Agreement

Agreement Made as of July 1, 1999

by Salton Inc
December 10th, 1999
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                                                                    EXHIBIT 10.3


                        AGREEMENT MADE AS OF JULY 1, 1999
                                 BY AND BETWEEN
                          MICHAEL SREDNICK ("SREDNICK")
                                       AND
                 SALTON INC., A DELAWARE CORPORATION ("SALTON")


WHEREAS:

A.       Srednick is sometimes referred to for convenience in this Agreement as
         "Seller";

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") all of the outstanding shares of stock (the "Stock") of
         Srednick and Associates, Ltd. (the "Company").


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 the Stock.

2.       Seller's Put; Purchase Price.

         (a)  Seller shall have the right to exercise its Put of the Stock
              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 Stock.

         (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 Stock is thirteen million seven hundred fifty
              thousand dollars ($13,750,000) of which six million eight hundred
              seventy-five thousand dollars ($6,875,000) shall be paid in cash
              and six million eight hundred 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.
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3.       Salton's Call; Purchase Price.

         (c)  Salton shall have the right to exercise its Call on the Stock
              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 Stock.

         (d)  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.

         (e)  If Salton's Call is exercised by Salton, the total purchase price
              to be paid to Seller for the Stock 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. forth in Section 5.

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

         (e)  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 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



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                    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 or to such
                    other bank account as may be designated by Seller from time
                    to time at least ten (10) days prior to the payment due
                    date.

         (f)  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:

              (ii)  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.

              (iii) 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 or to such other bank account as may be designated
                    by Seller from time to time at least ten (10) days prior to
                    the payment due date.

         (b)  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.
         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 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.


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         (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 8 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 or pursuant to
                    Rule 144 adopted by the Securities and Exchange Commission
                    and as amended after the date hereof..

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

              (i)   a copy of the Articles of Incorporation, as amended, of the
                    Company certified by the California Secretary of State;

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

              (iii)  a copy of the organizational documents of MikeSam and the
                     operating agreement of MikeSam LLC;

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

              (v)    evidence of Uniform Commercial Code searches, searches,
                     federal tax lien searches and other certificates reasonably
                     requested by Salton in order to confirm that the Stock
                     being sold hereunder by Seller and the interest of the
                     Company in MikeSam are free and clear of all pledges,
                     security interests, Liens and encumbrances;

              (vi)   a stock certificate of the Company evidencing all of the
                     outstanding shares of the Company duly assigned to Salton;

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

              (viii) 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 (except as otherwise herein provided) the date of Closing
         that each of the following representations is true and correct:

         (a)  No Assets Except Interest in MikeSam. As of the Closing, the
              Company has no property or assets of any kind whatsoever except
              its interest in MikeSam LLC, a California limited liability
              company ("MikeSam").

         (b)  Only Asset of MikeSam. MikeSam's only asset is its existing 15%
              interest in a Joint Venture Agreement dated as of March 1, 1995
              ("JV Agreement") by and among Salton, Foreman Productions, Inc.
              and Benjamin H., a California corporation, creating a joint
              venture ("JV").



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         (c)  Benjamin H. Benjamin H., a California corporation, never held an
              interest in the JV and MikeSam holds the 15% interest in the JV
              designated as belonging to Benjamin H.

         (d)  Only Members of MikeSam. The only two members of MikeSam are Sam
              Perlmutter, an individual, and the Company.

         (e)  No Violation. Neither the execution, delivery or performance of
              this Agreement nor the consummation of the transactions
              contemplated hereby or thereby will (a) violate, conflict with or
              result in any breach of any provision of the Articles of
              Incorporation or Bylaws (or comparable organizational documents)
              of the Company, or (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 the Company 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 any assets
              of the Company in each case under any of the terms, conditions or
              provisions of any debt, note, bond, mortgage, indenture, deed of
              trust, license, lease, permit, agreement or other instrument or
              obligation to which the Company or Seller is a party or by which
              they or any of their respective properties or assets may be bound
              or affected or (c) violate any Rules (including foreign, federal
              and state securities laws) of any Governmental Authority
              applicable to the Company, or the Seller or any of their
              respective properties.

