<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 14a-11(c) or Section 14a-12
SALTON/MAXIM HOUSEWARES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
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or the Form or Schedule and the date of its filing.
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<PAGE> 2
SALTON MAXIM LOGO
SALTON/MAXIM HOUSEWARES, INC.
550 BUSINESS CENTER DRIVE
MOUNT PROSPECT, ILLINOIS 60056
To Our Stockholders:
You are invited to attend the Annual Meeting of Stockholders of
Salton/Maxim Housewares, Inc. to be held at the Four Seasons Hotel, 120 E.
Delaware Place, Chicago, Illinois, on December 10, 1998 at 3:00 p.m. local time.
We are pleased to enclose the notice of our annual meeting of stockholders,
together with a Proxy Statement, a proxy card and an envelope for returning the
proxy card. Our Annual Report, including financial statements for our fiscal
year 1998, is also included herewith.
Your vote is important. Please carefully review the Proxy Statement and
then complete and sign the enclosed proxy card and return it promptly. If you
attend the meeting and decide to vote in person, you may do so.
Your time and attention to this letter and the accompanying Proxy Statement
and proxy card is appreciated.
Sincerely,
Leonhard Dreimann
Leonhard Dreimann
Chief Executive Officer
November , 1998
<PAGE> 3
SALTON MAXIM LOGO
SALTON/MAXIM HOUSEWARES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Salton/Maxim Housewares, Inc., will
be held on Thursday, December 10, 1998 at 3:00 p.m. local time, at the Four
Seasons Hotel, 120 E. Delaware Place, Chicago, Illinois.
The purposes of the Annual Meeting are:
1. To elect two Class III Directors for a term expiring in 2000;
2. To elect three Class I Directors for a term expiring in 2001;
3. To vote on an amendment to our Restated Certificate of Incorporation to
change our name from "Salton/Maxim Housewares, Inc." to "Salton, Inc.;"
4. To vote on the 1998 Stock Option Plan;
5. To ratify the appointment of Deloitte & Touche LLP as our auditors for
the 1999 fiscal year; and
6. To transact any other business that many properly be presented at the
meeting.
You must be a holder of Common Stock or Series A Voting Convertible
Preferred Stock of record at the close of business on October 21, 1998 to vote
at the Annual Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE VOTE BY SIGNING AND RETURNING THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE. RETURNING THE PROXY CARD WILL NOT AFFECT YOUR RIGHT TO ATTEND THE
MEETING AND VOTE.
By Order of the Board of Directors
David C. Sabin
David C. Sabin
Secretary
Chicago, Illinois
November , 1998
<PAGE> 4
SALTON/MAXIM HOUSEWARES, INC.
550 BUSINESS CENTER DRIVE
MOUNT PROSPECT, ILLINOIS 60056
PROXY STATEMENT
The Board of Directors of the Company solicits your proxy for use at the
Annual Meeting of Stockholders on Thursday, December 10, 1998, or at any
adjournment thereof. We will begin sending this Proxy Statement, the attached
Notice of Annual Meeting and the enclosed proxy card on or about November ,
1998 to all stockholders entitled to vote.
INFORMATION ABOUT THE MEETING AND VOTING
WHO MAY VOTE AT THE MEETING?
Stockholders of record at the close of business on October 21, 1998 are
entitled to notice of and to vote at the Annual Meeting. At the record date,
6,568,572 shares of common stock of the Company (the "Common Stock") were issued
and outstanding. In addition, on the record date, 40,000 shares of Series A
Voting Convertible Preferred Stock of the Company (the "Series A Preferred
Stock"), were issued and outstanding, which were convertible on the record date
into 2,352,941 shares of Common Stock.
HOW MANY VOTES DO I HAVE?
Each share of Common Stock that you own entitles you to one vote. Each
share of Series A Preferred Stock that you own entitles you to 58.8 votes (the
number of shares of Common Stock into which such share of Series A Preferred
Stock is convertible on the record date). The Common Stock and the Series A
Preferred Stock vote as a single class and are identical in all respects with
respect to matters subject to the vote of stockholders.
HOW DO I VOTE BY PROXY?
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to attend
the Annual Meeting and vote.
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board as
follows:
- "FOR" the election of the two nominees for Class III Directors,
- "FOR" the election of the three nominees for Class I Directors,
- "FOR" the amendment to our Restated Certificate of Incorporation to
change our name,
- "FOR" the 1998 Stock Option Plan, and
- "FOR" ratification of the appointment of independent auditors for fiscal
1999.
If any other matter is presented, your proxy will vote in accordance with
his best judgment. At the time this Proxy Statement went to press, we knew of no
matters which needed to be acted on at the Annual Meeting, other than those
discussed in this Proxy Statement.
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MAY I REVOKE MY PROXY?
If you give a proxy, you may revoke it at any time before it is exercised.
You may revoke your proxy in any one of three ways:
- You may send in another proxy with a later date.
- You may notify the Company's Secretary in writing before the Annual
Meeting that you have revoked your proxy.
- You may vote in person at the Annual Meeting.
HOW DO I VOTE IN PERSON?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you are the beneficial owner of the
shares on November , 1998, the record date for voting.
WHAT CONSTITUTES A QUORUM?
A quorum of stockholders is necessary to hold a valid meeting. If
stockholders entitled to cast at least a majority of all the votes entitled to
be cast at the Annual Meeting are present in person or by proxy, a quorum will
exist. Abstentions and broker non-votes (i.e., when a broker does not have
authority to vote on a specific issue) are counted as present for establishing a
quorum.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSALS 1 AND 2: ELECT TWO The nominees for director in each of Class III
CLASS III DIRECTORS AND THREE and Class I who receive the most votes will be
CLASS I DIRECTORS elected. So, if you do not vote for a
particular nominee, or you indicate "withhold
authority to vote" for a particular nominee on
your proxy card, your vote will not count
either "for" or "against" the nominee.
A broker non-vote will also have no effect on
the outcome since only a plurality of votes
actually cast is required to elect a director.
PROPOSAL 3: APPROVE AMENDMENT The affirmative vote of a majority of the
TO THE RESTATED CERTIFICATE outstanding shares of Common Stock (assuming
OF INCORPORATION conversion of all outstanding shares of Series
A Preferred Stock into Common Stock) is
required to approve the amendment to our
Restated Certificate of Incorporation. So, if
you do not vote, or "abstain" from voting, it
has the same effect as if you voted "against"
the amendment.
PROPOSAL 4: APPROVE THE 1998 The affirmative vote of a majority of the votes
STOCK OPTION PLAN cast at the Annual Meeting is required to
approve the plan. So, if you "abstain" from
voting, it has the same effect as if you voted
"against" this proposal.
PROPOSAL 5: RATIFY SELECTION The affirmative vote of a majority of the votes
OF AUDITORS cast at the Annual Meeting is required to
ratify the selection of independent auditors.
So, if you "abstain" from voting, it has the
same effect as if you voted "against" this
proposal.
THE EFFECT OF BROKER NON-VOTES If your broker does not vote your shares on
Proposals 4 and 5, such "broker non-votes" do
not count as "shares present." This means that
a broker non-vote would reduce the number of
affirmative votes that are necessary to approve
each of these proposals.
For Proposal 3, a broker non-vote has the same
effect as a vote "against" this proposal.
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WHAT ARE THE COSTS OF SOLICITING THESE PROXIES?
The Company will pay all the costs of soliciting these proxies. In addition
to mailing proxy soliciting material, our directors and employees may also
solicit proxies in person, by telephone or by other electronic means of
communication. We will ask banks, brokers and other institutions, nominees and
fiduciaries to forward the proxy material to their principals and to obtain
authority to execute proxies. We will then reimburse them for expenses. We have
also retained Corporate Investor Communications, Inc. to assist us in the
distribution and solicitation of proxies. We have agreed to pay them a fee of
approximately $4,500 plus out-of-pocket expenses.
HOW DO I OBTAIN AN ANNUAL REPORT ON FORM 10-K?
IF YOU WOULD LIKE A COPY OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED JUNE 27, 1998, THAT WE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, WE WILL SEND YOU ONE WITHOUT CHARGE. PLEASE WRITE TO:
SALTON/MAXIM HOUSEWARES, INC.
550 BUSINESS CENTER DRIVE
MOUNT PROSPECT, ILLINOIS 60056
ATTENTION: WILLIAM B. RUE
PRESIDENT AND CHIEF OPERATING OFFICER
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PROPOSALS 1 AND 2: ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, having three-year
terms that expire in successive years. The Board is comprised of three Class I
Directors (David C. Sabin, William B. Rue and Robert A. Bergmann), two Class II
Directors (Bert Doornmalen and Bruce G. Pollack) and two Class III Directors
(Leonhard Dreimann and Frank Devine).
We are seeking your vote on the selection of two Class III Directors and
three Class I Directors at this Annual Meeting. The Class II Directors are not
up for election this year and will continue in office for the remainder of their
term.
The Board of Directors has nominated Messrs. Dreimann and Devine to stand
for reelection as the Class III Directors. The term of the Class III Directors
ends upon the election of Class III Directors at the 2000 annual meeting of
stockholders.
The Board of Directors has nominated Messrs. Sabin, Rue and Bergmann to
stand for reelection as the Class I Directors. The term of the Class I Directors
ends upon the election of Class I Directors at the 2001 annual meeting of
stockholders.
We know of no reason why any nominee may be unable to serve as a director.
If any nominee is unable to serve, your proxy may vote for another nominee
proposed by the Board, or the Board may reduce the number of directors to be
elected.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY DIRECTOR SINCE
---- --- ------------------------- --------------
<S> <C> <C> <C>
CLASS III DIRECTORS: (NOMINEES)
Leonhard Dreimann...................... 50 Chief Executive Officer 1988
and Director
Frank Devine........................... 54 Director 1994
CLASS I DIRECTORS: (NOMINEES)
David C. Sabin......................... 49 Chairman of the Board of 1988
Directors
William B. Rue......................... 51 President, Chief Operating 1998
Officer and Director
Robert A. Bergmann..................... 32 Director 1998
CLASS II DIRECTORS:
Bert Doornmalen........................ 54 Director 1994
Bruce G. Pollack....................... 39 Director 1998
</TABLE>
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
CLASS III DIRECTORS
LEONHARD DREIMANN has served as Chief Executive Officer and a director of
the Company since its inception in August 1988 and is a founder of the Company.
From 1988 to July 1998, Mr. Dreimann served as President of the Company. From
1987 to 1988, Mr. Dreimann served as president of the Company's predecessor,
Salton, Inc., a wholly-owned subsidiary of SEVKO, Inc. Prior to 1987, Mr.
Dreimann served as managing director of Salton Australia Pty. Ltd., a
distributor of Salton brand kitchen appliances. From 1988 to December 1993, Mr.
Dreimann served as an officer and a director of Glacier Holdings, Inc., a
publicly-held company, and as a director of its wholly-owned subsidiary Glacier
Water Systems, Inc. from 1987 to December 1993. Glacier Water developed,
manufactured and marketed an in-home water filtration system. From 1989 to
December 1993, Mr. Dreimann served as an officer and a director of Salton Time.
During 1994, Glacier Holdings and its subsidiaries ceased operations and were
liquidated.
FRANK DEVINE has been a director of the Company since December 1994. Mr.
