HOME PRODUCTS INTERNATIONAL INC, S-4/A, 1998-07-10

HOME PRODUCTS INTERNATIONAL INC
S-4/A, 1998-07-10
PLASTICS PRODUCTS, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 10, 1998

REGISTRATION NO. 333-56549

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

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
------------------------

AMENDMENT NO. 1
TO

FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

HOME PRODUCTS INTERNATIONAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3089 36-4147027
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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

4501 WEST 47TH STREET, CHICAGO, ILLINOIS 60632
(773) 890-1010
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

SELFIX, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3089 36-2490451
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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

SHUTTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
ILLINOIS 3089 36-3572036
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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

TAMOR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
MASSACHUSETTS 3089 04-2073885
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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

SEYMOUR HOUSEWARES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 3089 35-1873567
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

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

4501 WEST 47TH STREET, CHICAGO, ILLINOIS 60632
(773) 890-1010
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

<PAGE> 2

JAMES R. TENNANT

CHIEF EXECUTIVE OFFICER

4501 WEST 47TH STREET, CHICAGO, ILLINOIS 60632

(773) 890-1010
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH A COPY TO:

KENNETH G. KOLMIN, ESQ.
SONNENSCHEIN NATH & ROSENTHAL
8000 SEARS TOWER, CHICAGO, ILLINOIS 60606
(312) 876-8000

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _________

If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _________
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 5/8% Senior Subordinated Notes
due 2008........................ $125,000,000 100% $125,000,000 $36,875(1)
- ------------------------------------------------------------------------------------------------------------------------------
Guarantees of the 9 5/8% Senior
Subordinated Notes.............. (2) (2) $125,000,000 (2)
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- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Previously paid.

(2) This Registration Statement covers the Guarantees to be issued by certain
subsidiaries of Home Products International, Inc. of its obligations under
the 9 5/8% Senior Subordinated Notes. Such Guarantees are to be issued for
no additional consideration, and therefore no registration fee is required.

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

THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3

HOME PRODUCTS INTERNATIONAL, INC.
SELFIX, INC.
SHUTTERS, INC.
TAMOR CORPORATION
SEYMOUR HOUSEWARES CORPORATION
------------------------

CROSS REFERENCE SHEET

PURSUANT TO REGULATION S-K, ITEM 501(B),
SHOWING LOCATION OF INFORMATION REQUIRED BY ITEMS OF FORM S-4

<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION OR CAPTION IN PROSPECTUS
-------------------------------- ---------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Facing Page of Registration Statement; Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front and Outside Back Cover Pages of
Prospectus; Available Information
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Prospectus Summary; Risk Factors; Selected Historical
Financial Data
4. Terms of the Transaction................... Prospectus Summary; The Exchange Offer; Description
of the Exchange Notes
5. Pro Forma Financial Information............ Unaudited Pro Forma Combined Financial Data
6. Material Contracts with the Company Being
Acquired................................... *
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ The Exchange Offer; Plan of Distribution
8. Interests of Named Experts and Counsel..... *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ *
10. Information With Respect to S-3
Registrants................................ Selected Historical Financial Data; Unaudited Pro
Forma Combined Financial Data; Management's
Discussion and Analysis of Financial Condition and
Results of Operations; Business
11. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Documents by Reference
12. Information With Respect to S-2 or S-3
Registrants................................ *
13. Incorporation of Certain Information by
Reference.................................. *
14. Information With Respect to Registrants
Other Than S-2 or S-3 Registrants.......... *
15. Information With Respect to S-3
Companies.................................. *
16. Information With Respect to S-2 or S-3
Companies.................................. *
17. Information With Respect to Companies Other
Than S-2 or S-3 Companies.................. *
18. Information if Proxies, Consents or
Authorization Are to be Solicited.......... *
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited, or
in an Exchange Offer....................... Management; Principal Stockholders; Certain
Transactions
</TABLE>

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

* Not applicable or answer is in the negative.
<PAGE> 4

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.

SUBJECT TO COMPLETION, DATED JULY 10, 1998

PROSPECTUS

HOME PRODUCTS INTERNATIONAL, INC.

OFFER TO EXCHANGE UP TO $125,000,000 OF ITS
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
FOR ANY AND ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES DUE 2008
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1998, UNLESS EXTENDED
------------------------

Home Products International, Inc. ("HPI" and, together with its
subsidiaries, the "Company") hereby offers, upon the terms and subject to the
conditions set forth in this Prospectus and the accompanying Letter of
Transmittal (which together constitute the "Exchange Offer") to exchange $1,000
principal amount of 9 5/8% Senior Subordinated Notes due 2008 (the "Exchange
Notes") of HPI for each $1,000 principal amount of the issued and outstanding
9 5/8% Senior Subordinated Notes due 2008 (the "Original Notes," and the
Original Notes and the Exchange Notes, collectively, the "Notes") of HPI from
the Holders (as defined herein) thereof. As of the date of this Prospectus,
there is $125,000,000 aggregate principal amount of the Original Notes
outstanding. The terms of the Exchange Notes are identical in all material
respects to the Original Notes, except that the Exchange Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
and therefore will not bear legends restricting their transfer and will not
contain certain provisions providing for the payment of liquidated damages to
the holders of the Original Notes under certain circumstances relating to the
Exchange and Registration Rights Agreement (as defined herein), which provisions
will terminate as to all of the Notes upon the consummation of the Exchange
Offer.

The Company will accept for exchange any and all Original Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
, 1998, unless extended by the Company in its sole discretion
(the "Expiration Date"). Tenders of Original Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange
Offer is subject to certain customary conditions. See "The Exchange Offer."

The Exchange Notes will be general unsecured obligations of the Company,
and will be subordinated in right of payment to all existing and future Senior
Indebtedness (as defined) of the Company. The Exchange Notes will rank pari
passu in right of payment with any other Senior Subordinated Indebtedness (as
defined) of the Company and will rank senior in right of payment to all other
Subordinated Obligations (as defined) of the Company. The Company's payment
obligations under the Exchange Notes will be unconditionally guaranteed, jointly
and severally (the "Guarantees"), on a senior subordinated basis by each
Restricted Subsidiary (as defined) of the Company and any future Restricted
Subsidiary of the Company other than any Foreign Subsidiary, as defined (the
"Subsidiary Guarantors"). The Guarantees will be general unsecured obligations
of the Subsidiary Guarantors that will be subordinated to all existing and
future Guarantor Senior Indebtedness (as defined) of the Subsidiary Guarantors.
As of March 28, 1998, after giving effect to the Refinancing (as defined), (i)
the outstanding Senior Indebtedness of the Company, including the Subsidiary
Guarantors, would have been $9.2 million, all of which would have been Secured
Indebtedness (as defined), (ii) the Company, including the Subsidiary
Guarantors, would have had no Subordinated Obligation outstanding and no Senior
Subordinated Indebtedness outstanding other than the Notes, (iii) the
outstanding Guarantor Senior Indebtedness of the Subsidiary Guarantors would
have been $6.7 million, all of which would have been Secured Indebtedness, and
(iv) the Subsidiary Guarantors would have had no Guarantor Senior Subordinated
Indebtedness (as defined) and no Guarantor Subordinated Obligation (as defined).
See "Description of the Exchange Notes."

(continued on following page)

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

SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING ORIGINAL NOTES IN THE
EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------

THE DATE OF THIS PROSPECTUS IS , 1998.

<PAGE> 5

The Original Notes were sold by the Company on May 14, 1998, to Chase
Securities Inc. ("CSI") and NationsBanc Montgomery Securities LLC (the "Initial
Purchasers") in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act (the "Initial Offering").
The Initial Purchasers subsequently placed the Original Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act ("Rule
144A"). Accordingly, the Original Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder to satisfy the obligations of the Company under that certain
Exchange and Registration Rights Agreement, dated as of May 14, 1998, by and
among the Company and the Initial Purchasers (the "Exchange and Registration
Rights Agreement"), entered into in connection with the Initial Offering. See
"The Exchange Offer -- Purpose and Effect of the Exchange Offer."

The Original Notes were not registered under the Securities Act in reliance
upon an exemption from the registration requirements thereof. In general, the
Original Notes may not be offered or sold unless registered under the Securities
Act, except pursuant to an exemption from, or in a transaction not subject to,
the Securities Act. The Exchange Notes are being offered hereby in order to
satisfy certain obligations of the Company contained in the Exchange and
Registration Rights Agreement. Based on interpretations by the staff of the
Securities and Exchange Commission (the "Commission") set forth in no-action
letters issued to third parties, the Company believes that the Exchange Notes
issued pursuant to the Exchange Offer in exchange for Original Notes may be
offered for resale, resold or otherwise transferred by any holder thereof (other
than any such holder that is an "affiliate" of the Company within the meaning of
Rule 405 promulgated under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the ordinary course of such holder's
business, such holder has no arrangement with any person to participate in the
distribution of such Exchange Notes and neither such holder nor any such other
person is engaging in or intends to engage in a distribution of such Exchange
Notes. Notwithstanding the foregoing, each broker-dealer that receives Exchange
Notes for its own account pursuant to the Exchange Offer must acknowledge that
it will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with any resale of Exchange Notes received in
exchange for such Original Notes where such Original Notes were acquired by such
broker-dealer as a result of market making activities or other trading
activities (other than Original Notes acquired directly from the Issuers). The
Company has agreed that, for a period of 180 days after the date of this
Prospectus, it will make this Prospectus available to any broker-dealer for use
in connection with any such resale. See "Plan of Distribution."

UNTIL , 1998 (90 DAYS AFTER COMMENCEMENT OF THE EXCHANGE
OFFER), ALL DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all of the expenses incident to the Exchange Offer. Tenders of
Original Notes pursuant to the Exchange Offer may be withdrawn as provided
herein at any time prior to the Expiration Date (as defined herein). The
Exchange Offer is subject to certain customary conditions.

i
<PAGE> 6

The Company's Common Stock is listed on the Nasdaq Stock Market under the
symbol "HPII." There has not previously been any public market for the Original
Notes or the Exchange Notes. The Company does not intend to list the Exchange
Notes on any securities exchange, but the Original Notes are eligible for
trading in the Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") market. There can be no assurance that an active market for the
Exchange Notes will develop. See "Risk Factors -- Absence of Public Market."
Moreover, to the extent that the Original Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Original Notes could be adversely affected.

Interest on the Exchange Notes will accrue from the last interest payment
date on which interest was paid on the Original Notes surrendered in exchange
therefor or, if no interest has been paid on the Original Notes, from the Issue
Date (as defined), and will be payable semi-annually on May 15 and November 15
of each year, commencing on November 15, 1998. The Notes will mature on May 15,
2008. Except as described below, the Company may not redeem the Notes prior to
May 15, 2003. On or after such date, the Company may redeem the Notes, in whole
or in part, at any time at the redemption prices set forth herein, plus accrued
and unpaid interest thereon, if any, to the date of redemption. In addition, at
any time and from time to time prior to May 15, 2001, the Company may, subject
to certain requirements, redeem up to 35% of the aggregate principal amount of
the Notes at a price of 109.625% of the principal amount thereof, plus accrued
and unpaid interest thereon to the redemption date, with the net cash proceeds
of one or more public offerings of common stock of the Company, providing that
at least 65% of the original aggregate principal amount of the Notes remains
outstanding immediately after the occurrence of such redemption. The Notes will
not be subject to any sinking fund requirement. Upon a Change of Control (as
defined), each holder of Notes will have the right to require the Company to
repurchase all or any part of such holder's Notes at a price equal to 101% of
the principal amount of the Notes together with accrued and unpaid interest
thereon, if any, to the date of purchase. See "Description of the Exchange
Notes."

THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF ORIGINAL NOTES IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
THE ACCOMPANYING LETTER OF TRANSMITTAL, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE ACCOMPANYING LETTER OF
TRANSMITTAL, NOR ANY EXCHANGE MADE HEREUNDER, SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.

The Exchange Notes will be available initially only in book-entry form.
Except as may be described under "Book-Entry; Delivery and Form," the Company
expects that the Exchange Notes issued pursuant to the Exchange Offer will be
represented by one or more duly registered Global Notes (as defined), that will
be deposited with, or on behalf of, the Depository Trust Company ("DTC") and
registered in its name or in the name of Cede & Co., its nominee. Beneficial
interests in the Global Note representing the Exchange Notes will be shown on,
and transfers thereof will be effected only through, records maintained by DTC
and its participants. After the initial issuance of the Global Note, Exchange
Notes in certificated form will be issued in exchange for the Global Note only
in accordance with the terms and conditions set forth in the Indenture. See
"Book-Entry; Delivery and Form."

This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. These documents are available upon request from
James E. Winslow, Executive Vice President, Chief Financial Officer and
Secretary, Home Products International, Inc., 4501 West 47th Street, Chicago,

ii
<PAGE> 7

Illinois 60632, (773) 890-1010. In order to ensure timely delivery of the
documents, any request should be made by , 1998 (five days before
the Expiration Date).

THE CONTENTS OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL, BUSINESS
OR TAX ADVICE. EACH PROSPECTIVE PARTICIPANT IN THE EXCHANGE OFFER SHOULD CONSULT
ITS OWN ATTORNEY, BUSINESS ADVISOR OR TAX ADVISOR AS TO LEGAL, BUSINESS OR TAX
ADVICE. PROSPECTIVE INVESTORS MAY OBTAIN ADDITIONAL INFORMATION UPON REQUEST
FROM THE INITIAL PURCHASERS OR THE COMPANY WHICH THEY MAY REASONABLY REQUIRE IN
CONNECTION WITH THE DECISION TO PARTICIPATE IN THE EXCHANGE OFFER.

FORWARD LOOKING STATEMENTS

THIS PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO FORMA COMBINED
FINANCIAL DATA," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS" AND "BUSINESS." ALL OF THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT OF THE
COMPANY WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY UNCERTAIN.
THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES AND
STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES WILL BE
REALIZED AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH
DIFFERENCES INCLUDE: (1) INCREASED COMPETITION; (2) INCREASED COSTS; (3) LOSS OR
RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (4) INCREASES IN THE COMPANY'S COST OF
BORROWING OR UNAVAILABILITY OF ADDITIONAL DEBT OR EQUITY CAPITAL; (5) ADVERSE
STATE OR FEDERAL LEGISLATION OR REGULATION OR ADVERSE DETERMINATIONS BY
REGULATIONS; AND (6) CHANGES IN GENERAL ECONOMIC CONDITIONS AND/OR IN THE
MARKETS IN WHICH THE COMPANY MAY, FROM TIME TO TIME, COMPETE. MANY OF SUCH
FACTORS ARE BEYOND THE CONTROL OF THE COMPANY AND ITS MANAGEMENT. FOR FURTHER
INFORMATION OR OTHER FACTORS WHICH COULD AFFECT THE FINANCIAL RESULTS OF THE
COMPANY AND SUCH FORWARD LOOKING STATEMENTS, SEE "RISK FACTORS."

iii
<PAGE> 8

SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and Consolidated Financial
Statements (including the related notes) appearing elsewhere in this Prospectus.
As used herein and except as the context may otherwise require, (i) the
"Company" or "HPI" means, collectively, Home Products International, Inc., a
Delaware corporation, which is a holding company not engaged in any business
other than holding the capital stock of its consolidated subsidiaries, Selfix,
Inc., a Delaware corporation ("Selfix"), Seymour Housewares Corporation, a
Delaware corporation ("Seymour"), Tamor Corporation, a Massachusetts corporation
("Tamor"), and Shutters, Inc., an Illinois corporation ("Shutters"), (ii)
"Selfix" includes both Selfix and, unless the context otherwise requires,
Shutters (which was previously a wholly-owned subsidiary of Selfix), (iii)
"Tamor" includes both Tamor and Housewares Sales, Inc., a Massachusetts
corporation and Tamor's wholly-owned distribution subsidiary, (iv) the "Tamor
Acquisition" refers to the acquisition by the Company of the business of Tamor,
effective as of January 1, 1997 and (v) the "Seymour Acquisition" refers to the
acquisition by the Company of the business of Seymour, which was acquired after
the close of fiscal 1997 on December 30, 1997. The pro forma financial data for
(i) fiscal 1996 give effect to the Tamor Acquisition as though it had occurred
on the first day of fiscal 1996, (ii) the first quarter of fiscal 1997 and the
fiscal year 1997 give effect to the Seymour Acquisition, the New Credit Facility
(as hereinafter defined) and the Initial Offering (as hereinafter defined) as
though they had occurred on the first day of fiscal 1997 and (iii) the first
quarter of fiscal 1998 give effect to the New Credit Facility and the Initial
Offering as if they had occurred on the first day of fiscal 1998.

THE COMPANY

OVERVIEW

The Company, based in Chicago, Illinois, is a leading designer,
manufacturer and marketer of a broad range of value-priced, quality consumer
houseware products in the United States. The Company's significant product lines
include (i) ironing boards, covers and pads, (ii) home/closet organization
products, (iii) plastic storage containers and totes, (iv) laundry accessories,
(v) bath and shower organization products, (vi) juvenile products and (vii) home
improvement products. HPI's ability to provide a substantial array of
up-to-date, quality products on a timely basis, combined with its commitment to
provide additional support services to its customers (such as just-in-time
delivery, product planograms and point-of-purchase advertising) has enabled the
Company to become a preferred supplier to the large, national retailers carrying
its products and to establish a leading market position in several product
lines. The Company's strong relationships with its base of retailers (including
Wal-Mart, Target and Kmart) provide a large and efficient distribution channel
for its products. These relationships enable the Company to work with retailers
to develop products that are well received by both the retailer and the
end-user. On a pro forma basis, the Company's combined net sales and EBITDA for
the twelve month period ended March 28, 1998, would have been $219.4 million and
$32.3 million, respectively.

The Company has actively pursued a growth strategy of selectively acquiring
and integrating complementary houseware manufacturers. This has enabled the
Company to become one of the leading suppliers and cost-effective manufacturers
of houseware products in the United States. The Company believes it has
demonstrated its ability to identify, purchase and integrate companies which
offer complementary product lines and to derive significant manufacturing and
operating efficiencies from such acquisitions. For example, the acquisitions of
Tamor in January 1997 and Seymour in December 1997 strengthened the Company's
ability to offer "one-stop shopping" for a wide range of houseware products to
its retail customers. These acquisitions, combined with internal growth, have
increased the Company's net sales from approximately $35.2 million in fiscal
year 1992 to approximately $222.3 million in fiscal year 1997 (on a pro forma
basis), while EBITDA margins have increased from 7.4% to 14.5% (on a pro forma
basis) during the same period. The additional product offerings resulting from
both strategic acquisitions and an active product development program have
strengthened the Company's relationships with its existing customer base of
national retailers, enabling the Company to obtain increased dedicated retail
shelf space for its expanding product lines. Management believes that the
Company has established a platform to continue this consolidation and product
1
<PAGE> 9

development strategy within the highly fragmented houseware products industry
and that such strategy will further position the Company for continued growth in
the retail distribution channel. The Company continues to look for opportunities
to acquire companies that fit within its acquisition strategy. To that end, the
Company has had, and continues to have, numerous discussions with potential
acquisition candidates. As of the date of this Prospectus, the Company has made
a number of oral and written acquisitions proposals to certain of such
candidates, but has not entered into any binding agreements. While the Company
believes that it is likely to enter into one or more agreements in the near
future with respect to such potential acquisitions, no assurance can be given
that such agreements will be reached or that any of such potential acquisitions
will be consummated.

Industry sources estimate that the total housewares industry in the United
States is approximately $54 billion in size. Within the housewares industry, HPI
currently offers products in the home organization, laundry management and home
improvement segments. Management estimates that the current market size in the
United States for these segments is between $5 billion and $8 billion. This
market is served by a highly fragmented manufacturer base. The Company currently
operates in several categories including (i) ironing boards, covers and pads,
(ii) home/closet organization products, (iii) plastic storage containers and
totes, (iv) laundry accessories, (v) bath and shower organization products, (vi)
juvenile products and (vii) home improvement products. In the opinion of
management, the housewares industry is driven by (i) retailers committing an
increasing amount of shelf space to storage products, (ii) retailers
consolidating the number of their suppliers, (iii) new household and home office
formations, (iv) a movement away from generic products towards items designed to
perform specific functions and (v) overall retailer consolidation.

COMPETITIVE STRENGTHS

Management believes that the following competitive strengths contribute to
the Company's position as a leading manufacturer and marketer of popular
houseware products and serve as a foundation for the Company's business
strategy.

- LEADING MARKET POSITION. Management believes that the Company has a
leading market position in each of the product categories in which its products
compete. In particular, management believes that the Company is the leading
ironing board, cover and pad manufacturer in the United States and is the
nation's leading supplier of plastic clothes hangers. The Company's home
organization products, including plastic clothes hangers, are marketed under the
Selfix and Tamor brand names, which are widely recognized in the industry.
Management believes the Company's broad product offerings in the home
organization products category provide it with a competitive advantage over
other manufacturers. In the bath and shower products segment, management
believes the Company is a leading producer of plastic bath and shower
accessories commanding the second largest market share in the United States. In
the storage container market, management believes the Company ranks third in
market share in the United States. Through both acquisitions and internal
product development, the Company seeks to enhance its position as a leading
supplier of housewares in a highly fragmented industry.

- ESTABLISHED DISTRIBUTION NETWORK. The Company has established a broad
distribution network serving both domestic and international markets. The
Company's houseware products are sold through national and regional retailers,
hardware and homecenter stores, food and drug stores, juvenile stores, specialty
stores, and to hotels. Management believes that its distribution network allows
it to successfully launch new products and broaden existing product lines with
greater consumer acceptance. The Company's distribution network also provides
marketing and distribution synergies for its acquired businesses, which
generally are suppliers of houseware products marketed through many of the same
retail distribution channels.

2
<PAGE> 10

known competitors. For instance, the Company provides its customers with a
variety of retail support services, including customized merchandise
planogramming, small shipping packs, point-of-purchase displays, electronic data
interchange ("EDI") and just-in-time product delivery. The Company also utilizes
its customers' point of sale ("POS") information to allow the Company to better
monitor product sales. Management believes that its prompt and reliable product
delivery of value-priced, high-volume products enables its customers to maintain
minimal inventories.

- INNOVATIVE, CONSUMER-DRIVEN PRODUCT LINE EXTENSIONS. The Company
develops and introduces innovative products with features and benefits that are
designed to meet the needs and demands of consumers. New products or product
line extensions are frequently developed or acquired after consultation with the
Company's major retail customers. This enables the Company to leverage its
existing customer base, to expand its product offerings and to assess the
potential viability of products prior to development. Typically, the Company's
new product introductions are developed by making incremental modifications to
its market-proven products. During 1997, approximately 60 new products and
product improvements were launched by the Company, with each of the Company's
business units introducing at least one new product line.

- FLEXIBLE, LOW-COST MANUFACTURER. The Company operates a network of
efficient manufacturing facilities that result in favorable per unit product
costs. Recent acquisitions have enabled the Company to broaden its product base,
expand its sales and distribution capabilities and increase manufacturing and
distribution synergies, while achieving significant scale in manufacturing. For
instance, management estimates that the Company is the largest United States
manufacturer of full-size ironing boards, building approximately 14,200 units
per day. This volume enables the Company to purchase rolled steel in bulk and
achieve economies of scale. Similarly, it is a large processor of various grades
of plastic resin, utilizing approximately 85 injection molding machines to
process approximately 85 million pounds of plastic resin per year. The Company
is able to achieve cost advantages through the use of off-prime grades of resin
that are typically bought through brokers in the secondary market. The Company
also processes approximately seven million yards of fabric annually, utilizing
its domestic operations, as well as its Reynosa, Mexico facility for those
aspects of production that are more labor intensive. The Company seeks to
maximize its operating efficiency by ensuring that each plant has flexible
manufacturing capabilities as well as utilizing its Mexico operation and Asian
outsourcing opportunities to lower production costs. In addition, the Company is
able to utilize excess capacity in its plants to meet peak demand and optimize
production planning.

- EXPERIENCED MANAGEMENT TEAM. The Company's senior management team has a
wide range of experience in the production, development and marketing of
housewares and related products. Leading the Company's senior management team is
Mr. James R. Tennant, the Company's Chairman and Chief Executive Officer, who
has 20 years of corporate management experience in marketing-oriented
capacities. Mr. Tennant has been with HPI since 1994. Mr. Stephen R. Brian, the
President and Chief Operating Officer of the Company, has 29 years experience in
management and production capacities with major consumer product companies,
including General Electric Corporation and Sunbeam. Mr. James E. Winslow,
Executive Vice President and Chief Financial Officer of the Company, has 16
years of financial management experience in the consumer products industry,
including 11 years with Wilson Sporting Goods. Mr. Winslow has been with HPI
since 1994. Furthermore, the Company's operations are managed by experienced
consumer product and manufacturing professionals.

BUSINESS STRATEGY

The Company intends to continue to take advantage of consolidation
opportunities in the housewares industry and to continue to grow by expanding
its product offerings through strategic acquisitions and by capitalizing on
established distribution channels to increase sales. The Company's strategy for
achieving that objective includes the following key elements:

3
<PAGE> 11

continue to increase sales and to become a leading supplier of new product
categories as well as additional products in its existing product categories.
Management believes that such growth will enable the Company to expand its
merchandising relationships with its existing key customers, and to increase its
presence in these customers' stores, which in turn would give the Company
additional leverage to support further growth.

- CONTINUE BUILDING STRATEGIC SUPPLIER RELATIONSHIPS. Management believes
that national retailers are increasingly interested in establishing "one-stop
shopping" supplier relationships for their store chains to enhance their margins
and operating efficiencies. In addition, these mass merchandisers have come to
expect value-added services (such as merchandise planogramming and EDI) that are
primarily offered by large suppliers. Management believes that the breadth of
the Company's product offerings, combined with the value-added services it
provides, will enable the Company to continue to build close and interactive
relationships with its retailers, capture larger market share and garner
incremental shelf space for its products.

- LAUNCH PRODUCT LINE IMPROVEMENTS AND NEW PRODUCTS. The Company has
successfully launched product line improvements and new products and intends to
continue to do so by capitalizing on its strong relationships with its
retailers. In 1997, the Company introduced approximately 60 new products and
product improvements, which accounted for approximately 13% of the Company's
1997 revenues (excluding sales generated from laundry management products).
Through these product introductions, the Company's products are kept up-to-date
and appealing for both the retailer and end-user. The Company is also able to
manage its research and development expenditures at levels below those of its
competitors as most of these product innovations and improvements require only
minimal feature enhancements and relatively limited technological input.
Management believes that innovative product introductions will further enhance
revenue growth, profitability and market share.

- INCREASE MARKET PENETRATION. The Company expects that strategic
acquisitions, as well as internally developed new product lines, will result in
increased penetration of its existing markets and enable it to develop and
extend its customer base both in the United States and internationally. The
Company also plans to expand its export sales team and leverage established
contacts with key distributors to continue to increase its sales
internationally.

- PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES. Management anticipates that
the fragmented nature of the housewares industry will continue to provide
significant opportunities for growth through strategic acquisitions of
complementary businesses. Management intends to continue to acquire businesses
at attractive multiples of cash flow and achieve operational and distribution
efficiencies through integration of complementary businesses. The Company's
acquisition strategy focuses on businesses with product offerings which (i)
offer product expansion into related categories, (ii) focus on products which
can be marketed through the Company's existing distribution channels and (iii)
enhance manufacturing efficiencies by increasing throughput and lowering per
unit production costs, thereby increasing the Company's marketing and
distribution efficiencies. Management will also consider strategic joint
ventures which would provide access to new products, technologies or markets.
The Company continues to look for opportunities to acquire companies that fit
within its acquisition strategy. To that end, the Company has had, and continues
to have, numerous discussions with potential acquisition candidates. As of the
date of this Prospectus, the Company has made a number of oral and written
acquisitions proposals to certain of such candidates, but has not entered into
any binding agreements. While the Company believes that it is likely to enter
into one or more agreements in the near future with respect to such potential
acquisitions, no assurance can be given that such agreements will be reached or
that any of such potential acquisitions will be consummated.

4
<PAGE> 12

THE INITIAL OFFERING

Original Notes................ The Original Notes were sold by the Company on
May 14, 1998 (the "Initial Offering"), to Chase
Securities Inc. and NationsBanc Montgomery
Securities LLC (the "Initial Purchasers")
pursuant to a Purchase Agreement, dated as of
May 7, 1998, by and among the Company, certain
of its subsidiaries and the Initial Purchasers
(the "Purchase Agreement"). The Initial
Purchasers subsequently resold the Original
Notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act
("Rule 144A").

Exchange and Registration
Rights Agreement.............. Pursuant to the Purchase Agreement, the Company
and the Initial Purchasers entered into an
Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement"),
dated as of May 14, 1998 (the "Issue Date"),
which grants the holders of the Original Notes
certain exchange and registration rights. The
Exchange Offer is intended to satisfy such
exchange and registration rights, which rights
shall terminate upon consummation of the
Exchange Offer. See "The Exchange Offer --
Purpose and Effect of the Exchange Offer."

THE EXCHANGE OFFER

Securities Offered............ $125,000,000 aggregate principal amount of
9 5/8% Senior Subordinated Notes due 2008, of
the Company (the "Exchange Notes").

The Exchange Offer............ $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of
Original Notes. As of the date hereof,
$125,000,000 aggregate principal amount of
Original Notes are outstanding. The Company
will issue the Exchange Notes to holders as
promptly as practicable after the Expiration
Date.

Based on an interpretation by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company believes
that Exchange Notes issued pursuant to the
Exchange Offer in exchange for Original Notes
may be offered for resale, resold and otherwise
transferred by any holder thereof (other than
any such holder that is an "affiliate" of the
Company within the meaning of Rule 405 under
the Securities Act) without compliance with the
registration and prospectus delivery provisions
of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary
course of such holder's business and that such
holder does not intend to participate and has
no arrangement or understanding with any person
to participate in the distribution of such
Exchange Notes.

Any participating broker-dealer (an "Exchanging
Dealer") that acquired Original Notes for its
own account as a result of market making
activities or other trading activities may be a
statutory underwriter. Each Exchanging Dealer
that receives Exchange Notes for its own
account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a
prospectus, an

5
<PAGE> 13

Exchanging Dealer will not be deemed to admit
that it is an "underwriter" within the meaning
of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to
time, may be used by an Exchanging Dealer in
connection with resales of Exchange Notes
received in exchange for Original Notes where
such Original Notes were acquired by such
Exchanging Dealer as a result of market making
activities or other trading activities. the
Company has agreed that, for a period of 180
days after the Expiration Date, it will make
this Prospectus available to any Exchanging
Dealer for use in connection with any such
resale. See "Plan of Distribution." Any holder
who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the
Exchange Notes could not rely on the position
of the staff of the Commission enunciated in
no-action letters and, in the absence of an
exemption therefrom, must comply with the
registration and prospectus delivery
requirements of the Securities Act in
connection with any resale transaction. Failure
to comply with such requirements in such
instance may result in such holder incurring
liability under the Securities Act for which
the holder is not indemnified by the Company.

Expiration Date............... 5:00 p.m., New York City time, on
, 1998, unless the Exchange
Offer is extended, in which case the term
"Expiration Date" means the latest date and
time to which the Exchange Offer is extended.

Accrued Interest on the
Exchange Notes and the
Original Notes.............. Interest on the Exchange Notes issued pursuant
to the Exchange Offer will accrue from the last
interest payment date on which interest was
paid on the Original Notes surrendered in
exchange therefor or, if no interest has been
paid on the Original Notes, from the Issue
Date. Holders whose Original Notes are accepted
for exchange will be deemed to have waived the
right to receive any interest accrued on the
Original Notes.

Conditions to the Exchange
Offer......................... The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange
Offer -- Conditions."

Procedures for Tendering
Original Notes................ Each holder of Original Notes wishing to accept
the Exchange Offer must complete, sign and date
the accompanying Letter of Transmittal, or a
facsimile thereof (or, in the case of a
book-entry transfer, transmit an Agent's
Message (as defined) in lieu thereof), in
accordance with the instructions contained
herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile (or Agent's Message), together with
the Original Notes and any other required
documentation to the Exchange Agent (as
defined) at the address set forth herein. By
executing the Letter of Transmittal (or
transmitting an Agent's Message), each holder
will represent to the Company that, among other
things, the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such Exchange Notes, whether or not
such person is the holder, that neither the
holder nor any such other person has any
arrangement
6
<PAGE> 14

or understanding with any person to participate
in the distribution of such Exchange Notes and
that neither the holder nor any such other
person is an "affiliate," as defined under Rule
405 of the Securities Act, of the Company. See
"The Exchange Offer -- Purpose and Effect of
the Exchange Offer" and "-- Procedures for
Tendering."

Untendered Original Notes..... Following the consummation of the Exchange
Offer, holders of Original Notes eligible to
participate but who do not tender their
Original Notes will not have any further
exchange or registration rights and such
Original Notes will continue to be subject to
certain restrictions on transfer. Accordingly,
the liquidity of the market for such Original
Notes could be adversely affected. See "Risk
Factors -- Absence of Public Market."

Consequences of Failure to
Exchange...................... Original Notes that are not exchanged pursuant
to the Exchange Offer will remain restricted
securities. Accordingly, such Original Notes
may be resold only (i) to the Company, (ii)
pursuant to Rule 144A or Rule 144 under the
Securities Act or pursuant to some other
exemption under the Securities Act, (iii)
outside the United States to a foreign person
pursuant to the requirements of Rule 904 under
the Securities Act, or (iv) pursuant to an
effective registration statement under the
Securities Act. See "The Exchange
Offer -- Consequences of Failure to Exchange."

Shelf Registration
Statement..................... If any holder of Original Notes (other than any
such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under
the Securities Act) is not eligible under
applicable securities laws to participate in
the Exchange Offer and such holder has
satisfied certain conditions relating to the
provision of information to the Company for use
therein, and under certain other circumstances,
the Company has agreed to use its reasonable
best efforts to file with the Commission a
shelf registration statement (the "Shelf
Registration Statement"), and to use its
reasonable best efforts to have such Shelf
Registration Statement declared effective. the
Company has agreed to maintain the
effectiveness of the Shelf Registration
Statement for, under certain circumstances, a
maximum of two years, to cover resales of the
Original Notes held by any such holders.

Special Procedures for
Beneficial Owners............. Any beneficial owner whose Original Notes are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes
to tender on such owner's own behalf, such
owner must, prior to completing and executing
the Letter of Transmittal and delivering its
Original Notes, either make appropriate
arrangements to register ownership of the
Original Notes in such owner's name or obtain a
properly completed bond power from the
registered holder. The transfer of registered
ownership may take considerable time.

7
<PAGE> 15

Guaranteed Delivery
Procedures.................... Holders of Original Notes who wish to tender
their Original Notes and whose Original Notes
are not immediately available or who cannot
deliver their Original Notes (or comply with
the procedures for book-entry transfer), the
Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or transmit an Agent's Message
in lieu thereof) prior to the Expiration Date
must tender their Original Notes according to
the guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."

Withdrawal Rights............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date.

Acceptance of Original Notes
and Delivery of Exchange
Notes....................... The Company will accept for exchange any and
all Original Notes that are properly tendered
in the Exchange Offer prior to 5:00 p.m., New
York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange
Offer will be delivered as promptly as
practicable following the Expiration Date. See
"The Exchange Offer -- Terms of the Exchange
Offer."

Use of Proceeds............... There will be no cash proceeds to the Company
from the exchange pursuant to the Exchange
Offer.

Exchange Agent................ LaSalle National Bank.

THE EXCHANGE NOTES

General....................... The form and terms of the Exchange Notes are
the same as the form and terms of the Original
Notes (which they replace) except that (i) the
issuance of the Exchange Notes will have been
registered under the Securities Act and,
therefore, will not bear legends restricting
the transfer thereof, and (ii) the holders of
Exchange Notes will not be entitled to certain
rights under the Exchange and Registration
Rights Agreement, including the provisions
providing for an increase in the interest rate
on the Original Notes in certain circumstances
relating to the timing of the Exchange Offer,
which rights will terminate when the Exchange
Offer is consummated. See "The Exchange
Offer -- Purpose and Effect of the Exchange
Offer." The Exchange Notes will evidence the
same debt as the Original Notes and will be
entitled to the benefits of the Indenture. See
"Description of the Exchange Notes." The
Original Notes and the Exchange Notes are
referred to herein collectively as the "Notes."

Issuer........................ Home Products International, Inc.

Securities Offered............ $125,000,000 aggregate principal amount of
9 5/8% Senior Subordinated Notes due 2008 of
the Company.

Maturity Date................. May 15, 2008.

Interest Payment Dates........ May 15 and November 15 of each year, commencing
on November 15, 1998.

Guarantees.................... The Company's payment obligations under the
Notes will be jointly and severally guaranteed
on a senior subordinated basis by

8
<PAGE> 16

each of the Company's Restricted Subsidiaries
(as defined) other than any Foreign Subsidiary
(as defined). The Guarantees will be
subordinated in right of payment to all
existing and future Senior Indebtedness of the
Subsidiary Guarantors, including the guarantees
of Senior Indebtedness issued by the Subsidiary
Guarantors under the New Credit Facility. See
"Description of the Exchange
Notes -- Subsidiary Guarantees."

Optional Redemption........... Except as described below, the Notes will not
be redeemable at the Company's option prior to
May 15, 2003. Thereafter, the Notes will be
subject to redemption at any time at the option
of the Company, in whole or in part, upon not
less than 30 nor more than 60 days' advance
notice, at the redemption prices set forth
herein, plus accrued and unpaid interest
thereon, if any, to the applicable redemption
date. In addition, at any time and from time to
time, prior to May 15, 2001, the Company may
redeem up to 35% of the original aggregate
principal amount of the Notes at a redemption
price of 109.625% of the principal amount
thereof, plus accrued and unpaid interest
thereon, if any, to the redemption date, with
the net cash proceeds of one or more public
offerings of common stock of the Company;
provided that at least 65% of the original
aggregate principal amount of Notes remains
outstanding immediately after the occurrence of
such redemption. See "Description of the
Exchange Notes -- Optional Redemption."

Change of Control............. Upon the occurrence of a Change of Control each
holder of Notes will have the right to require
the Company to repurchase all or any part of
such holder's Notes at a price equal to 101% of
the principal amount thereof plus accrued and
unpaid interest, to the date of purchase. See
"Description of the Exchange Notes -- Change of
Control."

Ranking....................... The Notes will be general unsecured obligations
of the Company that will be subordinated to all
existing and future Senior Indebtedness of the
Company. The Notes will rank pari passu in
right of payment with any other Senior
Subordinated Indebtedness of the Company and
will rank senior in right of payment to all
other Subordinated Obligation of the Company.
The Guarantees will be general unsecured
obligations of the Subsidiary Guarantors that
will be subordinated to all existing and future
Guarantor Senior Indebtedness of the Subsidiary
Guarantors. At March 28, 1998, after giving pro
forma effect to the Refinancing, (i) the
outstanding Senior Indebtedness of the Company,
including the Subsidiary Guarantors, would have
been $9.2 million, all of which would have been
Secured Indebtedness, (ii) the Company,
including the Subsidiary Guarantors, would have
had no Subordinated Obligation outstanding and
no Senior Subordinated Indebtedness outstanding
other than the Notes, (iii) the outstanding
Guarantor Senior Indebtedness of the Subsidiary
Guarantors would have been $6.7 million, all of
which would have been Secured Indebtedness, and
(iv) the Subsidiary Guarantors would have had
no Guarantor Senior Subordinated Indebtedness
and no Guarantor Subordinated Obligation. See
"Description of the Exchange Notes -- Ranking
and Subordination."

9
<PAGE> 17

Restrictive Covenants......... The Indenture will contain certain covenants
that, among other things, will limit the
ability of the Company and/or its Restricted
Subsidiaries to (i) incur additional
indebtedness, (ii) pay dividends or make
certain other restricted payments, (iii) make
investments, (iv) enter into transactions with
affiliates, (v) make certain asset dispositions
and (vi) merge or consolidate with, or transfer
substantially all of its assets to, another
person. The Indenture also will limit the
ability of the Company to create restrictions
on the ability of Restricted Subsidiaries to
pay dividends or make any other distributions.
In addition, the Company will be obligated,
under certain circumstances, to offer to
repurchase the Notes with the net cash proceeds
of certain sales or other dispositions of
assets. However, all of these limitations and
prohibitions are subject to a number of
important qualifications. See "Description of
the Exchange Notes -- Certain Covenants."

Use of Proceeds............... The Company will not receive any proceeds from
the Exchange Offer. The Company used the net
proceeds from the Initial Offering, together
with borrowings under a new $100 million senior
secured revolving credit facility (the "New
Credit Facility" and, together with the Initial
Offering, the "Refinancing") which the Company
concurrently entered into with The Chase
Manhattan Bank: (i) to repay approximately $122
million of outstanding indebtedness under the
Company's prior credit facility and to pay
certain fees, prepayment penalties and expenses
related to such repayment; (ii) to pay certain
other fees and expenses incurred in connection
with the Refinancing; and (iii) for working
capital and general corporate purposes. See
"Use of Proceeds."

RISK FACTORS

See "Risk Factors" for a discussion of certain factors that should be
considered before tendering Original Notes in exchange for Exchange Notes. These
risk factors are generally applicable to the Original Notes as well as the
Exchange Notes.
------------------------

The principal executive offices of the Company are located at 4501 West
47th Street, Chicago, Illinois 60632, and the Company's telephone number is
(773) 890-1010.

10
<PAGE> 18

SUMMARY PRO FORMA COMBINED FINANCIAL DATA

THE COMPANY

The following table sets forth certain unaudited summary pro forma combined
financial data of the Company for the periods ended and as of the dates
indicated. The unaudited pro forma statement of operations data give effect to
the Seymour Acquisition and related financing and the Refinancing as if they had
occurred at the beginning of the periods indicated. An effective tax rate of 40%
has been assumed for all periods; however, the year ended December 27, 1997 and
the fifty-two weeks ended March 28, 1998, include a $3.1 million benefit due to
the reduction of an income tax valuation allowance. The unaudited pro forma
balance sheet data reflect the Refinancing as if it had occurred on March 28,
1998. The "Other Data" below, not directly derived from the Unaudited Pro Forma
Combined Financial Data, or the HPI or Seymour historical consolidated financial
statements, have been presented to provide additional analysis. The Summary Pro
Forma Combined Financial Data do not purport to represent what the Company's
financial position or results of operations would actually have been had the
Seymour Acquisition or the Refinancing in fact occurred on the assumed dates or
to project the Company's financial position or results of operations for any
future date or period. The Summary Pro Forma Combined Financial Data have been
derived from, and should be read in conjunction with, the Unaudited Pro Forma
Combined Financial Data and the notes thereto, the respective historical
consolidated financial statements of HPI and Seymour and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THIRTEEN THIRTEEN FIFTY-TWO
WEEKS WEEKS WEEKS
YEAR ENDED ENDED ENDED ENDED
DEC. 27, MARCH 29, MARCH 28, MARCH 28,
1997 1997 1998 1998
---------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales..................................... $222,287 $55,282 $52,408 $219,413
Gross profit(a)............................... 64,499 15,680 15,953 64,772
Operating profit.............................. 15,349 4,022 5,094 16,421
Interest (expense)(b)......................... (15,537) (4,043) (3,482) (14,976)
Earnings (loss) before income taxes and
extraordinary item......................... (920) 122 1,625 583
Income tax (expense) benefit.................. 3,511 (49) (650) 2,910
Earnings before extraordinary item............ 2,591 73 975 3,493
Earnings before extraordinary item per
share -- basic............................. $ 0.38 $ 0.01 $ 0.12 $ 0.48
Earnings before extraordinary item per
share -- diluted........................... $ 0.37 $ 0.01 $ 0.12 $ 0.46
OTHER DATA:
Gross profit margin(a)........................ 29.0% 28.4% 30.4% 29.5%
EBITDA(c)..................................... $ 32,335 $ 8,099 $ 8,036 $ 32,272
EBITDA margin(c).............................. 14.5% 14.7% 15.3% 14.7%
Cash interest expense(b)(d)................... $ 14,922 $ 3,890 $ 3,320 $ 14,352
Capital expenditures.......................... 11,031 1,038 4,092 14,085
Ratio of total debt to EBITDA................. -- -- -- 4.2x
Ratio of EBITDA to cash interest expense(d)... 2.2x 2.1x 2.4x 2.2x
</TABLE>

11
<PAGE> 19

<TABLE>
<CAPTION>
AS ADJUSTED
AS OF
MARCH 28,
1998
-----------
(DOLLARS IN
THOUSANDS)
<S> <C>
BALANCE SHEET DATA (END OF PERIOD):
Working capital(e).......................................... $ 24,285
Total assets................................................ 227,268
Total debt, including capital lease obligations............. 134,166
Total stockholders' equity.................................. 52,765
</TABLE>

- ---------------
(a) Gross profit is defined as net sales less cost of goods sold. Gross profit
margin is computed as gross profit as a percentage of net sales.

(b) Had the Company's equity offering, which was completed in July 1997,
occurred on the first day of fiscal 1997, interest expense would have been
reduced by $0.9 million for the year ended December 27, 1997, $0.5 million
for the thirteen weeks ended March 29, 1997, and $0.4 million for the
fifty-two weeks ended March 28, 1998.

(c) EBITDA is defined as the sum of (i) earnings before income taxes and
extraordinary item, (ii) interest expense, (iii) interest income, (iv)
depreciation and amortization, (v) one-time charges in the third and fourth
quarter of 1997 of $2.6 million relating to the consolidation and
disposition of certain Seymour manufacturing operations, (vi) a $0.6 million
one-time write-off in the third quarter of 1997 of an asset eliminated in
connection with the termination of Seymour's defined benefit pension plan
and (vii) certain other one-time items totaling $0.3 million during the
third and fourth quarters of 1997. Management believes that the
consolidation of the Seymour manufacturing operations should enable it to
generate an additional $1.8 million in annual cost savings following the
completion of the consolidation. However, no assurance can be given that
such savings will be realized. Management believes that EBITDA is a measure
commonly used by analysts and investors to determine a company's ability to
service and incur debt. Accordingly, this information has been presented to
permit a more complete analysis. EBITDA should not be considered a
substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity. EBITDA margin is computed as EBITDA as a percentage of net sales.

(d) Ratio of EBITDA to cash interest expense represents EBITDA divided by total
interest expense, net of deferred financing cost amortization.

(e) Working capital is computed as current assets less current liabilities.

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<PAGE> 20

RISK FACTORS

Prospective investors should carefully consider the following risk factors
in addition to the other information included in this Prospectus before
tendering Original Notes in exchange for Exchange Notes. The risk factors set
forth below are generally applicable to the Original Notes as well as the
Exchange Notes. This Prospectus contains, in addition to historical information,
certain forward-looking statements that are subject to risks and other
uncertainties. The Company's actual results may differ materially from those
anticipated in these forward-looking statements. Factors that might cause such a
difference include those discussed below, as well as general economic and
business conditions, competition and other factors discussed elsewhere in this
Prospectus. All forward-looking statements attributed to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements set forth herein.

SUBSTANTIAL LEVERAGE; DEBT SERVICE OBLIGATIONS; LIQUIDITY

In connection with the Refinancing, the Company has incurred a significant
amount of indebtedness. As of March 28, 1998, after giving pro forma effect to
the Refinancing, the Company would have had $134.2 million of consolidated
indebtedness, of which $9.2 million would have been Senior Indebtedness.

The Company's ability to make scheduled payments of principal of, or to pay
the interest, if any, on, or to refinance its indebtedness (including the
Notes), or to fund planned capital expenditures or finance acquisitions will
depend on its future financial and operating performance, which to a certain
extent is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond its control. Based on the current
and anticipated level of operations, management believes that cash flows from
operations and available cash, together with available borrowings under the New
Credit Facility, will be adequate to meet the Company's anticipated future
requirements for working capital, budgeted capital expenditures, acquisition
financing and scheduled payments of principal and interest on its indebtedness,
including the Notes, for the foreseeable future. The Company, however, may need
to refinance all or a portion of the principal of the Notes on or prior to
maturity. There can be no assurance that the Company's business will generate
sufficient cash flows from operations or that future borrowings will be
available under the New Credit Facility in an amount sufficient to enable the
Company to service its indebtedness, including the Notes, or make anticipated
capital expenditures and to fund future acquisitions. In addition, there can be
no assurance that the Company will be able to effect any refinancing on
commercially reasonable terms, or at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Capital Resources
and Liquidity."

The degree to which the Company will be leveraged could have important
consequences to holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii) a
substantial portion of the Company's cash flow from operations will be required
to be dedicated to the payment of interest on the Notes and the Company's other
existing indebtedness, thereby reducing the funds available to the Company for
other purposes; (iii) the agreements governing the Company's long-term
indebtedness will contain certain restrictive financial and operating covenants;
(iv) certain indebtedness under the New Credit Facility will be at variable
rates of interest, which will cause the Company to be vulnerable to increases in
interest rates; (v) all of the indebtedness outstanding under the New Credit
Facility will be secured by substantially all of the assets of the Company and
will become due prior to the time the principal on the Notes will become due;
(vi) the Company will be substantially more leveraged than certain of its
competitors, which might place the Company at a competitive disadvantage; and
(vii) the Company's substantial degree of leverage could make it more vulnerable
in the event of a downturn in general economic conditions or in its business. In
addition, the degree to which the Company is leveraged could prevent it from
repurchasing all of the Notes tendered to it upon the occurrence of a Change of
Control. See "Description of the Exchange Notes -- Change of Control" and
"Description of Other Indebtedness -- New Credit Facility."

SUBORDINATION; ASSET ENCUMBRANCE

The Notes will be general unsecured obligations of the Company that will be
subordinated to all Senior Indebtedness of the Company. The Guarantees will be
general unsecured obligations of the Subsidiary

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<PAGE> 21

Guarantors that will be subordinated to all Guarantor Senior Indebtedness of the
Subsidiary Guarantors. At March 28, 1998, after giving pro forma effect to the
Refinancing, (i) the outstanding Senior Indebtedness of the Company, including
the Subsidiary Guarantors, would have been $9.2 million, all of which would have
been Secured Indebtedness, (ii) the Company, including the Subsidiary
Guarantors, would have had no Subordinated Obligation outstanding and no Senior
Subordinated Indebtedness other than the Notes, (iii) the outstanding Guarantor
Senior Indebtedness of the Subsidiary Guarantors would have been $6.7 million,
all of which would have been Secured Indebtedness, and (iv) the Subsidiary
Guarantors would have had no Guarantor Senior Subordinated Indebtedness and no
Guarantor Subordinated Obligation. Although the Indenture contains limitations
on the amount of additional indebtedness which the Company and the Subsidiary
Guarantors may incur under certain circumstances, the amount of such
Indebtedness could be substantial and such Indebtedness may be Senior
Indebtedness. See "Description of the Exchange Notes." The Indenture will
provide that the Company and the Restricted Subsidiaries may not incur or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness and senior in any respect in right
of payment to the Notes.

The Company may not pay principal of, or premium or interest on, the Notes,
make any deposit pursuant to defeasance provisions or repurchase or redeem or
otherwise retire any Notes (i) if any Designated Senior Indebtedness (as
defined) is not paid when due or any other default on Designated Senior
Indebtedness occurs and the maturity of such Designated Senior Indebtedness is
accelerated in accordance with its terms or (ii) if any other default on
Designated Senior Indebtedness occurs that permits the holders of such
Designated Senior Indebtedness to accelerate the maturity of such Senior
Indebtedness in accordance with its terms and the Trustee received notice of
such default, unless, in either case, the default has been cured or waived, any
such acceleration has been rescinded or such Senior Indebtedness has been paid
in full or, in the case of any non-payment default, 179 days have passed since
the default notice was given. Upon any payment or distribution to creditors of
the Company in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property, the holders of Senior
Indebtedness will be entitled to receive payment in full in cash or Cash
Equivalents (as defined) before the holders of the Notes will be entitled to
receive any payment (other than in the form of Permitted Junior Securities (as
defined)). See "Description of the Exchange Notes -- Ranking and Subordination."
Substantially similar provisions are applicable to the Guarantees. The Notes and
the Guarantees are also unsecured and thus, in effect, will rank junior to any
Secured Debt of the Company or the Subsidiary Guarantors. The indebtedness
outstanding under the New Credit Facility will be secured by liens on
substantially all of the assets of the Company.

In addition, under certain circumstances, the Guarantee provided by any
Subsidiary Guarantor could be set aside under fraudulent conveyance or other
laws and rules affecting creditors' rights. See "-- Fraudulent Conveyance;
Preferential Transfer." In any such case, the Notes would be effectively
subordinated to all liabilities of such Subsidiary Guarantor, including trade
debt.

RESTRICTIVE COVENANTS

The New Credit Facility and the Indenture include certain covenants that,
among other things, restrict: (i) the making of investments, loans and advances
and the paying of dividends and other restricted payments; (ii) the incurrence
of additional indebtedness; (iii) the granting of liens, other than liens
created pursuant to the New Credit Facility and certain permitted liens; (iv)
mergers, consolidations and sales of all or a substantial part of the Company's
business or property; (v) the sale of assets; and (vi) the making of capital
expenditures. The New Credit Facility will also require the Company to maintain
certain financial ratios, including interest coverage and leverage ratios. All
of these restrictive covenants may restrict the Company's ability to expand or
to pursue its business strategies. The ability of the Company to comply with
these and other provisions of the New Credit Facility may be affected by changes
in economic or business conditions, results of operations or other events beyond
the Company's control. The breach of any of these covenants could result in a
default under the New Credit Facility, in which case, depending on the actions
taken by the lenders thereunder or their successors or assignees, such lenders
could elect to declare all amounts borrowed under the New Credit Facility,
together with accrued interest, to be due and payable, and the Company could be
prohibited from making payments with respect to the Notes until the default is
cured or all Senior

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<PAGE> 22

Indebtedness is paid or satisfied in full. If the Company were unable to repay
such borrowings, such lenders could proceed against their collateral. If the
indebtedness under the New Credit Facility were to be accelerated, there can be
no assurance that the assets of the Company would be sufficient to repay in full
such indebtedness and the other indebtedness of the Company, including the
Notes. See "Description of Other Indebtedness -- New Credit Facility" and
"Description of the Exchange Notes -- Ranking and Subordination."

OPERATION THROUGH SUBSIDIARIES

The Company is a holding company and conducts substantially all of its
operations through its subsidiaries. As a result, the Company is required to
rely upon repayment from its subsidiaries for the funds necessary to meet its
obligations, including the payment of interest on and principal of the Notes.
The ability of the subsidiaries to make such payments will be subject to, among
other things, applicable state laws. Claims of creditors of the Company's
subsidiaries will generally have priority as to the assets of such subsidiaries
over claims of the Company.

Although the Guarantees provide the holders of the Notes with a direct
claim against the assets of the Subsidiary Guarantors, enforcement of the
Guarantees against any Subsidiary Guarantor may be subject to legal challenge in
a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of
such Subsidiary Guarantor and would be subject to certain defenses available to
guarantors generally. See "-- Fraudulent Conveyance; Preferential Transfer."
Although the Indenture contains waivers of most guarantor defenses, certain of
those waivers may not be enforced by a court in a particular case. To the extent
that the Guarantees are not enforceable, the Notes would be effectively
subordinated to all liabilities of the Subsidiary Guarantors, including trade
payables of such Subsidiary Guarantors, whether or not such liabilities
constitute Senior Indebtedness under the Indenture. In addition, the payment of
dividends to the Company by its subsidiaries is contingent upon the earnings of
those subsidiaries and subject to various business considerations and, for
certain subsidiaries, the Indenture will permit restrictive loan covenants to be
contained in the instruments governing the indebtedness of such subsidiaries,
including the covenants which restrict in certain circumstances the payment of
dividends and distributions and the transfer of assets to the Company. See
"Description of Other Indebtedness -- New Credit Facility" and "Description of
the Exchange Notes -- Certain Covenants -- Limitation on Restricted Payments."

RISKS ASSOCIATED WITH ACQUISITION STRATEGY

The Company continues to look for opportunities to acquire companies that
fit within its acquisition strategy. To that end, the Company has had, and
continues to have, numerous discussions with potential acquisition candidates.
As of the date of this Prospectus, the Company has made a number of oral and
written acquisitions proposals to certain of such candidates, but has not
entered into any binding agreements. While the Company believes that it is
likely to enter into one or more agreements in the near future with respect to
such potential acquisitions, no assurance can be given that such agreements will
be reached or that any of such potential acquisitions will be consummated. The
Company's ability to accomplish its strategy will depend upon a number of
factors including, among other things, the Company's ability to identify
acceptable acquisition candidates, to consummate such acquisitions on terms
favorable to the Company and to promptly and profitably integrate the acquired
operations into the Company's operations. See "Business -- Business Strategy."

Acquiring additional businesses may require additional capital and the
consent of the Company's lenders and may have a significant impact on the
Company's financial position and results of operations. Any such acquisitions
may involve the issuance of additional debt or the issuance of one or more
classes or series of the Company's equity securities, which could have a
dilutive effect on the then outstanding Common Stock of the Company.
Acquisitions could result in substantial amortization charges to the Company
from the accumulation of goodwill and other intangible assets which could reduce
reported earnings. There can be no assurance that the Company will be successful
in accomplishing its acquisition strategy or that any acquired operations will
be profitable or will be successfully integrated into the Company or that any
such future acquisitions will not materially and adversely affect the Company's
financial condition or results of operations. Opportunities
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<PAGE> 23

for growth through acquisitions, future operating results and the success of
acquisitions may be subject to the effects of, and changes in, United States and
foreign trade and monetary policies, laws and regulations, political and
economic developments, inflation rates, and the effect of taxes and operating
conditions. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Capital Resources and Liquidity."

