-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Chm/ysOPwoG+qtWGaVklKVwBYYSTUg6SkRG5v8mpr0Rs65cQGkGzMaVqWeInnAqO C7UjeyCUy6TAlPA1oSAboQ== 0000950144-96-004513.txt : 19960724 0000950144-96-004513.hdr.sgml : 19960724 ACCESSION NUMBER: 0000950144-96-004513 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19960722 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SALTON MAXIM HOUSEWARES INC CENTRAL INDEX KEY: 0000878280 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 363777824 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-42085 FILM NUMBER: 96597357 BUSINESS ADDRESS: STREET 1: 550 BUSINESS CENTER DR STREET 2: C/O KENSINGTON CENTER CITY: MOUNT PROSPECT STATE: IL ZIP: 60056 BUSINESS PHONE: 8478034600 MAIL ADDRESS: STREET 1: 550 BUSINESS CENTER DRIVE CITY: MT PROSPECT STATE: IL ZIP: 60056 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WINDMERE CORP CENTRAL INDEX KEY: 0000217084 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 591028301 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 5980 MIAMI LAKES DR CITY: MIAMI LAKES STATE: FL ZIP: 33014 BUSINESS PHONE: 3053622611 MAIL ADDRESS: STREET 1: 5980 MIAMI LAKES DRIVE CITY: MIAMI LAKES STATE: FL ZIP: 33014 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY INDUSTRIES INC DATE OF NAME CHANGE: 19830815 FORMER COMPANY: FORMER CONFORMED NAME: SAVE WAY BARBER & BEAUTY SUPPLIES INC DATE OF NAME CHANGE: 19770626 SC 13D 1 WINDMERE-DURABLE HOLDINGS SC 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 SALTON/MAXIM HOUSEWARES, INC. - -------------------------------------------------------------------------------- (Name of issuer) COMMON STOCK, $.01 PAR VALUE - -------------------------------------------------------------------------------- (Title of class of securities) 795757103 - -------------------------------------------------------------------------------- (CUSIP number) ANDREW HULSH, ESQ. GREENBERG, TRAURIG, HOFFMAN, LIPOFF, ROSEN & QUENTEL, P.A. 1221 BRICKELL AVENUE MIAMI, FLORIDA 33131 (305) 579-0832 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) JULY 10, 1996 - -------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ]. Check the following box if a fee is being paid with the statement [X]. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) 2 SCHEDULE 13D CUSIP No. 795757103 Page 2 of __ Pages ----------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON WINDMERE-DURABLE HOLDINGS, INC. ("WINDMERE") 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] 3 SEC USE ONLY 4 SOURCE OF FUNDS WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) 6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES 7 SOLE VOTING POWER 6,508,572 NUMBER OF SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY EACH 9 SOLE DISPOSITIVE POWER 6,508,572 REPORTING PERSON WITH 10 SHARED DISPOSITIVE POWER 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,508,572 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 50% 14 TYPE OF REPORTING PERSON CO
3 ITEM 1. SECURITY AND ISSUER. This Statement relates to the Common Stock, par value $.01 per share (the "Common Stock"), of Salton/Maxim Housewares, Inc. ("Salton/Maxim"). The executive offices of Salton/Maxim are located at 550 Business Center Drive, Mount Prospect, Illinois 60056. ITEM 2. IDENTITY AND BACKGROUND. Windmere is a Florida corporation. Windmere's principal offices are located at 5980 Miami Lakes Drive, Miami Lakes, Florida 33014. Windmere has not been convicted in a criminal proceeding in the last five years. During the last five years, Windmere has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction which resulted in it being subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On July 11, 1996, Windmere consummated its previously announced transaction with Salton/Maxim pursuant to that certain Stock Purchase Agreement dated February 27, 1996, as amended (the "Stock Purchase Agreement"). Pursuant to the Stock Purchase Agreement, Salton/Maxim issued and sold to Windmere (the "Share Issuance") 6,508,572 newly issued shares of Common Stock of Salton/Maxim, which represents 50% of the outstanding shares of Common Stock of Salton/Maxim after giving effect to the Share Issuance. In consideration for the Share Issuance, Windmere paid Salton/Maxim: (i) $3,254,286 in cash, as described below; (ii) a subordinated promissory note in the aggregate principal amount of $10,847,620 (the "Note"), which Note is secured by substantially all of the assets of Windmere and its domestic subsidiaries and guaranteed by such domestic subsidiaries; and (iii) 748,112 shares of Windmere's common stock. The cash portion of the consideration for the Share Issuance was paid by the cancellation by Windmere of Salton/Maxim's obligation to repay a loan in the principal amount of $3,254,286 which Windmere had made to Salton/Maxim in April 1996. The Note is payable July 10, 2001 and bears interest at 8% per annum payable quarterly. Windmere expects to fund principal and interest payments required under the Note with cash on hand, borrowings or other sources, or a combination thereof. Windmere was also granted an option to purchase up to 485,000 shares of Common Stock at $4.83 per share, which option is exercisable only if and to the extent that options to purchase shares of Common Stock which were outstanding on February 27, 1996 are exercised (as of the date hereof, no portion of the option granted to Windmere is exercisable). 4 ITEM 4. PURPOSE OF TRANSACTION. Windmere has acquired the Common Stock of Salton/Maxim for the purpose of making an investment in Salton/Maxim and not with the view to, or for resale in connection with, any distribution thereof. Windmere has no present intention of selling, granting any participation in, or otherwise distributing the Common Stock. Windmere does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participations to such person or to any third person, with respect to any of its shares of Common Stock. The shares of the Common Stock of Salton/Maxim owned by Windmere have not been registered under the Securities Act of 1933, as amended, but Windmere has been granted certain registration rights with respect to such shares pursuant to the registration rights agreement referred to in Item 6 below. ITEM 5. INTEREST IN SECURITIES OF ISSUER. To the best knowledge of Windmere, Windmere is the beneficial owner of 6,508,572 shares of Common Stock of Salton/Maxim or approximately 50% of the Common Stock of Salton/Maxim currently outstanding. Windmere has the sole power to vote and dispose of all of its shares of Common Stock of Salton/Maxim, subject to the provisions of the stockholder agreement referred to in Item 6 below. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. In connection with the Share Issuance, Windmere and Salton/Maxim also entered into a Stockholder Agreement (the "Stockholder Agreement"). Pursuant to the Stockholder Agreement, Windmere is entitled to designate for election, so long as its ownership does not fall below 15% of the outstanding Common Stock, that percentage of Salton/Maxim's directors as is proportionate to its stock ownership percentage; provided that the number of directors designated by Windmere will in no event exceed 50% of the total number of directors. The following persons designated by Windmere were elected as directors of Salton/Maxim on July 11, 1996: David M. Friedson, Chairman of the Board, President and Chief Executive Officer of Windmere; Harry D. Schulman, Senior Vice President of Windmere; Laurence S. Chud, M.D., Vice President Investment Banking of CP Baker & Company; and James Connolly, President of KQED Books and Video. There is now a total of eight directors serving on the Salton/Maxim Board of Directors. The Stockholder Agreement also contains provisions which, subject to specified time periods and exceptions, restrict the acquisition by Windmere of shares of Common Stock of Salton/Maxim that would increase its percentage ownership interest. Windmere and Salton/Maxim also entered into a Registration Rights Agreement (the "Registration Agreement"). Subject to the restrictions on disposition of shares contained in the Stockholder Agreement, the Registration Agreement gives Windmere certain demand and piggyback registration rights with respect to its shares 2 5 of Common Stock of Salton/Maxim. Expenses relating to registrations (other than selling expenses and commissions) will generally be payable by Salton/Maxim. The foregoing description of the Stock Purchase Agreement and the documents contemplated thereby, including the Note, the Stockholder Agreement and the Registration Agreement, and the transactions contemplated by such documents, does not purport to be complete and is qualified in its entirety by reference to each of such documents, copies of which are filed as exhibits hereto. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. (a) Stock Purchase Agreement dated February 27, 1996, as amended, between Windmere and Salton/Maxim. (b) Stockholder Agreement dated July 11, 1996 between Windmere and Salton/Maxim. (c) Registration Rights Agreement dated July 11, 1996 between Windmere and Salton/Maxim. 3 6 SIGNATURE After reasonable inquiry and to the best of knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. July 17, 1996 ------------------------------- (Date) /s/ Harry D. Schulman ------------------------------- Harry D. Schulman Senior Vice President 4 7 INDEX TO EXHIBITS Exhibit No. Description Sequential Page No. - ----------- ----------- ------------------- 2.1 Stock Purchase Agreement dated February 27, 1996, as amended, between Windmere and Salton/Maxim. 2.2 Stockholder Agreement dated July 11, 1996 between Windmere and Salton/Maxim. 2.3 Registration Rights Agreement dated July 11, 1996 between Windmere and Salton/Maxim. EX-2.1 2 STOCK PURCHASE PLAN 1 Exhibit 2.1 ================================================================================ STOCK PURCHASE AGREEMENT BY AND BETWEEN WINDMERE CORPORATION AND SALTON/MAXIM HOUSEWARES, INC. ___________________ FEBRUARY 27, 1996 ___________________ =============================================================================== 2 TABLE OF CONTENTS
Page ---- ARTICLE I. SALE AND PURCHASE OF SHARES SECTION 1.01. Sale and Purchase of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. Payment for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II. CLOSING SECTION 2.01. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.02. Deliveries by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 2 SECTION 2.03. Deliveries by Windmere . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ARTICLE III. REPRESENTATIONS AND WARRANTIES SECTION 3.01. Representations and Warranties of the Company . . . . . . . . . . . . . . . . 3 (a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . 3 (b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . 4 (e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 (f) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 6 (g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (h) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 (i) Absence of Changes in Benefit Plans; Labor Relations . . . . . . . . . . . . 6 (j) Benefit Plan Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 (k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (l) Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (m) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (n) Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 SECTION 3.02. Representations and Warranties of Windmere . . . . . . . . . . . . . . . . . 9 (a) Organization, Standing and Corporate Power . . . . . . . . . . . . . . . . . 9 (b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (c) Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 (d) Authority; Noncontravention . . . . . . . . . . . . . . . . . . . . . . . . . 10 (e) SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 (f) Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . 11 (g) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (h) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (i) Absence of Changes in Benefit Plans; Labor Relations . . . . . . . . . . . . 12 (j) Benefit Plan Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 (k) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) 3 (l) No Voting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (m) Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (n) Purchase for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (o) Ownership of Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (p) Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS SECTION 4.01. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 (a) Conduct of Business by the Company . . . . . . . . . . . . . . . . . . . . . 15 (b) Other Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE V. ADDITIONAL AGREEMENTS SECTION 5.01. Preparation of the Proxy Materials; Stockholders Meeting . . . . . . . . . . 18 SECTION 5.02. Access to Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.03. Reasonable Efforts; Notification . . . . . . . . . . . . . . . . . . . . . . 19 SECTION 5.04. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.05. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.06. Nasdaq and NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.07. Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 5.08. Negotiation of Commercial Agreements . . . . . . . . . . . . . . . . . . . . 20 ARTICLE VI. CONDITIONS PRECEDENT SECTION 6.01. Conditions to Each Party's Obligation To Effect the Stock Purchase . . . . . 20 (a) Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (b) Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (c) No Injunctions or Restraints; Illegality . . . . . . . . . . . . . . . . . . 21 (d) Commercial Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 6.02. Conditions to Obligations of Windmere . . . . . . . . . . . . . . . . . . . . 21 (a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 21 (b) Performance of Obligations of the Company . . . . . . . . . . . . . . . . . . 21 (c) Nasdaq National Market Listing . . . . . . . . . . . . . . . . . . . . . . . 21 (d) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 21 (e) Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 6.03. Conditions to Obligations of the Company . . . . . . . . . . . . . . . . . . 21 (a) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . 21 (b) Performance of Obligations of Windmere . . . . . . . . . . . . . . . . . . . 22 (c) NYSE Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (d) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 22 (f) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (g) Lenders' Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (h) Closing Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(ii) 4 ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 7.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 7.04. Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE VIII. GENERAL PROVISIONS SECTION 8.01. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . 24 SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 8.03. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 SECTION 8.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 8.05. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries . . . . . . . . . . . . . . . 26 SECTION 8.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 8.08. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 8.09. Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(iii) 5 STOCK PURCHASE AGREEMENT dated February 27, 1996 (the "Agreement"), by and between WINDMERE CORPORATION, a Florida corporation ("Windmere"), and SALTON/MAXIM HOUSEWARES, INC., a Delaware corporation (the "Company"). A. Windmere and the Company each are engaged in the business of designing and marketing a broad range of small kitchen appliances and personal and beauty care appliances, among other products. B. The Boards of Directors of each of Windmere and the Company believe that certain strategic benefits would be gained by each of Windmere and the Company if Windmere becomes a substantial owner of the Company's common stock. C. Windmere desires to purchase 50% of the issued and outstanding common stock of the Company, par value $.01 per share ("Company Common Stock"), and to receive an option (the "Option") to purchase up to 485,000 shares (which number of shares is equal to the number of shares of Company Common Stock issuable upon the exercise of presently issued and outstanding options to purchase Company Common Stock) of Company Common Stock at an exercise price of $4.83 per share, and the Company desires to sell such Company Common Stock and to grant such Option upon the terms and subject to the conditions set forth herein. AGREEMENT NOW, THEREFORE, in consideration of the premises and of the mutual covenants contained herein, the parties agree as follows: ARTICLE I. SALE AND PURCHASE OF SHARES SECTION 1.01. Sale and Purchase of Shares; Grant of Option. (a) On the terms and subject to the conditions of this Agreement, at the Closing referred to in Section 2.01 hereof, the Company shall issue, sell and deliver to Windmere, and Windmere shall purchase, acquire and accept from the Company, (i) 6,508,572 shares (the "Company Shares") of Company Common Stock and (ii) an Option to purchase up to 485,000 shares of Company Common Stock at an exercise price of $4.83 per share. The Option shall be exercisable only if and to the extent that options to purchase the shares of Company Common Stock which are outstanding on the date hereof are exercised. The Company shall notify Windmere in writing (the "Option Notice") within ten (10) days after the issuance by the Company of any shares of Company Common Stock resulting from the exercise of stock options outstanding on the date hereof, which Option Notice shall specify the number of shares of Company Common Stock being issued upon the exercise of such options. Windmere may, by written notice given to the Company within ninety (90) days after receipt of the Option Notice by Windmere, elect to purchase from the Company at $4.83 per share up to such number of additional shares of Company Common Stock as is equal to the number of shares of Company Common Stock being issued upon the exercise of the options as set forth in the Option Notice. The sale and purchase of the Company Shares pursuant to this Agreement is sometimes hereinafter referred to as the "Stock Purchase". (b) At the Closing, the Company shall deliver or cause to be delivered to Windmere, against payment therefor in accordance with Section 1.02 hereof, stock certificates representing the Shares being sold by the Company hereunder. 6 SECTION 1.02. Payment for Shares. (a) As payment in full for the Company Shares, Windmere shall pay to the Company at the Closing, in the manner herein provided, the following (the "Purchase Price"): (i) Windmere shall deliver Three Million Two Hundred Fifty Four Thousand Two Hundred Eighty Six Dollars ($3,254,286) in immediately available funds; (ii) Windmere shall deliver Windmere's Subordinated Promissory Note, in the form attached hereto as Exhibit A (the "Note"), in an aggregate principal amount of Ten Million Eight Hundred Forty Seven Thousand Six Hundred Twenty Dollars ($10,847,620); and (iii) Windmere shall issue and deliver 748,112 shares (the "Windmere Shares") of its common stock, par value $.10 per share ("Windmere Common Stock"). ARTICLE II. CLOSING SECTION 2.01. Closing. Subject to the satisfaction or waiver of the conditions stated in Article VI of this Agreement, the closing of the transactions contemplated hereby (the "Closing") shall be held on the fifth business day after all the conditions set forth in Article VI have been satisfied or waived, at the offices of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., 1221 Brickell Avenue, Miami, Florida 33131, or such other date, time and place as may be agreed by the parties. The date upon which the Closing occurs is hereinafter referred to as the "Closing Date." The Closing shall be deemed completed as of 11:59 p.m. Miami time on the night of the Closing Date. SECTION 2.02. Deliveries by the Company. At or prior to the Closing, the Company shall deliver to Windmere: (i) certificates representing the Company Shares being purchased by Windmere hereunder; (ii) the Commercial Agreements, duly executed by the Company; (iii) the Stockholder Agreement, duly executed by the Company; (iv) the Registration Rights Agreement, duly executed by the Company; and (v) a certificate executed by the President and Chief Executive Officer of the Company to the effect that the conditions set forth in Sections 6.02(a) and (b) have been satisfied; SECTION 2.03. Deliveries by Windmere. At or prior to the Closing, Windmere shall deliver to the Company: (i) by wire transfer in immediately available funds to an account of the Company (designated in writing by the Company to Windmere at least seven days prior to the Closing), the payment described in Section 1.02(a)(i) as being required to be paid by Windmere to the Company at Closing; - 2 - 7 (ii) the Note described in Section 1.02(a)(ii) as being required to be delivered by Windmere to the Company at Closing; (iii) a certificate representing the Windmere Shares described in Section 1.02(a)(iii) as being required to be delivered by Windmere to the Company at Closing; (iv) the Security Agreements, duly executed by Windmere and its domestic subsidiaries granting the Company a security interest in substantially all of their respective assets, and Guaranties executed by Windmere's domestic subsidiaries, each in form and substance reasonably acceptable to the Company; (v) the Commercial Agreements, duly executed by Windmere; (vi) the Stockholder Agreement, duly executed by Windmere; (vii) the Registration Rights Agreement, duly executed by Windmere; and (viii) a certificate executed by the President and the Chief Financial Officer of Windmere to the effect that the conditions set forth in Sections 6.03(a) and (b) have been satisfied. ARTICLE III. REPRESENTATIONS AND WARRANTIES SECTION 3.01. Representations and Warranties of the Company. The Company represents and warrants to Windmere as follows: (a) Organization, Standing and Corporate Power. Each of the Company and its Significant Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has the requisite corporate power and authority to carry on its business