<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
July 11, 1996
-------------------------------------------------------
Date of Report (Date of earliest event reported)
Salton/Maxim Housewares, Inc.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-19557 36-3777824
- ---------------------------- --------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
550 Business Center Drive, Mount Prospect, Illinois 60056
----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(708) 803-4600
-------------------------------
(Registrant's telephone number)
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On July 11, 1996, Salton/Maxim Housewares, Inc. (the "Registrant")
consummated its previously announced transaction with Windmere-Durable
Holdings, Inc. ("Windmere") pursuant to that certain Stock Purchase Agreement
dated February 27, 1996, as amended (the "Stock Purchase Agreement"). Pursuant
to the Stock Purchase Agreement, the Registrant issued and sold to Windmere
(the "Share Issuance") 6,508,572 newly issued shares of common stock of the
Registrant ("Common Stock"), which represents 50% of the outstanding shares of
Common Stock of the Registrant after giving effect to the Share Issuance. In
consideration for the Share Issuance, Windmere paid the Registrant: (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 the Registrant's
obligation to repay a loan in the principal amount of $3,254,286 which Windmere
had made to the Registrant in April 1996. The Note is payable five years from
the closing date of the Share Issuance and bears interest at 8% per annum
payable quarterly. Windmere has informed the Registrant that it 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 are outstanding on February 27, 1996 are
exercised.
Windmere is engaged principally in manufacturing and distributing a
wide variety of personal care products and household appliances. Windmere
designs and manufactures its products for sale to retail stores, distributors
and professional beauty supply customers located primarily in the United
States, Canada and Europe, with additional distribution in Latin America and
the Far East. Windmere's products are sold largely under its private labels.
Windmere also manufactures products on a contract basis for others. Windmere's
common stock is traded on the NYSE.
In connection with the Share Issuance, the Registrant and Windmere
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%, that percentage of
the Registrant'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 the Registrant 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 Registrant's Board of Directors.
The Stockholder Agreement also contains provisions which, subject to
specified time periods and exceptions, restrict the disposition by Windmere of
shares of Common Stock of the Registrant and restrict purchases by Windmere of
additional shares of Common Stock of the Registrant that would increase its
percentage ownership interest.
-2-
<PAGE> 3
The Registrant and Windmere 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 of Common Stock of the Registrant. Expenses relating to
registrations (other than selling expenses and commissions) will generally be
payable by the Registrant.
The Registrant and Windmere also entered into a Marketing Cooperation
Agreement (the "Marketing Cooperation Agreement"). Pursuant to the Marketing
Cooperation Agreement, until Windmere's interest in the Registrant is less than
30% for at least ten consecutive days, each of the Registrant and Windmere has
agreed to participate in a variety of mutually satisfactory marketing
cooperation efforts designed to expand the market penetration of each party
through, among other things: (i) the expansion of distribution bases or
channels; (ii) the possible use of co-branding or housebrand strategies for
certain products; and (iii) the possible coordination of promotional
activities. Notwithstanding the foregoing, any transaction or series of
related transactions between the Registrant and Windmere arising from or
relating to any such marketing cooperation efforts must be approved by a
majority of the Registrant's directors not designated by Windmere.
The foregoing description of the Stock Purchase Agreement and the
documents contemplated thereby, including the Note, the Stockholder Agreement,
the Registration Agreement and the Marketing Cooperation 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, a copy
of which is attached hereto as or is incorporated herein by reference. A copy
of the Registrant's press release, dated July 11, 1996, relating to the
above-described transactions is attached hereto as Exhibit 99.1.
The Registrant does not consider the Share Issuance to be a "change of
control" transaction. However, in light of the significant ownership interest
in the Registrant and other rights which Windmere acquired in connection with
the Share Issuance, the Registrant is reporting the Share Issuance pursuant to
Item 1 of this Current Report on Form 8-K.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Information pertaining to the consideration received by the Registrant
from Windmere for the Share Issuance is incorporated by reference from Item 1
of this Current Report on Form 8-K. The amount of consideration received by
the Registrant was determined pursuant to arms-length negotiations with
Windmere.
