Company's products aresteel, aluminum ingot, ceramic compounds, plastic compounds and hardwoodproducts. All of these materials are generally available from numerous suppliersand the Company believes that the loss of any one supplier would not have asignificant impact on its operations.

SEASONALITY

Shipments are higher in the second half of the year and highest in the fourthquarter due to the seasonality of housewares retail sales.



Item 2. Properties

The following table sets forth the location and size of the Company's principalproperties.

-6-<PAGE>OPERATING FACILITIES<TABLE>Property Owned:<CAPTION> APPROXIMATE FLOOR AREALOCATION NATURE OF USE OF PROPERTY (Square Feet)<S> <C> <C>

Terre Haute, Manufacturing, distribution and 469,000 Indiana administrative (Ceramic on Steel(TM) cookware and distribution of cutlery products)

Sidney, Ohio Manufacturing (cast iron, cast 186,500 aluminum cookware)

Wauconda, Manufacturing (cutlery) 65,000 Illinois

Property Leased:<CAPTION> APPROXIMATE EXPIRATION NATURE OF FLOOR AREA DATELOCATION USE OF PROPERTY (Square Feet) OF LEASE<S> <C> <C> <C> Sidney, OH Warehouse 32,000 July 31, 1995Terre Haute, IN Warehouse 86,400 Apr. 30, 1995

New York, NY Administrative 1,330 Sep. 30, 1995Stamford, CT Administrative 5,000 May 7, 1995Sandpoint, ID Manufacturing 22,000 Oct. 6, 1995St. Laurent, Quebec Administrative Canada and Warehouse 16,230 Nov. 30, 1997Plattsburgh, NY Warehouse 27,700 Oct 1, 1997</TABLE>

In addition, the Company leases an average of 2,700 square feet of retail spacein 28 factory outlet malls with initial lease terms ranging from 3 to 7 years.

In the opinion of the Company's management, the properties and plants describedabove are in good condition and repair and are adequate for the particular

operations for which they are used.

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NON-OPERATING FACILITIES

Property Owned: (Reported as "other assets" in the financial statements



in this Report).

<TABLE><CAPTION> APPROXIMATE

FLOOR AREALOCATION NATURE OF USE OF PROPERTY (Square Feet)<S> <C> <C>New Hope, Manufacturing/ Minnesota Distribution facility (leased to third parties) 65,280

New Hope, Manufacturing/ Minnesota Distribution facility (leased to third party) 21,500

Hyannis, Candle manufacturing facility Massachusetts (leased to third party) 74,600

Antrim, Manufacturing facility New Hampshire 55,400

</TABLE>

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Item 3. Legal Proceedings

The Company and its wholly owned subsidiary, Chicago Cutlery, Inc., institutedan action on February 2, 1995 against the personal representatives of the Estateof Ronald J. Gangelhoff in the United States District Court for the District ofMinnesota, Fourth Division. The action was instituted in February in order tocomply with Minnesota probate practices for settling claims against estates. Theaction seeks indemnity and/or contribution for all losses and expenses sufferedand incurred, and to be suffered and incurred, by the plaintiffs arising fromthe New Hampshire Department of Environmental Services mandated clean-up of

hazardous substances generated at the Antrim, New Hampshire manufacturing siteowned by Chicago Cutlery, Inc. and arising from the remediation of the site andthe landfill at which some of the substances were disposed. The action alsoseeks a declaratory judgement that the defendants are liable to the Company. Theaction is brought on the basis of the breach of representations and warrantiesin the 1988 Stock Purchase Agreement pursuant to which the Company purchased thestock of Chicago Cutlery, Inc. from Ronald J. Gangelhoff. It is also broughtunder the provisions of the Comprehensive Environmental Response, Compensation,and Liability Act, the provisions of the New Hampshire Hazardous Waste Clean-upand Contribution statutes and under common law causes of action.

Before the death of Mr. Gangelhoff, Chicago Cutlery, Inc. had instituted anaction on October 8, 1993 against David D. Hurlin in the United States District

Court for the District of New Hampshire seeking damages and a declaratoryjudgement that Mr. Hurlin is liable to plaintiff for losses and expensessuffered and incurred, and to be suffered and incurred, arising from themandated clean-up of hazardous substances generated at the Antrim, New Hampshiremanufacturing site during the period it was owned by Goodell Company and arisingfrom remediation of the site. The basis of the action against Mr. Hurlin is thatas chief executive officer, a director and substantial stockholder of theGoodell Company he was in control of, or in a position to control and direct,hazardous substances handling and disposal practices at the site when hazardoussubstances were improperly released to the environment. The action is brought



under the provisions of the Comprehensive Environmental Response, Compensation,and Liability Act, the provisions of the New Hampshire Hazardous Waste Clean-upand Contribution statutes and under common law causes of action. To the extentthat recovery is made against David D. Hurlin, the amount of the Company's claimagainst the assets of the late Ronald J. Gangelhoff will be reduced.

For information concerning various environmental matters with which the Companyis involved, see Note to Consolidated Financial Statements on page 22 of thisReport.

In connection with the examination of the Company's 1991 tax return, theInternal Revenue Service has proposed an adjustment with regard to thedeductions related to a covenant not to compete applying to tax years 1991through 1993. While the ultimate resolution of this matter can not be assessedat this time, the Company believes that it has adequate support for its positionand that the final resolution will not have a material adverse effect on theCompany's financial position, results of operations or cash flow.

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Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

EXECUTIVE OFFICERS OF THE COMPANY

The following individuals are executive officers of the Company, each of whomwill serve in the capacities indicated until May 2, 1995, or until the electionand qualification of a successor.

<TABLE><CAPTION>

Name Position with Company Age<S> <C> <C>Paul A. Saxton Chairman of the Board, President, 56 and Chief Executive Officer

Gordon R. Erickson Secretary and General Counsel 66

Stephen M. Evans Controller 53

Robert L. Gray Vice President, Finance and 44 Treasurer</TABLE>

Messrs. Saxton and Erickson have been executive officers of the Company for morethan five years. Mr. Evans has been an executive officer of the Company sinceJuly 1, 1990. Prior thereto Mr. Evans held various administrative and managerialpositions in the Company's cookware group. Mr. Gray has been employed by theCompany since April, 1990 and an executive officer since July 1, 1990. Priorthereto he was Treasurer of Helene Curtis Industries, Inc.

PART II

Item 5. Market for the Company's Common Stock and Related Stockholder Matters



The market on which the Company's Common Stock is traded is the New York StockExchange, Inc. The high and low sales prices of the Company's Common Stock andthe cash dividends declared for each quarterly period during the last two fiscalyears appear on page 11 of this Report.

The approximate number of holders of Common Stock as of March 15, 1995,including beneficial owners of shares held in nominee accounts of whom theCompany is aware, was 1,000.

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Item 6. Selected Financial Data<TABLE>SELECTED CONSOLIDATED FINANCIAL DATA(in thousands except for per share amounts)<CAPTION>

Year Ended December 31, 1994 1993 1992 1991 1990<S> <C> <C> <C> <C> <C>

Net sales $96,515 $87,452 $79,382 $74,028 $68,967 Operating income 6,637 6,415 8,342 8,379 9,513 Interest expense, net 1,699 1,299 1,319 1,590 2,622 Income from continuing operations before income taxes $ 4,938 $ 5,116 $ 7,023 $ 6,789 $ 6,891 Income taxes $ 2,188 $ 2,080 $ 2,599 $ 2,919 $ 3,027 Income from continuing operations $ 2,750 $ 3,036 $ 4,424 $ 3,870 $ 3,864 Average number of common shares outstanding including common stock

equivalents 3,440 3,340 3,295 3,217 2,949 Income from continuing operations per common share $ 0.80 $ 0.91 $ 1.34 $ 1.20 $ 1.31 Income from continuing operations per common share assuming full dilution $ 0.80 $ 0.91 $ 1.34 $ 1.20 $ 1.25 Dividends per common share $ 0.32 $ 0.32 $ 0.32 $ 0.32 $ 0.24 Financial Summary: Total assets $98,358 $72,017 $72,001 $61,832 $57,315 Total debt 34,313 17,000 20,053 14,824 12,847

Net worth 50,255 43,929 41,696 37,252 33,371

</TABLE>

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Continuing Operations

The operating results described below reflect the results of the cutlery,



cookware, kitchen tool (acquired in October of 1992), precision cutting tool(acquired in October of 1994) and retail outlet store operations.

Year Ended December 31, 1994 versus 1993

Net sales for 1994 were $96,515,000, an increase of 10% when compared to netsales of $87,452,000 for 1993. Sales increased as a result of growth in theCompany's kitchen tool and retail outlet store businesses and as a result ofacquisitions. While the dollar amount of gross profit increased modestly, gross

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profit margins declined reflecting competitive pricing pressures and increasedraw material costs. Selling, general and administrative expense increasedslightly. Increased costs related to the higher sales volume and a partialyear's amortization of goodwill (related to the purchases of the assets ofWalter Absil Company Limited, Olfa Products Corp. and National Housewares, Inc.)were offset by reduced general and administrative costs. Included in operatingexpense were additions of $391,000 to bad debt reserves to cover customerbankruptcies during the year and $153,000 (exclusive of amounts for whichrecovery from unaffiliated third parties is expected) to the reserve provisionsfor environmental remediation.

Net income was $2,750,000 or $0.80 per share in 1994 compared to $3,036,000 or$0.91 per share in 1993. The effective tax rate applied to pre-tax incomeincreased to 44% in 1994, compared to 41% in 1993. The effective tax rateincreased to provide for potential assessments with regard to ongoing review bythe Internal Revenue Service of years 1991-1993.

Year Ended December 31, 1993 versus 1992

Net sales for 1993 were $87,452,000, an increase of 10% when compared to netsales of $79,382,000 for 1992. Sales increased primarily as a result of growthin the Company's kitchen tool and retail outlet store businesses. Despite theincrease in sales and benefit from the decrease of the cost of goods sold($285,000) resulting from the reduction of the LIFO Reserve, operating income

decreased from $8,342,000 to $6,415,000. The decline in operating income waslargely attributable to a combination of pricing issues, incremental costs andone-time charges. Competitive pressures prevented the Company from realizingprice increases on cookware lines sufficient to cover increases in costs.Further, in response to these pressures, the Company reduced prices on its keyMagnalite Professional cookware line by more than 10%. In addition, closeoutsales on slow moving inventories at low margins resulted in below average profitrealizations. Operating expenses for the year included incremental expenses(versus 1992) of $2,372,000 related to the full year operation of the kitchentool business (acquired in October of 1992), $470,000 added to the provision forenvironmental remediation costs and $420,000 of costs related to thestreamlining of operations.

Net income was $3,036,000 or $0.91 per share in 1993 compared to $4,424,000 or$1.34 per share ($4,642,000 or $1.40 per share after the favorable adjustmentfor the cumulative effect of a change in accounting for income taxes inaccordance with FAS No. 109) in 1992. The effective income tax rate in 1993 was40.7% compared to 37.0% in 1992. The tax rate in 1992 was abnormally low due tothe availability of certain state tax benefits.

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<PAGE>

Seasonality

Sales are higher in the second half of the year and highest in the fourthquarter due to the seasonality of housewares retail sales.

Capital Resources and Liquidity

On November 30, 1994, the Company completed a financing package consisting of a$30,000,000 three year bank loan agreement ($3,000,000 outstanding at December31, 1994) and the private placement of $20,000,000 of 8.41% Senior Notes.Proceeds from the new financing package were used to refinance existing bankloans incurred to support working capital requirements and for acquisitions. Asa result of the new financing, the Company believes that it has sufficientliquidity to fund existing operations and to continue to make acquisitions.

Substantially all of the expenditures made by the Company to comply withenvironmental regulations are for the remediation of previously contaminatedsites. The Company has established a reserve to cover such expenses (see Note 9to the Consolidated Financial Statements). In addition to the amounts providedfor in the reserve, the Company may be required to make certain additionalcapital expenditures which, in aggregate, are not expected to be material.Subsequent to the completion of the remediation contemplated in setting the

reserve, the Company believes that the ongoing costs of compliance withenvironmental regulation, including the cost of monitoring, pollution abatementand disposal of hazardous materials, will not be material.

Effect of Inflation

For the year ended December 31, 1994, price increases in certain commoditiesused by the Company (e.g., aluminum ingot (47%), steel (6%) and packagingmaterials (10%)) had an adverse effect on the operations of the Company. Therewas no such effect in the years ended December 31, 1993 or 1992.

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Item 8. Financial Statements and Supplementary Data

Index to Financial Statements Page

Financial Statements:

Report of Independent Accountants 14Consolidated Statement of Income for the three years ended

December 31, 1994 15

Consolidated Balance Sheet at December 31, 1994 and 1993 17-18 Consolidated Statement of Cash Flows for the three years ended December 31, 1994 19-20 Consolidated Statement of Changes in Stockholders' Equity for the three years ended December 31, 1994 16-17 Notes to Consolidated Financial Statements 21-33

Financial Statement Schedule: For the five years ended December 31, 1994 II - Valuation and Qualifying Accounts 11



All other schedules are omitted because they are not applicable or the requiredinformation is shown in the financial statements or notes thereto.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of General Housewares Corp.

In our opinion, the consolidated financial statements listed in the accompanyingindex present fairly, in all material respects, the financial position ofGeneral Housewares Corp., and its subsidiaries at December 31, 1994 and 1993,and the results of their operations and their cash flows for each of the threeyears in the period ended December 31, 1994, in conformity with generallyaccepted accounting principles. These financial statements are theresponsibility of the Company's management; our responsibility is to express anopinion on these financial statements based on our audits. We conducted ouraudits of these statements in accordance with generally accepted auditingstandards which require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, andevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for the opinion expressed above.

As discussed in Note 1 to the financial statements, the Company adoptedStatement of Financial Accounting Standards No. 109, Accounting for Income Taxesin 1992.

PRICE WATERHOUSE LLP

Indianapolis, IndianaJanuary 30, 1995

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<PAGE><TABLE>

CONSOLIDATED STATEMENT OF INCOME<CAPTION>

For the year ended December 31, 1994 1993 1992 (in thousands except for per share amounts) <S> <C> <C> <C>

Net sales $96,515 $87,452 $79,382 Cost of goods sold 61,505 52,798 48,

095 Gross profit . 35,010 34,654 31,287 Selling, general and administrative expenses 28,373 28,239 22,945 Operating income 6,637 6,415 8,342 Interest expense, net 1,699 1,299 1,319



Income before income taxes 4,938 5,116 7,023 Income taxes 2,188 2,080 2,599

Income before cumulative effectof accounting change 2,750 3,306 4,

424 Cumulative effect of change in accounting for income taxes - -218 Net income $ 2,750 $ 3,036 $ 4,642

Earnings per common share, primaryand fully diluted:

Income before cumulative effect of accounting change $ 0.80 $ 0.91 $ 1.34

Cumulative effect of change inaccounting for income taxes - - 0

.06

Earnings per share $ 0.80 $ 0.91 $ 1

.40</TABLE>

See notes to consolidated financial statements.

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Consolidated Statement of Stockholders' Equity<CAPTION>

Common Common Capital in Cumulative Cost ofMinimum Stock Stock Excess of Translation Retained TreasuryPension Shares Amount Par Value Adjustments Earnings SharesLiability Total(in thousands)<S> <C> <C> <C> <C> <C> <C><C> <C>

Balances, December 31, 1991 3,444 $1,148 $16,553 - $22,766 $(3,215)

- $37,252Restricted stock activity - - 95 - - -

- 95Shares issued upon exercise of options 84 28 672 - - -

- 700Shares issued for employee



stock purchase plan 3 1 37 - - -

- 38Dividends - - - - (1,031) -

- (1,031)Net income - - - - 4,642 -

- 4,642

Balances, December 31, 1992 3,531 1,177 17,357 - 26,377 (3,215) - 41,696

Restricted stock activity - - 49 - - (1)

- 48Shares issued upon exercise of options 30 10 254 - - -

- 264Shares issued for employee stock purchase plan 6 2 91 - - -

- 93Tax benefit from exercise of stock options - - 283 - - -

- 283Minimum pension liability - - - - - -

(446) (446)Dividends - - - - (1,045) -

- (1,045)Net income - - - - 3,036 -

- 3,036

BalancesDecember 31, 1993 3,567 1,189 18,034 - 28,368 (3,216) (446) 43,929

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Restricted stock activity (23) (5) 82 - - -

- 77Shares issued upon

exercise of options 16 5 141 - - -

- 146Shares issued for employee stock purchase plan 7 2 70 - - -

- 72Tax benefit from exercise of stock



options - - 14 - - -- 14

Shares issued for acquisition 400 133 4,367 - - -

- 4,500Translation adjustments - - - (215) - -

- (215)Minimum pension liability - - - - - -

71 71Dividends - - - - (1,089) -

- (1,089)Net income - - - - 2,750 -

- 2,750

Balances December 31, 1994 3,967 $1,324 $22,708 $(215) $30,029 $(3,216) $(375) $50,255</TABLE>

See notes to consolidated financial statements.<TABLE>

CONSOLIDATED BALANCE SHEET<CAPTION>

December 31, 1994 1993(in thousands except per share amounts)<S> <C> <C>ASSETSCurrent Assets: Cash and cash equivalents $ 2,993 $ 785 Accounts receivable, less allowances of $5,312 ($3,379 in 1993) 16,854 11,656 Inventories 20,841 11,765

Deferred tax asset 2,184 1,601 Other current assets 905 1,410 Total current assets 43,777 27,217Property, Plant & Equipment, Net 13,001 12,620Other Assets 7,455 7,213Patents and Other Intangible Assets 4,294 4,757Cost in Excess of Net Assets Acquired 29,831 20,210 ------- ------- $98,358 $72,017

-17-<PAGE>

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities: Current maturities of long-term debt $ 1,122 $- Deferred payment obligation 2,382 - Accounts payable 3,544 1,959



Salaries, wages and related benefits 2,525 2,399 Property taxes 420 402 Accrued liabilities 2,309 1,727 Income taxes payable 1,141 733 Total current liabilities 13,443 7,220Long-Term Debt 30,809 17,000Deferred Liabilities 3,851 3,868Commitments and Contingent Liabilities(Note 9)Stockholders' Equity: Preferred stock - $1.00 par value: Authorized - 1,000,000 shares Common stock - $.33-1/3 par value: Authorized - 10,000,000 shares Outstanding - 1994 - 3,966,705 and 1993 - 3,567,383 shares 1,324 1,189 Capital in excess of par value 22,708 18,034 Treasury stock at cost - 1994 and 1993 - 243,760 shares (3,216) (3,216) Retained earnings 30,029 28,368 Cumulative translation adjustment (215) -

Minimum pension liability (375) (446) Total stockholders' equity 50,255 43,929 ------- ------- $98,358 $72,017</TABLE>


-18-<PAGE><TABLE>

CONSOLIDATED STATEMENT OF CASH FLOWS<CAPTION>

For the year ended December 31, 1994 1993 1992 (in thousands) Cash flows from operating activities: <S> <C> <C> <C>

Net income $2,750 $3,036 $4,642 Adjustments to reconcile net income to net cash provided by operating activities -

Depreciation and amortization 3,623 3,240 2,567 Foreign exchange gain (95) - - Compensation related to stock awards 76 48 95 (Increase) decrease in deferred tax assets (546) (333) 400 (Increase) decrease in operating assets: Accounts receivable (2,636) 1,177 (1,073) Inventory (2,761) 755 (2,728)



Other assets (482) (719) (838) Increase (decrease) in operating liabilities: Accounts payable 1,585 (993) 194 Salaries, wages & related benefits, property taxes and accrued liabilities 109 1,687 (687) Income taxes payable 408 187 473 ------ ------- ------- Net cash provided by operating activities 2,031 8,085 3,045 Cash flows used for investing activities: Additions to property, plant and equipment, net (2,545) (2,823) (3,122) Payment for acquisitions (8,643) (609) (5,269) Net cash used for investing ------- -------- -------- activities (11,188) (3,432) (8,391)

-19-<PAGE><CAPTION>

Cash flows from financing activities:

Collection of notes receivable 1,018 242 - Long-term debt (repayment) borrowings (8,783) (3,488) 3,284 Issuance of senior notes 20,000 - - Proceeds from stock options and employee stock purchases 219 357 739 Dividends paid (1,089) (1,045) (1,031

) Net cash provided by (used for) ------ ------ ------ financing activities 11,365 (3,934) 2,992

Net increase (decrease) in cash and ====== ====== ====== cash equivalents 2,208 719 (2,354) Cash and cash equivalents at beginning of year 785 66 2,420

Cash and cash equivalents at ======= ======= ======= end of year $2,993 $785 $66</TABLE>


-20-<PAGE>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands except for per share amounts)

1. Accounting Policies



Principles of Consolidation - The Consolidated Financial Statements include theaccounts of General Housewares Corp. and its subsidiaries, all of which arewholly owned.

Inventories - Inventories are stated at the lower of cost or market and atDecember 31 were comprised of the following:<TABLE><CAPTION> 1994 1993<S> <C> <C>Raw Materials $ 4,293 $ 2,630Work in Process 2,292 1,885Finished Goods 16,064 8,827 ------- ------- $22,649 $13,342LIFO Reserve ( 1,808) ( 1,577) ======= ======= $20,841 $11,765</TABLE>Cost at December 31, 1994, is determined on a last-in, first-out (LIFO) basisfor approximately 80% of the Company's inventories. The remaining inventoriesare determined on a first-in, first-out (FIFO) basis. During 1993, inventoryquantities were reduced. This reduction resulted in a liquidation of LIFO

inventory quantities carried at lower costs prevailing in prior years ascompared with the cost of 1993 purchases, the effect of which decreased cost ofgoods sold by approximately $285 and increased net income by approximately $170.There were no such liquidations in 1994.

Property, Plant and Equipment - Property, plant and equipment is recorded atcost and depreciated over estimated useful lives using the straight-line method.<TABLE><CAPTION>Property, Plant and Equipment is as follows:

1994 1993<S> <C> <C>

Land $ 674 $ 642Buildings 4,245 4,381Machinery and Equipment 28,129 26,905 ------- ------- 33,048 31,928Less Depreciation 20,047 19,308 ======= ======= $13,001 $12,620</TABLE>Other Current Assets - Included in other current assets is a receivable arisingfrom the sale of stainless steel tooling and inventories of $153 ($922 in 1993),as well as a receivable related to an anticipated recovery of $400 of estimatedenvironmental costs and other miscellaneous receivables and prepaid expenses.

-21-<PAGE>

Other Assets - Included in other assets are three manufacturing facilities (Landand Buildings - cost of $5,866 with accumulated depreciation of $1,416) that theCompany no longer operates. All of the facilities are currently being leased tounaffiliated third parties under non-cancelable leases. Income generated bythese leases is not significant to the consolidated operations of the Company.Each of these facilities is being depreciated over its estimated useful life



using the straight-line method. Other assets also include prepaid pensionexpense.

Intangible Assets - The cost in excess of net assets acquired is amortized usingthe straight-line method over periods ranging from 10 to 40 years. Otherintangible assets arising from acquisitions are included in patents and otherintangible assets and are amortized using the straight-line method over periodsof 5 to 15 years. Amortization of intangible assets was approximately $1,179 in1994 ($1,008 in 1993 and $646 in 1992) and accumulated amortization was $4,768and $3,589 at December 31, 1994 and 1993, respectively. In addition, at December31, 1994 and 1993 the Company recognized an intangible asset related to therecording of a minimum pension liability in accordance with Statement ofFinancial Accounting Standards No. 87.

Income Taxes - Effective January 1, 1992, the Company adopted Statement ofFinancial Accounting Standards No. 109, Accounting for Income Taxes (FAS 109).The adoption of FAS 109 increased net income in 1992 by $218.

Deferred Liabilities - Deferred liabilities include a minimum pension liability,deferred federal income taxes and deferred compensation.

Earnings per Share - Earnings per share are computed using the weighted averagenumber of shares of common stock and common stock equivalents outstanding duringthe year.

Sales to a Significant Customer - During 1994 and 1993, the Company had netsales to a single customer of $12,100 and $12,000, respectively, whichrepresented approximately 13% and 14% of total net sales for 1994 and 1993,respectively.

Accounts Receivable - Substantially all accounts receivable are uncollateralizedand arise from sales to the retail industry. Accounts receivable allowancesinclude reserves for doubtful accounts, returns, adjustments and co-opadvertising allowances to customers.

Reclassification - Certain 1993 and 1992 amounts have been reclassified toconform with the 1994 presentation.

Cash Equivalents - The Company considers all highly liquid temporary cashinvestments with low interest rate risk to be cash equivalents. Temporary cashinvestments are stated at cost, which approximates market value.

Currency Translation - The net assets of foreign operations are translated intoU.S. dollars using current exchange rates. Revenue, costs and expenses aretranslated at average exchange rates during the reporting period.

-22-<PAGE>

2. Acquisitions

Effective October 1, 1994, the Company purchased the assets of Walter AbsilCompany Limited and Olfa Products Corp. (collectively referred to as "OlfaProducts Group"). The Olfa Products Group is the exclusive North Americandistributor of precision cutting tools and accessories manufactured by OlfaCorporation of Osaka, Japan. Assets acquired include accounts receivable,inventories and equipment.

The purchase price was $13,576 and consisted of a cash payment of $6,843,



Subordinated Promissory Notes in the principal amount of $2,233 bearing interestat 6% per annum and 400,000 restricted shares (valued at $4,500) of theCompany's common stock. The common stock issued in connection with thisacquisition is restricted as to both sale and voting rights. All suchrestrictions will expire no later than September 30, 1999.

The acquisition has been accounted for as a purchase and the net assets andresults of operations are included in the Company's Consolidated FinancialStatements beginning October 1, 1994. The purchase price has been allocated tothe assets acquired and liabilities assumed of the Olfa Products Group based ontheir estimated respective fair values. Cost in excess of net assets acquiredwas $6,349 and is being amortized over 20 years.

In connection with the issuance of restricted common stock related to theacquisition of Olfa Products Group, the Company has agreed, under certaincircumstances, to make payments of up to $600 to the former owners upon sale ofthe restricted common stock. In addition, the Company has agreed to makepayments of up to approximately $3,565 to the management of the Olfa ProductsGroup based upon the achievement of a specific aggregate financial target forthe three year period ending December 31, 1997.

Effective September 1, 1994, the Company purchased the assets of the Normandy,enamel on steel cookware, business of National Housewares, Inc. for a cashconsideration of $1,800 and deferred payments equal to $3,767 plus an incentive

payment of $382 based upon operational performance for the remainder of 1994.The cash payment was equivalent to the fair market value of the inventoriesacquired. Cost in excess of net assets acquired is $4,149 and is being amortizedover 10 years.

The following unaudited pro forma information combines the consolidated resultsof operations of the Company, the Olfa Products Group and Normandy as if theacquisitions had occurred at the beginning of 1994 and 1993. The pro formainformation is not necessarily indicative of the results of operations whichwould have actually occurred during such periods.

-23-<PAGE>

<TABLE><CAPTION>

(Unaudited) 1994 1993 <S> <C> <C>

Net sales $114,184 $110,057 Income before taxes 5,831 6,971 Net income 3,277 4,137 Earnings per average

common share $ 0.88 $ 1.11</TABLE>

On August 19, 1993, the Company purchased the assets of Idaho Woodworks, Inc., amanufacturer of cutting boards. Receivables, inventories and equipment werepurchased at book value for $609.

Effective October 1, 1992, the Company purchased all of the partnershipinterests in OXO International L.P. ("OXO"), a New York limited partnershipmarketing a broad line of kitchen tools. Kitchen tools sold by OXO utilize a



proprietary handle which is subject to a patent owned by the Company. The assetsacquired consisted primarily of inventory, accounts receivable and patents, andinclude tooling used to manufacture the OXO products.

The purchase price was $6,250 and consisted of a cash payment of $5,500 andSubordinated Promissory Note in the principal amount of $750 bearing interest at8% per annum.

The acquisition has been accounted for as a purchase and the net assets andresults of operations are included in the Company's Consolidated FinancialStatements beginning October 1, 1992. The purchase price has been allocated tothe assets acquired (including amounts assigned to patents of $4,100 andcovenants not to compete of $650) and liabilities assumed of OXO based on theirestimated respective fair values. Cost in excess of net assets acquired was $463and is being amortized over 40 years.

The following unaudited pro forma information combines the consolidated resultsof operations of the Company and OXO as if the acquisition had occurred at thebeginning of 1992. The pro forma information is not necessarily indicative ofthe results of operations which would have actually occurred during suchperiods.

<TABLE><CAPTION>

(Unaudited) 1992<S> <C>

Net sales $82,655 Income before taxes 6,871 Net income 4,540 Earnings per average common share $ 1.38

</TABLE>

-24-<PAGE>

3. Debt

<TABLE>

Long-term debt includes the following:<CAPTION>

December 31, 1994 1993 <S> <C> <C>

Bank Credit Agreement $ 3,000 $12,000 8.41% senior notes payable in equal annual installments commencing 1998 through 2004 20,000 -

12% subordinated note payable in equal annual installments commencing



1996 through 2000 5,000 5,000

Deferred payment obligation due in quarterly installments of $125,000 from January, 1995 through September, 1998 (discounted at 6%) 1,793 -

6% subordinated notes payable in equal annual installments in Canadian dollars commencing 1995 through 1997 2,138 -

------- ------- 31,931 17,000 Less current portion 1,122 - ======= ======= Long-term debt $30,809 $17,000

</TABLE>

-25-<PAGE>

At December 31, 1994 and 1993, all of the Company's debt outstanding wasunsecured.

The bank debt outstanding at December 31, 1994, relates to a Credit Agreementwith two banks with an aggregate commitment of $30,000 of which $5,000 isreserved for letters of credit at December 31, 1994. The commitment will expireon November 30, 1997, and may be renewed, under certain circumstances, for twoadditional one year periods. Drawings under the Credit Agreement are pricedbased on Prime or LIBOR with spreads calculated on an incentive formula. AtDecember 31, 1994, the Company could borrow under the Credit Agreement at Primeor LIBOR + 1%. The interest rate on outstanding amounts on December 31, 1994,was 7.125%. The agreement replaced a $20,000 Revolving Credit Agreement with the

same banks. In addition during 1994 the Company sold $20,000 of 8.41% SeniorNotes payable to a group of institutional investors.

Terms of the Credit Agreement and the Senior Notes require among other thingsthat the Company maintain certain minimum financial ratios. In addition theagreements provide for limits on dividends and certain investments.

The deferred payment obligation was incurred in connection with the acquisitionof assets of the Normandy, enamel on steel cookware, business of NationalHousewares, Inc. In addition to the obligation listed in the above table, theCompany has additional obligations related to the transaction of $2,382,000 allof which were payable January 1995.

Terms of the Deferred Payment Obligation and all of the Subordinated Notesprovide for the right of offset upon the occurrence of certain events.

Aggregate principal payments for the five years subsequent to December 31, 1994,are as follows:

1995 $1,122 1996 2,147 1997 5,174 1998 4,345



1999 and thereafter 19,143

Cash paid during 1994 for interest, net of cash received, was $1,614 (1993 -$1,361; 1992 - $1,258).

4. Common Stock and Rights

Common stock reserved at December 31, 1994, included 231,404 shares reserved foroutstanding stock options.

In February 1989, the Company effected a dividend distribution of one Right foreach outstanding share of common stock. Under certain circumstances, each Rightmay be exercised to purchase 1/100th of a share of Series A Junior ParticipatingPreferred Stock, at a purchase price of $25, subject to adjustment to preventdilution. Each preferred share fraction is designed to be equivalent in votingand dividend rights to one share of common stock. The Rights may only beexercised after a person acquires, or has the right to acquire, 21% or more ofthe common stock or makes an offer for 30% or more of the common stock. TheRights, which do not have voting rights and do not entitle the holder todividends, expire on February 27, 1999, and may be redeemed by the Company priorto their being exercisable at a price of $.01 per Right.

-26-<PAGE>

5. Stock Plans

The Company maintains a stock plan for key employees which provides for thegranting of options or awards of restricted stock until January 31, 2003. Asummary of transactions under the plan follows:<TABLE><CAPTION>

Restricted Stock Stock Options<S> <C> <C>

Outstanding December 31, 1991 53,300 267,601Granted during 1992 2,219 37,000Canceled during 1992 (4,900) (4,233)Released or exercised during 1992 (5,219) (83,699)

Outstanding December 31, 1992 45,400 216,669Granted during 1993 - 68,000Canceled during 1993 (3,400) (1,335)Released or exercised during 1993 (4,000) (29,596)

Outstanding December 31, 1993 38,000 253,738

Granted during 1994 10,500 5,000Canceled during 1994 (34,000) (11,035)Released or exercised during 1994 (4,000) (16,299)

Outstanding December 31, 1994 10,500 231,404</TABLE>

Options granted under the plan provide for the issuance of common stock at notless than 100% of the fair market value on the date of grant. When options are



exercised, proceeds received are credited to common stock and capital in excessof par value. Stock options were exercised at prices ranging from $7.125 to$13.375 in 1994. Options outstanding at December 31, 1994, were granted atprices ranging from $7.125 to $13.75 per share. Options for 170,567 shares wereexercisable at December 31, 1994.

Restricted stock granted under the plan is subject to restrictions relating toearnings targets of the Company and/or continuous employment or otherrelationships.

-27-<PAGE>

On July 1, 1992, the Company introduced its Employee Stock Purchase Plan. Theplan, administered by a Committee appointed by the Board of Directors, isintended to qualify as an "employee stock purchase plan" within the meaning ofSection 423 of the Internal Revenue Code. The Employee Stock Purchase Planprovides that shares of the Company's Common Stock will be purchased at the endof each calendar quarter with funds deducted from the payroll of eligibleemployees. Employees receive a bargain purchase price equivalent to 90% of thelower of the opening or closing stock price of each calendar quarter. Dividendspaid to the Employee Stock Purchase Plan fund are reinvested in the fund to buy

additional shares. At December 31, 1994, the balance in the plan consisted of13,072 shares of General Housewares Corp. Common Stock (8,700 shares in 1993).

6. Employee Benefit Plans

The Company sponsors four defined benefit pension plans which coversubstantially all salaried and hourly employees. Pension benefit formulas arerelated to final average pay or fixed amount per year of service. It is theCompany's policy to fund at least the minimum amounts required by applicableregulations.

<TABLE><CAPTION>

Net periodic pension cost included the following components:<S> <C> <C> <C>

1994 1993 1992Service cost-benefits earned during the period $ 458 $ 410 $ 375Interest cost on projected benefit obligation 1,166 1,079 1,044Actual return on plan assets (34) (1,180) (865)Net amortization and deferral (919) 168 (58) ------ ------ ------

Net periodic pension cost $ 671 $ 477 $ 496

</TABLE>

-28-<PAGE>

<TABLE>The funded status of the plans as of December 31 was as follows:



<CAPTION>

1994 1993 Assets Accumulated Assets Accumulated Exceed Benefits Exceed Benefits Accumulated Exceed Accumulated Exceed Benefits Assets Benefits Assets<S> <C> <C> <C> <C>

Accumulated benefit obligation - vested $12,315 $2,233 $12,405 $2,289 - non vested 220 47 224 45 12,535 2,280 12,629 2,334

Effect of projected salary increases 953 - 1,002 -Projected benefits obligation 13,488 2,280 13,631 2,334

Plan assets at fair value 13,090 2,172 12,898 1,895

Plan assets less than

projected benefits obligation (398) (108) (733) (439)

Unrecognized net transition (asset) liability (960) 111 (1,097) 126

Unrecognized net loss from experience differences 2,131 672 2,282 675

Unrecognized prior service cost 920 336 1,036 361

Adjustment to recognize

minimum liability - (1,119) - (1,162)

Prepaid (accrued) pension cost recognized in balance sheet $ 1,693 $ (108) $ 1,488 $ (439)

</TABLE>

-29-<PAGE>

In accordance with the provisions of Statement of Financial Accounting StandardsNo. 87 - Employers' Accounting for Pensions, the Company has recorded anadditional minimum liability at December 31, 1994 and 1993, representing theexcess of the accumulated benefit obligation over the fair value of plan assetsand prepaid pension asset. The minimum liability for plans with accumulatedbenefits in excess of assets of $ 1,119 at December 31, 1994, has been includedin the Company's consolidated balance sheet as a deferred liability with anoffset in other intangible assets and equity. In addition, a deferred tax assetof $298 has been recognized for the minimum liability charge to equity.



The actuarial present value of the projected benefit obligation at December 31,1994 and 1993, was determined using a weighted average discount rate of 8.0% and7.5%, respectively, and a rate of increase in future compensation levels of 4%.The weighted average expected long-term rate of return on assets was 9% atDecember 31, 1994 and 1993. As of December 31, 1994, approximately 59% (1993 -33%) of the plan's assets were invested in fixed income funds.

In addition to the defined benefit plans described above, the Company alsosponsors a 401 (K) plan for all full-time employees. The Company matches aportion of each employee contribution. The Company's contribution expense was$302 in 1994 ($335 in 1993 and $306 in 1992).

The Company maintains a non-qualified, unfunded deferred compensation plan forcertain key executives providing payments upon retirement. The present value ofthe deferred compensation is included in deferred liabilities and the annualcharge to earnings is not significant.

-30-<PAGE>

7. Income Taxes

The components of the provision for income taxes were as follows:<TABLE><CAPTION>

1994 1993 1992<S> <C> <C> <C>

Current income tax expense: Federal $2,382 $2,043 $1,987 State 352 370 212Total current income tax ------ ------ ------

expense 2,734 2,413 2,199Deferred federal income tax expense (benefit) (546) (333) 400 ====== ====== ======Total income tax expense: $2,188 $2,080 $2,599

</TABLE>

The Company did not have a significant source of foreign income in each of theyears ended December 31, 1994, 1993 and 1992.

A reconciliation of the federal statutory rate to the Company's effective tax

rate is as follows:<TABLE><CAPTION> Percent of pretax income 1994 1993 1992<S> <C> <C> <C>

Federal statutory rate 34.0% 34.0% 34.0%State income taxes, net of federal income tax



benefit 4.7 4.8 2.0Amortization of excess purchase price 4.0 3.9 2.8Prior years accrual adjustment 1.4 (2.5) -Miscellaneous items .2 .5 (1.6) ---- ---- ---- 44.3% 40.7% 37.2%

</TABLE>

-31-<PAGE>

Federal income tax returns for all years prior to 1991 are closed. The InternalRevenue Service is currently conducting a review of the Company's tax returnsfor the years 1991-1993. The Company believes that it has made adequateprovision for income taxes that may become payable with respect to the yearsunder review.

Deferred tax assets (liabilities) are comprised of the following at December 31:

<TABLE><CAPTION>

1994 1993<S> <C> <C>

Gross deferred tax assets:

Accounts receivable allowances $849 $404Vacation 210 200Self-insurance 119 300Pension 509 388

Environmental reserve 539 338Other, miscellaneous 355 351 ------ ------Gross deferred tax assets $2,581 $1,981

<CAPTION>

Gross deferred tax liabilities:<S> <C> <C>Property, plant and equipment ($1,296) ($1,646)Pension (912) (746)Other current receivables (136) -Other, miscellaneous (264) (230)

-------- --------Gross deferred tax liabilities ($2,608) ($2,622)

======== ========Net deferred tax liabilities ($ 27) ($ 641)

</TABLE>

Cash paid for income taxes during 1994 was $1,659 (1993 - $1,939; 1992 - $1,988)



-32-<PAGE>

8. Operating Leases

The Company principally leases warehouses, administrative offices, computerequipment and retail outlet store space. Certain of the retail store leasesprovide for contingent rental payments, generally based on the sales volume ofthe applicable retail unit. All of these leases are classified as operatingleases.

Future minimum annual lease payments under these operating leases, the majorityof which have initial or remaining non-cancelable lease terms in excess of oneyear, were as follows at December 31, 1994:

1995 $1,395 1996 1,127 1997 1,042 1998 732 1999 417

Later Years 343

Certain leases require payments of real estate taxes, insurance, repairs andother charges. Total rental expense was $1,455 in 1994 (1993 - $1,106; 1992 -$840).

9. Commitments and Contingent Liabilities

The Company is currently involved in the review and evaluation, or remediation,of seven sites posing potential or identified environmental contaminationproblems. Based on information currently available, management's best estimateof probable remediation costs, recorded as a liability, is $1,549 at December31, 1994 ($994 at December 31, 1993) -- which aggregate amount management

believes will be paid out during the course of the next five years. The Companyexpects that it will recover approximately $400 from unaffiliated sources.Within a range of reasonably possible environmental cleanup liabilitiesestablished on the basis of current information, the recorded liabilityrepresents approximately 90% of the currently estimable maximum loss that hasbeen identified by the Company and its environmental advisors. While neither thetiming nor the amount of the ultimate costs associated with environmentalmatters can be accurately determined, management does not expect that thesematters will have a material effect on the Company's consolidated financialposition, results of operations or cash flow.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There have been no changes in or disagreements with the Company's independentaccountants on accounting and financial disclosure.

