<PAGE> 1
As filed with the Securities and Exchange Commission on March 3, 2000
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SALTON, INC.
(Exact name of registration as specified in its charter)
Delaware 36-3777824
(State or other jurisdiction of (I.R.S. Employer identification
incorporation or organization) number)
550 Business Center Drive
Mount Prospect, Illinois 60056
(847) 803-4600
(address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
William B. Rue
President and Chief Operating Officer
550 Business Center Drive
Mount Prospect, Illinois 60056
(847) 803-4600
(name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Neal Aizenstein
Sonnenschein Nath & Rosenthal
8000 Sears Tower
Chicago, Illinois 60606
(312) 876-8938
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number on the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act,
check the following box and list the Securities Act registration number of the
earlier effective registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
==============================================================================================================
Title of each class of securities Proposed maximum Proposed maximum Amount of
to be Registered offering price(1)(2) offering price per registration fee
unit
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Common Stock, $0.01 par value -- --
- --------------------------------------------------------------------------------------------------------------
Preferred Stock, $0.01 par value -- --
- --------------------------------------------------------------------------------------------------------------
Debt Securities -- --
- --------------------------------------------------------------------------------------------------------------
Total $100,000,000 100%(3) $26,400
==============================================================================================================
</TABLE>
(1) Or (i) if any Debt Securities are issued at an original issue discount,
such greater principal amount as shall result in an aggregate initial
offering price equal to the amount to be registered or (ii) if any Debt
Securities are issued with a principal amount denominated in a foreign
currency or composite currency, such principal amount shall result in an
aggregate initial offering price equivalent thereto in United States
dollars at the time of initial offering..
(2) These figures are estimates made solely for the purpose of calculating the
registration fee pursuant to Rule 457(o). Exclusive of accrued interest, if
any, on the Debt Securities and accrued dividends, if any, on the Preferred
Stock.
(3) The proposed maximum offering price per unit will be determined by in
connection with the issuance of the Securities.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
The information in this prospectus is not complete and may be changed.
We may not sell the securities until the registration statement filed with the
securities and exchange commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 2, 2000
Prospectus
$100,000,000
SALTON, INC.
By this prospectus, we may offer--
Common Stock
Preferred Stock
Debt Securities
See "Risk Factors" on page 5 for information you should consider
before buying the securities.
------------
We will provide specific terms of these securities in supplements to
this prospectus. You should read this prospectus and any supplement carefully
before you invest.
------------
This prospectus may not be used to offer and sell securities unless
accompanied by a prospectus supplement.
------------
Neither the securities and exchange commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This prospectus is dated ___, 2000
<PAGE> 3
SUMMARY
This prospectus is part of a registration statement that we filed with
the SEC utilizing a "shelf" registration process. Under this shelf process, we
may, from time to time, sell in one or more offerings up to a total dollar
amount of $100,000,000 of any combination of the following securities:
-- shares of our common stock,
-- shares of our preferred stock, and
-- our debt securities
This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering, including the specific amounts, prices and terms of the
securities offered. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
below under the heading "Where You Can Find More Information."
SALTON, INC.
We were incorporated in Delaware. Our principal executive offices are
located at 550 Business Center Drive, Mount Prospect, Illinois 60056 and our
telephone number is (847) 803-4600.
COMMON STOCK
We may issue shares of common stock. Common stockholders are entitled
to receive dividends declared by the Board of Directors, subject to rights of
preferred stock holders. Currently, we do not pay a dividend. Each holder of
common stock is entitled to one vote per share. The holders of common stock have
no preemptive rights.
PREFERRED STOCK
We may issue up to 2,000,000 shares of preferred stock under our
certificate of incorporation, without further stockholder action, in one or more
series. We will determine the dividend, voting, and conversion rights, and other
provisions at the time of sale.
DEBT SECURITIES
We may offer unsecured general obligations in the form of subordinated
debt. The subordinated debt securities will be entitled to payment only after
payment on our senior debt. Senior debt generally includes all indebtedness for
money borrowed by us, except indebtedness that is stated to be not senior to, or
to have the same rank as, or is expressly junior to the debt securities.
The subordinated debt will be issued under an indenture between us and
a trustee to be appointed by us. We have summarized the general features of the
subordinated debt from the indenture. The indenture will be filed as an exhibit
to the registration statement we filed with the SEC with respect to the
securities that may be offered hereunder if we offer any debt securities.
Instructions on how you can get copies of these documents are provided below
under the heading "Where You Can Find More Information."
<PAGE> 4
GENERAL
-- The subordinated debt securities will be subordinated to all
senior debt.
-- The indenture will not limit the amount of subordinated debt
that we may issue or provides holders any protection should
there be a highly leveraged transaction involving our company.
-- The indenture will generally allow us to merge or to
consolidate with another U.S. company or convey, transfer or
lease our properties and assets substantially as an entirety
to another U.S. company, so long as the successor assumes our
obligations under the indenture and immediately after giving
effect to the transaction we are not in default under the
indenture. If these events occur, the other company will be
required to assume our responsibilities on the subordinated
debt, and we will be released from all liabilities and
obligations, except in the case of a lease.