         (f)  Capitalization of the Company. The authorized capital stock of the
              Company consists solely of One Hundred Thousand (100,000) shares
              of Common Stock, and there are issued and outstanding One Thousand
              (1,000) shares of Common Stock owned of record and beneficially by
              the Seller, free and clear of all Liens. There are no shares of
              Common Stock held by the Company as treasury stock. All of the
              issued and outstanding shares of Common Stock are validly issued,
              fully paid, non-assessable and are without, and were not issued in
              violation of, any preemptive rights. No other class of capital
              stock of the Company is authorized, issued or outstanding, and
              there are no options, warrants, calls, subscriptions, conversion
              or other rights, agreements or commitments to acquire from the
              Company any shares of capital stock of the Company, or any other
              securities convertible into, exchangeable for or evidencing the
              right to subscribe for any shares of capital stock of the Company,
              or any other security of the Company. There are no outstanding or
              authorized stock appreciation, phantom stock or similar rights
              with respect to the Company. There are no voting agreements,
              voting trust agreements, proxies or stockholder or similar
              agreements relating to the capital stock of the Company. Upon
              delivery of and payment for the Stock as herein



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              provided, Seller shall convey to Salton valid and marketable title
              thereto, free and clear of any Liens. No other Person, including
              Affiliates of the Seller has any rights in, to or under or with
              respect to the Stock. Upon delivery and payment for the Stock as
              herein provided, such Stock shall be duly authorized, validly
              issued, fully paid and non-assessable.

         (g)  Consents and Approvals. 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 by the Seller of the transactions contemplated by
              this Agreement or to enable the Company to continue to hold its
              interest in MikeSam after the Closing.

         (h)  Books and Records. The books and records of the Company are, and
              have been, maintained in the usual, regular, ordinary and
              appropriate manner by the Company and all of the transactions of
              the Company are properly reflected therein.

         (i)  Financial Statements. Seller has furnished to Salton (a) copies of
              the reviewed balance sheet of the Company as of the last day in
              the period ended December 31, 1998, together with the related
              reviewed statements of income, stockholder equity and changes in
              cash flows for such year, and the notes and supplementary
              information thereto, accompanied by the review reports thereon of
              the Company's independent public accountant, and (b) shall deliver
              no later than December 10, 1999 copies of the unaudited balance
              sheet of the Company as of November 30, 1999 (the "Most Recent
              Balance Sheet"), together with the related unaudited consolidated
              statements of income, stockholder equity and changes in cash flows
              for the eleven month period ended on such date, certified by the
              Seller (such reviewed and unaudited financial statements being
              hereinafter referred to as the "Financial Statements"). The
              Financial Statements and each item therein, including any notes
              thereto (i) were prepared in accordance with generally accepted
              accounting principles applied on a consistent basis throughout the
              periods covered thereby ("GAAP"), (ii) present fairly the
              financial position as of such dates and for the periods then
              ended, (iii) are accurate, correct and complete and in accordance
              with the books of account and records of the Company and (iv) can
              be reconciled with the financial statements and the financial
              records maintained and the accounting methods applied by the
              Company for federal income tax purposes.

         (j)  C Status. The Company has never elected so called Subchapter S
              status under Section 1351 et seq. of the Internal Revenue Code of
              1986, as amended, and has always been taxed for federal income tax
              purposes as a so called C corporation.

         (k)  Absence of Undisclosed Liabilities. As of the Closing, there are
              no Liabilities, commitments or obligations of the Company of any
              kind


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              whatsoever, there is no valid basis for the assertion of any such
              Liabilities, commitments or obligations, and no existing
              condition, situation or set of circumstances which is reasonably
              likely to result in such a Liability, commitment or obligation.

         (l)  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 the Company involving,
              affecting or relating to the business, assets, operations or
              securities of the Company, or the transactions contemplated by
              this Agreement, nor is there any basis for any such Claim. Neither
              of the Company nor the Seller, or their respective assets is
              subject to any order, writ, judgment, award, injunction or decree
              of any Governmental Authority or arbitrator.

         (m)  Liens and Encumbrances. The Company holds and owns full,
              unconditional, good and marketable title to its interest in
              MikeSam free and clear of all Liens.

         (n)  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 of the Company.

         (o)  Absence of Employee Benefit Plans. As of the Closing, the Company
              does not maintain nor does it have any liability with respect to
              an employee benefit plan as defined in ERISA.

         (p)  ERISA. There are no facts which could give rise to any Claim
              against or liability of the Company, the Seller or Salton for
              failure to comply with ERISA or the Code.

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

         (r)  Taxes. The Company 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, and will deliver to Salton an



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              adequate accrual or reserve for the payment of all Taxes payable
              in respect of the period, including portions thereof, subsequent
              to the last of said periods required to be so accrued or reserved
              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. The
              Company 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 the Company 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 the Company 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 the Company 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. For periods
              subsequent to 1995, the Company's Tax Returns have never been
              audited by the Internal Revenue Service or comparable state, local
              or foreign agencies. The Company has not been a member of an
              Affiliated Group or been included in a combined, consolidated or
              unitary Tax return. The Company 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. The Company 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.

         (s)  Compliance with Applicable Law. (a) The Company 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. The Company has not acted or been in violation
              of, any Rule of any Governmental Authority applicable to the
              Company or its assets or prior operations.