-33-<PAGE>



PART III

The information required by Part III, Items 10, 11, 12 and 13 with respectto the directors and executive officers of the Company has been omitted becausethis information appears on pages 1 to 9 of the Company's definitive proxystatement which the Company expects to file with the Securities and ExchangeCommission on or prior to March 31, 1995, and which is incorporated herein byreference, except with respect to the identification and business experience ofexecutive officers required by Item 10, which is set forth under the caption"Executive Officers of the Company" in Part I of this Report. The Report of theCompensation Committee and the Performance Graph, which begin on page 9 and onpage 12, respectively, of the Company's definitive proxy statement, are notincorporated by reference.

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K

(a) 1. Financial Statements - See item 8 - index to financial statements.

(a) 2. Financial Statement Schedule - See item 8 - index to financial statements.

(a) 3. Exhibits

3.(i) Restated Certificate of Incorporation, filed May 7, 1987 (filed as Exhibit 3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1988, and incorporated herein by reference).

(ii) By-laws as amended February 7, 1995.

5. Rights Agreement dated as of February 22, 1989 (filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A, and incorporated herein by reference).

10. Material Contracts

10.1 Note Purchase Agreement, dated November 30, 1994 among the Company and certain institutional investors.

10.2 Credit Agreement, dated November 30, 1994, between the Company and Harris Trust and Savings Bank as agent, and The First National Bank of Chicago.

*10b. Employment and Consulting Agreement, dated July 1, 1990, between the Company and John H. Muller, Jr. (filed as Exhibit 10b to the Company's Annual Report on

Form 10-K for the year ended December 31, 1990, and incorporated herein by reference).

-34-<PAGE>

*10c. Compensation Agreement, dated August 7, 1987, between



the Company and Paul A. Saxton relating to retirement and termination arrangements (filed as Exhibit 10c to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference).

*10e. Employment Agreement, dated April 12, 1990, between the Company and Robert L. Gray, relating, among other matters, to termination arrangements (filed as Exhibit 10e to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, and incorporated herein by reference).

*10f. The Company's Severance Compensation Plan, as amended and restated August 6, 1985, in which all of the named executive officers participate, and form of designation of participation.

11a. Computation of primary earnings per share.

21. Subsidiaries of the registrant.

23. Consent of Price Waterhouse, independent accountants, to the incorporation by reference constituting part of

Registration Statements on Form S-8 (Nos. 33-33328, 2-77798 and 33-48336) of their report dated January 30, 1995.

99. Audited financial statements of the Company's Employee Stock Purchase Plan.

* Represents a contract, plan or arrangement pursuant to which compensation or benefits are provided to certain Executive Officers or Directors of the Company.

(b) Reports on Form 8-K

Form 8-K was filed during the last quarter of 1994 documenting theacquisition of the assets of Walter Absil Company Limited and Olfa ProductsCorp. and is incorporated herein by reference.

-35-<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange

Act of 1934, the registrant has duly caused this Report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

GENERAL HOUSEWARES CORP.

By /s/ Robert L. Gray Robert L. Gray 3/28/94 Vice President, Finance and Treasurer Date Principal Financial Officer



By /s/ Stephen M. Evans 3/28/94 Stephen M. Evans Date Corporate Controller Principal Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Reporthas been signed below by the following persons on behalf of the registrant andin the capacities and on the dates indicated.

/s/ Paul A. Saxton 3/28/94 Paul A. Saxton Date Chairman of the Board President and Chief Executive Officer

/s/ Charles E. Bradley 3/28/94 Charles E. Bradley - Director Date

/s/ John S. Crowley 3/28/94 John S. Crowley - Director Date

/s/ Thomas L. Francis 3/28/94 Thomas L. Francis - Director Date

/s/ Joseph Hinsey IV 3/28/94

Joseph Hinsey IV - Director Date /s/ Ann Manix 3/28/94

Ann Manix - Director Date

/s/ John H. Muller, Jr. 3/28/94 John H. Muller, Jr. - Director Date

/s/ Phillip A. Ranney 3/28/94 Phillip A. Ranney - Director Date

-37-

<PAGE>

INDEX TO EXHIBITS Exhibit No.

3(ii) Amended By-Laws

10.1 Note Purchase Agreement

10.2 Corporate Credit Agreement

11a Computation of primary earnings per share

21 Subsidiaries of the registrant

23 Consent of Price Waterhouse

27 Financial Data Schedule

99 Financial statements of the Company's EmployeeStock Purchase Plan



</TEXT></DOCUMENT><DOCUMENT><TYPE>EX-3.II<SEQUENCE>2<DESCRIPTION>AMENDED BY-LAWS<TEXT>


RESTATED BY-LAWS

As Amended February 7, 1995

ARTICLE I

Offices

SECTION 1. Principal Office. The principal office or place of business of theCorporation in the State shall be the Corporation's registered office in theCity of Wilmington, County of New Castle, State of Delaware.

SECTION 2. Other Offices. The Corporation may also have offices at such otherplaces both within and without the State of Delaware as the Board of Directorsmay from time to time determine or as the business of the Corporation may fromtime to time require.

ARTICLE II

Stockholders

SECTION 1. Place of Meeting. All meetings of the stockholders shall be held atthe registered office of the Corporation in the State of Delaware or at suchother place within or without the State of Delaware as may from time to time bedesignated by the Board of Directors or as stated in the notice of such meeting.

SECTION 2. Annual Meetings. The annual meeting of the stockholders of theCorporation shall be on such date and time each year as may be designated byresolution of the Board of Directors from time to time for the purpose ofelecting directors for the ensuing year and for the transaction of such otherproper business, notice of which is given in the notice of such meeting.

SECTION 3. Special Meetings. Special meetings of the stockholders for anypurpose or purposes may be called by the Board of Directors, the Chairman of theBoard or the President, and shall be called by the Chairman of the Board, thePresident, or Secretary upon receipt of a request in writing signed by amajority of the Board of Directors. Such request shall state the purpose orpurposes of the proposed meeting and the matters proposed to be acted upon

thereat.

SECTION 4. Notice of Meetings. Not less than 10 days nor more than 60 dayswritten or printed notice of every meeting of stockholders, stating the place,date and time thereof, and, in the case of a special meeting (and the annualmeeting, if so required by law), the purpose or purposes for which the meetingis called, shall be given to each stockholder entitled to vote thereat byleaving the same with him or at his residence or usual place of business or bymailing it, postage prepaid, and addressed to him at his address as it appearson the records of the Corporation.



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No notice of the time, date, place or purpose of any meetingof stockholders need be given to any stockholder entitled to such notice whoattends in person or is represented by proxy (except when the stockholderattends a meeting for the express purpose of objecting at the beginning of themeeting to the transaction of any business on the grounds that the meeting isnot lawfully called or convened), or to any stockholder entitled to such noticewho, in writing executed and filed with the records of the meeting either beforeor after the time thereof, waives such notice. Neither the business to betransacted at, nor the purpose of, any annual or special meeting of stockholdersneed be specified in any such written waiver of notice.

SECTION 5. Record Dates. The Board of Directors may fix in advance a date, notexceeding 60 days preceding the date of any meeting of stockholders or of anyexpress consent to corporate action in writing without a meeting, any dividendpayment date, any date of any other distribution, any date for the allotment ofany rights, or any date for the exercise of any rights in respect of any change,conversion or exchange of stock or for the purpose of any other lawful action,and, in the case of any meeting of stockholders, not less than 10 days, as arecord date for the determination of the stockholders entitled to notice of or

to vote at such meeting or to express consent to corporate action in writingwithout a meeting, or entitled to receive such dividends or other distributionsor rights, or to exercise such rights in respect of any change, conversion orexchange of stock, or for the purpose of any other lawful action, as the casemay be; and only stockholders of record on such dates shall be entitled tonotice of and to vote at such meeting or to express consent to corporate actionin writing without a meeting, or to receive such dividends or otherdistributions or rights, or to exercise such rights in respect of any change,conversion or exchange of stock, as the case may be.

SECTION 6. List of Stockholders Entitled to Vote. The officer who has charge ofthe stock ledger of the Corporation shall prepare and make, at least 10 daysbefore every meeting of stockholders, a complete list of the stockholders

entitled to vote at the meeting, arranged in alphabetical order and showing theaddress and number of shares registered in the name of each stockholder. Suchlist shall be open to the examination of any stockholder, for any purposegermane to the meeting, during ordinary business hours, for a period of at least10 days prior to the meeting, either at a place within the city where themeeting is to be held or, if such place is not specified in the notice of suchmeeting, at the place where the meeting is to be held; and such list shall alsobe produced and kept at the time and place of the meeting during the whole timethereof, and may be inspected by any stockholder who is present.

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SECTION 7. Quorum, Adjournment of Meetings. The presence in person or by proxyof the holders of record of a majority of the shares of stock of the Corporationissued and outstanding and entitled to be voted thereat shall constitute aquorum at all meetings of stockholders, except as otherwise may be required bylaw. In the absence of a quorum, the holders of record of a majority of theshares of stock present in person or by proxy and entitled to be voted thereatshall have power to adjourn the meeting from time to time, without notice otherthan an announcement at the meeting of the time and place of such adjournment(except as otherwise provided in this SECTION 7) until the requisite number ofshares of stock entitled to be voted at such meeting shall be present in person



or by proxy. At any such adjourned meeting at which the requisite number ofshares of stock entitled to be voted thereat shall be present in person or byproxy, any business may be transacted which might have been transacted at themeeting as originally called and notified.

A determination of stockholders of record entitled to noticeof or to vote at a meeting of stockholders shall apply to any adjournment ofsuch meeting unless the Board of Directors fixes a new record date for theadjourned meeting. If an adjournment of any meeting of stockholders shall be formore than 30 days, or if after adjournment a new record date is fixed by theBoard of Directors for the adjourned meeting, a notice of adjourned meetingshall be given to each stockholder of record entitled to notice of or to vote atthe meeting.

SECTION 8. Conduct of Meetings. The meetings of the stockholders shall bepresided over by the Chairman of the Board or the President, or if neither bepresent, by a Vice President, or if none of them is present, by a chairman to beelected at the meeting. The Secretary of the Corporation, if present, shall actas secretary of such meeting, or if he is not present, an Assistant Secretaryshall so act, or if neither the Secretary nor an Assistant Secretary is present,then the meeting shall elect its secretary.

SECTION 9. Voting and Inspectors. Each stockholder entitled to vote at a meetingof stockholders or to consent or dissent to corporate action in writing without

a meeting may vote, consent or dissent in person or by proxy, but no proxy needbe sealed, witnessed or acknowledged. No proxy may be voted upon or acted uponafter three years from its date unless such proxy shall provide for a longerperiod.

All elections shall be had and all questions decided by amajority of the votes cast at a duly constituted meeting, except as otherwiserequired by the Certificate of Incorporation, these By-Laws or a specific

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statutory provision superseding requirements contained in the Certificate of

Incorporation or in these By-Laws.

At any election of directors, the chairman of the meeting may,and if required by law, shall, appoint one or more inspectors or judges ofelection who shall first subscribe an oath or affirmation to execute faithfullytheir duties at such election with strict impartiality and according to the bestof their ability, and shall after the election make a certificate of the resultof the vote taken. No candidate for the office of director shall be appointedsuch inspector or judge.

All elections of directors shall be by written ballot. Thechairman of the meeting may cause the vote to be taken on any other matters tobe by written ballot.

SECTION 10. Validity of Proxies and Ballots. At every meeting of thestockholders, all proxies shall be received and taken in charge of, and allballots, if any, shall be received and canvassed by, the secretary of themeeting, who shall decide all questions touching the qualification of voters,the validity of the proxies, and the acceptance or rejection of votes, unlessinspectors or judges of election shall have been appointed, in which event suchinspectors or judges of election shall so act.

ARTICLE III



Board of Directors

SECTION 1. General Powers. The business property and affairs of the Corporationshall be conducted and managed under the supervision of a Board of Directors.The Board of Directors shall have and exercise, or cause to be exercised, in thename and on behalf of the Corporation all the powers of the Corporation, exceptthose conferred upon or reserved to stockholders expressly by statute, theCertificate of Incorporation or these By-Laws.

SECTION 2. Number and Tenure of Office. The number of directors which shallconstitute the whole Board shall be such as from time to time may be fixed byresolution of the Board of Directors at a duly held regular or special meeting,but in no case shall the number be less than three. The directors shall beclassified with respect to the time for which they shall severally hold officeby dividing them into three classes, each class to consist of such number ofdirectors as the directors may determine, provided that the whole number ofdirectors of any class shall not exceed the whole number of directors of anyother class by more than one. At each annual meeting, the successors to the

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directors of the class whose terms shall expire in that year shall be elected to

hold office for a term of three years from the date of their election and untilthe election and qualification of their successors, so that the term of officeof one class of directors shall expire in each year. Notwithstanding theprovisions of this SECTION 2 of ARTICLE III, whenever the holders of any seriesof non-voting Preferred Stock shall be entitled, voting separately as a class,to elect directors, the terms of all directors elected by such holders shallexpire on the next succeeding annual meeting of stockholders. Directors need notbe stockholders.

SECTION 3. Vacancies. In case of any vacancy in the Board of Directors throughdeath, resignation, removal, increase in the number of directors, or othercause, such vacancy may be filled by the vote of a majority of the remainingdirectors, although such majority shall not constitute a quorum. Any successor

director so elected shall hold office for the unexpired term of the directorwhose office has been vacated.

SECTION 4. Removal of Directors. Any director may be removed from office, forcause at any time, by the vote of at least two-thirds of the whole Board ofDirectors or by the vote at a special meeting, called for such purpose, of theholders of at least two-thirds of all shares outstanding and entitled to votefor the election of directors.

SECTION 5. Place of Meeting; Maintenance of Books and Records. The directors mayhold their meetings, whether regular or special, and keep the books, records ofaccount and stock ledgers of the Corporation either within or without the Stateof Delaware, at any office or offices of the Corporation or at any place as they

may from time to time by resolution determine, or, in the case of meetings, asshall be specified or fixed in the respective notices, waivers of notice, orconsents with respect thereto.

SECTION 6. Regular Meeting. Regular meetings of the Board of Directors shall beheld at such times and at such places either within or without the State ofDelaware as the directors may from time to time determine. No notice of anyregular meeting need be given to any director, except as otherwise provided inARTICLE XI hereof.



The annual meeting of the Board of Directors shall be held assoon as practicable after the annual meeting of the stockholders for theelection of directors, and no notice of such meeting shall be necessary if heldat the same place as the annual meeting of stockholders following such meeting,except as otherwise provided in ARTICLE XI hereof.

SECTION 7. Special Meetings. Special meetings of the Board of Directors may beheld from time to time at such places either within or without the State ofDelaware upon call of the Chairman of the Board or the President, or by a quorumof the Board, by written notice duly served on each director, sent by means ofelectronic transmission or mailed, postage prepaid, to each director at his

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address as it appears on the records of the Corporation, not less than 48 hoursbefore such meeting. No notice need be given to any director who attends themeeting in person or to any director who, in writing executed and filed with therecords of the meeting either before or after the holding thereof, waives suchnotice. Such notice or waiver of notice may but need not state the business tobe transacted at, or the purpose or purposes of, such meeting.

SECTION 8. Quorum. One-third of the total number of directors shall constitute aquorum for the transaction of any and all business, provided that a quorum shall

in no case be less than two directors. If at any meeting of the Board thereshall be less than a quorum present, a majority of those present shall havepower to adjourn the meeting from time to time, without notice other thanannouncement at the meeting of the time and place of such adjourned meeting,until a quorum shall have been obtained. The act of the majority of thedirectors present at any meeting at which there is a quorum shall be the act ofthe Board, except as may be otherwise specifically provided by statute, by theCertificate of Incorporation or by these By-Laws.

SECTION 9. Committees. The Board of Directors may at any time, by theaffirmative vote of a majority of the whole Board, appoint from among itsmembers an Executive Committee composed of two or more directors, and maydelegate by resolution to such Executive Committee, in the intervals between

meetings of the Board of Directors, any or all of the powers of the Board ofDirectors respecting the business, affairs and property of the Corporation, andthe power to authorize the seal of the Corporation to be affixed to all paperswhich may require it; provided, however, that nothing herein shall be deemed toprohibit the designation of additional committees for limited and appropriatepurposes with such memberships as may be provided in the resolution of the Boardof Directors designating any such committee. In the absence or disqualificationof any member of any such committee at a meeting thereof, the member or membersthereof present at such meeting and not disqualified from voting, whether or nothe or they constitute a quorum, may unanimously appoint a member of the Board ofDirectors to act at such meeting in the place of any such absent or disqualifiedmember. All such committees shall report the action taken or principal mattersconsidered to the Board of Directors at the next succeeding regular or special

meeting, and any action by the committees which in all cases shall be by amajority of those present at a meeting at which there is quorum shall be subjectto revision and alteration by the Board of Directors, provided that no rights ofthird persons shall be affected by any such revision or alteration. The Board ofDirectors may at any time, by the affirmative vote of a majority of the wholeBoard, remove, with or without cause, any member of any such committee and fillvacancies therein. -6-<PAGE>



SECTION 10. Informal Action. Any action required or permitted to be taken at anymeeting of the Board of Directors, or of any committee, may be taken without ameeting, if consents in writing, setting forth such action are signed by allmembers of the Board or of such committee, as is the case may be, and suchwritten consents are filed with the minutes of proceedings of the Board or suchcommittee.

SECTION 11. Compensation. Directors and members of any committee of theCorporation contemplated by these By-Laws or otherwise provided for byresolution of the Board of Directors who are not salaried officers of theCorporation shall, in consideration of their serving as such, receive from theCorporation such amount per annum or such fees, for attendance at meetings ofthe Board of Directors or of such committee, or both, as the Board may from timeto time determine.

All directors and members of any such committee shall receivereimbursement for the reasonable expenses incurred by them in connection withtheir attendance at meetings or the performance of their duties. Nothingcontained herein shall preclude any director or any member of such committeefrom serving the Corporation in any other capacity and receiving compensationtherefor.

ARTICLE IV

Officers

SECTION 1. Election; Appointment; Vacancies. The executive officers of theCorporation shall be chosen by the Board of Directors as soon as may bepracticable after the annual meeting of stockholders. Such executive officersmay include a Chairman of the Board, a Vice Chairman of the Board and one ormore Vice President and shall include a President, a Secretary and a Treasurer.The Board of Directors may also in its discretion appoint Assistant Secretaries,Assistant Treasurers, a Controller, Assistant Controllers, and other officers,agents and employees, or may, by resolution delegate this authority to theChairman of the Board or President of the Corporation. The Board of Directors,or the Chairman of the Board or President if authorized as aforesaid, may fillany vacancy which may occur in any office, except that vacancies in executive

offices shall be filled by the Board of Directors. Any number of offices, exceptthose of President and Vice President and those of Treasurer and Controller, maybe held by the same person, but no officer shall execute, acknowledge or verifyany instrument in more than one capacity, if such instrument is required by law,these By-Laws or otherwise to be executed, acknowledged or verified by two ormore officers.

SECTION 2. Tenure of Office; Removal. Executive officers, and other officers ifto be elected by the Board, shall be elected at the first meeting of the Board

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of Directors, or as soon thereafter as practicable, after the annual meeting ofstockholders to hold office until their successors are chosen and qualified.Other officers, if appointed by the Chairman of the Board or President asprovided in SECTION 1 of this ARTICLE IV., shall have a tenure in office untiltheir successors be chosen and qualified. Executive officers and any otherofficers, agents, or employees elected by the Board may be removed from officeat any time with or without cause by the Board of Directors and officers, agentsor employees appointed by the Chairman of the Board or President as aforesaid,may be removed from office at any time with or without cause by such officers orby the Board of Directors, but any such removal shall be without prejudice to



contractual rights with the Corporation, if any, of the officers, agents, oremployees so removed.

SECTION 3. Powers and Duties. Officers, agents and employees shall have suchpowers and duties in the management of the business, property and affairs of theCorporation as are provided by statute, the Certificate of Incorporation andthese By-Laws, as well as such powers and duties as generally pertain to theirrespective offices and such powers and duties as may from time to time beconferred by resolution of the Board of Directors.

SECTION 4. Salaries. The salaries of all officers, agents and employees of theCorporation shall be fixed by or pursuant to the authority of the Board ofDirectors.

SECTION 5. Fidelity Bonds. The Board of Directors may require any officer, agentor employee of the Corporation to give bond for the faithful discharge of hisduties, in such sum and of such character as the Board of Directors may fromtime to time prescribe.

ARTICLE V

Checks, Notes, Etc.

All checks and drafts on the Corporation's bank accounts and

all bills of exchange and promissory notes, and all acceptances, guarantees,obligations, evidences of indebtedness and other instruments for the payment ofmoney, and all certificates or other instruments representing the Corporation'sstock or other securities, and any indentures, mortgages or agreements withrespect thereto, shall be signed by such officer or officers, agent or agents,as shall be thereunto authorized from time to time by the Board of Directors.

-8-<PAGE> ARTICLE VI

Capital Stock

SECTION 1. Certificate of Shares. The interest of each stockholder of theCorporation shall be evidenced by certificates for shares of stock in such formas the Board of Directors may from time to time prescribe, except insofar asprovided by law. No certificate shall be valid unless it is signed by theChairman of the Board, the President or a Vice President, and by the Secretary,an Assistant Secretary, the Treasurer or an Assistant Treasurer of theCorporation and sealed with its seal (which seal may be in facsimile), and ifsuch certificate is countersigned by a transfer agent or registered by aregistrar (in each case other than the Corporation or its employees), thesignatures of the aforesaid officers of the Corporation may be by facsimile. Inthe event that any such officer so signing a certificate manually or byfacsimile is no longer an officer of the Corporation or holds a different officeat the time the certificate is issued, shall have the same force and effect as

if such officer held at such time the office held by him when so signing,whether manually or by facsimile, the certificate.

SECTION 2. Transfer of Shares. Shares of the Corporation shall be transferableon the books of the Corporation by the holder thereof in person or by his dulyauthorized attorney or legal representative, upon surrender and cancellation ofcertificates for the same number of shares of the same class or series, dulyendorsed or accompanied by proper instruments of assignment and transfer, withsuch proof of the authenticity of the signature as the Corporation or its agentsmay reasonably require. The Board of directors shall designate an officer of the



Corporation to act as transfer clerk in the absence of the appointment of atransfer agent.

SECTION 3. Stock Ledgers. The stock ledgers of the Corporation, containing thenames and addresses of the stockholders and the number of shares held by themrespectively, shall be kept at the office of the Secretary of the Corporation,whether within or without the State of Delaware, in the custody of the transferclerk or, if the Corporation employs a transfer agent, at the offices ofsuchtransfer agent, and shall during the usual business hours of every business daybe open for inspection and for copying for any proper purpose by any personauthorized by the laws of the State of Delaware and the Certificate ofIncorporation to do so.

SECTION 4. Lost, Stolen or Destroyed Certificates. The Board of Directors maydetermine the conditions upon which a new certificate representing shares of anyclass or series may be issued in place of a certificate which is alleged to havebeen lost stolen or destroyed; and may, in their discretion, require the owner

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of such certificate or his legal representative to give bond, with sufficientsurety to the Corporation and the transfer agent, if any, to indemnify it andsuch transfer agent against any and all loss or claims which may arise by reason

of the issue of a new certificate in the place of the one so lost, stolen ordestroyed.

ARTICLE VII

Corporate Seal

The corporate seal shall have inscribed thereon the name ofthe Corporation, the year of its organization, the words "Corporate Seal,Delaware", and such other inscriptions, if any, as the Board of Directors mayfrom time to time determine. The seal may be used by causing it or a facsimilethereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

Fiscal Year

The fiscal year of the Corporation shall cover such period of12 calendar months as the Board of Directors may determine. In the absence ofany such determination, the accounts of the Corporation shall be kept on acalendar year basis.

ARTICLE IX

Voting the Stock of Other Corporations

Any stock or other securities of other corporations, which mayfrom time to time be held by the Corporation, may be represented and voted atany meeting of stockholders or security holders of such other corporations bythe Chairman of the Board, the President, or any Vice President of theCorporation, or by proxy or proxies appointed by any such person, or otherwisepursuant to authorization thereunto given by resolution of the Board ofDirectors.

ARTICLE X



Indemnification of Directors, Officers and Others

SECTION 1. Indemnification of Directors and Officers. The Corporation shall, tothe fullest extent permitted by applicable law, indemnify any person (and theheirs, executors and administrators thereof) who was or is made, or threatenedto be made, a party to an action, suit or proceeding, whether civil, criminal,administrative or investigative, whether involving any actual or alleged breachof duty, neglect or error, any accountability, or any actual or allegedmisstatement, misleading statement or other act or omission and whether brought

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or threatened in any court or administrative or legislative body or agency,including an action by or in the right of the Corporation to procure a judgmentin its favor and an action by or in the right of any other corporation of anytype or kind, domestic or foreign, or any partnership, joint venture, trust,employee benefit plan or other enterprise, which any director or officer of theCorporation is serving or served in any capacity at the request of theCorporation, by reason of the fact that he, his testator or intestate is or wasa director or officer of the Corporation, or is serving or served such othercorporation, partnership, joint venture, trust, employee benefit plan or otherenterprise in any capacity, against judgments, fines, amounts paid insettlement, and costs, charges and expenses, including attorneys' fees, incurred

therein or in any appeal thereof.

SECTION 2. Indemnification of Others. The Corporation shall indemnify otherpersons and reimburse the expenses thereof, to the extent required by applicablelaw, and may indemnify any other person to whom the Corporation is permitted toprovide indemnification of the advancement of expenses, whether pursuant torights granted pursuant to, or provided by, the Delaware General Corporation Lawor otherwise.

SECTION 3. Advances or Reimbursement of Expenses. The Corporation shall, fromtime to time, reimburse or advance to any person referred to in SECTION 1 uponreceipt of a written undertaking by or on behalf of such person to repay suchamount(s) if a judgment or other final adjudication adverse to the director or

officer establishes that (i) his acts were committed in bad faith or were theresult of active and deliberate dishonesty and, if either case, were material tothe cause of action so adjudicated, (ii) he personally gained in fact afinancial profit or other advantage to which he was not legally entitled, or(iii) his conduct was otherwise of a character such that Delaware law wouldrequire that such amount(s) be repaid.

SECTION 4. Service of Certain Entities Deemed Requested. Any director or officerof the Corporation serving (i) another corporation of which a majority of theshares entitled to vote in the election of its directors is held by theCorporation, or (ii) any employee benefit plan of the Corporation or anycorporation referred to in clause (i), in any capacity shall be deemed to bedoing so at the request of the Corporation.

SECTION 5. Interpretation. Any person entitled to be indemnified or to thereimbursement or advancement of expenses as a matter of right pursuant to thisArticle may elect to have the right to indemnification (or advancement ofexpenses) interpreted on the basis of the applicable law in effect at the timeof the occurrence of the event or events giving rise to the action, suit orproceeding, to the extent permitted by applicable law, or on the basis of theapplicable law in effect at the time indemnification is sought.

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SECTION 6. Indemnification Right. The right to be indemnified or to thereimbursement or advancement of expenses pursuant to this Article (i) is acontract right pursuant to which the person entitled thereto may bring suit asif the provisions hereof were set forth in a separate written contract betweenthe Corporation and the director or officer, (ii) is intended to be retroactiveand shall be available with respect to events occurring prior to the adoptionhereof, and (iii) shall continue to exist after the rescission or restrictivemodification hereof with respect to events occurring prior thereto.

SECTION 7. Indemnification Claims. If a request to be indemnified or of thereimbursement or advancement of expenses pursuant hereto is not paid in full bythe Corporation within 30 days after a written claim has been received by theCorporation, the claimant may at any time thereafter bring suit against theCorporation to recover the unpaid amount of the claim and, if successful inwhole or in part, the claimant shall be entitled also to be paid the expenses ofprosecuting such claim. Neither the failure of the Corporation (including itsBoard of Directors, independent legal counsel, or its stockholders) to have madea determination prior to the commencement of such action that indemnification ofor reimbursement or advancement of expenses to the claimant is proper in thecircumstances, nor an actual determination by the Corporation (including itsBoard of Directors, independent legal counsel, or its stockholders) that theclaimant is not entitled to indemnification or to the reimbursement or

advancement of expenses shall be a defense to the action or create a presumptionthat claimant is not so entitled.

ARTICLE XI

Amendments

The By-Laws of the Corporation may be altered, amended, addedto or repealed at any annual or special meeting of stockholders at which aquorum is present or represented, provided notice of the proposed alteration,amendment, addition or repeal is set forth in the notice of such meeting, by theaffirmative vote of a majority of the shares of stock present or represented atsuch meeting and entitled to vote thereat, or by the Board of Directors at any

regular or special meeting of the Board if notice of the proposed alteration,amendment, addition or repeal is contained in the notice of any such meeting orin the waivers or consents with respect thereto. Any action of the Board ofDirectors of the Corporation taken under this ARTICLE XI may be altered,amended, added to or repealed by the stockholders at such meeting or at anyother meeting. In no event shall the Board of Directors of the Corporation havepower to alter, amend, add to or repeal this ARTICLE XI.

* * * * * -12-

</TEXT>

</DOCUMENT>

<DOCUMENT><TYPE>EX-10.1<SEQUENCE>3<DESCRIPTION>CORPORATE NOTE AGREEMENT<TEXT>



General Housewares Re:$20,000,000 8.41% Senior NotesCorp. Note Agreement Dated as of November 15, 1994Due November 15, 2004

TABLE OF CONTENTS

(NOT A PART OF THE AGREEMENT

SECTION HEADING PAGE

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.......... ....................1

Section 1.1. Description of Notes...........................................1 Section 1.2. Commitment, Closing Date.......................................2 Section 1.3. Other Agreements...............................................2

SECTION 2. PREPAYMENT OF NOTES..............................................2

Section 2.1. Required Prepayments...........................................2 Section 2.2 Optional Prepayment with Premium................................2 Section 2.3. Notice of Optional Prepayments.................................3

Section 2.4. Application of Prepayments.....................................3 Section 2.5. Direct Payment.................................................3

SECTION 3. REPRESENTATIONS..................................................4

Section 3.1. Representation of the Company..................................4 Section 3.2. Representation of the Purchaser................................4

SECTION 4. CLOSING CONDITIONS...............................................4

Section 4.1. Conditions.....................................................4 Section 4.2. Waiver of Conditions...........................................6

SECTION 5. COMPANY COVENANTS................................................6

Section 5.1. Corporate Existence, Etc.......................................6 Section 5.2. Insurance......................................................6 Section 5.3. Taxes, Claims for Labor and Materials; Compliance with Laws...........................................6 Section 5.4. Maintenance....................................................7 Section 5.5. Nature of Business.............................................7 Section 5.6. Current Ratio..................................................7 Section 5.7. Fixed Charges Coverage Ratio...................................7 Section 5.8. Consolidated Net Worth.........................................7 Section 5.9. Limitations on Funded Debt and Current Debt....................7 Section 5.10. Limitation on Liens............................................8

Section 5.11. Investments...................................................10 Section 5.12. Restricted Payments...........................................11 Section 4.15. Mergers, Consolidations and Sales of Assets...................12

<PAGE>

Section 5.14. Repurchase of Notes...........................................14 Section 5.15. Transactions with Affiliates..................................14 Section 5.16. Reports and Rights of Inspection..............................14



SECTION 6. EVENTS OF DEFAULT AND REMEDIES THEREFOR.........................17

Section 6.1. Events of Default.............................................17 Section 6.2. Notice to Holders.............................................18 Section 6.3. Acceleration of Maturities....................................19 Section 6.4. Recission of Acceleration.....................................19

SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS................................20

Section 7.1. Consent Required..............................................20 Section 7.2. Solicitation of Holders.......................................20 Section 7.3. Effect of Amendment or Waiver.................................20

SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS........................20

Section 8.1. Definitions...................................................20 Section 8.2. Accounting Principles.........................................28 Section 8.3. Directly or Indirectly........................................28

SECTION 9. MISCELLANEOUS...................................................28

Section 9.1. Registered Notes..............................................28 Section 9.2. Exchange of Notes.............................................29

Section 9.3. Loss, Theft, Etc. of Notes....................................29 Section 9.4. Expenses, Stamp Tax Indemnity.................................29 Section 9.5. Powers and Rights Not Waived; Rememdies Cumulative....................................................30 Section 9.6. Notices.......................................................30 Section 9.7. Successors and Assigns........................................30 Section 9.8. Survival of Covenants and Representations.....................30 Section 9.9. Severability..................................................31 Section 9.10. Governing Law.................................................31 Section 9.11. Captions......................................................31

Signature Page................................................................32

ii

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ATTACHMENTS TO NOTE AGREEMENT:

Schedule I Names and Addresses of Purchasers and Amounts of Commitments Schedule II Description of Debt and Leases; Subsidiaries of the Company

Schedule III Liens Existing as of the Closing Date Securing Funded Debt of the Company and Its Restricted Subsidiaries

Exhibit A Form of 8.41% Senior Note Due November 15, 2004

Exhibit B Representations and Warranties of the Company

Exhibit C Description of Special Counsel's Closing Opinion

Exhibit D Description of Closing Opinion of Counsel to the Company



iii

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GENERAL HOUSEWARES CORP. 1536 Beech Street Terre Haute, Indiana 47804

NOTE AGREEMENT Re: $20,000,000 8.41% Senior Notes Due November 15, 2004

Dated as of November 15, 1994

To the Purchaser named in Schedule Ihereto which is a signatory of thisAgreement Ladies and Gentlemen:

The undersigned, General Housewares Corp., a Delaware corporation (the"Company"), agrees with you as follows:

SECTION 1. DESCRIPTION OF NOTES AND COMMITMENT.

Section 1.1. Description of Notes. The Company will authorize the issue and

sale of $20,000,000 aggregate principal amount of its 8.41 % Senior Notes (the"Notes") to be dated the date of issue, to bear interest from such date at therate of 8.41% per annum, payable semiannually on the fifteenth day of May andNovember in each year (commencing May 15, 1995) and at maturity and to bearinterest on overdue principal (including any overdue required or optionalprepayment payment of principal) and premium, if any, and (to the extent legallyenforceable) on any overdue installment of interest at the rate of 9.41 % perannum after the date due, whether by acceleration or otherwise, until paid, tobe expressed to mature on November 15, 2004, and to be substantially in the formattached hereto as Exhibit A. Interest on the Notes shall be computed on thebasis of a 360-day year of twelve 30-day months. The Notes are not subject toprepayment or redemption at the option of the Company prior to their expressedmaturity dates except on the terms and conditions and the amounts and with the

premium, if any, set forth in Section 2 of this Agreement. The term "Notes" asused herein shall include each Note delivered pursuant to this Agreement and theseparate agreements with the other purchasers named in Schedule I. You and theother purchasers named in Schedule I are hereinafter sometimes referred to asthe "Purchasers". The terms which are capitalized herein shall have the meaningsset forth in Section 8.1 unless the context shall otherwise require.

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Section 1.2. Commitment, Closing Date. Subject to the terms and conditionshereof and on the basis of the representations and warranties hereinafter setforth, the Company agrees to issue and sell to you, and you agree to purchasefrom the Company, Notes in the principal amount set forth opposite your name onSchedule I hereto at a price of 100% of the principal amount thereof on theClosing Date hereafter mentioned.

Delivery of the Notes will be made at the offices of Chapman and Cutler,111 West Monroe Street, Chicago, Illinois 60603, against payment therefor inFederal Reserve or other funds current and immediately available at theprincipal office of Harris Trust and Savings Bank, Chicago, Illinois, in theamount of the purchase price at 10:00 A.M., Chicago, Illinois, time on November30, 1994 or such later date as shall mutually be agreed upon by the Company andthe Purchasers (the "Closing Date"). The Notes delivered to you on the ClosingDate will be delivered to you in the form of a single registered Note in theform attached hereto as Exhibit A for the full amount of your purchase (unlessdifferent denominations are specified by you), registered in your name or in thename of such nominee, as may be specified in Schedule I attached hereto.

Section 1.3 Other Agreements. Simultaneously with the execution anddelivery of this Agreement, the Company is entering into similar agreements withthe other Purchasers under which such other Purchasers agree to purchase fromthe Company the principal amount of Notes set opposite such Purchasers' names inSchedule I, and your obligation and the obligations of the Company hereunder are

subject to the execution and delivery of the similar agreements by the otherPurchasers. This Agreement and said similar agreements with the other Purchasersare herein collectively referred to as the "Agreements". The obligations of eachPurchaser shall be several and not joint and no Purchaser shall be liable orresponsible for the acts of any other Purchaser.

SECTION 2. PREPAYMENT OF NOTES.

Section 2.1 Required Prepayments. In addition to paying the entireoutstanding principal amount and the interest due on the Notes on the maturitydate thereof, the Company agrees that on November 15 in each year, commencingNovember 15, 1998 and ending November 15, 2003, both inclusive, it will prepayand apply and there shall become due and payable on the principal indebtedness

evidenced by the Notes an amount equal to the lesser of (a) $2,857,142 or (b)the principal amount of the Notes then outstanding. The entire remainingprincipal amount of the Notes shall become due and payable on November 15, 2004.No premium shall be payable in connection with any required prepayment madepursuant to this Section 2.1. In the event that the Company shall prepay lessthan all of the Notes pursuant to Section 2.2 hereof, the amount of suchprepayment shall be deemed to be applied first to the amount of principalscheduled to be paid at maturity and then to the remaining scheduled principalpayments in inverse order of their scheduled maturities.

Section 2.2. Optional Prepayment with Premium. In addition to the paymentsrequired by Section 2.1, upon compliance with Section 2.3, the Company shallhave the privilege, at any time and from time to time of prepaying the

outstanding Notes, either in whole or in part (but if in part then in a minimumprincipal amount of $1,000,000), by payment of the principal amount of the

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Notes, or portion thereof to be prepaid, and accrued interest thereon to thedate of such prepayment, together with a premium equal to the Make-Whole Amount,determined as of five Business Days prior to the date of such prepaymentpursuant to this Section 2.2.



Section 2.3. Notice of Optional Prepayments. The Company will give noticeof any prepayment of the Notes pursuant to Section 2.2 to each holder thereofnot less than 15 days nor more than 60 days before the date fixed for suchoptional prepayment specifying (a) such date, (b) the principal amount of theholder's Notes to be prepaid on such date, (c) that a premium may be payable,(d) the date when such premium will be calculated, (e) the estimated premium,together with a reasonably detailed computation of such estimated premium, and(f) the accrued interest applicable to the prepayment. Such notice of prepaymentshall also certify all facts, if any, which are conditions precedent to any suchprepayment. Notice of prepayment having been so given, the aggregate principalamount of the Notes specified in such notice, together with accrued interestthereon and the premium, if any, payable with respect thereto shall become dueand payable on the prepayment date specified in said notice. Two Business Daysprior to the prepayment date specified in such notice, the Company shall provideeach holder of a Note written notice of the premium, if any, payable inconnection with such prepayment and, whether or not any premium is payable, areasonably detailed computation of the Make-Whole Amount.

Section 2.4. Application of Prepayments. All partial prepayments madepursuant to Section 2.1 or Section 2.2 shall be applied on all outstanding Notesratably in accordance with the unpaid principal amounts thereof.

Section 2.5. Direct Payment. Notwithstanding anything to the contrary

contained in this Agreement or the Notes, in the case of any Note owned by youor your nominee or owned by any subsequent Institutional Holder which has givenwritten notice to the Company requesting that the provisions of this Section 2.5shall apply, the Company will punctually pay when due the principal thereof,interest thereon and premium, if any, due with respect to said principal,without any presentment thereof, directly to you, to your nominee or to suchsubsequent Institutional Holder at your address or your nominee's address setforth in Schedule I hereto or such other address as you, your nominee or suchsubsequent Institutional Holder may from time to time designate in writing tothe Company or, if a bank account with a United States bank is designated foryou or your nominee on Schedule I hereto or in any written notice to the Companyfrom you, from your nominee or from any such subsequent Institutional Holder,the Company will make such payments in immediately available funds to such bank

account, no later than 11:00 A.M. Chicago, Illinois time on the date due, markedfor attention as indicated, or in such other manner or to such other account inany United States bank as you, your nominee or any such subsequent InstitutionalHolder may from time to time direct in writing. If for any reason whatsoever theCompany makes any such payment after such 11:00 A.M. transmittal time on the duedate or after 11:00 A.M. Chicago, Illinois time on any date after the due date,such payment shall be deemed to have been made on the next following Business

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Day and for any overdue period such payment shall bear interest at the rate of9.41% per annum as provided in Section 1.1 of this Agreement.

SECTION 3 REPRESENTATIONS.

Section 3.1. Representations of the Company. The Company represents andwarrants that all representations and warranties set forth in Exhibit B are trueand correct as of the date hereof and are incorporated herein by reference withthe same force and effect as though herein set forth in full.

