Exhibit 99.12
Execution Version
WAIVER, CONSENT AND FIRST AMENDMENT
TO CREDIT AGREEMENT
THIS WAIVER, CONSENT AND FIRST
AMENDMENT TO CREDIT AGREEMENT (this “ Amendment
”) is made and entered into as of October 1, 2007, by
and among the financial institutions from time to time parties
hereto (such financial institutions, together with their respective
successors and assigns, are referred to hereinafter each
individually as a “ Lender ” and collectively as
the “ Lenders ”), THE BANK OF NEW YORK, a New
York corporation, with offices at 600 E. Los Colinas Blvd.,
Suite 1300, Irving, Texas 75039, as administrative agent and
collateral agent for the Lenders the “ Agent ”),
SALTON, INC., a Delaware corporation with offices at 1955 Field
Court, Lake Forest, Illinois 60045 (the “ Parent
”), each of the Parent’s Subsidiaries identified on the
signature pages hereof as Borrowers and each of the Parent’s
Subsidiaries identified on the signature pages hereof as
Guarantors.
RECITALS :
WHEREAS , the Lenders, the
Agent and the Borrowers are parties to that certain Credit
Agreement, dated as of August 26, 2005 (as it may be further
amended, modified, supplemented or amended and restated from time
to time, the “ Credit Agreement ”);
WHEREAS , Salton, Inc., SFP
Merger Sub, Inc. and APN Holding Company, Inc. (“ APN
”) are, concurrently with the execution and delivery of this
Amendment, executing and delivering an Agreement and Plan of Merger
dated as of, and as in effect on, the date hereof (the “
Merger Agreement ”);
WHEREAS , concurrently with
the execution and delivery of this Amendment, the Borrowers and the
Harbinger Capital Partners Master Fund I, LTD. and Harbinger
Capital Partners Special Situation Fund, L.P. (the “
Harbinger Entities ”) are entering into a Loan
Purchase Agreement (the “ Loan Purchase Agreement
”) that provides that upon the occurrence of certain event
and according to certain terms, the Harbinger Entities agree to buy
certain loans and obligations outstanding on November 10, 2007
under the First Lien Credit Agreement;
WHEREAS , concurrently with
the execution and delivery of this Amendment, the Borrowers, the
Harbinger Entities and Harbinger Capital Partners Master Fund I,
LTD., as administrative agent and collateral agent for the
Harbinger Entities (the “ Senior Second Lien Agent
”) are entering into a Reimbursement and Senior Secured
Credit Agreement (the “ Reimbursement and Credit
Agreement ”) pursuant to which, among other things, the
Borrowers agree to pay or reimburse the Harbinger Entities for all
obligations and liabilities that the Harbinger Entities incur in
connection with that certain Loan Purchase Agreement;
WHEREAS , as a condition to
entering into the Reimbursement and Credit Agreement, the Senior
Second Lien Agent and Harbinger have required a security interest
in assets that currently secure the obligations under the First
Lien Credit Agreement and the Credit Agreement;
WHEREAS , concurrently with
the execution and delivery of this Amendment, the Senior Lien Agent
is entering into an Amended and Restated Intercreditor Agreement
(the “ Intercreditor Agreement ”) with the First
Lien Agent and the Senior Second Lien Agent and a Junior Liens
Intercreditor Agreement (the “ Junior Liens Intercreditor
Agreement ”) with the Senior Second Lien Agent; and
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WHEREAS , In order consummate
the transactions contemplated by these Recitals, the Borrowers have
requested, and the Agent and the Lenders have agreed, to certain
amendments to the Credit Agreement as 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 (as amended hereby).
Section 2. Amendments to the
Credit Agreement . The Credit Agreement is hereby
amended, effective as of the date this Amendment becomes effective
in accordance with Section 6 hereof, as follows:
2.01 Additional
Definitions . Annex A to the Credit Agreement is hereby
amended by adding the following definitions in the correct
alphabetical order:
(a) “ Harbinger ”
means the “Lenders” as defined in the Reimbursement and
Credit Agreement.
(b) “ Junior Liens
Intercreditor Agreement ” means the Junior Liens
Intercreditor Agreement dated as of October 1, 2007 among the
Senior Second Lien Agent and the Agent, as amended, modified,
supplemental or restated from time to time.
(c) “ Loan Purchase
Agreement ” means the Loan Purchase Agreement dated as of
October 1, 2007 among the Borrower Parties, the First Lien
Co-Agent, the First Lien Lenders and Harbinger, and all exhibits
and schedules thereto.
(d) “ Reimbursement and
Credit Agreement ” means the Reimbursement and Senior
Secured Credit Agreement dated October 1, 2007 Harbinger
Capital Partners Master Fund I, LTD., Harbinger Capital Partners
Special Situation Fund, L.P., (collectively, “
Harbinger ”) among Harbinger Capital Partners Master
Fund I, LTD., as administrative Agent and collateral Agent for
Harbinger, and Parent, Borrowers and Guarantors.
(e) “ Reimbursement Loan
Documents ” means the “ Loan Documents
” as defined in the Reimbursement and Credit Agreement.
(f) “ Senior Second Lien
Agent ” means Harbinger Capital Partners Master Fund I,
LTD, as administrative agent and collateral agent for
Harbinger.
2.02 Amended
Definitions . Annex A to the Credit Agreement is hereby
amended by:
(a) deleting the period at the end of
the definition of “ Permitted Liens ”, inserting
the word ‘and” in lieu thereof and adding the following
clause (k) thereto:
2.03 “(k) Liens,
subject to the Intercreditor Agreement and the Junior Liens
Intercreditor Agreement, to secure obligations and liabilities
arising under the Reimbursement and Credit Agreement and the
Reimbursement Loan Documents.”
