EXHIBIT O
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FORM OF
STOCKHOLDERS AGREEMENT
BY AND AMONG
SALTON, INC.,
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
AND
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.
__________________________________________
DATED AS OF ____________ __, 2007
__________________________________________
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TABLE OF CONTENTS
PAGE
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ARTICLE I INTERPRETATION.....................................................1
1.1 DEFINITIONS................................................1
ARTICLE II REPRESENTATIONS AND WARRANTIES....................................3
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............3
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.........4
ARTICLE III STANDSTILL.......................................................5
3.1 STANDSTILL.................................................5
ARTICLE IV GOVERNANCE........................................................5
4.1 COMPOSITION OF THE BOARD...................................5
4.2 AFFILIATE TRANSACTIONS.....................................5
ARTICLE V MISCLANEOUS........................................................6
5.1 AMENDMENTS AND WAIVERS.....................................6
5.2 NOTICES....................................................6
5.3 INTERPRETATION.............................................6
5.4 SEVERABILITY...............................................7
5.5 COUNTERPARTS...............................................7
5.6 ENTIRE AGREEMENT...........................................7
5.7 THIRD PARTY BENEFICIARIES..................................7
5.8 GOVERNING LAW..............................................7
5.9 SUCCESSORS AND ASSIGNS.....................................7
5.10 SUBMISSION TO JURISDICTION; WAIVERS........................7
5.11 SPECIFIC PERFORMANCE.......................................8
5.12 WAIVER OF JURY TRIAL.......................................8
EXHIBITS
Exhibit A - Addresses for Notice
(i)
FORM OF
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") is made and entered into
as of _________ __, 2007, by and between Salton, Inc., a Delaware corporation
(the "COMPANY"), and Harbinger Capital Partners Master Fund I, Ltd., a company
organized under the laws of the Cayman Islands (the "MASTER FUND"), and
Harbinger Capital Partners Special Situations Fund, L.P., a Delaware limited
partnership (each, a "STOCKHOLDER" and, collectively, the "STOCKHOLDERS").
WHEREAS, on February 7, 2007, the Company, SFP Merger Sub, Inc., a
Delaware corporation and a direct wholly owned subsidiary of the Company, and
APN Holding Company, Inc., a Delaware corporation, entered into an Agreement
and Plan of Merger (the "MERGER AGREEMENT");
WHEREAS, in connection with the Merger, the Stockholders received in
the aggregate [_________] shares of Common Stock (as hereafter defined);
WHEREAS, in addition to the shares received in the Merger, the Master
Fund also owns 701,600 shares of Common Stock and the Stockholders own other
securities of the Company;
WHEREAS, the parties hereto desire to enter into this Agreement to
establish certain arrangements with respect to the shares of Common Stock to be
beneficially owned by the Stockholders and their respective Affiliates
following the Effective Time (as defined in the Merger Agreement), as well as
restrictions on certain activities in respect of the Common Stock, corporate
governance and other related corporate matters; and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, the Company has requested that each Stockholder enter into this
Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
INTERPRETATION
1.1 DEFINITIONS. The following terms, as used in this Agreement,
shall have the meanings set forth below.
"ACTION" means any controversy, claim, action, litigation, arbitration,
mediation or any other proceeding by or before any Governmental Entity,
arbitrator, mediator or other Person acting in a dispute resolution capacity,
or any investigation, subpoena or demand preliminary to any of the foregoing.
"AFFILIATE" means, with respect to a Person, another Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person. For purposes of
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this Agreement, the Company and its Subsidiaries shall not be considered
Affiliates of any Stockholder.
"AGREEMENT" shall have the meaning ascribed to it in the preamble to
this Agreement.
"BOARD" means the Board of Directors of the Company.
"COMMON STOCK" means the Company's common stock, par value $0.01 per
share, and any other class of common stock of the Company that may be created
from time to time, and any securities issued in respect thereof, or in
substitution therefor, in connection with any stock split, dividend or
combination, or any reclassification, recapitalization, merger, consolidation,
exchange or other similar reorganization.
"COMPANY" shall have the meaning ascribed to it in the preamble to this
Agreement.
"CONTRACT" means any legally binding instrument or legal obligation of
any kind, whether written or oral.
"CONTROLLED AFFILIATES" means, with respect to a Person, Affiliates as
to which such Person owns at least a majority of the voting power and controls
their investment and voting decisions.
"DIRECTOR" means any member of the Board (other than any advisory,
honorary or other non-voting member of the Board).
"ENCUMBRANCE" means any lien, security interest, pledge, mortgage, deed
of trust, charge, option or other encumbrance attaching to title to any
tangible or intangible property or right.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"GOVERNMENTAL ENTITY" means any arbitrator, court, judicial,
legislative, administrative or regulatory agency, commission, department,
board, bureau, body or other governmental authority or instrumentality or any
Person exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, whether foreign,
federal, state or local.