Section 3.2. Representations of the Purchaser. (a) You represent, and inentering into this Agreement the Company understands, that you are acquiring the



Notes for the purpose of investment and not with a view to the distributionthereof, and that you have no present intention of selling, negotiating orotherwise disposing of the Notes; it being understood, however, that thedisposition of your property shall at all times be and remain within yourcontrol.

(b) You further represent that either: (1) you are acquiring Notes withassets from your general account and not with the assets of any separate accountin which any employee benefit plan has any interest; (2) no part of the funds tobe used by you to purchase the Notes constitutes assets allocated to anyseparate account maintained by you such that the application of such fundsconstitutes a prohibited transaction under Section 406 of ERISA; or (3) all or apart of such funds constitute assets of one or more separate accounts, trusts ora commingled pension trust maintained by you, and you have disclosed to theCompany the names of such employee benefit plans whose assets in such separateaccount or accounts or pension trusts exceed 10% of the total assets or areexpected to exceed 10% of the total assets of such account or accounts or trustsas of the date of such purchase and the Company has advised you in writing (andin making the representations set forth in this clause (3) you are relying onsuch advice) that the Company is not a party-in-interest nor are the Notesemployer securities with respect to the particular employee benefit plandisclosed to the Company by you as aforesaid (for the purpose of this clause(3), all employee benefit plans maintained by the same employer or employeeorganization are deemed to be a single plan). As used in this Section 3.2(b),

the terms "Separate Account", "Party-in-Interest", "Employer Securities" and"Employee Benefit Plan" shall have the respective meanings assigned to them inERISA.

SECTION 4. CLOSING CONDITIONS.

Section 4.1. Conditions. Your obligation to purchase the Notes on theClosing Date shall be subject to the performance by the Company of itsagreements hereunder which by the terms hereof are to be performed at or priorto the time of delivery of the Notes and to the following further conditionsprecedent:

(a) Closing Certificate. You shall have received a certificate dated

the Closing Date, signed by the President or a Vice President of the Company, -4-<PAGE>

the truth and accuracy of which shall be a condition to your obligation to purchase the Notes proposed to be sold to you and to the effect that (1) the representations and warranties of the Company set forth in Exhibit B hereto are true and correct on and with respect to the Closing Date, (2) the Company has performed all of its obligations hereunder which are to be performed on or prior to the Closing Date, and (3) no Default or Event of Default has occurred and is continuing.

(b) Legal Opinions. You shall have received from Chapman and Cutler, who are acting as your special counsel in this transaction, and from Gordon R. Erickson, Esq., General Counsel for the Company, their respective opinions dated the Closing Date, in form and substance satisfactory to you, and covering the matters set forth in Exhibits C and D, respectively, hereto.

(c) Company's Existence and Authority. On or prior to the Closing Date, you shall have received, in form and substance reasonably satisfactory to you and your special counsel, such documents and evidence



with respect to the Company as you may reasonably request in order to establish the existence and good standing of the Company and the authorization of the transactions contemplated by this Agreement.

(d) Related Transactions. The Company shall have consummated the sale of the entire principal amount of the Notes scheduled to be sold on the Closing Date pursuant to this Agreement and the other agreements referred to in Section 1.3.

(e) Private Placement Number. On or prior to the Closing Date, special counsel to the Purchasers shall have duly made the appropriate filings with Standard & Poor's CUSIP Service Bureau, as agent for the National Association of Insurance Commissioners, in order to obtain a private placement number for the Notes.

(f) Funding Instructions. At least three Business Days prior to the Closing Date, you shall have received written instructions executed by a Responsible Officer of the Company directing the manner of the payment of funds and setting forth (1) the name and address of the transferee bank, (2) such transferee bank's ABA number, (3) the account name and number into which the purchase price for the Notes is to be deposited, and (4) the name and telephone number of the account representative responsible for verifying receipt of such funds.

(g) Legality of Investment. The Notes to be purchased by you shall be a legal investment for you under the laws of each jurisdiction to which you may be subject (without resort to any so-called "Basket Provisions" to such laws).

(h) Satisfactory Proceedings. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation thereof, shall be satisfactory in form and substance to you and your special counsel, and you shall have received a copy (executed or certified as may be appropriate) of all legal documents or proceedings taken in connection with the consummation of said transactions.

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Section 4.2. Waiver of Conditions. If on the Closing Date the Company failsto tender to you the Notes to be issued to you on such date or if the conditionsspecified in Section 4.1 have not been fulfilled, you may thereupon elect to berelieved of all further obligations under this Agreement. Without limiting theforegoing, if the conditions specified in Section 4.1 have not been fulfilled,you may waive compliance by the Company with any such condition to such extentas you may in your sole discretion determine. Nothing in this Section 4.2 shalloperate to relieve the Company of any of its obligations hereunder or to waiveany of your rights against the Company.

SECTION 5. COMPANY COVENANTS.

From and after the Closing Date and continuing so long as any amountremains unpaid on any Note:

Section 5.1. Corporate Existence, Etc. The Company will preserve and keepin full force and effect, and will cause each Restricted Subsidiary to preserveand keep in full force and effect, its corporate existence and all licenses andpermits necessary to the proper conduct of its business, provided that theforegoing shall not prevent any transaction permitted by Section 5.13.



Section 5.2. Insurance. The Company will maintain, and will cause eachRestricted Subsidiary to maintain, insurance coverage by financially sound andreputable insurers and in such forms and amounts and against such risks as arecustomary for corporations of established reputation engaged in the same or asimilar business and owning and operating similar properties.

Section 5.3. Taxes, Claims for Labor and Materials, Compliance with Laws.(a) The Company will promptly pay and discharge, and will cause each RestrictedSubsidiary promptly to pay and discharge, all lawful taxes, assessments andgovernmental charges or levies imposed upon the Company or such RestrictedSubsidiary, respectively, or upon or in respect of all or any part of theproperty or business of the Company or such Restricted Subsidiary, all tradeaccounts payable in accordance with usual and customary business terms, and allclaims for work, labor or materials, which if unpaid might become a Lien uponany property of the Company or such Restricted Subsidiary; provided the Companyor such Restricted Subsidiary shall not be required to pay any such tax,assessment, charge, levy, account payable or claim if (1) the validity,applicability or amount thereof is being contested in good faith by appropriateactions or proceedings which will prevent the forfeiture or sale of any propertyof the Company or such Restricted Subsidiary or any material interference withthe use thereof by the Company or such Restricted Subsidiary, and (2) theCompany or such Restricted Subsidiary shall set aside on its books, reserves

deemed by it to be adequate with respect thereto.

(b) The Company will promptly comply and will cause each RestrictedSubsidiary to promptly comply with all laws, ordinances or governmental rulesand regulations to which it is subject, including, without limitation, theOccupational Safety and Health Act of 1970, as amended, ERISA and allEnvironmental Laws, the violation of which could materially and adversely affectthe properties, business, prospects, profits or conditions (financial otherwise)of the Company and its Restricted Subsidiaries or would result in any Lien notpermitted under Section 5.10.

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Section 5.4. Maintenance, Etc. The Company will maintain, preserve andkeep, and will cause each Restricted Subsidiary to maintain, preserve and keep,its properties which are used or useful in the conduct of its business (whetherowned in fee or a leasehold interest) in good repair and working order and fromtime to time will make all necessary repairs, replacements, renewals andadditions so that at all times the efficiency thereof shall be maintained.

Section 5.5. Nature of Business. Neither the Company nor any RestrictedSubsidiary will engage in any business if, as a result, the general nature ofthe business, taken on a consolidated basis, which would then be engaged in bythe Company and its Restricted Subsidiaries would be substantially changed fromthe general nature of the business engaged in by the Company and its Restricted

Subsidiaries on the date of this Agreement.

Section 5.6. Current Ratio. The Company will at all times keep and maintainthe ratio of Consolidated Current Assets to Consolidated Current Liabilities atnot less than 1.5 to 1.0.

Section 5.7. Fixed Charges Coverage Ratio. The Company will keep andmaintain the ratio of Earnings Available for Fixed Charges to Fixed Charges asof the end of each fiscal quarter for the immediately preceding period of fourconsecutive fiscal quarters (taken as a single accounting period) at not less



than 1.75 to 1.00.

Section 5.8. Consolidated Net Worth. The Company will at all times keep andmaintain Consolidated Net Worth at an amount not less than the sum of (i)$40,000,000 plus (ii) 50% of positive Consolidated Net Income earned by theCompany during each completed fiscal quarter on a cumulative basis (withoutdeduction for a net loss during a fiscal quarter) from September 30, 1994through and including the date of determination.

Section 5.9. Limitation on Funded Debt and Current Debt. (a) The Companywill not create, assume, guarantee or otherwise incur or in any manner be orbecome liable in respect of any Funded Debt, and the Company will not permit anyRestricted Subsidiary to create, assume, guarantee or otherwise incur or in anymanner be or become liable in respect of any Current Debt or Funded Debt,except:

(1) Funded Debt evidenced by the Notes;

(2) Funded Debt of the Company and Current Debt and Funded Debt of its Restricted Subsidiaries outstanding as of the date of this Agreement and described on Schedule II hereto;

(3) other Funded Debt of the Company and other Current Debt and Funded Debt of its Restricted Subsidiaries, provided that at the time of creation,

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issuance, assumption, guarantee or incurrence thereof and after giving effect thereto and to the application of the proceeds thereof:

(i) Consolidated Funded Debt will not exceed 50% of the sum of (A) Consolidated Funded Debt plus (B) Consolidated Net Worth, and

(ii) in the case of the issuance of any Current Debt or Funded Debt of a Restricted Subsidiary other than Current Debt or Funded Debt described in Section 5.9(a)(4), the aggregate amount of Current Debt

and Funded Debt of all Restricted Subsidiaries shall not exceed 10% of Consolidated Net Worth; and

(4) Current Debt or Funded Debt of a Restricted Subsidiary to the Company or to a Wholly-owned Restricted Subsidiary.

(b) The renewal, extension or refunding of any Funded Debt or Current Debt,issued, incurred or outstanding pursuant to Section 5.9(a) shall constitute theissuance of additional Funded Debt or Current Debt, as the case may be, whichis, in turn, subject to the limitations of the applicable provisions of Section5.9(a).

(c) Any corporation which becomes a Restricted Subsidiary after the date

hereof shall for all purposes of this Section 5.9 be deemed to have created,assumed or incurred at the time it becomes a Restricted Subsidiary all FundedDebt and Current Debt of such corporation existing immediately after it becomesa Restricted Subsidiary.

Section 5.10. Limitation on Liens. The Company will not, and will notpermit any Restricted Subsidiary to, create or incur, or suffer to be incurredor to exist, any Lien on its or their property or assets, whether now owned orhereafter acquired, or upon any income or profits therefrom, or transfer anyproperty for the purpose of subjecting the same to the payment of obligations in



priority to the payment of its or their general creditors, or acquire or agreeto acquire, or permit any Restricted Subsidiary to acquire, any property orassets upon conditional sales agreements or other title retention devices,except:

(a) Liens for property taxes and assessments or governmental charges or levies and Liens securing claims or demands of mechanics and materialmen, provided that payment thereof is not at the time required by Section 5.3;

(b) Liens of or resulting from any judgment or award, the time for the appeal or petition for rehearing of which shall not have expired, or in respect of which the Company or a Restricted Subsidiary shall at any time in good faith be prosecuting an appeal or proceeding for a review and in respect of which a stay of execution pending such appeal or proceeding for review shall have been secured;

(c) Liens incidental to the conduct of business or the ownership of properties and assets (including warehousemen's and attorneys' liens and statutory landlords' liens) and deposits, pledges or Liens to secure the performance of bids, tenders or trade contracts, or to secure statutory obligations, surety or appeal bonds or other Liens of like general nature, in any such case incurred in the ordinary course of business and not in connection with the borrowing of money, provided in each case, the

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obligation secured is not overdue or, if overdue, is being contested in good faith by appropriate actions or proceedings;

(d) minor survey exceptions or minor encumbrances, easements or reservations, or rights of others for rights-of-way, utilities and other similar purposes, or zoning or other restrictions as to the use of real properties, which are necessary for the conduct of the activities of the Company and its Restricted Subsidiaries or which customarily exist on properties of corporations engaged in similar activities and similarly

situated and which do not in any event materially impair their use in the operation of the business of the Company and its Restricted Subsidiaries;

(e) Liens securing Indebtedness of a Restricted Subsidiary to the Company or to a Wholly-owned Restricted Subsidiary;

(f) Liens securing Funded Debt of the Company or any Restricted Subsidiary outstanding on the Closing Date and described on Schedule III hereto;

(g) Liens created or incurred after the Closing Date given to secure the payment of, or to secure Indebtedness incurred to provide funds for the payment of, the purchase price incurred in connection with the acquisition

or purchase of fixed assets useful and intended to be used in carrying on the business of the Company or a Restricted Subsidiary, including Liens existing on such fixed assets at the time of acquisition thereof or at the time of acquisition or purchase by the Company or a Restricted Subsidiary of any business entity then owning such fixed assets, whether or not such existing Liens were given to secure the payment of the purchase price of the fixed assets to which they attach so long as they were not incurred, extended or renewed in contemplation of such acquisition or purchase, provided that (1) the Lien shall attach solely to the fixed assets acquired or purchased, (2) such Lien shall have been created or incurred within six



months of the date of acquisition or purchase, (3) at the time of acquisition or purchase of such fixed assets, the aggregate amount remaining unpaid on all Indebtedness secured by Liens on such fixed assets, whether or not assumed by the Company or a Restricted Subsidiary, shall not exceed an amount equal to 100% of the lesser of the total purchase price or fair market value at the time of acquisition or purchase of such fixed assets (as determined in good faith by the Board of Directors of the Company), and (4) all such Indebtedness shall have been incurred within the applicable limitations provided in Section 5.6 and Section 5.9(a)(3); and

(h) Liens created or incurred after the Closing Date given to secure Indebtedness of the Company or any Restricted Subsidiary in addition to the Liens permitted by the preceding clauses (a) through (g) hereof, provided that (1) all Indebtedness secured by Liens created or incurred pursuant to this Section 5.10(h) shall not at any time exceed 10% of Consolidated Net Worth, and (2) all such Indebtedness shall have been incurred within the applicable limitations provided in Section 5.6 and Section 5.9(a)(3).

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Section 5.11. Investments. The Company will not, and will not permit anyRestricted Subsidiary to, make any Investments, other than:

(a) Investments by the Company and its Restricted Subsidiaries in and to Restricted Subsidiaries, including any Investment in a corporation which, after giving effect to such Investment, will become a Restricted Subsidiary;

(b) Investments representing loans or advances in the usual and ordinary course of business to officers, directors and employees for expenses (including moving expenses related to a transfer) incidental to carrying on the business of the Company or any Restricted Subsidiary;

(c) receivables arising from the sale of goods and services in the ordinary course of business of the Company and its Restricted Subsidiaries;

(d) Investments in commercial paper maturing in 270 days or less from the date of issuance which, at the time of acquisition by the Company or any Subsidiary, is accorded the highest rating by Standard & Poor's Corporation, Moody's Investors Service, Inc. or another nationally recognized credit rating agency of similar standing;

(e) Investments in direct obligations of the United States of America or any agency or instrumentality of the United States of America, the payment or guarantee of which constitutes a full faith and credit obligation of the United States of America, in either case, maturing within twelve months from the date of acquisition thereof;

(f) Investments in certificates of deposit maturing within one year

from the date of issuance thereof issued by a bank or trust company organized under the laws of the United States or any State thereof having capital, surplus and undivided profits aggregating more than $250,000,000, provided that at the time of acquisition thereof by the Company or a Subsidiary, the senior unsecured long-term debt of such bank or trust company or of the holding company of such bank or trust company is rated "A" or better by Standard & Poor's Corporation or "A" or better by Moody's Investors Service, Inc. or an equivalent rating by another nationally recognized credit rating agency of similar standing;



(g) Investments in certificates of deposit maturing within one year from the date of issuance thereof issued by a bank organized under the laws of the United States or any State thereof, provided that the aggregate amount of all Investments in certificates of deposit pursuant to the provisions of this paragraph (g) shall not at any time exceed $1,000,000;

(h) Investments in marketable obligations of indebtedness maturing within 270 days from the date of acquisition thereof of any State, territory or possession of the United States or any political subdivision

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of any of the foregoing or the District of Columbia, which obligations at the time of acquisition by the Company or any Subsidiary, are rated "A" or better by Standard & Poor's Corporation or "A" or better by Moody's Investors Service, Inc. or an equivalent rating by another nationally recognized credit rating agency of similar standing;

(i) Investments in any money market fund organized and existing under the laws of and doing business in any state of the United States which is classified as a current asset in accordance with GAAP, which is managed by a fund manager of recognized national standing and which invests substantially all of its assets in obligations described in clauses (d),

(e), (f) and (h) of this Section 5.11; and

(j) Other Investments of the Company and its Restricted Subsidiaries at any time owned not described in the foregoing clauses (a) through (i) of this Section 5.11, provided, that the aggregate amount of all such other Investments, including the Investment then proposed to be made, shall not exceed an amount equal to 10% of Consolidated Net Worth.

In valuing any Investment for the purpose of applying the limitations setforth in this Section 5.11, such Investment shall be taken at the original costthereof, without allowance for any subsequent write-offs or appreciation ordepreciation therein, but less (i) any amount repaid or recovered on account ofcapital or principal and (ii) in the event any such Investment shall be either

sold or otherwise disposed of or completely written off in accordance with GAAPand any resulting loss therefrom shall be required to be included inConsolidated Net Income, the amount of such loss.

For purposes of this Section 5.11, at any time when a corporation becomes aRestricted Subsidiary, all Investments of such corporation at such time shall bedeemed to have been made by such corporation, as a Restricted Subsidiary, atsuch time.

Section 5.12. Restricted Payments. (a) The Company will not except ashereinafter provided:

(1) Declare or pay any dividends, either in cash or property, on any

shares of its capital stock of any class (except dividends or other distributions payable solely in shares of common stock of the Company);

(2) Directly or indirectly, or through any Subsidiary or through any Affiliate of the Company, purchase, redeem or retire any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock (other than (i) in exchange for or out of the net cash proceeds to the Company from the substantially concurrent issue or sale of shares of common stock of the Company or warrants, rights or options to purchase or acquire any shares of its common



stock, and (ii) payments to any officer of the Company in connection with the exercise of such officer's stock appreciation rights granted pursuant to stock purchase plans of the Company and/or its

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Restricted Subsidiaries, to the extent such payments are required to be deducted in the calculation of Consolidated Net Income); or

(3) Make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its capital stock;

(such declarations or payments of dividends, purchases, redemptions orretirements of capital stock and warrants, rights or options and all such otherpayments or distributions being herein collectively called "RestrictedPayments"), if after giving effect thereto the aggregate amount of RestrictedPayments made during the period from and after December 31, 1993 to andincluding the date of the making of the Restricted Payment in question wouldexceed the sum of (A) $3,000,000 plus (B) 50% of Consolidated Net Income for theperiod from and after the Closing Date to and including the date of the makingof the Restricted Payment in question, computed on a cumulative basis for saidentire period (or if such Consolidated Net Income is a deficit figure, thenminus 100% of such deficit).

(b) The Company will not declare any dividend which constitutes aRestricted Payment payable more than 60 days after the date of declarationthereof.

(c) For the purposes of this Section 5.12, the amount of any RestrictedPayment declared, paid or distributed in property shall be deemed to be thegreater of the book value or fair market value (as determined in good faith bythe Board of Directors of the Company) of such property at the time of themaking of the Restricted Payment in question.

(d) The Company will not authorize or make a Restricted Payment if aftergiving effect to the proposed Restricted Payment: (1) an Event of Default would

exist or (2) the Company could not incur at least $1.00 of additional FundedDebt pursuant to Section 5.9(a)(3).

Section 5.13. Mergers, Consolidations and Sales of Assets. (a) The Companywill not, and will not permit any Restricted Subsidiary to (i) consolidate withor be a party to a merger with any other Person or (ii) sell, lease or otherwisedispose of all or any substantial part (as defined in paragraph (d) of thisSection 5.13) of the assets of the Company and its Restricted Subsidiaries(other than sales of goods or services in the ordinary course of business),provided, however, that:

(1) any Restricted Subsidiary may merge or consolidate with or into the Company or any Wholly-owned Restricted Subsidiary so long as in any

merger or consolidation involving the Company, the Company shall be the surviving or continuing corporation;

(2) the Company may consolidate or merge with any other corporation if (i) the Company shall be the surviving or continuing corporation, and (ii) at the time of any such consolidation or merger and after giving effect thereto (x) no Default or Event of Default shall have occurred and be continuing, and (y) the Company would be permitted to incur at least $1.00 of additional Funded Debt under the provisions of Section 5.9(a)(3); and



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(3) any Restricted Subsidiary may sell, lease or otherwise dispose of all or any substantial part of its assets to the Company or to any Wholly-owned Restricted Subsidiary.

(b) The Company will not permit any Restricted Subsidiary to issue or sellany shares of stock of any class (including as "stock" for the purposes of thisSection 5.13, any warrants, rights or options to purchase or otherwise acquirestock or other Securities exchangeable for or convertible into stock) of suchRestricted Subsidiary to any Person other than the Company or a Wholly-ownedRestricted Subsidiary, except (i) for the purpose of qualifying directors, or(ii) in satisfaction of the validly pre-existing preemptive rights of minorityshareholders in connection with the simultaneous issuance of stock to theCompany and/or a Restricted Subsidiary whereby the Company and/or suchRestricted Subsidiary maintain their same proportionate interest in suchRestricted Subsidiary.

(c) The Company will not sell, transfer or otherwise dispose of anyshares of stock in any Restricted Subsidiary (except to qualify directors) orany Indebtedness of any Restricted Subsidiary, and will not permit anyRestricted Subsidiary to sell, transfer or otherwise dispose of (except to theCompany or a Wholly-owned Restricted Subsidiary) any shares of stock or any

Indebtedness of any other Restricted Subsidiary, unless:

(1) simultaneously with such sale, transfer, or disposition, all shares of stock and all Indebtedness of such Restricted Subsidiary at the time owned by the Company and by every other Subsidiary shall be sold, transferred or disposed of as an entirety;

(2) the Board of Directors of the Company shall have determined, as evidenced by a resolution thereof, that the retention of such stock and Indebtedness is no longer in the best interests of the Company;

(3) such stock and Indebtedness is sold, transferred or otherwise disposed of to a Person, for a cash consideration or other value and on

terms reasonably deemed by the Board of Directors to be adequate and satisfactory;

(4) the Restricted Subsidiary being disposed of shall not have any continuing investment in the Company or any other Subsidiary not being simultaneously disposed of; and

(5) such sale or other disposition does not involve a substantial part (as hereinafter defined) of the assets of the Company and its Restricted Subsidiaries.

(d) As used in this Section 5.13, a sale, lease or other disposition ofassets shall be deemed to be a "substantial part" of the assets of the Company

and its Restricted Subsidiaries only if the book value of such assets when addedto the book value of all other assets sold, leased or otherwise disposed of bythe Company and its Restricted Subsidiaries (other than sales of goods or

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services in the ordinary course of business) during the 12-month period endingwith the date of such sale, lease or other disposition, exceeds 15% of theConsolidated Total Assets of the Company and its Restricted Subsidiaries



determined as of the end of the immediately preceding fiscal year.

Section 5.14. Repurchase of Notes. Neither the Company nor any RestrictedSubsidiary, directly or indirectly, may repurchase or make any offer torepurchase any Notes unless an offer has been made to repurchase Notes, prorata, from all holders of the Notes at the same time and upon the same terms. Incase the Company or any Restricted Subsidiary repurchases or otherwise acquiresany Notes, such Notes shall immediately thereafter be cancelled and no Notesshall be issued in substitution therefor. Without limiting the foregoing, uponthe purchase or other acquisition of any Notes by the Company, any RestrictedSubsidiary or any Affiliate, such Notes shall no longer be outstanding forpurposes of any section of this Agreement relating to the taking by the holdersof the Notes of any actions with respect hereto, including, without limitation,Section 6.3, Section 6.4 and Section 7.1.

Section 5.15. Transaction with Affiliates. The Company will not, and willnot permit any Restricted Subsidiary to, enter into or be a party to anytransaction or arrangement with any Affiliate (including, without limitation,the purchase from, sale to or exchange of property with, or the rendering of anyservice by or for, any Affiliate), except (i) in the ordinary course of andpursuant to the reasonable requirements of the Company's or such RestrictedSubsidiary's business and upon fair and reasonable terms no less favorable tothe Company or such Restricted Subsidiary than would be obtainable in acomparable arm's-length transaction with a Person other than an Affiliate, and

(ii) for arrangements which the Company shall enter into with the GangelhoffEnterprises Trust regarding environmental cleanup costs and expenses for theAntrim, New Hampshire premises owned by Chicago Cutlery, Inc.

Section 5.16. Reports and Rights of Inspection. The Company will keep, andwill cause each Subsidiary to keep, proper books of record and account in whichfull and correct entries will be made of all dealings or transactions of, or inrelation to, the business and affairs of the Company or such Subsidiary, inaccordance with GAAP consistently applied (except for changes disclosed in thefinancial statements furnished to you pursuant to this Section 5.16 andconcurred in by the independent public accountants referred to in Section5.16(b)), and will furnish to you so long as you are the holder of any Note andto each other Institutional Holder of the then outstanding Notes (in duplicate

if so specified below or otherwise requested):

(a) Quarterly Statements. As soon as available and in any event within 60 days after the end of each quarterly fiscal period (except the last) of each fiscal year, copies of:

(1) consolidated balance sheets of the Company and its Restricted Subsidiaries as of the close of such quarterly fiscal period, setting forth in comparative form the consolidated figures for the fiscal year then most recently ended, and

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(2) consolidated statements of income, retained earnings and cash flows of the Company and its Restricted Subsidiaries for such quarterly fiscal period and for the portion of the fiscal year ending with such quarterly fiscal period, in each case setting forth in comparative form the consolidated figures for the corresponding periods of the preceding fiscal year, all in reasonable detail and certified as complete and correct, subject to changes resulting from year-end adjustments, by an authorized financial officer of the Company;



(b) Annual Statements. As soon as available and in any event within 120 days after the close of each fiscal year of the Company, copies of:

(1) consolidated balance sheets of the Company and its Restricted Subsidiaries as of the close of such fiscal year, and

(2) consolidated statements of income, retained earnings and cash flows of the Company and its Restricted Subsidiaries for such fiscal year, in each case setting forth in comparative form the consolidated figures for the preceding fiscal year, all in reasonable detail and accompanied by a report thereon of a firm of independent public accountants of recognized national standing selected by the Company to the effect that the consolidated financial statements have been prepared in accordance with GAAP consistently applied (except for changes in application in which such accountants concur) and present fairly the financial condition of the Company and its Restricted Subsidiaries and that the examination of such accountants in connection with such financial statements has been conducted in accordance with generally accepted auditing standards;

(c) Audit Reports. Promptly upon receipt thereof, one copy of each interim or special audit made by independent accountants of the books of the Company or any Restricted Subsidiary, in either case taken as a whole,

including, however, any other interim or special audit if such audit contains information which could materially and adversely affect the properties, business, profits or condition (financial or otherwise) of the Company and its Restricted Subsidiaries;

(d) SEC and Other Reports. Promptly upon their becoming available, one copy of each financial statement, report, notice or proxy statement sent by the Company to its stockholders generally and of each regular or periodic report, and any registration statement or prospectus filed by the Company or any Subsidiary with any securities exchange or the Securities and Exchange Commission or any successor agency, and copies of any orders in any proceedings to which the Company or any of its Subsidiaries is a party, issued by any governmental agency, Federal or state, having jurisdiction

over the Company or any of its Subsidiaries;

-15-<PAGE> (e) Officer's Certificates. Within the periods provided in paragraphs (a) and (b) above, a certificate of an authorized financial officer of the Company stating that such officer has reviewed the provisions of this Agreement and setting forth:

(1) the information and computations (in sufficient detail) required in order to establish whether the Company was in compliance with the requirements of Section 5.6 through 5.15, inclusive, at the end of the period covered by the financial statements then being

furnished, and

(2) whether there existed as of the date of such financial statements and whether, to the best of such officer's knowledge, there exists on the date of the certificate or existed at any time during the period covered by such financial statements any Default or Event of Default and, if any such condition or event exists on the date of the certificate, specifying the nature and period of existence thereof and the action the Company is taking and proposes to take with respect thereto;



(f) Accountant's Certificates. Within the period provided in paragraph (b) above, a certificate of the accountants who are reporting upon such financial statements, stating that they have reviewed this Agreement and stating further whether, in making their audit, such accountants have become aware of any Default or Event of Default under any of the terms or provisions of this Agreement insofar as any such terms or provisions pertain to or involve accounting matters or determinations, and if any such condition or event then exists, specifying the nature and period of existence thereof;

(g) Unresticted Subsidiaries. During any periods when there shall be one or more Unrestricted Subsidiaries:

(1) if at the end of any fiscal quarter the book value of the assets of the Unrestricted Subsidiaries constitutes 20% or more of the total consolidated assets of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP, then within the respective periods provided in paragraphs (a) and (b) above, quarterly financial statements for such fiscal quarter and annual financial statements for the year in which such fiscal quarter occurs, in each case of the character and as otherwise in said paragraphs (a) and (b) provided covering each Unrestricted Subsidiary (or groups of Unrestricted Subsidiaries on a consolidated basis); and

(2) if the Company shall not be required to deliver financial statements of Unrestricted Subsidiaries pursuant to clause (1) of this paragraph (g) and if for any reason you and the other Institutional Holders shall not be receiving the financial statements of the Company and its consolidated Subsidiaries pursuant to paragraph (d) above, then within the respective periods provided in paragraphs (a) and (b) above, financial statements of the character and for the dates and periods as in said paragraphs (a) and (b) provided covering the Company and its consolidated Subsidiaries; and

(h) Requested Information. With reasonable promptness, such other data and information as you or any such Institutional Holder may reasonably

request.

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Without limiting the foregoing, the Company will permit you, so long as you arethe holder of any Note, and each Institutional Holder of the then outstandingNotes (or such Persons as either you or such Institutional Holder maydesignate), to visit and inspect, under the Company's guidance, any of theproperties of the Company or any Subsidiary, to examine all of their books ofaccount, records, reports and other papers, to make copies and extractstherefrom and to discuss their respective affairs, finances and accounts withtheir respective officers, employees, and independent public accountants (and by

this provision the Company authorizes said accountants to discuss with you thefinances and affairs of the Company and its Restricted Subsidiaries), all atsuch reasonable times and as often as may be reasonably requested. The Companyshall not be required to pay or reimburse you or any such holder for expenseswhich you or any such holder may incur in connection with any such visitation orinspection. SECTION 6. EVENTS OF DEFAULT AND REMEDIES THERFOR.

Section 6.1. Events of Default. Any one or more of the following shall



constitute an "Event of Default" as such term is used herein:

(a) Default shall occur in the payment of interest on any Note when the same shall have become due and such default shall continue for more than five days; or

(b) Default shall occur in the making of any required prepayment on any of the Notes as provided in Section 2.1; or

(c) Default shall occur in the making of any other payment of the principal of any Note or premium, if any, thereon at the expressed or any accelerated maturity date or at any date fixed for prepayment; or

(d) Default shall occur in the observance or performance of any covenant or agreement contained in Section 5.6 through Section 5.13 or Section 6.2; or

(e) Default shall occur in the observance or performance of any other provision of this Agreement which is not remedied within 30 days after the earlier of (1) the day on which a Responsible Officer of the Company first obtains knowledge of such default, or (2) the day on which written notice thereof is given to the Company by the holder of any Note; or

(f) Default shall be made in the payment of the principal of or

interest on any Indebtedness of the Company (other than the Notes) or any Restricted Subsidiary for borrowed money aggregating more than $2,000,000, as and when the same shall become due and payable by the lapse of time, by declaration, by call for redemption or otherwise, and such default shall continue beyond the period of grace, if any, allowed with respect thereto; or

(g) Default or the happening of any event shall occur under any indenture, agreement, or other instrument under which any Indebtedness (other

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than the Notes) of the Company or any Restricted Subsidiary for borrowed money aggregating more than $1,000,000 may be issued and such default or event shall continue for a period of time sufficient to permit the acceleration of the maturity of any Indebtedness of the Company or any Restricted Subsidiary outstanding thereunder; or

(h) Any representation or warranty made by the Company herein, or made by the Company in any written statement or certificate furnished by the Company in connection with the consummation of the issuance and delivery of the Notes or furnished by the Company pursuant hereto, is untrue in any material respect as of the date of the issuance or making thereof; or

(i) Final judgment or judgments for the payment of money aggregating in excess of $1,000,000 is or are outstanding against the Company or any Restricted Subsidiary or against any property or assets of either and any one of such judgments has remained unpaid, unvacated, unbonded or unstayed by appeal or otherwise for a period of 30 days from the date of its entry; or

(j) A custodian, receiver, liquidator or trustee of the Company or any Restricted Subsidiary, or of any of the property of either, is appointed or takes possession and such appointment or possession remains uncontested or



in effect for more than 60 days; or the Company or any Restricted Subsidiary generally fails to pay its debts as they become due or admits in writing its inability to pay its debts as they mature; or the Company or any Restricted Subsidiary is adjudicated bankrupt or insolvent; or an order for relief is entered under the Federal Bankruptcy Code against the Company or any Restricted Subsidiary; or any of the property of either is sequestered by court order and the order remains in effect for more than 60 days; or bankruptcy, reorganization, arrangement, or insolvency proceedings or other proceedings for relief under any bankruptcy or similar laws for relief of debtors, are instituted against the Company or any Restricted Subsidiary and are not stayed or dismissed within 60 days after filing; or

(k) The Company or any Restricted Subsidiary files a petition in voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, or insolvency law of any jurisdiction or similar laws for relief of debtors, whether now or subsequently in effect; or consents to the filing of any petition against it under any such law; or consents to the appointment of or taking possession by a custodian, receiver, trustee or liquidator of the Company any Restricted Subsidiary, or any of the property of either.

Section 6.2. Notice to Holders. When any Default or Event of Default hasoccurred, or if the holder of any Note or of any other evidence of Indebtednessfor borrowed money of the Company or any Subsidiary gives any notice or takes

any other action with respect to a claimed default, the Company agrees to givewritten notice within three Business Days after the date on which a ResponsibleOfficer of the Company acquires knowledge of such event, to all holders of theNotes then outstanding specifying the nature and period of existence thereof andwhat action the Company is taking or proposes to take with respect thereto.

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Section 6.3. Acceleration of Maturities. When any Event of Defaultdescribed in paragraph (a), (b) or (c) of Section 6.1 has happened and iscontinuing, any holder of any Note may, and when any Event of Default describedin paragraphs (d) through (i), inclusive, of said Section 6.1 has happened and

is continuing, the holder or holders of 51% or more of the principal amount ofthe Notes at the time outstanding may, by notice in writing to the Company inthe manner provided in Section 9.6, declare the entire principal and allinterest accrued on all Notes to be, and all Notes shall thereupon become,forthwith due and payable, without any presentment, demand, protest or othernotice of any kind, all of which are hereby expressly waived. When any Event ofDefault described in paragraph (j) or (k) of Section 6.1 has occurred, then alloutstanding Notes shall immediately become due and payable without presentment,demand or notice of any kind. Upon the Notes becoming due and payable as aresult of any Event of Default as aforesaid, the Company will forthwith pay tothe holders of the Notes the entire principal and interest accrued on the Notesand, to the extent not prohibited by applicable law, an amount as liquidateddamages for the loss of the bargain evidenced hereby (and not as a penalty)

equal to the Make-Whole Amount, determined as of the date of declaration of anacceleration or, in the case of an Event of Default described in paragraph (j)or (k) of Section 6.1, the date of acceleration. No course of dealing on thepart of the holder or holders of any Notes nor any delay or failure on the partof any holder of Notes to exercise any right shall operate as a waiver of suchright or otherwise prejudice such holder's rights, powers and remedies. TheCompany further agrees, to the extent permitted by law, to pay to the holder orholders of the Notes all costs and expenses incurred by them in the collectionof any Notes upon any default hereunder or thereon, including reasonablecompensation to such holder's or holders' attorneys for all services rendered in



connection therewith.

Section 6.4. Rescission of Acceleration. The provisions of Section 6.3 aresubject to the condition that if the principal of and accrued interest on all orany outstanding Notes have been declared immediately due and payable by reasonof the occurrence of any Event of Default described in paragraphs (a) through(i), inclusive, of Section 6.1, the holders of 66-2/3% in aggregate principalamount of the Notes then outstanding may, by written instrument filed with theCompany, rescind and annul such declaration and the consequences thereof,provided that at the time such declaration is annulled and rescinded:

(a) no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement;

(b) all arrears of interest upon all the Notes and all other sums payable under the Notes and under this Agreement (except any principal, interest or premium on the Notes which has become due and payable solely by reason of such declaration under Section 6.3) shall have been duly paid; and

(c) each and every other Default and Event of Default shall have been made good, cured or waived pursuant to Section 7.1;

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and provided further, that no such rescission and annulment shall extend to oraffect any subsequent Default or Event of Default or impair any right consequentthereto.

SECTION 7. AMENDMENTS, WAIVERS AND CONSENTS.

Section 7.1. Consent Required. Any term, covenant, agreement or conditionof this Agreement may, with the consent of the Company, be amended or compliancetherewith may be waived (either generally or in a particular instance and eitherretroactively or prospectively), if the Company shall have obtained the consentin writing of the holders of at least 66-2/3% in aggregate principal amount of

outstanding Notes; provided that without the written consent of the holders ofall of the Notes then outstanding, no such amendment or waiver shall beeffective (a) which will change the time of payment (including any prepaymentrequired by Section 2.1) of the principal of or the interest on any Note orchange the principal amount thereof or change the rate of interest thereon, or(b) which will change any of the provisions with respect to optionalprepayments, or (c) which will change the percentage of holders of the Notesrequired to consent to any such amendment or waiver of any of the provisions ofthis Section 7 or Section 6.

Section 7.2. Solicitation of Holders. So long as there are any Notesoutstanding, the Company will not solicit, request or negotiate for or withrespect to any proposed waiver or amendment of any of the provisions of this

Agreement or the Notes unless each holder of Notes (irrespective of the amountof Notes then owned by it) shall be informed thereof by the Company and shall beafforded the opportunity of considering the same and shall be supplied by theCompany with sufficient information to enable it to make an informed decisionwith respect thereto. The Company will not, directly or indirectly, pay or causeto be paid any remuneration, whether by way of supplemental or additionalinterest, fee or otherwise, to any holder of Notes as consideration for or as aninducement to entering into by any holder of Notes of any waiver or amendment ofany of the terms and provisions of this Agreement or the Notes unless suchremuneration is concurrently offered, on the same terms, ratably to the holders



of all Notes then outstanding. Promptly and in any event within 30 days of thedate of execution and delivery of any such waiver or amendment, the Companyshall provide a true, correct and complete copy thereof to each of the holdersof the Notes.

Section 7.3. Effect of Amendment or Waiver. Any such amendment or waivershall apply equally to all of the holders of the Notes and shall be binding uponthem, upon each future holder of any Note and upon the Company, whether or notsuch Note shall have been marked to indicate such amendment or waiver. No suchamendment or waiver shall extend to or affect any obligation not expresslyamended or waived or impair any right consequent thereon.

SECTION 8. INTERPRETATION OF AGREEMENT; DEFINITIONS.

Section 8.1. Definitions. Unless the context otherwise requires, the termshereinafter set forth when used herein shall have the following meanings and the

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following definitions shall be equally applicable to both the singular andplural forms of any of the terms herein defined:

"Affiliate" shall mean any Person (other than a Restricted Subsidiary)

(a) which directly or indirectly through one or more intermediaries controls, oris controlled by, or is under common control with, the Company, (b) whichbeneficially owns or holds 10% or more of any class of the Voting Stock of theCompany or (c) 10% or more of the Voting Stock (or in the case of a Person whichis not a corporation, 10% or more of the equity interest) of which isbeneficially owned or held by the Company or a Subsidiary. The term "control"means the possession, directly or indirectly, of the power to direct or causethe direction of the management and policies of a Person, whether through theownership of Voting Stock, by contract or otherwise.

"Business Day" shall mean any day other than a Saturday, Sunday or otherday on which banks in Terre Haute, Indiana or Chicago, Illinois are required bylaw to close or are customarily closed.

"Capitalized Lease" shall mean any lease the obligation for Rentals withrespect to which is required to be capitalized on a consolidated balance sheetof the lessee and its subsidiaries in accordance with GAAP prepared inaccordance with GAAP.

"Capitalized Rentals" of any Person shall mean as of the date of anydetermination thereof the amount at which the aggregate Rentals due and tobecome due under all Capitalized Leases under which such Person is a lesseewould be reflected as a liability on a consolidated balance sheet of suchPerson.

"Code" shall mean the Internal Revenue Code of 1986, as amended, and the

regulations from time to time promulgated thereunder.

