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EXHIBIT 10.1
AGREEMENT
AGREEMENT, dated as of September 7, 2000, between Salton, Inc., a
Delaware corporation (the "Company"), and George Foreman, an individual
("Foreman").
WITNESSETH
WHEREAS, the Company and George Foreman are parties to an agreement (the
"Foreman Agreement") dated July 1, 1999 pursuant to which the Company purchased
from Foreman certain trademarks and other property; and
WHEREAS, under the Agreement, Foreman has the right to receive four annual
cash installments of $20,000,000 each on the first, second, third and fourth
anniversary of the closing of the transactions contemplated by the Foreman
Agreement (the "Future Consideration"); and
WHEREAS, the parties desire to, among other things, amend the terms of the
Future Consideration to provide for the payment to Foreman on the date hereof of
shares of common stock, $.01 par value per share, of the Company (the "Common
Stock") valued at $20,000,000 in lieu of the second annual $20,000,000 cash
installment of the balance of the Purchase Price payable pursuant to Section
3(b) of the Foreman Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
1. Amendment.
(a) Notwithstanding Section 3(b) of the Foreman Agreement, the
parties hereto agree that, in lieu of the second installment of the balance
of the Purchase Price payable pursuant to Section 3(b) of the Foreman
Agreement, the Company shall issue the Foreman on the date hereof 546,075
shares of Common Stock:
(b) Except as specifically set forth in this Agreement, the terms
and provisions of the Foreman Agreement and the agreements contemplated
thereby (including, without limitation, the Trademark Security Agreement)
shall continue in full force and effect.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Foreman as follows:
(a) Organization and Standing of the Company. The Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware.
(b) Authority. The Company has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Company have been duly and validly authorized by all requisite corporate
proceedings on the part of the Company and do not require the approval or
consent of any stockholders of the
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Company. This Agreement has been duly executed and delivered by the Company
and is (assuming the due authorization, execution and delivery by Foreman)
a valid and binding agreement of the Company, enforceable against it in
accordance with its terms, except as such enforceability may be limited by
bankruptcy and insolvency laws and by other laws affecting the rights of
creditors generally or by the availability of equitable remedies and except
as rights of indemnity or contribution may be limited by federal or state
securities or other laws or the public policy underlying such laws.
(c) Status of Shares. The Shares (as defined below) have been (or
will be) duly authorized by all necessary corporate action on the part of
the Company (no consent or approval of stockholders being required by law,
the Certificate of Incorporation of the Company, as amended and restated,
or its By-laws). The Shares, when delivered pursuant to this Agreement,
will be validly issued and outstanding, fully paid and nonassessable and
free and clear of any liens (other than those imposed by the securities
laws), and the issuance of such Shares is not and will not be subject to
preemptive or similar rights of any other stockholder of the Company. For
purposes of this Agreement, "Shares" shall mean the shares of Common Stock
issued to Foreman pursuant to this Agreement, and any additional shares of
Common Stock issued to Foreman in accordance with Section 4(e) of this
Agreement.
3. Representations and Warranties of Foreman. Foreman hereby represents
and warrants to the Company as follows:
(a) Authority and Authorization of Foreman. Foreman has the
requisite power to enter into this Agreement. This Agreement has been duly
executed and delivered by Foreman and is (assuming the due authorization,
execution and delivery by the Company) a valid and binding agreement of
Foreman, enforceable against Foreman in accordance with its terms except as
may be limited by bankruptcy and insolvency laws and by other laws
affecting the rights of creditors generally and except as may be limited by
the availability of equitable remedies and except as rights of indemnity or
contribution may be limited by federal or state securities or other laws or
the public policy underlying such laws.
(b) Experience of Foreman; Acquisition for Investment. Foreman is
an accredited investor as defined in Regulation D under the Securities Act
of 1933. Foreman has extensive knowledge and experience in financial and
business matters and has the capability to evaluate the merits and risks of
an investment in the Shares and has had the opportunity to ask any and all
questions of the Company's management. Foreman represents that he is not
acquiring the Shares with a view to or for sale in connection with any
distribution thereof, except as permitted by and pursuant to Section 4 of
this Agreement, and that he has no present intention or plan to effect any
distribution of the Shares, except as permitted by and pursuant to Section
4 of this Agreement; provided, however that the disposition of Foreman's
property shall at all times be and remain within his control, subject to
the provisions of this Agreement. Foreman understands that the Shares have
not yet been registered under the Securities Act of 1933 (the "Securities
Act") by reason of specific exemptions therefrom which depend upon, among
other things,
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the accuracy of his representations as expressed herein. The Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY APPLICABLE STATE
SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED
IN THE ABSENCE OF SUCH REGISTRATIONS OR EXEMPTIONS THEREFROM
UNDER SAID ACT OR LAWS.
(c) Rule 144. Foreman acknowledges that the Shares must be held
indefinitely unless subsequently registered under the Securities Act or any
applicable state securities laws or unless exemptions from such
registrations are available. Foreman is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of
securities purchased in a private placement subject to the satisfaction of
certain conditions.
