-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HtJ3xNFe/pQKTZ5f3jZy6i/tzHpvCugmCH/2gf6TCE+q9KtOsjykt2ePrPq5A0wi TrpxsWDvHcWSJv4svN/ZpA== 0000950142-07-001367.txt : 20070612 0000950142-07-001367.hdr.sgml : 20070612 20070611195347 ACCESSION NUMBER: 0000950142-07-001367 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20070612 DATE AS OF CHANGE: 20070611 GROUP MEMBERS: HARBERT MANAGEMENT CORPORATION GROUP MEMBERS: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. GROUP MEMBERS: HARBINGER CAPITAL PARTNERS OFFSHORE MANAGER, L.L.C. GROUP MEMBERS: HMC INVESTORS, L.L.C. GROUP MEMBERS: MICHAEL D. LUCE GROUP MEMBERS: PHILIP FALCONE GROUP MEMBERS: RAYMOND J. HARBERT SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SALTON INC CENTRAL INDEX KEY: 0000878280 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC HOUSEWARES & FANS [3634] IRS NUMBER: 363777824 STATE OF INCORPORATION: DE FISCAL YEAR END: 0626 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42085 FILM NUMBER: 07913562 BUSINESS ADDRESS: STREET 1: 1955 FIELD COURT STREET 2: - CITY: LAKE FOREST STATE: IL ZIP: 60045 BUSINESS PHONE: 8478034600 MAIL ADDRESS: STREET 1: 1955 FIELD COURT CITY: LAKE FOREST STATE: IL ZIP: 60045 FORMER COMPANY: FORMER CONFORMED NAME: SALTON MAXIM HOUSEWARES INC DATE OF NAME CHANGE: 19930328 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. CENTRAL INDEX KEY: 0001233563 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O INTERNATIONAL FUND SERVICES LIMITED STREET 2: THIRD FL, BISHOP'S SQUARE REDMOND'S HILL CITY: DUBLIN 2 STATE: L2 ZIP: 00000 BUSINESS PHONE: 2125216972 MAIL ADDRESS: STREET 1: C/O INTERNATIONAL FUND SERVICES LIMITED STREET 2: THIRD FL, BISHOP'S SQUARE REDMOND'S HILL CITY: DUBLIN 2 STATE: L2 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: HARBERT DISTRESSED INVESTMENT MASTER FUND LTD DATE OF NAME CHANGE: 20030516 SC 13D/A 1 sc13da12_salton.txt AMENDMENT NO. 12 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (AMENDMENT NO. 12) SALTON, INC. (Name of Issuer) COMMON STOCK, $0.01 PAR VALUE (Title of Class of Securities) 795757103 (CUSIP Number) WILLIAM R. LUCAS, JR. ONE RIVERCHASE PARKWAY SOUTH BIRMINGHAM, ALABAMA 35244 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 8, 2007 (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [_] Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). =============================================================================== - --------------------------- --------------------------- CUSIP NO. 795757103 Page 2 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Harbinger Capital Partners Master Fund I, Ltd. S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 3 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Harbinger Capital Partners Offshore Manager, L.L.C. S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 4 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS HMC Investors, L.L.C. S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 5 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Harbert Management Corporation S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Alabama - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 6 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Philip Falcone S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 7 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Raymond J. Harbert S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 8 - --------------------------- --------------------------- SCHEDULE 13D - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSONS Michael D. Luce S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [_] (b) [X] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF -0- ------------------------------------------------ SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED 3,348,667 ------------------------------------------------ BY EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON -0- ------------------------------------------------ WITH 10 SHARED DISPOSITIVE POWER 3,348,667 - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,348,667 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [_] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 18.59% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - -------------------------------------------------------------------------------- - --------------------------- --------------------------- CUSIP NO. 795757103 Page 9 - --------------------------- --------------------------- This Amendment No. 12 amends and supplements the Statement on Schedule 13D filed on June 13, 2006, as amended October 20, 2006, October 26, 2006, November 6, 2006, November 16, 2006, December 18, 2006, January 3, 2007, January 24, 2007, February 9, 2007, March 30, 2007, May 3, 2007 and May 9, 2007 (as amended, the "Schedule 13D") by Harbinger Capital Partners Master Fund I, Ltd. (the "Master Fund"), Harbinger Capital Partners Offshore Manager, L.L.C. ("Harbinger Management"), the investment manager of the Master Fund, HMC Investors, L.L.C., its managing member ("HMC Investors"), Harbert Management Corporation ("HMC"), the managing member of HMC Investors, Philip Falcone, a shareholder of HMC and the portfolio manager of the Master Fund, Raymond J. Harbert, a shareholder of HMC, and Michael D. Luce, a shareholder of HMC, relating to the Common Stock, par value $0.01 per share (the "Shares"), of Salton, Inc., a Delaware corporation (the "Issuer"). The purpose of this Amendment is to amend the reference to the Commitment Letter provided by Silver Point Finance, LLC dated March 23, 2007 in Item 7 of the Schedule 13D as such Commitment Letter was amended by a Letter Agreement, dated May 4, 2007 between Silver Point Finance, LLC and APN Holdco and further amended by a Letter Agreement, dated June 8, 2007 between Silver Point Finance, LLC and APN Holdco. The Capitalized terms used herein and not otherwise defined in this Amendment No. 12 shall have the meanings set forth in the Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER Paragraphs (a) and (b) of Item 5 of the Schedule 13D are hereby amended and restated as follows: (a, b) As of the date hereof and upon conversion of the Series A Voting Convertible Preferred Stock of Issuer (the "Preferred Stock") acquired by the Master Fund, the Master Fund may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). - --------------------------- --------------------------- CUSIP NO. 795757103 Page 10 - --------------------------- --------------------------- The Master Fund has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. As of the date hereof, the Master Fund also has a short position of 709,560 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, Harbinger Management may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). Harbinger Management has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, HMC Investors may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). HMC Investors has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, HMC may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii)2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). HMC has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, Philip Falcone may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). - --------------------------- --------------------------- CUSIP NO. 795757103 Page 11 - --------------------------- --------------------------- Philip Falcone has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, Raymond J. Harbert may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). Raymond J. Harbert has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. (a, b) As of the date hereof and upon conversion of the Preferred Stock acquired by the Master Fund, Michael D. Luce may be deemed to be the beneficial owner of 3,348,667 Shares, consisting of (i) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund, plus (ii) 701,600 issuable Shares acquired by the Master Fund on December 28, 2006 in connection with the Stock Purchase Agreement. The 3,348,667 Shares described hereto represent approximately 18.59% of the 18,010,856 Shares of Issuer deemed outstanding for purposes of this report (which include (i) 15,363,789 Shares outstanding as of May 11, 2007, plus (ii) 2,647,067 Shares that are issuable to the Master Fund upon conversion of the 30,000 shares of Preferred Stock owned by the Master Fund). Michael D. Luce has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 3,348,667 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 3,348,667 Shares. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Item 7 of the Schedule 13D is hereby amended to replace the references to each of Exhibit A and Exhibit Q in its entirety with the following information: EXHIBIT DESCRIPTION ------- ----------- Exhibit A: Agreement between the Reporting Persons to file jointly Exhibit Q: Commitment Letter provided by Silver Point Finance, LLC dated March 23, 2007, as amended by that certain Letter Agreement, dated May 4, 2007 between Silver Point Finance, LLC and APN Holding Company, Inc. and as further amended by a Letter Agreement, dated June 8, 2007 between Silver Point Finance, LLC and APN Holding Company, Inc. - --------------------------- --------------------------- CUSIP NO. 795757103 Page 12 - --------------------------- --------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. By: Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HARBINGER CAPITAL PARTNERS OFFSHORE MANAGER, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HMC INVESTORS, L.L.C. By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HARBERT MANAGEMENT CORPORATION By: /s/ William R. Lucas, Jr. ------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President & General Counsel - --------------------------- --------------------------- CUSIP NO. 795757103 Page 13 - --------------------------- --------------------------- /s/ Philip Falcone ------------------------------------ Philip Falcone /s/ Raymond J. Harbert ------------------------------------ Raymond J. Harbert /s/ Michael D. Luce ------------------------------------ Michael D. Luce June 12, 2007 Attention: Intentional misstatements or omissions of fact constitute federal criminal violations (see 18 U.S.C. 1001). - --------------------------- --------------------------- CUSIP NO. 795757103 Page 14 - --------------------------- --------------------------- EXHIBIT A AGREEMENT The undersigned agree that this Schedule 13D, Amendment No. 11, dated May 8, 2007 relating to the Shares of Salton, Inc. shall be filed on behalf of the undersigned. HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. By: Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HARBINGER CAPITAL PARTNERS OFFSHORE MANAGER, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HMC INVESTORS, L.L.C. By: /s/ William R. Lucas, Jr. --------------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President HARBERT MANAGEMENT CORPORATION By: /s/ William R. Lucas, Jr. ------------------------------- Name: William R. Lucas, Jr. Title: Executive Vice President & General Counsel - --------------------------- --------------------------- CUSIP NO. 795757103 Page 15 - --------------------------- --------------------------- /s/ Philip Falcone ------------------------------------ Philip Falcone /s/ Raymond J. Harbert ------------------------------------ Raymond J. Harbert /s/ Michael D. Luce ------------------------------------ Michael D. Luce June 12, 2007 EX-99 2 exh-q_sc13da12.txt EXHIBIT Q EXHIBIT Q --------- SILVER POINT FINANCE, LLC TWO GREENWICH PLAZA, FIRST FLOOR GREENWICH, CT 06830 March 23, 2007 COMMITMENT LETTER $175 MILLION SENIOR SECURED CREDIT FACILITIES APN Holding Company c/o Harbinger Capital Partners Master Fund I, Ltd. c/o Harbinger Capital Partners Special Situations Fund, L.P. 555 Madison Avenue, 16th Floor New York, New York 10022 Attention: Mr. David Maura Ladies and Gentlemen: In accordance with our recent discussions with APN Holding Company ("COMPANY"), a company formed by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (collectively, "SPONSOR") and the sole owner of Applica Incorporated ("APPLICA"), set forth on Attachment A hereto is an outline of the terms and conditions pursuant to which Silver Point Finance, LLC (acting individually or through one or more of its affiliates) ("SILVER POINT") is pleased to advise you of its commitment to provide financing in support of the proposed merger (the "MERGER") of the Company with a special purpose subsidiary ("SALTON SUB") of Salton, Inc. ("SALTON") (Salton and the Company and all of their respective subsidiaries, the "COMBINED ENTITY"). Silver Point understands that Company and Salton would like to arrange (a) financing in order to (i) refinance all of the Combined Entity's existing indebtedness (other than indebtedness in the aggregate amount of at least $100 million (comprised of principal, accrued interest and any premiums thereon) held by the Sponsor and its affiliates as of the date hereof, which shall be converted into or exchanged for preferred stock of Salton) and repurchase all existing preferred stock, (ii) finance working capital needs in North America with the North American ABL Facility (as hereinafter defined), (iii) consummate the Merger and (iv) pay fees and expenses associated with such transactions, and (b) financing in order to (i) refinance all of the existing indebtedness of Salton Europe Ltd. (the "UK BORROWER") and its subsidiaries and (ii) finance the UK Borrower's working capital needs in England (collectively clauses (a) and (b), together with the acquisition of Applica on January 23, 2007, the "TRANSACTION"). This letter establishes terms and conditions under which Silver Point commits to provide (a) to certain US entities that are affiliates of the Combined Entities mutually agreed upon by the Company and Silver Point a senior secured credit facility (the "U.S. FACILITY") and (b) to the UK Borrower a senior secured credit facility (the "UK FACILITY"; and together with the U.S. Facility, the "FACILITY") in an aggregate amount equal to $175 million (the "FACILITY AMOUNT"), the allocation of the Facility Amount APN Holding Company March 23, 2007 Page 2 between the U.S. Facility and the UK Facility to be designated as provided in Attachment A. Silver Point's commitment to provide the U.S. Facility and the UK Facility shall be subject in all respects to satisfaction of the terms and conditions contained in this commitment letter, in Attachment A and in the interest and fee letter dated the date hereof between the parties hereto (the "INTEREST AND FEE LETTER") and the receipt by Silver Point of a satisfactory letter agreement (the "SPONSOR LETTER") from Sponsor. You and we each agree to negotiate in good faith to finalize loan documentation required for the U.S. Facility and the UK Facility following the execution and delivery of this commitment letter. Please note, moreover, that the terms and conditions of the proposed Facility are not limited to those set forth herein or in Attachment A. Matters not covered or made clear herein or in Attachment A are subject to mutual written agreement of the parties. COSTS AND EXPENSES In consideration of this commitment and recognizing that, in connection herewith, 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), Company hereby agrees to pay or reimburse Silver Point for all such costs and expenses (collectively, "EXPENSES"), regardless of whether any of the transactions contemplated hereby are consummated. Company also agrees to pay all Expenses of Silver Point (including, without limitation, fees and disbursements of counsel) incurred in connection with the enforcement of any of its rights and remedies hereunder. CONFIDENTIALITY AND ARMS LENGTH By accepting this commitment letter, Company agrees that this commitment letter (including Attachment A) is for its confidential use only and that neither its existence nor the terms hereof will be disclosed by Company to any person; PROVIDED, HOWEVER, that Company may disclose the existence of this commitment letter and/or the terms hereof, including the Interest and Fee Letter, to its and Salton's respective 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 commitment letter and the Interest and Fee Letter, in each case executed by Company and subject to compliance with the provisions hereof