EXHIBIT 99.1
EXECUTION COPY
THIRD AMENDMENT
TO, AND WAIVER UNDER,
AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO, AND WAIVER UNDER, AMENDED AND RESTATED CREDIT
AGREEMENT (this "Third Amendment") is made and entered into as of July 8, 2005,
by and among the financial institutions identified on the signature pages hereof
(such financial institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a "Lender" and
collectively as the "Lenders"), XXXXX FARGO FOOTHILL, INC., a California
corporation, as administrative agent and collateral agent for the Lenders (in
such capacities, together with any successor administrative agent and collateral
agent, the "Agent"), SILVER POINT FINANCE, LLC, as the co-agent, syndication
agent, documentation agent (in such capacities, together with any successor
co-agent, syndication agent, and documentation agent, the "Co-Agent"), arranger
and book runner, SALTON, INC., a Delaware corporation (the "Parent"), each of
the Parent's Subsidiaries identified on the signature pages hereof as Borrowers
(collectively with the Parent, the "Borrowers") and each of the Parent's
Subsidiaries identified on the signature pages hereof as Guarantors
(collectively, the "Guarantors" and, together with the Borrowers, the "Borrower
Parties").
WITNESSETH:
WHEREAS, the Lenders, the Agent, the Co-Agent, and the Borrower Parties
are parties to that certain Amended and Restated Credit Agreement, dated as of
May 9, 2003 and amended and restated as of June 15, 2004 (as amended as of
August 30, 2004 and as of May 11, 2005, and as it may be further amended,
modified, supplemented or amended and restated from time to time, the "Credit
Agreement");
WHEREAS, subsequent to the issuance of Parent's consolidated financial
statements for the fiscal quarter ended April 2, 2005, Parent determined that
its Series A Convertible Preferred Stock should be classified outside of
permanent equity in accordance with the guidance of Emerging Issues Task Force
Topic No. D-98 "Classification and Measurement of Redeemable Securities",
because the redemption of the Series A Convertible Preferred Stock in shares of
common stock is outside of Parent's control (the "Non-GAAP Preferred Stock
Classification"); and, based upon such determination, on June 28, 2005, Parent's
management and the Audit Committee of the Board of Directors, in consultation
with Parent's independent registered public accounting firm, Deloitte & Touche
LLP, concluded that Parent's financial statements for the fiscal quarters ended
October 2, 2004, January 1, 2005 and April 2, 2005 and for the fiscal years
ended July 3, 2004, June 28, 2003 and June 29, 2002 (collectively, the
"Applicable Financial Statements") needed to be restated to reclassify the
Series A Convertible Preferred Stock as temporary equity (the "Financial
Statement Restatements");
WHEREAS, as a result of the Non-GAAP Preferred Stock Classification, the
Borrower Parties have failed to comply with the requirements set forth in
Section 5.1 of the Credit Agreement to prepare its books, records and accounts
in accordance with GAAP with respect to the Applicable Financial Statements (the
"Section 5.1 Default"); and
WHEREAS, the Borrower Parties, the Lenders, the Agent and the Co-Agent
wish to amend the Credit Agreement as herein provided;
NOW, THEREFORE, in consideration of the agreements and provisions herein
contained, the parties hereto do hereby agree as follows:
SECTION 1. DEFINITIONS. Any capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement.
SECTION 2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is hereby
amended, effective as of the date this Third Amendment becomes effective in
accordance with Section 7 hereof, as follows:
2.01 AMENDMENT TO SECTION 1.1 OF THE CREDIT AGREEMENT. Section 1.1 of the
Credit Agreement is hereby amended by deleting "$275,000,000" therein and
inserting "$287,000,000 minus the original principal amount of the Second Lien
Term Loan as of the Second Lien Closing Date" in lieu thereof.
2.02 AMENDMENT TO SECTION 3.1(b) OF THE CREDIT AGREEMENT. Section 3.1(b)
of the Credit Agreement is hereby amended by adding the words "other than
pursuant to Section 3.1(c)" after the words "The Term Loan may not be prepaid".