"INDEPENDENT DIRECTOR" means any Director who is or would be
"independent" within the meaning of the rules of the NYSE.
"LAW" means any statute, law, ordinance, rule or regulation of any
Governmental Entity.
"MERGER AGREEMENT" shall have the meaning ascribed to such term in the
recitals to this Agreement.
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"NYSE" means the New York Stock Exchange.
"ORDER" means any order, judgment, ruling, decree, writ, permit,
license or other requirement of any Governmental Entity.
"PERMIT" means any permit, approval, license, authorization,
certificate, right, exemption or Order from any Governmental Entity.
"PERSON" means any individual or legal entity, including any
partnership, joint venture, corporation, trust, unincorporated organization,
limited liability company or Governmental Entity.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCKHOLDER" or "STOCKHOLDERS" shall have the meaning ascribed to such
term in the Preamble.
"STOCKHOLDER GROUP" shall have the meaning ascribed to such term in
Section 3.1 of this Agreement.
"SUBSIDIARY" of any Person means any Person whose financial condition
is required to be consolidated with the financial condition of the first Person
in the preparation of the first Person's financial statements under GAAP.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Stockholders as follows:
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware.
(b) The Company has the requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery by the Company of this Agreement have been duly
authorized and approved by all necessary corporate action on the part of the
Company. This Agreement constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except
to the extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(c) The execution and delivery by the Company of this
Agreement and the performance of its obligations hereunder and compliance with
the terms hereof do not and will not, (i) violate or conflict with any
provision of its certificate of incorporation or bylaws or the comparable
governing documents of any of its Subsidiaries, (ii) violate or conflict with
any Law or Order applicable to the Company or any of its Subsidiaries or by
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which any of their respective properties or assets may be bound, (iii) require
any filing with, or Permit, consent or approval of, or the giving of any notice
to, any Governmental Entity, or (iv) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default under, or give rise to any right of termination, cancellation or
acceleration of, or result in the creation of any Encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under, or give
rise to any obligation, right of termination, cancellation, acceleration or
increase of any obligation or a loss of a material benefit under, any of the
terms, conditions or provisions of any Contract to which the Company or any of
its Subsidiaries is a party, or by which the Company or any of its Subsidiaries
may be bound, excluding in the case of clauses (iii) and (iv) above, conflicts,
violations, breaches, defaults, rights of termination, cancellations,
accelerations, increases, losses, creations and impositions of Encumbrances
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of the Company to perform its
obligations under this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each
Stockholder hereby, severally and not jointly, represents and warrants to the
Company as of the date hereof in respect of itself as follows:
(a) The Stockholder is duly organized, validly existing and
in good standing under the laws of the jurisdiction in which it is organized.
(b) The Stockholder has the requisite power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
The execution and delivery by the Stockholder of this Agreement have been duly
authorized and approved by all necessary action on the part of the Stockholder.
This Agreement constitutes the valid and binding obligation of the Stockholder,
enforceable against the Stockholder in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar Laws affecting the
enforcement of creditors' rights generally and by general equitable principles.
(c) The execution and delivery by the Stockholder of this
Agreement and the performance of its obligations hereunder and compliance with
the terms hereof do not and will not, (i) violate or conflict with any
provision of its articles of incorporation, certificate of formation, bylaws or
partnership agreement, as applicable, (ii) violate or conflict with any Law or
Order applicable to the Stockholder or by which any of its properties or assets
may be bound, (iii) require any filing with, or Permit, consent or approval of,
or the giving of any notice to, any Governmental Entity, or (iv) result in a
violation or breach of, conflict with, constitute (with or without due notice
or lapse of time or both) a default under, or give rise to any right of
termination, cancellation or acceleration of, or result in the creation of any
Encumbrance upon any of the properties or assets of the Stockholder under, or
give rise to any obligation, right of termination, cancellation, acceleration
or increase of any obligation or a loss of a material benefit under, any of the
terms, conditions or provisions of any Contract to which the Stockholder is a
party, or by which the Stockholder may be bound, excluding in the case of
clauses (iii) and (iv) above, conflicts, violations, breaches, defaults, rights
of termination, cancellations, accelerations, increases, losses, creations and
impositions of Encumbrances which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Stockholder to perform its obligations under this Agreement.