-3-
<PAGE> 4
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro forma financial information.
Pro forma financial information pertaining to the Share Issuance is
incorporated by reference to the Registrant's Form 8-K dated February 27, 1996.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Stock Purchase Agreement, dated as of February 27, 1996, by and between the Registrant and Windmere
(incorporated by reference to the Registrant's Form 8-K dated February 27, 1996)
2.2 Subordinated Promissory Note dated July 11, 1996 in the principal amount of $10,847,620 issued by
Windmere to the Registrant
2.3 Stockholder Agreement dated July 11, 1996 between the Registrant and Windmere
2.4 Registration Rights Agreement dated July 11, 1996 between the Registrant and Windmere
2.5 Marketing Cooperation Agreement dated July 11, 1996 between the Registrant and Windmere
99.1 Press Release of the Registrant and Windmere, issued July 11, 1996
</TABLE>
-4-
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
SALTON/MAXIM HOUSEWARES, INC.
/s/ WILLIAM B. RUE
------------------------------
William B. Rue
Dated: July 11, 1996 Senior Vice President and
Chief Operating Officer
-5-
<PAGE> 6
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Stock Purchase Agreement, dated as of February 27, 1996, by and between the Registrant and Windmere
(incorporated by reference to the Registrant's Form 8-K dated February 27, 1996)
2.2 Subordinated Promissory Note dated July 11, 1996 in the principal amount of $10,847,620 issued by
Windmere to the Registrant
2.3 Stockholder Agreement dated July 11, 1996 between the Registrant and Windmere
2.4 Registration Rights Agreement dated July 11, 1996 between the Registrant and Windmere
2.5 Marketing Cooperation Agreement dated July 11, 1996 between the Registrant and Windmere
99.1 Press Release of the Registrant and Windmere, issued July 11, 1996
</TABLE>
-6-
<PAGE> 1
EXHIBIT 2.2
THIS IS A SUBORDINATED NOTE
AS FURTHER DESCRIBED HEREIN
PROMISSORY NOTE
Chicago, Illinois
$10,847,620 July 11, 1996
1. Payment. FOR VALUE RECEIVED, Windmere-Durable Holdings, Inc.
("Windmere") on July 11, 2001 hereby promises to pay to the order of
Salton/Maxim Housewares, Inc. ("Seller") the principal sum of Ten Million Eight
Hundred Forty-Seven Thousand Six Hundred and Twenty Dollars ($10,847,620) and
to pay interest at 8% per annum (calculated on the basis of a 365-day year and
actual days elapsed) on the outstanding principal amount hereunder on the last
day of each calendar quarter, commencing September 30, 1996. Upon the
occurrence and during the continuation of an Event of Default (as defined
below), the principal amount then outstanding shall, without limiting the
rights of Seller hereunder, bear interest at a rate per annum which is equal to
the lesser of (i) 5% over the rate which would otherwise be applicable thereto,
and (ii) the highest amount permitted by law. Both principal and interest are
payable in lawful money of the United States of America and in immediately
available funds to Seller at 550 Business Center Drive, Mount Prospect,
Illinois 60056. The payment of the principal hereof and interest hereon on the
scheduled dates therefor is subject to the subordination provisions set forth
below.
2. Other Documents. This Promissory Note (the "Note") is the
Note referred to in Section 1.02(a)(ii) of that certain Stock Purchase
Agreement, dated as of February 27, 1996, between Windmere and Seller (the
"Purchase Agreement") and represents partial payment by Windmere for the shares
of common stock of Seller issued to Windmere.
As security for repayment of the indebtedness arising
hereunder, Windmere and its Domestic Subsidiaries have executed and delivered
to Seller those certain Security Agreements of even date herewith (the
"Security Agreements"). In addition, all the Domestic Subsidiaries have
guaranteed the obligations of Windmere to Seller pursuant to a Guaranty of even
date herewith (the "Guaranty").