-- The indenture will provide that holders of a majority of the
total principal amount of the subordinated debt outstanding in
any series may vote to change our obligations or your rights
concerning the subordinated debt. But to change the payment of
principal, interest, or adversely effect the right to convert
or certain other matters, every holder in that series must
consent.
-- We may discharge the indenture and defease restrictive
covenants by depositing sufficient funds with the trustee to
pay the obligations when due, as long as we are not in default
under the indenture at that time. All amounts due to you on
the subordinated debt would be paid by the trustee from the
deposited funds.
EVENTS OF DEFAULT
The following will be events of default under the indenture:
-- Principal not paid when due,
-- Sinking fund payment not made when due,
-- Failure to pay interest for 30 days,
-- Covenants not performed for 90 days after notice,
-- Bankruptcy, insolvency or reorganization, and
-- Any other event of default in the indenture.
REMEDY
Upon an event of default, other than a bankruptcy, insolvency or
reorganization, the trustee or holders of 25% of the principal amount
outstanding in a series may declare principal immediately payable. However, the
holders of a majority in principal amount may rescind this action.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference a number of
forward-looking statements relating to Salton, Inc. within the meaning of the
Private Securities Litigation Reform Act of 1995 with respect to:
-- our financial condition;
-- our results of operations;
-- our business plans;
-- our business strategies, operating efficiencies or synergies,
competitive positions and growth opportunities for existing
products;
-- the plans and objectives of our management;
-- the markets for our stock; and
-- other matters.
We consider any statements that are not historical facts as
"forward-looking statements" for the purpose of the safe harbor provided by
Section 21E of the Securities Exchange Act of 1934 and Section 27A of the
Securities Act of 1933. These forward-looking statements are necessarily
estimates reflecting the best judgment of our senior management. They involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the forward-looking statements. These
differences could be material; therefore, you should evaluate forward-looking
statements in light of various important factors, including those set forth or
incorporated by reference in this document.
Important factors that could cause actual results to differ materially
from estimates or forecasts contained in the forward-looking statements include,
among others:
-- the integration of Toastmaster, including the failure to
realize anticipated revenue enhancements and cost savings;
-- our relationship and contractual arrangements with key
customers, suppliers and licensors;
-- the risks relating to pending legal proceedings
-- cancellation or reduction of orders;
-- the timely development, introduction and customer acceptance
of our products;
-- dependence on foreign suppliers and supply and manufacturing
constraints;
-- competitive products and pricing;
-- economic conditions and the retail environment;
-- the availability and success of future acquisitions;
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<PAGE> 6
-- our degree of leverage;
-- the risks related to intellectual property rights;
-- year 2000 issues; and
-- other factors both referenced and not reference in this
prospectus.
Words such as "estimate," "project," "plan," "intend," "expect,"
"believe" and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are found at various places
throughout this document and the other documents incorporated by reference,
including our Annual Report on Form 10-K for the fiscal year ended June 26,
1999, including any amendments, and our Quarterly Reports on Form 10-Q for the
quarterly periods ended September 25, 1999 and December 25, 1999, including any
amendments.
You should not place undue reliance on these forward-looking
statements, which speak only as of the date of such statements. We do not
undertake any obligation to publicly update or release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
this document or to reflect the occurrence of unanticipated events.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance with those requirements file annual,
quarterly and special reports, proxy statements and other information with the
Securities and Exchange Commission. You may read and copy any reports,
statements or other information that we file with the Securities and Exchange
Commission at the Commission's public reference rooms at the following
locations:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. Seven World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison
Washington, D.C. 20549 New York, NY 10048 Suite 1400
Chicago, Illinois 60661-2511
Please call the Commission at 1-800-SEC-0330 for further information on
the public reference rooms. These filings with the Commission are also available
to the public from commercial document retrieval services and at the Internet
world wide web site maintained by the Commission at "http://www.sec.gov."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information into
this document, which means that we can disclose important information to you by
referring you to other documents filed separately with the Commission. The
information incorporated by reference is considered part of this document,
except for any information superseded by information contained directly in this
document or in later filed documents incorporated by reference in this document.
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This document incorporates by reference the documents set forth below
that we have previously filed with the Commission. These documents contain
important business and financial information about Salton that is not included
in or delivered with this document.
Period
------
1) Annual Report on Form 10-K Fiscal year ended June 26, 1999.
2) Quarterly Reports on Form 10-Q Quarters ended September 25, 1999
and December 25, 1999.
3) Current Reports on Form 8-K Dated December 9, 1999.
4) The description of the Salton's common stock under the caption
"Description of Capital Stock" on pages 33 to 35 of the prospectus
forming a part of the registration statement on Form S-1 (Reg. No.
33-42097) under the Securities Act of 1933, as amended, declared
effective by the SEC on December 19, 1991.
