EXHIBIT 99.2
FORBEARANCE AGREEMENT AND AMENDMENT
This Forbearance Agreement and Amendment (this "Agreement") is dated as
of May 10, 2004, and is entered into among Salton, Inc., a Delaware corporation
(the "Parent"), Toastmaster Inc., a Delaware corporation ("Toastmaster"), Salton
Toastmaster Logistics LLC, a Delaware limited liability company ("Logistics";
together with the Parent and Toastmaster, collectively, the "Borrowers" and
each, individually, a "Borrower"), Home Creations Direct, Ltd., a Delaware
corporation ("Home Creations"), Sonex International Corporation, a Delaware
corporation ("Sonex"), Icebox, LLC, an Illinois limited liability company
("Icebox"), Family Products Inc., a Delaware corporation ("Family Products"),
Salton Holdings, Inc., a Delaware corporation ("Holdings"; together with Home
Creations, Sonex, Icebox and Family Products, collectively, the "Guarantors" and
each, individually, a "Guarantor"), Wachovia Bank, National Association, as
Administrative Agent for the Lenders ("Agent"), and the Lenders signatory
hereto.
RECITALS:
WHEREAS, the Borrowers, the Guarantors, Agent, the other agents party
thereto and the Lenders party thereto have entered into that certain Credit
Agreement dated as of May 9, 2003, as amended by that certain First Amendment to
Credit Agreement dated as of February 4, 2004, among the Borrowers, the
Guarantors, the Lenders signatory thereto and Agent (as heretofore amended and
as otherwise amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein and not otherwise defined
shall have the meaning ascribed to such terms in the Credit Agreement); and
WHEREAS, as a result of the Borrowers' breach of Section 7.23 of the
Credit Agreement, Fixed Charge Covenant Ratio, an Event of Default under Section
9.1(c) of the Credit Agreement has occurred and is continuing and the Borrowers
anticipate that certain other Events of Default as hereinafter described may
occur during the term of this Agreement; and
WHEREAS, Agent and the Lenders are willing to forbear from enforcing
their rights that arise because of the existing Event of Default (and certain
anticipated Events of Default as hereinafter described) for a limited period of
time, provided that each Borrower Party complies with the terms of this
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
1.1. The following terms used in this Agreement shall have the meanings
set forth below:
"Anticipated Default" means any Event of Default arising from the
Borrowers' failure after the date hereof to comply with certain Sections of the
Credit Agreement as designated as an "Anticipated Default" on Schedule A hereto
for the period specified on Schedule A.
"Borrower Party Representative" means each Borrower Party's directors,
officers, management personnel, employees, accountants, consultants and other
agents and representatives.
"Event of Termination" means the occurrence of any of the following:
(a) the occurrence of any Default or Event of Default other than the Existing
Default or the Anticipated Defaults; (b) the failure of any Borrower Party to
comply with any term, condition or covenant set forth in this Agreement; or (c)
any representation made by any Borrower Party under or in connection with this
Agreement shall prove to be materially false or misleading as of the date when
made.
"Existing Default" means the Event of Default designated as an
"Existing Default" on Schedule A, it being expressly acknowledged that the
Existing Default has occurred prior to the date hereof and for the period
indicated on Schedule A, and the occurrence or discovery of any other Default or
Event of Default after the date hereof or for any other period shall not
constitute an Existing Event of Default.
"Lender Party" means Agent and the accountants, auditors, consultants,
attorneys and other agents and the financial consultant or consultants engaged
on behalf of Agent as provided in Section 4.1 hereof.
"Termination Date" means the earlier to occur of (a) five p.m. Eastern
time on June 10, 2004, or (b) the date upon which an Event of Termination
occurs.
SECTION 2. AGREEMENT TO FORBEAR AND AUTHORIZATION
2.1. Until the Termination Date, (a) Agent and the Lenders hereby agree
to refrain from exercising any of their rights and remedies under the Credit
Agreement or any of the other Loan Documents that may exist by virtue of the
Existing Default or the Anticipated Defaults and (b) the Lenders hereby
authorize Agent to continue making Revolving Loans and arranging for the
issuance of Letters of Credit, and agree to continue to fund such Revolving
Loans and participate in such Letters of Credit, in accordance with the terms of
the Credit Agreement, notwithstanding the Existing Default and the Anticipated
Defaults and the resulting inability of Borrowers to satisfy Section 8.2(a)(ii)
of the Credit Agreement.