(d) Shares. Foreman acknowledges and agrees that he will not,
except in connection with a merger, tender offer or similar transaction
involving the Company, sell, transfer or otherwise dispose of the Shares
except to the public pursuant to the registration statement contemplated by
Section 4 hereof or in brokerage transactions in accordance with Rule 144
under the Securities Act.
4. Registration.
(a) The Company agrees, at its sole expense, to prepare and file
with the Securities and Exchange Commission (the "Commission") as soon as
reasonably practicable after the issuance of any Shares to Foreman pursuant
to this Agreement a registration statement (including a prospectus therein)
(or amend and continue the effectiveness of any registration statement)
with respect to the sale of such Shares to the public in brokerage
transactions and to use its reasonable best efforts to cause such
registration statement to become and remain effective for such period as
may be necessary to permit the successful marketing of such Shares, but not
exceeding the earlier of (i) September 30, 2001 and (ii) the date on which
Foreman could dispose of any remaining Shares to the public pursuant to
Rule 144(k) under the Securities Act. The date on which Foreman is entitled
to use such prospectus for the sale of the Shares is sometimes referred to
herein as the "Effective Date". Notwithstanding the foregoing, the Company
shall be entitled to prohibit any offers or sales of the Shares pursuant to
the prospectus for a reasonable period of time (but not exceeding an
aggregate of 90 days during any 12 month period) if the Company determines,
in its reasonable judgment, that (i) the Company is in possession of
material information that has not been disclosed to the public and the
Company reasonably determines that it would be significantly detrimental to
the Company and its stockholders to disclose such information at such time
in a registration statement or (ii) such registration and offering would
interfere with any
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financing, acquisition, corporate reorganization or other material
transaction involving the Company or any of its affiliates and, in any such
case, the Company promptly gives Foreman written notice of such
determination, containing a general statement of the reasons for such
postponement and an approximation of the anticipated delay. Foreman agrees
that, upon receipt of any such written notice, he will forthwith
discontinue disposition of any Shares until he receives notice in writing
from the Company that the use of the prospectus may be resumed. The Company
shall furnish to Foreman promptly after the date when the registration
statement becomes effective such number of prospectuses as may be needed in
order to facilitate the public sale of the Shares. Foreman shall furnish to
the Company such information regarding Foreman and the distribution of the
Shares as the Company may from time to time reasonably request in order to
comply with the Securities Act.
(b) In the event that the aggregate proceeds (after reasonable
and customary brokerage commissions) from the sale of Shares by Foreman to
the public prior to the one year anniversary of the Effective Date plus the
market value (based on the average closing price of the Common Stock (as
reported on the NYSE Composite Transactions Reporting system as published
in The Wall Street Journal or, if not published therein, in another
alternative source) during the ninety (90) trading days ending on the third
trading day preceding the one year anniversary of the Effective Date) of
Shares which Foreman continues to hold on the one year anniversary of the
Effective Date are less than the product of (x) the number of Shares
multiplied by (y) $36.625, then the Company shall pay to Foreman an amount
in cash (or, at the election of the Company in accordance with Section 4(e)
hereof, in additional shares of Common Stock) equal to the difference
between (a) the product of (x) the number of Shares sold during the
specified one year period multiplied by (y) $36.625 and (b) the aggregate
proceeds (after reasonable and customary brokerage commissions) from the
sale of such Shares.
(c) In the event the aggregate proceeds (after reasonable and
customary brokerage commissions) from the sale of Shares by Foreman to the
public prior to the one year anniversary of the Effective Date plus the
market value (based on the average closing price of the Common Stock (as
reported on the NYSE Composite Transactions Reporting system as published
in The Wall Street Journal or, if not published therein, in another
alternative source) during the ninety (90) trading days ending on the third
trading day preceding the one year anniversary of the Effective Date) are
more than the product of (x) the number of Shares multiplied by (y)
$36.625, then Foreman shall pay to the Company an amount in cash equal to
fifty percent (50%) of the excess.
(d) Foreman agrees that he will not sell in the aggregate more
than 50,000 Shares during any trading day and that he will use his
reasonable best efforts to obtain the best available sales price for any
Shares sold on or prior to the one year anniversary of the Effective Date.
(e) Payments required to be made by any party to any other party
pursuant to Section 4(b) or 4(c) shall be made promptly after the one year
anniversary of the Effective Date (and in any event not later than fifteen
(15) days after the
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one year anniversary of the Effective Date). In the event that the Company
elects to make any payment required by Section 4(b) hereof with respect to
any fiscal year by issuing shares of Common Stock to Foreman, then the
Company shall issue to Foreman that number of shares of Common Stock that
is equal to (1) the dollar amount of the payment required, divided by (2)
the average closing price of the Common Stock (as reported on the NYSE
Corporate Reporting System as published in The Wall Street Journal or, if
not published therein, in another alternative source) during the ninety
(90) trading days ending on the third trading day preceding the one year
anniversary of the Effective Date. Each of the parties will cooperate with
each other and furnish each other information (including, without
limitation, documented information concerning any sales of the Shares) to
determine the amount of payments due pursuant to Sections 4(b) through (d)
above. For purposes of Sections 4(b), in the event that Foreman sells any
of the Shares pursuant to a merger, tender offer or similar transaction
involving the Company, he shall be deemed to have sold such Shares to the
public for an amount equal to the aggregate consideration he receives for
the sale of such Shares in such transaction.
