STATEMENT OF AGREEMENT

 

                                                                    EXHIBIT 10.1

                    AGREEMENT OF PURCHASE AND SALE OF ASSETS

THIS AGREEMENT OF PURCHASE AND SALE OF ASSETS (the "Agreement") is dated this
11th day of January, 2002, by and among THE RIVAL COMPANY, a Delaware
corporation ("Rival"), THE HOLMES GROUP, INC., a Massachusetts corporation
("Holmes"; and together with Rival, "Sellers") and CONAIR CORPORATION, a
Delaware corporation (the "Purchaser"), with a later "Effective Date" as
provided for herein.

                              BACKGROUND STATEMENT

A.       The transaction contemplated by this Agreement relates to the sale of
         assets of Holmes' division manufacturing and selling certain identified
         "Products" (as defined below) under the Pollenex(R) tradename (the
         "Business"); certain assets of which arE owned by Holmes and others by
         Rival.

B.       Sellers desire to sell certain of the assets necessary to operate the
         Business and Purchaser desires to purchase such assets of the Business,
         specifically excluding the Excluded Assets (as hereinafter defined) for
         the Purchase Price (as hereinafter defined) and upon the terms and
         subject to the conditions hereinafter set forth.

                             STATEMENT OF AGREEMENT

         In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:

1.0      PURCHASE AND SALE OF BUSINESS AND ASSETS.

1.1      ASSETS TRANSFERRED. On the "Effective Date" (as defined below), Sellers
         shall sell, assign and deliver to Purchaser, free and clear of all
         liabilities, obligations, liens and encumbrances of any kind other than
         the Assumed Liabilities and except as expressly set forth herein, and
         Purchaser shall purchase and acquire from Sellers, all right, title and
         interest in and to the following properties, assets and rights owned by
         Sellers, excluding the Excluded Assets (collectively, the "Purchased
         Assets"):

         (a)      all inventories of finished products and any work-in-process
                  and components owned and held by Sellers on the Closing Date
                  and having a product number or product code identified on
                  SCHEDULE 1.1(a)(I) and all packaging materials relating
                  thereto (collectively, the "Inventories"), including
                  Inventories in transit to Sellers and Inventories at any
                  location, whether or not controlled by Seller, but excluding
                  the inventories of products identified by product number or
                  product code on SCHEDULE 1.1(a)(II) (the "Excluded
                  Inventory");

         (b)      all rights to sell products having a product number or product
                  code identified on SCHEDULE 1.1(a)(I) (collectively,
                  "Products") and all products currently under development as
                  identified on SCHEDULE 1.1(b) (the "Products Under
                  Development"), but excluding rights to sell finished products
                  having a product number or product code identified on SCHEDULE
                  1.1(a)(II), whether sold under the Pollenex brand name for a
                  limited period of time as provided for in Section 1.3 hereof
                  or under another brand name (the "Excluded Products");

         (c)      the tooling, dies and molds specified on SCHEDULE 1.1(c),
                  except for those items on such Schedule which are marked with
                  a 50%/50% designation, (collectively, the "Tooling"), together
                  with (i) such interest, if any, that Sellers may hold in the
                  tooling, dies and molds specified on SCHEDULE 1.1(c) and
                  marked with a 50%/50% designation and (ii) whatever interest
                  Sellers may hold in any tooling, dies and molds not listed on
                  SCHEDULE 1.1(c) which are used in the manufacture of the
                  Products, in all cases located at the several facilities of
                  third party manufacturers of Products or Products Under
                  Development ("Third Party Manufacturers"), together with any
                  transferable manufacturer warranties relating to the Tooling;

         (d)      all transferable rights (including rights that become
                  transferable pursuant to SECTION 9.1 of this Agreement or
                  otherwise pursuant to the consent or approval of third
                  parties) of Sellers relating to the Purchased Assets or the
                  Business under all written or oral contracts, arrangements,
                  license and technology agreements and other agreements;
                  including without limitation all open purchase orders and,
                  subject to Section 4.1(e) hereof, open customer orders
                  relating to Products, Products Under Development and
                  Inventories (collectively, the "Contracts"), but excluding
                  distribution agreements and sales representative arrangements,
                  purchase orders and customer orders relating to Excluded
                  Inventories and customer orders for Products and Inventories
                  fulfilled by Sellers prior to the Closing Date (the "Excluded
                  Contracts");

         (e)      (i) all patents and patent applications identified on SCHEDULE
                  1.1(e)(i), (ii) subject to the license back to Sellers set
                  forth in Section 1.3, all trademarks, service marks and trade
                  names identified on SCHEDULE 1.1(e)(ii), and any registrations
                  and applications therefore, and all common law trademarks used
                  solely in connection with the Products (the "Pollenex Marks"),
                  (iii) subject to the license back to Sellers set forth in
                  Section 1.3, all copyrights, all copyright registrations and
                  applications for copyright registrations identified on
                  SCHEDULE 1.1(e)(iii), and any other non-registered copyrights
                  used in connection with the marketing, promotion and sale of
                  the Products or Products Under Development (the items
                  described in clauses (i), (ii) and (iii) are collectively
                  referred to as the "Intellectual Property"), together with all
                  files relating to the prosecution or maintenance of any item
                  of Intellectual Property in the possession of Sellers or their
                  agents;

         (f)      all designs, plans, product drawings, trade secrets,
                  inventions, data, processes, procedures, technology,
                  techniques, blueprints, drawings, surveys, research and
                  development files, computer files, research records,
                  manufacturing know-how, manufacturing formulae, and similar
                  information, wherever located, relating to the manufacture of
                  Products or Products Under Development by Sellers or by third
                  parties or relating to Tooling (collectively, the "Know-How");

         (g)      to the extent relating to the Business, all manuals,
                  information, computer files and other catalogs, mailing lists,
                  price lists, lists of customers, production data, marketing,
                  advertising and promotional materials and records (including
                  without limitation items relating to Products displayed in
                  Sellers' industry trade booth), purchasing materials and
                  records, manufacturing and quality control records and
                  procedures and other similar materials;

         (h)      to the extent their transfer is permitted by law or applicable
                  regulations or guidelines, any licenses, permits, approvals,
                  license applications and product registrations issued by any
                  governmental agency or pursuant to any regulatory,
                  engineering, industrial or other codes, including without
                  limitation those of Underwriters Laboratories ("Permits"); and

         (i)      subject to Section 1.2 hereof, all rights to bring or maintain
                  claims, suits or proceedings with respect to the Purchased
                  Assets which have not arisen prior to the Closing Date or been
                  brought or maintained by Sellers prior to the Closing Date.

1.2      EXCLUDED ASSETS. Sellers retain and do not transfer (a) cash and cash
         equivalents of Sellers or the Business, (b) any accounts receivable of
         Sellers or the Business, (c) the Excluded Inventory, (d) the Excluded
         Contracts, (e) the Excluded Products and (f) any contractual claims
         Sellers may have against third parties for damages, indemnification or
         otherwise arising under one or more Contracts, and arising from damage
         or injury suffered by Sellers either before or after Closing and
         relating to the Excluded Liabilities (collectively, the "Excluded
         Assets").

1.3      SELLERS' USE OF POLLENEX MARKS. Purchaser acknowledges and agrees that
         Sellers will continue to manufacture, market and sell Excluded Products
         following Closing, and that such sale will utilize and involve the
         Pollenex Marks. Purchaser agrees that Sellers may use, and to the
         extent necessary hereby grants to Sellers a non-exclusive and
         irrevocable license to the Pollenex Marks to the extent necessary to
         manufacture, market and sell the Excluded Products for a period of nine
         (9) months following the Closing Date; PROVIDED THAT Purchaser may
         terminate such license with respect to any individual Excluded

         Product if the quality of such Excluded Product as sold by Sellers
         under the Pollenex Marks has declined in such a manner and to such an
         extent that continued use of the Pollenex Marks in connection with the
         Excluded Product would have a detrimental effect on Purchaser's
         goodwill associated with the Pollenex Marks. On the sixty-first day
         after Closing, Sellers shall pay to Purchaser a one-time license fee in
         the amount of Twenty-Five Thousand Dollars ($25,000).