Devine serves as a business consultant for various entities. He has founded or
co-founded Bachmann-Devine, Incorporated, a venture capital firm, American Home,
Inc., an importer of hand-loomed rugs and decorative accessories, World Wide
4
<PAGE> 8
Digital Vaulting, Inc., an on-line digital data storage company and Shapiro,
Devine & Craparo, Inc., a household goods manufacturers representation company
serving the retail industry. Mr. Devine also serves on the board of directors of
these companies.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
CLASS I DIRECTORS
DAVID C. SABIN has served as Chairman of the Company since September 1991
and has served as Secretary and a director of the Company since its inception in
August 1988 and is a founder of the Company. Mr. Sabin served as the president
and a director of Glacier Holdings from December 1988 through May 1994 and as a
director of Salton Time Inc., a wholly-owned subsidiary of Glacier Holdings,
since 1989. Salton Time was an importer and distributor of quartz wall and alarm
clocks. From 1991 through May 1994, Mr. Sabin was an officer and a director of
Stylemaster, Inc., a wholly-owned subsidiary of Glacier Holdings, which was
engaged in the manufacture and distribution of plastic housewares articles.
Stylemaster, Inc. filed for protection under Chapter 11 of the United States
Bankruptcy Code in March 1994. During 1994, Glacier Holdings and its
subsidiaries ceased operations and were liquidated.
WILLIAM B. RUE has been a director of the Company since August 1998. Mr.
Rue has served as President of the Company since August 1998, as Chief Operating
Officer of the Company since December, 1994 and as Chief Financial Officer and
Treasurer of the Company since September, 1988. From 1985 to 1988, he was
Treasurer of SEVKO, Inc. and from 1982 to 1984 he was Vice President-Finance of
Detroit Tool Industries Corporation. Prior to that time, Mr. Rue had been
employed since 1974 by the accounting firm of Touche Ross & Co.
ROBERT A. BERGMANN has been a director of the Company since August 1998.
Mr. Bergmann has been a Principal of Centre Partners Management LLC since 1995.
From 1989 to 1991 and from 1993 to 1995, Mr. Bergmann was an Associate of Centre
Partners L.P. Mr. Bergmann serves as a director of Music Holdings Corp.,
Rembrandt Photo Services and a number of other private corporations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES.
DIRECTORS CONTINUING IN OFFICE UNTIL 1999 ANNUAL MEETING
CLASS II DIRECTORS
BERT DOORNMALEN has been a Director of the Company since July 1994. Mr.
Doornmalen has been the Managing Director of Markpeak Ltd., a Hong Kong company
which represents the Company in the purchase and inspection of products in the
Far East, since 1981.
BRUCE G. POLLACK has been a Director of the Company since August 1998. Mr.
Pollack has been a Managing Director of Centre Partners Management LLC since
1995. Mr. Pollack is also a Partner of Centre Partners L.P. which he joined in
1991. Mr. Pollack serves as a director of Music Holdings Corp., KIK Corp.
Holdings Inc., Rembrandt Photo Services, Johnny Rockets Group, Inc. and a number
of other private corporations.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held five meetings during the fiscal
year ended June 28, 1997 and twelve meetings during the fiscal year ended June
27, 1998.
The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee held two meetings during fiscal 1997 and two meetings during
fiscal 1998. The Compensation Committee held one meeting during fiscal 1997 and
three meetings during fiscal 1998. The Committees received their authority and
assignments from the Board of Directors and report to the Board of Directors.
Each director
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attended at least 75% of the meetings of the Board of Directors and 75% of the
meetings of the Committees on which he served.
The Audit Committee recommends the engagement of the Company's independent
auditors and is primarily responsible for approving the services performed by
the Company's independent auditors. The Committee also reviews and evaluates the
Company's accounting principles and its system of internal accounting controls.
The Committee currently consists of Frank Devine and Bert Doornmalen.
The Compensation Committee reviews and approves the Company's executive
compensation policy, makes recommendations concerning the Company's employee
benefit policies for executives, and has authority to administer the Company's
stock option plans. The Committee currently consists of Frank Devine and Bert
Doornmalen.
COMPENSATION OF DIRECTORS
We compensate directors who are not employees of the Company with a fee in
the amount of $7,500 per annum and $1,000 per meeting he or she attends (plus
reimbursement for out-of-pocket expenses incurred in connection with attending
such meetings). During each of the fiscal years ended June 28, 1997 and June 27,
1998, each non-employee director was granted options to purchase 2,000 shares of
Common Stock under the Company's Non-Employee Directors Stock Option Plan.
EXECUTIVE OFFICERS' COMPENSATION
The following table shows the total compensation received by the Company's
Chief Executive Officer and its other executive officers for each of the fiscal
years ending June 27, 1998, June 28, 1997 and June 29, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- --------------------- -------
OTHER RESTRICTED
ANNUAL STOCK OPTIONS/ LTPP ALL OTHER
NAME AND SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR $ $ ($)(1) ($) (#) ($) ($)
------------------ ---- ------- ------- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Leonhard Dreimann.................. 1998 350,000 191,552 55,364 -- 47,147(3) -- --
(Chief Executive Officer) 1997 282,000 150,000 54,000 -- -- -- --
1996 200,000 15,000 55,000 -- 70,000(2) -- --
David C. Sabin..................... 1998 350,000 191,552 11,087 -- 47,147(3) -- --
(Chairman and Secretary) 1997 251,000 150,000 17,000 -- -- -- --
1996 150,000 15,000 20,000 -- 70,000(2) -- --
William B. Rue..................... 1998 240,000 142,296 11,453 -- 47,146(3) -- --
(President, Chief Operating 1997 192,000 50,000 17,000 -- -- -- --
Officer and Chief Financial
Officer) 1996 150,000 15,000 25,000 -- 70,000(2) -- --
</TABLE>
- ---------------
(1) Consists primarily of reimbursement for costs associated with use and
maintenance of an automobile.
(2) Options were awarded on October 26, 1995 under the Company's 1995 Employee
Stock Option Plan at an exercise price equal to the fair market value of the
Common Stock on the date of grant ($2.50).
(3) Options were awarded on May 6, 1998 under the Company's 1995 Employee Stock
Option Plan at an exercise price equal to the fair market value of the
Common Stock on the date of grant ($12.25).
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The following table sets forth certain information concerning options
granted to the named executive officers during the fiscal year ended June 27,
1998. No options were awarded to the named executive officers during the fiscal
year ended June 28, 1997.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------ POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ---------- ------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Leonhard Dreimann.......... 47,147 24.3% 12.25 5/06/08 $363,220 $920,465
David C. Sabin............. 47,146 24.3 12.25 5/06/08 363,220 920,465
William B. Rue............. 47,146 24.3 12.25 5/06/08 363,213 920,445
</TABLE>
- ---------------
(1) Options vest 33% on each anniversary of December 19, 1997.
The following table sets forth certain information with respect to the
unexercised options to purchase the Common Stock held by the named executive
officers at June 27, 1998. None of the named executive officers exercised any
stock options during the fiscal year ended June 27, 1998.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS/SARS AT
OPTIONS/SARS AT FY-END (#) FY-END ($)(1)
------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Leonhard Dreimann...................... 140,000 47,147 $ 857,500 $53,040
David C. Sabin......................... 70,000 47,147 761,250 53,040
William B. Rue......................... 120,000 47,146 1,163,750 53,039
</TABLE>
- ---------------
(1) Based on the fair market value of the Common Stock on June 26, 1998 ($13.375
per share) less the option exercise price.
EMPLOYMENT AGREEMENTS
David C. Sabin (Chairman of the Board), Leonhard Dreimann (Chief Executive
Officer), and William B. Rue (President, Chief Operating Officer and Chief
Financial Officer), have each entered into employment agreements (the
"Employment Agreements"), effective as of December 19, 1997, which provide for
their continued employment in their present capacities with the Company through
December 31, 2001.
Messrs. Sabin and Dreimann are entitled to an annual salary at the rate of
$425,000 through June 30, 1998 and $500,000 thereafter. Mr. Rue is entitled to
an annual salary at the rate of $285,000 through June 30, 1998 and $350,000
thereafter. In addition, commencing with calendar year 1998, each of the
executives is entitled to an annual bonus each calendar year ranging from 25% of
his base salary (if the Company achieves threshold performance goals) to 100% of
his salary (if the Company achieves target performance goals) to 125% of his
salary (if the Company achieves maximum performance goals).
Under the terms of the Employment Agreements, if the executive is
terminated without cause or resigns with good reason, he is entitled to receive
a lump-sum payment equal to his salary for the remainder of the term, plus the
bonuses he would have received if the Company achieved target performance goals
for the remainder of the term and other benefits which he would have been
entitled to for the remainder of the term. The termination of employment by the
executive during the 30-day period immediately following the one-year
anniversary of a change of control constitutes good reason under the executive's
Employment Agreement. In
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<PAGE> 11
addition, if the executive voluntarily terminates his employment within two
years after a change of control of the Company, he is entitled to receive a lump
sum payment equal to his salary and other benefits for the remainder of the
term. The termination without cause of the executive or resignation for good
reason by the executive constitutes good reason for the other the executives to
resign under the Employment Agreements.
Each Employment Agreement provides for the granting of 126,358 options to
purchase shares of Common Stock to the executive (63,179 options with an
exercise price equal to the closing price of the Common Stock on the Nasdaq
National Market on December 18, 1998 and 63,179 options with an exercise price
equal to the closing price of the Common Stock on the Nasdaq National Market on
December 17, 1999). Upon a change of control prior to the granting of such
options, each executive may elect to receive in lieu of the exercise of such
options a lump sum payment equal to (1) the difference between (x) the average
of the closing price of the Common Stock on the Nasdaq National Market for the
five trading days immediately preceding the change of control and (y) $15.25,
multiplied by (2) the number of shares of the Common Stock subject to such
options.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for administering the
compensation program for the executive officers of the Company.
Set forth below is a discussion of the Company's compensation philosophy,
together with a discussion of the factors considered by the Committee in
determining the compensation of the Company's Chief Executive Officer and other
executive officers for the fiscal years ended June 28, 1997 and June 27, 1998.
OBJECTIVES AND POLICIES. The Company's executive compensation program is
designed to enable the Company to recruit, retain and motivate the high quality
employees it needs. As a result, the Committee has determined that executive
compensation opportunities, including those for Mr. Dreimann, should create
incentives for superior performance and consequences for below target
performance.
The Company's executive compensation mix includes a base salary, annual
cash bonus awards and long-term compensation in the form of stock options.
Through this compensation structure, the Company aims to:
- attract and retain highly qualified and talented executives,
- provide appropriate incentives to motivate those individuals to maximize
stockholder returns by producing sustained superior performance, and
- reward them for outstanding individual contributions to the achievement
of the Company's near-term and long-term business objectives.
The Committee's policy is that a significant portion of the executive's
compensation opportunities must be tied to achievement of annual objectives of
the Company.
BASE SALARY. The base salary for Mr. Dreimann and the other executive
officers are established by employment agreements between the Company and these
executives. The Board of Directors approved the Employment Agreements entered
into by the executives effective December 19, 1997 after reviewing data derived
from compensation surveys and other advisory services provided by an independent
consultant and other publicly available competitive compensation data. The
Committee may in its discretion make salary increases based on an assessment of
each executive's performance against the underlying accountabilities of each
executive's position.
ANNUAL CASH INCENTIVES. Payments of bonuses to executives are tied to the
Company's level of achievement of annual pretax earnings targets, establishing a
direct link between executive pay and Company profitability. Annual pretax
earnings targets are based upon the earnings budget for the Company as reviewed
by the Board of Directors. Annual incentive payments are paid only when earnings
exceed those set forth in the budget. Each of the executives is entitled to
receive an annual cash bonus, commencing with calendar year 1998, under the
Employment Agreements (see above) based on achievement of performance goals.
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<PAGE> 12
STOCK OPTIONS. The Company's long-term incentives are in the form of stock
option awards. The objective of these awards is to advance the longer term
interests of the Company and its stockholders and complement incentives tied to
annual performance. These awards provide rewards to executives upon the creation
of incremental stockholder value and the attainment of long-term earnings goals.