"Company" shall mean General Housewares Corp., a Delaware corporation,and any Person who succeeds to all, or substantially all, of the assets andbusiness of General Housewares Corp.

"Consolidated Current Assets" shall mean as of the date of anydetermination thereof such assets of the Company and its Restricted Subsidiarieson a consolidated basis as shall be determined in accordance with GAAP toconstitute current assets.



"Consolidated Current Liabilities" shall mean as of the date of anydetermination thereof such liabilities of the Company and its RestrictedSubsidiaries on a consolidated basis as shall be determined in accordance withGAAP to constitute current liabilities, minus to the extent included therein,any payments in respect of Funded Debt that are required to be made within oneyear from the date of determination.

"Consolidated Funded Debt" shall mean all Funded Debt of the Company andits Restricted Subsidiaries, determined on a consolidated basis eliminatingintercompany items.

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"Consolidated Net Income" for any period shall mean the net income of theCompany and its Restricted Subsidiaries determined on a consolidated basis inaccordance with GAAP, excluding unremitted earnings of UnrestrictedSubsidiaries.

"Consolidated Net Worth" shall mean, as of the date of any determinationthereof, the total stockholder's equity of the Company and its RestrictedSubsidiaries determined in accordance with GAAP.

"Consolidated Total Assets" shall mean, as of the date of determinationthereof, the total assets of the Company and its Restricted Subsidiariesdetermined on a consolidated basis in accordance with GAAP.

"Current Debt" of any Person shall mean as of the date of anydetermination thereof (a) all Indebtedness of such Person for borrowed moneyother than Funded Debt of such Person and (b) Guaranties by such Person ofCurrent Debt of others.

"Default" shall mean any event or condition the occurrence of which would,with the lapse of time or the giving of notice, or both, constitute an Event ofDefault.

"Earnings Available for Fixed Charges" for any period shall mean the sumof (a) Consolidated Net Income during such period plus (to the extent deductedin determining Consolidated Net Income), (b) all provisions for any Federal,state or other income taxes made by the Company and its Restricted Subsidiariesduring such period and (c) Fixed Charges during such period.

"Environmental Law" shall mean any international, federal, state or localstatute, law, regulation, order, consent decree, judgment, permit, license,code, covenant, deed restriction, common law, treaty, convention, ordinance orother requirement relating to public health, safety or the environment,including, without limitation, those relating to releases, discharges oremissions to air, water, land or groundwater, to the withdrawal or use ofgroundwater, to the use and handling of polychlorinated biphenyls or asbestos,

to the disposal, treatment, storage or management of hazardous or solid waste,or Hazardous Substances or crude oil, or any fraction thereof, or to exposure totoxic or hazardous materials, to the handling, transportation, discharge orrelease of gaseous or liquid Hazardous Substances and any regulation, order,notice or demand issued pursuant to such law, statute or ordinance, in each caseapplicable to the property of the Company and its Subsidiaries or the operation,construction or modification of any thereof, including without limitation, thefollowing: the Comprehensive Environmental Response, Compensation and LiabilityAct of 1980, as amended by the Superfund Amendments and Reauthorization Act of1986, the Solid Waste Disposal Act, as amended by the Resource Conservation and



Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, theHazardous Materials Transportation Act, as amended, the Federal Water PollutionControl Act, as amended by the Clean Water Act of 1976, the Safe Drinking WaterControl Act, the Clean Air Act of 1966, as amended, the Toxic Substances ControlAct of 1976, the Occupational Safety and Health Act of 1977, as amended, theEmergency Planning and Community Right-to-Know Act of 1986, the NationalEnvironmental Policy Act of 1975, the Oil Pollution Act of 1990 and any similar

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or implementing state law, and any state statute and any further amendments tothese laws providing for financial responsibility for cleanup or other actionswith respect to the release or threatened release of Hazardous Substances orcrude oil, or any fraction thereof, and all rules, regulations, guidancedocuments and publications promulgated thereunder.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974,as amended, and any successor statute of similar import, together with theregulations thereunder, in each case as in effect from time to time. Referencesto sections of ERISA shall be construed to also refer to any successor sections.

"ERISA Affiliate" shall mean any corporation, trade or business that is,along with the Company, a member of a controlled group of corporations or a

controlled group of trades or businesses, as described in section 414(b) and414(c), respectively, of the Code or Section 4001 of ERISA. "Event of Default"shall have the meaning set forth in Section 6.1.

"Fixed Charges" for any period shall mean on a consolidated basis the sumof (a) all Rentals (excluding all Capitalized Rentals) payable during suchperiod by the Company and its Restricted Subsidiaries, and (b) all InterestCharges on all Indebtedness (including the interest component of all CapitalizedRentals) of the Company and its Restricted Subsidiaries.

"Funded Debt" of any Person shall mean (a) all Indebtedness of suchPerson for borrowed money or which has been incurred in connection with theacquisition of assets in each case having a final maturity of one or more than

one year from the date of origin thereof (or which is renewable or extendible atthe option of the obligor for a period or periods more than one year from thedate of origin), including all payments in respect thereof that are required tobe made within one year from the date of any determination of Funded Debt,whether or not the obligation to make such payments shall constitute a currentliability of the obligor under GAAP, (b) all Capitalized Rentals of such Person,and (c) all Guaranties by such Person of Funded Debt of others.

"GAAP" shall mean generally accepted accounting principles at the time.

"Guaranties" by any Person shall mean all obligations (other thanendorsements in the ordinary course of business of negotiable instruments for

deposit or collection) of such Person guaranteeing, or in effect guaranteeing,any Indebtedness, dividend or other obligation of any other Person (the "primaryobligor") in any manner, whether directly or indirectly, including, withoutlimitation, all obligations incurred through an agreement, contingent orotherwise, by such Person: (a) to purchase such Indebtedness or obligation orany property or assets constituting security therefor, (b) to advance or supplyfunds (1) for the purchase or payment of such Indebtedness or obligation, or (2)to maintain working capital or any balance sheet or income statement conditionor otherwise to advance or make available funds for the purchase or payment ofsuch Indebtedness or obligation, (c) to lease property or to purchase Securities



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or other property or services primarily for the purpose of assuring theowner of such Indebtedness or obligation of the ability of the primary obligorto make payment of the Indebtedness or obligation, or (d) otherwise to assurethe owner of the Indebtedness or obligation of the primary obligor against lossin respect thereof. For the purposes of all computations made under thisAgreement, a Guaranty in respect of any Indebtedness for borrowed money shall bedeemed to be Indebtedness equal to the principal amount of such Indebtedness forborrowed money which has been guaranteed.

"Hazardous Substance" shall mean any hazardous or toxic material, substanceor waste, pollutant or contaminant which is regulated under any statute, law,ordinance, rule or regulation of any local, state, regional or federal authorityhaving jurisdiction over the property of the Company and its Subsidiaries or itsuse, including but not limited to any material, substance or waste which is: (a)defined as a hazardous substance under Section 311 of the Federal WaterPollution Control Act (33 U.S.C. Section 1317), as amended; (b) regulated as ahazardous waste under Section 1004 or Section 3001 of the Federal Solid WasteDisposal Act, as amended by the Resource Conservation and Recovery Act (42U.S.C. Section 6901 et seq.), as amended; (c) defined as a hazardous substanceunder Section 101 of the Comprehensive Environmental Response, Compensation and

Liability Act (42 U.S.C. Section 9601 et seq.), as amended; or (d) defined orregulated as a hazardous substance or hazardous waste under any rules orregulations promulgated under any of the foregoing statutes.

"Indebtedness" of any Person shall mean and include all obligations ofsuch Person which in accordance with GAAP shall be classified upon a balancesheet of such Person as liabilities of such Person, and in any event shallinclude all (a) obligations of such Person for borrowed money or which have beenincurred in connection with the acquisition of property or assets, (b)obligations secured by any Lien upon property or assets owned by such Person,even though such Person has not assumed or become liable for the payment of suchobligations, (c) obligations created or arising under any conditional sale orother title retention agreement with respect to property acquired by such

Person, notwithstanding the fact that the rights and remedies of the seller,lender or lessor under such agreement in the event of default are limited torepossession or sale of property, (d) obligations to purchase any property or toobtain the services of another Person if the contract requires that payment forsuch property or services be made regardless of whether such property isdelivered or such services are performed, except that no obligation shallconstitute Indebtedness solely because the contract provides for commerciallyreasonable liquidated charges or reimbursement of expenses followingcancellation, (e) Capitalized Rentals and (f) Guaranties of obligations ofothers of the character referred to in this definition.

"Institutional Holder" shall mean any of the following Persons: (a) anybank, savings and loan association, savings institution, trust company or

national banking association, acting for its own account or in a fiduciarycapacity, (b) any charitable foundation, (c) any insurance company, (d) anyfraternal benefit society, (e) any pension, retirement or profit-sharing trustor fund within the meaning of Title I of ERISA or for which any bank, trustcompany, national banking association or investment adviser registered under theInvestment Advisers Act of 1940, as amended, is acting as trustee or agent, (f)any investment company or business development company, as defined in theInvestment Company Act of 1940, as amended, (g)any small business investment

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company licensed under the Small Business Investment Act of 1958, as amended,(h) any broker or dealer registered under the Securities Exchange Act of 1934,as amended, or any investment adviser registered under the Investment AdviserAct of 1940, as amended, (i) any government, any public employees' pension orretirement system, or any other government agency supervising the investment ofpublic funds, (j) any other entity all of the equity owners of which areInstitutional Holders or (k) any other Person which may be within the definitionof "qualified institutional buyer" as such term is used in Rule 144A, as fromtime to time in effect, promulgated under the Securities Act of 1933, asamended.

"Interest Charges" for any period shall mean all interest and allamortization of debt discount and expense on any particular Indebtedness forwhich such calculations are being made.

"Investments" shall mean all investments, in cash or by delivery ofproperty, made directly or indirectly in any Person, whether by acquisition ofshares of capital stock, Indebtedness or other obligations or Securities or byloan, advance, capital contribution or otherwise; provided that "Investments"shall not mean or include routine investments in property to be used or consumedin the ordinary course of business.

"Lien" shall mean any interest in property securing an obligation owedto, or a claim by, a Person other than the owner of the property, whether suchinterest is based on the common law, statute or contract, and including but notlimited to the security interest lien arising from a mortgage, encumbrance,pledge, conditional sale or trust receipt or a lease, consignment or bailmentfor security purposes. The term "Lien" shall include reservations, exceptions,encroachments, easements, rights-of-way, covenants, conditions, restrictions,leases and other similar title exceptions and encumbrances (including, withrespect to stock, stockholder agreements, voting trust agreements, buy-backagreements and all similar arrangements) affecting property. For the purposes ofthis Agreement, the Company or a Restricted Subsidiary shall be deemed to be theowner of any property which it has acquired or holds subject to a conditionalsale agreement, Capitalized Lease or other arrangement pursuant to which title

to the property has been retained by or vested in some other Person for securitypurposes and such retention or vesting shall constitute a Lien.

"Long-Term Lease" shall mean any lease of real or personal property(other than a Capitalized Lease) having an original term, including any periodfor which the lease may be renewed or extended at the option of the lessor, ofmore than three years.

"Make-Whole Amount" shall mean in connection with any prepayment oracceleration of the Notes the excess, if any, of (i) the aggregate present valueas of the date of such prepayment of each dollar of principal being prepaid orpaid (taking into account the application of such prepayment required by thelast sentence of Section 2.1) and the amount of interest (exclusive of interest

accrued to the date of prepayment) that would have been payable in respect ofsuch dollar if such prepayment or payment had not been made, determined bydiscounting such amounts at the Reinvestment Rate from the respective dates onwhich they would have been payable, over (ii) 100% of the principal amount of

-25-<PAGE>

the outstanding Notes being prepaid or paid. If the Reinvestment Rate is equalto or higher than the interest rate on the Notes then applicable, the Make-Whole



Amount shall be zero. For purposes of any determination of the Make-WholeAmount:

"Reinvestment Rate" shall mean (1) 0.50%, plus the yield to maturity of the United States Treasury obligations with a maturity (as compiled by and published on Telerate Page 5 or its successor not more than five Business Days immediately preceding the payment date) equal to the remaining Weighted Average Life to Maturity (rounded to the nearest month) of the principal being prepaid or paid (taking into account the application of each prepayment or payment required by the last sentence of Section 2.1) or (2) if such yield shall not have been so published, the Reinvestment Rate in respect of such payment date shall mean 0.50%, plus the mean of the yields to maturity of United States Treasury obligations (as compiled by and published in the United States Federal Reserve Bulletin or its successor publication for each of the two weeks immediately preceding the fifth Business Day prior to the payment date) with a constant maturity equal to the Weighted Average Life to Maturity of the principal being prepaid or paid (taking into account the application of each prepayment or payment required by the last sentence of Section 2.1). If no maturity determined pursuant to the preceding sentence exactly equals the Weighted Average Life to Maturity, yields for the next longer and the next shorter published maturities shall be calculated pursuant to the foregoing sentence and the Reinvestment Rate shall be interpolated from such yields on a straight-line basis (rounding to the nearest month). If such yields shall

not have been so published, the Reinvestment Rate in respect of such determination date shall be calculated on the basis of the arithmetic mean of the arithmetic means of the secondary market ask rates, as of approximately 3:30 P.M., New York City time, on the last business days of each of the two weeks preceding the payment date, for the actively traded U.S. Treasury security or securities with a maturity most closely corresponding to the remaining Weighted Average Life to Maturity, as reported by three primary United States Government securities dealers in New York City of national standing selected in good faith by the Company.

"Weighted Average Life to Maturity" of the principal amount of the Notes being prepaid or paid shall mean, as of the time of any determination thereof, the number of years obtained by dividing the then Remaining

Dollar-Years of such principal by the aggregate amount of such principal. The term "Remaining Dollar-Years" of such principal shall mean the amount obtained by (i) multiplying (x) the remainder of (1) the amount of principal that would have become due on each scheduled payment date if such prepayment or payment had not been made, less (2) the amount of principal on the Notes scheduled to become due on such date after giving effect to such prepayment or payment and the application thereof in accordance with the last sentence of Section 2.1, by (y) the number of years (calculated to the nearest one-twelfth) which will elapse between the date of such prepayment or payment, as the case may be, and such scheduled payment date, and (ii) totalling the products obtained in (i).

"Minority Interests" shall mean any shares of stock of any class of a

Restricted Subsidiary (other than directors' qualifying shares as required

-26-<PAGE>

by law) that are not owned by the Company and/or one or more of its RestrictedSubsidiaries. Minority Interests shall be valued by valuing Minority Interestsconstituting preferred stock at the voluntary or involuntary liquidating valueof such preferred stock, whichever is greater, and by valuing Minority Interestsconstituting common stock at the book value of capital and surplus applicable



thereto adjusted, if necessary, to reflect any changes from the book value ofsuch common stock required by the foregoing method of valuing Minority Interestsin preferred stock.

"Multiemployer Plan" shall have the same meaning as in ERISA.

"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entitysucceeding to any or all of its functions under ERISA.

"Person" shall mean an individual, partnership, limited liability company,corporation, trust or unincorporated organization, and a government or agency orpolitical subdivision thereof.

"Plan" shall mean a "pension plan," as such term is defined in ERISA,established or maintained by the Company or any ERISA Affiliate or as to whichthe Company or any ERISA Affiliate contributed or is a member or otherwise mayhave any liability.

"Property" shall mean any interest in any kind of property or asset,whether real, personal or mixed, and whether tangible or intangible.

"Purchasers" shall have the meaning set forth in Section 1.1.

"Rentals" shall mean and include as of the date of any determination

thereof all fixed payments (including as such all payments which the lessee isobligated to make to the lessor on termination of the lease or surrender of theproperty) payable by the Company or a Restricted Subsidiary, as lessee orsublessee under a lease of real or personal property, but shall be exclusive ofany amounts required to be paid by the Company or a Restricted Subsidiary(whether or not designated as rents or additional rents) on account ofmaintenance, repairs, insurance, taxes and similar charges. Fixed rents underany so-called "percentage leases" shall be computed solely on the basis of theminimum rents, if any, required to be paid by the lessee regardless of salesvolume or gross revenues.

"Reportable Event" shall have the same meaning as in ERISA.

"Responsible Officer" shall mean the chief executive officer, the chiefoperating officer or the chief financial officer.

"Restricted Subsidiary" shall mean (i) any Subsidiary which is listed onSchedule II hereto as a Restricted Subsidiary, and (ii) any other Subsidiary (A)which is organized under the laws of the United States or any State thereof orof Canada or any Province thereof, (B) which conducts substantially all of itsbusiness and has substantially all of its assets within the United States orCanada, (C) of which more than 80% (by number of votes) of the Voting Stock is

-27-<PAGE>

owned by the Company and/or one or more Wholly-owned Restricted Subsidiaries,and (D) which is designated as a Restricted Subsidiary by written notice of thePresident or any Vice President of the Company to the holders of the Notes;provided, however, that no such designation shall be effective unless (x) suchSubsidiary shall never theretofore have been a Restricted Subsidiary, (y)immediately after such designation, the Company could incur at least $1.00 ofadditional Funded Debt under the limitation of Section 5.9(a)(3) and (z) noDefault or Event of Default shall then exist and be continuing.

"Security" shall have the same meaning as in Section 2(1) of the Securities



Act of 1933, as amended.

The term "subsidiary" shall mean as to any particular parent corporationany corporation of which more than 50% (by number of votes) of the Voting Stockshall be beneficially owned, directly or indirectly, by such parent corporation.The term "Subsidiary" shall mean a subsidiary of the Company.

"Unrestricted Subsidiary" shall mean any Subsidiary which is not aRestricted Subsidiary.

"Voting Stock" shall mean Securities of any class or classes, the holdersof which are ordinarily, in the absence of contingencies, entitled to elect amajority of the corporate directors (or Persons performing similar functions).

"Wholly-owned" when used in connection with any Subsidiary shall mean aSubsidiary of which all of the issued and outstanding shares of stock (exceptshares required as directors' qualifying shares) and all Indebtedness forborrowed money shall be owned by the Company and/or one or more of itsWholly-owned Subsidiaries.

Section 8.2. Accounting Principles. Where the character or amount of anyasset or liability or item of income or expense is required to be determined orany consolidation or other accounting computation is required to be made for the

purposes of this Agreement, the same shall be done in accordance with GAAP, tothe extent applicable, except where such principles are inconsistent with therequirements of this Agreement.

Section 8.3. Directly or Indirectly. Where any provision in this Agreementrefers to action to be taken by any Person, or which such Person is prohibitedfrom taking, such provision shall be applicable whether the action in questionis taken directly or indirectly by such Person.

SECTION 9. MISCELLANEOUS.

Section 9.1. Registered Notes. The Company shall cause to be kept at itsprincipal office a register for the registration and transfer of the Notes, and

the Company will register or transfer or cause to be registered or transferred,as hereinafter provided, any Note issued pursuant to this Agreement.

-28-<PAGE>

At any time and from time to time the holder of any Note which has beenduly registered as hereinabove provided may transfer such Note upon surrenderthereof at the principal office of the Company duly endorsed or accompanied by awritten instrument of transfer duly executed by the holder of such Note or itsattorney duly authorized in writing.

The Person in whose name any Note shall be registered shall be deemed and

treated as the owner and holder thereof for all purposes of this Agreement.Payment of or on account of the principal, premium, if any, and interest on anyNote shall be made to or upon the written order of such holder.

Section 9.2. Exchange of Notes. At any time and from time to time, upon notless than five days' notice to that effect given by the holder of any Noteinitially delivered or of any Note substituted therefor pursuant to Section 9.1,this Section 9.2 or Section 9.3, and, upon surrender of such Note at its office,the Company will deliver in exchange therefor, without expense to such holder,except as set forth below, a Note for the same aggregate principal amount as the



then unpaid principal amount of the Note so surrendered, or Notes in thedenomination of $200,000 (or such lesser amount as shall constitute 100% of theNotes of such holder) or any amount in excess thereof as such holder shallspecify, dated as of the date to which interest has been paid on the Note sosurrendered or, if such surrender is prior to the payment of any interestthereon, then dated as of the date of issue, registered in the name of suchPerson or Persons as may be designated by such holder, and otherwise of the sameform and tenor as the Notes so surrendered for exchange. The Company may requirethe payment of a sum sufficient to cover any stamp tax or governmental chargeimposed upon such exchange or transfer.

Section 9.3. Loss, Theft, Etc. of Notes. Upon receipt of evidencesatisfactory to the Company of the loss, theft, mutilation or destruction of anyNote, and in the case of any such loss, theft or destruction upon delivery of abond of indemnity in such form and amount as shall be reasonably satisfactory tothe Company, or in the event of such mutilation upon surrender and cancellationof the Note, the Company will make and deliver without expense to the holderthereof, a new Note, of like tenor, in lieu of such lost, stolen, destroyed ormutilated Note. If the Purchaser or any subsequent Institutional Holder is theowner of any such lost, stolen or destroyed Note, then the affidavit of anauthorized officer of such owner, setting forth the fact of loss, theft ordestruction and of its ownership of such Note at the time of such loss, theft ordestruction shall be accepted as satisfactory evidence thereof and no furtherindemnity shall be required as a condition to the execution and delivery of a

new Note other than the written agreement of such owner to indemnify theCompany.

Section 9.4. Expenses, Stamp Tax Indemnity. Whether or not the transactionsherein contemplated shall be consummated, the Company agrees to pay directly allof your out-of-pocket expenses in connection with the preparation, execution anddelivery of this Agreement and the transactions contemplated hereby, includingbut not limited to all investment banking and similar fees, the reasonablecharges and disbursements of Chapman and Cutler, your special counsel,duplicating and printing costs and charges for shipping the Notes, adequatelyinsured to you at your home office or at such other place as you may designate,and all such expenses relating to any amendments, waivers or consents pursuant

-29-<PAGE>

to the provisions hereof (whether or not the same are actually executed anddelivered), including, without limitation, any amendments, waivers, or consentsresulting from any work-out, renegotiation or restructuring relating to theperformance by the Company of its obligations under this Agreement and theNotes. The Company further agrees that it will pay and save you harmless againstany and all liability with respect to stamp and other taxes, if any, which maybe payable or which may be determined to be payable in connection with theexecution and delivery of this Agreement or the Notes, whether or not any Notesare then outstanding. The Company agrees to protect and indemnify you againstany liability for any and all brokerage fees and commissions payable or claimed

to be payable to any Person in connection with the transactions contemplated bythis Agreement. Without limiting the foregoing, the Company agrees to pay thecost of obtaining the private placement number for the Notes and authorizes thesubmission of such information as may be required by Standard & Poor's CUSIPService Bureau for the purpose of obtaining such number. .

Section 9.5. Powers and Rights Not Waived; Remedies Cumulative. No delay orfailure on the part of the holder of any Note in the exercise of any power orright shall operate as a waiver thereof; nor shall any single or partialexercise of the same preclude any other or further exercise thereof, or the



exercise of any other power or right, and the rights and remedies of the holderof any Note are cumulative to, and are not exclusive of, any rights or remediesany such holder would otherwise have.

Section 9.6. Notices. All communications provided for hereunder shall be inwriting and, if to you, delivered or mailed prepaid by registered or certifiedmail or overnight air courier, or by facsimile communication, in each caseaddressed to you at your address appearing on Schedule I to this Agreement orsuch other address as you or the subsequent holder of any Note initially issuedto you may designate to the Company in writing, and if to the Company, deliveredor mailed by registered or certified mail or overnight air courier, or byfacsimile communication, to the Company at 1536 Beech Street, Terre Haute,Indiana 47804, Attention: Robert L. Gray, or to such other address as theCompany may in writing designate to you or to a subsequent holder of the Noteinitially issued to you; provided, however, that a notice to you by overnightair courier shall only be effective if delivered to you at a street addressdesignated for such purpose in Schedule I, and a notice to you by facsimilecommunication shall only be effective if confirmed by transmission of a copythereof by prepaid overnight air courier, or, in either case, as you or asubsequent holder of any Note initially issued to you may designate to theCompany in writing.

Section 9.7. Successors and Assigns. This Agreement shall be binding uponthe Company and its successors and assigns and shall inure to your benefit and

to the benefit of your successors and assigns, including each successive holderor holders of any Notes.

Section 9.8. Survival of Covenants and Representations. All covenants,representations and warranties made by the Company herein and in anycertificates delivered pursuant hereto, whether or not in connection with theClosing Date, shall survive the closing and the delivery of this Agreement andthe Notes.

-30-

<PAGE>

Section 9.9. Severability. Should any part of this Agreement for any reasonbe declared invalid or unenforceable, such decision shall not affect thevalidity or enforceability of any remaining portion, which remaining portionshall remain in force and effect as if this Agreement had been executed with theinvalid or unenforceable portion thereof eliminated and it is hereby declaredthe intention of the parties hereto that they would have executed the remainingportion of this Agreement without including therein any such part, parts orportion which may, for any reason, be hereafter declared invalid orunenforceable.

Section 9.10. Governing Law. This Agreement and the Notes issued and sold

hereunder shall be governed by and construed in accordance with Illinois law,including all matters of construction, validity and performance.

Section 9.11. Captions. The descriptive headings of the various Sections orparts of this Agreement are for convenience only and shall not affect themeaning or construction of any of the provisions hereof.

-31-



<PAGE>

The execution hereof by you shall constitute a contract between us for theuses and purposes hereinabove set forth, and this Agreement may be executed inany number of counterparts, each executed counterpart constituting an originalbut all together only one agreement.


By Robert L. Gray ----------------------- Its Vice President, Finance and

Treasurer

Accepted as of November 15, 1994.

FIRST COLONY LIFE INSURANCE COMPANY

BY James J. Wishan ---------------- Its Chief Investment Officer First Colony Corporation

-32-<PAGE>

NAMES AND ADDRESSES PRINCIPAL AMOUNT OF PURCHASERS OF NOTES TO BE PURCHASED

FIRST COLONY LIFE INSURANCE COMPANY $8,000,000700 Main StreetP.O. Box 1280Lynchburg, Virginia 24505

Attention: Mr. George D. Vermilya, Jr.Telecopier Number: (804) 948-5749

Payments

All payments on or in respect of the Notes to be by bank wire transfer ofFederal or other immediately available funds (identifying each payment as"General Housewares Corp., 8.41% Senior Notes due 2004, PPN 370073 A@ 7,principal, premium or interest") to:



Crestar Bank (ABA #05-10-0002-0)Richmond, VirginiaCredit - #2111

Attention: Income Processing Unit Number 27955

for credit to: First Colony Life Insurance Company Account Number 10765400

Notices

All notices and communications, including notices with respect to paymentsand written confirmation of each such payment, to be addressed as first providedabove.

Name of Nominee in which Notes are to be issued: None

Taxpayer I.D.Number: 54-0596414

SCHEDULE I (to Note Agreement)

<PAGE>


AMERICAN MAYFLOWER LIFE $2,000,000INSURANCE COMPANY700 Main StreetP.O. Box 1280Lynchburg, Virginia 24504

Attention: Mr. George D. Vermilya, Jr.Telecopier Number: (804) 948-5484


Chemical BankNew York, New York (ABA #0210-0012-8)Attention: Rich Boxer

for credit to: American Mayflower Life Insurance CompanyCustodian Account Number N-92585-25

Notices

All notices and communications, including notices with respect to payments andwritten confirmation of each such payment, to be addressed as first providedabove.




Taxpayer I.D. Number: 13-5660550

(I-2)

<PAGE>


THE NORTH ATLANTIC LIFE INSURANCE COMPANY $2,000,000OF AMERICAc/o Washington Square Capital100 Washington Square, Suite 800Minneapolis, Minnesota 55401-2147Attention: Securities DepartmentTelecopier Number: (612) 372-5368

All payments on or in respect of the Notes to be by bank wire transfer of

Federal or other immediately available funds (identifying each payment as"General Housewares Corp., 8.41% Senior Notes due 2004, PPN 370073 A@ 7,principal, premium or interest") to:

First National Bank N.A./Mpls. (ABA #091000022)601 2nd Avenue SouthMinneapolis, MinnesotaAttention: Securities Accounting

for credit to: Northern Life Insurance CompanyAccount Number 1602-3237-6105

Notices

All notices and communications, including notices with respect to paymentsand written confirmation of each such payment, to be addressed as first providedabove.



(I-3)<PAGE>


THE NORTH ATLANTIC LIFE INSURANCE COMPANY $2,000,000 OF AMERICAc/o Washington Square Capital100 Washington Square, Suite 800Minneapolis, Minnesota 55401-2147



Attention: Securities DepartmentTelecopier Number: (612) 372-5368


Northern Trust Company (ABA #071-000-152)

for credit to: The North Atlantic Life Insurance Company of America Account Number 5186041000 Further Credit to 26-67303 North Atlantic Life Attention: MBS Processing

Notices

All notices and communications to be addressed as first provided above, exceptnotices of payments on or in respect of the Notes and written confirmation ofeach such payment to be addressed: Attention: Securities Operations.



(I-4)

<PAGE>

NAMES AND ADDRESSES PRINCIPAL AMOUNT OF PURCHASERS OF NOTES TO BE PURCHASEDBERKSHIRE LIFE INSURANCE COMPANY $2,000,000

700 South StreetPittsfield, Massachusetts 01201Attention: Securities DepartmentTelecopier Number: (413) 443-9397

All payments on or in respect of the Notes to be by bank wire transfer ofFederal or other immediately available funds (identifying each payment as"General Housewares Corp., 8.41% Senior Notes due 2004, PPN 370073 A@ 7,principal, premium or interest") not later than 11:00 A.M. Chicago, Illinoistime to:

The Chase Manhattan Bank, N.A. (ABA #021000021)One Chase Manhattan Plaza

New York, New York 10081

for credit to:Berkshire Life Insurance Company's

Account Number 002-4-020877

Notices

All notices and communications, including notices with respect to payments andwritten confirmation of each such payment, to be addressed as first provided



above.



(I-5)

<PAGE><TABLE><CAPTION>

DESCRIPTION OF DEBT AND LEASES<S>

<C>Current Debt of the Company and its Restricted Subsidiaries outstanding

2,403,000on September 30, 1994 is as follows:

2,403,000

Funded Debt (other than Capitalized rentals) of the Company and its

Restricted Subsidiaries outstanding on September 30, 1994 is as follows

Long-term Notes Payable to Harris Bank (lines of credit)18,500,000

Defferred Purchase Payment Due to Normandy1,363,408$5M Subordinated Note Due Stockholders

5,000,000

----------

Total Funded Debt24,863,408

==========

</TABLE>

Long-term Leases of the Company and its Restricted Subsidiariesoutstanding on September 30, 1994 are as follows:<TABLE><CAPTION>

ANNUAL

BASE RENTLESSOR/LOCATION DESCRIPTION LEAS



E TERM EXPIRES PAYMENTS<S> <C> <C>

<C> <C>

B&B Warehousing, Sidney, OH Warehouse 41 mos 08/30/1995 38,400

Factory Merchants, Pigeon Forge, TN Retail Outlet 60 mos 04/30/1996 37,866 StoreMG Burlington, Burlington, WA Retail Outlet 72 mos 06/27/1997 42,884 StoreMG Chelsea, Lake Elsinore, CA Retail Outlet 60 mos 11/18/1997 53,288 StoreMG Hillsboro II Ltd., Hillsboro, TX Retail Outlet 60 mos 04/03/1997 42,328 StoreSouthpoint Outlet Cntr, Gilroy,CA Retail Outlet 84 mos 10/31/1999 55,000 StoreCalhoun Outlet Cntr, Calhoun, GA Retail Outlet 60 mos 11/30/1997 45,744

StoreTanger Factory Outlet, Casa Grande, AZ Retail Outlet 60 mos 01/31/1998 37,500 StoreLas Vegas Outlet, Las Vegas, NV Retail Outlet 84 mos 03/31/2000 44,800 StoreOhio Factory Shops, Jeffersonville, OH Retail Outlet 72 mos 07/31/1998 43,408 StoreGulf Coast Factory, Ellenton, FL Retail Outlet 60 mos 08/31/1998 40,170 Store

Castle Rock Factory Stores, Castle Rock, Co Retail Outlet 60 mos 08/28/1998 53,436 StoreTanger Properties, Stroud, OK Retail Outlet 60 mos 07/31/1998 37,500 StoreGainesville Factory Stores, Gainesville, TX Retail Outlet 84 mos 08/31/2000 36,160

StoreStanley K. Tanger, Gonzales, LA Retail Outlet 60 mos 09/30/1998 37,500 StoreQueenstown Properties, Queentown, MD Retail Outlet 60 m

os 10/16/1998 41,252 StoreMaxArthur Glenn Group, Algodones, NM Retail Outlet 60 mos 10/15/1998 43,200 StoreStanley K. Tanger, McMinnville, OR Retail Outlet 60 mos 12/11/1998 40,000 StoreMCG Outlet Cntr., Conroe, TX Retail Outlet 60 mos 05/25/1999 44,550



StoreHorizon Outlet Centers LTD PSH, Birch Run, MI Retail Outlet 84 mos 07/15/2001 45,000 StoreR.R. Laconia, Inc., Tilton, NH Retail Outlet 84 mos 07/15/2001 40,238 StoreR.R. Foley, Inc., Foley, AL Retail Outlet 84 mos 07/29/2001 41,850 StoreTerre Haute First National Bank Company Car 48 mos 01/28/1995 8,832

IBM Corp. IBM Hardware/ 60 mos 12/15/94 116,448 Software

---------

1,085,974</TABLE>

<PAGE>

Total Annual Base Rents on Leases

Capitalized Leases of the Company and its Restricted Subsidiaries outstanding onSeptember 30, 1994 are as follows:

None

II-2<PAGE><TABLE>

SUBSIDIARIES OF THE COMPANY <CAPTION> RESTRICTED SUBSIDIARIES:

PERCENTAGE OF VOTING STOCK NAME OF JURISDICTION OF OWNED BYCOMPANY ANDSUBSIDIARY INCORPORATION EACH OTHER SUBSIDIARY

<S> <C> <C>Chicago Cutlery, Inc. Florida 100%

Chicago Cutlery etc., Inc. Indiana 100%

General Housewares U.S. Virgin Islands 100%Export Corporation

General Housewares Province of Quebec, 100%



of Canada Inc. Canada

<CAPTION> SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES):

JURISDICTION PERCENTAGE OF VOTING STOCK NAME OF OF OWNED BY COMPANY AND SUBSIDIARY CORPORATION EACH OTHER SUBSIDIARY

<S> <C> <C>

None None None

</TABLE>

II-3

<PAGE>

LIENS EXISTING AS OF THE CLOSING DATE SECURING FUNDED DEBT OF THE COMPANY AND ITS RESTRICTED SUBSIDIARIES

None

SCHEDULE III (to Note Agreement)

<PAGE>

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED(THE "SECURITIES ACT"). ANY SALE, TRANSFER OR OTHER DISPOSITION OF THIS NOTE(OTHER THAN TO THE ISSUER HEREOF) MAY BE MADE ONLY IF MADE (A) PURSUANT TO ANEFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (B) PURSUANT TO ANEXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.


8.41% Senior Note

Due November 15, 2004

No. ------------, ----



$

GENERAL HOUSEWARES CORP., a Delaware Corporation (the COMPANY), for valuereceived, herby promises to pay to

or registered assigns on the fifteenth day of November 2004 the principal amount of

DOLLARS ($ ) and to pay interest (computed on the basis of a 360-day year of twelve 30-daymonthes) on the principal amount from time to time remaining unpaid hereon atthe rate of 8.41% per annum from the date hereof until maturity, payablesemiannually on the fifteenth of May and November in each year (commencing onMay 15, 1995) and at maturity. The Company agrees to pay interest on overdueprincipal (including any overdue required or optional prepayment of Principal)and premium, if any, and (to the extent legally enforceable) on any overdueinstallment of interest, at the rate of 9.41% per annum after the due date,whether by acceleration or otherwise, until paid.

Both the principal hereof and interest hereon are payable at the principaloffice of the Company in Terre Haute, Indiana in coin or currency of the UnitedStates of America which at the time of payment shall be legal tender for thepayment of public and private debts. If any amount of principal, premium, ifany, or interest on or in respect of this Note becomes due and payable on anydate which is not a Business Day, such amount shall be payable on theimmediately preceding Business Day. "Business Day" means any day other than aSaturday, Sunday or other day on which banks in Terre Haute, Indiana or Chicago,Illinois are required by law to close or are customarily closed.

EXHIBIT A

(to Note Agreement)<PAGE>

This Note is one of the 8.41% Senior Notes due November 15, 2004 (theNotes) of the Company in the aggregate principal amount of $20,000,000 issued orto be issued under and pursuant to the terms and provisions of the separate NoteAgreements, each dated as of November 15, 1994 (the Note Agreements), enteredinto by the Company with the original Purchasers therein referred to and thisNote and the holder hereof are entitled equally and ratably with the holders ofall other Notes outstanding under the Note Agreements to all the benefitsprovided for thereby or referred to therein. Reference is hereby made to theNote Agreements for a statement of such rights and benefits.

This Note and the other Notes outstanding under the Note Agreements may bedeclared due prior to their expressed maturity dates and certain prepayments arerequired to be made thereon, all in the events, on the terms and in the mannerand amounts as provided in the Note Agreements.

The Notes are not subject to prepayment or redemption at the option of theCompany prior to their expressed maturity dates except on the terms andconditions and in the amounts and with the premium, if any, set forth in Section2 of the Note Agreements.



This Note is registered on the books of the Company and is transferableonly by surrender thereof at the principal office of the Company duly endorsedor accompanied by a written instrument of transfer duly executed by theregistered holder of this Note or its attorney duly authorized in writing.Payment of or on account of principal, premium, if any, and interest on thisNote shall be made only to or upon the order in writing of the registeredholder.


By ---------------------- Its

A-2

<PAGE>

REPRESENTATION AND WARRANTIES

The Company represents and warrants to you as follows:

1. Subsidiaries. Schedule II attached to the Agreements states the name ofeach of the Company's Subsidiaries, its jurisdiction of incorporation and thepercentage of its Voting Stock owned by the company and/or its Subsidiaries.Those Subsidiaries listed in Section 1 of said Schedule II constitute RestrictedSubsidiaries. The Company and each Subsidiary has good and marketable title toall of the shares it pruports to own of the stock of each Subsidiary, free andclear in each case of any Lien. All such shares have been duly issued and arefully paid and non-assessable.

2. Corporate Organization and Authority. The Company, and each RestrictedSubsidiary,

(a) is a corporation duly organized, validly existing and in goodstanding under the laws of its jurisdiction of incorporation;

(b) has all requisite power and authority and all necessary licensesand permits to won and operate its properties and to carry on its business asnow conducted and as presently proposed to be conducted; and

(c) is duly licensed or qualified and is in good standing as a foreigncorporation in each jurisdiction wherein the nature of the business transactedby it or the nature of the property owned or leased by it makes such licensing

or qualification necessary, except where the failure to be so licensed orqualified and in good standing would not have a material adverse effect on thefinancial condition or propertied or operations of the Company and itsRestricted Subsidiaries taken as a whole.

3. Business and Property. You have hertofore been furnished with a copy ofthe Confidential Offering Memorandum dated October 12, 1994 (the "Memorandum")prepared by First Chicago which generally sets forht the business conduc5ed andproposed to be conducted by the Company and its Subsidiaries and the principalproperties of the Company and its Subsidiaries.



4. Financial Statements. (a)The consolidated balance sheets of the Companyand its consolidated Subsidiaries as of December 31 in each of the years 1989 to1993, both inclusive, and the statements of income and retained earnings andchanges in financial position or cash flows for the fiscal years ended on saiddates, each accompanied by a report theron containing an opinion unqualified asto scope limitations imposed by the Company and otherwise without qualificationexcept as therein noted, by Price Waterhouse, have been prepared in accordancewith GAAP consistently applied except as therinnoted, are correct and completeand present fairly the financial postition of the company and its consolidatedSubsidiaries as of such dates and the results of their operations and changes intheir financial position or cash flows for such periods. the unauditedconsolidated balance sheets of the

EXHIBIT B (to Note Agreement)

<PAGE>

Company and its consolidated Subsidiaries as of September 30, 1994, and theunaudited statements of income and retained earnings and cash flows for thenine-month period ended on said date prepared by the Company have been preparedin accordance with GAAP consistently applied, are correct and complete andpresent fairly the financial position of the Company and its consolidated

Subsidiaries as of said date and the results of their operations and changes intheir financial posititon or cash flows for such period.

(b) Since December 31, 1993 there has been no change in the condition,financial or otherwise, of the Company and its consolidated Subsidiaries asshown on the consolidate balance sheet as of such date except changes in theordinary course of business, none of which individually or in the aggregate hasbeen materially adverse.

5. Indebtedness. Schedule II attached to the Agreements correctly describesall Current Debt, Funded Debt, Capitalized Leases and Long-Term Leases of theCompany and its Restricted Subsidiaries outstanding on September 30, 1994.