and thereof, (i) the Company may file a copy of this letter (but for clarity not the Interest and Fee Letter) in any public record in which it is required by law to be filed and may make such other public disclosures of the terms and conditions of this letter (but for clarity not the Interest and Fee Letter) as Company is required by law, in the opinion of its counsel, to make and (ii) the Company and/or Salton may disclose a summary of Attachment A hereto as well as the interest rates described in the Interest and Fee Letter but no other term set forth herein or therein as the Company and/or Salton is required by law, in the opinion of its counsel, to make, in each APN Holding Company March 23, 2007 Page 3 case, 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 commitment letter, you acknowledge and agree that: (a) the Facility and any related arranging or other services described in this commitment letter is an arm's-length commercial transaction between you, Salton and your respective affiliates, on the one hand, and Silver Point, on the other hand, and you and Salton are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated by this commitment letter; (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, Sponsor, 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, Sponsor'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, Sponsor, Salton, Applica or any respective affiliates on other matters) and Silver Point has no obligation to you, Sponsor, Salton, Applica or any respective affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth in this 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, Sponsor's, Salton's, 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, Sponsor, 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 commitment letter, Silver Point is relying on the accuracy of the information furnished by or on behalf of you, Sponsor, 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, Sponsor, 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 APN Holding Company March 23, 2007 Page 4 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, Sponsor, 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 commitment 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. SYNDICATION Silver Point commits to underwrite the Facility in its entirety. Silver Point may, in consultation with Company, syndicate the U.S. Facility and/or the UK Facility (or any portion of either) to additional lenders with a corresponding reduction in Silver Point's share of the Facility. Silver Point will, in consultation with Company, manage all aspects of any syndication, including the timing of all offers to potential lenders and the acceptance of commitments, the amount offered, any titles that are offered and the compensation or fees provided. You agree to, and agree to cause Sponsor 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 Sponsor, the Sponsor'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 Sponsor and Salton and its subsidiaries assisting in the preparation of information memorandum(s), lender presentation(s) and other marketing materials to be used APN Holding Company March 23, 2007 Page 5 in connection with such syndication(s) (if any); (c) you, Sponsor and Salton using commercially reasonable efforts to ensure that the syndication efforts of Silver Point benefit materially from your, Sponsor's and Salton's existing banking relationships; and (d) you, Sponsor 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, Company hereby agrees to work exclusively with Silver Point to accomplish the Facility and agrees that, unless each of the conditions precedent contained in this commitment letter, in Attachment A hereto and in the Interest and Fee Letter have been satisfied (other than conditions precedent not in the Company's control after the Company has used commercially reasonable efforts to have such conditions satisfied, provided in such a circumstance that if the Company or one of its affiliates 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, the Company shall immediately pay in cash to Silver Point a fee equal to 1.50% times the Facility Amount) and Silver Point nevertheless fails to fund the Facility as contemplated herein and in Attachment 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 a five-year $250 million credit facility, secured solely by a first lien security interest in accounts receivables, inventory and the proceeds thereof located in the United States, Canada and Puerto Rico (the "ABL COLLATERAL") and to be provided by a syndicate of lenders with Bank of America, N.A. or another institution reasonably satisfactory to Silver Point as agent (the "NORTH AMERICAN ABL FACILITY"), is not a breach of the foregoing obligations. INDEMNIFICATION Company agrees to indemnify and hold harmless Silver Point, and each of its affiliates and each of its respective officers, directors, employees, agents, advisors, attorneys and representatives (each, an "INDEMNIFIED PARTY") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, fees and disbursements of counsel), that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or relating to this commitment letter, the Interest and Fee Letter or the transactions contemplated hereby, or any use made or proposed to be made with the proceeds of the Facility, irrespective of whether the transactions contemplated hereby are consummated, except to the extent such claim, damage, loss, liability, or expense is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. Company further agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract, tort or otherwise) to Company, Sponsor, Salton or any affiliates for or in connection with the transactions contemplated hereby, except to the extent such liability is found in a final non-appealable APN Holding Company March 23, 2007 Page 6 judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In no event, however, shall any Indemnified Party be liable on any theory of liability for any special, indirect, consequential or punitive damages. GOVERNING LAW. This commitment 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 commitment letter, together with the Interest and Fee 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 commitment 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 commitment 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 commitment 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 or the Interest and Fee Letter. Please indicate your acceptance of the provisions hereof by signing the enclosed copy of this letter and returning it, together with a signed copy of the Interest and Fee Letter and the fees payable pursuant to the Interest and Fee Letter, 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. All respective commitments and undertakings of Silver Point under this commitment letter will expire at 6:00 p.m. (New York City time) on March 23, 2007, unless you execute this commitment letter and the Interest and Fee Letter and pay the fees payable as provided herein and therein and the Sponsor executes the Sponsor Letter. Thereafter, all accepted commitments and undertakings of Silver Point hereunder will expire on the earliest of (a) July 31, 2007, unless the closing date of the Facility occurs on or prior thereto, (b) the closing of the Merger or (c) the abandonment or termination of any of the definitive documentation for the Merger. In addition, all accepted commitments and undertakings of Silver Point hereunder may be terminated by us if you fail to perform your obligations under this commitment letter or the Interest and Fee Letter on a timely basis. APN Holding Company March 23, 2007 Page 7 The provisions of this commitment letter regarding Costs and Expenses, Confidentiality and Arms Length, Indemnification, Governing Law, Exclusivity, and Waiver of Jury Trial and the Interest and Fee Letter 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 commitment letter or any commitment or undertaking of Silver Point hereunder. Except as provided in the previous sentence, your obligations under this commitment letter (other than in respect of Information and Syndication as provided herein) shall automatically terminate and be superseded by the provisions of the credit documentation upon the initial funding thereunder and the payment of all amounts owing at such time hereunder, and you shall automatically be released from all liability in connection therewith at such time. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Very truly yours, SILVER POINT FINANCE, LLC By: /s/ Richard Petrilli ---------------------- Name: RICHARD PETRILLI Title: AUTHORIZED SIGNATORY ACCEPTED AND AGREED TO as of March 23, 2007 APN HOLDING COMPANY By: /s/ Philip Falcone ------------------ Name: ------------------ Title: ---------------- ATTACHMENT A TO COMMITMENT LETTER SUMMARY OF TERMS AND CONDITIONS OF THE SENIOR SECURED CREDIT FACILITIES SET FORTH BELOW IS A SUMMARY OF THE PRINCIPAL TERMS AND CONDITIONS OF THE U.S. FACILITY AND THE UK FACILITY AND THE DOCUMENTATION RELATED THERETO. CAPITALIZED TERMS USED AND NOT OTHERWISE DEFINED HEREIN HAVE THE MEANINGS SET FORTH IN THE COMMITMENT LETTER TO WHICH THIS SUMMARY OF TERMS AND CONDITIONS IS ATTACHED AND OF WHICH IT FORMS A PART. I. PARTIES STRUCTURE OF TRANSACTION APN Holding Company ("COMPANY"), a company formed by Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (collectively, "SPONSOR") and the sole owner of Applica Incorporated ("APPLICA"), will merge (the "MERGER") with a special purpose subsidiary ("SALTON SUB") of Salton, Inc. ("SALTON"). Salton and the Company, together with all of their respective subsidiaries, the "COMBINED ENTITY". BORROWERS With respect to the U.S. Facility (as defined below), certain US entities that are the Combined Entities and/or affiliates of the Combined Entities to be mutually agreed upon by the Company and the Agent, which will include a newly-formed, wholly-owned subsidiary of Salton ("NEWCO") which will own all assets of Salton (other than assets that Agent consents to as immaterial, such consent not to be unreasonably withheld) (collectively, the "U.S. BORROWERS"). With respect to the UK Facility (as defined below), Salton Europe Ltd. or a special purpose finance company to be mutually agreed upon by the Company and the Agent (the "UK BORROWER"; and together with the U.S. Borrowers, the "BORROWERS"). GUARANTORS With respect to the U.S. Facility, Salton and all of Salton's direct and indirect domestic subsidiaries that are not U.S. Borrowers (the "U.S. FACILITY GUARANTORS"). With respect to the UK Facility, Salton and all of Salton's direct and indirect subsidiaries that are not UK Borrowers, except for such direct or indirect subsidiaries which (i) the Agent determines in its sole discretion are not material or (ii) the guarantee by such subsidiary would contravene the laws of such guarantor's jurisdiction of organization (the "UK FACILITY GUARANTORS"; and together with the U.S. Facility Guarantors, the "GUARANTORS"; the U.S. Borrowers and the U.S. Facility Guarantors, collectively, the "U.S. CREDIT PARTIES"; the UK Borrower and the UK Facility Guarantors, collectively, the "UK CREDIT PARTIES"; the Borrowers and the Guarantors, collectively, the "CREDIT PARTIES"). AGENT Silver Point Finance, LLC or any other Lender designated by Silver Point (in such capacity, the "AGENT"). LENDERS Silver Point, one or more of its affiliates, and other lenders designated by Agent (collectively, the "LENDERS") provided that the UK Facility may be arranged by Silver Point through a bank or other financial institution in the UK. CLOSING DATE The date on which all Initial Conditions Set forth herein have been satisfied and the initial funding under the Facilities has occurred, which date shall be on or before July 31, 2007 or such later date as mutually agreed upon in writing among the Company and the Agent (the "CLOSING DATE"). II. U.S. FACILITY A term loan facility (the "U.S. FACILITY"), the amount of which shall be designated in the final documentation upon mutual agreement by the Company and the Agent (the "U.S. FACILITY AMOUNT") (the loans thereunder the "U.S. LOAN"). The U.S. Facility Amount and the UK Facility Amount (as hereinafter defined) shall equal $175 million in aggregate. The U.S. Loan shall be repayable in principal installments as follows: (1) on February 28, 2008, $15.0 million and (2) on June 30, 2008, $10.0 million. On the five year anniversary of the Closing Date (the "U.S. FACILITY MATURITY DATE"), the unpaid balance of the U.S. Facility and any accrued interest shall be due and payable in full. AVAILABILITY The U.S. Loan shall be made in a single drawing on the Closing Date. On the Closing Date, the outstanding U.S. Loan and the outstanding UK Loans (as hereinafter defined) shall equal $175 million in aggregate. III. UK FACILITY A revolving credit and term loan facility (the "UK FACILITY") comprised of the UK Debtors Facility, the UK Revolving Credit Facility and the UK Property Term Loan. The UK Facility shall be in an aggregate principal amount which shall be designated in the final documentation upon mutual agreement by the Company and the Agent (the "UK FACILITY AMOUNT") (the loans thereunder, the "UK LOANS" and together with the U.S. Loan, the "LOANS"). The U.S. Facility Amount and the UK Facility Amount shall equal $175 million in aggregate, with the UK Facility Amount denominated in pounds. UK DEBTORS FACILITY Lenders will purchase or lend against (at the Agent's sole discretion) trade debt from the UK Borrower under a facility (the "UK DEBTORS FACILITY") in an aggregate amount denominated in pounds which shall be designated in the final documentation upon mutual agreement by the Company and the Agent. Upon the date (the "UK DEBTORS FACILITY TRIGGER DATE") that is the earlier of (i) the first date on which the amounts outstanding under the UK Debtors Facility are less than or equal to the UK Debtors Facility Maximum (as hereinafter defined) and (ii) October 31, 2007, and thereafter, the amounts permitted to be outstanding and available by way of purchase price shall not exceed 85% of eligible trade debtors of the UK Borrower in England or other jurisdictions acceptable to Agent, or where credit is insured to the satisfaction of Agent (the "UK DEBTORS FACILITY MAXIMUM") at any time. Upon the Closing Date, the amount available and drawn shall be an amount designated in the final documentation upon mutual agreement by the Company and the Agent (for indicative purposes only, such amount is currently estimated to be $25 million). After the Closing Date, the Lenders shall not be obligated to make advances under the UK Debtors Facility until after the UK Debtors Facility Trigger Date. UK REVOLVING CREDIT FACILITY A revolving credit facility (the "UK REVOLVING CREDIT FACILITY") will be available, in an aggregate amount denominated in pounds which shall be designated in the final documentation upon mutual agreement by the Company and the Agent (the "UK REVOLVING CREDIT FACILITY LIMIT"). Upon the date (the "UK REVOLVING CREDIT FACILITY TRIGGER DATE") that is the earlier of (i) the first date on which the amounts outstanding under the UK Revolving Credit Facility are less than or equal to the UK Revolving Credit Facility Maximum (as hereinafter defined) and (ii) October 31, 2007, and thereafter, the amounts permitted to be outstanding and available shall not exceed the lesser of (i) 75% of the value of eligible finished stock in England owned by the UK Borrower, valued at the lower of cost or market value (the "UK REVOLVING CREDIT FACILITY MAXIMUM") or (ii) 85% of the net orderly liquidation value of such stock. Upon the Closing Date, the amount available and drawn shall be an amount designated in the final documentation upon mutual agreement by the Company and the Agent (for indicative purposes only, such amount is currently estimated to be $25 million). After the Closing Date, the Lenders shall not be obligated to make advances under the UK Revolving Credit Facility until after the UK Revolving Credit Facility Trigger Date. UK PROPERTY TERM LOAN A term loan facility (the "UK PROPERTY TERM LOAN") in an amount equal to the lesser of (a) $10 million (equivalent but denominated in pounds) and (b) 75% of the fair market value of the property owned by the UK