2.2. Nothing in this Agreement shall be construed as a waiver of or
acquiescence to the Existing Default or Anticipated Default, which shall
continue in existence subject only to the agreement of Agent and the Lenders, as
set forth herein, not to enforce their remedies for a limited period of time.
Except as expressly provided herein, the execution and delivery of this
Agreement shall not: (a) constitute an extension, modification, or waiver of any
aspect of the Credit Agreement or the other Loan Documents; (b) extend the terms
of the Credit Agreement or the due date of any of the Obligations; (c) give rise
to any obligation on the part of Agent or the Lenders to extend, modify or waive
any term or condition of the Credit Agreement or any of the other Loan
Documents; or (d) give rise to any defenses or counterclaims to the right of
Agent and the Lenders to compel payment of the Obligations or to otherwise
enforce their rights and remedies under the Credit Agreement and the other Loan
Documents. Except as expressly limited herein, Agent and the Lenders hereby
expressly reserve all of their rights and remedies
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under the Loan Documents and under applicable law with respect to the Existing
Default and Anticipated Defaults. From and after the Termination Date, Agent
shall be entitled to enforce the Loan Documents according to the original terms
of the Loan Documents (as amended from time to time and as expressly amended
herein).
SECTION 3. REPRESENTATIONS AND WARRANTIES
In consideration of the limited agreement of Agent and the Lenders to
forbear from the exercise of their rights and remedies as set forth above, each
Borrower Party hereby represents and warrants to Agent and the Lenders as of the
date hereof as follows:
3.1. The execution, delivery and performance of this Agreement by such
Borrower Party are within its corporate or limited liability company power and
have been duly authorized by all necessary corporate or limited liability
company action, and this Agreement constitutes a valid and legally binding
agreement enforceable against such Borrower Party in accordance with its terms.
3.2. All Loan Documents to which such Borrower Party is a party,
including, without limitation, the Credit Agreement, constitute valid and
legally binding obligations of such Borrower Party, enforceable against such
Borrower Party in accordance with the terms thereof.
SECTION 4. COVENANTS AND AGREEMENTS
In order to induce Agent and the Lenders to forbear from the exercise
of its rights and remedies as set forth above, each Borrower Party hereby
covenants and agrees with Agent and the Lenders as follows:
4.1. Each Borrower Party hereby acknowledges the intent of Lenders to
engage, through Agent's counsel and for the benefit of the Lenders, a financial
consultant. Each Borrower Party acknowledges and agrees that, all in accordance
with Section 13.7 of the Credit Agreement, all fees, costs and expenses of such
financial consultant shall constitute a part of the Obligations that will be
secured by the Collateral and shall be payable by Borrowers upon demand by
Agent.
4.2. Each Borrower Party shall, upon reasonable notice from Agent, make
each Borrower Party Representative available for meetings with any Lender Party,
as may be reasonably requested by Agent. Each Borrower Party shall cooperate
fully, and shall cause each Borrower Party Representative to cooperate fully, in
furnishing information and taking such other actions as and when reasonably
requested by any Lender Party regarding such Borrower Party's assets, affairs,
financial condition and operations. Each Borrower Party authorizes each Lender
Party to meet and/or have discussions with any Borrower Party Representative
from time to time to discuss any matters regarding such Borrower Party's assets,
affairs, financial condition and operations, and shall direct and authorize, and
hereby directs and authorizes, all such Borrower Party Representatives to fully
disclose to such Lender Party all information reasonably requested by such
Lender Party regarding such Borrower Party's assets, affairs, financial
condition and operations. Each Borrower Party waives and releases any such
Borrower Party Representative
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from the operation and provisions of any confidentiality agreement with such
Borrower Party so that such Borrower Party Representative is not prohibited from
providing information to any Lender Party. Each Borrower Party shall promptly,
when and as requested by any Lender Party, provide such Lender Party with access
to such Borrower Party's original books and records and permit such Lender Party
to make copies thereof.
4.3. The Borrower Parties hereby acknowledge that, as provided in
Section 7.14 of the Credit Agreement, no prepayment of interest on the Senior
Notes is permitted.
4.4. No Borrower Party shall deposit into escrow with or otherwise
transfer funds to any trustee for the holders of the Senior Notes prior to the
Termination Date for the purpose of making any interest payment when due on the
Senior Notes.
