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                                                                 EXHIBIT 10.32







                 PURCHASE, DISTRIBUTION AND MARKETING AGREEMENT


                                 BY AND BETWEEN


                         SALTON/MAXIM HOUSEWARES, INC.


                                      AND


                               KMART CORPORATION





                           _________________________

                                JANUARY 27, 1997
                           _________________________





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                 PURCHASE, DISTRIBUTION AND MARKETING AGREEMENT

     This Agreement ("Agreement") is entered into as of January 27, 1997 (the
"Execution Date") between Salton/Maxim Housewares, Inc., a Delaware corporation
("Salton"), and Kmart Corporation, a Michigan corporation ("Kmart").

                                    PREAMBLE

     WHEREAS, pursuant to License Agreements by and between White Consolidated
Industries, Inc. ("WCI") and Salton (the "License Agreements"), Salton has the
exclusive right and license within the United States to use the trademark
"White-Westinghouse" and all associated designs and trade dress (together, the
"Trademark") in connection with the design, manufacture, advertising, sale and
promotion of, among others, the products listed on Exhibit A hereto, each of
which will bear and include the Trademark (such products bearing the Trademark
are hereinafter referred to as the "Products");

     WHEREAS, Kmart is a leading discount retailer of various consumer and
other products, including products similar to the Products; and

     WHEREAS, Salton desires to grant to Kmart certain exclusive rights and
obligations to purchase, distribute, sell, market and promote the Products in
the United States, and Kmart desires to accept and exercise these rights and
obligations, upon the terms and subject to the conditions of this Agreement.

     WHEREAS, simultaneously with the execution of this Agreement, Kmart is
executing an agreement with New M-Tech Corporation, an affiliate of Salton, as
defined in Section 1.1 below (the "New Tech Agreement"), for the use of the
Trademark on Audio products, Video products, Telephones, Telephone Answering
Machines and Telephone accessories all as specifically described therein, which
agreement is critical to Kmart's overall program for use of the Trademark on
Products under this Agreement with Salton, is a primary inducement for Kmart's
entering into, and is a continuing necessary component of and precondition to
Kmart's performance under this Agreement with Salton.

     Accordingly, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:

                              TERMS AND CONDITIONS
1. DEFINITIONS

      As used in this Agreement, the following terms shall have the
           meaning given to them below:

      1.1  "Affiliate" means any Person involved in a situation where,
           directly or indirectly, one Person controls, or has the power to
           control, the other Person or a third party controls, or has the
           power to control, both Persons.
      
      1.2  "Discount Department Store" shall include, without
           limitation, the Persons listed on Schedule 1.2 hereof as well as all
           department stores which are similar to Discount Department Stores in
           terms of market niche, size and product pricing which now or
           hereafter may exist.



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      1.3  "Person" shall include any individual, corporation,
           partnership, association, cooperative, joint venture, or any other
           form of business entity recognized under the law.

      1.4  "sale" shall mean any action involving selling.

      1.5  "sell" shall mean to, directly or indirectly, sell,
           distribute, supply, solicit or accept orders for, negotiate for the
           sale or distribution of, or take any other action that is in
           furtherance of, any of the foregoing.  "Sell" also includes any other
           forms of that verb, whether active or passive, or in the past,
           present, or future tense.

      1.6  "United States" shall mean the United States of America,
           including Puerto Rico and Guam.

2. APPOINTMENT

      2.1  Appointment by Salton; Acceptance by Kmart.  Subject to the
           provisions of this Agreement, Salton hereby appoints Kmart as the
           sole and exclusive Discount Department Store to purchase,
           distribute, sell, market and promote the Products in the United
           States and Kmart hereby accepts such appointment. The rights granted
           to Kmart under this Agreement shall hereinafter collectively be
           referred to as the "Right."  No other Discount Department Store
           shall have any such Right during the Term of this Agreement and/or
           any extension or renewal thereof, regardless of source (i.e.,
           whether from Salton or any other entity) subject to Sections 10.4
           and 10.5 hereof.  Notwithstanding the foregoing, nothing in this
           Agreement shall be deemed to preclude the sale of Products (i) by
           entities or stores other than Discount Department Stores including,
           without limitation, retail department stores, specialty housewares,
           gourmet and kitchen stores and national cable television programs or
           (ii) by any Person outside the United States.  Furthermore, nothing
           in this Agreement shall preclude Kmart from purchasing products of
           the type listed on Exhibit A hereto from any sources other than
           Salton if such products do not bear or include or are not sold under
           the Trademark, and no payments shall be due to Salton hereunder in
           respect of such sales.

      2.2  Territorial Limitations.  Salton covenants and agrees that,
           during the term of this Agreement or until this Agreement is
           terminated in accordance with the provisions of Article 10 below:

           2.2.1 Salton shall not, directly or indirectly, sell
                 any Product to a Discount Department Store in the United
                 States, subject to Sections 10.4 and 10.5 hereof.

           2.2.2 Except with the prior written consent of Salton
                 (which consent may be refused in the sole, absolute and
                 arbitrary discretion of Salton), Kmart shall not sell any
                 Product to any Person outside the United States.  The United
                 States includes Puerto Rico and Guam.

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            2.2.3   The parties acknowledge and agree that the relationship
                    hereby established between Kmart and Salton is solely that
                    of buyer and seller of goods that each is an independent
                    contractor engaged in the operation of its own respective
                    business, that neither party shall be considered to be the
                    agent of the other party for any purpose whatsoever, except
                    as otherwise expressly indicated in this Agreement, and
                    that, except as otherwise expressly indicated in this
                    Agreement, neither party has any authority to enter into any
                    contract, assume any obligations or make any warranties or
                    representations on behalf of the other party.  Nothing in
                    this Agreement shall be construed to establish a partnership
                    or joint venture relationship between Salton and Kmart.
                    Nothing in this Agreement shall be deemed in any way to
                    constitute a sublicense by Salton of its rights under the
                    License Agreement, and the relationship between the parties
                    hereto shall at all times be as set forth in this paragraph.

3. REPRESENTATIONS AND WARRANTIES OF SALTON

   3.1      Salton represents and warrants to Kmart as follows:

            3.1.1   Organization, Power and Authority.  It is duly organized
                    and validly existing under the laws of the State of
                    Delaware, has all requisite power and authority to conduct
                    its business as now, and as proposed to be, conducted and to
                    execute, deliver and perform its obligations under this
                    Agreement.  This Agreement has been duly authorized,
                    executed and delivered by Salton and represents a valid and
                    binding obligation enforceable against Salton in accordance
                    with its terms.

            3.1.2   No Conflicts; Consents.  Execution and delivery hereof, or
                    performance by Salton hereunder, shall not (a) violate or
                    create a default under (i) Salton's Certificate of
                    Incorporation or by-laws (true and correct copies of which
                    have been delivered to Kmart), (ii) any mortgage, indenture,
                    agreement, note or other instrument to which it is a party
                    or to which its assets are subject including, without
                    limitation, the License Agreement or (iii) any court order
                    or decree or other governmental directive or (b) result in
                    the action of any lien, charge or encumbrance on any
                    material portion of Salton's assets, except as contemplated
                    hereby.

            3.1.3   Brokers.  No broker, investment banker, financial advisor
                    or other person is entitled to any broker's, finder's,
                    financial advisor's or other similar fee or commission in
                    connection with the transactions contemplated by this
                    Agreement based upon arrangements made by or on behalf of
                    Salton.

            3.1.4   Trademark/Compliance with Laws.  It has the contractual
                    right and authority to use the Trademark for the Products as
                    provided in this Agreement and to grant to Kmart all rights
                    which are set forth in this Agreement including but not
                    limited to the "Right" described in Section 2.1 herein,
                    including but not limited to, the right to import all
                    Products into the United States for the full duration of
                    this Agreement; and Salton shall provide U.S. Customs with



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                    sufficient proof and documentation to enable Kmart to do so.
                    (Notwithstanding the foregoing, Salton shall have up to ten
                    (10) business days to correct any such U.S. Customs Problems
                    which do not affect Kmart's ability to use the Trademark in
                    connection with the sale of any of the Products pursuant to
                    this Agreement.)  In addition, no other Discount Department
                    Store shall have the right to use the Trademark in
                    connection with the sale of any of the Products or sell
                    Products bearing the Trademark or have any of Kmart's rights
                    hereunder during the Term of this Agreement and any renewal
                    and/or extension hereof.  Furthermore, this Agreement as
                    well as Salton's performance hereunder shall be in
                    compliance with all applicable laws, rules and regulations
                    other than immaterial violations.  Any claim which Kmart
                    reasonably believes impairs or would impair Kmart's ability
                    to receive any of the benefits of this Agreement, or any
                    failure under this Agreement and/or under the NewTech
                    Agreement with respect to this (or the Salton Agreement's)
                    Section 3.1.4 and/or Section 2.1, whether such failure
                    relates to any or all Products, shall entitle Kmart, in
                    addition to all other rights and remedies, without resort to
                    the notice and cure requirements under Section 10.3 herein,
                    to immediately terminate this Agreement and owe nothing to
                    Salton except for payment for Products accepted and sold by
                    Kmart through the date of termination.

       3.1.5        Qualifications.  Throughout the Term of this Agreement and 
                    any renewal or extension hereof, Salton shall comply with 
                    the following requirements:

                    a.   New Vendor Packet Compliance. Salton must have executed
                         and delivered to Kmart all documents required by
                         Kmart's New Vendor Packet, including, but not limited
                         to, Kmart's agreement on standard purchase order terms
                         and conditions attached as Exhibit B (collectively, the
                         "Related Documents") and must currently be in full
                         compliance with the same except as required by this
                         Agreement.  Salton's execution of this Agreement shall
                         constitute Salton's acceptance of and agreement to the
                         terms and conditions contained in all of the Related
                         Documents to the extent not inconsistent with the terms
                         of this Agreement.

                    b.   Kmart Corporation Code of Business Conduct. Salton must
                         be in full compliance with the Kmart Code of Business
                         Conduct and all applicable laws, rules and regulations,
                         including but not limited to child, forced, and prison
                         labor laws and must not have violated the Code of
                         Business Conduct or  applicable laws during the twelve
                         calendar months preceding the date of execution of this
                         Agreement.


                    c.   Continuing Business Conduct with Kmart Foreign
                         Subsidiaries and Operations. Salton must not restrict 
                         or curtail in any way its historical business practices
                         and course of dealing with Kmart's foreign subsidiaries
                         and other foreign operations if any existed.




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                      d.  Industry Performance.  Salton must at a minimum meet
                          normal industry standards for performance regarding
                          timing and completion levels of fill rates without
                          substitutions.

                      e.  Electronic Data Interchange. Salton must accommodate
                          and participate in Kmart's electronic data interchange
                          program.


4.   REPRESENTATIONS AND WARRANTIES OF KMART

     4.1       Kmart represents and warrants to Salton as follows:

               4.1.1  Organization, Power and Authority.  It is duly organized
                      and validly existing under the laws of the State of
                      Michigan, has all requisite power and authority to conduct
                      its business as now, and as proposed to be, conducted and
                      to execute, deliver and perform its obligations under this
                      Agreement.  This Agreement has been duly authorized,
                      executed and delivered by Kmart and represents a valid and
                      binding obligation enforceable against Kmart in accordance
                      with its terms.

               4.1.2  No Conflicts; Consents.  Execution and delivery
                      hereof, or performance by Kmart hereunder, shall not (a)
                      of Incorporation or by-laws (true and correct copies of
                      which have been delivered to Salton), (ii) any mortgage,
                      indenture, agreement, note or other instrument to which it
                      is a party or to which its assets are subject or (iii) any
                      court order or decree or other governmental directive or
                      (b) result in the action of any lien, charge or
                      encumbrance on any material portion of Kmart's assets.

               4.1.3  Brokers.  No broker, investment banker, financial advisor 
                      or other person is entitled to any broker's, finder's,
                      financial advisor's or other similar fee or commission in
                      connection with the transactions contemplated by this
                      Agreement based upon arrangements made by or on behalf of
                      Kmart.

5.   MINIMUM ORDERS; OTHER OBLIGATIONS

   
     5.1       Minimum Product Orders/Sales and Exclusive Remedy. 
               Subject to Section 5.2 hereof, during the Term of this  
               Agreement, Kmart agrees to place orders for a minimum   
               U.S. dollar amount of Products within each category     
               specified below (each, a "Category") from Salton [*] (the 
               "Minimum Product Orders") at the purchase prices        
               determined in accordance with Sections 7.1.1 and 7.1.2  
               hereof during the periods (each, a "Period," and        
               together, the "Periods") in each case as specified below
               ($ in millions).  All Products ordered prior to the date
               of this Agreement shall be credited against the Minimum 
               Product Orders for the initial Period of this Agreement.    
    

