EXHIBIT Z
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HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD.
HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P.
X/X 000 XXXXXXX XXXXXX, 00XX XXXXX
XXX XXXX, XXX XXXX 00000
October 1, 0000
XXX Holding Company, Inc.
c/o 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to that certain Agreement and Plan of Merger, dated
as of October 1, 2007 (as amended from time to time, the "MERGER AGREEMENT"),
by and among Salton, Inc., a Delaware corporation ("PARENT"), SFP Merger Sub,
Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent
("MERGERSUB"), and APN Holding Company, Inc., a Delaware corporation ("APN
HOLDCO"), pursuant to which MergerSub shall merge with and into APN Holdco with
APN Holdco as the surviving corporation (the "MERGER"). Capitalized terms used
and not otherwise defined herein have the respective meanings ascribed to them
in the Merger Agreement.
We understand that, in order to finance the Transactions, APN Holdco
requires financing in an aggregate amount, which together with all cash
available at APN Holdco, Parent and their respective Subsidiaries, is
sufficient to (a) refinance in full all amounts outstanding under the
Indebtedness listed on SECTION 6.14(A) of the Apple Disclosure Schedule (other
than amounts required to refinance such of Parent's 12 1/4% Senior Subordinated
Notes due 2008 and Second Lien Notes as will be exhanged by the Funds (as
defined below) in payment of the Aggregate Purchase Price (as defined below),
(b) provide such reasonable working capital and sufficient liquidity for Parent
and its Subsidiaries after the Effective Time as APN Holdco shall deem
appropriate and (c) pay all fees and expenses incurred in connection with the
Transactions.
This letter agreement confirms the terms and conditions pursuant to
which Harbinger Capital Partners Master Fund I, Ltd. (the "MASTER FUND") and
Harbinger Capital Partners Special Situations Fund, L.P. (the "SPECIAL FUND"
and together with the Master Fund, the "FUNDS") commit to provide the
Financing.
1. FINANCING. The Funds agree that at, and subject to, the
Closing, the Funds will provide, or cause to be provided to Parent, a senior
secured revolving credit facility (the "HARBINGER FACILITY") to provide
financing in an aggregate amount, which together with all cash available at APN
Holdco, Parent and their respective Subsidiaries, is sufficient to (a)
refinance in full all amounts outstanding under the Indebtedness listed on
SECTION 6.14(A) of the Apple Disclosure Schedule (other than amounts required
to refinance such of Parent's 12 1/4% Senior Subordinated Notes due 2008 and
Second Lien Notes as will be exhanged by the Funds for shares of Parent Series
D Preferred Stock pursuant to that certain Commitment Agreement of
even date herewith among Parent and the Funds), (b) provide such reasonable
working capital and sufficient liquidity for Parent and its Subsidiaries after
the Effective Time as APN Holdco shall deem appropriate and (c) pay all fees
and expenses incurred in connection with the Transactions. The terms of the
Harbinger Facility will provide for a scheduled maturity no sooner than three
years from the Effective Date, an interest rate (assuming no default) of 650
basis points over LIBOR and a 6.5% prepayment penalty declining ratably on an
annual basis until maturity. The Harbinger Facility will also provide for
security and guarantees, representations and warranties, covenants, conditions
and events of defaults substantially similar to those set forth in Strawberry's
Senior Secured Credit Facility as in effect on the date hereof, except that the
Harbinger Facility will not contain any financial covenants. The Funds shall be
paid up-front fees by Parent aggregating $5,000,000, assuming that the entire
Financing is provided pursuant to the Harbinger Facility. If only a portion of
the Financing is provided by the Harbinger Facility, the up-front fee payable
to the Funds shall be equal to the product of $5,000,000 and a fraction, the
numerator of which is the amount of borrowing availability under the Harbinger
Facility and the denominator of which is the aggregate amount of the Financing
being provided by all sources. There will be no warrants or other equity issued
in connection with the Harbinger Facility.
2. DEFINITIVE AGREEMENTS. As soon as reasonably practicable
after your execution of this letter agreement, you and the Funds shall commence
the good faith negotiation of definitive agreements relating to the Harbinger
Facility in accordance with the terms and conditions hereof. The definitive
agreements will include the terms summarized herein and such other terms
typical for financings of this type.
3. CERTAIN CONDITIONS. The commitments of the Funds hereunder
are subject, in the Funds' sole discretion, to (a) the satisfaction of the
conditions set forth in Sections 7.1 and 7.2 of the Merger Agreement, (b) (c)
the execution of the definitive agreements referred to in Section 2 above, and
(c) the concurrent consummation of the Transactions in accordance with the
terms of the Merger Agreement.