4.5. No later than May 5, 2004, and on each Business Day thereafter,
the Borrowers shall deliver to Agent a Borrowing Base Certificate supporting the
information delivered in accordance with Section 9 of the Security Agreement.
4.6. No later than May 12, 2004, and on the first Business Day of each
week thereafter, the Borrowers shall deliver to Agent, in form and substance
satisfactory to Agent, an estimate of the Borrower Parties' accounts payable to
Salton Hong Kong Ltd., including, without limitation, the following information
for each account payable: (a) origination date; and (b) due date.
4.7. No later than May 12, 2004, and on the first Business Day of each
week thereafter, the Borrowers shall deliver to Agent, in form and substance
satisfactory to Agent, a projection of Availability for the period from the date
of delivery of such projection through June 30, 2004, prepared on a day by day
basis.
4.8. No later than May 12, 2004, and on the first Business Day of each
week thereafter, the Borrowers shall deliver to Agent, in form and substance
satisfactory to Agent, a cash flow projection of the Parent relative to the
Parent's operations for the succeeding thirteen (13) week period, prepared on a
day by day basis and comparing actual results with the cash flow projection for
the immediately preceding week, including, without limitation, (a) a list of the
intercompany transfers between the Parent, on the one hand, and its
Subsidiaries, on the other hand, projected during such period and (b) as of the
date of such projection, the balance of the $100,000,000 account payable owed by
the Parent to Salton Hong Kong Ltd. and an anticipated schedule of repayment for
such account payable balance.
4.9. No later than May 17, 2004, the Borrowers shall deliver to Agent,
in form and substance satisfactory to Agent, financial forecasts (to include
forecasted consolidated and consolidating balance sheets, income statements and
cash flow statements) for the Parent and for the Borrowers as at the end of and
for each Fiscal Month for the period from May 1, 2004, through December 31,
2004, including, without limitation, the projected Consolidated Fixed Charge
Coverage Ratio and US Fixed Charge Coverage Ratio as of the end of each Fiscal
Month during such period.
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4.10. No later than May 17, 2004, and on the first Business Day of each
week thereafter, the Borrowers shall deliver to Agent, in form and substance
satisfactory to Agent, a list of the suppliers of Salton Hong Kong Ltd. and the
obligations of Salton Hong Kong Ltd. to such suppliers, including, without
limitation, the following information with respect to each supplier: (a) amount
owed to such supplier; (b) payment terms of such amount; and (c) due date(s) of
such amount.
4.11. No later than May 20, 2004, the Borrowers shall deliver to Agent,
in form and substance satisfactory to Agent, a detailed written summary of the
Borrowers' expense reduction plan.
4.12. No later than May 27, 2004, the Borrowers shall meet with Agent
and the Lenders to explain, discuss and answer questions relating to the items
delivered pursuant to Sections 4.9 and 4.11 hereof and such other matters as
requested by Agent or any Lender.
4.13. The Borrowers hereby acknowledge that Agent has established a
Reserve (in addition to those Reserves established by Agent prior to April 30,
2004) against Availability in the amount of $10,000,000 in accordance with the
terms of the Credit Agreement and that such Reserve shall remain in place at the
discretion of Agent.
4.14. The Borrowers shall pay to Agent, for the benefit of the Lenders
according to their Pro Rata Shares, a non-refundable fee in the amount of
$200,000 due and payable on the date hereof.
4.15. This Agreement is intended to be a further accommodation by Agent
and the Lenders to Borrowers. In consideration of all such accommodations, and
acknowledging that Agent and the Lenders will be specifically relying on the
following provisions as a material inducement in entering into this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, each Borrower Party, on behalf of itself and its
shareholders and subsidiaries, hereby releases, remises and forever discharges
Agent, the Lenders and their agents, servants, employees, directors, officers,
attorneys, accountants, consultants, affiliates, representatives, receivers,
trustees, subsidiaries, predecessors, successors and assigns (collectively, the
"Released Parties") from any and all claims, damages, losses, demands,
liabilities, obligations, actions and causes of action whatsoever (whether
arising in contract or in tort, and whether at law or in equity), whether known
or unknown, matured or contingent, liquidated or unliquidated, in any way
arising from, in connection with, or in any way concerning or relating to the
Credit Agreement, the other Loan Documents, and/or any dealings with any of the
Released Parties in connection with the transactions contemplated by such
documents or this Agreement prior to the execution of this Agreement. This
release shall be and remain in full force and effect notwithstanding the
discovery by any Borrower Party after the date hereof (i) of any new or
additional claim against any Released Party, (ii) of any new or additional facts
in any way relating to the subject matter of this release, (iii) that any fact
relied upon by it was incorrect or (iv) that any representation made by any
Released Party was untrue or that any Released Party concealed any fact,
circumstance or claim relevant to such Borrower Party's execution of this
release; provided, however, this release shall not extend to any claims arising
after the execution of this Agreement in connection with the Credit Agreement
and the other
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Loan Documents. Each Borrower Party acknowledges and agrees that this release is
intended to, and does, fully, finally and forever release all matters described
in this Section 4.13, notwithstanding the existence or discovery of any such new
or additional claims or facts, incorrect facts, misunderstanding of law,
misrepresentation or concealment.