Stock options only produce value to executives if the price of the Company's
stock appreciates, thereby directly linking the interests of executives with
those of stockholders. The Committee decides on the number and timing of stock
option grants to executive officers based on its assessment of the performance
of each executive. The Committee weighs any factors it considers relevant and
gives such factors the relative weight it considers appropriate under the
prevailing circumstances. The Committee does not take into account the size of
previous option grants and the number of options currently held by an executive
in determining the number of stock options granted. The executive's right to the
stock options generally vest over a period and each option is exercisable, but
only to the extent it has vested, over a ten-year period following its grant.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. Mr. Dreimann's base salary for the
fiscal years ended June 28, 1997 and June 27, 1998 was based on his rights under
his prior employment agreement with the Company, which expired on December 15,
1997, and his new Employment Agreement, as described above. The bonuses,
perquisites and other benefits received by Mr. Dreimann that are reported in the
Summary Compensation Table were provided pursuant to such employment agreements.
The Committee awarded Mr. Dreimann the cash bonuses for fiscal 1997 and 1998
because the Company's financial performance exceeded budgeted performance in
each of those years. In recognition of Mr. Dreimann's contributions, the
Committee also granted Mr. Dreimann on May 6, 1998 an option to purchase 47,147
shares of Common Stock with an exercise price of $12.25 (the fair market value
of the Common Stock on May 6, 1998, the date of grant).
LIMITS TO TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION. The Committee has
reviewed the potential consequences for the Company of Section 162(m) of the
Internal Revenue Code, which imposes a limit on tax deductions for annual
compensation in excess of one million dollars paid to any of the five most
highly compensated executive officers. This provision had no impact on the
Company in fiscal 1997 or fiscal 1998, but could apply in future years if the
executives are paid bonuses based on the Company's financial performance
significantly exceeding budgeted performance. The Committee will review from
time to time in the future the potential impact of Section 162(m) on the
deductibility of executive compensation. However, the Committee intends to
maintain the flexibility to take actions that we consider to be in the best
interests of the Company and our stockholders and which may be based on
considerations in addition to tax deductibility.
Compensation Committee
Bert Doornmalen
Frank M. Devine
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Bert Doornmalen, a director of the Company, is the Managing Director of
Markpeak, Ltd., a Hong Kong company. The Company recorded inventory purchases
with Markpeak, Ltd. of $15.7 million in fiscal 1998 and $7.8 million in fiscal
1997. The Company paid commissions to Markpeak of $273,000 in fiscal 1998 and
$432,000 in fiscal 1997.
Mr. Frank M. Devine, a director of the Company, is a co-founder of the firm
Shapiro, Devine and Craparo, Inc. ("SDC"), a manufacturers representation firm.
The firm represents many major manufacturers of household products (including
the Company) to the retail industry. The Company recorded commissions with SDC
of approximately $290,000 in fiscal 1998 and $241,000 in fiscal 1997. As of June
27, 1998, the Company owed SDC $38,000 for current charges.
Mr. David M. Friedson, a former director of the Company, is Chairman of the
Board, President and Chief Executive Officer of Windmere-Durable Holdings, Inc.
("Windmere-Durable"). Mr. Friedson served on the Compensation Committee during
fiscal 1997 and 1998. Reference is made to "Certain Transactions" below for a
discussion of the relationships between the Company and Windmere-Durable.
9
<PAGE> 13
PERFORMANCE GRAPH
The following graph compares the performance of the Company with the
performance of the Standard & Poor's 500 Stock Index (S&P 500) and the average
performance of a group consisting of the Company's peer corporations which are
industry competitors for the period from June 27, 1993 to June 27, 1998. The
corporations making up the peer companies group are Black & Decker Corp.,
Craftmade International Inc., Helen of Troy Corp., National Presto Industries
Inc., Rival Co., Royal Appliance Manufacturing Co., Singer Co. N.V.,
Sunbeam-Oster Company Inc., Toastmaster Inc. and Windmere-Durable Holdings, Inc.
The graph assumes that the value of the investment in the Common Stock and each
index was $100 at June 27, 1993 and that all dividends, if any, were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C>
Salton/Maxim Housewares, Inc.: $100 $100 $106 $211 $361 $653
Peer Companies Group $100 $101 $128 $161 $217 $282
S&P 500 $100 $ 97 $114 $138 $188 $201
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of October 15, 1998 by (i) each person known to
the Company to beneficially own 5% or more of the Common Stock, (ii) each of the
directors and executive officers of the Company and (iii) all executive officers
and directors of the Company as a group. The number of shares of Common Stock
shown as owned by the persons and group named below assumes the exercise of all
currently exercisable options and the conversion of all shares of Series A
Preferred Stock held by such persons and group, and the percentage shown
10
<PAGE> 14
assumes the exercise of such options and the conversion of such shares and
assumes that no options held by others are exercised.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
NAME OF BENEFICIAL HOLDER OWNED(1) OWNED
------------------------- ------------ ------------
<S> <C> <C>
Centre Partners Group(2).................................... 2,566,641 28.8%
Mr. Leonhard Dreimann(3).................................... 842,733 9.0
Mr. William B. Rue(3)....................................... 623,902 6.9
Mr. David C. Sabin(4)....................................... 338,676 3.8
Mr. Frank Devine(5)......................................... 31,000 *
Mr. Bert Doornmalen(5)...................................... 16,000 *
Mr. Robert A. Bergmann...................................... 0 *
Mr. Bruce G. Pollack(2)..................................... 0 *
All Directors and executive officers as a group (7
persons)(6)............................................... 1,215,909 13.1%
</TABLE>
- ---------------
* Less than 1%.
(1) Unless otherwise indicated below, the persons named in the table above have
sole voting and investment power with respect to the number of shares set
forth opposite their names. Beneficially owned shares include shares subject
to options exercisable within 60 days of October 15, 1998.
(2) Consists of an aggregate of 213,700 shares of Common Stock and 40,000 shares
of Series A Preferred Stock: (i) 65,777 shares of Common Stock and 12,312
shares of Series A Preferred Stock owned of record by Centre Capital
Investors II, L.P. ("Investors II"), (ii) 21,401 shares of Common Stock and
4,006 shares of Series A Preferred Stock owned of record by Centre Capital
Tax-Exempt Investors II, L.P. ("Tax-Exempt II"), (iii) 14,312 shares of
Common Stock and 2,679 shares of Series A Preferred Stock owned of record by
Centre Capital Offshore Investors II, L.P. ("Offshore II"), (iv) 1,010
shares of Common Stock and 189 of Series A Preferred Stock shares owned of
record by Centre Parallel Management Partners, L.P. ("Parallel"), (v) 11,311
shares of Common Stock and 2,117 shares of Series A Preferred Stock owned of
record by Centre Partners Coinvestment, L.P. ("Coinvestment") and (vi)
99,889 shares of Common Stock and 18,697 shares of Series A Preferred Stock
owned of record of the State Board of Administration of Florida (the
"Florida Board"). As of October 15, 1998, the 40,000 shares of Series A
Preferred Stock were convertible into 2,352,941 shares of the Common Stock.
Investors II, Tax-Exempt II and Offshore II are limited partnerships, of
which the general partner of each is Centre Partners II, L.P. ("Partners
II"), and of which Centre Partners Management LLC ("Centre Management") is
an attorney-in-fact. Parallel and Coinvestment are also limited
partnerships. In its capacity as manager of certain investments for the
Florida Board pursuant to a management agreement, Centre Management is an
attorney-in-fact of Parallel. Centre Partners II LLC is the ultimate general
partner of each of Investors II, Tax-Exempt II, Offshore II, Parallel and
Coinvestment. Bruce G. Pollack is Managing Director of Centre Management and
Centre Partners II LLC and as such may be deemed to beneficially own and
share the power to vote or dispose of the Common Stock and Series A
Preferred Stock held by Investors II, Tax-Exempt II, Offshore II, Parallel,
Coinvestment and the Florida Board. Mr. Pollack disclaims the beneficial
ownership of such Common Stock and Series A Preferred Stock. The foregoing
is based upon information contained in a Schedule 13D/A dated September 16,
1998 filed with the Securities and Exchange Commission.
(3) Includes, with respect to Mr. Dreimann and Mr. Rue: (i) 463,580 shares owned
by Dominator Investors Group, a Hong Kong corporation ("Dominator"), which
is owned 71.9% by Mr. Dreimann and 18.1% by Mr. Rue; and (ii) 140,000 shares
and 120,000 shares, respectively, of Common Stock which may be acquired upon
the exercise of immediately exercisable options.
(4) Includes 70,000 shares of common stock which may be acquired upon the
exercise of immediately exercisable stock options. Also includes (i) 179,676
shares owned by Duquesne Financial Corporation ("Duquesne"), a corporation
which is owned by Susan Sabin, and (ii) 89,000 shares owned by Susan
11
<PAGE> 15
Sabin. Susan Sabin is David Sabin's wife. Mr. Sabin disclaims beneficial
ownership of all shares owned by Duquesne and Susan Sabin.
(5) Includes, with respect to each of Messrs. Doornmalen and Devine, 16,000
shares of Common Stock which may be acquired upon the exercise of
immediately exercisable options.
(6) Includes an aggregate of 362,000 shares which may be acquired by Directors
and officers of the Company upon the exercise of immediately exercisable
options. See footnotes 3 through 5 above.
The addresses of the persons shown in the table above who are beneficial
owners of more than five percent of the Company's Common Stock are as follows:
Centre Partners Management LLC, 30 Rockefeller Plaza, Suite 5050, New York, New
York 10020; and Messrs. Dreimann, Rue and Sabin, 550 Business Center Drive,
Mount Prospect, Illinois 60056.
SECTION 16 REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and directors, and persons who own more than 10% of the outstanding Common
Stock, to file reports of ownership and changes in ownership of such securities
with the Securities and Exchange Commission. Officers, directors and
greater-than-10% beneficial owners are required to furnish the Company with
copies of all Section 16(a) forms they file. Based solely upon our review of the
copies of the forms furnished to the Company and other information, we believe
that all of these reporting persons complied with their filing requirement for
fiscal 1998.
CERTAIN TRANSACTIONS
On July 11, 1996, Windmere-Durable purchased from the Company 6,508,572
newly issued shares of Common Stock (the "Purchase"), which represented 50% of
the outstanding shares of the Common Stock on February 27, 1996 after giving
effect to the Purchase. As consideration for the Purchase, Windmere-Durable paid
the Company: (1) $3,254,286 in cash, as described below; (2) a subordinated
promissory note in the aggregate principal amount of $10,847,620 (the "Windmere
Note"); and (3) 748,112 shares of Windmere-Durable's common stock. The cash
portion of the consideration for the Purchase was paid by the cancellation of
the Company's obligation to repay a loan in the principal amount of $3,254,286
which Windmere-Durable had made to the Company in April 1996. Windmere-Durable
was also granted an option to purchase up to 485,000 shares of the Common Stock
at an exercise price of $4.83 per share, which option is exercisable only if and
to the extent that options to purchase shares of Common Stock which were
outstanding on February 27, 1996 are exercised.
In connection with the Purchase, the Company and Windmere-Durable entered
into a Marketing Cooperation Agreement. The Company and Windmere-Durable agreed
in the Marketing Cooperation Agreement that until Windmere-Durable's interest in
the Company is less than 30% for at least ten consecutive days, they will
participate in a variety of mutually satisfactory marketing cooperation efforts
designed to expand the market penetration of each party.
In connection with the Marketing Corporation Agreement, the Company entered
into a letter agreement dated April 30, 1997 with Windmere-Durable. The letter
agreement provides that the Company pay to Windmere-Durable a fee based upon the
Company's net sales less specified costs and expenses relating to the Company's
supply agreement with Kmart in consideration of Windmere's guarantee of the
Company's obligations under the supply agreement. The Company had amounts due to
Windmere-Durable, including its subsidiary Durable Electrical Metal Factory,
Ltd., of approximately $4.8 million at June 27, 1998. The Company purchased
inventory from Durable of $27.1 million in fiscal 1998 and $23.5 million in
fiscal 1997.
