EXHIBIT 99.3
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
_______________________________________________________
TABLE OF CONTENTS
Page
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 MISCELLANEOUS 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
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control with, such Person. For purposes of 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 creditor's 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 which any of their
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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
MISCELLANEOUS
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.
(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,
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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 Action with
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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 partys 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: Xxxxxx X. Xxxxxxx
Title: Senior Managing Director
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: Xxxxxxx X. Xxxxx, Xx.
Title: Senior Vice President and
General Counsel
[Signature Page to Stockholders Agreement]
Exhibit A
ADDRESSES FOR NOTICE
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