   
* Confidential Treatment Requested
    



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<TABLE>
<CAPTION>
Category                Up to and                                                          
  (In                   Including   7/1/98-   7/1/99-   7/1/00-   7/1/01-  7/1/02-  7/1/03-
Millions                 6/30/98    6/30/99   6/30/00   6/30/01   6/30/02  6/30/03  6/30/04
--------                ---------   -------   -------   -------   -------  -------  -------
<S>                      <C>         <C>       <C>       <C>       <C>      <C>      <C>      
 Kitchen                                                                                      
Housewares:              $40.0       $50.0     $52.0     $54.1     $56.2    $ 58.5   $ 60.8   
Personal                                                                                      
  Care:                   13.0        13.5      14.1      14.6      15.2      15.8     16.4   
Heaters/Fans:             18.0        18.7      19.5      20.2      21.1      21.9     22.8   
Electric                                                                                      
  Air                                                                                         
Cleaners                 $ 6.0       $ 6.2     $ 6.5     $ 6.8     $ 7.0    $  7.3   $  7.6   
                         
                                                                                              
  and                                                                                         
Humidifiers:                                                                                  
 Total                   -----       -----     -----     -----     -----    ------   ------   
                         $77.0       $88.4     $92.1     $95.7     $99.5    $103.5   $107.6   
                         =====       =====     =====     =====     =====    ======   ======   
</TABLE>


   
         Specific purchase orders shall be issued by Kmart from time to
         time for the Products being purchased ("Specific Purchase Orders"). 
         The Specific Purchase Orders shall be in the form and substance of the
         form of purchase order annexed hereto as Exhibit C for domestic orders
         and Exhibit D for import orders, both of which are incorporated herein
         by this reference ("Purchase Order Forms") and shall govern and
         control the terms of each purchase by Kmart of Products hereunder;
         provided, that in the event of a conflict between the terms set forth
         in a Specific Purchase Order and in this Agreement, the terms set
         forth in this Agreement shall be determinative of such conflict.  Each
         Specific Purchase Order may be accepted or rejected by Salton,
         provided that:  (i) Salton's failure to provide Kmart with written
         notice of rejection of any Specific Purchase Order within five (5)
         days of Kmart's issuance thereof shall constitute Salton's acceptance
         of such Specific Purchase Order; and (ii) Salton is required to 
         accept all Specific Purchase Orders for which [*], and all such Orders 
         shall automatically qualify as accepted by Salton; and (iii) Salton 
         is required to accept all Specific Purchase Orders which Salton is to
         fill [*] ("Direct Salton Orders"), provided (a) they are issued at 
         prices negotiated by Kmart and Salton or; (b) are consistent with 
         prices quoted by Salton to Kmart; and (c) are issued within ninety 
         (90) days of the required delivery date and; (d) are in an order 
         quantity which is not inconsistent with the average order quantity on
         Specific Purchase Orders issued by Kmart to Salton [*] over the 
         preceding one hundred twenty (120) days, and all such Orders placed 
         shall automatically qualify as accepted by Salton.  Notwithstanding 
         the foregoing, Salton shall use its best efforts to fill all Specific
         Purchase Orders, placed by Kmart in less than ninety (90) days from 
         the required delivery date.  For purposes of this Agreement, in the
         event that Kmart issues a Specific Purchase Order which is accepted by
         Salton as set forth above and Salton [*] fails through no fault of
         Kmart to timely deliver conforming Products to or on behalf of Kmart
         by the required delivery date specified therein, or if for any reason,
         but through no fault of Kmart, Salton is unable to procure Products
         [*] then [*] the Minimum Product Orders in the applicable Category
         shall be reduced by the dollar amount set forth in the Specific 
         Purchase Order(s) related thereto, whether or not such Products are
         ultimately purchased by Kmart.
    

   
* Confidential Treatment Requested
    

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         Kmart's deductions for documented claims whether under the Specific
         Purchase Orders or otherwise, shall not reduce Kmart's fulfillment of
         the Minimum Product Orders, and for purposes of determining if Kmart
         has issued the Minimum Product Orders, Kmart shall be deemed to have
         purchased all Products covered by a remittance regardless of
         offsets/deductions for claims.  If, however, Kmart issues a Specific
         Purchaser Order which is accepted by Salton as set forth above and
         Salton [*] timely delivers conforming Products to or on behalf of Kmart
         by the required delivery date specified therein, and Kmart fails to
         remit payment for such conforming Products so delivered, then such
         Products shall not be counted for purposes of determining if Kmart has
         issued the Minimum Product Orders, unless and until such Products are
         ultimately paid for by Kmart.  Notwithstanding the foregoing, Kmart
         shall not be relieved of any obligation to pay for conforming Products
         timely delivered to or on behalf of Kmart in accordance with any
         Specific Purchase Order.
    

         Subject to Sections 5.1 above and 5.2 below, in the event that
         Kmart fails to place the Minimum Product Orders in any of the
         Categories specified above within any of the periods specified above,
         then Kmart shall be required to pay Salton within thirty (30) days
         following the end of any such period, as Salton's sole and exclusive
         remedy hereunder and upon receipt of an invoice from Salton therefor,
         an amount equal to (i) (A) the Minimum Product Orders in such Category
         less (B) the Actual Order Amount in such Category multiplied by (ii)
         five percent (5%) (the "Fee(s)").  The "Actual Order Amount" for
         purposes of this Section 5.1 shall mean, subject to Section 5.1 above
         and Section 5.2 below, the positive amount, if any, obtained by adding
         (i) the actual amount of Products ordered by Kmart in the applicable
         Category during the applicable Period (adjusted upwards pursuant to
         Section 5.1 above and 5.2 below) and (ii) the excess, if any, of (A)
         the actual amount of Products ordered by Kmart in the applicable
         Category during the Period (adjusted upwards pursuant to Section 5.1
         above and 5.2 below) immediately prior to the applicable Period (the
         "Prior Period") less (B) the Minimum Product Orders in the applicable
         Category for the Prior Period.  In no event, however, shall Salton's
         Fees (for both ordered and unordered Products) ever exceed the amount
         Salton would have received in any Category under Section 5.1 herein if
         Kmart had met all Minimum Product Order commitments stated therein,
         and Salton shall reconcile and refund all Fees received in excess
         thereof subject to Section 7.1.2 hereof.  For example, if during the
         Period from the Execution Date of this Agreement through June 30,
         1998, Kmart issues Product Orders in the Kitchen Housewares Category
         equal to an aggregate of $48.0 million and, if during the period from
         July 1, 1998 through June 30, 1999, Kmart issues Product Orders in the
         Kitchen Housewares Category equal to an aggregate of $41.0 million,
         then Kmart shall pay Salton, as Salton's sole and exclusive remedy for
         Kmart's failure to issue the Minimum Product


   
* Confidential Treatment Requested
    

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           Orders for the Products, an amount equal to $50,000 on or before 
           July 30, 1999 ($1.0 million x 5%).  Product Orders in a particular 
           Category may not be used to satisfy the Minimum Product Orders in 
           any other Category.

      5.2  Reduction of Minimum Product Orders.  In the event that during 
           any Period aggregate retail sales of Products in the United
           States for a particular Category have decreased from the Prior
           Period (the amount of such reduction of sales in the United States
           of Products in any particular Category is hereinafter expressed as a
           percentage, and the amount by which such percentage exceeds 10% is
           hereinafter referred to as the "Reduction Percentage"), then the
           Minimum Product Orders for that Category for the Period following
           the Prior Period (the "Adjustment Period") shall be reduced.  This
           reduction shall be in an amount (the "Reduction Amount") equal to
           (i) the higher of (A) the Minimum Product Order commitment for the
           applicable Category for the Adjustment Period or (b) the actual
           Product Orders by Kmart of the Products in the applicable Category
           during the Prior Period (the "Actual Prior Period Orders")
           multiplied by (ii) the Reduction Percentage.  The Reduction Amount
           will then be subtracted from the higher of (i) the Minimum Product
           Order commitment for the applicable Category for the Adjustment
           Period or (ii) the Actual Prior Period Orders, to determine the new
           Minimum Product Order commitment for the applicable Category for the
           Adjustment Period; provided, however, that if this computation
           yields an amount greater than the Minimum Product Order commitment
           for such Period, then no adjustment shall be made.  In addition, an
           adjustment may only be made to the extent that it would not reduce
           the Minimum Product Order commitment for the Adjustment Period below
           80% of the amount specified for such Period for the applicable
           Category under Section 5.1.  All computations will be based on
           prices that do not include any internal Kmart charges.  By way of
           example only, if retail sales of Kitchen Housewares in the United
           States decrease by 30% during the Period from July 1, 1999 to June
           30, 2000 and Kmart issues orders for $60.0 million of Products in
           the Kitchen Housewares Category during the Period from July 1, 1999
           to June 30, 2000, then the Minimum Product Orders commitment for
           Kitchen Housewares for the Period from July 1, 2000 to June 30, 2001
           shall be reduced from $54.1 million to $43.2 million ([30%-10%] x
           $60.0 = $12.0 million; $12.0 million subtracted from $54.1 million
           = $42.1 million; however, the Minimum Product Orders can never be
           reduced under this Section 5.2 by more than 80% of $54.1 million
           (which equals $43.2 million).  For purposes of this Section 5.2,
           sales of Products in the United States within a particular Category
           shall be determined by reference to applicable information published
           in the most widely-circulated trade publication containing such
           information; provided, that if Kmart and Salton are unable to agree
           upon the publication from which such information is to be derived,
           then the applicable information shall be derived by reference to a
           trade publication selected by Kmart and a trade publication selected
           by Salton, and the applicable sales information shall be determined 
           on the basis of the average of the data contained in the two 
           publications.

   
      5.3  Retail Sales Price.  Kmart shall have sole discretion in setting the
           sales price for the sale of the Products to its customers.
    





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6.   DELIVERY

      6.1  Availability of Products.  Products shall be shipped in
           accordance with the Specific Purchase Orders.  Salton shall use its
           reasonable best efforts to make available to Kmart sufficient
           quantities of the Products to satisfy Kmart's Product Orders.

      6.2  Product Forecasts.  To assist Salton in production scheduling
           for the manufacture of the Products, Kmart shall provide to Salton,
           monthly, a six month rolling forecast of its requirements for
           Products.  The first forecast shall be provided by Kmart to Salton
           within thirty (30) business days of the Execution Date of this
           Agreement (to forecast the requirements for the six months ended
           June 30, 1997 and for the next five succeeding calendar months) and
           thereafter shall be provided to Salton on or before the 20th day of
           each month (to forecast the requirements for the next six succeeding
           calendar months).  It is understood and agreed that all forecasts
           are estimates only and Kmart shall only be bound to purchase the
           Products pursuant to Specific Purchase Orders issued by it to
           Salton, subject to the satisfaction of the Minimum Product Order
           commitment set forth in Section 5.1 hereof; and the Fee on any
           shortfall in the Minimum Product Order for any Category and Kmart's
           payment for conforming Products ordered and timely delivered through
           the date of Termination shall be Salton's sole and exclusive remedy
           hereunder.

      6.3  Shipping Arrangements; Risk of Loss.  The shipping
           arrangements, insurance and risk of loss relating to Products
           purchased hereunder shall be specified in each Specific Purchase
           Order.

7. MANUFACTURE OF PRODUCTS; PRICE AND PAYMENT TERMS

   
      7.1  Manufacture of Products. All Products for which Specific Purchase
           Orders have been issued (subject to Section 5.1 of this Agreement)
           may be manufactured by or on behalf of Salton [*] Salton acknowledges
           and Kmart acknowledges (based upon Salton's representation) that
           under the License Agreement WCI has the right before the initial
           order of a new Product within ten (10) days of submission by Salton,
           to approve or reject the Product specimen, related artwork and
           packaging, which consent shall not be unreasonably withheld and shall
           be automatic unless rejection is communicated in writing to Kmart
           within the ten (10) day period. In each such case, Salton shall be
           solely responsible for making timely submission to WCI and timely
           written communication to Kmart of any rejection; and Kmart shall have
           no liability, whatsoever, for any claim or failure relating to or
           arising from this Section 7.1.
    