As a result of the Tamor and Seymour acquisitions, the Company has
experienced significant growth and will seek to continue to expand its
operations through acquisitions. The management of the Company's growth, if any,
will require continued expansion and refinement of the Company's control systems
and a significant increase in the Company's development, manufacturing, quality
control, marketing, logistics and service capabilities, all of which could place
a significant strain on the Company's resources. There is no assurance that the
Company will adequately anticipate all of the demands that its growth, if any,
will impose on such control systems. If the Company's management is unable to
manage growth effectively, then the quality of the Company's products, its
ability to retain and hire key personnel and its financial condition and results
of operations could be materially and adversely affected. Failure to integrate
new personnel on a timely basis could also have an adverse effect on the
Company.

CUSTOMER CONCENTRATION; CONSOLIDATING CUSTOMER BASE

During fiscal 1997, on a pro forma basis, Wal-Mart, Kmart and Target
accounted for approximately 17.5%, 12.5% and 5.9%, respectively, of the
Company's gross sales. During fiscal 1997, no other customer represented 5% or
more of the net sales (approximately $222.3 million on a pro forma basis) of the
Company. Although the Company believes that its relationships with Wal-Mart,
Kmart, Target and its other large customers are good, it does not have long-term
purchase agreements or other contractual assurances as to future sales to these
customers. If any significant customer substantially reduces its level of
purchases from the Company, the Company's financial position and results of
operations would be adversely affected. Moreover, continued consolidation within
the retail industry may result in an increasingly concentrated customer base. To
the extent such consolidation continues to occur, the Company's revenues and
profitability may be increasingly sensitive to a significant deterioration in
the financial condition of, or other adverse developments in its relationships
with, one or more customers. From time to time, the Company has experienced
credit losses due to customers seeking protection under bankruptcy or similar
laws. Although such credit losses have not had a material adverse effect on the
Company to date, there can be no assurance that future credit losses will not
have a material adverse effect on the Company. See "Business -- Marketing and
Sales" and "-- Customers and Distribution."

COMPETITION

The market for the Company's products is highly competitive. The Company
competes with a significant number of companies, some of which have greater
name-brand recognition, larger customer bases and/or significantly greater
financial resources than the Company, such as Rubbermaid Inc. There are no
substantial regulatory or other barriers to entry of new competitors into the
Company's industries. There can be no assurance that the Company will be able to
compete successfully against current and future sources of competition or that
the current and future competitive pressures faced by the Company will not
adversely affect its profitability or financial performance. See
"Business -- Competition."

A number of the Company's products are similar in design and/or function to
competitors' products. There can be no assurance that third parties will not
assert infringement or misappropriation claims against the Company in the future
with respect to current or future products. Any such claims or litigation,
whether with or without merit, could be costly and could have a material adverse
effect on the Company's financial position and results of operations. See
"Business -- Patents, Trademarks and Licenses" and "Business -- Legal
Proceedings."

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<PAGE> 24

AVAILABILITY AND PRICING OF RAW MATERIALS

The primary raw materials used in plastic injection molding are various
plastic resins -- primarily polypropylene and its derivatives. The plastic
resins used by the Company are produced from petrochemical intermediates which,
in turn, are derived from natural gas liquids. Plastic resin prices may
fluctuate as a result of changes in natural gas and crude oil prices and
capacity and changes in supply and demand for resin and petrochemical
intermediates from which they are produced. The automotive and housing
industries are significant users of plastic resin. As a result, significant
changes in the demand for automobiles or housing construction may cause
significant fluctuations in the price of plastic resin. See
"Business -- Manufacturing, Raw Materials and Suppliers."

The Company purchases plastic resin from various suppliers. The Company has
no long-term supply contracts for the purchase of resin, although the Company
generally maintains a 60-day supply of resin. For fiscal 1997, the cost of resin
on a pro forma basis accounted for approximately 18% of the Company's total cost
of goods sold and 13% of the Company's net sales. In the past, the Company has
had limited ability to increase product pricing in response to plastic resin
price increases. Any future increases in the price of plastic resins could have
a material adverse effect on the Company's financial position and results of
operations. The Company generally attempts to reduce its resin costs by
purchasing off-prime grades of material primarily through brokers in secondary
markets thereby enabling the Company to buy resin at a discount. There is no
assurance that the Company will continue to have available necessary quantities
of resin at reasonable prices. See "Business -- Manufacturing, Raw Materials and
Suppliers."

The Company also purchases steel and greige fabric used in the
manufacturing and production of ironing boards and covers and pads from various
suppliers. Any price increases because of the unavailability of steel could have
a material adverse effect.

RETAIL INDUSTRY; ECONOMIC CONDITIONS

The Company sells its products through retailers, including mass
merchandisers, supermarkets, hardware stores, specialty stores and other retail
channels. See "Business -- Customers and Distribution." Retail sales depend, in
part, on general economic conditions. A significant decline in such conditions
could have a negative impact on sales by retailers of products sold by the
Company and consequently could have an adverse effect on the Company's sales,
profitability and cash flows. Retail environments which are poor or perceived to
be poor, whether due to economic or other conditions, may lead houseware
manufacturers and marketers, including the Company, to increase their
discounting and promotional activities. Such activities could have an adverse
effect on the Company's profit margins and, consequently, its results of
operations. The Company may also not be able to fully offset the impact of
inflation through price increases due to an unfavorable retail environment.

RECENT LOSSES; SELFIX RESTRUCTURING

The Company has incurred operating losses in two of the last five fiscal
years. The Company's operating losses were $4.5 million in 1994 and $4.1 million
in 1995. Beginning in 1994, management of the Company restructured the Company's
operations to improve its profitability by, among other things, eliminating
unprofitable product lines, reducing overhead, upgrading financial controls and
increasing international distribution capabilities. See "Business -- Company
History." After implementing the restructuring, the Company had operating
profits of $1.4 million in fiscal 1996 and $12.7 million in fiscal 1997.
Although the Company has restructured its operations and returned to
profitability, there is no assurance that the Company will be able to maintain
profitability.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends, in large part, upon the efforts and
abilities of its senior management team, particularly James R. Tennant, the
Company's Chief Executive Officer. The loss of the services of Mr. Tennant or
one or more of the Company's other key employees could have a material adverse
effect on the Company's business. Certain of the Company's senior management,
including Mr. Tennant, have entered into employment agreements with the Company,
containing certain non-competition provisions. The Company

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<PAGE> 25

does not carry key man life insurance on Mr. Tennant or any of its senior
management team. See "Management -- Employment Agreements."

LABOR RELATIONS

As of December 30, 1997, the Company employed 1,240 persons in the United
States. Approximately 90 are hourly employees at its Leominster, Massachusetts
facility, covered by a collective bargaining agreement which expires in March,
1999; and approximately 150 are hourly employees at its Chicago, Illinois
facilities, covered by a collective bargaining agreement which expires in
January 2001. The Company also employs approximately 200 hourly employees at its
Reynosa, Mexico facility, who are covered by a collective bargaining agreement
which expires in December 1999. The Company utilizes the services of
approximately 350 temporary workers in its injection molding operations, for
assembly and in certain warehouses. Although the Company believes its
relationship with its employees is good, there can be no assurance that the
Company will successfully renegotiate the labor contracts when they expire
without work stoppages. However, the Company does not anticipate having problems
renegotiating any contracts that would materially affect its results of
operations. See "Business -- Employees."

YEAR 2000 COMPLIANCE

The Company is aware of the issues associated with the programming code in
existing computer and software systems as the millennium ("Year 2000")
approaches. The Year 2000 problem is pervasive and complex, as virtually every
computer operator could be affected in some way by the rollover of the two-digit
year value to "00." The issue is whether systems will properly recognize date
sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause
complete system failures. The costs to date have not been material; however, no
assurance can be given that additional amounts will not be required to be
expended or that the Company's computer system will be totally Year 2000
compliant. The inability to be totally Year 2000 compliant may have an adverse
effect on the Company. The Company also plans to communicate with customers,
vendors and others to ensure that their systems are Year 2000 compliant.
However, there can be no assurance that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material effect on the Company.

RISKS ASSOCIATED WITH DEVELOPING NEW PRODUCTS

In order to remain competitive, the Company is developing and introducing
new products and product modifications and intends to continue to develop and
introduce other new products in the future. The development, production and
marketing of new products could require significant investment of financial
resources. Although management intends to introduce and develop new products
which are complementary to the Company's existing products, the Company may
encounter production and marketing obstacles which would have a material adverse
effect on the sales of these new products and the Company's results of
operations. See "Business -- Business Strategy."

LEGAL PROCEEDINGS

Due to the nature of the Company's products, the Company is subject to
product liability claims involving personal injuries allegedly related to the
Company's products. The Company believes that such legal proceedings and claims,
individually and in the aggregate, are either without merit or that the
Company's insurance is generally adequate to cover such claims. Nevertheless,
currently pending claims and any future claims are subject to the uncertainties
related to litigation and the ultimate outcome of any such proceedings or claims
cannot be predicted. There is also no assurance that the product liability
insurance of the Company is or will be adequate to cover such claims.
Furthermore, there can be no assurance that insurance will remain available or,
if available, that it will not be prohibitively expensive. The loss of insurance
coverage could have a material adverse effect on the Company's results of
operations and financial condition. See "Business -- Legal Proceedings."

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<PAGE> 26

ENVIRONMENTAL REGULATION

The Company's operations are subject to a wide variety of federal, state
and local laws and regulations governing, among other things, emissions to air,
discharge to waters, the generation, handling, storage, transportation,
treatment and disposal of hazardous substances and other materials, and employee
health and safety matters. Also, as an owner and/or operator of real property or
a generator of hazardous substances, the Company may be subject to environmental
cleanup liability, regardless of fault, pursuant to the Comprehensive
Environmental Response Compensation and Liability Act or analogous state laws.
An environmental report obtained in connection with the acquisition of Tamor
indicated that certain remedial work relating to ground contamination of Tamor's
Leominster, Massachusetts facility was required. The former shareholders of
Tamor escrowed $1.1 million to pay for, among other things, any required
remediation at the Leominster, Massachusetts facility. The Company has completed
certain remediation projects at the Leominster, Massachusetts facility. The
Company believes that the cost of the remediation already completed, plus the
cost of any additional remediation that may be required in the future, will be
less than the amount of the escrow.

Except as described above, the Company believes that its properties and
facilities are in compliance, in all material respects, with applicable federal,
state and local laws, ordinances and regulations concerning the presence of
hazardous substances and that continued compliance with such laws, ordinances
and regulations will not have a material effect on the Company's capital
expenditures, earnings or competitive position. However, no assurances can be
given that (i) future laws, ordinances or regulations will not require or impose
any material expenditures or liabilities in connection with any environmental
conditions on the Company's facilities, (ii) the current environmental condition
of the Company's properties will not be affected by the condition of properties
in the vicinity of the Company's facilities or by third parties unrelated to the
Company and (iii) prior owners of any of the Company's properties and facilities
did not create environmental problems of which the Company is not aware. See
"Business -- Environmental Matters."

LIMITATION ON ABILITY TO REPURCHASE NOTES UPON A CHANGE OF CONTROL

Upon the occurrence of a Change of Control each holder of Notes would have
the right to require the Company to repurchase all or a portion of such holder's
Notes at a price equal to 101% of the aggregate principal amount of the Notes,
together with accrued and unpaid interest to the date of repurchase. However,
the New Credit Facility will prohibit the purchase of the Notes by the Company
in the event of a Change of Control, unless and until such time as the
indebtedness under the New Credit Facility is repaid in full. The Company's
failure to purchase the Notes would result in a default under the Indenture and
the New Credit Facility, which, in turn, could result in amounts outstanding
under the New Credit Facility being declared due and payable. Any such
declaration could have adverse consequences to the Company and the holders of
the Notes. In the event of a Change of Control, there can be no assurance that
the Company would have sufficient assets to satisfy all of its obligations under
the New Credit Facility and the Notes. See "Description of Other
Indebtedness -- New Credit Facility" and "Description of the Exchange
Notes -- Change of Control."

FRAUDULENT CONVEYANCE; PREFERENTIAL TRANSFER

If the court in a lawsuit brought by an unpaid creditor or representative
of creditors, such as a trustee in bankruptcy, were to find under relevant
federal and state fraudulent conveyance statutes that the Company or any
Subsidiary Guarantor did not receive fair consideration or reasonably equivalent
value for incurring the indebtedness represented by the Notes or the Guarantees,
and that, at the time of such incurrence, the Company or such Subsidiary
Guarantor (i) was insolvent, (ii) was rendered insolvent by reason of such
incurrence, (iii) was engaged in a business or transaction for which the assets
remaining with the Company or such Subsidiary Guarantor constituted unreasonably
small capital or (iv) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured, or to find that the
Company acted with actual intent to defraud, such court, subject to applicable
statutes of limitation, could (i) void the Company's obligations under the Notes
or the Subsidiary Guarantor's obligations under the Guarantees, (ii) subordinate
the Notes or the Guarantees to other indebtedness of the Company or the
Subsidiary Guarantors or (iii) take other action detrimental to the holders of
the Notes.
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<PAGE> 27

The measure of insolvency for these purposes will vary depending upon the
law of the jurisdiction being applied. Generally, however, a company will be
considered insolvent for these purposes if the sum of that company's debts is
greater than all of that company's assets at a fair valuation, or if the present
fair salable value of that company's assets is less than the amount that will be
required to pay its probable liability on its existing debts as they become
absolute and matured or if it is unable to pay its debts as they become due.
Moreover, regardless of solvency, a court could avoid an incurrence of
indebtedness, including the Notes, if it determined that such transaction was
made with intent to hinder, delay or defraud creditors, or a court could
subordinate the indebtedness, including the Notes, to the claims of all existing
and future creditors on similar grounds. Based upon financial and other
information currently available to it, management believes the Company is
solvent and will continue to be solvent after the consummation of the
Refinancing. However, there can be no assurance as to what standard a court
would apply in order to determine whether the Company or the Subsidiary
Guarantors were "insolvent" upon consummation of the sale of the Notes and the
Guarantees.

Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against the
Company or any Subsidiary Guarantor within at least 90 days after any payment by
the Company or any Subsidiary Guarantor with respect to the Notes or the
Guarantees or the incurrence of any future Guarantee, all or a portion of such
payment or such future Guarantee could be voided as a preferential transfer and
the recipient of such payment could be required to return such payment if
certain other factors necessary to establish a valid preference action are
present.

ABSENCE OF PUBLIC MARKET

The Original Notes were issued to, and the Company believes are currently
owned by, a relatively small number of beneficial owners. Prior to the Exchange
Offer, there has not been any public market for the Original Notes. The Original
Notes have not been registered under the Securities Act and will be subject to
restrictions on transferability to the extent that they are not exchanged for
Exchange Notes by holders who are entitled to participate in the Exchange Offer.
The market for Original Notes not tendered for exchange in the Exchange Offer is
likely to be more limited than the existing market for Original Notes. The
holders of Original Notes (other than any such holder that is an "affiliate" of
the Company within the meaning of Rule 405 under the Securities Act) who are not
eligible to participate in the Exchange Offer are entitled to certain
registration rights, and the Company is required to file a Shelf Registration
Statement with respect to such Original Notes. See "The Exchange
Offer -- Purpose and Effect of the Exchange Offer."

The Exchange Notes are new securities for which there currently is no
market. Although the Initial Purchasers have informed the Company that they
currently intend to make a market in the Exchange Notes, they are not obligated
to do so and any such market making may be discontinued at any time without
notice. In addition, such market making activity may be limited during the
effectiveness of the Shelf Registration Statement (if filed). Accordingly, there
can be no assurance as to the development or liquidity of any market for the
Exchange Notes. The Original Notes have been designated for trading in the
PORTAL market. The Company does not intend to apply for listing of the Exchange
Notes on any securities exchange or for their quotation through an automated
dealer quotation system.

The liquidity of, and trading market for, the Exchange Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.

FAILURE TO EXCHANGE ORIGINAL NOTES FOR EXCHANGE NOTES

Exchange Notes will be issued in exchange for Original Notes only after
timely receipt by the Exchange Agent of such Original Notes, a properly
completed and duly executed Letter of Transmittal and all other required
documentation. See "The Exchange Offer -- Procedures for Tendering." Therefore,
holders of Original Notes desiring to tender such Original Notes in exchange for
Exchange Notes should allow sufficient time to ensure timely delivery. Neither
the Exchange Agent nor the Company is under any duty to give notification of
defects or irregularities with respect to tenders of Original Notes for
exchange. Original Notes

20
<PAGE> 28

that are not tendered or are tendered but not accepted will, following
consummation of the Exchange Offer, continue to be subject to the existing
restrictions upon transfer thereof and, upon consummation of the Exchange Offer,
certain registration rights under the Exchange and Registration Rights Agreement
will terminate. In addition, any holder of Original Notes who tenders in the
Exchange Offer for the purpose of participating in the distribution of the
Exchange Notes may be deemed to have received restricted securities and, if so,
will be required to comply with the registration and prospectus delivery
requirement of the Securities Act in connection with any resale transaction.
Each broker-dealer that receives Exchange Notes for its own account in exchange
for Original Notes, where such Original Notes were acquired by such activities,
must acknowledge that it will deliver a prospectus in connection with any resale
of such Exchange Notes. To the extent that Original Notes are tendered and
accepted in the Exchange Offer, the trading market for untendered and tendered
but unaccepted Original Notes could be adversely affected due to the limited
amount, or "float," of the Original Notes that are expected to remain
outstanding following the Exchange Offer. Generally, a lower "float" of a
security could result in less demand to purchase such security and could,
therefore, result in lower prices for such security. For the same reason, to the
extent that a large amount of Original Notes are not tendered or are tendered
and not accepted in the Exchange Offer, the trading market for the Exchange
Notes could be adversely affected. See "Plan of Distribution" and "The Exchange
Offer."

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<PAGE> 29

THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

The Original Notes were sold by the Company on May 14, 1998, to the Initial
Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently resold the Original Notes to qualified institutional buyers (as
defined in Rule 144A) ("QIBs") in reliance on Rule 144A. As a condition to the
Purchase Agreement, the Company and the Initial Purchasers entered into the
Exchange and Registration Rights Agreement on the date of the Initial Offering
(the "Issue Date").

The following description of the Exchange and Registration Rights Agreement
is a summary only, does not purport to be complete and is qualified in its
entirety by reference to all provisions of the Exchange and Registration Rights
Agreement, a copy of which has been filed as an exhibit to the Exchange Offer
Registration Statement (as defined below). See "Available Information."

Pursuant to the Exchange and Registration Rights Agreement, the Company
agreed to (i) file with the Commission on or prior to 60 days after the Issue
Date a registration statement (the "Exchange Offer Registration Statement")
relating to the Exchange Offer and (ii) use its reasonable best efforts to cause
the Exchange Offer Registration Statement to be declared effective under the
Securities Act within 150 days after the Issue Date. As soon as practicable
after the effectiveness of the Exchange Offer Registration Statement, the
Company will offer to the holders of Transfer Restricted Securities (as defined)
who are not prohibited by any law or policy of the Commission from participating
in the Exchange Offer the opportunity to exchange their Transfer Restricted
Securities for the Exchange Notes. The Company will keep the Exchange Offer open
for not less than 30 days (or longer, if required by applicable law) after the
date notice of the Exchange Offer is mailed to the holders of the Original
Notes. If a change in law or applicable interpretations of the staff of the
Commission do not permit the Company to effect the Exchange Offer or do not
permit any holder of the Original Notes (including the Initial Purchaser) to
participate in the Exchange Offer, the Company will use its reasonable best
efforts to file with the Commission a shelf registration statement (the "Shelf
Registration Statement") to cover resales of Transfer Restricted Securities by
such holders who satisfy certain conditions relating to the provision of
information in connection with the Shelf Registration Statement. For purposes of
the foregoing, "Transfer Restricted Securities" means each Original Note until
(i) the date on which such Original Note has been exchanged for a freely
transferable Exchange Note in the Exchange Offer; (ii) the date on which such
Original Note has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement; or (iii) the
date on which such Original Note is distributed to the public in accordance with
Rule 144 under the Securities Act or is salable pursuant to Rule 144(k) under
the Securities Act.

The Company will use its reasonable best efforts to have the Exchange Offer
Registration Statement or, if applicable, the Shelf Registration Statement
(each, a "Registration Statement") declared effective by the Commission as
promptly as practicable after the filing thereof. Unless the Exchange Offer
would not be permitted by a policy of the Commission, the Company will commence
the Exchange Offer and will use its reasonable best efforts to consummate the
Exchange Offer as promptly as practicable, but in any event prior to 180 days
after the Issue Date. If applicable, the Company will use its best efforts to
keep the Shelf Registration Statement effective for a period of two years after
the Issue Date, or such shorter period as may be required to permit holders to
sell the Original Notes in accordance with Rule 144 under the Securities Act. If
(i) either an Exchange Offer Registration Statement or Shelf Registration
Statement is not filed with the Commission on or prior to 60 days after the
Issue Date; (ii) either an Exchange Offer Registration Statement or a Shelf
Registration Statement is not declared effective within 150 days after the Issue
Date; or (iii) the Exchange Offer is not consummated on or prior to 180 days
after the Issue Date in respect of tendered Original Notes and a Shelf
Registration Statement has not been declared effective or a Shelf Registration
Statement is filed and declared effective within 150 days after the Issue Date
but shall thereafter cease to be effective (at any time that the Company is
obligated to maintain the effectiveness thereof) without being succeeded within
60 days by an additional Registration Statement filed and declared effective
(each such event referred to in clauses (i) through (iii), a "Registration
Default"), the Company will pay liquidated damages ("Liquidated Damages") to
each holder of Transfer Restricted Securities, during the period of one
22
<PAGE> 30

or more such Registration Defaults, in an amount equal to $0.192 per week per
$1,000 principal amount of the Original Notes constituting Transfer Restricted
Securities held by such holder until a Registration Statement is filed, an
Exchange Offer Registration Statement or Shelf Registration Statement is
declared effective or the Exchange Offer is consummated or the Shelf
Registration Statement is declared effective or again becomes effective, as the
case may be. All accrued Liquidated Damages shall be paid to holders in the same
manner as interest payments on the Original Notes on semi-annual payment dates
which correspond to interest payment dates for the Original Notes. Following the
cure of all Registration Defaults, the accrual of Liquidated Damages will cease.

The Exchange and Registration Rights Agreement also provides that the
Company (i) shall make available for a period of 180 days after the consummation
of the Exchange Offer a prospectus meeting the requirements of the Securities
Act to any broker-dealer for use in connection with any resale of any such
Exchange Notes and (ii) shall pay all expenses incident to the Exchange Offer
(including the expense of one counsel to the holders of the Original Notes) and
will indemnify certain holders of the Original Notes (including any
broker-dealer) against certain liabilities, including liabilities under the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of Exchange
Notes received in exchange for Original Notes where such Original Notes were
acquired by such broker-dealer as a result of market making activities or other
trading activities (other than Original Notes acquired directly from the
Company). A broker-dealer which delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act and will be bound by the provisions of the
Exchange and Registration Rights Agreement (including certain indemnification
rights and obligations).

Each holder of Original Notes who wishes to exchange such Original Notes
for Exchange Notes in the Exchange Offer will be required to make certain
representations, including representations that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business; (ii) it
has no arrangement or understanding with any person to participate in the
distribution of the Exchange Notes; and (iii) it is not an affiliate of the
Company or an Exchanging Dealer (as defined) not complying with the requirements
of the next paragraph, or if it is an affiliate, that it will comply with the
registration and prospectus delivery requirements of the Securities Act to the
extent applicable.

If the holder is not a broker-dealer, it will be required to represent that
it is not engaged in, and does not intend to engage in, the distribution of the
Exchange Notes. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Original Notes, where such Original Notes were acquired
by such broker-dealer as a result of market making activities or other trading
activities (an "Exchanging Dealer"), must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. See "Plan of
Distribution."

Holders of the Original Notes will be required to make certain
representations to the Company (as described above) in order to participate in
the Exchange Offer and will be required to deliver information to be used in
connection with the Shelf Registration Statement in order to have their Original
Notes included in the Shelf Registration Statement and benefit from the
provisions regarding Liquidated Damages set forth in the preceding paragraphs. A
holder who sells Original Notes pursuant to the Shelf Registration Statement
generally will be required to be named as a selling securityholder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the Exchange and
Registration Rights Agreement which are applicable to such a holder (including
certain indemnification obligations).

Following the consummation of the Exchange Offer, holders of the Original
Notes who were eligible to participate in the Exchange Offer but who did not
tender their Original Notes will not have any further registration rights and
such Original Notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for such Original Notes could
be adversely affected. See "Risk Factors -- Absence of Public Market."

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<PAGE> 31

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Original
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City time,
on the Expiration Date. The Company will issue $1,000 principal amount of
Exchange Notes in exchange for each $1,000 principal amount of outstanding
Original Notes accepted in the Exchange Offer. Holders may tender some or all of
their Original Notes pursuant to the Exchange Offer. However, Original Notes may
be tendered only in integral multiples of $1,000.

The form and terms of the Exchange Notes are the same as the form and terms
of the Original Notes except that (i) the issuance of the Exchange Notes will
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, and (ii) the holders of the Exchange
Notes will not be entitled to certain rights under the Exchange and Registration
Rights Agreement, including the provisions providing for an increase in the
interest rate on the Original Notes in certain circumstances relating to the
timing of the Exchange Offer, all of which rights terminate upon consummation of
the Exchange Offer. The Exchange Notes will evidence the same debt as the
Original Notes and will be entitled to the benefits of the Indenture.

As of the date of this Prospectus, $125,000,000 aggregate principal amount
of Original Notes are outstanding. The Company has fixed the close of business
on , 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.

Holders of Original Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the Indenture in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.

The Company shall be deemed to have accepted validly tendered Original
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
holders for the purpose of receiving the Exchange Notes from the Company.

If any tendered Original Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Original Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.

Holders who tender Original Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than transfer taxes in certain circumstances, in connection
with the Exchange Offer. See "-- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.

In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by written notice and will mail to the registered holders
of Original Notes an announcement thereof, each prior to 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.

The Company reserves the right, in its sole discretion, (i) to delay
accepting any Original Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "-- Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent, or (ii) to amend the terms of
the Exchange Offer in any manner. Any

24
<PAGE> 32

such delay in acceptance, extension, termination or amendment will be followed
as promptly as practicable by oral or written notice thereof to the registered
holders.

INTEREST ON THE EXCHANGE NOTES

Interest on the Exchange Notes issued pursuant to the Exchange Offer will
accrue from the last interest payment date on which interest was paid on the
Original Notes surrendered in exchange therefor or, if no interest has been paid
on the Original Notes, from the Issue Date. Holders whose Original Notes are
accepted for exchange will be deemed to have waived the right to receive any
interest accrued on the Original Notes.

Interest on the Exchange Notes is payable semi-annually in arrears on each
May 15 and November 15, commencing on November 15, 1998.

PROCEDURES FOR TENDERING

Only a holder of Original Notes may tender such Original Notes in the
Exchange Offer. For a holder to validly tender Original Notes pursuant to the
Exchange Offer, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantee, or (in the case of a
book-entry transfer) an Agent's Message in lieu of the Letter of Transmittal,
and any other required documents must be received by the Exchange Agent at the
address set forth under "Exchange Agent" prior to 5:00 p.m., New York City time,
on the Expiration Date. In addition, prior to 5:00 p.m., New York City time, on
the Expiration Date, either (a) certificates for tendered Original Notes must be
received by the Exchange Agent at such address or (b) such Original Notes must
be transferred pursuant to the procedures for book-entry transfer described
below (and a confirmation of such tender received by the Exchange Agent,
including an Agent's Message if the tendering holder has not delivered a Letter
of Transmittal). The term "Agent's Message" means a message transmitted by the
book-entry transfer facility, The Depository Trust Company (the "Book-Entry
Transfer Facility"), to and received by the Exchange Agent and forming a part of
a book-entry confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the tendering participant that such
participant has received and agrees to be bound by the Letter of Transmittal and
that the Company may enforce such Letter of Transmittal against such
participant.

By executing the Letter of Transmittal (or transmitting an Agent's Message
in lieu thereof), each holder will make to the Company the representations set
forth above under the heading "-- Purpose and Effect of the Exchange Offer."

The tender of Original Notes by a holder and the acceptance thereof by the
Company will constitute agreement between such holder and the Company in
accordance with the terms and subject to the conditions set forth herein and in
the Letter of Transmittal.

THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE
RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Original Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.

Signatures on a Letter of Transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an Eligible Institution (as defined below) unless the
25
<PAGE> 33

Original Notes tendered pursuant thereto are tendered (i) by a registered holder
who has not completed the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. In the
event that signatures on a Letter of Transmittal or a notice of withdrawal, as
the case may be, are required to be guaranteed, such guarantee must be made by a
member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States, or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Exchange
Act, which is a member of one of the recognized signature guarantee programs
identified in the Letter of Transmittal (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the
registered holder of any Original Notes listed therein, such Original Notes must
be endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Original
Notes with the signature thereon guaranteed by an Eligible Institution.

If the Letter of Transmittal or any Original Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and evidence
satisfactory to the Company or their authority to so act must be submitted with
the Letter of Transmittal.

The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Original Notes at the Book-Entry Transfer Facility for the purpose of
facilitating the Exchange Offer, and subject to the establishment thereof, any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Original Notes by causing such
Book-Entry Transfer Facility to transfer such Original Notes into the Exchange
Agent's account with respect to the Original Notes in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. Although delivery
of the Original Notes may be effected through book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility, an appropriate
Letter of Transmittal properly completed and duly executed with any required
signature guarantee (or, in the case of book-entry transfer, an Agent's Message
in lieu thereof) and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at its address
set forth below on or prior to the Expiration Date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under such procedures. Delivery of documents to the Book-Entry Transfer
Facility does not constitute delivery to the Exchange Agent.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Original Notes and withdrawal of tendered
Original Notes will be determined by the Company in its sole discretion, which
determination will be final and binding. The Company reserves the absolute right
to reject any and all Original Notes not properly tendered or any Original Notes
the Company's acceptance of which would, in the opinion of counsel for the
Company, be unlawful. The Company also reserves the right in its sole discretion
to waive any defects, irregularities or conditions of tender as to particular
Original Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will be
final and binding on all parties. Unless waived, any defects or irregularities
in connection with tenders of Original Notes must be cured prior to the
Expiration Date. Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Original Notes, nor shall any of them incur any liability for failure
to give any such notice. Tenders of Original Notes will not be deemed to have
been made until such defects or irregularities have been cured or waived. Any
Original Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.

GUARANTEED DELIVERY PROCEDURES

Holders who wish to tender their Original Notes and (i) whose Original
Notes are not immediately available, (ii) who cannot deliver their Original
Notes, the Letter of Transmittal (or, in the case of book-entry

26
<PAGE> 34

transfer, an Agent's Message) or any other required documents to the Exchange
Agent, or (iii) who cannot complete the procedures for book-entry transfer
(including delivery of an Agent's Message), prior to the Expiration Date, may
effect a tender if:

(a) the tender is made through an Eligible Institution;

(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution (i) an Agent's Message with respect to guaranteed
delivery that is accepted by the Company, or (ii) a properly completed and
duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail or hand delivery) setting forth the name and address of the holder,
the certificate number(s) of such Original Notes and the principal amount
of Original Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile thereof)
together with the certificate(s) representing the Original Notes (or a
confirmation of book-entry transfer of such Original Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility), and any
other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and

(c) such properly completed and executed Letter of Transmittal or
facsimile thereof (or, in the case of book-entry transfer, an Agent's
Message), as well as the certificate(s) representing all tendered Original
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Original Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility), and all other documents required by the Letter of
Transmittal are received by the Exchange Agent within three New York Stock
Exchange trading days after the Expiration Date.

Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to holders who wish to tender their Original Notes according to the
guaranteed delivery procedures set forth above.

WITHDRAWAL OF TENDERS

Except as otherwise provided herein, tenders of Original Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.

To withdraw a tender of Original Notes in the Exchange Offer, a telegram,
telex, letter or facsimile transmission notice of withdrawal must be received by
the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Any such notice of withdrawal must (i)
specify the name of the person having deposited the Original Notes to be
withdrawn (the "Depositor"), (ii) identify the Original Notes to be withdrawn
(including the certificate number(s) and principal amount of such Original
Notes, or, in the case of Original Notes transferred by book-entry transfer, the
name and number of the account at the Book-Entry Transfer Facility to be
credited), (iii) be signed by the holder in the same manner as the original
signature on the Letter of Transmittal by which such Original Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Original Notes register the transfer of such Original Notes into the name of the
person withdrawing the tender, and (iv) specify the name in which any such
Original Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Original Notes so withdrawn will
be deemed not to have been validly tendered for purposes of the Exchange Offer
and no Exchange Notes will be issued with respect thereto unless the Original
Notes so withdrawn are validly retendered. Any Original Notes which have been
tendered but which are not accepted for exchange will be retendered to the
holder thereof without cost to such holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Original Notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering" at any time prior to the
Expiration Date.

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<PAGE> 35

CONDITIONS

Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Original
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Original Notes, if:

(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer, or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries;

(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or

(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.

If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Original Notes and
return all tendered Original Notes to the tendering holders, (ii) extend the
Exchange Offer and retain all Original Notes tendered prior to the expiration of
the Exchange Offer, subject, however, to the rights of holders to withdraw such
Original Notes (see "-- Withdrawal of Tenders"), or (iii) waive such unsatisfied
conditions with respect to the Exchange Offer and accept all properly tendered
Original Notes which have not been withdrawn. The Company is not aware of any
federal or state consents that must be obtained, other than obtaining the
effectiveness of the Exchange Offer Registration Statement, prior to
consummation of the Exchange Offer.

EXCHANGE AGENT

LaSalle National Bank has been appointed as Exchange Agent (the "Exchange
Agent") for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to the Exchange
Agent addressed as follows:

<TABLE>
<CAPTION>
BY OVERNIGHT DELIVERY: BY MAIL: BY HAND:
- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C>
LaSalle National Bank LaSalle National Bank LaSalle National Bank
135 South LaSalle Street 135 South LaSalle Street 135 South LaSalle Street
Room 1825 Room 1825 Room 1825
Chicago, Illinois 60603 Chicago, Illinois 60603 Chicago, Illinois 60603
Attn: Margaret M. Muir Attn: Margaret M. Muir Attn: Margaret M. Muir
</TABLE>

FACSIMILE TRANSMISSION NUMBER:
(312) 904-2236

CONFIRM BY TELEPHONE:

(312) 904-2226

FEES AND EXPENSES

The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.

The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company,

28
<PAGE> 36

however, will pay the Exchange Agent reasonable and customary fees for its
services and will reimburse it for its reasonable out-of-pocket expenses in
connection therewith.

The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.

ACCOUNTING TREATMENT

The Exchange Notes will be recorded at the same carrying value as the
Original Notes, which is face value, less the original issue discount (net of
amortization) as reflected in the Company's accounting records on the date of
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by the Company. Certain expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.

CONSEQUENCES OF FAILURE TO EXCHANGE

The Original Notes that are not exchanged for Exchange Notes pursuant to
the Exchange Offer will remain restricted securities. Accordingly, such Original
Notes may be resold only (i) to the Company (upon redemption thereof or
otherwise), (ii) so long as the Original Notes are eligible for resale pursuant
to Rule 144A, to a person inside the United States whom the seller reasonably
believes is a qualified institutional buyer within the meaning of Rule 144A in a
transaction meeting the requirements of Rule 144A, in accordance with Rule 144
under the Securities Act, or pursuant to another exemption from the registration
requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Company), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.

RESALE OF THE EXCHANGE NOTES

With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person who is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Original Notes in the ordinary
course of business and who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquired Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Exchanging Dealer that receives Exchange
Notes for its own account in exchange for Original Notes, where such Original
Notes were acquired by such Exchanging Dealer as a result of market making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. See "Plan of
Distribution."

As contemplated by these no-action letters and the Exchange and
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Company in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person (other than a
broker-dealer referred to in the next sentence) is not engaging, and does not
intend to engage, in the distribution of the Exchange Notes, (iii) the holder or
any such other person has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) neither the holder
nor any such other person is an "affiliate" of the Company within the meaning of

29
<PAGE> 37

Rule 405 under the Securities Act, and (v) the holder or any such other person
acknowledges that if such holder or other person participates in the Exchange
Offer for the purpose of distributing the Exchange Notes it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on those
no-action letters. As indicated above, each Exchanging Dealer that receives an
Exchange Note for its own account in exchange for Original Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. For a description of the procedures for such resales by
Exchanging Dealers, see "Plan of Distribution."

USE OF PROCEEDS

This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Exchange and Registration
Rights Agreement. The Company will not receive any proceeds from the issuance of
the Exchange Notes offered hereby. In consideration for issuing the Exchange
Notes contemplated in this Prospectus, the Company will receive Original Notes
in like principal amount, the form and terms of which are the same as the form
and terms of the Exchange Notes (which replace the Original Notes), except as
otherwise described herein. The Original Notes surrendered in exchange for
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase or decrease in
the indebtedness of the Company. As such, no effect has been given to the
Exchange Offer in the pro forma statements or capitalization tables.

The $125 million of gross proceeds from the Initial Offering (before
deductions of underwriting discounts and other expenses of the Initial
Offering), together with borrowings under the New Credit Facility of
approximately $2.8 million, were used to pay (i) all amounts outstanding under
the Company's previously outstanding credit facility with General Electric
Capital Corporation, together with certain fees, prepayment penalties and
expenses related to such repayment, in an aggregate amount of approximately $122
million, (ii) other fees and expenses of approximately $1.3 million incurred in
connection with the Refinancing and (iii) for working capital and general
corporate purposes. See "Description of Other Indebtedness -- New Credit
Facility."

30
<PAGE> 38

CAPITALIZATION

The following table sets forth the pro forma capitalization of the Company
after giving effect to the Seymour Acquisition and the Refinancing. See "Use of
Proceeds." This table should be read in conjunction with the Consolidated
Financial Statements and notes thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 28, 1998
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash........................................................ $ 4,163 $ 4,163
======== ========
Short-term debt:
Current maturities of Existing Credit Facility............ $ 5,600 $ --
Current maturities of industrial development revenue bonds
and capital lease obligations.......................... 991 991
-------- --------
Total short-term debt............................. 6,591 991
-------- --------
Long-term debt:
Existing Credit Facility.................................. 114,400 --
New Credit Facility....................................... -- 2,500
Industrial development revenue bonds and capital lease
obligations............................................ 5,675 5,675
Notes offered hereby...................................... -- 125,000
-------- --------
120,075 133,175
-------- --------
Stockholders' equity:
Common stock and other equity............................. 47,939 47,939
Retained earnings......................................... 8,125 4,826
-------- --------
Total stockholders' equity........................ 56,064 52,765
-------- --------
Total capitalization.............................. $182,730 $186,931
======== ========
</TABLE>

31
<PAGE> 39

SELECTED HISTORICAL FINANCIAL DATA

HOME PRODUCTS INTERNATIONAL, INC.

The following table sets forth selected historical financial data of HPI as
of and for each of the five fiscal years in the period ended December 27, 1997
and for the thirteen week periods ended March 29, 1997 and March 28, 1998. The
statement of operations data for the five fiscal years in the period ended
December 27, 1997 were derived from HPI's audited historical financial
statements included elsewhere in this Prospectus. The unaudited statement of
operations data for the thirteen week periods ended March 29, 1997 and March 28,
1998 were derived from the unaudited financial statements of HPI. "Other Data"
below, not directly derived from the HPI historical financial statements, have
been presented to provide additional analysis. In the opinion of management, the
unaudited data includes all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the data for such periods. Interim
results for the thirteen week period ended March 28, 1998, are not necessarily
indicative of results that can be expected in future periods. The summary
historical financial data below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the historical consolidated financial statements and notes thereto included
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THIRTEEN WEEKS
YEAR ENDED ENDED
---------------------------------------------------- ---------------------
DEC. 25, DEC. 31, DEC. 30, DEC. 28, DEC. 27, MARCH 29, MARCH 28,
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- -------- -------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.............................. $39,711 $40,985 $41,039 $38,200 $129,324 $31,738 $52,408
Gross profit(a)........................ 17,207 15,398 15,361 15,208 40,436 9,128 15,953
Operating profit (loss)................ 2,993 (4,488) (4,075) 1,365 12,748 2,526 5,092
Interest expense....................... (1,066) (999) (896) (707) (5,152) (1,532) (3,006)
Extraordinary item, net of tax......... -- -- -- -- -- -- (1,737)
Net earnings (loss).................... 1,515 (6,003) (4,010) 806 7,320 1,032 (491)
OTHER DATA:
Gross profit margin(a)................. 43.3% 37.6% 37.4% 39.8% 31.3% 28.8% 30.4%
Capital expenditures................... $ 3,131 $ 2,326 $ 1,334 $ 1,734 $ 8,568 $ 597 $ 4,092
Ratio of earnings to fixed
charges(b)........................... 2.8x -- -- 2.0x 2.4x 1.7x 1.7x
</TABLE>

- ---------------
(a) Gross profit is defined as net sales less cost of goods sold. Gross profit
margin is computed as gross profit as a percentage of net sales.

(b) For the purposes of computing this ratio, earnings consist of earnings
(loss) before income taxes, extraordinary item and fixed charges. Fixed
charges consist of interest expense, amortization of debt financing costs,
and the estimated interest factor in rental expense. The 1994 and 1995
coverage deficiencies were $5.8 million and $4.3 million, respectively.

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

The following table sets forth selected financial data of Seymour as of and
for each of the three fiscal years in the period ended June 30, 1997 and for the
six month periods ended December 28, 1996 and December 27, 1997. The statement
of operations and balance sheet data for the three years in the period ended
June 30, 1997 have been derived from Seymour's audited historical consolidated
financial statements. The unaudited statement of operations data for the six
month periods ended December 28, 1996 and December 27, 1997 have been derived
from the unaudited financial statements of Seymour. The historical Seymour
statements of operations reflect certain reclassifications to conform with HPI
presentation. "Other Data" below, not directly derived from the Seymour
historical financial statements, have been presented to provide additional
analysis. The Selected Historical Financial Data below should be read in
conjunction with

32
<PAGE> 40

"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical consolidated financial statements and notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 30, --------------------
-------------------------------- DEC. 28, DEC. 27,
1995 1996 1997 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales........................... $ 92,554 $105,532 $ 98,274 $45,248 $43,096
Gross profit(a)..................... 25,266 25,687 29,518 12,583 10,233
Operating profit (loss)............. 3,737 (684) 6,220 1,188 (3,171)
Interest expense, net............... (7,394) (8,384) (7,923) (4,047) (3,708)
Net loss............................ (2,410) (11,888) (2,019) (2,883) (7,487)
OTHER DATA:
Gross profit margin(a).............. 27.3% 24.3% 30.0% 27.8% 23.7%
Capital expenditures................ $ 1,124 $ 2,595 $ 1,161 $ 321 $ 1,376
BALANCE SHEET DATA:
Working capital(b).................. $ 26,453 $ 21,604 $ 16,070 $16,360 $ 9,627
Total assets........................ 124,580 111,323 103,188 99,906 93,810
Total debt, including capital lease
obligations...................... 83,779 83,772 76,301 76,884 70,003
Total stockholders' equity.......... 22,829 10,850 8,765 7,923 1,238
</TABLE>

- ---------------
(a) Gross profit is defined as net sales less cost of goods sold. Gross profit
margin is computed as gross profit as a percentage of net sales.

(b) Working capital is computed as current assets less current liabilities.

33
<PAGE> 41

UNAUDITED PRO FORMA COMBINED FINANCIAL DATA

The following Unaudited Pro Forma Combined Financial Data of the Company
are based on, and should be read in conjunction with, the Consolidated Financial
Statements of HPI and Seymour and the notes thereto included elsewhere in this
Prospectus, and have been adjusted to give pro forma effect to the Seymour
Acquisition and related financing and the Refinancing. An effective tax rate of
40% has been assumed for all periods; however, the year ended December 27, 1997
includes a $3.1 million income tax benefit due to the reduction of a valuation
allowance. The historical Seymour statements of operations reflect certain
reclassifications to conform with HPI presentation.

The Unaudited Pro Forma Combined Statement of Operations for the year ended
December 27, 1997 has been prepared by combining the Consolidated Statement of
Operations of HPI for the year ended December 27, 1997 with the Unaudited
Consolidated Statement of Operations of Seymour for the year ended December 27,
1997, as if the Seymour Acquisition and related financing and the Refinancing
had occurred on December 29, 1996.

The Unaudited Pro Forma Combined Statement of Operations of the Company for
the thirteen week period ended March 28, 1998 gives pro forma effect to the
Refinancing as if it had occurred on December 28, 1997. The Unaudited Pro Forma
Combined Statement of Operations for the thirteen week period ended March 29,
1997 gives pro forma effect to the Seymour Acquisition and related financing and
the Refinancing as if each of the transactions had occurred on December 29,
1996. The Unaudited Pro Forma Combined Statement of Operations for the thirteen
week period ended March 29, 1997 has been prepared by combining the Unaudited
Consolidated Statement of Operations of HPI for the thirteen week period ended
March 29, 1997 with the Unaudited Consolidated Statement of Operations of
Seymour for the thirteen week period ended March 29, 1997.

The pro forma adjustments are based upon available information and certain
assumptions that HPI believes are reasonable. Other data included on the pro
forma statements of operations have been presented to provide additional
analysis. The Seymour Acquisition has been accounted for using the purchase
method of accounting. Allocations of the purchase price have been determined
based upon preliminary information and estimates of fair value and are subject
to change. Differences between the amounts included herein and the final
allocations are not expected to have a material effect on the Unaudited Pro
Forma Combined Financial Data. The Unaudited Pro Forma Combined Financial Data
do not purport to represent what the Company's results of operations would have
been if such events had occurred at the dates indicated, nor do such statements
purport to project the results of the Company's operations for any future
period.

34
<PAGE> 42

HOME PRODUCTS INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 27, 1997

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
----------------------------
SEYMOUR PRO FORMA
HPI SEYMOUR ACQUISITION REFINANCING COMBINED
--------- ------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.................... $ 129,324 $92,963 $ -- $ -- $ 222,287
Cost of goods sold........... 88,888 69,121 (221)(b) -- 157,788
--------- ------- --------- ----- ---------
Gross profit............... 40,436 23,842 221 -- 64,499
Operating expenses........... 27,688 21,916(a) (1,300)(c) (17)(g) 49,150
875(d)
(12)(b)
--------- ------- --------- -----
Operating profit........... 12,748 1,926 658 17 15,349
Interest (expense)........... (5,152) (7,701) (1,871)(e) (813)(f) (15,537)
Other income (expense)....... 70 (635)(a) -- (167)(l) (732)
--------- ------- --------- ----- ---------
Earnings (loss) before
income taxes and
extraordinary item...... 7,666 (6,410) (1,213) (963) (920)
Income tax (expense) benefit
before change in valuation
allowance.................. (3,489) (260) 3,732(h) 385(h) 368
Change in income tax
valuation allowance........ 3,143(i) -- -- -- 3,143
--------- ------- --------- ----- ---------
Total income tax (expense)
benefit.................... (346) (260) 3,732 385 3,511
--------- ------- --------- ----- ---------
Earnings (loss) before
extraordinary item...... $ 7,320 $(6,670) $ 2,519 $(578) $ 2,591
========= ======= ========= ===== =========
Earnings before extraordinary
item per share -- basic.... $ 0.38
=========
Earnings before extraordinary
item per share --diluted... $ 0.37
=========
Weighted average common
shares
outstanding -- basic....... 5,436,002 1,320,700(j) 6,756,702
Weighted average common
shares
outstanding -- diluted..... 5,682,415 1,320,700(j) 7,003,115
OTHER DATA:
EBITDA(k).................. $ 32,335
EBITDA margin(k)........... 14.5%
Capital expenditures....... $ 11,031
</TABLE>

See Notes to Unaudited Pro Forma Combined Financial Data
35
<PAGE> 43

HOME PRODUCTS INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THIRTEEN WEEKS ENDED MARCH 29, 1997

<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------
SEYMOUR PRO FORMA
HPI SEYMOUR ACQUISITION REFINANCING COMBINED
--------- ------- ----------- ----------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Net sales.......................... $ 31,738 $23,544 $ -- $ -- $ 55,282
Cost of goods sold................. 22,610 16,992 -- -- 39,602
--------- ------- --------- ----- ---------
Gross profit..................... 9,128 6,552 -- -- 15,680
Operating expenses................. 6,602 5,076 218(d) (2)(g) 11,658
(236)(c)
Operating profit................. 2,526 1,476 18 2 4,022
Interest (expense)................. (1,532) (1,951) (468)(e) (92)(f) (4,043)
Other income (expense)............. 155 19 -- (31)(l) 143
--------- ------- --------- ----- ---------
Earnings (loss) before income tax
and extraordinary item........ 1,149 (456) (450) (121) 122
Income tax (expense) benefit....... (117) (119) 139(h) 48(h) (49)
--------- ------- --------- ----- ---------
Earnings (loss) before
extraordinary item............ $ 1,032 $ (575) $ (311) $ (73) $ 73
========= ======= ========= ===== =========
Earnings (loss) before
extraordinary item per
share -- basic................... $ 0.01
=========
Earnings (loss) before
extraordinary item per
share -- diluted................. $ 0.01
=========
Weighted average common shares
outstanding -- basic............. 4,298,779 1,320,700(j) 5,619,479
Weighted average common shares
outstanding -- diluted........... 4,513,683 1,320,700(j) 5,834,383
OTHER DATA:
EBITDA(k)........................ $ 8,099
EBITDA margin(k)................. 14.7%
Capital expenditures............. $ 1,038
</TABLE>

See Notes to Unaudited Pro Forma Combined Financial Data
36
<PAGE> 44

HOME PRODUCTS INTERNATIONAL, INC.

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
THIRTEEN WEEKS ENDED MARCH 28, 1998

<TABLE>
<CAPTION>
PRO FORMA PRO
REFINANCING FORMA
HPI ADJUSTMENTS COMBINED
-------- ------------ ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net sales................................................. $52,408 $ -- $52,408
Cost of goods sold........................................ 36,455 -- 36,455
------- ------ -------
Gross profit............................................ 15,953 -- 15,953
Operating expenses........................................ 10,861 (2)(g) 10,859
------- ------ -------
Operating profit........................................ 5,092 2 5,094
Interest (expense)........................................ (3,006) (476)(f) (3,482)
Other income (expense).................................... 58 (45)(l) 13
------- ------ -------
Earnings (loss) before income taxes and extraordinary
item................................................. 2,144 (519) 1,625
Income tax (expense) benefit.............................. (898) 248(h) (650)
------- ------ -------
Earnings (loss) before extraordinary item............... $ 1,246 $ (271) $ 975
======= ====== =======
Earnings before extraordinary item per share -- basic..... $0.12
=======
Earnings before extraordinary item per share -- diluted... $0.12
=======
Weighted average common shares outstanding -- basic....... 7,928,668 7,928,668
Weighted average common shares outstanding -- diluted..... 8,316,182 8,316,182

OTHER DATA:
EBITDA(k)............................................... $ 8,036
EBITDA margin(k)........................................ 15.3%
Capital expenditures.................................... $ 4,092
</TABLE>

See Notes to Unaudited Pro Forma Combined Financial Data
37
<PAGE> 45

HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(DOLLARS IN THOUSANDS)

(a) Other income (expense) includes a $550 write-off of a prepaid asset that was
eliminated in connection with the termination of Seymour's defined benefit
pension plan. Operating expenses includes $2,600 of expense estimated to be
incurred in connection with the consolidation and disposition of certain
Seymour manufacturing operations.

(b) Reflects an adjustment of Seymour depreciation expense to conform with HPI's
half-year convention depreciation policy. Cost of goods sold is reduced by
$221 and operating expenses is reduced by $12.

(c) Reflects cost savings relating to the consolidation of Seymour's sales,
marketing and R&D functions with those of existing HPI companies. The
estimated cost savings primarily represents wages and benefits associated
with redundant Seymour personnel.

(d) Reflects the additional amortization expense resulting from the recording of
goodwill associated with the Seymour Acquisition. Goodwill is amortized over
40 years.

(e) Reflects the interest expense on additional debt of $21,043 for the Seymour
Acquisition at the 1997 effective Existing Credit Facility at an assumed
weighted average interest rate of 8.89%.

(f) Reflects the estimated net change in interest expense as if the Refinancing
had occurred as of the beginning of the applicable years. An interest rate
of 9.625% has been used for the Refinancing. The pro forma adjustment to
interest expense is comprised of the following:

<TABLE>
<CAPTION>
THIRTEEN THIRTEEN
YEAR WEEKS WEEKS
ENDED ENDED ENDED
DEC. 27, MARCH 29, MARCH 28,
1997 1997 1998
-------- --------- ---------
<S> <C> <C> <C>
Elimination of debt discount created from issuance of
Warrants to General Electric Capital Corporation.......... $ 400 $171 $ --
Increased effective interest rate resulting from the Initial
Offering as compared to historical rates.................. (166) (53) (194)
Interest expense on $5,000 of additional debt resulting from
the Initial Offering as compared to historical debt
levels.................................................... (481) (120) (120)
Interest expense on assumed borrowings under the New Credit
Facility.................................................. (241) (60) (60)
Unused revolver fees on the New Credit Facility............. (453) (113) (110)
Incremental change in amortization of deferred financing
fees...................................................... 123 80 (55)
Other....................................................... 5 3 63
----- ---- -----
Total............................................. $(813) $(92) $(476)
===== ==== =====
</TABLE>

(g) Reflects the elimination of the annual fees associated with the Existing
Credit Facility.

(h) Reflects an adjustment to income tax (expense) benefit by applying an
effective tax rate of 40% to the historical results of HPI and Seymour, as
well as to the Seymour Acquisition and Refinancing pro forma adjustments.

(i) The change in the income tax valuation allowance of $3,143 results from
management's determination that it is more likely than not that the Company
will realize its deferred tax assets.

(j) Reflects the increase in weighted average common shares outstanding as a
result of the Seymour Acquisition.

(k) EBITDA is defined as the sum of (i) earnings before income taxes and
extraordinary items, (ii) interest expense, (iii) interest income, (iv)
depreciation and amortization, (v) one-time charges in the third and fourth
quarter of 1997 of $2,600 relating to the consolidation and disposition of
certain Seymour manufacturing operations, (vi) a $550 one-time write off in
the third quarter of 1997 of an asset eliminated in connection with the
termination of Seymour's defined benefit pension plan and (vii) certain
other one-time items totaling $293 during the third and fourth quarters of
1997. Management believes

38
<PAGE> 46
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL DATA -- (CONTINUED)

that the consolidation of the Seymour manufacturing operations should enable
it to generate an additional $1,800 in annual cost savings following the
completion of the consolidation. However, no assurance can be given that
such savings will be realized. Management believes that EBITDA is a measure
commonly used by analysts and investors to determine a company's ability to
service and incur debt. Accordingly, this information has been presented to
permit a more complete analysis. EBITDA should not be considered a
substitute for net income or cash flow data prepared in accordance with
generally accepted accounting principles or as a measure of profitability or
liquidity. EBITDA margin is computed as EBITDA as a percentage of net sales.

(l) Reflects the estimated change in interest income as if the Initial Offering
had occurred as of the beginning of the applicable years.

39
<PAGE> 47

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the "Selected
Historical Financial Data," "Unaudited Pro Forma Combined Financial Data" and
the Consolidated Financial Statements of the Company and the notes thereto
included elsewhere in this Prospectus. This Prospectus contains, in addition to
historical information, forward-looking statements that are subject to risks and
other uncertainties. The Company's actual results may differ materially from
those anticipated in these forward-looking statements.

The Company reports on a 52-53 week year ending on the last Saturday of
December. References to the fiscal years 1997, 1996 and 1995 are for the
fifty-two weeks ended December 27, 1997, December 28, 1996, and December 30,
1995, respectively.

THIRTEEN WEEKS ENDED MARCH 28, 1998 ("FIRST QUARTER 1998") COMPARED TO
THIRTEEN WEEKS ENDED MARCH 29, 1997 ("FIRST QUARTER 1997") (PRO FORMA TO INCLUDE
SEYMOUR)

The following discussion and analysis compares the pro forma results for
the first quarter 1998 to the pro forma results for the first quarter 1997.
Management believes that such comparison is necessary to meaningfully analyze
the changes occurring in such periods. The pro forma financial results give
effect to the Seymour Acquisition and related financing and the Refinancing as
if they had occurred on December 29, 1996. The pro forma operating expenses
reflect additional amortization expense resulting from the recording of goodwill
associated with the Seymour Acquisition. The pro forma interest expense reflects
the estimated net increase in interest expense as if the Seymour Acquisition and
the Refinancing had occurred on December 29, 1996. Income tax expense assumes a
pro forma rate of 40% for the period presented. The pro forma number of weighted
shares assumes the 1,320,700 shares issued as a result of the Seymour
Acquisition were outstanding as of December 29, 1996.

As such, in the discussion that follows, all comparisons are made on a pro
forma basis with reference to the following:

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
------------------------------------------------
MARCH 28, 1998 MARCH 29, 1997
-------------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................................... $52,408 100.0% $55,282 100.0%
Cost of goods sold.............................. 36,455 69.6 39,602 71.6
------- ----- ------- -----
Gross profit.................................. 15,953 30.4 15,680 28.4
Operating expenses.............................. 10,859 20.7 11,658 21.1
------- ----- ------- -----
Operating profit.............................. 5,094 9.7 4,022 7.3
Interest (expense).............................. (3,482) (6.6) (4,043) (7.3)
Other income.................................... 13 -- 143 0.2
------- ----- ------- -----
Earnings before income taxes.................. 1,625 3.1 122 0.2
Income tax (expense)............................ (650) (1.2) (49) (0.1)
------- ----- ------- -----
Earnings before extraordinary item.............. $ 975 1.9% $ 73 0.1%
======= ===== ======= =====
Earnings before extraordinary item per
share -- basic................................ $ 0.12 $ 0.01
======= =======
Earnings before extraordinary item per
share -- diluted.............................. $ 0.12 $ 0.01
======= =======
</TABLE>

Net sales. Net sales of $52.4 million in the first quarter of 1998
decreased $2.9 million, or 5.2%, from net sales of $55.3 million in the first
quarter of 1997. Net sales were down as a result of the Company's continuing
effort to cutback or eliminate the sales of certain underperforming products. In
addition, sales as compared to the prior period were negatively impacted by the
bankruptcy of several retailers during the fourth quarter of 1997 and first
quarter of 1998. Sales to such customers for the first quarter of 1997 totaled
$2.1 million as compared to $0.4 million in the first quarter of 1998.