6. Full Disclosure. Neither the financial statements referred to inparagraph 4 hereof nor the Agreements, the Memorandum or any other writtenstatement furnished by the Company to you in connection with the negotiation ofthe sale of the Notes, contains any untrue statement of a material fact or omitsa material fact necessary to make the statements contained therein or herein notmisleading. There is no fact peculiar to the Company or its Subsidiaries whichthe company has not disclosed to your in writing whcih materially affectsadversely nor, so far as the Company can now foresee, will materially affectadversely the properties, business, prospects profits or condition (financial orotherwise) of the Company and its Restricted Subsidiaries, taken as a whole.

7. Pending Litigation. There are no proceedings pending or, to theknowledge of the Company, threatened against or affecting the Company or any

Restricted Subsidiary in any court or before any governmental authority orarbitration board or tribunal whcih involve a reasonable likelihood ofmaterially and adversely affecting the properties, business, prospects, profitsor condition (financial or otherwise) of the company and its RestrictedSubsidiaries. Except as discolsed by the Company in its annual report on Form10K for the fiscal year ended December 31, 1993 and its quarterly reports onForm 10Q for the quarterly periods ending March 31, 1994, June 30, 1994 andSeptember 30, 1994, respectively, neither the Company nor any RestrictedSubsidiary is in default with respect to any order of any court or governmentalauthority or arbitration board or tribunal.



8. Title to Properties. The Company and each Restricted Subsidiary has goodand marketable title in fee simple (or its equivalent under applicable law) toall material parcels of real property and has good title to all the othermaterial items of property it purports to own, including that reflected in themost recent balance sheet referred to in paragraph 4 hereof, except as sold orotherwise disposed of in the ordinary course of business and except for Lienspermitted by the Agreements. Schedule III attached to the Agreement correctlydescribes all Liens securing Funded Debt of the company and its RestrictedSubsidiaries as of the Closing Date.

B-2

<PAGE>

9. Patents and Trademarks. The Company and each Restricted Subsidiary ownsor possesses all the patents, trademarks, trade names, service marks,copyrights, licenses and rights with respect to the foregoing necessary for thepresent and planned future conduct of its business, without any known conflictwith the rights of others.

10. Sale is Legal and Authorized. (a) the sale of the Notes and complianceby the Company with all of the provisions of the Agreements and the Notes --

(i) are within the corporate powers of the Company; and

(ii) will not violate any provisions of any law or any order of any court or governmental authority or agency and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, the Articles of Incorporation or By-laws of the Company or any indenture or other agreement or instrument to which the Company is a party or by which it may be bound or result in the imposition of any Liens or encumbrances on any property of the Company.

(b) The sale of the Notes and the execution and delivery of the Agreementsand the Notes have been duly authorized by proper corporated action on the partof the Company (no action by the stockholders of the Company being required by

law, by the Articles of Incorporation or By-laws of the Company or otherwise)and the Agreements and the Notes have been executed and delivered by the Companyand constitute the legal, valid and binding obligations, contracts andagreements of the Company enforceable in accordance with their respective terms.

11. No Defaults. No Default or Event of Default has occurred and iscontinuing. The company is not in default in the payment of principal orinterest on any Indebtedness for borrowed money and is not in default under anyinstrument or instruments or agreements under and subject to which anyIndebtedness for borrowed money has been issued and no event has occurred and iscontinuing under the provisions of any such instrument or agreement which withthe lapse of time or the giving of notice, or both, would constitute an event ofdefault thereunder.

12. Governmental Consent. No approval, consent or withholding of objectionon the part of any regulatory body, state, Federal or local, is necessary inconnection with the execution and delivery by the Company of the Agreements orthe issuance, sale or delivery of the Notes or compliance by the Company withany of the provisions of the Agreements or the Notes.

13. Taxes. All tax returns required to be filed by the Company or anyRestricted Subsidiary in any jurisdiction have, in fact, been filed, and alltaxes, assessments, fees and other governmental charges upon the Company or any



Restricted Subsidiary or upon any of their respective properties, income orfranchises, which are shown to be due and payable in such returns have beenpaid. For all taxable years ending on or before December 31, 1990, the Federalincome tax liablility of the Company and its Restricted Subsidiaries has been

B-3

<PAGE>

satisfied and either the period of limitations on assessment of additionalFederal income tax has expired or the Company and its Restricted Subsidiarieshave entered into an agreement with the Internal Revenue Service closingconclusively the total tax liability for the taxable year. Although the Companyis currently being audited by the Internal Revenue Service for the taxable yearending December 31, 1991 and although the Company has been informed by theInternal Revenue Service in connection with such audit that certain deductionsmay be disallowed, the company does not know of any proposed additional taxassessment against it for which adequate provision has not be en made on itsaccounts, and no material controversy in respect of additional Federal or stateincome taxes due since said date is pending or to the knowledge of the Companythreatened. The provisions for taxes on the books of the Company and eachRestricted Subsidiary are adequate for all open years, and for its currentfiscal period.

14. Use of Proceeds. The net proceeds from the sale of the Notes will beused to pay down existing indebtedness under the Company's bank-provided creditlines and for other corporate purposes. None of the transactions contemplated inthe Agreements (including, without limitation thereof, the use of proceeds fromthe issuance of the Notes) will violate or result in a violation of Section 7 ofthe Securities Exchange Act of 1934, as amended, or any regulation issuedpursuant thereto, including, without limitation, Regulations G,T, U and X of theBoard of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. Neitherthe Company nor any Subsidiary owns or intends to carry or purchase any "marginstock" within the meaning of said Regulation G. None of the proceeds from thesale of the Notes will be used to purchase, or refinance any borrowing theproceeds of which were used to purchase, any "security" within the meaning ofthe Securities Exchange Act of 1934, as amended.

15. Private Offering. Neither the Company, directly or indirectly, nor anyagent on its behalf has offered or will offer the Notes or any similar Securityto or has solicited or will solicit an offer to acquire the Notes or any similarSecurity from or has otherwise approached or negotiated or will approach ornegotiate in respect of the Notes or any similar Security with any Person otherthat the Purchasers and not more than 48 other institutional investors, each ofwhom was offered a portion of the Notes at private sale for investment. Neitherthe company, directly or indirectly, nor any agent on its behalf has offered orwill offer the Notes or any similar Security to or has solicited or will solicitan offer to acquire the Notes or any similar Security from any Person so as tobring the issuance and sale of the Notes within the provisions of Section 5 ofthe Securities Act of 1933, as amended.

16. ERISA. the consummation of the transaction provided for in theAgreements and compliance by the Company with the provisions thereof and theNotes issued thereunder will not involve any prohibited transaction within themeaning of ERISA or Section 4975 of the Internal Revenue Code or 1986, asamended. Each Plan complies in all material repects with all applicable statutesand governmental rules and regulations, and (a) no Reportable Event has occurredand is continuing with respect to any Plan, (b) neither the Company nor anyERISA Affiliate has withdrawn from any Plan or Multiemployer Plan or institutedsteps to do so, (c) no steps have been instituted to terminate any Plan. No



condition exists or event or transaction has occurred in connection with any

B-4

<PAGE>

Plan which could result in the incurrence by the Company or any ERISA Affiliateof any material liability, fine or penalty. No Plan maintained by the Company orany ERISA Affiliate, nor any trust created thereunder, has incurred any"accumulated funding deficiency" as defined in Section 302 of ERISA nor does thepresent value of all benefits vested under all Plans exceed, as of the lastannual valuation date, the value of the assets of the Plans allocable to suchvested benefits by an amount greater that $99,000 in the aggregate. Neither theCompany nor any ERISA Affiliate has any contingent liability with respect to anyprot-retirement "welfare benefit plan" (as such term is defined in ERISA exceptas has been disclosed to the Purchasers.

17. Compliance with Law. (a) Neither the Company nor any RestrictedSubsidiary (1) is in violation of any law, ordinance, franchise, governmentalrule or regulation to which it is subject; or (2) has failed to obtain anylicense, permit, franchise or other governmental authorization necessary to theownership of its property or to the conduct of its business, which violation orfailure to obtain would materially affect adversely the business, prospects,

profits, properties or condition (financial or otherwise) of the Company and itsRestricted Subsidiaries, taken as a whole, or impair the ability of the Companyto perform its obligations contained in the Agreements or the Notes. Neither theCompany nor any Restricted Subsidiary is in default with respect to any order ofany court or governmental authority or arbitration board or tribunal.

(b) Without limiting the provisions of clause (a) of this paragraph 17, theCompany is in compliance with all applicable Environmental Laws, the failure tocomply with which would materially affect adversely the properties, business,prospects, profits or condition (financial or otherwise) of the Company and itsSubsidiaries taken as a whole or the ability of the Company to perform itsobligations under the Agreements or the Notes.

18. Investment Company Act. The Company is not, and is not directly orindirectly controlled by or acting on behalf of any Person which is, required toregister as an "investment company" under the Investment Company Act of 1940, asamended.

19. Foreign Assets Control Regulations, etc. None of the Company, anyRestricted Subsidiary or any Affiliate of the Company is, by reason of being a"national" of "designated foreign country" or a "specially designated national"within the meaning of the Regulations of the Office of Foreign Assets Control,United States Treasury Department (31 C.F.R., Subtitle B, Chapter V), or for anyother reason, subject to any restriction or prohibition under, or is inviolation of, any Federal statute or Presidential Executive Order, or any rulesor regulations of any department, agency or administrative body promulgated

under any such statute or order, concerning trade or other relations with anyforeign country or any citizen or national thereof or the ownerhip or operationof any property.

B-5

<PAGE>

DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION



The closing opinion of Chapman and Cutler, special counsel to thepurchasers, called for by Section 4.1 of the Agreements, shall be dated theClosing Date and addressed to the Purchasers, shall be satisfactory in form andsubstance to the Purchasers and shall be to the effect that:

1. The Company is a corporation, validly existing and in good standing under the laws of the State of Delaware and has the corporate power and the corporate authority to execute and deliver the Agreements and to issue the Notes.

2. The Agreements have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding contracts of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).

3. The Notes have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors'

rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).

4. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Agreements does not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

The opinion of Chapman and Cutler shall also state that the opinion ofGordon R. Erickson, Esq., is satisfactory in scope and form to Chapman andCutler and that, in their opinion, the Purchasers are justified in relying

thereon.

In rendering the opinion set forth in paragraph 1 above, Chapman and Cutlermay rely solely upon an examination of the Certificate of Incorporationcertified by, and a certificate of good standing of the Company from, theSecretary of State of the State of Delaware, the By-laws of the Company and thegeneral business corporation law of the State of Delaware. The opinion ofChapman and Cutler is limited to the laws of the State of Illinois, the generalbusiness corporation law of the State of Delaware and the Federal laws of theUnited States.

EXHIBIT C (to Note Agreement)

<PAGE>

With respect to matters of fact upon which such opinion is based, Chapmanand Cutler may rely on appropriate certificates of public officials and officersof the Company.



C-2

<PAGE>

DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY

The closing opinion of Gordon R. Erickson, Esq., General Counsel for theCompany, which is called for by Section 4.1 of the Agreements, shall be datedthe Closing Date and addressed to the Purchasers, shall be satisfactory in scopeand form to the Purchasers and shall be to the effect that:

1. The Company is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, has the corporate power and the corporate authority to execute and perform the Agreements and to issue the Notes and has the full corporate power to carry on its present business and is duly licensed or qualified in all states and jurisdictions wherein the nature of the business carried on by it or the assets and properties owned or leased by it requires such qualification or licensing, except where the failure to be so licensed or qualified would not have a material adverse effect on the financial condition or properties or operations of the Company and its Restricted Subsidiaries taken as a whole.

2. Each Subsidiary is a corporation duly organized, validly existing

and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary and all of the issued and outstanding shares of capital stock of each such Subsidiary have been duly issued, are fully paid and non-assessable and are owned by the Company.

3. The Agreements have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding contracts of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors'

rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).

4. The Notes have been duly authorized by all necessary corporate action on the part of the Company, have been duly executed and delivered by the Company and constitute the legal, valid and binding obligations of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent conveyance or similar laws affecting creditors' rights generally, and general principles of equity (regardless of whether the application of such principles is considered in a proceeding in equity or at law).

5. No approval, consent or withholding of objection on the part of, or filing, registration or qualification with, any governmental body, Federal, state or local, is necessary in connection with the execution, delivery and performance of the Agreements or the Notes.

EXHIBIT D (to Note Agreement)

<PAGE>



6. The issuance and sale of the Notes and the execution, delivery and performance by the Company of the Agreements do not conflict with or result in any breach of any of the provisions of or constitute a default under or result in the creation or imposition of any Lien upon any of the property of the Company pursuant to the provisions of the Certificate of Incorporation or By-laws of the Company or any agreement or other instrument known to such counsel to which the Company is a party or by which the Company may be bound.

7. The issuance, sale and delivery of the Notes under the circumstances contemplated by the Agreements does not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or the qualification of an indenture under the Trust Indenture Act of 1939, as amended.

8. The issuance of the Notes and the use of the proceeds of the sale of the Notes in accordance with the provisions of and contemplated by the Agreements do not violate or conflict with Regulation G, T, U or X of the Board of Governors of the Federal Reserve System.

9. There is no litigation pending or, to the best knowledge of such counsel, threatened which in such counsel's opinion could reasonably be expected to have a materially adverse effect on the Company's business or assets or which would impair the ability of the Company to issue and

deliver the Notes or to comply with the provisions of the Agreements.

The opinion of Gordon R. Erickson, Esq., shall cover such other mattersrelating to the sale of the Notes as the Purchasers may reasonably request andmay rely upon an opinion of Canadian counsel with respect to the opinionrequired in paragraph 2 regarding the Company's Canadian Subsidiary. Withrespect to matters of fact on which such opinion is based, such counsel shall beentitled to rely on appropriate certificates of public officials and officers ofthe Company.

D-2

</TEXT></DOCUMENT><DOCUMENT><TYPE>EX-10.2<SEQUENCE>4<DESCRIPTION>CORPORATE CREDIT AGREEMENT<TEXT>

$30,000,000

Credit Agreement Dated as of

November 30, 1994 Among

General Housewares Corp., The Banks Signatory Hereto,

And Harris Trust And Savings Bank



as Agent

<PAGE>

TABLE OF CONTENTS

Section Page

Section 1. The Credit Facility...................................1 Section 1.1. The Revolving Credit..............................1

Section 2. General Provisions Applicable To All Loans............4 Section 2.1. Applicable Interest Rates.........................4 Section 2.2. Minimum Borrowing Amounts.........................7 Section 2.3. Borrowing Procedures..............................7 Section 2.4. Interest Periods..................................8 Section 2.5. Maturity of Loans.................................9 Section 2.6. Prepayments.......................................9 Section 2.7. Default Rate......................................10 Section 2.8. The Notes.........................................10 Section 2.9. Commitment Terminations...........................11 Section 2.10. Funding Indemnity.................................11

Section 2.11. Margin Adjustments................................12Section 3. Fees..................................................12 Section 3.1. Commitment Fee....................................12 Section 3.2. Closing Fee.......................................13 Section 3.3. Agent's Fees......................................13 Section 3.4. Letter of Credit Fees.............................13 Section 3.5. Transaction Charges...............................13Section 4. Place And Application Of Payments; Extension of

Termination Date......................................13 Section 4.1. Place and Application of Payments.................13

Section 5. Definitions; Interpretation...........................15

Section 5.1. Definitions.......................................15 Section 5.2. Interpretation....................................24

<PAGE>

Section 6. Representations And Warranties........................24 Section 6.1. Organization and Qualification....................24 Section 6.2. Subsidiaries......................................25 Section 6.3. Corporate Authority and Validity of Obligations...25 Section 6.4. Not an Investment Company.........................25 Section 6.5. Margin Stock......................................25 Section 6.6. Financial Reports.................................26

Section 6.7. No Material Adverse Change........................26 Section 6.8. Litigation........................................26 Section 6.9. Tax Returns.......................................26 Section 6.10. Approvals.........................................26 Section 6.11. Liens.............................................27 Section 6.12. ERISA.............................................27 Section 6.13. Material Agreements...............................27 Section 6.14. Compliance with Environmental Laws................27Section 7. Conditions Precedent..................................28 Section 7.1. Initial Borrowing.................................28



Section 7.2. All Loans and Letters of Credit...................28 Section 7.3. Additional Conditions to Loans (other than Refunding Borrowings), Letters of Credit....................29

Section 7.4. Letters of Credit.................................29 Section 7.5. Termination of The 1993 Credit Agreement..........29

Section 8. Covenants.............................................30 Section 8.1. Corporate Existence...............................30 Section 8.2. Maintenance.......................................30 Section 8.3. Taxes.............................................30 Section 8.4. Insurance.........................................30 Section 8.5. Financial Reports and Other Information...........30 Section 8.6. Consolidated Net Worth............................32 Section 8.7. Leverage Ratio....................................32 Section 8.8. Fixed Charge Coverage Ratio.......................32 Section 8.9. Minimum Current Ratio.............................32 Section 8.10. Distributions.....................................33 Section 8.11. Indebtedness for Borrowed Money...................33 Section 8.12. Sale and Leaseback................................34 Section 8.13. Investments.......................................34 Section 8.14. Capital Expenditures..............................34 Section 8.15. Mergers, Consolidations, Leases, and Sales........34 Section 8.16. ERISA.............................................35

Section 8.17. Conduct of Business...............................35 Section 8.18. Liens.............................................35 Section 8.19. Use of Proceeds; Margin Stock.....................36 Section 8.20. Compliance with Laws..............................36<PAGE>

Section 9. Events Of Default And Remedies........................36 Section 9.1. Events of Default.................................36 Section 9.2. Non-Bankruptcy Defaults...........................38 Section 9.3. Bankruptcy Defaults...............................38 Section 9.4. Letters of Credit.................................38 Section 9.5. Expenses..........................................39

Section 10. Change In Circumstances...............................39 Section 10.1. Change of Law.....................................39 Section 10.2. Unavailability of Deposits or Inability to Ascertain, or Inadequacy of, LIBOR...........................39 Section 10.3. Increased Cost and Reduced Return.................40 Section 10.4. Lending Offices...................................41 Section 10.5. Discretion of Bank as to Manner of Funding........41

Section 11. The Agent.............................................41 Section 11.1. Appointment and Authorization.....................41 Section 11.2. Agent and Affiliates..............................42 Section 11.3. Action by Agent...................................42 Section 11.4. Consultation with Experts.........................42

Section 11.5. Liability of Agent................................42 Section 11.6. Indemnification...................................43 Section 11.7. Credit Decision...................................43 Section 11.8. Resignation of the Agent..........................43 Section 11.9. Payments..........................................43Section 12. Miscellaneous.........................................44 Section 12.1. Withholding Taxes.................................44 Section 12.2. No Waiver of Rights...............................45 Section 12.3. Non-Business Day..................................45 Section 12.4. Documentary Taxes.................................45



Section 12.5. Survival of Representations.......................45 Section 12.6. Survival of Indemnities...........................45 Section 12.7. Sharing of Set-Off................................45 Section 12.8. Notices...........................................46 Section 12.9. Counterparts......................................47 Section 12.10. Successors and Assigns............................47 Section 12.11. Participants and Note Assignees...................47 Section 12.12. Assignment of Commitments by Banks................47 Section 12.13. Amendments........................................48 Section 12.14. Non-Reliance on Margin Stock......................48 Section 12.15. Legal Fees and Indemnification....................48 Section 12.18. Governing Law.....................................49 Section 12.19. Headings..........................................49 Section 12.20. Entire Agreement..................................49

<PAGE>

Exhibit A Revolving Credit NoteExhibit B Subsidiaries of General Housewares Corp.Exhibit C Opinion of CounselExhibit D Compliance CertificateExhibit E Funded Debt of Subsidiaries and Existing Short Term

Indebtedness of BorrowerExhibit F LiensExhibit G Guaranties

<PAGE> CREDIT AGREEMENT To each of the Banks signatory hereto

Ladies and Gentlemen:

The undersigned, General Housewares Corp., a Delaware corporation (the

"Borrower"), applies to you for your several commitments, subject to all theterms and conditions hereof and on the basis of the representations andwarranties hereinafter set forth, to make a revolving credit facility (the"Revolving Credit") and a letter of credit facility (the "Letter of CreditFacility") available in the form of loans or letters of credit, all as morefully hereinafter set forth. Each of you is hereinafter referred to as a "Bank",all of you are hereinafter referred to collectively as the "Banks" and HarrisTrust and Savings Bank in its capacity as agent hereunder is hereinafterreferred to as the "Agent".

SECTION 1. THE CREDIT FACILITY.

Section 1.1. The Revolving Credit. (a) General. Subject to the terms and

conditions hereof, the Banks agree to extend the Revolving Credit to theBorrower which may be availed of by the Borrower in its discretion from time totime to and including the Termination Date. The Revolving Credit, subject to allof the terms and conditions hereof, may be utilized by the Borrower in the formof loans ("Loans"), letters of credit (such letters of credit, together with allletters of credit issued and outstanding under The 1993 Credit Agreement whichshall be deemed issued and outstanding hereunder, the "Letters of Credit"), allas more fully hereinafter set forth. The maximum amount of the Revolving Creditwhich each Bank agrees to extend to the Borrower (which in the case ofEurocurrency Loans denominated in an Alternative Currency means the Original



Dollar Amount thereof) shall be as set forth opposite its name under the heading"Revolving Credit Loan Commitment" on the applicable signature page hereof (its"Revolving Credit Loan Commitment" and cumulatively for all the Banks the"Revolving Credit Loan Commitments") (subject to any reductions thereof pursuantto the terms hereof). The obligations of the Banks hereunder are several and notjoint and no Bank shall under any circumstances be obligated to extend credithereunder in excess of its Revolving Credit Loan Commitment.

(b) Loans. Each Borrowing of Loans shall be made ratably from the Banks inproportion to their respective Commitments. The Borrower may elect that eachBorrowing of Loans be made available by means of Domestic Rate Loans denominatedin U.S. Dollars or Eurocurrency Loans denominated either in U.S. Dollars or anAlternative Currency.

(c) Letters of Credit. (i) General Terms. Subject to all of the terms andconditions hereof, the Banks agree to extend the Letter of Credit Facilitythrough the Termination Date to the Borrower which may be availed of in the formof Letters of Credit, provided that the maximum amount of the Letter of CreditFacility (which in the case of Letters of Credit payable in an AlternativeCurrency means the U.S. Dollar Equivalent thereof as determined pursuant toSection 1.1(c)(vi) hereof which each Bank agrees to extend to the Borrower shall

-1-<PAGE>

be as set forth opposite its name under the headings "Letter of CreditCommitment" on the applicable signature page hereof (its "Letter of CreditCommitment" and cumulative for all the Banks, the "Letter of CreditCommitments") (subject to any reductions thereof pursuant to the terms thereof).The obligations of the Banks hereunder are several and not joint and no Bankshall under any circumstances be obligated to extend credit hereunder in excessof its Letter of Credit Commitment except as contemplated in Section 1.1(d)hereof. The aggregate outstanding amount of Letter of Credit Utilization by theBorrower hereunder shall in no event exceed the Letter of Credit Commitments.The Letters of Credit shall be issued by the Agent, but each Bank shall beobligated to reimburse the Agent for a pro rata share of the amount of eachdraft drawn thereunder and, accordingly, each Letter of Credit shall be deemed

to utilize the Commitments of all Banks pro rata in accord with the respectiveamounts thereof.

(ii) Term. Each Letter of Credit issued hereunder shall expire not later than the earlier of (i) one year from the date issued (or be cancelable not later than one year from the date issued) or (ii) the Termination Date.

(iii) General Characteristics. Each Letter of Credit issued hereunder shall be payable in U.S. dollars or an Alternative Currency, shall conform to the general requirements of the Agent for the issuance of commercial or standby letters of credit (as appropriate) as to form and substance and shall be a letter of credit which the Agent may lawfully issue.

(iv) Applications. At the time the Borrower requests each Letter of Credit to be issued (or prior to the first issuance of a Letter of Credit, in the case of a continuing application), it shall execute and deliver to the Agent an application for such Letter of Credit in the form customarily prescribed by the Agent for a Letter of Credit of the type requested (the "Applications"). In the event that the Agent is not promptly reimbursed for the amount of any draft drawn under a Letter of Credit issued hereunder, the obligation of the Borrower to reimburse it for the amount of such draft so paid by the Agent shall bear interest (which the Borrower hereby



promises to pay) from and after the date such draft is paid until payment in full thereof (a) in the case of a draft payable in U.S. Dollars, at the rate per annum determined by adding 2% per annum to the Domestic Rate as from time to time in effect and (b) in the case of a draft payable in an Alternative Currency, at the rate per annum determined by adding 2% to the sum of the Overnight Eurocurrency Rate as from time to time in effect and the Applicable Margin for Eurocurrency Loans under the Revolving Credit. Subject to the provisions hereof, the Borrower may request a Loan in payment of any such reimbursement obligation, such Loans to be evidenced by the Notes and, further, in the event the conditions precedent to making any such Loan are not satisfied, the Borrower hereby irrevocably authorizes the Banks

-2-<PAGE>

to make a Domestic Rate Loan for payment of any such reimbursement obligations, any such Loan may be made without regard to the provisions of Section 5 hereof and the Borrower acknowledges and agrees, however, that the Banks shall be under no obligation to make any such Loan and the Banks shall incur no liability to the Borrower or any other Person for failing or refusing to make a Loan under this Section 1.1(c). This Agreement supersedes any terms of the Applications which are irreconcilably inconsistent with the terms hereof. Anything contained in the Applications

to the contrary notwithstanding the Borrower shall pay fees in connection with Letters of Credit as set forth in Sections 3.4 and 3.5 hereof.

(v) Change in Law. If the Agent or any Bank shall determine in good faith that any change in any applicable law, regulation or guideline (including, without limitation, Regulation D of the Board of Governors of the Federal Reserve System) or any new law, regulation or guideline, or any interpretation of any of the foregoing by any governmental authority charged with the administration thereof or any central bank or other fiscal, monetary or other authority having jurisdiction over such Bank (whether or not having the force of law) shall:

(i) impose, modify or deem applicable any reserve, special

deposit or similar requirements against the Letters of Credit, or the Agent's or such Bank's or the Borrower's liability with respect thereto; or

(ii) impose on the Agent or such Bank any penalty with respect to the foregoing or any other condition regarding this Agreement, the Applications or the Letters of Credit;

and the Agent or such Bank shall determine in good faith that the result of any of the foregoing is to increase the cost (whether by incurring a cost or adding to a cost) to the Agent or such Bank of issuing, maintaining or participating in the Letters of Credit hereunder (without benefit of, or credit for, any prorations, exemptions, credits or other offsets available

under any such laws, regulations, guidelines or interpretations thereof), then the Agent or such Bank shall use its best efforts to give the Borrower prompt notice thereof and the Borrower shall pay on demand to the Agent or such Bank from time to time as specified by the Agent or such Bank such additional amounts as the Agent or such Bank shall reasonably determine are sufficient to compensate and indemnify it (computed commencing on the effective date of any event mentioned herein) for such increased cost. If the Agent or a Bank makes such a claim for compensation, it shall provide to the Borrower a certificate setting forth such increased costs as a result of any event mentioned herein and such certificate shall be Prima



Facie evidence as to the amount thereof.

(vi) Foreign Currency Equivalency. For all purposes of determining the amount of Letters of Credit hereunder, Letters of Credit payable in an Alternative Currency shall be converted into their U.S. Dollar Equivalent as of the time issued and shall be reconverted into their U.S. Dollar Equivalent as of the first day of each calendar quarter (and as of any other time the Required Banks deem appropriate), with each such redetermination to apply until the next determination.

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(d) Participation in Letters of Credit. Each Bank shall participate on apro rata basis in the Letters of Credit issued by the Agent, which participationshall automatically arise upon the issuance of each Letter of Credit. Each Bankunconditionally agrees that in the event the Agent is not immediately reimbursedby the Borrower for the amount paid by it on any draft presented under a Letterof Credit, then in that event such Bank shall pay to the Agent that portion ofthe amount of each draft so paid by the Agent which is equal to the samepercentage of the amount so paid as the percentage which its Commitment bears tothe aggregate of the Commitments and in return such Bank shall automaticallyreceive an equivalent percentage participation in the rights of the Agent toobtain reimbursement from the Borrower for the amount of such draft, together

with interest thereon as provided for herein. In the event that any Bank failsto honor its obligation to reimburse the Agent for its pro rata share of theamount of any such draft then in that event (i) each other Bank shall pay to theAgent its pro rata share of the payment due the Agent from the defaulting Bank,(ii) the defaulting Bank shall have no right to participate in any recoveriesfrom the Borrower in respect of such draft and (iii) all amounts to which thedefaulting Bank would otherwise be entitled under the terms of this Agreementshall first be applied to reimbursing the Banks for their respective pro ratashares of the defaulting Bank's portion of the draft together with interestthereon at the rate provided for in Section 1.1(c)(iv) hereof. Uponreimbursement to other Banks pursuant to clause (iii) above of the amountsadvanced by them to the Agent in respect of the defaulting Bank's share of thedraft, together with interest thereon, the defaulting Bank shall thereupon be

entitled to its participation in the Agent's rights of recovery against theBorrower in respect of the draft paid by the Agent.

SECTION 2. GENERAL PROVISIONS APPLICABLE TO ALL LOANS.

Section 2.1. Applicable Interest Rates. (a) Domestic Rate Loans. EachDomestic Rate Loan made by a Bank (including Loans made pursuant to Section1.1(c) hereof) shall bear interest (computed on the basis of a year of 360 daysand actual days elapsed) on the unpaid principal amount thereof from the datesuch Loan is made until maturity (whether by acceleration or otherwise) at arate per annum equal to the Domestic Rate from time to time in effect, payableon the last day of the applicable Interest Period and at maturity (whether byacceleration or otherwise).

"Domestic rate" means for any day the greater of:

(i) The rate of interest announced by the agent from time as its primecommercial rate, or equivalent, with any change in the domestic rate resultingfrom a change in said prime commercial rate to be effective as of the date ofthe relevant change in said prime commercial rate; and

(ii) the sum of the (x) the rate for that day set forth opposite thecaption "Federal Fund (effective)" in the daily statistical release designated



as "Composite 3:30 P.M. Quotations for U.S. Government Securities", or anysuccessor publication, published by the Federal Reserve Bank of New York or, ifsuch publication shall be suspended or terminated, the arithmetic average of therates quoted to the Agent as the prevailing rates per annum (rounded upward, ifnecessary, to the next higher 1/100 of 1%) bid at approximately 10:00 A.M.

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(Chicago time) (or as soon thereafter as is practicable) on such day by two ormore New York or Chicago Federal funds dealers of recognized standing selectedby the Agent for the purchase at face value of Federal funds in the secondarymarket in an amount comparable to the principal amount owed to the Banks forwhich such rate is being determined, plus (y) 1/2 of 1% (0.50%).

(b) Eurocurrency Loans. (i) General. Each Eurocurrency Loan made by a Bank(including Loans made pursuant to Section 1.1(c) hereof) shall bear interest(computed on the basis of a year of 360 days and actual days elapsed) on theunpaid principal amount thereof from the date such Loan is made until maturity(whether by acceleration or otherwise) at a rate per annum equal to the sum ofthe applicable Eurocurrency Margin plus the Adjusted LIBOR, payable on the lastday of the applicable Interest Period and at maturity (whether by accelerationor otherwise), and, if the applicable Interest Period is longer than threemonths, on each day occurring every three months after the date such Loan is

made.

"Adjusted LIBOR" means, for any Borrowing of Eurocurrency Loans, a rateper annum determined in accordance with the following formula:

Adjusted LIBOR = LIBOR -------------------------------------- 100% - Eurocurrency Reserve Percentage

"LIBOR" means, with respect to an Interest Period for a Borrowing ofEurocurrency Loans, (a) the LIBOR Index Rate for such Interest Period, if suchrate is available, and (b) if the LIBOR Index Rate cannot be determined, thearithmetic average of the rate of interest per annum, as determined by the Agent

(rounded upwards, if necessary, to the nearest whole multiple of 1/16 of 1%), atwhich deposits of U.S. Dollars or the relevant Alternative Currency inimmediately available and freely transferable funds are offered to the Agent at11:00 a.m. (London, England time) two Business Days prior to the commencement ofsuch Interest Period by major banks in the interbank market for a period equalto such Interest Period and in an amount approximately equal to the principalamount of the Eurocurrency Loan scheduled to be made by the Agent as part ofsuch Borrowing.

"Libor Index Rate" means, for any Interest Period, the rate per annum(rounded upwards, if necessary, to the next higher one hundred-thousandth of apercentage point) for deposits in U.S. Dollars or the relevant AlternativeCurrency for a period equal to such Interest Period, which appears on the

Telerate Page 3750 as of 11:00 a.m. (London, England time) on the day twoBusiness Days before the commencement of such Interest Period.

"Telerate Page 3750" means the display designated as "Page 3750" on theTelerate Service (or such other page as may replace Page 3750 on that service orsuch other service as may be nominated by the British Bankers' Association asthe information vendor for the purpose of displaying British Bankers'Association Interest Settlement Rates for deposits in U.S. Dollars or therelevant Alternative Currency).



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"Eurocurrency Reserve Percentage" means, for any Borrowing of EurocurrencyLoans, the daily average for the applicable Interest Period of the maximum rateat which reserves (including, without limitation, any supplemental, marginal andemergency reserves) are imposed during such Interest Period by the Board ofGovernors of the Federal Reserve System (or any successor) under Regulation D on"Eurocurrency Liabilities", as defined in such Board's Regulation D, (or inrespect of any other category of liabilities that includes deposits by referenceto which the interest rate on Eurocurrency Loans is determined or any categoryof extension of credit or other assets that include loans by non-United Statesoffices of any Bank to United States residents) subject to any amendments ofsuch reserve requirement by such Board or its successor, taking into account anytransitional adjustments thereto. For purposes of this definition, theEurocurrency Loans shall be deemed to be "Eurocurrency Liabilities" as definedin Regulation D without benefit or credit for any prorations, exemptions oroffsets under Regulation D.

"Eurocurrency Margin" means 1.00% subject to adjustment as provided inSection 2.11 hereof.

(ii) Borrowings of Alternative Currencies. On the date the Borrowerrequests a Borrowing of Eurocurrency Loans from the Banks in an Alternative

Currency, as provided in Section 2.3(a) below, the Agent shall promptly notifyeach Bank of the currency in which such Borrowing is requested. If a Bankdetermines that such Alternative Currency is not available to it in sufficientamount and for a sufficient term to enable it to make the Loan requested of itas part of such Eurocurrency Borrowing and so notifies the Agent no later than2:00 p.m. (Chicago time) on the same day it receives notice from the Agent ofsuch requested Loan, the Agent shall promptly so notify the Borrower. If theBorrower nevertheless desires such Borrowing, it must notify the Agent by nolater than 3:00 p.m. (Chicago time) on such day. If the Agent does not receivesuch notice from the Borrower by 3:00 p.m. (Chicago time), the Borrower shallautomatically be deemed to have revoked its request of the EurocurrencyBorrowing and the Agent will promptly notify the Banks of such revocation. Ifthe Borrower does give such notice by 3:00 p.m. (Chicago time), each Bank that

did not notify the Agent by 2:00 p.m. (Chicago time) that the requestedAlternative Currency is unavailable to it to fund the requested Loan shall,subject to Section 7 hereof, make its Loan in the Alternative Currency requestedin accordance with Section 2.3(d) hereof. Each Bank that did so notify the Agentby 2:00 p.m. (Chicago time) that it would not be able to make the Loan requestedfrom it shall, subject to Section 7 hereof, make a Eurocurrency Loan denominatedin U.S. Dollars in the amount of the Original Dollar Amount of, and with thesame Interest Period as, the Eurocurrency Loan such Bank was originallyrequested to make. Such Eurocurrency Loan denominated in U.S. Dollars shall bemade by the affected Bank on the same day as the other Banks make theirEurocurrency Loans denominated in the applicable Alternative Currency as part ofthe relevant Borrowing of Eurocurrency Loans, but shall bear interest withreference to the Adjusted LIBOR applicable to U.S. Dollars rather than the

relevant Alternative Currency for the applicable Interest Period and shall bemade available in accordance with the procedures for disbursing U.S. DollarLoans under Section 2.3(d) hereof. Any Loan made in an Alternative Currencyshall be advanced in such currency, and all payments of principal and interestthereon shall be made in such Alternative Currency.

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(c) Rate Determinations. The Agent shall determine each interest rate



applicable to the Loans and reimbursement obligations hereunder, and itsdetermination thereof shall be conclusive and binding except in the case ofmanifest error.

Section 2.2. Minimum Borrowing Amounts. Each Borrowing of Domestic RateLoans shall be in an amount not less than $1,000,000, or any larger amount thatis an integral multiple of $500,000. Each Borrowing of Eurocurrency Loansdenominated in U.S. Dollars shall be in an amount not less than $3,000,000, orany larger amount that is an integral multiple of $1,000,000. Each Borrowing ofEurocurrency Loans denominated in an Alternative Currency shall be in an amountfor which the U.S. Dollar Equivalent is not less than $3,000,000 or any largeramount that is an integral multiple of the U.S. Dollar equivalent of $1,000,000or, solely in the case of Refunding Borrowing for a Borrowing in an AlternativeCurrency, if less, the same amount of the Alternative Currency as the maturingBorrowing.

Section 2.3. Borrowing Procedures. (a) Notice to the Agent. The Borrowershall give telephonic or telecopy notice to the Agent (which notice shall beirrevocable once given and, if by telephone, shall be promptly confirmed inwriting) by no later than 10:00 A.M. (Chicago time) (i) on the date at leastthree (3) Business Days prior to the date of each requested Borrowing ofEurocurrency Loans and (ii) on the date of any requested Borrowing of DomesticRate Loans. Each such notice shall specify the date of the requested Borrowing(which shall be a Business Day), the amount of the requested Borrowing, the type

of Loans to comprise such Borrowing and, if such Borrowing is to be comprised ofEurocurrency Loans, the Interest Period applicable thereto and if such Borrowingis of a Eurocurrency Loan denominated in an Alternative Currency, theAlternative Currency in which such Loan is to be denominated. The Borroweragrees that the Agent may rely on any such telephonic or telecopy notice givenby any person it in good faith believes is an Authorized Representative withoutthe necessity of independent investigation and in the event any notice by suchmeans conflicts with the written confirmation, such notice shall govern if theAgent has acted in reliance thereon.

(b) Notice to the Banks. The Agent shall give prompt telephonic, telex ortelecopy notice to each of the Banks of any borrowing request received pursuantto Section 2.3(a) above and, if such notice requests the Banks to make

Eurocurrency Loans, the Agent shall give notice to the Borrower and each of theBanks by like means of the interest rate applicable thereto (but, if such noticeis given by telephone, the Agent shall confirm such rate in writing) promptlyafter the Agent has made such determination.

(c) Borrower's Failure to Notify. In the event Borrower fails to givenotice pursuant to Section 2.3(a) above of the reborrowing of the principalamount of any maturing Borrowing of Loans denominated in U.S. Dollars and hasnot notified the Agent by 10:00 A.M. (Chicago time) on the day such Borrowingmatures that it intends to repay such Borrowing, the Borrower shall be deemed tohave requested a Borrowing of Domestic Rate Loans on such day in the amount ofthe maturing Borrowing of Loans, subject to Section 7.2 hereof. In the event theBorrower fails to give notice pursuant to Section 2.3(a) above of the

reborrowing of the principal amount of any maturing Borrowing of Loans

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denominated in an Alternative Currency and has not notified the Agent by 10:00A.M. (Chicago time) on the day such Borrowing matures that it intends to repaysuch Borrowing, the Borrower shall be deemed to have required a Borrowing ofEurocurrency Loans denominated in the same currency as the maturing Borrowing onsuch day in the amount of the maturing Borrowing of Loans with an Interest



Period of one (1) month, subject to Section 7.2 hereof.

(d) Disbursement of Loans. Not later than 11:00 A.M. (Chicago time) on thedate of any Borrowing of Loans denominated in U.S. Dollars other than DomesticRate Loans, and not later than 12 Noon (Chicago time) on the date of anyBorrowing of Domestic Rate Loans, each Bank shall make available its Loan infunds immediately available in Chicago, Illinois at the principal office of theAgent, except to the extent such Borrowing is either a reborrowing, in whole orin part, of the principal amount of a maturing Borrowing of Loans (a "RefundingBorrowing") or a refinancing of a reimbursement obligation with respect to aletter of credit issued (a "Refinancing Borrowing"), in which case each Bankshall record the Loan made by it as a part of such Refunding Borrowing orRefinancing Borrowing, as the case may be, on its books or records or on aschedule to the appropriate Note, as provided in Section 2.8 hereof, and shalleffect the repayment, in whole or in part, as appropriate, of its maturing Loanor reimbursement obligation through the proceeds of such new Loan. Subject toSection 7 hereof, the Agent shall make the proceeds of each Borrowing availableto the Borrower at the Agent's principal office in Chicago, Illinois. If aBorrowing is to be denominated in an Alternative Currency, subject to Sections2.1(b)(ii) and 7 hereof, each Bank shall make available its Loan in theAlternative Currency at such office as the Agent has previously notified to eachBank, for delivery to the Borrower at the Agent's direction, in funds thencustomary for the settlement of international transactions in such currency andno later than such local time as is necessary for such funds to be received and

transferred to the Borrower for same day value, except to the extent suchBorrowing is a Refunding Borrowing or a Refinancing Borrowing, in which caseeach Bank shall record the Loan made by it as part of such Refunding Borrowingor Refinancing on its books and records or on a schedule to the appropriate Noteas provided in Section 2.8 hereof, and shall effect the repayment, in whole orin part, as appropriate, of its maturing Loan or reimbursement obligationthrough the proceeds of such new Loan.