as now being conducted. Each of the Company and its subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing (individually or in the aggregate) would not have a material adverse effect on the Company. The Company has delivered to Windmere complete and correct copies of its Amended and Restated Certificate of Incorporation and By-laws and the certificates of incorporation and by-laws (or similar organizational documents) of its Significant Subsidiaries, in each case as amended to the date hereof. For purposes of this Agreement, a "Significant Subsidiary" means any subsidiary of the Company that constitutes a significant subsidiary within the meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission (the "SEC"). (b) Subsidiaries. Schedule 3.01(b) lists each subsidiary of the Company, together with its jurisdiction of incorporation or organization. All the outstanding shares of capital stock of each such subsidiary have been validly issued and are fully paid and nonassessable and, except as set forth on Schedule 3.01 (b), owned by the Company, by another subsidiary of the Company or by the Company and another such subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances and security interests of any kind or nature whatsoever (collectively, "Liens"). Except for the capital stock of its subsidiaries and except for the ownership interests set forth in Schedule - 3 - 8 3.01 (b), the Company does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity. (c) Capital Structure. The authorized capital stock of the Company consists of 20,000,000 shares of Company Common Stock and 2,000,000 shares of preferred stock, par value $.01 per share ("Company Preferred Stock"). At the date of this Agreement, (i) 6,508,572 shares of Company Common Stock are issued and outstanding, (ii) no shares of Company Common Stock are held by the Company in its treasury, (iii) 925,000 shares of Company Common Stock are reserved for issuance upon the exercise of outstanding stock options granted pursuant to (A) the Company's 1992 Stock Option Plan, (B) the Company's 1995 Employee Stock Option Plan and (C) the Company's Non-Employee Directors Stock Option Plan (such stock options and plans are hereinafter collectively referred to as the "Company Stock Plans"), and (iv) no shares of Company Preferred Stock are issued or are outstanding. Except as set forth above, since such date, no shares of capital stock or other voting securities of the Company have been issued or are outstanding, except for issuances pursuant to the Company Stock Plans. All outstanding shares of capital stock of the Company are, and all shares which may be issued pursuant to the Company Stock Plans will be, when issued in accordance with the respective terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into securities having the right to vote) on any matters on which shareholders of the Company may vote. Except as set forth above, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company or any of its subsidiaries is a party or by which any of them is bound obligating the Company or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or of any of its subsidiaries or obligating the Company or any of its subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the date of this Agreement, there are not any outstanding contractual obligations of the Company or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries. The Company Shares to be issued to Windmere have been duly authorized and, when delivered pursuant to this Agreement, will be duly and validly issued, fully-paid and nonassessable, and free of any Liens or restrictions. (d) Authority; Noncontravention. The Company has the requisite corporate power and authority to enter into this Agreement, each of the other Transaction Documents to be executed and delivered by the Company, and all other agreements and instruments contemplated hereby and thereby, and to consummate the transactions and perform the obligations contemplated hereby and thereby to be consummated by it, subject to obtaining approval of the stockholders of the Company pursuant to Section 5.01(b). The execution and delivery by the Company of this Agreement and each of the other Transaction Documents to be executed and delivered by the Company and the consummation by the Company of the transactions contemplated hereby and thereby to be consummated by it have been duly authorized by all necessary corporate action on the part of the Company, subject to obtaining approval of the stockholders of the Company pursuant to Section 5.01(b). This Agreement has been duly executed and delivered by the Company and constitutes, and the other Transaction Documents to be entered into by the Company at or prior to the Closing will be, when executed and delivered by the Company (and assuming this Agreement and such other Transaction Documents to be entered into by Windmere constitute legal, valid and binding obligations of Windmere), valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except that enforceability of this Agreement and the other Transaction Documents may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable - 4 - 9 defenses and to the discretion of the court before which any proceeding therefor may be brought. Except as set forth on Schedule 3.01 (d), the execution, delivery and performance of this Agreement and each of the other Transaction Documents to be executed and delivered by the Company does not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions of this Agreement and each of the other Transaction Documents to be executed and delivered by the Company will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the properties or assets of the Company or any of its subsidiaries under, any provision of (i) the Restated Certificate of Incorporation or By-laws of the Company or any provision of the comparable charter or organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to the Company or any of its subsidiaries or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or decree applicable to the Company or any of its subsidiaries or their respective properties or assets, other than, in the case of clause (ii) and clause (iii), any such conflicts, violations, defaults, rights, losses or Liens that individually or in the aggregate would not (x) have a material adverse effect on the Company, (y) impair in any material respect the ability of the Company to perform its obligations under this Agreement, or (z) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement to be consummated by it. No consent, approval, order or authorization of or registration, declaration or filing with, any federal, state or local government or any court, tribunal, administrative agency or commission or other governmental authority or agency, domestic or foreign (a "Governmental Entity"), is required by or with respect to the Company or any of its subsidiaries in connection with the execution and delivery by the Company of this Agreement and each of the other Transaction Documents to be executed and delivered by the Company or the consummation by the Company of the transactions contemplated hereby and thereby to be consummated by it, except for (i) those required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) those required by federal and state securities laws, (iii) those required by the Nasdaq National Market, (iv) those required by any applicable state takeover laws, (v) the consents set forth on Schedule 3.01 (d) and (vi) such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a material adverse effect on the Company or prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. (e) SEC Documents. The Company has filed all required reports, schedules, forms, statements and other documents required to be filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") with the SEC since July 1, 1994 (the "Company SEC Documents"). As of their respective dates, the Company SEC Documents complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such Company SEC Documents. Except to the extent that information contained in any SEC Document has been revised or superseded by a later-filed SEC Document, filed and publicly available prior to the date of this Agreement, none of the Company SEC Documents contained when filed any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the Company SEC Documents complied as of their respective dates of filing with the SEC as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of the - 5 - 10 Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The representations and warranties set forth in this Section 3.01(e) shall not apply to any noncompliance, nonfilings, misstatements, omissions or failures to present fairly or conform to generally accepted accounting principles which would not, individually or in the aggregate, have a material adverse affect on the Company. Except as set forth in the Company SEC Documents or as set forth on Schedule 3.01(e), and except for liabilities and obligations incurred in the ordinary course of business consistent with past practice, the Company has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a balance sheet of the Company or in the notes thereto which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on the Company. (f) Absence of Certain Changes or Events. Except as disclosed in the Company SEC Documents filed prior to the date of this Agreement, and except as set forth on Schedule 3.01(f) or expressly contemplated by this Agreement, since July 1, 1995, the Company has conducted its business only in the ordinary course, and there has not been (i) any material adverse change in the Company, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company's capital stock, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) (x) any granting by the Company or any of its subsidiaries to any officer of the Company or any of its subsidiaries of any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements in effect as of the date of the most recent audited financial statements included in the Company SEC Documents, (y) any granting by the Company or any of its subsidiaries to any officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements in effect as of the date of the most recent audited financial statements included in the Company SEC Documents or (z) any entry by the Company or any of its subsidiaries into any employment, severance or termination agreement with any officer, (v) any damage, destruction or loss, whether or not covered by insurance, that has or is likely to have a material adverse effect on the Company, or (vi) any change in accounting methods, principles or practices by the Company materially affecting its assets, liabilities or business, except insofar as may have been required by a change in generally accepted accounting principles. (g) Litigation. Except as disclosed in the Company SEC Documents, there is no suit, action or proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on the Company, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against the Company or any of its subsidiaries having, or which would reasonably be expected to have, any such effect. (h) Compliance with Laws. Except as disclosed in the Company SEC Documents, the Company and its subsidiaries are in compliance with all applicable statutes, laws, ordinances, regulations, rules, judgments, decrees and orders of any Governmental Entity applicable to its business or operations, except for instances of possible noncompliance that, individually or in the aggregate, would not have a material adverse effect on the Company. To the knowledge of the Company, each of the Company and its subsidiaries has in effect all Federal, state, local and foreign governmental approvals, authorizations, certificates, filings, franchises, licenses, notes, permits and rights ("Permits"), necessary for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and there has occurred no default under any such Permit, except for the lack of Permits and for defaults under Permits which, individually or in the aggregate, would not have a material adverse effect on the Company. - 6 - 11 (i) Absence of Changes in Benefit Plans; Labor Relations. Except as disclosed in the Company SEC Documents, since July 1, 1995, there has not been any adoption or amendment in any material respect by the Company or any of its subsidiaries of any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other plan, arrangement or understanding in each ease maintained or contributed to, or required to be maintained or contributed to, by the Company or its subsidiaries for the benefit of any current or former employee, officer or director of the Company or any of its subsidiaries (each, a "Benefit Plan" and, collectively, "Benefit Plans"). Except as set forth in Schedule 3.01 (i) or as disclosed in the Company SEC Documents, there exist no employment, severance, termination or indemnification agreements, arrangements or understandings between the Company or any of its subsidiaries and any current or former employee, officer or director of the Company or any of its subsidiaries or any consulting agreement with the Company or any of its subsidiaries with respect to which the aggregate liability thereunder exceeds $100,000 or which cannot be canceled by the Company or any such subsidiary without penalty on 30 days' or less notice. (j) Benefit Plan Compliance. (i) Schedule 3.01(j)(i) contains a list and brief description of all "employee pension benefit plans" (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans maintained, or contributed to, or required to be contributed to, by the Company or any of its subsidiaries or any other person or entity that, together with the Company, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code") (the Company and each such other person or entity, a "Company Commonly Controlled Entity") for the benefit of any current or former employees, officers or directors of the Company or any of its subsidiaries. The Company has delivered or made available to Windmere true, complete and correct copies of (1) each Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof), (2) the most recent annual report on Form 5500 filed with the Internal Revenue Service with respect to each Benefit Plan (if any such report was required), (3) the most recent summary plan description for each Benefit Plan for which such summary plan description is required and (4) each trust agreement and group annuity contract relating to any Benefit Plan. Each Benefit Plan has been administered in all material respects in accordance with its terms and is in compliance with the applicable provisions of ERISA, the Code, all other applicable laws and all applicable collective bargaining agreements except where the failure to comply would not be reasonably expected to result in a material adverse effect on the Company. (ii) All Pension Plans have been the subject of determination letters from the Internal Revenue Service, or have filed a timely application therefor, to the effect that such Pension Plans are qualified and exempt from Federal income taxes under Section 401 (a) and 501 (a), respectively, of the Code, and no such determination letter has been revoked nor has any such Pension Plan been amended since the date of its most recent determination letter or application therefor in any respect that would adversely affect its qualification or materially increase its costs. (iii) No Company Commonly Controlled Entity has incurred any liability which has not been fully paid to a Pension Plan under Title IV of ERISA (other than for contributions not yet due) or to the Pension Benefit Guaranty Corporation (other than for payment of premiums not yet due) that, when aggregated with other such liabilities, would result in a material adverse effect on the Company. - 7 - 12 (iv) As of the most recent valuation date for each Pension Plan that is a "defined benefit pension plan" (as defined in Section 3 (35) of ERISA subject to Title IV of ERISA (other than a multiemployer plan) (hereinafter a "Defined Benefit Plan")), there was not any material amount of "unfunded benefit liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined Benefit Plan, and the Company is not aware of any facts or circumstances that would materially adversely change the funded status of any such Defined Benefit Plan. The Company has furnished or made available to Windmere the most recent actuarial report or valuation with respect to each Defined Benefit Plan and has no reason to believe that the conclusions expressed in those reports or valuations are incorrect. (v) No Company Commonly Controlled Entity has been required at any time within the five calendar years preceding the date hereof or is required currently to contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such withdrawal has resulted or would result in any "withdrawal liability" (within the meaning of Section 4201 of ERISA) that has not been fully paid. (vi) With respect to any Benefit Plan that is an employee welfare benefit plan, (1) no such Benefit Plan is funded through a "welfare benefits fund", as such term is defined in Section 419(e) of the Code, and (2) each such Benefit Plan that is a "group health plan", as such term is defined in Section 5000(b)(1) of the Code, complies substantially with the applicable requirements of Section 4980B(f) of the Code. (vii) Schedule 3.01 (j) (vii) lists all outstanding options as of the date of this Agreement, showing for each such option: (1) the number of shares issuable, (2) the number of vested shares, (3) the date of expiration and (4) the exercise price. (viii) Except as disclosed in Schedule 3.01(j)(viii), no employee of the Company or any of its subsidiaries will be entitled to any additional compensation or benefits or any acceleration of the time of payment or vesting of any compensation or benefits under any Benefit Plan as a result of the transactions contemplated by this Agreement. (ix) Neither the Company or any of its subsidiaries nor any person acting on behalf of the Company or any of its subsidiaries has, in contemplation of any corporate transaction involving Windmere, issued any written communication to, or otherwise made or entered into any legally binding commitment with, any employees of the Company or of any of its subsidiaries to the effect that, following the date hereof, (i) any benefits or compensation provided to such employees under existing Benefit Plans or under any other plan or arrangement will be enhanced, (ii) any new plans or arrangements providing benefits or compensation will be adopted, (iii) any Benefit Plans will be conducted for any period of time, or (iv) any plans or arrangements provided by Windmere will be made available to such employees. (k) Taxes. The Company and its subsidiaries have filed all material tax returns and reports required to be filed by it and has paid all taxes required to be paid by it (other than taxes, the failure to pay which would not, individually or in the aggregate, have a material adverse effect on the Company), and the most recent financial statements contained in the Company SEC Documents reflect an adequate reserve for all material taxes payable by the Company for all taxable periods and portions thereof through the date of such financial statements. No deficiencies for any taxes have been proposed, asserted or assessed against the Company (other than deficiencies, the liability for which would not, individually or in the aggregate, have a material adverse effect on the Company), - 8 - 13 and no requests for waivers of the time to assess any taxes are pending. None of the assets or properties of the Company or any of its subsidiaries is subject to any material tax lien. As used in this Agreement, "taxes" shall include all Federal, state, local and foreign income, property, sales, excise and other taxes, tariffs or governmental charges of any nature whatsoever, including any interest, penalties or additions with respect thereto. (l) Voting Requirements. The affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock voted in person or by proxy at the Stockholders Meeting (as defined in Section 5.01(b)) is the only vote of the holders of any class or series of the Company's capital stock necessary to approve this Agreement and the transactions contemplated by this Agreement. (m) Brokers. Except as set forth on Schedule 3.01(m), no broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company. (n) Purchase for Investment. The Company is acquiring the Windmere Shares for investment for its own account and not with a view to, or in connection with, a distribution thereof within the meaning of the Securities Act. The Company is able to bear the economic risk of an investment in the Windmere Shares pursuant to this Agreement and can afford to sustain a total loss on such investment, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment and therefor has the capacity to protect its own interests in connection with the purchase of the Windmere Shares. SECTION 3.02. Representations and Warranties of Windmere. Windmere represents and warrants to the Company as follows: (a) Organization, Standing and Corporate Power. Each of Windmere and its Significant Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated and has the requisite corporate power and authority to carry on its business as now being conducted. Each of Windmere and its subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed or to be in good standing (individually or in the aggregate) would not have a material adverse effect on Windmere. Windmere has delivered to the Company complete and correct copies of its Amended and Restated Articles of Incorporation and By-laws and the articles of incorporation and by-laws (or similar organizational documents) of its Significant Subsidiaries, in each case as amended to the date hereof. (b) Subsidiaries. Schedule 3.02(b) lists each subsidiary of Windmere with aggregate total assets in excess of $500,000, together with its jurisdiction of incorporation or organization. All the outstanding shares of capital stock of each such subsidiary have been validly issued and are fully paid and nonassessable and, except as set forth on Schedule 3.02 (b), owned by Windmere, by another subsidiary of Windmere or by Windmere and another such subsidiary, free and clear of all Liens. Except for the capital