Borrower, located in England and acceptable to the Lenders. The UK Property Term Loan shall be available on the Closing Date. The UK Property Term Loan will be repaid in consecutive equal monthly installments of principal commencing on the first day of the first month immediately succeeding the Closing Date and on the first day of each month thereafter. The amount of each monthly installment will be calculated based on a 60-month amortization, with the final installment to be in the amount of the then outstanding principal balance of the UK Property Term Loan on the UK Credit Termination Date. UK MATURITY DATE The UK Debtors Facility, the UK Revolving Credit Facility and the UK Property Term Loan, shall be repaid in full in cash on the fifth anniversary of the Closing Date (the "UK CREDIT TERMINATION DATE"). IV. CERTAIN PAYMENT PROVISIONS FEES AND INTEREST RATES As set forth in the Interest and Fee Letter. OPTIONAL PREPAYMENTS AND The respective Borrowers may, upon COMMITMENT prior written notice, (i) prepay the REDUCTIONS U.S. Facility or the UK Property Term Loan or (ii) reduce the commitments under the UK Debtors Facility or the UK Revolving Credit Facility, in whole at any time or in part from time to time. MANDATORY PREPAYMENTS With respect to the U.S. Facility, customary mandatory prepayments (subject to the terms of the North American ABL Facility in respect of asset sales of accounts receivable and inventory (other than in the ordinary course of business) in North America with an equivalent reduction in the amount of the commitments under the North American ABL Facility) will be included in the Credit Documentation (including, without limitation, in an amount equal to (a) 100% of the net cash proceeds from the incurrence of debt other than permitted debt, (b) 50% of the net cash proceeds from the issuance of equity (other than equity issued to Sponsor the proceeds of which are used to fund permitted acquisitions), (c) 100% of the net cash proceeds from the sale of assets (other than inventory in the ordinary course of business), casualty events, receipt of tax refunds, and other extraordinary receipts and (d) 75% of excess cash flow (as defined in the Credit Documentation) commencing with fiscal year ending June 30, 2008), subject to customary exceptions and reinvestment provisions to be negotiated. Application of such mandatory prepayments shall be as set forth in the Credit Documentation. With respect to the UK Facility, customary mandatory prepayments will be included in the Credit Documentation (including, without limitation, in an amount equal to 100% of the net cash proceeds from the sale of assets, casualty events, receipt of tax refunds, and other extraordinary receipts), subject to customary exceptions to be negotiated. Application of such mandatory prepayments to be as set forth in the definitive Credit Documentation. V. COLLATERAL The obligations of each U.S. Credit Party in respect of the U.S. Facility shall be secured by (i) a perfected second priority security interest in the ABL Collateral (which is otherwise subject only to the first priority security interest in favor of the North American ABL Facility, which shall be the only collateral for the North American ABL Facility); and (ii) a perfected first priority security interest in substantially all of its other tangible and intangible assets, wherever located (including, without limitation, intellectual property, real property, intercompany loans, licenses, permits and capital stock / shareholdings (as appropriate) and other equity interests in subsidiaries and affiliates), except for (x) those assets as to which the Agent shall determine in its sole discretion that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby, and (y) in the case of foreign jurisdictions, subject to limitations of local law. The obligations of each Credit Party in respect of the UK Facility shall be secured by (i) a perfected second priority security interest (or the UK equivalent) in the ABL Collateral (which is otherwise subject only to the first priority security interest in favor of the North American ABL Facility, which shall be the only collateral for the North American ABL Facility); and (ii) a perfected first priority security interest (or the UK equivalent) in substantially all of its other tangible and intangible assets, wherever located (including, without limitation, intellectual property, real property, intercompany loans, licenses, permits, capital stock / shareholdings (as appropriate) and other equity interests in subsidiaries and affiliates and a minimum five-year license to the George Foreman products and rights for Europe, such license in form and substance reasonably satisfactory to the Agent), except for (x) those assets as to which the Agent shall determine in its sole discretion that the costs of obtaining such a security interest are excessive in relation to the value of the security to be afforded thereby, and (y) in the case of foreign jurisdictions, subject to limitations of local law. VI. USE OF PROCEEDS The proceeds of the U.S. Facility shall be used on the Closing Date to refinance a portion of the Combined Entity's existing indebtedness (other than indebtedness in the aggregate amount of at least $100 million (comprised of principal, accrued interest and any premiums thereon) held by the Sponsor and its affiliates as of the date hereof, which shall be converted into or exchanged for at least $100 million of preferred stock of Salton) in the United States and repurchase preferred stock and to pay fees and expenses incurred in connection with the closing of the Transaction. The proceeds of the UK Loans shall be used (i) on the Closing Date to refinance all of the UK Borrower's and its subsidiaries existing indebtedness, (ii) on the Closing Date and if necessary to refinance a portion of the Combined Entities existing indebtedness in the United States and (iii) to finance the UK Borrower's working capital needs in England. VII. CERTAIN CONDITIONS INITIAL CONDITIONS The availability of the Facility is subject to the satisfaction or written waiver of the following conditions: (a) completion of the Agent's legal, environmental and collateral (including, but not limited to, field audits, inventory appraisals and real property appraisals) due diligence and receipt of reports related thereto, the results of which are reasonably satisfactory in form and substance to the Agent; (b) all of the Combined Information shall be complete and correct in all material respects; and no changes, occurrences or developments shall have occurred, and no new or additional information shall have been received or discovered by the Agent regarding the Company, Applica, Salton and their respective subsidiaries or the Transaction after the date of the Commitment Letter to which this Attachment A is attached that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect (as defined below); (c) availability under the North American ABL Facility at closing, on a pro forma basis after giving effect to the initial use of proceeds under the North American ABL Facility and the consummation of the Transaction, of not less than $20 million; (d) there shall not have occurred any event, change, development or circumstance since December 31, 2005 in respect of Company and its subsidiaries or since June 30, 2006 in respect of Salton and its subsidiaries, in each case, which has had, or could reasonably be expected to have, a material adverse effect on or change in (x) the financial condition, business, results of operation, management, general affairs, assets or liabilities of Company and its subsidiaries or Salton and its subsidiaries, in each case, taken as a whole or (y) the Facility or the Transaction (a "MATERIAL ADVERSE EFFECT"); PROVIDED, HOWEVER, that in no event shall any of the following be deemed to constitute a Material Adverse Effect under clause (x) above: any event, circumstance, change or effect resulting from or relating to (i) a change in general political, economic or financial market conditions, (ii) changes affecting the industries generally in which Salton and its subsidiaries conduct