{"id":42158,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/commitment-letter-salton-maxim-housewares-inc-and-lehman.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"commitment-letter-salton-maxim-housewares-inc-and-lehman","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/operations\/commitment-letter-salton-maxim-housewares-inc-and-lehman.html","title":{"rendered":"Commitment Letter &#8211; Salton\/Maxim Housewares Inc. and Lehman Brothers Inc."},"content":{"rendered":"<pre>\n\nLEHMAN BROTHERS INC.                              LEHMAN COMMERCIAL PAPER INC.\n3 WORLD FINANCIAL CENTER                          3 WORLD FINANCIAL CENTER\nNEW YORK, NEW YORK 10285                          NEW YORK, NEW YORK  10285\n\n\n\n                                                        July 1, 1998\n\n\n                        Salton\/Maxim Housewares, Inc.\n                      Senior Secured Credit Facilities\n                              Commitment Letter\n\n\n\nSalton\/Maxim Housewares, Inc.\n550 Business Center Drive\nMt. Prospect, IL  60056\n\nAttention:  Mr. William Rue\n\nLadies and Gentlemen:\n\n     You have advised Lehman Commercial Paper Inc. ('LCPI') and Lehman Brothers\nInc. ('LBI') that Salton\/Maxim Housewares, Inc., a Delaware corporation (the\n'Borrower'), intends to purchase (the 'Stock Repurchase') from Windmere-Durable\nHoldings, Inc. (the 'Seller') (i) the 6,535,072 shares of the Borrower's common\nstock (the 'Stock') owned by the Seller for consideration consisting of $12.00\nin cash per share of Stock plus a $15,000,000 subordinated promissory note of\nthe Borrower and (ii) options owned by the Seller to purchase 458,500 shares of\nStock at $7.17 per share for consideration consisting of $3,287,445 in cash.\nIn that connection, you have requested that LBI agree to structure, arrange and\nsyndicate senior secured credit facilities in an aggregate amount of up to\n$215,000,000 (the 'Credit Facilities'), and that LCPI commit to provide the\nentire principal amount of the Credit Facilities.  It is understood that the\nBorrower may, at its option, refinance a portion of the loans under the Credit\nFacilities with the proceeds of at least $100,000,000 in senior subordinated\nnotes to be issued by the Borrower after the closing under the Credit\nFacilities.\n\n     LBI is pleased to advise you that it is willing to act as exclusive\nadvisor and arranger for the Credit Facilities.\n\n     Furthermore, LCPI is pleased to advise you of its commitment to provide\nthe entire amount of the Credit Facilities upon the terms and subject to the\nconditions set forth or \n\n\n\n                                                                              2\n\nreferred to in this commitment letter (the 'Commitment Letter') and in the\nSummary of Terms and Conditions attached hereto as Exhibit A (the 'Term\nSheet').\n\n     It is agreed that LBI will act as the sole and exclusive advisor and\narranger for the Credit Facilities and that LBI will, in such capacity, perform\nthe duties and exercise the authority customarily performed and exercised by it\nin such role.  You agree that no other agents, co-agents or arrangers will be\nappointed, no other titles will be awarded and no compensation (other than (i)\nthat expressly contemplated by the Term Sheet and the Fee Letter referred to\nbelow and (ii) a $250,000 fee payable by the Borrower to Andrew Glashow) will \nbe paid in connection with the Credit Facilities unless you and we shall so \nagree.\n\n     We intend to syndicate the Credit Facilities to a group of financial\ninstitutions (together with LCPI, the 'Lenders') identified by us in\nconsultation with you; provided, that syndication of the Credit Facilities is\nnot a condition to LCPI's obligation to make the Credit Facilities available.\nLBI may commence syndication efforts at any time after the execution of this\nCommitment Letter, and you agree actively to assist LBI in completing a\nsyndication satisfactory to it.  Such assistance shall include (a) your using\ncommercially reasonable efforts to ensure that the syndication efforts benefit\nmaterially from your existing lending relationships, (b) direct contact between\nsenior management and advisors of the Borrower and the proposed Lenders, (c)\nassistance in the preparation of a Confidential Information Memorandum and\nother marketing materials to be used in connection with the syndication and (d)\nthe hosting, with LBI, of one or more meetings of prospective Lenders.  You\nalso agree that, at your expense, you will work with LBI and LCPI to procure a\nrating for the Credit Facilities by Moody's Investors Service, Inc. and\nStandard &amp; Poor's Ratings Group; provided that procuring such a rating is not a\ncondition to LCPI's obligation to make the Credit Facilities available.\n\n     LBI, in consultation with the Borrower, will manage all aspects of the\nsyndication, including decisions as to the selection of institutions to be\napproached and when they will be approached, when their commitments will be\naccepted, which institutions will participate, the allocations of the\ncommitments among the Lenders and the amount and distribution of fees among the\nLenders.  To assist LBI in its syndication efforts, you agree promptly to\nprepare and provide to LBI and LCPI all information with respect to the\nBorrower, the Stock Repurchase and the other transactions contemplated hereby,\nincluding all financial information and projections (the 'Projections'), as we\nmay reasonably request in connection with the arrangement and syndication of\nthe Credit Facilities.  You hereby represent and covenant that (a) all\ninformation other than the Projections (the 'Information') that has been or\nwill be prepared by or under the direction of the Borrower and made available\nto LBI and LCPI by you or any of your representatives is or will be, when\nfurnished, complete and correct in all material respects and does not or will\nnot, when furnished, contain any untrue statement of a material fact or omit to\nstate a material fact necessary in order to make the statements contained\ntherein not materially misleading in light of the circumstances under which\nsuch statements are made and (b) the Projections that have been or will be made\navailable to LBI and LCPI by you or any of your\n\n\n\n\n                                                                             3\n\n\nbeen or will be prepared in good faith based upon reasonable assumptions.  You\nunderstand that in arranging and syndicating the Credit Facilities we may use \nand rely on the Information and Projections without independent verification \nthereof.\n\n     As consideration for LCPI's commitment hereunder and LBI's agreement to\nperform the services described herein, you agree to pay to LCPI the\nnonrefundable fees set forth in Annex I to the Term Sheet and in the Fee Letter\ndated the date hereof and delivered herewith (the 'Fee Letter').\n\n     The commitments and agreements of LBI and LCPI described herein are\nsubject to (a) there not occurring or becoming known to us after the date\nhereof any event or condition that has had or could reasonably be expected to\nhave a material adverse effect on the business, operations, property or\ncondition (financial or otherwise) of the Borrower and its subsidiaries, taken\nas a whole, (b) our completion of and satisfaction in all respects with a due\ndiligence investigation of the Borrower, (c) our not becoming aware after the\ndate hereof of any information or other matter affecting the Borrower or the\ntransactions contemplated hereby which is inconsistent in a material and\nadverse manner with any such information or other matter disclosed to us prior\nto the date hereof, (d) there not having occurred a material disruption of or\nmaterial adverse change in financial, banking or capital market conditions\nthat, in our judgment, could reasonably be expected to materially impair the\nsyndication of the Credit Facilities, (e) our satisfaction that prior to and\nduring the syndication of the Credit Facilities there shall be no competing\noffering, placement or arrangement of any debt securities or bank financing by\nor on behalf of the Borrower or any affiliate thereof, provided, that the\nrestrictions of this clause (e) shall in any event cease to apply after the\ndate which is nine months after the Closing Date (as defined in the Term\nSheet), (f) the negotiation, execution and delivery on or before July 31, 1998\nof definitive documentation with respect to the Credit Facilities satisfactory\nto LCPI and its counsel and (g) the other conditions set forth or referred to\nin the Term Sheet.  