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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SALTON/MAXIM HOUSEWARES, INC.
- --------------------------------------------------------------------------------
(Name of issuer)
COMMON STOCK, $.01 PAR VALUE
- --------------------------------------------------------------------------------
(Title of class of securities)
795757103
- --------------------------------------------------------------------------------
(CUSIP number)
ANDREW HULSH, ESQ.
GREENBERG, TRAURIG, HOFFMAN,
LIPOFF, ROSEN & QUENTEL, P.A.
1221 BRICKELL AVENUE
MIAMI, FLORIDA 33131
(305) 579-0832
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to receive notices and communications)
JULY 10, 1996
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent of
the class of securities described in Item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class.) (See Rule 13d-7.)
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<TABLE>
<S> <C> <C>
SCHEDULE 13D
CUSIP No. 795757103 Page 2 of __ Pages
-----------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
WINDMERE-DURABLE HOLDINGS, INC. ("WINDMERE")
2
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) or 2(e)
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
7 SOLE VOTING POWER 6,508,572
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 6,508,572
REPORTING
PERSON WITH
10 SHARED DISPOSITIVE POWER
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,508,572
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50%
14 TYPE OF REPORTING PERSON
CO
</TABLE>
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock, par value $.01 per share
(the "Common Stock"), of Salton/Maxim Housewares, Inc.
("Salton/Maxim"). The executive offices of Salton/Maxim are located
at 550 Business Center Drive, Mount Prospect, Illinois 60056.
ITEM 2. IDENTITY AND BACKGROUND.
Windmere is a Florida corporation. Windmere's principal offices are
located at 5980 Miami Lakes Drive, Miami Lakes, Florida 33014.
Windmere has not been convicted in a criminal proceeding in the last
five years.
During the last five years, Windmere has not been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction which resulted in it being subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or state securities laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On July 11, 1996, Windmere consummated its previously announced
transaction with Salton/Maxim pursuant to that certain Stock Purchase
Agreement dated February 27, 1996, as amended (the "Stock Purchase
Agreement"). Pursuant to the Stock Purchase Agreement, Salton/Maxim
issued and sold to Windmere (the "Share Issuance") 6,508,572 newly
issued shares of Common Stock of Salton/Maxim, which represents 50% of
the outstanding shares of Common Stock of Salton/Maxim after giving
effect to the Share Issuance. In consideration for the Share
Issuance, Windmere paid Salton/Maxim: (i) $3,254,286 in cash, as
described below; (ii) a subordinated promissory note in the aggregate
principal amount of $10,847,620 (the "Note"), which Note is secured by
substantially all of the assets of Windmere and its domestic
subsidiaries and guaranteed by such domestic subsidiaries; and (iii)
748,112 shares of Windmere's common stock. The cash portion of the
consideration for the Share Issuance was paid by the cancellation by
Windmere of Salton/Maxim's obligation to repay a loan in the principal
amount of $3,254,286 which Windmere had made to Salton/Maxim in April
1996. The Note is payable July 10, 2001 and bears interest at 8% per
annum payable quarterly. Windmere expects to fund principal and
interest payments required under the Note with cash on hand,
borrowings or other sources, or a combination thereof. Windmere was
also granted an option to purchase up to 485,000 shares of Common
Stock at $4.83 per share, which option is exercisable only if and to
the extent that options to purchase shares of Common Stock which were
outstanding on February 27, 1996 are exercised (as of the date hereof,
no portion of the option granted to Windmere is exercisable).
<PAGE> 4
ITEM 4. PURPOSE OF TRANSACTION.
Windmere has acquired the Common Stock of Salton/Maxim for the purpose
of making an investment in Salton/Maxim and not with the view to, or
for resale in connection with, any distribution thereof. Windmere has
no present intention of selling, granting any participation in, or
otherwise distributing the Common Stock. Windmere does not have any
contract, undertaking, agreement or arrangement with any person to
sell, transfer, or grant participations to such person or to any third
person, with respect to any of its shares of Common Stock.
The shares of the Common Stock of Salton/Maxim owned by Windmere have
not been registered under the Securities Act of 1933, as amended, but
Windmere has been granted certain registration rights with respect to
such shares pursuant to the registration rights agreement referred to
in Item 6 below.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
To the best knowledge of Windmere, Windmere is the beneficial owner of
6,508,572 shares of Common Stock of Salton/Maxim or approximately 50%
of the Common Stock of Salton/Maxim currently outstanding. Windmere
has the sole power to vote and dispose of all of its shares of Common
Stock of Salton/Maxim, subject to the provisions of the stockholder
agreement referred to in Item 6 below.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
In connection with the Share Issuance, Windmere and Salton/Maxim also
entered into a Stockholder Agreement (the "Stockholder Agreement").
Pursuant to the Stockholder Agreement, Windmere is entitled to
designate for election, so long as its ownership does not fall below
15% of the outstanding Common Stock, that percentage of Salton/Maxim's
directors as is proportionate to its stock ownership percentage;
provided that the number of directors designated by Windmere will in
no event exceed 50% of the total number of directors. The following
persons designated by Windmere were elected as directors of
Salton/Maxim on July 11, 1996: David M. Friedson, Chairman of the
Board, President and Chief Executive Officer of Windmere; Harry D.
Schulman, Senior Vice President of Windmere; Laurence S. Chud, M.D.,
Vice President Investment Banking of CP Baker & Company; and James
Connolly, President of KQED Books and Video. There is now a total of
eight directors serving on the Salton/Maxim Board of Directors.
The Stockholder Agreement also contains provisions which, subject to
specified time periods and exceptions, restrict the acquisition by
Windmere of shares of Common Stock of Salton/Maxim that would increase
its percentage ownership interest.
Windmere and Salton/Maxim also entered into a Registration Rights
Agreement (the "Registration Agreement"). Subject to the restrictions
on disposition of shares contained in the Stockholder Agreement, the
Registration Agreement gives Windmere certain demand and piggyback
registration rights with respect to its shares
2
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of Common Stock of Salton/Maxim. Expenses relating to registrations
(other than selling expenses and commissions) will generally be
payable by Salton/Maxim.
The foregoing description of the Stock Purchase Agreement and the
documents contemplated thereby, including the Note, the Stockholder
Agreement and the Registration Agreement, and the transactions
contemplated by such documents, does not purport to be complete and is
qualified in its entirety by reference to each of such documents,
copies of which are filed as exhibits hereto.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(a) Stock Purchase Agreement dated February 27, 1996, as amended,
between Windmere and Salton/Maxim.
(b) Stockholder Agreement dated July 11, 1996 between Windmere and
Salton/Maxim.
(c) Registration Rights Agreement dated July 11, 1996 between
Windmere and Salton/Maxim.
3
<PAGE> 6
SIGNATURE
After reasonable inquiry and to the best of knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
July 17, 1996
-------------------------------
(Date)
/s/ Harry D. Schulman
-------------------------------
Harry D. Schulman
Senior Vice President
4
<PAGE> 7
INDEX TO EXHIBITS
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
2.1 Stock Purchase Agreement dated February 27,
1996, as amended, between Windmere and Salton/Maxim.
2.2 Stockholder Agreement dated July 11, 1996 between
Windmere and Salton/Maxim.
2.3 Registration Rights Agreement dated July 11, 1996
between Windmere and Salton/Maxim.
<PAGE> 1
Exhibit 2.1
================================================================================
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
WINDMERE CORPORATION
AND
SALTON/MAXIM HOUSEWARES, INC.
___________________
FEBRUARY 27, 1996
___________________
===============================================================================
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I.
SALE AND PURCHASE OF SHARES
<S> <C> <C>
SECTION 1.01. Sale and Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II.
CLOSING
SECTION 2.01. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.02. Deliveries by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.03. Deliveries by Windmere . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company . . . . . . . . . . . . . . . . 3
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . 3
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(f) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 6
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Absence of Changes in Benefit Plans; Labor Relations . . . . . . . . . . . . 6
(j) Benefit Plan Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(l) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(m) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(n) Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02. Representations and Warranties of Windmere . . . . . . . . . . . . . . . . . 9
(a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . 9
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . 10
(e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 11
(g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(i) Absence of Changes in Benefit Plans; Labor Relations . . . . . . . . . . . . 12
(j) Benefit Plan Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
(i)
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<TABLE>
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(l) No Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(m) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(n) Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(o) Ownership of Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(p) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) Conduct of Business by the Company . . . . . . . . . . . . . . . . . . . . . 15
(b) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Materials; Stockholders Meeting . . . . . . . . . . 18
SECTION 5.02. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.03. Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5.04. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.06. Nasdaq and NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.07. Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 5.08. Negotiation of Commercial Agreements . . . . . . . . . . . . . . . . . . . . 20
ARTICLE VI.
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the Stock Purchase . . . . . 20
(a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(c) No Injunctions or Restraints; Illegality . . . . . . . . . . . . . . . . . . 21
(d) Commercial Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.02. Conditions to Obligations of Windmere . . . . . . . . . . . . . . . . . . . . 21
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Performance of Obligations of the Company . . . . . . . . . . . . . . . . . . 21
(c) Nasdaq National Market Listing . . . . . . . . . . . . . . . . . . . . . . . 21
(d) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 21
(e) Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.03. Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . 21
(a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Performance of Obligations of Windmere . . . . . . . . . . . . . . . . . . . 22
(c) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 22
(f) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(g) Lenders' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(h) Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
(ii)
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ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
<TABLE>
<S> <C> <C>
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 7.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.01. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . 24
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.05. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . 26
SECTION 8.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
</TABLE>
(iii)
<PAGE> 5
STOCK PURCHASE AGREEMENT dated February 27, 1996 (the "Agreement"), by
and between WINDMERE CORPORATION, a Florida corporation ("Windmere"), and
SALTON/MAXIM HOUSEWARES, INC., a Delaware corporation (the "Company").
A. Windmere and the Company each are engaged in the business of
designing and marketing a broad range of small kitchen appliances and personal
and beauty care appliances, among other products.
B. The Boards of Directors of each of Windmere and the Company
believe that certain strategic benefits would be gained by each of Windmere and
the Company if Windmere becomes a substantial owner of the Company's common
stock.
C. Windmere desires to purchase 50% of the issued and outstanding
common stock of the Company, par value $.01 per share ("Company Common Stock"),
and to receive an option (the "Option") to purchase up to 485,000 shares (which
number of shares is equal to the number of shares of Company Common Stock
issuable upon the exercise of presently issued and outstanding options to
purchase Company Common Stock) of Company Common Stock at an exercise price of
$4.83 per share, and the Company desires to sell such Company Common Stock and
to grant such Option upon the terms and subject to the conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I.
SALE AND PURCHASE OF SHARES
SECTION 1.01. Sale and Purchase of Shares; Grant of Option.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01 hereof, the Company shall
issue, sell and deliver to Windmere, and Windmere shall purchase, acquire and
accept from the Company, (i) 6,508,572 shares (the "Company Shares") of Company
Common Stock and (ii) an Option to purchase up to 485,000 shares of Company
Common Stock at an exercise price of $4.83 per share. The Option shall be
exercisable only if and to the extent that options to purchase the shares of
Company Common Stock which are outstanding on the date hereof are exercised.
The Company shall notify Windmere in writing (the "Option Notice") within ten
(10) days after the issuance by the Company of any shares of Company Common
Stock resulting from the exercise of stock options outstanding on the date
hereof, which Option Notice shall specify the number of shares of Company
Common Stock being issued upon the exercise of such options. Windmere may, by
written notice given to the Company within ninety (90) days after receipt of
the Option Notice by Windmere, elect to purchase from the Company at $4.83 per
share up to such number of additional shares of Company Common Stock as is
equal to the number of shares of Company Common Stock being issued upon the
exercise of the options as set forth in the Option Notice. The sale and
purchase of the Company Shares pursuant to this Agreement is sometimes
hereinafter referred to as the "Stock Purchase".
(b) At the Closing, the Company shall deliver or cause to
be delivered to Windmere, against payment therefor in accordance with Section
1.02 hereof, stock certificates representing the Shares being sold by the
Company hereunder.
<PAGE> 6
SECTION 1.02. Payment for Shares.
(a) As payment in full for the Company Shares, Windmere
shall pay to the Company at the Closing, in the manner herein provided, the
following (the "Purchase Price"):
(i) Windmere shall deliver Three Million Two
Hundred Fifty Four Thousand Two Hundred Eighty Six Dollars ($3,254,286) in
immediately available funds;
(ii) Windmere shall deliver Windmere's
Subordinated Promissory Note, in the form attached hereto as Exhibit A (the
"Note"), in an aggregate principal amount of Ten Million Eight Hundred Forty
Seven Thousand Six Hundred Twenty Dollars ($10,847,620); and
(iii) Windmere shall issue and deliver 748,112
shares (the "Windmere Shares") of its common stock, par value $.10 per
share ("Windmere Common Stock").
ARTICLE II.
CLOSING
SECTION 2.01. Closing. Subject to the satisfaction or waiver of
the conditions stated in Article VI of this Agreement, the closing of the
transactions contemplated hereby (the "Closing") shall be held on the fifth
business day after all the conditions set forth in Article VI have been
satisfied or waived, at the offices of Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131, or such
other date, time and place as may be agreed by the parties. The date upon
which the Closing occurs is hereinafter referred to as the "Closing Date." The
Closing shall be deemed completed as of 11:59 p.m. Miami time on the night of
the Closing Date.
SECTION 2.02. Deliveries by the Company. At or prior to the
Closing, the Company shall deliver to Windmere:
(i) certificates representing the Company Shares being
purchased by Windmere hereunder;
(ii) the Commercial Agreements, duly executed by the
Company;
(iii) the Stockholder Agreement, duly executed by the
Company;
(iv) the Registration Rights Agreement, duly executed by
the Company; and
(v) a certificate executed by the President and Chief
Executive Officer of the Company to the effect that the conditions set forth in
Sections 6.02(a) and (b) have been satisfied;
SECTION 2.03. Deliveries by Windmere. At or prior to the Closing,
Windmere shall deliver to the Company:
(i) by wire transfer in immediately available funds to an
account of the Company (designated in writing by the Company to Windmere at
least seven days prior to the Closing), the payment described in Section
1.02(a)(i) as being required to be paid by Windmere to the Company at Closing;
- 2 -
<PAGE> 7
(ii) the Note described in Section 1.02(a)(ii) as being
required to be delivered by Windmere to the Company at Closing;
(iii) a certificate representing the Windmere Shares
described in Section 1.02(a)(iii) as being required to be delivered by Windmere
to the Company at Closing;
(iv) the Security Agreements, duly executed by Windmere
and its domestic subsidiaries granting the Company a security interest in
substantially all of their respective assets, and Guaranties executed by
Windmere's domestic subsidiaries, each in form and substance reasonably
acceptable to the Company;
(v) the Commercial Agreements, duly executed by Windmere;
(vi) the Stockholder Agreement, duly executed by Windmere;
(vii) the Registration Rights Agreement, duly executed by
Windmere; and
(viii) a certificate executed by the President and the Chief
Financial Officer of Windmere to the effect that the conditions set forth in
Sections 6.03(a) and (b) have been satisfied.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The
Company represents and warrants to Windmere as follows:
(a) Organization, Standing and Corporate Power. Each of
the Company and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of the Company and its subsidiaries is duly qualified
or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so
qualified or licensed or to be in good standing (individually or in
the aggregate) would not have a material adverse effect on the
Company. The Company has delivered to Windmere complete and correct
copies of its Amended and Restated Certificate of Incorporation and
By-laws and the certificates of incorporation and by-laws (or similar
organizational documents) of its Significant Subsidiaries, in each
case as amended to the date hereof. For purposes of this Agreement, a
"Significant Subsidiary" means any subsidiary of the Company that
constitutes a significant subsidiary within the meaning of Rule 1-02
of Regulation S-X of the Securities and Exchange Commission (the
"SEC").
(b) Subsidiaries. Schedule 3.01(b) lists each subsidiary
of the Company, together with its jurisdiction of incorporation or
organization. All the outstanding shares of capital stock of each such
subsidiary have been validly issued and are fully paid and
nonassessable and, except as set forth on Schedule 3.01 (b), owned by
the Company, by another subsidiary of the Company or by the Company and
another such subsidiary, free and clear of all pledges, claims, liens,
charges, encumbrances and security interests of any kind or nature
whatsoever (collectively, "Liens"). Except for the capital stock of its
subsidiaries and except for the ownership interests set forth in
Schedule
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<PAGE> 8
3.01 (b), the Company does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of
the Company consists of 20,000,000 shares of Company Common Stock and
2,000,000 shares of preferred stock, par value $.01 per share ("Company
Preferred Stock"). At the date of this Agreement, (i) 6,508,572 shares
of Company Common Stock are issued and outstanding, (ii) no shares of
Company Common Stock are held by the Company in its treasury, (iii)
925,000 shares of Company Common Stock are reserved for issuance upon
the exercise of outstanding stock options granted pursuant to (A) the
Company's 1992 Stock Option Plan, (B) the Company's 1995 Employee Stock
Option Plan and (C) the Company's Non-Employee Directors Stock Option
Plan (such stock options and plans are hereinafter collectively
referred to as the "Company Stock Plans"), and (iv) no shares of
Company Preferred Stock are issued or are outstanding. Except as set
forth above, since such date, no shares of capital stock or other
voting securities of the Company have been issued or are outstanding,
except for issuances pursuant to the Company Stock Plans. All
outstanding shares of capital stock of the Company are, and all shares
which may be issued pursuant to the Company Stock Plans will be, when
issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into securities having the right to vote) on any matters on
which shareholders of the Company may vote. Except as set forth above,
as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the
Company or any of its subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of
this Agreement, there are not any outstanding contractual obligations
of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries. The Company Shares to be issued to Windmere have
been duly authorized and, when delivered pursuant to this Agreement,
will be duly and validly issued, fully-paid and nonassessable, and free
of any Liens or restrictions.