40
<PAGE> 48

Gross profit. Gross profit increased from $15.7 million in the first
quarter of 1997 to $16.0 million in the first quarter of 1998 in spite of a
sales decline of $2.9 million. Gross profit margins increased from 28.4% in 1997
to 30.4% in 1998 due to a decrease in the cost of plastic resin. The Company
experienced a price decrease resulting in margin savings of 2.8% as compared to
a year ago. The discontinuance of certain underperforming products also helped
to improve margins. Partially offsetting the margin improvements were product
mix shifts, manufacturing inefficiencies related to new product start ups and
unabsorbed overhead on reduced manufacturing production.

Operating expenses. Operating expenses of $10.9 million in the first
quarter of 1998 were down $0.8 million as compared to the first quarter of 1997.
As a percent of net sales, operating expenses were 20.7% in 1998 as compared to
21.1% in 1997. Selling expenses declined $0.4 million in 1998 but remained at
12.3% of sales for both years. Commissions and freight decreased $0.4 million as
a result of the decline in sales. Administrative expenses increased from 6.0% of
net sales in 1997 to 6.7% of net sales in 1998 as a result of the decrease in
net sales.

Amortization of intangibles decreased $0.6 million from the first quarter
of 1997 to the first quarter of 1998. This is a result of certain intangibles
that were fully amortized in 1997 as well as a write-down of a non-compete
agreement in the fourth quarter of 1997.

Interest expense. Interest expense of $3.5 million in the first quarter of
1998 was down $0.5 million from $4.0 million in 1997. Both periods reflect
interest and financing fees related to the Refinancing. The decrease is due to a
public stock offering of 3,780,000 shares in the third quarter of 1997, of which
1,500,000 shares were sold by selling stockholders. Proceeds from the stock
offering to the Company, $20.9 million, were used to repay a subordinated note
of $7.0 million, term notes of $13.6 million, and accrued interest of $0.3
million.

Income taxes. Income taxes increased to $0.7 million in the first quarter
of 1998 from $0.1 million in the first quarter of 1997 as a result of higher
earnings.

Earnings before extraordinary item. Earnings before extraordinary item
increased to $1.0 million in the first quarter of 1998 from first quarter
earnings in 1997 of $0.1 million. Diluted earnings per share increased to $0.12
in the first quarter of 1998 from $0.01 in the first quarter of 1997 based on
8,316,182 and 5,834,383 weighted shares outstanding for 1998 and 1997,
respectively.

FISCAL YEAR 1997 (ACTUAL) COMPARED TO FISCAL YEAR 1996 (PRO FORMA TO INCLUDE
TAMOR)

The following discussion and analysis compares the actual results of 1997
to the pro forma results for 1996. Management believes that such a comparison
(pro forma 1996 results for Tamor) is necessary to meaningfully analyze the
changes occurring in such years. The pro forma financial results give effect to
the Tamor Acquisition, and related financing, as if each of the transactions had
occurred on January 1, 1996. The pro forma operating expenses reflect (i)
additional amortization expense resulting from the recording of goodwill
associated with the Tamor Acquisition, (ii) net estimated cost savings as a
result of the Tamor Acquisition, including a net reduction in discretionary
distributions paid to and on behalf of related parties of Tamor and (iii)
additional costs associated with the Company's 401(k) and profit sharing plans
and certain other fees. The pro forma interest expense reflects the estimated
net increase in interest expense as if the Tamor Acquisition and related
financing had occurred on January 1, 1996. The pro forma number of weighted
average shares assumes the 480,000 shares issued as a result of the Tamor
Acquisition and a warrant issued in connection with the acquisition financing
were outstanding as of January 1, 1996.

41
<PAGE> 49

As such, in the discussion that follows, all comparisons are made on a pro
forma basis with reference to the following:

<TABLE>
<CAPTION>
FIFTY-TWO WEEKS ENDED
--------------------------------------------------
PRO FORMA
DECEMBER 27, 1997 DECEMBER 28, 1996
----------------------- -----------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales............................................. $129,324 100.0% $113,914 100.0%
Cost of goods sold.................................... 88,888 68.7 80,810 70.9
-------- ----- -------- -----
Gross profit........................................ 40,436 31.3 33,104 29.1
Operating expenses.................................... 27,688 21.5 24,864 21.8
-------- ----- -------- -----
Operating profit.................................... 12,748 9.8 8,240 7.3
Interest (expense).................................... (5,152) (4.0) (6,328) (5.6)
Other income.......................................... 70 0.1 847 0.7
-------- ----- -------- -----
Earnings before income taxes........................ 7,666 5.9 2,759 2.4
Income tax (expense).................................. (346) (0.2) (160) (0.1)
-------- ----- -------- -----
Net earnings.......................................... $ 7,320 5.7% $ 2,599 2.3%
======== ===== ======== =====
Net earnings per share -- basic....................... $ 1.35 $ 0.60
======== ========
Net earnings per share -- diluted..................... $ 1.29 $ 0.59
======== ========
</TABLE>

Net sales. Net sales of $129.3 million were up $15.4 million from the
prior year. The sales increase was primarily driven by new product introductions
within Tamor's storage container line. The introduction of the flat lid 20, 30,
and 48 gallon storage totes contributed $12.2 million of new product sales.
Growth in the storage category was driven by continuing consumer trends toward
larger, more durable products for storage of seasonal and other items. Sales of
plastic hangers increased $3.5 million from 1996 as a result of aggressive
pricing action taken in response to competitive pressures. 1997 also saw an
increase in the bath and shower category with the introduction of Selfix's
Suction Lock bath line. This increase offset declines in less profitable
juvenile and home organization products. Home improvement products experienced a
decrease of $0.9 million due to postponed remodeling projects by end users.

Gross profit. Gross profit margins in 1997 were 31.3% of net sales, up
significantly from 1996 margins of 29.1%. The margin improvement was a direct
result of a decline in the cost of plastic resin. The average cost of plastic
resin dropped from $0.37 per pound in 1996 to $0.33 in 1997. The decrease in the
cost of plastic resin resulted in savings of approximately $2.6 million as
compared to 1996. This savings represents 2% of 1997 net sales. Declines in
resin costs were a reflection of plastic resin market factors and not as a
result of any change in the Company's buying practices. In addition to the
decrease in cost of plastic resin, margins also benefited from improved usage of
existing capacity. Tamor was able to shift some of its excess molding capacity
($2.1 million) to Selfix and Shutters, allowing all three entities to run nearly
at full capacity. Fixed costs were absorbed over an expanded manufacturing
volume thus reducing unit costs as a percent of net sales.

Operating expenses. Operating expenses, including selling, administrative,
and amortization of intangibles, decreased slightly as a percentage of sales
from 1996 to 1997. Selling expenses decreased from 14.9% in 1996 to 14.2% in
1997. The slight decrease as a percentage of net sales is attributable to the
Company's continuous efforts to effectively manage costs. Administrative
expenses increased from 6.2% of net sales in 1996 to 6.5% in 1997. The minor
increase is due to the 1997 implementation of two separate incentive bonus
plans, as well as an increase in the reserve for bad debts. Amortization of
intangibles increased slightly, but as a percentage of net sales remained
constant at 0.7%.

Interest expense. Interest expense of $5.2 million in 1997 decreased $1.1
million from $6.3 million in 1996 due to a public stock offering of 3,780,000
shares in the third quarter, of which 1,500,000 were sold by selling
stockholders. Proceeds from the offering to the Company, $20.9 million, were
used to repay a subordinated note of $7.0 million, term notes of $13.6 million
and accrued interest of $0.3 million.

42
<PAGE> 50

Other income. Other income of $0.1 million in 1997 decreased from $0.8
million in 1996. In 1996, the Company realized interest income on excess cash
flow as well as the proceeds of a life insurance policy.

Income taxes. The Company was able to use federal net operating loss
carryforwards and use the elimination of its valuation allowance to reduce the
1997 federal tax liability to zero. The valuation allowance was eliminated as a
result of the Company's determination that it was more likely than not that the
benefit of the deferred tax assets recorded would be realized. The Company
recorded a provision for state income taxes in the amount of $0.3 million, as a
result of the inability to use tax loss carryforwards in Massachusetts, Tamor's
primary state of business. The pro forma 1996 results also reflect zero federal
tax expense, and the state provision recorded reflects the actual state taxes
paid by Tamor.

Net earnings. Net earnings in 1997 were $7.3 million, or $1.29 per common
share -- diluted, based on 5.7 million weighted average common shares
outstanding. This compares to net earnings of $2.6 million in 1996, or $0.59 per
common share -- diluted, based on 4.4 million weighted average common shares
outstanding. The $4.7 million increase in profitability is due to a 13.5%
increase in net sales combined with a 2.2% increase in gross margin. The
increase in weighted average common shares outstanding is the result of the
secondary public stock offering in July, 1997, the exercise of stock options
throughout 1997, and stock issued in connection with the Company's Employee
Stock Purchase Plan.

FISCAL 1996 COMPARED TO FISCAL 1995

The following discussion and analysis compares the actual historical
results of 1996 and 1995 without consideration for the Tamor Acquisition, which
would affect, among other items, raw materials prices:

<TABLE>
<CAPTION>
FIFTY-TWO WEEKS ENDED
------------------------------------------------
DECEMBER 28, 1996 DECEMBER 30, 1995
-------------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net sales....................................... $38,200 100.0% $41,039 100.0%
Cost of goods sold.............................. 22,992 60.2 25,678 62.6
------- ----- ------- -----
Gross profit.................................. 15,208 39.8 15,361 37.4
Operating expenses.............................. 13,843 36.2 17,385 42.3
Restructuring charge............................ -- -- 2,051 5.0
------- ----- ------- -----
Operating profit (loss)....................... 1,365 3.6 (4,075) (9.9)
Interest expense................................ (707) (1.9) (896) (2.2)
Other income (expense).......................... 148 0.4 688 1.7
------- ----- ------- -----
Earnings (loss) before income taxes........... 806 2.1 (4,283) (10.4)
Income tax benefit.............................. -- -- 273 0.6
------- ----- ------- -----
Net earnings (loss)............................. $ 806 2.1% $(4,010) (9.8)%
======= ===== ======= =====
Net earnings (loss) per share -- basic.......... $ 0.21 $ (1.11)
======= =======
Net earnings (loss) per share -- diluted........ $ 0.21 $ (1.11)
======= =======
</TABLE>

General. Fiscal 1996 results began to reflect the positive benefits of the
restructuring actions taken during fiscal years 1994 and 1995. The Company's net
earnings in fiscal 1996 of $0.8 million reflect reduced operating expenses,
improved manufacturing efficiencies and increased gross profit margins.

Overhead reductions and operating initiatives which were implemented in
1994 and 1995 directly benefited 1996 results as follows: (i) a 24% reduction in
the workforce; (ii) the elimination of unprofitable product lines; (iii) the
closing of three facilities; (iv) a reduction in outside warehousing costs; (v)
a 29% reduction of gross inventory; and (vi) the reduction of operating expenses
below amounts spent in fiscal 1993.

Net sales. Net sales of $38.2 million in 1996 decreased $2.8 million, or
6.9%, from net sales in 1995 of $41.0 million. The reduction in sales was a
direct result of decisions made in 1995 to discontinue the sale of certain
underperforming housewares products. Discontinued products, accounting for $3.3
million of 1995 net

43
<PAGE> 51

sales, were across all of the housewares product lines but were greatest in the
hooks and home helpers and home organization product lines. Home bathwares sales
increased 3.0% from 1995 as a result of an expanded line of shower organizers.
Juvenile products sales increased 10.0% as the Company had a full year in which
to sell the child safety product line acquired in October 1995. Home improvement
products increased 5.0% as a result of increased placement with remodeling
distributors.

Gross profit. Gross profit margins in 1996 were 39.8% of net sales, an
increase from margins in 1995 of 37.4% of net sales. Increased gross profit
margins were attributable to a slight decrease in the cost of plastic resin but
more significantly to the impact of decisions made in 1995 and the selling of
fewer lower margin products. Plastic resin costs declined about 9.0% during 1996
to an average cost of $0.48 per pound from an average cost of $0.53 per pound
for plastic resin during 1995. Selfix used approximately seven million pounds of
plastic resin resulting in a cost savings of $0.3 million as compared to 1995
cost levels. The declines in resin costs were a reflection of plastic resin
market factors and not as a result of any change in the Company's buying
practices.

Operating expenses. Selling expenses decreased from 25.5% of net sales in
1995 to 23.7% of net sales in 1996. Warehousing and customer service costs were
reduced by the first quarter closing of the Company's Canadian facility. All
Canadian business is now serviced from the Company's manufacturing and
distribution facilities in Chicago. The closing resulted in personnel reductions
and reduced warehousing costs. In addition, management decided that the Company
was better served by outsourcing certain product design services. This resulted
in further personnel related savings.

Administrative expenses also decreased as a percent of net sales.
Administrative expenses were 12.0% of net sales in 1996 as compared to 15.7% in
1995. Management efforts to evaluate and reduce spending successfully reduced
personnel costs, professional fees and nearly all other administrative items.
Costs related to the search and evaluation of acquisition targets were
significantly decreased in 1996. Management devoted the majority of its
attention to cost reduction efforts, manufacturing efficiencies, and managing
the impact of selling a reduced number of product lines. Fourth quarter costs in
1996 of approximately $0.2 million related to the Tamor Acquisition were
capitalized. In addition, 1995 included an increase in the allowance for
doubtful accounts of $0.4 million to address the uncertain financial condition
of several retailers. Further, management decided in 1995 to outsource its
management information department and incurred $0.4 million of charges for
related severance payments and equipment write-offs.

Amortization of intangibles decreased from 1.2% of net sales in 1995 to
0.5% in 1996. The decrease in amortization is the result of 1995 write-offs of
previously capitalized patents and trademarks related to discontinued product
lines.

Restructuring charge. Restructuring charges totaling $2.1 million were
recorded in 1995 related to discontinuing certain unprofitable product lines,
closing the Company's Canadian facility and moving the Canadian operations to
Chicago. Such charges included severance benefits, the write-off of Canadian
fixed assets, early lease termination charges on the Canadian building lease and
the write-off of inventory and intangibles related to discontinued product
lines. The charges for the closing and relocation of the Canadian operation
totaled $1.0 million, including severance benefits of $0.2 million covering all
of the Canadian employees. The relocation of the Canadian operation was
completed in the first half of 1996. The remaining $1.1 million of restructuring
charges related to product lines the Company decided to discontinue and the
write-off of related product molds, inventory and patents. The after tax and per
share impact of the write-off of depreciable assets in connection with the 1995
restructuring charge was $1.0 million and $0.27, respectively.

Interest expense. In December 1995, the Company used excess cash to pay
down a $1.5 million note payable to a bank. In addition, $0.8 million of
installment payments on variable rate demand bonds were made. As a result of
these payments, Selfix's 1996 interest expense was reduced $0.2 million as
compared to 1995. Changes in interest rates had no significant impact on
interest expense between years.

Other income. In 1996, other income of $0.1 million was significantly less
than the $0.7 million of other income in 1995. Other income in 1995 was
positively impacted by the favorable settlement of a non-compete

44
<PAGE> 52

and consulting agreement. The favorable settlement allowed $0.3 million of
related accruals to be reversed into 1995 earnings. In addition, 1995 other
income included gains on sales of fixed assets and a franchise tax refund.

Income taxes. The Company was able to use tax losses from prior years to
reduce current year tax provisions to zero. In 1995 and 1994, however, the
Company was unable to record a significant tax benefit on pre-tax losses because
of the unavailability of tax loss carrybacks. An income tax benefit of $0.3
million was recorded in 1995 through the utilization of alternative minimum tax
carrybacks. The Company has about $6.5 million of book tax losses to shelter
future reported pre-tax earnings.

Net earnings (loss). Net earnings in 1996 were $0.8 million or $0.21 per
common share--diluted, based on 3.9 million weighted average common shares
outstanding. This compares to a net loss of $4.0 million in 1995 or $1.11 loss
per common share--diluted, based on 3.6 million weighted average common shares
outstanding. The $4.8 million turnaround in profitability was due to the
operating improvements achieved over the prior few years and the $2.1 million
decrease in restructuring charges. The increase in common shares and common
share equivalents was the result of stock issued in connection with the
Company's Stock Purchase Plan and the dilutive impact of stock options. The
increase in the Company's year end stock price from $5.625 to $8.625 caused
several previously issued stock option grants to be treated as dilutive for
purposes of the common share equivalent determination.

OPERATING RESULTS BY INDUSTRY SEGMENT

The Company operates in two industry segments: (i) houseware products and
(ii) home improvement products.

Houseware Products

The housewares segment significantly improved its profitability in 1997.
Operating profits of $12.3 million were achieved compared to pro forma (for the
Tamor Acquisition) operating profits in 1996 of $7.7 million. The improvement
resulted primarily from a 13.5% increase in net sales and a drop in the cost of
plastic resin of $0.03 per pound or $2.4 million as compared to 1996. Other
factors adding to the improvement were better utilization of existing capacity,
allowing for the reduction in outside molding, and holding selling and marketing
expenses steady in spite of the increase in sales.

Historical operating profits of $0.9 million in 1996 were up $5.8 million
as compared to a loss in 1995, of $4.9 million. The improvement resulted from
higher gross profit margins and reduced operating expenses. The majority of the
operating initiatives and cost cutting measures of the prior two years benefited
the housewares segment. The Selfix line of products was significantly
streamlined from nearly 2,000 SKUs in 1994 to under 700 SKUs as of the end of
1996. The reduction in SKUs has allowed management to concentrate on selling
more profitable products, allocate capital resources accordingly and cutback
personnel. Additionally, 1995 results included a $2.1 million restructuring
charge, whereas 1996 did not.

Home Improvement Products

Operating profits of the home improvement segment remained flat from 1996
to 1997 at $0.5 million. Sales for 1997 decreased $1.1 million as a result of
postponed remodeling projects by end users. Offsetting the effects of a decline
in sales were higher gross profit margins. The cost of plastic resin decreased
$0.06 per pound in 1997 or $0.2 million as compared to 1996. Shutters was able
to operate at nearly full capacity in 1997 by molding for the housewares
segment, allowing them to absorb their fixed costs over an expanded
manufacturing volume, thus reducing unit costs as a percentage of net sales. In
response to the sales shortfall, operating expenses were significantly reduced
in 1997.

Operating profits in 1996 of $0.5 million declined from $0.8 million in
1995. The decline in profitability occurred primarily in the first quarter when
sales were significantly constrained by weather conditions in the midwest and
northeast. Late winter storms deferred the start of the building season. This
resulted in missed sales and significant unabsorbed fixed manufacturing costs.
Although sales caught up later in the year, the unabsorbed manufacturing costs
could not be recovered. In addition, operating expenses increased 8.0% to
45
<PAGE> 53

support new product introductions and to pursue new trade channel opportunities.
During the fourth quarter, management initiated a series of changes to
permanently reduce manufacturing costs and operating expenses. This resulted in
a fourth quarter profit as compared to historical fourth quarter losses.
Further, these changes positioned the home improvement segment for improved
profitability in 1997.

SEYMOUR ACQUISITION

Effective December 30, 1997 (within the Company's 1998 fiscal year), the
Company acquired Seymour, a privately held company founded in 1942. Seymour is a
leading designer, manufacturer and marketer of consumer laundry care products.
Seymour manufactures and markets a full line of ironing boards, covers and pads
and numerous laundry related accessories.

Seymour was acquired for a total purchase price of $100.7 million,
consisting of $16.4 million in cash, $14.3 million in common stock (1,320,700
shares) and the assumption of $70.0 million of debt. The necessary funds to
complete the acquisition were obtained from the Existing Credit Facility.

The Existing Credit Facility consists of a $20.0 million revolving credit
facility, two term loans totaling $110.0 million and a $10.0 million senior
subordinated term loan. The revolving credit facility, the term loans and the
senior subordinated term loan provided a total of $140.0 million of available
financing. The Existing Credit Facility is secured by a pledge of all of the
assets of the subsidiaries of the Company and all of the shares of capital stock
of such subsidiaries. Interest on the revolving credit facility and term notes
is initially charged at floating rates of 100-150 basis points over the lender's
prime rate or 250-300 basis points over LIBOR, at the option of the Company. The
senior subordinated term loan of $10.0 million bears interest at a floating rate
of 300 basis points over the lender's prime rate, but in no event less than 11%.

If the Seymour Acquisition had occurred on January 1, 1997, the Company's
1997 net sales of $129.3 million would have increased by $93.0 million to $222.3
million and operating profits of $12.7 million would have increased by $2.6
million to $15.3 million. The pro forma operating profit of $15.3 million
includes a charge of $2.6 million related to management's plans to consolidate
and dispose of certain manufacturing operations of Seymour.

SEYMOUR FISCAL YEAR 1997 COMPARED TO FISCAL YEAR 1996

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------------------------
1997 1996
------------------- --------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales.............................................. $98,274 100.0% $105,532 100.0%
Cost of goods sold..................................... 68,756 70.0 79,845 75.7
------- ----- -------- -----
Gross profit......................................... 29,518 30.0 25,687 24.3
Operating expenses..................................... 23,298 23.7 26,371 25.0
------- ----- -------- -----
Operating profit (loss).............................. 6,220 6.3 (684) (0.7)
Interest (expense)..................................... (7,923) (8.0) (8,384) (7.9)
Other expense.......................................... (57) -- (223) (0.2)
------- ----- -------- -----
Loss before income taxes............................. (1,760) (1.8) (9,291) (8.8)
Income tax (expense)................................... (259) (0.3) (2,597) (2.5)
------- ----- -------- -----
Net loss............................................... $(2,019) (2.1)% $(11,888) (11.3)%
======= ===== ======== =====
</TABLE>

Net sales. Net sales of $98.3 million for 1997 decreased $7.3 million, or
6.9%, from net sales of $105.5 million for 1996. The sales decline was primarily
concentrated at one particular customer where sales were down $7.1 million. At
the beginning of fiscal year 1997, this customer was significantly overstocked
on boards, covers and pads, with an excess of four to five months of supply on
hand, and throughout the year lowered its inventory to a more appropriate level.
For all other customers, sales of covers and pads were up while sales of ironing
boards and indoor dryers were down slightly.

46
<PAGE> 54

Gross profit. Gross profit margins for 1997 were 30.0% of net sales, up
significantly from margins of 24.3% for 1996. The improvements were due to
reductions in inventory obsolescence, inventory shrinkage and costs of direct
labor, material and overhead. In late 1996 Seymour implemented various material
planning processes and inventory control measures that resulted in improved
plant efficiencies, reductions in material and overtime costs and reductions in
slow-moving and obsolete inventory.

Operating expenses. Operating expenses for 1997 decreased $3.1 million, or
11.7%, from 1996. As a percentage of sales, operating costs decreased from 25.0%
of net sales in 1996 to 23.7% of net sales in 1997. The decline in operating
expenses was primarily due to a reduction in bad debt expense for 1997. There
were a number of bankruptcy filings in 1996 that negatively impacted Seymour's
reserves. Headcount reductions and management's continued efforts to control
operating costs further led to reduced operating expenses in 1997.

Interest expense. Interest expense decreased $0.5 million from $8.4
million in 1996 to $7.9 million in 1997. The decrease in interest was
attributable to improved earnings and subsequent additional cash flows that
enabled Seymour to reduce borrowings under its revolving line of credit
agreement from $13.4 million in 1996 to $6.4 million in 1997.

Income taxes. Income taxes decreased from $2.6 million in 1996 to $0.3
million in 1997. This decrease was attributable to the recognition in 1996 of a
full reserve against deferred tax assets, which resulted in a deferred tax
provision of $2.4 million.

SEYMOUR FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------------------
1996 1995
----------------- ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Net sales.............................................. $105,532 100.0% $92,554 100.0%
Cost of goods sold..................................... 79,845 75.7 67,288 72.7
-------- ----- ------- -----
Gross profit......................................... 25,687 24.3 25,266 27.3
Operating expenses..................................... 26,371 25.0 21,529 23.3
-------- ----- ------- -----
Operating income (loss).............................. (684) (0.7) 3,737 4.0
Interest (expense)..................................... (8,384) (7.9) (7,394) (7.9)
Other income (expense)................................. (223) (0.2) 125 0.1
-------- ----- ------- -----
Loss before income taxes............................. (9,291) (8.8) (3,532) (3.8)
Income tax (expense) benefit........................... (2,597) (2.5) 1,122 1.2
-------- ----- ------- -----
Net loss............................................... $(11,888) (11.3)% $(2,410) (2.6)%
======== ===== ======= =====
</TABLE>

Net sales. Net sales of $105.5 million for fiscal 1996 increased $13.0
million, or 14.0%, from net sales of $92.6 million for fiscal 1995. This
increase was due to the inclusion of net sales derived from the business of
Magla Products which was acquired in December 1994.

Gross profit. Gross profit margins in 1996 were 24.3% of net sales as
compared to 27.3% of net sales in 1995. The decline was primarily due to
one-time manufacturing inefficiencies resulting from the initial integration of
Magla Products, the closing of Seymour's Arkansas facility and the relocation of
these operations to other existing Seymour facilities.

Operating expenses. Operating expenses of $26.4 million, or 25.0%, of 1996
net sales increased $4.9 million from $21.5 million or 23.3% of 1995 net sales.
The primary contributors to the increase as a percentage of net sales were
allowances for bad debts as a result of several customers filing for bankruptcy
in 1996, coupled with an increase in employee procurement costs associated with
several key management changes. Further contributing to the 1996 increase in
operating expenses was additional amortization related to the acquisition of
Magla Products.

Interest expense. Interest expense of $8.4 million for fiscal 1996
represented an increase of $1.0 million from 1995 interest expense of $7.4
million. The increase resulted from interest expense incurred to finance the
47
<PAGE> 55

acquisition of Magla Products and an increase in the outstanding borrowings on
Seymour's revolving line of credit.

Income taxes. The provision for income taxes increased to $2.6 million in
1996 from a tax benefit of $1.1 million in 1995. This increase was attributable
to the recognition of a full reserve against deferred tax assets, which resulted
in a deferred tax provision of $2.4 million.

SEYMOUR SIX MONTH PERIOD ENDED DECEMBER 27, 1997 COMPARED TO SIX MONTH PERIOD
ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
6 MONTHS ENDED 6 MONTHS ENDED
DECEMBER 27, 1997 DECEMBER 31, 1996
------------------ ------------------
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C>
Net sales............................................. $43,096 100.0% $45,248 100.0%
Cost of goods sold.................................... 32,863 76.3 32,665 72.2
------- ----- ------- -----
-- -- -- --
Gross profit........................................ 10,233 23.7 12,583 27.8
Operating expense..................................... 13,404 31.1 11,395 25.2
------- ----- ------- -----
Operating profit (loss)............................. (3,171) (7.4) 1,188 2.6
Interest expense...................................... (3,708) (8.6) (4,047) (9.0)
Other income (expense)................................ (550) (1.3) 32 0.1
------- ----- ------- -----
Loss before income taxes............................ (7,429) (17.3) (2,827) (6.3)
Income tax (expense).................................. (58) (0.1) (56) (0.1)
------- ----- ------- -----
Net loss.............................................. $(7,487) (17.4)% $(2,883) (6.4)%
======= ===== ======= =====
</TABLE>

Net sales. Net sales for the six month 1997 period of $43.1 million
decreased $2.1 million, or 4.6%, from net sales of $45.2 million for 1996. The
sales decrease is primarily due to a decline in the sales of safety gates.
Safety gate sales declined due to decisions by some of the Company's customers
to reduce the number of suppliers within the juvenile products category. All
other product categories were essentially unchanged between the periods.

Gross profit. Gross profit margin for the six month 1997 period was 23.7%
of net sales, down from 27.8% for 1996. The primary reason for the decline in
gross margin was a reduction in pricing in response to competitive pressures. In
addition, margins were impacted by lower production volume in an effort to keep
inventories in line. The reduction in production volume resulted in unabsorbed
overhead costs.

Operating expenses. Operating expenses increased from $11.4 million, or
25.2% of net sales for the six month 1996 period to $13.4 million, or 31.1% of
net sales for 1997. Included in operating expenses for the period are one-time
costs of $2.6 million associated with the consolidation and disposition of
certain manufacturing operations. If the costs associated with plant
consolidations were excluded, operating expenses for the period would have been
25.2% of net sales and down $0.6 million as compared to the prior period.

Interest expense. Interest expense decreased $0.3 million to $3.7 million
for the six month 1997 period from $4.0 million for 1996. This decrease was
attributable to improved cash flow which enabled Seymour to reduce its average
borrowings under its revolving line of credit from $11.9 million for the six
month period ended December 31, 1996 to $1.7 million for the six month period
ended December 27, 1997.

Other income (expense). Other expense for the six month 1997 period
includes a $0.6 million write-off of a prepaid asset that was eliminated in
connection with the termination of Seymour's defined benefit pension plan.

Income taxes. The provision for income taxes in both periods relate to
state taxes payable in states where net operating loss carryforwards were
unavailable.

48
<PAGE> 56

CAPITAL RESOURCES AND LIQUIDITY

Cash and cash equivalents at December 27, 1997 were $0.6 million as
compared to $2.9 million at December 28, 1996. The decrease in cash is the
result of daily sweeps against the Company's revolving line of credit that was
established in February 1997 in connection with the Tamor Acquisition. Capital
spending of $8.6 million was used to acquire molds to support new product
introductions, additional injection molding machines and to fund an expansion of
the Company's Missouri warehouse facility. Since the Tamor Acquisition, working
capital has increased $4.3 million.

In July 1997, the Company completed a stock offering of 3,780,000 shares of
Common Stock, of which 1,500,000 shares were sold by selling stockholders. Net
proceeds to the Company of $20.9 million were used to repay a subordinated note
of $7.0 million, term notes of $13.6 million and accrued interest of $0.3
million.

The Company's capital spending needs in 1998 are expected to be between
$10.0 million and $12.0 million. Most of the spending relates to new injection
molding presses to expand existing capacity and to replace old, inefficient
machines. The replacement machines are expected to reduce manufacturing cycle
times and ongoing maintenance costs. In addition, the Company exercised an
option in the first quarter of 1998 to purchase the leased manufacturing and
warehouse facility in Missouri at an approximate cost of $1.4 million. Where
possible, management will pursue alternative means of financing such as capital
leases and other purchase money transactions. In addition, operating leases will
be pursued to the extent they represent attractive economic alternatives.

Management intends to continue to pursue its consolidation strategy within
the housewares industry. The ability to successfully fund future acquisitions
will depend on the financial situation of the target company, possible
renegotiation or refinancing of existing credit terms or the possibility of
obtaining an alternative credit facility, and the ability to use stock in lieu
of cash.

Upon consummation of the Refinancing, interest payments on the Notes and
interest payments under the New Credit Facility will represent significant cash
requirements for the Company. After the consummation of the Refinancing, the
Company will have outstanding approximately $134.2 million of consolidated
indebtedness, consisting of $125.0 million principal amount of the Notes,
approximately $2.5 million drawn under the New Credit Facility, $4.4 million of
industrial development revenue bonds (see "Description of Other Indebtedness")
and $2.3 million of capital lease obligations. The Company will have $89.0
million of availability under the New Credit Facility after giving effect to the
$2.5 million drawn upon the consummation of the Refinancing and approximately
$8.5 million reserved for letters of credit. See "Description of Other
Indebtedness -- New Credit Facility."

As a result of the Refinancing the Company expects to incur extraordinary
charges in the second quarter of 1998 totaling $3.3 million, net of tax, related
to the write-off of deferred financing fees and prepayment penalties.

The Company believes its financing facilities together with its cash flow
from operations will provide sufficient capital to fund operations, make the
required debt repayments and meet the anticipated capital spending needs.

YEAR 2000

The Company is aware of the issues associated with the programming code in
existing computer and software systems as the Year 2000 approaches. The Year
2000 problem is pervasive and complex, as virtually every computer operator
could be affected in some way by the rollover of the two-digit year value to
"00." The issue is whether systems will properly recognize date sensitive
information when the year changes to 2000. Systems that do not properly
recognize such information could generate erroneous data or cause complete
system failures. The Company believes that its costs associated with the
rollover of the two-digit value to "00" will not be material. The Company also
plans to communicate with customers, vendors and others to ensure that their
systems are Year 2000 compliant. See "Risk Factors -- Year 2000 Compliance."

49
<PAGE> 57

BUSINESS

OVERVIEW

The Company, based in Chicago, Illinois, is a leading designer,
manufacturer and marketer of a broad range of value-priced, quality consumer
houseware products in the United States. The Company's significant product lines
include (i) ironing boards, covers and pads, (ii) home/closet organization
products, (iii) plastic storage containers and totes, (iv) laundry accessories,
(v) bath and shower organization products, (vi) juvenile products and (vii) home
improvement products. HPI's ability to provide a substantial array of
up-to-date, quality products on a timely basis, combined with its commitment to
provide additional support services to its customers (such as just-in-time
delivery, product planograms and point-of-purchase advertising) has enabled the
Company to become a preferred supplier to the large, national retailers carrying
its products and to establish a leading market position in several product
lines. The Company's strong relationships with its base of retailers (including
Wal-Mart, Target and Kmart) provide a large and efficient distribution channel
for its products. These relationships enable the Company to work with retailers
to develop products that are well-received by both the retailer and the
end-user. On a pro forma basis, the Company's combined net sales and EBITDA for
the twelve month period ended March 28, 1998, would have been $219.4 million and
$32.3 million, respectively.

The Company has actively pursued a strategy of selectively acquiring and
integrating complementary houseware manufacturers. This has enabled the Company
to become one of the leading suppliers and cost-effective manufacturers of
houseware products in the United States. The Company believes it has
demonstrated its ability to identify, purchase and integrate companies which
offer complementary product lines and to derive significant manufacturing and
operating efficiencies from such acquisitions. For example, the acquisitions of
Tamor in January, 1997 and Seymour in December, 1997 strengthened the Company's
ability to offer "one-stop shopping" for a wide range of houseware products to
its retail customers. These acquisitions, combined with internal growth, have
increased the Company's net sales from approximately $35.2 million in fiscal
year 1992 to approximately $222.3 million in fiscal year 1997 (on a pro forma
basis), while EBITDA margins have increased from 7.4% to 14.5% (on a pro forma
basis) during the same period. The additional product offerings resulting from
both strategic acquisitions and an active product development program have
strengthened the Company's relationships with its existing customer base of
national retailers, enabling the Company to obtain increased dedicated retail
shelf space for its expanding product lines. Management believes that the
Company has established a platform to continue this consolidation and product
development strategy within the highly fragmented houseware products industry
and that such strategy will further position the Company for continued growth in
the retail distribution channel. The Company continues to look for opportunities
to acquire companies that fit within its acquisition strategy. To that end, the
Company has had, and continues to have, numerous discussions with potential
acquisition candidates. As of the date of this Prospectus, the Company has made
a number of oral and written acquisitions proposals to certain of such
candidates, but has not entered into any binding agreements. While the Company
believes that it is likely to enter into one or more agreements in the near
future with respect to such potential acquisitions, no assurance can be given
that such agreements will be reached or that any of such potential acquisitions
will be consummated.

50
<PAGE> 58

COMPANY HISTORY

The Company was founded in 1952 under the name Selfix, Inc. and became a
public company in 1988. In 1994, the Company began a restructuring program which
included replacing the senior management team, implementing a focused sales and
marketing program, expanding distribution, decreasing the number of product
SKUs, reducing overhead and upgrading financial and systems controls. Effective
January 1, 1997, the Company acquired Tamor, which designs, manufactures and
markets storage totes, hangers and juvenile organization products and its
affiliated product distribution company, Houseware Sales, Inc. In February 1997,
a holding company was established with HPI as the holding company entity. The
Company completed a common stock offering in June 1997 of 3,780,000 shares, of
which 1,500,000 shares were sold by selling stockholders at $9.75 per share.
With a view to expanding into new related product categories, the Company
acquired Seymour in December 1997.

The principal executive offices of the Company are located at 4501 West
47th Street, Chicago, Illinois 60632, and the Company's telephone number is
(773) 890-1010.

COMPETITIVE STRENGTHS

- LEADING MARKET POSITION. Management believes that the Company has a
leading market position in each of the product categories in which its
products compete. In particular, management believes that the Company is
the leading ironing board, cover and pad manufacturer in the United
States and is the nation's leading supplier of plastic clothes hangers.
The Company's home organization products, including plastic clothes
hangers, are marketed under the Selfix and Tamor brand names, which are
widely recognized in the industry. Management believes the Company's
broad product offerings in the home organization products category
provides it with a competitive advantage over other manufacturers. In the
bath and shower products segment, management believes the Company is a
leading producer of plastic bath and shower accessories commanding the
second largest market share in the United States. In the storage
container market, management believes the Company ranks third in market
share in the United States. Through both acquisitions and internal
product development, the Company seeks to enhance its position as a
leading supplier of housewares in a highly fragmented industry.

- ESTABLISHED DISTRIBUTION NETWORK. The Company has established a broad
distribution network serving both domestic and international markets. The
Company's houseware products are sold through national and regional
retailers, hardware and homecenter stores, food and drug stores, juvenile
stores, specialty stores, and to hotels. Management believes that its
distribution network allows it to successfully launch new products and
broaden existing product lines with greater consumer acceptance. The
Company's distribution network also provides marketing and distribution
synergies for its acquired businesses, which generally are suppliers of
houseware products marketed through many of the same retail distribution
channels.

- STRONG, COLLABORATIVE RELATIONSHIPS WITH RETAILERS. The Company
maintains close and interactive relationships with a diverse customer
base of retailers by focusing on new product development and creative
marketing and packaging ideas. The Company has also strengthened its
relationships with major customers through acquisitions which have
enabled it to supply its customers with a broader selection of houseware
product lines, resulting in increased retail shelf space devoted to the
Company's products. HPI offers customer-specific merchandising programs
which management believes enable retailers and distributors to achieve a
higher gross margin on the Company's products than with the products of a
number of its nationally known competitors. For instance, the Company
provides its customers with a variety of retail support services,
including customized merchandise planogramming, small shipping packs,
point-of-purchase displays, EDI, and just-in-time product delivery. The
Company also utilizes its customers' POS information to allow the Company
to better monitor product sales.

51
<PAGE> 59

Management believes that its prompt and reliable product delivery of
value-priced, high-volume products enables its customers to maintain
minimal inventories.

- INNOVATIVE, CONSUMER-DRIVEN PRODUCT LINE EXTENSIONS. The Company
develops and introduces innovative products with features and benefits
that are designed to meet the needs and demands of consumers. New
products or product line extensions are frequently developed or acquired
after consultation with the Company's major retail customers. This
enables the Company to leverage its existing customer base to expand its
product offerings and to assess the potential viability of products prior
to development. Typically, the Company's new product introductions are
developed by making incremental modifications to its market-proven
products. During 1997, approximately 60 new products and product
improvements were launched by the Company, with each of the Company's
business units introducing at least one new product line.

- FLEXIBLE, LOW-COST MANUFACTURER. The Company operates a network of
efficient manufacturing facilities that result in favorable per unit
product costs. Recent acquisitions have enabled the Company to broaden
its product base, expand its sales and distribution capabilities and
increase manufacturing and distribution synergies, while achieving
significant scale in manufacturing. For instance, management estimates
that the Company is the largest United States manufacturer of full-size
ironing boards, building approximately 14,200 units per day. This volume
enables the Company to purchase rolled steel in bulk and achieve
economies of scale. Similarly, it is a large processor of various grades
of plastic resin, utilizing approximately 85 injection molding machines
to process approximately 85 million pounds of plastic resin per year. The
Company is able to achieve cost advantages through the use of off-prime
grades of resin that are typically bought through brokers in the
secondary market. The Company also processes approximately seven million
yards of fabric annually, utilizing its domestic operations, as well as
its Reynosa, Mexico facility for those aspects of production that are
more labor intensive. The Company seeks to maximize its operating
efficiency by ensuring that each plant has flexible manufacturing
capabilities as well as utilizing its Mexico operation and Asian
outsourcing opportunities to lower production costs. In addition, the
Company is able to utilize excess capacity in its plants to meet peak
demand and optimize production planning.

- EXPERIENCED MANAGEMENT TEAM. The Company's senior management team has a
wide range of experience in the production, development and marketing of
housewares and related products. Leading the Company's senior management
team is Mr. James R. Tennant, the Company's Chairman and Chief Executive
Officer, who has 20 years of corporate management experience in
marketing-oriented capacities. Mr. Tennant has been with HPI since 1994.
Mr. Stephen R. Brian, the President and Chief Operating Officer of the
Company, has 29 years experience in management and production capacities
with major consumer product companies, including General Electric
Corporation and Sunbeam. Mr. James E. Winslow, Executive Vice President
and Chief Financial Officer of the Company, has 16 years of financial
management experience in the consumer products industry, including 11
years with Wilson Sporting Goods. Mr. Winslow has been with HPI since
1994. Furthermore, the Company's operations are managed by experienced
consumer product and manufacturing professionals.

BUSINESS STRATEGY

- LEVERAGE MARKET SHARE POSITION. The Company intends to maintain a
leading market position in the United States in each of the product
segments in which it operates and intends to leverage its market strength
to introduce new products in all of its product categories. Through
acquisitions of companies with complementary product lines and through an
internal product development program, the Company expects to continue to
increase sales and to become a leading supplier of new product categories
as well as additional products in its existing product categories.
Management believes that such growth will

52
<PAGE> 60

enable the Company to expand its merchandising relationships with its
existing key customers, and to increase its presence in these customers'
stores, which in turn would give the Company additional leverage to
support further growth.

- CONTINUE BUILDING STRATEGIC SUPPLIER RELATIONSHIPS. Management believes
that national retailers are increasingly interested in establishing
"one-stop shopping" supplier relationships for their store chains to
enhance their margins and operating efficiencies. In addition, these mass
merchandisers have come to expect value-added services (such as
merchandise planogramming and EDI) that are primarily offered by large
suppliers. Management believes that the breadth of the Company's product
offerings, combined with the value-added services it provides, will
enable the Company to continue to build close and interactive
relationships with its retailers, capture larger market share and garner
incremental shelf space for its products.

- LAUNCH PRODUCT LINE IMPROVEMENTS AND NEW PRODUCTS. The Company has
successfully launched product line improvements and new products and
intends to continue to do so by capitalizing on its strong relationships
with its retailers. In 1997, the Company introduced approximately 60 new
products and product improvements, which accounted for approximately 13%
of the Company's 1997 revenues (excluding sales generated from laundry
management products). Through these product introductions, the Company's
products are kept up-to-date and appealing for both the retailer and
end-user. The Company is also able to manage its research and development
expenditures at levels below those of its competitors as most of these
product innovations and improvements require only minimal feature
enhancements and relatively limited technological input. Management
believes that continued product introductions will further enhance
revenue growth, profitability and market share.

- INCREASE MARKET PENETRATION. The Company expects that strategic
acquisitions, as well as internally developed new product lines, will
result in increased penetration of its existing markets and enable it to
develop and extend its customer base both in the United States and
internationally. The Company also plans to expand its export sales team
and leverage established contacts with key distributors to continue to
increase its sales internationally.

- PURSUE STRATEGIC ACQUISITIONS AND ALLIANCES. Management anticipates that
the fragmented nature of the housewares industry will continue to provide
significant opportunities for growth through strategic acquisitions of
complementary businesses. Management intends to continue to acquire
businesses at attractive multiples of cash flow and achieve operational
and distribution efficiencies through integration of complementary
businesses. The Company's acquisition strategy focuses on businesses with
product offerings which (i) offer product expansion into related
categories, (ii) focus on products which can be marketed through the
Company's existing distribution channels and (iii) enhance manufacturing
efficiencies by increasing throughput and lowering per unit production
costs, thereby increasing the Company's marketing and distribution
efficiencies. Management will also consider strategic joint ventures
which would provide access to new products, technologies or markets. The
Company continues to look for opportunities to acquire companies that fit
within its acquisition strategy. To that end, the Company has had, and
continues to have, numerous discussions with potential acquisition
candidates. As of the date of this Prospectus, the Company has made a
number of oral and written acquisitions proposals to certain of such
candidates, but has not entered into any binding agreements. While the
Company believes that it is likely to enter into one or more agreements
in the near future with respect to such potential acquisitions, no
assurance can be given that such agreements will be reached or that any
of such potential acquisitions will be consummated.

PRODUCTS

The Company's significant product lines include (i) ironing boards, covers
and pads, (ii) home/closet organization products, (iii) plastic storage
containers and totes, (iv) laundry accessories, (v) bath and shower organization
products, (vi) juvenile products and (vii) home improvement products.

53
<PAGE> 61

PRO FORMA GROSS SALES BY PRODUCT CATEGORY
FISCAL YEAR ENDED DECEMBER 27, 1997
(DOLLARS IN MILLIONS)

<TABLE>
<CAPTION>
PLASTIC BATH AND
IRONING BOARDS, HOME/CLOSET STORAGE SHOWER HOME
COVERS ORGANIZATION CONTAINERS LAUNDRY ORGANIZATION JUVENILE IMPROVEMENT
AND PADS PRODUCTS AND TOTES ACCESSORIES PRODUCTS PRODUCTS PRODUCTS
--------------- ------------ ---------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross sales.......... $75.4 $55.9 $47.3 $17.6 $16.6 $16.6 $8.4
% Sales.............. 32% 23% 20% 7% 7% 7% 4%
</TABLE>

Ironing Boards, Covers and Pads. The Company offers a significant variety
of ironing boards under the Seymour brand name (approximately 185 individual
SKU's). Key products in this category include the EasyBoard (perforated board),
SureFoot (vented, four leg board), ReadyPress (over-the-door) and WorkWizard
(vented, four-leg with hanger rack). Management believes the Company is also the
leading manufacturer of ironing board covers and pads. The Company offers eight
different types of covers and pads in over 85 different designs that fit not
only its own ironing boards, but all regular size boards. The Company is the
only company that sells ironing board covers with 3M Scotchguard protection.

Home/Closet Organization Products. The Company offers a variety of
products for general home organization, under both the Selfix and Tamor brand
names. This category is primarily comprised of plastic clothes hangers, which
represented 33% of this category's gross dollar sales in 1997. Due to the
commodity nature of the hanger segment, margins in this category are inherently
lower, while unit volumes are substantially higher. Management believes that HPI
has a leading market share in the sale of plastic clothes hangers in the United
States, and that its broad product offering gives it a competitive advantage
over other hanger manufacturers. In addition to plastic hangers, the Company
markets a complete line of over 150 hooks, primarily made of plastic, under the
brand name Selfix. The original product marketed by the Company was a plastic
hook, unique in that it employed a proprietary no-tools mounting system. The
Company has expanded its offering of these patented, self-adhesive hooks, and
now believes it offers a complete line in the opening price-point segment.

Also included in this category are other plastic organizers, closet and
clothing care products, recycling containers, plastic kitchen organizers
(including vinyl coated wire kitchen organizers) and miscellaneous housewares
products.

Plastic Storage Containers and Totes. The Company offers a variety of
plastic home storage containers under the Tamor brand name. The Company's home
storage containers range in size from shoe boxes to jumbo (48 gallon) totes, and
include specialty containers sold during holiday seasons. These products range
in retail price from $2 to $20 and contain a variety of product attributes,
including removable wheels and domed-top lids, which increase storage capacity.
Management believes these features are key to obtaining shelf space and
competing in the market.

Laundry Accessories. Management believes the Company is the leading
producer of laundry accessories in the United States. Key products within this
category include drying racks, laundry bags, hampers and sorters, clotheslines,
and clothes pins.

Bath and Shower Organization Products. The Company markets a broad line of
value-priced plastic bath accessories and organizers, primarily under the brand
name Selfix. These products include shower organizers, towel bars, soap dishes,
shelves, portable shower sprays, and fog-free shower mirrors. In January 1997,
the Company launched a major line extension in the bath and shower organization
category, Suction-Lock(R) Organizers. The Company believes it is a leading
producer of opening price-point plastic bath accessories in the United States.

Juvenile Products. The Company markets a line of quality children's
organization products, under the brand names Tidy Kids(R), Kidtivity(R), and
Lil' Helpers(TM). These products include closet extenders, hook racks, storage
cubes, clothes hangers, under-the-bed storage trolleys, and safety gates and are
sold in the juvenile or housewares departments of its core customers, and also
through specialty juvenile retailers like Toys 'R Us and

54
<PAGE> 62

Babies 'R Us. Management believes the Company created a market niche of
children's organization products in the development and successful sales of its
Tidy Kids(R) and Lil' Helpers(TM)products, and that it offers the premier
children's organization program in the industry.

Home Improvement Products. Through the Shutters brand name, the Company
markets a unique line of plastic exterior shutters to the construction trades
and to consumers through retailers and home improvement catalogs. Because of a
patented design, the shutters are assembled from components, rather than formed
in a single piece, which allows the shutters to be configured in a variety of
sizes and colors. The Company markets the shutters in component form to
remodeling distributors and in finished form to home center retailers. In both
cases, the key competitive advantage is customization of size and color, and
quick turnaround service.

MARKETING AND SALES

The Company's primary marketing strategy is to design innovative products
with consumer features and benefits, and focus on marketing these products to
its retail customers. Management believes that one of its competitive advantages
is prompt and reliable product delivery of value-priced, high-volume products,
allowing customers to maintain minimal inventories. The Company believes that
the customer-specific merchandising programs it offers enable retailers to
achieve a higher margin on the Company's products than the products of some of
its competitors. To that end, the Company provides its customers a variety of
retail support services, including customized merchandise planogramming, small
shipping packs, point-of-purchase displays, EDI, and just-in-time product
delivery designed to continue their growth with volume retailers.

The Company's marketing efforts also include advertising, promotional and
differentiated packaging programs. Promotions include cooperative advertising,
customer rebates targeted at the Company's value-added feature products and
point-of-purchase displays.

CUSTOMERS AND DISTRIBUTION

The Company's houseware products are sold through national and regional
discounters, hardware/home center, food/drug stores, juvenile stores, specialty
stores, and to hotels. The Company sells directly to major retail customers
through the Company's internal sales management team. The Company also sells to
approximately 3,000 other customers through a network of approximately 50
independent manufacturers' representatives. The Company's key distribution
channels include the following: (i) Wal-Mart, which accounted for approximately
17.5% of the Company's fiscal 1997 pro forma gross sales; (ii) Kmart, which
accounted for approximately 12.5% of the Company's fiscal 1997 pro forma gross
sales; and (iii) Target, which accounted for approximately 5.9% of the Company's
fiscal 1997 pro forma gross sales.

Management believes that one of its greatest opportunities is to fully
leverage the Company's long-standing relationships with these customers in order
to gain additional market share in its core products lines and to successfully
introduce new and enhanced products lines.

COMPETITION

The houseware products industry is highly fragmented and management
believes that no single supplier accounts for more than 5% of total market
sales. The Company competes with a significant number of companies, some of
which have greater name-brand recognition, larger customer bases and/or
significantly greater financial resources than the Company. The Company's key
competitors include Rubbermaid and Sterilite. There are no substantial
regulatory or other barriers to entry of new competitors into the Company's
markets. To provide complete product lines, suppliers of houseware products have
begun to consolidate. Accordingly, the Company believes that it is
well-positioned to pursue its strategy of growth through acquisitions.

The Company believes that large national retailers are continuing to reduce
the number of suppliers of storage and other housewares products with which they
do business in order to improve margins and operating efficiencies. These
retailers are forming key relationships with suppliers that can provide complete
product

55
<PAGE> 63

lines within product categories, profitable fast-turning products, timely
delivery and merchandising support. With its numerous product lines and strong
relationships with these retailers, the Company believes it is well-positioned
to continue to meet their needs.

MANUFACTURING, RAW MATERIALS AND SUPPLIERS

The Company manufactures the majority of its plastic resin products at its
five manufacturing facilities using injection molding and extrusion processes.
The primary raw material used in the Company's injection molding operations is
plastic resin, primarily polypropylene. Plastic resin is a spot commodity with
pricing parameters tied to supply and demand characteristics beyond the
Company's control. In total, the Company used 84.8 million pounds of plastic
resin in 1997 representing approximately 32% of the Company's total cost of
goods sold and 22% of the Company's net sales. Because of the large amount of
plastic resin used and the relative inability to pass cost increases along to
its retail customers, the Company is highly susceptible to changes in plastic
resin pricing. After giving effect to the Seymour Acquisition, the Company's
usage of plastic resin in 1997 dropped to 13% of net sales and 18% of total cost
of goods sold.

Due to the nature of its products, the Company is able to use off-prime
grades of resin which allows the Company to buy plastic resin through brokers in
a secondary market at a discount. Buying off-prime material at a discount gives
the Company a cost advantage but does not alleviate the pricing risks inherent
in buying a commodity raw material. Plastic resin is utilized by a number of
different industries, many of which have quite different demand cycles than the
Company's primary housewares business. For example, the automobile and housing
industries are very large users of plastic resin. Demand changes in the
automobile industry or the number of new housing starts can impact plastic resin
pricing.

Plastic resin prices can vary widely from year to year and are very
difficult to predict beyond a few months. Tamor's plastic resin cost history is
illustrative of the swings that can occur in resin pricing. Tamor, which uses
about 90% of the Company's resin requirements, experienced a 26% average price
increase from 1993 to 1994, another 25% increase from 1994 to 1995, a 16% price
decrease from 1995 to 1996 and a further 10% price decrease from 1996 to 1997.

There is no futures market for plastic resin and, as a result, the Company
cannot lock in its costs without purchasing significant quantities beyond its
immediate manufacturing needs. The Company has no long-term supply contracts for
the purchase of plastic resin. However, the Company generally maintains a 60-day
supply of resin. See "Risk Factors -- Availability and Pricing of Raw
Materials."

The Company manufactures the majority of its rolled steel products at its
facilities in Seymour, Indiana. Approximately 14,200 full size ironing boards
are manufactured daily with three shifts. The Company's total capacity is
approximately 3.6 million units per year (24 hour day/250 days). The Company
diversifies its purchases for rolled steel primarily from three different rolled
steel companies. The Company makes it a practice to purchase steel from the
lowest cost reliable supplier. The Company purchases approximately seven million
yards of fabric annually for the manufacture of ironing board covers and pads.
In addition, the Company outsources the manufacturing of wire caddies to general
Asian suppliers.

MANAGEMENT SYSTEMS

The Company's network information system allows it to communicate online
with any customer or internal or external salesperson. The Company's largest
customers, Kmart, Wal-Mart, Target and Toys R Us, are on electronic mail and
transmit all orders via EDI. With Kmart and Wal-Mart, the Company's POS
information systems allow it to access daily sales activity directly from retail
cash registers at the customers' points of sale.

Internally, the manufacturing process is guided by a manufacturing resource
planning system. This computerized planning infrastructure allows the Company to
plan its manufacturing, purchasing and labor resources and make revisions on a
daily basis in reaction to ever-changing sales activity.

By the end of fiscal 1998, the Company expects that most of its systems
will be Year 2000 compliant and that all of its systems will be compliant by the
end of fiscal 1999; although there can be no assurance that the
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<PAGE> 64

Company will not experience difficulties in the integration of its systems which
could have a material adverse effect on the Company. See "Risk Factors--Year
2000 Compliance."

PROPERTIES

At March 28, 1998, the Company maintained facilities with an aggregate of
1,924,000 square feet of space. The Company considers all of its facilities to
be in good operating condition. Currently, all of the Company's manufacturing
facilities are operating at or near full capacity. The following table
summarizes the principal physical properties, both owned and leased, used by the
Company in its operations:

<TABLE>
<CAPTION>
SIZE OWNED/
FACILITY USE (SQUARE FEET) LEASED
- -------- ---------------------------------- ------------- ------
<S> <C> <C> <C>
SELFIX
Chicago, IL Manufacturing/Distribution 186,000 Leased
Chicago, IL Storage/Distribution 83,500 Leased
SEYMOUR
Mooresville, NC Manufacturing/Distribution 270,000 Owned
McAllen, Texas Administration/Distribution 5,000 Leased
Reynosa, Mexico Manufacturing 30,000 Owned
Seymour, IN
Corporate Corporate administration 10,000 Owned
East Plant Manufacturing 70,000 Owned
South Plant Manufacturing/Distribution 105,000 Owned
Skaggs Facility Storage 40,000 Leased
West Plant Manufacturing/Storage/Distribution 132,000 Owned
Logistics Center Storage/Distribution 100,000 Leased
SHUTTERS
Hebron, IL Manufacturing/Distribution 62,500 Owned
TAMOR
Fitchburg, MA Distribution 220,000 Leased
Leominster, MA Manufacturing 100,000 Owned
Leominster, MA Sales Office 5,000 Leased
Leominster, MA Storage 120,000 Leased
Louisiana, MO Manufacturing/Distribution 340,000 Owned
Thomasville, GA Manufacturing Distribution 45,000 Owned
</TABLE>

PATENTS, TRADEMARKS AND LICENSES

Selfix, Tamor, Shutters, and Seymour collectively own a number of
trademarks and approximately 150 mechanical and design patents in the United
States relating to various products and manufacturing processes. The Company
believes that, in the aggregate, its patents enhance its business by
discouraging competitors from adopting patented features of its products;
however, no single patent, trademark or license is material to the business of
the Company.

EMPLOYEES

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<PAGE> 65

350 temporary workers in its injection molding operations, for assembly and in
certain warehouses. Management believes that employee relations are good. See
"Risk Factors -- Labor Relations."