We also incorporate by reference additional documents that may be filed
with the Commission under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
prior to the termination of this offering. These include periodic reports, such
as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference through
the Commission or the Commission's Internet web site as described above. You may
also obtain them by requesting them from us in writing or by telephone at the
following address or phone numbers:
SALTON, INC..
550 Business Center Drive
Mount Prospect, Illinois 60056
(847) 803-4600
Documents incorporated by reference are available from us without charge,
excluding all exhibits, except that if we have specifically incorporated by
reference an exhibit in this document, the exhibit will also be provided without
charge.
You should rely only on the information contained or incorporated by
reference in this document on any prospectus supplement. We have not authorized
anyone to provide you with information that is different from what is contained
in this document. This document is dated February 25, 2000. You should not
assume that the information contained in this document is accurate as of any
date other than that date.
RISK FACTORS
You should consider carefully the specific risks set forth under the
caption "Risk Factors" in the prospectus supplement before making an investment
decision.
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<PAGE> 8
USE OF PROCEEDS
Unless otherwise indicated in the applicable prospectus supplement, we
anticipate that any net proceeds from the sale of securities offered by this
prospectus will be used to fund expansion of our business, including for:
-- additional working capital,
-- capital expenditures,
-- acquisitions of products, technologies and businesses, and
-- general corporate purposes.
When we offer a particular series of securities offered by this prospectus, the
prospectus supplement relating to that offering will set forth the intended use
of the net proceeds received from that offering. Pending the application of the
net proceeds, we expect to invest the proceeds from the sale of offered
securities in interest-bearing securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended Twenty-Six Months Ended
------------------------------------------------------------------------------------------
July 1, June 29, June 28, June 27, June 26, December 26, December 25,
1995 1996 1997 1998 1999 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings
to fixed charges(1) 1.21x 1.28x 2.19x 5.10x 4.16x 7.25x 7.24x
</TABLE>
(1) Calculated as follows:
earnings = net income + fixed charges + income taxes
fixed charges = interest expense + the portion of operating lease rentals
which Salton estimates represents the interest element in such rentals +
amortization of debt discount and expense.
DESCRIPTION OF THE DEBT SECURITIES
The debt securities will be our subordinated debt securities. The
subordinated debt securities will be issued under an indenture between us and a
trustee to be appointed by us. The prospectus, together with its prospectus
supplement, will describe all the material terms of a particular series of
subordinated debt securities.
The following is a summary of the most important provisions and
definitions of the indenture. For additional information, you should look at the
applicable indenture that will be filed as an exhibit to the registration
statement which includes this prospectus in the event we offer subordinated debt
securities. In this description of the subordinated debt securities, the words
"Salton", "we", "us" or "our" refer only to Salton, Inc. and not to any of our
subsidiaries.
GENERAL
Subordinated debt securities may be issued in separate series without
limitation as to aggregate principal amount. We may specify a maximum aggregate
principal amount for the subordinated debt securities of any series. We will not
be limited as to the amount of subordinated debt securities we may issue under
the indenture.
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The prospectus supplement will set forth:
-- the offering price,
-- the title,
-- any limit on the aggregate principal amount,
-- the person who shall be entitled to receive interest, if other
than the record holder on the record date,
-- the date the principal will be payable,
-- the interest rate, if any, the date interest will accrue, the
interest payment dates and the regular record dates,
-- the place where payments shall be made,
-- any mandatory or optional redemption provisions,
-- if applicable, the method for determining how principal,
premium, if any, or interest will be calculated by reference
to an index or formula,
-- if other than U.S. currency, the currency or currency units in
which principal, premium, if any, or interest will be payable
and whether we or the holder may elect payment to be made in a
different currency,
-- the portion of the principal amount that will be payable upon
acceleration of stated maturity, if other than the entire
principal amount,
-- if the principal amount payable at stated maturity will not be
determinable as of any date prior to stated maturity, the
amount which will be deemed to be the principal amount, any
defeasance provisions if different from those described below
under "Satisfaction and Discharge--Defeasance," any conversion
or exchange provisions,
-- whether the subordinated debt securities will be issuable in
the form of a global security,
-- any subordination provisions if different from those described
below under "Subordinated Debt Securities,"
-- any deletions of, or changes or additions to, the events of
default or covenants, and
-- any other specific terms of such subordinated debt securities.
Unless otherwise specified in the prospectus supplement:
-- the subordinated debt securities will be registered debt
securities; and
-- registered debt securities denominated in U.S. dollars will be
issued in denominations of $1,000 or an integral multiple of
$1,000.
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<PAGE> 10
Subordinated debt securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at time of issuance is below market rates.
EXCHANGE AND TRANSFER
Subordinated debt securities may be transferred or exchanged at the
office of the security registrar or at the office of any transfer agent
designated by us. We will not impose a service charge for any transfer or
exchange, but we may require holders to pay any tax or other governmental
charges associated with any transfer or exchange.