3. Definitions. Capitalized terms used in this Agreement without
definition shall have the respective meanings accorded to them in that certain
amended and restated letter agreement, dated July 28, 1995 (the "Senior
Creditor Letter Agreement"), between Windmere and NationsBank of Florida,
National Association (the "Senior Creditor"), without giving effect to any
amendments thereto.
<PAGE> 2
4. Events of Default. Notwithstanding the maturity date set
forth above, the maturity of this Note may be accelerated by Seller upon the
occurrence of any of the following events ("Events of Default"):
(a) Nonpayment of principal or interest hereunder when and as the
same shall become due hereunder; or
(b) Windmere or any Domestic Subsidiary fails to observe or
perform any term, covenant or condition contained in the
Security Agreements, and fails to remedy any such default
within the period of grace, if any, provided therein; or
(c) Any Domestic Subsidiary fails to observe or perform any term,
covenant or condition contained in the Guaranty; or
(d) Windmere enters into any merger, consolidation,
reorganization, or liquidates, winds up, or dissolves itself
(or suffers any liquidation or dissolution), or conveys,
sells, assigns, leases, transfers, or otherwise disposes of,
in one transaction or a series of transactions, substantially
all of its business, property or assets, whether now owned or
hereafter acquired, other than a merger of a Subsidiary into
another Subsidiary or a merger in which Windmere is the
surviving entity; or
(e) Voluntary or involuntary bankruptcy, reorganization,
insolvency, arrangement, receivership or similar proceedings
are commenced by or against Windmere or any of its Domestic
Subsidiaries, and such proceedings continue undismissed for 60
days; or
(f) One or more final judgments (for which no appeal may be taken)
for the payment of money in excess of $1,000,000 in the
aggregate are outstanding against Windmere or any of its
Subsidiaries or against any property or assets of any of them,
and any such judgment has remained unpaid, unvacated, unbonded
or unstayed by appeal or otherwise for a period of 30 days
from the date of its entry; or
(g) Windmere shall incur, create, assume or permit to exist
aggregate Indebtedness basis however evidenced, or guarantee,
assume or endorse or otherwise become or remain liable in
connection with any Contingent Obligation, other than
Indebtedness evidenced by this Note, in excess of $50,000,000
on a consolidated basis;
(h) Windmere or any of its Subsidiaries fails to pay principal,
interest or premium with respect to any Indebtedness of
Windmere or any of its Subsidiaries in an aggregate principal
amount greater than $500,000 or fails to perform, observe
-2-
<PAGE> 3
or fulfill any term or covenant contained in any agreement or
instrument under or pursuant to which any such Indebtedness
may have been issued, created, assumed, guaranteed or secured
by Windmere or any of its Subsidiaries, and such default
continues beyond the period of grace, if any, specified
therein and permits the holder of such indebtedness to
accelerate the maturity thereof.
(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.
5. Subordination. Payments under this Note are subordinated to
repayment of all Senior Indebtedness (as defined in the next sentence), but
only to the extent and in the manner provided in this Section 5. "Senior
Indebtedness" shall mean all indebtedness owed by Windmere to the Senior
Creditor pursuant to the Senior Creditor Letter Agreement, as such agreement
may be amended from time to time, or any indebtedness incurred by Windmere from
time to time in connection with any other credit facility with any financial
institution or bank; provided that in no event shall the Senior Indebtedness
outstanding at any time ever exceed $50,000,000.
(a) Upon any payment or distribution of the assets of Windmere,
whether in cash, property or securities, from any source whatsoever, to
creditors upon any dissolution, winding-up, total or partial liquidation,
reorganization, composition, arrangement, or adjustment of Windmere or its
securities (whether voluntary or involuntary, or in bankruptcy, insolvency,
reorganization, liquidation or receivership proceedings, or upon an assignment
for the benefit of creditors, or any other marshalling of the assets and
liabilities of Windmere or otherwise), the Senior Creditor shall be entitled to
receive payment in full in cash of all amounts due or to become due in respect
of the Senior Indebtedness before any payment is made on account of or applied
on this Note.