On July 28, 1998, the Company repurchased (the "Stock Repurchase") the
6,535,072 shares of the Common Stock owned by Windmere-Durable. The price for
the Stock Repurchase was $12 per share in cash plus a $15.0 million subordinated
promissory note (the "Junior Subordinated Note"). The Junior Subordinated Note,
which has a term of six and one-half years and bears interest at 4.0% per annum
payable annually, is subject to offsets of 5% of the total purchase price paid
by the Company for product purchases from Windmere-Durable and its affiliates
during the term of the note. The principal amount of the Junior
12
<PAGE> 16
Subordinated Note is also subject to reduction in the event the Company's supply
agreement with Kmart is terminated for any reason.
In connection with the Stock Repurchase: (1) Windmere effectively repaid in
full the Windmere Note in the principal amount of approximately $10.8 million,
which note was issued to the Company in July, 1996; (2) the Company repurchased
for approximately $3.3 million Windmere's option to purchase up to 458,500
shares of the Company, which option was granted to Windmere-Durable in July,
1996; and (3) Windmere-Durable and the Company agreed to continue various
commercial and other arrangements, including the fee agreement relating to the
Company's supply agreement with Kmart, subject to certain modifications.
On July 28, 1998, the Company also issued $40.0 million of Series A
Preferred Stock to affiliates of Centre Partners Management LLC ("Centre
Partners") in connection with a Stock Purchase Agreement dated July 15, 1998
(the "Preferred Stock Agreement"). The Series A Preferred Stock is generally
non-dividend bearing and is currently convertible into 2,352,941 shares of
Common Stock (reflecting a $17 per share conversion price). Centre Partners is a
private investment firm that manages the commitments and assets of Centre
Capital Investors II, L.P. and related entities.
In connection with the issuance of the Series A Preferred Stock, the
Company paid Centre Partners a $500,000 transaction fee. The Preferred Stock
Agreement provides that Centre Partners generally has the right to designate two
directors as long as it and its affiliates own at least 12.5% of the total
voting power of the Company and one director as long as it and its affiliates
own at least 7.5% of the total voting power of the Company. Centre Partners has
designated Robert A. Bergmann and Bruce G. Pollack to serve as directors of the
Company. The affiliates of Centre Partners and the Company also entered into a
Registration Rights Agreement which grants such affiliates certain demand and
piggyback registration rights with respect to their shares of Series A Preferred
Stock and shares of the Common Stock which are issuable upon conversion thereof.
Reference is made to "Compensation Committee Interlocks and Insider
Participation" above for a discussion of the relationships between the Company
and each of Markpeak, Ltd. and Shapiro, Devine and Craparo, Inc.
The Company believes that each of the above transactions were on terms
which were no less favorable to the Company than would have been available in
similar transactions with unaffiliated third parties.
PROPOSAL 2: APPROVE AMENDMENT TO THE COMPANY'S
RESTATED CERTIFICATE OF INCORPORATION
We are seeking your approval to change the name of the Company from
"Salton/Maxim Housewares, Inc." to "Salton, Inc." by amending the Company's
Restated Certificate of Incorporation. No other change to the Company's Restated
Certificate of Incorporation, other than to change the Company's name as
recorded by the Delaware Secretary of State and to change the name under which
the Company transacts business and trades on the NASDAQ National Market, is
contemplated. The Company's new name will be effective upon the filing of an
Amended and Restated Certificate of Incorporation with the Delaware Secretary of
State.
The Board of Directors believes that the proposed name change is in the
best interest of the Company and its stockholders. The Company's predecessor,
Salton Housewares, Inc. acquired the assets of Financo-Maxim, Inc. in 1989 and
changed its name to Salton/Maxim Housewares, Inc. The combined company continued
to market its products under the Salton(R), Salton Creations(R) and Maxim(R)
brand names. Since that time, the Company has significantly expanded the brand
names under which it offers products. Kitchen and small household electrical
appliances are now marketed and distributed under the Salton(R), Maxim(R),
Breadman(R), Juiceman(R), George Foreman Grills(R), White-Westinghouse(R) and
Farberware(TM) brand names. Tabletop products are marketed and distributed under
the Block(R) China, Atlantis(R) Crystal and Gear(R) brand names. Personal and
beauty care appliances and gift products are marketed and distributed under the
Salton Creations(R) brand name and time products under the Salton Time(R) brand
name.
13
<PAGE> 17
The Board of Directors believes that the name of the Company cannot
describe the full range of products and/or brand names used by the Company. The
Board has decided to change the name of the Company to Salton, Inc. since the
Salton(R) brand name has been in existence since 1947 and is the name which the
financial and consumer markets most closely associate with the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF INCORPORATION.
PROPOSAL 3: 1998 STOCK OPTION PLAN
The Board of Directors has adopted the Salton/Maxim Housewares, Inc. 1998
Stock Option Plan, subject to your approval at the Annual Meeting. All of the
Company's executive officers have an interest in the proposal as they are
eligible to participate in the Stock Option Plan.
We have summarized below certain key provisions of the Stock Option Plan.
Because it is a summary, it may not contain all the information that is
important to you. Before you decide how to vote, you should review the full text
of the Stock Option Plan, which we have included as Appendix A.
PURPOSE. The purpose of the Stock Option Plan is to provide key incentives
for the Company to attract new employees, retain existing employees and
stimulate employees towards furthering the interests of both the Company and
stockholders alike.
TYPES OF AWARDS. The Plan permits the granting of any or all of the
following types of awards to employees of the Company or any of its affiliates:
- stock options, including incentive stock options ("ISOs");
- stock appreciation rights ("SARs");
- restricted stock;
- performance shares or units conditioned upon meeting performance
criteria; and
- other stock unit awards.
NUMBER OF SHARES; LIMITATIONS. A total of 600,000 shares of Common Stock
are reserved for grant pursuant to awards under the Stock Option Plan. We will
adjust the number of shares available for issuance under the Stock Option Plan
if there are changes in our capitalization, a merger, or a similar transaction.
We may issue new shares or treasury shares or both. Treasury shares are shares
that are previously issued and subsequently repurchased and are holding in our
treasury.
The maximum number of shares for which options or SARs or a combination
thereof may be granted to any one grantee in a calendar year is 200,000 shares.
The maximum dollar amount of compensation that may be represented by performance
units (not denominated in shares) awarded to any one participant during a
calendar year is 150% of the participant's annual base salary in effect on the
date of the award, multiplied by the number of years (and fractions thereof) in
the performance period.
ELIGIBILITY. All employees of the Company and its affiliates (approximately
219 persons) are eligible to be participants.
ADMINISTRATION. The Compensation Committee will administer the Stock Option
Plan. The Compensation Committee has the authority to, among other things,
select employees of the Company and its affiliates to whom awards are granted,
to determine the types of awards and the number of shares covered and to set the
terms, conditions and provisions of such awards and to cancel or suspend awards.
The Compensation Committee is authorized to construe and interpret the Stock
Option Plan and any agreements entered into under the Stock Option Plan, to
establish, amend, and rescind any rules and regulations relating to the Stock
Option Plan, and to make all other determinations which may be necessary or
desirable for the administration of the Stock Option Plan.
14
<PAGE> 18
POWER TO AMEND PLAN. The Board of Directors may amend, alter or discontinue
the Stock Option Plan at any time without the approval of the stockholders of
the Company.
STOCK OPTIONS. Stock options may be either nonqualified or ISOs (within the
meaning of Section 422 of the Internal Revenue Code).
The Committee may issue stock options at an exercise price no less than the
fair market value of the Common Stock on the date of grant. The exercise price
of a stock option may be paid in cash or previously owned stock or both. Stock
options may also be exercised through a "cashless exercise" procedure. This
allows employees to sell immediately some or all of the shares to generate
sufficient cash to pay the exercise price of the stock option and to satisfy
withholding tax obligations.
The Compensation Committee will fix the term of a stock option upon grant.
However, under the Stock Option Plan, the term may be no longer than ten years.
STOCK APPRECIATION RIGHTS. Stock appreciation rights entitle an employee to
receive the excess, if any, of the fair market value on the date of exercise
over the exercise price. The Compensation Committee must issue stock
appreciation rights at no less than at the fair market value of the Common Stock
on the date of grant. At the discretion of the Compensation Committee, the
Compensation Committee may make payments to an employee upon exercise of a stock
appreciation right in cash, shares of common stock or both.
The Compensation Committee may grant stock appreciation rights alone or
together with stock options.
The Compensation Committee has not awarded stock appreciation rights in the
past and has no current intention of making this type of award in the future.
RESTRICTED STOCK. Restricted stock represents the right of the participant
to receive one share of the Common Stock, subject to the terms and conditions
established by the Compensation Committee. A recipient may not dispose the
restricted stock until those terms and conditions are satisfied. Holders of
restricted stock have, with respect to such stock, all of the rights of a
stockholder, including the right to vote the shares and the right to receive any
cash dividends, unless the Compensation Committee shall otherwise determine.
PERFORMANCE AWARDS. From time to time, the Compensation Committee may
select a period during which one or more performance criteria designated by the
Compensation Committee are measured for the purpose of determining the extent to
which a performance award has been earned. The performance criteria which the
Compensation Committee may designate are:
- earnings (either in the aggregate or on a per share basis) before or
after taxes, before or after depreciation and amortization and before or
after interest expense,
- net income (before or after taxes),
- operating income,
- cash flow,
- return measures (including return on assets, equity or sales),
- share price (including growth measures and total stockholder return or
attainment by the shares of a specified value for a specified period of
time),
- reductions in expense levels in each case where applicable determined
either on a Company-wide basis or in respect of any one or more business
units,
- net economic value, or
- economic value added.
Performance awards may be in the form of performance shares (valued by
reference to shares of stock), or performance units (valued by reference to cash
or property other than stock). Performance awards may be paid in cash, stock,
other property or a combination thereof.
15
<PAGE> 19
OTHER STOCK UNIT AWARDS. The Compensation Committee may award other stock
unit awards to a grantee with or without restrictions under circumstances and on
terms determined by the Committee.
CHANGE OF CONTROL PROVISIONS. A change of control is deemed to occur in the
event of certain acquisitions of 35% or more of the outstanding Common Stock,
certain mergers and other transactions which result in the Company's
stockholders owning 60% or less of the surviving corporation, or certain changes
in the composition of the Board of Directors. In order to maintain all of the
participant's rights in the event of a change of control of the Company, the
Compensation Committee may, in its sole discretion, as to any award, either at
the time an award is made or any time thereafter, take any one or more of the
following actions:
(1) provide for the acceleration of any time periods relating to the
exercise or realization of any such award so that such award may be
exercised or realized in full on or before a date fixed by the Committee;
(2) provide for the purchase of any such award with or without the
participant's consent for an amount of cash equal to the amount that could
have been attained upon the exercise of such award or realization of the
participant's rights had such award been currently exercisable or payable
or exercisable or payable during a stipulated period prior to the change of
control;
(3) make such adjustment to any such award then outstanding as the
Committee deems appropriate to reflect such change in control; or
(4) cause any such award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving corporation after such
change in control. The Committee may, in its discretion, include such
further provisions and limitations respecting a change in control in any
award agreement as it may deem equitable and in the best interests of the
Company.
TERM. The Plan will terminate on July 30, 2008, ten years from the date of
its adoption by the Board of Directors. This means that, if you approve the
Stock Option Plan at the Annual Meeting, no awards will be permitted to be made
under the Stock Option Plan after this date.