business, (iii) seasonal fluctuations in the business of Salton and its subsidiaries to the extent materially consistent with historical results, (iv) any acts of terrorism or war, (v) compliance with the terms of, or the taking of any action required by, the Transaction Documents (as defined below), (vi) the failure to comply with the financial covenants in the senior secured and second lien credit agreements of Salton and its subsidiaries; PROVIDED, that the underlying causes of such non-compliance shall not be excluded from the determination of a Material Adverse Effect; PROVIDED FURTHER, that such indebtedness is repaid in full and terminated on the Closing Date, except in the case of each of clauses (i), (ii) (iii) and (iv) to the extent such event, circumstance, change or effect has had a disproportionate effect on Salton and its subsidiaries as compared to other persons in the industry in which Salton and its subsidiaries conduct their business; (e) Agent shall be reasonably satisfied that no borrowing limits of the UK Borrower or any of its subsidiaries shall be breached and the Transaction contemplated herein does not violate any financial assistance rules or regulations of England and Wales or any other applicable jurisdiction; (f) the applicable Credit Parties shall have executed and delivered definitive documentation with respect to the Facility (the "CREDIT DOCUMENTATION"), that is prepared by counsel to the Agent, as well as all documentation (including, but not limited to, evidence of insurance, legal opinions, trade debtors servicing agreements, solvency certificates and officers' certificates) required to be delivered pursuant to the Credit Documentation, in each case reasonably satisfactory in form and substance to the Agent; and there shall not exist, on a pro forma basis after giving effect to the Transaction and the initial funding under the Facility and the North American ABL Facility, a default or event of default under the Facility or any of the other Credit Documentation; (g) the applicable Credit Parties shall have executed and delivered definitive documentation with respect to the North American ABL Facility reasonably satisfactory in form and substance to the Agent, and there shall not exist, on a pro forma basis after giving effect to the Transaction and the initial funding under the Facility and the North American ABL Facility, a default or event of default thereunder or any document related thereto; (h) the corporate structure of the Combined Entity and their respective subsidiaries is as set forth in Appendix A attached hereto; PROVIDED, however, that prior to the Closing Date, Salton will transfer all of its assets owned as of the date hereof or thereafter (including ownership of all of Salton's subsidiaries, but excluding assets that Agent consents to as immaterial, such consent not to be unreasonably withheld) to Newco, and such transfer and resulting structure is in form and substance reasonably satisfactory to the Agent and its counsel; (i) Agent shall have received true and correct copies of all documents entered into in connection with the Merger, the acquisition of Applica and any related transactions (the "TRANSACTION DOCUMENTS") and shall be reasonably satisfied in form and substance with such documents; the Merger and all other transactions contemplated by the Transaction Documents shall have been consummated pursuant to the Transaction Documents; and all conditions precedent in the Transaction Documents shall have been satisfied or waived (with the prior written consent of the Agent, such consent not to be unreasonably withheld); it is understood and agreed that the Merger Agreement dated February 7, 2007 is satisfactory in form and substance to Agent; (j) Agent, for the benefit of the Lenders, shall have been granted perfected first priority security interests (or perfected second priority security interests, as applicable) in all assets of the Credit Parties to the extent described in "Collateral" and shall have received Uniform Commercial Code, tax lien, and litigation searches, UK Companies House and HM Land Registry searches, security documentation and title insurance and any other documentation reasonably requested by the Agent (or the equivalent under English law) evidencing the existence or status of the Agent's lien or security, all of which shall be reasonably satisfactory in form and substance to Agent; (k) Agent shall have received (i) (a) the audited financial statements of Applica and its subsidiaries, for the fiscal year ended December 31, 2005 (and, if the Closing Date occurs on or after March 30, 2007, December 31, 2006), consisting of balance sheets and the related consolidated statements of income, stockholders' equity and cash flows for such fiscal year(s), and (b) for the interim period(s) from January 1, 2006 to the Closing Date, internally prepared, unaudited financial statements of Applica and its subsidiaries, consisting of balance sheets and the related consolidated statements of income, stockholders' equity and cash flows for each quarterly period completed prior to forty-five (45) days before the Closing Date and for each monthly period completed prior to twenty (20) days prior to the Closing Date, in the case of clauses (a) and (b), certified by the chief financial officer of Applica that they fairly present, in all material respects, the financial condition of Applica and its subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject, if applicable, to changes resulting from audit and normal year end adjustments and (ii) (a) the audited financial statements of Salton and its subsidiaries, for the fiscal year ended June 30, 2006, (and, if the Closing Date occurs on or after September 30, 2007, June 30, 2007), consisting of balance sheets and the related consolidated statements of income, stockholders' equity and cash flows for such fiscal year(s), and (b) for the interim period(s) from June 30, 2006 to the Closing Date, internally prepared, unaudited financial statements of Salton and its subsidiaries, consisting of balance sheets and the related consolidated statements of income, stockholders' equity and cash flows for each quarterly period completed prior to forty-five (45) days before the Closing Date and for each monthly period completed prior to twenty (20) days prior to the Closing Date, in the case of clauses (a) and (b), certified by the chief financial officer of Salton that they fairly present, in all material respects, the financial condition of Salton and its subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated, subject, if applicable, to changes resulting from audit and normal year end adjustments; (l) Agent shall have received the consolidated projections of the Combined Entity and its subsidiaries (together with breakdowns of Salton and its pre-Merger subsidiaries and Company and its pre-Merger subsidiaries on an individual basis and the U.S. Credit Parties and the UK Credit Parties located in the UK, each on an individual basis) for the period from the Closing Date through and including fiscal year 2013, including monthly projections for each month from the Closing Date through June 2008; (m) Agent shall have received all collateral-related information reasonably requested by Agent; (n) Sponsor shall have purchased at least $100 million of new preferred stock of Salton by rolling over indebtedness (comprised of principal, accrued interest and any premiums thereon) of Salton held by Sponsor in the aggregate amount of at least $100 million as of the date hereof (the "SPONSOR SALTON DEBT") and shall have contributed common equity (the terms of each of which shall be satisfactory in form and substance to Agent) to the Combined Entity, and the proceeds therefrom, together with borrowings made on the Closing Date pursuant to the Facility and the North American ABL Facility, shall be sufficient to consummate the Transaction, pay all related fees and expenses and fund all cash needs under clause (p) below; (o) Agent shall have received (i) copies of each organizational and constitutional document of each Credit Party, as applicable, and, to the extent applicable, certified