(b) No payment under this Note shall be made during a Payment
Blockage Period (as defined hereinafter); provided, however, that no more than
one Payment Blockage Period may exist during any 360 day period. As used
herein, a "Payment Blockage Period" is the period commencing on the business
day following the day Windmere receives from the Senior Creditor notice that an
"Event of Default" (as defined in Senior Creditor Letter Agreement) has
occurred and is continuing in respect of the Senior Indebtedness and
terminating 180 days later.
(c) Seller or any subsequent holder of this Note, by its
acceptance of this Note, agrees that during any Payment Blockage Period, it
will not ask, demand, sue for, take or receive from Windmere, by set-off or in
any other manner, any money which may now or hereafter be owing by Windmere
under this Note.
6. Prepayment. This Note may be prepaid at any time without
penalty or premium.
-3-
<PAGE> 4
7. Assignment. This Note may be assigned or pledged by Seller to
any person or entity. This Note may not be assigned by Windmere.
8. Amendment; Waiver. This Note may only be amended in
accordance with the terms of the Stockholder Agreement between Windmere and
Seller of even date hereof. No failure or delay on the part of the holder of
this Note or to exercise any power or right under this Note shall operate as a
waiver of such power or right or preclude other or further exercise thereof or
the exercise of any other power or right. No waiver of any condition or
performance will operate as a waiver of any subsequent condition or obligation.
Windmere hereby waives diligence, presentment, demand for payment, notice of
dishonor or acceleration, protest and notice of protest, and any and all other
notices or demands in connection with delivery, acceptance, performance,
default or enforcement of this Note.
9. Governing Law; Legal Fees. This Note shall be governed by and
construed in accordance with the laws of the State of Illinois, and Windmere
agrees to pay the reasonable legal fees and disbursements of counsel in
connection with the enforcement of this Note.
WINDMERE-DURABLE HOLDINGS, INC.
By: _________________________________
Title:___________________________
Address:
5980 Miami Lake Drive
Miami Lakes, Florida 33014-2467
-4-
<PAGE> 1
EXHIBIT 2.3
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.
-2-
<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
-3-
<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:
-4-
<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.
-5-
<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
-6-
<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
-7-
<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.
-8-
<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
-9-
<PAGE> 11
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
-10-
<PAGE> 12
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
-11-
<PAGE> 13
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
-12-
<PAGE> 14
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
-13-
<PAGE> 15
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.
-14-
<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
-15-
<PAGE> 17
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:
----------------------- ------------------
-16-
<PAGE> 1
EXHIBIT 2.4
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
-2-
<PAGE> 3
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
-3-
<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")
-4-
<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
-5-
<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:
-6-
<PAGE> 7
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;
-7-
<PAGE> 8
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,
-8-
<PAGE> 9
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
-9-
<PAGE> 10
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
-10-
<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.
-11-
<PAGE> 12
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:
----------------------- ---------------------
Name: Name:
-------------------- -----------------
Title: Title:
-------------------- -----------------
-12-
<PAGE> 1
EXHIBIT 2.5
MARKETING COOPERATION AGREEMENT
This Marketing Cooperation Agreement ("Agreement") is made as of
July 11, 1996 by and between Salton/Maxim Housewares, Inc., a Delaware
corporation ("Salton"), and Windmere-Durable Holdings, Inc., a Florida
corporation ("Windmere").
RECITALS
A. Pursuant to that certain Stock Purchase Agreement between
Salton and Windmere dated as of February 27, 1996 (the "Stock Purchase
Agreement"), Windmere has concurrently herewith sold, assigned, transferred,
conveyed and delivered to Windmere certain shares.
B. Salton and Windmere are also parties to a Stockholder
Agreement dated as of July 11, 1996 (the "Stockholder Agreement"), pursuant to
which Windmere and the Company establish certain terms and conditions
concerning Windmere's investment in Salton and Salton's corporate governance.
C. Both Salton and Windmere believe that, in order to form a
successful strategic alliance that will enhance the overall competitive
position of each party without limiting the competition which may exist between
them, Salton and Windmere shall participate in a variety of mutually
satisfactory marketing cooperation efforts designed to achieve maximum market
penetration for both parties.