                 7.1.1  Direct Salton Orders.  In the event that Kmart elects
                        in its sole and absolute discretion to procure the
                        manufacture of Products directly by or on behalf of
                        Salton, then Kmart shall enter into an agreement with
                        Salton for such Products as Kmart desires to purchase
                        and Salton is willing to manufacture pursuant to a
                        purchase order identical in all respects to the

   
* Confidential Treatment Requested
    

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         Purchase Order Form annexed hereto as Exhibit C for domestic
         orders and Exhibit D for import orders (the "Direct Purchase Order"). 
         The price to Kmart of Products under a Direct Purchase Order, and all
         other terms and conditions not specified in this Agreement or in the
         Purchase Order Form, shall be determined by mutual agreement
         acceptable to each of Kmart and Salton in its sole discretion at or
         prior to the time the applicable Direct Purchase Order is issued by
         Kmart and accepted by Salton.
    

   
7.1.2    Orders from [*] pursuant to a purchase order identical in all respects
         to the Purchase Order Form annexed hereto as Exhibit C for
         domestic orders and Exhibit D for import orders (the "[*] Purchase
         Order").  Kmart shall make direct payments to [*] of the amounts owed
         under such [*] Purchase Order for conforming Products timely delivered
         (the "[*] Payments").  Salton shall remain liable for the [*] Payments
         in the event Kmart fails to make such [*] Payments.  Kmart shall
         indemnify and hold harmless Salton and its officers, directors,
         employees and agents from and against any claim, liability or damages,
         including related costs and attorneys' fees, of which it is timely
         advised in writing resulting from the failure by Kmart to make [*]
         Payments, or otherwise perform, in accordance with the terms of the
         [*] Purchase Orders unless such failure is caused or contributed to by
         Salton, Windmere or WCI.  Kmart shall control the defense and
         settlement of any claims for which such indemnify is provided. 
         Nothing in this Agreement shall be construed to limit or restrict
         Kmart in any fashion from dealing directly with [*] Salton shall not
         be liable for the failure to perform, including warranties, [*] unless
         and except to the extent that such failure is caused or contributed to
         by Salton, Windmere or WCI.
    

   
7.1.3    Purchase Orders from Kmart to Salton Relating to [*] Kmart
         agrees that delivery [*] of the Products in conformity with the
         applicable [*] Purchase Order shall be deemed, without any further
         agreement or instrument, the agreement of Kmart to purchase such
         Products from Salton in the manner set forth in Section 7.1.2 above
         and in this Section 7.1.3 on exactly the same terms and conditions
         provided [*] under the [*] Purchase Order issued by Kmart at a price
         equal to the sum of (i) the [*] Payment for such Products plus (ii)
         five percent (5%) of the "first cost" of such [*] Payment (the "first
         cost" being the price up to the f.o.b. point of shipment, net of any
         taxes, freight costs, customs fees, duties, etc.).  (The amounts set
         forth in (i) and (ii) are collectively referred to herein as the
         "Salton Payment").  Upon delivery [*] of the conforming Products
         identified in the [*] Purchase Order to Kmart, together with the
         related invoice, Kmart shall at its sole and exclusive option either
         (i) pay the Salton Payment to Salton whereupon Salton shall pay the
         [*] Payment to [*] or (ii) pay the [*] Payment directly to  [*] and
         remit the difference between the Salton Payment and the [*] Payment
         directly to Salton. Kmart's exercise of either of the preceding
         options shall extinguish any and  all rights of Salton to such
         payments.
    

   
* Confidential Treatment Requested
    

                                       10

<PAGE>   12
   
    

   
7.1.4      Aggregate Sales Reports.  Within ten (10) days after the end of
           each calendar month during the term of this Agreement, Kmart
           shall provide Salton with a written statement (the "Kmart
           Statement") indicating, with respect to the preceding month, (i) the
           aggregate dollar amount of all purchases of Products [*] under this
           Agreement and the quantity and types of Products so purchased, (ii)
           the aggregate dollar amount of [*] Payments made directly to [*]
           upon delivery of the Products, (iii) the aggregate dollar amount of
           the Salton Payments made directly to Salton upon delivery of
           conforming Products.  Salton shall have the right, upon reasonable
           notice and at reasonable times, within six (6) months following its
           receipt of the Kmart Statement to review the books and records of
           Kmart with respect only to (i), (ii) and (iii) above for the period
           covered by such Kmart Statement, to confirm the accuracy of the
           payments made hereunder provided that such right of review shall not
           be exercisable more than once per year and provided further that is
           such review reveals an underpayment of more than one percent (1%) of
           the amount to which Salton is entitled hereunder, then Salton may
           conduct such review twice per year.  The cost and expenses of such
           examination shall be paid solely by Salton; provided, that if such
           examination reveals an underpayment to either Salton of more than
           one percent (1%) of the amount to which Salton is entitled
           hereunder, then the reasonable out of pocket costs and expenses of
           such examination shall be paid by Kmart upon receipt of an invoice
           therefor with support documentation attached.  Notwithstanding the
           foregoing, the first Aggregate Sales Report will not be issued until
           after February 15, 1997. 
    

   
7.1.5      Examination by Independent Auditors.  The independent auditors
           for each of Salton and Windmere-Durable Holdings, Inc. ("Windmere")
           presently Deloitte & Touche and Grant Thornton L.L.P., shall have
           the right during the term of this Agreement at any time that either
           Salton or Windmere requires audited financial statements (e.g. in
           connection with the preparation of their respective annual reports,
           bank loans or certain acquisitions) to review the books and records
           of Kmart, but in no event more than twice per year.  Any additional
           audits shall be conducted only with Kmart's express prior written
           consent, which shall not be unreasonably withheld, and shall be only
           for the purpose of confirming the accuracy of, and relating only to,
           the financial information required to be provided to Salton
           hereunder as set forth in Section 7.1.4 herein, including, all [*]
           Purchase Orders.  All information obtained by such auditors in the
           course of such review shall be maintained by such auditors as
           confidential and shall not be disclosed to any party, including
           Windmere and/or Salton, without the express prior written consent of
           Kmart.  The cost and expenses of such examination shall be paid
           solely by Salton and/or Windmere, as the case may be; provided, that
           if such
    


   
* Confidential Treatment Requested
    

                                       11
<PAGE>   13
           examination reveals an underpayment of more than one percent
           (1%) of the amount to which Salton is entitled hereunder, then the
           reasonable out of pocket costs and expenses of such examination
           shall be paid by Kmart upon receipt of an invoice therefor with
           support documentation attached.

   
    7.1.6  Assignment of Rights.  In consideration of Kmart entering into this
           Agreement and agreeing to pay [*] directly  subject to and in
           accordance with the terms hereof, this Agreement  shall constitute
           the automatic assignment to Kmart of all rights  of Salton against
           [*] with respect  to Products purchased from [*] pursuant  to this
           Agreement, which rights may not be enforced by Salton.   Salton
           shall have no liability with respect to any non-performance  of 
           [*] unless Salton, Windmere or WCI causes or contributes to such
           non-performance.  This Agreement shall also  constitute the
           automatic and irrevocable assignment of the [*] Payment portion of
           the Salton Payment to [*], and such payment is not assignable to any
           other party, including Salton.
    

   
    7.1.7  Sole and Exclusive Remedy of Salton.  Salton's sole and exclusive 
           remedy relating to any [*] Purchase Order or any failure under
           this entire Section 7 shall be against Kmart for its payment of the
           difference between the Salton Payment and the [*] Payment or for
           enforcement of Kmart's indemnification obligation under Section
           7.1.2 hereunder.  Salton shall have no right to enforce against
           Kmart, Kmart's payment of the [*] Payment portion of the Salton
           Payment unless Kmart shall have wrongfully failed to pay such amount
           to [*] upon timely delivery of conforming Products under a [*]
           Purchase Order.  Salton shall have no right to enforce performance
           or seek any other remedy against [*] hereunder or under any [*]
           Purchase Order.
    

    7.1.8  Invoicing Requirements/Payment Terms.

           A.  Salton will follow the invoicing requirements provided by
               Kmart from time to time.

           B.  Payment for all Direct Salton Orders of Products f.o.b.
               Asia ("Import Products") and purchased hereunder shall be as
               follows:  (i) Direct Salton Orders shall be made by wire
               transfer within five (5) business days following the receipt of
               goods ("ROG") provided the International Department has received
               (i) the original invoice, (ii) an original signed bill of lading
               and (iii) the customary signed Kmart Inspection certificate for
               goods manufactured overseas.

           C.  Payment for all domestic Direct Salton Orders purchased 
               hereunder shall be made by check issued within ten (10) business 
               days of receipt of goods ("ROG") provided Kmart has received 
               the applicable invoice.

   
           D.  Payment for all domestic and Import [*] Orders purchased 
               hereunder shall be made pursuant to Section 7.1.3
    

   
* Confidential Treatment Requested
    



                                       12
<PAGE>   14




                herein. If Kmart, in its sole and exclusive discretion
                exercises the payment option set forth in (ii) under Section
                7.1.3, Salton shall invoice Kmart for the difference between
                the Salton Payment and the TPM Payment after Salton receives
                each Aggregate Sales Report described in Section 7.1.4 herein.
                Salton shall prepare and submit 2 invoices covering each
                Aggregate Sales Report: one for import orders and one for
                domestic orders.  The invoices shall be directed to:

                FOR DOMESTIC ORDERS:              FOR IMPORT ORDERS:
                Bryan Atkinson                    Linda Peterson
                Manager, Accounting Operations    Director, International
                Kmart Corporation                   Administration
                3100 West Big Beaver Road         Kmart Corporation
                Troy, MI 48084                    3100 West Big Beaver Road
                                                  Troy, MI 48084

Kmart shall pay all such invoices within ten (10) business days of receipt.

7.1.9    Stand-by Letter of Credit.  Kmart shall open, within ten (10) business
         days of the Execution Date, a transferable and assignable stand-by
         irrevocable letter of credit in the sum of $10,000,000 in favor of
         Salton from a financial institution reasonably acceptable to Salton
         ("Letter of Credit") which can only be drawn upon for Kmart's failure
         to pay for Direct Salton Orders of conforming Products which are
         timely shipped f.o.b. Asia as further described in this Section and
         for no other reason (including, but not limited to, any Salton
         Payment) Salton shall have as its sole and exclusive remedy for
         Kmart's failure to pay for such Products, notwithstanding Section
         10.3 herein, the right to draw on the Letter of Credit at any time and
         from time to time provided all of the following procedures are
         followed by Salton and all of the following conditions are met: 
         (i) Kmart has failed to pay for such Products as provided herein (ii)
         Salton has provided Kmart with the required written notice and
         opportunity to cure pursuant to Section 10.3 herein and has submitted
         an affidavit signed by the Chief Financial Officer of Salton as
         follows:  "Salton has timely delivered conforming Products f.o.b. Asia
         to Kmart, Kmart has taken deliveries of such Products and Salton has
         invoiced Kmart therefor.  Kmart Corporation owes Salton/Maxim
         Housewares, Inc. $___________ pursuant to invoices [invoice numbers to
         be inserted] (iii) A copy of such invoices and the corresponding
         inspection certificates indicating that the Products have passed
         inspection and corresponding original bills of lading duly signed by
         an authorized officer of Kmart are annexed to the affidavit; (iv);
         Kmart has failed to pay the amount owing when due after receipt of an
         invoice therefor and a notice specifying such amount and describing
         the obligation including respective purchase order number(s), (v). 
         Kmart has received such notice on _____, sixty (60) days have elapsed
         (for individual obligations of up to $2 million) or thirty (30) days
         have elapsed (for individual obligations of more than $2 million), and
         Kmart has failed to pay the amount owing or provide proof that the
         amount is not owing.


                                       13
<PAGE>   15




        Salton shall provide Kmart with ten (10) days prior written notice of
        its intent to submit such affidavit to draw on the Letter of
        Credit and shall not be entitled to submit such affidavit if Kmart can
        prove payment of the amount claimed owing or that the goods were not
        conforming or timely delivered or otherwise resolve the dispute within
        such ten (10) day period.  The Letter of Credit shall be in form and
        substance reasonably satisfactory to Salton and shall terminate on
        December 15, 1997.

7.1.10  Currency Exchange.  Prices charged Kmart and payments made by Kmart to
        Salton for the Products shall be in U.S. dollars.

8. RETURNS, ALLOWANCES AND WARRANTIES

   8.1  Terms of Specific Purchase Order to Control.  The terms and
        conditions of this Agreement, including the Purchase Order Forms, as
        well as the terms and conditions set forth in each Specific Purchase
        Order shall determine the rights and obligations of the parties with
        respect to returns, allowances and warranties relating to Products
        ordered thereunder.