2.0      ASSUMPTION OF LIABILITIES.

2.1      ASSUMED LIABILITIES. Subject to the terms and conditions of this
         Agreement, as of the Closing Date Purchaser assumes and agrees to
         perform and discharge the following, and only the following liabilities
         of Sellers incurred in the ordinary course of operating the Business
         (the "Assumed Liabilities"):

         (a)      all liabilities arising from and after the Closing Date under
                  and pursuant to all Contracts;

         (b)      all liabilities and responsibility for warranty and breach of
                  warranty obligations and claims for Products ("Warranty
                  Claims") arising after the Closing Date, including, without
                  limitation, warranty returns, service, replacement or
                  reimbursement obligations, PROVIDED HOWEVER that Purchaser
                  shall not assume and Sellers shall be solely liable and
                  responsible for any and all obligations arising from or
                  related to Warranty Claims in accordance with the following
                  schedule:

                  Closing through 4/11/02:            100%
                  4/12/02 through 6/11/02:             70%
                  6/12/02 through 7/11/02:             50%
                  7/12/02 through 8/11/02:             40%
                  8/12/02 through 10/11/02:            20%
                  10/12/02 through 1/11/03:            10%

         (c)      all liabilities for any claims, losses and damages resulting
                  from injury or death of any person, or any damage to property,
                  caused by any Product which either (i) bears a manufacture
                  date after the Closing Date, (ii) otherwise can be
                  conclusively demonstrated by evidence produced in conjunction
                  with the product liability claim to have been manufactured
                  after the Closing Date or (iii) bears a manufacture date prior
                  to or on the Closing Date but has been modified in any way
                  material to the use or consumer's understanding of the
                  Products after the Closing by Purchaser or its agents
                  (including as to packaging or directions for use included in
                  Product packaging; and

         (d)      with respect to Products which are not described in subsection
                  (c) and as to which it cannot be ascertained whether Sellers
                  or Purchase manufactured the Product, all liabilities for any
                  claims, losses and damages resulting from injury or death of
                  any person, or any damage to property caused by any Product,
                  which claim is made after Closing and alleging an occurrence
                  after September 30, 2002.

2.2      EXCLUDED LIABILITIES. Except as expressly set forth above, Purchaser
         does not assume, and Sellers will pay, honor and discharge, all
         liabilities, obligations and commitments of any kind relating to or
         arising out of the operation of the Business prior to the Closing Date
         (the "Excluded Liabilities"). Without limitation, the Excluded
         Liabilities include responsibility for crediting customer accounts in
         connection with return authorizations requested by Sellers' customers
         relating to Products purchased by them prior to Closing, and accepted
         for return by Purchaser, if the following procedures have been followed
         in connection with such return authorization:

                  (i)      The return authorization is requested within sixty
                           (60) days of the Closing Date;

                  (ii)     Prior to accepting the return authorization, Ron
                           Diamond of Purchaser shall have contacted Greg White
                           of Sellers and in good faith established that the
                           return authorization is in accordance with industry
                           standards and past practice of Sellers and
                           Purchasers;

                  (iii)    The parties shall have discussed the proposed return
                           authorization and any reasonable alternatives, such
                           as marks downs of the affected Products, and shall
                           further have discussed whether the proposed return
                           authorization is in the nature of a customer
                           concession;

                  (iv)     All parties agree to conduct such discussions in good
                           faith and on an expedited basis; and

                  (v)      After discussion in accordance with these procedures,
                           the parties shall take such actions with regard to
                           proposed return authorizations as may be mutually
                           agreed upon.

                  (vi)     If Sellers' customer Walmart requests return
                           authorizations in connection with any "reset" of
                           products involving Products, Ron Diamond may take
                           such action with regard to such return authorization
                           as he in good faith determines to be reasonable,
                           after consultation with Greg White.

                  (vii)    Purchaser and Sellers can each designate a
                           representative other than Ron Diamond and Greg White,
                           respectively, to take action under this Section 2.2.

         Any disagreements between the parties relating to return authorizations
         shall be resolved by arbitration pursuant to Section 13 hereof.

2.3      MECHANICS RELATING TO WARRANTY CLAIMS. With respect to Warranty Claims
         which arise between the Closing Date and June 11, 2002, Sellers shall
         (a) accept return of the defective Products relating to such Warranty
         Claims from customers, (b) make payment (whether directly or through
         adjustment to customer accounts) to customers and (c) invoice Purchaser
         for the percentage of such Warranty Claims for which Purchaser is
         responsible under Section 2.1(b). With respect to Warranty Claims which
         arise between June 12, 2002 and January 11, 2003, Purchaser shall (a)
         accept return of the defective Products relating to such Warranty
         Claims from customers, (b) make payment (whether directly or through
         adjustment to customer accounts) to customers and (c) invoice Sellers
         for the percentage of such Warranty Claims for which Sellers are
         responsible under Section 2.1(b). All invoices rendered under this
         Section 2.3 shall be paid net thirty (30) days. With Purchaser's
         consent (which will not unreasonably be withheld), in lieu of accepting
         return of defective Products Sellers may authorize customers to destroy
         defective Products in the field, subject to customary industry
         standards for such practices. At any time Purchaser may request that
         defective Products which otherwise would be returned to Sellers or
         destroyed in field be returned directly to Purchaser, at its expense.

3.0      CLOSING; PURCHASE PRICE.

3.1      CLOSING; EFFECTIVE DATE. This Agreement is being executed and delivered
         by exchange of closing documents via fax and e-mail on the date hereof,
         and shall be deemed consummated and become effective (the "Closing")
         upon payment of the Purchase Price pursuant to Section 3.2 hereof (the
         "Effective Date"). The time period between execution and delivery of
         this Agreement and the "Payment Date" (as defined in Section 3.2) is
         required solely because Purchaser's banking institution was closed at
         the time of execution and delivery, such that Purchaser was not able
         simultaneously to make payment of the Purchase Price. Accordingly,
         consummation of this Agreement remains subject to Purchaser's payment
         of the Purchase Price pursuant to Section 3.2 hereof only, and payment
         of the Purchase Price and consummation of the transactions contemplated
         hereby by both parties is subject to no conditions. Upon payment of the
         Purchase Price and consummation of this Agreement, the Closing shall be
         deemed effective as of 12:00:01 a.m. on the Effective Date (also herein
         referred to as the "Closing Date").

3.2      PURCHASE PRICE AND PAYMENT. The purchase price (the "Purchase Price")
         for the Purchased Assets is Fifteen Million One Hundred Thousand
         Dollars US ($15,100,000.00). The Purchase Price, less the "Escrow
         Amount," shall be paid in cash by wire transfer to an account
         designated by Sellers, with such wire transfer to be initiated by
         Purchaser no later than 10:00 am EST on January 14, 2002 (the "Payment
         Date").

3.3      ESCROW. Simultaneously with payment of the Purchase Price, One Million
         Five Hundred Thousand Dollars US ($1,500,000.00) of the Purchase Price
         shall be placed in escrow (the "Escrow Amount") with Posternak,
         Blankstein & Lund, L.L.P. (the "Escrow

         Agent"), pursuant to an Escrow Agreement in the form attached hereto as
         EXHIBIT 3.3 (the "Escrow Agreement").

3.4      ALLOCATION OF PURCHASE PRICE. Within ninety (90) days of the Closing,
         Sellers and Purchaser shall agree in writing upon an allocation of the
         Purchase Price and Assumed Liabilities among the Purchased Assets and
         the noncompetition covenants set forth in Section 8.3 ("Allocation
         Schedule"). Such allocation shall be made in accordance with the
         provisions of Section 1060 of the Internal Revenue Code of 1986, as
         amended, and shall be binding upon the Sellers and the Purchaser for
         all purposes. Purchaser and Sellers agree to (i) be bound by the
         Allocation Schedule, (ii) act in a manner consistent with the
         Allocation Schedule in the preparation of financial statements and
         filing of all state and United States federal income tax returns
         (including, without limitation, providing the other for their review a
         draft of Form 8594 and thereafter filing Form 8594 with its United
         States federal income tax return for the taxable year that includes the
         Closing Date) and in the course of any tax audit, tax review or tax
         litigation relating thereto, and (iii) take no position and cause any
         of their Affiliates (which term is defined as set forth in Rule 12b-2
         of the General Rules and Regulations under the Securities Exchange Act
         of 1934, as amended) to take no position inconsistent with the
         Allocation Schedule for any tax purposes or in any judicial proceeding.

3.5      BREACH OF OBLIGATION TO CLOSE. A party which fails to consummate the
         transactions contemplated hereby on the Payment Date shall be deemed to
         be in material breach of its obligations hereunder, unless such failure
         results from the other party's failure so to consummate the
         transactions (a "Closing Breach"). In the event of a Closing Breach by
         a party, the other party shall be entitled to liquidated damages in the
         amount of Five Hundred Thousand Dollars US ($500,000.00), which both
         parties agree to be a reasonable estimation of actual damages in the
         event of a Closing Breach. Liquidated damages provided for hereunder
         shall be a party's sole and exclusive remedy for a Closing Breach by
         the other party. Notwithstanding Section 13 hereof, a party may bring
         an action in a court of competent jurisdiction to enforce its rights
         under this Section 3.5. Upon a Closing Breach, this Agreement shall be
         deemed null and void and of no further force and effect, except for the
         provisions of this Section 3.5 and Sections 7.3 and 15.10.

4.0      TRANSITION PERIOD; TRANSFER OF PURCHASED ASSETS.

4.1      INVENTORY.

         (a)      At Purchaser's option, following the Closing Date and for a
                  period of up to forty-five (45) days thereafter (the
                  "Inventory Transition Period"), Sellers will continue to
                  accept and fulfill customer orders for Products (the
                  "Post-Closing Orders") from Inventories located at Sellers'
                  facilities for the account of Purchaser. Sellers shall accept
                  and fulfill Post-Closing Orders on the same terms and
                  conditions as such orders were fulfilled prior to Closing,
                  unless Purchaser directs otherwise in advance in any instance.
                  Purchaser agrees to reimburse Sellers for all direct costs of
                  storage and shipment of Inventories for Purchaser's account,
                  but no additional fees shall be assessed for the transition
                  services provided for in this section.