In the event of any potential redemption of subordinated debt
securities of any series, we will not be required to:
-- issue, register the transfer of, or exchange, any subordinated
debt security of that series during a period beginning at the
opening of business 15 days before the day of mailing of a
notice of redemption and ending at the close of business on
the day of the mailing, or
-- register the transfer of or exchange any subordinated debt
security of that series selected for redemption, in whole or
in part, except the unredeemed portion being redeemed in part.
We will initially appoint the trustee as the security registrar. Any
transfer agent, in addition to the security registrar, initially designated by
us will be named in the prospectus supplement. We may designate additional
transfer agents or change transfer agents or change the office of the transfer
agent. However, we will be required to maintain a transfer agent in each place
of payment for the subordinated debt securities of each series.
GLOBAL SECURITIES
The subordinated debt securities of any series may be represented, in
whole or in part, by one or more global securities. Each global security will:
-- be registered in the name of a depositary that we will
identify in a prospectus supplement,
-- be deposited with the depositary or nominee or custodian, and
-- bear any required legends.
No global security may be exchanged in whole or in part for
subordinated debt securities registered in the name of any person other than the
depositary or any nominee unless:
-- the depositary has notified us that it is unwilling or unable
to continue as depositary or has ceased to be
qualified to act as depositary,
-- an event of default is continuing, or
-- any other circumstances described in a prospectus supplement.
As long as the depositary, or its nominee, is the registered owner of a
global security, the depositary or nominee will be considered the sole owner and
holder of the subordinated debt securities represented by the global security
for all purposes under the indenture. Except in the above limited circumstances,
owners of beneficial interests in a global security will not be:
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<PAGE> 11
-- entitled to have the subordinated debt securities registered
in their names,
-- entitled to physical delivery of certificated subordinated
debt securities, and
-- considered to be holders of those subordinated debt securities
under the indenture.
Payments on a global security will be made to the depositary or its
nominee as the holder of the global security. Some jurisdictions have laws that
require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to transfer
beneficial interests in a global security.
Institutions that have accounts with the depositary or its nominee are
referred to as "participants." Ownership of beneficial interests in a global
security will be limited to participants and to persons that may hold beneficial
interests through participants. The depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of
subordinated debt securities represented by the global security to the accounts
of its participants.
Ownership of beneficial interests in a global security will be shown on
and effected through records maintained by the depositary, with respect to
participants' interests, or any participant, with respect to interests of
persons held by participants on their behalf.
Payments, transfers and exchanges relating to beneficial interests in a
global security will be subject to policies and procedures of the depositary.
The depositary's policies and procedures may change from time to time. Neither
we nor the trustee will have any responsibility or liability for the
depositary's or any participant's records with respect to beneficial interests
in a global security.
PAYMENT AND PAYING AGENTS
The provisions of this paragraph will apply to the subordinated debt
securities unless otherwise indicated in the prospectus supplement. Payment of
interest on a subordinated debt security on any interest payment date will be
made to the person in whose name the subordinated debt security is registered at
the close of business on the regular record date. Payment on subordinated debt
securities of a particular series will be payable at the office of a paying
agent or paying agents designated by us. However, at our option, we may pay
interest by mailing a check to the record holder. The corporate trust office
will be designated as our sole paying agent.
We may also name any other paying agents in the prospectus supplement.
We may designate additional paying agents, change paying agents or change the
office of any paying agent. However, we will be required to maintain a paying
agent in each place of payment for the subordinated debt securities of a
particular series.
All moneys paid by us to a paying agent for payment on any subordinated
debt security which remain unclaimed for a period ending the earlier of:
-- 10 business days prior to the date the money would be turned
over to the state, or
-- at the end of two years after such payment was due,
will be repaid to us. Thereafter, the holder may look only to Salton for such
payment.
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<PAGE> 12
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey, transfer
or lease our properties and assets substantially as an entirety to, any person,
unless:
-- the successor, if any, is a U.S. corporation, limited
liability company, partnership, trust or other entity,
-- the successor assumes our obligations on the subordinated debt
securities and under the indentures,
-- immediately after giving effect to the transaction, no default
or event of default shall have occurred and be continuing, and
-- certain other conditions are met.
EVENTS OF DEFAULT
The indenture will define an event of default with respect to any
series of subordinated debt securities as one or more of the following events:
(1) failure to pay principal of or any premium on any subordinated debt
security of that series when due,
(2) failure to pay any interest on any subordinated debt security of
that series for 30 days when due,
(3) failure to deposit any sinking fund payment when due,
(4) failure to perform any other covenant in the indenture continued
for 90 days after being given the notice required in the indenture,
(5) our bankruptcy, insolvency or reorganization, and
(6) any other event of default specified in the prospectus supplement.
An event of default of one series of subordinated debt securities is
not necessarily an event of default for any other series of subordinated debt
securities.
If an event of default, other than an event of default described in
clause (5) above, occurs and continues, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding securities of that
series may declare the principal amount of the subordinated debt securities of
that series to be due and payable immediately. If an event of default described
in clause (5) above occurs, the principal amount of all the subordinated debt
securities of that series, will automatically become immediately due and
payable. Any payment by us on the subordinated debt securities following any
acceleration will be subject to the subordination provisions described below
under "Subordinated Debt Securities."