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ARTICLE III
STANDSTILL
3.1 STANDSTILL.
(a) For a period of 12 months following the Effective Time,
the Stockholders, their Controlled Affiliates and any group of persons, acting
with the knowledge and consent of the Stockholders, acquiring, holding, voting
or disposing of securities which would be required under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder to file with
the Stockholders and their Controlled Affiliates a statement on Section 13D
with the SEC as a "person" with the meaning of Section 13(d)(3) of the Exchange
Act (such group of persons, the "STOCKHOLDER GROUP") shall not acquire, offer
to acquire or agree to acquire the legal or beneficial ownership of any
additional shares of Common Stock, and the Company shall not take any action,
including stock repurchases, in either case that would result in the
Stockholder Group holding, in the aggregate, legal or beneficial ownership of
in excess of 90% of the outstanding Common Stock. The foregoing restriction
will not apply to acquisitions pursuant to a transaction in which the same
price per share is offered for all shares of Common Stock not owned by the
Stockholder Group and such acquisition is (a) approved by a majority of the
Independent Directors (after receipt of a fairness opinion from a nationally
recognized investment bank), or (b) if a merger, subject to a vote of the
holders of a majority of shares of Common Stock not held by the Stockholder
Group, or (c) if a tender offer, (i) subject to a non-waivable minimum
condition that at least a majority of the shares of Common Stock not owned by
the Stockholder Group be tendered and (ii) if the tender offer is consummated,
an unconditional commitment to acquire the shares of Common Stock not acquired
in the tender offer at the same price per share and otherwise for the same
consideration paid in the tender offer, as promptly as possible, and in each
case within 90 days, which time period may be extended, if necessary, due to
review by the SEC, pursuant to a back-end merger.
(b) For purposes of this Agreement, all determinations of
the amount of outstanding Common Stock shall be based on information set forth
in the most recent quarterly or annual report, and any current report
subsequent thereto, filed by the Company with the SEC, unless the Company shall
have updated such information by delivery of written notice to the
Stockholders.
ARTICLE IV
GOVERNANCE
4.1 COMPOSITION OF THE BOARD. For so long as the securities of the
Company are listed on the NYSE, the Stockholders (provided that together with
their Controlled Affiliates they retain collectively a majority of the
outstanding Common Stock) and the Company shall ensure that there shall be at
least three members of the Board who are Independent Directors.
4.2 AFFILIATE TRANSACTIONS. For a period of 12 months following the
date hereof, the Company will not engage in any transaction with any
Stockholder or their respective Affiliates unless such transaction is on
arms-length terms and, if the total value of such transaction is greater than
$1,000,000, approved by a majority of the Independent Directors, except for (a)
transactions contemplated by this Agreement or the Merger Agreement, including
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(x) any Stockholder providing any Financing or Alternative Financing (as such
terms are defined in the Merger Agreement) as contemplated by the Merger
Agreement and exercising any rights or remedies in such Stockholder's capacity
as a provider of such financing, to the extent permitted by the terms of any
such financing and (y) the payment to any Stockholder of fees and expenses as
contemplated by the Merger Agreement, the Financing or the Alternative
Financing, (b) the exercise by any Stockholder of any rights or remedies in its
capacity as a holder of the Company's Series A Voting Convertible Preferred
Stock, $0.01 par value per share or the Company's Series C Preferred Stock,
$0.01 par value per share, (c) the exercise by any Stockholder of any rights or
remedies in its capacity as a holder of the Company's Second Lien Notes or the
Company's 12 1/4% Senior Subordinated Notes due 2008, (d) transactions pursuant
to any registration rights agreement (or amendment thereof) with any
Stockholder or any of its Affiliates, (e) any indemnity provided on behalf of
or to, directors of the Company or any of its Subsidiaries, (f) the declaration
or payment of any dividend or distribution in respect of the Company's capital
stock, approved by the Board or (g) the repurchase, redemption or retirement of
any of the Company's capital stock, approved by the Board and on terms
available to each holder of the same class or series of the Company's capital
stock.
ARTICLE V
MISCLANEOUS
5.1 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties to this Agreement,
including, in the case of the Company, either (a) the written consent of a
majority of the Independent Directors or (b) approval by a vote of the holders
of Common Stock not held by the Stockholders or their respective Affiliates.
5.2 NOTICES. All notices required or permitted pursuant to this
Agreement will be in writing and will be deemed to be properly given when
actually received by the Person entitled to receive the notice at the address
set forth on EXHIBIT A hereto, or at such other address as a party may provide
by notice to the other.
5.3 INTERPRETATION.
(a) When a reference is made in this Agreement to Articles,
Sections, Exhibits or Schedules, such reference will be to an Article or
Section or Exhibit or Schedule to this Agreement unless otherwise indicated.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they will be deemed to be followed by the words "without
limitation." Unless the context otherwise requires, (i) "or" is disjunctive but
not necessarily exclusive, (ii) words in the singular include the plural and
vice versa, and (iii) the use in this Agreement of a pronoun in reference to a
party hereto includes the masculine, feminine or neuter, as the context may
require. This Agreement will not be interpreted or construed to require any
Person to take any action, or fail to take any action, that would violate any
applicable Law.
