EXHIBIT R
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SILVER POINT FINANCE, LLC
XXX XXXXXXXXX XXXXX, 0XX XXXXX
XXXXXXXXX, XX 00000
CONFIDENTIAL
March 23, 2007
Harbinger Capital Partners Master Fund I, Ltd.
Harbinger Capital Partners Special Situations Fund, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxx
RE: APN HOLDING COMPANY ET AL. CREDIT FACILITIES
(THIS "LETTER")
Ladies and Gentlemen:
This Letter sets forth certain agreements among Harbinger Capital Partners
Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund,
L.P. (collectively, "SPONSOR") in connection with the financing arrangements to
be entered into among Silver Point Finance, LLC (acting individually or through
one or more of its affiliates) ("SILVER POINT"), certain other financial
institutions as lenders and APN Holdings Company ("COMPANY") and certain other
entities, all as set forth in that certain Commitment Letter dated of even date
herewith and attached hereto as EXHIBIT A (as amended, amended and restated,
supplemented or otherwise modified and in effect from time to time, the
"COMMITMENT LETTER"), between the Company and Silver Point. Capitalized terms
used but not defined herein shall have the meanings provided to such terms in
the Commitment Letter.
Silver Point's commitment to provide the U.S. Facility and the UK Facility
shall be subject in all respects to the satisfaction of the terms and
conditions contained in this Letter.
COSTS AND EXPENSES
In consideration of the commitments made to the Company under the
Commitment Letter and recognizing that, in connection therewith, Silver Point
is incurring costs and expenses and allocating internal resources (including,
without limitation, fees and disbursements of counsel, filing and recording
fees, costs and expenses of due diligence, transportation, duplication,
messenger, appraisal, audit, and consultant costs and expenses), Sponsor hereby
agrees to pay or reimburse Silver Point for all such costs and expenses
(collectively, "Expenses"), regardless of whether any of the transactions
contemplated in the Commitment Letter are consummated. Sponsor also agrees to
pay all Expenses of Silver Point (including, without limitation, fees and
APN Holding Company
March 23, 2007
disbursements of counsel) incurred in connection with the enforcement of any of
its rights and remedies thereunder.
CONFIDENTIALITY AND ARMS LENGTH
By accepting this Letter, Sponsor agrees that this Letter (including the
Commitment Letter attached hereto as Exhibit A and, for the avoidance of doubt,
the Interest and Fee Letter) is for its confidential use only and that neither
its existence nor the terms hereof or thereof will be disclosed by Sponsor to
any person; PROVIDED, HOWEVER, that Sponsor may disclose the existence of this
Letter and/or the terms hereof to Sponsor's officers, directors, employees,
accountants, attorneys and other advisors, in each case, on a "need-to-know"
basis in connection with the transactions contemplated hereby and on the same
confidential basis as provided herein. The foregoing notwithstanding, following
the return to us of a counterpart of this Letter executed by Sponsor, and the
Commitment Letter and the Interest and Fee Letter executed by the Company, and
subject to compliance with the provisions hereof and thereof, Sponsor may (i)
make public disclosures of the terms and conditions of this Letter (but for
clarity not the Interest and Fee Letter) as Sponsor is required by law, in the
opinion of its counsel, to make, and (ii) may disclose a summary of the
Attachment A to the Commitment Letter as well as the interest rates described
in the Interest and Fee Letter but no other term set forth herein or therein as
Sponsor is required by law, in the opinion of its counsel, to make, in each
case of clause (i) and (ii) herein, subject to prior review and approval by
Silver Point of such disclosure (such approval not to be unreasonably
withheld).
After the closing date, you agree that we may, at our expense, and in
consultation with you, publicly announce as we may choose the capacities in
which we or our respective affiliates have acted in connection with the
Facility.