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants set forth in this Agreement, Salton and Windmere hereby agrees 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.
Article 2. SCOPE OF COOPERATION
2.1 Cooperation Efforts. Under this Agreement and in a manner consistent
with all applicable laws and regulations, each of Salton and Windmere
shall participate in a variety of mutually satisfactory marketing
cooperation efforts designed to expand the market penetration of each
of Salton and Windmere through, among other things: (i) the expansion
of distribution bases or channels; (ii) the possible use of
co-branding or housebrand strategies for certain products; and (iii)
the possible coordination of promotional activities. Notwithstanding
the foregoing, the parties agree that the terms of any transaction or
series of related transactions between Salton and Windmere arising
from or relating to any such marketing cooperation
<PAGE> 2
efforts (collectively, "Marketing Transactions") shall be subject to
the provisions of Section 5.3 of the Stockholder Agreement.
2.2 Marketing Cooperation Conference. Without limiting the generality of
the foregoing, the parties agree that a marketing conference shall be
held at least once every ninety (90) days to identify marketing
cooperation opportunities. Windmere shall host the first such
conference within three (3) months of the date hereof. Thereafter,
each party shall alternate hosting every other such conference held
throughout the term hereof. Such conference size, format (in person,
video conference or teleconference), topics and schedule will be
decided between the parties.
Article 3. CONFIDENTIALITY
3.1 Definition. The term "Confidential Information" shall mean any
information disclosed by one party (the "Disclosing Party") to the
other party (the "Receiving Party") concerning the operations and
affairs of the Disclosing Party or its Affiliates in connection with
the performance of this Agreement or any Marketing Transaction.
3.2 Confidentiality Obligations. Receiving Party and its Affiliates will
treat and hold as such, and except as contemplated by any Marketing
Transaction, will not use for the benefit of themselves or others, any
Confidential Information. Receiving Party and its Affiliates shall
not disclose such Confidential Information to any third party during
the term of this Agreement or at any time thereafter. The Receiving
Party shall only permit disclosure of the Confidential Information to
the Receiving Party's directors, officers, employees, agents and
advisors who have a need to know (it being agreed that such directors,
officers, employees, agents and advisors shall be informed by the
Receiving Party of the confidential nature of such information and
that by receiving such information they are agreeing to be bound by
this Agreement) and shall not use the Confidential Information for any
purpose other than the purpose contemplated by this Agreement.
3.3 Exceptions. The confidentiality obligations set forth in this Article
3 shall not apply to any information which:
(a) is rightfully in the possession of the Receiving Party prior
to receipt from the Disclosing Party; or
(b) is rightfully received by the Receiving Party from a third
party without the breach of any restriction on disclosure; or
(c) is disclosed pursuant to applicable laws, regulations or court
order, provided that the Receiving Party shall give the
Disclosing Party prompt notice of such request so that
-2-
<PAGE> 3
the Disclosing Party has an opportunity to defend, limit or
protect such disclosure; or
(d) is established to be in the public domain other than as a
consequence of a breach of an obligation undertaken not to
disclose the information; or
(e) is made public by the Disclosing Party.
Article 4. TERM
The term of this Agreement shall commence on the date hereof and shall
terminate at the first time after the date hereof that the Purchaser
Interest shall have been less than thirty percent (30%) for a period
of at least ten (10) consecutive days.
Article 5. NOTICE
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 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 Salton: 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) 876-8938
To Windmere: 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
-3-
<PAGE> 4
Miami, Florida 33131
Attention: Andrew Hulsh, Esq.
Fax: (305) 599-0717
Article 6. GOVERNING LAW
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.
Article 7. ASSIGNMENT
This Agreement and all of the provisions hereof shall be binding and
inure to the benefit of Salton, Windmere and their respective
successors and assigns. Neither party hereto shall assign or transfer
any rights, privileges or obligations hereunder without the prior
written consent of the other party hereto.