STOCK PRICE. On October , 1998, the closing price of the Common Stock on
the Nasdaq National Market was $ .
NEW PLAN BENEFITS. As of the date of this Proxy Statement, we have made no
awards under the Stock Option Plan. Since awards will be authorized by the
Compensation Committee in its sole discretion, it is not possible to determine
the benefits or amounts that will be received by any particular employee or
group of employees in the future.
In connection with the Employment Agreements, we agreed to grant to the
executives the following options under the Stock Option Plan:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION DOLLAR VALUE(1) COVERED BY STOCK OPTIONS
----------------- --------------- ------------------------
<S> <C> <C>
Leonhard Dreimann...................................... Indeterminate 63,179(2)
(Chief Executive Officer) Indeterminate 63,179(3)
David C. Sabin......................................... Indeterminate 63,179(2)
(Chairman and Secretary) Indeterminate 63,179(3)
William B. Rue......................................... Indeterminate 63,179(2)
(President, Chief Operating Indeterminate 63,179(3)
Officer and Chief Financial Officer)
All executive officers as a group (3 persons).......... Indeterminate 379,074
</TABLE>
- ---------------
(1) Dollar value will be realized only to the extent that the market value of
the Common Stock on the date the option is exercised exceeds the exercise
price of the option.
(2) Options will have an exercise price equal to the closing price of the Common
Stock on December 18, 1998 and will vest in three annual installments,
commencing on December 19, 1997.
16
<PAGE> 20
(3) Options will have an exercise price equal to the closing price of the Common
Stock on December 17, 1999 and will vest in three annual installments,
commencing on December 19, 1997.
In the event you do not approve the Stock Option Plan, we have agreed in
the Employment Agreements to grant to the executives stock appreciation rights
which would provide them with substantially the same benefits as the grants
listed above.
TAX ASPECTS OF THE PLAN. The grant of an option or SAR will create no tax
consequences for a grantee or the Company. In general, the grantee will have no
taxable income upon exercising an ISO if the applicable ISO holding period is
satisfied (except that the alternative minimum tax may apply), and the Company
will receive no deduction when an ISO is exercised. Upon exercising a
nonstatutory option or a SAR, the optionee must recognize ordinary income equal
to the difference between the exercise price and the fair market value of shares
of Common Stock on the date of the exercise; the Company will be entitled to a
deduction for the same amount, subject to the possible applicability of the
$1,000,000 compensation deductibility limit of Section 162(m). Generally, there
will be no tax consequence to the Company in connection with a disposition of
shares acquired by exercise of an option except that the Company may be entitled
to a deduction in the case of a disposition of shares acquired by exercise of an
ISO before the applicable ISO holding periods have been satisfied.
With respect to other awards granted under the Stock Option Plan that are
settled either in cash or in stock or other property that is either transferable
or not subject to substantial risk of forfeiture, the participant must recognize
ordinary income equal to the cash or the fair market value of shares or other
property received and the Company will be entitled to a deduction for the same
amount, subject to possible limitation under Section 162(m). With respect to
awards that are settled in stock or other property that is restricted as to
transferability and subject to substantial risk of forfeiture, the participant
must recognize ordinary income equal to the fair market value of the shares or
other property received at the first time the shares or other property become
transferable or not subject to substantial risk of forfeiture, whichever occurs
earlier, and the Company will be entitled to a deduction for the same amount,
subject to possible limitation under Section 162(m).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 1998 STOCK
OPTION PLAN.
5. INDEPENDENT AUDITORS
We are asking you to ratify the Board selection of Deloitte & Touche LLP as
independent auditors for fiscal 1999.
Deloitte & Touche LLP has audited the Company's financial statements for
each fiscal year since the fiscal year ended July 1, 1989. Representatives of
Deloitte & Touche LLP are expected to be present at the meeting with the
opportunity to make a statement if they desire to do so, and are expected to be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY'S AUDITORS FOR FISCAL 1999.
INFORMATION ABOUT STOCKHOLDER PROPOSALS
If you wish to submit proposals to be included in our 1999 proxy statement,
we must receive them on or before July 16, 1999. Please address your proposals
to: WILLIAM B. RUE, PRESIDENT AND CHIEF OPERATING OFFICER, SALTON/MAXIM
HOUSEWARES, INC., 550 BUSINESS CENTER DRIVE, MOUNT PROSPECT, ILLINOIS 60058.
Under our By-laws, if you wish to nominate directors or bring other
business before the stockholders:
- You must notify the Secretary in writing not less than 60 days nor more
than 90 days before the first anniversary of the preceding year's annual
meeting. If, however, the date of the annual meeting is advanced by more
than 30 days or delayed by more than 60 days from such anniversary date,
you may notify us not earlier than 90 days before such annual meeting and
not later than the later of (1) the
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<PAGE> 21
60th day prior to such annual meeting or (2) 10 days after the first
public announcement of the meeting date.
- Your notice must contain the specific information required in our
By-laws.
Please note that these requirements relate only to matters you wish to bring
before your fellow stockholders at an annual meeting. They are separate from the
SEC's requirements to have your proposal included in our proxy statement.
If you would like a copy of our By-laws, we will send you one without
charge. Please write to the Secretary of the Company.
By Order of the Board of Directors
David C. Sabin
Secretary
November , 1998
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<PAGE> 22
APPENDIX A
SALTON/MAXIM HOUSEWARES, INC.
1998 STOCK OPTION PLAN
<PAGE> 23
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 1. Purpose..................................................... 1
Section 2. Definitions................................................. 1
Section 3. Administration.............................................. 3
Section 4. Shares Subject to the Plan.................................. 4
Section 5. Eligibility................................................. 4
Section 6. Stock Options............................................... 4
Section 7. Stock Appreciation Rights................................... 6
Section 8. Restricted Stock............................................ 8
Section 9. Performance Awards.......................................... 8
Section 10. Other Stock Unit Awards..................................... 9
Section 11. Termination of Employment................................... 9
Section 12. Transferability of Awards................................... 10
Section 13. Change in Control........................................... 10
Section 14. Amendments and Termination.................................. 11
Section 15. General Provisions.......................................... 12
Section 16. Term of Plan................................................ 13
</TABLE>
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SALTON/MAXIM HOUSEWARES, INC.
1998 STOCK OPTION PLAN
THE PLAN. Salton/Maxim Housewares, Inc., a Delaware corporation (the
"Company"), hereby establishes the Salton/Maxim Housewares, Inc. 1998 Stock
Option Plan (the "Plan"), effective as of the Effective Date.
SECTION 1. PURPOSE. The purposes of the Plan are to encourage employees of
the Company and its Affiliates to acquire an ownership interest in the growth
and performance of the Company and to increase their incentive to contribute to
the Company's future success, thus enhancing the value of the Company for the
benefit of stockholders, and enhancing the ability of the Company and its
Affiliates to attract and retain individuals upon whom, in large measure, the
progress, growth and profitability of the Company depends.
SECTION 2. DEFINITIONS. The following terms have the meanings set forth
below:
"Affiliate" means any Person that directly, or through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the Company.
"Award" means any Option, SAR, Restricted Stock Award, Performance Share,
Performance Unit or Other Stock Unit Award.
"Award Agreement" means the written agreement or instrument by which every
Award is evidenced.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to a specific section of the Code shall also refer to any
successor provision, and any regulations promulgated under such section or
successor provision.
"Committee" means the Stock Option Committee of the Board.
"Company" means Salton/Maxim Housewares, Inc.
"Effective Date" means July 30, 1998, the date this Plan is adopted by the
Board; provided, however, that if the Plan is not approved by a majority of the
stockholders present and voting at an annual meeting of the stockholders of the
Company on or before December 31, 1998, this Plan shall not be effective and
this Plan and any Award theretofore made under this Plan shall be void.
"Employee" means any employee of the Company or of any Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934.
"Fair Market Value" means, with respect to a Share, (i) the closing price
of the Shares on The NASDAQ Stock Market or any other national stock exchange on
which the Shares are then traded, or if no such reported sale of Shares shall
have occurred on such date, on the next preceding date on which there was such a
reported sale; or (ii) if the Shares are not listed for trading on a national
securities exchange or authorized for quotation on The NASDAQ Stock Market, the
average of the closing bid and asked prices as reported by the NASDAQ or, if no
such prices shall have been reported for such date, on the next preceding date
for which such prices were so reported.
"Incentive Stock Option" means an Option granted pursuant to Section 6(h)
that is intended to meet the requirements of Section 422 of the Code.
"including" means including without limitation.
"Limited Right" means an SAR which is exercisable only for a limited period
after a Change in Control as provided in Section 7(f).
"Mature Shares" means Shares to which the holder thereof has good title,
free and clear of all liens and encumbrances, and which such holder either (i)
has held for at least six months or (ii) has purchased on the open market.
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"Nonstatutory Stock Option" means an Option granted to a Participant
pursuant to Section 6 that is not intended to be an Incentive Stock Option.
"Option" means any right granted to a Participant under the Plan allowing
such Participant to purchase Shares at such price or prices and during such
period or periods as the Committee shall determine.
"Optionee" means any Participant to whom an Option has been granted under
the Plan.
"Option Price" means the per share purchase price of Shares subject to an
Option.
"Other Stock Unit Award" means any right granted to a Participant by the
Committee pursuant to Section 10.
"Participant" means an Employee who is selected by the Committee to receive
an Award under the Plan.
"Performance Award" means any Award of Performance Shares or Performance
Units pursuant to Section 9.
"Performance Period" means that period established by the Committee at the
time any Performance Award is granted or at any time thereafter during which any
performance goals specified by the Committee with respect to such Award are to
be measured.
"Performance Share" means any grant pursuant to Section 9 of a unit valued
by reference to a designated number of Shares, which value may be paid to the
Participant by delivery of such property as the Committee shall determine,
including cash, Shares, or any combination thereof, upon achievement of such
performance goals during the Performance Period as the Committee shall establish
at the time of such grant or thereafter.
"Performance Unit" means any grant pursuant to Section 9 of a unit valued
by reference to a designated amount of property other than Shares, which value
may be paid to the Participant by delivery of such property as the Committee
shall determine, including cash, Shares, or any combination thereof, upon
achievement of such performance goals during the Performance Period as the
Committee shall establish at the time of such grant or thereafter.
"Permitted Transferee" means, in respect of any Participant, any member of
the Immediate Family of such Participant, any trust of which all of the primary
beneficiaries are such Participant or members of his or her Immediate Family, or
any partnership of which all of the partners are such Participant or members of
his or her Immediate Family. The "Immediate Family" of a Participant means the
Participant's spouse, children, stepchildren, grandchildren, parents,
stepparents, siblings, grandparents, nieces and nephews.
"Person" means any individual, corporation, partnership, limited liability
company, association, trust, unincorporated organization, or government or
political subdivision thereof.
"Restricted Stock" means any Share issued with the restriction that the
holder may not sell, transfer, pledge, or assign such Share and with such other
restrictions as the Committee, in its sole discretion, may impose (including any
restriction on the right to vote such Share, and the right to receive any cash
dividends), which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise, as the Committee may specify.
"Restricted Stock Award" means an Award of Restricted Stock pursuant to
Section 8.
"SAR" means any right granted to a Participant pursuant to Section 7 to
receive, upon exercise by the Participant, an amount equal to the number of
Shares with respect to which the right is granted multiplied by the excess of
(i) the Fair Market Value of one Share on the date of exercise or, if the
Committee shall so determine in the case of any such right other than one
related to any Incentive Stock Option, at any time during a specified period
before the date of exercise, over (ii) the grant price of the right as specified
by the Committee.
"Shares" means shares of the common stock of the Company.
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SECTION 3. ADMINISTRATION.
