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EXHIBIT 10.1
THIRD AMENDMENT TO LOAN AGREEMENT
This Third Amendment to Loan Agreement (the "Third Amendment") is made
by and among Safety 1st, Inc. ("Safety 1st"), a Massachusetts corporation with
offices at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxxxxxxx; Safety 1st
(Europe) Limited ("Safety Europe"), a limited liability company organized under
the laws of the United Kingdom, 3232301 Canada, Inc. ("3232301"), a corporation
organized under the federal laws of Canada; Safety 1st Home Products Canada,
Inc. ("Safety Canada"), a corporation organized under the federal laws of
Canada; Safety 1st International, Inc. ("Safety International"), a corporation
organized under the laws of the U.S. Virgin Islands; and Fleet National Bank
("Fleet" or the "Agent"), a banking corporation organized under the laws of the
United States; The First National Bank of Boston ("Bank of Boston"), a banking
corporation organized under the laws of the United States; and USTrust ("UST"),
a Massachusetts trust company (collectively "the Banks"). Safety 1st, Safety
Europe, 3232301, Safety Canada and Safety International are sometimes
collectively hereinafter referred to as "the Borrowers".
WITNESSETH:
WHEREAS, the Banks and the Borrowers have entered into a certain loan
arrangement (the "Loan Arrangement") which Loan Arrangement is evidenced by,
among other documents and instruments, that certain Loan Agreement dated as of
March 28, 1996, as amended by that certain Amendment to Loan Agreement dated
April 19, 1996 and that certain Amendment to Loan Agreement dated May 10, 1996
(collectively, as same may be further amended, modified, supplemented or
restated from time to time, the "Loan Agreement") wherein the Banks agreed to
make certain loans to the Borrowers; and
WHEREAS, the Banks, the Borrowers and Xxxxxxx Xxxxxx ("Xxxxxx") entered
into that certain Forbearance Agreement dated August 2, 1996 (as same has been
amended as set forth below, the "Forbearance Agreement"), that certain Amended
Forbearance Agreement dated August 13, 1996, that Second Amendment to
Forbearance Agreement dated September 6, 1996, that certain Third Amendment to
Forbearance Agreement dated September 20, 1996, that certain Fourth Amendment to
Forbearance Agreement dated September 27, 1996, that certain Fifth Amendment to
Forbearance Agreement dated October 4, 1996, and that certain Sixth Amendment to
Forbearance Agreement dated October 11, 1996 wherein the Banks agreed to forbear
from exercising their rights and remedies as a result of certain Events of
Default under the Loan Agreement and agreed to continue providing loans under
the Loan Agreement notwithstanding such defaults; and
WHEREAS, the Banks and the Borrowers have agreed to amend the Loan
Agreement as set forth herein:
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Banks and the Borrowers hereby
agree that the Loan Agreement shall be amended as follows (terms not otherwise
defined herein shall have the meanings set forth in the Loan Agreement):
1. The definition of "Borrowing Base" is hereby amended by deleting the
first full sentence thereof and by replacing same with the following:
"Borrowing Base" shall mean an amount equal to the sum of: (i)
80% of the Net Outstanding Amount of Base Accounts attributable to
Domestic Accounts Receivable and Foreign Accounts Receivable plus (ii)
(a) the lesser of (I) $11,000,000.00 or (II) 40% of the sum of Net
Security Value of Base Inventory plus Letters of Credit (other than
standby letters of credit), less (b) the Inventory reserve reflected on
the books and records of the Borrower; provided that the maximum
portion of the Borrowing Base comprised of availability against Foreign
Accounts Receivable and inventory located outside the continental
United States shall not be more than Five Million ($5,000,000.00)
Dollars.
2. The definition of "Loan" and "Loans" is hereby deleted in its entirety
and shall be replaced by the following: "'Loan' and 'Loans' shall mean,
collectively, the Revolving Credit Loans and the Term Loans.
3. The definition of "Loan Documents" is hereby amended by inserting the
words "the Term Notes, the Revolver Cushion Notes, the Guaranty," after
the words "the Credit Notes" on line 2 thereof and by adding the
following text at the end thereof:
"together with any and all modifications, amendments,
restatements, supplements and extensions thereto or thereof."
4. The definition of "Maximum Amount" is hereby deleted in its entirety
and shall be replaced by the following:
"'Maximum Amount' shall mean Thirty-One Million Three Hundred
Thousand ($31,300,000.00) Dollars."
5. The definition of "Maturity Date" is hereby deleted in its entirety and
shall be replaced by the following:
"'Maturity Date' shall mean May 31, 1997."