In connection with all aspects of each transaction contemplated by this
Letter and the Commitment Letter, you acknowledge and agree that: (a) the
Facility and any related arranging or other services described in the
Commitment Letter is an arm's-length commercial transaction between you, Salton
and your respective affiliates (including, without limitation, the Company), on
the one hand, and Silver Point, on the other hand, and you, the Company and
Salton are capable of evaluating and understanding and understand and accept
the terms, risks and conditions of the transactions contemplated by the
Commitment Letter and hereunder; (b) in connection with the process leading to
such transaction, Silver Point is and has been acting solely as a principal and
is not the financial advisor or fiduciary for you, Company, Salton, Applica or
any respective affiliates, stockholders, creditors or employees or any other
party; (c) Silver Point has not assumed nor will it assume an advisory or
fiduciary responsibility in your, Company's, Salton's, Applica's or any
respective affiliates' favor with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether
Silver Point has advised or is currently advising you, Company, Salton, Applica
or any respective affiliates on other matters) and Silver Point has no
obligation to you, Company, Salton, Applica or any respective affiliates with
respect to the transactions contemplated hereby or in the Commitment Letter
except those obligations expressly set forth in the Commitment Letter and the
definitive credit documentation; (d) Silver Point and its respective affiliates
may be engaged in a broad range of transactions that involve interests that
differ from yours, Company's, Salton's,
APN Holding Company
March 23, 2007
Applica's or any respective affiliates' interests and Silver Point has no
obligation to disclose any of such interests by virtue of any advisory, agency
or fiduciary relationship; and (e) Silver Point has not provided any legal,
accounting, regulatory or tax advice with respect to any of the transactions
contemplated hereby and you, Company, Salton, Applica and any respective
affiliate have consulted with such entity's own legal, accounting, regulatory
and tax advisors to the extent deemed appropriate by such entity. You hereby
waive and release, to the fullest extent permitted by law, any claims that you
may have against Silver Point with respect to any breach or alleged breach of
fiduciary duty.
INFORMATION
In issuing this Letter, Silver Point is relying on the accuracy of the
information furnished by or on behalf of you, the Company, Salton, Applica, or
any respective affiliate or representative of such entity, without independent
verification thereof. You hereby represent and warrant that (a) all
information, other than Projections (as defined below) and information of a
general economic or industry specific nature, that has been or is hereafter
made available to Silver Point (including information provided both prior to
and after the acquisition of Applica by the Company) by you, the Company,
Salton, Applica or any respective affiliate or representative (or on your or
such entity's behalf) in connection with any aspect of the Transaction taken as
a whole, (the "INFORMATION") is and will be complete and correct as of the time
such information or statement was made in all material respects and does not
and will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements contained therein not materially
misleading in light of the circumstances in which they were made as of the time
such information or statement was made, and (b) all financial projections,
budgets and estimates concerning the Combined Entity, Applica or Salton (or any
subsidiaries, and including information provided both prior to and after the
acquisition of Applica by the Company) that have been or are hereafter made
available to Silver Point by you, the Company, Salton, Applica or any
respective affiliate or representative (or on your or such entity's behalf)
(the "PROJECTIONS") have been or will be prepared in good faith based upon
reasonable assumptions at the time made. You agree to furnish us with such
Information and Projections as we may reasonably request and to supplement the
Information and the Projections from time to time until the Closing Date and,
if requested by us, for a reasonable period thereafter as is necessary to
complete the syndication of the Facility (if any) so that the representation,
warranty and covenant in the immediately preceding sentence remains correct on
the Closing Date and on such later date on which the syndication of the
Facility (if any) is completed. You agree that you will promptly notify us of
any material change in circumstances that could be expected to call into
question the Information or the continued reasonableness of any assumptions
underlying the Projections. In issuing this Letter, you recognize and confirm
that Silver Point (i) is and will be using and relying on the Information and
the Projections (collectively, the "COMBINED INFORMATION") without independent
verification thereof, (ii) does not assume responsibility for the accuracy or
completeness of the Information or the Projections and such other information
and (iii) will not be making any appraisal of any assets or liabilities of the
Combined Entity.
APN Holding Company
March 23, 2007
SYNDICATION
You agree to, and agree to cause the Company and Salton and its
subsidiaries to, take such commercially reasonable actions as Silver Point may
reasonably request from time to time to actively assist Silver Point in forming
a syndicate (if any) for the U.S. Facility and/or the UK Facility (or any
portion of either) including, without limitation, (a) you and your advisors
promptly providing, and causing the Company, the Company's advisors and Salton
and Salton's advisors, to promptly provide, Silver Point with all information
reasonably deemed necessary by Silver Point to successfully complete such
syndication(s); (b) you (and your respective subsidiaries) and the Company and
Salton and its subsidiaries assisting in the preparation of information
memorandum(s), lender presentation(s) and other marketing materials to be used
in connection with such syndication(s) (if any); (c) you, the Company and
Salton using commercially reasonable efforts to ensure that the syndication
efforts of Silver Point benefit materially from your, the Company's and
Salton's existing banking relationships; and (d) you, the Company and Salton
otherwise assisting Silver Point in its syndication efforts, including by
making your management available from time to time to participate in rating
agency meetings, lender meetings and other communications with potential
lenders at such times and places as Silver Point may reasonably request.