4. THIRD PARTY BENEFICIARY. The Funds acknowledge that Parent
has relied on this letter agreement and is an express third-party beneficiary
hereof. This letter agreement is not intended to, and does not, confer upon any
Person, other than Parent and APN Holdco, rights or remedies hereunder or in
connection herewith.
5. LIMITATIONS. Notwithstanding anything that may be expressed
or implied in this letter agreement, it is expressly agreed and acknowledged
that, no Person other than the Funds shall have any obligation hereunder and
that, notwithstanding that the Master Fund is a company organized under the
laws of the Cayman Islands and the Special Fund is a Delaware limited
partnership, no recourse hereunder or under any documents or instruments
delivered in connection herewith shall be had against any former, current or
future director, officer, agent, employee, general or limited partner, manager,
member, advisor, stockholder, affiliate or assignee of either Fund or any
former, current or future director, officer, agent, employee, general or
limited partner, manager, member, advisor, stockholder, affiliate or assignee
of any of the foregoing, whether by the enforcement of any assessment or by any
legal or equitable proceeding, or by virtue of any statute, regulation or other
applicable law; it being expressly agreed and acknowledged that no personal
liability whatsoever shall attach to, be imposed on, or
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otherwise be incurred by any former, current or future director, officer,
agent, employee, general or limited partner, manager, member, advisor,
stockholder, affiliate or assignee of either Fund or any former, current or
future director, officer, agent, employee, general or limited partner, manager,
member, advisor, stockholder, affiliate or assignee of any of the foregoing, as
such, for any obligations of the Funds under this letter agreement or any
documents or instruments delivered in connection herewith or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
6. ASSIGNMENT. Each of the Funds shall be entitled to assign all
or a portion of its obligations hereunder to one or more of its Affiliates that
agree to assume such Fund's obligations hereunder, PROVIDED that such Fund
shall remain obligated to perform its obligations hereunder to the extent not
performed by such Affiliate(s). This letter agreement shall not be assignable
by APN Holdco without the Funds' prior written consent.
7. TERMINATION; AMENDMENT.
(a) If the Closing is not completed on or prior to the
Outside Date, this letter agreement shall automatically terminate and be of no
further force and effect, except that Sections 5, 8 and 9 of this letter
agreement shall remain in full force and effect notwithstanding the termination
of this letter agreement or the commitments and agreements of the Funds
hereunder.
(b) This letter agreement may not be terminated (except
as otherwise provided in paragraph (a) of this Section 7), amended, and no
provision waived or modified, except by an instrument in writing signed by the
Funds and APN Holdco; PROVIDED that (except as otherwise provided in paragraph
(a) of this Section 7) any termination, amendment, waiver or modification prior
to the payment of the Merger Consideration shall require Parent's prior written
consent.
8. GOVERNING LAW; WAIVER OF JURY TRIAL. This letter agreement
shall be governed and construed in accordance, with the laws of the State of
Delaware applicable to contracts executed in and to be performed in that State.
All actions arising out of or relating to this letter agreement shall be heard
and determined exclusively in the state courts located in the State of
Delaware. The parties hereto hereby (a) submit to the exclusive jurisdiction of
the state courts located in the State of Delaware for the purpose of any action
arising out of or relating to this letter agreement brought by any party hereto
or between any of the parties hereto and the express third-party beneficiary
hereof, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named court, that its property is
exempt or immune from attachment or execution, that the action is brought in an
inconvenient forum, that the venue of the action is improper, or that this
letter agreement or the transactions contemplated hereby may not be enforced in
or by the above-named court.
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 LETTER AGREEMENT. EACH OF THE
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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 LETTER AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.
9. ENTIRE AGREEMENT; EFFECT. This letter agreement constitutes
the entire agreement between the parties hereto with respect to the matters
covered hereby and supersedes all prior communications, written and oral,
between the parties.
10. COUNTERPARTS. This letter agreement may be executed in and
delivered (including by facsimile transmission) in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which taken together
shall constitute one and the same instrument.
[Remainder of Page Intentionally Left Blank]
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If the foregoing terms and conditions are acceptable to you, please so
indicate by signing both of the enclosed copies of this letter agreement where
indicated and returning one to the undersigned.
Very truly yours,
HARBINGER CAPITAL PARTNERS
MASTER FUND I, LTD.
By: Harbinger Capital Partners Offshore
Manager, L.L.C., AS ITS INVESTMENT
MANAGER
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Senior
Managing Director
HARBINGER CAPITAL PARTNERS
SPECIAL SITUATIONS FUND, L.P.
By: Harbinger Capital Partners Special
Situations GP, LLC, ITS GENERAL PARTNER
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Senior
Managing Director
Accepted and agreed to
on this 1st day of October, 2007:
APN HOLDING COMPANY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President and Senior
Managing Director
[Signature Page to Commitment Letter]