(d) Authority; Noncontravention. The Company has the
requisite corporate power and authority to enter into this Agreement,
each of the other Transaction Documents to be executed and delivered by
the Company, and all other agreements and instruments contemplated
hereby and thereby, and to consummate the transactions and perform the
obligations contemplated hereby and thereby to be consummated by it,
subject to obtaining approval of the stockholders of the Company
pursuant to Section 5.01(b). The execution and delivery by the Company
of this Agreement and each of the other Transaction Documents to be
executed and delivered by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby to be
consummated by it have been duly authorized by all necessary corporate
action on the part of the Company, subject to obtaining approval of the
stockholders of the Company pursuant to Section 5.01(b). This
Agreement has been duly executed and delivered by the Company and
constitutes, and the other Transaction Documents to be entered into by
the Company at or prior to the Closing will be, when executed and
delivered by the Company (and assuming this Agreement and such other
Transaction Documents to be entered into by Windmere constitute legal,
valid and binding obligations of Windmere), valid and binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, except that enforceability of
this Agreement and the other Transaction Documents may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable
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<PAGE> 9
defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth on Schedule
3.01 (d), the execution, delivery and performance of this Agreement
and each of the other Transaction Documents to be executed and
delivered by the Company does not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the
provisions of this Agreement and each of the other Transaction
Documents to be executed and delivered by the Company will not,
conflict with, or result in any violation of, or constitute a default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the
Company or any of its subsidiaries under, any provision of (i) the
Restated Certificate of Incorporation or By-laws of the Company or any
provision of the comparable charter or organizational documents of any
of its subsidiaries, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of
its subsidiaries or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in
the following sentence, any (A) statute, law, ordinance, rule or
regulation or (B) judgment, order or decree applicable to the Company
or any of its subsidiaries or their respective properties or assets,
other than, in the case of clause (ii) and clause (iii), any such
conflicts, violations, defaults, rights, losses or Liens that
individually or in the aggregate would not (x) have a material adverse
effect on the Company, (y) impair in any material respect the ability
of the Company to perform its obligations under this Agreement, or (z)
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement to be consummated by it.
No consent, approval, order or authorization of or registration,
declaration or filing with, any federal, state or local government or
any court, tribunal, administrative agency or commission or other
governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
subsidiaries in connection with the execution and delivery by the
Company of this Agreement and each of the other Transaction Documents
to be executed and delivered by the Company or the consummation by the
Company of the transactions contemplated hereby and thereby to be
consummated by it, except for (i) those required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (ii) those required by federal and state securities laws,
(iii) those required by the Nasdaq National Market, (iv) those
required by any applicable state takeover laws, (v) the consents set
forth on Schedule 3.01 (d) and (vi) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in
the aggregate, have a material adverse effect on the Company or
prevent or materially delay the consummation of any of the
transactions contemplated by this Agreement.
(e) SEC Documents. The Company has filed all required
reports, schedules, forms, statements and other documents required to
be filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") with the SEC since July 1, 1994 (the "Company SEC
Documents"). As of their respective dates, the Company SEC Documents
complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Documents. Except to the
extent that information contained in any SEC Document has been revised
or superseded by a later-filed SEC Document, filed and publicly
available prior to the date of this Agreement, none of the Company SEC
Documents contained when filed any untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC
Documents complied as of their respective dates of filing with the SEC
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the financial
position of the
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<PAGE> 10
Company as of the dates thereof and the results of its operations and
cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). The
representations and warranties set forth in this Section 3.01(e) shall
not apply to any noncompliance, nonfilings, misstatements, omissions
or failures to present fairly or conform to generally accepted
accounting principles which would not, individually or in the
aggregate, have a material adverse affect on the Company. Except as
set forth in the Company SEC Documents or as set forth on Schedule
3.01(e), and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice, the Company
has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by generally accepted
accounting principles to be set forth on a balance sheet of the
Company or in the notes thereto which, individually or in the
aggregate, could reasonably be expected to have a material adverse
effect on the Company.
(f) Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, and except as set forth on Schedule 3.01(f) or expressly
contemplated by this Agreement, since July 1, 1995, the Company has
conducted its business only in the ordinary course, and there has not
been (i) any material adverse change in the Company, (ii) any
declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any
of the Company's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv)
(x) any granting by the Company or any of its subsidiaries to any
officer of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business consistent
with prior practice or as was required under employment agreements in
effect as of the date of the most recent audited financial statements
included in the Company SEC Documents, (y) any granting by the Company
or any of its subsidiaries to any officer of any increase in severance
or termination pay, except as was required under any employment,
severance or termination agreements in effect as of the date of the
most recent audited financial statements included in the Company SEC
Documents or (z) any entry by the Company or any of its subsidiaries
into any employment, severance or termination agreement with any
officer, (v) any damage, destruction or loss, whether or not covered
by insurance, that has or is likely to have a material adverse effect
on the Company, or (vi) any change in accounting methods, principles
or practices by the Company materially affecting its assets,
liabilities or business, except insofar as may have been required by a
change in generally accepted accounting principles.
(g) Litigation. Except as disclosed in the Company SEC
Documents, there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on the Company, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or
any of its subsidiaries having, or which would reasonably be expected
to have, any such effect.
(h) Compliance with Laws. Except as disclosed in the
Company SEC Documents, the Company and its subsidiaries are in
compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental
Entity applicable to its business or operations, except for instances
of possible noncompliance that, individually or in the aggregate,
would not have a material adverse effect on the Company. To the
knowledge of the Company, each of the Company and its subsidiaries has
in effect all Federal, state, local and foreign governmental
approvals, authorizations, certificates, filings, franchises,
licenses, notes, permits and rights ("Permits"), necessary for it to
own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any
such Permit, except for the lack of Permits and for defaults under
Permits which, individually or in the aggregate, would not have a
material adverse effect on the Company.
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<PAGE> 11
(i) Absence of Changes in Benefit Plans; Labor Relations.
Except as disclosed in the Company SEC Documents, since July 1, 1995,
there has not been any adoption or amendment in any material respect by
the Company or any of its subsidiaries of any collective bargaining
agreement or any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option,
phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan, arrangement or
understanding in each ease maintained or contributed to, or required to
be maintained or contributed to, by the Company or its subsidiaries for
the benefit of any current or former employee, officer or director of
the Company or any of its subsidiaries (each, a "Benefit Plan" and,
collectively, "Benefit Plans"). Except as set forth in Schedule 3.01
(i) or as disclosed in the Company SEC Documents, there exist no
employment, severance, termination or indemnification agreements,
arrangements or understandings between the Company or any of its
subsidiaries and any current or former employee, officer or director of
the Company or any of its subsidiaries or any consulting agreement with
the Company or any of its subsidiaries with respect to which the
aggregate liability thereunder exceeds $100,000 or which cannot be
canceled by the Company or any such subsidiary without penalty on 30
days' or less notice.
(j) Benefit Plan Compliance. (i) Schedule 3.01(j)(i)
contains a list and brief description of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to
herein as "Pension Plans"), "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other Benefit Plans
maintained, or contributed to, or required to be contributed to, by
the Company or any of its subsidiaries or any other person or entity
that, together with the Company, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986,
as amended (the "Code") (the Company and each such other person or
entity, a "Company Commonly Controlled Entity") for the benefit of any
current or former employees, officers or directors of the Company or
any of its subsidiaries. The Company has delivered or made available
to Windmere true, complete and correct copies of (1) each Benefit Plan
(or, in the case of any unwritten Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan (if any
such report was required), (3) the most recent summary plan
description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity
contract relating to any Benefit Plan. Each Benefit Plan has been
administered in all material respects in accordance with its terms and
is in compliance with the applicable provisions of ERISA, the Code,
all other applicable laws and all applicable collective bargaining
agreements except where the failure to comply would not be reasonably
expected to result in a material adverse effect on the Company.
(ii) All Pension Plans have been the subject of
determination letters from the Internal Revenue Service, or
have filed a timely application therefor, to the effect that
such Pension Plans are qualified and exempt from Federal
income taxes under Section 401 (a) and 501 (a), respectively,
of the Code, and no such determination letter has been revoked
nor has any such Pension Plan been amended since the date of
its most recent determination letter or application therefor
in any respect that would adversely affect its qualification
or materially increase its costs.
(iii) No Company Commonly Controlled Entity has
incurred any liability which has not been fully paid to a
Pension Plan under Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due)
that, when aggregated with other such liabilities, would
result in a material adverse effect on the Company.
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<PAGE> 12
(iv) As of the most recent valuation date for each
Pension Plan that is a "defined benefit pension plan" (as
defined in Section 3 (35) of ERISA subject to Title IV of
ERISA (other than a multiemployer plan) (hereinafter a
"Defined Benefit Plan")), there was not any material amount of
"unfunded benefit liabilities" (as defined in Section
4001(a)(18) of ERISA) under such Defined Benefit Plan, and the
Company is not aware of any facts or circumstances that would
materially adversely change the funded status of any such
Defined Benefit Plan. The Company has furnished or made
available to Windmere the most recent actuarial report or
valuation with respect to each Defined Benefit Plan and has no
reason to believe that the conclusions expressed in those
reports or valuations are incorrect.
(v) No Company Commonly Controlled Entity has
been required at any time within the five calendar years
preceding the date hereof or is required currently to
contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer
plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Section 4201 of
ERISA) that has not been fully paid.
(vi) With respect to any Benefit Plan that is an
employee welfare benefit plan, (1) no such Benefit Plan is
funded through a "welfare benefits fund", as such term is
defined in Section 419(e) of the Code, and (2) each such
Benefit Plan that is a "group health plan", as such term is
defined in Section 5000(b)(1) of the Code, complies
substantially with the applicable requirements of Section
4980B(f) of the Code.
(vii) Schedule 3.01 (j) (vii) lists all outstanding
options as of the date of this Agreement, showing for each
such option: (1) the number of shares issuable, (2) the number
of vested shares, (3) the date of expiration and (4) the
exercise price.
(viii) Except as disclosed in Schedule
3.01(j)(viii), no employee of the Company or any of its
subsidiaries will be entitled to any additional compensation
or benefits or any acceleration of the time of payment or
vesting of any compensation or benefits under any Benefit Plan
as a result of the transactions contemplated by this
Agreement.
(ix) Neither the Company or any of its
subsidiaries nor any person acting on behalf of the Company or
any of its subsidiaries has, in contemplation of any corporate
transaction involving Windmere, issued any written
communication to, or otherwise made or entered into any
legally binding commitment with, any employees of the Company
or of any of its subsidiaries to the effect that, following
the date hereof, (i) any benefits or compensation provided to
such employees under existing Benefit Plans or under any other
plan or arrangement will be enhanced, (ii) any new plans or
arrangements providing benefits or compensation will be
adopted, (iii) any Benefit Plans will be conducted for any
period of time, or (iv) any plans or arrangements provided by
Windmere will be made available to such employees.
(k) Taxes. The Company and its subsidiaries have filed
all material tax returns and reports required to be filed by it and
has paid all taxes required to be paid by it (other than taxes, the
failure to pay which would not, individually or in the aggregate, have
a material adverse effect on the Company), and the most recent
financial statements contained in the Company SEC Documents reflect an
adequate reserve for all material taxes payable by the Company for all
taxable periods and portions thereof through the date of such
financial statements. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company (other than
deficiencies, the liability for which would not, individually or in
the aggregate, have a material adverse effect on the Company),
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<PAGE> 13
and no requests for waivers of the time to assess any taxes are
pending. None of the assets or properties of the Company or any of its
subsidiaries is subject to any material tax lien. As used in this
Agreement, "taxes" shall include all Federal, state, local and foreign
income, property, sales, excise and other taxes, tariffs or
governmental charges of any nature whatsoever, including any interest,
penalties or additions with respect thereto.
(l) Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common
Stock voted in person or by proxy at the Stockholders Meeting (as
defined in Section 5.01(b)) is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve
this Agreement and the transactions contemplated by this Agreement.
(m) Brokers. Except as set forth on Schedule 3.01(m), no
broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company.
(n) Purchase for Investment. The Company is acquiring
the Windmere Shares for investment for its own account and not with a
view to, or in connection with, a distribution thereof within the
meaning of the Securities Act. The Company is able to bear the
economic risk of an investment in the Windmere Shares pursuant to this
Agreement and can afford to sustain a total loss on such investment,
and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
proposed investment and therefor has the capacity to protect its own
interests in connection with the purchase of the Windmere Shares.
SECTION 3.02. Representations and Warranties of Windmere. Windmere
represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of
Windmere and its Significant Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite
corporate power and authority to carry on its business as now being
conducted. Each of Windmere and its subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than
in such jurisdictions where the failure to be so qualified or licensed
or to be in good standing (individually or in the aggregate) would not
have a material adverse effect on Windmere. Windmere has delivered to
the Company complete and correct copies of its Amended and Restated
Articles of Incorporation and By-laws and the articles of
incorporation and by-laws (or similar organizational documents) of its
Significant Subsidiaries, in each case as amended to the date hereof.
(b) Subsidiaries. Schedule 3.02(b) lists each subsidiary
of Windmere with aggregate total assets in excess of $500,000,
together with its jurisdiction of incorporation or organization. All
the outstanding shares of capital stock of each such subsidiary have
been validly issued and are fully paid and nonassessable and, except
as set forth on Schedule 3.02 (b), owned by Windmere, by another
subsidiary of Windmere or by Windmere and another such subsidiary,
free and clear of all Liens. Except for the capital stock of its
subsidiaries and except for the ownership interests set forth in
Schedule 3.02 (b), Windmere does not own, directly or indirectly, any
capital stock or other ownership interest in any corporation,
partnership, joint venture or other entity.
(c) Capital Structure. The authorized capital stock of
Windmere consists of 40,000,000 shares of Windmere Common Stock and
20,000,000 shares of preferred stock, par value $.01 per share
("Windmere Preferred Stock"). At the date of this Agreement, (i)
16,408,012 shares of
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<PAGE> 14
Windmere Common Stock were issued and outstanding, (ii) no shares of
Windmere Common Stock were held by Windmere in its treasury, (iii)
3,100,000 shares of Windmere Common Stock were reserved for issuance
upon the exercise of outstanding stock options granted pursuant to (A)
Windmere's 1992 Incentive Stock Option Plan, (B) individual
non-qualified stock option agreements, (C) Windmere's 1988 Director
Option Plan (such stock options and plans, collectively, the "Windmere
Stock Plans"), (D) Windmere's 1982 Stock Option Plan and (E) certain
warrants issued in 1992 in connection with the settlement of certain
litigation involving Windmere, and (iv) no shares of Windmere
Preferred Stock were issued or outstanding. Except as set forth above,
since such date, no shares of capital stock or other voting securities
of Windmere have been issued or are outstanding, except for issuances
pursuant to the Windmere Stock Plans. All outstanding shares of
capital stock of Windmere are, and all shares which may be issued
pursuant to Windmere Stock Plans will be, when issued in accordance
with the terms thereof, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no
bonds, debentures, notes or other indebtedness of Windmere having the
right to vote (or convertible into securities having the right to
vote) on any matters on which shareholders of Windmere may vote.
Except as set forth above, as of the date of this Agreement, there are
no securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Windmere
or any of its subsidiaries is a party or by which any of them is bound
obligating Windmere or any of its subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of
capital stock or other voting securities of Windmere or of any of its
subsidiaries or obligating Windmere or any of its subsidiaries to
issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. As of
the date of this Agreement, there are not any outstanding contractual
obligations of Windmere or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of Windmere or
any of its subsidiaries. The Windmere Shares to be issued to the
Company have been duly authorized and, when delivered pursuant to this
Agreement, will be duly and validly issued and outstanding, fully paid
and nonassessable, and free of any Liens or restrictions.
(d) Authority; Noncontravention. Windmere has the
requisite corporate power and authority to enter into this Agreement,
each of the other Transaction Documents to be executed and delivered
by Windmere, and all other agreements and instruments contemplated
hereby and thereby and to consummate the transactions and perform the
obligations contemplated hereby and thereby to be consummated by it.
