Agreement - Sam Perlmutter and Salton Inc.


                        Agreement made as of July 1, 1999
                                 by and between
                            Sam Perlmutter ('Seller')
                                       and
                 Salton Inc., a Delaware corporation ('Salton')

WHEREAS:

A.   Seller expects to receive a distribution from MikeSam LLC, a California
     limited liability company ('MikeSam') of a seven and one half percent
     (7.5%) undivided interest in certain licenses for trademarks and MikeSam is
     sometimes referred to for convenience in this Agreement;;

B.   Seller desires to acquire an option to sell to Salton (the 'Put'), and
     Salton desires to acquire an option to purchase from Seller (the 'Call'),
     Seller's undivided interest in certain trademarks.

THEREFORE, Seller and Salton agree as set forth below.

     1.   Property Subject to Options. The property subject to the Put and the
          Call is all right, title and interest in a seven and one half percent
          (7.5%) undivided interest in the following assets:

          (a)  the registered trademarks and the goodwill associated therewith
               to use in perpetuity and worldwide which include, but are not
               limited to the name George Foreman (including shortened versions
               of the name, such as 'George'), pictures, caricatures,
               likenesses, and the signatures of G. Foreman which have been used
               in connection with the marketing of certain products by Salton;
               and

          (b)  The unregistered common law trademarks and the good will
               associated therewith and certain trademark applications to use in
               perpetuity and worldwide which include, but are not limited to
               the name George Foreman (including shortened versions of the
               name, such as 'George'), pictures, caricatures, likenesses, and
               the signatures of George Foreman which have been used in
               connection with the marketing of certain products by Salton.

         Seller's interests in the property referred to above are defined as the
'Foreman Interests'.

     2.   Seller's Put; Purchase Price.

          (a)  Seller shall have the right to exercise its Put of the Foreman
               Interests during a period ('Put Period') that commences December
               1, 1999, and ends at the close of business, CST, on the thirtieth
               (30th day) next following the first day of the Put Period
               (including the first day of the Put Period). If Seller does not
               exercise its Put within the Put Period, the Put shall terminate
               automatically without any notice from Salton and Seller shall
               have no further right to compel Salton to purchase the Foreman
               Interests.



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          (b)  If Seller gives Notice to Salton of Seller's exercise of its Put,
               there shall be a closing of the sale pursuant to the Put (the
               'Closing') which shall occur as set forth in Section 6(c) not
               later than sixty (60) days after such Notice is given on a date
               designated by Salton, except that if the sixtieth (60th) day is
               not a day when banks in Los Angeles and New York City are both
               open for business ('Business Day'), then the Closing shall occur
               not later then the next day that is a Business Day.

          (c)  If Seller's Put is exercised, the total purchase price to be paid
               to Seller for the Foreman Interests is thirteen million seven
               hundred fifty thousand dollars ($13,750,000) of which six million
               eight hundred and seventy five thousand dollars ($6,875,000)
               shall be paid in cash and six million eight hundred and seventy
               five thousand dollars ($6,875,000) shall be paid in shares of
               Common Stock of Salton (the 'Salton Shares') valued as set forth
               in Section 5.

     3.   Salton's Call; Purchase Price.

          (a)  Salton shall have the right to exercise its Call on the Foreman
               Interests within a thirty (30) day period ('Call Period') that
               begins on the day next following the end of the Put Period and
               ends on the close of business, CST, on the thirtieth (30th) day
               next following the commencement of the Call Period (including the
               first day of the Call Period). If Salton has not exercised its
               Call within the Call Period, the Call shall terminate
               automatically without any notice from Seller and Salton shall
               have no further right to compel Seller to sell the Foreman
               Interests.

          (b)  Upon Salton giving Notice to Seller of Salton's exercise of its
               Call, there shall be a Closing of the sale pursuant to the Call
               which shall occur as set forth in Section 6(c) not later than
               thirty (30) days after such Notice is given on a date designated
               by Salton, except that if the thirtieth (30th) day is not a
               Business Day, then the Closing shall occur not later then the
               next day that is a Business Day.

          (c)  If Salton's Call is exercised by Salton, the total purchase price
               to be paid to Seller for the Foreman Interests is thirteen
               million five hundred thousand dollars ($13,500,000) of which six
               million seven hundred fifty thousand dollars ($6,750,000) shall
               be payable in cash and six million seven hundred fifty thousand
               dollars ($6,750,000) shall be payable in Salton Shares valued as
               set forth in Section 5.

     4.   Terms of Payment. The total purchase price owing to Seller shall be
          paid as set forth below.

          (a)  Put Price. On the exercise of Seller's Put, the total purchase
               price, $13,750,000, shall be paid as follows:

               (i)   On the Closing (defined in Section 6(c) below),one million
                     three hundred seventy-five thousand dollars ($1,375,000)
                     shall be paid in cash and six million eight hundred
                     seventy-five thousand dollars ($6,875,000) shall be paid in
                     shares of the Common Stock of Salton (the 'Salton Shares').
                     The cash portion of the purchase price to be paid at the
                     Closing




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                     shall be delivered by Federal Funds wired to a bank
                     account designated by Seller prior to the date of the
                     Closing. The portion of the purchase price to be paid in
                     Salton Shares shall be delivered in one or more stock
                     certificates of Salton evidencing the Salton Shares
                     registered in the name of Seller.

               (ii)  The balance of the cash portion of the purchase price, five
                     million five hundred thousand dollars ($5,500,000) shall be
                     paid in four equal installments of one million three
                     hundred seventy-five thousand dollars ($1,375,000) each,
                     without interest, on the first day of July, 2000, 2001,
                     2002 and 2003 unless such July 1 is not a Business Day, in
                     which case the payment shall be made on the next date which
                     is Business Day. Each installment shall be delivered by
                     federal funds wired to a bank account designated by Seller
                     prior to the date of closing.

          (b)  Call Price. On the exercise of Purchaser's Call, the total
               purchase price, $13,500,000, owing to Seller shall be paid as set
               forth below:

               (i)   On the Closing (defined in Section 6(c) below), one million
                     three hundred thousand dollars ($1,300,000) shall be paid
                     in cash and six million five hundred thousand dollars
                     ($6,500,000) shall be paid in shares of the Common Stock of
                     Salton (the 'Salton Shares'). The cash portion of the
                     purchase price to be paid at the Closing shall be delivered
                     by Federal Funds wired to a bank account designated by
                     Seller prior to the date of the Closing. The portion of the
                     purchase price to be paid in Salton Shares shall be
                     delivered in one or more stock certificates of Salton
                     evidencing the Salton Shares registered in the name of
                     Seller.

               (ii)  The balance of the cash portion of purchase price, five
                     million four hundred thousand dollars ($5,400,000) shall be
                     paid in four equal installments of one million three
                     hundred fifty thousand dollars ($1,350,000) each, without
                     interest, on the first days of July, 2000, 2001, 2002 and
                     2003 unless such July 1 is not a Business Day, in which
                     case the payment shall be made on the next date which is
                     Business Day. Each installment shall be delivered by
                     federal funds wired to a bank account designated by Seller
                     prior to the date of closing.

          (c)  Advance Payments. Salton shall receive credit at a Closing under
               this Agreement, and, to the extent of Salton's payments, against
               the annual installments of the purchase to be paid in cash, for
               payments made by Salton after the date hereof, as advances toward
               the cash portion of the purchase price in the event the call or
               the Put is exercised.