as of a recent date by the appropriate governmental official, each dated the Closing Date or a recent date prior thereto; (ii) signature and incumbency certificates of the officers of such person executing the Credit Documentation to which it is a party; (iii) resolutions of the board of directors or similar governing body of each Credit Party approving and authorizing the execution, delivery and performance of the Credit Documentation and the Transaction Documents to which it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the Closing Date by its secretary or an assistant secretary as being in full force and effect without modification or amendment; and (iv) a good standing certificate or in relation to a UK Credit Party a certificate of incorporation from the applicable governmental authority of each Credit Party's jurisdiction of incorporation, organization or formation and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do business, each dated a recent date prior to the Closing Date; (p) Concurrently with the initial funding of the Facility, all pre-existing indebtedness (other than the Sponsor Salton Debt) and preferred stock of the Combined Entity and its subsidiaries shall have been repaid or repurchased in full (or, with respect to certain preferred stock and unsecured senior subordinated notes acceptable to the Agent, arrangements therefor shall have been made to do so), all commitments thereto shall have been terminated, and all liens or security interests related thereto shall have been terminated or released, in all cases on terms and in form and substance reasonably satisfactory to the Agent; (q) All costs, fees and expenses (including, without limitation, legal fees and expenses, title premiums and recording taxes and fees) and other compensation contemplated by the Commitment Letter and the Interest and Fee Letter shall have been paid to the extent due, Company shall have complied in all material respects with all of its other obligations under the Commitment Letter and the Interest and Fee Letter and Sponsor shall have complied in all material respects with all of its obligations under the Sponsor Letter; (r) All material governmental, shareholder and third-party approvals and consents necessary in connection with the transactions contemplated by the Commitment Letter and the financing thereof and otherwise referred to herein shall have been received and shall be in full force and effect, and all applicable waiting periods shall have expired without any action being taken by any applicable authority; (s) There shall not exist any action, suit, investigation, litigation or proceeding pending or threatened in any court or before any arbitrator or governmental authority that, in the reasonable opinion of the Agent, materially and adversely affects any of the transactions contemplated by the Commitment Letter and the financing thereof, or that has or could reasonably be expected to have a material adverse effect on the Combined Entity and its subsidiaries taken as a whole or any of the transactions contemplated by the Commitment Letter and the financing thereof; (t) All intercompany indebtedness shall be subordinated pursuant to terms and subject to documentation in form, scope and substance reasonably satisfactory to the Agent; (u) Agent shall have received and be reasonably satisfied with the valuation of capital stock and other equity interests of the UK Borrower and the UK Guarantors; (v) Agent and the agent under the North American ABL Facility shall have entered into an intercreditor agreement in form, scope and substance reasonably satisfactory to Agent and drafted by counsel to the Agent; (w) The Combined Entities shall not have greater than $325.0 million of total indebtedness on a pro forma basis for the Transaction (or such lesser amount as would satisfy the cash uses of funds related to the consummation of the Merger and related refinancings and financings); (x) Salton shall have appointed a Chief Integration Officer and, no later than the three-month anniversary of the Closing Date, Salton shall have appointed a Chief Executive Officer, in each case, reasonably satisfactory to the Agent; and (y) The Combined Entities shall not have sold any assets after the date hereof other than Mexican real estate assets currently owned by Salton. ON-GOING CONDITIONS The making of each extension of credit shall be subject to the satisfaction or written waiver of the following conditions: (i) the accuracy of all representations and warranties in the Credit Documentation (including, without limitation, material adverse change (which will be defined in the Credit Documentation) and litigation representations) in all material respects (to the extent not otherwise qualified by materiality) other than those which specifically relate to an earlier date and (ii) there being no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit. VIII. CERTAIN DOCUMENTATION MATTERS The Credit Documentation shall contain representations, warranties, affirmative and negative covenants, and events of default relating to the Credit Parties and their subsidiaries consistent with this summary of terms and conditions and other terms reasonably deemed appropriate by the Agent (subject to exceptions and carve-outs to be agreed upon), including, without limitation: KEY OFFICER PROVISION Commencing on and after the three month anniversary of the Closing Date, Salton shall continue to employ a Chief Executive Officer and, commencing on and after the Closing Date, Salton shall continue to employ a Chief Integration Officer, in each case, reasonably satisfactory to Agent. SALTON AS HOLDCO Usual and customary affirmative and negative covenants regarding Salton being and remaining a holding company, the sole asset of which is the ownership of all of the equity interests of Newco. FINANCIAL COVENANTS With respect to the U.S. Facility, financial covenants that consist of (i) minimum EBITDA, (ii) a minimum fixed charge coverage ratio and (iii) a maximum leverage ratio. With respect to the UK Facility, financial covenants that consist of (i) minimum EBITDA, (ii) a minimum fixed charge coverage ratio and (iii) a maximum leverage ratio. ASSIGNMENTS AND PARTICIPATIONS Each Lender shall be permitted to assign or transfer its rights and obligations under the Facility, or any part thereof, to any person or entity without the consent of the Credit Parties. Each Lender shall be permitted to grant participations in such rights and obligations, or any part thereof, to any person or entity without the consent of the Credit Parties, subject to customary limitations on voting rights. Pledges of Loans in accordance with applicable law shall be permitted without restriction. Promissory notes shall be issued under the Facility only upon request. EXPENSES AND INDEMNIFICATION The Combined Entity shall pay (i) all reasonable expenses of the Agent associated with the syndication of the Facility and the preparation, negotiation, execution and delivery of the Credit Documentation and any amendment or waiver with respect thereto (including, the reasonable fees, disbursements and other charges of counsel), (ii) all reasonable out-of-pocket expenses of having the Loans shadow rated by one or more rating agencies, and (iii) all expenses of the Agent and the Lenders (including the fees, disbursements and other charges of counsel) in connection with the enforcement of the Credit Documentation. The Agent and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent resulting from the bad faith, gross negligence or willful misconduct of the indemnified party). The Credit Documentation will contain customary increased cost, withholding tax, capital adequacy and yield protection provisions. GOVERNING LAW AND FORUM State of New York. SILVER POINT FINANCE, L.L.C. TWO GREENWICH PLAZA, FIRST FLOOR GREENWICH, CT 06830 May 4, 2007 APN Holding Company c/o Harbinger Capital Partners Master Fund I, Ltd. c/o Harbinger Capital Partners Special Situations Fund, L.P. 555 Madison Avenue, 16th Floor New York, New York 10022 Attention: Mr. David Maura Re: APN Holding Company et al. Credit Facilities Commitment Letter Amendment Ladies and Gentlemen: Reference is made to the Commitment Letter dated March 23, 2007 (the "COMMITMENT LETTER"), addressed to APN Holding Company ("COMPANY") from Silver Point Finance, L.L.C. ("SILVER POINT") and accepted by the Company. All defined terms used herein and not otherwise defined shall have the meaning given to them in the Commitment Letter. In accordance with our recent discussions, Silver Point understands that the Company has agreed to sell the Belson brand and its related assets and operations for cash proceeds of at least $36.5 million ("PROCEEDS"). Silver Point is willing to amend the Commitment Letter and Interest and Fee Letter as follows: 1. The Proceeds are paid to the Company and will not be distributed or paid to any equity holders of the Company. 