         (b)      Not later than the end of the Inventory Transition Period, or
                  at any time prior to that upon Purchaser's election by giving
                  reasonable notice to Sellers, Purchaser shall remove all
                  Inventories from Sellers' facilities utilizing shippers of its
                  choice and at its cost and expense. Purchaser agrees to
                  provide sufficient notice to Sellers to coordinate assembly of
                  Inventories and shipment.

         (c)      At such time as (i) Purchaser removes Inventory from Sellers'
                  facilities, (ii) Sellers ship Inventory on Purchaser's behalf
                  pursuant to customer order or (iii) Inventories consisting of
                  goods in transit are delivered directly to Purchaser's
                  facilities, all items of Inventory shall be counted and
                  recorded, and Purchaser and Sellers shall each be entitled to
                  have a representative present to observe such count. For
                  purposes of determining Sellers' compliance with the
                  representations set forth in Sections 5.3(b) and 5.11, and the
                  measure of Purchaser's damages for any lack of compliance, (A)
                  any shortfall in total units of Inventory from the listing
                  presented at SCHEDULE 5.3(b) and (B) any units that are
                  determined by the parties not to be usable and salable in the
                  ordinary course of business, shall be valued in accordance
                  with the methodology used to determine the reserve set forth
                  on SCHEDULE 5.3(b) (the "Valuation Method"). Any shortfall in
                  units of Inventory of any product code shall be offset by any
                  excess in units of Inventory of any other product codes,
                  valued in accordance with the Valuation Method.

         (d)      Promptly following Closing, Sellers and Purchaser will jointly
                  contact all Third Party Manufacturers to advise them of the
                  sale of the Business. Purchaser will provide instructions to
                  each Third Party Manufacturer as to the future manufacture of
                  Products and as to the storage and shipment of Inventories
                  located at the respective Third Party Manufacturer's
                  facilities. Sellers will cooperate with Purchaser to assist in
                  the transition of the working relationship with each Third
                  Party Manufacturer, including without limitation by providing
                  copies of documentation and other materials regarding such
                  relationship.

         (e)      Following the Inventory Transition Period, Sellers shall
                  forward any new customer orders, return authorizations and
                  other customer communications they receive with respect to
                  Products to Purchaser on a twice-weekly basis. Furthermore, if
                  Products that are subject to return from customers in a manner
                  consistent with this Agreement are delivered to Sellers rather
                  than to Purchaser, Sellers will contact Purchaser and permit
                  Purchaser to remove such Products to its own facilities.

         (f)      If any customer orders open at Closing relate both to Products
                  and to Excluded Products, the parties will cooperate in
                  contacting customers to reissue orders to the relevant party.

         (g)      Sellers acknowledge that the Inventories contain UPC codes
                  provided to Sellers by the third party issuer of such UPC
                  codes. Sellers further acknowledge that Purchaser will utilize
                  the existing UPC codes in connection with the sale of the
                  Inventories without any requirement of overlabeling or
                  application of new UPC codes and Sellers have no objection
                  thereto.

4.2      TOOLING.

         (a)      Purchaser acknowledges that all Tooling is located at the
                  facilities of the Third Party Manufacturers. Within two weeks
                  following the Closing Date (the "First Examination Period"),
                  Purchaser shall examine the Tooling located at the facilities
                  of the Third Party Manufacturers identified on SCHEDULE 1.1(c)
                  to determine whether such Tooling complies with the
                  representations and warranties of Sellers contained in SECTION
                  5.4 hereof. If despite Purchaser's reasonable efforts it
                  cannot complete such examination within two weeks, it shall
                  complete its examination of the remaining Tooling within six
                  weeks following the Closing Date (the "Second Examination
                  Period"). Any claim by Purchaser of any noncompliance with
                  such representations and warranties must be made against
                  Sellers within fifteen (15) days after the end of the relevant
                  Examination Period (the "Tooling Claim Period").

         (b)      Following Closing, Purchaser will provide instructions to each
                  Third Party Manufacturer as to the utilization of the Tooling.

4.3      KNOW-HOW. Sellers shall deliver all Know-How in the possession of
         Sellers on Closing. Certain Know-How may be located at the facilities
         of Third Party Manufacturers and such Know-How will remain at such
         facilities following Closing.

4.4      RISK OF LOSS. Risk of loss of Inventories, wherever located, and of
         Tooling located in Third Party Manufacturer facilities, passes from
         Sellers to Purchaser (i) on the earlier to occur of completion of
         Purchaser's inspections under Section 4.2(a) or at the end of the
         Second Examination Period (with respect to Tooling), or (ii) on the
         earliest to occur of any of the events described in Section 4.1(c)(i),
         (ii) or (iii) or at the end of the Inventory Transition Period (with
         respect to items of Inventory).

4.5.     OTHER TRANSITION MATTERS. Upon request with reasonable advance notice,
         Sellers agree to accompany Purchaser on visits to up to five (5)
         customers of the Business for purposes of transitioning the account.
         Sellers further agree to provide reasonable assistance to Purchaser in
         the transition of the Business, including without limitation customer
         service, MIS and marketing functions relating to the Business. All such
         assistance shall be provided at no cost to Purchaser.

4.6      ADDITIONAL TRADEMARKS. During the Inventory Transition Period, the
         parties agree to cooperate to identify any common law trademarks that
         are used in connection with the Products that have not been transferred
         pursuant to Section 1.1(e) hereof, and if Sellers reasonably determine
         that such marks are not material to the manufacture, marketing or sale
         of other products of Sellers, Sellers shall transfer such trademarks to
         Purchaser for no additional consideration.

5.0      REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers, jointly and
         severally, hereby represent and warrant to Purchaser that:

5.1      CORPORATE ORGANIZATION. Rival and Holmes are each corporations duly
         organized, validly existing and in good standing under the laws of
         their respective jurisdictions of incorporation and each has all
         requisite power and authority to own, lease, license and operate its
         properties and assets and to conduct the Business now owned, leased,
         licensed and operated by it. Rival and Holmes are duly qualified,
         licensed or domesticated and in good standing in each jurisdiction
         where the nature of its activities or the character of the properties
         owned, leased or operated by each of them in connection with the
         Business, require such qualification, licensing or domestication,
         except where such failure to qualify would not have a Material Adverse
         Effect on the Condition of the Business (as defined in SECTION 5.18
         below).

5.2      CORPORATE AUTHORIZATION, CERTAIN CORPORATE ACTIONS, NO CONFLICTS.
         Sellers each have all requisite power and authority to execute and
         deliver this Agreement and all necessary corporate proceedings have
         been taken to authorize the execution, delivery and performance by
         Sellers of this Agreement and the transactions described herein. This
         Agreement is the legal, valid and binding obligation of Sellers, and is
         enforceable as to each of them in accordance with its terms, except as
         such validity, binding effect or enforcement may be limited by
         bankruptcy, insolvency or similar laws affecting creditors'

         rights generally or by equitable principles relating to the
         availability of remedies. Except as set forth in SCHEDULE 5.2 of the
         DISCLOSURE SCHEDULE, neither the execution, delivery nor performance of
         this Agreement by Sellers, nor consummation of the transactions
         contemplated hereby, will, with or without the giving of notice or the
         passage of time, or both, either (i) conflict with, result in a
         default, right to accelerate or loss of rights under, or result in the
         creation of any lien, charge or encumbrance pursuant to, any provision
         of either Seller's charter, bylaws or any franchise, mortgage, deed of
         trust, lease, license, agreement, understanding, law, rule or
         regulation or any order, judgment, or decree to which either Seller is
         a party or by which either Seller or any of their respective properties
         may be bound or affected or (ii) except as set forth in SCHEDULE 5.2 of
         the DISCLOSURE SCHEDULE, require any waiver, consent, approval,
         authorization or action of or filing with any third party.

5.3      FINANCIAL INFORMATION. Included at SCHEDULE 5.3 of the DISCLOSURE
         SCHEDULE is the following financial information as of December 31,
         2001, and as previously provided to Purchaser:

         (a)      SCHEDULE 5.3(a) fairly presents in all material respects the
                  net book value (gross book value less appropriate reserves,
                  including depreciation) calculated in accordance with
                  generally accepted accounting principles ("GAAP") of the
                  tooling set forth on SCHEDULE 1.1(c), as such amounts are
                  carried on Sellers' books and records.

         (b)      The quantity and the carrying cost of the Inventory, as such
                  amounts are carried on Sellers' books and records and
                  calculated in accordance with GAAP, are set forth on SCHEDULE
                  5.3(b).

         (c)      Sellers represent and warrant to Purchaser that the items
                  "Gross Sales" and "Standard Cost of Goods Sold" as set forth
                  on SCHEDULE 5.3(c) fairly present in all material respects the
                  gross sales and the standard cost of goods sold for the
                  Business for the twelve months ended December 31, 2001.

5.4      OPERATIONS OF THE BUSINESS; ADEQUACY OF PURCHASED ASSETS.

         (a)      Except as set forth in SCHEDULE 5.4(a) of the DISCLOSURE
                  SCHEDULE, as of the Closing Date the Business is operated only
                  through Sellers and not through any other direct or indirect
                  subsidiary or affiliate of Sellers.