ENVIRONMENTAL MATTERS

An environmental report obtained in connection with the Tamor Acquisition
indicated that certain remedial work relating to ground contamination of Tamor's
Leominster, Massachusetts facility was required. The former shareholders of
Tamor placed $1.1 million in escrow to pay for, among other things, any required
remediation at the Leominster, Massachusetts facility. The Company has completed
certain remediation projects at the Leominster, Massachusetts facility. The
Company believes that the cost of remediation already completed, plus the cost
of any additional remediation that may be required in the future, can be
completed for an amount which will not exceed the amount in escrow.

LEGAL PROCEEDINGS

A subsidiary of the Company was notified in early 1997, that it has been
named co-defendants, along with an unrelated third party, in a product
liability/personal injury suit. The suit seeks $7.0 million in total damages,
one-half from each defendant. The Company and its subsidiary have adequate
levels of insurance coverage, and its defense is being handled by its insurance
carrier's attorneys. Although management of the Company cannot predict the
ultimate outcome of this matter with certainty, it believes that the ultimate
resolution to this matter will not have a material effect on the Company's
financial condition taken as a whole. See "Risk Factors -- Legal Proceedings".

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<PAGE> 66

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers of the Company and their respective
ages and principal positions, as of March 28, 1998, are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
James R. Tennant................................... 45 Chairman of the Board and Chief Executive
Officer
Stephen R. Brian................................... 49 President and Chief Operating Officer
James E. Winslow................................... 43 Executive Vice President, Chief Financial
Officer and Secretary
Charles R. Campbell................................ 58 Director
Joseph Gantz....................................... 50 Director
Stephen P. Murray.................................. 35 Director
Marshall Ragir..................................... 53 Director
Jeffrey C. Rubenstein.............................. 56 Director
Daniel B. Shure.................................... 40 Director
Joel D. Spungin.................................... 60 Director
</TABLE>

James R. Tennant, Chairman of the Board and Chief Executive Officer joined
the Company as Chairman of the Board and Chief Executive Officer in April 1994.
Mr. Tennant was elected a Director of the Company in December 1992, and was a
member of the Company's Compensation Committee until April 1994. From 1982 to
1994, Mr. Tennant was Division President of True North Communications, an
international marketing services company. Mr. Tennant is a member of the
Nominating Committee.

Stephen R. Brian, President and Chief Operating Officer joined the Company
as President and Chief Operating Officer in January 1998. From June 1996 to
January 1998, Mr. Brian was President and Chief Executive Officer of Seymour
Housewares Corporation. From April 1994 to June 1996, Mr. Brian was Executive
Vice President Manufacturing and Technology for Sunbeam. Prior to April 1994,
Mr. Brian was employed by Hamilton Beach/Proctor Silex with his final position
being Executive Vice President of Operations.

James E. Winslow, Executive Vice President, Chief Financial Officer and
Secretary was named Executive Vice President in October 1996. Mr. Winslow joined
the Company as Chief Financial Officer and Senior Vice President in November
1994. From 1983 to 1994, Mr. Winslow was employed by Wilson Sporting Goods Co.
in various capacities, his final position being Vice President and Chief
Financial Officer.

Charles R. Campbell has been a Director of the Company since September
1994. Since 1996, Mr. Campbell has been a principal with the Everest Group, a
management consulting firm. From 1995 to 1996, Mr. Campbell was President of
C.R. Campbell & Associates, a management consulting firm. From 1985 to 1995, Mr.
Campbell was Senior Vice President, Chief Financial and Administrative Officer
of Federal Signal Corporation, a diversified manufacturer of capital goods. From
1982 to 1985, he was Vice President and Chief Financial Officer of the Masonite
Corporation, a manufacturer of building products. Mr. Campbell is a member of
the Audit Committee.

Joseph Gantz was appointed to the Board of Directors in January 1998 in
connection with the Company's acquisition of Seymour on December 30, 1997. Mr.
Gantz joined Seymour Housewares, Inc., as Chairman of the Board in 1996. From
1994 to 1996, Mr. Gantz was President and General Manager of Rubbermaid Cleaning
& Maintenance Products ("RCMP"), a manufacturer and marketer of brooms, brushes
and mops. RCMP, formerly, Empire Brushes, Inc., was a $1 billion division of
Rubbermaid. From 1974 to 1994, Mr. Gantz held various positions at Empire
Brushes, Inc., a manufacturer and marketer of brooms, brushes and mops, with his
final position being President. Mr. Gantz is a member of the Nominating
Committee.

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<PAGE> 67

Stephen P. Murray was appointed to the Board of Directors in January 1998
in connection with the Company's acquisition of Seymour on December 30, 1997.
Mr. Murray is a general partner of Chase Capital Partners, an affiliate of Chase
Manhattan Bank and Chase Securities Inc. Prior to joining Chase Capital
Partners, Mr. Murray was a Vice President with the Middle Market Lending
Division of Manufacturers Hanover. Mr. Murray is a member of the Audit
Committee. Mr. Murray is a director of several privately held companies.

Marshall Ragir has been a Director of the Company since July 1995. Since
1991, Mr. Ragir has been President and Chief Executive Officer of Know Business
Inc., a venture capital and investment company. Mr. Ragir is a member of the
Compensation Committee. Mr. Ragir is a director of several charitable
foundations and non-profit agencies.

Jeffrey C. Rubenstein has been a Director of the Company since September
1986. Since 1991, Mr. Rubenstein has been a principal with the law firm of Much
Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., an Illinois professional
corporation, which is counsel to the Company. From January 1989 until June 1991,
Mr. Rubenstein was of counsel to the law firm of Sachnoff & Weaver, Ltd., an
Illinois professional corporation, of which he had been a principal prior to
July 1988. From March 1988 until January 1989, Mr. Rubenstein was President of
Medical Management of America, Inc., ("MMA"), a management services company for
health care providers. Mr. Rubenstein is a member of the Audit and Compensation
Committees. Mr. Rubenstein is a director of Miller Building Systems, Inc., Vita
Food Products, Inc. and a number of privately held companies.

Daniel B. Shure has been a Director of the Company since December 1994.
Since 1988, Mr. Shure has been President and Chief Executive Officer of
Strombecker Corporation, an international toy manufacturer and distributor. From
1987 to 1988, he was Vice President of Giftco, Inc., a wholesaler and
distributor of non-durable products. From 1986 to 1987, Mr. Shure was Executive
Vice President of North American Bear Company, a toy manufacturer. Mr. Shure is
a member of the Nominating Committee. He is also a director of a number of
privately held companies.

Joel D. Spungin has been a Director of the Company since September 1996.
Mr. Spungin is managing Partner of DMS Enterprises, L.P., a consulting and
management advisory partnership. Mr. Spungin was formerly Chairman and Chief
Executive Officer of United Stationers and since 1994, he has been Chairman
Emeritus of United Stationers, Inc. From 1981 to 1995, Mr. Spungin was employed
by United Stationers, Inc. in various capacities with his final position being
Chairman of the Board and Chief Executive Officer. Mr. Spungin is a member of
the Compensation Committee. Mr. Spungin is also a director of AAR Corporation
and a number of privately held companies.

EMPLOYMENT AGREEMENTS

Messrs. James R. Tennant, Chairman of the Board and Chief Executive
Officer, and Stephen R. Brian, President and Chief Operating Officer, have
entered into employment agreements with the Company as of January 1, 1997 and
January 5, 1998, respectively. The terms of these agreements are for a period of
three years subject to automatic one year renewals unless earlier terminated.
Mr. Tennant's employment agreement provides for an annual base salary of
$275,000 and Mr. Brian's employment agreement provides for an annual base salary
of $250,000. In October 1997, the Board of Directors increased Mr. Tennant's
base salary to $350,000. In January 1998, the Board of Directors increased Mr.
Brian's salary to $265,000. Mr. Tennant is entitled to receive a discretionary
bonus, based on the Company's financial performance, as well as incentive
bonuses subject to the terms of the Executive Incentive Plan and the Management
Incentive Plan. Mr. Brian is eligible to participate in the Company's senior
management bonus program, as such bonus program may be amended by the Board of
Directors from time to time. If the Company does not renew Mr. Tennant's
employment agreement for any renewal year after December 31, 1999, Mr. Tennant
will be entitled to receive a severance payment of $250,000, payable in twelve
monthly installments, and may exercise options which have vested prior to such
date. If Mr. Tennant's employment is terminated after a Change In Control (as
defined therein) of the Company, Mr. Tennant is entitled to receive a $500,000
severance payment and all of his stock options will immediately vest. In the
event the Company is sold for a price of $5.50 per share or more

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<PAGE> 68

in a stock sale or asset sale and Mr. Tennant is employed by the Company on the
closing of any such event, Mr. Tennant will be entitled, at his option, to (i)
receive a $1,000,000 payment from the Company or (ii) exercise all stock options
he holds as if they were then available and vested. In the event the Company
terminates Mr. Brian's employment Without Cause (as defined therein), Mr. Brian
is entitled to receive a severance payment equal to 100% of his yearly base
salary then in effect, plus all compensation that he would otherwise be entitled
to through the initial three-year term. In addition, Mr. Brian will have the
right to exercise stock options which have vested prior to the date of
termination. Upon a Change of Control (as defined therein) if (i) Mr. Brian
voluntarily terminates his employment within 180 days thereafter, Mr. Brian is
entitled to receive an amount equal to 100% of his base salary then in effect or
(ii) the Company causes Mr. Brian's termination within 180 days of a Change of
Control, Mr. Brian shall be entitled to receive 100% of his base salary then in
effect plus all compensation that he otherwise would be entitled to through the
initial three-year term. In addition, upon a Change In Control, Mr. Brian's
stock options become immediately vested and exercisable. All amounts payable to
Mr. Brian upon a Change of Control shall be payable in 12 monthly installments.
Mr. Tennant's employment agreement provides for the granting of 350,000 options
to purchase Common Stock, (100,000 options at $6.00 per share; 175,000 options
at $7.00 per share; and 75,000 at $8.00 per share). The 350,000 options vest
one-third each year beginning on January 1, 1997, and expire on December 31,
1999. The expiration of these options can be extended for a period of five years
if the trading price of the Common Stock exceeds $10.00 per share for the entire
month of December 1999. Mr. Tennant was granted additional stock options for
200,000 shares at a price of $5.00 per share, which vest in equal increments
over a three year period. These options may be extended until April 30, 2005,
under the same conditions as the other options. The principal terms of Mr.
Tennant's employment agreement, including the grant of additional stock options
at an exercise price of $5.00 per share, were included in an agreement between
the Company and Mr. Tennant dated September 19, 1996. Mr. Brian was granted
100,000 options to purchase the Company's Common Stock at a price per share
equal to $11.375. Mr. Brian is also eligible for additional options each year as
are approved by the Board of Directors.

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<PAGE> 69

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of March 25, 1998 (as
of the dates indicated in the table below with respect to Warburg Pincus Asset
Management, Inc.; SAFECO Asset Management Co.; Putnam Investments, Inc.,; Putnam
Investment Management, Inc.; The Putnam Advisory Company, Inc.; Marsh & McLennan
Companies, Inc.; T. Rowe Price Associates, Inc.; and T. Rowe Price Small Cap
Value Fund, Inc.) with respect to the beneficial ownership of the Company's
issued and outstanding Common Stock by (i) each stockholder known by the Company
to be the beneficial owner of more than 5% of its Common Stock, (ii) each
director, (iii) each executive officer named in the Directors and Executive
Officers Table and (iv) all of the directors and executive officers of the
Company as a group.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") which generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power
and/or investment power with respect to those securities. Unless otherwise
indicated, the persons or entities identified in the table have sole voting and
investment power with respect to the shares shown as beneficially owned by them.
Percentage ownership calculations are based upon 7,943,680 shares of Common
Stock outstanding.

<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT
BENEFICIALLY OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) CLASS(2)
- ------------------------------------ ------------ --------
<S> <C> <C>
Chase Venture Capital Associates, L.P.(3)................... 1,289,760 16.2%
Warburg Pincus Asset Management, Inc.(4).................... 868,500 10.9
SAFECO Asset Management Company(5).......................... 489,200 6.2
Putnam Investments, Inc.; Putnam Investment Management,
Inc.; The Putnam Advisory Company, Inc.; and Marsh &
McLennan Companies, Inc.(6)............................... 438,000 5.5
T. Rowe Price Associates, Inc., and T. Rowe Price Small Cap
Value Fund, Inc.(7)....................................... 427,500 5.4
Jeffrey C. Rubenstein(8).................................... 568,858 7.2
James R. Tennant(9)......................................... 389,300 4.9
Charles R. Campbell......................................... 6,000 *
Daniel B. Shure............................................. 6,400 *
Marshall Ragir(10).......................................... 231,093 2.9
Joel D. Spungin............................................. 7,500 *
Stephen P. Murray(11)....................................... 1,289,760 16.2
Joseph Gantz................................................ 8,000 *
Stephen R. Brian............................................ 7,200 *
James E. Winslow(12)........................................ 31,397 *
All directors and executive officers as a group (10
persons)(13).............................................. 2,314,515 29.1%
</TABLE>

- ---------------
(1) Unless otherwise indicated, the persons or entities have sole voting and
investment power with respect to the shares beneficially owned by them.

(2) Asterisks indicate less than 1%.

(3) According to information provided by Chase Venture Capital Associates, L.P.
("CVCA"), CVCA is a California limited partnership and its general partner
is Chase Capital Partners ("CCP"), a New York general partnership. The
shares being reported include 319,599 shares of Common Stock which, as of
March 25, 1998, were held in escrow pursuant to an escrow agreement entered
into in connection with the Company's December 30, 1997 acquisition of
Seymour (CVCA was the majority shareholder of Seymour prior to acquisition
by the Company). The escrow was created to provide the Company with a means
to secure certain indemnification obligations pursuant to the Seymour
acquisition agreement. The shares may be transferred by the escrow agent to
the Company to satisfy certain indemnification claims. The escrow will
terminate on December 30, 1998, and based upon the number of shares of the

62
<PAGE> 70

Company's Common Stock remaining in the escrow, CVCA may receive no shares,
a currently undeterminable number of the 319,599 shares, or all of the
319,599 shares. CCP and CVCA expressly disclaim that they are, in fact, the
beneficial owners of such shares. The address for CVCA and CCP is 380
Madison Avenue, New York, New York 10017.

(4) According to information contained in a report on Schedule 13G/A dated
January 21, 1998, filed by Warburg Pincus Asset Management, Inc.
("Warburg"), Warburg serves as investment adviser to numerous accounts. The
shares being reported on Schedule 13G/A are owned by Warburg's accounts.
Warburg and the various accounts to which they are advisers have sole power
to vote 361,100 shares of Common Stock (which represent 4.5% of the shares
outstanding); have shared power to vote 463,400 shares of Common Stock
(which represent 5.8% of the shares outstanding); and have sole power to
dispose of 868,500 shares of Common Stock (which represent 10.9% of the
shares outstanding). For purposes of the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), Warburg
is deemed to be a beneficial owner of such shares; however, Warburg
expressly disclaims that it is, in fact, the beneficial owner of such
shares. Warburg's address is 466 Lexington Avenue, New York, New York
10017.

(5) According to information contained in a report on Schedule 13G/A dated
February 10, 1998, filed by SAFECO Asset Management Company ("SAMC"), a
wholly owned subsidiary of SAFECO Corporation ("SAFECO"), SAMC beneficially
owns 489,200 shares of Common Stock (which represent 6.2% of the shares
outstanding) as a result of acting as an investment adviser for registered
investment companies. SAFECO and the various accounts to which they are
advisers have shared power to vote and sole power to dispose of 489,200
shares of Common Stock (which represent 6.2% of the shares outstanding).
Such shares include 293,200 shares beneficially owned by SAFECO Common
Stock Trust (which represents 3.7% of the shares outstanding). For purposes
of the Exchange Act, SAMC and SAFECO are deemed to be beneficial owners of
such shares; however, SAMC and SAFECO expressly disclaim that, they are, in
fact, the beneficial owners of such shares. SAMC's address is 601 Union
Street, Suite 2500, Seattle, Washington 98101 and SAFECO's address is
SAFECO Plaza, Seattle, Washington 98185.

(6) According to information contained in a report on Schedule 13G dated
January 20, 1998, filed by Putnam Investment, Inc. ("PI"), the shares being
reported are beneficially owned by Putnam Investment Management, Inc.
("PIM") and the Putnam Advisory Company, Inc. ("PAC"), each a registered
investment adviser subsidiary of PI. PI is a wholly owned subsidiary of
Marsh & McLennan Companies, Inc. ("M&M"). PI and PAC share voting power
with respect to 286,600 shares of Common Stock (which represent 3.6% of the
shares outstanding) and PIM and PI share investment power with respect to
133,100 shares of Common Stock (which represent 1.7% of the shares
outstanding) and PI and PAC share investment power with respect to 304,900
shares (which represent 3.8% of the shares outstanding). For purposes of
the Exchange Act, PI, PIM, PAC and M&M are deemed to be beneficial owners
of such shares; however, PI, PIM, PAC and M&M expressly disclaim that they
are, in fact, the beneficial owners of such shares. The address for PI,
PIM, and PAC is One Post Office Square, Boston, Massachusetts 02109 and the
address for M&M is 116 Avenue of the Americas, New York, New York 10036.

(7) According to information contained in a report on Schedule 13G/A dated
February 9, 1998, and correspondence to the Company from T. Rowe Price
Associates, Inc. ("Price Associates"), the shares of Common Stock being
reported are owned by various individual and institutional investors,
including T. Rowe Price Small Cap Value Fund, Inc. ("Price Fund") (which
owned 402,500 shares and represents 5.1% of the shares outstanding), which
Price Associates serves as an investment adviser. Price Associates has sole
voting power with respect to 25,000 shares and sole investment power with
respect to 427,500 shares (which represent 5.4% of the shares outstanding).
Price Fund has sole voting power with respect to 402,500 shares and does
not have investment power with respect to any shares. For purposes of the
reporting requirements of the Exchange Act, Price Associates is deemed to
be a beneficial owner of such shares; however, Price Associates and Price
Fund expressly disclaim that they are, in fact, the beneficial owners of
such shares. The address for Price Associates and Price Fund is 100 East
Pratt Street, Baltimore, Maryland 21202.
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<PAGE> 71

(8) Jeffrey C. Rubenstein is the executor of the Norma L. Ragir Estate and in
such capacity exercises voting and investment power with respect to the
shares of Common Stock beneficially owned by the Norma L. Ragir Estate
(248,251 shares). Mr. Rubenstein is a director of the Meyer and Norma Ragir
Foundation (the "Ragir Foundation") and in such capacity exercises shared
voting and investment power with respect to the shares of Common Stock
beneficially owned by the Ragir Foundation (164,000 shares). Mr. Rubenstein
is co-trustee of five separate trusts and, in such capacities exercises
shared voting and investment power with respect to the shares of Common
Stock beneficially owned by the five separate Ragir trusts. The five Ragir
trusts, and the respective number of shares held by each is as follows:
MJR/NLR Gift Trust -- Judith Ragir Separate Trust (15,189 shares); MJR/NLR
Gift Trust -- Robert Ragir Separate Trust (13,985 shares); MJR/NLR Gift
Trust -- Marshall Ragir Separate Trust (15,190 shares) (collectively, the
"Ragir Gift Trusts"); Meyer J. Ragir Family Irrevocable Trust -- Judith
Ragir (24,750 shares); and the Meyer J. Ragir Family Irrevocable Trust --
Marshall Ragir Separate Trust (66,993 shares) (collectively, the "Ragir
Family Trusts"). All five Ragir trusts are collectively referred to herein
as the "Ragir Trusts". None of the Ragir Trusts individually owns more than
1% of the Common Stock of the Company. The shares of Common Stock
beneficially owned by the Norma L. Ragir Estate, the Ragir Foundation and
the Ragir Trusts are deemed to be beneficially owned by Mr. Rubenstein
pursuant to the Exchange Act. Mr. Rubenstein, as executor of the Norma L.
Ragir Estate and a director of the Ragir Foundation and co-trustee of the
Ragir Trusts, exercises either sole or shared voting and investment power
with respect to 548,358 shares of Common Stock (which represent 6.9% of the
outstanding shares). Mr. Rubenstein expressly disclaims that he is, in
fact, the beneficial owner of such shares. The address for Mr. Rubenstein
is 200 North LaSalle Street, Suite 2100, Chicago, Illinois 60601.

(9) Includes 371,668 shares of Common Stock subject to stock options
exercisable within 60 days of March 25, 1998.

(10) Includes 164,000 shares of Common Stock beneficially owned by the Ragir
Foundation with respect to which Mr. Ragir, in his capacity as a director,
exercises shared voting and investment power. These shares are deemed to be
beneficially owned by Mr. Ragir pursuant to the Exchange Act. Mr. Ragir
expressly disclaims that he is, in fact, the beneficial owner of such
shares. The number of shares reported in the table also includes 66,993
shares of Common Stock beneficially owned by the Meyer J. Ragir Family
Irrevocable Trust -- Marshall Ragir Separate Trust with respect to which
Mr. Ragir, in his capacity as a co-trustee, exercises shared voting and
investment power. Does not include 15,190 shares of Common Stock
beneficially owned by the MJR/NLR Gift Trust -- Marshall Ragir Separate
Trust with respect to which Mr. Ragir does not exercise sole or shared
voting or investment power.

(11) Mr. Murray is a general partner of Chase Capital Partners, which is the
general partner of CVCA, and in such capacity exercises shared voting and
investment power with respect to the shares beneficially owned by CVCA
(1,289,760 shares which represent 16.2% of the shares outstanding). These
shares are deemed to be beneficially owned by Mr. Murray pursuant to the
Exchange Act. Mr. Murray expressly disclaims that he is, in fact, the
beneficial owner of such shares.

(12) Includes 20,035 shares of Common Stock subject to stock options exercisable
within 60 days of March 25, 1998.

(13) Includes 391,703 shares of Common Stock subject to stock options
exercisable within 60 days of March 25, 1998.

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<PAGE> 72

CERTAIN TRANSACTIONS

The Company leases its principal office and the Selfix manufacturing and
distribution facility in Chicago, Illinois from the Ragir Gift Trusts. Marshall
Ragir is a director of the Company and is the brother of Judith Ragir and Robert
Ragir. The Company made aggregate payments to the Ragir Gift Trusts under the
lease of $519,687 during fiscal 1997 and $467,139 during fiscal 1996. Rent
payments are subject to adjustment every three years to reflect increases in the
Consumer Price Index. The lease expires in July 2010. The Company believes that
the rent paid to the Ragir Gift Trusts under the lease represents fair market
value and that the other terms and conditions are commercially reasonable.

The Company entered into three exclusive patent licensing agreements with
Meyer J. Ragir, two in 1971 and one in 1981, relating to patented manufacturing
processes used to produce wood insert molded products and the patented design of
certain suction lock and shower organizer products, which in each case were
developed by Mr. Ragir. The licensing agreements also cover any improvements
which Mr. Ragir developed with respect to such patents. The licensing agreements
provide for payment of royalties based upon unit sales of licensed products
subject to annual minimum royalties in the aggregate amount of $8,500. Pursuant
to the licensing agreements, the Company accrued approximately $28,500 for
fiscal 1997 payable to Mr. Ragir's estate (the "Meyer J. Ragir Estate") and paid
$25,909 to the Meyer J. Ragir Estate for fiscal 1996. Jeffrey C. Rubenstein, a
director of the Company, is executor of the Meyer J. Ragir Estate.

Jeffrey C. Rubenstein, a director of the Company is a principal with the
law firm Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C., which
serves as general counsel to the Company. The Company made aggregate payments to
Much Shelist Freed Denenberg Ament Bell & Rubenstein, P.C. during fiscal 1997 in
the amount of $730,000. Mr. Rubenstein, as executor of the Meyer J. Ragir
Estate, executor of the Norma L. Ragir Estate, a director of the Ragir
Foundation, and co-trustee of the Ragir Trusts, exercises either sole or shared
voting and investment power with respect to 548,358 shares of the Company's
Common Stock, or 6.9% of the outstanding shares of Common Stock as of March 25,
1998. The Company's principal office and the Selfix manufacturing facility in
Chicago, Illinois is owned by the Ragir Gift Trust, of which Mr. Rubenstein
serves as co-trustee.

In fiscal 1997, the Company engaged the services of the Everest Group, a
management consulting firm to assist it with the preparation of a long-term
strategic plan. Charles R. Campbell, a director of the Company and member of the
Compensation Committee, was a principal with the Everest Group. The Company made
aggregate payments to the Everest Group during fiscal 1997 in the amount of
$99,400. Management believes this transaction was conducted on an arm's length
basis at competitive prices.

Chase Securities Inc. ("CSI"), one of the Initial Purchasers, is an
affiliate of The Chase Manhattan Bank ("Chase") which will be agent bank and a
lender to the Company under the New Credit Facility. Chase Venture Capital
Associates, L.P. ("CVCA"), an affiliate of CSI and Chase, owns approximately
16.2% of the Company's outstanding Common Stock, including shares of Common
Stock that are held in escrow pursuant to an escrow agreement entered into in
connection with the Company's December 30, 1997 acquisition of Seymour. See
"Principal Stockholders." Stephen P. Murray, a director of the Company, is a
General Partner of Chase Capital Partners which is an affiliate of CSI, Chase
and CVCA. In addition, CSI, Chase and their affiliates perform various
investment banking and commercial banking services on a regular basis for
affiliates of the Company.

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DESCRIPTION OF OTHER INDEBTEDNESS

NEW CREDIT FACILITY

General. On May 14, 1998, the Company entered into the New Credit Facility
with The Chase Manhattan Bank, as administrative agent, and the several lenders
parties thereto. The New Credit Facility consists of a senior secured revolving
facility in a the maximum aggregate principal amount of $100.0 million. The
following is a summary description of the principal terms of the New Credit
Facility and is subject to, and qualified in its entirety by, reference to the
definitive agreement.

All obligations of the Company under the New Credit Facility are
unconditionally and irrevocably guaranteed jointly and severally by each of the
Company's Subsidiary Guarantors. Indebtedness under the New Credit Facility is
secured by a first priority security interest in (i) all of the capital stock of
each of the Company's domestic subsidiaries and certain foreign subsidiaries
provided that the granting of such security interest will not create an adverse
tax consequence and (ii) all tangible and intangible assets of the Company and
the Subsidiary Guarantors, with exceptions to be negotiated.

Revolving Loans. The Company is entitled to draw amounts under the New
Credit Facility for general corporate purposes and working capital requirements
for it and its subsidiaries and for financing permitted acquisitions. The
Revolving Facility includes sub-limits of up to $15 million for letters of
credit and up to $5 million for swing line loans available on same-day notice.
The New Credit Facility will mature on the fifth anniversary of the Closing
Date.

Availability. The availability of the New Credit Facility is subject to
various conditions precedent typical of bank facilities of this type including,
among other things, the absence of any material adverse change in the business,
property, assets, condition (financial or otherwise/or prospect) of the Company
and its subsidiaries taken as a whole and the consummation of the Refinancing.
The New Credit Facility may be borrowed, repaid and reborrowed during the term
thereof.

Interest Rates. Borrowings under the New Credit Facility bear interest at
a rate per annum (at the Company's option) equal to: (i) the alternate base rate
plus the applicable margin; or (ii) LIBOR plus the applicable margin.

Mandatory Commitment Reductions. Mandatory commitment reductions must be
made from the net proceeds of an issuance or incurrence of certain indebtedness
and from the proceeds of certain sales or dispositions of certain assets,
subject in each case to certain exceptions.

Optional Prepayments. Loans may be prepaid and commitments may be reduced
at the Company's option in minimum amounts to be agreed upon.

Fees. The Company is required to pay a commitment fee, on a quarterly
basis, ranging from 0.375% to 0.5%, based on the average daily unused portion of
the revolving commitments and certain fees in respect of letters of credit
issued under the New Credit Facility.

Covenants. The New Credit Facility contains certain covenants applicable
to, and other requirements of, the Company and its subsidiaries. The affirmative
covenants provide for, among other things, mandatory reporting by the Company of
financial and other information and notice by the Company upon the occurrence of
certain events. The New Credit Facility also contains certain negative covenants
and restrictions on actions by the Company including, without limitation,
restrictions on indebtedness, liens, guaranteed obligations, mergers, asset
dispositions, investments, loans, advances, acquisitions, dividends and other
restricted payments, transactions with affiliates, change in business and
prepayment of subordinated indebtedness. The New Credit Facility requires the
Company to meet certain financial covenants including interest coverage and
maximum leverage ratios.

Events of Default. The New Credit Facility contains certain customary
events of default including, without limitation, non-payment of principal,
interest or fees, violation of covenants, material inaccuracy of representations
and warranties, cross default to certain other indebtedness, bankruptcy and
insolvency events, material undischarged judgments, ERISA violations and change
of control.
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INDUSTRIAL DEVELOPMENT REVENUE BONDS

The Company, through two of its subsidiaries, Shutters (the "Shutters
Project") and Selfix (the "Selfix Project") has two variable rate demand
Industrial Development Revenue Bonds outstanding. The Shutters Project bond has
a principal balance of $2.0 million, was issued in December 1989 and matures on
November 1, 2002. The Selfix Project bond has a principal balance of $2.4
million, was issued in September 1990 and matures on September 1, 2005. Interest
on both bonds is based on a variable rate payable monthly and principal payments
are due annually on December 1.

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DESCRIPTION OF THE EXCHANGE NOTES

The Original Notes were, and the Exchange Notes will be, issued under an
Indenture (the "Indenture"), dated as of May 14, 1998, among the Company, the
Subsidiary Guarantors and LaSalle National Bank, as trustee (the "Trustee"). The
form and terms of the Exchange Notes are the same as the form and terms of the
Original Notes (which they replace) except that (i) the Exchange Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, and (ii) the holders of Exchange Notes will
not be entitled to certain rights under the Exchange and Registration Rights
Agreement, including the provisions providing for an increase in the interest
rate on the Original Notes in certain circumstances relating to the timing of
the Exchange Offer, which rights will terminate when the Exchange Offer is
consummated. The Original Notes issued in the Initial Offering and the Exchange
Notes offered hereby are referred to collectively as the "Notes."

The following summary of certain provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), and to all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act, as in effect on the date of the Indenture.
The definitions of certain capitalized terms used in the following summary are
set forth below under "Certain Definitions." References in this "Description of
the Exchange Notes" section and the "Registration Rights," "Book-Entry; Delivery
and Form" and "Plan of Distribution" sections to "the Company" mean only Home
Products International, Inc. and not any of its subsidiaries.

GENERAL

The Notes are unsecured senior subordinated obligations of the Company,
limited to $125 million aggregate principal amount, and will mature on May 15,
2008. The Original Notes were and the Exchange Notes will be, issued only in
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000. Pursuant to the Indenture, the Trustee, initially, will
serve as registrar and paying agent. No service charge will be made for any
registration of transfer or exchange of the Notes, except for any tax or other
governmental charge that may be imposed in connection therewith. Each Note will
bear interest at the rate of 9 5/8% per annum from the date of issuance, or from
the most recent date to which interest has been paid or provided for, payable
semi-annually on May 15 and November 15 of each year commencing on November 15,
1998 to holders of record at the close of business on the May 1 or November 1
immediately preceding the interest payment date.

Interest will be computed on the basis of a 360 day year comprised of
twelve 30 day months. Principal of, premium, if any, and interest on the Notes
will be payable, and the Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially will be the corporate trust office of the Trustee in New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the holders as such address appears in
the Note Register. No service charge will be made for any registration of
transfer or exchange of Notes, but the Company may require payment of a sum
sufficient to cover any transfer tax or other similar governmental charge
payable in connection therewith.

The Notes will be issued in fully registered form without interest coupons,
in denominations of $1,000 and any integral multiple of $1,000. The Notes will
be represented by one or more registered notes in global form and in certain
circumstances may be represented by Notes in definitive form. See "Book-Entry;
Delivery and Form."

The Notes have been designated for trading in the PORTAL market.

OPTIONAL REDEMPTION

Except as set forth below, the Notes will not be redeemable at the option
of the Company prior to May 15, 2003. On and after such date, the Notes will be
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each

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holder's registered address, at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest to the
redemption date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date) if
redeemed during the 12-month period commencing on May 15 of the years set forth
below:

<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
------ ----------------
<S> <C>
2003................................................. 104.813%
2004................................................. 103.208%
2005................................................. 101.604%
2006 and thereafter.................................. 100.000%
</TABLE>

In addition, at any time and from time to time prior to May 15, 2001, the
Company may redeem in the aggregate up to 35% of the original principal amount
of the Notes with the proceeds of one or more Equity Offerings received by, or
invested in, the Company so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 109.625% plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that at least 65% of the original aggregate principal amount of the Notes must
remain outstanding after each such redemption, provided, further, that each such
redemption occurs within 90 days after the closing of each Equity Offering.

In the case of any partial redemption, selection of the Notes for
redemption will be made by the Trustee on a pro rata basis, by lot or by such
other method as the Trustee in its sole discretion will deem to be fair and
appropriate, although no Note of $1,000 in original principal amount or less
will be redeemed in part. If any Note is to be redeemed in part only, the notice
of redemption relating to such Note will state the portion of the principal
amount thereof to be redeemed. A new Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof upon
cancellation of the original Note.

RANKING AND SUBORDINATION

The payment of the principal of, premium, if any, and interest on the Notes
and other obligations with respect to the Notes is subordinated in right of
payment, as set forth in the Indenture, to the prior payment in full in cash or
Cash Equivalents when due of all Senior Indebtedness of the Company. However,
payment from the money or the proceeds of U.S. Government Obligations held in
any defeasance trust described under "Defeasance" below is not subordinate to
any Senior Indebtedness or subject to the restrictions described herein. As of
March 28, 1998, on a pro forma basis after giving effect to the Refinancing, the
outstanding Senior Indebtedness of the Company, including the Subsidiary
Guarantors, would have been $9.2 million (exclusive of unused commitments).
Although the Indenture contains limitations on the amount of additional
Indebtedness that the Company may incur, under certain circumstances the amount
of such Indebtedness could be substantial and, in any case, such Indebtedness
may be Senior Indebtedness. See "Certain Covenants -- Limitation on
Indebtedness."

"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, created, incurred or assumed, as the Bank Indebtedness and
all other Indebtedness of the Company, including accrued and unpaid interest
thereon (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company at the rate specified
in the documentation with respect thereto whether or not a claim for post filing
interest is allowed in such proceeding) and fees relating thereto, unless, in
the instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that the obligations in respect of such Indebtedness
are not superior in right of, or are subordinate to, payment to the Notes;
provided, however, that Senior Indebtedness will not include (i) any obligation
of the Company to any Subsidiary, (ii) any liability for Federal, state,
foreign, local or other taxes owed or owing by the Company, (iii) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities), (iv) any Indebtedness, Guarantee or obligation of the Company that
is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of the Company, including any Senior
Subordinated Indebtedness and any Subordinated Obligations or (v) any
obligations in respect of Capital Stock.
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<PAGE> 77

Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company. The Company has agreed in the Indenture that it
will not incur, directly or indirectly, any Indebtedness that is subordinate or
junior in ranking in any respect to Senior Indebtedness unless such Indebtedness
is Senior Subordinated Indebtedness or is expressly subordinated in right of
payment to Senior Subordinated Indebtedness. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured.

The Company may not pay principal of, premium, if any, or interest on, the
Notes or make any deposit pursuant to the provisions described under
"Defeasance" below and may not otherwise purchase, redeem or retire any Notes
(collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when
due in cash or Cash Equivalents or (ii) any other default on Senior Indebtedness
occurs and the maturity of such Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, the default has been cured or waived and
any such acceleration has been rescinded or such Senior Indebtedness has been
paid in full in cash or Cash Equivalents. However, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of the Senior Indebtedness
with respect to which either of the events set forth in clause (i) or (ii) of
the immediately preceding sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or (ii)
of the second preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods, the
Company may not pay the Notes for a period (a "Payment Blockage Period")
commencing upon the receipt by the Trustee (with a copy to the Company) of
written notice (a "Blockage Notice") of such default from the Representative of
the holders of such Designated Senior Indebtedness specifying an election to
effect a Payment Blockage Period and ending 179 days thereafter (or earlier if
such Payment Blockage Period is terminated (i) by written notice to the Trustee
and the Company from the Person or Persons who gave such Blockage Notice, (ii)
because the default giving rise to such Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence,
unless the holders of such Designated Senior Indebtedness or the Representative
of such holders have accelerated the maturity of such Designated Senior
Indebtedness, the Company may resume payments on the Notes after the end of such
Payment Blockage Period. Not more than one Blockage Notice may be given in any
consecutive 360-day period, irrespective of the number of defaults with respect
to Designated Senior Indebtedness during such period.

Upon any payment or distribution of the assets or securities of the Company
upon a total or partial liquidation, dissolution, reorganization or bankruptcy
of or similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full in cash or Cash
Equivalents of the Senior Indebtedness (including interest accruing after, or
which would accrue but for, the commencement of any proceeding at the rate
specified in the applicable Senior Indebtedness, whether or not a claim for such
interest would be allowed) before the holders of the Notes are entitled to
receive any payment or distribution, and until the Senior Indebtedness is paid
in full in cash or Cash Equivalents, any payment or distribution to which
holders of the Notes would be entitled but for the subordination provisions of
the Indenture will be made to holders of the Senior Indebtedness as their
interests may appear. If a payment or distribution is made to holders of the
Notes that, due to the subordination provisions, should not have been made to
them, such holders are required to hold it in trust for the holders of Senior
Indebtedness and pay it over to them as their interests may appear.

If payment of the Notes is accelerated because of an Event of Default, the
Company or the Trustee will promptly notify the holders of the Designated Senior
Indebtedness or the Representative of such holders of the acceleration. The
Company may not pay the Notes until five Business Days after such holders or the
Representative of the Designated Senior Indebtedness receive notice of such
acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.

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<PAGE> 78

By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders.

SUBSIDIARY GUARANTEES

Each Subsidiary Guarantor will unconditionally guarantee, jointly and
severally, to each holder and the Trustee, on a senior subordinated basis, the
full and prompt payment of principal of, premium, if any, and interest on the
Notes, and of all other obligations of the Company under the Indenture.

The Indebtedness evidenced by each Subsidiary Guarantee (including the
payment of principal of, premium, if any, and interest on the Notes and other
obligations with respect to the Notes) will be subordinated to all Guarantor
Senior Indebtedness of such Subsidiary Guarantor on the same basis as the Notes
are subordinated to Senior Indebtedness of the Company. Each Subsidiary
Guarantee will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of such Subsidiary Guarantor. In addition, a
Subsidiary Guarantor may not incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Guarantor Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness is Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor. As of March 28, 1998, on a pro forma basis after
giving effect to the Refinancing, there would have been approximately $6.7
million of Guarantor Senior Indebtedness of Subsidiary Guarantors. See
"Description of Other Indebtedness." Although the Indenture contains limitations
on the amount of additional Indebtedness that the Company's Restricted
Subsidiaries may incur, under certain circumstances the amount of such
Indebtedness could be substantial and, in any case, such Indebtedness may be
Guarantor Senior Indebtedness. See "Certain Covenants -- Limitation on
Indebtedness" and "-- Ranking and Subordination".

The obligations of each Subsidiary Guarantor will be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including, without limitation, any
guarantees in respect of Indebtedness under the Senior Credit Agreement) and
after giving effect to any collections from or payments made by or on behalf of
any other Subsidiary Guarantor in respect of the obligations of such other
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under the Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.

Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor without limitation. Each
Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation, partnership or trust other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor) except that if the surviving corporation of any such
merger or consolidation is a Subsidiary of the Company, such Subsidiary may not
be a Foreign Subsidiary. Upon the sale or disposition of a Subsidiary Guarantor
(by merger, consolidation, the sale of its Capital Stock or the sale of all or
substantially all of its assets) to a Person (whether or not an Affiliate of the
Subsidiary Guarantor) which is not a Subsidiary of the Company, which sale or
disposition is otherwise in compliance with the Indenture (including the
covenant described under "Certain Covenants -- Limitation on Sales of Assets and
Subsidiary Stock"), such Subsidiary Guarantor will be deemed released from all
its obligations under the Indenture and its Subsidiary Guarantee and such
Subsidiary Guarantee will terminate; provided, however, that any such
termination will occur only to the extent that all obligations in respect of
Indebtedness of such Subsidiary Guarantor under the Senior Credit Agreement and
all of its guarantees of, and under all of its pledges of assets or other
security interests which secure, any other Indebtedness of the Company will also
terminate upon such release, sale or transfer.

CHANGE OF CONTROL

Upon the occurrence of any of the following events (each a "Change of
Control"), unless the Company shall have exercised its right to redeem the Notes
as described under "-- Optional Redemption", each holder will have the right to
require the Company to repurchase all or any part of such holder's Notes at a
purchase

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<PAGE> 79

price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date):

(i) (A) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire,
whether such right is exercisable immediately or only after the passage of
time), directly or indirectly, of more than 40% of the total voting power
of the Voting Stock of the Company (or its successor by merger,
consolidation or purchase of all or substantially all of its assets); and
(B) the Permitted Holders "beneficially own" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act), directly or indirectly, in the aggregate a
lesser percentage of the total voting power of the Voting Stock of the
Company (or its successor by merger, consolidation or purchase of all or
substantially all of its assets) than such other person and do not have the
right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the board of directors of the Company
or such successor; or

(ii) during any period of two consecutive years, individuals who at
the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of at least a majority of the directors of
the Company then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
so approved or is a designee of the Permitted Holders or was nominated or
elected by such Permitted Holders or any of their designees) cease for any
reason to constitute a majority of the Board of Directors of the Company
then in office; or

(iii) the sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets of the
Company and its Restricted Subsidiaries taken as a whole to any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
other than a Permitted Holder; or

(iv) the adoption by the stockholders of a plan for the liquidation or
dissolution of the Company.

Within 30 days following any Change of Control, unless the Company has
previously mailed a redemption notice with respect to all the outstanding Notes
as described under "-- Optional Redemption", the Company will mail a notice to
each holder with a copy to the Trustee stating: (i) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's Notes at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of purchase
(subject to the right of holders of record on a record date to receive interest
on the relevant interest payment date); (ii) the repurchase date (which shall be
no earlier than 30 days nor later than 60 days from the date such notice is
mailed); and (iii) the procedures determined by the Company, consistent with the
Indenture, that a holder must follow in order to have its Notes purchased.

The Company will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations described in the Indenture by virtue thereof.

The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Senior Credit Agreement. Future
Senior Indebtedness of the Company and its Subsidiaries may also contain
prohibitions of certain events that would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the holders of their right to require the Company to
repurchase the Notes could cause a default under such Senior Indebtedness, even
if the Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to the
holders upon a repurchase may be limited by

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the Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of the
Senior Credit Agreement will (and other Senior Indebtedness may) prohibit the
Company's prepayment of Notes prior to their scheduled maturity. Consequently,
if the Company is not able to prepay the Bank Indebtedness and any other Senior
Indebtedness containing similar restrictions or obtain requisite consents, as
described above, the Company will be unable to fulfill its repurchase
obligations if holders of Notes exercise their repurchase rights following a
Change of Control, thereby resulting in a default under the Indenture.

The Change of Control provisions described above may deter certain mergers,
tender offers and other takeover attempts involving the Company by increasing
the capital required to effectuate such transactions. The definition of "Change
of Control" includes a disposition of all or substantially all of the property
and assets of the Company and its Restricted Subsidiaries. With respect to the
disposition of property or assets, the phrase "all or substantially all" as used
in the Indenture varies according to the facts and circumstances of the subject
transaction, has no clearly established meaning under New York law (which is the
choice of law under the Indenture) and is subject to judicial interpretation.
Accordingly, in certain circumstances there may be a degree of uncertainty in
ascertaining whether a particular transaction would involve a disposition of
"all or substantially all" of the property or assets of a Person, and therefore
it may be unclear as to whether a Change of Control has occurred and whether the
Company is required to make an offer to repurchase the Notes as described above.

CERTAIN COVENANTS

The Indenture contains certain covenants including, among others, the
following:

Limitation on Indebtedness. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, Incur any Indebtedness; provided,
however, that the Company may Incur Indebtedness if on the date thereof the
Consolidated Coverage Ratio for the Company and its Restricted Subsidiaries is
at least (i) 2.00 to 1.00, if such Indebtedness is Incurred on or prior to the
second anniversary of the Issue Date and (ii) 2.25 to 1.00, if such Indebtedness
is Incurred thereafter.

(b) Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness: (i)(A)
Indebtedness Incurred pursuant to the Senior Credit Agreement in an aggregate
principal amount not to exceed the greater of (1) $100 million less the amount
of all mandatory reductions of the revolving credit commitments thereunder and
(2) the Borrowing Base and (B) Indebtedness Incurred under any other senior
credit facility or facilities, providing for revolving loans; provided, that the
aggregate principal amount of all such additional revolving Indebtedness under
such other senior credit facility or facilities after giving effect to such
Incurrence, does not exceed (1) the Borrowing Base, less (2) the maximum
aggregate commitments under the Senior Credit Agreement; (ii) the Subsidiary
Guarantees and Guarantees of, or Liens in respect of, Indebtedness Incurred
pursuant to paragraph (a) above or clause (i) of this paragraph (b); (iii)
Indebtedness of the Company owing to and held by any Wholly-Owned Subsidiary or
Indebtedness of a Restricted Subsidiary owing to and held by the Company or any
Wholly-Owned Subsidiary; provided, however, that any subsequent issuance or
transfer of any Capital Stock or any other event which results in any such
Wholly-Owned Subsidiary ceasing to be a Wholly-Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to the Company or another
Wholly-Owned Subsidiary) will be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the issuer thereof; (iv) Indebtedness
represented by (A) the Notes, (B) any Indebtedness (other than the Indebtedness
described in clauses (i), (ii) and (iii)) outstanding on the Issue Date and (C)
any Refinancing Indebtedness Incurred in respect of any Indebtedness described
in this clause (iv), clause (v) or clause (vii) or Incurred pursuant to
paragraph (a) above; (v) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred (A) to provide all or any portion of
the funds utilized to consummate the transaction or series of related
transactions pursuant to which such Restricted Subsidiary became a Subsidiary or
was otherwise acquired by the Company or (B) otherwise in connection with, or in
contemplation of, such acquisition); provided, however, that at the time such
Restricted Subsidiary is acquired by the Company, the Company would have
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been able to Incur $1.00 of additional Indebtedness pursuant to paragraph (a)
above after giving effect to the Incurrence of such Indebtedness pursuant to
this clause (v); (vi) Indebtedness under Currency Agreements and Interest Rate
Agreements and certain raw material hedging transactions; provided, however,
that in the case of Currency Agreements and Interest Rate Agreements, such
Currency Agreements and Interest Rate Agreements are entered into for bona fide
hedging purposes of the Company or its Restricted Subsidiaries (as determined in
good faith by the Board of Directors or senior management of the Company) and
correspond in terms of notional amount, duration, currencies and interest rates,
as applicable, to Indebtedness of the Company or its Restricted Subsidiaries
Incurred without violation of the Indenture or to business transactions of the
Company or its Restricted Subsidiaries on customary terms entered into in the
ordinary course of business and in the case of raw material hedging
transactions, such are entered into with respect to the purchase of raw
materials and are entered in the ordinary course of business for bona fide
hedging purposes; (vii) Purchase Money Indebtedness and Capitalized Lease
Obligations Incurred on or after the Issue Date; provided, however, that the
aggregate principal amount of such Indebtedness Incurred on or after the Issue
Date and outstanding at any time pursuant to this clause (vii) shall not exceed
$15 million, and such Indebtedness as originally Incurred shall not constitute
more than 100% of the cost (determined in accordance with GAAP) of the property
so purchased or leased; and (viii) Indebtedness (other than Indebtedness
described in clauses (i)-(vii)) in a principal amount which, when taken together
with the principal amount of all other Indebtedness Incurred pursuant to this
clause (viii) and then outstanding, will not exceed $10 million.

(c) Neither the Company nor any Restricted Subsidiary will Incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly, to refinance any Subordinated Obligations of the Company
unless such Indebtedness will be subordinated to the Notes to at least the same
extent as such Subordinated Obligations. No Subsidiary Guarantor will incur any
Indebtedness under paragraph (b) above if the proceeds thereof are used,
directly or indirectly to refinance any Guarantor Subordinated Obligations of
such Subsidiary Guarantor unless such Indebtedness will be subordinated to the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Obligations.

(d) In addition, the Company will not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Notes equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien. No
Subsidiary Guarantor will Incur any Secured Indebtedness which is not Guarantor
Senior Indebtedness of such Subsidiary Guarantor unless contemporaneously
therewith effective provision is made to secure such Subsidiary Guarantor's
obligations under its Subsidiary Guarantee equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.

(e) For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness incurred pursuant to and in
compliance with, this covenant, (i) in the event that Indebtedness meets the
criteria of more than one of the types of Indebtedness described in paragraph
(b) above, the Company, in its sole discretion, will classify, or later
reclassify, such item of Indebtedness and only be required to include the amount
and type of such Indebtedness in one of such clauses; and (ii) the amount of
Indebtedness issued at a price that is less than the principal amount thereof
will be equal to the amount of the liability in respect thereof determined in
accordance with GAAP.

Limitation on Layering. The Company will not Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness
or is contractually subordinated in right of payment to Senior Subordinated
Indebtedness. No Subsidiary Guarantor will Incur any Indebtedness if such
Indebtedness is contractually subordinate or junior in ranking in any respect to
any Guarantor Senior Indebtedness of such Subsidiary Guarantor unless such
Indebtedness is Guarantor Senior Subordinated Indebtedness of such Subsidiary
Guarantor or is contractually subordinated in right of payment to Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor.

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Limitation on Restricted Payments. (a) The Company will not, and will not
permit any of its Restricted Subsidiaries, directly or indirectly, to (i)
declare or pay any dividend or make any distribution on or in respect of its
Capital Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries)
except (A) dividends or distributions payable in its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase such
Capital Stock and (B) dividends or distributions payable to the Company or a
Restricted Subsidiary of the Company (and if such Restricted Subsidiary is not a
Wholly-Owned Subsidiary, to its other holders of Capital Stock or other equity
interests, as applicable, on a pro rata basis), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company held by Persons
other than a Restricted Subsidiary of the Company or any Capital Stock of a
Restricted Subsidiary of the Company held by any Affiliate of the Company, other
than another Restricted Subsidiary (in either case, other than in exchange for
its Capital Stock (other than Disqualified Stock)), (iii) purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase or acquisition) or (iv)
make any Investment (other than a Permitted Investment) in any Unrestricted
Subsidiary or any other Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to in clauses (i) through (iv) as a "Restricted Payment"),
if at the time the Company or such Restricted Subsidiary makes such Restricted
Payment: (A) a Default shall have occurred and be continuing (or would result
therefrom); or (B) the Company is not able to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under "Limitation on Indebtedness"; or
(C) the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made (without double counting) subsequent to the Issue Date
would exceed the sum of: (1) 50% of the Consolidated Net Income accrued during
the period (treated as one accounting period) from the Issue Date to the end of
the most recent fiscal quarter ending prior to the date of such Restricted
Payment as to which financial results are available (or, in case such
Consolidated Net Income is a deficit, minus 100% of such deficit); (2) the
aggregate Net Cash Proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) or other capital contributions
subsequent to the Issue Date (other than net proceeds received from an issuance
or sale of such Capital Stock to a Subsidiary of the Company or an employee
stock ownership plan or similar trust to the extent such sale to an employee
stock ownership plan or similar trust is financed by loans from or guaranteed by
the Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination); (3) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent to
the Issue Date of any Indebtedness of the Company convertible or exchangeable
for Capital Stock of the Company (less the amount of any cash, or other
property, distributed by the Company upon such conversion or exchange); and (4)
the amount equal to the net reduction in Investments made by the Company or any
of its Restricted Subsidiaries in any Person resulting from (x) repurchases or
redemptions of such Investments by such Person, proceeds realized upon the sale
of such Investment to an unaffiliated purchaser, repayments of loans or advances
or other transfers of assets (including by way of dividend or distribution) by
such Person to the Company or any Restricted Subsidiary of the Company or (y)
the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries
(valued in each case as provided in the definition of "Investment") not to
exceed, in the case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of the amount of
Restricted Payments; provided, however, that no amount will be included under
this clause (4) to the extent it is already included in Consolidated Net Income.

(b) The provisions of paragraph (a) will not prohibit: (i) any purchase or
redemption of Capital Stock or Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock of the Company issued or sold to a Subsidiary or an employee stock
ownership plan or similar trust to the extent such sale to an employee stock
ownership plan or similar trust is financed by loans from or guaranteed by the
Company or any Restricted Subsidiary unless such loans have been repaid with
cash on or prior to the date of determination); provided, however, that (A) such
purchase or redemption will be excluded in

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subsequent calculations of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale will be excluded from clause (C) (2) of paragraph
(a); (ii) any purchase or redemption of Subordinated Obligations of the Company
made by exchange for, or out of the proceeds of the substantially concurrent
sale of, Subordinated Obligations of the Company; provided, however, that such
purchase or redemption will be excluded in subsequent calculations of the amount
of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under "Limitation on
Sales of Assets and Subsidiary Stock" below; provided, however, that such
purchase or redemption will be excluded in subsequent calculations of the amount
of Restricted Payments; (iv) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would have complied
with this provision; provided, however, that such dividends will be included in
subsequent calculations of the amount of Restricted Payments; (v) repurchases of
Capital Stock deemed to occur upon the exercise of stock options if such Capital
Stock represents a portion of the exercise price hereof; provided, however, that
such repurchases will be excluded from the calculation of the amount of
Restricted Payments; and (vi) any repurchase, retirement or other acquisition or
retirement for value of Capital Stock of the Company held by any future, present
or former employee of the Company or any Subsidiary pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement; provided, however, that the aggregate Restricted Payment made
under this clause (vi) does not exceed in any calendar year $2 million; provided
further that such amount in any calendar year may be increased by any unused
amounts from any of the three years prior to such calendar year.

Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Company will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or become effective
any consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness or other obligations owed to the
Company, (ii) make any loans or advances to the Company or (iii) transfer any of
its property or assets to the Company, except (A) any encumbrance or restriction
pursuant to an agreement in effect at or entered into on the date of the
Indenture (including, without limitation, the Senior Credit Agreement); (B) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Indebtedness Incurred by a Restricted Subsidiary on
or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred as consideration in, or to provide all
or any portion of the funds utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary became a
Restricted Subsidiary or was acquired by the Company) and outstanding on such
date; (C) any encumbrance or restriction with respect to a Restricted Subsidiary
pursuant to an agreement effecting a refinancing of Indebtedness Incurred
pursuant to an agreement referred to in clause (A) or (B) of this covenant or
this clause (C) or contained in any amendment to an agreement referred to in
clause (A) or (B) of this covenant or this clause (C); provided, however, that
the encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such agreement or amendment are no less favorable to the
Holders of the Notes than encumbrances and restrictions contained in such
agreements; (D) in the case of clause (iii) above, any encumbrance or
restriction (1) that restricts in a customary manner the subletting, assignment
or transfer of any property or asset that is subject to a lease, license or
similar contract, or the assignment or transfer of any such lease, license or
other contract, (2) by virtue of any transfer of, agreement to transfer, option
or right with respect to, or Lien on, any property or assets of the Company or
any Restricted Subsidiary not otherwise prohibited by the Indenture, (3)
contained in mortgages, pledges or other security agreements securing
Indebtedness of a Restricted Subsidiary to the extent such encumbrance or
restrictions restrict the transfer of the property subject to such mortgages,
pledges or other security agreements or (4) pursuant to customary provisions
restricting dispositions of real property interests set forth in any reciprocal
easement agreements of the Company or any Restricted Subsidiary; (E) any
restriction with respect to a Restricted Subsidiary (or any of its property or
assets) imposed pursuant to an agreement entered into for the direct or indirect
sale or disposition of all or substantially all the Capital Stock or assets of
such Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; and (F)
encumbrances or restrictions arising or existing by reason of applicable law.

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Limitation on Sales of Assets and Subsidiary Stock. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, make any Asset
Disposition unless (i) the Company or such Restricted Subsidiary receives
consideration (including by way of relief from, or by any other Person assuming
sole responsibility for, any liabilities, contingent or otherwise) at the time
of such Asset Disposition at least equal to the fair market value, as determined
in good faith by the Board of Directors (including as to the value of all
non-cash consideration), of the shares and assets subject to such Asset
Disposition, (ii) at least 80% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash or Cash Equivalents
and (iii) an amount equal to 100% of the Net Available Cash from such Asset
Disposition is applied by the Company (or such Restricted Subsidiary, as the
case may be) (A) first, to the extent the Company or any Restricted Subsidiary,
as the case may be, elects (or is required by the terms of any Senior
Indebtedness or Indebtedness (other than Preferred Stock) of a Wholly-Owned
Subsidiary), to prepay, repay or purchase Senior Indebtedness or Indebtedness
(other than any Preferred Stock) of a Wholly-Owned Subsidiary (in each case
other than Indebtedness owed to the Company or an Affiliate of the Company)
within 180 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the extent of the balance of
such Net Available Cash after application in accordance with clause (A), at the
Company's election to invest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) within one year
from the later of the date of such Asset Disposition or the receipt of such Net
Available Cash; (C) third, to the extent of the balance of such Net Available
Cash after application and in accordance with clauses (A) and (B) (the "Excess
Proceeds"), to make an offer to purchase the Notes and other Senior Subordinated
Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Indebtedness with the proceeds from any Asset
Disposition ("Pari Passu Notes") at 100% of the principal amount thereof (or
100% of the accreted value of such Pari Passu Notes so tendered if such Pari
Passu Notes were issued at a discount) plus accrued and unpaid interest, if any,
to the date of purchase; and (D) fourth, to the extent of the balance of the
Excess Proceeds, after application in accordance with clause (C), to fund other
corporate purposes not prohibited by the Indenture; provided, however, that, in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clause (A) above, the Company or such Restricted Subsidiary will retire such
Indebtedness and will cause the related loan commitment, if any, to be
permanently reduced in an amount equal to the principal amount so prepaid,
repaid or purchased. Notwithstanding the foregoing provisions, (i) the Company
and its Restricted Subsidiaries will not be required to apply any Net Available
Cash in accordance herewith except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant exceed $5 million and (ii) in addition, the Company and its
Restricted Subsidiaries may make in the aggregate $1 million in Asset
Dispositions each year which are not subject to the provisions of this covenant.