     5.   Calculation of Number of Shares to be delivered to Seller at Closing.

          (a)  On Exercise of Put. The number of shares of common stock of
               Salton to be delivered to Seller on the Closing shall be the
               greater of the following two




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               numbers: (i) two hundred thirty-seven thousand and sixty-nine
               (237,069) or (ii) 6,875,000 divided by the Average Salton Price
               as defined in this Section 5.

          (b)  On Exercise of Call. The number of shares of common stock of
               Salton to be delivered to Seller on the Closing shall be the
               greater of the following two numbers: (i) two hundred twenty-four
               thousand one hundred thirty eight (224,138) or (ii) 6,500,000
               divided by the Average Salton Price as defined in this Section 5.

          (c)  The 'Average Salton Price' shall be the average of the closing
               prices of Salton common stock on the New York Stock Exchange
               ('NYSE') as reported on the NYSE Composite Transaction Tape for
               the twenty trading days ending on the third trading day preceding
               the Closing Date

     6.   Conditions to Closing.

          (a)  Seller Conditions. At or before the Closing, Seller shall have
               received the following:

               (i)   a copy of the Articles of Incorporation, as amended, of
                     Salton certified by the Delaware Secretary of State

               (ii)  a copy of the By-Laws of Salton and a copy of the Unanimous
                     Consent of Directors of the Board of Directors of Salton
                     authorizing the execution, delivery and performance of this
                     Agreement, both certified by the Secretary of Salton;

               (iii) a good standing certificate of Salton certified by the
                     Secretary of State of Delaware;

               (iv)  a bring down certificate executed by an officer of Salton
                     certifying that the representations and warranties of
                     Salton set forth in Section 7 below are true and correct as
                     of the Closing;

               (v)   Seller shall have received the cash portion of the purchase
                     price to be delivered at the Closing; and

               (vi)  Seller shall have received certificates for Salton Shares
                     issued in the name of Seller bearing a restrictive legend
                     which permits the Salton Shares to be sold only pursuant to
                     a registered offering pursuant to Section 9 hereof or
                     pursuant to Rule 144 adopted by the Securities and Exchange
                     Commission.

          (b)  Salton Conditions. At or before the Closing, Salton shall have
               received the following:

               (i)   a copy of the Articles of Organization, as amended, of
                     MikeSam certified by the California Secretary of State



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               (ii)  a good standing certificate of MikeSam certified by the
                     Secretary of State of California ;

               (iii) a copy of the operating agreement of MikeSam certified by
                     Seller and by Mike Srednick, the owner of all the
                     outstanding stock of Srednick and Associates, Inc., the
                     owner of the remaining interests in MikeSam.

               (iv)  evidence of Uniform Commercial Code searches, searches of
                     the Offices of the United States Trademark Patent Office
                     Registration System and other certificates reasonably
                     requested by Salton in order to confirm that the properties
                     being sold hereunder by Seller are free and clear of all
                     security interests, liens and encumbrances.

               (v)   a bill of sale and assignment of the Foreman Interests;

               (vi)  such other documents and assignments as Salton may require
                     reasonably in order to effect the assignment and transfer
                     to Salton of the assets sold hereunder; and

               (vii) Salton shall have such consents, if any, as Salton
                     determines are required under Salton's existing Credit
                     Agreement with Lehman Brothers Commercial Paper Inc. as
                     Administrative Agent for the several bank lenders who are
                     parties from time to time to the Credit Agreement.

          (c)  Closing. The closing shall occur on the date as determined above
               in this Agreement at the offices of Sonnenschein Nath & Rosenthal
               located at Suite 1500, 601 South Figueroa Street, Los Angeles, CA
               90017 at 10 A.M., CST. At the closing, Seller and Salton shall
               each make the deliveries required of them as set forth above.;

     7.   Representations and Warranties of Seller. Seller represents, warrants
          and agrees with Salton that, as of the date hereof and up to and
          including the date of closing that each of the following
          representations is true and correct:

          (a)  No Prior Transfer of Seller's Interest. Seller has not licensed
               or in any other way authorized any Person to use in any manner
               any of the Seller's undivided interest in the Foreman Interests
               and to Seller's knowledge, there is no unauthorized use thereof
               by any Person.

          (b)  No Prior Commitment to Sell. Seller has no commitment or legal
               obligation, absolute or contingent, to any Person other than
               Salton to sell, assign, license, transfer or effect a sale of any
               of Seller's undivided interest in the Foreman Interests or to
               enter into any Contract or cause the entering into of a Contract
               with respect to the foregoing.

          (c)  Seller's Percentage Interest. As of the date of Closing, Seller
               shall own all right, title and interest in and to a seven and one
               half percent (7.5%) undivided interest in the Foreman Interests
               free and clear of all Liens.





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          (d)  MikeSam. MikeSam owned all right, title and interest in and to a
               fifteen percent (15%) interest in a Joint Venture ('JV') formed
               pursuant to a Joint Venture Agreement dated as March 1, 1995
               among Salton Maxim Houseware, Inc., George Foreman Productions,
               Inc., a Nevada corporation and Benjamin H., a California
               corporation ('BH'); BH was never organized; MikeSam has owned
               since the creation of the Joint Venture Agreement the 15%
               interest designated in the Joint Venture Agreement to belong to
               BH; upon a dissolution of the joint venture, MikeSam will receive
               and continue to own as set forth above, a fifteen percent (15%)
               undivided interest in the Foreman Interests distributed in the
               liquidation of the JV.

          (e)  Only Members. The only two members of MikeSam are, Seller and
               Srednick & Associates, Inc., a California corporation, each of
               which owned a fifty percent (50%) interest as a member in
               MikeSam.

          (f)  Litigation. There are no Claims pending or threatened before any
               Governmental Authority or before any arbitrator of any nature,
               brought by or against the Seller or MikeSam involving, affecting
               or relating to the business, assets, operations or securities of
               MikeSam, or the transactions contemplated by this Agreement, nor
               is there any basis for any such Claim. Neither of MikeSam or the
               Seller, or their respective assets is subject to any order, writ,
               judgment, award, injunction or decree of any Governmental
               Authority or arbitrator.

          (g)  Liens and Encumbrances. Seller holds and owns full,
               unconditional, good and marketable title to his interest in
               MikeSam free and clear of all Liens.

          (h)  Contracts. The consummation of the transactions contemplated
               hereby, without notice to or consent or approval of any party,
               will not constitute a default under or a breach of any provisions
               of any Contract affecting Seller.

          (i)  Absence of Employee Benefit Plans. MikeSam has never maintained
               nor has any liability with respect to an employee benefit plan as
               defined in ERISA.

          (j)  ERISA. There are no facts which could give rise to any Claim
               against or liability of MikeSam or Seller for failure to comply
               with ERISA or the Code in connection with the sale of Seller's
               interest in the Foreman Interests.

          (k)  Environmental Matters. (a) MikeSam is and at all times has been,
               in compliance with all applicable Environmental Laws. MikeSam is
               not subject to any requirement to have any permits and other
               governmental authorizations under applicable Environmental Laws.
               MikeSam has not received any communication (written or oral),
               whether from a Governmental Authority, Person, citizens group or
               otherwise, that alleges that MikeSam is not or was not in
               compliance with any Environmental Law. (b)There is no
               Environmental Claim pending or threatened against MikeSam or
               against any Person whose Liability for any Environmental Claim
               that MikeSam has or may have retained or assumed either
               contractually or by operation of law.