(f) The Company shall indemnify and hold harmless Foreman any
expenses, losses, claims, damages or liabilities, joint or several, to
which Foreman may become subject under the Securities Act or the Securities
Exchange Act of 1934, as amended, including any of the foregoing incurred
in settlement of any litigation, commenced or threatened, insofar as such
expenses, losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the registration
statement or final prospectus contained therein, or any amendment or
supplement thereto; or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; and shall reimburse each Foreman for any legal or any
other expenses reasonably incurred by him in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to the
extent that any such expense, loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in the registration statement or said
prospectus or said amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by Foreman
specifically for use in the preparation thereof.
(g) Foreman shall indemnify and hold harmless the Company and
each person, if any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs the registration
statement and each director of the Company, against any and all such
expenses, losses, claims, damages or liabilities referred to in Section
4(f) above if the statement, alleged statement, omission or alleged
omission in respect of which such expense, loss, claim, damage or liability
was made in reliance upon and in conformity with information furnished in
writing to the Company by Foreman specifically for use in connection with
the preparation of the registration statement, prospectus, amendment or
supplement.
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(h) Promptly after receipt by an indemnified party of notice of
the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party, notify the
indemnifying party in writing of the commencement thereof; but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to any indemnified party otherwise than under this
Section 4 or to the extent that it has not been prejudiced as a proximate
result of such failure. In case any such action shall be brought against
any indemnified party, and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be legal defenses
available to it and/or other indemnified parties which are different from
or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select one separate counsel to
assert such legal defenses (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties). Upon the permitted assumption by the
indemnifying party of the defense of such action, and approval by the
indemnified party of counsel, the indemnifying party shall not be liable to
such indemnified party under this Section 4 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the
defense thereof (other than reasonable costs or investigation) unless (i)
the indemnified party shall have employed one separate counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence, (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time, (iii) the
indemnifying party and its counsel do not actively and vigorously pursue
the defense of such action or (iv) the indemnifying party has authorized
the employment of counsel for the indemnified party at the expense of the
indemnifying party.
(i) From the date hereof until September 30, 2001, the Company
agrees to use its reasonable best efforts to file with the Commission such
information as is required under the Securities Exchange Act of 1934, as
amended, and to take all actions as may be required as a condition to the
availability of Rule 144 under the Securities Act.
5. Miscellaneous.
(a) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed by the applicable party hereto in
accordance with the specific terms of this Agreement or were otherwise
breached. Each of the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement by the other and to
enforce specifically the terms and provisions hereof in addition to any
other remedy to which such party is entitled at law or in equity, and each
party waives the posting of any bond or security in connection with any
proceeding related thereto.
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(b) Expenses. Except for the Company's payment of the costs and
expenses of filing a registration statement (including a prospectus
therein) with respect to the sale of the Shares, no party hereto shall be
responsible for the payment of any other party's expenses incurred in
connection with this Agreement.
(c) Third Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and his
or its respective successors and permitted assigns, and it is not the
intention of the parties to confer third party beneficiary rights upon any
other person or entity.
(d) Amendments. This Agreement may not be modified, amended,
altered or supplemented except upon the execution and delivery of a written
agreement executed by each of Foreman and the Company.
(e) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part,
by Foreman without the prior written consent of the Company. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective
successors and assigns.
(f) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice).
(i) if to Foreman, to
George Foreman
with a copy to:
Mann Frankfort, Stein & Lipp
12 Greenway Plaza, 8th Floor
Houston, Texas 77046-1291
Attention: William J. Hickl III
(ii) if to the Company, to
Salton, Inc.
550 Business Center Drive
Mount Prospect, Illinois 60056
Attention: William B. Rue, President
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with a copy to:
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
Attention: Neal Aizenstein, Esq.
(g) Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to the conflict of law principles thereof. All actions and
proceedings arising out of or relating to this Agreement shall be heard and
determined in any state or Federal court sitting in Delaware. Each of the
parties hereto (i) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement
or any of the transactions contemplated hereby, (ii) agrees that such party
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court, (iii) agrees that such party
will not bring any action relating to this Agreement or the transactions
contemplated hereby in any court other than a Federal court sitting in the
State of Delaware or a Delaware state court and (iv) waives any right to
trial by jury with respect to any claim or proceeding related to or arising
out of this Agreement or any of the transactions contemplated hereby.
(h) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This
Agreement shall become effective when one counterpart signature page has
been signed by each party hereto and delivered to each of the other
parties.
(i) Effect of Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) Further Assurances. Each of the parties hereto agrees to
execute and deliver all such further documents, certificates and
instruments, and take all such further reasonable action as may be
necessary or reasonably appropriate, in order to consummate the
transactions contemplated hereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
SALTON, INC.
By:
Its:
GEORGE FOREMAN
By:
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