The execution and delivery by Windmere of this Agreement and the
consummation by Windmere of the transactions contemplated hereby and
thereby to be consummated by it have been duly authorized by all
necessary corporate action on the part of Windmere. This Agreement
has been duly executed and delivered by Windmere and constitutes, and
the other Transaction Documents to be entered into by Windmere at or
prior to the Closing will be, when executed and delivered by Windmere
(and assuming this Agreement and such other Transaction Documents to
be entered into by the Company constitute legal, valid and binding
obligations of the Company) valid and binding obligations of Windmere,
enforceable against Windmere in accordance with their respective
terms, except that enforceability of this Agreement and the other
Transaction Documents may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of
specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Except
as set forth on Schedule 3.02 (d), the execution, delivery and
performance of this Agreement and each of the other Transaction
Documents to be executed and delivered does not, and the consummation
of the transactions contemplated hereby and thereby and compliance
with the provisions of this Agreement and each of the other
Transaction Documents to be executed and delivered by Windmere will
not, conflict with, or result in any violation of, or constitute a
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in
the creation of any Lien upon any of the
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<PAGE> 15
properties or assets of Windmere or any of its subsidiaries under, any
provision of (i) the Restated Articles of Incorporation or By-laws of
Windmere or any provision of the comparable charter or organizational
documents of any of its subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to
Windmere or any of its subsidiaries or their respective properties or
assets or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any (A) statute, law,
ordinance, rule or regulation or (B) judgment, order or decree
applicable to Windmere or any of its subsidiaries or their respective
properties or assets, other than, in the case of clause (ii) and
clause (iii), any such conflicts, violations, defaults, rights, losses
or Liens that individually or in the aggregate would not (x) have a
material adverse effect on Windmere, (y) impair in any material
respect the ability of Windmere to perform its obligations under this
Agreement, or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement to be consummated
by it. No consent, approval, order or authorization of or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Windmere or any of its subsidiaries in
connection with the execution and delivery by Windmere of this
Agreement and each of the other Transaction Documents to be executed
and delivered by Windmere or the consummation by Windmere of the
transactions contemplated hereby and thereby to be consummated by it,
except for (i) those required by the HSR Act, (ii) those required by
federal and state securities laws, (iii) those required by the New
York Stock Exchange, (iv) those required by any applicable state
takeover laws, (v) the consents set forth on Schedule 3.02 (d) and
(vi) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be
obtained or made would not, individually or in the aggregate, have a
material adverse effect on Windmere or prevent or materially delay the
consummation of any of the transactions contemplated by this
Agreement.
(e) SEC Documents. Windmere has filed all required
reports, schedules, forms, statements and other documents required to
be filed under the Exchange Act with the SEC since December 31, 1993
(the "Windmere SEC Documents"). As of their respective dates, the
Windmere SEC Documents complied as to form in all material respects
with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to such
Windmere SEC Documents. Except to the extent that information
contained in any Windmere SEC Document has been revised or superseded
by a later-filed Windmere SEC Document, filed and publicly available
prior to the date of this Agreement, none of the Windmere SEC
Documents contained when filed any untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
financial statements of Windmere included in the Windmere SEC
Documents complied as of their respective dates of filing with the SEC
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally
accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present the financial
position of Windmere as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments).
The representations and warranties set forth in this Section 3.02(e)
shall not apply to any noncompliance, nonfilings, misstatements,
omissions or failures to present fairly or conform to generally
accepted accounting principles, which would not, individually or in
the aggregate, have a material adverse effect on Windmere. Except as
set forth in the Windmere SEC Documents, and except for liabilities
and obligations incurred in the ordinary course of business consistent
with past practice, Windmere has no liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required
by generally accepted accounting principles to be set forth on a
balance sheet of Windmere or in the notes thereto which, individually
or in the aggregate, could reasonably be expected to have a material
adverse effect on Windmere.
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<PAGE> 16
(f) Absence of Certain Changes or Events. Except as
disclosed in the Windmere SEC Documents filed prior to the date of
this Agreement, and except as set forth on Schedule 3.02(f) or
expressly contemplated by this Agreement, since December 31, 1994,
Windmere has conducted its business only in the ordinary course, and
there has not been (i) any material adverse change in Windmere, (ii)
any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any
of Windmere's capital stock, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock, (iv)
(x) any granting by Windmere or any of its subsidiaries to any officer
of Windmere or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business consistent
with prior practice or as was required under employment agreements in
effect as of December 31, 1994, (y) any granting by Windmere or any of
its subsidiaries to any officer of any increase in severance or
termination pay, except as was required under any employment,
severance or termination agreements in effect as of December 31, 1994
or (z) any entry by Windmere or any of its subsidiaries into any
employment, severance or termination agreement with any officer, (v)
any damage, destruction or loss, whether or not covered by insurance,
that has or is likely to have a material adverse effect on Windmere,
or (vi) any change in accounting methods, principles or practices by
Windmere materially affecting its assets, liabilities or business,
except insofar as may have been required by a change in generally
accepted accounting principles.
(g) Litigation. Except as disclosed in the Windmere SEC
Documents, there is no suit, action or proceeding pending or, to the
knowledge of Windmere, threatened against Windmere or any of its
subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a material adverse effect on Windmere, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Windmere or any
of its subsidiaries having, or which would reasonably be expected to
have, any such effect.
(h) Compliance with Laws. Except as disclosed in the
Windmere SEC Documents, Windmere and its subsidiaries are in
compliance with all applicable statutes, laws, ordinances,
regulations, rules, judgments, decrees and orders of any Governmental
Entity applicable to its business or operations, except for instances
of possible noncompliance that, individually or in the aggregate,
would not have a material adverse effect on Windmere. To the
knowledge of Windmere, each of Windmere and its subsidiaries has in
effect all Permits necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted,
and there has occurred no default under any such Permit, except for
the lack of Permits and for defaults under Permits which, individually
or in the aggregate, would not have a material adverse effect on
Windmere.
(i) Absence of Changes in Benefit Plans; Labor Relations.
Except as disclosed in the Windmere SEC Documents, since the date of
the most recent audited financial statements included in the Windmere
SEC Documents, there has not been any adoption or amendment in any
material respect by Windmere or any of its subsidiaries of any Benefit
Plan. Except as set forth in Schedule 3.02 (i) or as disclosed in the
Windmere SEC Documents, there exist no employment, severance,
termination or indemnification agreements, arrangements or
understandings between Windmere or any of its subsidiaries and any
current or former employee, officer or director of Windmere or any of
its subsidiaries or any consulting agreement with Windmere or any of
its subsidiaries with respect to which the aggregate liability
thereunder exceeds $100,000 or which cannot be canceled by Windmere or
any such subsidiary without penalty on 30 days' or less notice.
(j) Benefit Plan Compliance. (i) Schedule 3.02(j)(i)
contains a list and brief description of all "employee pension benefit
plans" (as defined in Section 3(2) of ERISA, "employee welfare benefit
plans" (as defined in Section 3(1) of ERISA) and all other Benefit
Plans maintained, or
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<PAGE> 17
contributed to, or required to be contributed to, by Windmere or any
of its subsidiaries or any other person or entity that, together with
Windmere, is treated as a single employer under Section 414(b), (c),
(m) or (o) of the Code (Windmere and each such other person or entity,
a "Windmere Commonly Controlled Entity") for the benefit of any
current or former employees, officers or directors of Windmere or any
of its subsidiaries. Windmere has delivered or made available to the
Company true, complete and correct copies of (1) each Benefit Plan
(or, in the case of any unwritten Benefit Plans, descriptions
thereof), (2) the most recent annual report on Form 5500 filed with
the Internal Revenue Service with respect to each Benefit Plan (if any
such report was required), (3) the most recent summary plan
description for each Benefit Plan for which such summary plan
description is required and (4) each trust agreement and group annuity
contract relating to any Benefit Plan. Each Benefit Plan has been
administered in all material respects in accordance with its terms and
is in compliance with the applicable provisions of ERISA, the Code,
all other applicable laws and all applicable collective bargaining
agreements except where the failure to comply would not be reasonably
expected to result in a material adverse effect on Windmere.
(ii) Except as disclosed in Schedule 3.02(j)(ii),
all Pension Plans have been the subject of determination
letters from the Internal Revenue Service, or have filed a
timely application therefor, to the effect that such Pension
Plans are qualified and exempt from Federal income taxes under
Section 401 (a) and 501 (a), respectively, of the Code, and no
such determination letter has been revoked nor has any such
Pension Plan been amended since the date of its most recent
determination letter or application therefor in any respect
that would adversely affect its qualification or materially
increase its costs.
(iii) No Windmere Commonly Controlled Entity has
incurred any liability which has not been fully paid to a
Pension Plan under Title IV of ERISA (other than for
contributions not yet due) or to the Pension Benefit Guaranty
Corporation (other than for payment of premiums not yet due)
that, when aggregated with other such liabilities, would
result in a material adverse effect on Windmere.
(iv) As of the most recent valuation date for each
Pension Plan that is a Defined Benefit Plan, there was not any
material amount of "unfunded benefit liabilities" (as defined
in Section 4001(a)(18) of ERISA) under such Defined Benefit
Plan, and Windmere is not aware of any facts or circumstances
that would materially adversely change the funded status of
any such Defined Benefit Plan. Windmere has furnished or made
available to the Company the most recent actuarial report or
valuation with respect to each Defined Benefit Plan and has no
reason to believe that the conclusions expressed in those
reports or valuations are incorrect.
(v) No Windmere Commonly Controlled Entity has
been required at any time within the five calendar years
preceding the date hereof or is required currently to
contribute to any "multiemployer plan" (as defined in Section
4001(a)(3) of ERISA) or has withdrawn from any multiemployer
plan where such withdrawal has resulted or would result in any
"withdrawal liability" (within the meaning of Section 4201 of
ERISA) that has not been fully paid.
(vi) With respect to any Benefit Plan that is an
employee welfare benefit plan, except as disclosed in Schedule
3.02(j)(vi), (1) no such Benefit Plan is funded through a
"welfare benefits fund", as such term is defined in Section
419(e) of the Code, and (2) each such Benefit Plan that is a
"group health plan", as such term is defined in Section
5000(b)(1) of the Code, complies substantially with the
applicable requirements of Section 4980B(f) of the Code.
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<PAGE> 18
(vii) Schedule 3.02 (j) (vii) lists all outstanding
Options as of the date of this Agreement, showing for each
such Option: (1) the number of shares issuable, (2) the number
of vested shares, (3) the date of expiration and (4) the
exercise price.
(viii) No employee of Windmere or any of its
subsidiaries will be entitled to any additional compensation
or benefits or any acceleration of the time of payment or
vesting of any compensation or benefits under any Benefit Plan
as a result of the transactions contemplated by this
Agreement.
(ix) Neither Windmere or any of its subsidiaries
nor any person acting on behalf of Windmere or any of its
subsidiaries has, in contemplation of any corporate
transaction involving Windmere, issued any written
communication to, or otherwise made or entered into any
legally binding commitment with, any employees of Windmere or
of any of its subsidiaries to the effect that, following the
date hereof, (i) any benefits or compensation provided to such
employees under existing Benefit Plans or under any other plan
or arrangement will be enhanced, (ii) any new plans or
arrangements providing benefits or compensation will be
adopted, (iii) any Benefit Plans will be conducted for any
period of time, or (iv) any plans or arrangements provided by
the Company will be made available to such employees.
(k) Taxes. Windmere and its subsidiaries have filed all
material tax returns and reports required to be filed by it and has
paid all taxes required to be paid by it (other than taxes, the
failure to pay which would not, individually or in the aggregate, have
a material adverse effect on Windmere), and the most recent financial
statements contained in the Windmere Filed SEC Documents reflect an
adequate reserve for all material taxes payable by Windmere for all
taxable periods and portions thereof through the date of such
financial statements. No deficiencies for any taxes have been
proposed, asserted or assessed against Windmere (other than
deficiencies, the liability for which would not, individually or in
the aggregate, have a material adverse effect on Windmere), and no
requests for waivers of the time to assess any taxes are pending. None
of the assets or properties of Windmere or any of its subsidiaries is
subject to any material tax lien.
(l) No Voting Requirements. No vote of the holders of
shares of Windmere Common Stock is necessary to approve this Agreement
and the transactions contemplated by this Agreement.
(m) Brokers. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Windmere.
(n) Purchase for Investment. Windmere is acquiring the
Company Shares for investment for its own account and not with a view
to, or in connection with, a distribution thereof within the meaning
of the Securities Act. Windmere is able to bear the economic risk of
an investment in the Company Shares pursuant to this Agreement and can
afford to sustain a total loss on such investment, and has such
knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the proposed investment
and therefor has the capacity to protect its own interests in
connection with the purchase of the Company Shares. Windmere
acknowledges that the Company Shares have not been registered under
the Securities Act or any state securities laws.
(o) Ownership of Voting Stock. Neither Windmere nor
any of its affiliates nor any person with whom Windmere or any
affiliate of Windmere is acting (within the meaning of Section
13(d)(3) of the Exchange Act) as a partnership, limited partnership,
syndicate or group (within the
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<PAGE> 19
meaning of Section 13(d)(3) of the Exchange Act) for the purpose of
acquiring, holding or disposing of securities issued by the Company
beneficially owns (as defined in Rule 13d-3 under the Exchange Act)
voting stock of the Company as of the date of this Agreement or will,
as of the Closing Date, beneficially own (as defined in Rule 13d-3
under the Exchange Act) any voting stock of the Company or rights to
acquire voting stock of the Company other than the Common Stock to be
purchased by Windmere hereunder.
(p) Financing. Windmere has the funds necessary to
consummate the transactions contemplated hereby and will have the same
at the time of the Closing.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 4.01. Conduct of Business. (a) Conduct of Business by the
Company. During the period from the date of this Agreement to the Closing Date,
the Company shall, and shall cause its subsidiaries to, except as expressly
contemplated or permitted by this Agreement or to the extent that Windmere
shall otherwise consent in writing, carry on their respective businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use reasonable
efforts to preserve intact their current business organizations, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having business dealings with them (except when in its good faith
judgment it is otherwise in its best interest) to the end that their goodwill
and ongoing business shall not be impaired in any material respect (in the
aggregate, with respect to the Company and its subsidiaries taken as a whole)
at the Closing Date. Without limiting the generality of the foregoing, during
the period from the date of this Agreement to the Closing Date, the Company
shall not, and shall not permit any of its subsidiaries to, (except as
expressly contemplated or permitted by this Agreement or on Schedule 4.01 or to
the extent that Windmere shall otherwise consent in writing) (which consent, in
the case of clauses (vii) through (xiii) of this Section 4.01, shall not be
unreasonably withheld):
(i) (x) declare, set aside or pay any
dividends on, or make any other distributions (whether in
cash, stock or property) in respect of, any of its capital
stock, except for dividends by a direct or indirect wholly
owned subsidiary of the Company to its parent, (y) split,
combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of,
in view of or in substitution for shares of its capital stock,
or (z) purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to
acquire any such shares or other securities;
(ii) issue, deliver, sell, pledge or otherwise
encumber any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting
securities or convertible securities (other than grants of
options under the Company Stock Plans consistent in amounts
and terms with past practice and the issuance of shares of
Company Common Stock upon the exercise of options outstanding
on the date of this Agreement and in accordance with their
present terms)
(iii) amend its Certificate of Incorporation,
by-laws or other comparable charter or organizational
documents;
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<PAGE> 20
(iv) except as set forth on Schedule 4.01(a)(iv),
acquire or agree to acquire (x) by merging or consolidating
with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof or (y) any assets that are
material, individually or in the aggregate, to the Company and
its subsidiaries taken as a whole, except purchases of assets
in the ordinary course of business consistent with past
practice;
(v) sell, lease, license, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of
its material properties or assets, other than in the ordinary
course of business consistent with past practice;
(vi) (y) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person,
issue or sell any debt securities or warrants or other rights
to acquire any debt securities of the Company or any of its
subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into
any arrangement having the economic effect of any of the
foregoing, except for borrowings incurred in the ordinary
course of business consistent with past practice, or (z) make
any loans, advances or capital contributions to, or
investments in, any other person;
(vii) make or agree to make any new capital
expenditure or expenditures which, in the aggregate, are in
excess of $500,000;
(viii) make any material tax election or settle or
compromise any material tax liability;
(ix) except as set forth on Schedule 4.01(a)(ix),
pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge,
settlement or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial
statements (or the notes thereto) of the Company included in
the Company SEC Documents or incurred in the ordinary course
of business consistent with past practice, or waive any
material benefits of, or agree to modify in any material
respect, any confidentiality, standstill or similar agreements
to which the Company or any of its subsidiaries is a party,
(x) except in the ordinary course of business,
modify, amend or terminate any material contract or agreement
to which the Company or any subsidiary is a party or waive,
release or assign any material rights or claims;
(xi) except in the ordinary course of business,
enter into any contracts, agreements, arrangements or
understandings relating to the distribution, sale or marketing
by third parties of the Company's or its subsidiaries'
products or products licensed by the Company or its
subsidiaries;
(xii) except in the ordinary course of business,
enter into any contracts, agreements, arrangements or
understandings relating to the distribution, sale or marketing
by the Company of products, patents or trademarks of other
parties;
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<PAGE> 21
(xiii) except as required to comply with applicable
law, (A) adopt, enter into, terminate or amend any Benefit
Plan or other arrangement for the benefit or welfare of any
director, officer or current or former employee, (B) increase
in any manner the compensation or fringe benefits of, or pay
any bonus to, any director, officer or employee (except for
normal increases or bonuses in the ordinary course of business
consistent with past practice), (C) pay any benefit not
provided for under any Benefit Plan, (D) except as permitted
in clause (B) or in Section 4.01(a)(ii), grant any awards
under any bonus, incentive, performance or other compensation
plan or arrangement or Benefit Plan (including the grant of
stock options, stock appreciation rights, stock based or stock
related awards, performance units or restricted stock, or the
removal of existing restrictions in any Benefit Plans or
agreement or awards made thereunder) or (E) take any action to
fund or in any other way secure the payment of compensation or
benefits under any employee plan, agreement, contract or
arrangement or Benefit Plan;
(xiv) make any change in any method of accounting
or accounting practice or policy other than those required by
generally accepted accounting principles; or
(xv) authorize any of, or commit or agree to take
any of, the foregoing actions.