                                       6



          (l)  Taxes. MikeSam has timely filed or caused to be filed all
               federal, state, local and foreign Tax (as defined below) and
               information returns required to be filed and has paid all Taxes
               required to be paid in respect of the periods for which returns
               are due, up to and including the Closing. For these purposes, the
               Tax attributable to the period including the Closing should be
               determined as if the taxable year ended at the Closing. MikeSam
               is not delinquent in the payment of any Tax, and no deficiencies
               for any Tax, assessment or governmental charge have been or will
               be claimed, proposed, assessed or threatened. There are no Liens
               on the assets of MikeSam for unpaid Taxes. No waiver or extension
               of time to assess any Taxes has been given or requested. No claim
               has been made by any taxing authority in any jurisdiction that
               MikeSam is or may be subject to taxation by that jurisdiction.
               For the purposes of this Section, the term 'Tax' shall include
               all taxes, charges, withholdings, fees, levies, penalties,
               additions, interest or other assessments imposed by any federal,
               state, local or foreign or other taxing authority on MikeSam or
               any of its former or present properties, assets or operations
               (including as a result of being a member of an affiliated,
               combined or unitary group or as a result of any obligation
               arising out of an agreement to indemnify any other Person), and
               including those related to income, employee welfare or retirement
               (including social security), gross receipts, sales, use,
               occupation, services, leasing, valuation, addition of value,
               transfer, license, customs duties or franchise; provided,
               however, that, although the term 'Tax' is defined herein to
               include 'income', nothing herein shall be deemed to be a
               representation or warranty that the other member of MikeSam who
               is not Seller, has paid all Tax that is owing by reason of the
               fifty percent (50%) share of the income of MikeSam that has been
               allocated for each fiscal year of MikeSam to such other member as
               required by the operating agreement of MikeSam and as has been
               set forth in the K-1 informational forms which have been filed by
               MikeSam and a copy of which K-1 returns have been furnished to
               such other member during the existence of MikeSam in accordance
               with the requirements of the Internal Revenue Code and California
               law. MikeSam's Tax Returns have never been audited by the
               Internal Revenue Service or comparable state, local or foreign
               agencies. MikeSam has not been a member of an Affiliated Group or
               been included in a combined, consolidated or unitary Tax return.
               MikeSam is not a party to or bound by any Tax allocation or Tax
               sharing agreement or has any current or potential obligation to
               indemnify any other Person with respect to Taxes. MikeSam is not
               required to make any adjustments under Section 481(a) of the Code
               by reason of a change in accounting method which affects any
               taxable year ending after the Closing Date, or has any
               application pending to effect such a change of accounting method.

          (m)  Compliance with Applicable Law. (a) MikeSam does not require and
               has no licenses, permits, franchises, authorizations,
               registrations and approvals (the 'Licenses') from any
               Governmental Authority and is not and will not be subject to any
               pending or threatened administrative or judicial proceeding with
               respect to the lack thereof. MikeSam has not acted or been in
               violation of, any Rule of any Governmental Authority applicable
               to MikeSam or its assets or prior operations.



                                       7




          (n)  Brokers' Fees and Commissions. The Seller has not employed any
               investment banker, broker, finder or intermediary in connection
               with the transactions contemplated hereby.

          (o)  Labor Matters. (a) No present or former employee or independent
               contractor performing services for MikeSam has a Claim pending or
               has threatened to or will make a Claim against MikeSam (under any
               Rule of any Governmental Authority or otherwise), including any
               Claim for (i) overtime pay, other than overtime pay for the
               current payroll period, (ii) wages, salaries or profit sharing
               (excluding wages, salaries or profit sharing for the current
               payroll period), (iii) vacations, time off or pay in lieu of
               vacation or time off, other than vacation or time off (or pay in
               lieu thereof) earned in respect of MikeSam's current fiscal year,
               (iv) any violation of any Rule or contract relating to minimum
               wages or maximum hours of work, (v) discrimination against
               employees on any basis, (vi) unlawful or wrongful employment or
               termination practices, (vii) unlawful retirement, termination or
               labor relations practices or breach of contract or (viii) any
               violation of occupational safety or health standards. There are
               and will be no administrative charges, arbitration or mediation
               proceedings or court complaints pending or threatened against
               MikeSam before the U.S. Equal Employment Opportunity Commission
               or any state or federal court or agency or any other entity
               concerning alleged employment discrimination, contract violation
               or any other matters relating to the employment of labor. There
               is and will be no unfair labor practice charge or complaint
               pending or threatened against MikeSam before the National Labor
               Relations Board or any similar state or local body.

          (p)  Compliance With Laws. MikeSam is and has been in compliance with
               all applicable Rules relating to the employment of labor,
               including employment and employment practices, terms and
               conditions of employment, wages and hours, equal opportunity,
               occupational health and safety, severance, termination or
               discharge, collective bargaining and the payment of employee
               welfare and retirement and other taxes, the Worker Adjustment
               Retraining and Notification Act and the Immigration Reform and
               Control Act of 1986, each as amended, and is not engaged in any
               unfair labor practice or any violation of any other law, rule or
               regulation concerning employment or retention of independent
               contractors.

          (q)  No Employees. MikeSam has no employees. As of the Closing Date,
               MikeSam will not a signatory or party to, or otherwise bound by,
               a collective bargaining agreement (or any other agreement with
               any labor organization) which covers employees of MikeSam, and
               there is no activity or proceeding of any labor organization (or
               representative thereof) to organize any unorganized employees of
               MikeSam. There is not pending or threatened against MikeSam any
               labor dispute, grievance, slowdown, lockout, strike, work
               stoppage or other collective labor action in effect, pending or
               threatened against or affecting MikeSam.

          (r)  Accounts Receivable; Liabilities. MikeSam has no accounts
               receivable or liabilities. MikeSam will have no liability for any
               healthcare, medical, disability,




                                       8



               death benefit or similar expenses of any manager or employee of
               MikeSam or any other Person which are the result of injuries or
               illnesses which occurred prior to the Closing (regardless of when
               such expenses are incurred).

          (s)  No Leased or Owned Real Property. MikeSam does not own, lease or
               sublease any real property.

          (t)  Disclosure. All documents, agreements and other papers and
               materials delivered by or on behalf of the Seller in connection
               with this Agreement, and the transactions contemplated hereby and
               thereby are true, complete and accurate. None of the
               representations, warranties or statements of the Seller contained
               in this Agreement or in any Schedules or Exhibits hereto contains
               any untrue statement of a material fact or omits to state any
               material fact required to be stated therein or necessary to make
               the representations, warranties or statements made, in the
               context in which made, not false or misleading. There is no fact
               that the Seller has not disclosed to Salton in writing that
               causes an adverse effect or could result in an adverse effect.
               The Seller acknowledges that the statements contained in this
               Section shall not be deemed to limit or qualify any of the other
               representations or warranties contained in this Agreement, in any
               Schedules or Exhibits hereto or in any agreement or document
               delivered in connection herewith.

          (u)  No Existing Commitment to Sell. Seller has no commitment or legal
               obligation, absolute or contingent, to any Person other than
               Salton to sell, assign, license, transfer or effect a sale of any
               of his interest in the Foreman Interests or to enter into any
               contract or cause the entering into of a contract with respect to
               the Foreman Interests.