After acceleration the holders of a majority in aggregate principal
amount of the outstanding securities of that series may, under certain
circumstances, rescind and annul such acceleration if all events of default,
other than the non-payment of accelerated principal, or other specified amount,
have been cured or waived.
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<PAGE> 13
Other than the duty to act with the required care during an event of
default, the trustee will not be obligated to exercise any of its rights or
powers at the request of the holders unless the holders offer the trustee
reasonable indemnity. Generally, the holders of a majority in aggregate
principal amount of the outstanding subordinated debt securities of any series
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee or exercising any trust or
power conferred on the trustee.
A holder will have the right to begin a proceeding under the indenture,
or for the appointment of a receiver or a trustee, or for any other remedy under
the indenture only if:
(1) the holder has previously given to the trustee written notice of a
continuing event of default with respect to the subordinated debt securities of
that series,
(2) the holders of at least 25% in aggregate principal amount of the
outstanding subordinated debt securities of that series have made a written
request and have offered reasonable indemnity to the trustee to begin the
proceeding,
(3) the trustee has not started the proceeding within 60 days after the
request, and
(4) the trustee has not received direction inconsistent with the
original request from the holders of a majority in aggregate principal amount of
the outstanding subordinated debt securities of that series within 60 days after
the original request.
Holders may, however, sue to enforce the payment of principal, premium
or interest on or after the due date without following the procedures listed in
(1) through (4) above.
We will furnish the trustee an annual statement by our officers as to
whether or not we are in default in the performance of the indenture and, if so,
specifying all known defaults.
MODIFICATION AND WAIVER
We and the trustee may make modifications and amendments to the
indenture with the consent of the holders of a majority in aggregate principal
amount of the outstanding securities of each series affected by the modification
or amendment.
However, neither we nor the trustee may make any modification or
amendment without the consent of the holder of each outstanding security of that
series affected by the modification or amendment if such modification or
amendment would:
-- change the stated maturity of any subordinated debt security,
-- reduce the principal, premium, if any, or interest on any
subordinated debt security,
-- reduce the principal of an original issue discount security or
any other subordinated debt security payable on acceleration
of maturity,
-- change the place of payment or the currency in which any
subordinated debt security is payable,
-- impair the right to sue for any payment after the stated
maturity or redemption date,
-- modify the subordination provisions in a materially adverse
manner to the holders,
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<PAGE> 14
-- adversely affect the right to convert any subordinated debt
security, or
-- change the provisions in the indenture that relate to
modifying or amending the indenture.
SATISFACTION AND DISCHARGE; DEFEASANCE
We may be discharged from our obligations on the subordinated debt
securities of any series that have matured or will mature or be redeemed within
one year if we deposit with the trustee enough cash to pay all the principal,
interest and any premium due to the stated maturity date or redemption date of
the subordinated debt securities.
The indenture contains a provision that permits us to elect:
-- to be discharged from all of our obligations, subject to
limited exceptions, with respect to any series of subordinated
debt securities then outstanding; and/or
-- to be released from our obligations under the following
covenants and from the consequences of an event of default
resulting from a breach of these covenants:
(1) the subordination provisions under the subordinated indenture, and
(2) covenants as to payment of taxes and maintenance of properties.
To make either of the above elections, we must deposit in trust with
the trustee enough money to pay in full the principal, interest and premium on
the subordinated debt securities. This amount may be made in cash and/or U.S.
government obligations. As a condition to either of the above elections, we must
deliver to the trustee an opinion of counsel that the holders of the
subordinated debt securities will not recognize income, gain or loss for Federal
income tax purposes as a result of the action.
If we elect to be discharged from all of our obligations as outlined
above in the first bullet point in this section, the holders of the subordinated
debt securities of the series will not be entitled to the benefits of the
indenture, except for registration of transfer and exchange of subordinated debt
securities and replacement of lost, stolen or mutilated subordinated debt
securities.
NOTICES
Notices to holders will be given by mail to the addresses of the
holders in the security register.
GOVERNING LAW
The indenture and the subordinated debt securities will be governed by,
and construed under, the law of the State of New York, without regard to
conflicts of laws principles.
REGARDING THE TRUSTEE
The indenture will limit the right of the trustee, should it become a
creditor of Salton, to obtain payment of claims or secure its claims.
The trustee is permitted to engage in certain other transactions.
However, if the trustee, acquires any conflicting interest, and there is a
default under the subordinated debt securities of any series for which they are
trustee, the trustee must eliminate the conflict or resign.
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<PAGE> 15
SUBORDINATION
The indebtedness evidenced by the debt securities will be subordinated
to the extent provided in the indenture to the prior payment in full of all
senior debt.
Upon any distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, payments on the subordinated debt securities will
be subordinated in right of payment to the prior payment in full of all senior
debt.