9.   DAMAGES, INDEMNIFICATION AND INSURANCE

        9.1  Indemnification.  To the fullest extent permitted by law, Salton
        shall reimburse, indemnify, defend and hold harmless, Kmart, its 
        directors, officers and employees and subsidiaries and
        affiliates and each of their respective directors, officers and
        employees from and against any damage, loss, expense or penalty, or any
        claim or action therefor, by or on behalf of any person or entity,
        arising out of the performance or failure of performance of this
        Agreement including but not limited, to any claim or failure with
        respect to Sections 2 or 3 hereof.

        Salton shall reimburse, indemnify, defend and hold harmless Kmart, its
        directors, officers and employees and subsidiaries and affiliates and
        each of their respective directors, officers and employees from and
        against all third-party claims alleging that any Products and or any
        Right furnished under this Agreement infringe any patent, copyright,
        trademark or other proprietary right or constitute a misuse of any
        trade secret information and shall pay all costs, attorneys fees,
        settlement payments and damages arising in connection with any such
        claims.  Kmart agrees to timely advise Salton of any such suit, claim
        or proceeding, and to extend reasonable cooperation to Salton in the
        defense or settlement of such suit, claim or proceeding, but Salton
        shall have sole control thereof.  In the event that an injunction is
        obtained against Kmart's use, purchase, distribution, sale, marketing
        and/or promotion of any Products and/or any Right in whole or in part,
        Salton shall promptly, at its option either: (a) procure for Kmart the
        right to continue using, purchasing, distributing, selling, marketing
        and/or promoting such Products enjoined from use, or (b) replace or
        modify the same so that Kmart's use, sale or possession is not subject
        to any such injunction, or (c) at Kmart's option refund to Kmart all    
        amounts paid to Salton for such Products and such Right, including but
        not limited to all Salton Payments.







                                       14
<PAGE>   16




      9.2  Insurance.  Salton shall, during the Term of this Agreement,
           maintain the following insurance coverages as indicated or as
           required by law, whichever shall be greater, with insurers in good
           standing and authorized to do business under the laws of the
           State(s) where performance hereunder shall occur:

           (a)  Comprehensive General Liability, naming Kmart as an additional
                insured including, but not limited to, Contractual
                Liability and Products Liability, with broad form property
                damage and bodily injury (including Personal Injury) coverage. 
                The minimum limits for each shall be $2,000,000 per occurrence.

           (b)  All insurance required in Exhibits B and C hereto, as well as
                that required under each Purchase Order.

           (c)  Employee fidelity insurance, workers compensation insurance and
                employer's liability insurance as required by all
                applicable federal, state or other laws, rules or regulations.

           Prior to execution of this Agreement, Salton shall tender to Kmart
           certificates of insurance evidencing the coverage required to
           be maintained by Salton hereunder.  The certificates must provide
           that no change or cancellation of insurance shall be made without
           thirty (30) days prior written notice to Kmart.


      9.3  Survival.  The provisions of this Section 9 shall
           survive the termination or expiration of this Agreement.


10.  TERM AND TERMINATION

     10.1  Term.  The Term of this Agreement shall be a period,
           commencing on the Execution Date and terminating on June 30, 2004,
           unless earlier terminated in accordance with this Section 10 of this
           Agreement.

     10.2  Extension of Terms.  If neither Kmart nor Salton terminate this
           Agreement pursuant to Section 10.3, 10.4 or 10.5, as
           applicable, Kmart shall have the right to extend the term of this
           Agreement for successive one-year periods through June 30, 2011, by
           delivering written notice to Salton of its desire to so extend this
           Agreement on or before May 30 of any year during the Term or any
           extension period, as applicable.  Upon any such extension, the
           Minimum Product Orders for each Category shall be increased at an
           annual rate of no more than four percent (4%) from the amount of
           Minimum Product Orders in the immediately preceding year during each
           year in which the Term has been so extended.  Kmart may terminate
           this Agreement without cause on sixty (60) days prior written notice
           at any time during any extension period without cost or penalty.

     10.3  Termination by Either Party. The occurrence of one or more of
           the following events shall constitute a default of the party
           responsible for the occurrence of such event ("Default"):



                                       15
<PAGE>   17
     (a)    Material breach of the Agreement, including, without limitation,
            (i) the failure of Salton to supply Products and/or provide
            services as provided for herein with such diligence as will insure
            compliance with all delivery, installation, completion and other
            dates specified herein, (ii) the failure of Kmart to pay or
            reimburse any material amounts which are due to be paid or
            reimbursed hereunder; (iii) any failure relating to Section 2.1,
            Section 3.1.4 and/or Section 9 herein; or (iv) New Tech's breach of
            the NewTech Agreement;

     (b)    Failure or material breach of any material condition, obligation,
            covenant, representation or warranty set forth herein; or

     (c)    Insolvency, or the institution of proceedings by or against a party
            under any federal or state bankruptcy or insolvency law or an
            assignment for the benefit of all or substantially all creditors
            which proceeding is not stayed within sixty (60) days of filing; or
            the cessation of operations or doing business for any reason.

     Upon the occurrence of a Default, the non-defaulting party shall provide
     written notice (the "Notice") to the defaulting party specifying the
     nature of the Default and the conduct required to cure such Default.  The
     defaulting party shall have 60 days following the date the Notice is
     received by the non-defaulting party to cure the Default (30 days for
     non-payment by Kmart under a Specific Purchase Order where the amount
     involved exceeds $2,000,000).  If the Default is not cured by the
     defaulting party within such period, the non-defaulting party may elect to
     either specifically enforce performance hereof  or terminate this
     Agreement.  If, however, Kmart defaults Salton's remedies shall not
     exceed the amount Salton would have received as its sole and exclusive
     remedy under Section 5 herein with respect to Minimum Product Orders which
     have not been placed as of the effective date of the Default or
     Termination.  In the event of Salton's Default or wrongful termination of
     this Agreement, Kmart shall not owe Salton any damages under Section 5 of
     this Agreement.

     A party's failure to demand cure of or terminate this Agreement as a
     result of a prior Default shall not be deemed a waiver by the party of the
     right to demand cure of or to terminate this Agreement as a result of a
     subsequent Default. Unless otherwise indicated to the contrary in this
     Agreement, the rights set  forth hereinabove are cumulative and in
     addition to those otherwise provided by law.

10.4 Termination at Option of Kmart.  (a) Kmart shall have the right to
     terminate this Agreement without cause in its sole discretion effective on
     June 30, 2002, by giving Salton written notice at any time up to June 30,
     2000.  Following delivery of such notice to Salton, the parties shall
     continue to be bound by all of the terms and conditions of this Agreement
     through June 30, 2002; provided, that the Minimum Product Purchase
     commitment, for the period of July 1, 2001 through June 30, 2002, as set
     forth in Section 5.1 hereof, shall be reduced to 25% of the amounts set
     forth in said Section 5.1; and provided further, that after June 30, 2000,
     Salton may commence marketing plans for the sale of Products to any other
     Person, including other Discount Department Stores, and, after July        
     31, 2001 Salton may




                                       16
<PAGE>   18

           market and sell Products to any other Person, including Discount
           Department Stores, notwithstanding Section 2.1 hereof. If Kmart
           does not elect to terminate this Agreement in accordance with the
           foregoing sentences of this Section 10.4, then Kmart shall have the
           right to terminate this Agreement without cause in its sole
           discretion effective June 30, 2003 and on each June 30 thereafter
           during the term of this Agreement by giving written notice to Salton
           of its desire to so terminate this Agreement.  Upon any such
           termination, Kmart shall owe nothing to Salton beyond payment for
           Products accepted by Kmart as of the effective date of termination. 
           Kmart shall be required to perform all Specific Purchase Orders
           issued prior to the effective date of such termination, and Kmart
           shall have no further obligation following such termination.

           (b) Notwithstanding the foregoing, it is specifically agreed by      
           the parties hereto that in the event Kmart terminates the Agreement
           at any time and such termination is not in accordance with this
           Section 10.4(a), or is otherwise in violation or breach of this
           Agreement, Kmart's liability hereunder shall not exceed an amount
           equal to the Fees specified in Section 5 herein for the Minimum
           Product Orders which have not been placed as of the effective date
           of such termination and for payment for Orders of conforming
           Products timely delivered through the date of such termination,
           Kmart shall be required to perform all Specific Purchase Orders
           issued prior to the effective date of such termination, and Kmart
           shall have no further obligation following such termination.

      10.5 Termination at Option of Salton. Salton shall have the right to 
           terminate this Agreement effective on June 30, 2002, by giving Kmart
           written notice at any time up to June 30, 2000.  Following delivery
           of such notice to Kmart, the parties shall continue to be bound by   
           all of the terms and conditions of this Agreement through June 30,
           2002; provided, that the Minimum Product Purchase commitment, for
           the period of July 1, 2001 through June 30, 2002, as set forth in
           Section 5.1 hereof, shall be reduced to 25% of the amounts set forth
           in said Section 5.1; and provided further, that after June 30, 2000,
           Salton may commence marketing plans for the sale of Products to any
           other Person, including other Discount Department Stores, and, after
           July 31, 2001 Salton may market and sell Products to any other
           Person, including Discount Department Stores, notwithstanding
           Section 2.1 hereof.  In the event that Salton does not elect to
           terminate this Agreement in accordance with the foregoing sentences
           of this Section 10.5, then Salton shall have the right to terminate
           this Agreement without cause in its sole discretion effective June
           30, 2003 and on each June 30 thereafter during the term of this
           Agreement by giving at least 12 months prior written notice to Kmart
           of its desire to so terminate this Agreement.  Upon any such
           termination, Kmart shall owe nothing to Salton beyond payment for
           Products accepted by Kmart as of the effective date of such
           termination.

      10.6 Duties Following Termination.  Upon Termination of this
           Agreement, neither party shall have any obligation to the other
           party except as hereinafter set forth in this Section 10.6.
           Notwithstanding the termination or expiration of this Agreement
           pursuant to this Article 10 or any other provision of this
           Agreement, unless otherwise indicated in this Agreement, all rights
           and obligations which were incurred or which matured under specific
           Purchase Orders issued prior to the effective date of termination or
           expiration shall survive termination and be subject to enforcement
           under the terms of this Agreement.  Termination of this Agreement
           shall not affect any duty of Kmart or Salton under Sections 9.1,
           11.1, 11.2, 11.3, 12.1, 12.4, 12.6, 12.11, 12.13 or 12.14 existing
           prior to the

           

                                       17
<PAGE>   19
           effective date of termination or expiration, all of which are
           intended to survive termination. Kmart shall have the right to
           distribute, sell, market and promote all existing inventory of
           Products ordered pursuant to Specific Purchase Orders prior to the
           termination of this Agreement, and to use all packaging materials,
           labels, tags, signage, advertising and promotional materials to
           effectuate the sale of such Products.

    10.7   Non-interference.  Except for negotiations involving Salton
           or with a Third Party Manufacturer, Kmart agrees that, except with
           Salton, it will not, during the Term of this Agreement or any
           extension or renewal thereof negotiate, obtain information or
           discuss with or enter into any agreement with any person or entity
           covering the licensing, purchase, sale, marketing or distribution of
           the Trademark for any of the Categories of Product purchased by
           Kmart from Salton.

    10.8   Termination of the NewTech Agreement.  If the NewTech Agreement is
           terminated at any time for any reason, Kmart may, in its sole
           option, elect to terminate this Agreement, and upon such
           termination, owe nothing further under this Agreement beyond payment
           for Products accepted and sold by Kmart through the date of
           termination.

11. CONFIDENTIALITY/PRESS RELEASES

    11.1   Confidentiality and Non-Disclosure. Salton agrees that any
           and all information in any form that is provided to Salton or any of
           its representatives as part of this Agreement is provided and
           received in confidence, and Salton, shall at all times preserve and
           protect the confidentiality of such information, and of any other
           proprietary or non-public information of or relating to Kmart or any
           of its related companies of which it or any of its representatives
           becomes aware or acquires during the performance of this Agreement
           (such information is hereinafter referred to as "Confidential
           Information"). Salton also agrees that it shall take all reasonable
           steps to ensure that such Confidential Information will not be
           disclosed to, or used by any person, association or entity except
           its own employees, and then only to the extent necessary to permit
           it to perform this Agreement.

           Each of Salton and Kmart agrees to keep the Minimum Product Orders,
           pricing, and Term of this Agreement (including rights of extension
           and termination) strictly confidential, except that each of Salton
           and Kmart shall be permitted to disclose any and all information
           concerning the transactions contemplated hereby to the extent it is
           legally required to do so, whether under applicable securities laws
           or otherwise,  provided, that Salton will use its reasonable best
           efforts to file with the Securities and Exchange Commission or any
           other applicable regulator or court a request for confidential
           treatment of the pricing and other business terms set forth in this
           Agreement.

