EXHIBIT 99.1
EXECUTION COPY
WAIVER UNDER SECOND AMENDMENT
TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS WAIVER UNDER SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT
AGREEMENT (this "Waiver") is made and entered into as of July 14, 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 amended as of May 11, 2005 (the "Second Amendment"), as
amended as of July 8, 2005 (the "Third Amendment"), and as it may be further
amended, modified, supplemented or amended and restated from time to time, the
"Credit Agreement");
WHEREAS, on or prior to June 10, 2005, (a) pursuant to Section 8.04 of
the Second Amendment (as modified by the Waiver under Second Amendment dated as
of May 23, 2005), Pifco Overseas Ltd. was required to have executed and
delivered to Agent a Blocked Account Agreement, in form and substance
satisfactory to the Co-Agent (the "Section 8.04 Requirement"), (b) pursuant to
Section 8.05 of the Second Amendment (as modified by the Waiver under Second
Amendment dated as of May 23, 2005), Agent was required to have received
opinions of Borrower Parties' counsel relating to such Blocked Account
Agreement, in form and substance satisfactory to Co-Agent (the "Section 8.05
Requirement"), (c) pursuant to Section 8.07 of the Second Amendment, Parent and
its Subsidiaries were required to have executed and delivered to Agent the
certificates representing all of the outstanding shares of each of the Foreign
Subsidiaries listed in Annex A to the Second Amendment owned by it, together
with undated stock powers covering each such certificate, duly executed in blank
(the "Section 8.07 Requirement"), (d) pursuant to Section 8.08 of the Second
Amendment, each of the Foreign Subsidiaries listed in Annex B to the Second
Amendment were required to have executed and delivered to Agent a pledge
agreement, each in form and substance satisfactory to Co-Agent (the "Section
8.08 Requirement"), (e) pursuant to Section 8.09 of the Second Amendment, Parent
was required to deliver to Agent the Intra-Group Loan Agreement dated as of June
30, 2001 between Salton International CV, as the borrower, and Salton, Inc., as
the lender, in an initial aggregate amount of (pound)35,725,154 (the
"Intercompany Note"), together
with an undated allonge covering such note, duly executed in blank (the "Section
8.09 Requirement"), and (f) pursuant to Section 8.10 of the Second Amendment,
Agent was required to have received opinions of Borrower Parties' foreign
counsel with respect to the deliveries contemplated in Sections 8.07, 8.08 and
8.09 of the Second Amendment, each in form and substance satisfactory to
Co-Agent (the "Section 8.10 Requirement", and collectively with the Section 8.04
Requirement, the Section 8.05 Requirement, the Section 8.07 Requirement, the
Section 8.08 Requirement, and the Section 8.09 Requirement, the "Second
Amendment Requirements");
WHEREAS, other than with respect to the delivery of the Intercompany
Note, the pledge agreements relating to the pledge by Salton UK and Salton
Nominees Limited of the capital Stock of Salton UK and the related opinions of
counsel, the Borrowers have not yet satisfied the Second Amendment Requirements
and, accordingly, Events of Default currently exist with respect to the
provisions of Sections 8.04, 8.05, 8.07, 8.08, 8.09, and 8.10 of the Second
Amendment (collectively, the "Second Amendment Defaults"); and
WHEREAS, as a result of the Non-GAAP Preferred Stock Classification (as
defined in the Third Amendment), 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 (as defined in the Third Amendment) (the
"Section 5.1 Default") and the waiver of the Section 5.1 Default under the Third
Amendment is not currently effective because all of the conditions precedent to
effectiveness set forth in Section 7 thereof have not been satisfied;
NOW, THEREFORE, in consideration of the agreements and provisions
herein contained, the parties hereto do hereby agree as follows:
1. DEFINITIONS. Any capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the Credit Agreement
and the Second Amendment, as applicable.
2. WAIVERS. Subject to the satisfaction of the terms and conditions
set forth herein (including, without limitation, the modifications to Annex A
and Annex B to the Second Amendment as described in Section 3 below), the Agent,
the Co-Agent and the Required Lenders hereby agree (a) to waive the Second
Amendment Defaults solely with respect to the Second Amendment Requirements and
(b) notwithstanding the provisions of Section 7 of the Third Amendment, to waive
the Section 5.1 Default solely with respect to the Non-GAAP Preferred Stock
Classification with respect to the Applicable Financial Statements.
