FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 10.1
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is
made and entered into this 28th day of February, 2008, by and among SALTON, INC., a Delaware
corporation (“Parent”), each subsidiary of Parent listed on the signature pages hereto as a
“Borrower” (Parent and each such subsidiary shall be referred to herein, collectively, as the
“Borrowers” and each individually as a “Borrower”), each subsidiary of Parent
listed on the signature page hereto as a “Guarantor” (such subsidiaries shall be referred to
herein, collectively, as the “Guarantors” and each individually as a “Guarantor”),
the financial institutions party to the Credit Agreement (as defined below) from time to time as
lenders (such financial institutions, together with their respective successors and assigns, shall
be referred to herein, collectively, as “Lenders” and each individually as a
“Lender”), and BANK OF AMERICA, N.A., a national banking association, in its capacity as
agent for Lenders (together with its successors and assigns in such capacity, “Agent”).
Recitals:
Borrowers, Lenders and Agent are parties to that certain Third Amended and Restated Credit
Agreement dated as of December 28, 2007 (as at any time amended, restated, modified or
supplemented, the “Credit Agreement”), pursuant to which Agent and Lenders have made
certain revolving credit loans and other financial accommodations to Borrowers.
The parties desire to amend the Credit Agreement as hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS ($10.00) in hand paid and other good and valuable consideration,
the receipt and sufficiency of which are hereby severally acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
1. Definitions. All capitalized terms used in this Amendment, unless otherwise
defined herein, shall have the meanings ascribed to such terms in the Credit Agreement.
2. Amendments to Credit Agreement . The Credit Agreement is hereby amended as
follows:
(a) By deleting sub-clause (b)(i) of Section 1.2(i) of the Credit Agreement in its
entirety and by substituting in lieu thereof the following new sub-clause (b)(i):
(i) is not increased by more than $10,000,000 at any time and
(b) By deleting the phrase “clauses (ii) and (iii) of this Section 11.1(a)”
in Section 11.1(a) of the Credit Agreement and by substituting in lieu thereof the phrase
“clause (ii) of this Section 11.1(a).”
(c) By deleting existing sub-clause (ii) of Section 11.1(a) of the Credit Agreement in its
entirety, by renumbering existing sub-clause (iii) of Section 11.1(a) of the Credit
Agreement as new sub-clause (ii), by deleting the word “or” at the end of sub-part (G) of existing
sub-clause (iii) of Section 11.1(a) of the Credit Agreement, and by adding the following
new sub-parts (I) and (J) to new sub-clause (ii) of Section 11.1(a) of the Credit Agreement
immediately following sub-part (H):
(I) increase any of the percentages set forth in the definition of “Borrowing Base”
or in
Section 1.2(i); or
(J) amend the definition of (1) “Borrowing Base” (other than to reduce the advance
rates set forth therein) or any of the definitions used therein that otherwise have
the effect of increasing Availability or (2) “In-Transit Inventory.”
(d) By deleting the phrase “, Supermajority Lenders” from Section 11.1(b) of the Credit
Agreement.
(e) By deleting the definitions of “Applicable Margin” and “Borrowing Base” contained in Annex
A to the Credit Agreement and by substituting in lieu thereof the following new definitions of
“Applicable Margin” and “Borrowing Base”:
“Applicable Margin” means, as of the First Amendment Date,
(i) | with respect to Base Rate Loans, 0.75%; and | ||
(ii) | with respect to LIBOR Revolving Loans, 2.50%. |
The Applicable Margin shall be adjusted (up or down) each Fiscal Quarter, based upon
Average Quarterly Availability for each Fiscal Quarter, commencing with the Fiscal
Quarter ending June 30, 2008. Adjustments in Applicable Margin shall be determined
by reference to the following grid:
If Average Quarterly | Level of | |
Availability is: | Applicable Margin is: | |
Greater than $75,000,000
|
Level I | |
Greater than $50,000,000, but less than or equal to
$75,000,000
|
Level II | |
Greater than $25,000,000, but less than or equal to
$50,000,000
|
Level III | |
Less than or equal to $25,000,000
|
Xxxxx XX |
Xxxxxxxxxx Xxxxxx | ||||||||||||||||
Xxxxx X | Xxxxx XX | Xxxxx XXX | Level IV | |||||||||||||
Base Rate Loans |
0.25 | % | 0.50 | % | 0.75 | % | 1.00 | % | ||||||||
LIBOR Revolving Loans |
2.00 | % | 2.25 | % | 2.50 | % | 2.75 | % |
Adjustments to the Applicable Margin based upon Average Quarterly Availability for
the Fiscal Quarter ending June 30, 2008, and for each Fiscal Quarter ending
thereafter, shall be effective for the ensuing Fiscal Quarter and shall be
implemented five (5) Business Days after the immediately preceding Fiscal Quarter.