           In the course of performance of this Agreement, Salton may disclose
           certain information to Kmart which Salton considers proprietary and
           confidential.  In order


      

                                       18
<PAGE>   20





            to be considered as proprietary and confidential and, thus, subject
            to the following restrictions, Salton must comply with both of the
            following requirements prior to disclosure of the information: (i)
            the information must be clearly and conspicuously identified in
            writing as "PROPRIETARY AND CONFIDENTIAL INFORMATION OF SALTON';
            and (ii) Salton must limit its dissemination of the information to
            an authorized representative of Kmart (i.e., one listed on attached
            Exhibit E) with a need to know such information in furtherance of
            the performance of this Agreement (the "Authorized Recipient")
            Provided Salton has complied with (i) and (ii) above, the
            Authorized Recipient shall maintain the confidentiality of such
            information to the same extent Kmart protects its own proprietary
            information and shall not disclose it to anyone other than Kmart
            employees, agents and/or consultants with a need to know who shall
            also be subject to this restriction.

            Confidential Information shall not include information that a party
            can demonstrate by written evidence:

            (i)   is in the public domain (provided that
                  information in the public domain has not and does not come
                  into the public domain as a result of the disclosure by the
                  receiving party or any of its Affiliates);

            (ii)  is known to the receiving party or any of its
                  Affiliates prior to the disclosure by the other party; or

            (iii) becomes available to the party on a
                  non-confidential basis from a source other than an Affiliate
                  of that party or the disclosing party.

      11.2  Press Releases.  Salton shall not issue any press releases
            relating to this Agreement or its relationship with Kmart without
            the prior written approval by an authorized representative of either
            the Corporate Affairs Department or the Investor Relations
            Department of Kmart as to the contents thereof.
      11.3  The Press Release confidentiality and non-disclosure
            obligations contained herein shall survive and continue after
            termination of this Agreement or any related agreements the parties
            may execute, and shall bind each of Salton's and Kmart's legal
            representatives, successors and assigns.

12. GENERAL TERMS AND CONDITIONS

      12.1  Dispute Resolution.  All disputes arising out of, or in
            relation to, this Agreement (other than disputes arising out of any
            claim by a third party in an action commenced against a party) shall
            be referred for decision forthwith to a senior executive of each
            party who is not personally involved in the dispute.  If no
            agreement can be reached through this process within thirty (30)
            days of request by one party to the other to nominate a senior
            executive for dispute resolution, then either party shall be
            entitled to pursue any and all available legal remedies.



                                       19
<PAGE>   21





      12.2 No Assignment.  Other than as specifically set forth in this
           Agreement, this Agreement may not be assigned nor may the
           performance of any duties hereunder be delegated by either party
           without the prior written consent of the other party; provided, that
           any such attempted assignment shall be void and shall not relieve
           the assignor from any of its obligations hereunder or under any
           other document or agreement delivered by such party pursuant to, or
           delivered (or acknowledged to have been delivered) contemporaneously
           with or in connection with the execution of, this Agreement, which
           shall continue to be binding upon such party notwithstanding any
           such attempted assignment.

      12.3 Notices.  Any notice required or permitted to be given under
           this Agreement shall be sufficiently given if in writing and
           delivered by registered or certified mail (return receipt
           requested), facsimile (with confirmation of transmittal), overnight
           courier (with confirmation of delivery), or hand delivered to the
           appropriate party at the address set forth below, or at such other
           address as such party may from time to time specify for that purpose
           in a notice similarly given:


<TABLE>
<S>                                         <C>
If to Salton:                               Salton/Maxim Housewares, Inc.
                                            550 Business Center Drive
                                            Mt. Prospect, Illinois 60056
                                            Attn:  William B. Rue
                                            Fax: (847) 803-8080

with a copy to (other than                  Greenberg, Traurig, Hoffman, Lipoff,
regularly prepared notices, reports, etc.   Rosen & Quentel, P.A.
required to be delivered hereunder):        1221 Brickell Avenue
                                            Miami, Florida 33131
                                            Attn: Cesar L. Alvarez
                                            Fax: (305) 579-0717

                                            and
                                            Sonnenschein Nath & Rosenthal
                                            8000 Sears Tower
                                            Chicago, Illinois 60606
                                            Attn:  Neil Aizenstein
                                            Fax:  (312) 876-7934

If to Kmart:                                Kmart Corporation
                                            3100 W. Big Beaver Road
                                            Troy, Michigan 48084
                                            Attn:  Divisional Vice President
                                            Home Electronics/Home Appliances
                                            Fax:  (810) 643-1054

with a copy to (other than                  Kmart Corporation
regularly prepared notices, reports, etc.   Legal Department
required to be delivered hereunder):        3100 W. Big Beaver Road
                                            Troy, Michigan 48084
                                            Attn:  General Counsel
</TABLE>




                                       20
<PAGE>   22





            Any such notice shall be effective (i) if sent by mail, as
            aforesaid, three (3) business days after mailing, (ii) if sent by
            facsimile, as aforesaid, when sent, and (iii) if sent by courier or
            hand delivered, as aforesaid, when received.  Provided, that if any
            such notice shall have been sent by mail and if on the date of
            mailing thereof or during the period prior to the expiry of the
            third business day following the date of mailing there shall be a
            general postal disruption (whether as a result of rotating strikes
            or otherwise) in the United States, then such notice shall not
            become effective until the third business day following the date of
            resumption of normal mail service.

      12.4  Governing Law and Consent to Jurisdiction. THIS AGREEMENT
            SHALL BE DEEMED TO HAVE BEEN EXECUTED AND DELIVERED IN TROY,
            MICHIGAN, AND SHALL BE CONSTRUED, INTERPRETED AND ENFORCED UNDER
            AND IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN.
            SALTON AGREES TO EXERCISE ANY RIGHT OR REMEDY IN CONNECTION WITH
            THIS AGREEMENT EXCLUSIVELY IN, AND HEREBY SUBMITS TO THE
            JURISDICTION OF, THE STATE OF MICHIGAN COURTS OF OAKLAND COUNTY,
            MICHIGAN OR THE UNITED STATES DISTRICT COURT IN DETROIT, MICHIGAN.

      12.5  Binding Agreement.  This Agreement shall be binding upon the
            parties hereto, and their respective successors and permitted
            assigns, whether by operation of law or otherwise.
      
      12.6  Entire Agreement.  This Agreement and all other documents and
            instruments specifically incorporated by reference herein contain
            the entire agreement and understanding of the parties with respect
            to the subject matter hereof and thereof and supersedes all
            negotiations, prior discussions and agreements relating to the
            subject of this Agreement. Any terms or conditions in any forms of
            Salton used in the performance of this Agreement which are in
            conflict with or in addition to the terms and conditions of this
            Agreement shall be void. This Agreement may not be amended or
            modified except by a written instrument signed by all of the parties
            hereto.
      
      12.7  Headings.  The headings to the various articles and
            paragraphs of this Agreement have been inserted for convenience only
            and shall not affect the meaning of the language contained in this
            Agreement.
      
      12.8  Waiver.  The waiver by any party of any breach by another
            party of any term or condition of this Agreement shall not
            constitute a waiver of any subsequent breach or nullify the
            effectiveness of that term or condition.
  
      12.9  Counterparts.  This Agreement may be executed in identical
            duplicate copies exchanged by facsimile transmission.  The parties
            agree to execute two identical original copies of the Agreement
            after exchanging signed facsimile versions.  Each identical
            counterpart shall be deemed an original, but all of which together
            shall constitute one and the same instrument.
 
      12.10 Severability of Provisions.  If, for any reason whatsoever,
            any term, covenant or condition of this Agreement or the application
            thereof to any party or circumstance

                                       21



<PAGE>   23





            is to any extent held or rendered invalid, unenforceable or
            illegal, then such term, covenant or condition:

                       (i) is deemed to be independent of the remainder of such
                  document and to be severable and divisible therefrom and its
                  validity, unenforceability or illegality does not affect,
                  impair or invalidate the remainder of such document or any
                  part thereof; and

                       (ii) continue to be applicable and enforceable to the
                  fullest extent permitted by law against any party and
                  circumstances other than those as to which it has been held
                  or rendered invalid, unenforceable or illegal.

    12.11   Limitation on Damages.  Except with respect to Salton's
            liability under Section 9 of this Agreement, neither party shall be
            liable to the other party for incidental, consequential, punitive or
            exemplary damages arising in connection with this Agreement or the
            performance, omission of performance or termination hereof, even if
            said party has been advised of the possibility of such damages and
            without regard to the nature of the claim or the underlying theory
            or cause of action (whether in contract, tort or otherwise).  In
            addition, in no event shall Kmart be liable for direct or any other
            damages in excess of the amount to which Salton is entitled to under
            Section 5 herein for Minimum Product Orders which have not been
            placed as of the effective date of the Default or Termination plus
            payment due for Products accepted by Kmart as of such date, nor
            shall Kmart's aggregate liability under this Agreement exceed such
            amount.

    12.12   Force Majeure.  Time is of the essence in the performance of
            all parts of this Agreement; provided, however, performance by
            either party shall be excused during the period in which such
            performance is made reasonably impossible because of a strike, act
            of God or change in laws ("Force Majeure").  Salton, however, shall
            use reasonable diligence to procure substitute performance.  If the
            period during  which performance is excused due to Force Majeure
            exceeds ten (10) days, then either party may terminate its
            obligations under any Specific Purchase Orders without liability,
            and such cancelled Order(s) shall continue to count towards
            fulfillment of the commitments set forth in Section 5 herein.  If
            the period of Force Majeure excusing Salton's performance exceeds
            120 days and such non-performance relates to more than 20% of the
            Minimum Product Orders during any Period, then Kmart may terminate
            this entire Agreement without further obligation to Salton.  Upon
            any such termination, nothing shall be due from Kmart beyond payment
            for Products accepted by Kmart as of the effective date of
            termination.

  12.13     Kmart Marks.  Salton acknowledges Kmart Properties Inc.'s
            ("KPI") exclusive right, title and interest in and to all
            trademarks, trade names, service marks, logos, assignees, program
            and event names, identifications and other proprietary rights and
            privileges which it licenses to Kmart with the right to sublicense
            (the "Kmart Marks").  This Agreement and its various provisions are
            not a license or assignment of any right, title or interest in the
            Kmart Marks by KPI or Kmart to Salton.  Salton shall not in any
            manner represent that it has any ownership in the Kmart Marks and
            shall not do or cause to be done anything impairing Kmart's
            exclusive license in



                                       22
<PAGE>   24


           the Kmart Marks.  Salton shall not use, print or duplicate the
           Kmart Marks except and only if Salton has obtained prior approval
           as provided herein.  Salton's use of the Kmart Marks is limited to
           the Term of this Agreement; upon termination hereof, Salton shall
           immediately cease all use of the Kmart Marks.  Salton shall not
           assign or attempt to assign any rights with regard to the Kmart
           Marks which arise hereunder; any such attempted assignment shall be
           void.

    12.14  White Westinghouse Marks.  Kmart acknowledges WCI's
           exclusive right, title and interest in and to the Trademarks.  This
           Agreement and its various provisions are not a license or assignment
           of any right, title or interest in the Trademark or the License
           Agreement by Salton or WCI to Kmart.  Kmart shall not do or cause to
           be done anything impairing Salton's exclusive license in the
           Trademark. Kmart's use of the Trademark is limited to the terms and
           conditions contained in this Agreement; upon termination hereof,
           Kmart shall immediately cease all use of the Trademark other than in
           connection with the sale, advertising or merchandising of Product
           inventory and order commitments (if any) existing at the time of
           such termination.  Kmart shall not assign or attempt to assign any
           rights with regard to the Trademark which arise hereunder; any such
           attempted assignment shall be void.
    12.15  No Third Party Beneficiaries.  The parties hereto expressly
           agree that there shall be no third party beneficiaries to this
           Agreement.
  
    IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the Execution Date.