LBI, LCPI and the Borrower intend to work diligently to\nclose the Credit Facilities as promptly as practicable.  Although this\nCommitment Letter and the Term Sheet summarize the principal terms and\nconditions applicable to the Credit Facilities, the terms and conditions of\nLCPI's commitment hereunder and of the Credit Facilities are not limited to\nthose set forth herein and in the Term Sheet.  Those matters that are not\ncovered by the provisions hereof and of the Term Sheet are subject to the\napproval and agreement of LCPI and the Borrower and shall be consistent with\nthis Commitment Letter and the Term Sheet.\n\n     You agree (a) to indemnify and hold harmless LBI, LCPI, their respective\naffiliates and their respective officers, directors, employees, advisors, and\nagents (each, an 'indemnified person') from and against any and all losses,\nclaims, damages and liabilities to which any such indemnified person may become\nsubject arising out of or in connection with this Commitment Letter, the Credit\nFacilities, the use of the proceeds thereof, the Stock Repurchase or any\nrelated transaction or any claim, litigation, investigation or proceeding\nrelating to any of the foregoing, regardless of whether any indemnified person\nis a party thereto, and to reimburse each indemnified person upon demand for\nany legal or other expenses incurred in connection with investigating or\ndefending any of the foregoing, \n\n\n\n\n                                                                             4\n\n\nprovided that the foregoing indemnity will not, as to any indemnified person,\napply to losses, claims, damages, liabilities or related expenses to the extent\nthey are found by a final, non-appealable judgment of a court to arise from the\nwillful misconduct or gross negligence of such indemnified person, and (b) to\nreimburse LBI and LCPI and their affiliates on demand for all reasonable\nout-of-pocket expenses (including due diligence expenses, syndication expenses,\ntravel expenses, and reasonable fees, charges and disbursements of counsel)\nincurred in connection with the Credit Facilities and any related documentation\n(including this Commitment Letter, the Term Sheet, the Fee Letter and the\ndefinitive financing documentation) or the administration, amendment,\nmodification or waiver thereof.  No indemnified person shall be liable for any\nindirect or consequential damages in connection with its activities related to\nthe Credit Facilities.\n\n     You acknowledge that LBI and its affiliates (the term 'LBI' being\nunderstood to refer hereinafter in this paragraph to include such affiliates,\nincluding LCPI) may be providing debt financing, equity capital or other\nservices (including financial advisory services) to other companies in respect\nof which you may have conflicting interests regarding the transactions\ndescribed herein and otherwise.  LBI will not use confidential information\nobtained from you by virtue of the transactions contemplated by this Commitment\nLetter or their other relationships with you in connection with the performance\nby LBI of services for other companies, and LBI will not furnish any such\ninformation to other companies.  You also acknowledge that LBI has no\nobligation to use in connection with the transactions contemplated by this\nCommitment Letter, or to furnish to you, confidential information obtained from\nother companies.\n\n     This Commitment Letter shall not be assignable by any party hereto without\nthe prior written consent of the other parties hereto (and any purported\nassignment without such consent shall be null and void), is intended to be\nsolely for the benefit of the parties hereto and is not intended to confer any\nbenefits upon, or create any rights in favor of, any person other than\nthe parties hereto.  This Commitment Letter may not be amended or waived except\nby an instrument in writing signed by you and LBI and LCPI.  This Commitment\nLetter may be executed in any number of counterparts, each of which shall be an\noriginal, and all of which, when taken together, shall constitute one\nagreement.  Delivery of an executed signature page of this Commitment Letter by\nfacsimile transmission shall be effective as delivery of a manually executed\ncounterpart hereof.  This Commitment Letter and the Fee Letter are the only\nagreements that have been entered into among us with respect to the Credit\nFacilities and set forth the entire understanding of the parties with respect\nthereto.  This Commitment Letter shall be governed by, and construed in\naccordance with, the laws of the State of New York.\n\n     This Commitment Letter is delivered to you on the understanding that\nneither this Commitment Letter, the Term Sheet or the Fee Letter nor any of\ntheir terms or substance shall be disclosed, directly or indirectly, to any\nother person except (a) to your officers, agents and advisors who are directly\ninvolved in the consideration of this matter, and Centre Partners and its\nclients who provide equity financing contemplated hereby or (b) as may be\ncompelled in a judicial or administrative proceeding or as otherwise required\nby \n\n\n\n\n                                                                             5\n\nlaw (in which case you agree to inform us promptly thereof), provided, that\nthe foregoing restrictions shall cease to apply (except in respect of the Fee\nLetter and its terms and substance) after this Commitment Letter has been\naccepted by you.\n\n     The compensation, reimbursement, indemnification and confidentiality\nprovisions contained herein and in the Fee Letter shall remain in full force\nand effect regardless of whether definitive financing documentation shall be\nexecuted and delivered and notwithstanding the termination of this Commitment\nLetter or LCPI's commitment hereunder.\n\n     LBI also will provide financial advisory services to the Borrower with\nrespect to the transaction to which this Commitment Letter relates.  The\nBorrower agrees that LBI has the right to place advertisements in financial and\nother newspapers and journals at its own expense describing its services to the\nBorrower, provided that LBI will submit a copy of any such advertisements to\nthe Borrower for its approval, which approval shall not be unreasonably\nwithheld. Furthermore, the Borrower agrees to include a reference to LBI's role\nas financial advisor in any press release announcing the transaction.\n\n     If the foregoing correctly sets forth our agreement, please indicate your\nacceptance of the terms hereof and of the Term Sheet and the Fee Letter by\nreturning to LCPI executed counterparts hereof and of the Fee Letter, together\nwith the amounts agreed upon pursuant to the Fee Letter to be payable upon the\nacceptance hereof, not later than 5:00 p.m., New York City time, on July 2,\n1998.  The commitments and agreements of LBI and LCPI herein will expire at\nsuch time in the event LCPI has not received such executed counterparts and\nsuch amounts in accordance with the immediately preceding sentence.\n\n\n\n\n\n                                                                              6\n\n\n\n     LBI and LCPI are pleased to have been given the opportunity to assist you\nin connection with this financing, and we look forward to working with you.\n\n                                    Very truly yours,\n\n                                    LEHMAN COMMERCIAL PAPER INC.\n\n\n                                    By:\n                                       ----------------------------------------\n                                         Title:  Authorized Signatory\n\n                                    LEHMAN BROTHERS INC.\n\n\n                                    By:\n                                       ----------------------------------------\n                                         Title:  Authorized Signatory\n\n\nAccepted and agreed to\nas of the date first\nwritten above by:\n\nSALTON\/MAXIM HOUSEWARES, INC.\n\n\nBy:\n   -------------------------------\n     Title:\n\n\n\n\n\n                                                                      Exhibit A\n                                                                      ---------\n\n                        SALTON\/MAXIM HOUSEWARES, INC.