EXCLUSIVITY
From and after your acceptance hereof, Sponsor hereby agrees to work
exclusively with Silver Point to accomplish the Facility and agrees that,
unless each of the conditions precedent contained in this Letter, in the
Commitment Letter attached hereto as Exhibit A and in the Interest and Fee
Letter have been satisfied (other than conditions precedent not in the
Sponsor's control after the Sponsor has used commercially reasonable efforts to
have such conditions satisfied, provided in such a circumstance that if Sponsor
or one of its affiliates (including, without limitation, the Company)
subsequently enters into a letter of intent, commitment letter, loan agreement
or other agreement for debt financing with another lender or funding source in
connection with an alternative financing to the Facility, Sponsor shall,
jointly and severally with Company, immediately pay in cash to Silver Point a
fee equal to 2.0% times the Facility Amount less any amounts actually paid in
cash by the Company as a Commitment Fee (as described in Annex A of the
Interest and Fee Letter in the section entitled "Commitment Fees")) and Silver
Point nevertheless fails to fund the Facility as contemplated herein and in the
Commitment Letter attached hereto as Exhibit A, it will not, directly or
indirectly, accept a proposal or commitment from another lender or funding
source in connection with an alternative financing to the Facility, or
otherwise permit or encourage another person to conduct due diligence in
connection with an alternative financing to the Facility. It is understood and
agreed that such activities with regards to the North American ABL Facility is
not a breach of the foregoing obligations.
PARTICIPATION.
Sponsor hereby acknowledges and agrees to use commercially reasonable
efforts, and shall cause its subsidiaries and affiliates (including, without
limitation, the Company) to use commercially reasonable efforts, (i) to
diligently negotiate, document and execute in good faith the definitive
documentation for the Facility, (ii) to consummate the Transactions
contemplated by this Letter and the Commitment Letter (subject to the
conditions precedent set forth therein)
APN Holding Company
March 23, 2007
and (iii) to rollover at least $100 million of indebtedness (comprised of
principal, accrued interest and any premiums thereon) held by the Sponsor as
described more fully in clause (n) in the section titled "Initial Conditions"
of the Summary of Terms and Conditions attached to the Commitment Letter
(subject to the conditions precedent set forth therein and the conditions
precedent set forth in the Merger Agreement dated February 7, 2007), and in
each case of clauses (i) through (iii), take all steps necessary or desirable
in respect thereof.
GOVERNING LAW.
This Letter shall be governed by, and construed in accordance with, the
law of the State of New York. Each of the parties hereto consents to the
jurisdiction and venue of the federal and/or state courts located within the
City of New York. This Letter sets forth the entire agreement between the
parties with respect to the matters addressed herein and supersedes all prior
communications, written or oral, with respect hereto. This Letter may be
executed in any number of counterparts, each of which, when so executed, shall
be deemed to be an original and all of which, taken together, shall constitute
one and the same letter. Delivery of an executed counterpart of a signature
page to this Letter by fax or other electronic transmission shall be as
effective as delivery of a manually executed counterpart of this letter. This
Letter is not assignable by you without our prior written consent and is
intended solely for the benefit of the parties hereto and the Indemnified
Parties. Nothing herein, express or implied, is intended to or shall confer
upon any other third party any legal or equitable right, benefit, standing or
remedy of any nature whatsoever under or by reason of this Letter.
WAIVER OF JURY TRIAL
Each party hereto irrevocably waives all right to trial by jury in any
action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Letter or the transactions
contemplated by this Letter or the actions of Silver Point or any of its
affiliates in the negotiation, performance, or enforcement of this Letter, the
Commitment Letter or the Interest and Fee Letter.
SURVIVAL OF TERMS
The provisions of this Letter regarding Costs and Expenses, Participation,
Information, Syndication, Confidentiality and Arms Length, Governing Law,
Exclusivity, and Waiver of Jury Trial shall remain in full force and effect
regardless of whether any definitive documentation for the Facility shall be
executed and delivered and notwithstanding the termination of this Letter or
any commitment or undertaking of Silver Point hereunder or under the Commitment
Letter.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please indicate your acceptance of the provisions hereof by signing the
enclosed copy of this letter and returning it to us at or before 6:00 p.m.
(Eastern Time) on or before March 23, 2007. If you elect to deliver this letter
by fax or other electronic transmission, please arrange for the executed
original to follow by next-day courier.
Very truly yours,
SILVER POINT FINANCE, LLC
By: /s/ Xxxxxxx Xxxxxxxx
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Name: XXXXXXX XXXXXXXX
Title: AUTHORIZED SIGNATORY
ACCEPTED AND AGREED TO
as of March 23, 2007
HARBINGER CAPITAL PARTNERS MASTER
FUND I, LTD.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Senior Managing Director
HARBINGER CAPITAL PARTNERS SPECIAL
SITUATIONS FUND, L.P.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Senior Managing Director
EXHIBIT A
[SEE COMMITMENT LETTER]
[EXHIBIT Q HEREIN]