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

         (u)  Labor Matters. (a) At the Closing, no present or former employee
              or independent contractor performing services for the Company has
              a Claim




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              pending or has threatened to or will make a Claim against the
              Company (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 the Company'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 the Company 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 the Company before the
              National Labor Relations Board or any similar state or local body.

         (v)  The Company 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.

         (w)  At the Closing, the Company has no employees except Seller. As of
              the Closing Date, the Company 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 the Company, and there is no activity or proceeding
              of any labor organization (or representative thereof) to organize
              any unorganized employees of the Company. There is not pending or
              threatened against the Company any labor dispute, grievance,
              slowdown, lockout, strike, work stoppage or other collective labor
              action in effect, pending or threatened against or affecting the
              Company.

         (x)  Accounts Receivable; Liabilities. At the Closing, the Company has
              no accounts receivable or liabilities and will have no liability
              for any healthcare, medical, disability, death benefit or similar
              expenses of any



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              director or employee of the Company 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).

         (y)  The Company does not own, lease or sublease any real property.

         (z)  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.

         (aa) 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 the Stock or to enter
              into any contract or cause the entering into of a contract with
              respect to the Stock.

         (bb) The Company is a duly organized and existing corporation in good
              standing under the laws of California.

         (cc) Seller has the legal capacity to own the Stock and to enter into
              and perform this Agreement and the Company has been duly
              authorized by the unanimous written consent of its sole
              stockholder enter into and to perform this Agreement.

         (dd) As of the Closing Date, Seller shall own all right, title and
              interest in and to Stock free and clear of all pledges, security
              interests, liens and encumbrances.

         (ee) The Company has all requisite power and authority to own its
              properties and the Company 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 the Company or for an administration
              order in respect of the Company, 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 the Company, and no power to make any such

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              appointment has arisen. The Company has delivered to Purchaser
              complete and correct copies of the Articles of Incorporation (or
              comparable organizational documents) presently in effect for the
              Company, and the Company is not in default under or in violation
              of any provision of such documents. The Company does not have any
              business subsidiaries or investments, direct or indirect, in any
              Person other than its interest as a member of MikeSam.

         (ff) The Company is qualified or licensed to do business and is in good
              standing in California which is the only jurisdiction in which the
              ownership or leasing of property by it or the conduct of its
              business requires such licensing or qualification.

         (gg) 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 the Seller in accordance with its
              terms.

         (hh) 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 Incorporation or Bylaws (or
              comparable organizational documents) of the Company, (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 the Company) 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 the Company, or (c) violate any
              Rules (including foreign, federal and state securities laws) of
              any Governmental Authority applicable to the Company or the
              Seller.

         (ii) 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 or
              to enable the Company to continue to exist after the Closing Date.

         (jj) Books and Records. The books and records of the Company are, and
              have been, maintained in the usual, regular, ordinary and
              appropriate manner by Seller or its agents, and all of the
              transactions of the Company are properly reflected therein.

5.       Representations and Warranties of Salton. Salton represents and
         warrants and agrees with MikeSam 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:


                                       12
   13

         (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.

         (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 by and among Salton and Lehmann Brothers
              Commercial Paper, Inc., as Administrative Agent for the several
              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)  No Defaults. There are no existing uncured events of default on
              the part of Salton under its Credit Agreement.

         (f)  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.

6.       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



                                       13
   14

              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 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.

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   15

              (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.

              (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




                                       15
   16

                    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
                    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



                                       16
   17

                     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 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);

              (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; and



                                       17
   18

              (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.

         (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.

7.       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,



                                       18
   19

              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
              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



                                       19
   20

              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.

8.       Survival of Representations, Warranties. All representations and
         warranties of Seller and Salton contained herein shall survive the
         Closing Date and shall terminate at the 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 12
         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.

                                       20
   21

5.       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 hold
              Seller 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 12. 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 this 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 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




                                       21
   22

              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
              Indemnifying 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 Indemnifying 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 13 against and in respect of
              the amount by which the Loss resulting from such final judgment
              exceed the amount of the proposed settlement.



                                       22
   23

         (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 this 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.

6.       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,


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administrators, 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;

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         "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;

7.       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:

              Michael Srednick
              131 Topsail Mall
              Marina Del Rey, California  90298
              Tel:  (310) 574-0066
              Fax:  (310) 574-0072

         With copies to:

              Dan B. Floyd, Esq.
              Floyd & Associates
              101 South Madison Avenue, Suite 200
              Pasadena, California  91101
              Tel:  (626) 440-1912
              Fax:  (626) 440-1952

         If to Salton, addressed to:

              Salton, Inc.
              550 Business Center Drive
              Mount Prospect, IL
              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).

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         (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.

         (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.



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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/ Michael Srednick
- -----------------------------------------         ------------------------------
Name:  Leon Dreimann                                    Michael Srednick
Title:   Chief Executive Officer



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