Section 2.4. Interest Periods. As provided in Section 2.3 hereof, at thetime of each request for the Borrowing of Loans hereunder the Borrower shallselect an Interest Period applicable to such Loans from among the availableoptions. The term "Interest Period" means the period commencing on the date aBorrowing of Loans is made and ending, (a) in the case of Domestic Rate Loans,

on the last day of the calendar quarter in which such Loan is made (i.e. thefirst to occur of March 31, June 30, September 30, and December 31 following thedate such Borrowing is made) and (b) in the case of Eurocurrency Loans, thedate, as the Borrower may select, 1, 2, 3 or 6 months thereafter; Provided,However, that:

(a) any Interest Period for a Borrowing of Domestic Rate Loans commencing less than 90 days before the Termination Date shall end on the Termination Date;

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(b) with respect to any Borrowing of Eurocurrency Loans, the Borrower may not select an Interest Period that extends beyond the Termination Date;

(c) whenever the last day of any Interest Period would otherwise be a day that is not a Business Day, the last day of such Interest Period shall be extended to the next succeeding Business Day, provided that, in the case of an Interest Period for a Borrowing of Eurocurrency Loans, if such extension would cause the last day of such Interest Period to occur in the following calendar month, the last day of such Interest Period shall be the immediately preceding Business Day; and



(d) for purposes of determining the Interest Period for a Borrowing of Eurocurrency Loans, a month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month; Provided, However, that if there is no numerically corresponding day in the month in which such an Interest Period is to end or if such an Interest Period begins on the last Business Day of a calendar month, then such Interest Period shall end on the last Business Day of the calendar month in which such Interest Period is to end.

Section 2.5. Maturity of Loans. Each Loan shall mature and become due andpayable by the Borrower on the last day of the Interest Period applicablethereto.

Section 2.6. Prepayments. (a) Voluntary. (i) Domestic Loans. The Borrowershall have the privilege of prepaying without premium or penalty and in whole orin part (but, if in part, then: (i) in an amount not less than $1,000,000 and inintegral multiples of $500,000 in the case of Domestic Rate Loans and (ii) in anamount such that the minimum amount required for a Borrowing pursuant to Section2.2 hereof remains outstanding) on any Business Day upon prior notice to theAgent which must be received by the Agent (which shall advise each Bank thereofpromptly thereafter) by no later than 11:00 a.m. on the prepayment date, suchprepayment to be made by the payment of the principal amount to be prepaid.

(ii) Eurocurrency Loans. The Borrower may not prepay any Eurocurrency Loan before its maturity.

(iii) Reborrowings. Any amount paid or prepaid on the Loans before the Termination Date may, subject to the terms and conditions of this Agreement, be borrowed, repaid and borrowed again.

(b) Mandatory. Concurrently with each reduction of the Commitments (whethervoluntarily or required) the Borrower shall prepay the Notes by the amount, ifany, necessary so that the aggregate outstanding principal balance of the Notes,when taken together with the aggregate outstanding amounts of Letter of CreditUtilization shall not exceed the Commitments as so reduced, each such prepaymentto be made by the payment of the principal amount to be prepaid and accrued

interest thereon to the date fixed for prepayment, and in the case ofEurocurrency Loans, any compensation required by Section 2.10 hereof.Additionally, in the event that outstanding Letter of Credit Utilization (which

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in the case of Letters of Credit payable in an Alternative Currency shall meanthe U.S. Dollar Equivalent thereof as determined pursuant to Section 1.1(c)(vi)hereof) shall at any time exceed the Letter of Credit Commitments, the Borrowershall pay the amount of such excess to the Agent, which each such payment first

to be applied to outstanding reimbursement obligations with respect to Lettersof Credit until payment in full thereof with any remaining balance to be held bythe Agent as collateral security for the obligations owing with respect to theLetters of Credit.

Section 2.7. Default Rate. If any payment of principal on any Loan is notmade when due (whether by acceleration or otherwise), such Loan shall bearinterest (computed on the basis of a year of 360 days and actual days elapsed)from the date such payment was due until paid in full, payable on demand, at arate per annum equal to:



(a) with respect to any Domestic Rate Loan, the sum of two percent (2%) plus the Domestic Rate from time to time in effect;

(b) with respect to any Eurocurrency Loan denominated in U.S. Dollars the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of two percent (2%) plus the Domestic Rate from time to time in effect; and

(c) with respect to any Eurocurrency Loan denominated in an Alternative Currency, the sum of two percent (2%) plus the rate of interest in effect thereon at the time of such default until the end of the Interest Period applicable thereto and, thereafter, at a rate per annum equal to the sum of the Applicable Eurocurrency Margin, plus two percent (2%) plus the Overnight Eurocurrency Rate.

Section 2.8. The Notes. (a) Each Loan made to the Borrower by a Bank(including Loans made pursuant to Section 1.1(c)(iv) hereof) shall be evidencedby a promissory note of the Borrower in the form of Exhibit A hereto(individually, a "Note" and collectively, the "Notes"). Such Notes shall bedated the date hereof, payable to the order of each Bank and shall otherwise bein the form of the relevant Exhibits hereto.

(b) Each Bank shall record on its books or records or on a schedule to theappropriate Note the amount of each Loan made by it to the Borrower, theInterest Period thereof, all payments of principal and interest and theprincipal balance from time to time outstanding thereon, in respect of anyEurocurrency Loan, the interest rate applicable thereto and the currency inwhich such Loan is made, and, in respect of any Loan, the type of such Loan;provided that prior to the transfer of any Note all such amounts shall berecorded on a schedule to such Note. The record thereof, whether shown on suchbooks or records of a Bank or on a schedule to any Note, shall be Prima Facieevidence as to all such amounts; Provided, However, that the failure of any Bankto record any of the foregoing or any error in any such record shall not limitor otherwise affect the obligation of the Borrower to repay all Loans made to ithereunder together with accrued interest thereon. At the request of any Bank and

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upon such Bank tendering to the Borrower the Note to be replaced, the Borrowershall furnish a new Note to such Bank to replace any outstanding Note and atsuch time the first notation appearing on a schedule on the reverse side of, orattached to, such Note shall set forth the aggregate unpaid principal amount ofall Loans, if any, then outstanding thereon.

Section 2.9. Commitment Terminations. The Borrower shall have the right atany time and from time to time, upon five (5) Business Days' prior written

notice to the Agent, to terminate without premium or penalty, in whole or inpart, the Commitments, any partial termination to be in an amount not less than$5,000,000 or any larger amount that is an integral multiple of $1,000,000, andto reduce ratably the respective Commitments of each Bank; provided that (x) theRevolving Credit Loan Commitments may not be reduced to an amount less than theaggregate principal amount of Loans (which, in the case of Eurocurrency Loansdenominated in an Alternative Currency, shall mean the Original Dollar Amountthereof) and (y) the Letter of Credit Commitments may not be reduced to anamount less than Letter of Credit Utilization then outstanding (which in thecase of Letters of Credit payable in an Alternative Currency shall mean the U.S.



Dollar Equivalent thereof as determined pursuant to Section 1.1(c)(vi) hereof)and further provided that the Borrower shall not be entitled to reduce theRevolving Credit Loan Commitments in whole without a termination in whole of theLetter of Credit Commitments and vice versa. Any termination of Commitmentspursuant to this Section 2.9 may not be reinstated.

Section 2.10. Funding Indemnity. In the event any Bank shall incur anyloss, cost or expense (including, without limitation, any loss of profit, andany loss, cost or expense incurred by reason of the liquidation or re-employmentof deposits or other funds acquired by such Bank to fund or maintain anyEurocurrency Loan or the relending or reinvesting of such deposits or amountspaid or prepaid to such Bank) as a result of:

(a) any payment or prepayment of a Eurocurrency Loan on a date other than the last day of its Interest Period,

(b) any failure (because of a failure to meet the conditions of Section 7 or otherwise) by the Borrower to borrow a Eurocurrency Loan on the date specified in a notice given pursuant to Section 2.3 hereof (unless such notice was revoked in accordance with Section 2.1(b)(ii) in the event a Bank determined that the requested Alternative Currency in which such Eurocurrency Loan was to be made was unavailable to it),

(c) any failure by the Borrower to make any payment of principal on

any Eurocurrency Loan when due (whether by acceleration or otherwise), or

(d) any acceleration of the maturity of a Eurocurrency Loan as a result of the occurrence of any Event of Default hereunder,

then, upon the demand of such Bank, the Borrower shall pay to such Bank suchamount as will reimburse such Bank for such loss, cost or expense. If any Bankmakes such a claim for compensation, it shall provide to the Borrower, with acopy to the Agent, a certificate executed by an officer of such Bank setting

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forth the amount of such loss, cost or expense in reasonable detail (includingan explanation of the basis for and the computation of such loss, cost orexpense) and the amounts shown on such certificate shall be conclusive.

Section 2.11. Margin Adjustments. The applicable Eurocurrency Marginspecified in Section 2.1(b) hereof shall be subject to quarterly adjustment(commencing with the fiscal quarter ending December 31, 1994) based upon theratio of (a) average monthly Consolidated Funded Debt for the immediatelypreceding four fiscal quarters ended on each such fiscal quarter end to (b)Consolidated Income Before Interest, Taxes and Depreciation for the immediatelypreceding four fiscal quarters ended on each such fiscal quarter end (the "CaseFlow Ratio") as follows (the margins from time to time applicable to theEurocurrency Loans being hereinafter referred to as the " Applicable

Eurocurrency Margin"):

<TABLE><CAPTION> Applicable EurocurrencyIf as of the last day of any fiscal quarter Margin Shall Each Be:

<S> <C>



LEVEL I: .625%Cash Flow Ratio is less than 1.75 to 1.00

LEVEL II: .75%Cash Flow Ratio is greater than or equal to 1.75 to 1.00but less than or equal to 2.50 to 1

LEVEL III: 1.00%Cash Flow Ratio is greater than 2.50 to 1.00</TABLE>

Not later than five Business Days after receipt by the Agent of thefinancial statements and the compliance certificate called for by Section 8.5hereof for the applicable quarter, the Agent shall determine the Cash Flow Ratiofor the applicable period based on the information contained in such financialstatements and compliance certificate and shall promptly notify the Borrower andthe Banks of such determination and of any change in the Applicable EurocurrencyMargin resulting therefrom, any such change in the Applicable EurocurrencyMargin to be effective as of the date the Agent so notifies the Borrower, withsuch new Applicable Eurocurrency Margin to continue in effect until theeffective date of the next quarterly redetermination in accordance with theforegoing. Each determination of the Cash Flow Ratio and Applicable EurocurrencyMargin by the Agent in accordance with this Section shall be conclusive and

binding on the Borrower and the Banks absent manifest error. The foregoing tothe contrary notwithstanding, in the event the Borrower shall have failed todeliver the financial statements for the applicable quarter within the timesprovided by Section 8.5 hereof, the highest applicable margins shall apply untildelivery of such financial statements.

SECTION 3. FEES.

Section 3.1. Commitment Fee. The Borrower shall pay to the Agent for theratable account of the Banks a commitment fee at the rate of one-fourth of one

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percent (0.25%) per annum (computed on the basis of a year of 360 days and theactual number of days elapsed) on the average daily Unused Amount of theRevolving Credit Loan Commitments hereunder. Such commitment fee is payable inarrears on the last day of each March, June, September and December occurringafter the date hereof (commencing December 31, 1994) and on the TerminationDate, unless the Revolving Credit Loan Commitments are terminated in whole on anearlier date, in which event the fees for the period to the date of suchtermination in whole shall be paid on the date of such termination.

Section 3.2. Closing Fee. The Borrower shall pay to the Agent for theratable account of the Banks, a nonrefundable closing fee equal to $39,000, suchfee to be payable on the earlier of (a) January 3, 1995 or (b) the date upon

which the Commitments are terminated in while pursuant to Section 2.9 hereof.

Section 3.3. Agent's Fees. The Borrower shall from time to time pay theAgent for its own use and benefit such fees as the Borrower and the Agent havemutually agreed upon.

Section 3.4. Letter of Credit Fees. (a) Standby Letters of Credit. TheBorrower shall pay to the Agent for the ratable account of the Banks anonrefundable fee for each special purpose standby Letter of Credit issuedhereunder equal to one percent (1%) per annum (computed on the basis of a year



of 360 days and actual days elapsed) (or such other rate as may be agreed uponby the Borrower and the Banks) of the initial face amount of each standby Letterof Credit, such fee to be payable in U. S. Dollars in advance on the date ofissuance of the relevant Letter of Credit and, in the event the term of anyLetter of Credit expires or is extendible for more than one year from theissuance date thereof, on the date(s) occurring each year thereafter and suchfee to be nonrefundable in the event any Letter of Credit is terminated orcanceled prior to its expressed maturity date.

(b) Commercial Letters of Credit. The Borrower shall pay to the Agent in U.S. Dollars, for the ratable account of the Banks, a nonrefundable negotiationfee for each documentary commercial letter of credit issued hereunder in anamount equal to 1/4 of 1% of the initial face amount of such Letter of Credit,such fee to be payable upon issuance of such letter of credit.

Section 3.5. Transaction Charges. The Borrower shall pay to the Agent forits own account such issuing and processing fees and charges as the Agent fromtime to time customarily imposes in connection with the issuance, negotiationand payment of letters of credit and drafts drawn thereunder, such fees to bepaid in accord with the standard and customary practices of the Agent.

SECTION 4. PLACE AND APPLICATION OF PAYMENTS; EXTENSION OF TERMINATION DATE.

Section 4.1. Place and Application of Payments. All payments of principal

of and interest on the Loans, reimbursement obligations with respect to Lettersof Credit and all payments of fees and all other amounts payable under thisAgreement shall be made to the Agent by no later than 12:00 noon (Chicago time)

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(a) at the principal office of the Agent in Chicago, Illinois (or such otherlocation in the State of Illinois as the Agent may designate to the Borrower) or(b) if such payment is to be made in an Alternative Currency, no later than12:00 noon local time at the place of payment to such office as the Agent haspreviously notified the Borrower, in each case for the benefit of the Banks. Anypayments received after such time shall be deemed to have been received by the

Agent on the next Business Day. All such payments shall be made (i) in the caseof obligations payable in U.S. Dollars, in immediately available funds at theplace of payment or (ii) in the case of obligations payable in an AlternativeCurrency, in such Alternative Currency in funds then customary for thesettlement of international transactions in such currency, in all cases, withoutsetoff or counterclaim and without reduction for, and free from, any and allpresent or future taxes, levies, imposts, duties, fees, charges, deductions,withholdings, restrictions or conditions of any nature imposed by any governmentor any political subdivision or taxing authority thereof. The Agent willpromptly thereafter cause to be distributed like funds relating to the paymentof principal or interest on Loans, reimbursement obligations with respect toLetters of Credit or fees ratably to the Banks and like funds relating to thepayment of any other amount payable to any Bank to such Bank, in each case to be

applied in accordance with the terms of this Agreement.

Anything contained herein to the contrary notwithstanding, all payments andcollections received in respect of the indebtedness evidenced by the Notes, thisCredit Agreement and the other Loan Documents received, in each instance, by theAgent or any of the Banks after the occurrence of an Event of Default shall beremitted to the Agent and distributed as follows:

(a) first, to the payment of any outstanding costs and expenses incurred by the Agent in monitoring, verifying, protecting, preserving or



enforcing rights under the Credit Agreement or the Notes or the other Loan Documents and in any event including all costs and expenses of a character which the Borrower has agreed to pay under Sections 9.5 and 12.15 hereof (such funds to be retained by the Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Banks, in which event such amounts shall be remitted to the Banks to reimburse them for payments theretofore made to the Agent);

(b) second, to the payment of any outstanding interest or other fees or amounts due under the Notes, the Credit Agreement and the other Loan Documents other than for principal, ratably as among the Banks in accord with the amount of such interest and other fees or amounts owing each Bank;

(c) third, to the payment of the principal of the Notes and principal amounts owing in respect of other Obligations hereunder, ratably as among the Banks in accord with the amount of such principal owing each Bank;

(d) fourth, to the Agent to be held as collateral security for all undrawn outstanding Letters of Credit hereunder unless and until all such indebtedness, obligations and liabilities have been fully paid and satisfied or such Letters of Credit have been terminated or expired; and

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(e) fifth, to the Borrower or whoever may be lawfully entitled thereto.

Section 4.2. Extension of the Revolving Credit Termination Date. No soonerthan 60 days prior to the second anniversary date of the Closing Date and nolater than the second anniversary of the Closing Date (and, if the same shallhave been extended pursuant to this Section 4.2, the third anniversary of theClosing Date) the Borrower may request in a written notice to the Agent that thescheduled Termination Date then in effect be extended for one (1) year. TheAgent will promptly inform the Banks of such request and each Bank shall notifythe Agent in writing within 30 days of receipt of such notice whether it agreesto such extension. In the event that any Bank shall fail to so notify the Agent

whether it agrees to such extension, such Bank shall be deemed to have refusedto grant the requested extension. Upon receipt by the Agent of the consent ofall the Banks, the Borrower and the Banks shall enter into such documents as theAgent may deem necessary or appropriate to reflect such extension. In no eventshall the Termination Date be extended beyond November 30, 1999.

SECTION 5. DEFINITIONS; INTERPERTATION.

Section 5.1. Definitions. The following terms when used herein have thefollowing meanings:

"Adjusted LIBOR" is defined in Section 2.1(b) hereof.

"Agent" means Harris Trust and Savings Bank and any successor pursuant toSection 11.8 hereof.

"Agreement Accounting Principles" shall mean generally accepted principlesof accounting in effect at the time of the preparation of the financialstatements referred to in Section 6.6 hereof, applied in a manner consistentwith that used in preparing such statements.

"Alternative Currency" means each of Canadian Dollars, British PoundsSterling, Japanese Yen or German Deutschmarks, so long as such currency is



freely transferable and freely convertible into U.S. Dollars.

"Applicable Eurocurrency Margin" is defined in Section 2.11 hereof.

"Authorized Representative" means any of the persons shown on the list ofofficers provided by the Borrower pursuant to Section 7.1(c) hereof, or anyother person shown on any updated such list provided by the Borrower to theAgent, or any further or different officer(s) or employee(s) of the Borrower sonamed by any Authorized Representative of the Borrower in a written notice tothe Agent.

"Bank" means each bank signatory hereto.

"Borrower" means General Housewares Corp., a Delaware corporation.

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"Borrowing" means the total of Loans of a single type made by one or moreBanks to the Borrower on a single date and for a single Interest Period and ifsuch Loans are Eurocurrency Loans, denominated in the same currency. Borrowingsof Loans are made ratably from each of the Banks according to their Commitments.

"Business Day" means any day other than a Saturday or Sunday on which Banks

are not authorized or required to close in Chicago, Illinois or New York, NewYork and, if the applicable Business Day relates to the borrowing or payment ofa Eurocurrency Loan, on which banks are dealing in United States Dollar depositsor the relevant Alternative Currency in the interbank market in London, Englandand Nassau, Bahamas and, if the applicable Business Day relates to a borrowingor payment of a Eurocurrency Loan denominated in an Alternative Currency, onwhich banks and foreign exchange markets are open for business in the city wheredisbursements of or payments on such Loans are to be made.

"Capital Lease" of a Person means at any date any lease of Property by suchPerson as lessee which would be capitalized on a balance sheet of such Personprepared in accordance with Agreement Accounting Principles.

"Capitalized Lease Obligations" of a Person means the amount of theobligations of such Person under Capitalized Leases which would be shown as aliability on a balance sheet of such Person, prepared in accordance withAgreement Accounting Principles.

"Cash Flow Ration" is defined in Section 2.11 hereof.

"Closing Date" shall mean November 30, 1994.

"Code" means the Internal Revenue Code of 1986, as amended.

"Commitments" shall mean and include the Revolving Credit Loan Commitmentsand the Letter of Credit Commitments, unless the context in which such term is

used shall otherwise require.

"Consolidated Current Assets" means the consolidated current assets of theBorrower and its Consolidated Subsidiaries determined in accordance withAgreement Accounting Principles.

"Consolidated Current Liabilities" means the consolidated currentliabilities of the Borrower and its Consolidated Subsidiaries determined inaccordance with Agreement Accounting Principles.



"Consolidated Funded Debt" means Funded Debt of the Borrower and itsSubsidiaries on a consolidated basis without duplication.

"Conslidated Income before Interest, Taxes and Depreciation" means, for anyfiscal quarter, Consolidated Income Before Interest, Taxes, Depreciation and

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Rentals less all payments during such fiscal quarter pursuant to all operatingleases, determined on a consolidated basis for the Borrower and the ConsolidatedSubsidiaries in accordance with Agreement Accounting Principles.

"Consolidated Income Before Interest, Taxes, Depreciation and Rentals"means, for any fiscal quarter, the sum of (i) earnings before income taxes forsuch fiscal quarter, plus (ii) Interest Expense for such fiscal quarter plus(iii) all charges for depreciation of fixed assets and amortization ofIntangible Assets for such fiscal quarter plus (iv) payments during such fiscalquarter pursuant to all operating leases determined on a consolidated basis forthe Borrower and the Consolidated Subsidiaries in accordance with AgreementAccounting Principles.

"Consolidated Net Earnings" for any period means the consolidated netincome of the Borrower and its Consolidated Subsidiaries accrued during such

period as computed on a consolidated basis in accordance with AgreementAccounting Principles, and, without limiting the foregoing, after deduction fromgross income of all charges and reserves, including charges and reserves for alltaxes on or measured by income, but excluding any profits or losses on the saleor other disposition not in the ordinary course of business of fixed or capitalassets or on the acquisition, retirement, sale or other disposition of stock orsecurities of the Borrower and its Consolidated Subsidiaries, and also excludingtaxes on such profits and any tax deductions or credits on account of any suchlosses.

"Consolidated Subsidiary" means any Subsidiary or other entity whoseaccounts are required to be consolidated with those of the Borrower inaccordance with Agreement Accounting Principles.

"Consolidated Net Worth" means, as of the date of any determinationthereof, the total stockholders equity of the Borrower and its ConsolidatedSubsidiaries, determined in accordance with Agreement Accounting Principles.

"Controlled Group" has the same meaning as in Section 414(b) of the Code.

"Current Assets" shall mean current assets as defined in accordance withAgreement Accounting Principles.

"Current Debt" means any obligation for borrowed money payable one year orless from the date of the creation of such obligation.

"Current Liabilities" shall mean current liabilities as defined inaccordance with Agreement Accounting Principles.

"Default" means any event or condition the occurrence of which would, withthe passage of time or the giving of notice, or both, constitute an Event ofDefault.

"Domestic Rate" is defined in Section 2.1(a) hereof.

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"Domestic Rate Loan" means a Loan bearing interest at the rate specified inSection 2.1(a) hereof.

"Earnings Available for Fixed Charges" for any period shall mean the sum of(a) Consolidated Net Earnings for such period plus (to the extent deducted indetermining such Consolidated Net Earnings), (b) all provisions for any Federal,state or other income taxes made by the Company and its ConsolidatedSubsidiaries during such period and (c) Fixed Charges during such period.

"ERISA" is defined in Section 6.12 hereof.

"Eurocurrency Loan" means a Loan bearing interest at the rate specified inSection 2.1(b) hereof and shall also include eurodollar loans outstanding as ofthe date hereof and made pursuant to The 1993 Credit Agreement.

"Eurocurrency Margin" is defined in Section 2.1(b) hereof.

"Eurocurrency Reserve Percentage" is defined in Section 2.1(b) hereof.

"Event of Default" means any of the events or circumstances specified inSection 9.1 hereof.

"Federal Funds Rate" is defined in Section 11.9 hereof. "Fixed Charge Coverage Ratio" is defined in Section 8.8 hereof.

"Fixed Charges" for any period shall mean on a consolidated basis the sum

of (a) All Rentals (excluding Capitalized Lease Obligations) payable by theBorrower and its Consolidated Subsidiaries plus (b) all Consolidated InterestExpense (including the interest component of all Capitalized Lease Obligations)of the Borrower and its Consolidated Subsidiaries.

"Fixed Rate Loans" means the Eurocurrency Loans.

"Funded Debt" of any Person shall mean (a) all Indebtedness of such Person

for borrowed money (including, without limitation, the Obligations hereunder) orwhich has been incurred in connection with the acquisition of assets in eachcase having a final maturity of one or more than one year from the date oforigin thereof (or which is renewable or extendible at the option of the obligorfor a period or periods more than one year from the date of origin), includingall payments in respect thereof that are required to be made within one yearfrom the date of any determination of Funded Debt, whether or not the obligationto make such payments shall constitute a current liability of the obligor underAgreement Accounting Principles, (b) all Capitalized Lease Obligations of suchPerson, and (c) all Guaranties by such Person of Funded Debt of others.

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"Gangelhoff Note" means the 12% Subordinated Note, due 2000 dated December29, 1988 of General Housewares Corp. payable to Ronald J. Gangelhoff in the faceprincipal amount of $5,000,000.

"Guaranties" of a Person means any agreement by which such Person assumes,guarantees, endorses, contingently agrees to purchase or provide funds for thepayment of, or otherwise becomes liable upon, the obligation of any otherPerson, or agrees to maintain the net worth or working capital or otherfinancial condition of any other Person or otherwise assures any creditor of



such other Person against loss, including, without limitation, any comfortletter, operating agreement, take-or-pay contract or letter of credit butexcluding customary indemnities by any Persons with respect to products sold byit in the ordinary course of business.

"Indebtedness" of any Person shall mean and include all obligations of suchPerson which in accordance with Agreement Accounting Principles shall beclassified upon a balance sheet of such Person as liabilities of such Person,and in any event shall include all (a) obligations of such Person for borrowedmoney or which have been incurred in connection with the acquisition of propertyor assets, (b) obligations secured by any Lien upon property or assets owned bysuch Person, even though such Person has not assumed or become liable for thepayment of such obligations, (c) obligations created or arising under anyconditional sale or other title retention agreement with respect to propertyacquired by such Person, notwithstanding the fact that the rights and remediesof the seller, lender or lessor under such agreement in the event of default arelimited to repossession or sale of property, (d) obligations to purchase anyproperty or to obtain the services of another Person if the contract requiresthat payment for such property or services be made regardless of whether suchproperty is delivered or such services are performed, except that no obligationshall constitute Indebtedness solely because the contract provides forcommercially reasonable liquidated charges or reimbursement of expensesfollowing cancellation, (e) Capitalized Lease Obligations, (f) obligations withrespect to letters of credit and bankers acceptances and (g) Guaranties of

obligations of others of the character referred to in this definition.

"Interest Period" is defined in Section 2.4 hereof.

"Investments" shall mean all investments, in cash or by delivery ofproperty, made directly or indirectly in any Person, whether by acquisition ofshares of capital stock, Indebtedness or other obligations or Securities or byloan, advance, capital contribution or otherwise; PROVIDED that "INVESTMENTS"shall not mean or include routine investments in property to be used or consumedin the ordinary course of business.

"Lending Office" is defined in Section 10.4 hereof.

"Letter of Credit" is defined in Section 1.1(a) hereof. "Letter of Credit Commitment" is defined in Section 1.1(c) hereof.

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"Letter of Credit Facility" is defined in the introductory paragraphhereof.

"Letter of Credit Utilization" means, as of any date of determination, thesum of (i) the maximum aggregate amount which is or at any time thereafter maybe available for drawing under all Letters of Credit then outstanding (which in

the case of Letters of Credit payable in an Alternative Currency shall mean theU.S. Dollar Equivalent thereof as determined pursuant to Section 1.1(c)(vi)hereof) plus (ii) the aggregate amount of all drawings under Letters of Credithonored by the Agent and not theretofore reimbursed by the Borrower.

"Leverage Ratio" is defined in Section 8.7 hereof.

"LIBOR" is defined in Section 2.1(b) hereof.

"Lien" means any interest in Property securing an obligation owed to, or a



claim by, a Person other than the owner of the Property, whether such interestis based on the common law, statute or contract, including, but not limited to,the security interest lien arising from a mortgage, encumbrance, pledge,conditional sale, security agreement or trust receipt, or a lease, consignmentor bailment for security purposes. The term "Lien" shall also includereservations, exceptions, encroachments, easements, rights of way, covenants,conditions, restrictions, leases and other title exceptions and encumbrancesaffecting Property. For the purposes of this definition, a Person shall bedeemed to be the owner of any Property which it has acquired or holds subject toa conditional sale agreement, Capital Lease or other arrangement pursuant towhich title to the Property has been retained by or vested in some other Personfor security purposes, and such retention of title shall constitute a "Lien."

"Loan" is defined in Section 1.1(a) hereof, and the term "type" of Loanrefers to its status as a Domestic Rate Loan or Eurocurrency Loan.

"Loan Documents" means this Agreement, the Notes and the Applications.

"Margin Stock" means "Margin Stock" as defined in Regulation U of the Boardof Governors of the Federal Reserve System.

"Material Plan" is defined in Section 9.1(f) hereof.

"Note" is defined in Section 2.8 hereof.

"Obligations" means all unpaid principal of and accrued and unpaid intereston the Notes and the reimbursement obligation of the Borrower with respect tothe Letters of Credit, all accrued and unpaid fees and all other obligations ofthe Borrower to the Banks or any Bank or the Agent arising under the LoanDocuments.

"Original Dollar Amount" means in relation to any Loan denominated in anAlternative Currency, the U.S. Dollar Equivalent of such Loan on the day it ismade. -20-<PAGE>

"Overnight Eurocurrency Rate" shall mean for a Eurocurrency Loandenominated in an Alternative Currency, or any Letter of Credit payable in anAlternative Currency, the rate of interest per annum as determined by the Agent(rounded upwards, if necessary, to the nearest whole multiple of one-sixteenthof one percent (1/16 of 1%)) at which overnight or weekend deposits of theappropriate currency for delivery in immediately available and freelytransferable funds would be offered by the Agent to major banks in the interbankmarket upon request of such major banks for the applicable period as determinedabove and in an amount comparable to the unpaid principal amount of suchEurocurrency Loan or reimbursement obligation with respect to such Letter ofCredit (or, if the Agent is not placing deposits in such currency in theinterbank market, then the Agent's cost of funds in such currency for suchperiod).

"PBGC" is defined in Section 6.12 hereof.

"Permitted Investments" means the following:

(1) Existing Investments in foreign Consolidated Subsidiaries, other Investments existing as of December 31, 1993 and disclosed on the audited financial statements herefore delivered to the Banks, Investments in domestic Consolidated Subsidiaries and Investments in any corporation which concurrently with such investment becomes a Consolidated Subsidiary;



(2) Property to be used by the Borrower or a Subsidiary in the ordinary course of its business;

(3) Current assets arising from the sale of goods and services in the ordinary course of business of the Borrower and its Subsidiaries;

(4) Investments in direct obligations of the United States of America, or any agency thereof, or obligations guaranteed by the United States of America, maturing not more than one year from the date of acquisition thereof;

(5) Investments in certificates of deposits maturing not more than one year from the date of acquisition thereof, issued by any of the Banks or any commercial banks or trust companies organized under the laws of the United States or any state thereof, each having capital, surplus and undivided profits aggregating at least $500,000,000;

(6) Investments in commercial paper given the highest rating by both Moody's Investors Service, Inc. and Standard and Poors Corporation and maturing not more than 270 days from the date of creation thereof;

(7) Investments in direct obligations of a state of the United States, or a municipality thereof, given the highest rating by both Moody's

Investors Services, Inc. and Standard and Poors Corporation and maturing not more than one year from the date of acquisition thereof; and

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(8) the Borrower's own stock option plans and savings or stock purchase plans.

Investments shall be valued at cost less any net return of capital through thesale, liquidation or repayment (by credit or otherwise) thereof or other returnof capital thereon.

"Person" means an individual, partnership, corporation, associate, trust,unincorporated organization or any other entity or organization, including agovernment or agency or political subdivision thereof.

"Plan" means with respect to the Borrower and each Subsidiary at any timean employee pension benefit plan which is covered by Title IV of ERISA orsubject to the minimum funding standards under Section 412 of the Code andeither (i) is maintained by a member of the Controlled Group for employees of amember of the Controlled Group of which the Borrower or such Subsidiary is apart, (ii) is maintained pursuant to a collective bargaining agreement or anyother arrangement under which more than one employer makes contributions and towhich a member of the Controlled Group of which the Borrower or such Subsidiaryis a part is then making or accruing an obligation to make contributions or has

within the preceding five plan years made contributions, or (iii) under which amember of the Controlled Group of which the Borrower or such Subsidiary is apart has any liability, including any liability by reason of having been asubstantial employer within the meaning of Section 4063 of ERISA at any timeduring the preceding five years or by reason of being deemed a contributingsponsor under Section 4069 of ERISA.

"Property" means any interest in any kind of property or asset, whetherreal, personal or mixed, or tangible or intangible, whether now owned orhereafter acquired.



"Refinancing Borrowing" is defined in Section 2.3(d) hereof.

"Refunding Borrowing" is defined in Section 2.3(d) hereof.

"Rentals" shall mean and include as of the date of any determinationthereof all fixed payments (including as such all payments which the lessee isobligated to make to the lessor on termination of the lease or surrender of theproperty) payable by the Borrower or a Consolidated Subsidiary, as lessee orsublessee under a lease of real or personal property, but shall be exclusive ofany amounts required to be paid by the Borrower or a Consolidated Subsidiary(whether or not designated as rents or additional rents) on account ofmaintenance, repairs, insurance, taxes and similar charges. Fixed rents underany so-called "percentage leases" shall be computed solely on the basis of theminimum rents, if any, required to be paid by the lessee regardless of salesvolume or gross revenues.

"Required Banks" means as of the date of determination thereof, those Banksholding at least 66-2/3% of the Commitments or, in the event that no Commitmentsare outstanding hereunder, those Banks holding at least 66-2/3% in aggregateprincipal amount of the Loans and Letter of Credit Utilization outstandinghereunder.

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"Revolving Credit" is defined in the introductory paragraph hereof.

"Revolving Credit Loan Commitment" is defined in Section 1.1(a) hereof.

"Security" has the same meaning as in Section 2(l) of the Securities Actof 1933, as amended.

"SEC" means the Securities and Exchange Commission.

"Set-Off" is defined in Section 12.7 hereof.

"Subordinated Indebtedness" means the Indebtedness for Borrowed Money ofthe Borrower evidenced by the Gangelhoff Note and any other Indebtedness forBorrowed Money of the Borrower for money borrowed the terms of which areacceptable to the Required Banks and which is subordinated in right of paymentto the prior payment of the Obligations pursuant to subordination provisionsapproved in writing by the Required Banks.

"Subsidiary" means any corporation of which more than fifty percent (50%)of the outstanding Voting Stock is at the time directly or indirectly owned bythe Borrower, by one or more of its Subsidiaries, or by the Borrower and one ormore of its Subsidiaries.

"Tangible Assets" of any Person means, as of the date of any determination

thereof, the total amount of all assets of such Person (less depreciation,depletion and other properly deductible valuation reserves) after deducting thefollowing: good will, patents, trade names, trade marks, copyrights, franchises,experimental expense, organization expense, unamortized debt discount andexpense, deferred assets, the excess of cost of shares acquired over book valueof related assets, any write-ups in the book value of any asset resulting from arevaluation thereof, and such other assets as are properly classified as"Intangible Assets" in accordance with Agreement Account Principles.

"Termination Date" means November 30, 1997, as the same may be extended



pursuant to Section 4.2 hereof.

"The 1993 Credit Agreement" means that certain Credit Agreement dated as ofApril 20, 1993 as amended among the Borrower, the Agent and the Banks.

"Total Liabilities" means the total of the liabilities of the Borrower andits Consolidated Subsidiaries on a consolidated basis determined in accordancewith Agreement Accounting Principles.

"Unfunded Vested Liabilities" means, with respect to any Plan at any time,the amount (if any) by which (i) the present value of all vested nonforfeitableaccrued benefits under such Plan exceeds (ii) the fair market value of all Planassets allocable to such benefits, all determined as of the then most recentvaluation date for such Plan, but only to the extent that such excess represents

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a potential liability of a member of the Controlled Group to the PBGC or thePlan under Title IV of ERISA.

"Unrestricted Subsidiary" shall mean any Subsidiary designated as such onExhibit B hereto.

"U.S. Dollars" means lawful currency of the United States of America.

"U.S. Dollar Equivalent" means the amount of U.S. Dollars which would berealized by converting an Alternative Currency into U.S. Dollars in the spotmarket at the exchange rate quoted by the Agent at approximately 11:00 a.m.(London, England time) two Business Days prior to the date on which acomputation thereof is required to be made, to major banks in the interbankexchange market for the purchase of U.S. Dollars for such Alternative Currency.

"Voting Stock" of any Person means capital stock of any class or classes(however designated) having ordinary voting power for the election of directorsof such Person, other than stock having such power only by reason of thehappening of a contingency.

"Welfare Plan" means a "Welfare Plan," as said term is defined in Section3(1) of ERISA.

"Wholly-Owned" means a Subsidiary of which all of the issued andoutstanding shares of stock (other than directors' qualifying shares as requiredby law) shall be owned by the Borrower and/or one or more of its Wholly-OwnedSubsidiaries.

Section 5.2. Interpretation. The foregoing definitions shall be equallyapplicable to both the singular and plural forms of the terms defined. Allreferences to times of day herein shall be references to Chicago, Illinois timeunless otherwise specifically provided. Where the character or amount of any

asset or liability or item of income or expense is required to be determined orany consolidation or other accounting computation is required to be made for thepurposes of this Agreement, the same shall be done in accordance with AgreementAccounting Principles as in effect from time to time, to the extent applicable,except where such principles are inconsistent with the specific provisions ofthis Agreement.

SECTION 6. REPRESENTATIONS AND WARRANTIES.

The Borrower represents and warrants to the Banks as follows:



Section 6.1. Organization and Qualification. The Borrower is duly organizedand validly existing in good standing under the laws of the State of Delaware,has full and adequate corporate power to carry on its business as now conducted,is duly licensed or qualified and in good standing in each jurisdiction in whichthe nature of the business transacted by it or the nature of the Property ownedor leased by it makes such licensing or qualification necessary, except wherethe failure to be so licensed or qualified and in goodstanding would not have a

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material adverse effect on the financial condition or Property, business oroperations of the Borrower and the Consolidated Subsidiaries taken as a whole.

Section 6.2. Subsidiaries. As of the date hereof, the only Subsidiaries ofthe Borrower are designated in Exhibit B hereto; each Subsidiary is acorporation duly organized and validly existing in good standing under the lawsof the jurisdiction in which it was incorporated, has full and adequatecorporate power to carry on its business as now conducted, and is duly licensedor qualified and in good standing in each jurisdiction in which the nature ofthe business transacted by it or the nature of the Property owned or leased byit makes such licensing or qualification necessary, except where the failure to

be so licensed or qualified and in good standing would not have a materialadverse effect on the financial condition or Property, business or operations ofthe Borrower and the Consolidated Subsidiaries taken as a whole. Exhibit Bhereto correctly sets forth, as to each Subsidiary, whether or not it is aConsolidated Subsidiary, the jurisdiction of its incorporation, the percentageof issued and outstanding shares of each class of its capital stock owned by theBorrower and the Subsidiaries and, if such percentage is not 100% (excludingdirectors' qualifying shares as required by law), a description of each class ofits authorized capital stock and the number of shares of each class issued andoutstanding. All of the issued and outstanding shares of capital stock of eachSubsidiary are validly issued and outstanding and fully paid and nonassessableand all such shares indicated in Exhibit B as owned by the Borrower or aSubsidiary are owned, beneficially and of record, by the Borrower or such

Subsidiary, free of any Lien.

Section 6.3. Corporate Authority and Validity of Obligations. The Borrowerhas full right and authority to enter into this Agreement, to make theborrowings herein provided for, to request that the Letters of Credit be issuedhereunder, to issue its Notes and execute and deliver the Applications inevidence thereof and to perform all of its obligations hereunder and under theNotes and Applications; this Agreement, each Note and each Application deliveredby the Borrower have been duly authorized, executed and delivered by theBorrower and constitute valid and binding obligations of the Borrowerenforceable in accordance with their terms; and this Agreement, the Notes andthe Applications do not, nor does the performance or observance by the Borroweror any Subsidiary of any of the matters or things therein provided for,

contravene any provision of law or any charter or by-law provision of theBorrower or any Subsidiary or any material covenant, indenture or agreement ofor affecting the Borrower or any Subsidiary or a substantial portion of theirrespective Properties.