(a) General. The Plan is administered by the Committee. A majority of the
members of the Committee may determine its actions and fix the time and place of
its meetings. The Committee may appoint agents (who may be Employees) to assist
in the administration of the Plan, and may authorize such persons to execute
agreements or other documents on its behalf. No member of the Committee shall be
liable for any action or determination made with respect to the Plan or any
Award.
(b) Power and Authority of Committee. The Committee shall have full power
and authority, in its sole discretion subject to the provisions of the Plan, to:
(i) determine the Employees to whom Awards may from time to time be
granted;
(ii) determine the type or types of Award to be granted to each
Participant;
(iii) determine the number of Shares or other amount to be covered by
each Award, subject to the limitations of Section 4.
(iv) determine the terms and conditions, not inconsistent with the
provisions of the Plan, of any Award;
(v) determine whether, to what extent and under what circumstances
Awards may be settled in cash, Shares or other property or canceled or
suspended;
(vi) determine whether, to what extent and on what terms and
conditions cash, Shares and other property and other amounts payable with
respect to an Award under this Plan shall be deferred, either automatically
or at the election of the Participant;
(vii) determine the existence or nonexistence of any fact or status
relevant to Awards or the rights of Participants thereunder, including
whether a Termination of Employment occurs by reason of cause, retirement,
death or disability;
(viii) construe and interpret the Plan, any Award Agreement, and any
other instrument or agreement entered into under the Plan;
(ix) adjust performance award criteria or the terms and conditions of
other Awards in recognition of unusual or nonrecurring events affecting the
Company or its financial statements or changes in applicable laws,
regulations or accounting principles;
(x) make such other determinations and waive such requirements as may
be required or permitted by Sections 6, 7, 8, 9, 10 and 11 or other
provisions of the Plan;
(xi) administer the Plan and establish such rules and regulations,
approve and prescribe such forms, and appoint such agents as it shall deem
appropriate for the proper administration of the Plan;
(xii) correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it
shall deem desirable to carry it into effect;
(xiii) make any other determination and take any other action that the
Committee deems necessary or desirable for administration of the Plan.
In making such determinations, the Committee may take into consideration
the value of the services rendered by the respective individuals, their
present and potential contributions to the success of the Company and its
Affiliates and such other factors which the Committee may deem relevant in
accomplishing the purposes of the Plan. The Committee's determinations
under the Plan need not be uniform. The Committee may make such
determinations selectively among persons who receive, or are eligible to
receive, Awards (whether or not such persons are similarly situated).
Decisions of the Committee shall be final and binding upon all Persons.
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SECTION 4. Shares Subject to the Plan.
(a) Aggregate Limit. Subject to adjustment as provided in Section 15(h), a
total of 600,000 Shares are reserved for grant pursuant to Awards under the
Plan. Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued Shares or treasury Shares. Shares shall be charged
against the foregoing limit upon the grant of each Award (other than a
Performance Unit or Other Stock Unit not denominated in Shares), but if such
Shares are thereafter forfeited or such Award otherwise terminates without the
issuance of such Shares or of other consideration in lieu of such Shares, the
Shares so forfeited or related to the terminated portion of such Award shall be
restored to the foregoing limit and shall again be available for Awards under
the Plan. If Shares are applied to pay the Option Price upon exercise of an
Option or to pay federal, state and local taxes upon exercise of an Option or
other receipt of payment under an Award, the Shares so applied shall be added to
the foregoing limit and shall be available for Awards under the Plan.
(b) Individual Annual Limits. Awards to any one individual in any one
calendar year are subject to the following limits:
(i) Options. The maximum number of Shares with respect to which
Options may be granted during a calendar year to any Participant is
200,000;
(ii) SARs. The maximum number of SARs that may be granted during a
calendar year to any Participant is 200,000;
(iii) Aggregate Options and SARs. The sum of the number of Shares with
respect to which Options may be granted and the number of SARs that may be
granted in total during a calendar year to any Participant is 200,000;
(iv) Other Share-Denominated Awards. The maximum number of Shares with
respect to which Restricted Stock, Performance Shares, and Other Stock
Units denominated in Shares in total may be granted during a calendar year
to any Participant is 100,000; and
(v) Dollar-Denominated Awards. The maximum dollar amount of
compensation that may be represented by Performance Units and Other Stock
Units not denominated in Shares awarded during calendar year to any
Participant is 150% of the Participant's annual base salary in effect on
the date of the Award multiplied by the number of whole and fractional
years in the Performance Period for Performance Units.
SECTION 5. ELIGIBILITY. The Committee may grant Awards to any Employee
(excluding any member of the Committee). An Employee may be granted more than
one Award, but only on the terms and subject to the restrictions hereinafter set
forth.
SECTION 6. STOCK OPTIONS.
(a) Issuance. The Committee may grant Options to Participants either alone
or in addition to other Awards granted under the Plan.
(b) Award Agreements. Each Option shall be evidenced by an Award Agreement
in such form as the Committee may from time to time approve. The Committee may
require that any Participant shall, as consideration for the grant of the
Option, agree in writing to remain in the employ of the Company or of one of
Affiliates, at the pleasure of the Company or of such Affiliate, for at least
one year from the date of the granting of such Option or until earlier
termination of the Participant's employment effected or approved by the Company
or by such Affiliate, in which event if the Participant violates such agreement,
any Options still held by such person at the time of such violation shall
automatically terminate. The Committee may waive this requirement in the case of
any Participant. Any Option shall also be subject to the following terms and
conditions and to such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall deem desirable.
(c) Date of Granting of Options. The date of grant of all Options shall be
the date designated by the Committee as the date of grant, provided that in no
event shall the date of grant be earlier than the date on which the Committee
approves the grant.
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(d) Option Price. The Option Price per Share shall be determined by the
Committee in its sole discretion; provided that the Option Price shall not be
less than 100% of the Fair Market Value of a Share on the date of the grant of
the Option.
(e) Option Period. The term of each Option shall be fixed by the Committee
in its sole discretion and set forth in the Award Agreement, provided that the
Option and any related SAR shall not be exercisable after the expiration of 10
years from the date the Option was granted.
(f) Exercisability. Options shall be exercisable either in full or in
installments at such time or times as determined by the Committee at or
subsequent to grant, and set forth in the Award Agreement; provided that the
Committee may in its sole discretion subsequent to grant waive any restriction
on the exercise of an Option.
(g) Method of Exercise. An Option shall be exercised by the delivery to the
Company (or an agent of the Company) during the period in which such Option is
exercisable of (x) written notice of exercise in a form acceptable to the
Committee for a specific number of Shares subject to the Option and (y) payment
in full of the Option Price of such specific number of Shares. Payment for the
Shares with respect to which an Option is exercised may be made by any one or
more of the following means:
(i) cash, negotiable personal check or electronic funds transfer;
(ii) the Committee in its sole discretion may permit payment through
tender of Mature Shares, valued at their Fair Market Value on the date of
exercise; provided that the Committee may impose whatever restrictions it
deems necessary or desirable with respect to such method of payment;
(iii) the Committee in its sole discretion may permit payment by
submitting acceptable certification to the Committee of the ownership of
Mature Shares, valued at their Fair Market Value on the date of exercise;
in which event the Shares issued to the Optionee for the portion of any
Option so exercised by shall not exceed the number of Shares covered by the
such portion of the Option less the number of Shares for which proof of
ownership is submitted in full or partial payment; or
(iv) the Committee in its sole discretion may permit payment through
the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Optionee has submitted an irrevocable notice of
exercise and irrevocable instructions to deliver promptly to the Company
the amount of sale or loan proceeds sufficient to pay for such Shares,
together with, if requested by the Committee, the amount of federal, state,
local or foreign withholding taxes payable by Optionee by reason of such
exercise.
(h) Incentive Stock Options. At the time of the grant of any Option, the
Committee may designate in the Award Agreement that such Option shall be an
Incentive Stock Option, which shall be subject to the following terms and
conditions.
(i) Option Term. The term of an Incentive Stock Option shall not
exceed 10 years (five years in the case of a 10% Owner) from the grant
date, and shall be subject to earlier termination as provided in the Plan
or in the applicable Award Agreement.
(ii) Option Price. The Option Price of an Incentive Stock Option shall
(1) not be less than 100% of the Fair Market Value on the grant date of the
Shares subject to the Option, or (2) in the case of a 10% Owner, not be
less than 110% of the Fair Market Value on the Grant Date of the Shares
subject to the Options.
(iii) $100,000 Limit. The aggregate Fair Market Value (determined as
of the time of grant) of the Shares with respect to which Incentive Stock
Options held by any Participant which are exercisable for the first time by
such Participant during any calendar year under the Plan (and under any
other benefit plans of the Company or of any parent or subsidiary
corporation of the Company) shall not exceed $100,000 or, if different, the
maximum limitation in effect at the time of grant under Section 422 of the
Code. To the extent the $100,000 Limit is exceeded, such Option shall be
deemed to be a Nonstatutory Stock Option.
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(iv) Grant Date. Each Incentive Stock Option shall be granted within
10 years from the earlier of the date the Plan is adopted or the date the
Plan is approved by the stockholders of the Company.
(v) Disqualifying Disposition. Each Incentive Stock Option shall
require the holder of Shares issued upon exercise of such Incentive Stock
Options to notify the Committee of any disposition of such Shares under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.
(vi) Nontransferability. Notwithstanding Section 12, a Participant may
not transfer an Incentive Stock Option otherwise than upon death by will or
under the applicable laws of descent and distribution or by designation of
a beneficiary pursuant to Section 12(a); and during the lifetime of the
Participant only the Participant may exercise an Incentive Stock Option.
(vii) Other Requirements. The terms of any Incentive Stock Option
shall comply in all respects with the provisions of Section 422 of the
Code.
(viii) Other Terms and Conditions. Except as otherwise provided in
this subsection, all the provisions of the Plan shall apply to Incentive
Stock Options.
(i) Form of Settlement. In its sole discretion, the Committee may provide,
at the time of grant, that the Shares to be issued upon an Option's exercise
shall be in the form of Restricted Stock or other similar securities, or may
reserve the right so to provide after the time of grant.
(j) Discretionary Share Withholding. The Committee in its sole discretion
may provide that when taxes are to be withheld in connection with the exercise
of an Option by delivering Shares in payment of the exercise price, or an
exercise of an SAR for stock, or upon the lapse of restrictions on Restricted
Stock received upon the exercise of an Option (the date on which such exercise
occurs or such restrictions lapse hereinafter referred to as the "Tax Date"),
the Optionee may elect to make payment for the withholding of federal, state and
local taxes, including Social Security and Medicare ("FICA") taxes, up to the
Optionee's marginal tax rate, by one or both of the following methods:
(i) delivering part or all of the payment in previously-owned Mature
Shares (which shall be valued at their Fair Market Value on the Tax Date);
(ii) requesting the Company to withhold from those Shares that would
otherwise be received upon exercise of the Option, upon exercise of an SAR
for stock, or upon the lapse of restrictions on Restricted Stock, a number
of Shares having a Fair Market Value on the Tax Date equal to the amount to
be withheld.
The Committee in its sole discretion may provide that the amount of tax
withholding to be satisfied by withholding Shares from the Option exercise shall
be the minimum amount of taxes, including FICA taxes, required to be withheld
under federal, state and local law, or shall be the entire amount of taxes,
including FICA taxes, required to be paid by Optionee under federal, state and
local law. An election by Optionee under this subsection is irrevocable. Any
fractional share amount and any additional withholding not paid by the
withholding or surrender of Shares must be paid in cash. If no timely election
is made, cash must be delivered to satisfy all tax withholding requirements.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) Issuance. The Committee may grant SARs to Participants either alone or
in addition to other Awards granted under the Plan. Such SARs may, but need not,
be granted in connection with a specific Option granted under Section 6. Any SAR
related to a Nonstatutory Stock Option may be granted at the same time such
Option is granted or at any time thereafter before exercise or expiration of
such Option. Any SAR related to an Incentive Stock Option must be granted at the
same time such Option is granted. The Committee may impose such conditions or
restrictions on the exercise of any SAR as it shall deem appropriate.