As a result of these subordination provisions, in the event of our
bankruptcy, dissolution or reorganization, holders of senior debt may receive
more, ratably, and holders of the subordinated debt securities may receive less,
ratably, than our other creditors.
In the event of any acceleration of the subordinated debt securities
because of an event of default, holders of any senior debt would be entitled to
payment in full in cash of all senior debt before the holders of debt securities
are entitled to receive any payment or distribution.
We are required to promptly notify holders of senior debt if payment of
the debt securities is accelerated because of an event of default.
We may also not make payment on the subordinated debt securities if:
-- a default in the payment of senior debt occurs and is continuing,
or
-- any other default occurs and is continuing with respect to
designated senior debt that permits holders or their
representatives of designated senior debt to accelerate its
maturity, and the trustee receives a payment blockage notice from
us or some other person permitted to give the notice under the
indenture.
We may and shall resume payments on, and may purchase or redeem or make
a sinking fund or defeasance payment on, the subordinated debt securities:
-- in case of a payment default, when the default is cured or waived
or ceases to exist, and
-- in case of a nonpayment default, the earlier of when the default
is cured or waived or ceases to exist or 179 days after the
receipt of the payment blockage notice if the maturity of the
designated senior debt has not been accelerated.
No new payment blockage period may start unless 365 days have elapsed
from the effectiveness of the prior payment blockage notice.
No nonpayment default that existed or was continuing on the date of
delivery of any payment blockage notice to the trustee shall be the basis for a
subsequent payment blockage notice.
The subordination provisions will not prevent the occurrence of any
event of default under the indenture.
If the trustee or any holder receives any payment that should not have
been made to them in contravention of subordination provisions before all senior
debt is paid in full, then such payment will be held in trust for the holders of
senior debt.
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<PAGE> 16
Definitions
"designated senior subordinated debt" means certain existing senior
debt and any of our other senior debt that expressly provides that it is
"designated senior subordinated debt."
"senior debt" means principal, premium and interest, including
bankruptcy interest, and fees on the following:
(1) our indebtedness evidenced by credit or loan agreement, note,
bond, debenture or other written obligation;
(2) our obligations for money borrowed;
(3) our obligations evidenced by a note in an acquisition of any
businesses, properties or assets;
(4) capitalized leases;
(5) leases for facilities, equipment or related assets for financing
purposes, as determined by Sun;
(6) certain types of off-balance sheet real estate leases;
(7) interest rate and currency agreements;
(8) letters of credit, bankers' acceptances or similar facilities;
(9) obligations issued or assumed as the deferred purchase price of
property or services, excluding trade accounts payable in the
ordinary course of business;
(10) obligations of the type listed in 1 through 9 above of another
person and all dividends of another person, which we have either
assumed or guaranteed or are liable or which is secured by a lien
on our property; and
(11) any renewals or extensions listed in 1 through 10 above.
However, senior debt shall not include:
-- debt securities, or
-- indebtedness if the terms of the indebtedness expressly provides
that it is not superior in right of payment to the subordinated
debt securities.
"subsidiary" means:
-- any corporation of which more than 66 2/3% is owned by us or by
one or more or our other subsidiaries, and
-- any partnership of which more than 66 2/3% of the equity capital
or profit interest is owned by us or by one or more of our other
subsidiaries.
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<PAGE> 17
DESCRIPTION OF PREFERRED STOCK
PREFERRED STOCK
The following description of preferred stock and the description of the
terms of a particular series of preferred stock that will be set forth in the
related prospectus supplement are not complete. These descriptions are qualified
in their entirety by reference to the certificate of designations relating to
that series. The rights, preferences, privileges and restrictions of the
preferred stock of each series will be fixed by the certificate of designations
relating to that series. The prospectus supplement also will contain a
description of certain United States federal income tax consequences relating to
the purchase and ownership of the series of preferred stock that is described in
the prospectus supplement.
As of February 25, 2000, there were 40,000 shares of preferred stock
outstanding. The Board of Directors has the authority, without further action by
the stockholders, to issue up to an additional 1,960,000 shares of preferred
stock in one or more series and to fix the following terms of the preferred
stock:
-- designations, powers, preferences, privileges,
-- relative participating, optional or special rights, and
-- the qualifications, limitations or restrictions, including
dividend rights, conversion rights, voting rights, terms of
redemption and liquidation preferences.
Any or all of these rights may be greater than the rights of the common stock.
The Board of Directors, without stockholder approval, can issue
preferred stock with voting, conversion or other rights that could negatively
affect the voting power and other rights of the holders of common stock.
Preferred stock could thus be issued quickly with terms calculated to delay or
prevent a change in control of Salton or make it more difficult to remove our
management. Additionally, the issuance of preferred stock may have the effect of
decreasing the market price of the common stock.