For the purposes of this covenant, the following will be deemed to be cash:
(i) the assumption by the transferee of Senior Indebtedness of the Company or
Indebtedness of any Restricted Subsidiary of the Company and the release of the
Company or such Restricted Subsidiary from all liability on such Senior
Indebtedness or Indebtedness in connection with such Asset Disposition (in which
case the Company will, without further action, be deemed to have applied such
assumed Indebtedness in accordance with clause (iii) (A) of the preceding
paragraph) and (ii) securities received by the Company or any Restricted
Subsidiary of the Company from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.

(b) In the event of an Asset Disposition that requires the purchase of
Notes pursuant to clause (iii)(C) of paragraph (a), the Company will be required
to apply such Excess Proceeds to the repayment of the Notes and any Pari Passu
Notes as follows: (i) the Company will make an offer to purchase (an "Offer")
within ten days of such time from all holders of the Notes in accordance with
the procedures set forth in the Indenture in the maximum principal amount
(expressed as a multiple of $1,000) of Notes that may be purchased out of an
amount (the "Note Amount") equal to the product of such Excess Proceeds
multiplied by a fraction, the numerator of which is the outstanding principal
amount of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and the outstanding principal amount (or accreted
value, as the case may be) of the Pari Passu Notes at a purchase price of 100%
of the principal amount thereof plus
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accrued and unpaid interest, if any, to the date of purchase and (ii) the
Company will make an offer to purchase any Pari Passu Notes (a "Pari Passu
Offer") in an amount equal to the excess of the Excess Proceeds over the Note
Amount at a purchase price of 100% of the principal amount (or accreted value,
as the case may be) thereof plus accrued and unpaid interest, if any, to the
date of purchase in accordance with the procedures (including prorating in the
event of oversubscription) set forth in the documentation governing such Pari
Passu Notes with respect to the Pari Passu Offer. If the aggregate purchase
price of the Notes and Pari Passu Notes tendered pursuant to the Offer and the
Pari Passu Offer is less than the Excess Proceeds, the remaining Excess Proceeds
will be available to the Company for use in accordance with clause (iii)(D) of
paragraph (a) above. The Company will not be required to make an Offer for Notes
pursuant to this covenant if the Excess Proceeds available therefor are less
than $10 million (which lesser amounts will be carried forward for purposes of
determining whether an Offer is required with respect to the Excess Proceeds
from any subsequent Asset Disposition).

(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.

Limitation on Affiliate Transactions. (a) The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, enter
into or conduct any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate of the
Company (an "Affiliate Transaction") unless: (i) the terms of such Affiliate
Transaction are no less favorable to the Company or such Restricted Subsidiary,
as the case may be, than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate;
(ii) in the event such Affiliate Transaction involves an aggregate amount in
excess of $5 million, the terms of such transaction have been approved by a
majority of the members of the Board of Directors of the Company having no
personal stake in such transaction, if any (and such majority determines that
such Affiliate Transaction satisfies the criteria in (i) above); and (iii) in
the event such Affiliate Transaction involves an aggregate amount in excess of
$10 million, the Company has received a written opinion from an independent
investment banking firm of nationally recognized standing that such Affiliate
Transaction is not materially less favorable than those that might reasonably
have been obtained in a comparable transaction at such time on an arm's-length
basis from a Person that is not an Affiliate.

(b) The foregoing paragraph (a) will not apply to (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements or bonuses (whether or not pursuant to an
employment agreement), stock options and stock ownership plans approved by the
Board of Directors of the Company, (iii) loans or advances to employees in the
ordinary course of business of the Company or any of its Restricted
Subsidiaries, (iv) the payment of reasonable fees to directors of the Company
and its Restricted Subsidiaries who are not employees of the Issuer or its
Restricted Subsidiaries, (v) any payments to the Company by the Restricted
Subsidiaries pursuant to a tax sharing agreement, (vi) transactions in the
ordinary course of business between the Company or any Restricted Subsidiary
with Selfix Europe L.L.C. or its successors and (vii) any transaction between
the Company and a Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries.

Limitation on Capital Stock of Restricted Subsidiaries. The Company will
not sell any shares of Capital Stock of a Restricted Subsidiary, and will not
permit any Restricted Subsidiary, directly or indirectly, to issue or sell any
shares of its Capital Stock except: (i) to the Company or a Wholly-Owned
Subsidiary; or (ii) (A) in compliance with the covenant described under
"-- Limitation on Sales of Assets and Subsidiary Stock" if, immediately after
giving effect to such issuance or sale, such Restricted Subsidiary would
continue to be a Restricted Subsidiary or (B) if, immediately after giving
effect to such issuance or sale, such Restricted Subsidiary would no longer be a
Restricted Subsidiary, and, in each case, the Investment of the Company in such
Person after giving effect to such issuance or sale would have been permitted to
be made under the "Limitation on Restricted Payments" covenant as if made on the
date of such issuance or sale.
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Notwithstanding the foregoing, the Company may sell all the Capital Stock of a
Subsidiary as long as the Company is in compliance with the terms of the
covenant described under "-- Limitation on Sales of Assets and Subsidiary
Stock".

Limitation on the Sale or Issuance of Preferred Stock of Restricted
Subsidiaries. The Company will not sell any shares of Preferred Stock of a
Restricted Subsidiary and will not permit any Restricted Subsidiary, directly or
indirectly, to issue or sell any shares of its Preferred Stock to any Person
(other than to the Company or a Wholly-Owned Subsidiary).

SEC Reports. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, to the extent
permitted by the Exchange Act, the Company will file with the Commission, and
provide, within 15 days after the Company is required to file the same with the
Commission, the Trustee and the holders of the Notes with the annual reports and
the information, documents and other reports (or copies of such portions of any
of the foregoing as the Commission may by rules and regulations prescribe) that
are specified in Sections 13 and 15(d) of the Exchange Act. In the event that
the Company is not permitted to file such reports, documents and information
with the Commission pursuant to the Exchange Act, the Company will nevertheless
provide such Exchange Act information to the Trustee and the holders of the
Notes as if the Company were subject to the reporting requirements of Section 13
or 15(d) of the Exchange Act.

Merger and Consolidation. The Company will not consolidate with or merge
with or into, or convey, transfer or lease all or substantially all its assets
to, any Person, unless: (i) the resulting, surviving or transferee Person (the
"Successor Company") will be a corporation, partnership, trust or limited
liability company organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia and the Successor Company
(if not the Company) will expressly assume, by supplemental indenture, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Notes and the Indenture; (ii) immediately
after giving effect to such transaction (and treating any Indebtedness that
becomes an obligation of the Successor Company or any Restricted Subsidiary of
the Successor Company as a result of such transaction as having been incurred by
the Successor Company or such Restricted Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and be
continuing; (iii) immediately after giving effect to such transaction, the
Successor Company would be able to Incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness"; and (iv)
the Company has delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer and such
supplemental indenture, if any, comply with the Indenture.

The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but, in the
case of a lease of all or substantially all its assets, the Company will not be
released from the obligation to pay the principal of and interest on the Notes.

Notwithstanding the foregoing clauses (ii) and (iii), (i) any Restricted
Subsidiary of the Company may consolidate with, merge into or transfer all or
part of its properties and assets to the Company and (ii) the Company may merge
with an Affiliate incorporated solely for the purpose of reincorporating the
Company in another jurisdiction to realize tax or other benefits.

Future Subsidiary Guarantors. After the Issue Date, the Company will cause
each Restricted Subsidiary other than a Foreign Subsidiary created or acquired
by the Company which Guarantees the Bank Indebtedness or Incurs Indebtedness
under paragraph (a) of "Limitation on Indebtedness" to execute and deliver to
the Trustee a Subsidiary Guarantee pursuant to which such Subsidiary Guarantor
will unconditionally Guarantee, on a joint and several basis, the full and
prompt payment of the principal of, premium, if any and interest on the Notes on
a senior subordinated basis.

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Subsidiary Guarantor under its Subsidiary Guarantee or pursuant to its
contribution obligations under the Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not constituting a
fraudulent conveyance or fraudulent transfer under federal or state law.

Each Subsidiary Guarantor will be permitted to consolidate with or merge
into or sell its assets to the Company or another Subsidiary Guarantor without
limitation. Each Subsidiary Guarantor will be permitted to consolidate with or
merge into or sell all or substantially all its assets to a corporation,
partnership or trust other than the Company or another Subsidiary Guarantor
except that if the surviving corporation of any such merger or consolidation is
a Subsidiary of the Company, such Subsidiary may not be a Foreign Subsidiary.
Upon the sale or disposition of a Subsidiary Guarantor (by merger,
consolidation, the sale of its Capital Stock or the sale of all or substantially
all of its assets) to a Person (whether or not an Affiliate of the Subsidiary
Guarantor) which is not a Subsidiary of the Company, which sale or disposition
is otherwise in compliance with the Indenture (including the covenant described
under "-- Certain Covenants -- Limitation on Sales of Assets and Subsidiary
Stock"), such Subsidiary Guarantor will be deemed released from all its
obligations under the Indenture and its Subsidiary Guarantee and such Subsidiary
Guarantee will terminate; provided, however, that any such termination will
occur only to the extent that all obligations of such Subsidiary Guarantor under
the Senior Credit Agreement and all of its guarantees of, and under all of its
pledges of assets or other security interests which secure, any other
Indebtedness of the Company will also terminate upon such release, sale or
transfer.

Limitation on Lines of Business. The Company will not, and will not permit
any Restricted Subsidiary to, engage in any business other than a Related
Business. Notwithstanding the foregoing, the Company may acquire and operate any
business which is primarily engaged in a Related Business at the time of
acquisition.

EVENTS OF DEFAULT

Each of the following constitutes an Event of Default under the Indenture:
(i) a default in any payment of interest on any Note when due, continued for 30
days, whether or not such payment is prohibited by the provisions described
under "-- Ranking and Subordination" above, (ii) a default in the payment of
principal of any Note when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise, whether or not such
payment is prohibited by the provisions described under "-- Ranking and
Subordination" above, (iii) the failure by the Company to comply with its
obligations under "-- Certain Covenants -- Merger and Consolidation" above, (iv)
the failure by the Company to comply for 30 days after notice with any of its
obligations under the covenants described under "-- Change of Control" above or
under the covenants described under "-- Certain Covenants" above (in each case,
other than a failure to purchase Notes which will constitute an Event of Default
under clause (ii) above), (v) the failure by the Company to comply for 60 days
after notice with its other agreements contained in the Indenture, (vi)
Indebtedness of the Company or any Restricted Subsidiary is not paid within any
applicable grace period after final maturity or is accelerated by the holders
thereof because of a default and the total amount of such Indebtedness unpaid or
accelerated exceeds $5 million (the "cross acceleration provision"), (vii)
certain events of bankruptcy, insolvency or reorganization of the Company or a
Significant Subsidiary (the "bankruptcy provisions"), (viii) any judgment or
decree for the payment of money in excess of $5 million is rendered against the
Company or a Significant Subsidiary and such judgment or decree remains
undischarged or unstayed for a period of 60 days after such judgment becomes
final and non-appealable (the "judgment default provision") or (ix) any
Subsidiary Guarantee ceases to be in full force and effect (except as
contemplated by the terms of the Indenture) or any Subsidiary Guarantor denies
or disaffirms its obligations under the Indenture or its Subsidiary Guarantee.
However, a default under clauses (iv) and (v) will not constitute an Event of
Default until the Trustee or the holders of 25% in principal amount of the
outstanding Notes notify the Company of the default and the Company does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

If an Event of Default occurs and is continuing, the Trustee or the holders
of at least 25% in principal amount of the outstanding Notes by notice to the
Company and the Trustee may declare the principal of and accrued and unpaid
interest, if any, on all the Notes to be due and payable. Upon such a
declaration, such principal and accrued and unpaid interest will be due and
payable immediately. If an Event of Default relating
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to certain events of bankruptcy, insolvency or reorganization of the Company
occurs and is continuing, the principal of and accrued and unpaid interest on
all the Notes will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any holders. Under
certain circumstances, the holders of a majority in principal amount of the
outstanding Notes may rescind any such acceleration with respect to the Notes
and its consequences.

Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium, if any, or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing, (ii)
holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or expense,
(iv) the Trustee has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity and (v) the
holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability. Prior to taking any action under the
Indenture, the Trustee will be entitled to indemnification satisfactory to it in
its sole discretion against all losses and expenses caused by taking or not
taking such action.

The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of, premium, if any, or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers in good
faith determines that withholding notice is in the interests of the Noteholders.
In addition, the Company is required to deliver to the Trustee, within 120 days
after the end of each fiscal year, a certificate indicating whether the signers
thereof know of any Default that occurred during the previous year. The Company
also is required to deliver to the Trustee, within 30 days after the occurrence
thereof, written notice of any events which would constitute certain Defaults,
their status and what action the Company is taking or proposes to take in
respect thereof.

AMENDMENTS AND WAIVERS

Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for the Notes) and any past default or compliance with any
provisions may be waived with the consent of the holders of a majority in
principal amount of the Notes then outstanding. However, without the consent of
each holder of an outstanding Note affected, no amendment may, among other
things, (i) reduce the amount of Notes whose holders must consent to an
amendment, (ii) reduce the stated rate of or extend the stated time for payment
of interest on any Note, (iii) reduce the principal of or extend the Stated
Maturity of any Note, (iv) reduce the premium payable upon the redemption or
repurchase of any Note or change the time at which any Note may be redeemed as
described under "-- Optional Redemption" above, (v) make any Note payable in
money other than that stated in the Note, (vi) impair the right of any holder to
receive payment of principal of and interest on such holder's Notes on or after
the due dates therefor or to institute suit for the enforcement of any payment
on or with respect to such holder's Notes or (vii) make any change in the
amendment provisions which require each holder's consent or in the waiver
provisions.

Without the consent of any holder, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation, partnership, trust or
limited liability company of the obligations of the Company under the Indenture,
to
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provide for uncertificated Notes in addition to or in place of certificated
Notes (provided that the uncertificated Notes are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Notes are described in Section 163(f)(2)(B) of the Code), to add
further Guarantees with respect to the Notes, to secure the Notes, to add to the
covenants of the Company for the benefit of the holders or to surrender any
right or power conferred upon the Company, to make any change that does not
adversely affect the rights of any holder or to comply with any requirement of
the Commission in connection with the qualification of the Indenture under the
Trust Indenture Act. However, no amendment may be made to the subordination
provisions of the Indenture that adversely affects the rights of any holder of
Senior Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or any group or representative thereof authorized to give a
consent) consent to such change.

The consent of the holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment. After an amendment under the
Indenture becomes effective, the Company is required to mail to the holders a
notice briefly describing such amendment. However, the failure to give such
notice to all the holders, or any defect therein, will not impair or affect the
validity of the amendment.

DEFEASANCE

The Company at any time may terminate all its obligations under the Notes
and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. If the Company exercises its legal defeasance option, the Subsidiary
Guarantees in effect at such time will terminate. The Company at any time may
terminate its obligations under covenants described under "-- Certain Covenants"
(other than "-- Merger and Consolidation"), the operation of the cross
acceleration provision, the bankruptcy provisions with respect to Significant
Subsidiaries, the judgment default provision and the Subsidiary Guarantee
provision described under "Events of Default" above and the limitations
contained in clauses (iii) and (iv) under "Certain Covenants -- Merger and
Consolidation" above ("covenant defeasance").

The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its covenant
defeasance option, payment of the Notes may not be accelerated because of an
Event of Default specified in clause (iv), (vi), (vii) (with respect only to
Significant Subsidiaries), (viii) or (ix) under "-- Events of Default" above or
because of the failure of the Company to comply with clause (iii) or (iv) under
"-- Certain Covenants -- Merger and Consolidation" above.

In order to exercise either defeasance option, the Company must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same amount and
in the same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred (and, in the case of legal defeasance
only, such Opinion of Counsel must be based on a ruling of the Internal Revenue
Service or other change in applicable Federal income tax law).

CONCERNING THE TRUSTEE

LaSalle National Bank is the Trustee under the Indenture and has been
appointed by the Company as Registrar and Paying Agent with regard to the Notes.

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GOVERNING LAW

The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.

CERTAIN DEFINITIONS

"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) to be used by the Company or a Restricted
Subsidiary in a Related Business; (ii) the Capital Stock of a Person that
becomes a Restricted Subsidiary as a result of the acquisition of such Capital
Stock by the Company or a Restricted Subsidiary of the Company; or (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Restricted Subsidiary of the Company; provided, however, that, in the case of
clauses (ii) and (iii), such Restricted Subsidiary is primarily engaged in a
Related Business.

"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.

"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries (including
any disposition by means of a merger, consolidation or similar transaction)
other than (i) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly-Owned Subsidiary, (ii) the sale
of Cash Equivalents in the ordinary course of business, (iii) a disposition of
inventory in the ordinary course of business, (iv) a disposition of obsolete or
worn out equipment or equipment that is no longer useful in the conduct of the
business of the Company and its Restricted Subsidiaries and that is disposed of
in each case in the ordinary course of business, (v) the sale, discount or
factoring (with or without recourse on commercially reasonable terms) of
accounts receivable arising in the ordinary course of business, (vi)
transactions permitted under "-- Certain Covenants -- Merger and Consolidation"
above and (vii) for purposes of the covenant described in "-- Certain
Covenants Limitation on Sales of Assets and Subsidiary Stock" only, a
disposition that constitutes a Restricted Payment permitted by the covenant
described under "-- Certain Covenants -- Limitation on Restricted Payments".

"Attributable Indebtedness" in respect of a sale/leaseback transaction
means, as of the time of determination, the present value (discounted at the
interest rate assumed in making calculations in accordance with GAAP) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such sale/leaseback transaction (including any period for
which such lease has been extended).

"Average Life" means, as of the date of determination, with respect to any
Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Indebtedness or Preferred
Stock multiplied by the amount of such payment by (ii) the sum of all such
payments.

"Bank Indebtedness" means any and all amounts, whether outstanding on the
Issue Date or thereafter incurred, payable by the Company or any Subsidiary
under or in respect of the Senior Credit Agreement and any related notes,
collateral documents, letters of credit and guarantees or any Interest Rate
Agreement entered into with a Lender (as defined in the Senior Credit Agreement)
in connection with the Senior Credit Agreement, including principal, premium, if
any, interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company at the rate
specified therein whether

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or not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.

"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.

"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
40% of the aggregate book value of inventory and (ii) 75% of the aggregate book
value of all accounts receivable of the Company and its Restricted Subsidiaries
on a consolidated basis, as determined in accordance with GAAP consistently
applied. To the extent that information is not available as to the amount of
inventory or accounts receivable as of a specific date, the Company shall use
the most recent available information for purposes of calculating the Borrowing
Base.

"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.

"Capitalized Lease Obligations" means an obligation that is required to be
classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation will be the capitalized amount of such obligation determined in
accordance with GAAP, and the Stated Maturity thereof will be the date of the
last payment of rent or any other amount due under such lease prior to the first
date such lease may be terminated without penalty.

"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States Government or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (ii) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition thereof, having a credit
rating of "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors Service, Inc.; (iii) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof issued
by any commercial bank the long-term debt of which is rated at the time of
acquisition thereof at least "A" or the equivalent thereof by Standard & Poor's
Rating Group, or "A" or the equivalent thereof by Moody's Investors Service,
Inc., and having capital and surplus in excess of $250 million (or foreign
currency equivalent thereof); (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(i), (ii) and (iii) entered into with any bank meeting the qualifications
specified in clause (iii) above; (v) commercial paper rated at the time of
acquisition thereof at least "A-2" or the equivalent thereof by Standard &
Poor's Rating Group or "P-2" or the equivalent thereof by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing ratings
of investments, and in either case maturing within 270 days after the date of
acquisition thereof; and (vi) interests in any investment company which invests
solely in instruments of the type specified in clauses (i) through (v) above.

"Code" means the Internal Revenue Code of 1986, as amended.

"Consolidated Coverage Ratio" as of any date of determination means, with
respect to any Person, the ratio of (i) the aggregate amount of Consolidated
EBITDA of such Person for the period of the most recent four consecutive fiscal
quarters for which financial statements are available ending prior to the date
of such determination to (ii) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that (A) If the Company or any Restricted
Subsidiary (1) has Incurred any Indebtedness since the beginning of such period
that remains outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an
Incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest
Expense for such period will be calculated after giving effect on a pro forma
basis to such Indebtedness as if such Indebtedness had been Incurred on the
first day of such period (except that in making such computation, the amount of
Indebtedness under any revolving credit facility outstanding on the date of such
calculation will be computed based on (a) the average daily balance of such
Indebtedness during

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such four fiscal quarters or such shorter period for which such facility was
outstanding or (b) if such facility was created after the end of such four
fiscal quarters, the average daily balance of such Indebtedness during the
period from the date of creation of such facility to the date of such
calculation) and the discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period, or (2) has
repaid, repurchased, defeased or otherwise discharged any Indebtedness since the
beginning of the period that is no longer outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio involves a discharge of Indebtedness (in each case
other than Indebtedness incurred under any revolving credit facility unless such
Indebtedness has been permanently repaid), Consolidated EBITDA and Consolidated
Interest Expense for such period will be calculated after giving effect on a pro
forma basis to such discharge of such Indebtedness, including with the proceeds
of such new Indebtedness, as if such discharge had occurred on the first day of
such period, (B) if since the beginning of such period the Company or any
Restricted Subsidiary will have made any Asset Disposition or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an Asset
Disposition, the Consolidated EBITDA for such period will be reduced by an
amount equal to the Consolidated EBITDA (if positive) directly attributable to
the assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated EBITDA (if negative) directly
attributable thereto for such period and Consolidated Interest Expense for such
period will be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with such
Asset Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (C) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) will have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a calculation to be
made hereunder, which constitutes all or substantially all of an operating unit
of a business, Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred on
the first day of such period and (D) if since the beginning of such period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Company or any Restricted Subsidiary since the beginning of such
period) will have made any Asset Disposition or any Investment or acquisition of
assets that would have required an adjustment pursuant to clause (B) or (C)
above if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto as if such Asset Disposition or
Investment or acquisition occurred on the first day of such period. For purposes
of this definition, whenever pro forma effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations will be determined in good
faith by a responsible financial or accounting officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the Consolidated Interest Expense on such Indebtedness will be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (any Interest Rate Agreement applicable to
such Indebtedness for a period (not in excess of 12 months) corresponding to the
remaining term of such Interest Rate Agreement as of the date of determination).

"Consolidated EBITDA" for any period means the Consolidated Net Income for
such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) income tax expense, (ii) Consolidated Interest
Expense, (iii) depreciation expense, (iv) amortization of intangibles and (v)
other non-cash charges reducing Consolidated Net Income (excluding any such
non-cash charge to the extent it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that was
paid in a prior period not included in the calculation). Notwithstanding the
foregoing, the provision for taxes based on the income or profits of, and the
interest, depreciation and amortization of, a

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Restricted Subsidiary of a Person will be added to Consolidated Net Income to
compute Consolidated EBITDA of such Person only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
the Consolidated Net Income of such Person.

"Consolidated Interest Expense" means, for any period, the total interest
expense of the Company and its Consolidated Subsidiaries, plus, to the extent
not included in such interest expense, (i) interest expense attributable to
Capitalized Lease Obligations and the interest portion of rent expense
associated with Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a capitalized lease in
accordance with GAAP, (ii) amortization of debt discount and debt issuance cost
(other than costs incurred in connection with the Refinancing), (iii)
capitalized interest and accrued interest, (iv) non-cash interest expense, (v)
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing, (vi) interest actually paid by the
Company or any such Subsidiary under any Guarantee of Indebtedness or other
obligation of any other Person, (vii) net costs associated with Hedging
Obligations (including amortization of fees), (viii) dividends in respect of all
Disqualified Stock of the Company and all Preferred Stock of Subsidiaries, in
each case, held by Persons other than the Company or a Wholly-Owned Subsidiary
and (ix) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust; provided, however, that there will
be excluded therefrom any such interest expense of any Unrestricted Subsidiary
to the extent the related Indebtedness is not Guaranteed or paid by the Company
or any Restricted Subsidiary. For purposes of the foregoing, total interest
expense will be determined after giving effect to any net payments made or
received by the Company and its Subsidiaries with respect to Interest Rate
Agreements. Notwithstanding the foregoing, the Consolidated Interest Expense
with respect to any Restricted Subsidiary of the Company that was not a
Wholly-Owned Subsidiary will be included only to the extent (and in the same
proportion) that the net income of such Restricted Subsidiary was included in
calculating Consolidated Net Income.

"Consolidated Net Income" means, for any period, the net income (loss) of
the Company and its Consolidated Subsidiaries; provided, however, that there
will not be included in such Consolidated Net Income: (i) any net income (loss)
of any Person if such Person is not a Restricted Subsidiary, except that (A)
subject to the limitations contained in (iv) below, the Company's equity in the
net income of any such Person for such period will be included in such
Consolidated Net Income up to the aggregate amount of cash actually distributed
by such Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to a Restricted Subsidiary, to the limitations contained in clause
(iii) below) and (B) the Company's equity in a net loss of any such Person
(other than an Unrestricted Subsidiary) for such period will be included in
determining such Consolidated Net Income to the extent such loss has been funded
with cash from the Company or a Restricted Subsidiary; (ii) any net income
(loss) of any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income (loss) of any Restricted Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (A) subject to the limitations contained
in (iv) below the Company's equity in the net income of any such Restricted
Subsidiary for such period will be included in such Consolidated Net Income up
to the aggregate amount of cash that could have been distributed by such
Restricted Subsidiary during such period to the Company or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution that could have been made to another Restricted
Subsidiary, to the limitation contained in this clause) and (B) the Company's
equity in a net loss of any such Restricted Subsidiary for such period will be
included in determining such Consolidated Net Income; (iv) any gain (loss)
realized upon the sale or other disposition of any property, plant, equipment or
other asset of the Company or its consolidated Subsidiaries which is not sold or
otherwise disposed of in the ordinary course of business and any gain (loss)
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) any extraordinary gain or loss and (vi) the cumulative effect of a change in
accounting principles.

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"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.

"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

"Designated Senior Indebtedness" means (i) the Bank Indebtedness in the
case of the Company and (ii) any other Senior Indebtedness which, at the date of
determination, has an aggregate principal amount outstanding of, or under which,
at the date of determination, the holders thereof are committed to lend up to,
at least $25 million and is specifically designated in the instrument evidencing
or governing such Senior Indebtedness as "Designated Senior Indebtedness" for
purposes of the Indenture.

"Disqualified Stock" means, with respect to any Person, any Capital Stock
of such Person which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding capital stock which is convertible or exchangeable
solely at the option of the Company or a Restricted Subsidiary) or (iii) is
redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the Stated Maturity of the Notes, provided, that only the
portion of Capital Stock which so matures or is mandatorily redeemable, is so
convertible or exchangeable or is so redeemable at the option of the holder
thereof prior to such Stated Maturity will be deemed to be Disqualified Stock.

"Equity Offering" means an offering for cash by the Company of its common
stock, or options, warrants or rights with respect to its common stock.

"Fiscal Year" means a 52 or 53 week period ending on the last Saturday in
December.

"Foreign Subsidiary" means any Subsidiary that is not organized under the
laws of the United States of America or any state thereof or the District of
Columbia.

"GAAP" means generally accepted accounting principles in the United States
of America as in effect as of the date of the Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture will be computed in conformity with GAAP.

"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness of such other Person (whether arising by virtue of partnership
arrangements, or by agreements to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, the following obligations, whether outstanding on the date of the
Indenture or thereafter issued, without duplication: (i) any Subsidiary
Guarantee of the Bank Indebtedness by such Subsidiary Guarantor and all other
Subsidiary Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Company or Guarantor Senior Indebtedness for any other Subsidiary Guarantor; and
(ii) all obligations consisting of the principal of and premium, if any, and
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to the Subsidiary
Guarantor regardless of whether post filing interest is allowed in such
proceeding) on, and fees and other amounts owing in respect of, all other
Indebtedness of the Subsidiary Guarantor, unless, in the instrument creating or
evidencing the same or

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pursuant to which the same is outstanding, it is expressly provided that the
obligations in respect of such Indebtedness are not senior in right of payment
to the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee;
provided, however, that Guarantor Senior Indebtedness will not include (A) any
obligations of such Subsidiary Guarantor to another Subsidiary Guarantor or any
other Subsidiary of the Subsidiary Guarantor, (B) any liability for Federal,
state, local, foreign or other taxes owed or owing by such Subsidiary Guarantor,
(C) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including Guarantees thereof or instruments
evidencing such liabilities), (D) any Indebtedness of such Subsidiary Guarantor
that is expressly subordinate in right of payment to any of the Indebtedness of
such Subsidiary Guarantor, including any Guarantor Senior Subordinated
Indebtedness and Guarantor Subordinated Obligations of such Subsidiary Guarantor
or (E) any obligation with respect to Capital Stock.

"Guarantor Senior Subordinated Indebtedness" means with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that specifically
provides that such Indebtedness is to rank pari passu in right of payment with
the obligations of such Subsidiary Guarantor under the Subsidiary Guarantee and
is not expressly subordinated by its terms in right of payment to any
Indebtedness of such Subsidiary Guarantor which is not Guarantor Senior
Indebtedness of such Subsidiary Guarantor.

"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter Incurred) which is expressly subordinate in right
of payment to the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee pursuant to a written agreement.

"Hedging Obligations" of any Person means the obligations of such Person
pursuant to any Interest Rate Agreement or Currency Agreement.

"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Restricted Subsidiary (whether by
merger, consolidation, acquisition or otherwise) will be deemed to be Incurred
by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary.

"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium, if any,
in respect of indebtedness of such Person for borrowed money; (ii) the principal
of and premium, if any, in respect of obligations of such Person evidenced by
bonds, debentures, notes or other similar instruments; (iii) all obligations of
such Person in respect of letters of credit or other similar instruments
(including reimbursement obligations with respect thereto); (iv) all obligations
of such Person to pay the deferred and unpaid purchase price of property or
services (except trade payables), which purchase price is due more than six
months after the date of placing such property in service or taking delivery and
title thereto or the completion of such services; (v) all Capitalized Lease
Obligations and all Attributable Indebtedness of such Person; (vi) the amount of
all obligations of such Person with respect to the redemption, repayment or
other repurchase of any Disqualified Stock or, with respect to any Subsidiary,
any Preferred Stock (but excluding, in each case, any accrued dividends); (vii)
all Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided, however,
that the amount of such Indebtedness will be the lesser of (A) the fair market
value of such asset at such date of determination and (B) the amount of such
Indebtedness of such other Persons; (viii) all Indebtedness of other Persons to
the extent Guaranteed by such Person; and (ix) to the extent not otherwise
included in this definition, net obligations of such Person under Currency
Agreements and Interest Rate Agreements (the amount of any such obligations to
be equal at any time to the net termination value of such agreement or
arrangement giving rise to such obligation that would be payable by such Person
at such time). The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.

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"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.

"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by, such Person. For purposes
of the "Limitation on Restricted Payments" covenant, (i) "Investment" will
include the portion (proportionate to the Company's equity interest in a
Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Restricted Subsidiary of the Company
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company will be deemed to continue to have a
permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive)
equal to (A) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (B) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so re-designated a Restricted
Subsidiary; and (ii) any property transferred to or from an Unrestricted
Subsidiary will be valued at its fair market value at the time of such transfer,
in each case as determined in good faith by the Board of Directors of the
Company.

"Issue Date" means the date on which the Notes are originally issued.

"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

"Net Available Cash" from an Asset Disposition means cash payments received
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other noncash form) therefrom, in each case net of (i) all
legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Disposition, in accordance with the terms of any Lien upon, or other
security agreement of any kind with respect to, such assets, or which must by
its terms, or in order to obtain a necessary consent to such Asset Disposition,
or by applicable law be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition and (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset Disposition.

"Net Cash Proceeds", with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.

"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.

"Officers' Certificate" means a certificate signed by two Officers.

"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
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"Permitted Holders" means (i) directors and officers of the Company on the
Issue Date and (ii) Chase Venture Capital Associates, L.P. and any Affiliate
thereof.

"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in (i) a Restricted Subsidiary or a Person which will, upon the
making of such Investment, become a Restricted Subsidiary; provided, however,
that the primary business of such Restricted Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) cash and Cash Equivalents; (iv) receivables owing to the Company or any
Restricted Subsidiary created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary trade terms; provided,
however, that such trade terms may include such concessionary trade terms as the
Company or any such Restricted Subsidiary deems reasonable under the
circumstances; (v) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of business;
(vi) loans or advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Restricted Subsidiary;
(vii) any Investment in an entity conducting a Related Business that is not a
Restricted Subsidiary; provided that the aggregate fair market value of all
Investments made pursuant to this clause (vii) (valued on the date each such
Investment was made and without giving effect to subsequent changes in value)
may not at any one time exceed $5 million; (viii) Investments in Selfix Europe,
L.L.C. or its Successors; provided that the aggregate fair market value of all
Investments made pursuant to this clause (viii) (valued on the date each such
Investment was made and without giving effect to subsequent changes in value)
may not at any one time exceed $3 million; (ix) stock, obligations or securities
received in settlement of debts created in the ordinary course of business and
owing to the Company or any Restricted Subsidiary or in satisfaction of
judgments; (x) any Investment in securities or other assets received in
connection with Asset Dispositions made in accordance with the provisions of the
covenant described under "Certain Covenants -- Limitation on Sales of Assets and
Subsidiary Stock"; and (xi) Currency Agreements, Interest Rate Agreements and
related Hedging Obligations entered into in compliance with the covenant
described under "Certain Covenants -- Limitation on Indebtedness" and hedging
arrangements with respect to the purchase of raw materials entered into in the
ordinary course of business on customary terms for bona fide hedging purposes.

"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.

"Preferred Stock", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.

A "Public Market" exists at any time with respect to the common stock of
the Company if (i) the common stock of the Company is then registered with the
Commission pursuant to Section 12(b) or 12(g) of the Exchange Act and traded
either on a national securities exchange or in the National Association of
Securities Dealers Automated Quotation System and (ii) at least 15% of the total
issued and outstanding common stock of the Company has been distributed prior to
such time by means of an effective registration statement under the Securities
Act.

"Purchase Money Indebtedness" of any Person means any Indebtedness of such
person to any seller or other person incurred to finance the acquisition or
construction of any asset (or, in each case, any interest therein) acquired or
constructed after the Issue Date which is related to a Related Business of the
Company and which is incurred concurrently with, or within 180 days of, such
acquisition or the completion of such construction and, if secured, is secured
only by the assets so financed.

"Refinancing Indebtedness" means Indebtedness that is Incurred to refund,
refinance, replace, renew, repay, redeem, retire or extend (including pursuant
to any defeasance or discharge mechanism) (collectively, "refinance",
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on
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the date of the Indenture or Incurred in compliance with the Indenture
(including Indebtedness of the Company that refinances Indebtedness of any
Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that
refinances Indebtedness of another Restricted Subsidiary) including Indebtedness
that refinances Refinancing Indebtedness, provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being refinanced, (ii) the Refinancing Indebtedness
has an Average Life at the time such Refinancing Indebtedness is Incurred that
is equal to or greater than the Average Life of the Indebtedness being
refinanced, and (iii) such Refinancing Indebtedness is Incurred in an aggregate
principal amount (or if issued with original issue discount, an aggregate issue
price) that is equal to or less than the sum of the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value) then
outstanding (plus fees and expenses, including any premium and defeasance costs)
of the Indebtedness being refinanced.

"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Restricted Subsidiaries on the date of the Indenture.

"Representative" means any trustee, agent or representative (if any) of an
issue of Senior Indebtedness.

"Restricted Subsidiary" means any Subsidiary of the Company other than an
Unrestricted Subsidiary.

"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.

"Senior Credit Agreement" means (i) the Senior Secured Credit Agreement
entered into among the Company, The Chase Manhattan Bank, as Administrative
Agent, and the lenders parties thereto from time to time, as the same may be
amended, supplemented or otherwise modified from time to time and any guarantees
issued thereunder and (ii) any renewal, extension, refunding, restructuring,
replacement or refinancing thereof (whether with the original Administrative
Agent and lenders or another administrative agent or agents or other lenders and
whether provided under the original Senior Credit Agreement or any other credit
or other agreement or indenture).

"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.

"Significant Subsidiary" means any Subsidiary that would be a "Significant
Subsidiary" of the Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.

"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency beyond the control of the issuer unless such contingency has
occurred).

"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the Notes pursuant to a written agreement.

"Subsidiary" of any Person means any corporation, association, partnership
or other business entity of which more than 50% of the total voting power of
shares of Capital Stock or other interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such Person and one
or more Subsidiaries of such Person or (iii) one or more Subsidiaries of such
Person. Unless otherwise specified herein, each reference to a Subsidiary will
refer to a Subsidiary of the Company.

"Subsidiary Guarantee" means, individually, any Guarantee of payment of the
Notes by a Subsidiary Guarantor pursuant to the terms of the Indenture, and,
collectively, all such Guarantees. Each such Subsidiary Guarantee will be in the
form prescribed in the Indenture.

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"Subsidiary Guarantor" means each Subsidiary of the Company in existence on
the Issue Date and any Restricted Subsidiary created or acquired by the Company
after the Issue Date (other than a Foreign Subsidiary) which Guarantees the Bank
Indebtedness or Incurs Indebtedness under paragraph (a) of the covenant
described under "Certain Covenants--Limitation on Indebtedness".

"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (ii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary of the
Company) to be an Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any Restricted Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated; provided,
however, that either (A) the Subsidiary to be so designated has total
consolidated assets of $10,000 or less or (B) if such Subsidiary has
consolidated assets greater than $10,000, then such designation would be
permitted under "--Certain Covenants--Limitation on Restricted Payments." The
Board of Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided, however, that immediately after giving effect to such
designation (i) the Company could Incur $1.00 of additional Indebtedness
pursuant to paragraph (a) under "--Certain Covenants--Limitation on
Indebtedness" and (ii) no Default shall have occurred and be continuing. Any
such designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing provisions.

"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
directors.

"Wholly-Owned Subsidiary" means a Restricted Subsidiary of the Company, all
of the Capital Stock of which (other than directors' qualifying shares) is owned
by the Company or one or more Wholly-Owned Subsidiaries.

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BOOK-ENTRY; DELIVERY AND FORM

Except as described in the next paragraph, the Notes initially will be
represented by one or more permanent global certificates in definitive, duly
registered form (the "Global Notes"). The Global Notes will be deposited on the
Issue Date with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC"), and registered in the name of a nominee of DTC.

THE GLOBAL NOTES

The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Notes, DTC or its custodian will credit, on its
internal system, an interest in such Global Notes to the respective accounts of
persons who have accounts with DTC and (ii) ownership of beneficial interests in
the Global Notes will be shown on, and the transfer of such ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). Such accounts initially will be
designated by or on behalf of the Initial Purchasers and ownership of beneficial
interests in the Global Notes will be limited to persons who have accounts with
DTC ("participants") or persons who hold interests through participants. QIBs
and institutional Accredited Investors who are not QIBs may hold their interests
in the Global Notes directly through DTC if they are participants in such
system, or indirectly through organizations which are participants in such
system.

So long as DTC, or its nominee, is the registered owner or holder of the
Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Notes represented by such Global Notes for all purposes
under the Indenture. No beneficial owner of an interest in the Global Notes will
be able to transfer that interest except in accordance with DTC's procedures, in
addition to those provided for under the Indenture with respect to the Notes.

Payments of the principal of, premium, if any, and interest on the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.

The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, and interest on the Global Notes, will credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Notes as
shown on the records of DTC or its nominee. The Company also expects that
payments by participants to owners of beneficial interests in the Global Notes
held through such participants will be governed by standing instructions and
customary practice, as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. Such payments
will be the responsibility of such participants.

Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same-day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Notes to persons in
states that require physical delivery of the Notes, or to pledge such
securities, such holder must transfer its interest in a Global Note in
accordance with the normal procedures of DTC and with the procedures set forth
in the Indenture.

DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes (including the presentation of Notes for exchange as
described below) only at the direction of one or more participants to whose
account the DTC interests in the Global Notes are credited and only in respect
of such portion of the aggregate principal amount of Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the Indenture, DTC will exchange the Global Notes
for Certificated Securities, which it will distribute to its participants.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the
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<PAGE> 101

meaning of the Uniform Commercial Code and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participants and facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes in accounts of its participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

CERTIFICATED SECURITIES

If DTC is at any time unwilling or unable to continue as a depositary for
the Global Note and a successor depositary is not appointed by the Issuer within
90 days, Certificated Securities will be issued in exchange for the Global
Notes.

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Original Notes where such Original Notes were acquired as a result
of market making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until [ ], 1998, all dealers
effecting transactions in the Exchange Notes may be required to deliver a
prospectus.

The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or at negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any such Exchange Notes. Any
broker-dealer that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Original Notes), other than commissions or concessions of any
broker-dealers and will indemnify the holders of the Original Notes (including
any broker-dealers) against certain liabilities, including liabilities under the
Securities Act. The Company will be indemnified by the holders of Original
Notes, severally, against certain liabilities, including liabilities under the
Securities Act.
94
<PAGE> 102

This Prospectus has been prepared for use in connection with the Exchange
Offer and may be used by CSI in connection with offers and sales related to
market making transactions in the Notes. CSI may act as principal or agent in
such transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale. The Company will not receive any of the
proceeds of such sales. CSI has no obligation to make a market in the Notes and
may discontinue its market making activities at any time without notice, at its
sole discretion. The Company has agreed to indemnify CSI against certain
liabilities, including liabilities under the Securities Act of 1933, and to
contribute to payments which CSI might be required to make in respect thereof.

For a description of certain relationships between the Company and CSI and
its affiliates, see "Certain Transactions."

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

Set forth below is a general description of certain of the material
anticipated federal income tax consequences of the ownership, exchange and
disposition of the Exchange Notes to Holders that receive the Exchange Notes in
exchange for Original Notes pursuant to the Exchange Offer. This discussion does
not purport to deal with all aspects of federal income taxation that may be
relevant to Holders in light of their personal investment circumstances, nor to
certain types of Holders subject to special treatment under the federal income
tax laws, such as dealers in securities or currencies, financial institutions,
tax-exempt entities, life insurance companies, persons holding Notes as a part
of a hedging, conversion or constructive sale transaction or a straddle or
holders of Notes whose "functional currency" is not the U.S. dollar, and is
generally limited to investors who will hold the Notes as capital assets within
the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended
(the "Code"). In addition, this description does not consider the effect of any
applicable foreign, state or local tax laws. Prospective investors are urged to
consult their own tax advisors as to the precise federal, state, local, foreign
and other tax consequences of the purchase, ownership and disposition of the
Notes.

This discussion is based on current provisions of the Code, existing and
proposed Treasury Regulations promulgated thereunder, rulings of the Internal
Revenue Service (the "Service") and judicial decisions now in effect, all of
which are subject to change, possibly retroactively. No ruling will be sought
from the Service with respect to the transactions contemplated hereby, and there
can be no assurance that the Service will not assert positions contrary to the
views expressed herein, or that any such contrary position would not be
sustained.

THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MIGHT BE RELEVANT TO AN INVESTOR'S DECISION TO ACQUIRE THE NOTES.
EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR CONCERNING THE APPLICATION OF
THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS PARTICULAR SITUATION
BEFORE DETERMINING WHETHER TO ACQUIRE THE NOTES.

TAX CONSIDERATIONS FOR U.S. HOLDERS

For purposes of this summary, a "U.S. Holder" is any person who is (i) a
citizen or resident of the United States; (ii) a corporation or partnership
created under the laws of the United States or any political subdivision
thereof; (iii) an estate, the income of which is subject to United States
federal income taxation without regard to the source of income; or (iv) a trust
if a U.S. court is able to exercise primary supervision over the administration
of such trust and one or more U.S. persons have the authority to control all
substantial decisions of such trust. A "Non-U.S. Holder" is any holder who is
not a U.S. Holder.

Exchange Pursuant to Exercise of Registration Rights

Neither an exchange of Original Notes for Exchange Notes nor the filing of
a registration statement with respect to the resale of the Notes should be a
taxable event to Holders of Notes, and Holders should not

95
<PAGE> 103

recognize any taxable gain or loss or any interest income as a result of such an
exchange or such a filing. Further, the holding period of the Exchange Notes
will include the holding period of the Original Notes, and the basis of the
Exchange Notes will be the same as the basis of the Original Notes immediately
before the exchange.

Taxation of Stated Interest

The Original Notes were issued at their stated principal amount and
accordingly were not issued with "original issue discount" within the meaning of
Section 1273 of the Code. Thus, stated interest on a Note will be includible in
the gross income of a U.S. Holder as ordinary income when received or accrued by
such U.S. Holder in accordance with its method of tax accounting.

Gain or Loss on Disposition of the Notes

If a Note is sold, exchanged or otherwise disposed of, the U.S. Holder
generally will recognize gain or loss in an amount equal to the difference
between the amount realized on the sale, exchange or other disposition and such
U.S. Holder's adjusted basis in the Note. The adjusted basis of the Note
generally will equal the U.S. Holder's cost. Any such gain or loss will
generally be capital gain or loss. Recently enacted legislation provides that
for individual U.S. Holders, the maximum rate of United States federal income
taxation generally is 28% if the Note disposed of was held for more than one
year but not more than eighteen months, and that the maximum rate generally is
20% if the Note disposed of was held for more than eighteen months.

Backup Withholding and Information Reporting

A U.S. Holder may be subject to backup withholding at the rate of 31%, with
respect to interest paid on a Note, unless such U.S. Holder (a) is a corporation
or comes within certain other exempt categories and, when required, demonstrates
this fact, or (b) provides a correct taxpayer identification number, certifies
as to the U.S. Holder's exemption from backup withholding and otherwise complies
with applicable requirements of the backup withholding rules. A U.S. Holder who
does not provide the Company or the U.S. Holder's broker with such U.S. Holder's
correct taxpayer identification number may be subject to penalties imposed by
the Service. Any amount paid as backup withholding will be credited against the
U.S. Holder's income tax liability. The Company will report to the U.S. Holders
and the Service the amount of any "reportable payments" for each calendar year
and the amount of tax withheld, if any, with respect to payments made with
respect to the Notes.

TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

Under present United States federal income and estate tax law and subject
to the discussion of backup withholding below:

(a) payments of interest on the Notes to a Non-U.S. Holder will not be
subject to federal withholding tax, provided that (1) the Non-U.S. Holder
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (2)
the Non-U.S. Holder is not (i) a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business or
(ii) a controlled foreign corporation that is related to the Company
through stock ownership and (3) either (i) the Non-U.S. Holder certifies to
the Company or its agent, under penalties of perjury, that it is not a
United States person and provides its name and address or (ii) a securities
clearing organization, bank or other financial institution which holds the
Notes and customers' Notes in the ordinary course of its trade or business
(a "financial institution") certifies to the Company or its agent under
penalties of perjury that such statement has been received by it from the
Non-U.S. Holder (or by a financial institution between it and the Non-U.S.
Holder) and furnishes the payor with a copy thereof;

(b) a Non-U.S. Holder will not be subject to federal income tax on
gain realized on the sale, redemption or other disposition of a Note,
unless (1) such Non-U.S. Holder is an individual who is present in the
United States for 183 days or more during the taxable year and certain
requirements are
96
<PAGE> 104

met or (2) the gain is effectively connected with a United States trade or
business of the Non-U.S. Holder; and

(c) a Note held by an individual Non-U.S. Holder who at the time of
death is not a citizen or resident of the United States for federal estate
tax purposes will not be subject to federal estate tax as a result of such
individual's death unless (1) the income from the Note is effectively
connected with a United States trade or business of the Non-U.S. Holder or
(2) the individual actually or constructively owns 10% or more of the total
combined voting power of all classes of stock of the Company entitled to
vote.

If a Non-U.S. Holder cannot satisfy the requirements of the "portfolio
interest" exception described in (a) above, payments of premium, if any, and
interest made to such Non-U.S. Holder will be subject to a 30% withholding tax
unless the beneficial owner of the Note provides the Company or its paying
agent, as the case may be, with a properly executed (1) IRS Form 1001 (or
successor form) claiming an exemption from withholding under the benefit of a
tax treaty or (2) IRS Form 4224 (or successor form) stating that interest paid
on the Note is not subject to withholding tax because it is effectively
connected with the beneficial owner's conduct of a trade or business in the
United States.

If a Non-U.S. Holder is engaged in a trade or business in the United States
and premium, if any, or interest on the Note is effectively connected with the
conduct of such trade or business, the Non-U.S. Holder, although exempt from the
withholding tax discussed above, will be subject to United States federal income
tax on such interest on a net income basis in the same manner as if it were a
U.S. Holder. In addition, if such holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to adjustments. For this
purpose, such premium, if any, and interest on a Note will be included in such
foreign corporation's earnings and profits.

No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-U.S. Holders
if a statement described in (a)(3) above has been received and the payor does
not have actual knowledge that the beneficial owner is a U.S. person. Payment of
the proceeds from the sale, redemption or other disposition of a Note to or
through a United States office of a broker, received by a Non-U.S. Holder will
not be subject to information reporting and backup withholding if the payor has
received the appropriate certification statement. Appropriate certification
procedures require that the Non-U.S. Holder certify as to its status as a
Non-U.S. Holder and provide its name and address. In addition, payments of the
proceeds from the sale, redemption or other disposition of a Note to or through
a foreign office of a broker or the foreign office of a custodian, nominee or
other agent acting on behalf of the beneficial owner of a Note will not be
subject to information reporting or backup withholding; however, if the broker,
custodian, nominee or other agent is a U.S. person, a controlled foreign
corporation for federal income tax purposes, or a foreign person 50% or more of
whose gross income over a specified three-year period is from a United States
trade or business, information reporting may be required with respect to such
payments. Any amounts withheld under the backup withholding rules from a payment
to a Non-U.S. Holder would be allowed as a refund or a credit against such
Non-U.S. Holder's federal income tax liability, provided that the required
information is furnished to the IRS. Recently finalized Treasury Regulations
would modify the application of information reporting requirements and the
backup withholding tax to Non-U.S. Holders effective January 1, 1999.

LEGAL MATTERS

The validity of the Exchange Notes offered hereby will be passed upon for
the Company by Sonnenschein Nath & Rosenthal, Chicago, Illinois.

EXPERTS

The consolidated financial statements of Home Products International, Inc.
and subsidiaries as of December 27, 1997 and December 28, 1996 and for the
fifty-two week periods then ended, included in this Prospectus have been audited
by Arthur Andersen LLP, independent public accountants, as stated in their
97
<PAGE> 105

report appearing herein. The consolidated statements of operations,
stockholders' equity and cash flows for the 52-week period ended December 30,
1995, of Home Products International, Inc. and subsidiaries included in this
Prospectus have been audited by Grant Thornton LLP, independent certified public
accountants, as stated in their report appearing herein. The consolidated
balance sheets of Seymour Sales Corporation and subsidiaries as of June 30, 1997
and 1996, and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the years then ended, have been audited
by Ernst & Young LLP, independent auditors, as stated in their report appearing
herein. The combined balance sheets of Tamor Plastics Corporation and Houseware
Sales, Inc. as of December 31, 1995 and 1996, and the related combined
statements of income, stockholders' equity and cash flows for the three years
then ended, have been audited by BDO Seidman, LLP, independent certified public
accountants, as stated in their report appearing herein.

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, covering the Exchange Notes offered hereby. This Prospectus does not
contain all the information set forth in the Exchange Offer Registration
Statement. For further information with respect to the Company and the Exchange
Offer, reference is made to the Exchange Offer Registration Statement.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to are not necessarily complete. With respect to such
contract, agreement or other document filed as an exhibit to the Exchange Offer
Registration Statement, reference is made to the exhibit for a more complete
description of the document or matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.

While any Original Notes remain outstanding the Company will make
available, upon request, to any holder and any prospective purchaser of Notes
the information required pursuant to Rule 144A(d)(4) under the Securities Act
during any period in which the Company is not subject to Section 13 or 15(d) of
the Exchange Act. Any such request should be directed to James E. Winslow,
Executive Vice President, Chief Financial Officer and Secretary, Home Products
International, Inc., 4501 West 47th Street, Chicago, Illinois 60632, (773)
890-1010.

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's Regional Offices at Seven World Trade
Center, 13th Floor, New York, New York 10048 and 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained by
mail from the Public Reference Section of the Commission at 450 West Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The reports, proxy
statements and other information may also be obtained from the Web site that the
Commission maintains at http://www.sec.gov. The Company's Common Stock is listed
on The Nasdaq Stock Market under the symbol "HPII," and such material may be
inspected at the offices of Nasdaq, National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20549.

The Indenture provides that the Company will furnish copies of the periodic
reports required to be filed with the Commission under the Exchange Act to the
holders of the Notes. If the Company is not subject to the periodic reporting
and informational requirements of the Exchange Act, it will, to the extent such
filings are accepted by the Commission, and whether or not the Company has a
class of securities registered under the Exchange Act, file with the Commission,
and provide the Trustee and the holders of the Notes within 15 days after such
filings with, annual reports containing the information required to be contained
in Form 10-K promulgated under the Exchange Act, quarterly reports containing
the information required to be contained in Form 10-Q promulgated under the
Exchange Act, and from time to time such other information as is required to be
contained in Form 8-K promulgated under the Exchange Act. If filing such reports
with the Commission is not accepted by the Commission or prohibited by the
Exchange Act, the Company will also provide copies

98
<PAGE> 106

of such reports, at its cost, to prospective purchasers of the Notes and
participants in the Exchange Offer promptly upon written request.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference:

1. Annual Report on Form 10-K for the fiscal year ended December 27,
1997.

2. Quarterly Report on Form 10-Q for the fiscal quarter ended March
28, 1998.

3. Reports on Form 8-K, dated December 30, 1997 (including the
amendment thereto on Form 8-K/A-1) and April 7, 1998.

4. Definitive Proxy Statement with respect to the Company's Annual
Meeting of Stockholders held on May 20, 1998.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of (i) the Exchange Offer and (ii) any resales by
CSI of Exchange Notes acquired pursuant to the Registration Statement of which
this Prospectus is a part, including resales of Exchange Notes acquired by it
pursuant to market making activities, hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents not
specifically described above. Requests for such documents should be directed to
James E. Winslow, Executive Vice President, Chief Financial Officer and
Secretary, 4501 West 47th Street, Chicago, Illinois 60632, (773) 890-1010.

99
<PAGE> 107

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HOME PRODUCTS INTERNATIONAL, INC.
Report of Arthur Andersen LLP............................... F-2
Report of Grant Thornton LLP................................ F-3
Consolidated Balance Sheets at December 27, 1997 and
December 28, 1996......................................... F-4
Consolidated Statements of Operations for the fiscal years
1997, 1996 and 1995....................................... F-5
Consolidated Statements of Stockholders' Equity for the
fiscal years 1997, 1996 and 1995.......................... F-6
Consolidated Statements of Cash Flows for the fiscal years
1997, 1996 and 1995....................................... F-7
Notes to Consolidated Financial Statements.................. F-8
Unaudited Quarterly Financial Information................... F-23
Report of Arthur Andersen LLP on Schedule II................ F-24
Report of Grant Thornton LLP on Schedule II................. F-25
Schedule of Valuation and Qualifying Accounts............... F-26
Condensed Consolidated Balance Sheets at March 28, 1998
(unaudited) and December 27, 1997......................... F-27
Condensed Consolidated Statements of Operations and Retained
Earnings for the thirteen week periods ended March 28,
1998 (unaudited) and March 29, 1997 (unaudited)........... F-28
Condensed Consolidated Statements of Cash Flows for the
thirteen week periods ended March 28, 1998 (unaudited) and
March 29, 1997 (unaudited)................................ F-29
Notes to Condensed Consolidated Financial Statements
(unaudited)............................................... F-30
SEYMOUR SALES CORPORATION AND SUBSIDIARIES
Report of Ernst & Young LLP................................. F-32
Consolidated Balance Sheets as of June 30, 1997 and 1996.... F-33
Consolidated Statements of Operations for the fiscal years
1997, 1996 and 1995....................................... F-34
Consolidated Statements of Changes in Stockholders' Equity
for the fiscal years 1997, 1996 and 1995.................. F-35
Consolidated Statements of Cash Flows for the fiscal years
1997, 1996 and 1995....................................... F-36
Notes to Consolidated Financial Statements.................. F-37
Condensed Consolidated Balance Sheet at December 27, 1997
(unaudited)............................................... F-47
Condensed Consolidated Statement of Operations for the Six
Months Ended December 27, 1997 and December 28, 1996
(unaudited)............................................... F-48
Condensed Consolidated Statements of Cash Flows for the Six
Months Ended December 27, 1997 and December 28, 1996
(unaudited)............................................... F-49
Notes to Unaudited Interim Financial Statements............. F-50
TAMOR PLASTICS CORPORATION AND HOUSEWARE SALES, INC.
Report of BDO Seidman, LLP.................................. F-51
Combined Balance Sheets as of December 31, 1995 and 1996.... F-52
Combined Statements of Income for each of the three years in
the period ended December 31, 1996........................ F-53
Combined Statements of Stockholders' Equity for each of the
three years in the period ended December 31, 1996......... F-54
Combined Statements of Cash Flows for each of the three
years in the period ended December 31, 1996............... F-55
Summary of Accounting Policies.............................. F-56
Notes to Combined Financial Statements...................... F-58
</TABLE>

F-1
<PAGE> 108

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

Board of Directors
Home Products International, Inc.