          (v)  Organization of MikeSam. MikeSam was a duly organized and
               existing limited liability company in good standing under the
               laws of California.

          (w)  Seller's Legal Capacity. Seller has the legal capacity to own his
               distributed interest in the Foreman Interests and to enter into
               and perform this Agreement As of the Closing Date, Seller shall
               own all right, title and interest in and to the Foreman Interests
               free and clear of all Liens.

          (x)  Status of MikeSam. MikeSam has all requisite power and authority
               to own its properties and MikeSam is not insolvent within the
               meaning of Section 1-201(23) of the Uniform Commercial Code. No
               order has been made or petition presented or resolution adopted
               which relates to the winding-up of MikeSam or for an
               administration order in respect of MikeSam, nor has any
               administrative receiver, receiver or receiver and manager been
               appointed by any Governmental Authority or other Person with
               respect to all or part of the assets of MikeSam, and no power to
               make any such appointment has arisen. Seller has delivered to
               Purchaser complete and correct copies of the Articles of
               Organization (or comparable organizational documents) presently
               in effect for MikeSam, and MikeSam is not in default under or in
               violation of any provision of such documents.



                                       9



          (y)  MikeSam Qualification. MikeSam is qualified or licensed to do
               business and is in good standing in California which is the only
               jurisdiction in which the conduct of its business requires such
               licensing or qualification.

          (z)  Seller's Due Authorization. This Agreement has been duly and
               validly executed and delivered by Seller and, assuming due
               authorization, execution and delivery by Salton, constitute valid
               and binding legal obligations of the Seller, enforceable against
               Seller in accordance with its terms.

          (aa) Sale No Conflict with MikeSam Documents. Neither the execution,
               delivery or performance of this Agreement nor the consummation of
               the transactions contemplated hereby will (a) violate, conflict
               with or result in any breach of any provision of the Articles of
               Organization or Bylaws (or comparable organizational documents)
               of MikeSam, (b) violate, conflict with or result in a violation
               or breach of, or constitute a default (with or without due notice
               or lapse of time or both) under, or permit the termination of, or
               require any notice under, or require the consent of any other
               party to, or result in the acceleration of, or entitle any party
               to accelerate (whether as a result of a change in control of
               MikeSam) any obligation or agreement, or result in the loss of
               any benefit or the imposition of any fee or penalty, or give rise
               to the creation of any Lien upon the property or assets of
               MikeSam, or (c) violate any Rules (including foreign, federal and
               state securities laws) of any Governmental Authority applicable
               to MikeSam or the Seller.

          (bb) No Filing Required. No filing or registration with, no notice to
               and no permit, authorization, consent or approval of, any third
               party or any Governmental Authority is necessary for the
               consummation of the transactions contemplated by this Agreement.

          (cc) Books and Records. The books and records of MikeSam are, and have
               been, maintained in the usual, regular, ordinary and appropriate
               manner by Seller or his agents, and all of the transactions of
               MikeSam, if any, are properly reflected therein.

     8.   Representations and Warranties of Salton. Salton represents and
          warrants and agrees with Seller that, as of the date hereof and up to
          and including the date of closing that each of the following
          representations is true and correct:

          (a)  Organization. Salton is a duly organized and existing corporation
               under the laws of the State of Delaware.

          (b)  Corporate Authority. Salton has the corporate power under its
               articles of incorporation and by laws to enter into and perform
               this Agreement.

          (c)  Board Approval. The Board of Directors of Salton has, by
               unanimous written consent in lieu of a special meeting,
               authorized Salton to enter into and perform this Agreement.



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          (d)  Restrictions on Salton. There are no contracts currently in
               effect which limit or restrict the right of Salton to enter into
               or perform this Agreement except only that Salton may determine
               that it requires consent from its lenders under the Second
               Amended and Restated Credit Agreement dated January 7, 1999 by
               and among Salton and Lehmann Brothers Commercial Paper, Inc., as
               Administrative Agent for the serveral lenders who are parties
               from time to time to such agreement ('Credit Agreement') to enter
               into and close the transactions contemplated by this Agreement.

          (e)  Shares Available. Salton has authorized but unissued shares of
               Common Stock and shares of Common Stock held as Treasury shares
               and has reserved, and shall continue to keep reserved for
               issuance in connection with the Closing of this Agreement a
               sufficient number of Shares to satisfy its obligation to deliver
               the number of Shares necessary to close this Agreement.

          (f)  There are no existing uncured events of default on the part of
               Salton under its Credit Agreement.

          (g)  Salton has authorized but unissued shares of Common Stock and
               shares of Common Stock held as Treasury shares and has reserved,
               and shall continue to keep reserved for issuance in connection
               with the Closing of this Agreement a sufficient number of Shares
               to satisfy its obligation to deliver the number of Shares
               necessary to close this Agreement.

     9.   Demand Registration of Salton Shares.

          (a)  Requests for Registration. The holders of a majority of the
               Salton Shares may make one request for registration under the
               Securities Act of all or part of their Salton Shares on Form S-1
               or any similar long-form registration ('Long-Form Registration')
               or, if available, on Form S-2 or S-3 or any similar short-form
               registration ('Short-Form Registration'). The request for a
               Demand Registration (as defined below) shall specify the
               approximate number of Salton Shares requested to be registered
               and the anticipated per share price range for such offering.
               Within ten days after receipt of any such request, Salton will
               give written notice of such requested registration to all other
               registered holders of the Salton Shares and, subject to Section 8
               (b) below, will include in such registration all Salton Shares
               with respect to which Salton has received written requests for
               inclusion therein within fifteen (15) business days after the
               receipt of Salton 's notice. The registration requested pursuant
               to this Section 9 (a) is referred to herein as the 'Demand
               Registration.' The holders of the Salton Shares taken together
               will be entitled to request for their collective benefit only one
               (1) Demand Registration. Salton will pay all Registration
               Expenses (as defined in this Section 9 in connection with such
               Demand Registration whether or not the Registration becomes
               effective.

          (b)  Priority on Demand Registrations. Salton may include in the
               Demand Registration securities of Salton which are not Salton
               Shares without the consent of the holders of the Salton Shares to
               be included in such registration unless the




                                       11



               managing underwriters of the Demand Registration advise Salton in
               writing that, in their opinion, the number of Salton Shares and
               other securities of Salton requested to be included in such
               offering exceeds the number of securities of Salton which can be
               sold therein without adversely affecting the marketability of the
               offering. If such managing underwriters so advise Salton, Salton
               will include in such registration, prior to the inclusion of any
               securities of Salton which are not Salton Shares, the number of
               Salton Shares requested to be included, which in the opinion of
               such underwriters, can be sold without adversely affecting the
               marketability of the offering, pro rata among the respective
               holders thereof on the basis of the number of shares of Salton
               Shares owned by each such holder.

          (c)  Selection of Underwriters. The Demand Registration will be
               managed by the holders of Salton Shares as follows: (i) the
               holders of a majority of the Salton Shares included in the Demand
               Registration will have the right to select the managing
               underwriters to administer the offering, subject to Salton's
               approval; and (ii) in consultation with the managing
               underwriter(s), the holders of a majority of the Salton Shares
               will have the power to determine the number of Salton Shares to
               be included in the offering (subject to the applicable
               limitations set forth herein), the offering price per Salton
               Share, the underwriting discounts and commissions per Salton
               Share, the timing of the registration (subject to the applicable
               limitations set forth herein) and all other administrative
               matters related to the registration.