(b) Other Actions. Windmere shall not, and shall not
permit any of its subsidiaries to, take any action that would, or that
could reasonably be expected to, result in (i) any of the
representations and warranties of Windmere set forth in this Agreement
that are not qualified as to materiality becoming untrue in any
material respect or (ii) any of the representations and warranties of
Windmere set forth in this Agreement that are qualified as to
materiality becoming untrue in any respect.
SECTION 4.02. No Solicitation. (a) The Company and its officers,
directors, employees, representatives and agents shall immediately cease any
discussions or negotiations with any parties that may be ongoing with respect
to a Third Party Acquisition Proposal. The Company shall not, nor shall it
permit any of its subsidiaries to, nor shall it authorize or permit any of its
officers, directors or employees or any investment banker, attorney or other
advisor or representative retained by it or any of its subsidiaries to, (i)
solicit, initiate or knowingly encourage the submission of, any Third Party
Acquisition Proposal, or (ii) participate in any discussions or negotiations
regarding, or furnish to any person any non-public information with respect to,
or take any other action knowingly to facilitate any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Third Party Acquisition Proposal; provided, however, that to the extent
required by the fiduciary obligations of the Board of Directors of the Company,
based on the advice of outside counsel, the Company may, (A) in response to a
request therefor, furnish non-public information with respect to the Company to
any person pursuant to a customary confidentiality agreement (as determined by
the Company's outside counsel) and discuss such information with such person
and (B) upon receipt by the Company of a Third Party Acquisition Proposal,
participate in negotiations and discussions regarding such Third Party
Acquisition Proposal. For purposes of this Agreement, "Third Party Acquisition
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of 15% or more of the consolidated
assets of the Company and its subsidiaries or 15% or more of any class of
equity securities of the Company or any of its Significant Subsidiaries or any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the
Company or any of its Significant Subsidiaries, or any merger, consolidation,
business combination, sale of substantially all assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by this Agreement,
or any other transaction the consummation of which could reasonably be expected
to impede, interfere with, prevent or materially delay the Stock Purchase or
which would reasonably be expected to dilute materially the benefits to
Windmere of the transactions contemplated hereby.
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<PAGE> 22
(b) Notwithstanding the foregoing, in the event the Company
receives any Superior Proposal (as defined below), the Board of Directors of
the Company, to the extent required by the fiduciary obligations thereof as
determined in good faith by the Board based on the advice of outside counsel,
may withdraw or modify its approval or recommendation of this Agreement or the
transactions contemplated hereby, approve or recommend such Superior Proposal,
enter into an agreement with respect to such Superior Proposal, approve the
solicitation of additional Third Party Acquisition Proposals or other
investment proposals and/or terminate this Agreement. The Company shall notify
Windmere in writing of any Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person making such
Superior Proposal, within 24 hours of receipt thereof. For purposes of this
Agreement, a "Superior Proposal" means a bona fide Third Party Acquisition
Proposal that the Board determines in its good faith reasonable judgment to be
more favorable to the Company and/or the Company stockholders than the
transactions contemplated by this Agreement and by the other Transaction
Documents, taken as a whole. Windmere agrees that neither the Company nor any
of its directors, officers, employees, representatives or agents acting in
accordance with their respective fiduciary obligations to the Company, nor any
person or entity who shall make a Third Party Acquisition Proposal shall be
deemed, by reason of the making of such proposal or any actions taken in good
faith in connection with it, to have tortiously or otherwise wrongfully
interfered with or caused a breach of this Agreement, the other Transaction
Documents or any other agreements, instruments and documents executed in
connection herewith or therewith, or to have tortiously or otherwise wrongfully
interfered with the transactions contemplated hereby or thereby, or the rights
of Windmere or any of their affiliates hereunder or thereunder.
(c) Nothing contained in this Section 4.02 shall prohibit the
Company from (i) taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act; (ii) subject
to the provisions of Section 5.05, issuing a press release or otherwise
publicly disclosing the terms of this Agreement, including without limitation
this Section 4.02 and (iii) making any disclosure to the Company's shareholders
if, in the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure to so disclose would be inconsistent
with applicable laws; (including, without limitation, laws relating to the
fiduciary duties of directors); provided that except to the extent required by
the fiduciary obligations of the Board of Directors of the Company determined
in good faith by the Board based upon the advice of outside counsel, the
Company may not withdraw or modify its approval or recommendation of this
Agreement or the transactions contemplated hereby.
ARTICLE V.
ADDITIONAL AGREEMENTS
SECTION 5.01. Preparation of the Proxy Materials; Stockholders
Meeting. (a) As soon as practicable following the date of this Agreement, the
Company shall prepare and file with the SEC the preliminary proxy materials
related to the solicitation of proxies from the Company's stockholders to
approve this Agreement and the transactions contemplated hereby and thereafter
shall use its reasonable efforts to distribute a proxy statement and related
proxy materials with respect thereto (the "Proxy Materials") to the Company's
stockholders as promptly as practicable. Windmere shall furnish all
information concerning itself to the Company as may be reasonably requested in
connection with any such action and the preparation, filing and distribution of
the Proxy Materials.
(b) The Company will (a) as soon as practicable following
the date of this Agreement, take all steps reasonably necessary in accordance
with applicable law to duly call, give notice of, convene and hold a meeting of
its stockholders (the "Stockholders Meeting") for the purpose of approving this
Agreement; (b) through its Board of Directors, recommend to its stockholders
approval of this Agreement in such Proxy Materials, except to the extent that
the Board of Directors shall have withdrawn or modified
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<PAGE> 23
its approval or recommendation of this Agreement as a result of their good
faith determination, based upon the advice of Sonnenschein Nath & Rosenthal,
the Company's outside counsel, that the failure to withdraw or modify its
approval or recommendation of this Agreement would cause such Board to violate
their fiduciary duties to the Company and its stockholders.
(c) Notwithstanding anything to the contrary in this
Agreement, the Company shall not be required to file with the SEC and
distribute to its stockholders the Proxy Materials unless and until (i) the
Company and Windmere have agreed to the form of Commercial Agreements and (ii)
the Board of Directors of the Company shall have received a written opinion
addressed to the Board from an investment banking firm satisfactory to the
Board as set forth in Section 6.03.
SECTION 5.02. Access to Information. (a) The Company and Windmere
shall, and shall cause each of their respective subsidiaries to, upon reasonable
notice from the other party hereto, afford to the other party hereto, and to
their respective officers, employees, accountants, counsel, financial advisors
and other representatives, reasonable access during normal business hours during
the period prior to the Closing Date to all their respective properties, books,
contracts, commitments, personnel and records and, during such period, each of
the Company and Windmere shall, and shall cause each of their respective
subsidiaries to, furnish promptly to the other party hereto upon request (i) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of Federal or
state securities laws or tax laws and (ii) all other information concerning its
business, properties and personnel as the Company or Windmere, as the case may
be, may reasonably request.
(b) Each of the Company and Windmere may make copies of
documents provided to them pursuant this Section 5.02 at their own expense. The
parties shall, and shall cause their respective officers, employees,
accountants, counsel, financial advisors and other representatives to, hold any
such information which is nonpublic in confidence on the same terms and
conditions as set forth in those certain letters each dated January 15, 1996, as
amended from time to time, between the Company and Windmere (the
"Confidentiality Agreements").
SECTION 5.03. Reasonable Efforts; Notification. (a) As soon as
practicable after the date hereof, Windmere and the Company shall jointly
prepare and file with the United States Federal Trade Commission (the "FTC") and
the Antitrust Division of the United States Department of Justice ("Antitrust
Division") report forms with respect to the Stock Purchase pursuant to the HSR
Act and the regulations promulgated thereunder. Windmere and the Company shall
comply promptly with any requests for additional information and documents from
the FTC or Antitrust Division, and shall cooperate in any review or
investigation by the FTC or Antitrust Division in a joint effort to have any
such review or investigation resolved without an adverse effect upon the
transactions contemplated hereby.
(b) Upon the terms and subject to the conditions set
forth in this Agreement, each of the parties agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all other
things necessary, proper or advisable to consummate and make effective, as
promptly as practicable, the Stock Purchase and the other transactions
contemplated by this Agreement, including (i) the obtaining of all other
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
other reasonable steps as may bc necessary to avoid an action or proceeding by
any Governmental Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated hereby,
including seeking to have any stay or temporary restraining order entered by
any court or other Governmental Entity vacated or reversed and (iv) the
execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without
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<PAGE> 24
limiting the foregoing, subject to the fiduciary duties of the Board of
Directors of the Company, the Company and its Board of Directors shall if any
state takeover statute or similar statute or regulation is or becomes
applicable to the Stock Purchase, this Agreement or the other transactions
contemplated by this Agreement, use all reasonable efforts to ensure that the
Stock Purchase and the other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Stock Purchase and the other transactions contemplated by this Agreement.
Nothing herein shall limit or affect the Company's taking actions specifically
permitted by Section 4.02(b).
SECTION 5.04. Fees and Expenses. All fees and expenses incurred in
connection with the Stock Purchase, this Agreement, the Proxy Statement, the
Registration Statement and the transactions contemplated by this Agreement shall
be paid by the party incurring such fees or expenses, whether or not the Stock
Purchase is consummated.
SECTION 5.05. Public Announcements. Windmere, on the one hand, and
the Company, on the other hand, will consult with each other before issuing, and
give each other the opportunity to review and comment upon, any press release or
other public statements with respect to the transactions contemplated by this
Agreement, including the Stock Purchase, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law, court process or by obligations pursuant to
any listing agreement with the New York Stock Exchange, Inc. (the "NYSE") or the
Nasdaq National Market. The parties agree that the initial press release to be
issued with respect to the transactions contemplated by this Agreement shall be
in the form heretofore agreed to by the parties.
SECTION 5.06. Nasdaq and NYSE Listing. The Company shall use its
reasonable efforts to make all filings required by NASDAQ with respect to the
shares of Company Common Stock to be issued in the Stock Purchase, subject to
official notice of issuance, prior to the Closing Date. Windmere shall use its
reasonable efforts to cause the shares of Windmere Common Stock to be issued in
the Stock Purchase as part of the Purchase Price to be approved for listing on
the NYSE, subject to official notice of issuance, prior to the Closing Date.
SECTION 5.07. Registration Statement. As soon as practicable after
the date hereof, Windmere shall file with the SEC a registration statement on
Form S-3 under the Securities Act (the "Registration Statement") covering all of
the Windmere Shares and shall use its reasonable efforts to cause the
Registration Statement to become effective as soon after such filing as
practicable.
SECTION 5.08. Negotiation of Commercial Agreements. Each of the
Company and Windmere shall use its reasonable efforts to negotiate and enter
into various commercial agreements (the "Commercial Agreements") which would
become effective upon the Closing. The parties hereto acknowledge and agree
that the Commercial Agreements must be mutually satisfactory to the Company and
Windmere with the intent of enhancing the business and competitive position of
both the Company and Windmere.
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<PAGE> 25
ARTICLE VI.
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Stock Purchase. The respective obligation of each party to effect the Stock
Purchase is subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) Stockholder Approval. This Agreement and the Stock
Purchase shall have been approved by the affirmative vote of the
holders of a majority of the votes cast in person or by proxy at the
Stockholders Meeting.
(b) Regulatory Compliance. All material filings with all
Governmental Authorities required to be made in connection with the
transactions contemplated hereby shall have been made, all waiting
periods thereunder shall have expired or terminated and all material
orders, permits, waivers, authorizations, exemptions, and approvals of
such entities required to be in effect on the date of the Closing in
connection with the transactions contemplated hereby shall have been
issued, all such orders, permits, waivers, authorizations, exemptions
or approvals shall be in full force and effect on the date of the
Closing; provided, however, that no provision of this Agreement shall
be construed as requiring any party to accept, in connection with
obtaining any requisite approval, clearance or assurance of
non-opposition, avoiding any challenge, or negotiating settlement, any
condition that would materially change or restrict the manner in which
the Company or Windmere conducts or proposes to conduct its business.
(c) No Injunctions or Restraints; Illegality. None of
the parties hereto shall be subject to any statute, rule, regulation,
decree, ruling, injunction or other order issued by any Governmental
Entity of competent jurisdiction (collectively, an "Injunction") which
prohibits, restrains, enjoins or restricts the consummation of the
transactions contemplated by this Agreement; provided, however, that
each of the Company and Windmere shall have used its reasonable
efforts, to the extent required pursuant to Section 5.03(b), to
prevent any such Injunction.
(d) Commercial Agreements. The Company and Windmere
shall have entered into the Commercial Agreements.
SECTION 6.02. Conditions to Obligations of Windmere. The
obligations of Windmere to effect the Stock Purchase is further subject to the
following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of the Company set forth in this
Agreement that are not so qualified shall be true and correct in all
material respects, in each case as of the date of this Agreement and
(except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this Agreement,
and Windmere shall have received a certificate signed on behalf of the
Company by the President and Chief Executive Officer of the Company to
such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and Windmere shall have received a certificate signed on
behalf of the Company by the President and Chief Executive Officer of
the Company to such effect.
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<PAGE> 26
(c) Nasdaq National Market Listing. The shares of Company
Stock issuable to Windmere pursuant to this Agreement shall have been
included for listing on the Nasdaq National Market, subject to official
notice of issuance.
(d) No Material Adverse Change. At any time on or after
the date of this Agreement there shall not have occurred any material
adverse change in the business, properties, assets, financial condition
or results of operations of the Company and its subsidiaries, taken as
a whole.
(e) Closing Deliveries. The Company shall have delivered,
or shall be delivering concurrently with the Closing, the documents and
instruments required to be delivered by the Company pursuant to Section
2.02.
SECTION 6.03. Conditions to Obligations of the Company. The
obligation of the Company to effect the Stock Purchase is further subject to the
following conditions:
(a) Representations and Warranties. The representations
and warranties of Windmere set forth in this Agreement that are
qualified as to materiality shall be true and correct, and the
representations and warranties of Windmere set forth in this Agreement
that are not so qualified shall be true and correct in all material
respects, in each case as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing
Date, except as otherwise contemplated by this Agreement, and the
Company shall have received a certificate signed on behalf of Windmere
by the President and the Chief Financial Officer of Windmere to such
effect.
(b) Performance of Obligations of Windmere. Windmere
shall have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed on
behalf of Windmere by the President and the Chief Financial Officer of
Windmere to such effect.
(c) NYSE Listing. The Windmere Common Stock issuable to
the Company pursuant to this Agreement shall have been approved for
listing on the NYSE, subject to official notice of issuance.
(d) No Material Adverse Change. At any time on or after
the date of this Agreement there shall not have occurred any material
adverse change in the business, properties, assets, financial
condition or results of operations of Windmere and its subsidiaries,
taken as a whole.
(e) Registration Statement. The Registration Statement
shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceedings seeking a stop order.
(f) Fairness Opinion. The Board of Directors of the
Company shall have received from an investment banking firm
satisfactory to the Board written opinions addressed to the Board (i)
for inclusion in the Proxy Statement and dated on or about the date
thereof, and (ii) immediately prior to the Closing Date and dated such
date, in each case substantially to the effect that the consideration
to be paid by Windmere for the Stock Purchase pursuant to this
Agreement is fair to the Company from a financial point of view, and
such opinions shall not have been withdrawn or materially modified
prior to the Closing Date.
(g) Lenders' Consents. The Company and Foothill Capital
Corporation ("Foothill") shall have entered into a definitive
amendment to the Loan and Security Agreement dated as of July 28,
1994, as amended (the "Loan Agreement"), by and between the Company
and Foothill, effective upon
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<PAGE> 27
consummation of this Agreement, amending the Loan Agreement such that
this Agreement and the transactions contemplated hereby are permitted
under the Loan Agreement as so amended and whereby no default, or
event which could result in a default, exists under the Loan Agreement
as so amended. The Company and LaSalle National Bank ("LaSalle")
shall have entered into a definitive amendment to the Loan and
Security Agreement dated as of December 20, 1991, as amended (the
"Loan and Security Agreement"), by and between the Company and
LaSalle, effective upon consummation of this Agreement, amending the
Loan and Security Agreement such that this Agreement and the
transactions contemplated hereby are permitted under the Loan and
Security Agreement as so amended and whereby no default, or event
which could result in a default, exists under the Loan and Security
Agreement as so amended.
(h) Closing Deliveries. Windmere shall have delivered,
or shall be delivering concurrently with the Closing, the documents
and instruments required to be delivered by Windmere pursuant to
Section 2.03.
ARTICLE VII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated, and
the Stock Purchase contemplated hereby may be abandoned, at any time prior to
the Closing Date;
(a) by mutual written consent of Windmere and the
Company,
(b) by either Windmere or the Company:
(i) if the Stock Purchase shall not have been
consummated on or before July 1, 1996, unless the failure to
consummate the Stock Purchase is the result of a breach of any
material obligation under this Agreement by the party seeking
to terminate this Agreement; provided, however, that the
passage of such period shall be tolled for any part thereof
during which any party shall be subject to a non-final order,
decree, ruling or other action restraining, enjoining or
otherwise prohibiting the consummation of the Stock Purchase;
or
(ii) if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or
taken any other action permanently enjoining, restraining or
otherwise prohibiting the Stock Purchase and such order,
decree, ruling or other action shall have become final and
nonappealable; or
(iii) if, upon a vote taken at a duly held
Stockholders Meeting or any adjournment thereof, any required
approval of the stockholders of the Company shall not have
been obtained; or
(iv) if the Company and Windmere shall have not
entered into the Commercial Agreements by March 29, 1996; or
(v) if the Board of Directors of the Company
shall have not received a written opinion addressed to the
Board from an investment banking firm satisfactory to the
Board as set forth in Section 6.03 by April 5, 1996.