Section 6.4. Not an Investment Company. The Borrower is not an "investmentcompany" within the meaning of the Investment Company Act of 1940, as amended.

Section 6.5. Margin Stock. Neither the Borrower nor any of its Subsidiariesis engaged principally, or as one of its primary activities, in the business of



extending credit for the purpose of purchasing or carrying Margin Stock, andneither the Borrower nor any of its Subsidiaries will use the proceeds of anyLoan or Letter of Credit in a manner that violates any provision of RegulationU, G or X of the Board of Governors of the Federal Reserve System.

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Section 6.6. Financial Reports. The consolidated statement of financialcondition of the Borrower and the Consolidated Subsidiaries as at December 31,1993 and the related statements of consolidated income and consolidated cashflows of the Borrower and the Consolidated Subsidiaries for the year then endedand accompanying notes thereto, which financial statements are accompanied bythe report of Price Waterhouse, independent public accountants, and theunaudited statement of consolidated financial condition of the Borrower and theConsolidated Subsidiaries as at September 30, 1994 and the related statements ofconsolidated income and consolidated cash flows of the Borrower and theConsolidated Subsidiaries for the nine months then ended and accompanying notes,heretofore furnished to the Banks, fairly present the consolidated financialconditions of the Borrower and the Consolidated Subsidiaries as at such datesand the consolidated results of their operations and their consolidated cashflows for the periods then ended in conformity with generally acceptedaccounting principles applied on a consistent basis.

Section 6.7. No Material Adverse Change. Since December 31, 1993, there hasbeen no material adverse change in the condition, financial or otherwise, orbusiness prospects of the Borrower and the Consolidated Subsidiaries taken as awhole.

Section 6.8. Litigation. There is no litigation or governmental proceedingpending, nor to the knowledge of the Borrower threatened, against the Borroweror any Consolidated Subsidiary which if adversely determined would (a) impairthe validity or enforceability of, or materially impair the ability of theBorrower to perform its obligations under, this Agreement, the Notes or theApplications or (b) result in any material adverse change in the financialcondition or Property, business or operations of the Borrower and theConsolidated Subsidiaries taken as a whole.

Section 6.9. Tax Returns. The consolidated United States federal income taxreturns of the Borrower for the taxable year ended December 31, 1989 and for alltaxable years ended prior to said date have been examined by the InternalRevenue Service and have been approved as filed, and any additional assessmentsin connection with any of such years have been paid or the applicable statute oflimitations therefor has expired. There are no assessments in respect of theconsolidated United States federal income tax returns of the Borrower and theConsolidated Subsidiaries of a material nature for any taxable year ended afterDecember 31, 1990 pending, nor to the knowledge of the Borrower is any suchassessment threatened, other than for those which are either (i) provided for byreserves which in the opinion of the Borrower are adequate therefor or (ii) arerelated to the deductibility of approximately $2,400,000 of noncompete payments

made by the Borrower to Ronald J. Gangelhoff during 1991, 1992 and 1993.

Section 6.10. Approvals. No authorization, consent, license, exemption orfiling or registration with any court or governmental department, agency orinstrumentality, or any approval or consent of the stockholders of the Borroweror from any other Person, is necessary to the valid execution, delivery orperformance by the Borrower of this Agreement, the Notes or the Applications.

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Section 6.11. Liens. There are no Liens on any of the Property of theBorrower or any Subsidiary, except those which are permitted by Section 8.18hereof.

Section 6.12. ERISA. The Borrower and each Subsidiary are in compliance inall material respects with the Employee Retirement Income Security Act of 1974,as amended ("ERISA"), to the extent applicable to them and have received nonotice to the contrary from the Pension Benefit Guaranty Corporation ("PBGC") orany other governmental entity or agency. As of December 31, 1993 the liabilityof the Borrower and its Subsidiaries to PBGC in respect of Unfunded VestedLiabilities would not have been in excess of $99,000 if all employee pensionbenefit plans maintained by the Borrower and its Subsidiaries had beenterminated as of such date. No condition exists or event or transaction hasoccurred with respect to any Plan which could reasonably be expected to resultin the incurrence by the Borrower or any Subsidiary of any material liability,fine or penalty. Except as disclosed to the Banks in writing, neither theBorrower nor any Subsidiary has any contingent liability with respect to anypost-retirement benefits under a Welfare Plan, other than liability forcontinuation coverage described in Part 6 of Title I of ERISA and liability forpost-retirement life insurance benefits.

Section 6.13. Material Agreements. Neither the Borrower nor any Subsidiaryis a party to any agreement or instrument or subject to any charter or othercorporate restriction materially and adversely affecting its business,properties or assets, operations or condition (financial or otherwise). Neitherthe Borrower nor any Subsidiary is in default in the performance, observance orfulfillment of any of the obligations, covenants or conditions contained in (i)any agreement to which it is a party, which default might have a materialadverse effect on the business, properties or assets, operations, or condition(financial or otherwise) of the Borrower and its Subsidiaries taken as a wholeor (ii) any agreement or instrument evidencing or governing Indebtedness.

Section 6.14. Compliance with Environmental Laws. (a) The business andoperation of the Borrower and its Subsidiaries comply in all respects with all

applicable federal, state, regional, county and local laws, statutes, rules,regulations and ordinances relating to public health, safety or the environment,including, without limitation, relating to releases, discharges, emissions ordisposals to air, water, land or groundwater, to the withdrawal or use ofgroundwater, to the use, handling or disposal of polychlorinated biphenyls(PCB's), asbestos or urea formaldehyde, to the treatment, storage, disposal ormanagement of hazardous substances (including, without limitation, petroleum,its derivatives, by-products or other hydrocarbons), to exposure to toxic,hazardous or other controlled, prohibited or regulated substances, to thetransportations, storage, disposal management or release or gaseous or liquidsubstances, and any regulation, order, injunction, judgment, declaration, noticeor demand issued thereunder, except to the extent that such noncompliance wouldnot have a material adverse effect on the business, operations, properties,

assets or condition (financial or otherwise) of the Borrower and itsSubsidiaries taken as a whole.

(b) The Borrower has not given, nor should it give, nor has it received,any notice, letter, citation, order, warning, complaint, inquiry, claim ordemand that: (i) the Borrower has violated, or is about to violate, any federal,

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state, regional, county or local environmental, health or safety statute, law,rule, regulation, ordinance, judgment or order; (ii) there has been a release,or there is a threat of release, of hazardous substances (including, withoutlimitation, petroleum, its by-products or derivatives, or other hydrocarbons)from the Borrower's property, facilities, equipment or vehicles; (iii) theBorrower may be or is liable, in whole or in part, for the costs or cleaning up,remediating or responding to a release of hazardous substances (including,without limitation, petroleum, its by-products or derivatives, or otherhydrocarbons); (iv) any of the Borrower's property or assets are subject to aLien in favor of any governmental entity for any liability, costs or damages,under any federal, state or local environmental law, rule or regulation arisingfrom, or costs incurred by such governmental entity in response to, a release ofa hazardous substance (including, without limitation, petroleum, its by-productsor derivatives, or other hydrocarbons), except to the extent that suchviolation, release, liability or Lien could not have a material adverse effecton the business, operations, properties, assets or condition (financial orotherwise) of the Borrower and its Subsidiaries taken as a whole.

SECTION 7. CONDITIONS PRECEDENT.

The obligation of each Bank to make any Loan or any other financialaccommodation hereunder shall be subject to the following conditions precedent:

Section 7.1. Initial Borrowing. Prior to the initial Borrowing and Letter

of Credit hereunder:

(a) The Agent shall have received for each Bank the favorable written opinion of Gordon R. Erickson, Secretary and General Counsel of the Borrower, in substantially the form of Exhibit C hereto, and otherwise in and substance satisfactory to the Required Banks;

(b) The Agent shall have received for each Bank (i) certified copies of resolutions of the Board of Directors of the Borrower authorizing the execution and delivery of this Agreement, the Notes and the Applications, indicating the authorized signers of this Agreement, the Notes and the Applications and all other documents relating thereto and the specimen signatures of such signers, (ii) copies of the Borrower's Articles of

Incorporation and by-laws certified by the Secretary or other appropriate officer of the Borrower together with a certificate of good standing certified by the appropriate governmental officer in the jurisdiction of the Borrower's incorporation; and

(c) The Agent shall have received from the Borrower a list of its Authorized Representatives.

Section 7.2. All Loans and Letters of Credit. As of the time of the makingof each Borrowing, the issuance of each Letter of Credit (including the initialBorrowing and Letter of Credit):

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(a) The Agent shall have received for each Bank the Notes of the Borrower and the notice required by Section 2.3 hereof;

(b) Each of the representations and warranties of the Borrower set forth in Section 6 hereof (except for Section 6.7) shall be true and correct as of said time, except to the extent that any such representation or warranty relates solely to an earlier date;



(c) The Borrower shall be in full compliance with all of the terms and conditions hereof, and no Default or Event of Default shall have occurred and be continuing or would occur as a result of making such Borrowing or issuing such Letter of Credit;

(d) After giving effect to the Borrowing or Letter of Credit the aggregate principal amount of all Loans and Letter of Credit Utilization outstanding hereunder shall not exceed the Commitments; and

(e) Such Borrowing or Letter of Credit shall not violate any order, judgment or decree of any court or other authority or any provision of law or regulation applicable to any Bank (including, without limitation, Regulation U of the Board of Governors of the Federal Reserve System) as then in effect, provided that if any such circumstances affects fewer than all the Banks then the unaffected Banks shall not be relieved of their obligations to make a Loan as part of a Refunding Borrowing. Each request for a Borrowing or Letter of Credit shall be deemed to be a representation and warranty by the Borrower on the date of such Borrowing as to the facts specified in paragraphs (b) and (c) of this Section 7.2.

Section 7.3. Additional Conditions to Loans (other than RefundingBorrowings), Letters of Credit. In addition to the conditions set forth inSections 7.1 and 7.2 hereof, as of the time of each Borrowing (other than aRefunding Borrowing), the issuance of each Letter of Credit, the representations

and warranties set forth in Section 6.7 hereof shall be true as of said time,and the request for such Borrowing, as mentioned in Section 7.2., shall be andconstitute a representation and warranty as to such matters specified in Section6.7 hereof.

Section 7.4. Letters of Credit. As a further condition to the issuance ofeach Letter of Credit, the Agent shall have received an Application therefor.

Section 7.5. Termination of the 1993 Credit Agreement. The initial Loanshereunder shall be in an amount sufficient to repay all indebtedness of theBorrower owing to the Banks and Agent under The 1993 Credit Agreement (otherthan with respect to (a) letters of credit which shall constitute Letters ofCredit issued and outstanding hereunder and (b) eurodollar loans outstanding

thereunder which shall constitute Eurocurrency Loans for all purposes hereof,including without limitation, Section 2.10 hereof) and the Borrower herebydirects the Agent to such extent to so apply the proceeds of such Loans at whichtime The 1993 Credit Agreement shall terminate.

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SECTION 8. COVENANTS.

The Borrower agrees that, so long as any Note is outstanding hereunder orany credit is available to or in use by the Borrower hereunder except to theextent compliance in any case or cases is waived in writing by the Required

Banks:

Section 8.1. Corporate Existence. The Borrower shall, and shall cause eachSubsidiary (other than an Unrestricted Subsidiary) to, preserve and maintain itscorporate existence, subject to the provisions of Section 8.15 hereof.

Section 8.2. Maintenance. The Borrower will maintain, preserve and keep itsplants, properties and equipment deemed necessary to the proper conduct of itsbusiness in reasonably good repair, working order and condition and will fromtime to time make all reasonably necessary repairs, renewals, replacements,



additions and betterments thereto so that at all times such plants, propertiesand equipment shall be reasonably preserved and maintained, and will cause eachSubsidiary so to do in respect of Property owned or used by it; Provided,However, that nothing in this Section shall prevent the Borrower or a Subsidiaryfrom discontinuing the operation or maintenance of any such properties if suchdiscontinuance is, in the judgment of the Borrower, desirable in the conduct ofits business or the business of the Subsidiary and not disadvantageous in anymaterial respect to the Banks or the holders of the Notes.

Section 8.3. Taxes. The Borrower will duly pay and discharge, and willcause each Subsidiary to pay and discharge, all taxes, rates, assessments, feesand governmental charges upon or against the Borrower or such Subsidiary oragainst their respective Properties, in each case before the same becomesdelinquent and before penalties accrue thereon, unless and to the extent thatthe same is being contested in good faith and by appropriate proceedings andreserves are provided therefor that in the opinion of the Borrower are adequate.

Section 8.4. Insurance. The Borrower will insure, and keep insured, andwill cause each Subsidiary to insure, and keep insured, in good and responsibleinsurance companies, all insurable Property owned by it which is of a characterusually insured by companies similarly situated and operating like Property; andto the extent usually insured (subject to self-insured retentions) by companiessimilarly situated and conducting similar businesses, the Borrower will alsoinsure, and cause each Subsidiary to insure, employers' and public and product

liability risks in good and responsible insurance companies. The Borrower willupon request of the Agent furnish a summary setting forth the nature and extentof the insurance maintained pursuant to this Section 8.4.

Section 8.5. Financial Reports and Other Information. The Borrower will,and will cause each Subsidiary to, maintain a standard system of accounting inaccordance with generally accepted accounting principles and will furnish to theBanks and their respective duly authorized representatives such information

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respecting the business and financial condition of the Borrower and the

Subsidiaries as may be reasonably requested; and without any request willfurnish to each Bank:

(a) Within 90 days after the close of each fiscal year of the Borrower, an audit report of the Borrower and its Consolidated Subsidiaries for such year and accompanying financial statements certified by independent certified public accountants of recognized national standing, prepared in accordance with generally accepted accounting principles on a consolidated basis, including a balance sheet as of the end of such period, related profit and loss and reconciliation of surplus statement, and a statement of changes in financial position, accompanied by any management letter prepared by said accountants and by a certificate of said accountants that, in the course of their examination necessary for their

certification of the foregoing, they have obtained no knowledge of any Default or Event of Default, or if, in the opinion of such accountants, any Default or Event of Default shall exist, stating the nature and status thereof.

(b) Within 60 days after the close of the first three quarterly periods of each fiscal year of the Borrower, a consolidated unaudited balance sheet as at the close of each such period and a consolidated profit and loss and reconciliation of surplus statement and a statement of changes in financial position for the period from the beginning of such fiscal year



to the end of such quarter, all certified by a responsible financial officer.

(c) Together with the financial statements required hereunder, a compliance certificate in substantially the form of Exhibit D hereto signed by a responsible financial officer of the Borrower showing the calculations necessary to determine compliance with this Agreement and stating that no Default or Event of Default exists, or if any Default or Event of Default exists, stating the nature and status thereof.

(d) Within 270 days after the close of each fiscal year, if any Unfunded Vested Liabilities exist a statement of the Unfunded Vested Liabilities of each Plan, certified as correct by an actuary enrolled under ERISA.

(e) As soon as possible and in any event within 30 days after the Borrower knows that any reportable event (as defined in ERISA) has occurred with respect to any Plan, a statement, signed by a responsible financial officer of the Borrower, describing said reportable event and the action which the Borrower proposes to take with respect thereto.

(f) As soon as possible and in any event within 10 days after receipt by a corporate officer of the Borrower, a copy of (i) any notice or claim to the effect that the Borrower or any Subsidiary is or may be liable to

any Person as a result of the release by the Borrower, any of its Subsidiaries or any other Person of any toxic or hazardous waste or substance into the environment, which liability could have a material adverse effect on the business, operation, properties, assets or conditions (financial or otherwise) of the

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Borrower and the Subsidiaries taken as a whole and (ii) any notice alleging any violation of any federal, state or local environmental, health or safety law or regulation by the Borrower or any Subsidiary which violation could have a material adverse effect on the business, operation,

properties, assets or conditions (financial or otherwise) of the Borrower and the Subsidiaries taken as a whole.

(g) Promptly upon the furnishing thereof to the shareholders of the Borrower, copies of all financial statements, reports and proxy statements so furnished.

(h) Promptly upon the filing thereof, copies of all registration statements and annual, quarterly, monthly or other regular reports which the Borrower or any Subsidiary files with the SEC.

(i) Promptly upon discovery thereof, notice of the occurrence of any Default and of any other development, financial or otherwise, which might

materially adversely affect its ability to repay the Obligations.

(j) Promptly after incurrence thereof, notice of any Funded Debt incurred by the Borrower after the date hereof.

(k) Such other information (including non-financial information) as the Agent or any Bank may from time to time reasonably request.

Section 8.6. Consolidated Net Worth. The Borrower will at all times keepand maintain Consolidated Net Worth at an amount not less than the sum of (i)



$45,000,000 plus (ii) 50% of positive Consolidated Net Earnings earned by theBorrower during each completed fiscal quarter on a cumulative basis (withoutdeduction for a net loss during a fiscal quarter) from January 1, 1995 throughand including the date of determination.

Section 8.7. Leverage Ratio. The Borrower will maintain at all times aratio of (a) the difference between (i) Consolidated Funded Debt less (ii)Indebtedness with respect to commercial letters of credit ("ConsolidatedAdjusted Funded Debt") to (b) the sum of (i) Consolidated Net Worth plus (ii)Consolidated Adjusted Funded Debt (the "Leverage Ratio") of not more than .45 to1.0.

Section 8.8. Fixed Charge Coverage Ratio. As of the end of each fiscalquarter, the Borrower will maintain a ratio of Earnings Available for FixedCharges to Fixed Charges, in each case for the previous four fiscal quartersending on the last day of such quarter (taken as a single accounting period)(the "Fixed Charge Coverage Ratio") for the previous four fiscal quarters endingon the last day of such quarter of not less than 2.0 to 1.0.

Section 8.9. Minimum Current Ratio. The Borrower will maintain at all timesa ratio of Consolidated Current Assets to Consolidated Current Liabilities ofnot less than 1.5:1.0.

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Section 8.10. Distribution. The Borrower will not, except as hereinafterprovided:

(a) declare or pay any dividends, either in cash or property on any class of its stock (except dividends payable solely in common stock of the Borrower); or

(b) directly or indirectly, or through any Subsidiary, purchase, redeem or retire any of its stock or any warrants, rights or options to purchase or otherwise acquire any shares of its stock (other than payments

to any officer of the Borrower in connection with the exercise of such officer's stock appreciation rights granted pursuant to stock purchase plans of the Borrower to the extent such payments are required to be deducted in the calculation of Consolidated Net Earnings and so long as a Default or Event of Default shall not have occurred and be continuing at the time of any such payment or would occur as a result thereof, the Borrower acknowledging and agreeing that all agreements relating to any such payments shall provide that the Borrower's obligation to make such payments shall be subject to satisfaction of the foregoing conditions); or

(c) make any other distribution, either directly or indirectly or through any Subsidiary, in respect of its stock;

(such declarations and payments of dividends (computed without duplication),purchases, redemptions or retirements of stock, warrants, rights or options andall such other distributions being herein collectively called "Distributions"),if after giving effect to any such Distribution, the aggregate amount ofDistributions declared or made outstanding during the period from and afterDecember 31, 1993 to and including the date of the declaration or making of theDistribution would exceed the sum of (i) $3,000,000 plus (ii) 50% ofConsolidated Net Earnings (or, if such Consolidated Net Earnings is a deficitfigure, then minus 100% of such deficit) for such period computed on acumulative basis for said entire period.



The Borrower will not declare any dividend payable more than 90 days afterthe date of the declaration thereof and will not declare or make anyDistribution if a Default has occurred and is continuing or if, on the datethereof and after giving effect thereto the payment would create a Default orEvent of Default.

For the purposes of this Section 8.10 the amount of any Distributiondeclared or paid or distributed in property shall be deemed to be the greater ofbook or fair market value as determined in good faith by the board of directorsof the Borrower (in each case after deducting any liabilities relating thereto,which are, concurrently with the receipt of such Distribution, assumed by therecipient thereof), of such property at the time of the making of theDistribution in question.

Section 8.11. Indebtedness for Borrowed Money. The Borrower will not norwill it permit any Subsidiary to, issue, incur, assume, create or haveoutstanding any Indebtedness for Borrowed Money; Provided, However, that theforegoing provisions shall not restrict nor operate to prevent:

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(a) the indebtedness of the Borrower on the Notes and with respect to the Letters of Credit;

(b) Funded Debt of the Borrower's Subsidiaries existing as of the date hereof and disclosed on Exhibit E hereto and Funded Debt of the Borrower;

(c) purchase money indebtedness permitted by Section 8.18(f) hereof; (d) other existing short term indebtedness of the Borrower disclosed on Exhibit E hereto;

(e) Subordinated Indebtedness; and

(f) indebtedness not otherwise permitted by this Section aggregating

not more than $1,000,000 at any one time outstanding.

Section 8.12. Sale and Leaseback. The Borrower will not, nor will it permitany Subsidiary to, sell or transfer any property in order to concurrently orsubsequently lease as lessee such or similar property.

Section 8.13. Investments. The Borrower will not, nor will it permit anySubsidiary to, make or suffer to exist any Investments except PermittedInvestments.

Section 8.14. Capital Expenditures. The Borrower will not, and will notpermit its Consolidated Subsidiaries to, expend or become obligated for capitalexpenditures (as defined and classified in accordance with Agreement Accounting

Principles consistently applied) during any fiscal year in excess of (a) theamount of all charges for depreciation of fixed assets and amortization ofIntangible Assets for the previous fiscal year computed on a consolidated basisfor the Borrower and the Consolidated Subsidiaries in accordance with AgreementAccounting Principles plus (b) Consolidated Net Earnings for the previous fiscalyear less (c) dividends paid during the previous fiscal year in the aggregatefor the Borrower and its Consolidated Subsidiaries, provided, that, the Borrowerwill not, nor will it permit its Consolidated Subsidiaries to, make any capitalexpenditure if a Default or Event of Default has occurred and is continuing, orif on the date thereof and after giving effect thereto such expenditure would



create a Default or Event of Default.

Section 8.15. Mergers, Consolidations, Leases, and Sales. The Borrower:

(a) will not be a party to any merger or consolidation except that a Subsidiary may merge into the Borrower or into any one or more Subsidiaries; and

(b) will not, and will not permit any Consolidated Subsidiary to,sell, assign, lease or otherwise transfer to any Person other than the Borroweror one or more Consolidated Subsidiaries any Properties (including, withoutlimitation, any capital stock of any Consolidated Subsidiary), unless such sale,assignment, lease or transfer is for a consideration not less than the fairmarket value thereof and unless, after giving effect to such sale,assignment,lease or transfer (i) the aggregate

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proceeds to the Borrower and the Consolidated Subsidiaries of all such sales,assignments, leases and transfers (other than sales of inventory in the ordinarycourse of its business as conducted on the date hereof) during the calendar yearin which such sale, assignment, lease or transfer shall occur shall not exceed10% of Tangible Assets, (ii) no Default or Event of Default shall have occurred

and be continuing or would occur as a result thereof and (iii) the Borrowershall have furnished to the Banks a certificate and historic pro formacalculations reasonably satisfactory to the Required Banks showing that aftergiving effect to such sale Consolidated Net Earnings for the immediatelypreceding twelve month period ending on or about the date of such sale would nothave been less than 10% of actual Consolidated Net Earnings for such period.

Section 8.16. ERISA. The Borrower will promptly pay and discharge allobligations and liabilities arising under ERISA of a character which if unpaidor unperformed might result in the imposition of a Lien against any of itsproperties or assets and will promptly notify the Agent of (i) the occurrence ofany reportable event (as defined in ERISA) with respect to a Plan, other thanany such event of which the PBGC has waived notice by regulation, (ii) receipt

of any notice from PBGC of its intention to seek termination of any Plan orappointment of a trustee therefor, (iii) its or any Subsidiary's intention toterminate or withdraw from any Plan, and (iv) the occurrence of any event withrespect to any Plan which could result in the incurrence by the Borrower or anySubsidiary of any material liability, fine or penalty, or any material increasein the contingent liability of the Borrower or any Subsidiary with respect toany post-retirement Welfare Plan benefit.

Section 8.17. Conduct of Business. The Borrower will not engage in anybusiness if, as a result, the general nature of the business which would then beengaged in by the Borrower would be substantially changed from the generalnature of the business engaged in by the Borrower on the date of this Agreement.

Section 8.18. Liens. The Borrower will not nor will it permit anySubsidiary to create, incur, permit to exist or to be incurred any Lien of anykind on any Property owned by the Borrower or any Subsidiary; Provided, However.that this Section 8.18 shall not apply to nor operate to prevent:

(a) Liens for taxes, assessments or governmental charges or levies on its property if the same shall not at the time be delinquent or thereafter can be paid without penalty or are being contested in good faith and by appropriate proceedings.



(b) Liens imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than 60 days past due.

(c) Liens arising out of pledges or deposits under worker's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation.

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(d) Utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of the Borrower or the Subsidiaries.

(e) Liens existing on the date hereof and described in Exhibit F hereto.

(f) Liens incurred to sellers in connection with purchase money financing up to an aggregate amount outstanding at any time of $3,000,000.

Section 8.19. Use of Proceeds; Margin Stock. The Borrower shall only usethe proceeds of the Loans for general corporate purposes, and the Borrower shallnot directly or indirectly use the proceeds of any of the Loans to purchase orcarry any Margin Stock, and at no time will Margin Stock constitute 25% or moreof the assets of the Borrower or of the consolidated assets of the Borrower andthe Subsidiaries.

Section 8.20. Compliance with Laws. Without limiting any of the othercovenants of the Borrower in this Section 8, the Borrower will, and will causeeach of its Subsidiaries to, conduct its business, and otherwise be, incompliance with all applicable laws, regulations, ordinances and orders of anygovernmental or judicial authorities (including, without limitation, those of

the type mentioned in Section 6.14 hereof), non-compliance with which would (a)impair the validity or enforceability or the ability of the Borrower to performits obligations under the Loan Documents or (b) result in any material adversechange in the financial condition or properties, business or operations of theBorrower and the Consolidated Subsidiaries taken as a whole; PROVIDED, HOWEVER,that the Borrower or any Subsidiary shall not be required to comply with anysuch law, regulation, ordinance or order if it shall be contesting such law,regulation, ordinance or order in good faith by appropriate proceedings andreserves, if appropriate, shall have been established therefor that are adequatein the Borrower's opinion.

SECTION 9. EVENTS OF DEFAULT AND REMEDIES.

Section 9.1. Events of Default. Any one or more of the following shallconstitute an Event of Default:

(a) (i) default in the payment when due of any principal on any Note or any Loan evidenced thereby, or of any reimbursement obligation with respect to any Letter of Credit, whether at the stated maturity thereof or at any other time provided in this Agreement; or (ii) default for a period of five days in the payment when due of interest on any Note or any Loan evidenced thereby or of any other sums required to be paid pursuant to this Agreement;



(b) default by the Borrower in the observance or performance of any covenant set forth in Sections 8.6 through 8.15 and Section 8.17 hereof;

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(c) default by the Borrower in the observance or performance of any other provision hereof not mentioned in (a) or (b) above, which is not remedied within 30 days after notice thereof to the Borrower by the Agent or any Bank;

(d) any representation or warranty made herein by the Borrower, or in any statement or certificate furnished pursuant hereto by the Borrower, or in any Application or in connection with any Loan or other extension of credit made hereunder, proves untrue in any material respect as of the date of the issuance or making thereof;

(e) the Borrower or any Subsidiary shall fail within thirty (30) days to pay, bond or otherwise discharge any judgment or order for the payment of money in excess of $500,000, which is not stayed on appeal or otherwise being appropriately contested in good faith;

(f) the Borrower or any other member of its Controlled Group shall

fail to pay when due an amount or amounts aggregating in excess of $500,000 which it shall have become liable to pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Vested Liabilities in excess of $500,000 (collectively, a "Material Plan") shall be filed under Title IV of ERISA by the Borrower or any other member of its Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any Material Plan or a proceeding shall be instituted by a fiduciary of any Material Plan against the Borrower or any member of its Controlled Group to enforce Section 515 or 4219(c)(5) of ERISA and such proceeding shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be

entitled to obtain a decree adjudicating that any Material Plan must be terminated;

(g) (A) default shall occur in the payment when due of any indebtedness for borrowed money issued, assumed or guaranteed by the Borrower or any Subsidiary aggregating in excess of $250,000, or (B) default shall occur under any indenture, agreement or other instrument under which any indebtedness for borrowed money of the Borrower or any Subsidiary may be issued, assumed or guaranteed, and such default shall continue for a period of time sufficient to permit the acceleration of the maturity of any such indebtedness for borrowed money of the Borrower or any Subsidiary aggregating in excess of $250,000 (whether or not such maturity is in fact accelerated);

(h) the Borrower or any of its Subsidiaries shall (i) have entered involuntarily against it an order for relief under the United States Bankruptcy Code, as amended, (ii) not pay, or admit in writing its inability to pay, its debts generally as they become due, (iii) make an assignment for the benefit of creditors, (iv) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, examiner, liquidator or similar official for it or any substantial part of its property, (v) institute any proceeding seeking to have entered against



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it an order for relief under the United States Bankruptcy Code, as amended, to adjudicate it insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors or fail to file an answer or other pleading denying the material allegations of any such proceeding filed against it, or (vi) fail to contest in good faith any appointment or proceeding described in Section 9.1.(i) hereof; or

(i) a custodian, receiver, trustee, examiner, liquidator or similar official shall be appointed for the Borrower or any of its Subsidiaries or any substantial part of any of their Property, or a proceeding described in Section 9.1(h)(v) shall be instituted against the Borrower, and such appointment continues undischarged or such proceeding continues undismissed or unstayed for a period of sixty (60) days.

Section 9.2. Non-Bankruptcy Defaults. When any Event of Default other thanthose described in Sections 9.1.(h) or (i) has occurred and is continuing, theAgent shall, if so directed by the Required Banks by notice to the Borrower,

take either or both of the following actions:

(a) terminate the remaining Commitments of the Banks hereunder on the date stated in such notice (which may be the date thereof); and

(b) declare the principal of and the accrued interest on all outstanding Notes and other outstanding Obligations of the Borrower to be forthwith due and payable and thereupon all of said Notes and other outstanding Obligations, including both principal and interest, shall be and become immediately due and payable together with all other amounts payable under this Agreement without further demand, presentment, protest or notice of any kind.

The Agent, after giving notice to the Borrower pursuant to Section 9.1 or thisSection 9.2, shall also promptly send a copy of such notice to the other Banks,but the failure to do so shall not impair or annul the effect of such notice.

Section 9.3. Bankruptcy Defaults. When any Event of Default described insubsections (h) or (i) of Section 9.1. hereof has occurred and is continuing,then all outstanding Notes and other Obligations shall immediately become dueand payable together with all other amounts payable under this Agreement withoutpresentment, demand, protest or notice of any kind, and the obligation of theBanks to extend further credit pursuant to any of the terms hereof shallimmediately terminate.

Section 9.4. Letters of Credit. When any Event of Default, other than an

Event of Default described in subsections (h) or (i) of Section 9.1 hereof hasoccurred and is continuing, the Borrower shall, upon demand of the Agent, andwhen any Event of Default described in subsections (h) or (i) of Section 9.1 hasoccurred, the Borrower shall, without notice or demand from the Agent,immediately pay to the Agent the full amount of each Letter of Credit, Provided,However, that with respect to the undrawn face amount of Letters of Credit, such

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amount shall be held by the Agent as collateral security for such Obligations ofthe Borrower with respect to such Letters of Credit, the Borrower herebyagreeing to immediately make each such payment and acknowledging and agreeingthe Agent would not have an adequate remedy at law for failure of the Borrowerto honor any such demand and that the Agent shall have the right to require theBorrower to specifically perform such undertaking whether or not any draws hadbeen made under the Letters of Credit.

Section 9.5. Expenses. The Borrower agrees to pay to the Agent and eachBank, or any other holder of any Note outstanding hereunder, all costs andexpenses incurred or paid by the Agent and such Bank or any such holder,including reasonable attorneys' fees and court costs, in connection with anyDefault or Event of Default by the Borrower hereunder or in connection with theenforcement of any of the terms hereof or of the other Loan Documents.

SECTION 10. CHANGE IN CIRCUMSTANCES.

Section 10.1. Change of Law. Notwithstanding any other provisions of thisAgreement or any Note, if at any time after the date hereof any change inapplicable law or regulation or in the interpretation thereof makes it unlawfulfor any Bank to make or continue to maintain Eurocurrency Loans or to giveeffect to its obligations as contemplated hereby, such Bank shall promptly givenotice thereof to the Borrower, with a copy to the Agent, and such Bank's

obligations to make or maintain Eurocurrency Loans under this Agreement shallterminate until it is no longer unlawful for such Bank to make or maintainEurocurrency Loans. The Borrower shall prepay on demand the outstandingprincipal amount of any such affected Eurocurrency Loans, together with allinterest accrued thereon and all other amounts then due and payable to such Bankunder this Agreement; Provided, However, subject to all of the terms andconditions of this Agreement, if denominated in U.S. Dollars, the Borrower maythen elect to borrow the principal amount of the affected Eurocurrency Loan fromsuch Bank by means of a Domestic Rate Loan from such Bank that shall not be maderatably by the Banks but only from such affected Bank and payments thereon shallbe made contemporaneously with payments on the relevant Borrowing ofEurocurrency Loans.

Section 10.2. Unavailability of Deposits or Inability to Ascertain, orInadequacy of, LIBOR. If on or prior to the first day of any Interest Period forany Borrowing of Eurocurrency Loans:

(a) the Agent advises the Borrower that deposits in the relevant currency (in the applicable amounts) are not being offered to it in the eurocurrency interbank market for such Interest Period, or

(b) Banks having 50% or more of the aggregate amount of the Commitments advise the Agent that LIBOR as determined by the Agent will not adequately and fairly reflect the cost to such Banks of funding their Eurocurrency Loans for such Interest Period, then the Agent shall forthwith

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give notice thereof to the Borrower and the Banks, whereupon until the Agentnotifies the Borrower that the circumstances giving rise to such suspension nolonger exist, the obligations of the Banks to make Eurocurrency Loans in theaffected currency shall be suspended.

Section 10.3. Increased Cost and Reduced Return. (a) If on or after the



date hereof, the adoption of any applicable law, rule or regulation, or anychange therein, or any change in the interpretation or administration thereof byany governmental authority, central bank or comparable agency charged with theinterpretation or administration thereof, or compliance by any Bank (or itsLending Office) with any request or directive (whether or not having the forceof law) of any such authority, central bank or comparable agency:

(i) shall subject any Bank (or its Lending Office) to any tax, duty or other charge with respect to its Eurocurrency Loans, its Notes or its obligation to make Eurocurrency Loans, or shall change the basis of taxation of payments to any Bank (or its Lending Office) of the principal of or interest on its Eurocurrency Loans or any other amounts due under this Agreement in respect of its Eurocurrency Loans or its obligation to make Eurocurrency Loans (except for changes in the rate of tax on the overall net income of such Bank or its Lending Office imposed by the jurisdiction in which such Bank's principal executive office or Lending Office is located); or

(ii) shall impose, modify or deem applicable any reserve, special deposit or similar requirement (including, without limitation, any such requirement imposed by the Board of Governors of the Federal Reserve System, but excluding with respect to any Eurocurrency Loans any such requirement included in an applicable Eurocurrency Reserve Percentage) against assets of, deposits with or for the account of, or

credit extended by, any Bank (or its Lending Office) or shall impose on any Bank (or its Lending Office) or on the interbank market any other condition affecting its Eurocurrency Loans, its Notes or its obligation to make Eurocurrency Loans;

and the result of any of the foregoing is to increase the cost to such Bank (orits Lending Office) of making or maintaining any Eurocurrency Loan, or to reducethe amount of any sum received or receivable by such Bank (or its LendingOffice) under this Agreement or under its Notes with respect thereto, by anamount deemed by such Bank to be material, then, within fifteen (15) days afterdemand by such Bank (with a copy to the Agent), the Borrower shall be obligatedto pay to such Bank such additional amount or amounts as will compensate suchBank for such increased cost or reduction (computed commencing on the effective

date of any event mentioned herein). Each Bank agrees to use its best efforts togive the Borrower notice of the occurrence of any event mentioned herein.

(b) The parties recognize that as of the date hereof the Banks are subject to guidelines published by various banking regulators in the United States and elsewhere with jurisdiction over the Banks, issued pursuant to the risk-based capital framework developed by the Basle Committee of Banking Regulation and Supervisory Practices, that call for the Banks to maintain capital against, among other things, unfunded loan commitments with a maturity of more than one year. The parties agree that each Bank shall have the right to require a renegotiation of the fees payable to it

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under Section 3.1 hereof at any time by giving notice to the Borrower and theAgent of its desire to so renegotiate such fees if such Bank determines it orany corporation controlling it is required to maintain capital to support suchBank's unused Commitment hereunder. Upon the Borrower receiving such notice froma Bank, for a period of 30 days the Borrower and such Bank shall attempt torenegotiate the fees payable to such Bank so that such fees shall be acceptableto both parties in their discretion, which renegotiated fees, if any, shall



become effective on the date specified by the Borrower and Bank in a writtennotice to the Agent setting forth such fee. If after such 30 day period theBorrower and such Bank have been unable to reach such an agreement, either suchparty shall have the right to terminate the relevant Bank's Commitmentshereunder by giving the other party and the Agent notice thereof, whereupon theCommitment of such Bank shall terminate; provided that if any Loans from suchBank are then outstanding hereunder the Borrower shall have the right to requirethat the Commitment of such Bank remain in effect in the amount of suchoutstanding Loans and thereafter continue to remain in effect in the aggregateamount of all Loans of such Bank outstanding hereunder; Provided, However, thatany repayment of such Bank's outstanding Loans (other than through a RefundingBorrowing) shall automatically reduce the amount of the Commitment of such Bankby the amount of such repayment. Without limiting the effect of any otherprovision hereof, it is specifically understood that each Bank may require therenegotiation of the fees payable to such Bank at any time hereunder, and nofailure or delay on the part of a Bank in requiring such renegotiation shall bedeemed a waiver of, or otherwise limited or affect, the Bank's right to requiresuch renegotiation.

Section 10.4. Lending Offices. Each Bank may, at its option, elect to makeits Loans hereunder at the branch, office or affiliate specified on theappropriate signature page hereof (each a "Lending Office") for each type ofLoan available hereunder or at such other of its branches, offices or affiliatesas it may from time to time elect and designate in a notice to the Borrower and

the Agent.

Section 10.5. Discretion of Bank as to Manner of Funding. Notwithstandingany other provision of this Agreement, each Bank shall be entitled to fund andmaintain its funding of all or any part of its Loans in any manner it sees fit,it being understood, however, that for the purposes of this Agreement alldeterminations hereunder shall be made as if each Bank had actually funded andmaintained each Eurocurrency Loan through the purchase of deposits in therelevant market having a maturity corresponding to such Loan's Interest Periodand bearing an interest rate equal to LIBOR for such Interest Period.

SECTION 11. THE AGENT.

Section 11.1. Appointment and Authorization. Each Bank hereby irrevocablyappoints Harris Trust and Savings Bank its Agent under this Agreement and theother Loan Documents and hereby authorizes the Agent to take such action asAgent and on its behalf and to exercise such powers under this Agreement and theother Loan Documents as are delegated to the Agent by the terms hereof, togetherwith such powers as are reasonably incidental thereto.

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Section 11.2. Agent and Affiliates. The Agent shall have the same rights

and powers under this Agreement and the other Loan Documents as any other Bankand may exercise or refrain from exercising the same as though it were not anAgent, and the Agent and its affiliates may accept deposits from, lend money to,and generally engage in any kind of business with the Borrower or any Subsidiaryor affiliate of the Borrower as if it were not an Agent hereunder andthereunder.

Section 11.3. Action by Agent. Except for action expressly required of theAgent hereunder, the Agent shall in all cases be fully justified in failing orrefusing to act hereunder and under the other Loan Documents unless the Agent



shall be indemnified to its reasonable satisfaction by the Banks against any andall liability and expense which may be incurred by it by reason of taking orcontinuing to take any such action. In all cases in which this Agreement doesnot require the Agent to take certain actions, the Agent shall be fullyjustified in using its discretion in failing to take or in taking any actionhereunder or under the other Loan Documents. Without limiting the generality ofthe foregoing, the Agent shall not be required to take any action with respectto any Event of Default, except as expressly provided in Section 9.2. The Agentshall be acting as an independent contractor hereunder and nothing herein shallbe deemed to impose on the Agent any fiduciary obligations to the Banks or theBorrower.

Section 11.4. Consultation with Experts. The Agent may consult with legalcounsel, independent public accountants and other experts selected by it andshall not be liable for any action taken or omitted to be taken by it in goodfaith in accordance with the advice of such counsel, accountants or experts.