          (d)  Piggyback Registrations.

               (i)   Option to Offer Piggyback. Whenever Salton proposes to
                     register any of its securities under the Securities Act and
                     the registration form to be used for the registration of
                     such securities (a'Piggyback Registration'), whether or not
                     for sale for its own account, Salton may elect to give
                     prompt written notice to the holders of Salton Shares of
                     its intention to effect such a registration and to include
                     in such registration all Salton Shares with respect to
                     which Salton has received written requests for inclusion
                     therein within 15 business days after the receipt of
                     Salton's notice, subject to the terms of this Section 9.

               (ii)  Piggyback Expenses. The Registration Expenses of the
                     holders of Salton Shares will be paid by Salton in all
                     Piggyback Registrations.

               (iii) Loss of Demand Registration. If the holders off Salton
                     Shares sell or are offered the right to sell at least
                     seventy five percent (75%) of the total number of Salton
                     Shares issued at the Closing in one or more Piggy Back
                     Registrations, the holders of Salton Shares shall no longer
                     be entitled to receive a Demand Registration under this
                     Agreement.

          (e)  Holdback Agreements.



                                       12




               (i)   Each holder of Salton Shares agrees not to effect any
                     public sale or distribution (including sales pursuant to
                     Rule 144) of equity securities of Salton, or any
                     securities, options or rights convertible into or
                     exchangeable or exercisable for such securities, during the
                     seven (7) days prior to and the one hundred eighty (180)
                     day period beginning on the effective date of any
                     underwritten Demand Registration or any underwritten
                     Piggyback Registration (except as part of such underwritten
                     registration), unless the underwriters managing the
                     registered public offering otherwise agree.

               (ii)  Salton agrees (i) not to effect any public sale or
                     distribution of its equity securities, or any securities
                     convertible into or exchangeable or exercisable for such
                     securities, during the seven days prior to and during the
                     one hundred eighty (180) day period beginning on the
                     effective date of any underwritten Demand Registration or
                     any underwritten Piggyback Registration (except as part of
                     such underwritten registration or pursuant to registrations
                     on Form S-4 or S-8 or any successor form), unless the
                     underwriters managing the registered public offering
                     otherwise agree.

          (f)  Registration Procedures. Whenever the holders of Salton Shares
               have requested that any Salton Shares be registered pursuant to
               this Agreement, Salton will use its reasonable efforts to effect
               the registration and the sale of such Salton Shares in accordance
               with the intended method of disposition thereof and pursuant
               thereto Salton will as expeditiously as possible:

               (i)   prepare and file with the Securities and Exchange
                     Commission such amendments and supplements to such
                     registration statement and the prospectus used in
                     connection therewith as may be necessary to keep such
                     registration statement effective for a period of either (i)
                     not less than six months (subject to extension pursuant to
                     Section 9 (h) or, if such registration statement relates to
                     an underwritten offering, such longer period as in the
                     opinion of counsel for the underwriters a prospectus is
                     required by law to be delivered in connection with sales of
                     Salton Shares by an underwriter or dealer or (ii) such
                     shorter period as will terminate when all of the securities
                     covered by such registration statement have been disposed
                     of in accordance with the intended methods of disposition
                     by the seller or sellers thereof set forth in such
                     registration statement (but in any event not before the
                     expiration of any longer period required under the
                     Securities Act), and to comply with the provisions of the
                     Securities Act with respect to the disposition of all
                     securities covered by such registration statement until
                     such time as all of such securities have been disposed of
                     in accordance with the intended methods of disposition by
                     the seller or sellers thereof set forth in such
                     registration statement;

               (ii)  furnish to each seller of Salton Shares such number of
                     copies of such registration statement, each amendment and
                     supplement thereto, the prospectus included in such
                     registration statement (including each preliminary
                     prospectus) and such other documents as such seller may


                                       13



                     reasonably request in order to facilitate the disposition
                     of the Salton Shares owned by such seller;

               (iii) use its reasonable efforts to register or qualify the
                     Salton Shares under such other securities or blue sky laws
                     of such jurisdictions as any seller reasonably requests and
                     do any and all other acts and things which may be
                     reasonably necessary or advisable to enable such seller to
                     consummate the disposition in such jurisdictions of the
                     Salton Shares owned by such seller (provided that Salton
                     will not be required to (i) qualify generally to do
                     business in any jurisdiction where it would not otherwise
                     be required to qualify but for this subparagraph, (ii)
                     subject itself to taxation in any such jurisdiction or
                     (iii) consent to general service of process in any such
                     jurisdiction);

               (iv)  notify each seller of such Salton Shares, at any time when
                     the prospectus relating thereto is required to be delivered
                     under the Securities Act, upon discovery that, or upon the
                     discovery of the happening of any event as a result of
                     which, the prospectus included in such registration
                     statement contains an untrue statement of a material fact
                     or omits any fact necessary to make the statements therein
                     not misleading in the light of the circumstances under
                     which they were made, and, at the request of any such
                     seller, Salton will prepare and furnish to such seller a
                     reasonable number of copies of a supplement or amendment to
                     such prospectus so that, as thereafter delivered to the
                     purchasers of such Salton Shares, such prospectus will not
                     contain an untrue statement of a material fact or omit to
                     state any fact necessary to make the statements therein not
                     misleading in the light of the circumstances under which
                     they were made;

               (v)   enter into such customary agreements (including
                     underwriting agreements in customary form) and take all
                     such other actions as the holders of a majority of the
                     Salton Shares being sold or the underwriters, if any,
                     reasonably request in order to expedite or facilitate the
                     disposition of such Salton Shares;

               (vi)  make available for inspection by any seller of Salton
                     Shares, any underwriter participating in any disposition
                     pursuant to such registration statement and any attorney,
                     accountant or other agent retained by any such seller or
                     underwriter, all financial and other records, pertinent
                     corporate documents and properties of Salton, and cause
                     Salton's officers, directors, employees and independent
                     accountants to supply all information reasonably requested
                     by any such seller, underwriter, attorney, accountant or
                     agent in connection with such registration statement;

               (vii) in the event of the issuance of any stop order suspending
                     the effectiveness of a registration statement, or of any
                     order suspending or preventing the use of any related
                     prospectus or suspending the




                                       14




               qualification of any securities included in such registration
               statement for sale in any jurisdiction, Salton will use
               reasonable efforts promptly to obtain the withdrawal of such
               order;

               (viii) obtain one or more comfort letters, dated the effective
                     date of such registration statement (and, if such
                     registration includes an underwritten public offering,
                     dated the date of the closing under the underwriting
                     agreement), signed by Salton's independent public
                     accountants in customary form and covering such matters of
                     the type customarily covered by comfort letters as the
                     holders of a majority of the Salton Shares being sold
                     reasonably request (provided that such Salton Shares
                     constitute at least 10% of the securities covered by such
                     registration statement); and

               (ix)  provide a legal opinion of Salton's outside counsel, dated
                     the effective date of such registration statement (and, if
                     such registration includes an underwritten public offering,
                     dated the date of the closing under the underwriting
                     agreement), with respect to the registration statement,
                     each amendment and supplement thereto, the prospectus
                     included therein (including the preliminary prospectus) and
                     such other documents relating thereto in customary form and
                     covering such matters of the type customarily covered by
                     legal opinions of such nature.