6. The definition of "Net Outstanding Amount of Base Accounts" is hereby
amended by inserting the following text at the end thereof:
"Without limiting the foregoing, the Net Outstanding Amount of
the Base Accounts shall also be reduced
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by (a) any Accounts Receivables owed by processors or other packagers
of Inventory and (b) Accounts Receivable arising from a bulk sale or
other disposition of Inventory outside the ordinary course of business
shall not be considered a Base Account."
7. The following new definitions are hereby inserted into Section 1 of the
Loan Agreement:
"Guaranty" the Limited Guaranty dated August 2, 1996 executed
by Xxxxxxx Xxxxxx of the obligations and liabilities of the Borrowers
to the Banks, which Guaranty is limited in amount as set forth therein,
as same has been or may be amended and/or modified from time to time.
"Revolving Credit Loans" shall mean, collectively, the
Revolving Loans and the Revolver Cushion Loans.
"Revolver Cushion Amount" shall mean the amount specified
below for the period specified below
(subject to reduction as set forth in Section 2.1.3 below):
Period Amount
------ ------
10/18/96 - 11/30/96 $ 1,000,000.00
12/1/96 - 1/31/97 $ 2,000,000.00
2/1/97 - 5/31/97 $ 3,000,000.00
"Revolver Cushion Loans" shall have the meaning set forth in
Section 2.1.3(a) hereof."
"Revolver Cushion Notes" shall have the meaning set forth in
Section 2.1.3(b) hereof.
"Term Loans" shall mean the loans to be made by the Banks to
the Borrowers on the date hereof in the aggregate principal amount of
$14,700,000.00, to be evidenced by the Term Notes made by each of the
Borrowers to each of the respective Banks in the amount equal to each
of the Banks' respective Commitment Percentage of the Term Loans.
"Term Notes" shall have the meaning ascribed to such term in
Section 2.5 hereof.
"Working Capital" shall mean the aggregate of the Borrowers'
(i) cash, (ii) Inventory and (iii) Base Accounts, less (iv) current
liabilities, including the Loans.
8. Section 2.1.1 of the Agreement is hereby deleted in its entirety and
shall be replaced by the following:
2.1.1 Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and
covenants of the Borrowers made herein and in the Loan Documents, each
of the
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Banks severally agrees to make loans ("Revolving Loans") to Safety 1st
as agent for the Borrowers at Safety 1st's request from time to time,
from and after the date hereof and prior to the Maturity Date, provided
that the principal amount of Revolving Loans outstanding at any time,
plus the aggregate Stated Amount of Letters of Credit outstanding at
such time, shall not exceed the lesser of (i) (a) the Maximum Amount
less (b) the outstanding balance of Revolver Cushion Loans at such time
or (ii) the Borrowing Base, and further, that at the time the Borrower
requests a Revolving Loan and after giving effect to the making thereof
there has not occurred and is not continuing any Event of Default or
any event which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default. Each request for a
Revolving Loan shall be in an amount not less than $5,000 or some
greater integral multiple of $5,000, except for Revolving Loans, with
respect to which the Borrower had elected the LIBOR Rate Option, the
minimum amounts of which are established in Section 2.4. If at any time
the debit balance of the Revolving Loan Account at such time, plus the
aggregate Stated Amount of Letters of Credit outstanding at such time,
shall exceed the lesser of (i) (a) the Maximum Amount less (b) the
outstanding balance of Revolver Cushion Loans at such time or (ii) the
Borrowing Base, the Borrowers shall, upon notice to Safety 1st of such
excess from the Agent, immediately pay cash to the Agent to be credited
to the Revolving Loan Account in such amount as shall be necessary to
eliminate the excess. The failure of the Borrowers to eliminate such
excess within three (3) business days shall be an Event of Default
under Section 6.1(a) hereof. In addition, the Banks may, in their
discretion, refuse to make Revolving Credit Loans or other credits to
the Borrowers at any time that the debit balance of the Revolving Loan
Account plus the aggregate Stated Amount of Letters of Credit
outstanding exceeds the lesser of (a) (i) the Maximum Amount less (ii)
the outstanding balance of Revolver Cushion Loans, or (b) the Borrowing
Base. The Revolving Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage. All requests for Revolving Loans
shall be in such form and shall be made in such manner as shall be
agreed between Safety 1st and the Agent. The Revolving Loans shall be
evidenced by a Revolving Credit Note in favor of each of the Banks
(collectively, the "Credit Notes"), each substantially in the form of
Exhibit 2.1.1 attached hereto.