         (b)      Except as set forth in SCHEDULE 5.4(b) of the DISCLOSURE
                  SCHEDULE, the Purchased Assets comprise all the assets,
                  properties and rights of every type and description, used or
                  held for use in or licensed from third parties with respect
                  to, the operation of the Business by Sellers in the ordinary
                  course as such Business has been

                  operated during the twelve-month period prior to the Closing,
                  and no assets, properties or rights material to the operation
                  of the Business as it has been operated by Sellers during such
                  period are not being transferred to Purchaser hereby. Except
                  as set forth in SCHEDULE 5.4(b) of the DISCLOSURE SCHEDULE, no
                  Person (as defined in SECTION 5.18 below) other than the
                  Sellers has any ownership interest in any such assets.

         (c)      Except as disclosed in SCHEDULE 5.4(c) of the DISCLOSURE
                  SCHEDULE, as of the Closing Date all items of Tooling are in
                  operating condition, are fit for the purposes intended and
                  have been maintained in accordance with good industry
                  standards (the "Closing Condition").

5.5      TITLE. Except as disclosed in SCHEDULE 5.5 of the DISCLOSURE SCHEDULE,
         Sellers or either of them have good, marketable and legal title to, or
         hold by valid and existing lease or license, free and clear of all
         mortgages, pledges, liens, or security interests, each piece of
         property included as a Purchased Asset.

5.6      LITIGATION; ORDERS. Except as set forth in SCHEDULE 5.6 of the
         DISCLOSURE SCHEDULE, there is no claim, legal action, administrative
         proceeding, governmental investigation, arbitration or other proceeding
         involving amounts in excess of One Hundred Dollars ($100)
         (collectively, "Litigation") pending, nor to Sellers' Knowledge (as
         defined in SECTION 5.18 below) threatened, against Sellers arising from
         or otherwise relating to the Business. As of the date hereof, there is
         no judgment or outstanding order, injunction, decree, stipulation or
         award (whether rendered by a court or administrative agency, or by
         arbitration) against Sellers relating to the Business that would
         prohibit the consummation of the transaction contemplated by this
         Agreement.

5.7      INTELLECTUAL PROPERTY. SCHEDULES 1.1(e)(i) and 1.1(e)(ii) contain
         complete and correct lists of all the patents and registered
         trademarks, and applications for the foregoing, both domestic and
         foreign, presently owned by Sellers, used or held for use in, licensed
         from third parties with respect to, or necessary to the operation of,
         the Business as operated by Sellers and relating to the manufacture,
         marketing and sale of the Products. Except as set out in SCHEDULE 5.7
         of the DISCLOSURE SCHEDULE, the Intellectual Property and Know-How are
         owned by Sellers free and clear of any license, sublicense, agreement,
         right, understanding, judgment, order, decree, stipulation, lien,
         charge or encumbrance of any kind. The rights being transferred to
         Purchaser pursuant to this Agreement, including rights to the
         Intellectual Property and Know-How, constitute all such rights owned by
         Sellers, used or held for use in or licensed from third parties with
         respect to the Business as operated by Sellers and relating to the
         manufacture, marketing and sale of the Products. To Sellers' Knowledge,
         the Products do not infringe upon or otherwise violate any intellectual
         property owned by any other Person, and there is no claim or action by
         any Person pending, or to Sellers' Knowledge threatened, with respect
         thereto. Except as

         described in SCHEDULE 5.7 of the DISCLOSURE SCHEDULE, to Sellers'
         Knowledge there is no infringement or improper use by any third party
         of the Intellectual Property or the Know-How relating to the Products,
         and there is no action or proceeding instituted by Sellers pending in
         which an act constituting an infringement of any of the rights to such
         Intellectual Property or Know-How was alleged to have been committed by
         a third party. SCHEDULE 5.7 of the DISCLOSURE SCHEDULE lists all
         licenses, sublicenses or agreements relating to the use by third
         parties of the Intellectual Property and Know-How, or the use by the
         Business of the intellectual property of another Person, and there is
         no default under any such license, sublicense or agreement.

5.8      COMPLIANCE WITH LAWS. Except as disclosed in SCHEDULE 5.8 of the
         DISCLOSURE SCHEDULE, the conduct of the Business materially complies
         with all applicable statutes, laws, regulations, ordinances, rules,
         judgments, orders or decrees applicable thereto.

5.9      TAXES. Except as disclosed in SCHEDULE 5.9 of the DISCLOSURE SCHEDULE,
         other than liens for taxes not yet due and payable, there are no unpaid
         taxes, deficiencies, assessments, penalties, interest or other
         governmental charges relating to the income, receipts, payrolls,
         transactions, capital or other operations of the Business which are or
         could become a lien on any of the Purchased Assets. There have been no
         examinations pending against, no claims have been asserted against, and
         there are no unexpired waivers of any statute of limitations with
         respect to any taxes, deficiencies, assessments, penalties, interest or
         other governmental charges which could become liens on any of the
         Purchased Assets.

5.10     CONTRACTS.

         (a)      SCHEDULE 5.10 of the DISCLOSURE SCHEDULE contains a listing of
                  all Contracts, including a full and accurate summary
                  description of any material oral contracts.

         (b)      Except as disclosed in SCHEDULE 5.10 of the DISCLOSURE
                  SCHEDULE and with respect to written Contracts only (not
                  verbal arrangements), the Contracts are legal, valid, and
                  effective in accordance with their terms, do not require any
                  consent or assignment to transfer to Purchaser and there does
                  not exist thereunder any default or event or condition which,
                  after notice or lapse of time or both, would constitute a
                  default thereunder by any party thereto.

         Except as disclosed in SCHEDULE 5.10 of the DISCLOSURE SCHEDULE,
         neither Sellers nor any other party to a Contract is in material breach
         thereof or default thereunder, and to Sellers' Knowledge there does not
         exist any event which, with the giving of notice or the lapse of time,
         would constitute such a breach or default. Except as otherwise set
         forth in SCHEDULE 5.10 of the DISCLOSURE SCHEDULE and with respect to
         written Contracts only (not verbal arrangements), all Contracts
         described or reflected therein are in full force and effect. To the
         extent any Contract (other than purchase orders or sales orders)
         requires the consent, notice or approval of another party to be
         transferred, such necessary consent, notice or approval

         requirement is designated in SCHEDULE 5.10 of the DISCLOSURE SCHEDULE.
         Sellers have provided Purchaser true, complete and correct copies of
         all written Contracts other than open purchase orders or customer
         orders, which are listed on SCHEDULE 5.10.

5.11     INVENTORIES. All Inventories (other than work-in-process and
         components) are of a quality usable and salable in the ordinary course
         of business, subject to appropriate reserves. Sellers make no
         representation or warranty with respect to the salability of the
         Inventories except as expressly provided herein. All Inventories are
         located at the locations set forth in SCHEDULE 5.11 of the DISCLOSURE
         SCHEDULE.

5.12     CONSENTS, APPROVALS, ETC. There are no filings required to be made by
         Sellers with, and there are no consents, approvals, permits or
         authorizations required to be obtained by Sellers from, governmental
         and regulatory authorities or instrumentalities of the United States,
         the several states or any other jurisdiction in connection with the
         execution and delivery of this Agreement by Sellers and the
         consummation by Sellers of the transactions contemplated hereby.

5.13     DEFECTS IN PRODUCTS OR DESIGNS; PRODUCTS.

         (a)      To Sellers' Knowledge, assuming manufacture in complete
                  accordance with Sellers' specifications, there are no defects
                  in the design of Products or the Tooling that would materially
                  adversely affect the performance or quality of the Products
                  and the Tooling is properly designed to produce the Products.

         (b)      The products manufactured and sold by Sellers have been
                  designed and manufactured in compliance with all regulatory,
                  engineering, industrial and other codes generally recognized
                  as being applicable thereto. Since January 1, 1999, none of
                  the Products has been the subject of any voluntary or
                  involuntary recall campaign performed by Sellers or any
                  voluntary or involuntary recall campaign required by, or
                  performed in cooperation with, any governmental agency, that
                  would adversely affect the performance or quality of such
                  Products and there are no claims or suits alleging violations
                  of the Fair Packaging and Labeling Act. Sellers have received
                  no written statements, citations or decisions by any
                  governmental or regulatory body specifically stating that any
                  Product made, manufactured, constructed, distributed, sold,
                  leased, supported or installed at any time by Sellers is
                  defective or unsafe or fails to meet any standards promulgated
                  by any such governmental or regulatory body or is misbranded.
                  Except as set forth in SCHEDULE 5.13(b) of the DISCLOSURE
                  SCHEDULE, no product liability claims are presently pending
                  (as to which Sellers have been served) or, to Sellers'
                  Knowledge, threatened.