               (x)   Salton may require each seller of Salton Shares as to which
                     any registration is being effected to furnish Salton such
                     information regarding such seller and the distribution of
                     such securities as Salton may from time to time reasonably
                     request in writing. .

          (g)  Registration Expenses. All expenses incident to Salton's
               performance of or compliance with this Agreement, including,
               without limitation, all registration and filing fees, fees and
               expenses of compliance with securities or blue sky laws, printing
               expenses, messenger and delivery expenses, salaries and expenses
               of its officers and employees performing legal or accounting
               duties, the expense of any annual audit or quarterly review, the
               expense of any liability insurance, the expenses and fees for
               listing the securities to be registered on the New York Stock
               Exchange, and fees and disbursements of counsel for Salton and
               all independent certified public accountants, underwriters
               (excluding discounts and commissions) and other Persons retained
               by Salton (all such expenses being herein called 'Registration
               Expenses'), will be borne by Salton.

          (h)  Delay of Registration. Notwithstanding the foregoing, Salton
               shall have the right to delay the effectiveness of the
               registration and of the listing of the Salton Shares for a period
               of up to one hundred eighty (180) days if: there are, in Salton's
               judgment, possible developments, events or actions which may
               occur concerning Salton or its business which would be required
               to be disclosed in a registration statement filed with the SEC,
               which are not in the best interest of Salton to disclose and need
               not be disclosed under the Securities Act unless and until such
               developments, events or actions occur



                                       15




          (i)  Participation in Underwritten Registrations.No Person may
               participate in any registration hereunder which is underwritten
               unless such Person (i) agrees to sell such Person's securities on
               the basis provided in any underwriting arrangements approved by
               the Person or Persons entitled hereunder to approve such
               arrangements (including, without limitation, pursuant to the
               terms of any over-allotment or 'green shoe' option requested by
               the managing underwriter(s); provided, that no holder of
               Registrable Securities will be required to sell more than the
               number of Registrable Securities that such holder has requested
               Salton to include in any registration) and (ii) completes and
               executes all questionnaires, powers of attorney, indemnities,
               underwriting agreements and other documents reasonably required
               under the terms of such underwriting arrangements.

     10.  Indemnification.

          (a)  Salton. Salton agrees to indemnify and hold harmless each holder
               of Salton Shares, its officers and directors and each Person who
               controls such holder (within the meaning of the Securities Act)
               against any losses, claims, actions, proceedings, judgments,
               damages and liabilities, joint or several, to which such holder
               or any such director, officer or controlling person may become
               subject to under the Securities Act or otherwise (collectively
               'Loss'), insofar as such Loss arises out of or is based upon (i)
               any untrue or alleged untrue statement of material fact contained
               in any registration statement, prospectus or preliminary
               prospectus or any amendment thereof or supplement thereto
               (relating to the Salton Shares) or (ii) any omission or alleged
               omission of a material fact required to be stated therein or
               necessary to make the statements therein not misleading, and
               Salton will reimburse such holder and each such director, officer
               and controlling person for any legal or any other expenses
               incurred by them in connection with investigating or defending
               any such Loss; provided, however, that Salton shall not be liable
               in any such case to the extent that any such Loss arises out of
               or is based upon an untrue statement or alleged untrue statement,
               or omission or alleged omission, made in such registration
               statement, any such prospectus or preliminary prospectus or any
               amendment or supplement thereto, or in any application, in
               reliance upon, and in conformity with, written information
               prepared and furnished to Salton by such holder expressly for use
               therein or by such holder's failure to deliver a copy of the
               registration statement or prospectus or any amendments or
               supplements thereto after Salton has furnished such holder with a
               sufficient number of copies of the same. In connection with an
               underwritten offering, Salton will indemnify such underwriters,
               their officers and directors and each Person who controls such
               underwriters (within the meaning of the Securities Act) to the
               same extent as provided above with respect to the indemnification
               of the holders of Salton Shares.

          (b)  Seller. In connection with any registration statement in which a
               holder of Salton Shares is participating, each such holder will
               furnish to Salton in writing such information and affidavits as
               Salton reasonably requests for use in connection with any such
               registration statement or prospectus and, to the extent permitted



                                       16
   17


               by law, will indemnify and hold harmless each other holder of
               Salton Shares, Salton, its directors and officers and each other
               Person who controls Salton (within the meaning of the Securities
               Act) against any Loss, joint or several, to which such other
               holder, Salton or any such director or officer or controlling
               person may become subject under the Securities Act or otherwise,
               insofar as such losses, claims, damages or liabilities (or
               actions or proceedings, whether commenced or threatened, in
               respect thereof) arise out of or are based upon (i) any untrue or
               alleged untrue statement of material fact contained in the
               registration statement, prospectus or preliminary prospectus or
               any amendment thereof or supplement thereto or in any application
               or (ii) any omission or alleged omission of a material fact
               required to be stated therein or necessary to make the statements
               therein not misleading, but only to the extent that such untrue
               statement or omission is made in such registration statement, any
               such prospectus or preliminary prospectus or any amendment or
               supplement thereto, or in any application, in reliance upon and
               in conformity with written information prepared and furnished to
               Salton by such holder expressly for use therein, and such holder
               will reimburse Salton and each such director, officer and
               controlling Person and each other holder of Salton Shares for any
               legal or any other expenses incurred by them in connection with
               investigating or defending any such Loss.

          (c)  Notice; Defense. Any person entitled to indemnification hereunder
               will (i) give prompt written notice to the indemnifying party of
               any claim with respect to which it seeks indemnification and (ii)
               unless in such indemnified party's reasonable judgment a conflict
               of interest between such indemnified and indemnifying parties may
               exist with respect to such claim, permit such indemnifying party
               to assume the defense of such claim with counsel reasonably
               acceptable to the indemnifying party. If such defense is assumed,
               the indemnifying party will not be subject to any liability for
               any settlement made by the indemnified party without its consent
               (but such consent will not be unreasonably withheld). An
               indemnifying party who is not entitled to, or elects not to,
               assume the defense of a claim will not be obligated to pay the
               fees and expenses of more than one counsel for all parties
               indemnified by such indemnifying party with respect to such
               claim, unless in the reasonable judgment of any indemnified party
               a conflict of interest may exist between such indemnified party
               and any other of such indemnified parties with respect to such
               claim.

          (d)  Survival. The indemnification provided for under this Agreement
               will remain in full force and effect regardless of any
               investigation made by or on behalf of the indemnified party or
               any officer, director or controlling person of such indemnified
               party and will survive the transfer of securities. Salton also
               agrees to make such provisions, as are reasonably requested by
               any indemnified party, for contribution to such party in the
               event Salton's indemnification is unavailable for any reason. .

     11.  Survival of Representations, Warranties. All representations and
          warranties of Seller and Salton contained herein shall survive the
          Closing Date and shall terminate at the





                                       17




          close of twenty four (24) full calendar months next following the
          Closing Date. Upon the termination of a representation or warranty in
          accordance with the foregoing, the representation or warranty shall
          have no further force or effect for any purpose under this Agreement,
          provided that, any representation or warranty in respect of which
          indemnity may be sought under Section 13 and the indemnity with
          respect thereto, shall survive the date at which it would otherwise
          terminate pursuant to this Section 12 if written notice of the
          inaccuracy or breach thereof giving rise to such right of indemnity
          shall have been given to the party against whom such indemnity may be
          sought prior to such time.