stock of its subsidiaries and except for the ownership interests set forth in Schedule 3.02 (b), Windmere does not own, directly or indirectly, any capital stock or other ownership interest in any corporation, partnership, joint venture or other entity. (c) Capital Structure. The authorized capital stock of Windmere consists of 40,000,000 shares of Windmere Common Stock and 20,000,000 shares of preferred stock, par value $.01 per share ("Windmere Preferred Stock"). At the date of this Agreement, (i) 16,408,012 shares of - 9 - 14 Windmere Common Stock were issued and outstanding, (ii) no shares of Windmere Common Stock were held by Windmere in its treasury, (iii) 3,100,000 shares of Windmere Common Stock were reserved for issuance upon the exercise of outstanding stock options granted pursuant to (A) Windmere's 1992 Incentive Stock Option Plan, (B) individual non-qualified stock option agreements, (C) Windmere's 1988 Director Option Plan (such stock options and plans, collectively, the "Windmere Stock Plans"), (D) Windmere's 1982 Stock Option Plan and (E) certain warrants issued in 1992 in connection with the settlement of certain litigation involving Windmere, and (iv) no shares of Windmere Preferred Stock were issued or outstanding. Except as set forth above, since such date, no shares of capital stock or other voting securities of Windmere have been issued or are outstanding, except for issuances pursuant to the Windmere Stock Plans. All outstanding shares of capital stock of Windmere are, and all shares which may be issued pursuant to Windmere Stock Plans will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights. There are no bonds, debentures, notes or other indebtedness of Windmere having the right to vote (or convertible into securities having the right to vote) on any matters on which shareholders of Windmere may vote. Except as set forth above, as of the date of this Agreement, there are no securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Windmere or any of its subsidiaries is a party or by which any of them is bound obligating Windmere or any of its subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of Windmere or of any of its subsidiaries or obligating Windmere or any of its subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking. As of the date of this Agreement, there are not any outstanding contractual obligations of Windmere or any of its subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Windmere or any of its subsidiaries. The Windmere Shares to be issued to the Company have been duly authorized and, when delivered pursuant to this Agreement, will be duly and validly issued and outstanding, fully paid and nonassessable, and free of any Liens or restrictions. (d) Authority; Noncontravention. Windmere has the requisite corporate power and authority to enter into this Agreement, each of the other Transaction Documents to be executed and delivered by Windmere, and all other agreements and instruments contemplated hereby and thereby and to consummate the transactions and perform the obligations contemplated hereby and thereby to be consummated by it. The execution and delivery by Windmere of this Agreement and the consummation by Windmere of the transactions contemplated hereby and thereby to be consummated by it have been duly authorized by all necessary corporate action on the part of Windmere. This Agreement has been duly executed and delivered by Windmere and constitutes, and the other Transaction Documents to be entered into by Windmere at or prior to the Closing will be, when executed and delivered by Windmere (and assuming this Agreement and such other Transaction Documents to be entered into by the Company constitute legal, valid and binding obligations of the Company) valid and binding obligations of Windmere, enforceable against Windmere in accordance with their respective terms, except that enforceability of this Agreement and the other Transaction Documents may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights generally and that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Except as set forth on Schedule 3.02 (d), the execution, delivery and performance of this Agreement and each of the other Transaction Documents to be executed and delivered does not, and the consummation of the transactions contemplated hereby and thereby and compliance with the provisions of this Agreement and each of the other Transaction Documents to be executed and delivered by Windmere will not, conflict with, or result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, or result in the creation of any Lien upon any of the - 10 - 15 properties or assets of Windmere or any of its subsidiaries under, any provision of (i) the Restated Articles of Incorporation or By-laws of Windmere or any provision of the comparable charter or organizational documents of any of its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Windmere or any of its subsidiaries or their respective properties or assets or (iii) subject to the governmental filings and other matters referred to in the following sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment, order or decree applicable to Windmere or any of its subsidiaries or their respective properties or assets, other than, in the case of clause (ii) and clause (iii), any such conflicts, violations, defaults, rights, losses or Liens that individually or in the aggregate would not (x) have a material adverse effect on Windmere, (y) impair in any material respect the ability of Windmere to perform its obligations under this Agreement, or (z) prevent or materially delay the consummation of any of the transactions contemplated by this Agreement to be consummated by it. No consent, approval, order or authorization of or registration, declaration or filing with, any Governmental Entity is required by or with respect to Windmere or any of its subsidiaries in connection with the execution and delivery by Windmere of this Agreement and each of the other Transaction Documents to be executed and delivered by Windmere or the consummation by Windmere of the transactions contemplated hereby and thereby to be consummated by it, except for (i) those required by the HSR Act, (ii) those required by federal and state securities laws, (iii) those required by the New York Stock Exchange, (iv) those required by any applicable state takeover laws, (v) the consents set forth on Schedule 3.02 (d) and (vi) such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a material adverse effect on Windmere or prevent or materially delay the consummation of any of the transactions contemplated by this Agreement. (e) SEC Documents. Windmere has filed all required reports, schedules, forms, statements and other documents required to be filed under the Exchange Act with the SEC since December 31, 1993 (the "Windmere SEC Documents"). As of their respective dates, the Windmere SEC Documents complied as to form in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such Windmere SEC Documents. Except to the extent that information contained in any Windmere SEC Document has been revised or superseded by a later-filed Windmere SEC Document, filed and publicly available prior to the date of this Agreement, none of the Windmere SEC Documents contained when filed any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of Windmere included in the Windmere SEC Documents complied as of their respective dates of filing with the SEC as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the financial position of Windmere as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The representations and warranties set forth in this Section 3.02(e) shall not apply to any noncompliance, nonfilings, misstatements, omissions or failures to present fairly or conform to generally accepted accounting principles, which would not, individually or in the aggregate, have a material adverse effect on Windmere. Except as set forth in the Windmere SEC Documents, and except for liabilities and obligations incurred in the ordinary course of business consistent with past practice, Windmere has no liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) required by generally accepted accounting principles to be set forth on a balance sheet of Windmere or in the notes thereto which, individually or in the aggregate, could reasonably be expected to have a material adverse effect on Windmere. - 11 - 16 (f) Absence of Certain Changes or Events. Except as disclosed in the Windmere SEC Documents filed prior to the date of this Agreement, and except as set forth on Schedule 3.02(f) or expressly contemplated by this Agreement, since December 31, 1994, Windmere has conducted its business only in the ordinary course, and there has not been (i) any material adverse change in Windmere, (ii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of Windmere's capital stock, (iii) any split, combination or reclassification of any of its capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, (iv) (x) any granting by Windmere or any of its subsidiaries to any officer of Windmere or any of its subsidiaries of any increase in compensation, except in the ordinary course of business consistent with prior practice or as was required under employment agreements in effect as of December 31, 1994, (y) any granting by Windmere or any of its subsidiaries to any officer of any increase in severance or termination pay, except as was required under any employment, severance or termination agreements in effect as of December 31, 1994 or (z) any entry by Windmere or any of its subsidiaries into any employment, severance or termination agreement with any officer, (v) any damage, destruction or loss, whether or not covered by insurance, that has or is likely to have a material adverse effect on Windmere, or (vi) any change in accounting methods, principles or practices by Windmere materially affecting its assets, liabilities or business, except insofar as may have been required by a change in generally accepted accounting principles. (g) Litigation. Except as disclosed in the Windmere SEC Documents, there is no suit, action or proceeding pending or, to the knowledge of Windmere, threatened against Windmere or any of its subsidiaries that, individually or in the aggregate, would reasonably be expected to have a material adverse effect on Windmere, nor is there any judgment, decree, injunction, rule or order of any Governmental Entity or arbitrator outstanding against Windmere or any of its subsidiaries having, or which would reasonably be expected to have, any such effect. (h) Compliance with Laws. Except as disclosed in the Windmere SEC Documents, Windmere and its subsidiaries are in compliance with all applicable statutes, laws, ordinances, regulations, rules, judgments, decrees and orders of any Governmental Entity applicable to its business or operations, except for instances of possible noncompliance that, individually or in the aggregate, would not have a material adverse effect on Windmere. To the knowledge of Windmere, each of Windmere and its subsidiaries has in effect all Permits necessary for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and there has occurred no default under any such Permit, except for the lack of Permits and for defaults under Permits which, individually or in the aggregate, would not have a material adverse effect on Windmere. (i) Absence of Changes in Benefit Plans; Labor Relations. Except as disclosed in the Windmere SEC Documents, since the date of the most recent audited financial statements included in the Windmere SEC Documents, there has not been any adoption or amendment in any material respect by Windmere or any of its subsidiaries of any Benefit Plan. Except as set forth in Schedule 3.02 (i) or as disclosed in the Windmere SEC Documents, there exist no employment, severance, termination or indemnification agreements, arrangements or understandings between Windmere or any of its subsidiaries and any current or former employee, officer or director of Windmere or any of its subsidiaries or any consulting agreement with Windmere or any of its subsidiaries with respect to which the aggregate liability thereunder exceeds $100,000 or which cannot be canceled by Windmere or any such subsidiary without penalty on 30 days' or less notice. (j) Benefit Plan Compliance. (i) Schedule 3.02(j)(i) contains a list and brief description of all "employee pension benefit plans" (as defined in Section 3(2) of ERISA, "employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and all other Benefit Plans maintained, or - 12 - 17 contributed to, or required to be contributed to, by Windmere or any of its subsidiaries or any other person or entity that, together with Windmere, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (Windmere and each such other person or entity, a "Windmere Commonly Controlled Entity") for the benefit of any current or former employees, officers or directors of Windmere or any of its subsidiaries. Windmere has delivered or made available to the Company true, complete and correct copies of (1) each Benefit Plan (or, in the case of any unwritten Benefit Plans, descriptions thereof), (2) the most recent annual report on Form 5500 filed with the Internal Revenue Service with respect to each Benefit Plan (if any such report was required), (3) the most recent summary plan description for each Benefit Plan for which such summary plan description is required and (4) each trust agreement and group annuity contract relating to any Benefit Plan. Each Benefit Plan has been administered in all material respects in accordance with its terms and is in compliance with the applicable provisions of ERISA, the Code, all other applicable laws and all applicable collective bargaining agreements except where the failure to comply would not be reasonably expected to result in a material adverse effect on Windmere. (ii) Except as disclosed in Schedule 3.02(j)(ii), all Pension Plans have been the subject of determination letters from the Internal Revenue Service, or have filed a timely application therefor, to the effect that such Pension Plans are qualified and exempt from Federal income taxes under Section 401 (a) and 501 (a), respectively, of the Code, and no such determination letter has been revoked nor has any such Pension Plan been amended since the date of its most recent determination letter or application therefor in any respect that would adversely affect its qualification or materially increase its costs. (iii) No Windmere Commonly Controlled Entity has incurred any liability which has not been fully paid to a Pension Plan under Title IV of ERISA (other than for contributions not yet due) or to the Pension Benefit Guaranty Corporation (other than for payment of premiums not yet due) that, when aggregated with other such liabilities, would result in a material adverse effect on Windmere. (iv) As of the most recent valuation date for each Pension Plan that is a Defined Benefit Plan, there was not any material amount of "unfunded benefit liabilities" (as defined in Section 4001(a)(18) of ERISA) under such Defined Benefit Plan, and Windmere is not aware of any facts or circumstances that would materially adversely change the funded status of any such Defined Benefit Plan. Windmere has furnished or made available to the Company the most recent actuarial report or valuation with respect to each Defined Benefit Plan and has no reason to believe that the conclusions expressed in those reports or valuations are incorrect. (v) No Windmere Commonly Controlled Entity has been required at any time within the five calendar years preceding the date hereof or is required currently to contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA) or has withdrawn from any multiemployer plan where such withdrawal has resulted or would result in any "withdrawal liability" (within the meaning of Section 4201 of ERISA) that has not been fully paid. (vi) With respect to any Benefit Plan that is an employee welfare benefit plan, except as disclosed in Schedule 3.02(j)(vi), (1) no such Benefit Plan is funded through a "welfare benefits fund", as such term is defined in Section 419(e) of the Code, and (2) each such Benefit Plan that is a "group health plan", as such term is defined in Section 5000(b)(1) of the Code, complies substantially with the applicable requirements of Section 4980B(f) of the Code. - 13 - 18 (vii) Schedule 3.02 (j) (vii) lists all outstanding Options as of the date of this Agreement, showing for each such Option: (1) the number of shares issuable, (2) the number of vested shares, (3) the date of expiration and (4) the exercise price. (viii) No employee of Windmere or any of its subsidiaries will be entitled to any additional compensation or benefits or any acceleration of the time of payment or vesting of any compensation or benefits under any Benefit Plan as a result of the transactions contemplated by this Agreement. (ix) Neither Windmere or any of its subsidiaries nor any person acting on behalf of Windmere or any of its subsidiaries has, in contemplation of any corporate transaction involving Windmere, issued any written communication to, or otherwise made or entered into any legally binding commitment with, any employees of Windmere or of any of its subsidiaries to the effect that, following the date hereof, (i) any benefits or compensation provided to such employees under existing Benefit Plans or under any other plan or arrangement will be enhanced, (ii) any new plans or arrangements providing benefits or compensation will be adopted, (iii) any Benefit Plans will be conducted for any period of time, or (iv) any plans or arrangements provided by the Company will be made available to such employees. (k) Taxes. Windmere and its subsidiaries have filed all material tax returns and reports required to be filed by it and has paid all taxes required to be paid by it (other than taxes, the failure to pay which would not, individually or in the aggregate, have a material adverse effect on Windmere), and the most recent financial statements contained in the Windmere Filed SEC Documents reflect an adequate reserve for all material taxes payable by Windmere for all taxable periods and portions thereof through the date of such financial statements. No deficiencies for any taxes have been proposed, asserted or assessed against Windmere (other than deficiencies, the liability for which would not, individually or in the aggregate, have a material adverse effect on Windmere), and no requests for waivers of the time to assess any taxes are pending. None of the assets or properties of Windmere or any of its subsidiaries is subject to any material tax lien. (l) No Voting Requirements. No vote of the holders of shares of Windmere Common Stock is necessary to approve this Agreement and the transactions contemplated by this Agreement. (m) Brokers. No broker, investment banker, financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Windmere. (n) Purchase for Investment. Windmere is acquiring the Company Shares for investment for its own account and not with a view to, or in connection with, a distribution thereof within the meaning of the Securities Act. Windmere is able to bear the economic risk of an investment in the Company Shares pursuant to this Agreement and can afford to sustain a total loss on such investment, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the proposed investment and therefor has the capacity to protect its own interests in connection with the purchase of the Company Shares. Windmere acknowledges that the Company Shares have not been registered under the Securities Act or any state securities laws. (o) Ownership of Voting Stock. Neither Windmere nor any of its affiliates nor any person with whom Windmere or any affiliate of Windmere is acting (within the meaning of Section 13(d)(3) of the Exchange Act) as a partnership, limited partnership, syndicate or group (within the - 14 - 19 meaning of Section 13(d)(3) of the Exchange Act) for the purpose of acquiring, holding or disposing of securities issued by the Company beneficially owns (as defined in Rule 13d-3 under the Exchange Act) voting stock of the Company as of the date of this Agreement or will, as of the Closing Date, beneficially own (as defined in Rule 13d-3 under the Exchange Act) any voting stock of the Company or rights to acquire voting stock of the Company other than the Common Stock to be purchased by Windmere hereunder. (p) Financing. Windmere has the funds necessary to consummate the transactions contemplated hereby and will have the same at the time of the Closing. ARTICLE IV. COVENANTS RELATING TO CONDUCT OF BUSINESS SECTION 4.01. Conduct of Business. (a) Conduct of Business by the Company. During the period from the date of this Agreement to the Closing Date, the Company shall, and shall cause its subsidiaries to, except as expressly contemplated or permitted by this Agreement or to the extent that Windmere shall otherwise consent in writing, carry on their respective businesses in the usual, regular and ordinary course in substantially the same manner as heretofore conducted and, to the extent consistent therewith, use reasonable efforts to preserve intact their current business organizations, keep available the services of their current officers and employees and preserve their relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with them (except when in its good faith judgment it is otherwise in its best interest) to the end that their goodwill and ongoing business shall not be impaired in any material respect (in the aggregate, with respect to the Company and its subsidiaries taken as a whole) at the Closing Date. Without limiting the generality of the foregoing, during the period from the date of this Agreement to the Closing Date, the Company shall not, and shall not permit any of its subsidiaries to, (except as expressly contemplated or permitted by this Agreement or on Schedule 4.01 or to the extent that Windmere shall otherwise consent in writing) (which consent, in the case of clauses (vii) through (xiii) of this Section 4.01, shall not be unreasonably withheld): (i) (x) declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, except for dividends by a direct or indirect wholly owned subsidiary of the Company to its parent, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in view