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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"), WELLS 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;
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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 2301 West Bernardino
Avenue, Redlands, California 92374 (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
2
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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