\n\n                       $215,000,000 CREDIT FACILITIES\n\n                       Summary of Terms and Conditions\n\n                                July 1,  1998\n\n                       -------------------------------\n\n\n     Salton\/Maxim Housewares, Inc., a Delaware corporation (the 'Borrower'),\nintends to purchase (the 'Stock Repurchase') from Windmere-Durable Holdings,\nInc. (the 'Seller') (i) the 6,535,072 shares of the Borrower's common stock\n(the 'Stock') owned by the Seller for consideration consisting of $12.00 in\ncash per share of Stock plus a $15,000,000 subordinated promissory note of the\nBorrower (the 'Seller Note') and (ii) options owned by the Seller to purchase\n458,500 shares of Stock at $7.17 per share for consideration consisting of\n$3,287,445 in cash.  The Stock purchased in the Stock Repurchase will become\ntreasury stock upon consummation of such purchase.  In order to finance the\nStock Repurchase and to provide for working capital and general corporate needs\nfollowing the Stock Repurchase, the Borrower wishes to establish senior secured\ncredit facilities in an aggregate amount of up to $215,000,000 as described\nbelow in this Summary of Terms and Conditions.  It is understood that the\nBorrower may, at its option, refinance the Tranche A Term Loans (as defined\nbelow) with the proceeds of approximately $100,000,000 in senior subordinated\nnotes to be sold in an offering for which Lehman Brothers Inc. will act as sole\nunderwriter, initial purchaser and\/or placement agent (the 'Senior Subordinated\nNotes') which may be issued by the Borrower after the closing under the credit\nfacilities described below (the date, if any,  on which the Senior Subordinated\nNotes are issued and the Tranche A Term Loans are repaid in full, the\n'Refinancing Date').\n\nI.  Parties\n    -------\n\n  Borrower:                  Salton\/Maxim Housewares, Inc., a Delaware \n                             corporation (the 'Borrower').\n\n  Guarantors:                Each of the Borrower's direct and indirect \n                             subsidiaries, if any, other than Salton Hong Kong \n                             Limited (the 'Hong Kong Subsidiary') (the \n                             'Guarantors'; the Borrower and the Guarantors, \n                             collectively, the 'Credit Parties').\n\n  Advisor and Arranger:      Lehman Brothers Inc. (in such capacity, the \n                             'Arranger').\n\n  Syndication Agent:         Lehman Commercial Paper Inc. (the 'Syndication \n                             Agent').\n\n\n                                                                              2\n\n  Administrative Agent:      An entity selected by the Syndication Agent, in\n                             consultation with the Borrower, during the\n                             syndication process to serve as\n                             administrative agent (the  'Administrative\n                             Agent').\n\n  Lenders:                   A syndicate of banks, financial institutions and \n                             other entities arranged by the Syndication\n                             Agent, in consultation with the Borrower\n                             (collectively, the 'Lenders').\n\nII. Types and Amounts of\n    Credit Facilities\n    -----------------\n\n1.  Term Loan Facilities\n    --------------------\n\n  Types and Amounts of\n  Facilities:                Term Loan Facilities (the 'Term Loan Facilities') \n                             in  an aggregate amount of $165,000,000\n                             (the loans  thereunder, the 'Term Loans') as\n                             follows:\n\n                             Tranche A Term Loan Facility:  A 5 year term loan\n                             facility (the 'Tranche A Term Loan Facility') in\n                             an aggregate principal amount equal to $90,000,000\n                             (the loans thereunder, the 'Tranche A Term\n                             Loans').  The Tranche A Term Loans shall be\n                             repayable in quarterly installments in amounts set\n                             forth below for each year following the Closing\n                             Date (as defined below):\n\n\n<font size=\"2\">\n\n                             Year                          Amount\n                             ----                          ------\n                                                        \n                             1                             $5,000,000\n                             2                             $5,000,000\n                             3                             $25,000,000\n                             4                             $25,000,000\n                             5                             $30,000,000\n<\/font>\n\n                             Delayed Draw Term Loan Facility:  A 5 year term\n                             loan facility (the 'Delayed Draw Term Loan \n                             Facility') in an aggregate principal amount\n                             equal to $75,000,000 (the loans thereunder, the\n                             'Delayed Draw Term Loans').  The Delayed Draw Term\n                             Loans shall be repayable in quarterly installments\n                             in amounts set forth below for each year following\n                             the Closing Date:\n\n\n\n\n                             Year                          Amount\n                             ----                          ------\n                                                        \n                             1                             0\n\n\n\n\n                                                                              3\n\n                                                        \n                             2                             $10,000,000\n                             3                             $20,000,000\n                             4                             $20,000,000\n                             5                             $25,000,000;\n\n\n\n                             provided, that if less than $75,000,000 in         \n                             aggregate principal amount of Delayed Draw Term\n                             Loans shall be borrowed, each of the installment\n                             amounts set forth above shall be proportionally\n                             reduced.\n\n  Availability:              The Tranche A Term Loans shall be made in a single\n                             drawing on the Closing Date.  The Delayed Draw Term\n                             Loans may be made in up to 10 drawings, in minimum\n                             amounts to be determined, during the period\n                             commencing on the Closing Date and ending on the\n                             date which is 364 days after the Closing Date.\n\n  Purpose:                   The proceeds of the Tranche A Term Loans shall be\n                             used to finance the Stock Repurchase and repay the\n                             Borrower's existing indebtedness to Foothill\n                             Capital and to pay related fees and expenses and\n                             for general corporate purposes. The proceeds of the\n                             Delayed Draw Term Loans shall be used to finance\n                             working capital and other general corporate\n                             purposes of the Borrower and its subsidiaries,\n                             including permitted acquisitions.\n\n2. Revolving Credit Facility\n   -------------------------\n\n  Type and Amount of\n  Facility:                  5-year revolving credit facility (the 'Revolving\n                             Credit Facility'; together with the Term Loan\n                             Facilities, the 'Credit Facilities') in the amount\n                             of $50,000,000 (the loans thereunder, the\n                             'Revolving Credit Loans').\n\n  Availability:              The Revolving Credit Facility shall be available on\n                             a revolving basis during the period commencing on\n                             the Closing Date and ending on the fifth\n                             anniversary thereof (the 'Revolving Credit\n                             Termination Date').