of or in substitution for shares of its capital stock, or (z) purchase, redeem or otherwise acquire any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (ii) issue, deliver, sell, pledge or otherwise encumber any shares of its capital stock, any other voting securities or any securities convertible into, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities (other than grants of options under the Company Stock Plans consistent in amounts and terms with past practice and the issuance of shares of Company Common Stock upon the exercise of options outstanding on the date of this Agreement and in accordance with their present terms) (iii) amend its Certificate of Incorporation, by-laws or other comparable charter or organizational documents; - 15 - 20 (iv) except as set forth on Schedule 4.01(a)(iv), acquire or agree to acquire (x) by merging or consolidating with, or by purchasing a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (y) any assets that are material, individually or in the aggregate, to the Company and its subsidiaries taken as a whole, except purchases of assets in the ordinary course of business consistent with past practice; (v) sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its material properties or assets, other than in the ordinary course of business consistent with past practice; (vi) (y) incur any indebtedness for borrowed money or guarantee any such indebtedness of another person, issue or sell any debt securities or warrants or other rights to acquire any debt securities of the Company or any of its subsidiaries, guarantee any debt securities of another person, enter into any "keep well" or other agreement to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, except for borrowings incurred in the ordinary course of business consistent with past practice, or (z) make any loans, advances or capital contributions to, or investments in, any other person; (vii) make or agree to make any new capital expenditure or expenditures which, in the aggregate, are in excess of $500,000; (viii) make any material tax election or settle or compromise any material tax liability; (ix) except as set forth on Schedule 4.01(a)(ix), pay, discharge, settle or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, settlement or satisfaction, in the ordinary course of business consistent with past practice or in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company SEC Documents or incurred in the ordinary course of business consistent with past practice, or waive any material benefits of, or agree to modify in any material respect, any confidentiality, standstill or similar agreements to which the Company or any of its subsidiaries is a party, (x) except in the ordinary course of business, modify, amend or terminate any material contract or agreement to which the Company or any subsidiary is a party or waive, release or assign any material rights or claims; (xi) except in the ordinary course of business, enter into any contracts, agreements, arrangements or understandings relating to the distribution, sale or marketing by third parties of the Company's or its subsidiaries' products or products licensed by the Company or its subsidiaries; (xii) except in the ordinary course of business, enter into any contracts, agreements, arrangements or understandings relating to the distribution, sale or marketing by the Company of products, patents or trademarks of other parties; - 16 - 21 (xiii) except as required to comply with applicable law, (A) adopt, enter into, terminate or amend any Benefit Plan or other arrangement for the benefit or welfare of any director, officer or current or former employee, (B) increase in any manner the compensation or fringe benefits of, or pay any bonus to, any director, officer or employee (except for normal increases or bonuses in the ordinary course of business consistent with past practice), (C) pay any benefit not provided for under any Benefit Plan, (D) except as permitted in clause (B) or in Section 4.01(a)(ii), grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Benefit Plan (including the grant of stock options, stock appreciation rights, stock based or stock related awards, performance units or restricted stock, or the removal of existing restrictions in any Benefit Plans or agreement or awards made thereunder) or (E) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract or arrangement or Benefit Plan; (xiv) make any change in any method of accounting or accounting practice or policy other than those required by generally accepted accounting principles; or (xv) authorize any of, or commit or agree to take any of, the foregoing actions. (b) Other Actions. Windmere shall not, and shall not permit any of its subsidiaries to, take any action that would, or that could reasonably be expected to, result in (i) any of the representations and warranties of Windmere set forth in this Agreement that are not qualified as to materiality becoming untrue in any material respect or (ii) any of the representations and warranties of Windmere set forth in this Agreement that are qualified as to materiality becoming untrue in any respect. SECTION 4.02. No Solicitation. (a) The Company and its officers, directors, employees, representatives and agents shall immediately cease any discussions or negotiations with any parties that may be ongoing with respect to a Third Party Acquisition Proposal. The Company shall not, nor shall it permit any of its subsidiaries to, nor shall it authorize or permit any of its officers, directors or employees or any investment banker, attorney or other advisor or representative retained by it or any of its subsidiaries to, (i) solicit, initiate or knowingly encourage the submission of, any Third Party Acquisition Proposal, or (ii) participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to, or take any other action knowingly to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, any Third Party Acquisition Proposal; provided, however, that to the extent required by the fiduciary obligations of the Board of Directors of the Company, based on the advice of outside counsel, the Company may, (A) in response to a request therefor, furnish non-public information with respect to the Company to any person pursuant to a customary confidentiality agreement (as determined by the Company's outside counsel) and discuss such information with such person and (B) upon receipt by the Company of a Third Party Acquisition Proposal, participate in negotiations and discussions regarding such Third Party Acquisition Proposal. For purposes of this Agreement, "Third Party Acquisition Proposal" means any inquiry, proposal or offer from any person relating to any direct or indirect acquisition or purchase of 15% or more of the consolidated assets of the Company and its subsidiaries or 15% or more of any class of equity securities of the Company or any of its Significant Subsidiaries or any tender offer or exchange offer that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of the Company or any of its Significant Subsidiaries, or any merger, consolidation, business combination, sale of substantially all assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any of its subsidiaries, other than the transactions contemplated by this Agreement, or any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Stock Purchase or which would reasonably be expected to dilute materially the benefits to Windmere of the transactions contemplated hereby. - 17 - 22 (b) Notwithstanding the foregoing, in the event the Company receives any Superior Proposal (as defined below), the Board of Directors of the Company, to the extent required by the fiduciary obligations thereof as determined in good faith by the Board based on the advice of outside counsel, may withdraw or modify its approval or recommendation of this Agreement or the transactions contemplated hereby, approve or recommend such Superior Proposal, enter into an agreement with respect to such Superior Proposal, approve the solicitation of additional Third Party Acquisition Proposals or other investment proposals and/or terminate this Agreement. The Company shall notify Windmere in writing of any Superior Proposal, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal, within 24 hours of receipt thereof. For purposes of this Agreement, a "Superior Proposal" means a bona fide Third Party Acquisition Proposal that the Board determines in its good faith reasonable judgment to be more favorable to the Company and/or the Company stockholders than the transactions contemplated by this Agreement and by the other Transaction Documents, taken as a whole. Windmere agrees that neither the Company nor any of its directors, officers, employees, representatives or agents acting in accordance with their respective fiduciary obligations to the Company, nor any person or entity who shall make a Third Party Acquisition Proposal shall be deemed, by reason of the making of such proposal or any actions taken in good faith in connection with it, to have tortiously or otherwise wrongfully interfered with or caused a breach of this Agreement, the other Transaction Documents or any other agreements, instruments and documents executed in connection herewith or therewith, or to have tortiously or otherwise wrongfully interfered with the transactions contemplated hereby or thereby, or the rights of Windmere or any of their affiliates hereunder or thereunder. (c) Nothing contained in this Section 4.02 shall prohibit the Company from (i) taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act; (ii) subject to the provisions of Section 5.05, issuing a press release or otherwise publicly disclosing the terms of this Agreement, including without limitation this Section 4.02 and (iii) making any disclosure to the Company's shareholders if, in the good faith judgment of the Board of Directors of the Company, after consultation with outside counsel, failure to so disclose would be inconsistent with applicable laws; (including, without limitation, laws relating to the fiduciary duties of directors); provided that except to the extent required by the fiduciary obligations of the Board of Directors of the Company determined in good faith by the Board based upon the advice of outside counsel, the Company may not withdraw or modify its approval or recommendation of this Agreement or the transactions contemplated hereby. ARTICLE V. ADDITIONAL AGREEMENTS SECTION 5.01. Preparation of the Proxy Materials; Stockholders Meeting. (a) As soon as practicable following the date of this Agreement, the Company shall prepare and file with the SEC the preliminary proxy materials related to the solicitation of proxies from the Company's stockholders to approve this Agreement and the transactions contemplated hereby and thereafter shall use its reasonable efforts to distribute a proxy statement and related proxy materials with respect thereto (the "Proxy Materials") to the Company's stockholders as promptly as practicable. Windmere shall furnish all information concerning itself to the Company as may be reasonably requested in connection with any such action and the preparation, filing and distribution of the Proxy Materials. (b) The Company will (a) as soon as practicable following the date of this Agreement, take all steps reasonably necessary in accordance with applicable law to duly call, give notice of, convene and hold a meeting of its stockholders (the "Stockholders Meeting") for the purpose of approving this Agreement; (b) through its Board of Directors, recommend to its stockholders approval of this Agreement in such Proxy Materials, except to the extent that the Board of Directors shall have withdrawn or modified - 18 - 23 its approval or recommendation of this Agreement as a result of their good faith determination, based upon the advice of Sonnenschein Nath & Rosenthal, the Company's outside counsel, that the failure to withdraw or modify its approval or recommendation of this Agreement would cause such Board to violate their fiduciary duties to the Company and its stockholders. (c) Notwithstanding anything to the contrary in this Agreement, the Company shall not be required to file with the SEC and distribute to its stockholders the Proxy Materials unless and until (i) the Company and Windmere have agreed to the form of Commercial Agreements and (ii) the Board of Directors of the Company shall have received a written opinion addressed to the Board from an investment banking firm satisfactory to the Board as set forth in Section 6.03. SECTION 5.02. Access to Information. (a) The Company and Windmere shall, and shall cause each of their respective subsidiaries to, upon reasonable notice from the other party hereto, afford to the other party hereto, and to their respective officers, employees, accountants, counsel, financial advisors and other representatives, reasonable access during normal business hours during the period prior to the Closing Date to all their respective properties, books, contracts, commitments, personnel and records and, during such period, each of the Company and Windmere shall, and shall cause each of their respective subsidiaries to, furnish promptly to the other party hereto upon request (i) a copy of each report, schedule, registration statement and other document filed or received by it during such period pursuant to the requirements of Federal or state securities laws or tax laws and (ii) all other information concerning its business, properties and personnel as the Company or Windmere, as the case may be, may reasonably request. (b) Each of the Company and Windmere may make copies of documents provided to them pursuant this Section 5.02 at their own expense. The parties shall, and shall cause their respective officers, employees, accountants, counsel, financial advisors and other representatives to, hold any such information which is nonpublic in confidence on the same terms and conditions as set forth in those certain letters each dated January 15, 1996, as amended from time to time, between the Company and Windmere (the "Confidentiality Agreements"). SECTION 5.03. Reasonable Efforts; Notification. (a) As soon as practicable after the date hereof, Windmere and the Company shall jointly prepare and file with the United States Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice ("Antitrust Division") report forms with respect to the Stock Purchase pursuant to the HSR Act and the regulations promulgated thereunder. Windmere and the Company shall comply promptly with any requests for additional information and documents from the FTC or Antitrust Division, and shall cooperate in any review or investigation by the FTC or Antitrust Division in a joint effort to have any such review or investigation resolved without an adverse effect upon the transactions contemplated hereby. (b) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use all reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all other things necessary, proper or advisable to consummate and make effective, as promptly as practicable, the Stock Purchase and the other transactions contemplated by this Agreement, including (i) the obtaining of all other necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings (including filings with Governmental Entities, if any) and the taking of all other reasonable steps as may bc necessary to avoid an action or proceeding by any Governmental Entity, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging this Agreement or the consummation of the transactions contemplated hereby, including seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity vacated or reversed and (iv) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by, and to fully carry out the purposes of, this Agreement. In connection with and without - 19 - 24 limiting the foregoing, subject to the fiduciary duties of the Board of Directors of the Company, the Company and its Board of Directors shall if any state takeover statute or similar statute or regulation is or becomes applicable to the Stock Purchase, this Agreement or the other transactions contemplated by this Agreement, use all reasonable efforts to ensure that the Stock Purchase and the other transactions contemplated by this Agreement may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such statute or regulation on the Stock Purchase and the other transactions contemplated by this Agreement. Nothing herein shall limit or affect the Company's taking actions specifically permitted by Section 4.02(b). SECTION 5.04. Fees and Expenses. All fees and expenses incurred in connection with the Stock Purchase, this Agreement, the Proxy Statement, the Registration Statement and the transactions contemplated by this Agreement shall be paid by the party incurring such fees or expenses, whether or not the Stock Purchase is consummated. SECTION 5.05. Public Announcements. Windmere, on the one hand, and the Company, on the other hand, will consult with each other before issuing, and give each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement, including the Stock Purchase, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with the New York Stock Exchange, Inc. (the "NYSE") or the Nasdaq National Market. The parties agree that the initial press release to be issued with respect to the transactions contemplated by this Agreement shall be in the form heretofore agreed to by the parties. SECTION 5.06. Nasdaq and NYSE Listing. The Company shall use its reasonable efforts to make all filings required by NASDAQ with respect to the shares of Company Common Stock to be issued in the Stock Purchase, subject to official notice of issuance, prior to the Closing Date. Windmere shall use its reasonable efforts to cause the shares of Windmere Common Stock to be issued in the Stock Purchase as part of the Purchase Price to be approved for listing on the NYSE, subject to official notice of issuance, prior to the Closing Date. SECTION 5.07. Registration Statement. As soon as practicable after the date hereof, Windmere shall file with the SEC a registration statement on Form S-3 under the Securities Act (the "Registration Statement") covering all of the Windmere Shares and shall use its reasonable efforts to cause the Registration Statement to become effective as soon after such filing as practicable. SECTION 5.08. Negotiation of Commercial Agreements. Each of the Company and Windmere shall use its reasonable efforts to negotiate and enter into various commercial agreements (the "Commercial Agreements") which would become effective upon the Closing. The parties hereto acknowledge and agree that the Commercial Agreements must be mutually satisfactory to the Company and Windmere with the intent of enhancing the business and competitive position of both the Company and Windmere. - 20 - 25 ARTICLE VI. CONDITIONS PRECEDENT SECTION 6.01. Conditions to Each Party's Obligation To Effect the Stock Purchase. The respective obligation of each party to effect the Stock Purchase is subject to the satisfaction or waiver on or prior to the Closing Date of the following conditions: (a) Stockholder Approval. This Agreement and the Stock Purchase shall have been approved by the affirmative vote of the holders of a majority of the votes cast in person or by proxy at the Stockholders Meeting. (b) Regulatory Compliance. All material filings with all Governmental Authorities required to be made in connection with the transactions contemplated hereby shall have been made, all waiting periods thereunder shall have expired or terminated and all material orders, permits, waivers, authorizations, exemptions, and approvals of such entities required to be in effect on the date of the Closing in connection with the transactions contemplated hereby shall have been issued, all such orders, permits, waivers, authorizations, exemptions or approvals shall be in full force and effect on the date of the Closing; provided, however, that no provision of this Agreement shall be construed as requiring any party to accept, in connection with obtaining any requisite approval, clearance or assurance of non-opposition, avoiding any challenge, or negotiating settlement, any condition that would materially change or restrict the manner in which the Company or Windmere conducts or proposes to conduct its business. (c) No Injunctions or Restraints; Illegality. None of the parties hereto shall be subject to any statute, rule, regulation, decree, ruling, injunction or other order issued by any Governmental Entity of competent jurisdiction (collectively, an "Injunction") which prohibits, restrains, enjoins or restricts the consummation of the transactions contemplated by this Agreement; provided, however, that each of the Company and Windmere shall have used its reasonable efforts, to the extent required pursuant to Section 5.03(b), to prevent any such Injunction. (d) Commercial Agreements. The Company and Windmere shall have entered into the Commercial Agreements. SECTION 6.02. Conditions to Obligations of Windmere. The obligations of Windmere to effect the Stock Purchase is further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement that are qualified as to materiality shall be true and correct, and the representations and warranties of the Company set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement, and Windmere shall have received a certificate signed on behalf of the Company by the President and Chief Executive Officer of the Company to such effect. (b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and Windmere shall have received a certificate signed on behalf of the Company by the President and Chief Executive Officer of the Company to such effect. - 21 - 26 (c) Nasdaq National Market Listing. The shares of Company Stock issuable to Windmere pursuant to this Agreement shall have been included for listing on the Nasdaq National Market, subject to official notice of issuance. (d) No Material Adverse Change. At any time on or after the date of this Agreement there shall not have occurred any material adverse change in the business, properties, assets, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. (e) Closing Deliveries. The Company shall have delivered, or shall be delivering concurrently with the Closing, the documents and instruments required to be delivered by the Company pursuant to Section 2.02. SECTION 6.03. Conditions