The prospectus supplement will specify:
-- the maximum number of shares,
-- the designation of the shares,
-- the annual dividend rate, if any, whether the dividend rate is
fixed or variable, the date dividends will accrue, the dividend
payment dates, and whether dividends will be cumulative,
-- the price and the terms and conditions for redemption, if any,
including redemption at our option or at the option of the
holders, including the time period for redemption, and any
accumulated dividends or premiums,
-- the liquidation preference, if any, and any accumulated dividends
upon the liquidation, dissolution or winding up of Salton's
affairs,
-- any sinking fund or similar provision, and, if so, the terms and
provisions relating to the purpose and operation of the fund,
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<PAGE> 18
-- the terms and conditions, if any, for conversion or exchange of
shares of any other class or classes of our capital stock or any
series of any other class or classes, or of any other series of
the same class, or any other securities or assets, including the
price or the rate of conversion or exchange and the method, if
any, of adjustment,
-- the voting rights, and
-- any or all other preferences and relative, participating,
optional or other special rights, privileges or qualifications,
limitations or restrictions.
Preferred stock will be fully paid and nonassessable upon issuance. The
preferred stock or any series of preferred stock may be represented, in whole or
in part, by one or more global certificates, which will have an aggregate
principal amount equal to that of the preferred stock represented by the global
certificate.
Each global certificate will:
-- be registered in the name of a depositary or a nominee of the
depositary identified in the prospectus supplement,
-- be deposited with such depositary or nominee or a custodian for
the depositary, and
-- bear a legend regarding the restrictions on exchanges and
registration of transfer and any other matters as may be provided
for under the certificate of designation.
PLAN OF DISTRIBUTION
We may sell the securities separately or together:
-- through one or more underwriters or dealers in a public offering
and sale by them,
-- directly to investors, or
-- through agents.
We may distribute the securities from time to time in one or more
transactions at a fixed price or prices, which may be changed from time to time:
-- at market prices prevailing at the times of sale,
-- at prices related to such prevailing market prices, or
-- at negotiated prices.
We will describe the method of distribution of the securities in the
prospectus supplement.
Underwriters, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from us or our purchasers (as their agents
in connection with the sale of securities). These underwriters, dealers or
agents may be considered to be underwriters under the Securities Act. As a
result, discounts, commissions, or profits on resale received by the
underwriters, dealers or agents may be treated as underwriting discounts and
commissions. The prospectus supplement will identify any such
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<PAGE> 19
underwriter, dealer or agent, and describe any compensation received by them
from us. Any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters, dealers and agents may be entitled to indemnification by
us against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments made by the underwriters,
dealers or agents, under agreements between us and the underwriters, dealers and
agents.
We may grant underwriters who participate in the distribution of
securities an option to purchase additional securities to cover over-allotments,
if any, in connection with the distribution.
All preferred stock and subordinated debt securities will be new issues
of securities with no established trading market. Underwriters involved in the
public offering and sale of preferred stock and subordinated debt securities may
make a market in the preferred stock and subordinated debt securities. However,
they are not obligated to make a market and may discontinue market making
activity at any time. Therefore, we cannot give any assurances to you as to the
liquidity of the trading market for any preferred stock or subordinated debt
securities.
Underwriters or agents and their associates may be customers of, engage
in transactions with or perform services for us in the ordinary course of
business.
LEGAL MATTERS
The validity of the issuance of our securities offered by this
prospectus will be passed upon for us by Sonnenschein Nath & Rosenthal, Chicago,
Illinois.
EXPERTS
The consolidated financial statements and financial statement schedules
of Salton, Inc. as of June 26, 1999 and June 27, 1998 and for each of the three
years in the period ended June 26, 1999 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their reports with respect thereto and
are incorporated herein by reference from Salton, Inc.'s Annual Report on Form
10-K in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.
The financial statements of Toastmaster as of December 31, 1998 and for
each of the three years in the period ended December 31, 1998 have been
incorporated by reference in this prospectus and in the registration statement
in reliance on the report of KPMG LLP, independent auditors, included in Salton
Inc.'s Annual Report on Form 10-K for the fiscal year ended June 26, 1999 and
incorporated by reference in this prospectus.
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred in
connection with the offering described in this Registration Statement. All of
such amounts (except the SEC registration fee) are estimated.
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<PAGE> 20
AMOUNT
SEC registration fee......................................... $ 26,400
Printing expenses............................................ 20,000
Legal fees and expenses...................................... 50,000
Accounting fees and expenses................................. 25,000
Fees and expenses of trustee................................. 20,000
Blue Sky fees and expenses................................... 10,000
Miscellaneous................................................ 600
--------
Total................................................... $152,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal or investigative (other than an
action by or in the right of the corporation) by reason of the fact that he is
or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any action or proceeding, had no reasonable
cause to believe his conduct was unlawful. Section 145 further provides that a
corporation similarly may indemnify any such person serving in any such capacity
who was or is a party or is threatened to be made a part to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor, against expenses actually and reasonably
incurred in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Delaware Court of chancery or such other
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL (relating to
unlawful payment of dividends and unlawful stock purchase and redemption) or
(iv) for any transaction from which the director derived an improper personal
benefit.
The Registrant's Restated Certificate of Incorporation (the
"Certificate") provides that Salton's directors shall not be liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director except to the extent that exculpation from liabilities is not
permitted under the DGCL as in effect at the time such liability is determined.
The Registrant's Certificate further provides that the Registrant shall
indemnify its directors and officers to the fullest extent permitted by the
DGCL.
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<PAGE> 21
The directors and officers of Salton are covered under directors' and
officers' liability insurance policies maintained by Salton.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed herewith or to be filed
by amendment:
EXHIBIT
NUMBER DESCRIPTION
*1.1 Form of Underwriting Agreement
3.1(1) Restated Certificate of Incorporation
3.2(1) Bylaws
3.3(2) Certificate of Designation
*4.1 Form of Indenture
*4.2 Form of Debt Security (included in Exhibit 4.1)
*5.1 Opinion of Sonnenschein Nath & Rosenthal.
23.1 Consent of Independent Accountants-- Deloitte & Touche LLP.
*23.2 Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1).
23.3 Consent of Independent Accountants-- KPMG LLP.
24.1 Power of Attorney (included on page II-3).
*25.1 Form T-1 Statement of Eligibility of Trustee for Indenture
under the Trust Indenture Act of 1939.
*To be filed by amendment or by a report on Form 8-K pursuant to Section 601 of
Regulation S-K.
(1) Incorporated by reference to Registrant's Registration Statement on
Form S-1 (Registration No. 33-42097)
(2) Incorporated by reference to Registrant's Current Report on Form 8-K
dated July 28, 1998.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was effective; and
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
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<PAGE> 22
The undersigned registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant, pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by any such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
or not such indemnification is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication to such
issue.
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<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Salton,
Inc. has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Chicago and the State
of Illinois, on the 2nd day of March, 2000.
SALTON, INC.
By: /s/ LEONHARD DREIMANN
-------------------------
Leonhard Dreimann
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Leonhard Dreimann, William B. Rue, David
C. Sabin, and John Thompson or any one of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place, and stead, in any and all
capabilities, to sign any and all pre- or post-effective amendments to this
Registration Statement, and to file the same with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 2nd day of March, 2000.
SIGNATURE
/s/ LEONHARD DREIMANN Chief Executive Officer and Director
- ---------------------------------------
Leonhard Dreimann (Principal Executive Officer)
/s/ WILLIAM B. RUE President and Chief Operating
- --------------------------------------- Officer
William B. Rue
/s/ JOHN E. THOMPSON Senior Vice President and Chief
- --------------------------------------- Financial Officer (Principal
John E. Thompson Accounting and Financial Officer)
/s/ DAVID C. SABIN Chairman of the Board and Director
- ---------------------------------------
David C. Sabin
/s/ FRANK DEVINE Director
- ---------------------------------------
Frank Devine
/s/ BERT DOORNMALEN Director
- ---------------------------------------
Bert Doornmalen
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<PAGE> 24
- --------------------------------------- Director
Robert A. Bergmann
- --------------------------------------- Director
Bruce G. Pollack
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<PAGE> 25
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
*1.1 Form of Underwriting Agreement
3.1(1) Restated Certificate of Incorporation
3.2(1) Bylaws
3.3(2) Certificate of Designation
*4.1 Form of Indenture
*4.2 Form of Debt Security (included in Exhibit 4.1)
*5.1 Opinion of Sonnenschein Nath & Rosenthal.
23.1 Consent of Independent Accountants-- Deloitte & Touche LLP.
*23.2 Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1).
23.3 Consent of Independent Accountants-- KPMG LLP.
24.1 Power of Attorney (included on page II-3).
*25.1 Form T-1 Statement of Eligibility of Trustee for Indenture under
the Trust Indenture Act of 1939.
- ------------------
*To be filed by amendment or by a report on Form 8-K pursuant to Section 601 of
Regulation S-K.
(1) Incorporated by reference to Registrant's Registration Statement on
Form S-1 (Registration No. 33-42097)
(2) Incorporated by reference to Registrant's Current Report on Form 8-K
dated July 28, 1998.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Salton, Inc. on Form S-3 of our report dated September 3, 1999,
appearing in the Annual Report on Form 10-K of Salton, Inc. for the year ended
June 26, 1999. We also consent to the reference to us under the heading
"Experts" in such Prospectus, which is part of this Registration Statement.
Chicago, Illinois
February 22, 2000
<PAGE> 1
Exhibit 23.3
[KPMG LETTERHEAD]
1000 Walnut, Suite 1600
P.O. Box 13127
Kansas City, MO 64199
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Toastmaster Inc.
We consent to the incorporation by reference in the registration statement on
Form S-3 of Salton, Inc. of our report dated March 16, 1999 relating to the
consolidated balance sheets of Toastmaster Inc. as of December 31, 1998 and
1997 and the related consolidated statements of operations, stockholders'
equity, comprehensive income (loss), and cash flows for each of the years in
the three-year period ended December 31, 1998 which report appears in the
June 26, 1999 annual report on Form 10-K of Salton, Inc.
KPMG LLP
Kansas City, Missouri
March 2, 2000