9. The Loan Agreement is hereby amended by adding the following new
Section 2.1.3 which shall read as follows:
"2.1.3. (a) Upon the terms and subject to the conditions of
this Agreement, and in reliance upon the representations, warranties
and covenants of the Borrowers made herein and in the Loan Documents,
each of the
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Banks severally agrees to make loans ("Revolver Cushion Loans") to
Safety 1st as agent for the Borrowers at Safety 1st's request from time
to time, from and after the date hereof and prior to the Maturity Date.
Revolver Cushion Loans shall be utilized to provide temporary credit
for unplanned working capital needs arising due to increased sales and
profitability. Without limiting the foregoing, the Borrowers expressly
acknowledge and agree that Revolver Cushion Loans will not be used to
(i) pay ordinary and usual operating expenses, (ii) cover operating
losses, or (iii) fund Capital Expenditures. No Revolver Cushion Loans
will be advanced to the extent availability exists for the Borrowers to
request Revolving Loans under the Borrowing Base set forth in Section
2.1.1 above. Revolver Cushion Loans may be requested only when no
availability exists under the Borrowing Base for the Borrower to
request Revolving Loans. The principal amount of Revolver Cushion Loans
outstanding at any one time shall not exceed (a) the Revolver Cushion
Amount or (b) when aggregated with the Stated Amount of all Letters of
Credit and the aggregate amount of all Revolving Loans outstanding, the
Maximum Amount, and further, that at the time the Borrower requests a
Revolver Cushion Loan and after giving effect to the making thereof
there has not occurred and is not continuing any Event of Default or
any event which, with the giving of notice or the passage of time, or
both, would constitute an Event of Default.
(b) Advances under the Revolver Cushion Loans shall
be evidenced by the Revolver Cushion Notes executed by each of the
Borrowers in favor of each of Banks (collectively, the "Revolver
Cushion Notes") each substantially in the form of Exhibit 2.1.3(b)
attached hereto. Interest on each Revolver Cushion Loan shall accrue at
the floating rate equal to the aggregate of the Prime Rate plus three
(3%) percent per annum with the interest to be paid monthly in arrears
on the first business day of each calendar month, commencing November
1, 1996; provided that if an Event of Default shall occur, then at the
option of the Banks the unpaid balance of Revolver Cushion Loans shall
bear interest, to the extent permitted by law, compounded monthly at a
rate per annum equal to 2% above the effective rate provided in the
Revolving Cushion Notes in effect on the day such Event of Default
occurs, in each case until such Event of Default is cured or waived.
The entire principal balance of each Revolving Cushion Loan shall be
repaid in full upon the earlier to occur of (i) seventy-five (75) days
from the date of advance thereof, or (ii) the Maturity Date. The
Borrowers' ability to request Revolver Cushion Loans hereunder shall be
suspended until such time as seven (7) days have elapsed since the
previous Revolver Cushion Loan has been repaid. Revolver Cushion Loans
shall be made pro rata in accordance with each Bank's
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Commitment Percentage.
(c) Each request for a Revolver Cushion Loan shall be
submitted to the Agent at least seven (7) days prior to the date of the
requested advance and shall include a detailed written summary in the
form of Exhibit 2.1.3(c) detailing the purposes and intended uses for
such requested Revolver Cushion Loan. The Banks will not unreasonably
withhold their consent to any requested Revolver Cushion Loan which
meets the requirements set forth herein."
10. The first sentence of Section 2.2.1 is hereby deleted in its entirety
and shall be replaced by the following:
"2.2.1 Upon the terms and subject to the conditions of this
Agreement, and in reliance upon the representations, warranties and
covenants of the Borrowers made herein and in the Loan Documents, the
Agent, under the joint responsibilities of the Banks, agrees to issue,
to the extent permitted by law and the Uniform Customs and Procedures
governing Letters of Credit (Publication No. 500 or any successor
thereto), Letters of Credit upon the application of Safety 1st during
the period from the date hereof to the Maturity Date; provided that (i)
the aggregate Stated Amount of Letters of Credit outstanding at any
time (the "Letter of Credit Exposure") shall not exceed at any time the
sum of Five Million ($5,000,000.00) Dollars and (ii) the Letter of
Credit Exposure, plus the principal amount of Revolving Loans
outstanding at such time, shall not exceed the lesser of: (a) the
Maximum Amount less the outstanding balance of Revolver Cushion Loans
at such time, or (b) the Borrowing Base, and provided, further, that at
the time Safety 1st requests the issuance of a Letter of Credit and
after giving effect to the issuance thereof, there has not occurred and
is not continuing an Event of Default or any event which, with the
giving of notice or the passage of time, or both would constitute an
Event of Default.