\n\n  Letters of Credit:         A portion of the Revolving Credit Facility not in\n                             excess of $10,000,000 shall be available for the\n                             issuance of letters of credit (the 'Letters of\n                             Credit') by one or more Lenders to \n\n\n                                                                             4\n\n\n                             be selected by the Borrower in the syndication\n                             process (in such capacity, the 'Issuing Lender'). \n                             No Letter of Credit shall have an expiration date\n                             after the earlier of (a) one year after the date\n                             of issuance and (b) five business days prior to\n                             the Revolving Credit Termination Date, provided\n                             that any Letter of Credit with a one-year tenor\n                             may provide for the renewal thereof for additional\n                             one-year periods (which shall in no event extend\n                             beyond the date referred to in clause (b) above).\n\n                             Drawings under any Letter of Credit shall be\n                             reimbursed by the Borrower (whether with its own\n                             funds or with the proceeds of Revolving Credit\n                             Loans).  To the extent that the Borrower does not\n                             so reimburse the Issuing Lender, the Lenders under\n                             the Revolving Credit Facility shall be irrevocably\n                             and unconditionally obligated to reimburse the\n                             Issuing Lender on a pro rata basis.\n\n  Maturity:                  The Revolving Credit Termination Date.\n\n  Purpose:                   The proceeds of the Revolving Credit Loans shall be\n                             used to finance the working capital needs,\n                             including inventory, and for general corporate\n                             purposes of the Borrower and its subsidiaries.\n\n\nIII. Certain Payment Provisions\n     --------------------------\n\n  Fees and Interest Rates:   As set forth on Annex I.\n\n  Optional Prepayments and\n  Commitment Reductions:     Loans may be prepaid and commitments may be reduced\n                             by the Borrower in minimum amounts to be agreed\n                             upon.  Optional prepayments of the Term Loans shall\n                             be applied to the Tranche A Term Loans and the\n                             Delayed Draw Term Loans ratably and to the\n                             installments thereof ratably in accordance with the\n                             then outstanding amounts thereof and may not be\n                             reborrowed.\n\n  Mandatory Prepayments and\n  Commitment Reductions:     The following amounts shall be applied to prepay\n                             the Term Loans and reduce the Revolving Credit\n                             Facility:\n\n\n\n                                                                             5\n\n                             (a) 100% of the net proceeds of any incurrence     \n                             of certain indebtedness (including, without\n                             limitation, the Senior Subordinated Notes) after\n                             the Closing Date by the Borrower or any of its\n                             Restricted Subsidiaries (as defined below);\n\n                             (b) 100% of the net proceeds of any sale or\n                             other disposition (including as a result of\n                             casualty or condemnation) by the Borrower or any\n                             of its Restricted Subsidiaries of any assets\n                             (except for the sale of inventory in the ordinary\n                             course of business and certain other dispositions\n                             to be agreed on); provided, that the definitive\n                             credit agreement will provide that proceeds of any\n                             such disposition which are reinvested in the\n                             Borrower's business within a time period to be\n                             agreed upon will not be required to be applied\n                             toward prepayment of the Loans and reduction of\n                             the Revolving Credit Facility; and\n\n                             (c) 50% of excess cash flow (to be defined in      \n                             a mutually satisfactory manner) for each fiscal\n                             year of the Borrower (commencing with the fiscal\n                             year in which the Closing Date occurs).\n\n                             All such amounts shall be applied, first, to       \n                             the prepayment of outstanding Term Loans, second,\n                             to the permanent reduction of the undrawn\n                             commitments under the Delayed Draw Term Loan\n                             Facility and, third, to the permanent reduction of\n                             the Revolving Credit Facility; provided, that the\n                             excess cash flow amounts described in clause (c)\n                             above shall not reduce the Revolving Credit\n                             Facility.  Each such prepayment of the Term Loans\n                             shall be applied to the Tranche A Term Loans and\n                             the Delayed Draw Term Loans ratably and to the\n                             installments thereof ratably in accordance with\n                             the then outstanding amounts thereof and may not\n                             be reborrowed; provided, that prepayments made\n                             with the proceeds of the Senior Subordinated Notes\n                             shall be applied to prepay ratably the Tranche A\n                             Term Loans and any outstanding Delayed Draw Term\n                             Loans, and any proceeds remaining after such\n                             prepayment shall not be required to be used to\n                             prepay Loans or reduce any Credit Facility.  The\n                             Revolving Credit Loans shall be prepaid and the\n                             Letters of Credit shall be cash collateralized or\n                             replaced to the extent such extensions of credit\n                             exceed the amount of the Revolving Credit\n                             Facility.\n\n\n                                                                              6\n\n\nIV.  Collateral              The obligations of each Credit Party in respect \n     ----------              of the Credit Facilities shall be secured by a \n                             perfected first priority security  interest\n                             (subject to customary permitted encumbrances) in\n                             all of its tangible and intangible assets\n                             (including, without limitation, intellectual\n                             property, real property (other than the Borrower's\n                             existing warehouse leases and other leasehold\n                             interests not having material value) and all of\n                             the capital stock of each of the Borrower's direct\n                             and indirect domestic subsidiaries and 65% of the\n                             capital stock of the Borrower's foreign\n                             subsidiaries), except for those assets as to which\n                             the Syndication Agent shall determine in its sole\n                             discretion that the costs of obtaining such a\n                             security interest are excessive in relation to the\n                             value of the security to be afforded thereby.\n\nV.   