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<PAGE> 28
(c) by Windmere:
(i) if the Board of Directors of the Company or
any committee thereof shall have withdrawn or modified in a
manner adverse to Windmere its approval of the Stock Purchase
or this Agreement, or approved or recommended any Third Party
Acquisition Proposal, or resolved to take any of the foregoing
actions; or
(ii) if the Company shall have entered into any
agreement with respect to any Superior Proposal.
(d) by the Company if the Company has received a Superior
Proposal or has withdrawn or modified its approval or recommendation
of this Agreement or the transactions contemplated hereby in
accordance with Section 4.02(b).
SECTION 7.02. Effect of Termination. In the event of termination
of this Agreement by either the Company or Windmere as provided in Section
7.01, this Agreement shall forthwith become void and have no effect, without
any liability or obligation on the part of Windmere or the Company, other than
the obligations of the parties under the Confidentiality Agreements and the
provisions of Sections 3.01(n), 3.02(n), 5.02(b), 5.04, this Section 7.02 and
Article VIII (other than Section 8.01) and except liability of a party to the
extent that such termination results from the wilful and material breach by
such party of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
SECTION 7.03. Amendment. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties hereto;
provided that after the Closing, this Agreement may only be amended in
accordance with the terms of the Stockholder Agreement.
SECTION 7.04. Extension; Waiver. At any time prior to the Closing,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document
delivered pursuant hereto or (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights. Notwithstanding anything to the
contrary herein, any waiver of the provisions of this Agreement after the
Closing may only be made in accordance with the terms of the Stockholder
Agreement.
ARTICLE VIII.
GENERAL PROVISIONS
SECTION 8.01. Survival of Representations and Warranties. The
representations and warranties in this Agreement will survive until the first
anniversary of the date of the Closing. No action may be brought with respect
to a breach of any representation or warranty in this Agreement after such time
unless, prior to such time, the party seeking to bring such an action has
notified the other party of such claim, specifying in reasonable detail the
nature of the loss suffered. This Section 8.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Closing Date.
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<PAGE> 29
SECTION 8.02. Notices. Except as otherwise provided in Section
4.02(f), all notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
<TABLE>
<S> <C>
(a) if to Windmere, to
Windmere Corporation
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-9867
Attention: David M. Friedson, President
with a copy to:
Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Andrew Hulsh, Esq.
(b) if to the Company, to
Salton/Maxim Housewares, Inc.
550 Business Center Drive
Mount Prospect, Illinois 60056
Attention: Leon Dreimann, President
with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Neal Aizenstein, Esq.
</TABLE>
SECTION 8.03. Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
first person;
(b) "knowledge" of any person means actual knowledge of
the directors and executive officers of such person;
(c) "material adverse change" or "material adverse
effect" means, when used in connection with the Company or Windmere,
any change or effect that is materially adverse to the
- 25 -
<PAGE> 30
business, properties, assets, financial condition or results of
operations of such party and its subsidiaries taken as a whole;
(d) "person" means an individual, corporation,
partnership, joint venture, association, trust, unincorporated
organization or other entity,
(e) a "subsidiary" of any person means another person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity
interests of which) is owned directly or indirectly by such first
person;
(f) "Transaction Documents" means this Agreement, the
Note, the Security Agreements, the Guaranties, the Stockholder
Agreement, the Registration Rights Agreement, and the Commercial
Agreements, amendments thereof, and all schedules and exhibits hereto
and thereto.
(g) "Security Agreements" means the Security Agreements
to be entered into by and between the Company, Windmere and the
domestic subsidiaries of Windmere (the "Domestic Subsidiaries") at the
Closing.
(h) "Guaranties" means the Guaranties to be entered into
by and between the Company and each of the Domestic Subsidiaries at
the Closing.
(i) "Stockholder Agreement" means the Stockholder
Agreement, in the form attached hereto as Exhibit B, to be entered
into by and between Windmere and the Company at the Closing.
(j) "Registration Rights Agreement" means the
Registration Rights Agreement, in the form attached hereto as Exhibit
C, to be entered into by and between Windmere and the Company at the
Closing.
SECTION 8.04. Interpretation. When a reference is made in this
Agreement to a Section, Exhibit or Schedule, such reference shall be to a
Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation".
SECTION 8.05. Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement, together with the other Transaction Documents and the
Confidentiality Agreements, constitute the entire agreement, and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof and are not intended to
confer upon any person other than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
- 26 -
<PAGE> 31
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Enforcement. The parties agree that (i) any legal
action or proceeding arising out of or in connection with this Agreement or the
transactions contemplated hereby shall be brought only in the courts of the
State of Delaware or the United States of America located in Delaware, (ii)
each irrevocably submits to the jurisdiction of each such court, and (iii) any
summons, pleading, judgment, memorandum of law, or other paper relevant to any
such action or proceeding shall be sufficiently served if delivered to the
recipient thereof by certified or registered mail (with return receipt) at its
address set forth in Section 8.02. Nothing in the preceding sentence shall
affect the right of any party to proceed in any jurisdiction for the
enforcement or execution of any judgment, decree or order made by a court
specified in said sentence. The parties hereto acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specifications or were
otherwise breached. It is accordingly agreed that each of the parties hereto
shall be entitled to an injunction or injunctions to prevent or cure breaches
of the provisions of this Agreement by the other and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they may be entitled by law or equity.
- 27 -
<PAGE> 32
IN WITNESS WHEREOF, Windmere and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
as of the date first written above.
WINDMERE CORPORATION
By:
-------------------------------------
Name: David M. Friedson
Title: President
SALTON/MAXIM HOUSEWARES, INC.
By:
-----------------------------------
Name:
Title:
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<PAGE> 33
AMENDMENT NO. 1
TO
STOCK PURCHASE AGREEMENT
This Amendment No. 1 (the "Amendment") to the Stock Purchase Agreement,
dated as of February 27, 1996 (the "Agreement"), is entered into as of April
8, 1996, by and between Windmere Corporation, a Florida corporation
("Windmere"), and Salton/Maxim Housewares, Inc., a Delaware corporation (the
"Company"). Capitalized terms used in this Amendment and not otherwise defined
herein shall have the meanings set forth in the Agreement.
WHEREAS, Windmere and the Company desire to amend the Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the undersigned,
intending to be legally bound hereby, agree as follows:
1. A new Section 1.03 is hereby added to read as follows:
"(a) Upon a Change in Control (as defined below) of Windmere, the
Company shall have the option (the "Change in Control Option"), but not
the obligation, to purchase all, or a portion, of the Company Shares
then owned by Windmere at a per share price equal to the book value per
share of the Company's outstanding Common Stock upon such Change in
Control. The Change in Control Option may be exercised by vote of a
majority of the Company Directors (as defined in the Stockholder
Agreement) by written notice from the Company to Windmere within ten
(10) days following such Change in Control. If any Company Shares are
purchased by the Company pursuant to the Change in Control Option, then
such purchase shall, unless the parties thereto otherwise agree, be
completed at a closing to be held at the offices of Greenberg, Traurig
in Miami, Florida at 10:00 a.m. local time on the 10th business day
following the exercise of the Change in Control Option.
(b) "Change in Control" shall mean:
(i) (A) the acquisition (other than by or from Windmere), at any
time after the date hereof, by any person, entity or "group," within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934 (the "Exchange Act"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either the then outstanding shares of common stock or the
combined voting power of Windmere's then outstanding voting securities
entitled to vote generally in the election of directors, which
acquisition has not been approved by a majority of
<PAGE> 34
the board of directors of Windmere (the "Board"), excluding the
nominees of any group or person seeking to effectuate such change in
control; or
(B) approval by the shareholders of Windmere of (x) a
reorganization, merger or consolidation with respect to which persons
who were the shareholders of Windmere immediately prior to such
reorganization, merger or consolidation do not, immediately thereafter,
own more than 50% of the combined voting power entitled to vote
generally in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities, (y) a
liquidation or dissolution of Windmere or (z) the sale of all or
substantially all of the assets of Windmere, unless the approved
reorganization, merger, consolidation, liquidation, dissolution or sale
is subsequently abandoned, which transaction has not been approved by
the Board; or
(ii) the ten (10) individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any person
becoming a director subsequent to the date hereof whose election, or
nomination for election by Windmere's shareholders, was approved by a
vote of at least a majority of the directors then comprising the
Incumbent Board (other than an election or nomination of an individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors
of Windmere, as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall be, for purposes of this
Agreement, considered as though such person were a member of the
Incumbent Board.
2. Section 2.03 (iv) is hereby amended to read in its entirety as follows:
"(iv) the Security Agreements duly executed by Windmere and its
domestic subsidiaries and the Guaranties duly executed by the domestic
subsidiaries of Windmere;"
3. Section 3.02 (c) is hereby amended by substituting "3,866,000" for
"3,100,000."
4. Section 5.07 is hereby amended to read in its entirety as follows:
"Section 5.07. Shelf Registration Statement. (a) As soon as
practicable after the date hereof, Windmere shall file with the SEC a
shelf registration statement (the "Shelf Registration Statement") under
Rule 415 of the Securities Act with respect to all of the Registrable
Shares (as defined below). Windmere will use all reasonable efforts to
(i) have the Shelf Registration Statement declared effective under the
Securities Act on the Closing Date to
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<PAGE> 35
permit the disposition of the Registrable Shares and (ii) keep the
Shelf Registration Statement continuously effective until the earliest
date on which neither the Company nor any of its affiliates owns any
Registrable Shares. Windmere agrees to furnish to the Company such
number of prospectuses in conformity with the requirements of the
Securities Act, and such other documents as the Company may reasonably
request in order to facilitate the public sale or other disposition of
the Registrable Shares. Windmere further agrees to use its reasonable
efforts to register or qualify the Registrable Shares covered by the
Shelf Registration Statement under such securities or Blue Sky laws of
such jurisdictions within the United States as the Company shall
reasonably request; provided, however, that Windmere shall not be
required to qualify generally to do business in any jurisdiction where
it is not then so qualified, or to take any action that would subject
it to general service of process in any such jurisdiction where it is
not then so subject, or subject Windmere to any tax in any such
jurisdiction where it is not then so subject.
Windmere shall pay all expenses, other than selling
commissions and stock transfer taxes applicable to the sale of the
Registrable Shares, incurred by Windmere in complying with this Section
5.07, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees, fees and disbursements
of counsel and accountants for Windmere and blue sky fees and expenses.
(b) Windmere shall indemnify and hold harmless each seller of
Registrable Shares, and each person, if any, who controls such seller
within the meaning of the Securities Act, and each officer, director,
employee and advisor of each of the foregoing (each a "Company
Indemnitee"), against any expenses, losses, claims, damages or
liabilities, joint or several, to which such Company Indemnitee may
become subject under the Securities Act, any state securities law or
otherwise, including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, insofar as such expenses, losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Shelf Registration
Statement or final prospectus contained therein, or any amendment or
supplement thereto; or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; or (iii) any violation by Windmere of
the Securities Act or rules of the SEC thereunder or any blue sky laws
or any rules promulgated thereunder, and shall reimburse each such
Company Indemnitee for any legal or any other expenses reasonably
incurred by them in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that
Windmere shall not be liable in any such case to the extent that any
such expense, loss, claim, damage or liability arises out of or is
based
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<PAGE> 36
upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Shelf Registration Statement or said
prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to Windmere by or on
behalf of the Company specifically for use in the preparation thereof.
(c) The Company shall indemnify and hold harmless Windmere
and each person, if any, who controls Windmere within the meaning of
the Securities Act, each officer of Windmere who signs the Shelf
Registration Statement and each director of Windmere, against any and
all such expenses, losses, claims, damages or liabilities referred to
in Section 5.07 (b) above if the statement, alleged statement, omission
or alleged omission in respect of which such expense, loss, claim,
damage or liability is asserted was made in reliance upon and in
conformity with information furnished in writing to Windmere by or on
behalf of the Company specifically for use in connection with the
preparation of the Shelf Registration Statement, prospectus, amendment
or supplement.
(d) If the indemnification provided for in Sections 5.07
(b) or (c) above is unavailable to an indemnified party in respect of
any losses, claims, damages or liabilities referred to therein, then in
lieu of indemnifying such indemnified party thereunder, the
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities, in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified parties on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations.
The relative fault of the indemnifying party and of the indemnified
parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied
by the indemnifying party, or by the indemnified parties, and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5.07(d) were determined by pro
rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages and
liabilities or actions in respect thereof referred to in the
immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. No person guilty of fraudulent
misrepresentations (within the
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<PAGE> 37
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) Promptly after receipt by an indemnified party of
notice of the commencement of any action, such indemnified party shall,
if a claim in respect thereof is to be made against the indemnifying
party, notify the indemnifying party in writing of the commencement
thereof; but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to any indemnified
party otherwise than under this Section 5.07 or to the extent that it
has not been prejudiced as a proximate result of such failure. In case
any such action shall be brought against any indemnified party, and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional
to those available to Windmere, the indemnified party or parties shall
have the right to select one separate counsel to assert such legal
defenses (in which case the indemnifying party shall not have the right
to direct the defense of such action on behalf of the indemnified party
or parties). Upon the permitted assumption by the indemnifying party
of the defense of such action, and approval by the indemnified party of
counsel, the indemnifying party shall not be liable to such indemnified
party under this Section 5.07 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs or investigation) unless
(i) the indemnified party shall have employed one separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time, (iii) the indemnifying party and its counsel do not
actively and vigorously pursue the defense of such action or (iv) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party.
(f) For purposes of this Section 5.07, "Registrable
Shares" means (i) the Windmere Shares and (ii) other shares of Windmere
Common Stock acquired by the Company from time to time. All
Registrable Shares shall cease to be Registrable Shares (a) when sold
in a registered public offering or in accordance with Rule 144
promulgated by the SEC under the Securities Act, or (b) when permitted
to be sold in accordance with Rule 144(k).
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<PAGE> 38
(g) The parties hereto agree that whether or not any
express assignment shall have been made, the provisions of this Section
5.07 shall (i) be for the benefit of and enforceable by any subsequent
holder of Registrable Shares (or of any portion thereof); and (ii)
survive the termination of this Agreement for any reason after the
Closing.
5. Section 6.01(a) is hereby amended to read in its entirety as follows:
"(a) Stockholder Approval. This Agreement and the Stock Purchase
shall have been approved by the affirmative vote of the
holders of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the
Stockholders Meeting."
6. Section 6.03(e) is hereby amended by adding the word "Shelf" before
"Registration Statement" in the heading and in the first line of such
Section.
7. The following new Section 6.03(f) is hereby added to the Agreement:
"(f) Repayment of Promissory Note. Any amounts due and owing to
Windmere on the Closing Date under that certain promissory
note to be issued by the Company to Windmere in excess of
$3,254,286 (which amount will be set-off by Windmere against
the cash portion of the Purchase Price set forth in Section
1.02(a)(i) hereof) shall have been paid."
8. The definition of "Security Agreements" in Section 8.03(g) is hereby
amended by adding ", in the form attached hereto as Exhibit D," after
"Security Agreements" in the first line of such definition.
9. The definition of "Guaranties" in Section 8.03(h) is hereby amended by
adding ", in the form attached hereto as Exhibit E," after "Guaranties"
in the first line of such definition.
10. Exhibit A of the Agreement is hereby amended by adding the following as
a new Section 4 (i):
"(i) The consolidated tangible net worth of Windmere and its Domestic
Subsidiaries (excluding real property) determined in accordance with
generally accepted accounting principles shall at any time be less than
$40,000,000."
11. Section 9 of Exhibit A of the Agreement is hereby amended by
substituting "Illinois" for "Delaware."
12. Section 4(h) of Exhibit A of the Agreement is hereby amended by
substituting "$500,000 for "$100,000."
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<PAGE> 39
13. A new Exhibit D, which is attached to this Amendment, is hereby added
to the Agreement.
14. A new Exhibit E, which is attached to this Amendment, is hereby added
to the Agreement.
15. Except as set forth in this Amendment, the provisions of the Agreement
shall remain in full force and effect and all references in the
Agreement and the other Transaction Documents shall be deemed to refer
to and mean the Agreement, as amended by this Amendment.
16. This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument.
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
WINDMERE CORPORATION
By: /s/ David M. Friedson
------------------------------
David M. Friedson
President
SALTON/MAXIM HOUSEWARES, INC.
By: /s/ Leonhard Dreimann
------------------------------
Leonhard Dreimann
President
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<PAGE> 1
EXHIBIT 2.2
STOCKHOLDER AGREEMENT
DATED AS OF July 11, 1996
BY AND BETWEEN
SALTON/MAXIM HOUSEWARES, INC.
AND
WINDMERE-DURABLE HOLDINGS, INC.