Section 11.5. Liability of Agent. No Agent nor any of its directors,officers, agents or employees shall be liable for any action taken or not takenby it in connection herewith (i) with the consent or at the request of theRequired Banks or (ii) in the absence of its own gross negligence or willfulmisconduct. The Agent nor any of its directors, officers, agents or employeesshall not be responsible for or have any duty to ascertain, inquire into orverify (i) any statement, warranty or representation made in connection with

this Agreement or any borrowing or other extension of credit hereunder or anyother Loan Document; (ii) the performance or observance of any of the covenantsor agreements of the Borrower in any Loan Document; (iii) the satisfaction ofany condition specified in Section 7, except receipt of items required to bedelivered to the Agent; or (iv) the validity, effectiveness or genuineness ofthis Agreement, the Notes, the Letters of Credit, any other Loan Document or anyother instrument or writing furnished in connection herewith. The Agent shallnot incur any liability by acting in reliance upon any notice, consent,certificate, request or statement, (whether written or oral) or other documentsbelieved by it to be genuine or to be signed by the proper party or parties and,in the case of legal matters, in relying on the advice of counsel (includingcounsel for the Borrower). The Agent may treat the Banks that are named hereinas the holders of the Notes and the indebtedness contemplated herein unless and

until the Agent receives notice of the assignment of the Note and theindebtedness held by a Bank hereunder pursuant to an assignment contemplated bySection 12.11 hereof.

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Section 11.6. Indemnification. Each Bank shall, ratably in accordance withits Commitments (or, if the Commitments have been terminated in whole, ratablyin accordance with its outstanding Loans and Letter of Credit Utilization),indemnify the Agent (to the extent not reimbursed by the Borrower) against anycost, expense (including counsels' fees and disbursements), claim, demand,action, loss, obligation, damages, penalties, judgments, suits or liability

(except such as result from the Agent's gross negligence or willful misconduct)that the Agent may suffer or incur in connection with this Agreement or anyother Loan Document or any action taken or omitted by the Agent hereunder orthereunder.

Section 11.7. Credit Decision. Each Bank acknowledges that it has,independently and without reliance upon the Agent or any other Bank, and basedon such documents and information as it has deemed appropriate, made its owncredit analysis and decision to enter into this Agreement. Each Bank alsoacknowledges that it will, independently and without reliance upon the Agent or



any other Bank, and based on such documents and information as it shall deemappropriate at the time, continue to make its own credit decisions in taking ornot taking any action under this Agreement or any other Loan Document.

Section 11.8. Resignation of the Agent. Subject to the appointment andacceptance of a successor Agent as provided below, the Agent may resign at anytime by giving written notice thereof to the Banks and the Borrower. Upon anysuch resignation of the Agent, the Required Banks shall have the right toappoint, with the consent of the Borrower, a successor Agent. If no successorAgent shall have been so appointed by the Required Banks, and shall haveaccepted such appointment, within thirty (30) days after the retiring Agent'sgiving of notice of resignation, then the retiring Agent may, on behalf of theBanks, appoint a successor Agent, which shall be a commercial bank organizedunder the laws of the United States of America or of any State thereof andhaving a combined capital and surplus of at least $200,000,000. Upon theacceptance of its appointment as Agent hereunder by a successor Agent, suchsuccessor Agent shall thereupon succeed to and become vested with all the rightsand duties of the retiring Agent, and the retiring Agent shall be dischargedfrom its duties and obligations hereunder and under the other Loan Documents.After any retiring Agent's resignation hereunder as Agent, the provisions ofthis Section 11 shall inure to its benefit as to any actions taken or omitted tobe taken by it while it was Agent.

Section 11.9. Payments. Unless the Agent shall have been notified by a Bank

prior to the date on which such Bank is scheduled to make payment to the Agentof the proceeds of a Loan (which notice shall be effective upon receipt) thatsuch Bank does not intend to make such payment, the Agent may assume that suchBank has made such payment when due and the Agent may in reliance upon suchassumption (but shall not be required to) make available to the Borrower theproceeds of the Loan to be made by such Bank and, if any Bank has not in factmade such payment to the Agent, such Bank shall, on demand, pay to the Agent theamount made available to the Borrower attributable to such Bank together withinterest thereon in respect of each day during the period commencing on the datesuch amount was made available to the Borrower and ending on (but excluding) thedate such Bank pays such amount to the Agent at a rate per annum equal to theFederal Funds Rate (as hereinafter defined). If such amount is not received fromsuch Bank by the Agent immediately upon demand, the Borrower will, on demand,

repay to the Agent the proceeds of the Loan attributable to such Bank with

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interest thereon at a rate per annum equal to the interest rate applicable tothe relevant Loan, but without such payment being considered a payment orprepayment of a Loan, so that the Borrower will have no liability under Section2.10 hereof with respect to such payment. "Federal Funds Rate" shall mean the"Federal Funds (Effective)" rate described in Section 2.1(a)(ii) hereof.

SECTION 12. MISCELLANEOUS.

Section 12.1. Witholding Taxes. (a) Except as otherwise required by law andsubject to Section 12.1(b) hereof, each payment by the Borrower under thisAgreement or the Notes or in respect of the Letters of Credit shall be madewithout setoff or counterclaim and without withholding for or on account of anypresent or future taxes imposed by or within the jurisdiction in which theBorrower is domiciled, any jurisdiction from which the Borrower makes anypayment hereunder, or (in each case) any political subdivision or taxingauthority thereof or therein. If any such withholding is so required, theBorrower shall make the withholding, pay the amount withheld to the appropriategovernmental authority before penalties attach thereto or interest accrues



thereon and forthwith pay such additional amount as may be necessary to ensurethat the net amount actually received by each Bank and the Agent free and clearof such taxes (including such taxes on such additional amount) is equal to theamount which that Bank or the Agent (as the case may be) would have received hadsuch withholding not been made. If the Agent or any Bank pays any amount inrespect of any such taxes, penalties or interest, the Borrower shall reimbursethe Agent or that Bank for that payment on demand in the currency in which suchpayment was made. If the Borrower pays any such taxes, penalties or interest, itshall deliver official tax receipts evidencing that payment or certified copiesthereof to the Agent on or before the thirtieth day after payment.

(b) U.S. Witholding Tax Exemptions. Each Bank that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower on or before the date the initial Borrowing is made hereunder, duly completed and signed copies of either Form 1001 (relating to such Bank and entitling it to a complete exemption from withholding on all amounts to be received by such Bank, including fees, pursuant to this Agreement and the Loans) or Form 4224 (relating to all amounts to be received by such Bank, including fees, pursuant to this Agreement and the Loans) of the United States Internal Revenue Service. Thereafter and from time to time, each such Bank shall submit to the Borrower such additional duly completed and signed copies of one or the other of such Forms (or such successor forms as shall be adopted from time to time by the relevant

United States taxing authorities) as may be (i) notified by the Borrower to such Bank and (ii) required under then-current United States law or regulations to avoid or reduce United States withholding taxes on payments in respect of all amounts to be received by such Bank, including fees, pursuant to this Agreement or the Loans or the Letters of Credit. Upon the request of the Borrower, each Bank that is a United States person (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower a certificate to the effect that it is such a United States person.

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(c) Inability of Bank to Submit Forms. If any Bank determines, as a result of any change in applicable law, regulation or treaty, or in any official application or interpretation thereof, that it is unable to submit to the Borrower any form or certificate that such Bank is obligated to submit pursuant to subsection (b) of this Section 12.1, or that such Bank is required to withdraw or cancel any such form or certificate previously submitted or any such form or certificate otherwise becomes ineffective or inaccurate, such Bank shall promptly notify the Borrower of such fact and the Bank shall to that extent not be obligated to provide any such form or certificate and will be entitled to withdraw or cancel any affected form or certificate, as applicable.

Section 12.2. No Waiver of Rights. No delay or failure on the part of anyBank or on the part of the holder or holders of any Note in the exercise of anypower or right shall operate as a waiver thereof, nor as an acquiescence in anydefault, nor shall any single or partial exercise thereof preclude any other orfurther exercise of any other power or right, and the rights and remedieshereunder of the Banks and of the holder or holders of any Notes are cumulativeto, and not exclusive of, any rights or remedies which any of them wouldotherwise have.

Section 12.3. Non-Business Day. If any payment of principal or interest on



any Loan or of any fee hereunder shall fall due on a day which is not a BusinessDay, interest at the rate such Loan bears for the period prior to maturity or atthe rate such fee accrues shall continue to accrue from the stated due datethereof to and including the next succeeding Business Day, on which the sameshall be payable.

Section 12.4. Documentary Taxes. The Borrower agrees that it will pay anydocumentary, stamp or similar taxes payable in respect to this Agreement, theApplications or any Note, including interest and penalties, in the event anysuch taxes are assessed irrespective of when such assessment is made and whetheror not any credit is then in use or available hereunder.

Section 12.5. Survival of Representations. All representations andwarranties made herein or in certificates given pursuant hereto shall survivethe execution and delivery of this Agreement, the Applications and of the Notes,and shall continue in full force and effect with respect to the date as of whichthey were made as long as any credit is in use or available hereunder.

Section 12.6. Survival of Indemnities. All indemnities and all otherprovisions relative to reimbursement to the Banks of amounts sufficient toprotect the yield of the Banks with respect to the Loans, including, but notlimited to, Section 2.10 and Section 10.3 hereof, shall survive the terminationof this Agreement and the payment of the Loans, the Notes and obligations inrespect of the Letters of Credit.

Section 12.7. Sharing of Set-off. Each Bank agrees with each other Bank aparty hereto that if on or after the date of the occurrence of an Event ofDefault and the acceleration of the maturity of the Notes pursuant to Section9.2 or 9.3 hereof such Bank shall receive and retain any payment, whether byset-off or application of deposit balances or otherwise ("Set-Off"), on any of

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the Obligations outstanding under this Agreement in excess of its ratable shareof payments on all Obligations then outstanding to the Banks, then such Bankshall purchase for cash at face value, but without recourse, ratably from each

of the other Banks such amount of the Obligations held by each such other Bank(or interest therein) as shall be necessary to cause such Bank to share suchexcess payment ratably with all the other Banks; Provided, However, that if anysuch purchase is made by any Bank, and if such excess payment or part thereof isthereafter recovered from such purchasing Bank, the related purchases from theother Banks shall be rescinded ratably and the purchase price restored as to theportion of such excess payment so recovered, but without interest. Each Bank'sratable share of any such Set-off shall be determined by the proportion that theaggregate amount of Loans and Obligations with respect to outstanding Letters ofCredit then due and payable to such Bank bears to the total aggregate amount ofthe Loans and Obligations with respect to outstanding Letters of Credit then dueand payable to all the Banks.

Section 12.8. Notices. Except as otherwise specified herein, all noticeshereunder shall be in writing (including cable, telecopy or telex) and shall begiven to the relevant party at its address, telecopier number or telex numberset forth below, in the case of the Borrower, or on the appropriate signaturepage hereof, in the case of the Banks and the Agent, or such other address,telecopier number or telex number as such party may hereafter specify by noticeto the Agent and the Borrower, given by United States certified or registeredmail, by telecopy or by other telecommunication device capable of creating awritten record of such notice and its receipt. Notices hereunder to the Borrowershall be addressed to:



General Housewares Corp.1536 Beech StreetTerre Haute, Indiana 47804-4066Attention: Robert L. GrayTelephone: (812)232-1000, Ext. 288Telecopy: (812)232-7016

with a copy to:

General Housewares Corp.Six Suburban AvenueP.O. Box 10265Stamford, Connecticut 06904-2265Attention: Gordon R. EricksonTelephone: (203)325-4141Telecopy: (203)348-5247

Each such notice, request or other communication shall be effective (i) if givenby telecopier, when such telecopy is transmitted to the telecopier numberspecified in this Section and a confirmation of such telecopy has been receivedby the sender, (ii) if given by telex, when such telex is transmitted to thetelex number specified in this Section and the answerback is received by sender,

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(iii) if given by mail, five (5) days after such communication is deposited inthe mail, certified or registered with return receipt requested, addressed asaforesaid or (iv) if given by any other means, when delivered at the addressesspecified in this Section; provided that any notice given pursuant to Section 1hereof shall be effective only upon receipt.

Section 12.9. Counterparts. This Agreement may be executed in any number ofcounterparts, and by the different parties on different counterparts, each ofwhich when executed shall be deemed an original but all such counterparts taken

together shall constitute one and the same instrument.

Section 12.10. Successors and Assigns. This Agreement shall be binding uponthe Borrower and its successors and assigns, and shall inure to the benefit ofeach of the Banks and the benefit of their respective successors and assigns,including any subsequent holder of any Note. The Borrower may not assign any ofits rights or obligations hereunder without the written consent of all of theBanks.

Section 12.11. Participants and Note Assignees. Each Bank shall have theright at its own cost to grant participations (to be evidenced by one or moreagreements or certificates of participation) in the Loans made, Commitmentsand/or Letters of Credit, by such Bank at any time and from time to time, and to

assign its rights under such Loans or the Notes evidencing such Loans to afederal reserve bank; provided that no such participation or assignment of aNote shall relieve any Bank of any of its obligations under this Agreement, andprovided further that no such assignee or participant shall have any rightsunder this Agreement except as provided in this Section 12.11, and the Agentshall have no obligation or responsibility to such participant or assignee,except that nothing herein provided is intended to affect the rights of anassignee of a Note to enforce the Note assigned. Any party to which such aparticipation or assignment has been granted shall have the benefits of Section2.10 and Section 10.3 hereof but shall not be entitled to receive any greater



payment under either such Section than the Bank granting such participation orassignment would have been entitled to receive with respect to the rightstransferred.

Section 12.12. Assignment of Commitments By Banks. Each Bank shall have theright at any time, with the prior consent of Borrower (which consent shall notbe unreasonably withheld or delayed), to sell, assign, transfer or negotiate allor any part of its Loans, Commitments and/or Letters of Credit to one or morecommercial banks or other financial institutions; provided that such assignmentis in an amount of at least $5,000,000 and provided further that without theconsent of the Borrower or the Agent, any Bank may so assign all or part of itsCommitment to any affiliate of the assigning Bank (provided that such affiliatecomplies with Section 12.1 hereof at the time of such assignment). Upon any suchassignment, and its notification to the Agent, the assignee shall become a Bankhereunder, all Loans and the Commitment it thereby holds shall be governed byall the terms and conditions hereof, and the Bank granting such assignment shallhave its Commitment and its obligations and rights in connection therewith,reduced by the amount of such assignment.

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Section 12.13. Amendments. Any provision of this Agreement, theApplications or the Notes may be amended or waived if, but only if, such

amendment or waiver is in writing and is signed by (a) the Borrower, (b) theRequired Banks, and (c) if the rights or duties of the Agent are affectedthereby, the Agent, as applicable; provided that:

(i) no amendment or waiver pursuant to this Section shall (A) increase any Commitment of any Bank without the consent of such Bank or (B) reduce the amount of or postpone the date for payment of any principal of or interest on any Loan or of any fee payable hereunder without the consent of the Bank to which such payment is owing or which has committed to make such Loan or other credit hereunder; and

(ii) no amendment or waiver pursuant to this Section shall, unless signed by each Bank, change the provisions of this Section, the definition

of Required Banks or Termination Date, or any condition precedent set forth in Section 7 hereof or the provisions of Sections 9.1.(h), 9.1.(i) or 9.3., or affect the number of Banks required to take any action hereunder.

Section 12.14. Non-Reliance on Margin Stock. Each of the Banks representsto the Agent and to each of the other Banks that it in good faith is not relyingupon any Margin Stock as collateral in the extension or maintenance of thecredit provided for in this Agreement.

Section 12.15. Legal Fees and Indemnification. The Borrower agrees to paythe reasonable fees and disbursements of Messrs. Chapman and Cutler, counsel tothe Agent, in connection with the preparation and execution of this Agreementand the other Loan Documents, and any amendment, waiver or consent related

hereto, whether or not the transactions contemplated herein are consummated. TheBorrower further agrees to indemnify each Bank, its directors, officers andemployees against all losses, claims, damages, penalties, judgments, liabilitiesand expenses (including, without limitations, all expenses of litigation orpreparation therefor whether or not any Bank is a party thereto) which any ofthem may pay or incur arising out of or relating to this Agreement, any otherLoan Document, the transactions contemplated hereby or thereby or the direct orindirect application or proposed application of the proceeds of any Loan orLetter of Credit hereunder, other than those which arise from the grossnegligence or willful misconduct of the party claiming indemnification. The



obligations of the Borrower under this Section shall survive the termination ofthis Agreement.

Section 12.16. Currency. Each reference in this Agreement to U.S. Dollarsor to an Alternative Currency (the "relevant currency") is of the essence. Tothe fullest extent permitted by law, the obligation of the Borrower in respectof any amount due in the relevant currency under this Agreement shall,notwithstanding any payment in any other currency (whether pursuant to ajudgment or otherwise), be discharged only to the extent of the amount in therelevant currency that the Bank entitled to receive such payment may, in

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accordance with normal banking procedures, purchase with the sum paid in suchother currency (after any premium and costs of exchange) on the Business Dayimmediately following the day on which such party receives such payment. If theamount in the relevant currency that may be so purchased for any reason fallsshort of the amount originally due, the Borrower shall pay such additionalamounts, in the relevant currency, as may be necessary to compensate for theshortfall. Any obligations of the Borrower not discharged by such payment shall,to the fullest extent permitted by applicable law, be due as a separate andindependent obligation and, until discharged as provided herein, shall continue

in full force and effect.

Section 12.17. Currency Equivalence. If for the purposes of obtainingjudgment in any court it is necessary to convert a sum due from the Borrowerhereunder or under the Notes in the currency expressed to be payable herein orunder the Notes (the "specified currency") into another currency, the partiesagree that the rate of exchange used shall be that at which in accordance withnormal banking procedures the Agent could purchase the specified currency withsuch other currency on the Business Day preceding that on which final judgmentis given. The obligation of the Borrower in respect of any such sum due to anyBank or the Agent hereunder or under any Note shall, notwithstanding anyjudgment in a currency other than the specified currency, be discharged only tothe extent that on the Business Day following receipt by such Bank or the Agent,

as the case may be, of any sum adjudged to be so due in such other currency,such Bank or the Agent, as applicable, may in accordance with normal bankingprocedures purchase the specified currency with such other currency. If theamount of the specified currency so purchased is less than the sum originallydue to such Bank or the Agent in the specified currency, the Borrower agrees, asa separate obligation and notwithstanding any such judgment, to indemnify suchBank and the Agent against such loss, and if the amount of the specifiedcurrency so purchased exceeds the sum of (a) the amount originally due to theapplicable Bank or the Agent in the specified currency plus (b) any amountsshared with other Banks as a result of allocations of such excess as adisproportionate payment to such Bank under Section 12.7 hereof, such Bank orthe Agent, as the case may be, agrees to remit such excess to the Borrower.

Section 12.18. Governing Law. This Agreement, the Applications and theNotes, and the rights and duties of the parties hereto and thereto, shall beconstrued and determined in accordance with the laws of the State of Illinois,without regard to the internal laws thereof with respect to conflicts of law.

Section 12.19. Headings. Section headings used in this Agreement are forreference only and shall not affect the construction of this Agreement.

Section 12.20. Entire Agreement. This Agreement constitutes the entireunderstanding of the parties hereto with respect to the subject matter hereof



and any prior or contemporaneous agreements, whether written or oral, withrespect thereto are superseded hereby.

-49-<PAGE>

Upon your acceptance hereof in the manner hereinafter set forth, thisAgreement shall be a contract between us for the purposes hereinabove set forth.

Dated as of November 30, 1994.

General Housewares Corp.

(Seal) By Robert L. Gray -------------------------------

Its Vice President-Finance and Treasurer

Attest:Gordon R. Erickson--------------------Secretary

-50-<PAGE>

Accepted and Agreed to as of the day and year last above written.

Address and Amount of Commitment:

111 West Monroe Street HARRIS TRUST AND SAVINGS BANK,Chicago, Illinois 60690 in its individual capacity as aAttention: Mr. Peter Krawchuk Bank, as Agent Emerging Majors EastTelecopy: (312) 461-2591Telephone: (312) 461-2783Revolving Credit Loan Commitment: $16,666,667 By Peter Krawchuk -------------------Letter of Credit Its Vice President Commitment: $ 3,333,333 -----------Aggregate Commitments: $20,000,000

Lending Offices:

Domestic Rate Loans: 111 West Monroe Street Chicago, Illinois 60690

Nassau Branch Eurocurrency Loans: c/o 111 West Monroe Street Chicago, Illinois 60690



One First National Plaza THE FIRST NATIONAL BANK OFChicago, Illinois 60670 CHICAGOAttention: Ms. Kelly H. GilroyMail Suite 0088Telecopy: (312) 732-5161 By Kelly H. GilroyTelephone: (312) 732-7485 -----------------Revolving Credit Its Loan Commitment: $ 8,333,333 -------------------Letter of Credit Commitment: $ 1,666,667 -----------Aggregate Commitments: $10,000,000

Lending Offices:

Domestic Rate Loans: One First National Plaza Chicago, Illinois 60670

Eurocurrency Loans: One First National Plaza Chicago, Illinois 60670

-51-<PAGE>

EXHIBIT A

REVOLVING CREDIT NOTE

November 30, 1994

FOR VALUE RECEIVED, the undersigned, General Housewares Corp., a Delawarecorporation (the "Borrower"), promises to pay to the order of

________________________ (the "Bank") on the Termination Date of the hereinafter

defined Credit Agreement, at the principal office of Harris Trust and SavingsBank in Chicago, Illinois (or, in the case of Eurocurrency Loans denominated inan Alternative Currency, at such office as the Agent has previously notified theBorrower), in immediately available funds in the currency in which theapplicable Loan was made, the aggregate unpaid principal amount of all Loansmade by the Bank to the Borrower under its Commitments pursuant to the CreditAgreement and with each Loan to mature and become payable on the last day of theInterest Period applicable thereto, but in no event later than the TerminationDate, together with interest on the principal amount of each Loan from time totime outstanding hereunder at the rates, and payable in the manner and on thedates, specified in the Credit Agreement.

The Bank shall record on its books or records or on a schedule attached to

this Note, which is a part hereof, each Loan made by it pursuant to itsCommitment, together with all payments of principal and interest and theprincipal balances from time to time outstanding hereon, whether the Loan is aDomestic Rate Loan or a Eurocurrency Loan and the interest rate and InterestPeriod applicable thereto and, in the case of any Eurocurrency Loan, thecurrency thereof, provided that prior to the transfer of this Note all suchamounts shall be recorded on the schedule attached to this Note. The recordthereof, whether shown on such books or records or on the schedule to this Note,shall be Prima Facie evidence of the same, Provided, However, that the failureof the Bank to record any of the foregoing or any error in any such record shall



not limit or otherwise affect the obligation of the Borrower to repay all Loansmade to it pursuant to the Credit Agreement together with accrued interestthereon.

This Note is one of the Notes referred to in the Credit Agreement dated asof November 30, 1994, among the Borrower, Harris Trust and Savings Bank, asAgent, and others (the "Credit Agreement"), and this Note and the holder hereofare entitled to all the benefits provided for thereby or referred to therein, towhich Credit Agreement reference is hereby made for a statement thereof. Alldefined terms used in this Note, except terms otherwise defined herein, shallhave the same meaning as in the Credit Agreement. This Note shall be governed byand construed in accordance with the laws of the State of Illinois.

-52-<PAGE>

Prepayments may be made hereon and this Note may be declared due prior tothe expressed maturity hereof, all in the events, on the terms and in the manneras provided for in the Credit Agreement.

The Borrower hereby waives demand, presentment, protest or notice of any

kind hereunder.

General Housewares Corp.

By ---------------------------

Its-------------------------

-53-

<PAGE><TABLE>

EXHIBIT B<CAPTION>

SUBSIDIARIES OF GENERAL HOUSEWARES CORP.

I. CONSOLIDATED SUBSIDIARIES

JURISDICTION OFPERCENTAGENAME INCORPORATIONOF OWNERSHIP<S> <C><C>

Chicago Cutlery, Inc. Florida100%



Chicago Cutlery etc., Inc. Indiana100%

General Housewares Export U.S. Virgin Islands100%

Corporation

General Housewares of Canada Inc. Province of Quebec, Canada100%

II. Subsidiaries Which Are Not Consolidated

None

</TABLE>

-54-<PAGE>

EXHIBIT C

To each of the Banks named in the hereinafter defined Credit Agreement

c/o Harris Trust and Savings Bank, as Agent under the Credit Agreement

Gentlemen:

I am Secretary and General Counsel of General Housewares Corp., a Delawarecorporation (the "Borrower"), in connection with the authorization of and theexecution and delivery of the Credit Agreement dated as of November 30, 1994,among the Borrower and you and the banks named therein (the "Credit Agreement").All terms used and not defined herein shall have the meanings assigned to themin the Credit Agreement.

In rendering this opinion, I have made such investigations of fact and haveconsidered such questions of law as I have deemed necessary for the purposes ofthis opinion, which is delivered to you pursuant to Section 7.1(a) of the CreditAgreement. Based on the foregoing, it is my opinion that:

(i) The Borrower is duly organized and validly existing in good standing under the laws of the State of Delaware; has the corporate power to carry on its present business; is duly licensed or qualified in all states and jurisdictions wherein the nature of the business carried on by it or the assets and properties owned or leased by it requires such qualification or licensing, except where the failure to be so licensed or qualified would not have a material adverse effect on the financial condition or properties, business or operations of the Borrower and the Consolidated Subsidiaries taken as a whole; and has the corporate power and



authority to enter into the Credit Agreement and the Applications, to make the borrowings and request letters of credit therein provided for, to issue its Notes and Applications and to perform each and all of the matters and things therein provided for.

(ii) Each Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and is duly licensed or qualified and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business transacted by it makes such licensing or qualification necessary and all of the issued and outstanding shares of capital stock of each such Subsidiary have been duly issued, are fully paid and non-assessable and are owned by the Borrower, by one or more Subsidiaries, or by the Borrower and one or more Subsidiaries.

-55-<PAGE>

(iii) The Credit Agreement, Applications and the Notes delivered on the date hereof have been duly authorized, executed, and delivered by and on behalf of the Borrower and constitute legal, valid, and enforceable obligations of the Borrower, except to the extent affected by bankruptcy, insolvency or other similar laws relating to or affecting the enforcement of creditors' rights and remedies generally and general principles of

equity.

(iv) The Loan Documents do not, nor will the performance or observance by the Borrower of any of the matters and things therein provided for, contravene any provision of law applicable to the Borrower, or, to our knowledge, any judgment or decree applicable to the Borrower, the Certificate of Incorporation, as amended, or By-laws of the Borrower, or any indenture or material agreement to which the Borrower is a party or by which it or any of its properties is bound.

(v) All authorizations, consents, approvals, filings, registrations, exemptions and regulatory approvals necessary to permit borrowings and requests for letters of credit by the Borrower under the Credit Agreement

and the Applications have been obtained and remain in full force and effect.

(vi) The making of the Loans and the application by the Borrower of the proceeds thereof do not violate Regulation U or Regulation X of the Board of Governors of the Federal Reserve System.

(vii) The Borrower is not an "Investment Company" or a company "Controlled" by an "Investment Company" as such terms are defined in the Investment Company Act of 1940, as amended.

(viii) There is no litigation or governmental proceeding pending, or to the best of my knowledge threatened, against the Borrower or any

Subsidiary which could reasonably be expected to (i) materially adversely affect the business and properties of the Borrower and its Subsidiaries on a consolidated basis or (ii) impair the validity or enforceability of any of the Loan Documents or materially impair the ability of the Borrower to perform its obligations under any of the Loan Documents.

The opinion of Gordon R. Erickson, Esq., shall cover such other mattersrelating to the Credit Agreement as the Banks may reasonably request and mayrely upon an opinion of Canadian counsel with respect to the opinion required inparagraph (ii) regarding the Borrower's Canadian Subsidiary. With respect to



matters of fact on which such opinion is based, such counsel shall be entitledto rely on appropriate certificates of public officials and officers of theBorrower.

Respectfully submitted,

-56-<PAGE>

EXHIBIT D


COMPLIANCE CERTIFICATE

This Compliance Certificate is furnished to the Agent and the Bankspursuant to that certain Credit Agreement dated as of November 30, 1994, by andamong the Borrower, the Agent and the Banks (the "Agreement"). Unless otherwisedefined herein, the terms used in this Compliance Certificate have the meaningsascribed thereto in the Agreement.

THE UNDERSIGNED HEREBY CERTIFIES THAT:

1. I am the duly elected ________________________ of the Borrower;

2. I have reviewed the terms of the Agreement and I have made, or havecaused to be made under my supervision, a detailed review of the transactionsand conditions of the Borrower and its Subsidiaries during the accounting periodcovered by the attached financial statements;

3. The examinations described in paragraph 2 did not disclose, and I haveno knowledge of, the existence of any condition or event which constitutes aDefault or Event of Default during or at the end of the accounting periodcovered by the attached financial statements or as of the date of this

Certificate, except as set forth below; and

4. Schedule I attached hereto sets forth financial data and computationsevidencing the Borrower's compliance with certain covenants of the Agreement,all of which data and computations are true, complete and correct.

Described below are the exceptions, if any, to paragraph 3 by listing, indetail, the nature of the condition or event, the period during which it hasexisted and the action which the Borrower has taken, is taking, or proposes totake with respect to each such condition or event:

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

The foregoing certifications, together with the computations set forth inSchedule I hereto and the financial statements delivered with this Certificatein support hereof, are made and delivered this day of , 19___.

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

-57-



<PAGE>

SCHEDULE I GENERAL HOUSEWARES CORP.<TABLE>

Compliance Calculations for Credit Agreement Dated as of November 30, 1994 Calculations as of _________________, 19___ <CAPTION>A. Leverage Ratio (Section 8.7) <S> <C>

1. Obligations for Borrowed Money $ --------------- 2. Conditional Sale Obligations

--------------- 3. Guaranties

-

-------------- 4. Take or pay (and similar) contract obligations-

-------------- 5. Debt (to the extent not otherwise included above) secured by liens or security interests

--------------- 6. Capitalized Lease Obligations (to the extent not otherwise included above)

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

7. Add Lines 1 through 6 (Total Indebtedness)

8. Short term Indebtedness (other than currentmaturities of long term Indebtedness)

--------------- 9. Line 7 minus Line 8 (Consolidated Funded Debt) =============== 10. Total Stockholders Equity (Consolidated Net Worth) $ --------------- 11. Consolidated Funded Debt (Line 9 above)

--------------- 12. Add Line 10 and Line 11 (or subtract Line 10 from Line 11 if Line 11 is a negative number)

--------------- 13. Ratio of Line 9 to Line 12

-----------:1.0



-58-<PAGE>

14. Line 13 ratio must not be in an amount greater than:

.45:1.0

B. Consolidated Net Worth (Section 8.6).

1. Consolidated Net Worth (Line A.10. above) $ --------------- 2. Line 1 must not be less than $45,000,000 (to be increased as provided in Section 8.6)

C. Current Ratio (Section 8.9).

1. Consolidated current assets $ -

-------------- 2. Consolidated current liabilities $ --------------- 3. Ratio of Line 1 to Line 2

----------: 1.0 4. Line 3 ratio must not be in an amount less than 1.5 : 1.0

D. Fixed Charge Coverage Ratio to it(Section 8.8).

1. Consolidated Net Earnings (including non- operating losses to the extent cash is reduced and excluding non-operating gains) $ --------------- 2. Consolidated Interest Expense $ --------------- 3. Federal, state and local income taxes $ --------------- 4. Payments due under operating leases (Rentals) $ -

-------------- 5. Sum of Lines 1 through 4 (Earnings Available for Fixed Charges) $ =============== 6. Consolidated Interest Expense (including capitalized leases) $ --------------- 7. Payments due under operating leases



(Line D.4. above) $ --------------- 8. Sum of Lines 6 and 7 $ =============== 9. Ratio of Line 5 to Line 8

-------- to 1.0 10. Line 12 ratio must be equal to or greater than:

2.0 to 1.0</TABLE>

-59-<PAGE>

EXHIBIT E

FUNDED DEBT OF SUBSIDIARIES AND EXISTING SHORT TERM INDEBTEDNESS OF BORROWER

1. Borrower's indebtedness to Merchant's Bank under $1,000,000 line of credit.

<PAGE>

EXHIBIT F LIENS

1. Lien on Borrower's copier-duplicator and copier and related accessories in favor of Eastman Kodak Credit Corporation in respect of the lease thereof.

-60-<PAGE>

EXHIBIT G GUARANTIES

None

</TEXT>

</DOCUMENT>



<DOCUMENT><TYPE>EX-11<SEQUENCE>5<DESCRIPTION>PRIMARY EARNINGS PER SHARE<TEXT>

EXHIBIT 11a

<TABLE><CAPTION>

COMPUTATION OF PRIMARY EARNINGS PER SHARE

1994 1993 1992<S> <C> <C> <C>

Income from continuing operations $2,750,000 $3,036,000 $4,424,000

Cumulative effect of change inaccounting for:

Income taxes in accordance with FAS #109 - - 218,0

00

Net income $2,750,000 $3,036,000 $4,642,000

Shares:Weighted average number of shares of common stock outstanding 3,406,115 3,265,896 3,223,583

Shares assumed issued (less shares assumed purchased for treasury) on stock options 34,156 74,442 71,1

51

Outstanding shares for primary earnings per share calculation 3,440,271 3,340,338 3,294,734

Earnings per common share:

Income from continuing operations $0.80 $0.91 $1.34 Cumulative effect of change in accounting for: Income taxes in accordance with

FAS #109 - - 0.06

Net income $0.80 $0.91 $1.40

</TABLE></TEXT></DOCUMENT>



<DOCUMENT><TYPE>EX-21<SEQUENCE>6<DESCRIPTION>SUBSIDIARIES OF REGISTRANT<TEXT>

EXHIBIT 21

SUBSIDIARIES OF THE REGISTRANT

Subsidiary State or Province Incorporated

General Housewares Export Corporation U.S. Virgin Islands

Chicago Cutlery, Inc. Florida

Chicago Cutlery etc., Inc. Indiana

General Housewares of Canada Inc. Quebec, Canada

</TEXT></DOCUMENT>

<DOCUMENT><TYPE>EX-23<SEQUENCE>7<DESCRIPTION>CONSENT OF INDEPENDENT ACCOUNTANTS<TEXT>

EXHIBIT 23CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Registration Statement on Form S-8 (No.33-33328, 2-77798, 33-48336 and 33-82136) of General Housewares Corp., of ourreport dated January 30, 1995, appearing on pages 9-10 of this Annual Report on

Form 10-K. We also consent to the application of such report to the FinancialStatement Schedule for the three years ended December 31, 1994, listed underItem 8 of this Annual Report on Form 10-K for the year ended December 31, 1994,when such schedule is read in conjunction with the financial statements referredto in our report. The audits referred to in such report also included theFinancial Statement Schedule.

PRICE WATERHOUSE LLP

Indianapolis, IndianaMarch 27, 1995

</TEXT>

</DOCUMENT><DOCUMENT><TYPE>EX-27<SEQUENCE>8<DESCRIPTION>ART. 5 FDS FOR 10-K<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5



<LEGEND> 0</LEGEND><CIK> 0000040643<NAME> 0<MULTIPLIER> 1,000<CURRENCY> U.S. Dollars <S> <C><PERIOD-TYPE> Year<FISCAL-YEAR-END> Dec-31-1994<PERIOD-START> Jan-01-1992<PERIOD-END> Dec-31-1994<EXCHANGE-RATE> 1<CASH> 2,993<SECURITIES> 0<RECEIVABLES> 22,166<ALLOWANCES> 5,312<INVENTORY> 20,841<CURRENT-ASSETS> 3,089<PP&E> 33,048<DEPRECIATION> 20,047<TOTAL-ASSETS> 98,358<CURRENT-LIABILITIES> 13,443<BONDS> 0

<COMMON> 1,324<PREFERRED-MANDATORY> 0<PREFERRED> 0<OTHER-SE> 48,931<TOTAL-LIABILITY-AND-EQUITY> 98,358<SALES> 96,515<TOTAL-REVENUES> 96,515<CGS> 61,505<TOTAL-COSTS> 61,505<OTHER-EXPENSES> 28,373<LOSS-PROVISION> 354<INTEREST-EXPENSE> 1,699<INCOME-PRETAX> 4,938

<INCOME-TAX> 2,188<INCOME-CONTINUING> 2,750<DISCONTINUED> 0<EXTRAORDINARY> 0<CHANGES> 0<NET-INCOME> 2,750<EPS-PRIMARY> 0.800<EPS-DILUTED> 0.800

</TABLE></TEXT>

</DOCUMENT><DOCUMENT><TYPE>EX-99<SEQUENCE>9<DESCRIPTION>STATEMENT OF FINANCIAL CONDITION ESPP<TEXT>

EXHIBIT 99



Employee Stock Purchase PlanFinancial StatementsDecember 31, 1994 and 1993

Price Waterhouse LLP

REPORT OF INDEPENDENT ACCOUNTANTS

February 15, 1995

To the Participants and Administrative Committee of General Housewares Corp.Employee Stock Purchase Plan

In our opinion, the accompanying statements of financial condition and of incomeand changes in plan equity present fairly, in all material respects, thefinancial condition of General Housewares Corp. Employee Stock Purchase Plan atDecember 31, 1994 and 1993, and the changes in its financial condition for theyears then ended, in conformity with generally accepted accounting principles.These financial statements are the responsibility of the plan's management; ourresponsibility is to express an opinion on these financial statements based onour audits. We conducted our audits of these statements in accordance withgenerally accepted auditing standards which require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements,assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for the opinion expressedabove.

Price Waterhouse LLP<TABLE><CAPTION>

STATEMENT OF FINANCIAL CONDITION

December 31,

1994 1993<S> <C> <C>

PLAN ASSETSInvestments in employer's securities (cost, 1994 - $159,750; 1993 - $113,973) $ 183,016 $ 113,100

LIABILITIES AND PLAN EQUITYLiabilities -

-Plan Equity $ 183,016 $ 113,100

</TABLE>

<PAGE><TABLE>STATEMENT OF INCOME AND CHANGES IN PLAN EQUITY<CAPTION> Year Year Ended Ende



d December 31, December 31, 1994 1993<S> <C> <C>

Dividend income $ 3,213 $1,532Administrative expenses (149)(72)

Net dividend income 3,0641,460

Unrealized appreciation (depreciation) in investments 23,573 (5,297)

Participant contributions 68,905 90,758

Participant distributions (25,626) (26,600)

Net increase in plan equity 69,916 60,321 Plan equity at beginning of period 113,100 52,779 --------- ---------Plan equity at end of period $ 183,016 $ 113,100

</TABLE>

NOTES TO FINANCIAL STATEMENTS

1. DESCRIPTION OF THE PLAN

The following description of the General Housewares Corp. (Company) Employee Stock Purchase Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions.

ELIGIBILITY

All full time employees who have completed three months of service will be eligible to participate and be a participant in the Plan at

the beginning of the next calendar quarter subsequent to their completion of three months of service.

STOCK PURCHASES

First Chicago Trust Company of New York, the Custodian for the Plan, will purchase common stock either (1) in the open market, (2) from an employee desiring to dispose of his/her shares pursuant to the Plan or (3) from the Company. The Company will pay all brokerage fees on all purchases of common stock under the Plan.



The price at which shares of common stock will be purchased will be the lesser of:

<PAGE>

(a) 90% of the market value of the common stock on the first business day of the applicable calendar quarter, or

(b) 90% of the market value of the common stock on the last business day of such calendar quarter.

The number of shares of common stock that will generally be purchased in each calendar quarter will be equal to the amount of payroll deductions made during such quarter plus any accumulated dividends divided by the purchase price of the common stock. Dividend reinvestments are subject to a 5% administration fee paid by the Plan.

WITHDRAWALS

An employee may withdraw part or all of his/her account balance at any time by giving written notice to the Company. The Company will refund part or all of the balance in the employee's account.

PARTICIPANT ACCOUNTS

A stock purchase account shall be maintained by the Custodian in the name of each participant. Authorized payroll deductions shall be held by the Company and credited to the participant's stock purchase account at the end of each calendar quarter. Interest will not accrue or be paid on available funds or any other cash held in a participant's stock purchase account. All dividends paid on Company stock held in a participant's stock purchase account shall be used to purchase additional Company stock.

2. SUMMARY OF ACCOUNTING POLICIES

Quoted market prices are used to value investments.

3. INVESTMENTS

At December 31, 1994 and 1993 investments were comprised of 13,073 and 8,700 shares, respectively, of General Housewares Corp. Common Stock. The closing market price on December 31, 1994 and 1993 was $14/share and $13/share, respectively. Net unrealized appreciation (depreciation) of investments was $23,573 and ($5,297) in 1994 and 1993, respectively.

<PAGE>

4. FEDERAL INCOME TAXES

The Plan is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code. As a result, participants are not subject to any tax at the time of the purchase of stock at a discount. A favorable letter of determination has not been requested or obtained from the Internal Revenue Service.



</TEXT></DOCUMENT>