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(b) Award Agreements. Any SAR granted to a Participant under the Plan shall
be evidenced by an Award Agreement in such form and the Committee may approve
and shall contain such terms and conditions not inconsistent with other
provisions of the Plan as shall be determined from time to time by the
Committee.
(c) Grant Price. The grant price of a SAR shall be determined by the
Committee in its sole discretion; provided that the grant price shall not be
less than the lesser of 100% of the Fair Market Value of a Share on the date of
the grant of the SAR, or the Option Price under the Nonstatutory Stock Option to
which the SAR relates.
(d) Exercise and Payment. Upon the exercise of SARs, an Optionee shall be
entitled to receive the value thereof. The Fair Market Value of a Share on the
date of exercise of SARs shall be determined in the same manner as the Fair
Market Value of a Share on the date of grant of an Option is determined. SARs
shall be deemed exercised on the date written notice of exercise in a form
acceptable to the Committee is received by the Secretary of the Company. Unless
the Award Agreement provides otherwise or reserves to the Committee or the
Participant or both the right to defer payment, the Company shall make payment
in respect of any SAR within five days of the date the SAR is exercised. Any
payment by the Company in respect of a SAR may be made in cash, Shares, other
property, or any combination thereof, as the Committee, in its sole discretion,
shall determine.
(e) Grant of Limited Rights.
(i) The Committee in its sole discretion may grant Limited Rights upon
or after the grant of any Option under the Plan. Each Limited Right shall
be identified with a share of Stock subject to an Option of the Optionee.
The number of Limited Rights granted to a Optionee shall equal the number
of Shares subject to the Option with which such Limited Rights are
identified. Upon the exercise, expiration, termination, forfeiture, or
cancellation of an Optionee's Option, the Optionee's associated Limited
Rights shall terminate.
(ii) Limited Rights shall become exercisable upon the occurrence of a
Change of Control. Limited Rights shall be exercised by delivery to the
Company, within 90 days after the date of such Change of Control, of
written notice of intent to exercise specific Limited Rights. The exercise
of Limited Rights shall result in the cancellation of the Option with which
such Limited Rights are identified, to the extent of such exercise.
(iii) The Company shall notify all Optionees of the occurrence of a
Change of Control promptly after its occurrence, but any failure of the
Company so to notify shall not deprive any Optionee of any rights that
accrued as a result of a Change of Control. Any such failure of the Company
shall, if an Optionee does not otherwise know of the Change of Control,
automatically extend the 90-day period specified above until 90 days after
the Company notifies such Optionee or such Optionee otherwise knows of the
Change of Control, whichever first occurs, but in no event beyond the
maximum term of the identified Option specified in the applicable Award
Agreement.
(iv) Within five business days after the exercise of any Limited
Rights, the Company shall pay to the Optionee, in cash (except that the
Committee may cause the Company to pay such amount in Shares if it
determines that a payment in cash would cause transaction to be ineligible
for pooling of interests accounting), an amount equal to the difference
between (A) the Change of Control Value, and (B) the Option Price of the
Option.
(v) "Change of Control Value" means the greater of (A) the highest
Fair Market Value of a Share during the 180-day period preceding the date
of the Company's receipt of notice of exercise of Limited Rights, or (B)
the cash amount (or fair cash value, as determined by the Committee in its
sole discretion, of consideration other than cash), payable in respect of a
Share to holders of Shares in connection with the Change of Control.
(g) Other Limitations. The Committee may at any time impose any other
limitations upon the exercise of SARs which, in the Committee's sole discretion,
are necessary or desirable in order for Participants to qualify for an exemption
from Section 16(b) of the Exchange Act.
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SECTION 8. RESTRICTED STOCK.
(a) Issuance. The Committee may issue Restricted Stock Awards to
Participants, for no cash consideration or for such minimum consideration as may
be required by applicable law, either alone or in addition to other Awards
granted under the Plan. The granting of Restricted Stock shall take place on the
date the Committee determines to grant the Restricted Stock.
(b) Registration. Any Restricted Stock may be evidenced in such manner as
the Committee in its sole discretion shall deem appropriate, including
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of shares of Restricted
Stock awarded under the Plan, such certificate shall be registered in the name
of the Participant, shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, and shall be held in
escrow by the Company. The Participant shall execute a stock power or powers
assigning the Shares of Restricted Stock back to the Company, which stock powers
shall be held in escrow by the Company and used only in the event of the
forfeiture of any of the Shares of Restricted Stock.
(c) Forfeiture. Except as otherwise determined by the Committee, no
Restricted Stock shall become free of restrictions prior to the date of the
first anniversary of the grant of the Restricted Stock. Unrestricted Shares,
evidenced in such manner as the Committee shall deem appropriate, shall be
issued to the Optionee promptly upon lapse of the period of forfeiture, as
determined or modified by the Committee.
(d) Share Withholding. The Committee in its sole discretion may provide
that a Participant who recognizes income under the federal income tax by reason
of the lapsing of restrictions on Shares of Restricted Stock may elect Share
withholding pursuant to Section 6(j).
SECTION 9. PERFORMANCE AWARDS.
(a) Issuance. The Committee may issue Performance Awards to Participants,
for no cash consideration or for such minimum consideration as may be required
by applicable law, either alone or in addition to other Awards granted under the
Plan. Except as provided in Section 13, Performance Awards will be paid only
after the end of the relevant Performance Period. Performance Awards may be paid
in cash, Shares, other property or any combination thereof, in the sole
discretion of the Committee at the time of payment. Performance Awards may be
paid in a lump sum or in installments following the close of the Performance
Period or, in accordance with procedures established by the Committee, on a
deferred basis.
(b) Performance Measures. Unless and until the Committee proposes for
stockholder vote and stockholders approve a change in the general performance
measures set forth in this Section, the attainment of which shall determine the
degree of payout and/or vesting with respect to Awards, the performance
measure(s) to be used for purposes of such Awards shall be chosen from among the
following:
(i) Earnings either in the aggregate or on a per-share basis, before
or after taxes, before or after depreciation and amortization, and before
or after interest expense;
(ii) Net income (before or after taxes);
(iii) Operating income;
(iv) Cash flow;
(v) Return measures (including return on assets, equity, or sales);
(vi) Share price (including growth measures and total stockholder
return or attainment by the Shares of a specified value for a specified
period of time);
(vii) Reductions in expense levels in each case where applicable
determined either in a Company-wide basis or in respect of any one or more
business units;
(viii) Net economic value; or
(ix) Economic value added.
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The degree of attainment of the preestablished performance goals required
for an Award and the amounts of Awards may not be adjusted after the Award is
granted, except that the Committee may retain the discretion to decrease the
amount of an Award.
SECTION 10. OTHER STOCK UNIT AWARDS.
(a) Stock and Administration. The Committee may grant other Awards of
Shares and other Awards that are valued in whole or in part by reference to, or
are otherwise based on, Shares or other property ("Other Stock Unit Awards")
hereunder to Participants, either alone or in addition to other Awards granted
under the Plan. Other Stock Unit Awards may be paid in Shares, cash or any other
form of property as the Committee shall determine. Subject to the provisions of
the Plan, the Committee shall have sole and complete authority to determine the
Employees to whom and the time or times at which such Awards shall be made, the
number of Shares to be granted pursuant to such Awards, and all other conditions
of the Awards, which may include attainment of goals based upon the performance
measures set forth in Section 9(b). The provisions of Other Stock Unit Awards
need not be the same with respect to each recipient.
(b) Terms and Conditions. Subject to the provisions of this Plan and any
applicable Award Agreement, Shares subject to Awards made under this Section 10
may not be sold, assigned, transferred, pledged or otherwise encumbered prior to
the date on which the Shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses. Shares granted
under this Section 10 may be issued for no cash consideration or for such
minimum consideration as may be required by applicable law.
SECTION 11. TERMINATION OF EMPLOYMENT. Except as otherwise provided in this
Section, all Awards not vested shall terminate upon a Participant's Termination
of Employment. For purposes of this Section, a Participant's Termination of
Employment occurs on the last day on which the Participant performs services as
an Employee; or if earlier on the date on which an Affiliate which employs the
Participant ceases to be an Affiliate (unless the Participant continues to be
employed by the Company or an Affiliate which continues to be an Affiliate).
(a) Options and SARs.
(i) Except as otherwise provided in this Section, upon a Participant's
Termination of Employment, all Options and SARs not vested and exercisable
immediately before such Termination of Employment shall terminate and no
Option or SAR may be exercised after such Termination of Employment.
(ii) If Termination of Employment occurs for a reason other than
retirement, death, disability or cause, Options and SARs which were vested
and exercisable immediately before such Termination of Employment shall
remain exercisable for a period of 90 days following such Termination of
Employment (but not for more than 10 years from the grant date of the
Option) and shall then terminate.
(iii) If Termination of Employment occurs by reason of retirement,
death or disability, Options and SARs which were vested and exercisable
immediately before such Termination of Employment shall remain exercisable
for a period of one year following such Termination of Employment (but not
for more than 10 years from the grant date of the Option) and shall then
terminate.
(b) Restricted Stock. Except as otherwise provided in this Section, upon a
Participant's Termination of Employment, all Shares of Restricted Stock still
subject to restrictions shall be forfeited by the Participant (and the
Participant shall sign any document and take any other action required to assign
such Shares back to the Company) and reacquired by the Company.
(c) Performance Awards:
(i) If Termination of Employment occurs during a Performance Period
for a reason other than retirement, disability or death, all Performance
Awards shall be forfeited upon such Termination of Employment.
(ii) If Termination of Employment occurs during a Performance Period
by reason of retirement, disability or death, the Participant shall be
entitled to payment at or after conclusion of the Performance Period in
accordance with the terms of the Award of that portion of the Performance
Award equal to the
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amount that would be payable if the Participant continued in employment for
the remainder of the Performance Period multiplied by a fraction, the
numerator of which is the number of days in the Performance Period
preceding such Termination of Employment and the denominator of which is
the total number of days in the Performance Period.
(d) Waiver by Committee. Notwithstanding the foregoing provisions of this
Section, the Committee may in its sole discretion as to all or part of any Award
as to any Participant, at the time the Award is granted or thereafter, determine
that Awards shall become exercisable or vested upon a Termination of Employment,
determine that Awards shall continue to become exercisable or vested in full or
in installments after Termination of Employment, extend the period for exercise
of Options or SARs following Termination of Employment (but not beyond 10 years
from the date of grant of the Option or SAR), or provide that any Performance
Award shall in whole or in part not be forfeited upon such Termination of
Employment.
SECTION 12. TRANSFERABILITY OF AWARDS
(a) No Award shall be transferable by the Participant otherwise than upon
death by will or under the applicable laws of descent and distribution; except
that a Participant may, by written instrument in a manner specified by the
Committee in the Award Agreement or thereafter, designate in writing a
beneficiary to exercise an Option or otherwise receive payment under any Award
after the death of the Participant. The Committee in its sole discretion may
authorize the transfer of a Nonstatutory Stock Option for no consideration to a
Permitted Transferee.
(b) Following the transfer of an Option to a Permitted Transferee, the
Permitted Transferee shall have all of the rights and obligations of the
Participant to whom the Option was granted and such Participant shall not retain
any rights with respect to the transferred Option, except that (i) the payment
of any tax attributable to the exercise of the Option shall remain the
obligation of the Participant, and (ii) the period during which the Option shall
become exercisable or remain exercisable under Section 11 shall depend on the
employment status of the original Optionee.