Certain Conditions\n     ------------------\n\n    Initial Conditions:      The availability of the Credit Facilities shall \n                             be conditioned upon satisfaction of, among other\n                             things, the following conditions precedent (the\n                             date upon which all such conditions precedent\n                             shall be satisfied, the 'Closing Date') on or\n                             before July 31, 1998:\n\n                             (a)  The Borrower shall have executed and\n                             delivered the definitive credit agreement (the\n                             'Credit Agreement'), and each Credit Party, as\n                             applicable, shall have executed and delivered the\n                             other financing documentation with respect to the\n                             Credit Facilities (together with the Credit\n                             Agreement, the 'Credit Documentation').\n\n                             (b)  The Borrower shall have received at least\n                             $40,000,000 in cash from the issuance of its       \n                             convertible preferred stock to Centre Partners or\n                             funds managed by Centre Partners, and the terms of\n                             such stock shall be satisfactory to the\n                             Syndication Agent (it being agreed that such terms\n                             shall be satisfactory if they are consistent with\n                             the terms described in the term sheet, dated May\n                             22, 1998, with respect to such convertible\n                             preferred stock).  The Seller Note shall be\n                             satisfactory to the Syndication Agent (it being\n                             agreed that the Seller Note as set forth in\n                             Exhibit A to the Stock Agreement, dated May 6,\n                             1998, between the Borrower and \n\n\n\n                                                                              7\n\n                             the Seller is satisfactory).  The capital\n                             structure of the Borrower and its subsidiaries\n                             after giving effect to the Stock Repurchase shall\n                             reflect the Stock Repurchase, the transactions\n                             described in this paragraph and the incurrence of\n                             the indebtedness contemplated hereby.\n\n                             (c)  The Lenders, the Administrative Agent, the\n                             Syndication Agent and the Arranger shall have      \n                             received all fees required to be paid, and all\n                             expenses for which invoices have been presented,\n                             on or before the Closing Date.\n\n                             (d)  All governmental and third party approvals\n                             (including any necessary shareholder approvals)    \n                             necessary or, in the discretion of the Syndication\n                             Agent, advisable in connection with the Stock\n                             Repurchase, the financing contemplated hereby and\n                             the continuing operations of the Borrower and its\n                             subsidiaries shall have been obtained and be in\n                             full force and effect.\n\n                             (e)  The Lenders shall be satisfied that the Stock\n                             Repurchase and the financing contemplated hereby   \n                             will not violate Regulations T, U or X of the\n                             Board of Governors of the Federal Reserve System.\n\n                             (f)  The Lenders shall have received (i) audited\n                             consolidated financial statements of the Borrower  \n                             for fiscal years 1996 and 1997 and (ii)\n                             satisfactory unaudited interim consolidated\n                             financial statements of the Borrower for each\n                             quarterly period ended subsequent to the date of\n                             the latest financial statements delivered pursuant\n                             to clause (i) of this paragraph as to which such\n                             financial statements are available (it being\n                             understood that such financial statements for the\n                             first three quarters of fiscal year 1998 have been\n                             reviewed and found acceptable).\n\n                             (g)  The Lenders shall have received a\n                             satisfactory pro forma consolidated balance sheet\n                             of the Borrower as at the date of the most\n                             recent consolidated balance sheet delivered\n                             pursuant to paragraph (f) above, adjusted to give\n                             effect to the consummation of the Stock Repurchase\n                             and the financings contemplated hereby as if such\n                             transactions had occurred on such date.\n\n\n\n                                                                             8\n\n                             (h)  The Lenders shall have received a\n                             satisfactory business plan for fiscal year 1999.\n\n                             (i)  The Lenders shall have received the results\n                             of a recent lien search in each relevant   \n                             jurisdiction with respect to the Borrower and its\n                             subsidiaries, and such search shall reveal no\n                             liens on any of the assets of the Borrower or its\n                             subsidiaries except for liens permitted by the\n                             Credit Documentation or liens to be discharged on\n                             or prior to the Closing Date pursuant to\n                             documentation satisfactory to the Administrative\n                             Agent.\n\n                             (j)  The Lenders shall have received a\n                             satisfactory solvency opinion from Houlihan, Lokey\n                             or another independent valuation firm satisfactory\n                             to the Syndication Agent which shall document the\n                             solvency of the Borrower and its subsidiaries\n                             after giving effect to the Stock Repurchase and\n                             the other transactions contemplated hereby.\n\n                             (k)  The Lenders shall be satisfied with the\n                             environmental affairs of the Borrower and its      \n                             subsidiaries.\n\n                             (l)  The Lenders shall have received such legal\n                             opinions (including opinions (i) from counsel to\n                             the Borrower and its subsidiaries and (ii)\n                             from such special and local counsel as may be\n                             required by the Syndication Agent), documents and\n                             other instruments as are customary for\n                             transactions of this type or as they may\n                             reasonably request.\n\n  On-Going Conditions:       The making of each extension of credit shall be \n                             conditioned upon (a) the accuracy in all material  \n                             respects of all representations and warranties in\n                             the Credit Documentation (including, without\n                             limitation, the material adverse change and\n                             litigation representations) and (b) there being no\n                             default or event of default in existence at the\n                             time of, or after giving effect to the making of,\n                             such extension of credit.  As used herein and in\n                             the Credit Documentation a 'material adverse\n                             change' shall mean any event, development or\n                             circumstance that has had or could reasonably be\n                             expected to have a material adverse effect on (a)\n                             the Stock Repurchase, (b) the business, assets,\n                             property or condition (financial or otherwise) of\n                             the Borrower and its Restricted Subsidiaries taken\n                             as a whole, or (c) the validity or \n\n\n                                                                             9 \n\n                             enforceability of any of the Credit Documentation \n                             or the rights and remedies of the Administrative \n                             Agent and the Lenders thereunder.