We have audited the accompanying consolidated balance sheets of Home
Products International, Inc. (formerly Selfix, Inc.) (a Delaware corporation)
and subsidiaries as of December 27, 1997 and December 28, 1996, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the fifty-two week periods then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Home Products International,
Inc. and subsidiaries as of December 27, 1997 and December 28, 1996, and the
results of its operations and its cash flows for the fifty-two week periods then
ended in conformity with generally accepted accounting principles.

Arthur Andersen LLP
Chicago, Illinois

February 6, 1998, except for

Note 17 as to which the

date is May 14, 1998

F-2
<PAGE> 109

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Home Products International, Inc. (formerly Selfix, Inc.)

We have audited the accompanying consolidated statements of operations,
stockholders' equity and cash flows for the 52-week period ended December 30,
1995 of Home Products International, Inc., (formerly Selfix, Inc.). These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of their operations and their
consolidated cash flows for the 52-week period ended December 30, 1995 of Home
Products International, Inc. and Subsidiaries, in conformity with generally
accepted accounting principles.

GRANT THORNTON LLP

Chicago, Illinois
February 9, 1996

F-3
<PAGE> 110

HOME PRODUCTS INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF FISCAL YEAR END
---------------------
1997 1996
--------- ---------
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 583 $ 2,878
Accounts receivable, net of allowance for doubtful
accounts of $1,716 at December 27, 1997 and $901 at
December 28, 1996...................................... 20,802 6,476
Notes and other receivables............................... 80 119
Inventories, net.......................................... 12,797 4,391
Prepaid expenses and other current assets................. 428 100
-------- --------
Total current assets.............................. 34,690 13,964
-------- --------
Property, plant and equipment -- at cost.................... 47,634 22,515
Less accumulated depreciation and amortization.............. (19,254) (14,581)
-------- --------
Property, plant and equipment, net.......................... 28,380 7,934
-------- --------
Deferred income taxes....................................... 3,466 --
Intangible and other assets................................. 32,807 2,807
-------- --------
Total assets................................................ $ 99,343 $ 24,705
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations............... $ 3,850 $ 838
Accounts payable.......................................... 9,664 1,956
Accrued liabilities....................................... 12,913 4,018
-------- --------
Total current liabilities......................... 26,427 6,812
-------- --------
Long-term obligations -- net of current maturities.......... 30,700 6,184
Stockholders' equity:
Preferred stock -- authorized, 500,000 shares, $.01 par
value; none issued..................................... -- --
Common stock -- authorized 15,000,000 shares, $.01 par
value; 6,674,271 shares issued at December 27, 1997 and
3,881,423 shares issued at December 28, 1996........... 67 39
Additional paid-in capital................................ 33,956 10,839
Retained earnings......................................... 8,616 1,296
Common stock held in treasury -- at cost (58,762
shares)................................................ (264) (264)
Currency translation adjustments.......................... (159) (201)
-------- --------
Total stockholders' equity........................ 42,216 11,709
-------- --------
Total liabilities and stockholders' equity.................. $ 99,343 $ 24,705
======== ========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE> 111

HOME PRODUCTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FISCAL YEAR
-----------------------------------------
1997 1996 1995
----------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Net sales.................................................. $129,324 $38,200 $41,039
Cost of goods sold......................................... 88,888 22,992 25,678
-------- ------- -------
Gross profit............................................. 40,436 15,208 15,361
Operating expenses
Selling.................................................. 18,332 9,042 10,474
Administrative........................................... 8,474 4,600 6,433
Amortization of intangible assets........................ 882 201 478
Restructuring charge..................................... -- -- 2,051
-------- ------- -------
27,688 13,843 19,436
-------- ------- -------
Operating profit (loss).................................. 12,748 1,365 (4,075)
-------- ------- -------
Other income (expense)
Interest income.......................................... 50 80 230
Interest (expense)....................................... (5,152) (707) (896)
Other income............................................. 20 68 458
-------- ------- -------
(5,082) (559) (208)
-------- ------- -------
Earnings (loss) before income taxes........................ 7,666 806 (4,283)
Income tax (expense) benefit............................... (346) -- 273
-------- ------- -------
Net earnings (loss)........................................ $ 7,320 $ 806 $(4,010)
======== ======= =======
Net earnings (loss) per common share -- Basic.............. $ 1.35 $ 0.21 $ (1.11)
======== ======= =======
Net earnings (loss) per common share -- Diluted............ $ 1.29 $ 0.21 $ (1.11)
======== ======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE> 112

HOME PRODUCTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON
ADDITIONAL CURRENCY STOCK HELD
PREFERRED COMMON PAID-IN RETAINED TRANSLATION OTHER, IN TREASURY
STOCK STOCK CAPITAL EARNINGS ADJUSTMENTS NET AT COST TOTAL
--------- ------ ---------- -------- ----------- ------ ----------- -------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994....... $ -- $36 $ 9,360 $ 4,500 $(222) $(51) $ -- $13,623
Net loss........................... -- -- -- (4,010) -- -- -- (4,010)
Issuance of 250,000 shares of
common stock in connection with
the acquisition of Mericon Child
Safety Products.................. -- 3 1,372 -- -- -- -- 1,375
Issuance of 8,147 shares of common
stock in connection with exercise
of stock options................. -- -- 33 -- -- -- -- 33
Purchase of 58,762 common share
held in treasury at cost......... -- -- -- -- -- -- (264) (264)
Other.............................. -- -- -- -- -- 60 -- 60
Translation adjustments............ -- -- -- -- 30 -- -- 30
------ --- ------- ------- ----- ---- ----- -------
BALANCE AT DECEMBER 30, 1995....... -- 39 10,765 490 (192) 9 (264) 10,847
Net earnings....................... -- -- -- 806 -- -- -- 806
Issuance of 19,639 shares of common
stock in connection with employee
stock purchase plan.............. -- -- 74 -- -- -- -- 74
Other.............................. -- -- -- -- -- (9) -- (9)
Translation adjustments............ -- -- -- -- (9) -- -- (9)
------ --- ------- ------- ----- ---- ----- -------
BALANCE AT DECEMBER 28, 1996....... -- 39 10,839 1,296 (201) -- (264) 11,709
Net earnings....................... -- -- -- 7,320 -- -- -- 7,320
Issuance of 19,560 shares in
connection with employee stock
purchase plan.................... -- -- 107 -- -- -- -- 107
Issuance or 480,000 shares of
common stock in connection with
Tamor Acquisition................ -- 5 2,395 -- -- -- -- 2,400
Issuance of 2,280,000 shares of
common stock in connection with
secondary public offering........ -- 23 20,148 -- -- -- -- 20,171
Issuance of warrant................ -- -- 400 -- -- -- -- 400
Issuance of 13,288 shares of common
stock in connection with the
exercise of stock options........ -- -- 67 -- -- -- -- 67
Translation adjustments............ -- -- -- -- 42 -- -- 42
------ --- ------- ------- ----- ---- ----- -------
BALANCE AT DECEMBER 27, 1997....... $ -- $67 $33,956 $ 8,616 $(159) $ -- $(264) $42,216
====== === ======= ======= ===== ==== ===== =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-6
<PAGE> 113

HOME PRODUCTS INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FISCAL YEAR
------------------------------
1997 1996 1995
-------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)....................................... $ 7,320 $ 806 $(4,010)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 5,687 2,214 3,337
Provision for restructuring charge..................... -- -- 2,051
Changes in assets and liabilities:
(Increase) decrease in accounts receivable............. (5,428) (1,786) 494
(Increase) decrease in inventories..................... (2,280) 760 105
Decrease in refundable income taxes.................... -- 222 159
Increase in net deferred tax asset..................... (3,466) -- --
(Increase) decrease in notes and other receivables..... -- (35) 1,691
Increase (decrease) in accounts payable................ (4,695) 622 (681)
Increase (decrease) in accrued liabilities............. 5,060 (793) (603)
Other operating activities, net........................ (1,320) (187) 32
-------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 878 1,823 2,575
-------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Tamor Acquisition, net of cash acquired................... (27,876) -- --
Proceeds from sale or maturity of marketable securities... -- 515 408
Capital expenditures, net................................. (8,382) (1,624) (1,215)
Restricted cash -- Industrial Revenue Bond................ -- -- 5
Mericon Child Safety Products Acquisition, net of cash
acquired............................................... -- -- (921)
-------- ------- -------
NET CASH USED FOR INVESTING ACTIVITIES...................... (36,258) (1,109) (1,723)
-------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on borrowings.................................... (34,609) (860) (2,471)
Proceeds from borrowings and warrants..................... 44,158 -- --
Net proceeds from borrowings under revolving line of
credit................................................. 3,355 -- --
Net proceeds from secondary stock offering................ 20,171 -- --
Payment of capital lease obligation....................... (164) (32) (27)
Purchase of treasury stock................................ -- -- (264)
Exercise of common stock options and issuance of common
stock under stock purchase plan........................ 174 74 33
-------- ------- -------
NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES........ 33,085 (818) (2,729)
-------- ------- -------
Net decrease in cash and cash equivalents................. (2,295) (104) (1,877)
Cash and cash equivalents at beginning of year............ 2,878 2,982 4,859
-------- ------- -------
Cash and cash equivalents at end of year.................. $ 583 $ 2,878 $ 2,982
======== ======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest.................................................. $ 3,568 $ 599 $ 822
-------- ------- -------
Income taxes, net......................................... 1,255 (314) (457)
-------- ------- -------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-7
<PAGE> 114

HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 27, 1997, DECEMBER 28, 1996, AND DECEMBER 30, 1995
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Home Products International, Inc. (the "Company") and its subsidiary
companies design, manufacture and market products in two industry segments:
housewares products and home improvement products. Housewares products are
marketed principally through mass market trade channels throughout the United
States and internationally. Home improvement products are sold principally
through wholesalers that service the residential construction, repair, and
remodeling industry throughout the United States.

Principles of Consolidation.

The consolidated financial statements include the accounts of the Company
and its subsidiary companies. All significant intercompany transactions and
balances have been eliminated. The accompanying statements do not include the
accounts of Seymour Sales Corporation or its wholly owned subsidiary, Seymour
Housewares Corporation, (collectively, "Seymour"), as the Company did not
complete the acquisition until after the end of fiscal 1997. See Note 16 for
more information regarding the acquisition of Seymour.

Use of Estimates.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments and Credit Risk.

The carrying value of cash, cash equivalents, investments and long-term
obligations approximate their fair values based upon quoted market rates. As of
December 27, 1997, and December 28, 1996, the Company had no significant
concentrations of credit risk related to cash equivalents.

Inventories.

Inventories are stated at the lower of cost or net realizable value with
cost determined on a first in, first out (FIFO) basis.

Property, Plant and Equipment.

Property, plant and equipment are stated at cost. Depreciation is charged
against results of operations over the estimated service lives of the related
assets.

Improvements to leased property are amortized over the life of the lease or
the life of the improvement, whichever is shorter. For financial reporting
purposes, the Company uses the straight-line method of depreciation. For tax
purposes, the Company uses accelerated methods where permitted.

F-8
<PAGE> 115
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The estimated service lives of the fixed assets are as follows:

<TABLE>
<S> <C>
Buildings................................................... 30 years
Land and building under capital lease....................... lease term
Machinery, equipment and vehicles........................... 3-8 years
Tools, dies and molds....................................... 5 years
Furniture, fixtures and office equipment.................... 2-8 years
Leasehold improvements...................................... lease term
</TABLE>

Revenue Recognition.

The Company recognizes revenue as products are shipped to customers.

Intangible Assets.

Goodwill, which represents the excess of the purchase price over the fair
value of net assets acquired, is amortized over forty years. Covenants not to
compete are amortized on a straight-line basis over the terms of the respective
agreements. Patents, royalty rights, trademarks acquired and licensing
agreements are amortized over their estimated useful lives ranging from five to
ten years.

Long-Lived Assets.

In fiscal 1996, the Company adopted Statement of Financial Accounting
Standard No. 121, ("SFAS 121"), "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to be Disposed Of". The statement requires entities
to review long-lived assets and certain intangible assets in certain
circumstances, and if the value of the asset is impaired, an impairment loss
shall be recognized. The adoption of this policy had no material effect on the
Company's financial position or results of operations.

Income Taxes.

Deferred tax assets and liabilities are determined at the end of each
period, based on differences between the financial statement bases of assets and
liabilities and the tax bases of those same assets and liabilities, using the
currently enacted statutory tax rates.

Net Earnings (Loss) Per Common Share.

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"),
which established new standards for the computation and presentation of earning
per share information. As required, the Company has adopted the provisions of
SFAS 128 for its year end 1997 financial statements, and has restated all prior
year earnings per share information. Net earnings (loss) per common
share -- basic, was calculated by dividing net earnings (loss) applicable to
common shares by the weighted average number of common shares outstanding during
each year. Net earnings (loss) per common share -- diluted, reflects the
potential dilution that could occur assuming exercise of all outstanding
"in-the-money" stock options. A reconciliation of the net earnings

F-9
<PAGE> 116
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(loss) and the number of shares used in computing basic and diluted earnings per
share was as follows (in thousands, except per share amounts):

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Net earnings (loss) per common share -- Basic:
Net earnings (loss) applicable to common shares........... $7,320 $ 806 $(4,010)
====== ====== =======
Weighted average common shares outstanding for the year... 5,436 3,820 3,617
====== ====== =======
Net earnings (loss) per common share -- Basic............. $ 1.35 $ 0.21 $ (1.11)
====== ====== =======
Net earnings (loss) per common share -- Diluted:
Net earnings (loss) applicable to common shares........... $7,320 $ 806 $(4,010)
====== ====== =======
Weighted average common shares outstanding for the year... 5,436 3,820 3,617
Increase in shares which would result from exercise of
"in-the-money" stock options........................... 246 34 --
------ ------ -------
Weighted average common shares assuming conversion of the
above securities....................................... 5,682 3,854 3,617
====== ====== =======
Net earnings (loss) per common share -- Diluted........... $ 1.29 $ 0.21 $ (1.11)
====== ====== =======
</TABLE>

Benefit Plans.

The Company provides a profit sharing and savings plan (including a 401(k)
plan) to which both the Company and eligible employees may contribute. Company
contributions to the profit sharing and savings plan are voluntary and at the
discretion of the Board of Directors. The Company matches the employee 401(k)
plan contributions with certain limitations. The total Company contributions to
both plans are limited to the maximum deductible amount under the Federal income
tax law.

The Company provides retirement plans for its employees covered under
collective bargaining agreements. The amount of the Company contribution is
determined by the respective collective bargaining agreement.

The contributions to all the profit sharing, savings, and retirement plans
for 1997, 1996 and 1995, were $414, $248, and $259, respectively.

Cash and Cash Equivalents.

The Company considers all highly liquid, short-term investments with an
original maturity of three months or less, to be cash equivalents.

Fiscal Year.

The Company's fiscal year ends on the last Saturday in December. References
to the fiscal years 1997, 1996 and 1995 are for the fifty-two weeks ended
December 27, 1997, December 28, 1996 and December 30, 1995.

Related Parties.

A director of the Company is the executor and co-trustee of certain estates
and trusts which lease facilities to the Company as discussed in Note 9. In
addition, the director is a partner in a law firm which is the Company's general
counsel. Total fees paid to this law firm in fiscal 1997 were $730.

F-10
<PAGE> 117
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In fiscal 1997 the Company engaged the services of a management consulting
firm in which a director of the Company is a partner. Total fees paid to this
management consulting firm in 1997 were $99.

In fiscal 1997, Tamor purchased raw materials and packaging from vendors
whose ownership was related to certain officers of Tamor. Such transactions were
as follows: (i) raw materials totaling $9,835, and packaging totaling $1,700.
Management believes the transactions were conducted on an arm's length basis at
competitive prices.

NOTE 2. ACQUISITION OF TAMOR PLASTICS CORPORATION AND HOUSEWARE SALES, INC.

Pursuant to an agreement dated October 29, 1996, the Company, as of January
1, 1997, took operating and financial control of Tamor Plastics Corporation, and
its affiliated product distribution company, Houseware Sales, Inc.,
(collectively, "Tamor"), assumed substantially all of the liabilities of Tamor
and retained substantially all of the earnings from Tamor's operations (the
"Tamor Acquisition"). Actual results are combined since the date of effective
control although the purchase did not close until February 28, 1997. Tamor,
founded in 1947, designs, manufactures, and markets quality plastic houseware
products, including storage totes, hangers, and juvenile organization products.

The Tamor Acquisition was completed by the Company for a total purchase
price of $41,900 consisting of $27,800 in cash, $2,400 of Common Stock (480,000
shares), and the assumption of $11,700 of short and long-term debt. The funds
used for the Tamor Acquisition were obtained from a credit agreement entered
into with General Electric Capital Corporation, ("GECC"), on February 27, 1997,
(the "Credit Agreement"). See Note 9 for additional information on the Credit
Agreement.

The Tamor Acquisition was accounted for as a purchase, and the operating
results of Tamor have been included in the accompanying financial statements
from January 1, 1997, the effective date of the acquisition. The excess of the
purchase price over the fair value of the assets acquired (goodwill)
approximated $27,599 and is being amortized over a period of forty years.

The unaudited pro forma consolidated results of operations as of December
28, 1996 would have been as follows, if the Tamor Acquisition had occurred on
January 1, 1996:

<TABLE>
<S> <C>
Net sales................................................... $113,914
Gross profit................................................ 33,104
Operating Income............................................ 8,240
Net earnings................................................ 2,599
Net earnings per common share -- Basic...................... $ 0.60
Net earnings per common share -- Diluted.................... $ 0.59
</TABLE>

Adjustments made in arriving at the pro forma combined results include
increased interest expense and amortization of debt issuance costs on
acquisition debt, amortization of goodwill, and certain operating expense
reductions. No effect has been given in operating expenses to the fair value of
the assets acquired, depreciable values or lives, or synergistic benefits which
may be realized from the acquisition.

The pro forma consolidated results do not purport to be indicative of
results that would have occurred had the Tamor Acquisition been in effect as of
January 1, 1996 nor do they purport to be indicative of the results that will be
obtained in the future.

NOTE 3. ACQUISITION OF MERICON CHILD SAFETY PRODUCTS

On October 24, 1995, the Company acquired 100% of the common stock of
Mericon Child Safety Products for a total purchase price of $2,421 consisting of
250,000 shares of the Company's common stock. The acquisition was accounted for
as a purchase, and accordingly, the results of operations are included in the

F-11
<PAGE> 118
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

consolidated financial results from the date of acquisition. The purchase price
in excess of the fair value of net assets acquired (goodwill) of approximately
$1,796 is being amortized over a period of forty years.

NOTE 4. PUBLIC STOCK OFFERING

On June 30, 1997, the Company completed a secondary public offering of
2,000,000 new shares of its common stock. Net proceeds in the amount of $18,300
were used to repay the subordinated note of $7,000, term notes of $11,100, and
accrued interest of $200. On July 16, 1997, an additional 280,000 shares were
sold pursuant to an underwriter's over-allotment provision. Net proceeds of
$2,600 were used to repay term notes of $2,500 and accrued interest of $100.

See Note 9 for additional information regarding the repayment of debt.

NOTE 5. INVENTORIES

The components of the Company's inventory were as follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Finished goods........................................... $ 7,335 $ 2,604
Work-in-process.......................................... 2,225 1,003
Raw materials............................................ 3,237 784
------- -------
$12,797 $ 4,391
======= =======
</TABLE>

NOTE 6. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:

<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Buildings and land..................................... $ 5,588 $ 2,176
Land and building under capital lease.................. 2,535 2,535
Machinery, equipment and vehicles...................... 17,936 7,092
Tools and dies......................................... 16,303 6,704
Furniture, fixtures and office equipment............... 3,339 2,679
Leasehold improvements................................. 1,933 1,329
-------- --------
47,634 22,515
Less accumulated depreciation and amortization......... (19,254) (14,581)
-------- --------
$ 28,380 $ 7,934
======== ========
</TABLE>

F-12
<PAGE> 119
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 7. INTANGIBLES AND OTHER ASSETS

Intangibles and other assets consist of the following:

<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Goodwill, net of accumulated amortization of $993 on
December 27, 1997, and $223 on December 28, 1996.......... $28,892 $1,978
Covenants not to compete, net of accumulated amortization of
$13 on December 27, 1997, and $7 on December 28, 1996..... 77 23
Industrial Revenue Bond fees, net of accumulated
amortization of $230 on December 27, 1997, and $202 on
December 28, 1996......................................... 173 201
Patents, net of accumulated amortization of $1,384 on
December 27, 1997, and $1,327 on December 28, 1996........ 96 153
Licensing agreement, net of accumulated amortization of $42
on December 27, 1997, and $23 on December 28, 1996........ 153 172
Deferred financing fees, net of accumulated amortization of
$439 on December 27, 1997, and $20 on December 28, 1996... 3,320 77
Other assets................................................ 96 203
------- ------
$32,807 $2,807
======= ======
</TABLE>

NOTE 8. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Compensation and other benefits........................... $ 3,012 $1,540
Sales incentives and commissions.......................... 2,721 814
Income taxes payable...................................... 3,551 92
Other..................................................... 3,629 1,572
------- ------
$12,913 $4,018
======= ======
</TABLE>

NOTE 9. LONG-TERM OBLIGATIONS

Long-term obligations consist of the following:

<TABLE>
<CAPTION>
1997 1996
------- ------
<S> <C> <C>
Revolving credit facility, variable rate, due August 28,
2002...................................................... $ 3,355 $ --
Term Loan A, variable rate, due July 1, 2002................ 11,783 --
Term Loan B, variable rate, due July 1, 2004................ 12,938 --
Illinois Development Finance Authority (IDFA) variable rate
demand Industrial Development Revenue bonds (Shutters
Project) Series 1989, due November 1, 2002................ 2,000 2,400
Illinois Development Finance Authority (IDFA) variable rate
demand Industrial Development Revenue Bonds (Selfix, Inc.
Project) Series 1990, due September 1, 2005............... 2,400 2,800
Capital lease obligations................................... 2,074 1,822
------- ------
34,550 7,022
Less current maturities..................................... (3,850) (838)
------- ------
$30,700 $6,184
======= ======
</TABLE>

F-13
<PAGE> 120
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In connection with the Tamor Acquisition, (as more fully described in Note
2), the Company entered into a credit agreement dated February 27, 1997 (the
"Credit Agreement"), with GECC which provided (i) a $20,000 revolving credit
facility, (ii) a twenty-two quarter $20,000 term loan, and (iii) a thirty
quarter $20,000 term loan. In addition, the Company obtained a $7,000
subordinated equity bridge note (the "Subordinated Note") through GECC. However,
as more fully described in Note 16, effective December 30, 1997 the Company
terminated the February 27, 1997, Credit Agreement, and entered into a $130,000
credit agreement dated December 30, 1997 (the "12/30/97 Credit Agreement") with
GECC. In addition to the 12/30/97 Credit Agreement, the Company obtained a
$10,000 senior subordinated note, also through GECC.

In connection with the Subordinated Note, the Company issued a warrant (the
"Warrant") to purchase 79,204 shares of common stock, exercisable at 50% of the
Market price ($5.80 per share), as defined in the Warrant. The exercise period
commenced on August 1, 1997, and terminates on February 27, 2007. The Warrant
was recorded by the Company at its estimated fair value of $400. As of December
27, 1997 the Warrant had not been exercised.

As discussed in Note 4, on June 24, 1997, the Company completed a secondary
public offering of 2,000,000 shares of its common stock. Net proceeds in the
amount of $18,300 were used to fully repay the Subordinated Note of $7,000, term
notes of $11,100, and accrued interest of $200. On July 16, 1997, an additional
280,000 shares were sold pursuant to an underwriter's over-allotment provision.
Net proceeds of $2,600 were used to repay term notes of $2,500 and accrued
interest of $100.

The IDFA variable rate demand Industrial Development Bonds (Shutters
Project) Series 1989, were issued in December 1989, and mature on November 1,
2002. Interest is calculated based upon a weekly variable rate, and is paid
monthly. Principal is payable in annual installments, due on December 1. The
variable rate at December 27, 1997, and December 28, 1996, was 4.6%.

The IDFA variable rate demand Industrial Development Bonds (Selfix Project)
Series 1990, were issued in September 1990, and mature on September 1, 2005.
Interest is calculated based upon a weekly variable rate, and is paid monthly.
Principal is payable in annual installments, due on December 1. The variable
rate at December 27, 1997, and December 28, 1996, was 4.6%.

Capital lease obligations include; (i) a lease agreement between Selfix and
two related trusts for Selfix's principal factory and corporate office; and (ii)
starting in fiscal 1997, various equipment lease agreements. Lease payments to
the trusts were $519, $467 and $491, in 1997, 1996 and 1995, respectively, and
lease payments for machinery and equipment in 1997 were $140.

The following schedule shows future minimum lease payments together with
the present value of the payments for capital lease obligations.

<TABLE>
<S> <C>
Years ending:
1998........................................................ $ 430
1999........................................................ 422
2000........................................................ 417
2001........................................................ 404
2002........................................................ 367
Thereafter.................................................. 2,604
-------
4,644
Less amount representing interest........................... (2,570)
-------
Present value of minimum lease payments..................... $ 2,074
=======
Long-term portion........................................... $ 1,974
Current portion............................................. 100
-------
$ 2,074
=======
</TABLE>

F-14
<PAGE> 121
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 10. COMMITMENTS AND CONTINGENCIES

The Company leases certain manufacturing, distribution, and office
facilities under noncancellable operating leases, expiring at various dates
through 1999. Future minimum lease payments amount to $1,046, and $1,020 for
fiscal years 1998 and 1999, respectively. Rent expense under operating leases
for 1997, 1996, and 1995, was $1,184, $354, and $381, respectively.

NOTE 11. INCOME TAXES

The components of earnings (loss) before income taxes are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ -------
<S> <C> <C> <C>
Domestic................................................ $7,602 $1,122 $(3,262)
Foreign................................................. 64 (316) (1,021)
------ ------ -------
$7,666 $ 806 $(4,283)
====== ====== =======
</TABLE>

Significant components of the Company's deferred tax items as of December
27, 1997 and December 28, 1996 are as follows:

<TABLE>
<CAPTION>
1997 1996
------ -------
<S> <C> <C>
DEFERRED TAX ASSETS
Inventory reserves and overhead capitalized for tax
purposes............................................... $1,166 $ 414
Employee benefit expenses and other accruals.............. 341 450
Accounts receivable reserve............................... 423 241
Capitalized lease treated as operating lease for tax
purposes............................................... 378 430
Accrued advertising, volume rebates and reserves for
returns................................................ 890 109
Other accrued liabilities................................. 235 344
Net operating loss carryforward........................... -- 612
Other..................................................... 936 889
------ -------
Gross deferred tax assets................................... 4,369 3,489
------ -------
DEFERRED TAX LIABILITIES
Depreciation.............................................. 628 301
Other..................................................... 275 45
------ -------
Gross deferred tax liabilities.............................. 903 346
------ -------
Deferred tax assets net of deferred liabilities............. 3,466 3,143
Valuation allowance......................................... -- (3,143)
------ -------
Net deferred tax asset...................................... $3,466 $ --
====== =======
</TABLE>

In fiscal 1997, the Company received a refund of approximately $330
relating to federal income taxes paid in prior years. Through the claim for
refund filed, and the level of fiscal 1997 taxable income, the Company utilized
all federal net operating loss carryforwards in fiscal 1997.

The Company has research and development credit carryforwards of
approximately $11, expiring through the year 2010, state investment tax credit
carryforwards of approximately $86 expiring through 2000 and foreign net
operating loss carryforwards of $1,082 expiring in 2002.

The Company eliminated the valuation allowance as of December 27, 1997
based upon the determination that it is more likely than not that the Company
will realize the benefits generated from the deferred tax assets recorded.

F-15
<PAGE> 122
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Income tax expense (benefit) is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------- ----- -----
<S> <C> <C> <C>
Current
U.S. federal.............................................. $ 1,721 $ 0 $(247)
Foreign................................................... -- (10) 22
State..................................................... 346 0 (48)
------- ----- -----
2,067 (10) (273)
------- ----- -----
Deferred
U.S. federal.............................................. 1,422 266 (463)
Increase (decrease) in valuation allowance................ (3,143) (256) 463
------- ----- -----
(1,721) 10 --
------- ----- -----
Total income tax expense (benefit).......................... $ 346 $ -- $(273)
======= ===== =====
</TABLE>

Income tax expense (benefit) differs from amounts computed based on the
U.S. federal statutory tax rate applied to earnings (loss) before tax as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
------- ----- -------
<S> <C> <C> <C>
Computed at statutory U.S. federal income tax rate.......... $ 2,683 $ 282 $(1,456)
State income taxes, net of U.S. federal tax benefit......... 383 (39) (32)
Foreign tax rate difference and foreign loss
carryforwards............................................. -- -- 460
Tax exempt interest......................................... -- (12) (25)
Exercise of Stock Options................................... (34) -- --
Non deductible goodwill..................................... 62 -- --
Other....................................................... 395 25 317
Change in valuation allowance............................... (3,143) (256) 463
------- ----- -------
$ 346 $ -- $ (273)
======= ===== =======
</TABLE>

NOTE 12. STOCK OPTIONS

Under the 1987, 1991 and 1994 stock option plans as amended, (collectively,
the "Stock Option Plan") key employees and certain key nonemployees were granted
options to purchase shares of the Company's common stock. All stock option
grants are authorized by the Compensation Committee of the Board of Directors,
which is comprised of outside directors.

Options granted may or may not be "incentive stock options" as defined by
the Internal Revenue Code of 1986. The exercise price is determined by the
Company's Board of Directors at the time of grant but may not be less than 100%
of the market price at the time of grant for incentive stock options. Options
may not be granted for a term greater than ten years.

All options granted, with the exception of those granted to the Chief
Executive Officer, vest within a five year period. The options granted to the
Chief Executive Officer vest on an accelerated schedule in accordance with his
employment contract.

In 1997, the shareholders of the Company voted to increase the maximum
number of shares of common stock which may be granted under the Stock Option
Plan by 450,000 shares to a maximum available of 1,475,000. A total of 120,820
shares of common stock have been issued as of December 27, 1997 from the Stock
Option Plan, and 1,354,180 shares remain in reserve.

F-16
<PAGE> 123
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company applies APB Opinion 25 "Accounting for Stock Based
Compensation" and related interpretations in accounting for stock option awards
under the Stock Option Plan. Accordingly, no compensation cost has been
recognized in the Company's financial statements. As required by SFAS 123, the
Company has computed, for pro forma disclosure purposes, the value of options
granted during fiscal years 1997 and 1996 using an option pricing model. The
weighted average assumptions used for stock option grants for 1997 and 1996 were
a dividend yield of 0%, expected volatility of the market price of the Company's
common stock of 43% for 1997, and 41% for 1996, a weighted-average expected life
of the options of approximately five years, and weighted average risk free
interest rates of 6.3% for fiscal 1997 and 6.5% for fiscal 1996.

Option valuation models require the input of highly subjective assumptions
including the expected stock price volatility. Because changes in the subjective
input assumptions can materially affect the fair value estimates, in
management's opinion, the existing model does not necessarily provide a reliable
single measure of the fair value of its employee stock based compensation plan.

Had compensation cost for the Company's 1997 and 1996 grants been
determined using the above fair values and considering the applicable vesting
periods, the Company's reported results would have been impacted as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------ ----- -------
<S> <C> <C> <C>
Net earnings (loss)
As reported............................................ $7,320 $ 806 $(4,010)
Pro forma.............................................. 6,720 564 (4,092)
Net earnings (loss) per common share -- Basic
As reported............................................ $ 1.35 $0.21 $ (1.11)
Pro forma.............................................. $ 1.24 $0.15 $ (1.13)
Net earnings (loss) per common share -- Diluted
As reported............................................ $ 1.29 $0.21 $ (1.11)
Pro forma.............................................. $ 1.18 $0.15 $ (1.13)
</TABLE>

A summary of the transactions in the option plans is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------------- ----------------- ------------------
SHARES PRICE* SHARES PRICE* SHARES PRICE*
--------- ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding at
beginning of year...... 781,987 $ 6.21 598,527 $6.74 557,842 $8.65
Granted.................. 497,900 10.17 248,900 4.95 626,700 7.22
Exercised................ (13,288) 4.58 -- -- (8,147) 4.15
Canceled................. (45,100) 10.38 (65,440) 6.20 (577,868) 9.14
--------- ------- --------
Unexercised options
outstanding at end of
year................... 1,221,499 7.70 781,987 6.21 598,527 6.74
========= ======= ========
Options exercisable at
end of year............ 199,734 6.75 16,754 4.89 15,784 4.69
========= ======= ========
Available for grant...... 132,681 1,934 195,394
========= ======= ========
</TABLE>

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

* Weighted average

F-17
<PAGE> 124
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- --------------
<S> <C> <C> <C>
Price range of options Granted........ $4.38 - $14.00 $4.25 - $6.00 $4.13 - $12.00
Exercised............................. $4.23 - $ 5.00 $ -- - $ -- $4.00 - $ 4.23
Canceled.............................. $4.25 - $10.38 $4.13 - $8.00 $3.13 - $12.00
Outstanding........................... $4.13 - $14.00 $4.13 - $8.00 $4.13 - $ 8.00
</TABLE>

The above stock options have the following characteristics as of December
27, 1997:

<TABLE>
<CAPTION>
REMAINING
SHARES LIFE SHARES
GRANT YEAR OUTSTANDING PRICE* (IN YEARS)* EXERCISABLE
---------- ----------- ------ ----------- -----------
<S> <C> <C> <C> <C>
Pre-1995................................... 16,399 $ 5.09 5.5 16,399
1995....................................... 512,200 6.88 7.5 116,668
1996....................................... 238,000 4.96 8.8 66,667
1997....................................... 454,900 10.15 9.8 --
--------- -------
1,221,499 199,734
========= =======
</TABLE>

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

* Weighted average

NOTE 13. EMPLOYEE STOCK PURCHASE PLAN

The 1995 Employee Stock Purchase Plan allows eligible employees to purchase
up to 200,000 shares of the Company's stock. The purchase price shall be the
lesser of 85% of the fair market value of a common share on the first day of
each purchase period or the fair market value of a common share on the last day
of such purchase period, adjusted to the nearest 1/8 point. As of December 27,
1997, and December 28, 1996, 19,560, and 19,639 shares respectively had been
purchased under the plan.

NOTE 14. STATEMENT OF OPERATIONS AND RESTRUCTURING CHARGES

In the fourth quarter of 1995, the Company announced its intent to
consolidate facilities and exit additional product lines. The 1995 charge is a
result of the Company's decision to exit certain unprofitable product lines,
close the Company's Canadian facility and move the Canadian operations to the
Chicago manufacturing and distribution facilities. The restructuring charges for
these initiatives totaled $2,051. The charges for the closing and relocation of
the Canadian operation totaled $951 including severance benefits of $184
covering all of the Canadian employees. The relocation of the Canadian operation
was completed in the first half of 1996. The remaining $1,100 of restructuring
charges pertains to product lines the Company has decided to exit and the
related write-off of product molds, inventory and patents. Approximately $66 of
inventory reserves, $74 of accrued legal and accrued severance and $140 of
accrued facility closing costs remained on the Company's books at December 28,
1996. As of December 27, 1997, no balances remained in these accounts.

In 1995, the Company received approximately $1,400, net of a contingent
liability, as its share of the net proceeds from a patent suit settlement. The
Company recorded approximately $500 as its share of the proceeds in other income
in 1994.

NOTE 15. SEGMENT AND GEOGRAPHIC INFORMATION

The Company operates in two industry segments, the housewares segment and
the home improvement products segment. The housewares segment provided
approximately 94% of the Company's gross sales in 1997 and the home improvement
products segment provided approximately 6% of the Company's gross sales in 1997.
Sales to customers outside the United States in 1997 accounted for approximately
6% of total net sales

F-18
<PAGE> 125
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

with Canada accounting for approximately 2% of total net sales. Information
about the Company's operations in these segments is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Gross sales:
Housewares......................................... $129,745 $31,375 $34,543
Home improvement products.......................... 8,385 9,457 8,993
-------- ------- -------
Consolidated.................................... $138,130 $40,832 $43,536
======== ======= =======
Operating profit (loss):
Housewares......................................... $ 12,277 $ 904 $(4,892)
Home improvement products.......................... 471 461 817
-------- ------- -------
Consolidated....................................... $ 12,748 $ 1,365 $(4,075)
======== ======= =======
Identifiable assets:
Housewares......................................... $ 93,898 $19,615 $19,676
Home improvement products.......................... 5,445 5,090 5,300
-------- ------- -------
Consolidated.................................... $ 99,343 $24,705 $24,976
======== ======= =======
Depreciation and amortization:
Housewares......................................... $ 5,274 $ 1,532 $ 2,684
Home improvement products.......................... 413 682 653
-------- ------- -------
Consolidated.................................... $ 5,687 $ 2,214 $ 3,337
======== ======= =======
Capital expenditures, net:
Housewares......................................... $ 8,062 $ 982 $ 880
Home improvement products.......................... 320 642 335
-------- ------- -------
Consolidated.................................... $ 8,382 $ 1,624 $ 1,215
======== ======= =======
</TABLE>

Information about the Company's operations by geographic area is as
follows:

<TABLE>
<CAPTION>
1997 1996 1995
-------- ------- -------
<S> <C> <C> <C>
Gross sales:
United States........................................ $136,407 $38,855 $40,283
Foreign.............................................. 1,723 1,977 3,253
-------- ------- -------
Consolidated...................................... $138,130 $40,832 $43,536
======== ======= =======
Operating profit (loss):
United States........................................ $ 12,689 $ 1,386 $(2,975)
Foreign.............................................. 59 (21) (1,100)
-------- ------- -------
Consolidated...................................... $ 12,748 $ 1,365 $(4,075)
======== ======= =======
Identifiable assets:
United States........................................ $ 99,018 $24,170 $23,699
Foreign.............................................. 325 535 1,277
-------- ------- -------
Consolidated...................................... $ 99,343 $24,705 $24,976
======== ======= =======
</TABLE>

As a percentage of gross sales, a single customer represented 23% in 1997,
and 12% in each of 1996 and 1995. A second customer represented 10% of 1997
gross sales, and less than 10% of gross sales in each of 1996 and 1995.

F-19
<PAGE> 126
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 16. SUBSEQUENT EVENTS

Effective December 30, 1997, (within the Company's fiscal 1998), the
Company completed the acquisition of Seymour Sales Corporation and its wholly
owned subsidiary, Seymour Housewares Corporation, (collectively, "Seymour").
Seymour, headquartered in Seymour, Indiana, is an industry leading manufacturer
and marketer of consumer laundry care products, including a full line of ironing
boards, ironing board covers and pads, and numerous laundry related accessories.

The acquisition will be accounted for as a purchase. As such, the excess of
the purchase price over the estimated fair value of the acquired net assets,
which approximates, $35,000, will be recorded as goodwill and amortized over
forty years. The purchase price allocation will be determined in 1998 when
additional information becomes available. Accordingly, the final allocation may
have a material effect on the pro forma information presented below.

Total consideration for the acquisition was $100,700, consisting of
approximately $16,400 in cash, $14,300 in common stock (1,320,700 shares) and
the assumption of $70,000 of debt.

The following unaudited pro forma information for the fifty-two weeks ended
December 27, 1997 presents the combined results of operations as if the
acquisition had been completed at the beginning of 1997, and may not be
indicative of what would have occurred had the acquisition actually been made as
of such date, or results which may occur in the future.

Had the Seymour Acquisition occurred on January 1, 1997, pro forma net
sales would have been $222,287, and operating profit would have been $15,332.
Pro forma net income before extraordinary item would have been $3,972 or $0.59
per common share -- basic and $0.57 per common share -- diluted. Pro forma net
earnings, after a $1,800 net of tax extraordinary item for the write-off of
deferred financing fees related to a prior credit agreement would have been
$2,172 or $0.32 per common share -- basic and $0.31 per common share -- diluted.

Adjustments made in arriving at the pro forma unaudited combined results
include increased interest expense, amortization of debt issuance costs on
acquisition debt, amortization of goodwill, certain operating expense reductions
and income tax expense recorded at an estimated combined statutory rate of 40%,
prior to adjustment to the valuation allowance. No effect has been given in
operating expenses to the fair value of assets acquired, depreciable values or
lives, transition and restructuring costs or synergistic benefits which may be
realized from the acquisition.

The source of funds for the acquisition included the proceeds of a $130,000
Credit Agreement, dated December 30, 1997, (the "12/30/97 Credit Agreement"),
among the Company, Selfix, Shutters, Tamor, and Seymour, the lenders which are
parties thereto and General Electric Capital Corporation ("GECC") as agent, and
a $10,000 senior subordinated note (the "12/30/97 Senior Subordinated Note"),
dated December 30, 1997. The 12/30/97 Credit Agreement consists of a $20,000
revolving credit facility (the "12/30/97 Revolver") and $110,000 in senior term
loans. All loans under the 12/30/97 Credit Agreement are secured by
substantially all of the assets of the subsidiaries of the Company (including
Seymour) and a pledge by the Company of all the outstanding shares of capital
stock of such subsidiaries.

The provisions of the 12/30/97 Credit Agreement include restrictions on
additional indebtedness, asset sales, acquisitions or mergers, capital
expenditures and dividend payments, among other things. As defined in the
12/30/97 Credit Agreement, the Company is also required to meet certain
financial tests which include, but are not limited to, those relating to a
minimum net worth test and a minimum interest coverage ratio.

The 12/30/97 Revolver provides up to $20,000 (including a letter of credit
facility of up to $15,000) subject to the availability of sufficient qualifying
collateral. Interest is charged, at the Company's option, at either (i) the 1, 2
or 3 month reserve adjusted LIBOR rate plus a margin of 2.5%; or (ii) a floating
rate equal to the prime rate plus a margin of 1.0%. Interest is paid monthly for
borrowings which bear interest based on
F-20
<PAGE> 127
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the prime rate and is paid at the end of the applicable LIBOR period for
borrowings which bear interest based on a LIBOR rate. An unused facility fee of
.5% per annum is charged on the average unused daily balance. As of December 30,
1997, there were no borrowings outstanding on the 12/30/97 Revolver and unused
availability was $13,400. Availability was reduced by several letters of credit
outstanding as of December 30, 1997, which totaled $6,600. The 12/30/97 Revolver
terminates on December 30, 2002.

The 12/30/97 Credit Agreement also includes two senior term loans, (i)
consisting of a $50,000 twenty-four quarter senior term loan ("Senior Term Loan
A") and (ii) a $60,000 thirty-two quarter senior term loan ("Senior Term Loan
B"). Both term loans are immediately due and payable in full if the 12/30/97
Revolver is terminated.

Senior Term Loan A is required to be repaid in quarterly principal
installments commencing in April 1998. Aggregate principal repayments for the
Senior Term Loan A are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
------------
<S> <C>
1998............................................... $ 3,750
1999............................................... 6,500
2000............................................... 7,750
2001............................................... 9,500
2002............................................... 10,000
Thereafter......................................... 12,500
</TABLE>

Interest is charged, at the Company's option at either: (i) the 1, 2 or 3
month reserve adjusted LIBOR plus a margin of 2.5%; or (ii) a floating rate
equal to the prime rate plus a margin of 1.0%. Interest is paid monthly for
borrowings which bear interest based on the prime rate and is paid at the end of
the applicable LIBOR period for borrowings which bear interest based on a LIBOR
rate.

Senior Term Loan B is required to be repaid in quarterly principal
installments commencing in April of 1998. Aggregate principal repayments for the
Senior Term Loan B are as follows:

<TABLE>
<CAPTION>
YEARS ENDING
------------
<S> <C>
1998............................................... $ 450
1999............................................... 600
2000............................................... 600
2001............................................... 600
2002............................................... 600
Thereafter......................................... 57,150
</TABLE>

Interest is charged, at the Company's option, at either: (i) the 1, 2 or 3
month reserve adjusted LIBOR plus a margin of 3.0%; or (ii) a floating rate
equal to the prime rate plus a margin of 1.5%. Interest is paid monthly for
borrowings which bear interest based on the prime rate and is paid at the end of
the applicable LIBOR period for borrowings which bear interest based on a LIBOR
rate.

The interest rates applicable to the obligations outstanding under the
12/30/97 Credit Agreement are subject to adjustment (up or down) based on the
Company's year to date 1998 consolidated financial performance.

The 12/30/97 Senior Subordinated Note matures on December 30, 2006, and is
secured by a second lien on substantially all of the assets of the Company's
subsidiaries. As such, the 12/30/97 Senior Subordinated Note is subordinated in
right of payment from the proceeds of such collateral to the 12/30/97 Revolver
and to the Senior Term Loans A and B. If all outstanding obligations under the
12/30/97 Credit Agreement have been paid and the commitment under the 12/30/97
Revolver has been terminated, the Company must prepay

F-21
<PAGE> 128
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the 12/30/97 Senior Subordinated Note in full. Interest is payable monthly, and
is charged at a rate of prime plus a margin of 3%, but in no event less than 11%
per annum. The 12/30/97 Senior Subordinated Note is due and payable in a single
installment on December 30, 2006.

The 12/30/97 Senior Subordinated Note contains a fee which is due and
payable to GECC upon repayment of the principal. If the 12/30/97 Senior
Subordinated Note is repaid in full on or prior to December 30, 1999, the
required fee is $500; if repaid in full after December 30, 1999, but prior to
December 30, 2000, the fee is $750; if repaid in full after December 30, 2000,
but prior to December 30, 2001, the fee is $1,200; if repaid in full after
December 30, 2001, but prior to December 30, 2002, the fee is $1,600; and if
repaid on or after December 30, 2002, the fee is $2,000.

The 12/30/97 Credit Agreement provides for mandatory prepayments of
obligations under the 12/30/97 Credit Agreement and the 12/30/97 Senior
Subordinated Note from proceeds received in certain transactions outside the
normal scope of the Company's business, such as the sale of fixed assets, or the
receipt of insurance proceeds. Additionally, the Company is subject to an annual
mandatory prepayment out of "excess cash", as defined in the 12/30/97 Credit
Agreement. The Company will be subject to a prepayment premium, as defined in
the 12/30/97 Credit Agreement, until December 30, 1999, if the revolving credit
facility is terminated or the Company prepays all or any portion of the Senior
Term Loans A or B other than as a result of the mandatory prepayments discussed
above.

NOTE 17. SUBSIDIARY GUARANTEES OF SENIOR SUBORDINATED NOTES

In May 1998, the Company issued $125,000,000 of Senior Subordinated Notes
due 2008 (the "Notes"). Interest on the Notes is payable semi-annually at a rate
of 9.625% per annum. Proceeds from the offering were used (i) to repay
approximately $122 million of outstanding indebtedness under the 12/30/97 Credit
Agreement, and to pay certain fees, prepayment penalties and expenses related to
such repayment, (ii) to pay certain other fees and expenses incurred in
connection with the issuance of the Notes and the refinancing of the 12/30/97
Credit Agreement, and (iii) for working capital and general corporate purposes.
Concurrently with the offering of the Notes, the Company entered into a new bank
revolving credit facility in a maximum principal amount of $100,000,000, which
replaced the 12/30/97 Credit Agreement.

The Company is a holding company with no assets or operations other than
its investment in its subsidiaries. The Notes are guaranteed by all direct and
indirect subsidiaries of the Company other than inconsequential subsidiaries
(the "Subsidiary Guarantors"). The guarantee obligations of the Subsidiary
Guarantors (which are all wholly owned subsidiaries of the Company) are full,
unconditional and joint and several. There are no restrictions on the ability of
the Company's subsidiaries to pay dividends or other distributions to the
Company (other than limitations imposed by law generally on the ability of a
corporation to declare and pay dividends and distributions to its stockholders).
Separate financial statements of the Subsidiary Guarantors are not included in
the accompanying financial statements because management of the Company has
determined that separate financial statements of the Subsidiary Guarantors would
not be material to investors.

F-22
<PAGE> 129

HOME PRODUCTS INTERNATIONAL, INC.

UNAUDITED QUARTERLY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
THIRTEEN THIRTEEN THIRTEEN THIRTEEN
WEEKS WEEKS WEEKS WEEKS
ENDED ENDED ENDED ENDED
MARCH 29 JUNE 28 SEPTEMBER 27 DECEMBER 27
1997 -------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales........................................ $31,738 $33,023 $32,875 $31,688
Gross profit..................................... 9,128 10,124 10,377 10,807
Net earnings..................................... 1,032 1,789 2,421 2,078
Net earnings per common share -- Basic........... $ 0.24 $ 0.41 $ 0.37 $ 0.31
Net earnings per common share -- Diluted......... $ 0.23 $ 0.40 $ 0.36 $ 0.30
</TABLE>

<TABLE>
<CAPTION>
THIRTEEN THIRTEEN THIRTEEN THIRTEEN
WEEKS WEEKS WEEKS WEEKS
ENDED ENDED ENDED ENDED
MARCH 30 JUNE 29 SEPTEMBER 28 DECEMBER 28
1996 -------- -------- ------------ -----------
<S> <C> <C> <C> <C>
Net sales........................................ $ 8,625 $10,155 $10,728 $ 8,692
Gross profit..................................... 2,858 4,311 4,388 3,651
Net earnings (loss).............................. (1,116) 709 764 449
Net earnings (loss) per common share -- Basic.... $ (0.29) $ 0.19 $ 0.20 $ 0.11
Net earnings (loss) per common
share -- Diluted............................... $ (0.29) $ 0.19 $ 0.20 $ 0.11
</TABLE>

F-23
<PAGE> 130

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE II

Board of Directors
Home Products International Inc.

We have audited in accordance with generally accepted auditing standards
the consolidated financial statements of Home Products International, Inc.
(formerly Selfix, Inc.) as of and for the fifty-two week period ended December
27, 1997 and December 28, 1996 included in this Prospectus, and have issued our
report thereon dated February 6, 1998. Our audits were made for the purpose of
forming an opinion on those statements taken as a whole. The Valuation and
Qualifying Accounts on Schedule II is the responsibility of the Company's
management. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

Arthur Andersen LLP
Chicago, Illinois

February 6, 1998, except for

Note 17 as to which

the date is May 14, 1998

F-24
<PAGE> 131

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULE II

Board of Directors
Home Products International, Inc. (Formerly Selfix, Inc.)

In connection with our audit of the consolidated financial statements of
Home Products International, Inc. (formerly Selfix, Inc.) and Subsidiaries
referred to in our report dated February 9, 1996, we have also audited Schedule
II for the 52-week period ended December 30, 1995. In our opinion, this schedule
presents fairly, in all material respects, the information required to be set
forth therein.

GRANT THORNTON LLP

Chicago, Illinois
February 9, 1996

F-25
<PAGE> 132

SCHEDULE II
HOME PRODUCTS INTERNATIONAL, INC.

VALUATION AND QUALIFYING ACCOUNTS
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 27, 1997,
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 28, 1996,
FOR THE FIFTY-TWO WEEKS ENDED DECEMBER 30, 1995

<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
---------------------- -----------
BALANCE AT CHARGED TO (NET BALANCE
BEGINNING COSTS AND BALANCES WRITE-OFFS/ AT END
OF PERIOD EXPENSES ACQUIRED RECOVERIES) OF PERIOD
---------- ---------- -------- ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
December 27, 1997...................... $ 901 $ 499 $659 $ (343) $1,716
December 28, 1996...................... $1,395 $ 211 $ -- $ (705) $ 901
December 30, 1995...................... $1,431 $ 524 $ -- $ (560) $1,395
WARRANTY RESERVES
December 27, 1997...................... $ 453 $ -- $ -- $ (181) $ 272
December 28, 1996...................... $ 495 $ -- $ -- $ (42) $ 453
December 30, 1995...................... $ 511 $ -- $ -- $ (16) $ 495
INVENTORY RESERVES
December 27, 1997...................... $ 993 $ 698 $300 $ (624) $1,367
December 28, 1996...................... $2,411 $ 678 $ -- $(2,096) $ 993
December 30, 1995...................... $1,560 $1,648 $ -- $ (797) $2,411
</TABLE>

F-26
<PAGE> 133

HOME PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 28, DECEMBER 27,
1998 1997
--------- ------------
(UNAUDITED)
(IN THOUSANDS,
EXCEPT SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,163 $ 583
Accounts receivable, net.................................. 30,460 20,802
Inventories, net.......................................... 24,756 12,797
Prepaid expenses and other current assets................. 1,974 508
-------- ------------
Total current assets.............................. 61,353 34,690
-------- ------------
Property, plant and equipment -- at cost.................... 62,840 47,634
Less accumulated depreciation and amortization.............. (21,121) (19,254)
-------- ------------
Property, plant and equipment, net.......................... 41,719 28,380
Intangible and other assets................................. 121,947 36,273
-------- ------------
Total assets...................................... $225,019 $ 99,343
======== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations............... $ 6,591 $ 3,850
Accounts payable.......................................... 16,293 9,664
Accrued liabilities....................................... 19,784 12,913
-------- ------------
Total current liabilities......................... 42,668 26,427
-------- ------------
Long-term obligations -- net of current maturities.......... 120,075 30,700
Other liabilities........................................... 6,212 --
Stockholders' equity:
Preferred Stock -- authorized, 500,000 shares, $.01 par
value; none issued..................................... -- --
Common Stock -- authorized 15,000,000 shares, $.01 par
value; 8,003,727 shares issued at March 28, 1998 and
6,674,271 shares issued at December 27, 1997........... 80 67
Additional paid-in capital.................................. 48,282 33,956
Retained earnings........................................... 8,125 8,616
Common stock held in treasury -- at cost (58,762 shares).... (264) (264)
Currency translation adjustments............................ (159) (159)
-------- ------------
Total stockholders' equity........................ 56,064 42,216
-------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $225,019 $ 99,343
======== ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-27
<PAGE> 134

HOME PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
----------------------
MARCH 28, MARCH 29,
1998 1997
--------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
Net sales................................................... $52,408 $31,738
Cost of goods sold.......................................... 36,455 22,610
Gross profit.............................................. 15,953 9,128
Operating expenses
Selling................................................... 6,429 4,588
Administrative............................................ 3,504 1,809
Amortization of intangible assets......................... 928 205
------- -------
10,861 6,602
------- -------
Operating profit.......................................... 5,092 2,526
------- -------
Other income (expense)
Interest income........................................... 45 31
Interest (expense)........................................ (3,006) (1,532)
Other, net................................................ 13 124
------- -------
(2,948) (1,377)
------- -------
Earnings before income taxes and extraordinary charge....... 2,144 1,149
Income tax (expense)........................................ (898) (117)
------- -------
Earnings before extraordinary charge........................ 1,246 1,032
Extraordinary charge for early retirement of debt, net of
tax benefit of $1,258..................................... (1,737) --
------- -------
Net earnings (loss)......................................... (491) 1,032
Retained earnings at beginning of period.................... 8,616 1,296
------- -------
Retaining earnings at end of period......................... $ 8,125 $ 2,328
======= =======
Net earnings before extraordinary item per common
share -- Basic............................................ $ 0.16 $ 0.24
Extraordinary charge for early retirement of debt, net of
tax....................................................... (0.22) --
------- -------
Net earnings (loss) per common share -- Basic............... $ (0.06) $ 0.24
======= =======
Net earnings before extraordinary item per common
share -- Diluted.......................................... $ 0.15 $ 0.23
Extraordinary charge for early retirement of debt, net of
tax....................................................... (0.21) --
------- -------
Net earnings (loss) per common share -- Diluted............. $ (0.06) $ 0.23
======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-28
<PAGE> 135

HOME PRODUCTS INTERNATIONAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
---------------------
MARCH 28, MARCH 29,
1998 1997
--------- ---------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)....................................... $ (491) $ 1,032
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization.......................... 2,929 1,721
Changes in assets and liabilities:
Decrease (increase) in accounts receivable........... 2,807 (1,960)
(Increase) in inventories............................ (361) (1,086)
Increase (decrease) in accounts payable.............. 1,449 (310)
(Decrease) increase in accrued liabilities........... (4,290) 697
Other operating activities, net........................ 2,116 160
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES................... 4,159 254
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Seymour acquisition, net of cash acquired................. (14,882) --
Tamor acquisition, net of cash acquired................... -- (27,792)
Capital expenditures, net................................. (4,034) (597)
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES...................... (18,916) (28,389)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on borrowings.................................... (99,218) (11,744)
Net proceeds from borrowings and warrants................. 117,538 43,671
Payment of capital lease obligation....................... (42) (9)
Exercise of common stock options and issuance of common
stock under stock purchase plan........................ 59 47
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES................... 18,337 31,965
Net increase in cash and cash equivalents................. 3,580 3,830
Cash and cash equivalents at beginning of period.......... 583 2,879
-------- --------
Cash and cash equivalents at end of period................ $ 4,163 $ 6,709
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest.................................................. $ 2,686 $ 300
-------- --------
Income taxes, net......................................... $ 905 $ --
-------- --------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-29
<PAGE> 136

HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1. Home Products International, Inc. (the "Company") and its
subsidiary companies design, manufacture and market products in two industry
segments: housewares products and home improvement products. Housewares products
are marketed principally through mass market trade channels throughout the
United States and internationally. Home improvement products are sold
principally through wholesalers that service the residential construction,
repair, and remodeling industry throughout the United States.

The condensed consolidated financial statements include the accounts of the
Company and its subsidiary companies. All significant intercompany transactions
and balances have been eliminated.

The unaudited condensed financial statements included herein as of and for
the thirteen weeks ended March 28, 1998 and for the thirteen weeks ended March
29, 1997 reflect, in the opinion of the Company, all adjustments (which include
only normal recurring adjustments) necessary for the fair presentation of the
financial position, the results of operations and cash flows. These unaudited
financial statements should be read in conjunction with the audited financial
statements and related notes thereto included in this Prospectus. The results
for the interim periods presented are not necessarily indicative of results to
be expected for the full year.