If a Default or Event of Default has occurred and is continuing at the time any
reduction in the Applicable Margin is to be implemented, no reduction may occur
until the first day of the first calendar month
following the date on which such Default or Event of Default is waived in writing by
the Agent (with the consent of the Required Lenders) or cured.
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“Borrowing Base” means, at any time, an amount equal to:
(a) | the sum of: |
(i) | 85% of the Net Amount of Eligible Accounts of each Borrowing Base Party; | ||
plus | |||
(ii) | an amount equal to the lesser of: |
(I) | 70% of the Cost Value of Eligible Inventory of each Borrowing Base Party, or | ||
(II) | 85% of the Net Orderly Liquidation Value of Eligible Inventory of each Borrowing Base Party; | ||
minus |
(b) | without duplication, Reserves. |
Notwithstanding the foregoing, in no event shall the amount of the Borrowing Base on
any date (a) attributable to Eligible In-Transit Inventory exceed (i) $50,000,000
with respect to Eligible In-Transit Inventory destined for a United States port of
entry or (ii) $15,000,000 with respect to Eligible In-Transit Inventory destined for
a Canadian port of entry; (b) attributable to Eligible Accounts that are Applica
Asia Serviced Accounts exceed the Applica Asia Serviced Account Sublimit; or (c)
attributable to Eligible Accounts of Account Debtors having their principal assets,
chief executive office or principal place of business in Puerto Rico and Eligible
Inventory of Applica Americas that is located in Puerto Rico exceed, in aggregate,
$5,000,000.
For purposes of the calculation of the Borrowing Base, (a) the value of Eligible
Accounts and Eligible Inventory shall be calculated based on Dollar Equivalents as
of the date of determination, and (b) the value of Eligible In-Transit Inventory
shall be net of all duty, freight, taxes, costs, insurance and other charges and
expenses which customarily pertain to such In-Transit Inventory.
(f) By deleting the definitions of “Seasonal Period” and “Supermajority Lenders” contained in
Annex A to the Credit Agreement.
(g) By adding the following definition of “First Amendment Date” to Annex A to the Credit
Agreement in proper alphabetical sequence:
“First Amendment Date” means February 28, 2008.
(h) By deleting the reference to “$10,000,000” in the first line of the definition of
“Unused Letter of Credit Subfacility” in Annex A to the Credit Agreement and
substituting in lieu thereof a reference to “$20,000,000.”
3. Interest Rate Disclosure. The Base Rate on the date hereof is 6.00% per annum,
and, therefore, the rate of interest in effect hereunder on the date hereof, expressed in simple
interest terms is 6.75% per annum with respect to any portion of the Loans bearing interest as a
Base Rate Loan.
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4. Ratification and Reaffirmation. Each Borrower hereby ratifies and reaffirms the
Obligations, each of the Loan Documents and all of such Borrower’s covenants, duties, indebtedness,
and liabilities under the Loan Documents.
5. Acknowledgments and Stipulations. Each Borrower acknowledges and stipulates that
the Credit Agreement and the other Loan Documents executed by such Borrower are legal, valid and
binding obligations of such Borrower that are enforceable against such Borrower in accordance with
the terms thereof; all of the Obligations are owing and payable without defense, offset or
counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date
hereof, the same is hereby waived by such Borrower); the security interests and liens granted by
such Borrower in favor of Agent are duly perfected, first priority security interests and Liens;
and, on and as of the opening of business February 28, 2008, the unpaid principal amount of the
Loans totaled $94,215,589.49 and the LC Obligations totaled $175,000.