to Obligations of the Company. The obligation of the Company to effect the Stock Purchase is further subject to the following conditions: (a) Representations and Warranties. The representations and warranties of Windmere set forth in this Agreement that are qualified as to materiality shall be true and correct, and the representations and warranties of Windmere set forth in this Agreement that are not so qualified shall be true and correct in all material respects, in each case as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date, except as otherwise contemplated by this Agreement, and the Company shall have received a certificate signed on behalf of Windmere by the President and the Chief Financial Officer of Windmere to such effect. (b) Performance of Obligations of Windmere. Windmere shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of Windmere by the President and the Chief Financial Officer of Windmere to such effect. (c) NYSE Listing. The Windmere Common Stock issuable to the Company pursuant to this Agreement shall have been approved for listing on the NYSE, subject to official notice of issuance. (d) No Material Adverse Change. At any time on or after the date of this Agreement there shall not have occurred any material adverse change in the business, properties, assets, financial condition or results of operations of Windmere and its subsidiaries, taken as a whole. (e) Registration Statement. The Registration Statement shall have become effective under the Securities Act and shall not be the subject of any stop order or proceedings seeking a stop order. (f) Fairness Opinion. The Board of Directors of the Company shall have received from an investment banking firm satisfactory to the Board written opinions addressed to the Board (i) for inclusion in the Proxy Statement and dated on or about the date thereof, and (ii) immediately prior to the Closing Date and dated such date, in each case substantially to the effect that the consideration to be paid by Windmere for the Stock Purchase pursuant to this Agreement is fair to the Company from a financial point of view, and such opinions shall not have been withdrawn or materially modified prior to the Closing Date. (g) Lenders' Consents. The Company and Foothill Capital Corporation ("Foothill") shall have entered into a definitive amendment to the Loan and Security Agreement dated as of July 28, 1994, as amended (the "Loan Agreement"), by and between the Company and Foothill, effective upon - 22 - 27 consummation of this Agreement, amending the Loan Agreement such that this Agreement and the transactions contemplated hereby are permitted under the Loan Agreement as so amended and whereby no default, or event which could result in a default, exists under the Loan Agreement as so amended. The Company and LaSalle National Bank ("LaSalle") shall have entered into a definitive amendment to the Loan and Security Agreement dated as of December 20, 1991, as amended (the "Loan and Security Agreement"), by and between the Company and LaSalle, effective upon consummation of this Agreement, amending the Loan and Security Agreement such that this Agreement and the transactions contemplated hereby are permitted under the Loan and Security Agreement as so amended and whereby no default, or event which could result in a default, exists under the Loan and Security Agreement as so amended. (h) Closing Deliveries. Windmere shall have delivered, or shall be delivering concurrently with the Closing, the documents and instruments required to be delivered by Windmere pursuant to Section 2.03. ARTICLE VII. TERMINATION, AMENDMENT AND WAIVER SECTION 7.01. Termination. This Agreement may be terminated, and the Stock Purchase contemplated hereby may be abandoned, at any time prior to the Closing Date; (a) by mutual written consent of Windmere and the Company, (b) by either Windmere or the Company: (i) if the Stock Purchase shall not have been consummated on or before July 1, 1996, unless the failure to consummate the Stock Purchase is the result of a breach of any material obligation under this Agreement by the party seeking to terminate this Agreement; provided, however, that the passage of such period shall be tolled for any part thereof during which any party shall be subject to a non-final order, decree, ruling or other action restraining, enjoining or otherwise prohibiting the consummation of the Stock Purchase; or (ii) if any Governmental Entity of competent jurisdiction shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Stock Purchase and such order, decree, ruling or other action shall have become final and nonappealable; or (iii) if, upon a vote taken at a duly held Stockholders Meeting or any adjournment thereof, any required approval of the stockholders of the Company shall not have been obtained; or (iv) if the Company and Windmere shall have not entered into the Commercial Agreements by March 29, 1996; or (v) if the Board of Directors of the Company shall have not received a written opinion addressed to the Board from an investment banking firm satisfactory to the Board as set forth in Section 6.03 by April 5, 1996. - 23 - 28 (c) by Windmere: (i) if the Board of Directors of the Company or any committee thereof shall have withdrawn or modified in a manner adverse to Windmere its approval of the Stock Purchase or this Agreement, or approved or recommended any Third Party Acquisition Proposal, or resolved to take any of the foregoing actions; or (ii) if the Company shall have entered into any agreement with respect to any Superior Proposal. (d) by the Company if the Company has received a Superior Proposal or has withdrawn or modified its approval or recommendation of this Agreement or the transactions contemplated hereby in accordance with Section 4.02(b). SECTION 7.02. Effect of Termination. In the event of termination of this Agreement by either the Company or Windmere as provided in Section 7.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of Windmere or the Company, other than the obligations of the parties under the Confidentiality Agreements and the provisions of Sections 3.01(n), 3.02(n), 5.02(b), 5.04, this Section 7.02 and Article VIII (other than Section 8.01) and except liability of a party to the extent that such termination results from the wilful and material breach by such party of any of its representations, warranties, covenants or agreements set forth in this Agreement. SECTION 7.03. Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto; provided that after the Closing, this Agreement may only be amended in accordance with the terms of the Stockholder Agreement. SECTION 7.04. Extension; Waiver. At any time prior to the Closing, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto or (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights. Notwithstanding anything to the contrary herein, any waiver of the provisions of this Agreement after the Closing may only be made in accordance with the terms of the Stockholder Agreement. ARTICLE VIII. GENERAL PROVISIONS SECTION 8.01. Survival of Representations and Warranties. The representations and warranties in this Agreement will survive until the first anniversary of the date of the Closing. No action may be brought with respect to a breach of any representation or warranty in this Agreement after such time unless, prior to such time, the party seeking to bring such an action has notified the other party of such claim, specifying in reasonable detail the nature of the loss suffered. This Section 8.01 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Closing Date. - 24 - 29 SECTION 8.02. Notices. Except as otherwise provided in Section 4.02(f), all notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed given if delivered personally or sent by overnight courier (providing proof of delivery) to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) if to Windmere, to Windmere Corporation 5980 Miami Lakes Drive Miami Lakes, Florida 33014-9867 Attention: David M. Friedson, President with a copy to: Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 1221 Brickell Avenue Miami, Florida 33131 Attention: Andrew Hulsh, Esq. (b) if to the Company, to Salton/Maxim Housewares, Inc. 550 Business Center Drive Mount Prospect, Illinois 60056 Attention: Leon Dreimann, President with a copy to: Sonnenschein Nath & Rosenthal 8000 Sears Tower Chicago, Illinois 60606 Attention: Neal Aizenstein, Esq.
SECTION 8.03. Definitions. For purposes of this Agreement: (a) an "affiliate" of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person; (b) "knowledge" of any person means actual knowledge of the directors and executive officers of such person; (c) "material adverse change" or "material adverse effect" means, when used in connection with the Company or Windmere, any change or effect that is materially adverse to the - 25 - 30 business, properties, assets, financial condition or results of operations of such party and its subsidiaries taken as a whole; (d) "person" means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity, (e) a "subsidiary" of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests of which) is owned directly or indirectly by such first person; (f) "Transaction Documents" means this Agreement, the Note, the Security Agreements, the Guaranties, the Stockholder Agreement, the Registration Rights Agreement, and the Commercial Agreements, amendments thereof, and all schedules and exhibits hereto and thereto. (g) "Security Agreements" means the Security Agreements to be entered into by and between the Company, Windmere and the domestic subsidiaries of Windmere (the "Domestic Subsidiaries") at the Closing. (h) "Guaranties" means the Guaranties to be entered into by and between the Company and each of the Domestic Subsidiaries at the Closing. (i) "Stockholder Agreement" means the Stockholder Agreement, in the form attached hereto as Exhibit B, to be entered into by and between Windmere and the Company at the Closing. (j) "Registration Rights Agreement" means the Registration Rights Agreement, in the form attached hereto as Exhibit C, to be entered into by and between Windmere and the Company at the Closing. SECTION 8.04. Interpretation. When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". SECTION 8.05. Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties. SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This Agreement, together with the other Transaction Documents and the Confidentiality Agreements, constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and thereof and are not intended to confer upon any person other than the parties any rights or remedies. SECTION 8.07. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof. - 26 - 31 SECTION 8.08. Assignment. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns. SECTION 8.09. Enforcement. The parties agree that (i) any legal action or proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of Delaware or the United States of America located in Delaware, (ii) each irrevocably submits to the jurisdiction of each such court, and (iii) any summons, pleading, judgment, memorandum of law, or other paper relevant to any such action or proceeding shall be sufficiently served if delivered to the recipient thereof by certified or registered mail (with return receipt) at its address set forth in Section 8.02. Nothing in the preceding sentence shall affect the right of any party to proceed in any jurisdiction for the enforcement or execution of any judgment, decree or order made by a court specified in said sentence. The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specifications or were otherwise breached. It is accordingly agreed that each of the parties hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they may be entitled by law or equity. - 27 - 32 IN WITNESS WHEREOF, Windmere and the Company have caused this Agreement to be signed by their respective officers hereunto duly authorized, as of the date first written above. WINDMERE CORPORATION By: ------------------------------------- Name: David M. Friedson Title: President SALTON/MAXIM HOUSEWARES, INC. By: ----------------------------------- Name: Title: - 28 - 33 AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT This Amendment No. 1 (the "Amendment") to the Stock Purchase Agreement, dated as of February 27, 1996 (the "Agreement"), is entered into as of April 8, 1996, by and between Windmere Corporation, a Florida corporation ("Windmere"), and Salton/Maxim Housewares, Inc., a Delaware corporation (the "Company"). Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings set forth in the Agreement. WHEREAS, Windmere and the Company desire to amend the Agreement as set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the undersigned, intending to be legally bound hereby, agree as follows: 1. A new Section 1.03 is hereby added to read as follows: "(a) Upon a Change in Control (as defined below) of Windmere, the Company shall have the option (the "Change in Control Option"), but not the obligation, to purchase all, or a portion, of the Company Shares then owned by Windmere at a per share price equal to the book value per share of the Company's outstanding Common Stock upon such Change in Control. The Change in Control Option may be exercised by vote of a majority of the Company Directors (as defined in the Stockholder Agreement) by written notice from the Company to Windmere within ten (10) days following such Change in Control. If any Company Shares are purchased by the Company pursuant to the Change in Control Option, then such purchase shall, unless the parties thereto otherwise agree, be completed at a closing to be held at the offices of Greenberg, Traurig in Miami, Florida at 10:00 a.m. local time on the 10th business day following the exercise of the Change in Control Option. (b) "Change in Control" shall mean: (i) (A) the acquisition (other than by or from Windmere), at any time after the date hereof, by any person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either the then outstanding shares of common stock or the combined voting power of Windmere's then outstanding voting securities entitled to vote generally in the election of directors, which acquisition has not been approved by a majority of 34 the board of directors of Windmere (the "Board"), excluding the nominees of any group or person seeking to effectuate such change in control; or (B) approval by the shareholders of Windmere of (x) a reorganization, merger or consolidation with respect to which persons who were the shareholders of Windmere immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities, (y) a liquidation or dissolution of Windmere or (z) the sale of all or substantially all of the assets of Windmere, unless the approved reorganization, merger, consolidation, liquidation, dissolution or sale is subsequently abandoned, which transaction has not been approved by the Board; or (ii) the ten (10) individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the date hereof whose election, or nomination for election by Windmere's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board (other than an election or nomination of an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of Windmere, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for purposes of this Agreement, considered as though such person were a member of the Incumbent Board. 2. Section 2.03 (iv) is hereby amended to read in its entirety as follows: "(iv) the Security Agreements duly executed by Windmere and its domestic subsidiaries and the Guaranties duly executed by the domestic subsidiaries of Windmere;" 3. Section 3.02 (c) is hereby amended by substituting "3,866,000" for "3,100,000." 4. Section 5.07 is hereby amended to read in its entirety as follows: "Section 5.07. Shelf Registration Statement. (a) As soon as practicable after the date hereof, Windmere shall file with the SEC a shelf registration statement (the "Shelf Registration Statement") under Rule 415 of the Securities Act with respect to all of the Registrable Shares (as defined below). Windmere will use all reasonable efforts to (i) have the Shelf Registration Statement declared effective under the Securities Act on the Closing Date to -2- 35 permit the disposition of the Registrable Shares and (ii) keep the Shelf Registration Statement continuously effective until the earliest date on which neither the Company nor any of its affiliates owns any Registrable Shares. Windmere agrees to furnish to the Company such number of prospectuses in conformity with the requirements of the Securities Act, and such other documents as the Company may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares. Windmere further agrees to use its reasonable efforts to register or qualify the Registrable Shares covered by the Shelf Registration Statement under such securities or Blue Sky laws of such jurisdictions within the United States as the Company shall reasonably request; provided, however, that Windmere shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject, or subject Windmere to any tax in any such jurisdiction where it is not then so subject. Windmere shall pay all expenses, other than selling commissions and stock transfer taxes applicable to the sale of the Registrable Shares, incurred by Windmere in complying with this Section 5.07, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel and accountants for Windmere and blue sky fees and expenses. (b) Windmere shall indemnify and hold harmless each seller of Registrable Shares, and each person, if any, who controls such seller within the meaning of the Securities Act, and each officer, director, employee and advisor of each of the foregoing (each a "Company Indemnitee"), against any expenses, losses, claims, damages or liabilities, joint or several, to which such Company Indemnitee may become subject under the Securities Act, any state securities law or otherwise, including any of the foregoing incurred in settlement of any litigation, commenced or threatened, insofar as such expenses, losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in the Shelf Registration Statement or final prospectus contained therein, or any amendment or supplement thereto; or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (iii) any violation by Windmere of the Securities Act or rules of the SEC thereunder or any blue sky laws or any rules promulgated thereunder, and shall reimburse each such Company Indemnitee for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that Windmere shall not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based -3- 36 upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Shelf Registration Statement or said prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished to Windmere by or on behalf of the Company specifically for use in the preparation thereof. (c) The Company shall indemnify and hold harmless Windmere and each person, if any, who controls Windmere within the meaning of the Securities Act, each officer of Windmere who signs the Shelf Registration Statement and each director of Windmere, against any and all such expenses, losses, claims, damages or liabilities referred to in Section 5.07 (b) above if the statement, alleged statement, omission or alleged omission in respect of which such expense, loss, claim, damage or liability is asserted was made in reliance upon and in conformity with information furnished in writing to Windmere by or on behalf of the Company specifically for use in connection with the preparation of the Shelf Registration Statement, prospectus, amendment or supplement. (d) If the indemnification provided for in Sections 5.07 (b) or (c) above is unavailable to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then in lieu of indemnifying such indemnified party thereunder, the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities, in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified parties on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party, or by the indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant to this Section 5.07(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities or actions in respect thereof referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentations (within the -4- 37 meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 5.07 or to the extent that it has not been prejudiced as a proximate result of such failure. In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to Windmere, the indemnified party or parties shall have the right to select one separate counsel to assert such legal defenses (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties). Upon the permitted assumption by the indemnifying party of the defense of such action, and approval by the indemnified party of counsel, the indemnifying party shall not be liable to such indemnified party under this Section 5.07 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof (other than reasonable costs or investigation) unless (i) the indemnified party shall have employed one separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time, (iii) the indemnifying party and its counsel do not actively and vigorously pursue the defense of such action or (iv) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. (f) For purposes of this Section 5.07, "Registrable Shares" means (i) the Windmere Shares and (ii) other shares of Windmere Common Stock acquired by the Company from time to time. All Registrable Shares shall cease to be Registrable Shares (a) when sold in a registered public offering or in accordance with Rule 144 promulgated by the SEC under the Securities Act, or (b) when permitted to be sold in accordance with Rule 144(k). -5- 38 (g) The parties hereto agree that whether or not any express assignment shall have been made, the provisions of this Section 5.07 shall (i) be for the benefit of and enforceable by any subsequent holder of Registrable Shares (or of any portion thereof); and (ii) survive the termination of this Agreement for any reason after the Closing. 5. Section 6.01(a) is hereby amended to read in its entirety as follows: "(a) Stockholder Approval. This Agreement and the Stock Purchase shall have been approved by the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy and entitled to vote at the Stockholders Meeting." 