2.03 AMENDMENT TO SECTION 3.1 (c) OF THE CREDIT AGREEMENT. Section 3.1(c)
of the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
"(c) Mandatory Prepayments. Notwithstanding anything to the contrary
contained herein, upon (i) any issuance of Debt or shares of Stock by any
Subsidiary (other than Debt permitted to be issued pursuant to Section
7.13), (ii) any issuance of Debt in the form of additional Second Lien
Term Loans after the Second Lien Closing Date or (iii) any sale or other
disposition of assets by any Subsidiary (other than any sale or
disposition permitted pursuant to Section 7.9) (the occurrence of any such
event in clause (i), (ii) or (iii) above, a "Prepayment Triggering
Event"), Borrowers shall prepay the outstanding principal amount of the
Loans in an amount equal to 100% of the Net Cash Proceeds received in
connection therewith up to an aggregate amount with respect to all of the
Prepayment Triggering Events equal to $11,000,000 and, to the extent that
the aggregate amount of any such Net Cash Proceeds exceeds $11,000,000,
Borrowers shall prepay the outstanding principal amount of the Loans in an
amount equal to 50% of such Net Cash Proceeds received in connection
therewith in excess of $11,000,000 and, subject to the immediately
succeeding sentence of this Section 3.1(c), Borrowers may use all or a
portion of the 50% of such Net Cash Proceeds not required to prepay the
Loans to purchase, prepay or redeem all or a portion of the outstanding
principal amount of the 2005 Senior Notes and, after the payment in full
and retirement of all outstanding 2005 Senior Notes, the 2008 Senior Notes
(and the Second Lien Term Loan to the extent required by the Second Lien
Credit Agreement to purchase 2008 Senior Notes); provided, that (x)
concurrently with each such application to the outstanding Loans, Agent
and
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Co-Agent shall establish and maintain a corresponding reserve against the
Maximum Amount and the Borrowing Base in an amount equal to the amount of
such prepayment (but in no event to exceed an aggregate amount of
$45,410,000 (minus the amount, if any, of the Make-Whole Payment (as
defined in Section 4 of the Third Amendment) that the Co-Agent and the
Lenders with Revolver Commitments are required to refund in accordance
with Section 4 of the Third Amendment)), and (y) such reserve against the
Maximum Amount and the Borrowing Base shall be released only at the sole
discretion of the Agent and the Co-Agent; provided, however, that,
notwithstanding the foregoing, if at the time of any such Prepayment
Triggering Event the aggregate outstanding principal amount of the Loans
does not exceed the result of the sum of clauses (a)(A), (a)(B) and (a)(C)
of the definition of Borrowing Base, then Borrowers may, subject to the
immediately succeeding sentence of this Section 3.1(c), in lieu of
prepaying the principal amount of the Loans, use all or a portion of such
Net Cash Proceeds to purchase, prepay or redeem all or a portion of the
outstanding principal amount of the 2005 Senior Notes and, after the
payment in full and retirement of all outstanding 2005 Senior Notes, the
2008 Senior Notes (and the Second Lien Term Loan to the extent required by
the Second Lien Credit Agreement to purchase 2008 Senior Notes); and
provided, further, however, that the Maximum Amount and the applicable
Commitments shall be permanently reduced, on a dollar for dollar basis, to
the extent that the Loans are prepaid in accordance with this Section
3.1(c) solely as a result of the issuance of Debt in the form of
additional Second Lien Term Loans after the Second Lien Closing Date in
accordance with the terms of the Second Lien Credit Agreement (as in
effect on the date hereof without any modification or amendment thereof).
Borrowers' right to use Net Cash Proceeds to purchase, prepay or redeem
all or a portion of the outstanding principal amount of the 2005 Senior
Notes and, after the payment in full and retirement of all outstanding
2005 Senior Notes, 2008 Senior Notes (and the Second Lien Term Loan to the
extent required by the Second Lien Credit Agreement to purchase 2008
Senior Notes) pursuant to this Section 3.1(c) is subject to (a) no Default
or Event of Default shall have occurred and be continuing or would result
therefrom, (b) in the case of the purchase, prepayment or redemption of
the 2005 Senior Notes, Availability is greater than $5,000,000 both
immediately before and immediately after giving effect to any such
purchase, prepayment or redemption made prior to September 15, 2005 and
(c) in the case of the purchase, prepayment or redemption of the 2008
Senior Notes (and the Second Lien Term Loan to the extent required by the
Second Lien Credit Agreement to purchase 2008 Senior Notes), Availability
is greater than $4,000,000 both immediately before and immediately after
giving effect to any such purchase, prepayment or redemption. Each
prepayment of the Loans made pursuant to this Section 3.1(c) shall be
applied: first, to the extent that the Required Lenders have not waived
all or any portion of such prepayment, to the outstanding principal amount
of the Term Loan, and second, ratably to the outstanding principal amount
of the Revolving Loans. The provisions of this Section 3.1(c) shall not be
deemed to be implied consent to any issuance, incurrence, sale or other
disposition otherwise prohibited by the terms and conditions of this
Agreement."
2.04 AMENDMENT TO SECTION 3.6 OF THE CREDIT AGREEMENT. Section 3.6 of the
Credit Agreement is hereby amended by adding the words "subject to the
Intercreditor Agreement," immediately after "tenth," in the second sentence
thereof.
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2.05 AMENDMENT TO SECTION 5.2 OF THE CREDIT AGREEMENT. Section 5.2 of the
Credit Agreement is hereby amended by inserting the following subsections at the
end thereof:
"(v) Monthly, in any event no later than the tenth (10th) day of
each month, a 13-week rolling cash flow report, which report shall show, among
other things, the actual versus the budgeted cash flow for the prior month.
(w) Promptly, true and complete copies of any and all documents,
notices, reports and other information delivered by or to any Loan Party
pursuant to the terms of the Second Lien Loan Documents except any such
documents, notices, reports or information otherwise required to be delivered
hereunder."
2.06 AMENDMENT TO SECTION 6.25 OF THE CREDIT AGREEMENT. Section 6.25 of
the Credit Agreement is hereby amended by adding the words ", the Second Lien
Loan Documents" after the words "the Loan Documents" in each of the second line
and the fifth line thereof.
2.07 AMENDMENT TO SECTION 7.9 OF THE CREDIT AGREEMENT. Section 7.9 of the
Credit Agreement is hereby amended by deleting clause (a) in its entirety and
inserting the following in lieu thereof: "(a)(i) sales of Inventory in the
ordinary course of business and (ii) sales of excess Inventory not in the
ordinary course of business in an aggregate amount not to exceed $15,000,000
(such amount to be based on the lower of book value and fair market value of the
subject Inventory) so long as (x) no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (y) Borrowers deliver to
Agent and Co-Agent a written notice at the time of each such sale that describes
the Inventory sold and the book value and fair market value of the subject
Inventory, and (z) such sale is not part of, does not result from and does not
arise in connection with a sale, disposition or transfer by a Loan Party of one
or more business divisions, lines of business or Subsidiaries of any Loan Party
except to the extent that such sale is comprised of excess Inventory that was in
existence immediately prior to the date of such sale, disposition or transfer by
such Loan Party of such business division, line of business or Subsidiary;".
2.08 AMENDMENT TO SECTION 7.10 OF THE CREDIT AGREEMENT. Section 7.10 of
the Credit Agreement is hereby amended by deleting the words "one hundred eighty
(180) days" in the third and fourth lines thereof and inserting "ninety one (91)
days" in lieu thereof.
2.09 AMENDMENT TO SECTION 7.12 OF THE CREDIT AGREEMENT. Section 7.12 of
the Credit Agreement is hereby amended by adding the words "or Section 7.13(k)"
at the end thereof.
2.10 AMENDMENT TO SECTION 7.13 OF THE CREDIT AGREEMENT. Section 7.13 of
the Credit Agreement is hereby amended by deleting the words "and (j) Seller
Subordinated Debt. The Parent shall not enter into any amendment or modification
of the documents evidencing the Debt permitted under clauses (e), (f) or (g)
above that is in any manner adverse to the Parent, any Subsidiary, the Agent or
any Lender" therein and inserting the following in lieu thereof: "(j) Seller
Subordinated Debt; and (k) the Second Lien Obligations incurred pursuant to the
Second Lien Credit Agreement. Notwithstanding anything to the contrary contained
herein, the Parent shall not, directly or indirectly, enter into any amendment
or modification of the documents
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evidencing the Debt permitted under clauses (e), (f) or (g) above that is in any
manner adverse to the Parent, any Subsidiary, the Agent, the Co-Agent or any
Lender. Notwithstanding anything to the contrary contained herein, no Borrower
Party shall, directly or indirectly, enter into any amendment or modification of
the Second Lien Credit Agreement, any other documents evidencing the Debt
permitted under clause (k) above or any other Second Lien Loan Document."
2.11 AMENDMENT TO SECTION 7.14 OF THE CREDIT AGREEMENT. Section 7.14 of
the Credit Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
"7.14 Prepayment. Notwithstanding anything to the contrary contained
herein, no Borrower Party shall prepay any Debt, except (a) the Obligations in
accordance with the terms of this Agreement, (b) in connection with a
refinancing permitted under Section 7.13(e) above including the application of
any proceeds received as a result of an equity infusion to prepay the Debt
described in Section 7.13(e), (c) the principal amount of the 2005 Senior Notes,
2008 Senior Notes (and the Second Lien Term Loan to the extent required to
repurchase 2008 Senior Notes) solely to the extent permitted pursuant to Section
3.1(c) or (d) the principal amount of the 2005 Senior Notes solely to the extent
permitted pursuant to Section 5 of the Third Amendment."
2.12 AMENDMENTS TO SECTION 7.31 OF THE CREDIT AGREEMENT. Section 7.31 of
the Credit Agreement is hereby amended by replacing each reference to "Foreign
Subsidiary" with "Subsidiary".
2.13 AMENDMENTS TO SECTION 9.1 OF THE CREDIT AGREEMENT. Section 9.1 of the
Credit Agreement is hereby amended as follows: (a) the word "or" is hereby
deleted at the end of clause (q) thereof; (b) the following clause (r) is hereby
added: "(r) there occurs any Default or Event of Default under, and as such
terms are defined in, the Second Lien Loan Documents; and"; and (c) the current
"clause (r)" is hereby renumbered "clause (s)".
2.14 AMENDMENT TO SECTION 9.2 OF THE CREDIT AGREEMENT. Section 9.2(a) of
the Credit Agreement is hereby amended by adding the words "and/or the
applicable Commitments" immediately after the words "reduce the Maximum Amount"
in clause (i) thereof.
2.15 AMENDMENTS TO SECTION 10.1 OF THE CREDIT AGREEMENT. Section 10.1 of
the Credit Agreement is hereby amended as follows: (a) the words "any early
termination or prepayment fees or penalties" in the third sentence thereof is
hereby deleted and the words "the Make-Whole Amount" is inserted in lieu
thereof; and (b) the following sentence is hereby added immediately after the
end of the third sentence thereof: "Without limiting the foregoing, in the event
of the termination of this Agreement and repayment of the Obligations at any
time prior to the Stated Termination Date, for any other reason, including (a)
termination upon the election of the Required Lenders to terminate after the
occurrence and during the continuation of an Event of Default, (b) foreclosure
and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding,
or (d) restructure, reorganization, or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Agent, the Co-Agent and the
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Lenders or profits lost by the Agent, the Co-Agent and the Lenders as a result
of such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of Agent,
the Co-Agent and the Lenders, Borrowers shall pay to Agent (for the benefit of
the Lenders in accordance with their Pro Rata Shares), in cash, the Make-Whole
Amount, measured as of the date of such termination.".
2.16 AMENDMENTS TO SECTION 11.2 OF THE CREDIT AGREEMENT. Section 11.2 of
the Credit Agreement is hereby amended as follows:
(a) Clause (b) thereof is hereby amended by (i) adding the
words "and the Intercreditor Agreement" immediately after the words "the Loan
Documents" in the seventh line thereof; and (ii) adding the words "and the
Intercreditor Agreement" immediately after the words "the other Loan Documents"
in the eighth line thereof.
(b) Clause (c) thereof is hereby amended by (i) deleting the
words "or any other Loan Document" in clause (i) thereof and inserting ", any
other Loan Document or the Intercreditor Agreement" in lieu thereof; and (ii)
deleting the words "or any other Loan Document" in clause (ii) thereof and
inserting ", any other Loan Document or the Intercreditor Agreement" in lieu
thereof.
(c) Clause (e) thereof is hereby amended by (i) deleting the
words "and the other Loan Documents" in clause (iii) thereof and inserting ",
the other Loan Documents and the Intercreditor Agreement" in lieu thereof; and
(ii) deleting the words "or any other Loan Document" in clause (iv) thereof and
inserting ", any other Loan Document or the Intercreditor Agreement" in lieu
thereof.
2.17 AMENDMENT TO SECTION 12.5 OF THE CREDIT AGREEMENT. Section 12.5 of
the Credit Agreement is hereby amended by deleting the words "Section 9" and
inserting "Section 9.2" in lieu thereof.
2.18 AMENDMENTS TO SECTION 12.17 OF THE CREDIT AGREEMENT. Section 12.17 of
the Credit Agreement is hereby amended by (a) adding the words "and the
Intercreditor Agreement" immediately after the words "the other Loan Documents"
in the second and third lines thereof and (b) deleting the words "or the other
Loan Documents" in the sixth line thereof and inserting ", the other Loan
Documents or the Intercreditor Agreement" in lieu thereof.
2.19 AMENDMENTS TO SECTION 13.7 OF THE CREDIT AGREEMENT. Section 13.7 of
the Credit Agreement is hereby amended by (a) adding the words ", the
Intercreditor Agreement" immediately after the words "this Agreement" in the
fifth line thereof, (b) adding the words ", the Intercreditor Agreement"
immediately after the words "the Loan Documents" in the eighth line thereof and
(c) adding the words ", the Intercreditor Agreement" immediately after the words
"the Loan Documents" in the second and third sentence thereof.
2.20 AMENDMENT TO SECTION 13.17(c) OF THE CREDIT AGREEMENT. Section
13.17(c) of the Credit Agreement is hereby amended by deleting the words
"Confidential Information" and inserting "confidential information" in lieu
thereof.
2.21 AMENDMENTS TO ANNEX A: CREDIT AGREEMENT DEFINITIONS.
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(a) The definition of "Availability" is hereby amended by deleting
it in its entirety and inserting the following in lieu thereof:
"Availability" means, at any time, the lesser of (a) the Maximum
Amount, minus the Aggregate Outstandings, minus Reserves other than Reserves
deducted in the calculation of the Borrowing Base, plus sixty-five percent (65%)
of the aggregate undrawn face amount of all outstanding commercial Letters of
Credit issued for the purpose of purchasing Eligible In-Transit Inventory not
included in the calculation of the Borrowing Base and (b) the Borrowing Base,
minus the Aggregate Outstandings, minus Reserves other than Reserves deducted in
the calculation of the Borrowing Base, plus sixty-five percent (65%) of the
aggregate undrawn face amount of all outstanding commercial Letters of Credit
issued for the purpose of purchasing Eligible In-Transit Inventory not included
in the calculation of the Borrowing Base.
(b) Clause (a)(D)(II) of the definition of "Borrowing Base" is
hereby amended by deleting "$11,000,000" and inserting "an amount equal to
$15,410,000 minus the amount, if any, of the Make-Whole Payment (as defined in
Section 4 of the Third Amendment) that the Co-Agent and the Lenders with
Revolver Commitments are required to refund in accordance with Section 4 of the
Third Amendment" in lieu thereof.
(c) The definition of "Collateral" is hereby amended by adding the
following words, ", except as otherwise agreed to by any Loan Party (including
pursuant to the Second Amendment to the Credit Agreement dated as of May 11,
2005)" immediately after the word "but" and immediately prior to the words ",
excluding up to 35% of the equity interests of any Borrower Party in any Foreign
Subsidiary".
(d) The following definition of "Exchange Offer" is hereby inserted
in Annex A of the Credit Agreement in proper alphabetical order:
""Exchange Offer" has the meaning specified in Section 4 of the
Third Amendment."
(e) The following definition of "Excluded Taxes" is hereby inserted
in Annex A of the Credit Agreement in proper alphabetical order:
""Excluded Taxes" has the meaning specified in Section 4.1(a)."
(f) The following definition of "Indemnified Liabilities" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Indemnified Liabilities" has the meaning specified in Section
13.11."
(g) The following definition of "Indemnified Person" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Indemnified Person" has the meaning specified in Section 13.11."
(h) The following definition of "Intercreditor Agreement" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
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""Intercreditor Agreement" means that certain Intercreditor
Agreement, dated as of the date that the Exchange Offer is consummated, among
the Co-Agent and the Agent, on the one hand, and the Second Lien Agent, on the
other hand, as amended, modified, supplemented or restated from time to time."
(i) The definition of "Make-Whole Amount" is hereby amended by
deleting it in its entirety and inserting the following in lieu thereof:
"Make-Whole Amount" means, as of any date of determination, an
amount equal to (a) during the period of time from and after the date of the
execution and delivery of this Agreement up to June 15, 2006, 4.50% times the
Maximum Amount; and (b) during the period of time from and including June 15,
2006 up to the Stated Termination Date, 3.50% times the Maximum Amount; provided
that, in the event of a prepayment of less than the entire outstanding amount of
the Term Loans and the Revolving Loans after the commencement of the Exercise of
Secured Creditor Remedies (as defined in the Intercreditor Agreement) that
results in a permanent reduction of the Maximum Amount and the Commitments
pursuant to Section 9(b) of the Intercreditor Agreement, the Make-Whole Amount
shall be equal to (x) the Make-Whole Amount, determined as set forth above,
times the result of (y) the amount of such prepayment divided by the Maximum
Amount (less any prior permanent reductions thereof)."
(j) The definition of "Maximum Amount" is hereby amended by deleting
it in its entirety and inserting the following in lieu thereof:
""Maximum Amount" means $287,000,000 minus the original principal
amount of the Second Lien Term Loan as of the Second Lien Closing Date, as such
Maximum Amount may be reduced from time to time in accordance with the terms
hereof and upon a permanent reduction of the Commitments pursuant to Section
9(b) of the Intercreditor Agreement.".
(k) The following definition of "Non-Consenting Lender" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Non-Consenting Lender" has the meaning specified in Section
11.1(c)."
(l) The following definition of "originating Lender" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""originating Lender" has the meaning set forth in Section 11.2(e)."
(m) The definition of "Permitted Liens" is hereby amended by (i)
deleting "and" at the end of clause (h) thereof; (ii) deleting the period and
inserting "; and" at the end of clause (i) thereof; and (iii) inserting the
following at the end thereof: "(j) Liens held by the Second Lien Agent, as agent
for the lenders party to the Second Lien Credit Agreement, to secure the Second
Lien Obligations, subject to the terms of the Intercreditor Agreement."
(n) The definition of "Permitted Transactions" is hereby amended by
adding the words "(1) the redemption or other acquisition by Parent of all or a
portion of the Senior Notes solely in connection with the exchange offer
pursuant to which holders of the Senior Notes tender all or a portion of their
Senior Notes in exchange for a ratable portion of the Second Lien
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Term Loan, Common Stock and Series C Preferred Stock on terms acceptable to the
Co-Agent and Agent, (2) acquisition by Parent of 2005 Senior Notes solely to the
extent permitted by Section 5 of the Third Amendment, (3) the purchase,
prepayment or redemption of the 2005 Senior Notes and/or 2008 Senior Notes (and
the Second Lien Term Loan to the extent required by the Second Lien Credit
Agreement to purchase 2008 Senior Notes) solely to the extent permitted pursuant
to Section 3.1(c) and (4)" immediately after the word "means" in the first line
thereof.
(o) The following definition of "Prepayment Triggering Event" is
hereby inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Prepayment Triggering Event" has the meaning set forth in Section
3.1(c)."
(p) The following definition of "Proposed Change" is hereby inserted
in Annex A of the Credit Agreement in proper alphabetical order:
""Proposed Change" has the meaning specified in Section 11.1(c)."
(q) The following definition of "Report" is hereby inserted in Annex
A of the Credit Agreement in proper alphabetical order:
""Report" has the meaning set forth in Section 12.18(a)."
(r) The following definition of "Required Amount" is hereby inserted
in Annex A of the Credit Agreement in proper alphabetical order:
""Required Amount" has the meaning set forth in Section 7.31."
(s) The definition of "Revolver Commitment" is hereby amended by
adding the words ", as such Revolver Commitment may be reduced from time to time
in accordance with the terms hereof and Section 9(b) of the Intercreditor
Agreement" at the end thereof.
(t) The following definition of "Second Lien Agent" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Second Lien Agent" means the "Second Lien Agent" as defined under
the Intercreditor Agreement."
(u) The following definition of "Second Lien Closing Date" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Second Lien Closing Date" means the "Closing Date" as defined
under the Second Lien Credit Agreement."
(v) The following definition of "Second Lien Credit Agreement" is
hereby inserted in Annex A of the Credit Agreement in proper alphabetical order:
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""Second Lien Credit Agreement" means that certain Credit Agreement,
dated as of the date that the Exchange Offer is consummated, by and among
Parent, Borrowers, Guarantors, the Second Lien Agent, as agent, and the lenders
from time to time party thereto, as such is amended, modified, supplemented or
restated from time to time in accordance with the terms thereof and hereof."
(w) The following definition of "Second Lien Loan Documents" is
hereby inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Second Lien Loan Documents" means the Loan Documents as such term
is defined in the Second Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and hereof."
(x) The following definition of "Second Lien Obligations" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Second Lien Obligations" means the Obligations as such term is
defined in the Second Lien Credit Agreement, as such is amended, modified,
supplemented or restated from time to time in accordance with the terms thereof
and hereof."
(y) The following definition of "Second Lien Term Loan" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Second Lien Term Loan" means the Term Loan as such term is defined
in the Second Lien Credit Agreement, as such is amended, modified, supplemented
or restated from time to time in accordance with the terms thereof and hereof."
(z) The definition of "Senior Notes" is hereby amended by adding the
words "(the "2005 Senior Notes")" after the words "10 3/4% Senior Subordinated
Notes Due 2005" therein and by adding the words "(the "2008 Senior Notes")"
after the words "12-1/4% Senior Subordinated Notes Due 2008" therein.
(aa) The definition of "Stated Termination Date" is hereby amended
by deleting "June 15, 2007" therein and inserting "December 31, 2007" in lieu
thereof.
(bb) The definition of "Term Loan Commitment" is hereby amended by
adding the words ", as such Term Loan Commitment may be reduced from time to
time in accordance with the terms hereof and Section 9(b) of the Intercreditor
Agreement" at the end thereof.
(cc) The following definition of "Third Amendment" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""Third Amendment" means that certain Third Amendment to the Credit
Agreement, dated as of July 8, 2005."
(dd) The definition of "Total Commitment" is hereby amended by
adding the words ", as such Total Commitment may be reduced from time to time in
accordance with the terms hereof and Section 9(b) of the Intercreditor
Agreement" at the end thereof.
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(ee) The following definition of "2005 Senior Notes" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""2005 Senior Notes" has the meaning set forth in the definition of
Senior Notes."
(ff) The following definition of "2008 Senior Notes" is hereby
inserted in Annex A of the Credit Agreement in proper alphabetical order:
""2008 Senior Notes" has the meaning set forth in the definition of
Senior Notes."
SECTION 3. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent, the
Co-Agent and the Lenders to enter into this Third Amendment, the Borrower
Parties hereby represent and warrant that:
3.01 NO DEFAULT. At and as of the date of this Third Amendment and after
giving effect to this Third Amendment, no Default or Event of Default exists.
3.02 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. At and as of the
date of this Third Amendment and both prior to and after giving effect to this
Third Amendment, each of the representations and warranties contained in the
Credit Agreement and other Loan Documents is true and correct in all material
respects.
3.03 CORPORATE POWER, ETC. The Borrower Parties (a) have all requisite
corporate power and authority to execute and deliver this Third Amendment and to
consummate the transactions contemplated hereby and (b) have taken all action,
corporate or otherwise, necessary to authorize the execution and delivery of
this Third Amendment and the consummation of the transactions contemplated
hereby.
3.04 NO CONFLICT. Neither the execution and delivery of this Third
Amendment nor consummation of the transactions contemplated hereby will (a)
conflict with or result in any breach or violation of any provision of the
certificate of incorporation, certificate of formation or by-laws of the
Borrower Parties, (b) result in any breach or violation of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in the creation of a Lien upon any of the
properties or assets of the Borrower Parties under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease agreement or other instrument or obligation to which the Borrower Parties
are parties or to which any of their properties or assets are subject, (c)
require any consent, approval, authorization or permit of, or filing with or
notification to, any third party or any Governmental Authority, or (d) violate
any order, writ, injunction, decree, judgment, ruling, law, statute, rule or
regulation of any Governmental Authority.
3.05 BINDING EFFECT. This Third Amendment has been duly executed and
delivered by the Borrower Parties and constitutes the legal, valid and binding
obligation of the Borrower Parties, enforceable against the Borrower Parties in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws, now or hereafter in effect, relating to or affecting the
11
enforcement of creditors' rights generally, and (b) the application of general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.06 FINANCIAL STATEMENT RESTATEMENTS. The Financial Statement
Restatements will have no effect on the previously reported net income, earnings
per share or cash flows of Parent and its Subsidiaries.
SECTION 4. PAYMENT OF MAKE-WHOLE AMOUNT; REDUCTION OF REVOLVER COMMITMENTS. As a
condition precedent to the Agent, the Co-Agent and the Lenders entering into
this Third Amendment, on the date hereof, Borrower Parties shall have paid to
the Co-Agent, for the ratable benefit of the Lenders with Revolver Commitments,
a make-whole payment (the "Make-Whole Payment"), in immediately available funds,
in an amount equal to $4,410,000, which represents a make-whole percentage of
4.50% multiplied by $98,000,000 (the amount by which the Revolver Commitments
would be reduced if a $110,000,000 second lien facility were created in
connection with the Exchange Offer contemplated by this Third Amendment (the
"Exchange Offer")); provided that, if upon consummation of the Exchange Offer
the amount of reductions in the Revolver Commitments is less than $98,000,000,
Co-Agent and the Lenders with Revolver Commitments shall, on a ratable basis,
refund to the Borrower Parties a portion of such payment equal to the lesser of
(a) an amount equal to (i) 4.50% multiplied by (ii) (A) $98,000,000 minus (B)
the actual amount of reductions in the Revolver Commitments as a result of the
consummation of the Exchange Offer and (b) $2,400,000; provided, further, that,
in the event that the Exchange Offer is not consummated on or prior to September
15, 2005, Co-Agent and the Lenders with Revolver Commitments shall, on a ratable
basis, refund to the Borrower Parties the full amount of the Make-Whole Payment.
Upon consummation of the Exchange Offer and satisfaction of the conditions
precedent set forth in Section 7 of this Third Amendment, the Revolver
Commitments shall be reduced by an amount equal to (a) $175,000,000 minus (b)
$287,000,000 minus the original principal amount of the Second Lien Term Loan as
of the Second Lien Closing Date minus $100,000,000.
SECTION 5. AGREEMENT REGARDING SHORT-TERM OBLIGATIONS RESERVE. Notwithstanding
anything in the Credit Agreement to the contrary, in the event that Parent shall
have duly accepted tendered Senior Notes in accordance with the terms of the
Exchange Offer and all of the conditions to effectiveness of the Third Amendment
shall have been satisfied, then Parent shall be entitled to make Borrowings that
would otherwise be available if not for the Short-Term Obligation Reserve
resulting from the 2005 Senior Notes that remain outstanding after such Exchange
Offer; provided that the funds from such Borrowings must be used solely to
purchase such 2005 Senior Notes.
SECTION 6. WAIVER. Subject to the satisfaction of the terms and conditions set
forth herein, the Agent, the Co-Agent and the Required Lenders hereby agree to
waive the Section 5.1 Default solely with respect to the Non-GAAP Preferred
Stock Classification with respect to the Applicable Financial Statements.
12
SECTION 7. CONDITIONS. This Third Amendment shall be effective upon the
fulfillment by the Borrower Parties, in a manner satisfactory to the Co-Agent,
the Agent and the Lenders, of all of the following conditions precedent set
forth in this Section 7 (such date, the "Effective Date"); provided, that,
notwithstanding the foregoing, Section 4 of this Third Amendment shall be
effective as of the date hereof:
7.01 EXECUTION OF THE THIRD AMENDMENT. Each of the parties hereto shall
have executed an original counterpart of this Third Amendment and shall have
delivered (including by way of telefacsimile or electronic mail) the same to the
Co-Agent.
7.02 REPRESENTATIONS AND WARRANTIES. As of the Effective Date, the
representations and warranties set forth in Section 3 hereof shall be true and
correct.
7.03 MAKE-WHOLE PAYMENT. Borrower Parties shall have made the Make-Whole
Payment to the Co-Agent, for the ratable benefit of the Lenders with Revolver
Commitments, required to be paid pursuant to Section 4 hereof.
7.04 REQUISITE AMOUNT OF 2005 SENIOR NOTES TENDERED. Borrower Parties
shall have delivered to the Co-Agent and the Agent an officer's certificate,
certifying that at least $75,000,000 of the outstanding principal amount of the
2005 Senior Notes shall have been validly tendered and not withdrawn by the
holders of the 2005 Senior Notes on or prior to the expiration time of the
Exchange Offer, and the Parent shall have duly accepted such tendered 2005
Senior Notes in accordance with the terms of the Exchange Offer.
7.05 AMENDMENT TO DECEMBER 16, 1998 INDENTURE. An amendment to the
December 16, 1998 Indenture relating to the 2005 Senior Notes, in form and
substance satisfactory to the Co-Agent and the Agent, shall have been duly
authorized and approved by the requisite holders of the 2005 Senior Notes and
shall have been duly executed by Parent and the Trustee under the December 16,
1998 Indenture, and Borrower Parties shall have delivered a certified copy of
the same to the Co-Agent and the Agent.
7.06 PROJECTIONS. Borrower Parties shall have delivered to the Co-Agent
and the Agent the final updated projections (giving pro forma effect to the
exchange and contemplated asset sales), in form and substance acceptable to the
Co-Agent and the Agent.
7.07 13-WEEK CASH FLOW REPORT. Borrower Parties shall have delivered to
the Co-Agent and the Agent a revised 13-week cash flow report, in form and
substance acceptable to the Co-Agent and the Agent.
7.08 SECOND LIEN LOAN DOCUMENTS. Borrower Parties shall have delivered to
the Co-Agent and the Agent certified copies of the Second Lien Loan Documents,
which shall each be in form and substance satisfactory to the Co-Agent and the
Agent and which shall each be effective in accordance with their terms.
7.09 INTERCREDITOR AGREEMENT. The Intercreditor Agreement among the
Co-Agent and the Agent, on the one hand, and the Second Lien Agent, on the other
hand, shall have been executed and delivered, in form and substance satisfactory
to the Co-Agent and the Agent, and shall be effective in accordance with its
terms.
13
7.10 OPINION OF COUNSEL. Agent shall have received an opinion of counsel
for the Borrower Parties, in form and substance satisfactory to the Co-Agent and
the Agent.
7.11 DELIVERY OF OTHER DOCUMENTS. The Co-Agent shall have received all
such other instruments, documents and agreements as the Co-Agent may reasonably
request, in form and substance reasonably satisfactory to the Co-Agent and the
Agent.
SECTION 8. MISCELLANEOUS.
8.01 CONTINUING EFFECT. Except as specifically provided herein, the Credit
Agreement and the other Loan Documents shall remain in full force and effect in
accordance with their respective terms and are hereby ratified and confirmed in
all respects.
8.02 NO WAIVER; RESERVATION OF RIGHTS. This Third Amendment is limited as
specified and the execution, delivery and effectiveness of this Third Amendment
shall not operate as a modification, acceptance or waiver of any provision of
the Credit Agreement, or any other Loan Document, except as specifically set
forth herein. Notwithstanding anything contained in this Third Amendment to the
contrary, the Agent, the Co-Agent and the Lenders expressly reserve the right to
exercise any and all of their rights and remedies under the Credit Agreement,
any other Loan Document and applicable law in respect of any Default or Event of
Default.
8.03 REFERENCES.
(a) From and after the Effective Date, (i)the Credit Agreement, the
other Loan Documents and all agreements, instruments and documents executed and
delivered in connection with any of the foregoing shall each be deemed amended
hereby to the extent necessary, if any, to give effect to the provisions of this
Third Amendment and (ii) all of the terms and provisions of this Third Amendment
are hereby incorporated by reference into the Credit Agreement, as applicable,
as if such terms and provisions were set forth in full therein, as applicable.
(b) From and after the Effective Date, (i) all references in the
Credit Agreement to "this Agreement", "hereto", "hereof, "hereunder" or words of
like import referring to the Credit Agreement shall mean the Credit Agreement as
amended hereby and (ii) all references in the Credit Agreement, the other Loan
Documents or any other agreement, instrument or document executed and delivered
in connection therewith to "Credit Agreement", "thereto", "thereof, "thereunder"
or words of like import referring to the Credit Agreement shall mean the Credit
Agreement as amended hereby.
8.04 GOVERNING LAW. THIS THIRD AMENDMENT, AND ALL MATTERS ARISING OUT OF
OR RELATING TO THE SUBJECT MATTER HEREOF, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8.05 SEVERABILITY. The provisions of this Third Amendment are severable,
and if any clause or provision shall be held invalid or unenforceable in whole
or in part in any jurisdiction,
14
then such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction and shall not in any manner
affect such clause or provision in any other jurisdiction, or any other clause
or provision in this Third Amendment in any jurisdiction.
8.06 COUNTERPARTS. This Third Amendment may be executed in any number of
counterparts and by facsimile, each of which counterparts when executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument. Delivery of an executed counterpart of this Third
Amendment by telefacsimile or electronic mail shall be equally effective as
delivery of a manually executed counterpart. A complete set of counterparts
shall be lodged with the Borrower Parties, the Agent, the Co-Agent and each
Lender.
8.07 HEADINGS. Section headings in this Third Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Third Amendment for any other purpose.
8.08 BINDING EFFECT; ASSIGNMENT. This Third Amendment shall be binding
upon and inure to the benefit of the Borrower Parties, the Agent, the Co-Agent
and the Lenders and their respective successors and assigns; provided, however,
that the rights and obligations of the Borrower Parties under this Third
Amendment shall not be assigned or delegated without the prior written consent
of the Agent, the Co-Agent and the Lenders.
8.09 EXPENSES. The Borrowers agree to pay the Agent and Co-Agent upon
demand, for all reasonable expenses, including reasonable fees of attorneys and
paralegals for the Agent, the Co-Agent and the Lenders (who may be employees of
the Agent, Co-Agent or the Lenders), incurred by the Agent, the Co-Agent and the
Lenders in connection with the preparation, negotiation and execution of this
Third Amendment and any document required to be furnished herewith.
8.10 INTEGRATION. This Third Amendment, together with the other Loan
Documents, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.
[Signature pages follow]
15
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORROWERS:
SALTON, INC., a Delaware corporation
By:
----------------
Title: President/COO
TOASTMASTER INC., a Missouri
corporation
By:
----------------
Title: President
SALTON TOASTMASTER LOGISTICS
LLC, a Delaware limited liability company
By:
----------------
Title: President
GUARANTORS:
HOME CREATIONS DIRECT, LTD.,
a Delaware corporation
By:
----------------
Title: President
SONEX INTERNATIONAL
CORPORATION, a Delaware corporation
By:
----------------
Title: President
[SIGNATURE PAGE OF THIRD AMENDMENT]
ICEBOX, LLC, an Illinois limited liability
company
By:
------------------
Title: President
FAMILY PRODUCTS INC., a Delaware corporation
By:
------------------
Title: President
SALTON HOLDINGS, INC., a Delaware
corporation
By:
------------------
Title: President
AGENT, CO-AGENT AND LENDERS:
XXXXX FARGO FOOTHILL, INC.
as the Administrative Agent, the Collateral
Agent and as a Lender
By: _____________________________________
Its: ____________________________________
SILVER POINT FINANCE, LLC, as the
Co-Agent, the Documentation Agent, and the
Syndication Agent
By: _____________________________________
Its: ____________________________________
[SIGNATURE PAGE OF THIRD AMENDMENT]
TRS THEBE LLC, as a Lender
By:
----------------------
Its: _____________________________________
SEA PINES FUNDING LLC, as a Lender
By: ______________________________________
Its: _____________________________________
SPIRET IV LOAN TRUST 2003-A, as a Lender
By: WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
trustee
By: _______________________________________
Its: _____________________________________
SPCP GROUP LLC, as a Lender
By: ______________________________________
Its: ______________________________________
FIELD POINT I, LTD., as a Lender
By: ______________________________________
Its: _____________________________________
FIELD POINT II, LTD., as a Lender
By: ______________________________________
Its: _____________________________________
[SIGNATURE PAGE OF THIRD AMENDMENT]