<PAGE> 2
STOCKHOLDER AGREEMENT
This Stockholder Agreement (this "Agreement") is entered into as of
July 11, 1996 by and between Salton/Maxim Housewares, Inc., a Delaware
corporation (the "Company"), and Windmere-Durable Holdings, Inc., a Florida
corporation (the "Purchaser").
A. The Purchaser and the Company have entered into that certain
Stock Purchase Agreement dated as of February 27, 1996, (the "Stock Purchase
Agreement") pursuant to which the Purchaser is acquiring certain shares of the
Common Stock of the Company, par value $.01 per share (the "Common Stock").
B. As a result of the transactions contemplated by the Stock
Purchase Agreement, the Purchaser will be a significant stockholder of the
Company.
C. It is a condition to the transactions contemplated by the
Stock Purchase Agreement and the desire of the Purchaser and the Company that
this Agreement be entered into to establish certain terms and conditions
concerning the Purchaser's investment in the Company and the Company's
corporate governance.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, the
Purchaser and the Company hereby agree as follows:
ARTICLE 1.
DEFINITIONS
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the respective meanings set forth below.
"AFFILIATE" of a party means any person or entity controlling,
controlled by, or under common control with, such party. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of
such person, whether through the ownership of voting securities, by agreement
or otherwise.
"BENEFICIALLY OWNED" shall have the meaning provided in Rule 13d-3
under the Exchange Act.
"BOARD" means the Board of Directors of the Company.
"BROKERS' TRANSACTIONS" means brokers' transactions within the meaning
of Rule 144 of the Securities Act, or any successor rule.
<PAGE> 3
"COMMERCIAL AGREEMENTS" means those certain agreements between the
Company and the Purchaser relating to various commercial relationships as
contemplated by the Stock Purchase Agreement and entered into prior to the date
hereof. .
"COMMISSION" means the Securities and Exchange Commission.
"CONFIDENTIALITY AGREEMENTS" means those certain Confidentiality
Agreements between the Purchaser and the Company, each dated January 15, 1996.
"DIRECTOR" means a member of the Board.
"EQUITY SECURITY" means Voting Stock and any options, warrants,
convertible securities, or other rights to acquire Voting Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GUARANTY" means that certain Guaranty between all of the Purchaser's
domestic subsidiaries and the Company.
"INDEPENDENT DIRECTOR" means a Director who is not (apart from such
directorship) an Affiliate, officer, employee, agent, holder of 5% or more of
the voting securities, consultant or partner of the Purchaser or the Company or
any Affiliate of either of them or of any entity that was dependent on the
Purchaser or the Company or any Affiliate of either of them for more than five
percent (5%) of its revenues or earnings in its most recent fiscal year.
"LAPSE EVENT" means the sale, transfer or other disposition by
Leonhard Dreimann or David Sabin of more than an aggregate of 450,000 shares of
Common Stock Beneficially Owned by such persons; provided, however that a Lapse
Event shall not occur upon (i) any pro rata distribution by Dominator Investors
Group of shares of Common Stock to its stockholders; (ii) any sale, transfer or
other disposition of shares of Common Stock to any person or entity if the
shares held by such person or entity are Beneficially Owned by Leonhard
Dreimann or David Sabin; or (iii) any sale, transfer or other disposition of
shares of Common Stock Beneficially Owned by Leonhard Dreimann or David Sabin
upon such person's death to such person's heirs, executors, legal
representatives or trustees.
"NOTE" means that certain promissory note due on the fifth anniversary
of the date hereof, issued by the Purchaser to the Company in the principal
amount of $10,847,620.
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<PAGE> 4
"PUBLIC OFFERING" means an underwritten public offering of securities
of the Company pursuant to an effective registration statement under the
Securities Act.
"PURCHASER INTEREST" means, as of any date, the percentage of the
Total Voting Power Beneficially Owned by the Purchaser and its Affiliates on
such date.
"REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights
Agreement between the Purchaser and the Company dated the date hereof.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY AGREEMENTS" means those certain Security Agreements between
the Purchaser and its domestic subsidiaries, on the one hand, and the Company,
on the other hand, dated the date hereof.
"STANDSTILL PERIOD" means the period of three years after the date
hereof.
"THIRD PARTY" means any person (including a "person" as defined in
Section 13(d)(3) of the Exchange Act) or entity other than the Purchaser, any
Affiliate of the Purchaser or any group including the Purchaser or any of its
Affiliates.
"TOTAL VOTING POWER" means, at any date, the total number of votes
that may be cast in the election of directors of the Company at any meeting of
stockholders of the Company held on such date assuming all shares of Voting
Stock were present and voted at such meeting, other than votes that may be cast
only by one class or series of stock (other than Common Stock) or upon the
happening of a contingency.
"TRANSACTION DOCUMENTS" means this Agreement, the Stock Purchase
Agreement, the Note, the Security Agreements, the Guaranty, the Registration
Rights Agreement, the Commercial Agreements, amendments thereof, and all
schedules and exhibits hereto and thereto.
"VOTING STOCK" means Common Stock and all other securities of the
Company, if any, entitled to vote generally in the election of Directors.
ARTICLE 2.
ACQUISITION OF SHARES
2.1. STANDSTILL. From the date hereof until the end of the
Standstill Period, neither the Purchaser nor any of its
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<PAGE> 5
Affiliates shall directly or indirectly acquire or offer to acquire Beneficial
Ownership of any Equity Securities or interest therein except as set forth in
Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4.
2.1.1. Purchase Right Upon Option Exercises. The Purchaser
shall have the right to purchase shares of Voting Stock pursuant to the option
set forth in Section 1.01 of the Stock Purchase Agreement.
2.1.2. Purchases to Restore Previous Purchaser Interest.
From and after the date hereof until such time as the Purchaser Interest has
been less than 30% for a period of at least ten (10) consecutive days, in the
event at any time or from time to time the number of outstanding shares of
Voting Stock is increased for any reason through the issuance of additional
shares (other than through the issuance of shares upon the exercise of stock
options outstanding on the date hereof), including, without limitation, upon
exercise of stock options (granted after the date hereof) or upon conversion or
exchange of convertible securities, or as consideration for acquisition of any
corporation or other entity or business or division thereof, but excluding any
shares of Voting Stock issued pursuant to stock splits or stock dividends
issued or distributed proportionately on all outstanding shares of Voting
Stock, then in connection with each such issuance the Purchaser and/or its
Affiliates shall have the right, but not the obligation, to purchase in the
open market at any available price, up to such number of additional shares of
Voting Stock as may then be necessary solely as a result of such issuance to
restore the Purchaser Interest to the same percentage of the Total Voting Power
as existed immediately prior to such increase in the number of outstanding
shares of Voting Stock. The Company shall notify the Purchaser of, and provide
the Purchaser with an accurate and complete description of, any event that has
caused the rights of the Purchaser and/or its Affiliates to acquire or offer to
acquire Equity Securities under this Section 2.1.2 to become exercisable within
15 days following the end of each fiscal quarter of the Company. The purchase
right set forth in this Section 2.1.2 shall be exercisable at any time and from
time to time until 90 days after the Purchaser's receipt of notice of such
issuance.
2.1.3. Third-Party Offers. From and after the date hereof
until such time as the Purchaser Interest has been less than 30% for a period
of at least ten (10) consecutive days, in the event any Third Party shall make
an offer to acquire a 20% or greater interest in Equity Securities, the
Purchaser and/or its Affiliates shall be permitted to make a competing offer,
and acquire Equity Securities pursuant thereto, subject to and in accordance
with the following:
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<PAGE> 6
(a) If the Third Party offer is approved or recommended
by a majority vote of the Company Directors (as defined in Section 4.2), then
the Purchaser shall have the right to make a competing offer and to acquire
Equity Securities pursuant to such competing offer, provided that (1) the
competing offer complies with Section 2.1.3(b), (2) the competing offer is made
prior to the earliest to occur of withdrawal, termination or consummation of
the Third Party offer, and (3) if the Third Party offer is withdrawn or
terminated without being consummated before the Purchaser acquires Equity
Securities pursuant to the competing offer, a majority of the Company Directors
determine in good faith that such Third Party offer was withdrawn or terminated
primarily as a result of the Purchaser's competing offer having superior terms
to or a substantially greater likelihood of success than such Third Party
offer.
(b) Any competing offer by the Purchaser pursuant to this
Section 2.1.3 shall be, as nearly as possible, for an identical amount of
securities and at a price per share no lower than and on terms no less
favorable than are offered by the Third Party. In the event the consideration
offered in any Third Party offer shall consist of securities or property other
than cash, the competing offer by the Purchaser may in the Purchaser's
discretion be for cash in an amount per share not less than the fair market
value of the consideration offered by the Third Party as determined by a
majority of the Company Directors.
2.1.4. Company Directors' Approval. The Purchaser and/or its
Affiliates may purchase Common Stock in any transactions approved by a majority
of the Company Directors.
2.1.5. ACQUISITIONS AFTER STANDSTILL PERIOD. After the
Standstill Period, the Purchaser shall not acquire or offer to acquire any
Equity Securities if, as the result of or after giving effect to such
acquisition, the Purchaser Interest (calculated as though Beneficial Ownership
of Voting Stock includes shares of Voting Stock that the Purchaser has the
right to acquire (other than pursuant to this Agreement) as described in
subsection (d)(1)(i) of Rule 13d-3 under the Exchange Act without regard to the
60-day limit set forth therein) would exceed the Purchaser Interest (calculated
in the same manner) as existed on the last day of the Standstill Period, except
pursuant to a tender offer and/or merger which would result in the Purchaser
and/or its Affiliates owning 100% of the Equity Securities.
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<PAGE> 7
ARTICLE 3.
TRANSFER OF SHARES
The Purchaser and its Affiliates shall not sell or otherwise transfer
any Equity Securities Beneficially Owned by such persons or any interest
therein, except as follows:
3.1. AFFILIATES. The Purchaser may transfer any or all Equity
Securities Beneficially Owned by the Purchaser to an Affiliate of the
Purchaser.
3.2. PUBLIC OFFERINGS AND BROKERS' TRANSACTIONS. From and after the
earlier of (i) the third anniversary of the date hereof and (ii) a Lapse Event,
the Purchaser and/or any of its Affiliates may sell any or all Equity
Securities Beneficially Owned by such persons in one or more Public Offerings
or in Brokers' Transactions if the Purchaser and/or its selling Affiliates
invoke and follow or require participating underwriters or brokers to invoke
and follow appropriate and reasonable procedures (subject to the prior approval
of a majority of the Company Directors, which shall not be unreasonably
withheld) designed to prevent the sale of such Equity Securities to any person
or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that
would, after giving effect to its acquisition of such Equity Securities,
Beneficially Own or have the right to acquire more than seven percent (7%) of
the Total Voting Power.
3.3. PRIVATE TRANSACTIONS. From and after the earlier of (i) the
third anniversary of the date hereof and (ii) a Lapse Event, the Purchaser
and/or any of its Affiliates may sell any or all Equity Securities Beneficially
Owned by such persons in one or more transactions not requiring registration
under the Securities Act provided that such sale is not to any person or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act) that
would, after giving effect to its acquisition of such Equity Securities,
Beneficially Own or have the right to acquire more than seven percent (7%) of
the Total Voting Power.
3.4. COMPANY DIRECTORS' APPROVAL. The Purchaser and/or any of its
Affiliates may sell any or all Equity Securities Beneficially Owned by such
persons in any transaction or transactions approved by a majority of the
Company Directors.
3.5. RESTRICTIVE LEGENDS. A copy of this Agreement shall be filed
with the Secretary of the Company and kept with the records of the Company.
Upon original issuance thereof and until such time as the same is no longer
required hereunder or under any applicable law, any certificate issued
representing any shares of Common Stock issued to the Purchaser and all
certificates issued upon transfer (except for transfers in accordance with
Section 3.2) or in exchange or substitution
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<PAGE> 8
therefor in accordance with this Article shall bear the following restrictive
legend:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF ("TRANSFERRED") UNLESS
AND UNTIL REGISTERED UNDER THE ACT OR UNLESS SUCH TRANSFER IS EXEMPT
FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT.
THE TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO
THE RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE STOCKHOLDER
AGREEMENT, DATED JULY 11, 1996, BETWEEN SALTON/MAXIM HOUSEWARES, INC.
AND THE STOCKHOLDER, AS FROM TIME TO TIME IN EFFECT, A COPY OF WHICH
IS ON FILE AT THE EXECUTIVE OFFICES OF SALTON/MAXIM HOUSEWARES, INC.
AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON
WRITTEN REQUEST TO SALTON/MAXIM HOUSEWARES, INC. NO SUCH TRANSFER
WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SUCH
STOCKHOLDERS' AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO PERSON
MAY REQUEST SALTON/MAXIM HOUSEWARES, INC. TO RECORD THE TRANSFER OF
ANY SHARES IF SUCH TRANSFER IS IN VIOLATION OF SUCH STOCKHOLDERS'
AGREEMENT.
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
ON VOTING PROVIDED FOR IN THE STOCKHOLDERS' AGREEMENT AND NO VOTE OF
SUCH SHARES THAT CONTRAVENES SUCH AGREEMENT SHALL BE EFFECTIVE.
The certificates representing shares of Common Stock Beneficially
Owned by the Purchaser (including, without limitation, all certificates issued
upon transfer or in exchange thereof or substitution therefor in accordance
with this Article) shall also bear any legend required under any other
applicable laws, including state securities or blue sky laws. The Company may
make a notation on its records or give instructions to any transfer agents or
registrars for such shares in order to implement the restrictions on transfer
set forth in this Article. The Company shall not incur any liability for any
refusal or delay in recognizing any transfer of shares of Common Stock if the
Company in good faith reasonably believes that such transfer may have been or
would be in violation of the provisions of applicable law or this Agreement.
3.6. CONTINUING RESTRICTIONS. In the event that Purchaser transfers
any Equity Securities or any interest therein to an Affiliate of the Purchaser
pursuant to Section 3.1, (i) the Purchaser shall notify such Affiliate of the
provisions set forth in this Article and Articles 4 and 5 hereof and shall be
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<PAGE> 9
responsible for any breach by such Affiliate of those provisions and (ii) so
long as any such Equity Securities are Beneficially Owned by such Affiliate,
the provisions of this Article shall apply to any sale or transfer of the
capital stock or other equity interests of such Affiliate or of the Purchaser
such that the Purchaser and such Affiliates would cease to be Affiliates. In
the event the Purchaser sells any Equity Securities to a person or entity
pursuant to Section 3.3, such person or entity shall enter into an agreement
with the Company agreeing to be bound by the provisions of this Article and
Articles 4 and 5 hereof and succeeding to the registration rights with respect
to the Equity Securities transferred as provided in the Registration Rights
Agreement.
ARTICLE 4.
BOARD REPRESENTATION
4.1. PURCHASER DESIGNEES.
4.1.1. Directors. At all times and from time to time after
the date hereof, the Purchaser shall have the right to designate that number of
Directors (the "Purchaser Directors") which will result in the total number of
Purchaser Directors being equal to the product (rounded up to the nearest whole
number) of (i) the total number of Directors then on the Board, and (ii) the
Purchaser Interest at that time; provided that in no event shall the number of
Purchaser Directors exceed the number of Company Directors at any time (it
being the intent of the parties that upon consummation of the transactions
contemplated by the Stock Purchase Agreement, the number of Directors which the
Purchaser shall be entitled to designate pursuant to this Section 4.1.1 shall
equal 50% of the total number of Directors then on the Board).
4.1.2. Purchaser Directors. Any Purchaser Director shall not
serve as a Director if such person shall be prohibited from serving as a
Director under applicable law, including antitrust law. At least one of the
Purchaser Directors shall qualify as an independent director in accordance with
Nasdaq National Market rules.
4.2. COMPANY DIRECTORS. At all times and from time to time after the
date hereof, the Board shall include at least four (4) Directors who are not
designated by the Purchaser (the "Company Directors"). The "Company Directors"
shall initially be Leonhard Dreimann, David Sabin, Bert Doornmalen and Frank
Devine; provided that any replacement or additional Company Directors shall be
elected pursuant to Section 4.5 hereof. At least one of the Company Directors
shall qualify as an independent director in accordance with Nasdaq National
Market rules.
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<PAGE> 10
4.3. ADDITIONAL AGREEMENTS.
4.3.1. By the Company. The Company shall from time to time
use its best efforts to increase the number of Directors constituting the Board
and/or obtain resignations from Directors (other than the Purchaser Directors
and the Company Directors required by Section 4.2) as may be required to ensure
that there will at all times be sufficient Board seats available to accommodate
the full number of Directors that the Purchaser is then entitled to designate
pursuant to Section 4.1. The Company shall promptly and at all times use its
best efforts, and take all such actions as may be appropriate for the election
to the Board of the Purchaser designees selected pursuant to Section 4.1, and
the Company Directors. Such actions shall include, without limitation, the
solicitation of proxies for the election of such persons at each regular or
special meeting of stockholders of the Company at which Directors are to be
elected, or pursuant to any written consent solicited in lieu of such a
meeting.