\n\n\nVI. Certain Documentation Matters\n    -----------------------------\n\n                             The Credit Documentation shall contain\n                             representations, warranties, covenants and events\n                             of default customary for financings of this type\n                             and other terms deemed appropriate by the Lenders,\n                             including, without limitation:\n\n  Restricted Subsidiaries\/\n  Unrestricted Subsidiaries: Initially, all subsidiaries of the Borrower will \n                             be Restricted Subsidiaries.  The Borrower may      \n                             designate the Hong Kong Subsidiary as an\n                             Unrestricted Subsidiary at any time after the\n                             total leverage ratio is less than or equal to 4.00\n                             to 1.00 if, after giving pro forma effect to such\n                             designation, no Default or Event of Default is in\n                             existence.   After the Hong Kong Subsidiary is\n                             designated as an Unrestricted Subsidiary, it will\n                             be excluded from the financial covenants and from\n                             the restrictions of the negative covenants.\n\n  Representations and\n  Warranties:                Financial statements (including pro forma financial\n                             statements); absence of undisclosed liabilities;\n                             no material adverse change; corporate existence;\n                             compliance with law; corporate power and\n                             authority; enforceability of Credit Documentation;\n                             no conflict with law or contractual obligations;\n                             no material litigation (other than the\n                             Westinghouse Electric Corporation litigation\n                             described in the Borrower's Form 10-K for fiscal\n                             year 1997); no default; ownership of property;\n                             liens; intellectual property; no burdensome\n                             restrictions; taxes; Federal Reserve regulations;\n                             ERISA; Investment Company Act; subsidiaries;\n                             environmental matters; solvency;  accuracy of\n                             disclosure; and creation and perfection of\n                             security interests.\n\n  Affirmative Covenants:     Delivery of financial statements, reports, \n                             accountants' letters, projections, officers'       \n                             certificates and other information requested by\n                             the Lenders; payment of other obligations;\n                             continuation of business and maintenance of\n                             existence and material rights and privileges;\n                             compliance \n\n\n\n                                                                            10\n\n                             with laws and material contractual obligations;\n                             maintenance of property and insurance; maintenance\n                             of books and records; right of the Lenders to\n                             inspect property and books and records; notices of\n                             defaults, litigation and other material events;\n                             compliance with environmental laws; further\n                             assurances (including, without limitation, with\n                             respect to security interests in after-acquired\n                             property); and agreement to issue the Senior\n                             Subordinated Notes within 120 days after the\n                             Closing Date or to obtain interest rate protection\n                             within 120 days after the Closing Date for an\n                             amount equal to the principal amount of the\n                             Tranche A Term Loans to be agreed upon on terms\n                             and conditions satisfactory to the Syndication\n                             Agent.\n\n  Financial Covenants:       Financial covenants (including, without \n                             limitation, minimum interest and fixed charge      \n                             coverage and maximum total leverage).  Although\n                             the permitted levels of the financial covenants\n                             will be agreed upon and reflected in the Credit\n                             Agreement, the maximum total leverage covenant\n                             will in any event not permit total leverage to be\n                             greater than 4.75 to 1.00 at any time prior to the\n                             Refinancing Date or greater than 5.5 to 1.00 at\n                             any time from and after the Refinancing Date\n                             (assuming that $100,000,000 in aggregate principal\n                             amount of Senior Subordinated Notes are issued on\n                             the Refinancing Date).  The Credit Agreement will\n                             provide that from and after the Refinancing Date,\n                             a maximum senior leverage covenant will be added\n                             to the financing covenants describe above, and the\n                             financial ratios in all financial covenants will\n                             be adjusted to reflect the revised capital\n                             structure of the Borrower.\n\n\n  Negative Covenants:        Limitations (subject to materiality and other \n                             customary exceptions, as appropriate) on:  \n                             indebtedness (including preferred stock of\n                             subsidiaries issued to persons other than the\n                             Borrower); liens; guarantee obligations; mergers,\n                             consolidations, liquidations and dissolutions;\n                             sales of assets; leases; dividends and other\n                             payments in respect of capital stock; capital\n                             expenditures; investments, loans and advances;\n                             optional payments and modifications of\n                             subordinated and other debt instruments;\n                             transactions with affiliates; sale and leasebacks;\n                             changes in fiscal year; negative pledge clauses;\n                             changes in lines of business.  The \n\n\n                                                                            11\n\n                             Credit Agreement will provide that from and\n                             after the Refinancing Date, certain of the\n                             negative covenants described above will be\n                             modified to reflect the revised capital structure\n                             of the Borrower.\n\n  Events of Default:         Nonpayment of principal when due; nonpayment of \n                             interest, fees or other amounts after a grace\n                             period to be agreed upon; material inaccuracy of\n                             representations and warranties; violation of\n                             covenants (subject, in the case of certain\n                             affirmative covenants, to a grace period to be\n                             agreed upon); cross-default to other material\n                             indebtedness of the Borrower and its subsidiaries;\n                             bankruptcy events; certain ERISA events; material\n                             judgments; actual or asserted invalidity of any\n                             guarantee or security document, subordination\n                             provisions or security interest; and a change of\n                             control (the definition of which is to be agreed).