11. Sections 2.3.1 and 2.3.2 of the Agreement are hereby deleted in their
entirety and shall be replaced by the following:
"2.3.1 Except to the extent that the Borrowers are permitted
to choose and have chosen the alternative set forth in Section 2.4,
Revolving Loans shall bear interest at a rate per annum equal to the
Prime Rate in effect from time to time plus one (1%) percent; provided,
that if an Event of Default shall occur, then at the option of the
Banks the unpaid balance of Revolving Loans shall bear interest, to the
extent permitted by law, compounded monthly at a rate per annum equal
to 2% above the effective rate provided in the Credit Notes in effect
on the day such Event of Default occurs, in each case until such Event
of Default is cured or waived. Except for Libor Rate
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Option Loans, interest on loans shall be payable monthly in arrears
before 2:00 p.m. Boston time on the first Business Day of each month
commencing November 1, 1996. Any change in the Prime Rate shall result
in a change on the same day in the rate of interest to accrue from and
after such day on the unpaid balance of principal of the Loans bearing
interest with reference to the Prime Rate. Interest accruing on the
unpaid balance of Loans from time to time shall be calculated on the
basis of a 360-day year for the actual number of days elapsed.
2.3.2 If the entire amount of any required principal and/or
interest payment on any Loan is not paid in full within ten (10) days
after the same is due, the Borrowers shall pay to the Agent a late fee
equal to five (5%) percent of the required payment. Any late charge
shall be shared among the Banks in accordance with the respective
commitment percentages of the Banks."
12. The Borrowers and the Banks hereby acknowledge and agree that the
provisions of 2.4 of the Agreement are hereby deemed inoperative and
that the Borrower shall not have the option of requesting Loans of any
nature at the LIBOR Rate or converting any Loan to a LIBOR Rate Loan.
Any references to LIBOR Rate borrowing in any other section of the
Agreement are therefore deemed inoperative.
13. Section 2 of the Agreement is hereby amended by inserting new Sections
2.5 and 2.6 which shall read as follows:
"2.5 Term Loans
Upon the terms and subject to the conditions of this Agreement, and in
reliance upon the representations, warranties and covenants of the
Borrowers made herein and in the Loan Documents, each of the Banks
severally agrees to make the Term Loans to Safety 1st as agent for the
Borrowers. The proceeds of the Term Loans will be used to reduce the
outstanding balance of the Revolving Loans existing prior to October
18, 1996. The Term Loans shall be evidenced by the Term Notes annexed
hereto as Exhibit 2.5 and shall be repaid in accordance with the terms
thereof."
"2.6 General
All of the Obligations of the Borrowers to the Banks under this
Agreement (including, without limitation, all interest, fees and other
charges and amounts due) are the joint and several obligations of the
Borrowers, in the case of Safety Europe, limited as provided in Section
9.1 hereof. If any one or more of the Borrowers is determined by any
court or other panel of competent jurisdiction not to be liable for the
total amount of the Obligations because such Borrower or Borrowers did
not receive sufficient corporate benefit or equivalent value for its or
their
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undertaking joint and several liability for the Obligations, such
Borrower or Borrowers are and shall be jointly and severally liable for
the Obligations to the extent that it or they did receive sufficient
corporate benefit or equivalent value, and in any event up to the sum
of outstanding direct loans, trade payables and any other direct or
indirect extensions of credit to such Borrower or Borrowers from the
other Borrowers. For the purposes of accrual of interest on the Loans,
items received in payment will be considered applied to the Loans when
same have been properly collected by the Banks.
14. Section 5.1(iii) is hereby amended by inserting the following new
language at the end thereof: "In addition, the Borrowers shall submit
(i) a detailed analysis of deductions, closeouts and Accounts
Receivable reserve and a reconciliation of the Accounts Receivable roll
forward through the last day of each month to the actual end of month
balances and (ii) a detailed analysis of changes in the Inventory
reserve and a detailed analysis of revenue and cost of sales of bulk
sales or other dispositions of Inventory outside the ordinary course."
15. Section 5.1(vii) is hereby deleted in its entirety and shall be
replaced by the following: "(vii) By 11:00 a.m. Boston, Massachusetts
time of each Business Day, a Borrowing Base Certificate as of the end
of the prior Business Day, substantially in the form of Exhibit
5.1(vii) hereto (the "Borrowing Base Certificate") together with such
other information regarding Inventory and Accounts Receivable as the
Agent or any Bank may reasonably require, which daily Borrowing Base
Certificate shall be adjusted weekly, as of Monday of each week, by
disallowed items, with such adjustments being reported on Wednesday of
each week. The Borrowing Base Certificates shall be reviewed, at the
Borrowers' expense, on a monthly basis by Xxxxxxxx & Xxxxxx or other
examiners acceptable to the Banks."