5.14     CUSTOMERS. SCHEDULE 5.14 of the DISCLOSURE SCHEDULE lists, on the basis
         of gross sales net returns for the twelve (12) month period ended
         December 31, 2001, the five (5) largest customers of the Business, with
         gross sales less returns listed ("Customers"). Sellers have received no
         written notice from any of the Customers that such Customer will
         terminate, cancel or discontinue a substantial portion of the business
         it conducts with the Business, which notice states a schedule or time
         period for such discontinuation. SCHEDULE 5.14 of the DISCLOSURE
         SCHEDULE sets forth, by customer, summaries of the Sellers' pricing,
         payment and shipping arrangements with such customer for identified
         Products (so-called "FACP Customer Reports"). FACP Customer Reports
         representing a significant portion of customers for Products during
         2001 are included in such SCHEDULE 5.14. Except as disclosed in
         SCHEDULE 5.14 of the DISCLOSURE SCHEDULE, Sellers have not entered into
         any express agreement with any customers, whether in writing or verbal,
         relating to the purchase and returns terms of Products that are not
         reflected in the FACP Customer Reports, except that from time to time
         customers exact pricing adjustments from Sellers within customary
         industry practices.

5.15     ALL MATERIAL INFORMATION; DISCLOSURE. No representation or warranty
         made herein by Sellers, and no statement contained in any certificate
         or other instrument furnished or to be furnished to Purchaser in
         connection with the transaction contemplated by this Agreement,
         contains or will contain any untrue statement of a material fact or
         omits or will omit to state any material facts necessary to make the
         information contained therein not misleading.

5.16     BROKERS. Sellers have not entered into any arrangement for the
         provision of services in connection with this Agreement or the
         transactions contemplated hereby that may give rise to an obligation to
         pay any brokers' or finders' fees or other commissions.

5.17     CUSTOMER WARRANTIES. Sellers have provided to Purchaser, or will
         provide within ten (10) business days of Closing, complete and accurate
         copies of the standard warranties given to purchasers of Products
         currently in effect with respect to the Products (the "Product
         Warranties"). Sellers have not given, nor have any of their
         salespersons, employees, distributors or agents been authorized to
         give, any warranty that deviates from the Product Warranties.

5.18     CERTAIN DEFINED ITEMS. References in SECTIONS 5.1 THROUGH 5.17 and
         elsewhere in this Agreement to (i) "Sellers' Knowledge" shall mean the
         facts and circumstances that Sellers knew or should have known after
         appropriate inquiry, PROVIDED THAT appropriate inquiry of employees of
         Sellers shall be deemed to have been made by inquiry of the following
         individuals: Frank Clements, Paul Izzo, Ira Morgenstern, Frank Marino,
         Terry Robertson and Jordan Kahn; each of these named individuals has
         reviewed this ARTICLE 5.0 and has provided to Sellers the information
         known to such individuals regarding the representations and warranties
         contained herein; (ii) "Material Adverse

         Change in the Condition of the Business" or "Material Adverse Effect on
         the Condition of the Business" shall mean a change or effect that
         likely would have a material adverse change or effect on the Purchased
         Assets or the results of operations of the Business; and (iii) "Person"
         shall mean any individual, corporation, limited liability company,
         partnership, proprietorship, trust or other entity of any kind.

6.0      REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby
         represents and warrants to Sellers that:

6.1      CORPORATE ORGANIZATION. Purchaser is a corporation duly organized,
         validly existing and in good standing under the laws of the State of
         Delaware and has all requisite power and authority to own, lease,
         license and operate its properties and assets and to conduct the
         businesses now owned, leased, licensed and operated by it. Purchaser is
         duly qualified, licensed or domesticated and in good standing in each
         jurisdiction where the nature of its activities or the character of its
         properties require such qualification, licensing or domestication.

6.2      CORPORATE AUTHORIZATION, CERTAIN CORPORATE ACTIONS, NO CONFLICTS.
         Purchaser has all requisite power and authority to execute and deliver
         this Agreement and all necessary corporate proceedings have been taken
         to authorize the execution, delivery and performance by Purchaser of
         this Agreement and the transaction described herein. This Agreement is
         the legal, valid and binding obligation of Purchaser, and is
         enforceable as to Purchaser in accordance with its terms, except as
         such validity, binding effect or enforcement may be limited by
         bankruptcy, insolvency or similar laws affecting creditors' rights
         generally or by equitable principles relating to the availability of
         remedies. Neither the execution, delivery, nor performance of this
         Agreement by Purchaser will, with or without the giving of notice or
         the passage of time, or both, conflict with, result in a default, right
         to accelerate or loss of rights under, or result in the creation of any
         lien, charge or encumbrance pursuant to, any provision of Purchaser's
         certificate of incorporation or bylaws or any franchise, mortgage, deed
         of trust, lease, license, agreement, understanding, law, rule or
         regulation or any order, judgment, or decree to which Purchaser is a
         party or by which Purchaser may be bound or affected.

6.3      LITIGATION; ORDERS. As of the date hereof, there is no judgment or
         outstanding order, injunction, decree, stipulation or award, or pending
         or threatened claims, suits or litigation against Purchaser that would
         prohibit the consummation of the transaction contemplated by this
         Agreement.

6.4      CONSENTS, APPROVALS, ETC. There are no filings required to be made by
         Purchaser with, and there are no consents, approvals, permits or
         authorizations required to be obtained by Purchaser from, governmental
         and regulatory authorities or instrumentalities of the United States,
         the several states or any other jurisdiction in connection with the
         execution and delivery of this Agreement by Purchaser and the
         consummation by Purchaser of the transaction contemplated hereby.

6.5      ALL MATERIAL INFORMATION; DISCLOSURE. No representation or warranty
         made herein by Purchaser, and no statement contained in any certificate
         or other instrument furnished or to be furnished to Sellers in
         connection with the transaction contemplated by this Agreement (all of
         which statements shall be deemed to have been made by Purchaser for all
         purposes of this Agreement), contains or will contain any untrue
         statement of a material fact or omits or will omit to state any
         material facts necessary to make the information contained therein not
         misleading.

6.6      BROKERS. Purchaser has not entered into any arrangement for the
         provision of any services in connection with this Agreement or the
         transactions contemplated thereby that may give rise to an obligation
         to pay brokers' or finders' fees or other commissions.

7.0      DELIVERIES AT CLOSING

7.1      DELIVERIES BY SELLERS. Sellers hereby deliver the following closing
         documents ("Sellers' Documents"), which shall be deemed held in escrow
         and dated and released at the Effective Date upon payment of the
         Purchase Price:

         (a)      to Purchaser, certificates executed by an executive officer of
                  each Seller, respectively, as to authorization, incumbency and
                  the investigations required by the provisions of ARTICLE 5.0,
                  in the form attached as EXHIBIT 7.1(a);

         (b)      to Purchaser, the Bill of Sale, Assignment and Assumption
                  Agreement in the form attached as EXHIBIT 7.1(b), duly
                  executed by an executive officer of each Seller, and all other
                  documents, certificates and agreements necessary to transfer
                  to Purchaser good, marketable and legal title to the Purchased
                  Assets, free and clear of any and all liens thereon;

         (c)      to Purchaser, assignments of all Intellectual Property in the
                  forms attached as EXHIBIT 7.1(c), duly executed by an
                  executive officer of each Seller;

         (d)      to Purchaser, evidence of release of all liens, charges and
                  encumbrances on the Purchased Assets, subject to final
                  approval for release of Sellers' lender;

         (e)      to Purchaser and the Escrow Agent, the Escrow Agreement.

         (f)      to Purchaser, the opinion of Posternak, Blankstein & Lund,
                  L.L.P., counsel to Sellers.

7.2      DELIVERIES BY PURCHASER. Purchaser hereby delivers the following
         closing documents ("Purchaser's Documents"), which shall be deemed held
         in escrow and dated and released at the Effective Date upon payment of
         the Purchase Price:

         (a)      to Sellers, a certificate executed by an executive officer of
                  Purchaser as to authorization and incumbency, in the form
                  attached as EXHIBIT 7.2(a);

         (b)      to Sellers, the Bill of Sale, Assignment and Assumption
                  Agreement in the form attached as EXHIBIT 7.1(b), duly
                  executed by an executive officer of Purchaser; and

         (c)      to Sellers and the Escrow Agent, the Escrow Agreement.

7.3      EFFECT OF CLOSING BREACH. Upon the occurrence of a Closing Breach,
         Sellers' Documents and Purchaser's Documents shall automatically be
         deemed null and void and of no further force and effect, and Sellers
         and Purchaser, as the case may be, shall destroy all copies of such
         documents, whether received in original, fax or e-mail form.

8.0      POST-CLOSING OBLIGATIONS.

8.1      PRODUCT MARKING. Following Closing, all products manufactured by, or
         manufactured by third parties pursuant to orders of, Purchaser relating
         in any way to the Products shall be indelibly imprinted, stamped or
         otherwise tagged with a distinctive identifying mark which
         distinguishes all such products from products manufactured by or on
         behalf of Sellers and included in Inventories. Within sixty (60) days
         after the Closing Date, Purchaser shall provide to Sellers a sample of
         the distinguishing mark for each Product.