4.3.2. By the Purchaser. The Purchaser and its Affiliates
shall vote all Voting Stock Beneficially Owned by them at each regular or
special meeting of the Company's stockholders at which Directors are to be
elected, or pursuant to any written consent solicited in lieu of such a
meeting, in favor of election to the Board, and shall otherwise use their best
efforts to cause the appointment or election to the Board, and to maintain as
Directors the Company Directors, consistently with this Article 4. If the
number of Directors that the Purchaser is entitled to designate pursuant to
Section 4.1 is at any time and for any reason (including, without limitation,
the resignation or removal of any Company Director) fewer than the number of
Purchaser Directors then serving on the Board, the Purchaser shall promptly
obtain resignations from such of its Purchaser Directors (chosen by the
Purchaser) as may be required to cause the number of Purchaser Directors
serving on the Board to be equal to the number of Directors that the Purchaser
is then entitled to designate.
4.3.3. By the Purchaser and the Company. Names of all
Director nominees designated by the Purchaser or by those Directors of the
Company not designated by the Purchaser shall be furnished to the Purchaser and
the Company (a) in the case of election of Directors at an annual meeting or
otherwise pursuant to a vote of the Company's stockholders, in time to be
included in the proxy materials related to such election, and (b) at least ten
(10) days prior to election or appointment of Directors by the Board. The
Company and the Purchaser agree that (a) the Purchaser Directors and the
Company Directors shall be classified, with respect to the time for which they
severally hold office, into three classes as nearly as equal in number as
possible as determined by the Board; and (b) the Purchaser
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Directors, on the one hand, and the Company Directors, on the other hand, will
be divided among the three classes as equally as possible.
4.4. COMMITTEES. The Purchaser shall be entitled to designate that
number of the Purchaser Directors to serve on each committee of the Board so
that such Purchaser Directors constitute the same percentage (rounded up to the
next whole number) of such committee as is on the Board; provided that in no
event shall the number of Purchaser Directors serving on a committee exceed the
number of Company Directors serving on such committee. With respect to the
audit committee, any Purchaser Director designee shall, as a condition to
membership thereon, meet all requirements imposed by the rules of any national
securities exchange, or the Nasdaq National Market, on which the Common Stock
may then be listed or quoted. With respect to the compensation committee, any
Purchaser Director designees shall, as a condition to membership thereon,
qualify as "disinterested" within the meaning of Rule 16b-3 under the Exchange
Act or any similar rule then in effect.
4.5. VACANCIES. If any Purchaser Director or Purchaser Director
nominee shall decline to serve on, resign or be removed from, or for any other
reason be unable to serve on the Board or any committee thereof, the vacancy
resulting therefrom shall be filled in accordance with the Company's
Certificate of Incorporation and Bylaws and this Article 4 by another person
designated by the Purchaser pursuant to Section 4.1. If any Company Director
or Company Director nominee shall decline to serve on, resign or be removed
from, or for any other reason be unable to serve on the Board or any committee
thereof, or if the size of the Board is increased the vacancy resulting
therefrom shall be filled in accordance with the Company's Certificate of
Incorporation and Bylaws and this Article 4 by a person designated by a
majority of the then Company Directors. This Section 4.5 shall not operate to
allow the Purchaser or the Company Directors to designate a greater percentage
of Directors or committee members than it or they would be entitled to
designate hereunder but for this Section 4.5.
ARTICLE 5.
CERTAIN COVENANTS
5.1. PROXY SOLICITATIONS. Neither the Purchaser nor its Affiliates
shall, directly or indirectly, (a) solicit, initiate or participate in any
"solicitation" of "proxies" or become a "participant" in any "election contest"
(as such terms are defined or used in Regulation 14A under the Exchange Act,
disregarding clause (iv) of Rule 14a-1(1)(2) and including any exempt
solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way participate in
a call for, any special meeting of
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stockholders of the Company (or take any action with respect to acting by
written consent of the Company's stockholders); request, or take any action to
obtain or retain any list of holders of any securities of the Company; or
initiate or propose any stockholder proposal or participate in the making of,
or solicit stockholders for the approval of, any stockholder proposal; (b)
deposit any Voting Stock in a voting trust or subject any Voting Stock to any
voting agreement or arrangements, except as provided herein and except that
this Section 5.1 (b) shall not prohibit any such arrangement solely among the
Purchaser and its wholly-owned subsidiaries; (c) form, join or in any way
participate in a "group" (within the meaning of Section 13(d)(3) of Exchange
Act) with respect to any Voting Stock (or any securities the ownership of which
would make the owner thereof a Beneficial Owner of Voting Stock ); (d) seek
Board representation or the removal of any Company Directors or a change in the
composition or size of the Board (other than as necessary to obtain the Board
representation to which it is entitled hereunder); (e) take any action, or
disclose any intent, purpose, plan or proposal, with respect to this Agreement,
the Company or its Affiliates or the Board, management, policies, affairs,
securities or assets of the Company or its Affiliates that is inconsistent with
this Agreement, including any action, intent, purpose, plan or proposal that is
conditioned on, or would require the Company or any of its Affiliates to make
any public disclosure relating to, any such action, intent, purpose, plan,
proposal or condition; or (f) assist, advise, encourage or act in concert with
any person with respect to, or seek to do, any of the foregoing.
Notwithstanding the generality of the foregoing, nothing herein shall (x)
prevent the Purchaser or its Affiliates from voting their respective shares, or
taking such other action as it may deem necessary or appropriate, to cause the
election as Directors of those persons the Purchaser is entitled to designate
pursuant to Section 4.1, (y) prevent the Purchaser from taking any action which
the Board of Directors of the Purchaser in good faith, based upon the advice of
outside counsel, determines is required by the fiduciary obligations of the
Purchaser as a stockholder of the Company to the Company's other stockholders
or (z) prohibit or restrict any action taken by the Purchaser or any of its
Affiliates in connection with the exercise of the rights of the Purchaser and
its Affiliates specifically permitted by this Agreement.
5.2. VOTING. Except as specifically otherwise set forth herein, the
Purchaser and its Affiliates shall vote any Voting Stock Beneficially Owned by
them in connection with any matter or proposal submitted to a vote of the
Company stockholders but not sponsored or supported by the Board either (a) in
accordance with the recommendation of a majority of the Board, or (b) in the
absence of a recommendation of a majority of the Board, then proportionately in
accordance with the votes of all stockholders of the Company who have voted
with respect to such matter or
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proposal; provided that except as otherwise set forth herein (including Article
4), the Purchaser and its Affiliates may vote any Voting Stock Beneficially
Owned by them in connection with any such matter or proposal in their sole
discretion so long as the Purchaser is not entitled to designate, and has not
designated, 50% of the total number of Directors then serving on the Board
pursuant to the terms of this Agreement. The Purchaser and its Affiliates
shall vote any Voting Stock Beneficially Owned by them in connection with any
regular or special meeting of stockholders or in any written consent executed
in lieu of such a meeting to (a) ensure that the Company's Certificate of
Incorporation and Bylaws do not at any time conflict with any provisions of
this Agreement and (b) otherwise carry out the provisions of this Agreement,
including, without limitation, voting to remove any Purchaser Director if the
number of Directors that the Purchaser is entitled to designate pursuant to
Section 4.1 is fewer than the number of Purchaser designees then serving on the
Board. The Purchaser and its Affiliates shall be present in person or
represented by proxy at all stockholder meetings of the Company called by the
Company so that all Voting Stock of which they are the Beneficial Owner may be
counted for the purpose of determining the presence of a quorum at such
meetings.
5.3. MATERIAL TRANSACTIONS. At all times that the Purchaser Interest
is less than 100%, neither the Purchaser nor any of its Affiliates shall engage
in any material transaction with the Company or any of its subsidiaries unless
such transaction has been approved by a majority of the Company Directors or,
in the case of a series of related transactions, is in accordance with
guidelines approved by a majority of the Company Directors. For purposes of
this Section 5.3, "material transaction" shall mean (i) any amendment to,
termination of, or waiver of any provision of, this Agreement or, any of the
other Transaction Documents that have been executed and delivered and (ii) any
transaction between the Company or any of its subsidiaries and the Purchaser or
any of its Affiliates, or any transaction (other than a transaction of the type
described in Section 2.1.3 or Section 2.1.4) between the stockholders of the
Company, in their capacity as stockholders, and the Purchaser or any of its
Affiliates, including, without limitation: (a) any sale of all or substantially
all of the assets of the Company or any of its subsidiaries or any business
division or operation of the Company or any of its subsidiaries, (b) any
issuance of Voting Stock or other securities by the Company or any of the
Company's subsidiaries, (c) any transaction including any related transactions
involving payments, the incurrence of obligations, or transfers of assets, and
(d) any merger or other business combination involving the Purchaser and/or any
of its Affiliates; provided, that "material transaction" shall not include any
(i) transaction in accordance with the terms of the Transaction Documents or
(ii) other transaction (including any related
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transactions) involving payments by or obligations or transfer of property of
the Company with an aggregate value less than $100,000.
ARTICLE 6.
MISCELLANEOUS
6.1. TERMINATION. Article 4 and Article 5 of this Agreement and the
rights and obligations of the Purchaser and the Company thereunder shall
terminate at the first time after the date hereof that the Purchaser Interest
shall have been less than fifteen percent (15%) for a period of at least thirty
(30) consecutive days.
6.2. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be
governed by, construed under and enforced in accordance with, the laws of the
State of Delaware without regard to its conflict-of-laws principles. The
Purchaser and the Company agree that (i) any legal action or proceeding arising
out of or in connection with this Agreement or the transactions contemplated
hereby shall be brought only in the courts of the State of Delaware or Federal
courts of the United States of America sitting in Delaware, (ii) each
irrevocably submits to the jurisdiction of each such court, and (iii) any
summons, pleading, judgment, memorandum of law, or other paper relevant to any
such action or proceeding shall be sufficiently served if delivered to the
recipient thereof by certified or registered mail (with return receipt) at its
address set forth in Section 6.4. Nothing in the proceeding sentence shall
affect the right of any party to proceed in any jurisdiction for the
enforcement or execution of any judgment, decree or order made by a court
specified in said sentence.
6.3. SPECIFIC PERFORMANCE. The parties hereto acknowledge and agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specifications or
were otherwise breached. It is accordingly agreed that each of the parties
hereto shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Agreement by the other and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which they may be entitled by law or equity.
6.4. NOTICES. Any notice required or permitted to be given under
this Agreement shall be written, and may be given by personal delivery, by
cable, telecopy, telex or telegram (with a confirmation copy mailed as
follows), by Federal Express, United Parcel Service, DHL, or other reputable
commercial delivery service, or by registered or certified mail, first-class
postage prepaid, return receipt requested. Notice shall be deemed given
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upon actual receipt. Mailed notices shall be addressed as follows, but each
party may change address by written notice in accordance with this paragraph.
To the Company: Salton/Maxim Housewares, Inc.
550 Business Center Drive
Mount Prospect, Illinois 60056
Attention: Chief Executive Officer
Fax: (708) 803-8080
with a copy to: Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Neal Aizenstein, Esq.
Fax: (312) 876-7934
To the Purchaser: Windmere Corporation
5980 Miami Lakes Drive
Miami Lakes, Florida 33014-9867
Attention: Chief Executive Officer
Fax: (305) 364-0502
with a copy to: Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Andrew Hulsh, Esq.
Fax: (305) 599-0717
6.5. WAIVER. Subject to Section 5.3 hereof, each party hereto may in
its sole discretion (i) extend the time for the performance of any of the
obligations or other acts of the other party hereunder or (ii) waive compliance
by the other party with any of the agreements or conditions contained herein.
No term or provision hereof shall be deemed waived and no breach hereof excused
unless such waiver or consent shall be in writing and signed by the party
claimed to have waived or consented (in the case of the Company, by a majority
of the Company Directors so waiving or consenting). No waiver hereunder shall
apply or be construed to apply beyond its expressly stated terms. No failure
to exercise and no delay in exercising any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, and no single or partial exercise
of any right, remedy, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. No failure to insist upon strict performance of any term or
provision of this Agreement, or to exercise any right hereunder, shall be
construed as a waiver or as a relinquishment of such term, provision, or right.
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<PAGE> 16
6.6. SUCCESSORS, ASSIGNMENT; PARTIES IN INTEREST AND THIRD PARTY
BENEFICIARIES. Except as otherwise expressly provided herein, this Agreement
and the rights hereunder may not be assigned by the Purchaser or the Company
without the prior written consent of the other party, which may be given or
withheld in the other party's discretion. This Agreement shall be binding upon
and inure solely to the benefit of the Purchaser and the Company and their
respective successors and permitted assigns, and except as provided in this
Section 6.6, nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement. Whenever this
Agreement provides for a majority of the Company Directors to make a
determination or otherwise take any action, any Company Director who abstains
from making such determination or taking such action based upon the advice of
counsel that such Director is not a disinterested Director shall not be counted
for purposes of determining whether a majority of the Company Directors shall
have made such determination or taken such action. In the event the Company
Directors shall not be in office or the Company has failed to seek enforcement
of its rights under this Agreement despite a demand by the Company Directors
that the Company do so, the present and future holders of Beneficial Ownership
of Voting Securities (other than the Purchaser and its Affiliates) are intended
third party beneficiaries of this Agreement and any such person may take such
action as may be deemed necessary or appropriate to enforce the rights and
obligations arising pursuant to this Agreement or to obtain the benefits
intended to be conferred hereby.
6.7. ENTIRE AGREEMENT. This Agreement, together with the other
Transaction Documents and the Confidentiality Agreements, constitutes the
entire agreement between the Purchaser and the Company with respect to the
subject matter hereof and thereof and the transactions contemplated hereby and
thereby and supersedes all prior or contemporaneous, written or oral agreements
or understandings with respect thereto. The provisions of the Confidentiality
Agreements shall continue in effect after the date hereof except that Sections
8 and 9 thereof shall terminate upon the date hereof.
6.8. AMENDMENT. Subject to Section 5.3 hereof, this Agreement may be
amended only to the extent permissible under applicable law and only by a
written instrument executed and delivered by a duly authorized officer of the
Purchaser and a duly authorized officer of the Company.
6.9. SEVERABILITY. The provisions set forth in this Agreement are
severable. If any provision of this Agreement is held invalid or unenforceable
in any jurisdiction, the remainder of this Agreement, and the application of
such provision to other persons or circumstances, shall not be affected
thereby, and
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shall remain valid and enforceable in such jurisdiction, and any such
invalidity or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
6.10. CUMULATION OF REMEDIES. All remedies available to any party
for breach or non-performance of this Agreement are cumulative and not
exclusive of any rights, remedies, powers or privileges provided by law, and
may be exercised concurrently or separately, and the exercise of any other
remedy shall not be deemed an election of such remedy to the exclusion of other
remedies.
6.11. FAIR CONSTRUCTION. This Agreement shall be deemed the joint
work product of the Purchaser and the Company without regard to the identity of
the draftperson, and any rule of construction that a document shall be
interpreted or construed against the drafting party shall not be applicable.
6.12. HEADINGS; REFERENCES. Headings used in this Agreement are
inserted as a matter of convenience and for reference, do not constitute a part
of this Agreement for any other purpose, and shall not affect the
interpretation or enforcement hereof or thereof.
6.13. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
SALTON/MAXIM HOUSEWARES, INC. WINDMERE-DURABLE HOLDINGS, INC.
a Delaware corporation a Florida corporation
By: By:
------------------------- --------------------
Name: Name:
----------------------- ------------------
Title: Title:
----------------------- ------------------
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EXHIBIT 2.3
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is entered into
as of July 11, 1996 by and between Windmere-Durable Holdings, Inc., a Florida
corporation (the "Investor") and Salton/Maxim Housewares, Inc., a Delaware
corporation (the "Company").
A. The Investor and the Company have entered into that certain
Stock Purchase Agreement dated as of February 27, 1996 (the "Stock Purchase
Agreement"), pursuant to which the Investor is acquiring certain shares of the
Company's Common Stock.
B. The Investor and the Company are also parties to a Stockholder
Agreement dated as of February 27, 1996 (the "Stockholder Agreement"), pursuant
to which the Investor and the Company establish certain terms and conditions
concerning the Investor's investment in the Company and the Company's corporate
governance.
C. The execution and delivery of this Agreement is a material
inducement and consideration to the Investor to enter into the Stock Purchase
Agreement and a condition to the transactions contemplated thereby.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, and covenants set forth in this Agreement, the
Investor and the Company hereby agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement without definition shall have
the respective meanings accorded to them in the Stockholder Agreement.
Capitalized terms used in this Agreement and not otherwise defined herein or in
the Stockholder Agreement shall have the respective meanings set forth below.
"ADVERSE DISCLOSURE" means public disclosure of material non-public
information relating to a Significant Transaction, which disclosure, in the
good faith judgment of a majority of the Company Directors, (i) would be
required to be made in any registration statement filed with the Commission by
the Company so that such registration statement would not be materially
misleading; and (ii) would have an adverse effect on the Company's ability to
complete such Significant Transaction, or the terms upon which such Significant
Transaction can be completed.
"COMMISSION" means the Securities and Exchange Commission.
<PAGE> 2
"DEMAND REGISTRATION" has the meaning set forth in Section 2.1.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing of an appropriate registration statement with
the Commission in compliance with the Securities Act.
"REGISTRABLE SHARES" means (i) the shares of Common Stock acquired by
the Investor pursuant to the Stock Purchase Agreement and (ii) other shares of
Common Stock acquired by the Investor from time to time not in violation of the
Stock Purchase Agreement or the Stockholder Agreement. All Registrable Shares
shall cease to be Registrable Shares when transferred to any person or entity
other than permitted transferees in accordance with the terms of the
Stockholder Agreement, or (a) when sold in a registered public offering or in
accordance with Rule 144 promulgated by the Commission under the Securities
Act, or (b) when permitted to be sold in accordance with Rule 144(k).