6. Section 6.03(e) is hereby amended by adding the word "Shelf" before "Registration Statement" in the heading and in the first line of such Section. 7. The following new Section 6.03(f) is hereby added to the Agreement: "(f) Repayment of Promissory Note. Any amounts due and owing to Windmere on the Closing Date under that certain promissory note to be issued by the Company to Windmere in excess of $3,254,286 (which amount will be set-off by Windmere against the cash portion of the Purchase Price set forth in Section 1.02(a)(i) hereof) shall have been paid." 8. The definition of "Security Agreements" in Section 8.03(g) is hereby amended by adding ", in the form attached hereto as Exhibit D," after "Security Agreements" in the first line of such definition. 9. The definition of "Guaranties" in Section 8.03(h) is hereby amended by adding ", in the form attached hereto as Exhibit E," after "Guaranties" in the first line of such definition. 10. Exhibit A of the Agreement is hereby amended by adding the following as a new Section 4 (i): "(i) The consolidated tangible net worth of Windmere and its Domestic Subsidiaries (excluding real property) determined in accordance with generally accepted accounting principles shall at any time be less than $40,000,000." 11. Section 9 of Exhibit A of the Agreement is hereby amended by substituting "Illinois" for "Delaware." 12. Section 4(h) of Exhibit A of the Agreement is hereby amended by substituting "$500,000 for "$100,000." -6- 39 13. A new Exhibit D, which is attached to this Amendment, is hereby added to the Agreement. 14. A new Exhibit E, which is attached to this Amendment, is hereby added to the Agreement. 15. Except as set forth in this Amendment, the provisions of the Agreement shall remain in full force and effect and all references in the Agreement and the other Transaction Documents shall be deemed to refer to and mean the Agreement, as amended by this Amendment. 16. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -7- 40 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. WINDMERE CORPORATION By: /s/ David M. Friedson ------------------------------ David M. Friedson President SALTON/MAXIM HOUSEWARES, INC. By: /s/ Leonhard Dreimann ------------------------------ Leonhard Dreimann President -8- EX-2.2 3 STOCKHOLDER AGREEMENT 1 EXHIBIT 2.2 STOCKHOLDER AGREEMENT DATED AS OF July 11, 1996 BY AND BETWEEN SALTON/MAXIM HOUSEWARES, INC. AND WINDMERE-DURABLE HOLDINGS, INC. 2 STOCKHOLDER AGREEMENT This Stockholder Agreement (this "Agreement") is entered into as of July 11, 1996 by and between Salton/Maxim Housewares, Inc., a Delaware corporation (the "Company"), and Windmere-Durable Holdings, Inc., a Florida corporation (the "Purchaser"). A. The Purchaser and the Company have entered into that certain Stock Purchase Agreement dated as of February 27, 1996, (the "Stock Purchase Agreement") pursuant to which the Purchaser is acquiring certain shares of the Common Stock of the Company, par value $.01 per share (the "Common Stock"). B. As a result of the transactions contemplated by the Stock Purchase Agreement, the Purchaser will be a significant stockholder of the Company. C. It is a condition to the transactions contemplated by the Stock Purchase Agreement and the desire of the Purchaser and the Company that this Agreement be entered into to establish certain terms and conditions concerning the Purchaser's investment in the Company and the Company's corporate governance. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, and covenants set forth in this Agreement, the Purchaser and the Company hereby agree as follows: ARTICLE 1. DEFINITIONS Capitalized terms used in this Agreement and not otherwise defined herein shall have the respective meanings set forth below. "AFFILIATE" of a party means any person or entity controlling, controlled by, or under common control with, such party. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such person, whether through the ownership of voting securities, by agreement or otherwise. "BENEFICIALLY OWNED" shall have the meaning provided in Rule 13d-3 under the Exchange Act. "BOARD" means the Board of Directors of the Company. "BROKERS' TRANSACTIONS" means brokers' transactions within the meaning of Rule 144 of the Securities Act, or any successor rule. 3 "COMMERCIAL AGREEMENTS" means those certain agreements between the Company and the Purchaser relating to various commercial relationships as contemplated by the Stock Purchase Agreement and entered into prior to the date hereof. . "COMMISSION" means the Securities and Exchange Commission. "CONFIDENTIALITY AGREEMENTS" means those certain Confidentiality Agreements between the Purchaser and the Company, each dated January 15, 1996. "DIRECTOR" means a member of the Board. "EQUITY SECURITY" means Voting Stock and any options, warrants, convertible securities, or other rights to acquire Voting Stock. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended. "GUARANTY" means that certain Guaranty between all of the Purchaser's domestic subsidiaries and the Company. "INDEPENDENT DIRECTOR" means a Director who is not (apart from such directorship) an Affiliate, officer, employee, agent, holder of 5% or more of the voting securities, consultant or partner of the Purchaser or the Company or any Affiliate of either of them or of any entity that was dependent on the Purchaser or the Company or any Affiliate of either of them for more than five percent (5%) of its revenues or earnings in its most recent fiscal year. "LAPSE EVENT" means the sale, transfer or other disposition by Leonhard Dreimann or David Sabin of more than an aggregate of 450,000 shares of Common Stock Beneficially Owned by such persons; provided, however that a Lapse Event shall not occur upon (i) any pro rata distribution by Dominator Investors Group of shares of Common Stock to its stockholders; (ii) any sale, transfer or other disposition of shares of Common Stock to any person or entity if the shares held by such person or entity are Beneficially Owned by Leonhard Dreimann or David Sabin; or (iii) any sale, transfer or other disposition of shares of Common Stock Beneficially Owned by Leonhard Dreimann or David Sabin upon such person's death to such person's heirs, executors, legal representatives or trustees. "NOTE" means that certain promissory note due on the fifth anniversary of the date hereof, issued by the Purchaser to the Company in the principal amount of $10,847,620. -2- 4 "PUBLIC OFFERING" means an underwritten public offering of securities of the Company pursuant to an effective registration statement under the Securities Act. "PURCHASER INTEREST" means, as of any date, the percentage of the Total Voting Power Beneficially Owned by the Purchaser and its Affiliates on such date. "REGISTRATION RIGHTS AGREEMENT" means that certain Registration Rights Agreement between the Purchaser and the Company dated the date hereof. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SECURITY AGREEMENTS" means those certain Security Agreements between the Purchaser and its domestic subsidiaries, on the one hand, and the Company, on the other hand, dated the date hereof. "STANDSTILL PERIOD" means the period of three years after the date hereof. "THIRD PARTY" means any person (including a "person" as defined in Section 13(d)(3) of the Exchange Act) or entity other than the Purchaser, any Affiliate of the Purchaser or any group including the Purchaser or any of its Affiliates. "TOTAL VOTING POWER" means, at any date, the total number of votes that may be cast in the election of directors of the Company at any meeting of stockholders of the Company held on such date assuming all shares of Voting Stock were present and voted at such meeting, other than votes that may be cast only by one class or series of stock (other than Common Stock) or upon the happening of a contingency. "TRANSACTION DOCUMENTS" means this Agreement, the Stock Purchase Agreement, the Note, the Security Agreements, the Guaranty, the Registration Rights Agreement, the Commercial Agreements, amendments thereof, and all schedules and exhibits hereto and thereto. "VOTING STOCK" means Common Stock and all other securities of the Company, if any, entitled to vote generally in the election of Directors. ARTICLE 2. ACQUISITION OF SHARES 2.1. STANDSTILL. From the date hereof until the end of the Standstill Period, neither the Purchaser nor any of its -3- 5 Affiliates shall directly or indirectly acquire or offer to acquire Beneficial Ownership of any Equity Securities or interest therein except as set forth in Sections 2.1.1, 2.1.2, 2.1.3 and 2.1.4. 2.1.1. Purchase Right Upon Option Exercises. The Purchaser shall have the right to purchase shares of Voting Stock pursuant to the option set forth in Section 1.01 of the Stock Purchase Agreement. 2.1.2. Purchases to Restore Previous Purchaser Interest. From and after the date hereof until such time as the Purchaser Interest has been less than 30% for a period of at least ten (10) consecutive days, in the event at any time or from time to time the number of outstanding shares of Voting Stock is increased for any reason through the issuance of additional shares (other than through the issuance of shares upon the exercise of stock options outstanding on the date hereof), including, without limitation, upon exercise of stock options (granted after the date hereof) or upon conversion or exchange of convertible securities, or as consideration for acquisition of any corporation or other entity or business or division thereof, but excluding any shares of Voting Stock issued pursuant to stock splits or stock dividends issued or distributed proportionately on all outstanding shares of Voting Stock, then in connection with each such issuance the Purchaser and/or its Affiliates shall have the right, but not the obligation, to purchase in the open market at any available price, up to such number of additional shares of Voting Stock as may then be necessary solely as a result of such issuance to restore the Purchaser Interest to the same percentage of the Total Voting Power as existed immediately prior to such increase in the number of outstanding shares of Voting Stock. The Company shall notify the Purchaser of, and provide the Purchaser with an accurate and complete description of, any event that has caused the rights of the Purchaser and/or its Affiliates to acquire or offer to acquire Equity Securities under this Section 2.1.2 to become exercisable within 15 days following the end of each fiscal quarter of the Company. The purchase right set forth in this Section 2.1.2 shall be exercisable at any time and from time to time until 90 days after the Purchaser's receipt of notice of such issuance. 2.1.3. Third-Party Offers. From and after the date hereof until such time as the Purchaser Interest has been less than 30% for a period of at least ten (10) consecutive days, in the event any Third Party shall make an offer to acquire a 20% or greater interest in Equity Securities, the Purchaser and/or its Affiliates shall be permitted to make a competing offer, and acquire Equity Securities pursuant thereto, subject to and in accordance with the following: -4- 6 (a) If the Third Party offer is approved or recommended by a majority vote of the Company Directors (as defined in Section 4.2), then the Purchaser shall have the right to make a competing offer and to acquire Equity Securities pursuant to such competing offer, provided that (1) the competing offer complies with Section 2.1.3(b), (2) the competing offer is made prior to the earliest to occur of withdrawal, termination or consummation of the Third Party offer, and (3) if the Third Party offer is withdrawn or terminated without being consummated before the Purchaser acquires Equity Securities pursuant to the competing offer, a majority of the Company Directors determine in good faith that such Third Party offer was withdrawn or terminated primarily as a result of the Purchaser's competing offer having superior terms to or a substantially greater likelihood of success than such Third Party offer. (b) Any competing offer by the Purchaser pursuant to this Section 2.1.3 shall be, as nearly as possible, for an identical amount of securities and at a price per share no lower than and on terms no less favorable than are offered by the Third Party. In the event the consideration offered in any Third Party offer shall consist of securities or property other than cash, the competing offer by the Purchaser may in the Purchaser's discretion be for cash in an amount per share not less than the fair market value of the consideration offered by the Third Party as determined by a majority of the Company Directors. 2.1.4. Company Directors' Approval. The Purchaser and/or its Affiliates may purchase Common Stock in any transactions approved by a majority of the Company Directors. 2.1.5. ACQUISITIONS AFTER STANDSTILL PERIOD. After the Standstill Period, the Purchaser shall not acquire or offer to acquire any Equity Securities if, as the result of or after giving effect to such acquisition, the Purchaser Interest (calculated as though Beneficial Ownership of Voting Stock includes shares of Voting Stock that the Purchaser has the right to acquire (other than pursuant to this Agreement) as described in subsection (d)(1)(i) of Rule 13d-3 under the Exchange Act without regard to the 60-day limit set forth therein) would exceed the Purchaser Interest (calculated in the same manner) as existed on the last day of the Standstill Period, except pursuant to a tender offer and/or merger which would result in the Purchaser and/or its Affiliates owning 100% of the Equity Securities. -5- 7 ARTICLE 3. TRANSFER OF SHARES The Purchaser and its Affiliates shall not sell or otherwise transfer any Equity Securities Beneficially Owned by such persons or any interest therein, except as follows: 3.1. AFFILIATES. The Purchaser may transfer any or all Equity Securities Beneficially Owned by the Purchaser to an Affiliate of the Purchaser. 3.2. PUBLIC OFFERINGS AND BROKERS' TRANSACTIONS. From and after the earlier of (i) the third anniversary of the date hereof and (ii) a Lapse Event, the Purchaser and/or any of its Affiliates may sell any or all Equity Securities Beneficially Owned by such persons in one or more Public Offerings or in Brokers' Transactions if the Purchaser and/or its selling Affiliates invoke and follow or require participating underwriters or brokers to invoke and follow appropriate and reasonable procedures (subject to the prior approval of a majority of the Company Directors, which shall not be unreasonably withheld) designed to prevent the sale of such Equity Securities to any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that would, after giving effect to its acquisition of such Equity Securities, Beneficially Own or have the right to acquire more than seven percent (7%) of the Total Voting Power. 3.3. PRIVATE TRANSACTIONS. From and after the earlier of (i) the third anniversary of the date hereof and (ii) a Lapse Event, the Purchaser and/or any of its Affiliates may sell any or all Equity Securities Beneficially Owned by such persons in one or more transactions not requiring registration under the Securities Act provided that such sale is not to any person or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) that would, after giving effect to its acquisition of such Equity Securities, Beneficially Own or have the right to acquire more than seven percent (7%) of the Total Voting Power. 3.4. COMPANY DIRECTORS' APPROVAL. The Purchaser and/or any of its Affiliates may sell any or all Equity Securities Beneficially Owned by such persons in any transaction or transactions approved by a majority of the Company Directors. 3.5. RESTRICTIVE LEGENDS. A copy of this Agreement shall be filed with the Secretary of the Company and kept with the records of the Company. Upon original issuance thereof and until such time as the same is no longer required hereunder or under any applicable law, any certificate issued representing any shares of Common Stock issued to the Purchaser and all certificates issued upon transfer (except for transfers in accordance with Section 3.2) or in exchange or substitution -6- 8 therefor in accordance with this Article shall bear the following restrictive legend: THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF ("TRANSFERRED") UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS SUCH TRANSFER IS EXEMPT FROM REGISTRATION OR IS OTHERWISE IN COMPLIANCE WITH THE ACT. THE TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE IS SUBJECT TO THE RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE STOCKHOLDER AGREEMENT, DATED JULY 11, 1996, BETWEEN SALTON/MAXIM HOUSEWARES, INC. AND THE STOCKHOLDER, AS FROM TIME TO TIME IN EFFECT, A COPY OF WHICH IS ON FILE AT THE EXECUTIVE OFFICES OF SALTON/MAXIM HOUSEWARES, INC. AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER OF SUCH SHARES UPON WRITTEN REQUEST TO SALTON/MAXIM HOUSEWARES, INC. NO SUCH TRANSFER WILL BE EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SUCH STOCKHOLDERS' AGREEMENT HAVE BEEN COMPLIED WITH IN FULL AND NO PERSON MAY REQUEST SALTON/MAXIM HOUSEWARES, INC. TO RECORD THE TRANSFER OF ANY SHARES IF SUCH TRANSFER IS IN VIOLATION OF SUCH STOCKHOLDERS' AGREEMENT. THE SHARES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON VOTING PROVIDED FOR IN THE STOCKHOLDERS' AGREEMENT AND NO VOTE OF SUCH SHARES THAT CONTRAVENES SUCH AGREEMENT SHALL BE EFFECTIVE. The certificates representing shares of Common Stock Beneficially Owned by the Purchaser (including, without limitation, all certificates issued upon transfer or in exchange thereof or substitution therefor in accordance with this Article) shall also bear any legend required under any other applicable laws, including state securities or blue sky laws. The Company may make a notation on its records or give instructions to any transfer agents or registrars for such shares in order to implement the restrictions on transfer set forth in this Article. The Company shall not incur any liability for any refusal or delay in recognizing any transfer of shares of Common Stock if the Company in good faith reasonably believes that such transfer may have been or would be in violation of the provisions of applicable law or this Agreement. 3.6. CONTINUING RESTRICTIONS. In the event that Purchaser transfers any Equity Securities or any interest therein to an Affiliate of the Purchaser pursuant to Section 3.1, (i) the Purchaser shall notify such Affiliate of the provisions set forth in this Article and Articles 4 and 5 hereof and shall be -7- 9 responsible for any breach by such Affiliate of those provisions and (ii) so long as any such Equity Securities are Beneficially Owned by such Affiliate, the provisions of this Article shall apply to any sale or transfer of the capital stock or other equity interests of such Affiliate or of the Purchaser such that the Purchaser and such Affiliates would cease to be Affiliates. In the event the Purchaser sells any Equity Securities to a person or entity pursuant to Section 3.3, such person or entity shall enter into an agreement with the Company agreeing to be bound by the provisions of this Article and Articles 4 and 5 hereof and succeeding to the registration rights with respect to the Equity Securities transferred as provided in the Registration Rights Agreement. ARTICLE 4. BOARD REPRESENTATION 4.1. PURCHASER DESIGNEES. 4.1.1. Directors. At all times and from time to time after the date hereof, the Purchaser shall have the right to designate that number of Directors (the "Purchaser Directors") which will result in the total number of Purchaser Directors being equal to the product (rounded up to the nearest whole number) of (i) the total number of Directors then on the Board, and (ii) the Purchaser Interest at that time; provided that in no event shall the number of Purchaser Directors exceed the number of Company Directors at any time (it being the intent of the parties that upon consummation of the transactions contemplated by the Stock Purchase Agreement, the number of Directors which the Purchaser shall be entitled to designate pursuant to this Section 4.1.1 shall equal 50% of the total number of Directors then on the Board). 4.1.2. Purchaser Directors. Any Purchaser Director shall not serve as a Director if such person shall be prohibited from serving as a Director under applicable law, including antitrust law. At least one of the Purchaser Directors shall qualify as an independent director in accordance with Nasdaq National Market rules. 4.2. COMPANY DIRECTORS. At all times and from time to time after the date hereof, the Board shall include at least four (4) Directors who are not designated by the Purchaser (the "Company Directors"). The "Company Directors" shall initially be Leonhard Dreimann, David Sabin, Bert Doornmalen and Frank Devine; provided that any replacement or additional Company Directors shall be elected pursuant to Section 4.5 hereof. At least one of the Company Directors shall qualify as an independent director in accordance with Nasdaq National Market rules. -8- 10 4.3. ADDITIONAL AGREEMENTS. 4.3.1. By the Company. The Company shall from time to time use its best efforts to increase the number of Directors constituting the Board and/or obtain resignations from Directors (other than the Purchaser Directors and the Company Directors required by Section 4.2) as may be required to ensure that there will at all times be sufficient Board seats available to accommodate the full number of Directors that the Purchaser is then entitled to designate pursuant to Section 4.1. The Company shall promptly and at all times use its best efforts, and take all such actions as may be appropriate for the election to the Board of the Purchaser designees selected pursuant to Section 4.1, and the Company Directors. Such actions shall include, without limitation, the solicitation of proxies for the election of such persons at each regular or special meeting of stockholders of the Company at which Directors are to be elected, or pursuant to any written consent solicited in lieu of such a meeting. 