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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"), 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 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
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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.
2
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3. UK PLEDGES. Annex A to the Se