SECTION 5. AMENDMENTS TO LOAN AGREEMENT
Effective as of April 1, 2004, Annex A of the Credit Agreement,
Definitions, is deemed amended and modified by amending and restating the
definition of "Applicable Margin" as follows:
"'Applicable Margin' means
(i) with respect to Base Rate Loans and all other Obligations
(other than LIBOR Rate Loans), 1.00%; and
(ii) with respect to LIBOR Rate Loans, 3.25%."
SECTION 6. MISCELLANEOUS
6.1. ACKNOWLEDGMENT OF VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS.
To the extent of any inconsistencies between the terms and provisions of this
Agreement and the terms and provisions of the Credit Agreement and other Loan
Documents, this Agreement shall govern. In all other respects, the Credit
Agreement (as amended hereby) and other Loan Documents shall remain in full
force and effect. Each Borrower Party expressly acknowledges and agrees that the
Credit Agreement and other Loan Documents are valid and enforceable by Agent and
the Lenders, and expressly reaffirms its obligations under the Credit Agreement
and other Loan Documents to which it is a party, free and clear of all defenses,
offsets and counterclaims of any kind or nature. Each Borrower Party further
expressly acknowledges and agrees that Agent has a valid, duly perfected and
fully enforceable security interest in and lien against each item of Collateral.
Each Borrower Party agrees that it shall not dispute the validity or
enforceability of the Credit Agreement and other Loan Documents or any of its
obligations thereunder, or the validity, priority, enforceability or extent of
Agent's security interest in or lien against any item of Collateral.
6.2. EXPENSES. Borrowers shall reimburse Agent and the Lenders, upon
demand, for all fees, costs and expenses (including, but not limited to,
attorneys' fees and expenses) incurred by Agent and the Lenders, or otherwise
due and payable, in connection with this Agreement and the transactions
contemplated thereby, including, but not limited to, such fees, costs and
expenses incurred in connection with the negotiation, drafting, implementation,
administration and enforcement of this Agreement and the other Loan Documents,
and the costs and expenses paid or incurred by any Lender Party (including
airfare, hotel, and other travel expenses) to (a) attend any meeting with any
Borrower Party, or the agents or representatives of such Borrower Party, (b)
obtain any information in connection with, or examine, any of the Collateral or
any Borrower Party's operations, affairs or financial condition or (c) otherwise
fulfill its obligations with respect to its engagement. Each Borrower hereby
acknowledges and
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agrees that Agent may charge such costs and fees to Borrowers' Loan Account
pursuant to the Credit Agreement, which amounts shall constitute Revolving Loans
under the Credit Agreement and shall accrue interest at the rate then applicable
to Revolving Loans thereunder.
6.3. CONDITIONS PRECEDENT. This Agreement shall become effective and be
deemed effective as of the date hereof, upon the occurrence of each of the
following, to the satisfaction of Agent:
(a) Agent shall have received counterparts of this Agreement,
duly executed and delivered by Borrower Parties, Agent and Required Lenders, by
noon Eastern time on May 10, 2004;
(b) Agent shall have received a fee letter, in form and
substance acceptable to Agent, duly executed and delivered by the Borrowers and
Agent, by noon Eastern time on May 10, 2004; and
(c) Agent shall have received such other documents as Agent
may request.