\n\n  Voting:                    Amendments and waivers with respect to the Credit \n                             Documentation shall require the approval of\n                             Lenders holding not less than a majority of the\n                             aggregate amount of the Term Loans, Revolving\n                             Credit Loans, participations in Letters of Credit\n                             and unused commitments under the Credit\n                             Facilities, except that (a) the consent of each\n                             Lender affected thereby shall be required with\n                             respect to (i) reductions in the amount or\n                             extensions of the scheduled date of amortization\n                             or maturity of any Loan, (ii) reductions in the\n                             rate of interest or any fee or extensions of any\n                             due date thereof, (iii) increases in the amount or\n                             extensions of the expiry date of any Lender's\n                             commitment and (iv) modifications to the pro rata\n                             provisions of the Credit Documentation and (b) the\n                             consent of 100% of the Lenders shall be required\n                             with respect to (i) modifications to any of the\n                             voting percentages and (ii) releases of all or\n                             substantially all of the Guarantors or all or\n                             substantially all of the collateral.\n\n\n  Assignments\n  and Participations:        The Lenders shall be permitted to assign and sell \n                             participations in their Loans and  commitments,\n                             subject, in the case of assignments (other than\n                             assignments (i) by the Syndication Agent or (ii)\n                             to another Lender or to an affiliate of a Lender),\n                             to the consent of the Syndication Agent, the\n                             Administrative Agent, the Issuing Lender and the\n                             Borrower (which consent in each case shall not be\n                             unreasonably \n\n\n\n                                                                            12\n\n\n                             withheld).  Non-pro rata assignments shall\n                             be permitted.  In the case of partial assignments\n                             (other than to another Lender or to an affiliate\n                             of a Lender), the minimum assignment amount shall\n                             be $5,000,000, and, after giving effect thereto,\n                             the assigning Lender shall have commitments and\n                             Loans aggregating at least $5,000,000, in each\n                             case unless otherwise agreed by the Borrower, the\n                             Syndication Agent and the Administrative Agent. \n                             Participants shall have the same benefits as the\n                             Lenders with respect to yield protection and\n                             increased cost provisions, provided, that no\n                             participant shall be entitled to receive any\n                             greater amount pursuant to such provisions that\n                             the transferor Lender would have received.  \n                             Voting rights of participants shall be limited to\n                             those matters with respect to which the\n                             affirmative vote of the Lender from which it\n                             purchased its participation would be required as\n                             described under 'Voting' above.  Pledges of Loans\n                             in accordance with applicable law shall be\n                             permitted without restriction.  Promissory notes\n                             shall be issued under the Credit Facilities only\n                             upon request.\n\n  Yield Protection:          The Credit Documentation shall contain customary \n                             provisions (a) protecting the Lenders against\n                             increased costs or loss of yield resulting from\n                             changes in reserve, tax, capital adequacy and\n                             other requirements of law and from the imposition\n                             of or changes in withholding or other taxes and\n                             (b) indemnifying the Lenders for 'breakage costs'\n                             incurred in connection with, among other things,\n                             any prepayment of a Eurodollar Loan (as defined in\n                             Annex I) on a day other than the last day of an\n                             interest period with respect thereto.\n\n  Expenses and\n  Indemnification:           The Borrower shall pay (a) all reasonable \n                             out-of-pocket expenses of the Administrative\n                             Agent, the Syndication Agent and the Arranger \n                             associated with the syndication of the Credit\n                             Facilities and the preparation, execution,\n                             delivery and administration of the Credit\n                             Documentation and any amendment or waiver with\n                             respect thereto (including the reasonable fees,\n                             disbursements and other charges of counsel) and\n                             (b) all out-of-pocket expenses of the\n                             Administrative Agent, the Syndication Agent and\n                             the Lenders (including the fees, disbursements and\n                             other \n\n\n                                                                            13\n\n                             charges of counsel) in connection with the\n                             enforcement of the Credit Documentation.\n\n                             The Administrative Agent, the Syndication  Agent,\n                             the Arranger and the Lenders (and their affiliates\n                             and their respective officers, directors,\n                             employees, advisors and agents) will have no\n                             liability for, and will be indemnified and held\n                             harmless against, any loss, liability, cost or\n                             expense incurred in respect of the financing\n                             contemplated hereby or the use or the proposed use\n                             of proceeds thereof (except to the extent\n                             resulting from the gross negligence or willful\n                             misconduct of the indemnified party).\n\n\n  Governing Law and Forum:   State of New York.\n\n  Counsel to the\n  Administrative Agent,\n  the Syndication Agent\n  and the Arranger:          Simpson Thacher &amp; Bartlett.\n\n\n\n\n\n\n                                                                        Annex I\n                                                                        -------\n\n\n                             Interest and Certain Fees\n                             -------------------------\n\n  Interest Rate Options:     The Borrower may elect that the Loans comprising \n                             each borrowing bear interest at a rate per annum \n                             equal to:\n\n                                  the Base Rate plus the Applicable Margin; or\n\n                                  the Eurodollar Rate plus the Applicable \n                                  Margin.\n\n\n                             As used herein:\n\n                             'Base Rate' means the highest of (i) the rate of\n                             interest publicly announced by Citibank, N.A. as\n                             its prime  rate in effect at its principal office\n                             in New York City (the 'Prime Rate'), (ii) the\n                             secondary market rate for three-month certificates\n                             of deposit (adjusted for statutory reserve\n                             requirements) plus 1% and (iii) the federal funds\n                             effective rate from time to time plus 0.5%.