Notwithstanding the foregoing or anything to the contrary contained herein, such
waivers pursuant to this Section 2 shall immediately terminate and no longer be
effective (and, accordingly, Events of Default shall exist at such time) on July
28, 2005 unless all of the Second Amendment Defaults shall have been cured on or
prior to such date.
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3. UK PLEDGES. Annex A to the Second Amendment is hereby amended by
deleting "Salton UK" and inserting "Salton Holdings Limited" in lieu thereof.
Annex B to the Second Amendment is hereby amended by deleting "Salton UK
Holdings Ltd." and "Salton Nominees Ltd." and inserting "Salton UK" in lieu
thereof.
4. 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:
(a) NO DEFAULT. At and as of the date of this Waiver (after
giving effect to this Waiver), no Default or Event of Default exists.
(b) 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 Second
Amendment Defaults and the Section 5.1 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.
(c) 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.
(d) 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.
(e) 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).
5. CONDITIONS. This Waiver shall be effective as of July 14, 2005
(the "Effective Date") upon the fulfillment by the Borrower Parties, in a manner
satisfactory to the Co-Agent and the Required Lenders, of all of the following
conditions precedent set forth in this Section 5:
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(a) 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.
(b) 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.
(c) REPRESENTATIONS AND WARRANTIES. As of the Effective Date, the
representations and warranties set forth in Section 4 hereof shall be true and
correct.
6. MISCELLANEOUS.
(a) CONTINUING EFFECT. Except as specifically provided herein,
the Credit Agreement, the Second Amendment, the Third Amendment 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.
(b) 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, the Second Amendment, the Third Amendment or any other Loan Document,
except as specifically set forth herein. Notwithstanding anything contained in
this Waiver to the contrary, Agent, Co-Agent and the Lenders expressly reserve
the right to exercise any and all of their rights and remedies under the Credit
Agreement, the Second Amendment, the Third Amendment, any other Loan Document
and applicable law in respect of any Default or Event of Default.
(c) 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.
(d) 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.
(e) COUNTERPARTS. This Waiver 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 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.
(f) 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.
(g) 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
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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.
(h) 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.
(i) 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:
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Title:
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TOASTMASTER INC., a Missouri
corporation
By:
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Title:
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SALTON TOASTMASTER LOGISTICS LLC, a
Delaware limited liability company
By:
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Title:
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GUARANTORS:
HOME CREATIONS DIRECT, LTD.,
a Delaware corporation
By:
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Title:
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SONEX INTERNATIONAL CORPORATION, a
Delaware corporation
By:
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Title:
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[SIGNATURE PAGE OF WAIVER]
ICEBOX, LLC, an Illinois limited
liability company
By:
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Title:
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FAMILY PRODUCTS INC., a Delaware
corporation
By:
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Title:
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SALTON HOLDINGS, INC., a
Delaware corporation
By:
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Title:
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AGENT AND CO-AGENT:
XXXXX FARGO FOOTHILL, INC. as the
Administrative Agent and the
Collateral Agent
By:
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Title:
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SILVER POINT FINANCE, LLC, as the
Co-Agent, the Documentation Agent,
and the Syndication Agent
By:
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Title:
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[SIGNATURE PAGE OF WAIVER]
LENDERS:
TRS THEBE LLC, as a Lender
By:
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Title:
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SEA PINES FUNDING LLC, as a Lender
By:
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Title:
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SPIRET IV LOAN TRUST 2003-A, as a
Lender
By: WILMINGTON TRUST COMPANY, not in
its individual capacity but solely
as trustee
By:
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Title:
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SPCP GROUP LLC, as a Lender
By:
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Title:
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FIELD POINT I, LTD., as a Lender
By:
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Title:
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FIELD POINT II, LTD., as a Lender
By:
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Title:
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[SIGNATURE PAGE OF WAIVER]
XXXXX FARGO FOOTHILL, INC.,
as a Lender
By:
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Title:
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