4.3.2. By the Purchaser. The Purchaser and its Affiliates shall vote all Voting Stock Beneficially Owned by them at each regular or special meeting of the Company's stockholders at which Directors are to be elected, or pursuant to any written consent solicited in lieu of such a meeting, in favor of election to the Board, and shall otherwise use their best efforts to cause the appointment or election to the Board, and to maintain as Directors the Company Directors, consistently with this Article 4. If the number of Directors that the Purchaser is entitled to designate pursuant to Section 4.1 is at any time and for any reason (including, without limitation, the resignation or removal of any Company Director) fewer than the number of Purchaser Directors then serving on the Board, the Purchaser shall promptly obtain resignations from such of its Purchaser Directors (chosen by the Purchaser) as may be required to cause the number of Purchaser Directors serving on the Board to be equal to the number of Directors that the Purchaser is then entitled to designate. 4.3.3. By the Purchaser and the Company. Names of all Director nominees designated by the Purchaser or by those Directors of the Company not designated by the Purchaser shall be furnished to the Purchaser and the Company (a) in the case of election of Directors at an annual meeting or otherwise pursuant to a vote of the Company's stockholders, in time to be included in the proxy materials related to such election, and (b) at least ten (10) days prior to election or appointment of Directors by the Board. The Company and the Purchaser agree that (a) the Purchaser Directors and the Company Directors shall be classified, with respect to the time for which they severally hold office, into three classes as nearly as equal in number as possible as determined by the Board; and (b) the Purchaser -9- 11 Directors, on the one hand, and the Company Directors, on the other hand, will be divided among the three classes as equally as possible. 4.4. COMMITTEES. The Purchaser shall be entitled to designate that number of the Purchaser Directors to serve on each committee of the Board so that such Purchaser Directors constitute the same percentage (rounded up to the next whole number) of such committee as is on the Board; provided that in no event shall the number of Purchaser Directors serving on a committee exceed the number of Company Directors serving on such committee. With respect to the audit committee, any Purchaser Director designee shall, as a condition to membership thereon, meet all requirements imposed by the rules of any national securities exchange, or the Nasdaq National Market, on which the Common Stock may then be listed or quoted. With respect to the compensation committee, any Purchaser Director designees shall, as a condition to membership thereon, qualify as "disinterested" within the meaning of Rule 16b-3 under the Exchange Act or any similar rule then in effect. 4.5. VACANCIES. If any Purchaser Director or Purchaser Director nominee shall decline to serve on, resign or be removed from, or for any other reason be unable to serve on the Board or any committee thereof, the vacancy resulting therefrom shall be filled in accordance with the Company's Certificate of Incorporation and Bylaws and this Article 4 by another person designated by the Purchaser pursuant to Section 4.1. If any Company Director or Company Director nominee shall decline to serve on, resign or be removed from, or for any other reason be unable to serve on the Board or any committee thereof, or if the size of the Board is increased the vacancy resulting therefrom shall be filled in accordance with the Company's Certificate of Incorporation and Bylaws and this Article 4 by a person designated by a majority of the then Company Directors. This Section 4.5 shall not operate to allow the Purchaser or the Company Directors to designate a greater percentage of Directors or committee members than it or they would be entitled to designate hereunder but for this Section 4.5. ARTICLE 5. CERTAIN COVENANTS 5.1. PROXY SOLICITATIONS. Neither the Purchaser nor its Affiliates shall, directly or indirectly, (a) solicit, initiate or participate in any "solicitation" of "proxies" or become a "participant" in any "election contest" (as such terms are defined or used in Regulation 14A under the Exchange Act, disregarding clause (iv) of Rule 14a-1(1)(2) and including any exempt solicitation pursuant to Rule 14a-2(b)(1)); call, or in any way participate in a call for, any special meeting of -10- 12 stockholders of the Company (or take any action with respect to acting by written consent of the Company's stockholders); request, or take any action to obtain or retain any list of holders of any securities of the Company; or initiate or propose any stockholder proposal or participate in the making of, or solicit stockholders for the approval of, any stockholder proposal; (b) deposit any Voting Stock in a voting trust or subject any Voting Stock to any voting agreement or arrangements, except as provided herein and except that this Section 5.1 (b) shall not prohibit any such arrangement solely among the Purchaser and its wholly-owned subsidiaries; (c) form, join or in any way participate in a "group" (within the meaning of Section 13(d)(3) of Exchange Act) with respect to any Voting Stock (or any securities the ownership of which would make the owner thereof a Beneficial Owner of Voting Stock ); (d) seek Board representation or the removal of any Company Directors or a change in the composition or size of the Board (other than as necessary to obtain the Board representation to which it is entitled hereunder); (e) take any action, or disclose any intent, purpose, plan or proposal, with respect to this Agreement, the Company or its Affiliates or the Board, management, policies, affairs, securities or assets of the Company or its Affiliates that is inconsistent with this Agreement, including any action, intent, purpose, plan or proposal that is conditioned on, or would require the Company or any of its Affiliates to make any public disclosure relating to, any such action, intent, purpose, plan, proposal or condition; or (f) assist, advise, encourage or act in concert with any person with respect to, or seek to do, any of the foregoing. Notwithstanding the generality of the foregoing, nothing herein shall (x) prevent the Purchaser or its Affiliates from voting their respective shares, or taking such other action as it may deem necessary or appropriate, to cause the election as Directors of those persons the Purchaser is entitled to designate pursuant to Section 4.1, (y) prevent the Purchaser from taking any action which the Board of Directors of the Purchaser in good faith, based upon the advice of outside counsel, determines is required by the fiduciary obligations of the Purchaser as a stockholder of the Company to the Company's other stockholders or (z) prohibit or restrict any action taken by the Purchaser or any of its Affiliates in connection with the exercise of the rights of the Purchaser and its Affiliates specifically permitted by this Agreement. 5.2. VOTING. Except as specifically otherwise set forth herein, the Purchaser and its Affiliates shall vote any Voting Stock Beneficially Owned by them in connection with any matter or proposal submitted to a vote of the Company stockholders but not sponsored or supported by the Board either (a) in accordance with the recommendation of a majority of the Board, or (b) in the absence of a recommendation of a majority of the Board, then proportionately in accordance with the votes of all stockholders of the Company who have voted with respect to such matter or -11- 13 proposal; provided that except as otherwise set forth herein (including Article 4), the Purchaser and its Affiliates may vote any Voting Stock Beneficially Owned by them in connection with any such matter or proposal in their sole discretion so long as the Purchaser is not entitled to designate, and has not designated, 50% of the total number of Directors then serving on the Board pursuant to the terms of this Agreement. The Purchaser and its Affiliates shall vote any Voting Stock Beneficially Owned by them in connection with any regular or special meeting of stockholders or in any written consent executed in lieu of such a meeting to (a) ensure that the Company's Certificate of Incorporation and Bylaws do not at any time conflict with any provisions of this Agreement and (b) otherwise carry out the provisions of this Agreement, including, without limitation, voting to remove any Purchaser Director if the number of Directors that the Purchaser is entitled to designate pursuant to Section 4.1 is fewer than the number of Purchaser designees then serving on the Board. The Purchaser and its Affiliates shall be present in person or represented by proxy at all stockholder meetings of the Company called by the Company so that all Voting Stock of which they are the Beneficial Owner may be counted for the purpose of determining the presence of a quorum at such meetings. 5.3. MATERIAL TRANSACTIONS. At all times that the Purchaser Interest is less than 100%, neither the Purchaser nor any of its Affiliates shall engage in any material transaction with the Company or any of its subsidiaries unless such transaction has been approved by a majority of the Company Directors or, in the case of a series of related transactions, is in accordance with guidelines approved by a majority of the Company Directors. For purposes of this Section 5.3, "material transaction" shall mean (i) any amendment to, termination of, or waiver of any provision of, this Agreement or, any of the other Transaction Documents that have been executed and delivered and (ii) any transaction between the Company or any of its subsidiaries and the Purchaser or any of its Affiliates, or any transaction (other than a transaction of the type described in Section 2.1.3 or Section 2.1.4) between the stockholders of the Company, in their capacity as stockholders, and the Purchaser or any of its Affiliates, including, without limitation: (a) any sale of all or substantially all of the assets of the Company or any of its subsidiaries or any business division or operation of the Company or any of its subsidiaries, (b) any issuance of Voting Stock or other securities by the Company or any of the Company's subsidiaries, (c) any transaction including any related transactions involving payments, the incurrence of obligations, or transfers of assets, and (d) any merger or other business combination involving the Purchaser and/or any of its Affiliates; provided, that "material transaction" shall not include any (i) transaction in accordance with the terms of the Transaction Documents or (ii) other transaction (including any related -12- 14 transactions) involving payments by or obligations or transfer of property of the Company with an aggregate value less than $100,000. ARTICLE 6. MISCELLANEOUS 6.1. TERMINATION. Article 4 and Article 5 of this Agreement and the rights and obligations of the Purchaser and the Company thereunder shall terminate at the first time after the date hereof that the Purchaser Interest shall have been less than fifteen percent (15%) for a period of at least thirty (30) consecutive days. 6.2. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement shall be governed by, construed under and enforced in accordance with, the laws of the State of Delaware without regard to its conflict-of-laws principles. The Purchaser and the Company agree that (i) any legal action or proceeding arising out of or in connection with this Agreement or the transactions contemplated hereby shall be brought only in the courts of the State of Delaware or Federal courts of the United States of America sitting in Delaware, (ii) each irrevocably submits to the jurisdiction of each such court, and (iii) any summons, pleading, judgment, memorandum of law, or other paper relevant to any such action or proceeding shall be sufficiently served if delivered to the recipient thereof by certified or registered mail (with return receipt) at its address set forth in Section 6.4. Nothing in the proceeding sentence shall affect the right of any party to proceed in any jurisdiction for the enforcement or execution of any judgment, decree or order made by a court specified in said sentence. 6.3. SPECIFIC PERFORMANCE. The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specifications or were otherwise breached. It is accordingly agreed that each of the parties hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement by the other and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they may be entitled by law or equity. 6.4. NOTICES. Any notice required or permitted to be given under this Agreement shall be written, and may be given by personal delivery, by cable, telecopy, telex or telegram (with a confirmation copy mailed as follows), by Federal Express, United Parcel Service, DHL, or other reputable commercial delivery service, or by registered or certified mail, first-class postage prepaid, return receipt requested. Notice shall be deemed given -13- 15 upon actual receipt. Mailed notices shall be addressed as follows, but each party may change address by written notice in accordance with this paragraph. To the Company: Salton/Maxim Housewares, Inc. 550 Business Center Drive Mount Prospect, Illinois 60056 Attention: Chief Executive Officer Fax: (708) 803-8080 with a copy to: Sonnenschein Nath & Rosenthal 8000 Sears Tower Chicago, Illinois 60606 Attention: Neal Aizenstein, Esq. Fax: (312) 876-7934 To the Purchaser: Windmere Corporation 5980 Miami Lakes Drive Miami Lakes, Florida 33014-9867 Attention: Chief Executive Officer Fax: (305) 364-0502 with a copy to: Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A. 1221 Brickell Avenue Miami, Florida 33131 Attention: Andrew Hulsh, Esq. Fax: (305) 599-0717 6.5. WAIVER. Subject to Section 5.3 hereof, each party hereto may in its sole discretion (i) extend the time for the performance of any of the obligations or other acts of the other party hereunder or (ii) waive compliance by the other party with any of the agreements or conditions contained herein. No term or provision hereof shall be deemed waived and no breach hereof excused unless such waiver or consent shall be in writing and signed by the party claimed to have waived or consented (in the case of the Company, by a majority of the Company Directors so waiving or consenting). No waiver hereunder shall apply or be construed to apply beyond its expressly stated terms. No failure to exercise and no delay in exercising any right, remedy, power or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, remedy, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. No failure to insist upon strict performance of any term or provision of this Agreement, or to exercise any right hereunder, shall be construed as a waiver or as a relinquishment of such term, provision, or right. -14- 16 6.6. SUCCESSORS, ASSIGNMENT; PARTIES IN INTEREST AND THIRD PARTY BENEFICIARIES. Except as otherwise expressly provided herein, this Agreement and the rights hereunder may not be assigned by the Purchaser or the Company without the prior written consent of the other party, which may be given or withheld in the other party's discretion. This Agreement shall be binding upon and inure solely to the benefit of the Purchaser and the Company and their respective successors and permitted assigns, and except as provided in this Section 6.6, nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement. Whenever this Agreement provides for a majority of the Company Directors to make a determination or otherwise take any action, any Company Director who abstains from making such determination or taking such action based upon the advice of counsel that such Director is not a disinterested Director shall not be counted for purposes of determining whether a majority of the Company Directors shall have made such determination or taken such action. In the event the Company Directors shall not be in office or the Company has failed to seek enforcement of its rights under this Agreement despite a demand by the Company Directors that the Company do so, the present and future holders of Beneficial Ownership of Voting Securities (other than the Purchaser and its Affiliates) are intended third party beneficiaries of this Agreement and any such person may take such action as may be deemed necessary or appropriate to enforce the rights and obligations arising pursuant to this Agreement or to obtain the benefits intended to be conferred hereby. 6.7. ENTIRE AGREEMENT. This Agreement, together with the other Transaction Documents and the Confidentiality Agreements, constitutes the entire agreement between the Purchaser and the Company with respect to the subject matter hereof and thereof and the transactions contemplated hereby and thereby and supersedes all prior or contemporaneous, written or oral agreements or understandings with respect thereto. The provisions of the Confidentiality Agreements shall continue in effect after the date hereof except that Sections 8 and 9 thereof shall terminate upon the date hereof. 6.8. AMENDMENT. Subject to Section 5.3 hereof, this Agreement may be amended only to the extent permissible under applicable law and only by a written instrument executed and delivered by a duly authorized officer of the Purchaser and a duly authorized officer of the Company. 6.9. SEVERABILITY. The provisions set forth in this Agreement are severable. If any provision of this Agreement is held invalid or unenforceable in any jurisdiction, the remainder of this Agreement, and the application of such provision to other persons or circumstances, shall not be affected thereby, and -15- 17 shall remain valid and enforceable in such jurisdiction, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 6.10. CUMULATION OF REMEDIES. All remedies available to any party for breach or non-performance of this Agreement are cumulative and not exclusive of any rights, remedies, powers or privileges provided by law, and may be exercised concurrently or separately, and the exercise of any other remedy shall not be deemed an election of such remedy to the exclusion of other remedies. 6.11. FAIR CONSTRUCTION. This Agreement shall be deemed the joint work product of the Purchaser and the Company without regard to the identity of the draftperson, and any rule of construction that a document shall be interpreted or construed against the drafting party shall not be applicable. 6.12. HEADINGS; REFERENCES. Headings used in this Agreement are inserted as a matter of convenience and for reference, do not constitute a part of this Agreement for any other purpose, and shall not affect the interpretation or enforcement hereof or thereof. 6.13. COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. SALTON/MAXIM HOUSEWARES, INC. WINDMERE-DURABLE HOLDINGS, INC. a Delaware corporation a Florida corporation By: By: ------------------------- -------------------- Name: Name: ----------------------- ------------------ Title: Title: ----------------------- ------------------ -16- EX-2.3 4 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 2.3 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is entered into as of July 11, 1996 by and between Windmere-Durable Holdings, Inc., a Florida corporation (the "Investor") and Salton/Maxim Housewares, Inc., a Delaware corporation (the "Company"). A. The Investor and the Company have entered into that certain Stock Purchase Agreement dated as of February 27, 1996 (the "Stock Purchase Agreement"), pursuant to which the Investor is acquiring certain shares of the Company's Common Stock. B. The Investor and the Company are also parties to a Stockholder Agreement dated as of February 27, 1996 (the "Stockholder Agreement"), pursuant to which the Investor and the Company establish certain terms and conditions concerning the Investor's investment in the Company and the Company's corporate governance. C. The execution and delivery of this Agreement is a material inducement and consideration to the Investor to enter into the Stock Purchase Agreement and a condition to the transactions contemplated thereby. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, and covenants set forth in this Agreement, the Investor and the Company hereby agree as follows: ARTICLE 1 DEFINITIONS Capitalized terms used in this Agreement without definition shall have the respective meanings accorded to them in the Stockholder Agreement. Capitalized terms used in this Agreement and not otherwise defined herein or in the Stockholder Agreement shall have the respective meanings set forth below. "ADVERSE DISCLOSURE" means public disclosure of material non-public information relating to a Significant Transaction, which disclosure, in the good faith judgment of a majority of the Company Directors, (i) would be required to be made in any registration statement filed with the Commission by the Company so that such registration statement would not be materially misleading; and (ii) would have an adverse effect on the Company's ability to complete such Significant Transaction, or the terms upon which such Significant Transaction can be completed. "COMMISSION" means the Securities and Exchange Commission. 