SALTON/MAXIM HOUSEWARES, INC.      KMART CORPORATION
By:                                By:
         (Signature)                       (Signature)
Name:                              Name:
Title:                             Title:



                                       23

<PAGE>   25





                                                                       EXHIBIT A
                            DESCRIPTION OF PRODUCTS


                              KITCHEN HOUSEWARES:

                Irons
                Can Openers
                Mixers
                Food Processors
                Electric Knives
                Popcorn Makers
                Toasters
                Toaster Ovens
                Coffee Makers
                Espresso/Cappuccino Makers
                Bread Machines
                Pasta Makers
                Doughnut Makers
                Woks
                Pressure Cookers
                Ice Tea Makers
                Sandwich Makers
                Waffle Irons/Waffle Makers
                Pancake Grills
                Portable Grilling Machines
                Ice Cream Makers
                Yogurt Makers
                Juice Makers
                Juice Extractors


                                 PERSONAL CARE:

                Hair Dryers
                Hair Curlers
                Curling Wands and Brushes
                Make up Mirrors
                Nail, Face, Feet and Body Care Products
                Massagers

                               FANS AND HEATERS:

                Portable Cooling Fans
                Portable Room Heaters and Heater/Fan
                Combinations

                     ELECTRIC AIR CLEANERS AND HUMIDIFIERS:

                Humidifiers
                Air Cleaners


                                       24










<PAGE>   26
                                  SCHEDULE 1.2
                           DISCOUNT DEPARTMENT STORES


                      
Ames Dept. Stores
Baby Superstore
Best Buy
Best Products Co.
Bradlees
Caldor Corp.
Circuit City Stores
Comp USA
Consolidated Stores
Dayton Hudson/Target
Dollar General
Dollar Tree Stores
Duckwall-ALCO Stores
Family Bargain
Family Dollar
50-Off Stores
Fred's 
Good Guys
Hills
Home Shopping Network
L. Luria & Son
Lechters
Loehmann's Inc.
MacFrugal's Bargains
Melville Corp.
Meyer (Fred)
Montgomery Wards
99 Cents Only
Office Depot
OfficeMax
Pamida
Phar-Mor
Price Costco
Roberds
Ross Stores
S & K Famous Brands
Sears 
Service Merchandise
ShopKo Stores
Staples
Tops Appliance City
Toys "R" Us
Tuesday Morning
Value City Dept. Stores
Venture
Waban
Wal-Mart Stores
Woolworth
                      
                                       25
<PAGE>   27
            PURCHASE ORDER TERMS AND CONDITIONS                        EXHIBIT B
    

Vendor and Kmart Corporation, 3100 West Big Beaver Road, Troy Michigan
48084-3163, ("Buyer") agree, to the fullest extent permitted by law, to be
bound by all terms and conditions contained or incorporated herein, all of
which are a part of each Purchase Order issued to Vendor by Buyer ("Order") and
should be carefully read.  Any provisions in Vendor's invoices, billing
statements, acknowledgment forms or similar documents which are inconsistent
with the provisions of an Order shall be of no force or effect.  The cost price
set forth in each Order includes the cost of manufacturing packaging, labeling
and shipping unless otherwise specified in the Order.

1.  Vendor's Acceptance. Vendor's commencement of or promise of shipment of 
    the Merchandise shall constitute Vendor's agreement that it shall
    deliver the Merchandise in accordance with the terms and conditions of the
    applicable Order. Vendor agrees to follow the shipping and invoicing
    instructions issued by Buyer's stores, warehouses, buying offices and
    Transportation and Accounting Departments, which instructions are
    incorporated by reference into the applicable Order.

2.  Vendor's Representations and Warranties. Vendor represents and warrants to 
    Buyer, in addition to all warranties implied by law, that each item of
    Merchandise described on the face of an Order (or in an EDI or telephone
    Order), together with all related packaging and labeling and other material
    furnished by Vendor ("Merchandise"), shall : (a) be free from defects in
    design, workmanship and/or materials including without limitation, such
    defects as could create a hazard to life or property; (b) conform in all
    respects with all applicable federal, state and local laws, Orders and
    regulations, including without limitation, those regarding (I) safety, (ii)
    content, (iii) flammability, (iv) weights, measures and sizes, (v) special
    use, care, handling, cleaning or laundering instructions or warnings, (vi)
    processing, manufacturing, labeling, advertising, selling, shipping and
    invoicing, (vii) registration and declaration responsibility, and (viii)
    occupational safety and health; (c) copyright not infringe or encroach upon
    Buyer's or any third party's personal, contractual or proprietary rights,
    including without limitation, patents trademarks, copyrights, rights of
    privacy or trade secrets; and (d) conform to all of Buyer's specifications
    and to all articles shown to Buyer as Merchandise samples.

3.  Vendor's indemnification of Buyer. Vendor agrees to reimburse, indemnify, 
    hold harmless and to defend at its expense (or to pay any attorney's
    fees incurred by Buyer) Buyer and its subsidiary and affiliate companies
    against all damage, loss, expenses, claim, liability or penalty, including
    without limitation, claims of infringement of patents, copyrights,
    trademarks, unfair composition, bodily injury, property or other damage,
    arising out of any use, possession, consumption or sale of said Merchandise
    and form any failure of Vendor to property perform an Order.  Vendor shall
    not be relieved of the forgoing indemnity and related obligations by
    allegations or any claim of negligence on the part of Buyer; provided,
    however, Vendor shall not remain or be liable hereunder to the extent any
    injury or damage is finally judicially determined to have been proximately
    caused by the sole negligence of 






<PAGE>   28


    Buyer.  Vendor shall obtain adequate insurance to cover such liability      
    under each Order and shall provide copies of the applicable certificate(s)
    of insurance annually to Buyers's Vendor Database Department at the above
    address.

4.  Defective or Non-conforming Merchandise. If any Merchandise is defective, 
    unsuitable, does not conform to all terms hereof and of the Order and
    all warranties implied by law, Buyer may at its options return it to Vendor
    for full credit or refund of the purchase price or repair it at Vendor's
    expense, and may charge Vendor such price or expense and the cost of any
    incurred inbound and outbound freight and a handling, storage and
    inspection charge of 7 1/2% of the returned Merchandise invoice price. Buyer
    shall be under no duty to inspect any Merchandise before resale thereof,
    and resale, or repackaging or repacking for the purpose of resale, shall
    not constitute a waiver of, or otherwise limit, any of the Buyer's rights
    resulting from defective or non-conforming Merchandise.

5.  Buyers Right to Cancel.  Buyer may without notice cancel, terminate and/or
    rescind all or part of an Order in the event Vendor Breaches or fails
    to perform any of its obligations in any material respect, or in the event
    Vendor becomes insolvent or proceedings are instituted by or against Vendor
    under any provisions of any federal or state bankruptcy or insolvency laws
    or Vendor ceased its operation.  Time is of the essence to each Order and
    Vendor's failure to meet any delivery date shall constitute a material
    breach of the Order. Vendor agrees to inform Buyer immediately in writing
    of any failure to timely ship all or any part of an Order, and Buyer's
    acceptance of any Merchandise after the applicable delivery date shall not
    constitute a waiver of, or otherwise limit, any of Buyer's rights resulting
    form the late delivery nor obligate Buyer to accept delivery of additional
    Merchandise under the Order.

6.  Special Features. All Merchandise designs, patents and trade names which 
    are supplied by Buyer to Vendor or which are distinctive of Buyer's
    private label Merchandise ("Special Features") shall be the property of
    Buyer and shall be used by Vendor only for Buyer. Buyer may use the Special
    Features on or with respect to goods manufactured by others and obtain
    legal protection for the Special Features including, without limitation,
    patents, patent designs, copyrights and trademarks.  Merchandise with
    Special Features which is not delivered to Buyer for any reason shall not
    be sold or transferred to any third party without written authorization of
    Buyer and unless and until all labels, tags, packaging and markings
    identifying the Merchandise to Buyer have been removed.

7.  Deductions and Set off. Any sums payable to Vendor shall be subject to 
    all claims and defenses of Buyer, whether arising from this or any
    other transaction, and Buyer may set off and deduct against any such sums
    all present and future indebtedness of Vendor to Buyer. Buyer shall provide
    a copy of the deduction voucher(s) for debits taken by Buyer against
    Vendor's account as a result of any returns or adjustments.  Vendor shall
    be deemed to have accepted each such deduction unless Vendor, within 90
    days following receipt of the deduction voucher, notifies Buyer in writing
    as to why a deduction should not be made and provides documentation of the
    reason(s) given.  Such written notice shall be directed to Buyer's Vendor
    Audit Department at the above address.  Buyer shall not be liable to Vendor
    for any interest or late charges.



<PAGE>   29


8.  Michigan Contract and Jurisdiction.  EACH ORDER, AND ALL OTHER ASPECTS
    OF THE BUSINESS RELATIONSHIP BETWEEN BUYER AND VENDOR, SHALL BE
    CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
    MICHIGAN.  VENDOR AGREES, WITH RESPECT TO ANY LITIGATION WHICH RELATES TO
    ANY ORDER OR WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN
    CONNECTION WITH SAID BUSINESS RELATION OR ANY TRANSACTION OF ANY NATURE
    BETWEEN BUYER AND VENDOR, TO COMMENCE SAME (I) EXCLUSIVELY IN (AND VENDOR
    HEREBY CONSENT TO THE JURISDICTION OF) THE STATE OF MICHIGAN COURTS OF
    OAKLAND COUNTY, MICHIGAN OR THE UNITED STATES DISTRICT COURT IN DETROIT,
    MICHIGAN; AND (II) WITHIN 18 MONTHS FROM THE DATE OF BUYER'S LAST ORDER TO
    VENDOR OR THE PERIOD PRESCRIBED BY THE APPLICABLE STATUE OF LIMITATIONS,
    WHICHEVER IS SOONER.

9.  Miscellaneous. (A) All rights granted to Buyer hereunder shall be in 
    addition to and not in lieu of Buyer's rights arising by operation of
    law. (B) any provisions of a hard copy Order which are typewritten or
    handwritten by Buyer shall supersede any contrary or inconsistent printed
    provisions therein. (c) No modification of terms of an Order shall be
    valid without the written authorization of Buyer. (D) Should any of the
    provisions of an Order be declared by a court of competent jurisdiction to
    be invalid, such decision shall not affect the validity of any remaining
    provisions.

10. Direct to Store and Distribution Center Invoice & Shipping Instructions. 
    (a) Each invoice shall include Buyer's Order number, Vendor's
    stock/style number, and Buyer's code number for each item on the invoice. 
    No substitutions of Merchandise shall be made without the written
    authorization of Buyer. (B) Each Order may be invoiced separately. (c) an
    Order may not be filled at a price higher than that shown on its face or
    transmitted without the written authorization of Buyer. (D) If freight
    costs are to be paid by Buyer, Vendor shall ship via the method and/or
    route specified in the instruction provided by Buyer's Transportation
    Department, shall make ONE COMPLETE shipment of the Merchandise and shall
    NOT make PARTIAL shipments without the written authorization of Buyer. (E)
    Vendor shall make n NO PACKAGE QUANTITY CHANGE on an Order without the
    written authorization of the Buyer.

11. Additional Distribution Center Shipping Instructions. (A) The applicable 
    bill of lading must be delivered to the Distribution Center at time of
    Merchandise delivery. (B) Vendor shall mar the contents of each
    Distribution Center carton clearly on the outside of the carton, case, or
    package. (c) Merchandise not packaged or shipped in quantities Order by
    Buyer shall at Buyer's option be returned to Vendor at Vendor's expense. 
    Vendor shall be charged a handling charge of 7 1/2% of the Merchandise
    invoice price on all Merchandise not packaged or shipped as Ordered.

12. Merchandise Testing, Merchandise shall, at Buyer's option, be subject to 
    domestic or overseas testing.  



<PAGE>   30

    Vendor agrees to pay for all fees and costs associated with such testing
    (which fees and costs are set forth in Buyer's current Quality Assurance
    Manual or other documentation provided to Vendor), The testing of Vendor's
    Merchandise by or on behalf of Kmart is not a substitute for Vendor's
    responsibilities, hereunder including without limitation, those relating to
    warranty and indemnification under Paragraphs 2 and 3 above.

13. Buyer Information/Orders. Buyer may at its discretion provide Vendor with 
    certain confidential or proprietary information relating to Buyer's
    purchase and/or sale of Vendor's Merchandise.  Vendor acknowledges that
    such information, together with any other information of or pertaining to
    Buyer provided to Vendor by Buyer or learned by Vendor as a consequence of
    the business relationship between Buyer and Vendor (the "Buyer
    Information") is provided and received in confidence and Vendor shall at
    all times preserve and protect the confidentiality thereof. Vendor agrees
    to take all necessary steps to ensure that the Buyer Information shall not
    be disclosed to, or used by any person, association or entity except
    Vendor's own employees having a need to know.  BUYER MAKES NO WARRANTY WITH
    RESPECT TO THE BUYER INFORMATION OR THE ACCURACY OR COMPLETENESS THEREOF. 
    AND IS PROVIDING SAME ON AN 'AS IS' BASIS; ALL IMPLIED WARRANTIES WITH
    RESPECT TO THE Buyer INFORMATION, INCLUDING HOSE OF MERCHANTABILITY AND
    FITNESS FOR A PARTICULAR PURPOSE, ARE EXCLUDED.  Vendor acknowledges and
    agrees that any sales forecast, quantity purchase estimates or similar
    projections received from Buyer are not purchase commitments of Buyer, but
    rather represent estimates for planning purposes only, and that the Buyer
    shall have no obligation to purchase or otherwise compensate Vendor for any
    of Vendor's finished products, or unfinished raw materials, not covered by
    an Order.