"REGISTRATION EXPENSES" means all expenses, except Selling Expenses,
incurred by the Company in complying with Articles 2 and 3, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for the Company, blue sky fees
and expenses, the expense of any special audits incident to or required by any
such registration, and expenses of all marketing and promotional efforts
reasonably requested by the managing underwriter.
"SELLING EXPENSES" means all underwriting discounts, selling
commissions, and stock transfer taxes applicable to the sale of the Registrable
Shares.
"SIGNIFICANT TRANSACTION" means a pending or imminent material
acquisition, disposition, financing, corporate reorganization or other business
combination or divestiture transaction.
ARTICLE 2
DEMAND REGISTRATIONS
2.1. REQUEST FOR REGISTRATION. At any time and from time to time
after the earlier of (i) two years and 270 days from the date hereof and (ii) a
Lapse Event, the Investor may request that the Company effect the registration
of Registrable Shares (a "Demand Registration"). Upon receipt of such request,
the Company shall use its reasonable efforts to effect such Demand
Registration, subject to the limitations set forth in Section 2.2. The Company
may include in any Demand Registration any
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other shares of Common Stock (including issued and outstanding shares of Common
Stock as to which the holders thereof have contracted with the Company for
"piggyback" registration rights) so long as the inclusion in such registration
of such shares will not, in the reasonable judgment of the managing
underwriter(s), if any, interfere with the successful marketing in accordance
with the intended method of sale or other disposition of all the Registrable
Shares sought to be registered. If it is determined as provided above that
there will be such interference, the other shares of Common Stock sought to be
included shall be excluded to the extent deemed appropriate by the managing
underwriter(s).
2.2. LIMITATIONS ON DEMAND REGISTRATIONS. Subject to Section 2.4,
the Company's obligation to effect a Demand Registration requested by the
Investor pursuant to Section 2.1 shall be subject to the following limitations:
2.2.1. The Company shall not be required to effect any Demand
Registration of fewer than that number of Registrable Shares which has an
aggregate market value of at least $2,500,000, based on the average closing
sale prices of the Company's Common Stock for the twenty days preceding the
date prior to the date of the Investor's request for a Demand Registration.
2.2.2. The Company shall not be required to effect any Demand
Registration within 9 months of the effectiveness of a Registration by the
Investor of Registrable Shares registered pursuant to the previous Demand
Registration effected by Company.
2.2.3. The Company may defer its obligations to effect a
Demand Registration if filing a registration statement with the Commission at
the time a Demand Registration is requested would require Adverse Disclosure,
provided that such deferral may not extend beyond the earlier to occur of (i)
180 days after the receipt by the Company of the Investor's request for such
Demand Registration, or (ii) the date that filing of a registration statement
with the Commission would not require Adverse Disclosure therein.
2.2.4. The Company shall not be required to effect more than
five (5) Demand Registrations and no registration statement relating to a
Demand Registration shall be declared effective prior to the earlier of (i) the
third anniversary of the date hereof and (ii) a Lapse Event.
2.3. HOLDBACK. Subject to Section 2.4, if requested (pursuant to a
timely written notice) by the managing underwriter(s) of an underwritten
offering or the initial purchaser(s) in any offering being resold pursuant to
Rule 144A under the Securities Act of Equity Securities by the Company, the
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<PAGE> 4
Investor shall agree on the same terms applicable to officers and directors of
the Company not to effect any public sale or distribution of any of the
Registrable Shares for a period of up to 180 days following and 15 days prior
to the date of the final prospectus contained in the registration statement
filed in connection with such offering.
2.4. MINIMUM SALE AVAILABILITY. The limitations on the Company's
obligations to effect Demand Registrations set forth in Section 2.2.3 and the
Investor's obligation under Section 2.3 shall not be applicable to the extent
that such limitations would result in the Investor not having a period of at
least 180 consecutive days within any 18-month period during which the Investor
may sell Registrable Shares under a Registration effected pursuant to the
provisions hereof.
2.5. SELECTION OF UNDERWRITER. Any Demand Registration and related
offering shall be managed by the Investor as follows: subject to the reasonable
approval of the Company, the Investor shall have the power to select the
managing underwriter(s), if any, for such offering, and shall in consultation
with the managing underwriter(s), if any, have the power to determine the
number of Registrable Shares to be included in such registration and offering
(subject to applicable limitations set forth herein), the offering price per
Registrable Share, the underwriting discounts and commissions per Registrable
Share and the timing of the registration and related offering (subject to
applicable limitations set forth herein). The Company shall enter into an
underwriting agreement in customary form with the underwriter(s) selected by
the Investor and shall enter into such other customary agreements and take all
such other customary actions as the Investor or its underwriter(s) may
reasonably request to facilitate the disposition of the Registrable Shares.
ARTICLE 3
PIGGYBACK REGISTRATIONS
3.1. REQUEST FOR REGISTRATION. At any time after the earlier of
(i) the third anniversary of the date hereof and (ii) a Lapse Event, if the
Company proposes to register any Common Stock for sale solely for cash, either
for its own account or for the account of a stockholder or stockholders (a
"Company Registration"), then the Company shall give the Investor written
notice of its intention to do so and of the intended method of sale (the
"Registration Notice") not fewer than 15 days prior to the anticipated filing
date of the registration statement effecting such Company Registration. The
Investor may request inclusion of any Registrable Shares in such Company
Registration by delivering to the Company, within 10 days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice")
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<PAGE> 5
stating the number of Registrable Shares proposed to be included and that such
shares are to be included in any underwriting only on the same terms and
conditions as the shares of Common Stock otherwise being sold through
underwriters under such Registration. The Company shall use its reasonable
efforts to cause all Registrable Shares specified in the Piggyback Notice to be
included in the Company Registration and any related offering, all to the
extent requisite to permit the sale by the Investor of such Registrable Shares
in accordance with the method of sale applicable to the other shares of Common
Stock included in the Company Registration.
3.2. LIMITATIONS ON PIGGYBACK REGISTRATIONS. The Company's
obligation to include Registrable Shares in the Company Registration pursuant
to Section 3.1 shall be subject to the following limitations:
3.2.1. The Company shall not be obligated to include any
Registrable Shares in a registration statement (i) filed on Form S-4 or Form
S-8 or such other similar successor forms then in effect under the Securities
Act, (ii) pursuant to which the Company is offering to exchange its own
securities, or (iii) relating to dividend reinvestment plans.
3.2.2. If the managing underwriter(s), if any, of an offering
related to the Company Registration determines in its reasonable judgment that
marketing factors require a limitation of the number of shares of Common Stock
that can be included in such offering, the managing underwriter(s) may exclude
the appropriate number of shares of Common Stock held by the stockholders of
the Company, including the Investor, from such registration. If the managing
underwriter(s) determines to exclude from such offering any Registrable Shares
that the Investor desires to include or any shares of Common Stock that other
Company stockholders with applicable registration rights desire to include, the
Investor and such other Company stockholders (except for such person or
persons, if any, upon whose demand such Registration is being made) shall share
pro rata in the portion of such offering available to them (the "Available
Portion"), with the Investor and each such other Company stockholder entitled
to include in such Company Registration and related offering a number of shares
of Common Stock equal to the product of (i) the Available Portion and (ii) a
fraction, the numerator of which is the total number of Registrable Shares
which the Investor desires to include in such Company Registration (in the case
of the Investor) or the total number of shares of Common Stock which such other
Company stockholder desires to include in such Company Registration (in the
case of each such other Company stockholder) and the denominator of which is
(x) the total of the number of Registrable Shares which the Investor desires to
include in such
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<PAGE> 6
Company Registration plus (y) the total number of shares of Common Stock that
such other Company stockholders desire to include in such Company Registration.
3.3. SELECTION OF UNDERWRITER. Any Company Registration and related
offering shall be managed by the Company; the Company shall have the power to
select the managing underwriter(s) for such offering, and shall in consultation
with the managing underwriter(s) have the power to determine the offering
price, the underwriting discounts and commissions, the terms of the
underwriting agreement and, the timing of the registration and related
offering. To the extent that the Investor participates in a Company
Registration and related offering pursuant to Section 3.1, the Investor shall
enter into, and sell its Registrable Shares only pursuant to, the underwriting
arranged by the Company, and shall either commit to attend the closing of the
offering and take such other actions as may be reasonably necessary to effect
the Investor's participation in the offering and to provide any assurances
reasonably requested by the Company and the managing underwriter(s) in that
regard, or shall deliver to the Company in custody certificates representing
all Registrable Shares to be included in the registration and shall execute and
deliver to the Company a custody agreement and a power of attorney, each in
form and substance appropriate for the purpose of effecting the Investor's
participation in the Company Registration and related offering and otherwise
reasonably satisfactory to the Company. If the Investor disapproves of the
features of the Company Registration and related offering, the Investor may
withdraw therefrom (in whole or part) by written notice to the Company and the
managing underwriter(s) delivered no later than ten (10) days prior to the
effectiveness of the applicable registration statement and the Registrable
Shares of the Investor shall thereupon be withdrawn from such registration.
ARTICLE 4
REGISTRATION PROCEDURES AND EXPENSE.
4.1. REGISTRATION PROCEDURES. If and whenever the Company is
required pursuant to this Agreement to use its reasonable efforts to effect the
registration of any of the Registrable Shares, the Investor shall furnish in
writing such information regarding the Investor and its Affiliates, the
Registrable Shares being registered and offered, and the intended method of
distribution of such Registrable Shares as is reasonably requested by the
Company for inclusion in the registration statement relating to such offering
pursuant to the Securities Act and the rules of the Commission thereunder, and
the Company shall, as expeditiously as reasonably practicable:
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4.1.1. prepare and file with the Commission a registration
statement (including a prospectus therein) with respect to such securities and
use its reasonable efforts to cause such registration statement to become and
remain effective for such period as may be necessary to permit the successful
marketing of such securities, but not exceeding 120 days for an offering in
connection with a Demand Registration, or, with regard to an offering in
connection with a Company Registration, for the period associated with such
offering;
4.1.2. prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to comply with the Securities Act and
the rules of the Commission thereunder; and to keep such registration statement
effective for that period of time specified in Section 4.1.1;
4.1.3. furnish to the Investor such number of prospectuses
and preliminary prospectuses in conformity with the requirements of the
Securities Act, and such other documents as the Investor may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares being sold:
4.1.4. upon written request by any underwriters of the
offering, and subject to applicable rules and guidelines, cause its certified
public accountants and attorneys, as applicable, to furnish to the Investor a
signed counterpart, addressed to the Investor and its underwriters, if any, of
(i) a letter from the independent certified public accountants of the Company
in the form customarily furnished to underwriters in firm commitment
underwritten offerings providing substantially that such accountants are
independent certified public accountants within the meaning of the Securities
Act and that in the opinion of such accountants, the financial statements and
other financial data of the Company included in the registration statement and
the prospectus, and any amendment or supplement thereto, comply as to form in
all material respects with the applicable accounting requirements of the
Securities Act, and additionally covering such other financial matters
(including information as of the date of such letter) with respect to the
registration in respect of which such letter is being given as the underwriters
may reasonably request; and (ii) an opinion of outside legal counsel to the
Company, dated the effective date of the registration statement, covering
substantially the same matters with respect to the registration statement and
the prospectus included therein as are customarily covered (at the time of such
registration) in the opinions of issuer's counsel delivered to the underwriters
in comparable underwritten public offerings;
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4.1.5. use its reasonable efforts to register or qualify the
Registrable Shares covered by such registration statement under such securities
or blue sky laws of such jurisdictions within the United States as the Investor
or its underwriters, if any, shall reasonably request; provided, however, that
the Company shall not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified, or to take any action that
would subject it to general service of process in any such jurisdiction where
it is not then so subject, or subject the Company to any tax in any such
jurisdiction where it is not then so subject;
4.1.6. cause all such Registrable Shares to be listed on each
securities exchange on which similar securities issued by the Company are then
listed;
4.1.7. provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
4.1.8. make available for inspection by the Investor and its
attorneys, and any participating underwriter, accountant or other agent
retained by the Investor and any participating underwriter in a Demand
Registration, all financial and other records, pertinent documents and
properties of the Company, and cause the Company's Affiliates (to the extent it
controls such Affiliates), employees, and agents to supply all information
reasonably requested by the Investor and any such underwriter, attorney,
accountant or agent in connection with the preparation of such registration
statement.
4.2. EXPENSES. The Company shall pay all Registration Expenses,
except as may be required to update any registration statement kept effective
for more than the period of time required by Section 4.1.1. The Investor shall
pay all Selling Expenses.
ARTICLE 5
INDEMNIFICATION
5.1. INDEMNIFICATION BY THE COMPANY. In the event of a registration
of any Registrable Shares pursuant to this Agreement, the Company shall
indemnify and hold harmless each seller of Registrable Shares, and each person,
if any, who controls such seller or underwriter within the meaning of the
Securities Act, and each officer, director, employee and advisor of each of the
foregoing (each an "Investor Indemnitee"), against any expenses, losses,
claims, damages or liabilities, joint or several, to which such Investor
Indemnitee may become subject under the Securities Act, any state securities
law or otherwise,
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including any of the foregoing incurred in settlement of any litigation,
commenced or threatened, insofar as such expenses, losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such shares are registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, any summary prospectus used in connection with any securities being
registered, or any amendment or supplement thereto; or (ii) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; or (iii) any violation by the
Company of the Securities Act or rules of the Commission thereunder or any blue
sky laws or any rules promulgated thereunder, and shall reimburse each such
Indemnitee for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such expense, loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
said preliminary prospectus or said prospectus or summary prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Investor or any
underwriter specifically for use in the preparation thereof; and provided,
further, that if any expenses, losses, claims, damages or liabilities arise out
of or are based upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not appear
in the final prospectus, the Company shall not have any liability with respect
thereto to any Investor Indemnitee if any Investor Indemnitee delivered a copy
of the preliminary prospectus to the person alleging such expenses, losses,
claims, damages or liabilities and failed to deliver a copy of the final
prospectus as amended or supplemented if it has been amended or supplemented,
to such person at or prior to the written confirmation of the sale to such
person.
5.2. INDEMNIFICATION BY THE INVESTOR. In the event of a registration
of any Registrable Shares pursuant to this Agreement, the Investor shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, each officer of the
Company who signs the registration statement, each director of the Company and
each underwriter and each person who controls any underwriter within the
meaning of the Securities Act (each a "Company Indemnitee"), against any and
all such expenses, losses, claims, damages or liabilities referred to in
Section 5.1 if the
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statement, alleged statement, omission or alleged omission in respect of which
such expense, loss, claim, damage or liability is asserted was made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of a holder of Registrable Shares specifically for use in
connection with the preparation of such registration statement, preliminary
prospectus, prospectus, summary prospectus, amendment or supplement; provided,
however, that if any expenses, losses, claims, damages or liabilities arise out
of or are based upon an untrue statement, alleged untrue statement, omission or
alleged omission contained in any preliminary prospectus which did not appear
in the final prospectus, the Investor shall not have any such liability with
respect thereto to any Company Indemnitee if any Company Indemnitee delivered a
copy of the preliminary prospectus to the person alleging much expenses,
losses, claims, damages or liabilities and failed to deliver a copy of the
final prospectus, as amended or supplemented if it has been amended or
supplemented, to such person at or prior to the written confirmation of the
sale to such person.
5.3. CONTRIBUTION. If the indemnification provided for in Sections
5.1 or 5.2 above is unavailable to an indemnified party in respect of any
losses, claims, damages or liabilities referred to therein, then in lieu of
indemnifying such indemnified party thereunder, the indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified parties on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified parties shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party, or by the
indemnified parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 5.3 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages and liabilities or actions in respect thereof
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or
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<PAGE> 11
claim. No person guilty of fraudulent misrepresentations (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
5.4. INDEMNIFICATION PROCEDURES. Promptly after receipt by an
indemnified party of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
shall not relieve it from any liability which it may have to any indemnified
party otherwise than under this Article 5 or to the extent that it has not been
prejudiced as a proximate result of such failure. In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the Company, the indemnified party or
parties shall have the right to select one separate counsel to assert such
legal defenses (in which case the indemnifying party shall not have the right
to direct the defense of such action on behalf of the indemnified party or
parties). Upon the permitted assumption by the indemnifying party of the
defense of such action, and approval by the indemnified party of counsel, the
indemnifying party shall not be liable to such indemnified party under this
Article 5 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof (other than reasonable
costs or investigation) unless (i) the indemnified party shall have employed
one separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the next preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time, (iii) the indemnifying party and its counsel do not actively and
vigorously pursue the defense of such action or (iv) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party.
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ARTICLE 6
MISCELLANEOUS
The provisions of Section 5.3 and Sections 6.2 through 6.13 of the
Stockholder Agreement are incorporated herein by reference and shall govern
this Agreement as though set forth in full herein and as though references in
those sections to "this Agreement" were references to both this Agreement and
the Stockholder Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
SALTON/MAXIM HOUSEWARES, INC. WINDMERE-DURABLE HOLDINGS, INC.
a Delaware corporation a Florida corporation
By: By:
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Name: Name:
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Title: Title:
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