Article 8. ARBITRATION
8.1 Negotiation and Arbitration. All disputes relating to this Agreement
or any Marketing Transaction shall be settled through friendly
negotiation between the parties, including providing written notice of
the dispute to the other party in advance of submitting any dispute to
arbitration pursuant to Section 8.2 hereof. The parties agree that no
such arbitration concerning a dispute between the parties will be
started until after the senior executive of each company has attempted
to speak (in person, by telephone or by videophone) to the other
concerning the dispute and attempted to resolve the dispute. In case
no settlement can be reached, the dispute shall be submitted to
arbitration as provided in Section 8.2.
8.2 Arbitration Procedures. All disputes relating to this Agreement or
any Marketing Transaction which are not resolved in accordance with
Section 8.1 hereof shall be finally settled by the arbitration
procedures set forth below and in accordance with the applicable
procedures of arbitration of the Commercial Arbitration Rules of the
American Arbitration Association as in effect from time to time. In
the event of such a dispute, a party may commence arbitration
hereunder by delivering to the other party a notice of arbitration (a
"Notice of Arbitration"). The Notice of Arbitration shall specify the
matters as to which arbitration is sought, the nature of any dispute
or the claims of such party to the arbitration and shall specify the
amount and nature of damages, if any, sought to be recovered as a
result of any alleged claim, and any other matters required by the
Commercial Arbitration Rules of the American Arbitration Association
as in effect from time to time to be included therein, if any. The
arbitration proceeding shall be held before three (3) arbitrators in
the headquarters city of the party not initiating the claim. Two (2)
of the arbitrators shall first be appointed by the parties, one (1) by
Salton (the "Salton
-4-
<PAGE> 5
Arbitrator") and one (1) by Windmere (the "Windmere Arbitrator"). In
the event that either party fails to select an arbitrator as set forth
herein within twenty (20) days from the delivery of a Notice of
Arbitration, then the matter shall be resolved by the arbitrator
selected by the other party. The Salton Arbitrator and the Windmere
Arbitrator shall appoint a third arbitrator, who shall act as the
chairman of the arbitral tribunal. If the Salton Arbitrator and the
Windmere Arbitrator fail to appoint a third arbitrator within twenty
(20) days after they have been appointed, the Salton Arbitrator and
the Windmere Arbitrator shall each prepare a list of three independent
arbitrators. The Salton Arbitrator and the Windmere Arbitrator shall
each have the opportunity to designate as objectionable and eliminate
one (1) arbitrator from the other arbitrator's list within seven (7)
days after submission thereof, and the third arbitrator shall then be
selected by lot from the arbitrators remaining on the lists submitted
by the Salton Arbitrator and the Windmere Arbitrator. The law applied
in such proceeding shall be the same as the governing law selected in
Article 6 of this Agreement. The arbitration procedure set forth
above shall be the sole and exclusive method for resolving and
remedying claims for money damages arising out of the terms of this
Agreement or any Marketing Transaction. The results of such
arbitration shall be conclusive and binding upon the parties, and
shall be enforceable in any court having jurisdiction over the parties
against whom the award was rendered. The arbitrators selected
pursuant to this Article 8 will determine the allocation of the costs
and expenses of arbitration based upon the percentage which the
portion of the contested amount not awarded to each party bears to the
amount actually contested by such party.
Article 9. SEVERABILITY
Should any clause, sentence, or paragraph of this Agreement judicially
be declared to be invalid, unenforceable, or void, such decision shall
not have the effect of invalidating or voiding the remainder of this
Agreement unless the economic equity of the parties is materially
affected thereby.
Article 10. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter of this Agreement and
merges all prior discussions between them, and neither of the parties
shall be bound by any modification of this Agreement, other than as
duly set forth on or subsequent to the date hereof in writing and
signed by a duly authorized representative of the party to be bound
thereby; provided that any amendment or waiver of any of the
provisions of this Agreement may only be made in accordance with the
terms of the Stockholder Agreement.
-5-
<PAGE> 6
Article 11. COOPERATION.
Each of the parties agrees to do such further acts and to execute and
deliver such additional documents as are reasonably necessary or
appropriate to give effect to the transactions contemplated by this
Agreement and carry out the purpose and intent of this Agreement.