8.2      ACCESS AFTER CLOSING. After the Closing, upon reasonable written
         notice, Purchaser and Sellers shall furnish or cause to be furnished to
         each other and their respective accountants, counsel and other
         representatives reasonable access, during normal business hours, to
         such information (including records pertinent to the Business) and
         assistance relating to the Business as is reasonably necessary for
         operations, financial reporting and accounting matters, the preparation
         and filing of any returns, reports or forms or the defense of any tax
         claim or assessment. In the case of Sellers, such assistance shall
         include access to any and all documents, records, files and
         correspondence relating to the Business, and Sellers will use
         reasonable efforts to maintain at their offices or in offsite storage
         for the longer of seven (7) years from its date or two (2) years after
         the Closing Date any such documents, records, files and correspondence
         that could be needed by Purchaser. In the case of Purchaser, such
         assistance shall include reasonably prompt written response to
         reasonable written inquiries of Sellers or either of them related to
         such financial reporting, accounting and tax matters, cooperation in
         responding to audit reports made by taxing authorities to Sellers
         regarding the Business, assisting Sellers (including making its
         employees reasonably available) in defending any lawsuits or claims
         against

         Sellers with respect to Excluded Liabilities or relating to the
         operation of the Business by Sellers prior to the Closing Date and, at
         Sellers' request and expense, participation in audits conducted with
         respect to Sellers. Purchaser shall use reasonable efforts to retain
         the books and records of Sellers included in the Purchased Assets for a
         period of seven (7) years after the Closing. After the end of such
         respective retention period, before disposing of such books or records,
         Purchaser and Sellers, as the case may be, shall use their best efforts
         to give notice to such effect to the other party, and such parties,
         within a reasonable time after the receipt of such notice, will notify
         the others whether to destroy such documents or whether it will, at its
         cost and expense, remove and retain all or any part of such books or
         records as it may select.

8.3      COVENANT NOT TO COMPETE. The parties acknowledge and agree that
         Purchaser is acquiring, and the consideration paid by Purchaser
         hereunder reflects, the goodwill of the Business associated with the
         manufacture, marketing and/or sale of the Products and Products Under
         Development. Therefore, as an inducement to enter into this Agreement
         and in partial consideration for the payment to Sellers of the Purchase
         Price and the transfer of the Purchased Assets to Purchaser, the
         parties agree that for a period of five (5) years following the Closing
         Date, except as contemplated under Section 1.3 hereof, neither Sellers,
         nor any subsidiaries of either Seller, nor Jordan A. Kahn, individually
         (the "Seller Covenant Group") will directly or indirectly engage in any
         business which competes with the manufacture, marketing and/or sale of
         Products or Products Under Development.

         For purposes of this Agreement: the term "compete" includes, without
         limitation, (A) owning or controlling any financial interest in any
         corporation, partnership, firm or other form of business organization
         (collectively, an "Entity") which is so engaged, except of a de minimus
         interest, (B) consulting with, advising or assisting in any way any
         Entity in the business areas where these noncompetition covenants are
         effective, which is now or becomes a competitor of Purchaser or (C)
         engaging in any practice, the intent of which is to evade the
         provisions of these covenants not to compete. The term "compete" is
         intended to refer to competition for a purchase by a consumer of a
         product of Sellers which performs a comparable function to that of a
         Product or a Product Under Development, and does not include offering
         for sale or selling any product to retailer customers which may compete
         for shelf space, special offers or retailer purchase budgets. Purchaser
         acknowledges that Sellers are in the business, among others, of
         manufacturing, marketing and selling products that purify, humidify and
         scent the air, and, without limitation, their continued development,
         marketing and sale of products in these areas will not be deemed to
         "compete" with the Products or the Products Under Development; in
         particular, no humidification product manufactured, marketed and sold
         by Sellers shall be deemed to "compete" with the PFAC5 Facial Care
         System, or any part thereof, listed on SCHEDULE 5.3(b).

 8.4     EXCEPTIONS TO COVENANT.

         (a)      In the event that any member of the Seller Covenant Group
                  acquires an entity or business, or an interest in an entity or
                  business, a part or division of which engages in a business
                  that would be violative of the covenants contained in SECTION
                  8.3, such member shall have a period of six (6) months after
                  closing of such acquisition to divest of all operations that
                  violate such covenants, and such acquisition and divestiture
                  shall not be prohibited by or deemed a breach of this
                  Agreement.

         (b)      The covenants contained in SECTION 8.3 shall not apply to any
                  Person which acquires one or more of Sellers and their
                  business, whether through merger, consolidation, purchase of
                  stock or assets or otherwise, nor shall it apply to the
                  business operated by such Person on a consolidated basis with
                  one or more of Sellers following such transaction.

         (c)      Nothing herein shall prevent or limit Jordan A. Kahn from
                  owning, directly or indirectly, any interest that is not a
                  controlling interest in any Person which may compete in the
                  manner provided in SECTION 8.3, PROVIDED THAT, Mr. Kahn is not
                  actively engaged in the business of such Person as a manager
                  or employee.

         (d)      Members of the Seller Covenant Group may market, distribute
                  and sell, in their sole discretion and without limitation, any
                  products included in inventory not included within the
                  Inventories purchased by Purchaser as part of the Purchased
                  Assets, including without limitation the Excluded Inventories
                  and any Excluded Products.

8.5      CONFIDENTIALITY. As a further inducement to Purchaser to enter into
         this Agreement and in partial consideration of the payment to Sellers
         of the Purchase Price, the Sellers agree that after the date hereof no
         member of the Seller Covenant Group will divulge to any person, firm or
         corporation any confidential information relating to the Business or
         the economic terms of this Agreement (except as is deemed by a party to
         be required in connection with public information requirements of the
         federal securities laws), including without limitation customers,
         customer lists, Know-How, contracts, prices, suppliers or other
         business practices, unless and until (i) such information shall have
         ceased to be confidential as evidenced by general public knowledge or
         availability through public sources, (ii) such disclosure is required
         in order for Sellers or any member of the Seller Covenant Group to
         continue its business operations as contemplated by and not in
         violation of this Agreement and (iii) disclosure is required under
         order of a court or other body having jurisdiction, provided that
         Sellers shall have given prior notice to Purchaser of any hearing or
         other proceeding in which the matter of such disclosure is to be heard.

8.6      PRESS RELEASE. The parties agree to issue only those press releases and
         such other forms of public notification announcing the transaction
         contemplated hereby as is consented to in advance by the other party,
         such consent not to be unreasonably withheld, or as is deemed by a
         party to be required in connection with public information requirements
         of the federal securities laws.

8.7      ACCOUNTS RECEIVABLE; IMPROPER WARRANTY CLAIM CREDITS. The parties
         acknowledge that following Closing, customers of Sellers and Purchasers
         may incorrectly apply payments or credits against a party not entitled
         to or responsible for such items under this Agreement. Therefore, in
         such event, the parties agree as follows:

         (a)      Sellers and Purchaser agree to (i) remit promptly to the other
                  party (the "Proper Payee") all receipts which are identified
                  by the remitter as being applicable to sale of Products by the
                  Proper Payee, (ii) provide contemporaneously to the Proper
                  Payee copies of all documents received from the account
                  debtors with respect to such remittances and (iii) provide to
                  the Proper Payee such other reasonable cooperation as shall be
                  necessary to assist Proper Payee's collection of such accounts
                  receivable.

         (b)      If any customer of Sellers or Purchaser, as the case may be,
                  credits the value of any warranty claims against any of its
                  accounts payable to Sellers or Purchaser, as the case may be,
                  and such warranty claims were appropriately borne by the other
                  party under the provisions of Section 2.0(b) hereof, Sellers
                  and Purchaser shall reasonably cooperate to reimburse the
                  other party in the amount of the obligation for such credit.

8.8      INSURANCE. Following Closing, Sellers (jointly and severally) and
         Purchaser each agree to obtain and maintain product liability insurance
         in amounts and for such duration of time that are customary for the
         industry in which the Products are sold.

8.9      FURTHER ASSURANCES. After the Closing and for no further consideration,
         Sellers (on the one hand), and Purchaser (on the other) shall (a)
         perform all reasonable acts (including without limitation, the use of
         their commercially reasonable efforts to enable the other party to
         accomplish transfer registration, permits, approvals, and the like as
         contemplated by this Agreement), and (b) execute, acknowledge and
         deliver such assignments, transfers, consents and other documents and
         instruments as the other party or its counsel may reasonably request,
         in each case, to vest in Purchaser or protect Purchaser's right, title
         and interest in, and enjoyment of, the Purchased Assets or to carry out
         the provisions and purposes of this Agreement.

9.0      CLOSING MATTERS.

9.1      AUTHORIZATIONS. Sellers and Purchaser, as promptly as practicable after
         the date hereof, shall (a) use commercially reasonable efforts to
         obtain, or cause to be obtained, all authorizations, approvals,
         consents and waivers from all Persons necessary to be obtained by them
         or their affiliates in conjunction with such transaction, and (b) use
         commercially reasonable efforts to take, or cause to be taken, all
         other actions necessary, proper or advisable in order to fulfill their
         obligations hereunder and to carry out the intentions of the parties
         expressed herein. Sellers and Purchaser will coordinate and cooperate
         with one another in exchanging such information and supplying such
         reasonable assistance as may be reasonably requested by each in
         connection with the foregoing.

9.2      PURCHASER'S INVESTIGATIONS. Purchaser acknowledges and agrees that
         prior to execution and delivery of this Agreement Sellers provided to
         it the names and buyer contact information for certain of Sellers'
         customers, and that it has had an opportunity to make inquiry of such
         customers with regard to Products and the Business.