14. Food Vendors. The following amendments to the above terms and conditions 
    hall apply to any food products purchased from Vendor by Buyer (any
    other Merchandise purchased from Vendor by Buyer shall be governed by the
    foregoing, without amendment): (I) Paragraph 4 - delete "or repair it at
    Vendor's expense" in line 3 and delete "and a handling, storage and
    inspection charge of 7 1/2% of the returned Merchandise invoice price"
    starting in Line 4; (ii) Paragraph 10 - delete the remainder of (d)
    starting with ", shall make ONE COMPLETE ..." starting in line 6; and (iii)
    Paragraph 12 - delete in its entirety.






<PAGE>   31


                                                              [KMART LETTERHEAD]

___________ 19___________

Dear Sir/Madam:

This letter will confirm that the Purchase Order Terms and Conditions on the
reverse side hereof (the "Terms") shall apply to all purchase orders issued to
Vendor by Kmart, whether by telephone, hard copy, electronically or otherwise.
Please note that the instructions in item 11 of the Terms are applicable to
Distribution Center purchase orders only.

Receipt of this confirmation is REQUIRED before Vendor will be authorized to
receive purchase orders from Kmart Corporation.

Please have the chairman, president or a vice president of Vendor confirm that
the Terms will apply to all Kmart orders issued to Vendor by signing and
returning one original of this letter (WITH NO CHANGES OF ANY KIND) to the
address below no later than 7 business days from the above date.  Retain the
other original or a copy for your files.  This letter must be signed by the
company which is paid by Kmart.

Very truly yours,
Kmart Corporation



---------------------------------   --------------------------------------------
Signature                           Registered Legal Name of Vendor


---------------------------------   --------------------------------------------
Title                               Address

                                    --------------------------------------------
                                    City                 State       Zip


                                    -------------------------------------------
                                    Vendor Officer Signature
                                    (Chairman, President or Vice President only)

                                    --------------------------------------------
                                    Print Name
RETURN TO:
ATTN
    -----------------------------   --------------------------------------------
KMART CORPORATION                   Title
3100 WEST BIG BEAVER ROAD
TROY MI  48084-3163




<PAGE>   32
                PURCHASE ORDER TERMS AND CONDITIONS                  EXHIBIT C

Vendor and Kmart Corporation, 3100 West Big Beaver Road, Troy Michigan
48084-3163, ("Buyer") agree, to the fullest extent permitted by law, to be
bound by all terms and conditions contained or incorporated herein, all of
which are a part of each Purchase Order issued to Vendor by Buyer ("Order") and
should be carefully read.  Any provisions in Vendor's invoices, billing
statements, acknowledgment forms or similar documents which are inconsistent
with the provisions of an Order shall be of no force or effect.  The cost price
set forth in each Order includes the cost of manufacturing packaging, labeling
and shipping unless otherwise specified in the Order.

1.    Vendor's Acceptance. Vendor's commencement of or promise of shipment of
      the Merchandise shall constitute Vendor's agreement that it shall
      deliver the Merchandise in accordance with the terms and conditions of
      the applicable Order.  Vendor agrees to follow the shipping and
      invoicing instructions issued by Buyer's stores, warehouses, buying
      offices and Transportation and Accounting Departments, which
      instructions are incorporated by reference into the applicable Order.
      
2.    Vendor's Representations and Warranties. Vendor represents and warrants
      to Buyer, in addition to all warranties implied by law, that each item
      of Merchandise described on the face of an Order (or in an EDI or
      telephone Order), together with all related packaging and labeling and
      other material furnished by Vendor ("Merchandise"), shall : (a) be free
      from defects in design, workmanship and/or materials including without
      limitation, such defects as could create a hazard to life or property;
      (b) conform in all respects with all applicable federal, state and
      local laws, Orders and regulations, including without limitation, those
      regarding (I) safety, (ii) content, (iii) flammability, (iv) weights,
      measures and sizes, (v) special use, care, handling, cleaning or
      laundering instructions or warnings, (vi) processing, manufacturing,
      labeling, advertising, selling, shipping and invoicing, (vii)
      registration and declaration responsibility, and (viii) occupational
      safety and health; (C) not infringe or encroach upon Buyer's or any third
      party's personal, contractual or proprietary rights, including without
      limitation, patents trademarks, copyrights, rights of privacy or trade
      secrets; and (d) conform to all of Buyer's specifications and to all
      articles shown to Buyer as Merchandise samples.
      
3.    Vendor's indemnification of Buyer. Vendor agrees to reimburse,
      indemnify, hold harmless and to defend at its expense (or to pay any
      attorney's fees incurred by Buyer) Buyer and its subsidiary and
      affiliate companies against all damage, loss, expenses, claim,
      liability or penalty, including without limitation, claims of
      infringement of patents, copyrights, trademarks, unfair composition,
      bodily injury, property or other damage, arising out of any use,
      possession, consumption or sale of said Merchandise and form any
      failure of Vendor to property perform an Order.  Vendor shall not be
      relieved of the forgoing indemnity and related obligations by
      allegations or any claim of negligence on the part of Buyer; provided,
      however, Vendor shall not remain or be liable hereunder to the extent
      any injury or damage is finally judicially determined to have been
      proximately caused by the sole negligence of 
<PAGE>   33

      Buyer.  Vendor shall obtain adequate insurance to cover such liability
      under each Order and shall provide copies of the applicable
      certificate(s) of insurance annually to Buyers's Vendor Database  
      Department at the above address.
      
4.    Defective or Non-conforming Merchandise. If any Merchandise is
      defective, unsuitable, does not conform to all terms hereof and of the
      Order and all warranties implied by law, Buyer may at its options
      return it to Vendor for full credit or refund of the purchase price or
      repair it at Vendor's expense, and may charge Vendor such price or
      expense and the cost of any incurred inbound and outbound freight and a
      handling, storage and inspection charge of 7 1/2% of the returned
      Merchandise invoice price.  Buyer shall be under no duty to inspect any
      Merchandise before resale thereof, and resale, or repackaging or
      repacking for the purpose of resale, shall not constitute a waiver of,
      or otherwise limit, any of the Buyer's rights resulting from defective
      or nonconforming Merchandise.
      
5.    Buyers Right to Cancel. Buyer may without notice cancel, terminate
      and/or rescind all or part of an Order in the event Vendor Breaches or
      fails to perform any of its obligations in any material respect, or in
      the event Vendor becomes insolvent or proceedings are instituted by or
      against Vendor under any provisions of any federal or state bankruptcy
      or insolvency laws or Vendor ceased its operation.  Time is of the
      essence to each Order and Vendor's failure to meet any delivery date
      shall constitute a material breach of the Order.  Vendor agrees to
      inform Buyer immediately in writing of any failure to timely ship all
      or any part of an Order, and Buyer's acceptance of any Merchandise
      after the applicable delivery date shall not constitute a waiver of, or
      otherwise limit, any of Buyer's rights resulting form the late delivery
      nor obligate Buyer to accept delivery of additional Merchandise under
      the Order.
      
6.    Special Features. All Merchandise designs, patents and trade names
      which are supplied by Buyer to Vendor or which are distinctive of
      Buyer's private label Merchandise ("Special Features") shall be the
      property of Buyer and shall be used by Vendor only for Buyer.  Buyer
      may use the Special Features on or with respect to goods manufactured
      by others and obtain legal protection for the Special Features
      including, without limitation, patents, patent designs, copyrights and
      trademarks.  Merchandise with Special Features which is not delivered
      to Buyer for any reason shall not be sold or transferred to any third
      party without written authorization of Buyer and unless and until all
      labels, tags, packaging and markings identifying the Merchandise to
      Buyer have been removed.
      
7.    Deductions and Set off. Any sums payable to Vendor shall be subject to
      all claims and defenses of Buyer, whether arising from this or any
      other transaction, and Buyer may set off and deduct against any such
      sums all present and future indebtedness of Vendor to Buyer.  Buyer
      shall provide a copy of the deduction voucher(s) for debits taken by
      Buyer against Vendor's account as a result of any returns or
      adjustments.  Vendor shall be deemed to have accepted each such
      deduction unless Vendor, within 90 days following receipt of the
      deduction voucher, notifies Buyer in writing as to why a deduction
      should not be made and provides documentation of the reason(s) given.
      Such written notice shall be directed to Buyer's Vendor Audit
      Department at the above address.  Buyer shall not be liable to Vendor
      for any interest or late charges.






<PAGE>   34



      
8.    Michigan Contract and Jurisdiction. EACH ORDERS AND ALL OTHER ASPECTS OF
      THE BUSINESS RELATIONSHIP BETWEEN BUYER AND VENDOR, SHALL BE CONSTRUED
      AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
      MICHIGAN.  VENDOR AGREES, WITH RESPECT TO ANY LITIGATION WHICH RELATES TO
      ANY ORDER OR WHICH OTHERWISE ARISES DIRECTLY OR INDIRECTLY OUT OF OR IN
      CONNECTION WITH SAID BUSINESS RELATION OR ANY TRANSACTION OF ANY NATURE
      BETWEEN BUYER AND VENDOR, TO COMMENCE SAME (I) EXCLUSIVELY IN (AND
      VENDOR HEREBY CONSENT TO THE JURISDICTION OF) THE STATE OF MICHIGAN
      COURTS OF OAKLAND COUNTY, MICHIGAN OR THE UNITED STATES DISTRICT COURT IN
      DETROIT, MICHIGAN; AND (II) WITHIN 18 MONTHS FROM THE DATE OF BUYER'S
      LAST ORDER TO VENDOR OR THE PERIOD PRESCRIBED BY THE APPLICABLE STATUE OF
      LIMITATIONS, WHICHEVER IS SOONER.

9.    Miscellaneous. (A) All rights granted to Buyer hereunder shall be in
      addition to and not in lieu of Buyer's rights arising by operation of
      law. (B) any provisions of a hard copy Order which are typewritten or
      handwritten by Buyer shall supersede any contrary or inconsistent printed
      provisions therein. (c) No modification of terms of an Order shall be
      valid without the written authorization of Buyer. (D) Should any of the
      provisions of an Order be declared by a court of competent jurisdiction
      to be invalid, such decision shall not affect the validity of any
      remaining provisions.

10.   Direct to Store and Distribution Center Invoice & Shipping
      Instructions. (a) Each invoice shall include Buyer's Order number,
      Vendor's stock/style number, and Buyer's code number for each item on
      the invoice.  No substitutions of Merchandise shall be made without the
      written authorization of Buyer. (B) Each Order may be invoiced
      separately. (c) an Order may not be filled at a price higher than
      that shown on its face or transmitted without the written authorization
      of Buyer. (D) If freight costs are to be paid by Buyer, Vendor shall
      ship via the method and/or route specified in the instruction provided
      by Buyer's Transportation Department, shall make ONE COMPLETE shipment
      of the Merchandise and shall NOT make PARTIAL shipments without the
      written authorization of Buyer. (E) Vendor shall make n NO PACKAGE
      QUANTITY CHANGE on an Order without the written authorization of the
      Buyer.
      
11.   Additional Distribution Center Shipping Instructions. (A) The
      applicable bill of lading must be delivered to the Distribution Center
      at time of Merchandise delivery. (B) Vendor shall mar the contents of
      each Distribution Center carton clearly on the outside of the carton,
      case, or package. (c) Merchandise not packaged or shipped in
      quantities Order by Buyer shall at Buyer's option be returned to Vendor
      at Vendor's expense.  Vendor shall be charged a handling charge of 7
      1/2% of the Merchandise invoice price on all Merchandise not packaged
      or shipped as Ordered.
      
12.   Merchandise Testing. Merchandise shall, at Buyer's option, be subject to
      domestic or overseas testing.  Vendor agrees to pay for all fees and
      costs associated with such testing
<PAGE>   35
      (which fees and costs are set forth in Buyer's current Quality
      Assurance Manual or other documentation provided to Vendor).  The testing
      of Vendor's Merchandise by or on behalf of Kmart is not a substitute for
      Vendor's responsibilities, hereunder including without limitation, those
      relating to warranty and indemnification under Paragraphs 2 and 3 above.