NOTE 2. Effective December 30, 1997 (within fiscal 1998) the Company
completed the acquisition of Seymour Sales Corporation and its wholly owned
subsidiary Seymour Housewares Corporation, (collectively "Seymour"). Seymour,
headquartered in Seymour, Indiana is an industry leading manufacturer and
marketer of consumer laundry care products, including a full line of ironing
boards, ironing board covers and pads and numerous laundry related accessories.

On December 30, 1997, in connection with the Company's acquisition of
Seymour, the Company refinanced its primary credit facility. As a result, the
Company was required to record a extraordinary charge related to the write-off
of certain deferred financing fees previously capitalized.

The pro forma impact of the acquisition of Seymour and the related
financing on the Company's historical results together with a detailed
description of the related financing is more fully described in Note 16 to the
Consolidated Financial Statements of the Company included in this Prospectus.

NOTE 3. Inventories are summarized as follows (in thousands):

<TABLE>
<CAPTION>
MARCH 28, DECEMBER 27,
1998 1997
--------- ------------
<S> <C> <C>
Finished goods....................................... $13,059 $ 7,335
Work-in-process...................................... 4,516 2,225
Raw materials........................................ 7,181 3,237
------- -------
$24,756 $12,797
======= =======
</TABLE>

NOTE 4. During fiscal 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings per Share," which established standards
for the computation and presentation of earnings per share information. Prior
period net earnings (loss) per share have been restated. Net earnings (loss) per
common share-basic, was calculated by dividing net earnings (loss) applicable to
common shares by the weighted average number of common shares outstanding during
each period. Net earnings (loss) per common share-diluted, reflects the
potential dilution that could occur assuming exercise of all outstanding
"in-the-

F-30
<PAGE> 137
HOME PRODUCTS INTERNATIONAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

money" stock options. A reconciliation of the net earnings (loss) and the number
of shares used in computing basic and diluted earnings per share was as follows
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
FOR THE THIRTEEN
WEEKS ENDED
----------------------
MARCH 28, MARCH 29,
1998 1997
--------- ---------
<S> <C> <C>
NET EARNINGS (LOSS) PER COMMON SHARE-BASIC:
Net earnings (loss) applicable to common shares............. $ (491) $1,032
====== ======
Weighted average common shares outstanding for the period... 7,929 4,299
====== ======
Net earnings (loss) per common share-Basic.................. $(0.06) $ 0.24
====== ======
Net earnings (loss) per common share-Diluted:
Net earnings (loss) applicable to common shares............. $ (491) $1,032
====== ======
Weighted average common shares outstanding for the period... 7,929 4,299
Increase in shares which would result from exercise of
"in-the-money" stock options.............................. 387 215
------ ------
Weighted average common shares assuming conversion of the
above securities.......................................... 8,316 4,514
====== ======
Net earnings (loss) per common share--Diluted............... $(0.06) $ 0.23
====== ======
</TABLE>

NOTE 5. The provision for income taxes is determined by applying an
estimated annual effective tax rate (federal, state and foreign combined) to
income before taxes. The estimated annual effective income tax rate is based
upon the most recent annualized forecast of pretax income, permanent book/tax
differences and tax credits.

F-31
<PAGE> 138

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Seymour Sales Corporation and Subsidiaries

We have audited the accompanying consolidated balance sheets of Seymour
Sales Corporation and subsidiaries as of June 30, 1997 and 1996, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the three years in the period ended June 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Seymour Sales Corporation and subsidiaries at June 30, 1997 and 1996, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended June 30, 1997, in conformity with generally
accepted accounting principles.

Indianapolis, Indiana ERNST & YOUNG, LLP
August 15, 1997, except for Note 10
as to which the date is August 25, 1997
and Note 11, as to which the date is
December 30, 1997

F-32
<PAGE> 139

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
JUNE 30,
--------------------------
1997 1996
----------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,529 $ 713
Accounts receivable, net (Note 2)......................... 15,897 16,762
Income taxes recoverable.................................. 346 346
Inventories (Note 3)...................................... 14,160 14,747
Prepaid pension cost (Note 6)............................. 448 --
Prepaid expenses and sundry............................... 450 623
-------- --------
Total current assets........................................ 32,830 33,191
Property and equipment (Note 4)............................. 12,512 14,868
Prepaid pension cost (Note 6)............................... --........ 674
Intangible assets, less accumulated amortization
(1997 -- $17,701; 1996 -- $13,055):
Goodwill.................................................. 48,127 49,554
Non-compete............................................... 6,481 9,086
Other..................................................... 3,238 3,950
-------- --------
57,846.... 62,590
-------- --------
Total assets................................................ $103,188 $111,323
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 7,303 $ 5,806
Other liabilities and accrued expenses.................... 4,377 4,558
Current maturity of long-term debt (Note 5)............... 4,488 571
State and local taxes..................................... 434 584
Deferred income taxes (Note 7)............................ 158 68
-------- --------
Total current liabilities................................... 16,760 11,587
Long-term debt (Note 5)..................................... 71,813 83,201
Postretirement benefit plan (Note 6)........................ 2,969 2,640
Deferred income taxes (Note 7).............................. 2,881 3,045
Stockholders' equity (Note 8):
Common Stock, $.0001 par value:
Authorized shares -- 750,000
Issued shares -- 153,608 in 1997 and 1996.............. -- --
Preferred Stock, $1 par value:
Authorized shares -- 24,000
Issued shares -- 19,762 in 1997 and 1996............... 20 20
Common Stock warrants..................................... 400 400
Additional paid-in capital................................ 26,168 26,168
Retained earnings (deficit)............................... (17,615) (15,596)
-------- --------
8,973 10,992
Less shares in treasury, at cost:
Common Stock -- 1,132 in 1997 and 819 in 1996
Preferred Stock -- 130 in 1997 and 89 in 1996............. (208) (142)
-------- --------
Total stockholders' equity.................................. 8,765 10,850
-------- --------
Total liabilities and stockholders' equity.................. $103,188 $111,323
======== ========
</TABLE>

See accompanying notes.
F-33
<PAGE> 140

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------
1997 1996 1995
------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Sales (Note 1).............................................. $98,274 $105,532 $92,554
Cost of products sold (Note 1).............................. 68,756 79,845 67,288
------- -------- -------
Gross profit................................................ 29,518 25,687 25,266
Operating expenses:
Marketing and selling..................................... 13,326 14,775 12,479
General and administrative................................ 5,312 6,775 4,958
Research and development.................................. 275 407 435
Amortization of intangible assets......................... 4,385 4,414 3,657
------- -------- -------
23,298 26,371 21,529
------- -------- -------
Operating income (loss)..................................... 6,220 (684) 3,737
Other (income) expenses:
Interest, net............................................. 7,923 8,384 7,394
Other..................................................... 57 223 (125)
------- -------- -------
7,980 8,607 7,269
------- -------- -------
Loss before income taxes.................................... (1,760) (9,291) (3,532)
Income taxes (Note 7)....................................... 259 2,597 (1,122)
------- -------- -------
Net loss.................................................... $(2,019) $(11,888) $(2,410)
======= ======== =======
</TABLE>

See accompanying notes.

F-34
<PAGE> 141

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
----------------------------------------------------------------------------
COMMON ADDITIONAL RETAINED
COMMON PREFERRED STOCK PAID-IN EARNINGS TREASURY
STOCK STOCK WARRANTS CAPITAL (DEFICIT) STOCK TOTAL
------ --------- -------- ---------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1994.... $-- $ 2 $255 $ 5,963 $ (1,298) $ (12) $ 4,910
Conversion of Junior
Subordinated Notes..... -- 18 -- 17,334 -- -- 17,352
Stock issued.............. -- -- 145 2,840 -- -- 2,985
Purchase for treasury..... -- -- -- -- -- (8) (8)
Net loss.................. -- -- -- -- (2,410) -- (2,410)
--- --- ---- ------- -------- ----- --------
Balance at June 30, 1995.... -- 20 400 26,137 (3,708) (20) 22,829
Stock issued.............. -- -- -- 31 -- -- 31
Purchase for treasury..... -- -- -- -- -- (122) (122)
Net loss.................. -- -- -- -- (11,888) -- (11,888)
--- --- ---- ------- -------- ----- --------
Balance at June 30, 1996.... -- 20 400 26,168 (15,596) (142) 10,850
Purchase for treasury..... -- -- -- -- -- (66) (66)
Net loss.................. -- -- -- -- (2,019) -- (2,019)
--- --- ---- ------- -------- ----- --------
Balance at June 30, 1997.... $-- $20 $400 $26,168 $(17,615) $(208) $ 8,765
=== === ==== ======= ======== ===== ========
</TABLE>

See accompanying notes.

F-35
<PAGE> 142

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
-----------------------------
1997 1996 1995
------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss.................................................. $(2,019) $(11,888) $ (2,410)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation of property and equipment................. 3,517 3,262 2,542
Amortization of intangible assets...................... 4,385 4,414 3,657
Deferred income taxes.................................. (74) 2,422 (885)
Benefit applied to reduce goodwill..................... 101 101 60
Non-cash interest expense.............................. 306 357 1,194
Changes in operating assets and liabilities net of
effects from purchase of Magla:
Accounts receivable.................................. 865 3,052 (5,099)
Inventories.......................................... 587 3,216 (5,975)
Prepaid expenses and sundry.......................... 173 79 31
Prepaid pension cost................................. 226 114 430
Accounts payable and accrued liabilities............. 1,317 (2,896) 3,380
Other current assets and liabilities................. (150) 512 (626)
Postretirement benefit plan.......................... 329 250 203
------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES...................................... 9,563 2,995 (3,498)
INVESTING ACTIVITIES
Net cash paid for acquired business....................... -- -- (42,841)
Purchases of property and equipment, net.................. (1,161) (2,595) (1,124)
Other..................................................... (10) (127) 397
------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES............. (1,171) (2,722) (43,568)
Financing activities
Purchase of treasury stock................................ (66) (122) (8)
Proceeds from sale of Common and Preferred Stock.......... -- 31 2,611
Principal borrowing (repayment) on revolving credit note,
net.................................................... (6,960) 850 10,500
Principal payment on other long-term debt................. (550) (1,000) (838)
Proceeds from long-term debt.............................. -- 48 35,827
Debt issuance costs....................................... -- -- (1,022)
------- -------- --------
NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES...................................... (7,576) (193) 47,070
------- -------- --------
Increase in cash and cash equivalents....................... 816 80 4
Cash and cash equivalents at beginning of year.............. 713 633 629
------- -------- --------
Cash and cash equivalents at end of year.................... $ 1,529 $ 713 $ 633
======= ======== ========
</TABLE>

See accompanying notes.

F-36
<PAGE> 143

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Business

The consolidated financial statements include the accounts of Seymour Sales
Corporation (SSC), its wholly owned subsidiary, Seymour Housewares Corporation
(SHC), and Seymour, S.A. de C.V., a wholly owned subsidiary of SHC,
(collectively referred to as "the Company"). All significant intercompany
balances and transactions have been eliminated. SSC is owned by Chase Capital
Partners, members of management of the Company and others.

The Company designs, manufactures and markets a broad range of ironing
boards, ironing board covers and pads, laundry accessories, juvenile gates and
tote carts. The Company's customers are principally located throughout North
America. Two of the Company's customers accounted for approximately 18% and 14%,
respectively, of gross sales for the year ended June 30, 1997.

Cash and Cash Equivalents

All highly liquid investments with a maturity of three months or less at
the date of purchase are considered to be cash equivalents.

Financial Instruments

The Company's financial instruments generally consist of cash and cash
equivalents, trade and other receivables, accounts payable and long-term debt.
The fair value of the Company's fixed rate debt was estimated using discounted
cash flow analyses based upon the Company's current incremental borrowing rates.
The carrying amounts of these financial instruments approximated their fair
value at June 30, 1997 and 1996.

Inventories

Inventories are stated at the lower of cost, determined utilizing the
first-in, first-out (FIFO) method, or market.

In December 1994, as part of the allocation of the acquisition purchase
price (see Note 9), the Company wrote up inventory acquired from original cost
to the fair value in accordance with applicable accounting principles. This
write up of inventory ($498,000) was charged to cost of goods sold in its
entirety during the year ended June 30, 1995.

A reserve is maintained for obsolete inventory and shrinkage of inventory.
This reserve is reviewed on a periodic basis during the year and at year end and
is adjusted, if necessary, based upon historical experience, known problems and
management's judgment. Actual write-offs of obsolete products are charged
against the reserve as identified.

Property and Equipment

Property and equipment is stated at cost. Depreciation is calculated by the
straight-line, half-year convention method at rates based upon the estimated
useful lives of the assets as follows:

<TABLE>
<S> <C>
Buildings................................................... 25 years
Building improvements....................................... 10 years
Machinery and equipment..................................... 5 years
</TABLE>

All costs of major improvements to existing facilities or equipment are
capitalized. The cost of repairs and maintenance to an existing asset that does
not improve or extend the life of that respective asset is expensed as incurred.
F-37
<PAGE> 144
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Intangibles

Goodwill is being amortized over 40 years and organization costs are being
amortized over 5 years using the straight-line method. Debt issuance costs and
noncompete agreements are being amortized over the lives of the agreements
(ranging from 5-10 years) using the straight-line method.

The carrying amount of goodwill is reviewed if facts and circumstances
suggest that it may be impaired. If this review indicates that goodwill will not
be recoverable, as determined based on the estimated undiscounted cash flows of
the entity acquired over the remaining amortization period, the carrying amount
of the goodwill is reduced by the estimated shortfall of cash flows. In
addition, the Company assesses long-lived assets for impairment under Statement
of Financial Accounting Standards No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. Under those
rules, goodwill associated with assets acquired in a purchase business
combination is included in impairment evaluations when events or circumstances
exist that indicate the carrying amount of those assets may not be recoverable.

Sales

Sales are presented in the income statement net of allowances for returns,
cash discounts and freight out. Gross sales were $101,700,000, $109,609,000 and
$96,638,000 for the years ended June 30, 1997, 1996 and 1995 respectively.

Advertising

The Company expenses the production costs of advertising as incurred except
for cooperative advertising where costs are expensed at the same time the
related revenue is recognized. For the years ended June 30, 1997, 1996 and 1995,
advertising expense totaled $3,042,000, $3,819,000 and $4,000,000, respectively.

Income Taxes

The Company provides for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes, ("FAS
109"). FAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax liabilities
and assets are determined based on the difference between the financial
statement and tax bases of assets and liabilities. These deferred taxes are
measured by applying the provisions of tax laws in effect at the balance sheet
date.

SHC joins with SSC in the filing of a consolidated federal income tax
return. Substantially all current and deferred income tax expenses are allocated
to SHC and subsidiary as the primary operating entities.

Stock Based Compensation

The Company accounts for its stock compensation arrangements under
requirements prescribed by Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees. In 1997, the Company adopted the
disclosure provisions of Financial Accounting Standards Board Statement No. 123,
Accounting for Stock Based Compensation. The Company has granted no new stock
options or awards after July 1, 1995.

Use of Estimates

The preparation of consolidated financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.

F-38
<PAGE> 145
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Reclassifications

Certain amounts in the 1995 financial statements have been reclassified to
conform to the 1997 and 1996 presentation.

2. ACCOUNTS RECEIVABLE

A summary of accounts receivable at June 30 follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Trade accounts receivable................................ $19,937 $20,477
Less allowances:
Doubtful accounts...................................... (1,059) (1,026)
Discounts and returns.................................. (629) (571)
Advertising............................................ (2,352) (2,118)
------- -------
$15,897 $16,762
======= =======
</TABLE>

The Company performs periodic credit evaluations of its customers'
financial condition and generally does not require collateral for amounts
outstanding.

3. INVENTORIES

A summary of inventories at June 30 follows:

<TABLE>
<CAPTION>
1997 1996
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Raw materials............................................ $ 4,113 $ 5,507
Work-in-process.......................................... 3,308 4,791
Finished goods........................................... 8,370 6,428
------- -------
15,791 16,726
Less allowance for obsolescence and shrinkage............ (1,631) (1,979)
------- -------
$14,160 $14,747
======= =======
</TABLE>

4. PROPERTY AND EQUIPMENT

A summary of property and equipment at June 30 follows:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Land.................................................... $ 878 $ 878
Buildings and improvements.............................. 6,613 6,551
Machinery and equipment................................. 15,584 15,199
Capital leases.......................................... 358 362
Construction in progress................................ 462 --
-------- -------
23,895 22,990
Less allowances for depreciation and amortization....... (11,383) (8,122)
-------- -------
$ 12,512 $14,868
======== =======
</TABLE>

F-39
<PAGE> 146
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. LONG-TERM DEBT

Long-term debt at June 30 consisted of the following:

<TABLE>
<CAPTION>
1997 1996
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Revolving Credit Note....................................... $ 6,390 $13,350
Senior Term Note............................................ 51,000 51,000
Senior Subordinated Note.................................... 19,000 19,000
Capital leases.............................................. 164 234
Other....................................................... -- 480
------- -------
76,554 84,064
Less unamortized discount................................... (253) (292)
------- -------
76,301 83,772
Less current portion........................................ (4,488) (571)
------- -------
$71,813 $83,201
======= =======
</TABLE>

The Company has a Revolving Credit Note with its principal lenders, Jackson
National Life Insurance Company, individually and as successor by merger to
Jackson National Life Insurance Company of Michigan (collectively referred to as
"JNL") which matures December 31, 2002. Under this Note, borrowings can be made
once per week up to a maximum outstanding of $14.0 million, further limited to a
percentage of eligible receivables and inventory. Interest is based on the
lesser of (A) the three-month LIBOR (adjusted for any required reserve
percentages) plus 3.0% or (B) a major bank prime lending rate plus 1.5%.
Additionally, a commitment fee of .5% is paid on the unused revolver balance
along with a 2% guarantee fee for the open letter of credit balance. The
interest rate was 8.7% at June 30, 1997. Interest is payable monthly.

The Senior Term Note is held by JNL. This Note bears a variable interest
rate based on the lower of the following: (A) the three-month LIBOR (adjusted
for any required reserve percentages) plus 3.25% or (B) a major bank prime
lending rate plus 1.75%. The interest rate was 9.0% at June 30, 1997. Interest
is payable monthly. Required principal payments are $4.4 million beginning on
June 30, 1998 and every six months thereafter through December 31, 1999. The
required payment beginning on June 30, 2000 is $4.9 million every 6 months
through December 31, 2001 followed by $6.9 million on June 30, 2002 and December
31, 2002. The Senior Term Note has a provision for optional prepayments and for
mandatory excess cash flow prepayment. Certain optional prepayments result in a
penalty. There is no mandatory excess cash flow prepayment for the period ended
June 30, 1997.

The Senior Subordinated Note, held by JNL, has a fixed interest rate of 12%
payable semi-annually in June and December. This Note has a maturity of December
31, 2004. The Note may be prepaid, in part or in whole, with penalty after
December 31, 1996. The prepayment penalty in 1998 is 9% (unless certain criteria
are met in which case the penalty is 4%) of the principal amount prepaid and
decreases each year thereafter. JNL also holds warrants to purchase shares of
common stock of SSC, as part of the Subordinated Note.

The Revolving Credit Note, the Senior Term Note and the Senior Subordinated
Note are collateralized by substantially all of SHC's assets and pledged stock
of SSC. In addition, the debt agreements require maintenance of certain debt
service ratios, limit additional borrowings, and require compliance with various
other restrictive covenants. Modifications to certain of these covenants were
made with agreements dated as of November 1, 1996.

Maturities of long-term debt are as follows: 1998, $4.5 million; 1999, $8.8
million; 2000, $9.3 million; 2001, $9.8 million; and 2002, $11.8 million; and
thereafter, $32.4 million.

F-40
<PAGE> 147
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company paid interest of $7,732,000, $8,088,000 and $6,200,000, for the
years ended June 30, 1997, 1996 and 1995, respectively.

6. EMPLOYEE BENEFIT PLANS

Pension Plan

SHC has a defined benefit pension plan covering all of its employees
working at its facilities in Seymour, Indiana. Plan benefits are based on years
of service and earnings. Plan assets consist of equity securities, as well as
government, corporate and other fixed-income obligations. SHC's policy is to
fund the Plan based on tax funding requirements.

The funded status and amounts recognized in the consolidated balance sheets
for the Plan at June 30, 1997 and 1996, were as follows:

<TABLE>
<CAPTION>
1997 1996
------ -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits......................................... $7,052 $ 5,424
====== =======
Accumulated benefit obligation.......................... $7,052 $ 5,588
====== =======
Projected benefit obligation.............................. $7,052 $ 8,312
Plan assets at fair value................................. 7,052 7,002
------ -------
Funded status............................................. -- (1,310)
Unrecognized net loss..................................... 448 1,984
------ -------
Prepaid pension costs..................................... $ 448 $ 674
====== =======
</TABLE>

Net pension cost included the following components:

<TABLE>
<CAPTION>
1997 1996 1995
----- ----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost....................................... $ 120 $ 485 $ 386
Interest cost on projected benefit obligation...... 522 557 419
Actual return on plan assets....................... (276) (657) (690)
Net amortization and deferral...................... (140) 269 316
----- ----- -----
Net periodic pension cost.......................... $ 226 $ 654 $ 431
===== ===== =====
</TABLE>

The assumptions used in determining the pension expense and obligations
were as follows:

<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Rate of compensation increase............................... 4.5% 4.5% 4.5%
Weighted-average discount rate.............................. 7.0% 7.5% 7.5%
Long-term rate of return on assets.......................... 7.0% 7.5% 7.0%
</TABLE>

The Pension Plan Administrative Committee on August 7, 1996, resolved that
the Pension Plan be frozen (resulting in no additional accumulation of benefits
under the plan) effective September 30, 1996, and the Plan was terminated as of
November 15, 1996. Accumulated benefits aggregating approximately $7,052,000
were fully vested for the eligible participants and assets of the Plan of
$7,052,000 were utilized to purchase investments that earn approximately 6%
interest to satisfy the pension obligation. Termination of the Pension Plan was
approved by the Internal Revenue Service on July 21, 1997. Distribution of
assets is expected to

F-41
<PAGE> 148
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

occur by October 1997. Anticipated expense related to the Plan for 1998 is
expected to total $448,000, consisting entirely of settlement loss.

Retirement Savings Plan

SHC has established a 401(k) savings plan named the "Seymour Housewares
Corporation Savings Plan" (Savings Plan) effective as of January 7, 1993. All
SHC employees who have completed certain minimum service requirements are
eligible to participate in the Savings Plan. Participants may defer specified
percentages of their compensation which the Company will match based upon a
specified formula. The Savings Plan provides for participant elective investment
of the deferred amounts in several funds. Company contributions charged to
expense were $341,000, $332,000 and $293,000 for the years ended June 30, 1997,
1996 and 1995, respectively.

Effective September 29, 1996, the Company amended its Savings Plan to
provide an additional discretionary employer profit-sharing contribution equal
to 3% of eligible compensation. For the year ended June 30, 1997, profit sharing
expense was $347,000.

Postretirement Benefit Plan

SHC also sponsors a defined benefit plan that provides postretirement
medical benefits and life insurance to full-time employees at the Seymour,
Indiana facilities who have worked 10 years, attained age 55 while in service
with the Company, and participated in the Company's health care plan for at
least one year immediately preceding leaving the Company. The Plan is
contributory, with retiree contributions adjusted annually, and contains other
cost-sharing features such as deductibles and coinsurance. The accounting for
the Plan anticipates future cost-sharing changes to the written Plan that are
consistent with the Company's expressed intent to increase the retiree
contribution annually for the expected general inflation rate for that year. In
addition, the Plan provides that the Company's share of benefit costs is limited
to 150% of the 1991 benefit cost level.

The Company's policy is to fund the cost of medical benefits and life
insurance in amounts determined at the discretion of management.

The following table presents the Plan's funded status reconciled with
amounts recognized in the Company's consolidated statement of financial
position.

<TABLE>
<CAPTION>
JUNE 30,
-----------------------
1997 1996
--------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................... $ 808 $ 983
Fully eligible active plan participants..................... 301 302
Other active plan participants.............................. 1,314 1,456
------ ------
Accumulated postretirement benefit obligation in excess of
plan assets............................................... 2,423 2,741
Unrecognized net gain (loss)................................ 546 (101)
------ ------
Accrued postretirement benefit cost......................... $2,969 $2,640
====== ======
</TABLE>

F-42
<PAGE> 149
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Net periodic postretirement benefit cost includes the following components:

<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Service cost................................................ $164 $133 $116
Interest cost............................................... 203 165 151
---- ---- ----
Net periodic postretirement benefit cost.................... $367 $298 $267
==== ==== ====
</TABLE>

The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) is 14 percent, 15
percent and 16 percent for 1997, 1996 and 1995, respectively, and is assumed to
decrease gradually (the assumed rate for 1998 is 13 percent) to 4 percent for
2003 and remain at that level thereafter. Increasing the assumed health care
cost trend rates by one percentage point each year would not have a material
effect on the accumulated postretirement benefit obligation or the aggregate of
the service and interest cost components of net periodic postretirement benefit
cost.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.5 percent at June 30, 1997, 1996 and
1995.

7. INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets as of June 30 are as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Deferred tax liabilities:
Intangibles............................................... $ 2,730 $ 2,665
Prepaid pension........................................... 152 229
Depreciation.............................................. 151 151
Other, net................................................ 6 68
------- -------
Total deferred tax liabilities.................... 3,039 3,113
Deferred tax assets:
Net operating loss carryforwards.......................... 3,640 3,111
Alternative minimum tax credit carryforwards.............. 50 50
Depreciation.............................................. 523 317
Health claims incurred but not reported................... 149 203
Postretirement benefit obligation......................... 1,009 896
Vacation pay.............................................. 169 172
Allowances related to receivables......................... 984 1,053
Allowances related to inventories......................... 382 366
Other, net................................................ 399 321
------- -------
7,305 6,489
Valuation allowance for deferred tax assets............... (7,305) (6,489)
------- -------
Total deferred tax assets......................... -- --
------- -------
Net deferred tax liabilities................................ $(3,039) $(3,113)
======= =======
</TABLE>

F-43
<PAGE> 150
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

At June 30, 1997, the Company has net operating loss carryforwards of
$10,706,000 for income tax purposes that expire in 2010, 2011 and 2012, and
alternative minimum tax credit carryforwards of $50,000 which may be carried
forward indefinitely.

Significant components of the provision for income taxes for the years
ended June 30 are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
----- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal................................................. $ -- $ (222) $ (227)
State................................................... 102 282 (153)
Foreign................................................. 130 14 83
----- ------- -------
Total current............................................. 232 74 (297)
Deferred federal:
Change in valuation allowance........................... 816 5,451 70
Other................................................... (890) (3,029) (955)
----- ------- -------
Total deferred federal.................................... (74) 2,422 (885)
Benefit applied to reduce goodwill........................ 101 101 60
----- ------- -------
$ 259 $ 2,597 $(1,122)
===== ======= =======
</TABLE>

The effect of state income taxes, the increase in the valuation allowance
and the benefit of excess tax-deductible goodwill amortization applied to reduce
goodwill are the only significant reconciling differences between income tax
expense for the periods and the amount of income tax expense that would result
from applying the U.S. statutory rate to pretax income.

A deferred tax asset was established as a result of an acquisition in a
previous year. For financial reporting purposes, a valuation allowance of
$643,000 was recognized as of the acquisition date to offset this deferred tax
asset. When realized, the tax benefit for this item will be applied to reduce
goodwill related to the acquisition.

An income tax refund of approximately $223,000 was received in 1996 while
income taxes paid for 1995 were approximately $350,000.

8. STOCKHOLDERS' EQUITY

Common stock consists of the following:

<TABLE>
<CAPTION>
SHARES
--------------------
CLASS AUTHORIZED ISSUED
- ----- ---------- -------
<S> <C> <C>
A........................................................ 250,000 142,008
B........................................................ 250,000 --
C........................................................ 250,000 11,600
</TABLE>

The three classes of common stock are identical in all respects except
voting rights. Holders of Class A Common are entitled to one vote per share on
all matters submitted to stockholders for a vote; Class B holders receive
one-quarter vote per share, except on certain critical issues (for which they
receive one vote per share); and Class C holders have no voting rights. For the
most part, any share of common stock may be converted into one share of common
stock of either of the other classes of common stock.

F-44
<PAGE> 151
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Preferred stock consists of the following:

<TABLE>
<CAPTION>
SHARES
-------------------
CLASS AUTHORIZED ISSUED
- ----- ---------- ------
<S> <C> <C>
A......................................................... 4,000 2,372
B......................................................... 20,000 17,390
</TABLE>

The preferred stock has no voting rights and entitles the holder to receive
dividends at the rate of 15% (Class A) or 13 1/4% (Class B) of liquidation value
($1,000 per share), payable in cash or additional shares of preferred stock.
Dividends are payable only when declared, and any unpaid dividends accumulate
and are compounded quarterly. No dividends were declared in the years ended June
30, 1997, 1996 or 1995. Cumulative preferred dividends in arrears were
$8,379,000, $4,877,000 and $1,825,000 as of June 30, 1997, 1996 and 1995,
respectively. The preferred stock is redeemable at the option of SSC at any
time.

In connection with the issuance of the Senior Subordinated Note, the lender
received warrants to purchase approximately 31,500 shares of Class B common
stock of SSC at any time through December 9, 2004 at a price of $.0033 per
share. A portion of the proceeds of the Note issuance ($400,000) was assigned to
the warrants, representing their estimated fair value at December 9, 1994.

In connection with the formation of SSC, options to acquire approximately
7,987 shares of Class A common stock were granted to certain members of
management. One-third of the options vest and become exercisable monthly over
various periods ending June 30, 1999. Another third of the options vest and
become exercisable over a five year period based on achievement of prescribed
annual operating cash flow targets. The cash flow target for one of the four
periods subsequent to January 7, 1993 was achieved. The final third vests and
becomes exercisable if, and when, the cumulative return on investment to SSC's
principal shareholder exceeds a specific threshold. As options vest, they become
exercisable at $.01 per share. None of the vested options to acquire 4,833
shares of common stock had been exercised at June 30, 1997.

Compensation expense attributable to the options that vest over time has
been measured by the difference between the fair value of the underlying shares
at January 7, 1993 and the exercise price. This expense is being recognized
ratably over the various periods ending June 30, 1999. Compensation expense with
respect to the other groups of options will be recognized, if earned, in the
periods that the related targets are met. The amount recognized as compensation
expense for the years ended June 30, 1997, 1996 and 1995 totaled $57,000,
$39,000 and $44,000, respectively.

9. ACQUISITION

In December 1994, SHC acquired the assets of Magla Products' (Magla)
laundry products business and certain of its affiliates. Concurrently, 100% of
the stock of Seymour, S.A. de C.V., formerly Magla Productos de Mexico, was
acquired. The total purchase price was approximately $45,357,000, which
consisted primarily of cash and an earnout provision with guaranteed minimum
payments, payable in 1995 through 1998. If payments in excess of the guaranteed
minimum are required pursuant to the earnout provision, they will be accounted
for as additional goodwill at the time of payment. The Company modified existing
long-term debt agreements to obtain funding for this acquisition. Pursuant to
this acquisition, certain stockholders of SSC infused capital into the Company
through the purchase of additional shares of Common and Preferred Stock.

The acquisition has been accounted for using the purchase method of
accounting, and the net assets and results of operations are included in the
consolidated financial statements from the acquisition date forward.

In June 1995, SHC acquired specific assets of Magla Metal Productos de
Mexico, S.A. de C.V. of Monterey, Mexico, a manufacturer of ironing boards, for
$450,000. The acquisition was financed through the

F-45
<PAGE> 152
SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company's working capital and was accounted for using the purchase method of
accounting, resulting in a cost in excess of net assets acquired of $342,000.

10. SUBSEQUENT EVENT -- CONSOLIDATION (UNAUDITED)

Subsequent to year-end, management recommended to the Board of Directors,
and announced to the Company's employees, a plan to consolidate certain
production operations during the year ended June 30, 1998. If enacted, one-time
costs associated with this consolidation are estimated to range from $800,000 to
$1,000,000. Management expects that future annual savings from this
consolidation will exceed the one-time costs.

11. SUBSEQUENT EVENT -- SALE OF THE COMPANY

On December 30, 1997, the stockholders of the Company entered into an
agreement with Home Products International, Inc., a Delaware corporation
("HPI"), whereby HPI acquired all of the capital stock of the Company. Total
consideration for the acquisition was $100,700,000 consisting of $16,400,000 in
cash, $14,300,000 in stock (1,320,700 shares of HPI common stock), and the
assumption of $70,000,000 of the Company's debt. HPI's common stock is publicly
traded on the NASDAQ National Stock Marketsm, under the ticker symbol HPII.

F-46
<PAGE> 153

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 27,
1997
--------------
<S> <C>
(UNAUDITED)

<CAPTION>
(IN THOUSANDS)
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,696
Accounts receivable, net.................................. 12,386
Inventories, net.......................................... 11,598
Prepaid expenses and other current assets................. 333
--------
Total current assets.............................. 26,013
--------
Property, plant and equipment, net.......................... 12,121
Intangible and other assets................................. 55,676
--------
Total assets................................................ $ 93,810
========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations............... $ 87
Accounts payable.......................................... 5,032
Accrued liabilities....................................... 11,267
--------
Total current liabilities......................... 16,386
--------
Long-term obligations -- net of current maturities.......... 69,916
Other long-term obligations................................. 6,270
Stockholders' equity
Common Stock.............................................. --
Preferred Stock........................................... 20
Additional paid-in capital................................ 26,568
Retained earnings......................................... (25,102)
Common Stock held in treasury -- at cost.................. (248)
--------
Total stockholders' equity........................ 1,238
--------
Total liabilities and stockholders' equity.................. $ 93,810
========
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-47
<PAGE> 154

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED DECEMBER 27, 1997 AND DECEMBER 28, 1996

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Net sales................................................... $43,096 $45,248
Cost of goods sold.......................................... 32,863 32,665
------- -------
Gross profit.............................................. 10,233 12,583
Operating expenses.......................................... 13,404 11,395
------- -------
Operating profit (loss)................................... (3,171) 1,188
Interest (expense).......................................... (3,708) (4,047)
Other income (expense)...................................... (550) 32
------- -------
Loss before income taxes.................................... (7,429) (2,827)
Income tax expense.......................................... (58) (56)
------- -------
Net loss.................................................... $(7,487) $(2,883)
======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-48
<PAGE> 155

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------
DECEMBER 27, DECEMBER 28,
1997 1996
------------ ------------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss.................................................. $(7,487) $(2,883)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization.......................... 4,129 4,089
Changes in assets and liabilities:
Decrease in accounts receivable...................... 3,511 4,984
Decrease in inventories.............................. 2,563 2,981
Decrease in prepaids and other assets................ 476 468
Increase (decrease) in accounts payable and accrued
liabilities......................................... 4,029 (1,171)
Other operating activities, net........................... 841 (298)
------- -------
Net cash provided by operating activities................... 8,062 8,170
------- -------
Cash flows from investing activities:
Capital expenditures, net................................. (1,556) (310)
------- -------
Net cash used for investing activities...................... (1,556) (310)
------- -------
Cash flows from financing activities:
Decrease in debt and repurchase of Common Stock........... (6,339) (6,927)
------- -------
Net cash used for financing activities...................... (6,339) (6,927)
------- -------
Net increase in cash and cash equivalents................. 167 933
Cash and cash equivalents at beginning of period.......... 1,529 713
------- -------
Cash and cash equivalents at end of period................ $ 1,696 $ 1,646
======= =======
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-49
<PAGE> 156

SEYMOUR SALES CORPORATION AND SUBSIDIARIES

NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

NOTE 1. Unless the context otherwise requires, the reference to the
"Company" is to Seymour Sales Corporation, its wholly owned subsidiary, Seymour
Housewares Corporation, and Seymour S.A. de C.V., a wholly owned subsidiary of
Seymour Housewares Corporation. All significant intercompany balances and
transactions have been eliminated.

The Company designs, manufactures, and markets a broad range of ironing
boards, ironing board covers and pads, laundry accessories, juvenile gates and
tote carts.

The unaudited condensed consolidated interim financial statements included
herein as of December 27, 1997 and for the six months ended December 27, 1997
and December 28, 1996 reflect, in the opinion of the Company, all adjustments
(which include only normal recurring adjustments) necessary for the fair
presentation of the financial position, the results of operations, and cash
flows. The results of the interim periods are not necessarily indicative of
results to be expected for the full years.

NOTE 2. Inventories are stated at the lower of cost, determined using the
first-in, first-out (FIFO) method, or market. A reserve is maintained for
obsolete inventory and shrinkage of inventory. This reserve is reviewed on a
periodic basis during the year and at year end is adjusted, if necessary, based
upon historical experience, known problems and management's judgment. Actual
write-offs of obsolete products are charged against the reserve as identified.

NOTE 3. Within the six month interim period ended December 27, 1997, in
connection with the termination of the Company's defined benefit plan, (the plan
was terminated in November 1996, and the termination was approved by the
Internal Revenue Service on July 21, 1997), the Company recorded a charge to
Other Expense of approximately $550. Distribution of the plan assets to the
participants was completed in December 1997. Also included within the six month
interim period ended December 27, 1997, the Company recorded a charge to
Operating Expenses of approximately $2,600, related to consolidation and
disposal of certain manufacturing facilities.

NOTE 4. Effective July 1, 1997 the Company changed its method of computing
depreciation expense, from a "half-year" convention to a "month placed in
service" convention. The effect of this change was to increase 1997 depreciation
expense by $233.

NOTE 5. Subsequent Event. On December 30, 1997, the stockholders of the
Company entered into an agreement with Home Products International, Inc., a
Delaware Corporation, ("HPI"), whereby HPI acquired all of the capital stock of
the Company. Total consideration for the acquisition was $100,700 consisting of
$16,400 in cash, $14,300 in stock (1,320,700 shares of HPI common stock), and
the assumption of $70,000 of the Company's debt. HPI's common stock is publicly
traded on the NASDAQ National Market(sm), under the ticker symbol, HPII.

F-50
<PAGE> 157

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders

Tamor Plastics Corporation and

Houseware Sales, Inc.

Leominster, Massachusetts

We have audited the accompanying combined balance sheets of Tamor Plastics
Corporation and Houseware Sales, Inc. as of December 31, 1995 and 1996 and the
related combined statements of income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1996. These combined
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these combined financial statements
based on our audits.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Tamor Plastics
Corporation and Houseware Sales, Inc. at December 31, 1995 and 1996, and the
combined results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.

BDO Seidman, LLP

January 24, 1997

Gardner, MA 01440

F-51
<PAGE> 158

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1996
---- ----
<S> <C> <C>
ASSETS (NOTE 6)
Current assets:
Cash and cash equivalents................................. $ 266,783 $ 1,187,858
Accounts receivable, less allowance of $237,000 in 1995
and $659,000 in 1996................................... 9,255,377 8,859,561
Inventories (Note 2)...................................... 6,188,565 6,427,148
Prepaid expenses and other................................ 331,375 354,019
----------- -----------
Total current assets................................. 16,042,100 16,828,586
----------- -----------
Property and equipment, at cost less accumulated
depreciation and amortization (Notes 3 and 4)............. 12,907,887 16,904,864
Cash surrender value of life insurance ($8,912,000 face
amount)................................................... 347,300 362,088
Deferred financing costs.................................... 34,709 --
Deferred state tax assets (Note 8).......................... 45,000 --
----------- -----------
TOTAL ASSETS................................................ $29,376,996 $34,095,538
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Checks issued against future deposits..................... $ 2,222,518 $ 4,376,807
Notes payable............................................. 115,000 --
Accounts payable -- trade (Note 7)........................ 4,654,920 4,202,355
Accounts payable -- other (Note 3)........................ -- 3,824,227
Accrued liabilities (Note 5).............................. 1,471,879 1,730,076
Current maturities of long-term debt (Note 6)............. 909,476 1,099,000
Current maturities of capital lease obligations (Note
4)..................................................... 589,470 634,000
----------- -----------
Total current liabilities............................ 9,963,263 15,866,465
----------- -----------
Long-term debt, less current maturities (Note 6)............ 7,434,253 6,031,963
Long-term obligations under capital leases (Note 4)......... 4,582,591 4,015,795
----------- -----------
Total liabilities.................................... 21,980,107 25,914,223
----------- -----------
Commitments and contingencies (Notes 1, 3, 4, 6, 7, 9 and
10)
Stockholders' equity:
Tamor Plastics Corporation common stock, $100 par value;
100 shares authorized; 50 shares issued................ 5,000 5,000
Additional paid-in capital................................ 294,425 294,425
Houseware Sales, Inc. common stock, no par value; 1,000
shares authorized; 100 shares issued................... 500 500
Retained earnings......................................... 7,096,964 9,363,618
----------- -----------
7,396,889 9,663,543
Less treasury stock, 11.23 shares at cost (Note 13)....... -- 1,482,228
----------- -----------
Total stockholders' equity........................... 7,396,889 8,181,315
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $29,376,996 $34,095,538
=========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-52
<PAGE> 159

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Net sales (Note 10)................................... $53,806,571 $60,300,801 $75,713,837
Cost of sales (Note 7)................................ 43,235,407 50,193,776 57,817,814
----------- ----------- -----------
Gross profit........................................ 10,571,164 10,107,025 17,896,023
----------- ----------- -----------
Operating expenses:
Selling and warehousing (Note 7).................... 6,220,829 6,565,029 9,885,973
General and administrative.......................... 2,205,219 2,274,035 3,637,606
----------- ----------- -----------
Total operating expenses......................... 8,426,048 8,839,064 13,523,579
----------- ----------- -----------
Income from operations................................ 2,145,116 1,267,961 4,372,444
----------- ----------- -----------
Other income (expense):
Interest expense.................................... (530,901) (1,140,353) (1,190,764)
Other income, net................................... 224,806 97,582 493,886
----------- ----------- -----------
Total other expense, net......................... (306,095) (1,042,771) (696,878)
----------- ----------- -----------
Income before state taxes on income (benefit)......... 1,839,021 225,190 3,675,566
State taxes on income (benefit) (Note 8).............. 93,000 (25,000) 160,000
----------- ----------- -----------
Net income............................................ $ 1,746,021 $ 250,190 $ 3,515,566
=========== =========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-53
<PAGE> 160

TAMOR PLASTICS CORPORATION AND HOUSEWARE SALES, INC.

COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
HOUSEWARE
TAMOR PLASTICS CORPORATION VICTORY BUTTON COMPANY, INC. SALES, INC.
---------------------------- ------------------------------- ---------------
COMMON STOCK ADDITIONAL COMMON STOCK ADDITIONAL COMMON STOCK
--------------- PAID-IN ------------------ PAID-IN --------------- RETAINED
SHARES AMOUNT CAPITAL SHARES AMOUNT CAPITAL SHARES AMOUNT EARNINGS
------ ------ ---------- ------ ------ ---------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993........ 3 $ 300 $ 51,125 400 $ 198,000 $ 100,000 100 $500 $ 6,145,495
Net income........................ -- -- -- -- -- -- -- -- 1,746,021
Distributions to stockholders..... -- -- -- -- -- -- -- -- (350,877)
-- ------ -------- ---- --------- --------- --- ---- -----------
BALANCE, DECEMBER 31, 1994........ 3 300 51,125 400 198,000 100,000 100 500 7,540,639
Merger of Victory Button Company,
Inc. (Note 12).................. 47 4,700 243,300 (400) (198,000) (100,000) -- -- --
Net income........................ -- -- -- -- -- -- -- -- 250,190
Distributions to stockholders..... -- -- -- -- -- -- -- -- (693,865)
-- ------ -------- ---- --------- --------- --- ---- -----------
BALANCE, DECEMBER 31, 1995........ 50 5,000 294,425 -- -- -- 100 500 7,096,964
Net income........................ -- -- -- -- -- -- -- -- 3,515,566
Purchase of Tamor Plastics
Corporation treasury stock (Note
13)............................. -- -- -- -- -- -- -- -- --
Distributions to stockholders..... -- -- -- -- -- -- -- -- (1,248,912)
-- ------ -------- ---- --------- --------- --- ---- -----------
BALANCE, DECEMBER 31, 1996........ 50 $5,000 $294,425 -- $ -- $ -- 100 $500 $ 9,363,618
== ====== ======== ==== ========= ========= === ==== ===========

TREASURY STOCK
-------------------
SHARES AMOUNT
------ ------
<S> <C> <C>
BALANCE, DECEMBER 31, 1993........ 100 $ 50,000
Net income........................ -- --
Distributions to stockholders..... -- --
----- ----------
BALANCE, DECEMBER 31, 1994........ 100 50,000
Merger of Victory Button Company,
Inc. (Note 12).................. (100) (50,000)
Net income........................ -- --
Distributions to stockholders..... -- --
----- ----------
BALANCE, DECEMBER 31, 1995........ -- --
Net income........................ -- --
Purchase of Tamor Plastics
Corporation treasury stock (Note
13)............................. 11.23 1,482,228
Distributions to stockholders..... -- --
----- ----------
BALANCE, DECEMBER 31, 1996........ 11.23 $1,482,228
===== ==========
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-54
<PAGE> 161

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

COMBINED STATEMENTS OF CASH FLOWS

(NOTE 11)

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income.......................................... $ 1,746,021 $ 250,190 $ 3,515,566
Adjustments to reconcile net income to net cash
provided (used) by operations:
Depreciation and amortization.................... 2,206,048 2,559,819 2,900,809
(Gain) loss on sales of fixed assets............. (62,358) 4,901 31,025
Deferred state taxes............................. -- (45,000) 45,000
Changes in operating assets and liabilities:
Accounts receivable............................ (2,233,842) (2,659,462) 395,816
Inventories.................................... (1,037,450) (841,399) (238,583)
Prepaid expenses and other assets.............. 84,988 (280,132) (37,432)
Checks issued against future deposits.......... 1,173,094 (1,208,451) 2,154,289
Accounts payable and accrued liabilities....... (423,147) 2,215,253 3,629,859
----------- ----------- -----------
Net cash provided (used) by operating
activities.................................. 1,453,354 (4,281) 12,396,349
----------- ----------- -----------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Additions to property and equipment................. (3,047,867) (1,654,653) (6,889,402)
Proceeds from sales of fixed assets................. 106,000 6,500 32,000
----------- ----------- -----------
Net cash used for investing activities......... (2,941,867) (1,648,153) (6,857,402)
----------- ----------- -----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving lines
of credit........................................ 2,780,005 1,816,189 (1,818,149)
Proceeds from vehicle loans......................... 90,182 52,365 140,830
Proceeds from term loans............................ -- 1,300,000 306,000
Payments of capital lease obligations............... -- (318,343) (558,966)
Principal repayment of term loans................... (514,213) (887,616) (1,009,256)
Distributions paid to stockholders.................. (350,877) (693,865) (1,248,912)
Purchase of treasury stock.......................... -- -- (429,419)
----------- ----------- -----------
Net cash provided (used) by financing
activities.................................. 2,005,097 1,268,730 (4,617,872)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 516,584 (383,704) 921,075
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR........ 133,903 650,487 266,783
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.............. $ 650,487 $ 266,783 $ 1,187,858
=========== =========== ===========
</TABLE>

See accompanying summary of accounting policies and notes to combined financial
statements.

F-55
<PAGE> 162

TAMOR PLASTICS CORPORATION AND HOUSEWARE SALES, INC.

SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Principles of Combination and Reporting

The Combined financial statements include the accounts of Tamor Plastics
Corporation ("Tamor") and Houseware Sales, Inc. ("Housewares") (collectively,
the "Companies"), which are related through common ownership and management.

All significant interaffiliate transactions and balances have been
eliminated.

Business

Tamor is engaged in the manufacturing and sale of plastic hangers, closet
accessories and houseware products, including an environmental product line of
recycling and separation containers. The company has manufacturing facilities in
Leominster, Massachusetts, Louisiana, Missouri and Thomasville, Georgia, and
sells to retail stores throughout the United States.

Housewares has an exclusive sales agreement with Tamor expiring in
February, 2009. Under the terms of the agreement, the company acts as the sole
sales representative for substantially all of Tamor's product lines and has
agreed not to sell, distribute or promote the sale of any other goods of a
competitive nature.

Cash Equivalents

For purposes of balance sheet classification and the statements of cash
flows, all highly liquid debt instruments purchased with a maturity of three
months or less are considered to be cash equivalents.

Inventories

Inventories are valued at the lower of cost (first-in, first-out) or
market. Inventory costs include materials, direct labor, depreciation and other
factory overhead costs.

Property, Equipment and Depreciation

Property and equipment are stated at cost. Depreciation is computed over
the estimated useful lives of the related assets using both straight-line and
accelerated methods. The estimated useful lives are as follows:

<TABLE>
<CAPTION>
CATEGORY LIFE
-------- ----
<S> <C>
Machinery and equipment..................................... 5 - 11 years
Real estate and improvements................................ 31 - 33 years
Leasehold improvements...................................... 5 - 7 years
Office furniture and equipment.............................. 5 - 7 years
Vehicles.................................................... 3 - 5 years
</TABLE>

Income Taxes

The Companies, with the consent of their stockholders, have elected S
Corporation status, whereby the stockholders of each corporation are taxed on
their proportionate share of each Corporation's taxable income. Accordingly, the
accompanying combined financial statements do not include a provision or
liability for federal income taxes.

Deferred income taxes are recognized for the tax consequences of temporary
differences between the financial reporting basis and the tax basis of the
Companies assets and liabilities. Valuation allowances are established when
necessary to reduce deferred tax assets to the amount expected to be realized.

F-56
<PAGE> 163

TAMOR PLASTICS CORPORATION AND HOUSEWARE SALES, INC.

SUMMARY OF ACCOUNTING POLICIES (CONTINUED)

Estimates and Assumptions

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates and assumptions.

Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, accounts payable and
accrued liabilities are reflected in the financial statements at fair value
because of the short-term maturity of those instruments.

Based upon borrowing rates currently available to the Companies for
issuance of similar debt with similar terms and remaining maturities, the
estimated fair value of the long-term debt and capital lease obligations at
December 31, 1996 approximates carrying value.

Concentration of Credit Risk

Cash and temporary cash investments are with financial institutions which
management considers to be of high quality; however, at times such deposits may
be in excess of the Federal Deposit Insurance Corporation insurance limits.

Revenue Recognition

The Companies recognize revenue when product is shipped to the customer.

F-57
<PAGE> 164

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS

1. SUBSEQUENT EVENT

Tamor's stockholders have entered into a stock purchase agreement with
another company which will result in the sale of 100% of the Company's
outstanding common stock subject to certain provisions, effective January 1,
1997.

Housewares has entered into a merger agreement which would result in the
Company being merged into the company that agreed to purchase Tamor's stock. All
shares of Housewares stock will be canceled, effective January 1, 1997. Prior to
the merger, assets and liabilities included in the December 31, 1996 combined
balance sheet are to be distributed/discharged as follows:

<TABLE>
<S> <C>
Cash and cash equivalents................................... $ 920,204
Other....................................................... 84,502
----------
Assets to be distributed............................... 1,004,706
Liabilities to be discharged................................ (97,075)
----------
Net distributions...................................... $ 907,631
==========
</TABLE>

2. INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Finished goods........................................ $3,464,297 $3,325,827
Work-in-process....................................... 870,517 1,175,432
Raw materials......................................... 1,853,751 1,925,889
---------- ----------
Total............................................ $6,188,565 $6,427,148
========== ==========
</TABLE>

3. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Machinery and equipment............................. $17,813,633 $21,544,567
Real estate and improvements........................ 839,533 1,205,847
Leasehold improvements.............................. 563,393 627,147
Office furniture and equipment...................... 751,246 951,248
Vehicles............................................ 671,691 639,393
Machinery and equipment deposits.................... 330,579 2,693,848
----------- -----------
Total.......................................... 20,970,075 27,662,050
Less accumulated depreciation....................... 13,068,850 15,045,366
----------- -----------
Net property and equipment owned.................... 7,901,225 12,616,684
Leased property under capital leases, net of
accumulated amortization (Note 4)................. 5,006,662 4,288,180
----------- -----------
Net property and equipment.......................... $12,907,887 $16,904,864
=========== ===========
</TABLE>

Tamor has a commitment to construct an addition to the manufacturing
facility in Louisiana, Missouri which it currently leases (Note 4). The Company
has the option through September, 1998 to purchase the building for $1,500,000.
The addition is estimated to cost approximately $2,400,000.

F-58
<PAGE> 165

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Accounts payable other consists of $3,824,227 of equipment purchases which
are expected to be refinanced on a long-term basis. Long-term financing has not
been arranged due to the impending change in ownership as described in Note 1.

4. LEASES

The Companies lease warehouse and manufacturing facilities, vehicles and
factory and office equipment under capital and operating leases. Assets held
under capital leases include:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Molding machines....................................... $4,008,600 $4,008,600
Molds.................................................. 767,614 767,614
Equipment.............................................. 791,254 791,254
Vehicles............................................... -- 36,700
---------- ----------
Total................................................ 5,567,468 5,604,168
Less accumulated amortization.......................... 560,806 1,315,988
---------- ----------
Leased property, net................................... $5,006,662 $4,288,180
========== ==========
</TABLE>

Lease amortization is included in depreciation expense.

Future minimum payments under capital leases and noncancellable operating
leases with an initial term of one year or more are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
Fiscal 1997............................................ $1,139,220 $ 338,000
1998............................................. 1,046,120 292,000
1999............................................. 1,037,869 292,000
2000............................................. 1,029,200 292,000
2001............................................. 1,029,200 73,000
Thereafter....................................... 1,164,451 --
---------- ----------
Total minimum lease payments........................... 6,446,060 $1,287,000
==========
Amount representing interest........................... 1,796,265
----------
Present value of net minimum lease payments............ 4,649,795
Less current obligations............................... 634,000
----------
Long-term obligations.................................. $4,015,795
==========
</TABLE>

Capital lease obligations include $4,527,717 due to a related entity.
Payments on such obligations aggregated $591,300 in 1995 and $1,227,104 in 1996.
Tamor has also guaranteed the related entity's obligations related to these same
leases in the amount of $4,527,717 (Note 7).

Operating lease expense, including ancillary costs of warehouse and
manufacturing facilities, amounted to $345,000 in 1994, $608,000 in 1995 and
$729,000 in 1996. The operating leases contain renewal options and require the
Companies to pay certain operating costs including maintenance, insurance, and
taxes in addition to the minimum lease payments.

F-59
<PAGE> 166

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. ACCRUED LIABILITIES

Accrued liabilities consist of the following:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Customer rebates...................................... $ 583,645 $ 643,596
Materials............................................. 483,386 442,209
Bonus................................................. -- 330,000
State taxes........................................... 3,662 90,836
Utilities............................................. 120,614 60,000
Payroll and retirement................................ 176,062 103,600
Other................................................. 104,510 59,835
---------- ----------
Total.......................................... $1,471,879 $1,730,076
========== ==========
</TABLE>

6. LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
TAMOR
Revolving line of credit with interest at variable
rates (7.6% at December 31, 1996), maturing May,
1998................................................ $6,374,278 $4,671,129
Term note payable in monthly installments of $35,983
plus interest at variable rates (7.6% at December
31, 1996) through May, 1998......................... 1,004,501 572,700
Term note payable in monthly installments of $36,111
plus interest at variable rates (7.6% at December
31, 1996) through January, 1998..................... 902,778 469,444
Note payable to former stockholder's estate in monthly
installments of $20,031 including interest at 5.0%
through August, 2001................................ -- 989,875
Term note payable in monthly installments of $2,600
including interest at 6.0% through June, 2001 with a
final payment of approximately $230,000 due August,
2001, collateralized by a building in Thomasville,
Georgia............................................. -- 300,489
TAMOR AND HOUSEWARES
Various vehicle loans payable in monthly installments
through September, 2001 with interest at rates from
7.4% to 8.4%........................................ 62,172 127,326
---------- ----------
Total.......................................... 8,343,729 7,130,963
Less scheduled current maturities..................... 909,476 1,099,000
---------- ----------
Long-term portion..................................... $7,434,253 $6,031,963
========== ==========
</TABLE>

The bank revolving line of credit and term notes (that mature in 1998), are
collateralized by all of Tamor's assets. The revolving credit line is advanced
based on 80% of qualified accounts receivable, plus 50% of raw material and
finished goods inventories, less certain outstanding letters of credit, all as
defined in the security agreement.

F-60
<PAGE> 167

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The loan agreements contain, among other matters, certain restrictive
covenants relating to ownership control, payment of dividends, further liens and
security interests, mergers or consolidation with others, investments and
advances, guaranties, borrowings, disposition of collateral, and capital
expenditures in excess of $1,500,000 for 1996 and $1,000,000 thereafter. Tamor
is also required to maintain certain financial ratios related to minimum net
worth, debt to equity and cash flow coverage. Tamor was not in compliance with
the capital expenditures limitation, cash flow coverage ratio, and additional
borrowings. Noncompliance has been waived by the bank for fiscal 1996.

Scheduled maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
Year ended December 31,
<S> <C>
1997................................................... $1,099,000
1998................................................... 5,095,000
1999................................................... 260,000
2000................................................... 274,000
2001................................................... 402,963
----------
Total.................................................. $7,130,963
==========
</TABLE>

7. RELATED PARTY TRANSACTIONS

Tamor purchases packaging materials from an entity which is partially owned
by two stockholders of Tamor. Payments to this entity for packaging materials
were $1,096,713 in 1994, $1,151,000 in 1995 and $1,313,000 in 1996. Accounts
payable trade includes $97,109 at December 31, 1995 and $40,304 at December 31,
1996 due to the related entity.

Tamor also purchases various raw materials from other related parties at
prevailing market prices. Payments to such related parties were $4,707,730 in
1994, $6,826,000 in 1995 and $14,270,000 in 1996. Accounts payable trade
includes $1,396,584 at December 31, 1995 and $1,679,826 at December 31, 1996 due
to the related entities.