6. Representations and Warranties. Each Borrower represents and warrants to Agent and
Lenders, to induce Agent and each Lender to enter into this Amendment, that no Default or Event of
Default exists on the date hereof; the execution, delivery and performance of this Amendment have
been duly authorized by all requisite corporate action on the part of such Borrower and this
Amendment has been duly executed and delivered by such Borrower; and all of the representations and
warranties made by such Borrower in the Credit Agreement are true and correct in all material
respects on and as of the date hereof.
7. Reference to Credit Agreement. Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to “this Agreement,” “hereunder,” or words of like import shall
mean and be a reference to the Credit Agreement, as amended by this Amendment.
8. Amendment Part of Credit Agreement. This Amendment shall constitute a part of the
Credit Agreement.
9. Conditions Precedent. The effectiveness of the amendments contained in Sections 2
hereof are subject to the satisfaction of each of the following conditions precedent, in form and
substance satisfactory to Agent in its sole and absolute discretion, unless satisfaction thereof is
specifically waived in writing by Agent:
(a) Agent shall have received a duly executed counterpart of this Amendment from each of the
parties hereto; and
(b) No Default or Event of Default shall be in existence.
10. Expenses of Agent. Borrowers agree to pay, on demand, all costs and expenses
incurred by Agent in connection with the preparation, negotiation and execution of this Amendment
and any other Loan Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of Agent’s legal counsel
and any taxes or expenses associated with or incurred in connection with any instrument or
agreement referred to herein or contemplated hereby.
11. Effectiveness; Governing Law. This Amendment shall be effective upon acceptance
by Agent and Lenders (notice of which acceptance is hereby waived), whereupon the same shall be
governed by and construed in accordance with the internal laws of the State of New York.
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12. Successors and Assigns. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
13. No Novation, etc. Except as otherwise expressly provided in this Amendment,
nothing herein shall be deemed to amend or modify any provision of the Credit Agreement or any of
the other Loan Documents, each of which shall remain in full force and effect. This Amendment is
not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and
the Credit Agreement, as herein modified, shall continue in full force and effect.
14. Counterparts; Telecopied Signatures. This Amendment may be executed in any number
of counterparts and by different parties to this Amendment on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such counterparts shall constitute
one and the same agreement. Any signature delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
15. Further Assurances. Each Borrower agrees to take such further actions as Agent
shall reasonably request from time to time in connection herewith to evidence or give effect to the
amendments set forth herein or any of the transactions contemplated hereby.
16. Section Titles. Section titles and references used in this Amendment shall be
without substantive meaning or content of any kind whatsoever and are not a part of the agreements
among the parties hereto.
17. Waiver of Jury Trial. To the fullest extent permitted by applicable law, the
parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or
proceeding arising out of or related to this Amendment.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have entered into this Amendment on the date first above written.
BORROWERS: SALTON, INC. |
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By: | /s/ Xxxxx X. Xxxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxxx | |||
Title: | President and Chief Executive Officer | |||
APPLICA CONSUMER PRODUCTS, INC. |
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By: | /s/ Xxxxx X. Xxxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxxx | |||
Title: | President and Chief Executive Officer | |||
APN HOLDING COMPANY, INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
APPLICA AMERICAS, INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
HP DELAWARE, INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
HPG LLC |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary |
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APPLICA MEXICO HOLDINGS, INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
SONEX INTERNATIONAL CORPORATION |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
HOME CREATIONS DIRECT LTD. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
SALTON HOLDINGS INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
ICEBOX LLC |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
TOASTMASTER INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
FAMILY PRODUCTS INC. |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary |
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ONE:ONE COFFEE LLC |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
SALTON TOASTMASTER LOGISTICS LLC |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
GUARANTORS: APPLICA CANADA CORPORATION |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Corporate Secretary | |||
APPLICA ASIA LIMITED |
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By: | /s/ Xxxx X. Xxxxxxxxxxx | |||
Name: | Xxxx X. Xxxxxxxxxxx | |||
Title: | Director | |||
[Signatures continued on following page]
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AGENT: BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent |
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By: | /s/ Xxxxxx Xxxxxx | |||
Name: | Xxxxxx Xxxxxx | |||
Title: | Senior Vice President | |||
LENDERS: BANK OF AMERICA, N.A., as a Lender |
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By: | /s/ Xxxxxx Xxxxxx | |||
Name: | Xxxxxx Xxxxxx | |||
Title: | Senior Vice President | |||
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