6.4. AMENDMENTS. No amendment or modification of any provision of this
Agreement shall be effective without the written agreement of Agent and Lenders
or the Required Lenders (as applicable under Section 11.1 of the Credit
Agreement), and no termination or waiver of any provision of this Agreement, or
consent to any departure by any Borrower Party therefrom, shall in any event be
effective without the written concurrence of Agent and Lenders or the Required
Lenders (as applicable under Section 11.1 of the Credit Agreement). Any waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
6.5. DEFAULT WAIVER. Agent's and the Lenders' failure, at any time or
times hereafter, to require strict performance by Borrower Parties with any
provision or term of this Agreement shall not waive, affect or diminish any
right of Agent or the Lenders thereafter to demand strict compliance and
performance therewith. Any suspension or waiver by Agent and the Lenders of the
Existing Default, Anticipated Default or any other Event of Default shall not,
except as may be expressly set forth herein, suspend, waive or affect the
Existing Default, Anticipated Default or any other Event of Default, whether the
same is prior or subsequent thereto and whether of the same or of a different
kind or character. None of the undertakings, agreements, warranties, covenants
and representations of any Borrower Party contained in this Agreement, the
Credit Agreement or any of the other Loan Documents, and no Existing Default,
Anticipated Default or other Event of Default, shall be deemed to have been
suspended or waived by Agent and the Lenders unless such suspension or waiver is
in writing and signed by Agent and Lenders or the Required Lenders (as
applicable under Section 11.1 of the Credit Agreement).
6.6. SOLE BENEFIT OF PARTIES. This Agreement is solely for the benefit
of the parties hereto and their respective successors and assigns, and no other
Person shall have any right, benefit or interest under or because of the
existence of this Agreement; provided, however, that each Released Party is an
express third party beneficiary hereof.
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6.7. TIME OF THE ESSENCE. Time is of the essence with respect to this
Agreement.
6.8. SECTION TITLES. The section titles contained in this Agreement are
included for the sake of convenience only, shall be without substantive meaning
or content of any kind whatsoever, and are not a part of the agreement between
the parties.
6.9. NO WAIVER; REMEDIES. No course of dealing between Borrowers and
Agent or any Lender and no delay or omission by Agent or the Lenders in
exercising any right or remedy under this Agreement or the other Loan Documents
or with respect to any Obligations shall operate as a waiver thereof or of any
other right or remedy, and no single or partial exercise thereof shall preclude
any other or further exercise thereof or the exercise of any other right or
remedy. All rights and remedies of Agent and the Lenders are cumulative.
6.10. SUCCESSORS AND ASSIGNS. Agent, the Lenders and the Borrower
Parties, as used herein, shall include the successors or assigns of those
parties, except that no Borrower Party shall have the right to assign its rights
hereunder or any interest herein.
6.11. FURTHER ASSURANCES. From time to time, each Borrower Party shall
take such action and execute and deliver to Agent such additional documents,
instruments, certificates and agreements as Agent may request to effectuate the
purposes of this Agreement and the other Loan Documents.
6.12. SEVERABILITY. The provisions of this Agreement are independent of
and separable from each other, and no such provision shall be affected or
rendered invalid or unenforceable by virtue of the fact that for any reason any
other such provision may be invalid or unenforceable in whole or in part. If any
provision of this Agreement is prohibited or unenforceable in any jurisdiction,
such provision shall be ineffective in such jurisdiction only to the extent of
such provision or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
prohibited or unenforceable nor render prohibited or unenforceable such
provision in any other jurisdiction.
6.13. ENTIRE AGREEMENT. This Agreement and the other Loan Documents
constitute the entire agreement and understanding between the parties hereto
with respect to the transactions contemplated hereby and supersede all prior
negotiations, understandings and agreements between such parties with respect to
such transactions.
6.14. APPLICABLE LAW. THIS AGREEMENT AND THE TRANSACTIONS EVIDENCED
HEREBY SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO
DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF
LAWS PROVISIONS) OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
6.15. WAIVER OF BOND. EACH BORROWER PARTY WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF AGENT OR ANY LENDER IN
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CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING OR TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF AGENT OR ANY LENDER OR TO ENFORCE BY
SPECIFIC PERFORMANCE, ANY TEMPORARY RESTRAINING ORDER, PRELIMINARY OR PERMANENT
INJUNCTION, OR THIS AGREEMENT.
6.16. CONSULTATION WITH COUNSEL. EACH BORROWER PARTY ACKNOWLEDGES THAT
IT HAS BEEN REPRESENTED BY ITS OWN LEGAL COUNSEL IN CONNECTION ITS EXECUTION OF
THIS AGREEMENT AND THE LOAN DOCUMENTS, THAT IT HAS EXERCISED INDEPENDENT
JUDGMENT WITH RESPECT TO THIS AGREEMENT AND THE LOAN DOCUMENTS, AND THAT IT HAS
NOT RELIED ON AGENT OR ANY LENDER OR ON AGENT'S OR ANY LENDER'S COUNSEL FOR ANY
ADVICE WITH RESPECT TO THIS AGREEMENT OR THE LOAN DOCUMENTS.