     12.  Indemnification.

          (a)  By Seller. Seller shall defend and indemnify Salton, and its
               officers and directors, and hold each of them harmless from and
               against any and all claims, demands, actions, suits, judgments,
               liability and loss, including legal fees and expenses and court
               costs (collectively 'Loss') incurred by any of them in connection
               with, arising out of, or resulting from (i) any breach of any
               representation or warranty made by Seller in this Agreement; or
               (ii) any failure by Seller to perform in a timely manner any
               agreement, covenant or obligation of Seller pursuant to this
               Agreement.

          (b)  By Salton. Salton shall defend and indemnify Seller, and its
               officers and directors, and hold each of them harmless from and
               against any and all Loss incurred by each of them in connection
               with, arising out of or resulting from (i) any breach or
               inaccuracy of any representation or warranty made by Salton in
               this Agreement or (ii) any failure by Salton to perform in a
               timely manner any agreement, covenant or obligation of Salton
               pursuant to this Agreement.

          (c)  Defense of Claims. If a claim for Loss (a 'Claim') is to be made
               by a party entitled to indemnification hereunder (the
               'Indemnified Party') against the party from whom indemnification
               is claimed (the 'Indemnifying Party'), the Indemnified Party
               shall give written notice (a 'Claim Notice') to the Indemnifying
               Party as soon as practicable after the Indemnified Party becomes
               aware of any fact, condition or event which may give rise to Loss
               for which indemnification may be sought under this Section 13. If
               any lawsuit or enforcement action is filed against any party
               entitled to the benefit of indemnity hereunder, written notice
               thereof shall be given to the Indemnifying Party as promptly as
               practicable (and in any event within ten (10) business days after
               the service of the citation or summons). The failure of any
               Indemnified Party to give timely notice hereunder shall not
               affect rights to indemnification hereunder, except to the extent
               that the Indemnifying Party demonstrates actual Loss caused by
               such failure. Notwithstanding the foregoing, a Claim Notice must
               be made within the survival period set forth in Section 12,
               whether or not the Indemnifying Party is prejudiced by any
               failure to give the Claim Notice. The Claim Notice shall describe
               in reasonable detail the nature of the Claim, including an
               estimate of the amount of Loss that have been or may be suffered
               or incurred by the Indemnified Party attributable to such Claim,
               the basis of the Indemnified Party's request for indemnification
               under the Agreement and all




                                       18



          information in the Indemnified Party's possession relating to such
          Claim. After receipt of such Claim Notice, the Indemnifying Party
          shall be entitled, if it so elects, at its own cost, risk and expense,
          (i) to take control of the defense and investigation of such lawsuit
          or action and (ii) to employ and engage attorneys of its own choice to
          handle and defend the same, provided however that the attorneys shall
          be reasonably acceptable to the Indemnified Party. If the Indemnifying
          Party fails to assume the defense of such Claim within ten (10)
          business days after receipt of the Claim Notice, the Indemnified Party
          against which such Claim has been asserted will (upon delivering
          notice to such effect to the Indemnifying Party) have the right to
          undertake, at the Indemnifying Party's cost and expense, the defense,
          compromise or settlement of such Claim on behalf of and for the
          account and risk of the Indemnifying Party; provided, however, that
          such Claim shall not be compromised or settled without the written
          consent of the Indemnified Party, which consent shall not be
          unreasonably withheld. In the event the Indemnifying Party assumes the
          defense of the Claim, the Indemnifyong Party will keep the Indemnified
          Party reasonably informed of the progress of any such defense,
          compromise or settlement. Notwithstanding the foregoing, the
          Indemnified Party shall be entitled to conduct its own defense at the
          cost and expense of the Indemnifying Party if the Indemnified Party
          establishes that the conduct of its defense by the Indemnifying Party
          would reasonably be likely to prejudice materially the Indemnified
          Party due to a conflict of interest between the Indemnified Party and
          the Indemnifying Party; and provided further that in any event the
          Indemnified Party may participate in such defense at its own expense.

          (d)  Settlement. In the event that the Indemnified Party settles any
               Claim without the prior written consent of the Indemnifying
               Party, the Indemnifying Party shall have no further
               indemnification obligations under this Section 13 with respect to
               such Claim; provided, however, that if the Indemnifying Party
               refuses to defend or otherwise handle such Claim and it is
               subsequently determined that the Indemnifying Party is or was
               obligated to defend or indemnify the Indemnified Party with
               respect to such Claim, then the Indemniying Party shall remain
               obligated with respect to such settlement amount. If the
               Indemnifying Party shall control the defense of any such Claim,
               the Indemnifying Party shall obtain the prior written consent of
               the Indemnified Party (which shall not be unreasonably withheld)
               before entering into any settlement of a Claim or ceasing to
               defend such Claim if, pursuant to or as a result of such
               settlement or cessation, injunctive or other equitable relief
               shall be imposed against the Indemnified Party or if such
               settlement or cessation does not expressly and unconditionally
               release the Indemnified Party from all liabilities and
               obligations with respect to such Claim, without prejudice. In the
               event that the Indemnifying Party proposes a settlement to any
               Claim with respect to which the Indemnifying Party is or was
               entitled to defend, which settlement is satisfactory to the party
               instituting such Claim, and the Indemnified Party withholds its
               consent to such settlement, and thereafter a final judgment is
               entered against the Indemnifying Party or Indemnified Party
               pursuant to which Loss exceeds the amount of the proposed
               settlement, then in such case the Indemnifying Party shall have
               no obligation to indemnify the Indemnified Party under this
               Section 12 against and in respect of





                                       19




          the amount by which the Loss resulting from such final judgment exceed
          the amount of the proposed settlement.

          (e)  Mitigation. Each Indemnified Party shall have an obligation to
               mitigate Loss under this Agreement, and to that end each party
               shall use its reasonable efforts and shall consult and cooperate
               with each other with a view towards mitigating Loss, costs and
               expenses that may give rise to claims for indemnification under
               this Section 12.

          (f)  Cooperation. In the event that any action, suit, proceeding or
               investigation relating hereto or to the transactions contemplated
               by this Agreement is commenced, whether before or after the
               Closing, the parties hereto agree to cooperate and use reasonable
               efforts to vigorously defend against and respond thereto and make
               available to each other such personnel, witnesses, books,
               records, documents or other information within its control that
               are necessary or appropriate for such defense; provided that,
               subject to Section 12, the Indemnifying Party shall reimburse the
               Indemnified Party for its out of pocket expenses incurred in
               connection therewith.

          (g)  Insurance Proceeds. With respect to any Claim required to be
               indemnified pursuant to this Agreement, so long as the
               Indemnifying Party has complied with its indemnification
               obligations on such Claim, (i) to the extent available, the
               Indemnified Party shall assign to the Indemnifying Party any
               applicable proceeds under any insurance policy which covers the
               matter which is the subject of the indemnification and shall take
               reasonable steps to insure that the Indemnifying Party obtains
               the benefits of such policy, including providing any notices as
               required under such policy; and (ii) if the Indemnified Party
               receives insurance proceeds with respect to any Loss paid by the
               Indemnifying Party, then the Indemnified Party shall reimburse
               the Indemnifying Party in an amount equivalent to such proceeds
               up to the amount actually paid by the Indemnifying Party.