9.3      BULK SALES COMPLIANCE. Each of Purchaser and Sellers hereby waive
         compliance with the provisions of any applicable statutes relating to
         bulk transfers of bulk sales. Sellers agree to indemnify and hold
         Purchaser harmless from and against any and all claims of Sellers'
         creditors or others asserted against Purchaser resulting from such
         non-compliance, as provided in Section 11.1 hereof.

10.0     CONSENTS AND APPROVALS. This Agreement shall not constitute an
         agreement to assign or transfer any interest in any instrument,
         contract, lease, permit or other agreement or arrangement or any claim,
         right or benefit arising thereunder or resulting therefrom, if an
         assignment or transfer or an attempt to make such an assignment or
         transfer without the consent of a third party would constitute a breach
         or violation thereof or would affect adversely the rights of Purchaser
         or Sellers thereunder. Any transfer or assignment to Purchaser by
         Sellers of any interest under any instrument, contract, lease, permit
         or other agreement or arrangement that requires the consent of a third
         party shall be made subject to such consent or approval being obtained.
         In the event any such consent or approval has not obtained on or prior
         to the Closing Date, Sellers shall continue to use commercially
         reasonable efforts to obtain any such approval or consent after the
         Closing Date until such time as such consent or approval has been
         obtained. Sellers will cooperate with Purchaser in any lawful and
         economically feasible arrangement to provide that Purchaser shall
         receive Sellers' interest in the benefits under any such instrument,
         contract, lease, permit or other agreement or arrangement, including a
         subcontract, sublease or performance by Sellers as agent, provided that
         Purchaser shall undertake to pay or satisfy the corresponding
         liabilities for the enjoyment of such benefit to the extent Purchaser
         would have been responsible therefor if such consent or approval had
         been obtained. In the case of an instrument, contract, lease, permit or
         other

         agreement or arrangement with respect to which Purchaser subcontracts
         or subleases from Sellers, Purchaser will be liable only to the extent
         agreed in such subcontract or sublease. Each party will pay its own
         costs of seeking to obtain or obtaining any necessary or desirable
         consent or approval whether before or after the Closing Date.

11.0     INDEMNIFICATION.

11.1     SELLERS' INDEMNIFICATION. Sellers, jointly and severally, hereby agree
         to indemnify and hold Purchaser harmless from, against and in respect
         of:

         (a)      any and all loss, liability, or damage, including reasonable
                  attorneys' fees and expenses (collectively "Damages") suffered
                  or incurred by Purchaser by reason of any breach of
                  representation or warranty or non-fulfillment or
                  non-performance of any covenant or agreement of Sellers
                  contained herein or in any certificate, document, instrument
                  or agreement delivered to Purchaser pursuant hereto or in
                  connection herewith; and

         (b)      any and all Damages suffered or incurred by Purchaser in
                  respect of or in connection with any Excluded Liabilities.

11.2     PURCHASER'S INDEMNIFICATION. Purchaser hereby agrees to indemnify and
         hold Sellers harmless from, against, and in respect of:

         (a)      any and all Damages suffered or incurred by Sellers or either
                  of them by reason of any breach of representation or warranty
                  or non-fulfillment or non-performance of any covenant or
                  agreement by Purchaser contained herein or in any certificate,
                  document, instrument or agreement delivered to Sellers
                  pursuant hereto or in connection herewith; and

         (b)      any and all Damages suffered or incurred by Sellers or either
                  of them by reason or in connection with the Assumed
                  Liabilities following Closing.

11.3     LIMITATIONS ON INDEMNIFICATION.

         (a)      Notwithstanding SECTION 11.1 above and subject to the earlier
                  time limitations set forth in SECTION 4.2 hereof, Sellers
                  shall not be liable to indemnify Purchaser for Purchaser's
                  Damages, and notwithstanding SECTION 11.2 above Purchaser
                  shall not be liable to indemnify Sellers for Sellers' Damages,
                  in either case arising from or relating to a breach of a
                  representation or warranty set forth in this Agreement unless
                  the Indemnified Party notifies the Indemnifying Party in
                  writing of its claim or potential claim for indemnification
                  not later than the day which is one (1) year after the Closing
                  Date.

         (b)      Notwithstanding SECTION 11.1 AND 11.2 above, Sellers shall not
                  be liable to indemnify or have any other liability arising
                  under this Agreement or otherwise to Purchaser for Purchaser's
                  Damages, and Purchaser shall not be liable to indemnify or
                  have any other liability arising under this Agreement or
                  otherwise to Sellers for Sellers' Damages, unless the
                  aggregate of the Indemnified Party's Damages exceeds $250,000,
                  and then only for the amount by which such aggregate exceeds
                  $250,000 (the "Basket"), PROVIDED THAT the Basket shall not
                  apply to any claims made by Purchaser (A) in compliance with
                  Section 4.2(a) hereof if and only if one or more items of
                  Tooling either (i) are not located at the facilities of a
                  Third Party Manufacturer or (ii) are inoperative or incapable
                  of producing the relevant Product (with Purchaser's damages
                  for such non-compliance to be based on the net book value of
                  such Tooling on SCHEDULE 5.3(a), or (B) for breach of the
                  representation contained in SECTION 5.3(b) regarding the
                  quantity or carrying cost of the Inventory. Furthermore,
                  Sellers shall not be liable to indemnify or have any other
                  liability arising under this Agreement or otherwise to
                  Purchaser for Purchaser's Damages, and Purchaser shall not be
                  liable to indemnify or have any other liability arising under
                  this Agreement or otherwise to Sellers for Sellers' Damages,
                  in excess of a total aggregate amount equal to twenty-five
                  percent (25%) of the Purchase Price (the "Cap"). For purposes
                  of this Agreement, the Escrow Amount shall be deemed included
                  in the Cap, and any payment of all or any portion of the
                  Escrow Amount to Purchaser pursuant to the Escrow Agreement
                  shall be credited against and reduce the Cap.

         (c)      The limitations contained in SECTION 11.3(a) AND 11.3(b) shall
                  not apply to any claim by Purchaser for indemnification based
                  on any breach of the representations contained in SECTIONS 5.5
                  OR 5.9, and the limitations contained in SECTION 11.3(a) shall
                  not apply to any claim by Purchaser for indemnification based
                  on any breach of the representations contained in SECTIONS 5.6
                  OR 5.7, PROVIDED HOWEVER that the survival period for
                  representations contained in SECTIONS 5.6 AND 5.7 contained in
                  SECTION 12 hereof shall continue to apply with respect to any
                  breaches of such sections. Furthermore, the limitations
                  contained in SECTION 11.3(b) shall not apply to breaches of
                  covenants contained in SECTIONS 2.0, 8.3 AND 8.5.

         (d)      Notwithstanding the foregoing, neither Sellers nor the
                  Purchaser will be entitled to indemnification with respect to
                  consequential damages or with respect to punitive damages,
                  except in the case of fraud or willful misconduct by the other
                  party. Any indemnification amounts payable by an Indemnifying
                  Party under SECTION 11.1 OR 11.2 shall be calculated after
                  giving effect to (i) any proceeds (net of retro-premium
                  adjustments and other expenses) actually received by an
                  Indemnified Party from insurance policies covering the damage
                  that is the subject of such claim for indemnity, and (ii) the
                  actual recognized tax benefit resulting from such damage.

11.4     PROCEDURE.

         (a)      In order for a party (the "Indemnified Party"), to be entitled
                  to any indemnification provided under this Agreement in
                  respect of, arising out of or involving a claim made by any
                  Person (other than another party to this Agreement, to which
                  this SECTION 11.4 shall not apply) against the Indemnified
                  Party (a "Third Party Claim"), such Indemnified Party must
                  notify the other party (the "Indemnifying Party") in writing
                  of the Third Party Claim within fifteen (15) business days
                  after receipt by such Indemnified Party or written notice of
                  the Third Party Claim; provided, however, that failure to give
                  such notification shall not affect the indemnification
                  provided hereunder except to the extent the Indemnifying Party
                  can demonstrate actual prejudice as a direct or indirect
                  result of such failure. Thereafter, the Indemnified Party
                  shall deliver to the Indemnifying Party, within fifteen (15)
                  business days after the Indemnified Party's receipt thereof,
                  copies of all notices and documents (including court papers)
                  received by the Indemnified Party relating to the Third Party
                  Claim.