2. Attachment A to the Commitment Letter, Section VII. CERTAIN CONDITIONS, Initial Conditions (y) is hereby amended to read: "The Combined Entities shall not have sold any assets after the date hereof other than Mexican real estate assets currently owned by Salton and the Belson brand and its related capital, operating and working capital assets currently owned by Applica and all liabilities related thereto; PROVIDED, that, such sale shall result in cash proceeds of at least $36.5 million and such proceeds shall be retained by the Company (including by way of Applica not paying any dividends from the date of the Commitment Letter to the Closing Date); PROVIDED, FURTHER, that, the cash proceeds of such sale may be used to pay the revolver loan under the Second Amended and Restated Credit Agreement, dated as of December 23, 2005, among Applica, Bank of America, N.A., as collateral and administrative agent, and the other parties thereto." 3. Attachment A to the Commitment Letter, Section VIII. CERTAIN DOCUMENTATION MATTERS, FINANCIAL COVENANTS is hereby amendment to include as an additional last paragraph: "With respect to both the UK Facility and the U.S. Facility, the consolidated maximum leverage to actual EBITDA ratio shall be no greater than 3.8 to 1 for the fiscal year ending in June 2008 and 2.2 to 1 for the fiscal year ending in June 2009; PROVIDED, that, all other financial covenants will be determined based upon the levels of indebtedness, actual EBITDA and fixed charges in the financial projections provided to Silver Point prior to the execution of the Commitment Letter." 4. The Early Termination Fees set forth in Annex A to the Interest and Fee Letter is amended to read: "With respect to the U.S. Facility, prepayments and commitment reductions shall be subject to an early termination fee equal to (i) a make-whole amount in the first twenty months following the closing date, (ii) 5.0% in month twenty-one through and including month thirty-two following the Closing Date, (iii) 3.0% in month thirty-three through and including month forty-four following the Closing Date, and (iv) $0 at any time thereafter. With respect to the UK Facility, prepayments and commitment reductions shall be subject to an early termination fee equal to (i) a make-whole amount in the first twenty months following the closing date, (ii) 5.0% in month twenty-one through and including month thirty-two following the Closing Date, (iii) 3.0% in month thirty-three through and including month forty-four following the Closing Date, and (iv) $0 at any time thereafter." Except as expressly supplemented and modified hereby, all provisions of the Commitment Letter and the Interest and Fee Letter shall remain in full force and effect. On an after each parties' execution of this letter, this letter and the Commitment Letter shall be construed as single instrument. Please evidence your acceptance of the terms of this letter by signing this letter in the space provided below and returning it to the undersigned. This letter shall be governed by, and construed in accordance with, the law of the State of New York. [signature page follows] Very truly yours, SILVER POINT FINANCE, L.L.C. By: /s/ Richard Petrilli ------------------------ Name: Richard Petrilli ------------------------ Title: Authorized Signatory ------------------------ [SIGNATURE PAGE TO COMMITMENT LETTER AMENDMENT] ACCEPTED AND AGREED TO as of May 4, 2007 APN HOLDING COMPANY By: /s/ Michael D. Luce ------------------------------------- Name: Michael D. Luce ------------------------------------- Title: President and Chief Operating Officer ------------------------------------- [SIGNATURE PAGE TO COMMITMENT LETTER AMENDMENT] SILVER POINT FINANCE, L.L.C. TWO GREENWICH PLAZA, FIRST FLOOR GREENWICH, CT 06830 June 8, 2007 APN Holding Company c/o Harbinger Capital Partners Master Fund I, Ltd. c/o Harbinger Capital Partners Special Situations Fund, L.P. 555 Madison Avenue, 16th Floor New York, New York 10022 Attention: Mr. David Maura Re: APN Holding Company et al. Credit Facilities Commitment Letter Amendment Ladies and Gentlemen: Reference is made to the Commitment Letter dated March 23, 2007 as amended by the amendment to the Commitment Letter dated May 4, 2007, addressed to APN Holding Company ("COMPANY") from Silver Point Finance, L.L.C. ("SILVER POINT") and accepted by the Company (the "COMMITMENT LETTER"). All defined terms used herein and not otherwise defined shall have the meaning given to them in the Commitment Letter. The Company has requested that the Commitment Letter be amended as set forth below and Silver Point is willing to so amend the Commitment Letter. The Company expressly acknowledges that the sale of the properties described in clauses (ii) and (iii) below may affect the principal amount of the UK Property Term Loan (as defined in the Commitment Letter). Attachment A to the Commitment Letter, Section VII. CERTAIN CONDITIONS, Initial Conditions (y) is hereby amended to read: "The Combined Entities shall not have sold any assets after the date hereof other than (i) Mexican real estate assets currently owned by Salton, (ii) the real estate assets located in Wombourne, Wolverhampton; UK; PROVIDED, THAT such sale results in cash proceeds of at least 1,150,000 GBP and such proceeds are used to immediately repay a portion of the outstanding term loans under the Amended and Restated Facility Agreement among Salton Holdings Limited, Salton Europe Limited and certain of their affiliate and Burdale Financial Limited dated as of October 10, 2006 ("Burdale Term Loans"), (iii) the real estate assets located in Failsworth, UK; PROVIDED THAT such such sale results in cash proceeds of at least 163,000 GBP and are used immediately to repay the Burdale Term Loans and (iv) the Belson brand and its related capital, operating and working capital assets currently owned by Applica and all liabilities related thereto; PROVIDED THAT, such sale results in cash proceeds of at least $36.5 million and such proceeds are retained by the Company (including by way of Applica not paying any dividends from the date of the Commitment Letter to the Closing Date) or are used to pay the revolver loan under the Second Amended and Restated Credit Agreement, dated as of December 23, 2005, among Applica, Bank of America, N.A., as collateral and administrative agent, and the other parties thereto; and " Except as expressly supplemented and modified hereby, all provisions of the Commitment Letter and the Interest and Fee Letter shall remain in full force and effect. On an after each parties' execution of this letter, this letter and the Commitment Letter shall be construed as single instrument. Please evidence your acceptance of the terms of this letter by signing this letter in the space provided below and returning it to the undersigned. This letter shall be governed by, and construed in accordance with, the law of the State of New York. [signature page follows] 2 Very truly yours, SILVER POINT FINANCE, L.L.C. By: /s/ Michael A. Gatto ------------------------ Name: Michael A. Gatto Title: Authorized Signatory ACCEPTED AND AGREED TO as of June 8, 2007 APN HOLDING COMPANY By:/s/ Philip A. Falcone --------------------- Name: Philip A. Falcone Title: Vice President and Senior Managing Director [SIGNATURE PAGE TO COMMITMENT LETTER AMENDMENT] -----END PRIVACY-ENHANCED MESSAGE-----