          (h)  Offset. If a Put or a Call is exercised under this Agreement,
               following the Closing of this Agreement, in addition to any other
               remedies set forth herein for the benefit of Salton, upon any
               breach by Seller of any representation, warranty or agreement by
               Seller set forth in this Agreement, including the indemnification
               provisions of this Section 12, Salton shall have the right to
               offset any amounts or any performance owing by Salton to Seller
               under this Agreement or any other agreement between Seller and
               Salton any the amount of any Loss incurred by Salton by reason of
               such breach by Seller.

     13.  Definitions. As used in this Agreement, the following capitalized
          terms shall have the following meaning.

         'Affiliate' shall mean (i) a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, another Person and (ii) any parent, spouse, lineal
descendant or adopted child of a Person specified in clause (i), any spouse or
adopted child of any such descendant or any child of such spouse, the executors,
administrators,





                                       20



conservators or personal representatives of any Person referred to in this
clause (ii) and any Person which, directly or indirectly, is owned or controlled
by one or more of the Persons referred to in this clause (ii);

         'Affiliated Group' means any affiliated group as defined in Section
1504 of the Code (or any analogous combined, consolidated or unitary group under
state, local or foreign income Tax law) of which the Company or any of its
Affiliates is or has been a member;

         'Claims' shall mean all pending and threatened claims, actions, causes
of action, demands, orders, notices, suits, grievances, proceedings, disputes,
arbitrations and investigations;

         'Environmental Claim' shall mean any Claim (written or oral) by any
Person or any Governmental Authority alleging potential Liability or obligations
(including potential Liability or obligations for or requirement to incur
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, personal injuries, or penalties) arising
out of, based on or resulting from (i) the presence, release or threatened
release into the environment, of any Materials of Environmental Concern at any
location, whether or not owned or operated by the Company, or (ii) circumstances
forming the basis of any violation, potential violation or alleged violation, or
Liability, potential Liability or alleged Liability, under any Environmental
Law;

         'Environmental Laws' shall mean all Rules and permit conditions
relating to pollution or protection of human health or the environment
(including ambient air, indoor air, surface water, ground water, land surface or
subsurface strata), including Rules relating to emissions, discharges, releases
or threatened releases of Materials of Environmental Concern, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Materials of Environmental Concern;

          'Governmental Authority' shall mean any court (federal, state, local,
foreign or otherwise), any arbitration or other alternative dispute mechanism,
any federal, state, local, foreign or other government or governmental
department, agency, board, commission, bureau or instrumentality and any other
regulatory authority;

         'Liability' means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes;

         'Liens' shall mean all title defects, charges, claims, restrictions,
liens, pledges, security interests, mortgages, tenancies and other possessory
interests, conditional sale or other title retention agreements, assessments,
easements, rights of way, covenants, restrictions, rights of first refusal,
encroachments and other burdens, options, restrictions or encumbrances of any
kind;

         'Person' shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or, as applicable, any other entity;

         'Rules' shall mean any federal, state, local or foreign statute, law,
code, ordinance, rule, regulation, judgment, writ, decree, injunction, order,
concession, grant, franchise, permit or license or other governmental or
regulatory authorization or approval applicable to the Company or any of the
Stockholders or any of their respective assets, properties or operations or any
Plan;



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     14.  Miscellaneous.

          (a)  Notices. All notices, requests, demands and other communications
               which are required or may be given under this Agreement shall be
               in writing and shall be deemed to have been duly given when
               received if personally delivered; when transmitted if transmitted
               by telecopy, electronic or digital transmission method and
               followed by a confirmation of receipt from the recipient of the
               notice ; the day after it is sent, if sent for next day delivery
               to a domestic address by recognized overnight delivery service
               (e.g., DHL); and upon receipt, if sent by certified or registered
               mail, return receipt requested. In each case notice shall be sent
               as indicated below:

                  If to Seller:

                           Sam Perlmutter
                           5757 Wilshire Boulevard, Suite 636
                           Los Angeles, CA  90036
                           Tel:     (323) 931-1017
                           Fax:     (323) 857-1351


         If to Salton, addressed to:

                           Salton, Inc.
                           550 Business Center Drive
                           Mount Prospect, Il  60056
                           Attn:    Leon Dreimann,
                           Chief Executive Officer
                           Tel: 847 803 4600
                           Fax:  (847) 803-1211


          (b)  Choice of Law. This Agreement shall be construed, interpreted and
               the rights of the parties determined in accordance with the laws
               of the State of Delaware (without reference to its choice of law
               provisions).

          (c)  Entire Agreement; Amendments and Waivers. This Agreement, ,
               together with all exhibits and schedules hereto and thereto , and
               the constitute the entire agreement among the parties pertaining
               to the subject matter hereof and supersede all prior agreements,
               understandings, negotiations and discussions, whether oral or
               written, of the parties. This Agreement may not be amended except
               by an instrument in writing signed on behalf of each of the
               parties hereto. No amendment, supplement, modification or waiver
               of this Agreement shall be binding unless executed in writing by
               the party to be bound thereby. No waiver of any of the provisions
               of this Agreement shall be deemed or shall constitute a waiver of
               any other provision hereof (whether or not similar), nor shall
               such waiver constitute a continuing waiver unless otherwise
               expressly provided.



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          (d)  Multiple Counterparts. This Agreement may be executed in one or
               more counterparts, each of which shall be deemed an original, but
               all of which together shall constitute one and the same
               instrument.

          (e)  Invalidity. In the event that any one or more of the provisions
               contained in this Agreement or in any other instrument referred
               to herein, shall, for any reason, be held to be invalid, illegal
               or unenforceable in any respect, then to the maximum extent
               permitted by law, such invalidity, illegality or unenforceability
               shall not affect any other provision of this Agreement or any
               other such instrument.

          (f)  Titles; Gender. The titles, captions or headings of the Sections
               herein, and the use of a particular gender, are for convenience
               of reference only and are not intended to be a part of or to
               affect or restrict the meaning or interpretation of this
               Agreement.

          (g)  Waiver of Trial by Jury. Each party to this Agreement hereby
               expressly waives any right to trial by jury of any claim, demand,
               action or cause of action arising under or in connection with
               this Agreement or the transaction contemplated hereby.

          (h)  Interpretation. The headings and captions contained in this
               Agreement and in the Schedules hereto are for reference purposes
               only and shall not affect in any way the meaning or
               interpretation of this Agreement.

          (i)  Further Assurances. Each of Seller and Salton will use reasonable
               efforts to implement the provisions of this Agreement, including
               but not limited to the execution and delivery of such other
               documents (including any license, assignment or assumption
               agreement, official certificates of registration, renewals,
               transfers or other documents supporting ownership of trademarks)
               in addition to those required by this Agreement, in form and
               substance reasonably satisfactory to the other party, as may be
               reasonably deemed necessary to implement any provision of this
               Agreement.

         IN WITNESS WHEREOF, this Agreement has been signed on behalf of each of
the parties hereto as the date first written above.

SALTON, INC.
a Delaware Corporation
/s/ Leon Dreimann                                     /s/ Sam Perlmutter
-----------------------------------                   --------------------------
Name:    Leon Dreimann                                Name: Sam Perlmutter
Title:   Chief Executive Officer




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