Article 12. EQUITABLE RELIEF
The parties acknowledge and agree that any unauthorized use, transfer
or copying of the Confidential Information will cause irreparable
injury to the Disclosing Party by substantially diminishing the value
of the Disclosing Party's trade secrets and other proprietary rights
contained in the Confidential Information. Therefore, if the
Receiving Party (including its directors, officers, employees, agents
and advisors) attempts to use, transfer, copy, license, assign or
otherwise convey the Confidential Information in any manner contrary
to the terms of this Agreement, the Disclosing Party shall, in
addition to any other remedies available to it, have the right to
enjoin, preliminary and permanently, the Receiving Party from any such
act, and the Receiving Party hereby acknowledges that other remedies
are inadequate and consents to such injunction.
Article 13. COUNTERPARTS
This Agreement may be executed in one or more counterparts all of
which taken together will constitute one and the same instrument.
Article 14. HEADINGS
Headings of Articles and other provisions of this Agreement are for
convenience only, and do not alter the meaning of this Agreement.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Marketing Cooperation Agreement, on the dates
below indicated.
WINDMERE-DURABLE HOLDINGS, INC. SALTON/MAXIM HOUSEWARES, INC.
By: By:
-------------------- -------------------------
Name: David M. Friedson Name: Leonhard Dreimann
Title: President Title: Chief Executive Officer
Date: July 11, 1996 Date: July 11, 1996
-6-
<PAGE> 1
FOR IMMEDIATE RELEASE: NEWS
July 11, 1996 Nasdaq National Market-SALT
WINDMERE-DURABLE HOLDINGS AND SALTON/MAXIM HOUSEWARES
COMPLETE FORMATION OF STRATEGIC ALLIANCE
Windmere-Durable Holdings Acquires 50% Interest in Salton/Maxim Housewares
MIAMI LAKES, Florida and MOUNT PROSPECT, Illinois - Windmere-Durable Holdings,
Inc. (NYSE-WND) and Salton/Maxim Housewares, Inc. (Nasdaq National Market-SALT)
today announced that Windmere-Durable has completed its acquisition of 50% of
Salton/Maxim, following yesterday's approval of the transaction by
Salton/Maxim's shareholders. Salton/Maxim issued approximately 6.5 million
shares of its common stock to Windmere-Durable in exchange for 748,112 shares
of Windmere-Durable common stock, a $10.8 million note and a cash payment of
$3.2 million. The transaction was originally announced on February 28, 1996.
David M. Friedson, Windmere-Durable's Chairman, President and Chief Executive
Officer, stated, "Consummation of this purchase brings us a step closer to
building a larger presence in consumer products and establishing a well
recognized brand, with the White-Westinghouse(R) name licensed by Salton/Maxim
earlier this year. We are joining forces with an organization whose strengths
in marketing and distribution will both complement and maximize our own
capabilities."
Leonhard Dreimann, Chief Executive Officer of Salton/Maxim, stated, "We are
very pleased to be allied with Windmere-Durable Holdings. Today's transaction
is the first step in building a closer relationship between our companies. We
look forward to working with Windmere-Durable's people on mutually rewarding
business development."
Salton/Maxim Housewares, headquartered in Mount Prospect, Illinois, designs and
markets small kitchen appliances and beauty care products under the Salton(R),
Maxim(R), Salton Creations (TM), Salton Time (TM) and White-Westinghouse (R)
brand names. The Company's products also include the Breadman (TM) and
Juiceman(TM) product lines.
Windmere-Durable Holdings, Inc. is a diversified manufacturer and distributor
of a broad range of consumer products, including personal care products for the
home and professional salons, kitchen electric appliances and consumer
electronics. The Company also markets the Litter Maid (TM) computerized,
infrared, automatic self-cleaning cat litter box.
###
CONTACTS:
Salton/Maxim Housewares, Inc. Windmere-Durable Holdings Inc.
Bill Rue Cindy Solovei
Senior Vice President & Chief Assistant Vice President-
Operating Officer Finance
847-803-4600 305-362-2611