\n\n                             'Applicable Margin' means a percentage determined \n                             in accordance with the pricing grid attached \n                             hereto as Annex I-A.\n\n                             'Eurodollar Rate' means the rate (adjusted for\n                             statutory reserve requirements for eurocurrency\n                             liabilities) at which eurodollar deposits\n                             for one, two, three or six months (as selected by\n                             the Borrower) are offered in the interbank\n                             eurodollar market.\n\n  Interest Payment Dates:    In the case of Loans bearing interest based upon \n                             the Base Rate ('Base Rate Loans'), quarterly in \n                             arrears.\n                         \n                             In the case of Loans bearing interest based upon\n                             the Eurodollar Rate ('Eurodollar Loans'), on the\n                             last day of each relevant interest period and,\n                             in the case of any interest period longer than\n                             three months, on each successive date three months\n                             after the first day of such interest period.\n\n  Commitment Fees:           The Borrower shall pay a commitment fee calculated\n                             at the rate determined in accordance with the \n                             pricing grid attached\n\n\n\n                                                                             2\n\n                             hereto as Annex I-A on the average daily unused    \n                             portion of the Revolving Credit Facility and the\n                             Delayed Draw Term Loan Facility, payable quarterly\n                             in arrears.\n\n  Letter of Credit Fees:     The Borrower shall pay a commission on all \n                             outstanding Letters of Credit at a per\n                             annum rate equal to the Applicable Margin then in\n                             effect with respect to Eurodollar Loans, in each\n                             case on the face amount of each such Letter of\n                             Credit.  Such commission shall be shared ratably\n                             among the Lenders participating in the Revolving\n                             Credit Facility and shall be payable quarterly in\n                             arrears.\n\n                             In addition to letter of credit commission, a\n                             fronting   fee calculated at a rate per annum to\n                             be agreed upon by the Borrower and the Issuing\n                             Bank on the face amount of each Letter of Credit\n                             shall be payable quarterly in arrears to the\n                             Issuing Lender for its own account.  In addition, \n                             administrative, issuance, amendment, payment and\n                             negotiation charges, in amounts agreed upon by the\n                             Borrower and the Issuing Lender, shall be payable\n                             to the Issuing Lender for its own account.\n\n  Default Rate:              At any time when the Borrower is in default in the\n                             payment of any amount of principal due under the\n                             Credit Facilities, such amount shall bear\n                             interest at 2% above the rate otherwise applicable\n                             thereto.  Overdue interest, fees and other amounts\n                             shall bear interest at 2% above the rate\n                             applicable to Base Rate Loans.\n\n  Rate and Fee Basis:        All per annum rates shall be calculated on the \n                             basis of a year of 360 days (or 365\/366 days, in\n                             the case of Base Rate Loans the interest rate\n                             payable on which is then based on the Prime Rate)\n                             for actual days elapsed.\n\n\n\n\n\n                                                                      Annex I-A\n                                                                      ---------\n\n\n                                Pricing Grid\n\nI.   Prior to the Refinancing Date, the following pricing will be in effect:\n\n\n<font size=\"2\">\n\n     Ratio of Total                                     Applicable \n        Debt to       Applicable Margin-  Commitment    Margin-Base\n        EBITDA        Eurodollar Loans*      Fee*       Rate Loans*\n        ------        -----------------      ----       -----------\n                                                  \n     &gt;4.0 to 1.0          2.375%            .50%          1.375%\n     -                                                 \n     &gt;3.5 to 1.0          2.125%            .50%          1.125%\n     -                                                 \n     &gt;3.0 to 1.0          1.875%            .40%          .875%\n     -                                                 \n     &gt;2.5 to 1.0          1.625%            .30%          .625%\n     -                                                 \n           :  2.5             1.375%            .30%          .375%\n<\/font>\n\nII.   From and after the Refinancing Date, the following pricing will be in\n      effect:\n\n\n<font size=\"2\">\n\n     Ratio of Total                                     Applicable \n        Debt to       Applicable Margin-  Commitment    Margin-Base\n        EBITDA        Eurodollar Loans*      Fee*       Rate Loans*\n        ------        -----------------      ----       -----------\n                                                  \n     &gt;5.0 to 1.0          2.125%            .50%          1.125%\n     -\n     &gt;4.5 to 1.0          1.875%            .50%           .875%\n     -\n     &gt;4.0 to 1.0          1.625%            .40%           .625%\n     -\n     &gt;3.5 to 1.0          1.375%            .30%           .375%\n     -    :  3.5             1.125%            .30%           .125%\n<\/font>\n------------------------\n     NOTE:  THE FOREGOING PRICING IS BASED UPON THE ASSUMPTION THAT\n$100,000,000 IN AGGREGATE PRINCIPAL AMOUNT OF SENIOR SUBORDINATED NOTES WILL BE\nISSUED ON THE REFINANCING DATE.\n\n*    Notwithstanding the foregoing grids, the Applicable Margin and Commitment\n     Fee rate will be (i) from the Closing Date to the earlier of the\n     Refinancing Date and the date which is six months after the Closing Date,\n     those set forth under 'I' above opposite the higher of (A) the Leverage\n     Ratio actually in effect from time to time and (B) the Leverage Ratio of\n     $3.5 to 1.0 under and (ii) from the Refinancing Date to the date which is\n     six months after the Refinancing Date, those set forth under 'II' above\n     opposite the higher of (A) the Leverage Ratio actually in effect from time\n     to time and (B) the \n\n\n\n\n                                                                             2\n\n     Leverage Ratio of $4.0 to 1.0. The pricing as set forth above will be\n     adjusted upon delivery of financial statements showing a change in the\n     applicable ratios that would require a change in the pricing pursuant to\n     the grid set forth above.\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[8042,8750],"corporate_contracts_industries":[9393,9418],"corporate_contracts_types":[9613,9620],"class_list":["post-42158","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-lehman-brothers-holdings-inc","corporate_contracts_companies-salton-inc","corporate_contracts_industries-consumer__appliances","corporate_contracts_industries-financial__securities","corporate_contracts_types-operations","corporate_contracts_types-operations__services"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/42158","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=42158"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=42158"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=42158"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=42158"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}