13.   Buyer Information/Orders. Buyer may at its discretion provide Vendor
      with certain confidential or proprietary information relating to
      Buyer's purchase and/or sale of Vendor's Merchandise.  Vendor
      acknowledges that such information, together with any other information
      of or pertaining to Buyer provided to Vendor by Buyer or learned by
      Vendor as a consequence of the business relationship between Buyer and
      Vendor (the "Buyer Information") is provided and received in confidence
      and Vendor shall at all times preserve and protect the confidentiality
      thereof. Vendor agrees to take all necessary steps to ensure that the
      Buyer Information shall not be disclosed to, or used by any person,
      association or entity except Vendor's own employees having a need to
      know.  BUYER MAKES NO WARRANTY WITH RESPECT TO THE BUYER INFORMATION OR
      THE ACCURACY OR COMPLETENESS THEREOF.  AND IS PROVIDING SAME ON AN 'AS
      IS' BASIS; ALL IMPLIED WARRANTIES WITH RESPECT TO THE Buyer INFORMATION,
      INCLUDING HOSE OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
      ARE EXCLUDED.  Vendor acknowledges and agrees that any sales forecast,
      quantity purchase estimates or similar projections received from Buyer
      are not purchase commitments of Buyer, but rather represent estimates for
      planning purposes only, and that the Buyer shall have no obligation to
      purchase or otherwise compensate Vendor for any of Vendor's finished
      products, or unfinished raw materials, not covered by an Order.

14.   Food Vendors. The following amendments to the above terms and
      conditions hall apply to any food products purchased from Vendor by
      Buyer (any other Merchandise purchased from Vendor by Buyer shall be
      governed by the foregoing, without amendment): (I) Paragraph 4 - delete
      "or repair it at Vendor's expense" in line 3 and delete "and a
      handling, storage and inspection charge of 7 1/2% of the returned
      Merchandise invoice price" starting in Line 4; (ii) Paragraph 10 -
      delete the remainder of (d) starting with ", shall make ONE COMPLETE
      ..." starting in line 6; and (iii) Paragraph 12 - delete in its
      entirety.

<PAGE>   36

                                                              [KMART LETTERHEAD]

___________ 19___________

Dear Sir/Madam:

This letter will confirm that the Purchase Order Terms and Conditions on the
reverse side hereof (the "Terms") shall apply to all purchase orders issued to
Vendor by Kmart, whether by telephone, hard copy, electronically or otherwise.
Please note that the instructions in item 11 of the Terms are applicable to
Distribution Center purchase orders only.

Receipt of this confirmation is REQUIRED before Vendor will be authorized to
receive purchase orders from Kmart Corporation.

Please have the chairman, president or a vice president of Vendor confirm that
the Terms will apply to all Kmart orders issued to Vendor by signing and
returning one original of this letter (WITH NO CHANGES OF ANY KIND) to the
address below no later than 7 business days from the above date.  Retain the
other original or a copy for your files.  This letter must be signed by the
company which is paid by Kmart.

Very truly yours,
Kmart Corporation



---------------------------------   --------------------------------------------
Signature                           Registered Legal Name of Vendor


---------------------------------   --------------------------------------------
Title                               Address

                                    --------------------------------------------
                                    City                 State       Zip


                                    -------------------------------------------
                                    Vendor Officer Signature
                                    (Chairman, President or Vice President only)

                                    --------------------------------------------
                                    Print Name
RETURN TO:
ATTN
    -----------------------------   --------------------------------------------
KMART CORPORATION                   Title
3100 WEST BIG BEAVER ROAD
TROY MI  48084-3163
<PAGE>   37
                   TERMS AND CONDITIONS                               EXHIBIT D


THIS ORDER CONTRACT IS UPON THE FOLLOWING TERMS AND CONDITIONS:

1.   Seller's commencement of or promise of shipment of the Merchandise shall
     constitute Seller's agreement that it will deliver the Merchandise in
     accordance with the terms and conditions contained or incorporated herein,
     all of which are a part of the Order Contract and should be carefully read.
     Any provision in Seller's invoices, billing statements, acknowledgments
     forms or other documents which are inconsistent with the provisions of this
     Order Contract shall be of no force or effect.

2.   Seller represents and warrants to Kmart Corporation ("Buyer"), in addition
     to all warranties implied by law, that each item of Merchandise described
     on the face hereof, together with all retail packaging, labeling, and other
     material furnished by seller ("Merchandise") shall (a) be free from defects
     in design, workmanship or materials, including without limitation such
     defects as could create a hazard to life or property, (b) conform in all
     respects with all applicable federal, state and local laws, orders and
     regulations, including, without imitation, those concerning the marking of
     the country of origin, fiber content, care labeling and shrinkage, as
     Merchandise not in compliance and not properly marked is subject to heavy
     penalty (c) not infringe or encroach upon Buyer's or any third party's
     personal, contractual or proprietary rights, including, without limitation,
     patents, trademarks, trade names, copyrights, rights of privacy or trade
     secrets; and (d) conform to all of Buyer's specifications and to all
     articles shown to Buyer as Merchandise samples.  Seller further represents
     and warrants that it has ascertained that no child, forced or prison labor
     is utilized in the manufacture of Merchandise.

3.   Seller agrees to reimburse, indemnify, hold harmless and defend at Seller's
     expense (or pay any attorney's fees incurred by Buyer) Buyer and its
     subsidiary and affiliate companies against all damage, loss, expense,
     claim, liability, fine, settlement or penalty, including, without
     limitation, claims of infringement of patents, copyrights and trademarks,
     unfair competition, bodily injury, or property or other damage arising out
     of any use, possession, consumption or sale of the Merchandise or failure
     to provide complete, accurate and acceptable (to U.S. Customs) information
     and documentation relating to, without limitation, the country of origin or
     failure of Seller to perform promptly this Order Contract. Seller shall
     obtain adequate insurance to cover its liability under this Order Contract
     and shall provide copies of the applicable certificates(s) of insurance to
     Buyer

4.   Acceptance of Merchandise by Buyer after inspection does not release or
     discharge Seller from any liability for damages or from any other remedy of
     Buyer for Seller's breach of any promise or warranty, expressed or implied.
     This Order of Contract may at Buyer's option be deemed canceled if the
     Merchandise ordered herein is not covered by a full set of "Clean" "On
     Board" Ocean Bills of Lading and Buyer's inspection Certificate dated on or
     before the shipping date specified on the face hereof.  Any such
     cancellation shall be without prejudice to all other rights and remedies
     occurring to Buyer by reason of Seller's breach, unless a written extension
     of shipping date(s) was previously granted in writing to Seller by Buyer,
     if any of the terms, conditions, or warranties of or underlying this Order
     Contract, express 
<PAGE>   38
     or implied, are not strictly complied with by Seller with respect to any
     shipment or installment shipment of the Merchandise order  herein, Buyer
     has the right, in addition to all other rights and remedies accruing to
     Buyer by reason of Seller's breach, to refuse to accept any or all
     deliveries of Merchandise ordered herein, buy any acceptance by Buyer of
     any such singular shipment or installment shipment shall not be deemed
     (whether or not Buyer notifies Seller of its demand for strict compliance
     with respect to future shipment installments) a waiver by Buyer of any of
     its rights to refuse any future shipments hereunder or of any other rights
     or remedies.

5.   All Merchandise design, patents and trademarks which are supplied by Buyer
     to Seller or which are distinctive of Buyer's private label Merchandise
     ("Special Features") shall be the property of Buyer and shall be used by
     Seller only for Buyer.  Buyer may use the Special Features on or with
     respect to goods manufactured by others and obtain legal protection for the
     Special Features including, without limitation, patents, design patents,
     copyrights and trademarks. Merchandise which is not delivered to Buyer for
     any reason shall not be sold or transferred to any third party without
     written authorization of Buyer and unless and until all labels, tags,
     packaging and markings identifying the Merchandise to Buyer have been
     removed.

6.   THIS ORDER CONTRACT SHALL BE CONSTRUED AND ENFORCED UNDER AND IN ACCORDANCE
     WITH THE INTERNAL LAWS OF THE STATE OF MICHIGAN. ANY UNSETTLED DISPUTE
     HEREUNDER WHERE THE AMOUNT IN CONTROVERSY IS LESS THAN OR EQUALS $50,000
     (U.S.) SHALL BE FINALLY SETTLED BY ARBITRATION, HELD IN THE UNITED STATES
     OF AMERICAN AT DETROIT, MICHIGAN AND CONDUCTED IN ACCORDANCE WITH THE RULES
     OF THE AMERICAN ARBITRATION ASSOCIATION.  JUDGEMENT UPON ANY ARBITRATION
     AWARD RENDERED, IF NOT SATISFIED WITHIN NINETY (90) DAYS, MAY BE ENTERED IN
     ANY COURT HAVING JURISDICTION, OR APPLICATION MAY BE MADE TO ANY SUCH COURT
     FOR A JUDICIAL RECOGNITION, ACCEPTANCE AND ORDER OF ENFORCEMENT, AS THE
     CASE MAY BE IN ANY UNSETTLED DISPUTE HEREUNDER WHERE THE AMOUNT IN
     CONTROVERSY EXCEEDS$50,000 (U.S.). IT IS HEREBY MUTUALLY AGREED THAT SELLER
     SHALL EXERCISE ANY RIGHT OR REMEDY EXCLUSIVE IN, AND HEREBY CONSENTS TO THE
     JURISDICTION OF, THE UNITED STATES DISTRICT COURT IN DETROIT, MICHIGAN.

7.    (A) All rights granted to Buyer hereunder shall be in addition to and not
     in lieu of Buyer's rights arising by operation of law; (b) any provision of
     this Order Contract which are typewritten or handwritten by Buyer shall
     supersede any contrary or inconsistent printed provisions; (c) no
     modification of terms of this Order Contract shall be valid, including,
     without limitation, price increase, unless in writing and signed by Buyer;
     (d) should any of the provision of this Order Contract be declared by a
     court of competent jurisdiction to be invalid, such decision shall not
     affect the validity of any remaining provision; (e) all of the terms herein
     shall apply to additional quantities of Merchandise order by Buyer except
     to the extent covered by a new written agreement; and (f) all documents
     prepared in connection 
<PAGE>   39
     with this Order Contract must be written in the English language and in
     U.S. currency figures.

8.   Neither this Order Contract nor any right, duty or obligation hereunder is
     assignable without the prior written consent of Buyer, nor shall Buyer be
     under any obligation TO recognize any assignment of monies payable
     hereunder.

9.   Seller agrees to prepare and produce all documents which are necessary for
     the Merchandise to clear U.S. Customs and which are otherwise required by
     applicable laws or regulations, the Letter of Credit or instructions set
     forth on the face hereof.

10.  All shipping cartons are to be marked and packed in accordance with Buyer's
     international Department Standard Instructions to foreign Shippers In
     addition, Seller agrees to follow any shipping instructions issued directly
     to Seller by Buyer's International Department

11.  Without in any way limiting Buyer's other rights and remedies arising under
     paragraph 2 above, seller agrees that any Merchandise, packaging that (1)
     misstates the true country of origin, or (2) is made in whole or in part by
     child or prison labor, will be a material breach of this Order Contract
     resulting in cancellation of this Order Contract and Liability of Seller to
     Buyer for liquidated damages equal to t the total FOB-factory cost of the
     Merchandise plus all freight, import/export charges and other costs
     incurred for the shipment or return (or destruction at Buyer's election)
     of seized or redelivered Merchandise.

12.  Except for the right to receive payment, Seller hereby assigns all of its
     rights (expressed and implied under any purchase order Seller issues to a
     manufacturer for Merchandise or any component thereof covered by this Order
     Contract including, without limitation, right of warranty and
     indemnification obligation on the part of Buyer to a manufacturer in
     connection with the Merchandise.  This partial assignments shall not act to
     limit Buyer's rights and remedies elsewhere under this Order Contract.

13.  Merchandise shall, at Buyer's option, be subject to domestic or overseas
     testing. Seller agrees to pay for all fees and costs associated with such
     testing (which fees and costs are set forth in Buyer's current Quality
     Assurance Manual or other documentation provided to Seller).  The testing
     of Seller's Merchandise by or on behalf of Kmart is not a substitute for
     Seller's responsibilities, hereunder including without limitation, those
     relating to warranty and indemnification under Paragraphs 2 and 3 above.

             Address All Correspondence
             Regarding This Order Contract To:      Kmart Corporation
                                                    International Department
                                                    3100 West Big Beaver Road
                                                    Troy MI       48084-3163
<PAGE>   40
                                   EXHIBIT E

                      AUTHORIZED REPRESENTATIVES OF KMART

Senior Vice President General Merchandise Manager, Hardlines
Divisional Vice President, Merchandising Hardlines
Buyer, Appliances, Music, Electronics



                                       26