Housewares pays commissions to related parties. These commissions amounted
to $334,917 in 1994, $154,862 in 1995 and $1,193,770 in 1996.

Housewares leases its office facilities as a tenant-at-will from a real
estate entity partially owned by the President of Housewares. Rent expense was
$52,588 in 1994, $48,591 in 1995 and $46,936 in 1996.

8. STATE TAXES ON INCOME

State taxes on income (benefit) consist of the following:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Current.......................................... $93,000 $ 20,000 $115,000
Deferred......................................... -- (45,000) 45,000
------- -------- --------
Total............................................ $93,000 $(25,000) $160,000
======= ======== ========
</TABLE>

A provision for Federal income taxes is not made due to the election by the
Companies, and consent by their stockholders, to include their respective shares
of the taxable income or loss of the Companies in their individual tax returns.
As a result, no Federal income tax is imposed on the Companies.

Under Massachusetts state tax rules, Subchapter S corporate earnings are
taxed at different rates depending on sales volume as well as includable in the
stockholders' Massachusetts income tax returns.

F-61
<PAGE> 168

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred state tax assets at December 31, 1996 consist of Massachusetts
investment tax credit carryforwards and other temporary differences aggregating
$125,000 less a valuation allowance of the same amount due to the expected
ownership change which would result in a change in the Company's tax status and
the elimination of all differences in the book and tax basis of assets and
liabilities.

9. COMMITMENTS AND CONTINGENCIES

Employment Agreement

Tamor has an employment agreement with an officer who is also a stockholder
of Tamor. The agreement provides for compensation above a minimum amount
determined by the board of directors, inflationary increases, and additional
compensation equal to four percent of Tamor's income before taxes. Minimum
annual compensation under the agreement is as follows:

<TABLE>
<CAPTION>
Year ended December 31,
<S> <C>
1997................................................... $ 165,000
1998................................................... 165,000
1999................................................... 165,000
2000................................................... 165,000
2001................................................... 165,000
Thereafter............................................. 197,000
----------
Total.................................................. $1,022,000
==========
</TABLE>

Retirement Plan

Housewares has a profit sharing retirement plan in which eligible employees
may elect to contribute up to 15% of their annual compensation and the Company
will match up to 2% of an employee's annual compensation. In addition, the
Company contributes an amount once a year based upon profits for the year.
Pension expense was $50,358 in 1994, $45,575 in 1995 and $51,403 in 1996.

10. SIGNIFICANT CUSTOMERS

The Companies have two significant customers that each comprise more than
10% of total sales in 1994, 1995 and 1996. Sales to these customers represent
approximately 31% and 17% of total sales in 1994, 33% and 12% of total sales in
1995, and 28% and 11% of total sales in 1996.

11. SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest and state income taxes was as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Interest..................................... $508,918 $1,096,590 $1,204,106
State income taxes........................... 30,476 93,401 14,364
</TABLE>

NONCASH INVESTING AND FINANCING ACTIVITIES:

The Company issued a note payable for $1,052,809 to the estate of a former
stockholder for the purchase of treasury stock in 1996.

The Companies incurred capital lease obligations of $5,243,529 in 1995 and
$36,700 in 1996.

F-62
<PAGE> 169

TAMOR PLASTICS CORPORATION

AND HOUSEWARE SALES, INC.

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

12. MERGER

On January 1, 1995, Victory Button Company, Inc. was merged with and into
Tamor Plastics Corporation. Both corporations were commonly owned by the same
stockholders. The merger was accounted for as a pooling of interests, and
accordingly, the accompanying financial statements include the accounts and
operations of Victory Button Company, Inc. for all periods prior to the merger.

13. TREASURY STOCK

The stockholders' have a stock redemption agreement which requires each
stockholder desiring to sell their stock to first offer the stock for sale to
the Company, and if not purchased by the Company, to the other stockholders, at
agreed upon book value. The stock redemption agreement will be rescinded upon
the closing of the stock sale as described in Note 1.

Upon the death of any stockholder, the Company is required to purchase the
decedent's stock at agreed upon book value. During 1996, 11.23 shares were
purchased by the Company for $1,482,228 including a note payable to the former
stockholders estate for $1,052,809 (See Note 6).

F-63
<PAGE> 170

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

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................... 1
Risk Factors................................ 13
The Exchange Offer.......................... 22
Use of Proceeds............................. 30
Capitalization.............................. 31
Selected Historical Financial Data.......... 32
Unaudited Pro Forma Combined Financial
Data...................................... 34
Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 40
Business.................................... 50
Management.................................. 59
Principal Stockholders...................... 62
Certain Transactions........................ 65
Description of Other Indebtedness........... 66
Description of the Exchange Notes........... 68
Book-Entry; Delivery and Form............... 93
Plan of Distribution........................ 94
Certain Federal Income Tax Consequences..... 95
Legal Matters............................... 97
Experts..................................... 97
Available Information....................... 98
Incorporation of Certain Documents by
Reference................................. 99
Index to Consolidated Financial
Statements................................ F-1
</TABLE>

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

$125,000,000

HOME PRODUCTS
INTERNATIONAL, INC.
OFFER TO EXCHANGE
9 5/8% SENIOR SUBORDINATED NOTES
DUE 2008 FOR ALL OUTSTANDING
9 5/8% SENIOR SUBORDINATED NOTES
DUE 2008 OF
HOME PRODUCTS INTERNATIONAL, INC.
--------------------

PROSPECTUS
--------------------
, 1998

------------------------------------------------------------
------------------------------------------------------------
<PAGE> 171

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Reference is made to the Company's Certificate of Incorporation and to
Section 145 of the Delaware General Corporation Law ("DGCL"). Section 145 of the
DGCL authorizes a corporation to provide indemnification against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred, in non-derivative actions, suits or
proceedings brought by third parties against an officer, director, employee or
agent of the corporation, if such party acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful as determined in accordance
with the statute.

In a derivative action, i.e., one by or in the right of the corporation,
indemnification may be made only for expenses actually and reasonably incurred
by directors, officers, employees or agents in connection with the defense or
settlement of an action or suit, and only with respect to a matter as to which
they shall have acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the Court in which the
action or suit was brought shall determine upon application that the defendant
directors, officers, employees or agents are fairly and reasonably entitled to
indemnity for such expenses despite such adjudication of liability.

The Company's Certificate of Incorporation limits the personal liability of
directors to the fullest extent permitted by Delaware law. In addition, the
Company's Certificate of Incorporation and By-laws provide that the Company
shall to the fullest extent permitted by Delaware law, indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative by reason of the fact that he or she is or was a director,
officer, employee or agent of the Company or is or was serving at the request of
the Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any and all
expenses, liabilities or other matters referred to or covered by Delaware law,
which were reasonably incurred by such person. This indemnification is in
addition to any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation, By-laws, any
agreement or notice of shareholders or disinterested directors. The Company's
Certificate of Incorporation and By-laws also permit it to secure insurance on
behalf of any director, officer, employee or other agent for any liability
arising out of his or her actions in such capacity, regardless of whether
Delaware law, the Certificate of Incorporation or By-laws would permit
indemnification. The Company maintains officers and directors liability
insurance.

Reference is also made to Section 102(b)(7) of the DGCL, which enables a
corporation in its original certificate of incorporation or an amendment thereto
to eliminate or limit the personal liability of a director for violations of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payments of dividends of unlawful stock purchase or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. The Company's Certificate of Incorporation limits the
personal liability of directors to the fullest extent permitted by Delaware law.

ITEM 21. EXHIBITS.

(a) See Exhibit Index filed herewith, which is incorporated herein by
reference.

(b) Financial Statement Schedules: None.

II-1
<PAGE> 172

ITEM 22. UNDERTAKINGS.

(a) The undersigned Registrants hereby undertake that insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim of indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred by the Registrants in the successful defense of any action, suit paid
by a director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrants' annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.

(c) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(d) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.

II-2
<PAGE> 173

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this amendment to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Chicago,
State of Illinois on July , 1998.

HOME PRODUCTS INTERNATIONAL, INC.

/s/ James R. Tennant
--------------------------------------

James R. Tennant
Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and as of the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ James R. Tennant Chairman of the Board of Directors and July 10, 1998
- ------------------------------------------------ Chief Executive Officer (Principal
James R. Tennant Executive Officer)

/s/ James E. Winslow Executive Vice President, Chief July 10, 1998
- ------------------------------------------------ Financial Officer and Secretary
James E. Winslow (Principal Financial and Principal
Accounting Officer)

Director July , 1998
- ------------------------------------------------
Charles R. Campbell
</TABLE>

II-3
<PAGE> 174

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ JOSEPH GANTZ* Director July 10, 1998
- ------------------------------------------------
Joseph Gantz

Director July , 1998
- ------------------------------------------------
Stephen P. Murray

/s/ MARSHALL RAGIR* Director July 10, 1998
- ------------------------------------------------
Marshall Ragir

Director July , 1998
- ------------------------------------------------
Jeffrey C. Rubenstein

/s/ DANIEL B. SHURE* Director July 10, 1998
- ------------------------------------------------
Daniel B. Shure

/s/ JOEL D. SPUNGIN* Director July 10, 1998
- ------------------------------------------------
Joel D. Spungin

*By
- ------------------------------------------------
James R. Tennant
Attorney-in-Fact
</TABLE>

II-4
<PAGE> 175

SIGNATURES

SELFIX, INC.

By /s/ James R. Tennant
--------------------------------------

James R. Tennant
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and as of the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ James R. Tennant Chairman of the Board of July 10, 1998
- ----------------------------------------------------- Directors (Principal) Executive
James R. Tennant Officer)

/s/ James E. Winslow Secretary (Principal Financial July 10, 1998
- ----------------------------------------------------- and Principal Accounting
James E. Winslow Officer)

Director July , 1998
- -----------------------------------------------------
Charles R. Campbell

/s/ MARSHALL RAGIR* Director July 10, 1998
- -----------------------------------------------------
Marshall Ragir

Director July , 1998
- -----------------------------------------------------
Jeffrey C. Rubenstein

/s/ DANIEL B. SHURE* Director July 10, 1998
- -----------------------------------------------------
Daniel B. Shure

/s/ JOEL D. SPUNGIN* Director July 10, 1998
- -----------------------------------------------------
Joel D. Spungin

*By -------------------------------------------------
James R. Tennant
Attorney-in-Fact
</TABLE>

II-5
<PAGE> 176

SIGNATURES

SHUTTERS, INC.

By
/s/ James R. Tennant
------------------------------------
James R. Tennant
President

Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and as of the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ James R. Tennant President and Director July 10, 1998
- ----------------------------------------------------- (Principal Executive
James R. Tennant Officer)

/s/ James E. Winslow Secretary and Director July 10, 1998
- ----------------------------------------------------- (Principal Financial and
James E. Winslow Principal Accounting
Officer)
</TABLE>

II-6
<PAGE> 177

SIGNATURES

TAMOR CORPORATION, INC.

By /s/ James R. Tennant
------------------------------------
James R. Tennant
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and as of the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ James R. Tennant Chairman of the Board of July 10, 1998
- ----------------------------------------------------- Directors (Principal Executive
James R. Tennant Officer)

/s/ James E. Winslow President, Treasurer and Clerk July 10, 1998
- ----------------------------------------------------- (Principal Financial and
James E. Winslow Principal Accounting Officer)
</TABLE>

II-7
<PAGE> 178

SIGNATURES

SEYMOUR HOUSEWARES CORPORATION

By /s/ James R. Tennant
------------------------------------
James R. Tennant
Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1933, this amendment
to this registration statement has been signed by the following persons in the
capacities and as of the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ James R. Tennant Chairman of the Board of July 10, 1998
- ----------------------------------------------------- Directors (Principal
James R. Tennant Executive Officer)

/s/ James E. Winslow Senior Vice President, Chief July 10, 1998
- ----------------------------------------------------- Financial Officer and
James E. Winslow Secretary (Principal
Financial and Principal
Accounting Officer)
</TABLE>

II-8
<PAGE> 179

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>

1.1.1* -- Purchase Agreement between Home Products International,
Inc., Selfix, Inc., Seymour Housewares Corporation,
Shutters, Inc., Tamor Corporation, Chase Securities Inc.
and NationsBanc Montgomery Securities, LLC dated May 7,
1998.
3.1.1* -- Amended and Restated Certificate of Incorporation of Home
Products International, Inc.
3.1.2* -- Certificate of Incorporation of Selfix, Inc., as amended.
3.1.3* -- Certificate of Incorporation of Seymour Housewares
Corporation, as amended.
3.1.4* -- Articles of Incorporation of Tamor Corporation, as
amended.
3.1.5* -- Articles of Incorporation of Shutters, Inc., as amended.
3.2.1 -- By-laws of Home Products International, Inc.
3.2.2* -- By-laws of Selfix, Inc.
3.2.3* -- By-laws of Seymour Housewares Corporation.
3.2.4* -- By-laws of Tamor Corporation.
3.2.5* -- By-laws of Shutters, Inc.
4.1.1* -- Indenture between Home Produces International, Inc., the
Subsidiary Guarantors (as defined therein) and LaSalle
National Bank dated May 14, 1998.
4.1.2* -- Specimen Certificate of 9 5/8% Senior Subordinated Notes
due 2008 ("Original Notes") (included in Exhibit 4.1.1
hereto).
4.1.3* -- Specimen Certificate of 9 5/8% Senior Subordinated Notes
due 2008 (the "Exchange Notes") (included in Exhibit
4.1.1 hereto).
4.1.4* -- Exchange and Registration Rights Agreement, by and among
Home Products International, Inc., Chase Securities Inc.
and NationsBanc Montgomery Securities LLC dated May 14,
1998.
5.1.1* -- Opinion of Sonnenschein Nath & Rosenthal Regarding
Legality.
10.1.1* -- Credit Agreement among Home Products International, Inc.,
the several banks and other financial institutions or
entities from time to time parties to the Credit
Agreement and the Chase Manhattan Bank, as Administrative
Agent, dated May 14, 1998.
12.1.1* -- Statement Regarding Computation of Earnings to Fixed
Charges.
21.1.1* -- List of Subsidiaries.
23.1.1* -- Consent of Arthur Andersen LLP.
23.1.2* -- Consent of Grant Thornton LLP.
23.1.3* -- Consent of Ernst & Young LLP.
23.1.4* -- Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1.1 hereto).
23.1.5** -- Consent of Arthur Andersen LLP.
23.1.6** -- Consent of Grant Thornton LLP.
23.1.7** -- Consent of Ernst & Young LLP.
23.1.8** -- Consent of BDO Seidman, LLP.
24.1.1* -- Power of Attorney (included with the signature page to
the Registration Statement).
25.1.1** -- Statement of Eligibility of Trustee, as amended
99.1.1* -- Form of Letter of Transmittal.
</TABLE>

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

* Previously filed.

** Filed herewith.

<PAGE> 1

EXHIBIT 23.1.5

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
included in this registration statement and to the incorporation by reference in
this registration statement of our reports dated February 6, 1998, included in
the Company's Form 10-K for the year ended December 27, 1997 and to all
references to our Firm included in this registration statement.

ARTHUR ANDERSEN LLP

Chicago, Illinois
July 8, 1998

<PAGE> 1

EXHIBIT 23.1.6

CONSENT OF INDEPENDENT ACCOUNTANTS

We have issued our report dated February 9, 1996 accompanying the
consolidated financial statements of Home Products International, Inc.
(formerly "Selfix, Inc.") ended December 30, 1995. We consent to the use of
the above report in the Registration Statement of Home Products International,
Inc. (formerly "Selfix, Inc.") on Form S-4 and to the use of our name as it
appears under the caption "Experts."

GRANT THORNTON LLP

Chicago, Illinois
July 8, 1998

<PAGE> 1

EXHIBIT 23.1.7

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated August 15, 1997 (except Note 11, as to which the date
is December 30, 1997), with respect to the consolidated financial statements of
Seymour Sales Corporation and subsidiaries in the Registration Statement
(Amendment No. 1 to Form S-4) and the related Prospectus of Home Products
International, Inc. for the registration of $125,000,000 of its 9 5/8 % Senior
Subordinated Notes due 2008.

Ernst & Young LLP

Indianapolis, Indiana
July 8, 1998

<PAGE> 1

EXHIBIT 23.1.8

CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Home Products International, Inc.

We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated January 24, 1997, relating to the
combined financial statements of Tamor Plastics Corporation and Houseware
Sales, Inc. as of December 31, 1996 and 1995 and for each of the three years in
the period ending December 31, 1996, which is contained in this Registration
Statement.

We also consent to the reference to us under the caption "Experts" in the
Registration Statement.

BDO Seidman, LLP

Gardner, Massachusetts
July 9, 1998

<PAGE> 1
EXHIBIT 25.1.1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM T-1

STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

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

LASALLE NATIONAL BANK
(Exact name of trustee as specified in its charter)

36-0884183
(I.R.S. Employer
Identification No.)

135 South LaSalle Street, Chicago, Illinois 60603
(Address of principal executive offices) (Zip Code)

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

M. ROBERT K. QUINN
Group Senior Vice President
General Counsel and Secretary
Telephone: (312) 904-2010
135 South LaSalle Street
Chicago, Illinois 60603
(Name, address and telephone number of agent for service)

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

HOME PRODUCTS INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)

Delaware 36-4147027
(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification No.)

4501 West 47th Street
Chicago, Illinois
60632
(Address of Principal Executive Offices) (Zip Code)

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

$125,000,000 9 5/8% Senior Subordinated Notes Due 2008
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION

Furnish the following information as to the trustee:

(a) Name and address of each examining or supervising authority to
which it is subject.

1. Comptroller of the Currency, Washington D.C.

2. Federal Deposit Insurance Corporation, Washington,
D.C.

3. The Board of Governors of the Federal Reserve
Systems, Washington, D.C.

(b) Whether it is authorized to exercise corporate trust powers.

Yes.

ITEM 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.

If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.

Neither the obligor nor any underwriter for the obligor is an affiliate of the
trustee.

ITEM 3. VOTING SECURITIES OF THE TRUSTEE.

Furnish the following information as to each class of voting securities of the
trustee:

Not applicable

ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES.

If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:

(a) Title of the securities outstanding under each other
indenture.

Not applicable

(b) A brief statement of the facts relied upon as a basis for the
claim that no conflicting interest within the meaning of Section
310(b)(1) of the Act arises as a result of the trusteeship under such
other indenture, including a statement as to how the indenture
securities will rank as compared with the securities issued under such
other indenture.

Not applicable
<PAGE> 3
ITEM 5. INTERLOCKING DIRECTORATES AND SIMILAR RELATIONSHIPS WITH THE OBLIGOR
OR UNDERWRITERS.

If the trustee or any of the directors or executive officers of the trustee is
a director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.

Not applicable

ITEM 6. VOTING SECURITIES OF THE TRUSTEE OWNED BY THE OBLIGOR OR ITS
OFFICIALS.

Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner and executive
officer of the obligor.

Not applicable

ITEM 7. VOTING SECURITIES OF THE TRUSTEE OWNED BY UNDERWRITERS OR THEIR
OFFICIALS.

Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter.

Not applicable

ITEM 8. SECURITIES OF THE OBLIGOR OWNED OR HELD BY THE TRUSTEE.

Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:

Not applicable

ITEM 9. SECURITIES OF THE UNDERWRITER OWNED OR HELD BY THE TRUSTEE.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of an underwriter for the obligor,
furnish the following information as to each class of securities of such
underwriter any of which are so owned or held by the trustee.

Not applicable

ITEM 10. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF VOTING SECURITIES OF CERTAIN
AFFILIATES OR SECURITY HOLDERS OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default voting securities of a person who, to the knowledge of
the trustee (1) owns 10 percent or more of the voting securities of the obligor
or (2) is an affiliate, other than a subsidiary, of the obligor, furnish the
following information as to the voting securities of such person.

Not applicable
<PAGE> 4
ITEM 11. OWNERSHIP OR HOLDINGS BY THE TRUSTEE OF ANY SECURITIES OF A PERSON
OWNING 50 PERCENT OR MORE OF THE VOTING SECURITIES OF THE OBLIGOR.

If the trustee owns beneficially or holds as collateral security for
obligations in default any securities of a person who, to the knowledge of the
trustee, owns 50 percent or more of the voting securities of the obligor,
furnish the following information as to each class of securities of such person
any of which are so owned or held by the trustee.

Not applicable

ITEM 12. INDEBTEDNESS OF THE OBLIGOR TO THE TRUSTEE.

If the obligor is indebted to the trustee, furnish the following information.

LaSalle National Bank has a $14 million participation in a $100 million
Revolving Line of Credit agented by Chase Manhattan Bank.

ITEM 13. DEFAULTS BY THE OBLIGOR.

a) State whether there is or has been a default with respect to the
securities under this indenture. Explain the nature of any such default.

Not applicable

b) If the trustee is a trustee under another indenture under which any
other securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.

Not applicable

ITEM 14. AFFILIATIONS WITH THE UNDERWRITERS.

If any underwriter is an affiliate of the trustee, describe each such
affiliation.

Not applicable

ITEM 15. FOREIGN TRUSTEE.

Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee under indentures qualified or to be qualified.

Not applicable

ITEM 16. LIST OF EXHIBITS.

List below all exhibits filed as part of this statement of eligibility and
qualification.

1. A copy of the Articles of Association of LaSalle National Bank
now in effect.

2. A copy of the certificate of authority to commence business.

3. A copy of the authorization to exercise corporate trust
powers.

4. A copy of the existing By-Laws of LaSalle National Bank.
<PAGE> 5
5. Not applicable.

6. The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939.

7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.

8. Not applicable.

9. Not applicable.
<PAGE> 6
SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
LaSalle National Bank, a corporation organized and existing under the laws of
the United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, State of Illinois, on the 21st day of
April, 1997.

LASALLE NATIONAL BANK

By: /s/ Sarah H. Webb
-----------------
Sarah H. Webb
FirstVice President
<PAGE> 7

EXHIBIT 1

ARTICLES
OF
ASSOCIATION

LA SALLE NATIONAL BANK (LOGO)

LA SALLE NATIONAL BANK
CHICAGO, ILLINOIS
<PAGE> 8
(LOGO)
LaSalle National Bank

ARTICLES OF ASSOCIATION

FIRST. The title of this association, which shall carry on the
business of banking under the laws of the United States shall be "LaSalle
National Bank."

SECOND. The place where the main banking house or office of this
association shall be located, its operations of discount and deposit carried
on, and its general business conducted, shall be Chicago, County of Cook, State
of Illinois.

THIRD. The Board of Directors of this association shall consist of
such number of its shareholders, not less than five nor more than twenty-five,
as from time to time shall be determined by a majority of the votes to which
all of its shareholders are at the time entitled. A majority of the Board of
Directors shall be necessary to constitute a quorum for the transaction of
business. The Board of Directors, by vote of a majority of the full board, may,
between annual meetings of shareholders increase the membership of the Board
where the number of directors last elected by shareholders was 15 or less, by
not more than two members, and where the number of directors last elected by
shareholders was 16 or more, by not more than four members and by a like vote
appoint qualified persons to fill the vacancies created thereby; provided that
the number of Directors shall at no time exceed twenty-five.

FOURTH. The regular annual meeting of the shareholders of this
association shall be held at its main banking house, or other convenient place
duly authorized by the board of directors on such day of each year as is
specified therefor in the bylaws.

FIFTH. The amount of capital stock which this association is
authorized to issue shall be Twenty Million Dollars ($20,000,000.00) divided
into 2,000,000 shares of common capital stock of the par value of $10.00 each;
but said capital stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United States.

If the capital stock is increased by the sale of additional shares
thereof, other than to key officers and employees of the association upon the
exercise of options granted pursuant to the terms of a stock option plan then
in effect, as to which sales all pre-emptive rights are waived, each
shareholder shall be entitled to subscribe for such additional shares in
proportion to the number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholders' meeting is specified in a
resolution adopted by the shareholders at the time the increase is authorized.
The board of directors shall have the power to prescribe a reasonable period of
time within which the pre-emptive rights to subscribe to the new shares of
capital stock may be exercised.

The association, at any time and from time to time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of
the shareholders.

SIXTH. The board of directors shall appoint one of its members
president of this association, who shall be chairman of the board, but the
board of directors may appoint a director in lieu of the president to be
chairman of the board, who shall perform such duties as may be designated by
the board of directors. The board of directors shall have the power to appoint
one or more vice presidents, a cashier and such other officers as may be
required to transact the business of this association; to fix the salaries to
be paid to all officers of this association; and to dismiss such officers, or
any of them.
<PAGE> 9
The board of directors shall have the power to define the duties of
officers and employees of this association, to require bonds from them, and to
fix the penalty thereof; to regulate the manner in which directors shall be
elected or appointed, and to appoint judges of the election; to make all bylaws
that it may be lawful for them to make for the general regulation of the
business of this association and the management of its affairs; and generally
to do and perform all acts that it may be lawful for a board of directors to do
and perform.

SEVENTH. This association shall have succession from the date of its
organization certificate until such time as it be dissolved by act of its
shareholders in accordance with the provisions of the banking laws of the
United States, or until its franchise becomes forfeited by reason of violation
of law, or until terminated by either a general or a special act of Congress,
or until its affairs be placed in the hands of a receiver and finally wound up
by him.

EIGHTH. The board of directors of this association, or any three or
more shareholders owning, in the aggregate, not less than ten percentum of the
stock of this association, may call a special meeting of shareholders at any
time: Provided, however, that, unless otherwise provided by law, not less than
ten days prior to the date fixed for any such meeting, a notice of the time,
place, and purpose of the meeting shall be given by first-class mail, postage
prepaid, to all shareholders of record of this association at their respective
addresses as shown upon the books of the association. These articles of
association may be amended at any regular or special meeting of the
shareholders by the affirmative vote of the shareholders owning at least a
majority of the stock of this association, subject to the provisions of the
banking laws of the United States. The notice of any shareholders' meeting, at
which an amendment to the articles of association of this association is to be
considered, shall be given as herein-above set forth.

NINTH. Any person, his heirs, executors, or administrators, may be
indemnified or reimbursed by the association for reasonable expenses actually
incurred in connection with any action, suit, or proceeding, civil or criminal,
to which he or they shall be made a party by reason of his being or having been
a director, officer, or employee of the association or of any firm,
corporation, or organization which he served in any such capacity at the
request of the association: Provided, however, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit, or
proceeding as to which he shall finally be adjudged to have been guilty of or
liable for negligence or wilful misconduct in the performance of his duties to
the association: And, provided further, that no person shall be so indemnified
or reimbursed in relation to any matter in such action, suit, or proceeding
which has been made the subject of a compromise settlement except with the
approval of a court of competent jurisdiction, or the holders of record of a
majority of the outstanding shares of the association, or the board of
directors, acting by vote of directors not parties to the same or substantially
the same action, suit, or proceeding, constituting a majority of the whole
number of the directors. The foregoing right of indemnification or
reimbursement shall not be exclusive of other rights to which such person, his
heirs, executors, or administrators, may be entitled as a matter of law.

********

May 17, 1982
Form No. 181, Rev 5/17/82 GW
<PAGE> 10
EXHIBIT 2

CERTIFICATE OF AUTHORITY
TO COMMENCE BUSINESS
<PAGE> 11
STATE OF ILLINOIS

AUDITOR'S OFFICE

NO. 333 (LOGO)

NATIONAL BANK TRUST CERTIFICATE

Springfield, FEBRUARY 15th 1928

I, OSCAR NELSON, Auditor of Public Accounts of the State of Illinois,
do hereby certify that the NATIONAL BUILDERS BANK OF CHICAGO located at
CHICAGO, County of COOK and State of Illinois, a corporation organized under
and by authority of the statutes of the United States governing National Banks
and authority granted by the Federal Reserve Act for the purpose of accepting
and executing trusts, has this day deposited in this office, securities in the
sum of TWO HUNDRED THOUSAND Dollars, $200,000.00 of the character designated by
Section 6 of the Act of the Legislature of the State of Illinois entitled "An
Act to provide for and regulate the administration of trusts by trust
companies,"

The said deposit is made for the benefit of the creditors of said
NATIONAL BUILDERS BANK OF CHICAGO under and by virtue of the provisions of the
Act above referred to and the said securities are now held by me in this office
in my official capacity as such Auditor of Public Accounts, for the uses and
purposes aforesaid.

I further certify that by virtue of the Acts aforesaid, the NATIONAL
BUILDERS BANK OF CHICAGO is hereby authorized to accept and execute trusts and
receive deposits of trust funds under the provisions and limitations of "An Act
to provide for and regulate the administration of trusts in Illinois.

IN TESTIMONY WHEREOF, I hereunto subscribe my name and
(SEAL) affix the seal of my office, the day and year first
above written.

/s/ Oscar Nelson
---------------------------
AUDITOR OF PUBLIC ACCOUNTS.
STATE OF ILLINOIS.
<PAGE> 12
NO. 13146.

TREASURY DEPARTMENT (LOGO)

OFFICE OF COMPTROLLER OF THE CURRENCY

Washington, D.C., NOVEMBER 29, 1927.

WHEREAS, by satisfactory evidence presented to the undersigned, it has
been made to appear that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of
CHICAGO in the County of COOK and State of ILLINOIS has complied with all the
provisions of the Statutes of the United States, required to be complied with
before an association shall be authorized to commence the business of Banking;

NOW THEREFORE I, J.W. MCINTOSH, Comptroller of the Currency, do hereby
certify that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of CHICAGO in the
County of COOK and State of ILLINOIS is authorized to commence the business of
Banking as provided in Section Fifty one hundred and sixty nine of the Revised
Statutes of the United States.

IN TESTIMONY WHEREOF witness my hand and Seal of (SEAL)
(SEAL) office this TWENTY-NINTH day of NOVEMBER, 1927.

/s/ J.W. McIntosh
---------------------------
Comptroller of the Currency
<PAGE> 13
CERTIFICATE OF CHANGE OF CORPORATE TITLE

(LOGO)

NO. 13146.

TREASURY DEPARTMENT

OFFICE OF THE COMPTROLLER OF THE CURRENCY

WASHINGTON, D.C., MAY 1, 1940.

WHEREAS, by satisfactory evidence presented to me, it appears that
under authority of sections 2, 3, and 4, of the Act of Congress approved May 1,
1886, entitled "An Act to enable national banking associations to increase
their capital stock and to change their names or location," shareholders owning
two-thirds of the stock of the national banking association heretofore known
as-- "NATIONAL BUILDERS BANK OF CHICAGO," located in CHICAGO, County of COOK,
State of ILLINOIS, have voted to change the name of said association to--
"LASALLE NATIONAL BANK," and have complied with all the provisions of the said
Act relative to national banking associations changing their name.

NOW, THEREFORE, IT IS HEREBY CERTIFIED, that the name of the said
association has been changed to-- "LASALLE NATIONAL BANK," and that such change
of name is hereby approved under authority conferred by said Act.

(SEAL) IN TESTIMONY WHEREOF, witness my hand and seal of
office this FIRST day of MAY, 1940.

/s/
-----------------------------------
ACTING Comptroller of the Currency.
<PAGE> 14
EXHIBIT 3

AUTHORIZATION TO EXERCISE
CORPORATE TRUST POWERS
<PAGE> 15
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM [LETTERHEAD]

WASHINGTON

May 9, 1940

LaSalle National Bank,
Chicago, Illinois.

Gentlemen:

The Board of Governors of the Federal Reserve System has been
officially advised by the Comptroller of the Currency that on May 1, 1940,
National Builders Bank of Chicago, Chicago, Illinois, changed its title to
LaSalle National Bank, and accordingly there is enclosed herewith a certificate
showing that LaSalle National Bank has authority to exercise the fiduciary
powers enumerated therein.

Kindly acknowledge receipt of this certificate.

Very truly yours,

S. R. Carpenter
--------------------------
S. R. Carpenter,
Assistant Secretary.

Enclosure
<PAGE> 16
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON

I, S. R. Carpenter, Assistant Secretary of the Board of Governors of
the Federal Reserve System (formerly known as the Federal Reserve Board), do
hereby certify that it appears from the records of the Board of Governors of
the Federal Reserve System that:

(1) Pursuant to the authority vested in the Federal Reserve Board by
an Act of Congress approved December 23, 1913, known as the Federal Reserve
Act, as amended, the Federal Reserve Board on December 8, 1927, granted to
National Builders Bank of Chicago, Chicago, Illinois, the right to act, when
not in contravention of State or local law, as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, committee of estates of lunatics, or in any other fiduciary capacity
in which State banks, trust companies or other corporations which come into
competition with national banks are permitted to act under the laws of the
State of Illinois;

(2) Under the provisions of an Act of Congress approved May 1, 1886,
National Builders Bank of Chicago, Chicago, Illinois, on May 1, 1940, changed
its title to LaSalle National Bank; and

(3) By virtue of the foregoing, LaSalle National Bank, Chicago,
Illinois, has authority to act, when not in contravention of State or local
law, as trustee, executor, administrator, registrar of stocks and bonds,
guardian of estates, assignee, receiver, committee of estates of lunatics, or
in any other fiduciary capacity in which State banks, trust companies or other
corporations which come into competition with national banks are permitted to
act under the laws of the State of Illinois, subject to regulations prescribed
by the Board of Governors of the Federal Reserve System.

IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the
seal of the Board of Governors of the Federal Reserve System to be affixed at
the City of Washington in the District of Columbia.

/s/ S. R. Carpenter
--------------------
Assistant Secretary.

Dated May 9, 1940
<PAGE> 17
EXHIBIT 4

BYLAWS

LA SALLE NATIONAL BANK

CHICAGO, ILLINOIS

LA SALLE NATIONAL BANK (LOGO)

Organized Under the National Banking Laws
of the United States
<PAGE> 18
BYLAWS

of the

LA SALLE NATIONAL BANK

(a National Banking Association which association
is herein referred to as the "bank")

ARTICLE I

MEETINGS OF SHAREHOLDERS

SECTION 1.1. ANNUAL MEETING. The regular annual meeting of the
shareholders for the election of directors and the transaction of whatever
other business may properly come before the meeting, shall be held at the main
office of the Bank, 135 South LaSalle Street, Chicago, Illinois, or such other
place as the Board of Directors may designate, at 9:00 A.M., on the third
Wednesday of March of each year. Notice of such meeting shall be mailed,
postage prepaid, at least ten days prior to the date thereof, addressed to each
shareholder at his address appearing on the books of the Bank. If for any
cause, an election of directors is not made on the said day, the Board of
Directors shall order the election to be held on some subsequent day as soon
thereafter as practicable, according to the provisions of law; and notice
thereof shall be given in the manner herein provided for the annual meeting.

SECTION 1.2. SPECIAL MEETINGS. Except as otherwise specifically
provided by statute, special meetings of the shareholders may be called for any
purpose at anytime by the board of directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock
of the bank. Every such special meeting, unless otherwise provided by law,
shall be called by mailing, postage pre-paid, not less than ten days prior to
the date fixed for such meeting, to each shareholder at his address appearing
on the books of the bank, a notice stating the purpose of the meeting.

SECTION 1.3. NOMINATIONS FOR DIRECTOR. Nominations for election to
the board of directors may be made by the board of directors or by any
shareholder of any outstanding class of capital stock of the bank entitled to
vote for the election of directors. Nominations, other than those made by or on
behalf of the existing management of the bank, shall be made in writing and
shall be delivered or mailed to the president of the bank and to the
Comptroller of the Currency, Washington, D.C., not less than 14 days nor more
than 50 days prior to any meeting of shareholders called for the election of
directors, provided, however, that if less than 21 days' notice of the meeting
is given to the shareholders, such nomination shall be mailed or delivered to
the president of the bank and to the Comptroller of the Currency not later than
the close of business on the seventh day following the day on which the notice
of meeting was mailed. Such notification shall contain the following
information to the extent known to the notifying shareholder: (a) the name and
address of each proposed nominee; (b) the principal occupation of each proposed
nominee; (c) the total number of shares of capital stock of each proposed
nominee; (d) the name and address of the notifying shareholder; and (e) the
number of shares of capital stock of the bank owned by the notifying
shareholder. Nominations not made in accordance herewith, may, in his
discretion, be disregarded by the chairman of the meeting, and upon his
instructions, the vote tellers may disregard all votes cast for each such
nominee.

SECTION 1.4. JUDGES OF ELECTION. Every election of directors shall
be managed by three judges, who shall be appointed by the board of directors
prior lo the time of said election. The
<PAGE> 19
judges of election shall hold and conduct the election at which they are
appointed to serve; and after the election, they shall file with the cashier a
certificate under their hands, certifying the result thereof and the names of
the directors elected. The judges of election. at the request of the chairman
of the meeting, shall act as tellers of any other vote by ballot taken at such
meeting, and shall certify the result thereof.

SECTION 1.5. PROXIES. Shareholders may vote at any meeting of the
shareholders by proxies duly authorized in writing, but no officer or employee
of this bank shall act as proxy. Proxies shall be valid only for one meeting,
to be specified therein, and any adjournments of such meeting. Proxies shall be
dated and shall be filed with the records of the meeting.

SECTION 1.6. QUORUM. A majority of the outstanding capital stock,
represented in person or by proxy, shall constitute a quorum at any meeting of
shareholders, unless otherwise provided by law; but less than a quorum may
adjourn any meeting, from time to time, and the meeting may be held, as
adjourned, without further notice. A majority of the votes cast shall decide
every question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the articles of association.

ARTICLE II

DIRECTORS

SECTION 2.1. BOARD OF DIRECTORS. The board of directors
(hereinafter referred to as the "board"), shall have power to manage and
administer the business affairs of the bank. Except as expressly limited by
law, all corporate powers of the bank shall be vested in and may be exercised
by said board.

SECTION 2.2. NUMBER. The board shall consist of not less than five
or more than twenty-five shareholders, the exact number within such minimum and
maximum limits to be fixed and determined from time to time by resolution of a
majority of the full board or by resolution of the shareholders at any meeting
thereof; provided, however, that a majority of the full board may not increase
the number of directors by more than two if the number of directors last
elected by shareholders was fifteen or less and by not more than four where the
number of directors last elected by shareholders was sixteen or more, provided
that in no event shall the number of directors exceed twenty-five.

SECTION 2.3. ORGANIZATION MEETING. The cashier, upon receiving the
certificate of the judges, of the result of any election, shall notify the
directors-elect of their election and of the time at which they are required to
meet at the main office of the bank for the purpose of organizing the new board
and electing and appointing officers of the bank for the succeeding year. Such
meeting shall be appointed to be held on the day of election or as soon
thereafter as practicable, and, in any event, within thirty days thereof. If,
at the time fixed for such meeting, there shall not be a quorum present the
directors present may adjourn the meeting, from time to time, until a quorum
is obtained.

SECTION 2.4 REGULAR MEETINGS. The regular meetings of the board
shall be held, without notice, on the third Wednesday of each month at the main
office. When any regular meeting of the board falls upon a holiday, the meeting
shall be held on the next banking business day unless the board shall designate
some other day.

SECTION 2.5 SPECIAL MEETINGS. Special meetings of the board may
be called by the
<PAGE> 20
chairman of the board, the president, or at the request of three or more
directors. Each member of the board shall be given notice stating the time and
place, by telegram, letter or in person, of each such special meeting.

SECTION 2.6. QUORUM. A majority of the directors shall constitute
a quorum at any meeting, except when otherwise provided by law; but a less
number may adjourn any meeting from time to time, and the meeting may be held,
as adjourned, without further notice.

SECTION 2.7. VACANCIES. When any vacancy occurs among the
directors, the remaining members of the board, in accordance with the laws of
the United States, may appoint a director to fill such vacancy at any regular
meeting of the board, or at a special meeting called for that purpose.

SECTION 2.8. RETIREMENT POLICY. A retirement policy adopted by the
board of directors shall be applicable to directors who are not active officers
of the bank.

ARTICLE III

COMMITTEES OF THE BOARD

SECTION 3.1. EXECUTIVE COMMITTEE. There shall be an executive
committee of the board. The members of the executive committee shall be chosen
by the board from time to time, shall hold office during its pleasure, and
shall consist of the chairman of the board, the chairman of the executive
committee selected by the board, who may but need not be the same person
designated to be president, and the president, ex officio, and not less than
seven additional members of the board who shall not be active officers of the
bank. It shall be the duty of this committee to exercise such powers and
perform such duties in respect to the making of loans and discounts as shall
from time to time be specified by resolution of the board. During such periods
as the board shall not be in session, the executive committee shall have and
may exercise all the powers of the board except such as are by law or by these
bylaws required to be exercised only by the board. The executive committee may
make rules for holding and conducting its meetings and keep in the minute book
of the bank a report of all action taken which shall be submitted for approval
at each regular meeting of the board and the action of the board shall be
recorded in the minutes of that meeting. A quorum of the executive committee
shall consist of not less than five of its members, at least three of whom
shall not be active officers of the bank. The chairman of the board, or in his
absence in the order named if present, the chairman of the executive committee
or the president, may designate any director who is not an active officer of
the bank, or a designated member, to serve as a member of the executive
committee at any specified meeting. Vacancies in the executive committee at any
time existing may be filled by appointment by the board. The board may at
anytime revise or change the membership and chairmanship of the executive
committee and make new or additional appointments thereto. The chairman of the
executive committee shall be ex officio a member of all committees except the
examining committee and the trust audit committee, and shall have such other
duties as may from time to time be assigned him by the board.

SECTION 3.2. OFFICERS' COMPENSATION COMMITTEE. There shall be an
officers' compensation committee of the board. The members of the officers'
compensation committee shall consist of the members ex officio provided for in
other sections of these bylaws and not less than three additional non-officer
members of the board who shall be appointed by the board each year at its first
meeting after the directors have been elected and qualified. It shall be the
duty of this committee to study the compensation of all officers of the bank
and from time to time report their recommendations to the board; and such other
duties, if any, as may from time to time be assigned to it by the board. A
majority of the committee, including at least two non-officer members, shall be
necessary for the committee to keep records of its action.
<PAGE> 21
SECTION 3.3. EXAMINING COMMITTEE. There shall be an examining
committee of the board. The members of the examining committee shall consist of
the members ex officio provided for in other sections of these bylaws, but
exclusive of any active officer of the bank and not less than three additional
non-officer members of the board who shall be appointed by the board each year
at its first meeting after the directors have been elected and qualified. It
shall be the duty of this committee to make an examination at least twice each
year into the affairs of the bank or to cause the examinations to be made by
accountants (who may be the bank's own accountants) responsible only to the
board in such examinations, and to report the result of such examinations in
writing to the board at the next regular meeting thereafter, or it may, at its
sole discretion, submit the reports of the national bank examiner or of the
Chicago Clearing House Association examination, with or without additional
comments by the committee itself, for, and in lieu of its personal
examinations. Such reports shall state whether the bank is in sound condition,
whether adequate internal audit controls and procedures are being maintained
and shall recommend to the board such changes in the manner of doing business
or conducting the affairs of the bank as shall be deemed advisable.

SECTION 3.4. OTHER COMMITTEES. The board may appoint, from time to
time, from its own members, other committees of one or more persons, for such
purposes and with such powers as the board may determine.

ARTICLE IV

OFFICERS AND EMPLOYEES

SECTION 4.1. CHAIRMAN OF THE BOARD. The board shall appoint one of
its members to be chairman of the board. The chairman of the board shall
supervise the carrying out of the policies adopted or approved by the board. He
shall have general executive powers, as well as the specific powers conferred
by these bylaws. He shall be ex officio a member of all committees, except the
examining committee and the trust audit committee. He shall have general
supervision and direction of the business, affairs and personnel of the bank.
He shall also have and may exercise such further powers and duties as from time
to time may be conferred upon, or assigned to him by the board.

SECTION 4. 2. VICE CHAIRMAN OF THE BOARD. The board may appoint one
of its members to be vice chairman of the board. He shall perform such duties
as may from time to time be assigned to him by the board.

SECTION 4.3. PRESIDENT. The board shall appoint one of its members
to be president of the bank. He shall be the chief executive officer and the
chief administrative officer of the bank and in the absence of the chairman of
the board, he shall preside at any meeting of the board at which he is present.
The president shall have general executive powers, and shall have and may
exercise any and all other powers and duties pertaining by law, regulation, or
practice to the office of president, or imposed by these bylaws. He shall be ex
officio a member of all committees, except the examining committee and trust
audit committee. He shall have general supervision of the business, affairs and
personnel of the bank and in the absence of the chairman of the board, shall
exercise the powers and perform the duties of the chairman of the board. He
shall also have and may exercise such further powers and duties as from time to
time may be conferred upon or assigned to him by the board.
<PAGE> 22
SECTION 4.4. SENIOR OFFICERS. The board may appoint one or more
executive vice presidents and one or more senior vice presidents. Each such
senior officer shall have such powers and duties as may be assigned to him by
the board, the chairman of the board, or the president.

SECTION 4.5. VICE PRESIDENT. The board may appoint one or more
vice presidents. Each vice president shall have such powers and duties as may
be assigned to him by the board, the chairman of the board, or the president.

SECTION 4.6. CASHIER. The board shall appoint a cashier who shall
have such powers and duties as may be assigned to him by the board, the
chairman of the board, or the president. The cashier shall be custodian of the
corporate seal, records, documents and papers of the bank. He shall provide for
keeping of proper records of all transactions of the bank.

SECTION 4.7. SECRETARY. The board shall appoint a secretary who
shall be secretary of the bank. He shall also perform such duties as may be
assigned to him from time to time by the board. The board may appoint a
secretary of the board who shall keep accurate minutes of all meetings. He
shall attend to the giving of all notices; he shall also perform such other
duties as may be assigned to him from time to time by the board.

SECTION 4.8. OTHER OFFICERS. The board may appoint one or more
assistant vice presidents, one or more trust officers, one or more assistant
secretaries, one or more assistant cashiers, and such other officers and
attorneys-in-fact as from time to time may appear to the board to be required
or desirable to transact the business of the bank. Such officers, respectively,
shall exercise such powers and perform such duties as pertain to their several
offices or as may be conferred upon or assigned to them by the board the
chairman of the board or the president.

SECTION 4.9. CLERKS AND AGENTS. The chairman of the board, the
president, or any other active officer of the bank authorized by the chairman
of the board, or the president, may appoint and dismiss all or any paying
tellers receiving tellers note tellers, vault custodians, bookkeepers and other
clerks, agents and employees as they may deem advisable for the prompt and
orderly transaction of the business of the bank, define their duties, fix the
salaries to be paid them and the conditions of their employment.

SECTION 4.10. RESPONSIBILITY FOR MONEYS, ETC. Each of the active
officers and clerks of this bank shall be responsible for all moneys, funds
valuables and property of every kind and description that may from time to time
be entrusted to his care or placed in his hands by the board or others, or that
otherwise may come into his possession as an active officer or clerk of this
bank.

SECTION 4.11. SURETY BONDS. All the active officers and clerks of
this bank may be covered by one of the blanket form bonds customarily written
by the surety companies, drawn for such an amount, and executed by such surety
company, as the board may from time to time require, and duly approve; or at
the discretion of the board, all such active officers and clerks shall, each
for himself, give such bond, with such security, and in such denominations as
the board may from time to time require and direct. All bonds approved by the
board shall assure the faithful and honest discharge of the respective duties
of such active officer or clerk and shall provide that such active officer or
clerk shall faithfully apply and account for all moneys, funds, valuables and
property of every kind and description that may from time to time come into his
hands or be entrusted to his care, and pay over and deliver the same to the
order of the board or to such other person or persons as may be authorized to
demand and receive the same.

SECTION 4.12. TERM OF OFFICE - OFFICER DIRECTOR. The chairman of
the board, the vice chairman of the board and the president, together with any
other active officers who may be
<PAGE> 23
duly elected members of the board, shall hold their respective offices for the
current year for which the board (of which they shall be members) was elected
and until their successors are appointed, unless they shall resign, be
disqualified, or be removed; and any vacancy occurring in the office of the
chairman of the board, the vice chairman of the board, the president, or in the
board, shall, if required by these bylaws, be filled by the remaining members.

SECTION 4.13. TERM OF OFFICE - OFFICER. The executive vice
presidents, the senior vice presidents, the vice presidents, the assistant vice
presidents, the cashier, the secretary, the trust officers and all other
officers and attorneys-in-fact who are not duly elected members of the board,
shall be appointed to hold their offices, respectively, during the pleasure of
the board.

ARTICLE V

TRUST DEPARTMENT

SECTION 5.1. TRUST DEPARTMENT. There shall be a department of the
bank known as the trust department which shall perform the fiduciary
responsibilities of the bank.

SECTION 5.2. TRUST OFFICER. There shall be a senior vice president
and trust officer, or vice president and trust officer of this bank, who shall
be designated as the managing officer of the trust department and whose duties
shall be to manage, supervise and direct all the activities of the trust
department. He shall do, or cause to be done, all things necessary or proper in
carrying on the business of the trust department in accordance with provisions
of law and regulations. He shall act pursuant to opinion of counsel where such
opinion is deemed necessary. Opinions of counsel shall be retained on file in
connection with all important matters pertaining to fiduciary activities. The
trust officer shall be responsible for all assets and documents held by the
bank in connection with fiduciary matters. The board may appoint such other
officers of the trust department as it may deem necessary, with such duties as
may be assigned to them by the board, the chairman of the board, or the
president.

SECTION 5.3. TRUST INVESTMENT COMMITTEE. There shall be appointed
by the board a trust investment committee of this bank composed of not less
than four members, including members ex officio provided for in other sections
of these bylaws, who shall be capable and experienced officers or directors of
the bank. All investments of funds held in a fiduciary capacity shall be made,
retained or disposed of only with the approval of the trust investment
committee; and the committee shall keep minutes of all its meetings, showing
the disposition of all matters considered and passed upon by it. The committee
shall, promptly after the acceptance of an account for which the bank has
investment responsibilities, review the assets thereof, to determine the
advisability of retaining or disposing of such assets. The committee shall
conduct a similar review at least once during each calendar year thereafter and
within fifteen months of the last such review. A report of all such reviews,
together with the action taken as a result thereof, shall be noted in the
minutes of the committee. Three members of the trust investment committee shall
constitute a quorum, and any action approved by a majority of those present
shall constitute the action of the committee.

SECTION 5.4. TRUST AUDIT COMMITTEE. The board shall appoint a
committee of not less than three directors, including members ex officio
provided for in other sections of these bylaws, exclusive of any active
officers of the bank, which shall at least once during each calendar year and
within fifteen months of the last such audit make suitable audits of the trust
department, or cause suitable audits to be made, by auditors responsible only
to the board, and at such time shall ascertain whether the department has been
administered in accordance with law, Regulation 9, and sound fiduciary
principles. Notwithstanding the provisions of this Section, the board at any
time may assign to
<PAGE> 24
the Examining Committee, in addition to the duties of the Examining Committee
set forth in Section 3.3 of these bylaws, all of the duties of the Trust Audit
Committee and during such time as the Examining Committee is performing the
duties of both committees, the Trust Audit Committee shall cease to function as
a committee of this board. The board at any time may reassign the duties
provided for in this Section to the Trust Audit Committee.

SECTION 5.5. TRUST DEPARTMENT FILES. There shall be maintained in
the trust department, files containing all fiduciary records necessary to
assure that its fiduciary responsibilities have been properly undertaken and
discharged.

SECTION 5.6. TRUST INVESTMENTS. Funds held in a fiduciary capacity
shall be invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the
character and class of investments to be made and does not vest in the bank a
discretion in the matter, fund shield pursuant to such instrument shall be
invested in investments in which corporate fiduciaries may invest under local
law.

ARTICLE VI

STOCK AND STOCK CERTIFICATES

SECTION 6.1. TRANSFERS. Shares of capital stock shall be
transferable on the books of the bank and a transfer book shall be kept in
which all transfers of stock shall be recorded. Every person becoming a
shareholder be such transfer shall in proportion to his shares, succeed to all
rights and liabilities of the prior holder of such shares.

SECTION 6.2. STOCK CERTIFICATES. Certificates of capital stock
shall bear the signature of any one of, the chairman of the board, or the
president (which may be engraved, printed or impressed) and shall be signed
manually or by facsimile process by the secretary, assistant secretary,
cashier, assistant cashier, or any other officer appointed by the board for
that purpose, to be known as an authorized officer and the seal of the bank
shall be engraven thereon. Each certificate shall recite on its face that the
stock represented thereby is transferable, properly endorsed, only on the books
of the bank.

ARTICLE VII

CORPORATE SEAL

SECTION 7.1. CORPORATE SEAL. The chairman of the board, the
president, the cashier, the secretary or any assistant cashier or assistant
secretary, or other officer thereunto designated by the board, shall have
authority to affix the corporate seal to any document requiring such seal, and
to attest the same. Such seal shall be substantially in the form set forth
herein.

ARTICLE VIII

INDEMNIFYING OFFICERS AND DIRECTORS

SECTION 8.1. INDEMNIFYING OFFICERS AND DIRECTORS. Any person, his
heirs, executors or administrators, may be indemnified or reimbursed by the
bank for reasonable expenses actually incurred in connection with any action,
suit or proceeding, civil or criminal, to which he or
<PAGE> 25
they shall be made a party by reason of his being or having been a director,
officer or employee of the bank or of any firm, corporation or organization
which he served in any such capacity at the request of the bank; provided,
however, that no person shall be so indemnified or reimbursed in relation to
any matter in such action, suit or proceeding as to which he shall finally be
adjudged to have been guilty of or liable for negligence or willful misconduct
in the performance of his duties to the bank; and, provided further, that no
person shall be so indemnified or reimbursed in relation to any matter in such
action, suit or proceeding which has been made the subject of a compromise
settlement except with the approval of a court of competent jurisdiction, or
the holders of record of a majority of the outstanding shares of the bank, or
the board, acting by vote of directors not parties to the same or substantially
the same action suit or proceeding, constituting a majority of the whole number
of the directors. The foregoing right of indemnification or reimbursement shall
not be exclusive of other rights to which such person, his heirs, executors or
administrators, may be entitled as a matter of law.

ARTICLE IX

MISCELLANEOUS PROVISIONS

SECTION 9.1. FISCAL YEAR. The fiscal year of the bank shall be the
calendar year.

SECTION 9.2. EXECUTION OF INSTRUMENTS. All agreements, indentures
mortgages, deeds, conveyances transfers certificates declarations, receipts,
discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies and other instruments or
documents may be signed, executed, acknowledged, verified, delivered or
accepted for the bank by the chairman of the board, or the vice chairman of the
board, or the president, or any executive vice president, or any senior vice
president, or any vice president, or the secretary or the cashier, or, if in
connection with the exercise of fiduciary powers of the bank by any of said
officers or by any officer in the trust department. Any such instruments may
also be signed, executed, acknowledged, verified, delivered or accepted for the
bank in such other manner and by such other officers as the board may from time
to time direct. The provisions of this Section 9.2 are supplementary to any
other provisions of these bylaws.

SECTION 9.3. RECORDS. The articles of association, the bylaws, and
the proceedings of all meetings of the shareholders and of the board shall be
recorded in appropriate minute books provided for the purpose; where these
bylaws so provide, the proceedings of standing committees of the board shall be
recorded in appropriate minute books provided for the purpose.

ARTICLE X

EMERGENCIES

SECTION 10.1. CONTINUATION OF BUSINESS. In the event of a state of
emergency of sufficient severity to interfere with the conduct and management
of the affairs of this bank, the officers and employees will continue to
conduct the affairs of the bank under such guidance from the directors as may
be available except as to matters which by statute require specific approval of
the board of directors and subject to conformance with any governmental
directives during the emergency.

SECTION 10.2. DESIGNATION OF PLACE OF BUSINESS. The offices of the
bank at which its business shall be conducted shall be the main office thereof
located at 135 South LaSalle Street, Chicago, Illinois, and any other legally
authorized location which may be leased or acquired by this bank to carry on
its business. During an emergency resulting in any authorized place of business
of
<PAGE> 26
this bank being unable to function, the business ordinarily conducted at such
location shall be relocated elsewhere in suitable quarters, in addition to or
in lieu of the locations heretofore mentioned, as may be designated by the
board of directors or by the executive committee or by such persons as are
then, in accordance with resolutions adopted from time to time by the board of
directors dealing with the exercise of authority in the time of such emergency,
conducting the affairs of this bank. Any temporarily relocated place of
business of this bank shall be returned to its legally authorized location as
soon as practicable and such temporary place of business shall then be
discontinued.

ARTICLE XI

BYLAWS

SECTION 11.1 INSPECTION. A copy of the bylaws with all amendments
thereto, shall at all times be kept in a convenient place at the main office of
the bank and shall be open for inspection to all shareholders, during banking
hours.

SECTION 11.2 AMENDMENTS. The bylaws may be amended, altered or
repealed, at any regular meeting of the board, by a vote of a majority of the
whole number of the directors.

***

I........................................... hereby certify that I am
the................................ Cashier/Secretary of LaSalle National
Bank, Chicago, Illinois and that the foregoing is a true and correct copy of
the bylaws of this bank as amended and that the same are in full force and
effect ............. day of...................19........

...............................
Cashier/Secretary.

December 15, 1982

(SEAL)
<PAGE> 27
EXHIBIT 5

NOT APPLICABLE
<PAGE> 28
EXHIBIT 6

LaSalle National Bank hereby consents in accordance with the provisions of
Section 321(b) of the Trust Indenture Act of 1939, that reports of examinations
by Federal, State, Territorial and District authorities may be furnished by
such authorities to the Securities and Exchange Commission upon its request
therefor.

LA SALLE NATIONAL BANK

By: /s/ Sarah H. Webb
----------------------
Sarah H. Webb
First Vice President
<PAGE> 29
EXHIBIT 7

Latest Report of Condition of
Trustee published pursuant to
law or the requirement of its
surviving or examining authority.
<PAGE> 30
EXHIBIT 8

NOT APPLICABLE
<PAGE> 31
EXHIBIT 9

NOT APPLICABLE