(c) If for any reason an Option or SAR is exercised by a person other than
the original Participant, or payment or distribution under any other Award is to
be made to a person other than the original Participant, the person exercising
or receiving payment or distribution under such Award shall, as a condition to
such exercise or receipt, supply the Committee with such evidence as the
Committee may reasonably require to establish the identity of such person and
such person's right to exercise or receive payment or distribution under such
Award.
(d) No Award shall be assigned, negotiated or pledged in any way (whether
by operation of law or otherwise) except as permitted by Section 12(a), and no
Award shall be subject to execution, attachment or similar process.
SECTION 13. CHANGE IN CONTROL.
(a) In order to maintain the Participants' rights in the event of any
Change in Control of the Company, as hereinafter defined, the Committee, as
constituted before such Change in Control, may, in its sole discretion, as to
any Award, either at the time an Award is made or any time thereafter, take any
one or more of the following actions: (i) provide for the acceleration of any
time periods relating to the exercise or realization of any such Award so that
such Award may be exercised or realized in full on or before a date fixed by the
Committee; (ii) provide for the purchase of any such Award with or without the
Participant's consent for an amount of cash equal to the amount that could have
been attained upon the exercise of such Award or realization of the
Participant's rights had such Award been currently exercisable or payable or
exercisable or payable during a stipulated period prior to the Change of
Control; (iii) make such adjustment to any such Award then outstanding as the
Committee deems appropriate to reflect such Change in Control; or (iv) cause any
such Award then outstanding to be assumed, or new rights substituted therefor,
by the acquiring or surviving corporation after such Change in Control. The
Committee may, in its discretion, include such further provisions and
limitations respecting a Change in Control in any Award Agreement as it may deem
equitable and in the best interests of the Company.
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<PAGE> 34
(b) A "Change in Control" shall be deemed to have occurred if:
(i) for any reason at any time less than 75% of the members of the
Board shall be individuals who fall into any of the following categories:
(A) individuals who were members of the Board on the Effective Date; or (B)
individuals whose election, or nomination for election by the Company's
stockholders (other than an election or nomination of an individual (an
"Excluded Individual") whose initial assumption of office ins in connection
with an actual or threatened "election contest" relating to the election of
the directors of the Company (as such term is used in Rule 14a-11 under the
Exchange Act), a "tender officer" (as such term is used in Section 14(d) of
the Exchange Act) or a proposed transaction described in (iii) below) was
approved by a vote of at least 75% of the members of the Board then still
in office who were members of the Board on the Effective Date; or (C)
individuals (other than Excluded Individuals) whose election, or nomination
for election, by the Company's stockholders, was approved by a vote of at
least 75% of the members of the Board then still in office who were elected
in the manner described in (A) or (B) above; or
(ii) any "person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act) or "group" (as such term is defined in Sections
3(a)(9) and 13(d)(3) of the Exchange Act) shall have become after the
Effective Date, according to a public announcement or filing, the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 35% or
more (calculated in accordance with Rule 13d-3) of the combined voting
power of the Company's then outstanding voting securities; or
(iii) the stockholders of the Company shall have approved a merger,
consolidation or dissolution of the Company, or a sale, lease, exchange or
disposition of all or substantially all of the Company's assets, if persons
who were the beneficial owners of the combined voting power of the
Company's voting securities immediately before any such merger,
consolidation, dissolution, sale, lease, exchange or disposition do not
immediately thereafter beneficially own, directly or indirectly, in
substantially the same proportions, more than 60% of the combined voting
power of the corporation resulting from any such transaction.
(c) Notwithstanding any other provision of the Plan to the contrary, (i) in
the event that the consummation of a Change in Control is contingent on using
pooling of interests accounting methodology; the Committee may take any action
necessary to preserve the use of pooling of interests accounting, and (ii) if
the Committee determines, in its discretion exercised prior to a sale or merger
of the Company (whether or not in connection with a Change in Control) that in
the Committee's judgment is reasonably likely to occur, that the exercise of
Awards would preclude the use of pooling-of-interests accounting ("pooling")
after the consummation of such sale or merger and that such preclusion of
pooling would have a material adverse effect on such sale or merger, the
Committee may (A) unilaterally cancel such Awards prior to the sale or merger in
consideration for reasonably equivalent value, (B) cause the Company to pay the
benefit attributable to such Awards in the form of Shares if the Committee
determines that such payment would not cause the transaction to become
ineligible for pooling, (C) defer the payment, distribution or exercise date of
any Award, or (D) substitute another form of Award of reasonably equivalent
value; in each case to the extent that the Committee determines that such
cancellation, payment, deferral or substitution would not cause the transaction
to become ineligible for pooling; and only in each case to the minimum extent
reasonably necessary to cause the transaction to become eligible for pooling.
SECTION 14. AMENDMENTS AND TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment, alteration, or discontinuation shall be
made that would impair the rights of a Participant under an Award theretofore
granted without the Participant's consent except as required to comply with
securities, tax or other laws.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall adversely affect the
rights of any Participant without the Participant's consent, except as provided
in subsection 9(b) or subsection 12(c) or except as required to comply with
securities, tax or other laws. The Committee may also substitute new Awards for
Awards previously granted to Participants, including previously-granted Options
having higher Option prices.
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<PAGE> 35
SECTION 15. GENERAL PROVISIONS.
(a) The term of each Award shall be for such period of months or years from
the date of its grant as may be determined by the Committee; provided that in no
event shall the term of any Option or any SAR exceed a period of 10 years from
the date of its grant.
(b) No Employee or Participant shall have any claim to be granted any Award
under the Plan and there is no obligation for uniformity of treatment of
Employees or Participants under the Plan.
(c) The prospective recipient of any Award under the Plan shall not, with
respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless the Committee shall have
executed an Award Agreement evidencing the Award and delivered a fully executed
copy thereof to the Participant.
(d) Nothing contained in the Plan or in any Award Agreement shall confer
upon any Participant any right with respect to continuance of employment by the
Company or its Affiliates, nor interfere in any way with the right of the
Company or its Affiliates to terminate the Participant's employment or change
the Participant's compensation at any time.
(e) All certificates for Shares delivered under the Plan pursuant to any
Award shall be subject to such stock-transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Shares are then listed, and any applicable Federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
(f) Receipt of an Option or other Award shall not entitle any Participant
(or Permitted Transferee) to any rights as a shareholder of the Company unless
and until such Option has been exercised or such other Award shall have been
paid and the Shares purchased or paid thereunder shall have been issued;
provided, however, that:
(i) Subject to the provisions of this Plan and any Award Agreement,
the recipient of an Award (including any deferred Award) may, if so
determined by the Committee, be entitled to receive, currently or on a
deferred basis, dividends with respect to the number of Shares covered by
the Award or interest on the amount of an Award not denominated in Shares
as determined by the Committee, in its sole discretion, and the Committee
may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested; and
(ii) The recipient of a Restricted Stock Award shall be entitled to
all rights of a shareholder of the Company upon issuance of such Restricted
Stock pursuant to Section 8(b) except to the extent otherwise provided in
the restrictions or other provisions of the Award Agreement pursuant to
which such Restricted Stock Award is made.
(g) Except as otherwise required in any applicable Award Agreement or by
the terms of the Plan, recipients of Awards under the Plan shall not be required
to make any payment or provide consideration other than the rendering of
services.
(h) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, spin-off or other change in
corporate structure affecting the Shares, such adjustment shall be made in the
aggregate number and class of Shares which may be delivered under the Plan, in
the number, class and option price of Shares subject to outstanding Options
granted under the Plan, and in the value of, or number or class of Shares
subject to, Awards granted under the Plan as may be determined to be appropriate
by the Committee, in its sole discretion, provided that the number of Shares
subject to any Award shall always be a whole number. The grant of Awards shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes in its capital or business
structure or to merge or to consolidate or to dissolve, liquidate, or sell or
transfer all or any part of its business or assets.
(i) The Company is authorized to withhold from any Award granted or payment
due under the Plan or any other amount owing from the Company to the Participant
(whether or not for payment of compensation)
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<PAGE> 36
the amount of withholding taxes due with respect to an Award or payment
hereunder and to take such other action as may be necessary in the opinion of
the Company to satisfy all obligations for the payment of such taxes. The
Company shall also be authorized to accept the delivery of shares by a
Participant in payment for the withholding of federal, state and local taxes up
to the Participant's marginal tax rates.
(j) The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws
of the State of Delaware.
(k) If any provision of this Plan is or becomes or is deemed invalid,
illegal or unenforceable in any jurisdiction, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to applicable laws or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan, it shall be stricken and the
remainder of the Plan shall remain in full force and effect.
(l) All obligations of the Company under the Plan shall be binding on any
successor to the Company.
(m) The adoption of this Plan shall not amend or terminate the Company's
1995 Employee Stock Option Plan (the "Prior Plan") or any outstanding option or
other award thereunder; and the aggregate number of Shares available under
Section 4 shall not be increased or reduced by Shares available under the Prior
Plan as of the Effective Date.
SECTION 16. TERM OF PLAN. No Award shall be granted pursuant to the Plan
after 10 years from the Effective Date, but any Award theretofore granted may
extend beyond that date.
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<PAGE> 37
PROXY PROXY
SALTON/MAXIM HOUSEWARES, INC.
ANNUAL MEETING/DECEMBER 10, 1998
Solicited by the Board of Directors
Leonhard Dreimann, David C. Sabin and William B. Rue, or any one or
more of them, each with power of substitution, are authorized to vote the
shares of the undersigned at the annual meeting of stockholders of
Salton/Maxim Housewares, Inc. to be held December 10, 1998 and at any
adjournment of that meeting. They shall vote on the matters described in
the proxy statement accompanying the notice of meeting in accordance with
the instructions on the reverse side of this card, and in their discretion
on such other matters as may come before the meeting.
IF NO SPECIFIC INSTRUCTIONS ARE PROVIDED, THIS PROXY WILL BE VOTED
FOR THE NOMINEES FOR DIRECTORS AND FOR PROPOSALS 3, 4 AND 5.
PLEASE SIGN ON THE REVERSE SIDE
................................................................................
SALTON/MAXIM HOUSEWARES, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
(CONTINUED FROM REVERSE SIDE)
<TABLE>
<S> <C> <C> <C>
[ ]
If no specific instructions are provided, this proxy will be voted for the nominees for directors and for proposals 3, 4 and 5.
For For All
1. Election of Class III Directors All Withhold Except
Nominees: Leonhard Dreimann, Frank Devine [ ] [ ] [ ]
FOR all nominees;
Withhold my vote from nominees; or For all nominees except any whose name I
have crossed out
2. Election of Class I Directors
Nominees: David C. Sabin, William B. Rue, Robert A. Bergmann [ ] [ ] [ ]
FOR all nominees;
Withhold my vote from nominees; or For all nominees except any whose name I
have crossed out
For Against Abstain
3. Approval of the Amendment to the Restated Certificate of Incorporation
For Against Abstain [ ] [ ] [ ]
For Against Abstain
4. Approval of the Salton/Maxim 1998 Stock Option Plan
For Against Abstain [ ] [ ] [ ]
For Against Abstain
5. Ratification of the selection of Deloitte & Touche LLP as independent
accountants [ ] [ ] [ ]
For Against Abstain
6. In their discretion, on any other matter that may properly come before the
meeting [ ] [ ] [ ]
Dated: __________________________________________________________________________________________________, 1998
________________________________________________________________________________________________________________
________________________________________________________________________________________________________________
(Signature(s))
Please sign exactly as your name appears above and return this proxy immediately in the enclosed reply envelope.
If signing for a corporation or partnership, or as agent, attorney or fiduciary, indicate the capacity in which
you are signing.
</TABLE>
................................................................................
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY USING THE ENCLOSED
ENVELOPE.