2 "DEMAND REGISTRATION" has the meaning set forth in Section 2.1. "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration effected by preparing and filing of an appropriate registration statement with the Commission in compliance with the Securities Act. "REGISTRABLE SHARES" means (i) the shares of Common Stock acquired by the Investor pursuant to the Stock Purchase Agreement and (ii) other shares of Common Stock acquired by the Investor from time to time not in violation of the Stock Purchase Agreement or the Stockholder Agreement. All Registrable Shares shall cease to be Registrable Shares when transferred to any person or entity other than permitted transferees in accordance with the terms of the Stockholder Agreement, or (a) when sold in a registered public offering or in accordance with Rule 144 promulgated by the Commission under the Securities Act, or (b) when permitted to be sold in accordance with Rule 144(k). "REGISTRATION EXPENSES" means all expenses, except Selling Expenses, incurred by the Company in complying with Articles 2 and 3, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration, and expenses of all marketing and promotional efforts reasonably requested by the managing underwriter. "SELLING EXPENSES" means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of the Registrable Shares. "SIGNIFICANT TRANSACTION" means a pending or imminent material acquisition, disposition, financing, corporate reorganization or other business combination or divestiture transaction. ARTICLE 2 DEMAND REGISTRATIONS 2.1. REQUEST FOR REGISTRATION. At any time and from time to time after the earlier of (i) two years and 270 days from the date hereof and (ii) a Lapse Event, the Investor may request that the Company effect the registration of Registrable Shares (a "Demand Registration"). Upon receipt of such request, the Company shall use its reasonable efforts to effect such Demand Registration, subject to the limitations set forth in Section 2.2. The Company may include in any Demand Registration any -2- 3 other shares of Common Stock (including issued and outstanding shares of Common Stock as to which the holders thereof have contracted with the Company for "piggyback" registration rights) so long as the inclusion in such registration of such shares will not, in the reasonable judgment of the managing underwriter(s), if any, interfere with the successful marketing in accordance with the intended method of sale or other disposition of all the Registrable Shares sought to be registered. If it is determined as provided above that there will be such interference, the other shares of Common Stock sought to be included shall be excluded to the extent deemed appropriate by the managing underwriter(s). 2.2. LIMITATIONS ON DEMAND REGISTRATIONS. Subject to Section 2.4, the Company's obligation to effect a Demand Registration requested by the Investor pursuant to Section 2.1 shall be subject to the following limitations: 2.2.1. The Company shall not be required to effect any Demand Registration of fewer than that number of Registrable Shares which has an aggregate market value of at least $2,500,000, based on the average closing sale prices of the Company's Common Stock for the twenty days preceding the date prior to the date of the Investor's request for a Demand Registration. 2.2.2. The Company shall not be required to effect any Demand Registration within 9 months of the effectiveness of a Registration by the Investor of Registrable Shares registered pursuant to the previous Demand Registration effected by Company. 2.2.3. The Company may defer its obligations to effect a Demand Registration if filing a registration statement with the Commission at the time a Demand Registration is requested would require Adverse Disclosure, provided that such deferral may not extend beyond the earlier to occur of (i) 180 days after the receipt by the Company of the Investor's request for such Demand Registration, or (ii) the date that filing of a registration statement with the Commission would not require Adverse Disclosure therein. 2.2.4. The Company shall not be required to effect more than five (5) Demand Registrations and no registration statement relating to a Demand Registration shall be declared effective prior to the earlier of (i) the third anniversary of the date hereof and (ii) a Lapse Event. 2.3. HOLDBACK. Subject to Section 2.4, if requested (pursuant to a timely written notice) by the managing underwriter(s) of an underwritten offering or the initial purchaser(s) in any offering being resold pursuant to Rule 144A under the Securities Act of Equity Securities by the Company, the -3- 4 Investor shall agree on the same terms applicable to officers and directors of the Company not to effect any public sale or distribution of any of the Registrable Shares for a period of up to 180 days following and 15 days prior to the date of the final prospectus contained in the registration statement filed in connection with such offering. 2.4. MINIMUM SALE AVAILABILITY. The limitations on the Company's obligations to effect Demand Registrations set forth in Section 2.2.3 and the Investor's obligation under Section 2.3 shall not be applicable to the extent that such limitations would result in the Investor not having a period of at least 180 consecutive days within any 18-month period during which the Investor may sell Registrable Shares under a Registration effected pursuant to the provisions hereof. 2.5. SELECTION OF UNDERWRITER. Any Demand Registration and related offering shall be managed by the Investor as follows: subject to the reasonable approval of the Company, the Investor shall have the power to select the managing underwriter(s), if any, for such offering, and shall in consultation with the managing underwriter(s), if any, have the power to determine the number of Registrable Shares to be included in such registration and offering (subject to applicable limitations set forth herein), the offering price per Registrable Share, the underwriting discounts and commissions per Registrable Share and the timing of the registration and related offering (subject to applicable limitations set forth herein). The Company shall enter into an underwriting agreement in customary form with the underwriter(s) selected by the Investor and shall enter into such other customary agreements and take all such other customary actions as the Investor or its underwriter(s) may reasonably request to facilitate the disposition of the Registrable Shares. ARTICLE 3 PIGGYBACK REGISTRATIONS 3.1. REQUEST FOR REGISTRATION. At any time after the earlier of (i) the third anniversary of the date hereof and (ii) a Lapse Event, if the Company proposes to register any Common Stock for sale solely for cash, either for its own account or for the account of a stockholder or stockholders (a "Company Registration"), then the Company shall give the Investor written notice of its intention to do so and of the intended method of sale (the "Registration Notice") not fewer than 15 days prior to the anticipated filing date of the registration statement effecting such Company Registration. The Investor may request inclusion of any Registrable Shares in such Company Registration by delivering to the Company, within 10 days after receipt of the Registration Notice, a written notice (the "Piggyback Notice") -4- 5 stating the number of Registrable Shares proposed to be included and that such shares are to be included in any underwriting only on the same terms and conditions as the shares of Common Stock otherwise being sold through underwriters under such Registration. The Company shall use its reasonable efforts to cause all Registrable Shares specified in the Piggyback Notice to be included in the Company Registration and any related offering, all to the extent requisite to permit the sale by the Investor of such Registrable Shares in accordance with the method of sale applicable to the other shares of Common Stock included in the Company Registration. 3.2. LIMITATIONS ON PIGGYBACK REGISTRATIONS. The Company's obligation to include Registrable Shares in the Company Registration pursuant to Section 3.1 shall be subject to the following limitations: 3.2.1. The Company shall not be obligated to include any Registrable Shares in a registration statement (i) filed on Form S-4 or Form S-8 or such other similar successor forms then in effect under the Securities Act, (ii) pursuant to which the Company is offering to exchange its own securities, or (iii) relating to dividend reinvestment plans. 3.2.2. If the managing underwriter(s), if any, of an offering related to the Company Registration determines in its reasonable judgment that marketing factors require a limitation of the number of shares of Common Stock that can be included in such offering, the managing underwriter(s) may exclude the appropriate number of shares of Common Stock held by the stockholders of the Company, including the Investor, from such registration. If the managing underwriter(s) determines to exclude from such offering any Registrable Shares that the Investor desires to include or any shares of Common Stock that other Company stockholders with applicable registration rights desire to include, the Investor and such other Company stockholders (except for such person or persons, if any, upon whose demand such Registration is being made) shall share pro rata in the portion of such offering available to them (the "Available Portion"), with the Investor and each such other Company stockholder entitled to include in such Company Registration and related offering a number of shares of Common Stock equal to the product of (i) the Available Portion and (ii) a fraction, the numerator of which is the total number of Registrable Shares which the Investor desires to include in such Company Registration (in the case of the Investor) or the total number of shares of Common Stock which such other Company stockholder desires to include in such Company Registration (in the case of each such other Company stockholder) and the denominator of which is (x) the total of the number of Registrable Shares which the Investor desires to include in such -5- 6 Company Registration plus (y) the total number of shares of Common Stock that such other Company stockholders desire to include in such Company Registration. 3.3. SELECTION OF UNDERWRITER. Any Company Registration and related offering shall be managed by the Company; the Company shall have the power to select the managing underwriter(s) for such offering, and shall in consultation with the managing underwriter(s) have the power to determine the offering price, the underwriting discounts and commissions, the terms of the underwriting agreement and, the timing of the registration and related offering. To the extent that the Investor participates in a Company Registration and related offering pursuant to Section 3.1, the Investor shall enter into, and sell its Registrable Shares only pursuant to, the underwriting arranged by the Company, and shall either commit to attend the closing of the offering and take such other actions as may be reasonably necessary to effect the Investor's participation in the offering and to provide any assurances reasonably requested by the Company and the managing underwriter(s) in that regard, or shall deliver to the Company in custody certificates representing all Registrable Shares to be included in the registration and shall execute and deliver to the Company a custody agreement and a power of attorney, each in form and substance appropriate for the purpose of effecting the Investor's participation in the Company Registration and related offering and otherwise reasonably satisfactory to the Company. If the Investor disapproves of the features of the Company Registration and related offering, the Investor may withdraw therefrom (in whole or part) by written notice to the Company and the managing underwriter(s) delivered no later than ten (10) days prior to the effectiveness of the applicable registration statement and the Registrable Shares of the Investor shall thereupon be withdrawn from such registration. ARTICLE 4 REGISTRATION PROCEDURES AND EXPENSE. 4.1. REGISTRATION PROCEDURES. If and whenever the Company is required pursuant to this Agreement to use its reasonable efforts to effect the registration of any of the Registrable Shares, the Investor shall furnish in writing such information regarding the Investor and its Affiliates, the Registrable Shares being registered and offered, and the intended method of distribution of such Registrable Shares as is reasonably requested by the Company for inclusion in the registration statement relating to such offering pursuant to the Securities Act and the rules of the Commission thereunder, and the Company shall, as expeditiously as reasonably practicable: -6- 7 4.1.1. prepare and file with the Commission a registration statement (including a prospectus therein) with respect to such securities and use its reasonable efforts to cause such registration statement to become and remain effective for such period as may be necessary to permit the successful marketing of such securities, but not exceeding 120 days for an offering in connection with a Demand Registration, or, with regard to an offering in connection with a Company Registration, for the period associated with such offering; 4.1.2. prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the Securities Act and the rules of the Commission thereunder; and to keep such registration statement effective for that period of time specified in Section 4.1.1; 4.1.3. furnish to the Investor such number of prospectuses and preliminary prospectuses in conformity with the requirements of the Securities Act, and such other documents as the Investor may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares being sold: 4.1.4. upon written request by any underwriters of the offering, and subject to applicable rules and guidelines, cause its certified public accountants and attorneys, as applicable, to furnish to the Investor a signed counterpart, addressed to the Investor and its underwriters, if any, of (i) a letter from the independent certified public accountants of the Company in the form customarily furnished to underwriters in firm commitment underwritten offerings providing substantially that such accountants are independent certified public accountants within the meaning of the Securities Act and that in the opinion of such accountants, the financial statements and other financial data of the Company included in the registration statement and the prospectus, and any amendment or supplement thereto, comply as to form in all material respects with the applicable accounting requirements of the Securities Act, and additionally covering such other financial matters (including information as of the date of such letter) with respect to the registration in respect of which such letter is being given as the underwriters may reasonably request; and (ii) an opinion of outside legal counsel to the Company, dated the effective date of the registration statement, covering substantially the same matters with respect to the registration statement and the prospectus included therein as are customarily covered (at the time of such registration) in the opinions of issuer's counsel delivered to the underwriters in comparable underwritten public offerings; -7- 8 4.1.5. use its reasonable efforts to register or qualify the Registrable Shares covered by such registration statement under such securities or blue sky laws of such jurisdictions within the United States as the Investor or its underwriters, if any, shall reasonably request; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, or to take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject, or subject the Company to any tax in any such jurisdiction where it is not then so subject; 4.1.6. cause all such Registrable Shares to be listed on each securities exchange on which similar securities issued by the Company are then listed; 4.1.7. provide a transfer agent and registrar for all such Registrable Shares not later than the effective date of such registration statement; 4.1.8. make available for inspection by the Investor and its attorneys, and any participating underwriter, accountant or other agent retained by the Investor and any participating underwriter in a Demand Registration, all financial and other records, pertinent documents and properties of the Company, and cause the Company's Affiliates (to the extent it controls such Affiliates), employees, and agents to supply all information reasonably requested by the Investor and any such underwriter, attorney, accountant or agent in connection with the preparation of such registration statement. 4.2. EXPENSES. The Company shall pay all Registration Expenses, except as may be required to update any registration statement kept effective for more than the period of time required by Section 4.1.1. The Investor shall pay all Selling Expenses. ARTICLE 5 INDEMNIFICATION 5.1. INDEMNIFICATION BY THE COMPANY. In the event of a registration of any Registrable Shares pursuant to this Agreement, the Company shall indemnify and hold harmless each seller of Registrable Shares, and each person, if any, who controls such seller or underwriter within the meaning of the Securities Act, and each officer, director, employee and advisor of each of the foregoing (each an "Investor Indemnitee"), against any expenses, losses, claims, damages or liabilities, joint or several, to which such Investor Indemnitee may become subject under the Securities Act, any state securities law or otherwise, -8- 9 including any of the foregoing incurred in settlement of any litigation, commenced or threatened, insofar as such expenses, losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such shares are registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, any summary prospectus used in connection with any securities being registered, or any amendment or supplement thereto; or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (iii) any violation by the Company of the Securities Act or rules of the Commission thereunder or any blue sky laws or any rules promulgated thereunder, and shall reimburse each such Indemnitee for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such expense, loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, said preliminary prospectus or said prospectus or summary prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Investor or any underwriter specifically for use in the preparation thereof; and provided, further, that if any expenses, losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in any preliminary prospectus which did not appear in the final prospectus, the Company shall not have any liability with respect thereto to any Investor Indemnitee if any Investor Indemnitee delivered a copy of the preliminary prospectus to the person alleging such expenses, losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person. 5.2. INDEMNIFICATION BY THE INVESTOR. In the event of a registration of any Registrable Shares pursuant to this Agreement, the Investor shall indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of the Securities Act, each officer of the Company who signs the registration statement, each director of the Company and each underwriter and each person who controls any underwriter within the meaning of the Securities Act (each a "Company Indemnitee"), against any and all such expenses, losses, claims, damages or liabilities referred to in Section 5.1 if the -9- 10 statement, alleged statement, omission or alleged omission in respect of which such expense, loss, claim, damage or liability is asserted was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of a holder of Registrable Shares specifically for use in connection with the preparation of such registration statement, preliminary prospectus, prospectus, summary prospectus, amendment or supplement; provided, however, that if any expenses, losses, claims, damages or liabilities arise out of or are based upon an untrue statement, alleged untrue statement, omission or alleged omission contained in any preliminary prospectus which did not appear in the final prospectus, the Investor shall not have any such liability with respect thereto to any Company Indemnitee if any Company Indemnitee delivered a copy of the preliminary prospectus to the person alleging much expenses, losses, claims, damages or liabilities and failed to deliver a copy of the final prospectus, as amended or supplemented if it has been amended or supplemented, to such person at or prior to the written confirmation of the sale to such person. 5.3. CONTRIBUTION. If the indemnification provided for in Sections 5.1 or 5.2 above is unavailable to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then in lieu of indemnifying such indemnified party thereunder, the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities, in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified parties on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified parties shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party, or by the indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant to this Section 5.3 were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities or actions in respect thereof referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or -10- 11 claim. No person guilty of fraudulent misrepresentations (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 5.4. INDEMNIFICATION PROCEDURES. Promptly after receipt by an indemnified party of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under this Article 5 or to the extent that it has not been prejudiced as a proximate result of such failure. In case any such action shall be brought against any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party; provided, however, that if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the Company, the indemnified party or parties shall have the right to select one separate counsel to assert such legal defenses (in which case the indemnifying party shall not have the right to direct the defense of such action on behalf of the indemnified party or parties). Upon the permitted assumption by the indemnifying party of the defense of such action, and approval by the indemnified party of counsel, the indemnifying party shall not be liable to such indemnified party under this Article 5 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof (other than reasonable costs or investigation) unless (i) the indemnified party shall have employed one separate counsel in connection with the assertion of legal defenses in accordance with the proviso to the next preceding sentence, (ii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time, (iii) the indemnifying party and its counsel do not actively and vigorously pursue the defense of such action or (iv) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. -11- 12 ARTICLE 6 MISCELLANEOUS The provisions of Section 5.3 and Sections 6.2 through 6.13 of the Stockholder Agreement are incorporated herein by reference and shall govern this Agreement as though set forth in full herein and as though references in those sections to "this Agreement" were references to both this Agreement and the Stockholder Agreement. IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. SALTON/MAXIM HOUSEWARES, INC. WINDMERE-DURABLE HOLDINGS, INC. a Delaware corporation a Florida corporation By: By: ----------------------- --------------------- Name: Name: -------------------- ----------------- Title: Title: -------------------- ----------------- -12- -----END PRIVACY-ENHANCED MESSAGE-----