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(b) The parties have participated jointly in negotiating
and drafting this Agreement. In the event that an ambiguity or a question of
intent or interpretation arises, this Agreement will be construed as if drafted
jointly by the parties, and no presumption or burden of proof will arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
5.4 SEVERABILITY. The illegality or partial illegality of any of
this Agreement, or any provision hereof, will not affect the validity of the
remainder of this Agreement, or any provision hereof, and the illegality or
partial illegality of this Agreement will not affect the validity of this
Agreement in any jurisdiction in which such determination of illegality or
partial illegality has not been made, except in either case to the extent such
illegality or partial illegality causes this Agreement to no longer contain all
of the material provisions reasonably expected by the parties to be contained
therein.
5.5 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which will be considered one and the same agreement and
will become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that each party need
not sign the same counterpart.
5.6 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
5.7 THIRD PARTY BENEFICIARIES. Nothing in this Agreement, expressed
or implied, is intended to confer on any Person other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
5.8 GOVERNING LAW. This Agreement will be governed by and construed
in accordance with the internal Laws of the State of Delaware applicable to
Contracts made and wholly performed within such state, without regard to any
applicable conflict of laws principles.
5.9 SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and
will inure to the benefit of the signatories hereto and their respective
successors and permitted assigns. Neither the Company nor any Stockholder may
assign this Agreement or any of their rights or liabilities hereunder without
the prior written consent of the other parties hereto, and any attempt to make
any such assignment without such consent will be null and void. Any such
assignment will not relieve the party making the assignment from any liability
under this Agreement.
5.10 SUBMISSION TO JURISDICTION; WAIVERS. Each Stockholder and the
Company irrevocably agrees that any Action with respect to this Agreement, any
provision hereof, the breach, performance, validity or invalidity hereof or for
recognition and enforcement of any judgment in respect hereof brought by
another party hereto or its successors or permitted assigns shall be brought
and determined in the Court of Chancery or other courts of the State of
Delaware located in the State of Delaware, and each Stockholder and the Company
hereby irrevocably submits and consents with regard to any such Action or
proceeding for itself and in respect to its property, generally and
unconditionally, to the exclusive jurisdiction of the aforesaid courts. Each of
Stockholder and the Company hereby irrevocably waives, and agrees not to
assert, by way of motion, as a defense, counterclaim or otherwise, in any
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Action with respect to this Agreement, any provision hereof or the breach,
performance, enforcement, validity or invalidity hereof, (a) any claim that it
is not personally subject to the jurisdiction of the above named courts for any
reason, (b) that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (c) to the
fullest extent permitted by applicable Laws, that (i) Action in any such court
is brought in an inconvenient forum, (ii) the venue of such Action is improper
and (iii) this Agreement, or the subject matter hereof, may not be enforced in
or by such courts. Each party hereto hereby agrees that, to the fullest extent
permitted by Law, service of any process, summons, notice or document by U.S.
registered mail to the respective addresses set forth in Section 5.2 shall be
effective service of process for any suit or proceeding in connection with this
Agreement or the transactions contemplated hereby.
5.11 SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree
that the failure of any party to perform its agreements and covenants hereunder
will cause irreparable injury to the other parties for which damages, even if
available, will not be an adequate remedy. Accordingly, each party hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of such party's obligations and to the
granting by any court of the remedy of specific performance of its obligations
hereunder.
5.12 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH OF THE PARTIES HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 5.12.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the Company and the Stockholders
has caused this Agreement to be signed by its officer thereunto duly
authorized, all as of the date first written above.
SALTON, INC.
By:
---------------------------------
Name:
Title:
HARBINGER CAPITAL PARTNERS MASTER
FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C., ITS INVESTMENT MANAGER
By:
---------------------------------
Name:
Title:
HARBINGER CAPITAL PARTNERS SPECIAL
SITUATIONS FUND, L.P.
By: Harbinger Capital Partners Special
Situations GP, LLC, ITS GENERAL PARTNER
By: HMC - New York, Inc., ITS
MANAGING MEMBER
By:
---------------------------------
Name:
Title:
EXHIBIT A
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ADDRESSES FOR NOTICE
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SALTON, INC.
0000 X. Xxxxx Xxxxx
Xxxx Xxxxxx, Xxxxxxxx 00000
Attention:
Facsimile: (000) 000-0000
With a copy to:
XXXXXXXXXXXX XXXX & XXXXXXXXX LLP
7800 Sears Tower, 000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000 6404
Attention: Xxxx Xxxxxxxxxx
Facsimile: 312.876.7934
HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
c/o 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 6064
Attention: Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.
c/o 555 Madison Avenue, 16th Floor
New York, New York 10022
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
XXXX, WEISS, RIFKIND, XXXXXXX & XXXXXXXX LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 6064
Attention: Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile: (000) 000 0000