6.17. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute one and the same agreement. In proving this
Agreement in any judicial proceedings, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against whom such
enforcement is sought. Any signatures delivered by a party by facsimile
transmission or by e-mail transmission of an adobe file format document (also
known as a PDF file) shall be deemed an original signature hereto.
6.18. LOAN DOCUMENT. This Agreement shall be deemed a Loan Document for
all purposes.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth above, by their respective duly
authorized officers.
AGENT AND LENDERS:
WACHOVIA BANK, NATIONAL ASSOCIATION
as Agent and a Lender
By:
-------------------------------------
Its:
------------------------------------
BANK OF AMERICA, N.A., as a Lender
By:
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Its:
------------------------------------
BANK ONE, NA, as a Lender
By:
-------------------------------------
Its:
------------------------------------
FLEET CAPITAL CORPORATION, as a Lender
By:
-------------------------------------
Its:
------------------------------------
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as a Lender
By:
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Its:
------------------------------------
[Signatures continue on following page.]
FORBEARANCE AGREEMENT
[Signatures continued from previous page.]
PNC BANK, NATIONAL ASSOCIATION, as a
Lender
By:
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Its:
------------------------------------
U.S. BANK NATIONAL ASSOCIATION, as a
Lender
By:
-------------------------------------
Its:
------------------------------------
COMERICA BANK, as a Lender
By:
-------------------------------------
Its:
------------------------------------
XXXXXX COMMERCIAL PAPER INC., as a Lender
By:
-------------------------------------
Its:
------------------------------------
BANKNORTH, N.A., as a Lender
By:
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Its:
------------------------------------
[Signatures continue on following page.]
FORBEARANCE AGREEMENT
[Signatures continued from previous page.]
CREDIT SUISSE FIRST BOSTON, ACTING
THROUGH ITS CAYMAN ISLANDS BRANCH, as a
Lender
By:
-------------------------------------
Its:
------------------------------------
By:
-------------------------------------
Its:
------------------------------------
HSBC BANK USA, as a Lender
By:
-------------------------------------
Its:
------------------------------------
FIRST NATIONAL BANK AND TRUST COMPANY,
as a Lender
By:
-------------------------------------
Its:
------------------------------------
RZB FINANCE LLC, as a Lender
By:
-------------------------------------
Its:
------------------------------------
By:
-------------------------------------
Its:
------------------------------------
[Signatures continue on following page.]
FORBEARANCE AGREEMENT
[Signatures continued from previous page.]
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:
-------------------------------------
Its:
------------------------------------
GUARANTORS:
HOME CREATIONS DIRECT, LTD., a Delaware
corporation
By:
-------------------------------------
Its:
------------------------------------
[Signatures continue on following page.]
FORBEARANCE AGREEMENT
[Signatures continued from previous page.]
SONEX INTERNATIONAL CORPORATION, a
Delaware corporation
By:
-------------------------------------
Its:
------------------------------------
ICEBOX, LLC, an Illinois limited
liability company
By:
-------------------------------------
Its:
------------------------------------
FAMILY PRODUCTS INC., a Delaware
corporation
By:
-------------------------------------
Its:
------------------------------------
SALTON HOLDINGS, INC., a Delaware
corporation
By:
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Its:
------------------------------------
FORBEARANCE AGREEMENT
SCHEDULE A TO FORBEARANCE AGREEMENT
LIST OF EXISTING DEFAULT
The Borrowers' failure to maintain the Consolidated Fixed Charge
Coverage Ratio for the Fiscal Month ended March 27, 2004, as required by Section
7.23 of the Credit Agreement.
LIST OF ANTICIPATED DEFAULTS
1. The Borrowers' failure to maintain the Consolidated Fixed Charge
Coverage Ratio for the Fiscal Months ended May 1, 2004, and May 29, 2004, as
required by Section 7.23 of the Credit Agreement.
2. The Borrowers' failure to maintain the US Fixed Charge Coverage
Ratio for the Fiscal Months ended May 1, 2004, and May 29, 2004, as required by
Section 7.23 of the Credit Agreement.