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(a) deleting the definition of
“ Intercreditor Agreement ” in its entirety and
inserting the following in lieu thereof:
“
Intercreditor Agreement ” means that certain Amended
and Restated Intercreditor Agreement dated as of October 1,
2007 among the Senior Second Lien Agent, the First Lien Agent, the
First Lien Co-Agent and the Agent, as amended, modified,
supplemented or restated from time to time.
(b) deleting the definition of
“ Foreign Pledge Agreements ” in its entirety
and inserting the following in lieu thereof:
“ Foreign Pledge
Agreements ” means, collectively those certain pledge
agreements, in form and substance reasonably satisfactory to the
Agent, among the Borrower Parties, or any of them, and the Agent
for the benefit of the Agent and the Lenders pursuant to which one
or more Borrower Parties or Subsidiaries of Borrower Parties pledge
certain equity interest of Foreign Subsidiaries.”
2.04 Amendment of
Section 7.12 . Section 7.12 of the Credit
Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
(a) “Section 7.12
Guaranties . No Loan party shall make, issue, or become
liable on any Guaranty, except: (a) Guaranties of the
Obligations in favor of the Agent, (b) Guaranties by the
Parent of Debt permitted by Section 7.13, trade payables and
real estate operating leases, (c) Guaranties of Debt by
Guarantors permitted by Sections 7.13 (e), (k) or
(m).”
2.05 Amendment of
Section 7.13 . Section 7.13 of the Credit
Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
(a) “Section 7.13.
Debt . No Loan Party shall incur or maintain any Debt, other
than: (a) the Obligations; (b) Debt described on
Schedule 7.13 ; (c) Debt of Salton Holdings
Limited and Salton Europe Limited, under the Facility Agreement
dated 23rd December 2005 among those entities, the lender
parties listed therein, Burdale Financial Limited as agent and
security trustee, as amended to the date hereof not exceeding the
principal amount outstanding set forth on Annex C, Section II
during the corresponding periods set forth on Annex C,
Section II; (d) [Reserved]; (e) the Senior Notes in a
principal amount equal to the principal amount outstanding on
August 8, 2007 less any repayments of principal of the Senior
Notes after such date; (f) the Intercompany Account so long as
such Debt is subject to the Subordination Agreement and, provided
that, from and after May 11, 2005 (i) no Borrower Party
shall make any Investment in a Foreign Subsidiary and (ii) no
Foreign Subsidiary shall make any Investment in another Foreign
Subsidiary; (g) Debt in respect of foreign currency hedging
agreements with aggregate notional amounts not greater than
$2,000,000 at any time; (h) [Reserved]; (i) [Reserved]; (j)
[Reserved]: (k) the First Lien Loans; (l) [Reserved]; and
(m) Debt incurred under the Reimbursement and Credit Agreement
to fund the purchase of First Lien Loans under Section 1(a) of the
Loan Purchase Agreement in a principal amount not exceeding the
Purchase Price (as defined in the Loan Purchase Agreement) of such
First Lien Loans, plus fees not to exceed $5,000,000 and expenses
reimbursable thereunder. Notwithstanding anything to the contrary
contained herein, the Parent shall not, directly or indirectly,
enter into any amendment or modification of the documents
evidencing the Debt permitted under clause (g) above that is
any manner adverse to the Parent, any Subsidiary, the Agent or any
Lender.
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2.06 Amendment to
Section 7.14 . Section 7.14 of the Credit
Agreement is hereby amended by deleting it in its entirety and
inserting the following in lieu thereof:
(a) “Section 7.14
Prepayment . Notwithstanding anything to the contrary
contained herein, no Borrower Party shall prepay any Debt, except
(a) First Lien Obligations in accordance with First Lien Loan
Documents, (b) Obligations in accordance with the
Reimbursement Documents, (c) in connection with a refinancing
permitted under Section 7.13(e) above including the
application of any proceeds received as a result of an equity
infusion to prepay the Debt described in
Section 7.13(e) , or (d) the principal amount of
the 2008 Senior Notes solely to the extent permitted pursuant to
Section 3.1(d) ; provided however , the
prepayments permitted under subsection (d) may be made only to
the extent such prepayments would not cause a default under the
First Lien Credit Agreement.
2.07 Addition of
Section 7.28 . Article 7 of the Credit Agreement
is hereby amended by adding Section 7.28 as follows
immediately after Section 7.27 :
“Section 7.28 Foreign
Subsidiaries . The Borrower Parties shall cause the liabilities
owed by Salton Europe Ltd. and/or its Subsidiaries to Salton Hong
Kong, Ltd that are secured by any assets of Salton Europe Ltd
and/or its Subsidiaries, whether by grant of a lien, retention of
title or other means, to not exceed, during the periods set forth
on Annex C, Section I, the corresponding amounts for such
periods set forth on Annex C; Section I; to the extent so secured
such liabilities shall be secured solely by accounts receivable and
inventory of Salton Europe Ltd. on a second lien basis, junior to
the lien securing the obligations described in Section 7.13
(c); and except as so permitted and notwithstanding, anything to
the contrary in the Loan Documents, Salton Hong Kong, Ltd. shall
have no Liens on any asset of Salton, Inc. or any of its
Subsidiaries.”
2.08 Schedules
. The schedules to the Credit Agreement are amended by
inserting:
(a) Annex A hereto as
Schedule 7.13 — Debt at August 4,
2007.
Section 3. Representations and
Warranties . In order to induce the Agent and the
Lenders to enter into this Amendment, the Borrower Parties hereby
represent and warrant that:
3.01 Representations
and Warranties True and Correct . At and as of the
date of this Amendment and both prior to and after giving effect to
this Amendment, each of the representations and warranties
contained in the Credit Agreement and other Loan Documents is true
and correct
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