         (b)      If a Third Party Claim is made against an Indemnified Party,
                  the Indemnifying Party will be entitled to participate in the
                  defense thereof and, if it acknowledges in writing its
                  obligations to indemnify the party seeking indemnification,
                  subject to all provisions of this ARTICLE 11, and so chooses
                  to assume the defense thereof with counsel selected by the
                  Indemnifying Party. Should the Indemnifying Party so elect to
                  assume the defense of a Third Party Claim, the Indemnifying
                  Party will not be liable to the Indemnified Party for any
                  legal expenses subsequently incurred by the Indemnified Party
                  in connection with the defense thereof. If the Indemnifying
                  Party assumes such defense, the Indemnified Party shall have
                  the right to participate in the defense thereof and to employ
                  counsel, at its own expense, separate from the counsel
                  employed by the Indemnifying Party, it being understood that
                  the Indemnifying Party shall control such defense. The
                  Indemnifying Party shall be liable for the fees and expenses
                  of counsel employed by the Indemnified Party for any period
                  during which the Indemnifying Party has not assumed the
                  defense thereof (other than after the 15-day period described
                  in SECTION 11.4(a) if the Indemnified Party shall have failed
                  to give notice of the Third Party Claim). If the Indemnifying
                  Party chooses to defend or prosecute a Third Party Claim, the
                  parties hereto shall cooperate in the defense or prosecution
                  thereof. Such cooperation shall include the retention and
                  (upon the Indemnifying Party's request) the provision to the
                  Indemnifying Party of records and information that are
                  reasonably relevant to such Third Party Claim, and making
                  employees available on a mutually convenient basis to provide
                  additional information and explanation of any material
                  provided hereunder. If the Indemnifying Party chooses to
                  defend or prosecute any Third Party Claim, the Indemnified
                  Party will consent to any reasonable settlement, compromise or

                  discharge of such Third Party Claim that the Indemnifying
                  Party may reasonably recommend and which the Indemnifying
                  Party will pay for or perform at its sole expense. If the
                  Indemnifying Party shall have assumed the defense of a Third
                  Party Claim, the Indemnified Party shall not admit any
                  liability with respect to, or settle, compromise or discharge,
                  such Third Party Claim without the Indemnifying Party's prior
                  written consent, which shall not be unreasonably withheld.

11.5     INDEMNIFICATION AS EXCLUSIVE REMEDY. The indemnification provided in
         this ARTICLE 11 shall be the exclusive post-closing remedy available to
         the parties for any breach of representation, warranty, covenant or
         agreement contained in this Agreement or any other documents,
         instruments or agreements executed in conjunction with the transactions
         contemplate hereby, except as may otherwise be expressly provided for
         in any such document, instrument or agreement; provided, however, that
         either party shall be entitled to seek injunctive relief to enforce the
         provisions of the Agreement or any related agreements.

12.0     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements,
         representations and warranties made by each of the parties hereto shall
         survive the Closing for a period of one (1) year, except the
         representations contained in (i) SECTION 5.5 and SECTION 5.9 shall
         survive until the expiration of the latest applicable statute of
         limitations, (ii) SECTION 5.6 and SECTION 5.7 shall survive the Closing
         for a period of two (2) years and (iii) in SECTION 5.4(c) shall survive
         through the end of the Tooling Claim Period and thereafter for any
         period in which a claim brought pursuant to Section 4.2(a) is being
         resolved. All indemnities, covenants and agreements made herein shall
         survive for the period expressly indicated herein, or, if not so
         indicated, indefinitely.

13.0     ARBITRATION.

         (a)      Any dispute, controversy or claim arising out of or in
                  connection with or relating to, this Agreement or any other
                  agreement entered into pursuant hereto, or the transactions
                  contemplated hereby, (a "Dispute"), including but not limited
                  to any breach or alleged breach hereof, shall be determined
                  and settled by arbitration in Boston, Massachusetts pursuant
                  to the rules then in effect of the American Arbitration
                  Association; PROVIDED, HOWEVER, that in the event the event
                  the Dispute involves an amount in excess of $250,000 the
                  Dispute shall be heard by a panel of three (3) arbitrators.

         (b)      The resolution of such arbitration shall be final and binding
                  on the parties hereto and enforceable in a court of competent
                  jurisdiction. The parties hereto hereby irrevocably submit to
                  the nonexclusive jurisdiction of any court of competent
                  jurisdiction for the purpose of enforcing any arbitration
                  award.

         (c)      This ARTICLE 13 shall not preclude any of the parties hereto
                  from seeking injunctive or other temporary relief in any court
                  of competent jurisdiction in the event of a breach or
                  threatened breach of this Agreement or any related agreement.

14.0     NOTICES. Any and all notices or other communications required or
         permitted to be given under any of the provisions of this Agreement
         shall be in writing and shall be deemed to have been duly given when
         personally delivered, one business day after being sent by express
         mail, or overnight courier service, five business days after being sent
         by first class registered mail, return receipt requested, or upon
         confirmation of receipt of a telefax (with a copy also sent by express
         mail or overnight courier services) addressed to parties at the
         addresses set forth below or at such other address as any party may
         specify by notice to the other parties, or, in the case of a telefax,
         to the telefax number indicated:

         If to Purchaser:

                           Conair Corporation
                           One Cummings Point Road
                           Stamford, Connecticut  06904
                           Attention:  Ron Diamond, President
                           Telefax:  (203) 965-8348

         with a copy to:

                           Richard Margulies, General Counsel
                           Conair Corporation
                           One Cummings Point Road
                           Stamford, Connecticut  06904
                           Telefax:  (203) 975-4658

         If to Sellers:

                           The Holmes Group, Inc.
                           One Holmes Way
                           Milford, MA  01757
                           Attention:  Paul A. Izzo, Esq.
                           Telefax:  508-634-8771

         with a copy to:
                           Posternak, Blankstein & Lund, L.L.P.
                           100 Charles River Plaza
                           Boston, MA  02114
                           Attention:  Lauren Jennings, Esq.
                           Telefax:  617- 367-2315

15.0     MISCELLANEOUS.

15.1     ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with the other
         transaction documents contemplated by and consummated pursuant to this
         Agreement, constitutes the entire agreement of the parties with respect
         to the subject matter and supersedes any prior agreements, oral or
         written, hereof and may not be modified, amended or terminated except
         by written agreement specifically referring to this Agreement and
         signed by each party hereto.

15.2     WAIVER. No waiver of any breach or default hereunder shall be
         considered valid unless in writing and signed by the party giving such
         waiver, and no such waiver shall be deemed a waiver of any subsequent
         breach or default of the same or similar nature.

15.3     BINDING EFFECT. This Agreement shall be binding upon and inure to the
         benefit of each party hereto, its successors and assigns.

15.4     NUMBERS AND HEADINGS. The section and paragraph numbers and headings
         contained herein are for the purposes of reference and convenience only
         and are not intended to define or limit the contents of said paragraphs
         or sections.

15.5     EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to herein
         are hereby incorporated by reference as if set out in full and form an
         integral part of this Agreement.

15.6     TRANSACTION TAXES. Sellers will pay all sales, transfer and documentary
         taxes, if any, and any and all further taxes arising by virtue of the
         sale, transfers and deliveries to be made to Purchaser as contemplated
         hereby. Notwithstanding the foregoing, gains, income and similar taxes
         shall be paid by the entity or person on which such tax is imposed.

15.7     COUNTERPARTS. This Agreement may be executed in one or more
         counterparts, all of which taken together shall be deemed one original.
         This Agreement and any agreements referenced herein or required
         pursuant to the Closing may be executed and delivered by facsimile
         signature. The parties agree to deliver original signatures promptly
         following execution by facsimile signature.

15.8     EXPENSES. Subject to any express provisions of this Agreement to the
         contrary, Purchaser shall bear the expenses, costs and fees incurred by
         it, and Sellers shall bear the expenses, costs and fees incurred by
         them, in connection with the transactions contemplated hereby, the
         preparation and execution of this Agreement and compliance herewith.

15.9     VALIDITY OF PROVISIONS. If any provision of this Agreement or any
         agreement referenced herein shall be held or deemed to be or shall, in
         fact, be inoperative or unenforceable as applied in any particular case
         because it conflicts with any other provision or provisions hereof or
         any constitution, statute, rule of public policy, or for any other
         reason, such circumstances shall not have the effect of rendering the
         provision in question inoperative or unenforceable in any other case or
         circumstance, or of rendering any other provision or provisions herein
         contained invalid, inoperative or unenforceable to any extent
         whatsoever. The invalidity of any one or more phrases, sentences,
         clauses, sections, or subsections of this Agreement or any other
         agreements referenced herein shall not affect the remaining portions
         thereof.

15.10    GOVERNING LAW. This Agreement shall be governed by and construed in
         accordance with the laws of The Commonwealth of Massachusetts
         applicable to contracts made and to be performed therein.

15.11    USE OF TERM "SELLERS". The use of the term "Sellers" or "Seller" in any
         instance shall relate to either or both of Holmes and Rival.

                        [SIGNATURES APPEAR ON NEXT PAGE]

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                       PURCHASER:

                                       CONAIR CORPORATION

                                       By: /s/ Richard A. Margulies
                                           -----------------------------------
                                       Its: Vice President and General Counsel

                                       SELLERS:

                                       THE RIVAL COMPANY

                                       By: /s/ Ira B. Morgenstern
                                           -----------------------------------
                                       Its: CFO

                                       THE HOLMES GROUP, INC.

                                       By: /s/ Ira B. Morgenstern
                                           -----------------------------------
                                       Its: CFO

         The undersigned, Jordan Kahn, executes this Agreement as to Sections
8.3 and 8.4 only, and for no other purpose.

/s/ Jordan A. Kahn
----------------------------
Jordan A. Kahn

 

Basic Info X:

Name: STATEMENT OF AGREEMENT
Type: Statement of Agreement
Date: Feb. 21, 2002
Company: HOLMES GROUP INC
State: Massachusetts

Other info: