WAIVER AND CONSENT UNDER AMENDED AND RESTATED CREDIT AGREEMENT
THIS WAIVER AND CONSENT UNDER AMENDED AND RESTATED CREDIT AGREEMENT (this
"Waiver") is made and entered into as of December 20, 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, as of May 11, 2005, as of July 8, 2005, as of September 22, 2005, as
of October 7, 2005, and as of November 9, 2005, and as it may be further
amended, modified, supplemented or amended and restated from time to time, the
"Credit Agreement");
WHEREAS, Salton Holdings Limited ("SHL"), Salton Europe Limited ("SEL"),
certain affiliates of SHL (together with SHL and SEL, the "Applicable UK Loan
Parties") desire to enter into that certain Facility Agreement, among the
Applicable UK Loan Parties, Burdale Financial Limited, as agent and security
trustee (the "UK Agent"), and the financial institutions party thereto as
lenders (the "UK Lenders"), in the form of Exhibit A attached hereto (the "UK
Facility Agreement"), pursuant to which the Applicable UK Loan Parties may
borrow funds from time to time in an aggregate amount not to exceed
L61,000,000 at any one time outstanding;
WHEREAS, the Applicable UK Loan Parties desire to enter into that certain
Deed of Debenture among the Applicable UK Loan Parties and the UK Agent, in the
form of Exhibit B attached hereto (the "UK Debenture"), pursuant to which the
Applicable UK Loan Parties would pledge specified assets to secure the
obligations under the UK Facility Agreement;
WHEREAS, Parent and SEL desire to enter into that certain Deed of Amendment
in the form of Exhibit C attached hereto (the "Deed of Amendment"), pursuant to
which the parties thereto agree to amend the terms of a Trademark License
Agreement dated January 1, 2004;
WHEREAS, absent a waiver from the Agent, the Co-Agent and the Lenders, the
entering into the UK Facility Agreement, the UK Debenture and the Deed of
Amendment by Parent and the Applicable UK Loan Parties, the consummation of the
transactions contemplated thereby and the performance by Parent and the
Applicable UK Loan Parties of their respective obligations thereunder
(including, without limitation, the incurrence of Debt and Liens thereunder and
the Guaranties thereunder) would violate or conflict with various covenants of
the Credit Agreement (including, without limitation, Sections 7.12, 7.13, 7.15,
7.18, 7.28 and 7.31) (the "Potential Covenant Defaults");
WHEREAS, the Borrowers have requested, and the Agent, the Co-Agent and the
Lenders have agreed, to waive the Potential Covenant Defaults subject to the
terms and conditions set forth herein;
WHEREAS, Section 5.2(v) of the Credit Agreement requires that the
Administrative Borrower furnish to each Lender, in such detail as the Agent or
the Co-Agent shall reasonably request, 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 (the "Section 5.2(v) Reporting Requirement");
WHEREAS, the Administrative Borrower has failed or may have failed to
comply with the Section 5.2(v) Reporting Requirement for the months ended
October 31, 2005 and November 30, 2005 (the "Section 5.2(v) Defaults");
WHEREAS, the Borrowers have requested, and the Agent, the Co-Agent and the
Lenders have agreed, to waive the Section 5.2(v) Defaults subject to the terms
and conditions set forth herein;
WHEREAS, the Required Lenders, the Co-Agent and the Borrower Parties are
parties to that certain Sixth Amendment to, and Waiver under, the Credit
Agreement and Security Agreement, dated as of November 9, 2005 (the "Sixth
Amendment");
WHEREAS, pursuant to Section 7 of the Sixth Amendment, Borrowers agreed to
deliver to the Co-Agent, on or prior to December 15, 2005, a fully executed
landlord waiver, in form and substance reasonably satisfactory to the Agent and
the Co-Agent, with respect to the property located at 0000 Xxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the "Required Landlord Waiver");
WHEREAS, the Borrowers have failed to deliver the Required Landlord Waiver
(the "Landlord Waiver Default");
WHEREAS, the Borrowers have requested, and the Agent, the Co-Agent and the
Lenders have agreed, to waive the Landlord Waiver Default subject to the terms
and conditions set forth herein;
WHEREAS, Section 3 of the Sixth Amendment provides that the waivers under
the Security Agreement set forth therein (the "Section 3 Security Agreement
Waivers") shall be rescinded and no longer effective if the Required Landlord
Waiver is not obtained in compliance with Section 7 of the Sixth Amendment; and
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WHEREAS, the Borrowers have requested, and the Agent, the Co-Agent and the
Lenders have agreed, to extend the Section 3 Security Agreement Waivers subject
to the terms and conditions set forth herein;
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. CONSENTS AND WAIVERS UNDER CREDIT AGREEMENT.
2.01 CONSENTS AND WAIVERS IN CONNECTION WITH UK FACILITY AGREEMENT AND UK
DEBENTURE. Subject to the satisfaction of the terms and conditions set forth
herein, the Agent, the Co-Agent and the Required Lenders hereby (a) consent to
the Applicable UK Loan Parties' entering into the UK Facility Agreement in the
form of Exhibit A hereto, (b) consent to the Applicable UK Loan Parties'
entering into the UK Debenture in the form of Exhibit B hereto and pledging
their assets thereunder notwithstanding Section 7.32 of the Credit Agreement,
(c) consent to Parent and SEL entering into the Deed of Amendment in the form of
Exhibit C hereto, and (d) waive the Potential Covenant Defaults solely to the
extent that such Defaults would arise from (i) the Applicable UK Loan Parties
entering into the UK Facility Agreement in the form of Exhibit A hereto and the
UK Debenture in the form of Exhibit B hereto and performing their obligations
thereunder or (ii) Parent and SEL entering into the Deed of Amendment in the
form of Exhibit C hereto and performing their respective obligations thereunder;
provided, that the foregoing consents and waivers shall be rescinded and no
longer effective if the aggregate amount of Debt incurred under the UK Facility
Agreement exceeds L61,000,000 at any one time outstanding or if any Loan Party
(other than the Applicable UK Loan Parties party to the UK Debenture as of the
date hereof) pledges or grants to the UK Agent and/or the UK Lenders a Lien on
such Loan Party's assets pursuant to the UK Debenture or otherwise.
2.02 WAIVERS IN CONNECTION WITH SECTION 5.2(V) DEFAULTS. Subject to the
satisfaction of the terms and conditions set forth herein, the Agent, the
Co-Agent and the Required Lenders hereby waive the Section 5.2(v) Defaults
solely with respect to the months ended October 31, 2005 and November 30, 2005.
2.03 WAIVER AND AGREEMENT IN CONNECTION WITH LANDLORD DEFAULT. Subject to
the satisfaction of the terms and conditions set forth herein, the Agent, the
Co-Agent and the Required Lenders hereby (a) waive the Landlord Default solely
with respect to the failure to deliver the Required Landlord Waiver in
accordance with Section 7 of the Sixth Amendment and (b) agree that,
notwithstanding Section 3 of the Sixth Amendment, the Section 3 Security
Agreement Waivers shall not be rescinded and shall remain effective; provided,
that the foregoing waiver and agreement shall be rescinded and no longer
effective if Administrative Borrower fails to deliver to the Lenders a fully
executed landlord waiver, in form and substance reasonably satisfactory to the
Agent and the Co-Agent, with respect to the property located at 0000 Xxxx
Xxxxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000, on or prior to January 15, 2006.
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SECTION 3. REPRESENTATIONS AND WARRANTIES. In order to induce the Agent,
the Co-Agent and the Lenders to enter into this Waiver, the Borrower Parties
hereby represent and warrant that:
3.01 NO DEFAULT. At and as of the date of this Waiver and after giving
effect to this Waiver, no Default or Event of Default exists.
3.02 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT. At and as of the date
of this Waiver and both prior to (other than with respect to the Potential
Covenant Defaults, the Section 5.2(v) Defaults and the Landlord Waiver Default)
and after giving effect to this Waiver, 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 Waiver 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 Waiver and the consummation of the transactions contemplated hereby.
3.04 NO CONFLICT. Neither the execution and delivery of this Waiver 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 Waiver 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 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 APPLICABLE UK LOAN PARTIES. All of the Applicable UK Loan Parties
(other than SHL) are Subsidiaries of SHL.
SECTION 4. CONDITIONS. This Waiver 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 4 (such date, the "Effective Date"):
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4.01 EXECUTION OF THE WAIVER. Each of the parties hereto shall have
executed an original counterpart of this Waiver and shall have delivered
(including by way of telefacsimile or electronic mail) the same to the Co-Agent.
4.02 REPRESENTATIONS AND WARRANTIES. As of the Effective Date, the
representations and warranties set forth in Section 3 hereof shall be true and
correct.
4.03 UK FACILITY AGREEMENT, UK DEBENTURE DOCUMENTS AND DEED OF AMENDMENT.
The Borrower Parties shall have delivered to the Co-Agent and the Agent true and
complete copies of the UK Facility Agreement, the UK Debenture, the Deed of
Amendment and all other documents relating thereto, and such documents shall be
in form and substance satisfactory to the Co-Agent and the Agent.
4.04 APPLICATION OF PROCEEDS. The Applicable UK Loan Parties shall use
approximately L23,000,000 of the proceeds of the UK Facility Agreement to repay
all of the obligations owing to HSBC Invoice Finance and HSBC Bank plc pursuant
to a facility letter dated July 22, 2004 and terminating such facility, and
shall provide satisfactory evidence thereof to the Co-Agent and the Agent.
4.05 DELIVERY OF OTHER DOCUMENTS. The Co-Agent and the Agent shall have
received all such other instruments, documents and agreements as the Co-Agent or
the Agent may reasonably request, in form and substance reasonably satisfactory
to the Co-Agent and the Agent.
SECTION 5. MISCELLANEOUS.
5.01 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.
5.02 NO WAIVER; RESERVATION OF RIGHTS. This Waiver is limited as specified
and the execution, delivery and effectiveness of this Waiver 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 Waiver 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.
5.03 GOVERNING LAW. THIS WAIVER, 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.
5.04 SEVERABILITY. The provisions of this Waiver are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part
in any jurisdiction, 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 Waiver in any jurisdiction.
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5.05 COUNTERPARTS. This Waiver may be executed in any number of
counterparts, 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 Waiver 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.
5.06 HEADINGS. Section headings in this Waiver are included herein for
convenience of reference only and shall not constitute a part of this Waiver for
any other purpose.
5.07 BINDING EFFECT; ASSIGNMENT. This Waiver 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 Waiver shall not be
assigned or delegated without the prior written consent of the Agent, the
Co-Agent and the Lenders.
5.08 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
Waiver and any document required to be furnished herewith.
5.09 INTEGRATION. This Waiver, 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]
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IN WITNESS WHEREOF, the parties hereto have caused this Waiver 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:
---------------------------------
TOASTMASTER INC., a Missouri corporation
By:
------------------------------------
Title:
---------------------------------
SALTON TOASTMASTER LOGISTICS LLC, a
Delaware limited liability company
By:
------------------------------------
Title:
---------------------------------
GUARANTORS:
HOME CREATIONS DIRECT, LTD., a Delaware
corporation
By:
------------------------------------
Title:
---------------------------------
SONEX INTERNATIONAL CORPORATION, a
Delaware corporation
By:
------------------------------------
Title:
---------------------------------
[SIGNATURE PAGE OF WAIVER]
ICEBOX, LLC, an Illinois limited
liability company
By:
------------------------------------
Title:
---------------------------------
FAMILY PRODUCTS INC., a Delaware
corporation
By:
------------------------------------
Title:
---------------------------------
SALTON HOLDINGS, INC., a Delaware
corporation
By:
------------------------------------
Title:
---------------------------------
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 WAIVER]
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:
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[SIGNATURE PAGE OF WAIVER]