16. Section 5.8(iv) of the Agreement is hereby deleted in its entirety.
17. Section 5.10 of the Agreement is hereby deleted in its entirety and
shall be replaced by the following: "Section 5.10 Capital Expenditures.
The Borrowers and the Subsidiaries shall not make any Capital
Expenditures in excess of aggregate amounts listed below in each of the
periods listed below:
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Amount Period
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$5,263,488.00 7/1/96 - 12/31/96
$2,000,000.00* 1/1/97 - 3/31/97
$ 600,000.00** 4/1/97 - 6/30/97
* plus an amount, not to exceed $1,000,000.00, equal to the difference,
if any, by which $5,263,488.00 exceeds the Capital Expenditures
incurred by the Borrowers from 7/1/96 to 12/31/96.
**plus an amount equal to the difference, if any, by which
$2,000,000.00 exceeds the Capital Expenditures incurred by the
Borrowers from 1/1/97 to 3/31/97.
18. Section 5.22 of the Agreement is hereby deleted in its entirety and
shall be replaced by the following:
"5.22 Total Liabilities to Tangible Net Worth Ratio. The Borrowers
shall not at any time permit the ratio of total liabilities to Consolidated
Tangible Net Worth to exceed 2.25 to 1.0 through March 31, 1997, and 2.0 to 1.0
thereafter.
19. 5.23 of the Agreement is hereby deleted in its entirety and shall be
replaced by the following:
"5.23 Minimum Tangible Net Worth. The Borrowers shall not permit
Consolidated Tangible Net Worth to be less than $28,000,000.00 through February
28, 1997, or less than $29,000,000.00 thereafter.
20. Section 5.24 of the Agreement is hereby deleted in its entirety.
21. Section 5.25 of the Agreement is hereby deleted in its entirety and
shall be replaced by the following: "Section 5.25 Interest Coverage.
The Borrowers shall not permit for any three month period the ratio of
(a) (i) EBITDA less (ii) Capital Expenditures plus (iii) proceeds of
bulk sales or other dispositions outside the ordinary course of
Inventory to (b) consolidated interest expense, to be less than 1.0 to
1.0, which covenant shall be calculated commencing November 30, 1996 as
of the close of each calendar month on a rolling three month basis."
22. Section 5.27 of the Agreement is hereby deleted in its entirety.
23. The Agreement is hereby amended by inserting a new Section 5.30 which
shall read as follows: "Section 5.30 The Borrowers will not permit
their consolidated EBITDA to be less than the amounts listed below,
which EBITDA shall be calculated on a rolling three month basis as of
the close of each calendar month:
EBITDA Date
------ ----
$ 631,615.00 9/30/96
$1,407,690.00 10/31/96
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$1,999,093.00 11/30/96
$1,972,065.00 12/31/96
$2,081,369.00 1/31/97
$1,821,278.00 2/28/97
$3,836,622.00 3/31/97
$3,848,538.00 4/30/97
$3,872,954.00 5/31/97
24. The Agreement is hereby amended by inserting a new Section 5.31 which
shall read as follows: "Section 5.31 The Borrowers will not permit as
of each date listed below Working Capital to be less than the amount
listed below:
Working Capital Date
--------------- ----
$ 745,236.00 9/30/96
$ 258,300.00 10/31/96
$ 364,133.00 11/30/96
$ 352,055.00 12/31/96
$ (132,566.00) 1/31/97
$3,938,145.00 2/28/97
$5,523,665.00 3/31/97
$5,391,717.00 4/30/97
$5,803,827.00 5/31/97
25. The Agreement is hereby amended by inserting the following new Section
5.32 which shall read as follows: "Section 5.32 Inventory Bulk
Sales/Tax Refunds. (a) The Borrower will use its best efforts to sell
in bulk sales or other dispositions any excess or discontinued
Inventory. The proceeds of any bulk sales or other dispositions of
Inventory outside the ordinary course shall be paid to the Bank to be
applied in reduction of (i) the outstanding principal balance due under
the Term Loans, then (ii) to the outstanding of Revolver Cushion Loans,
and then (iii) to the balance of the outstanding Revolving Loans."
(b) (i) Subject to (ii) below, the proceeds of any
tax refunds shall be paid to the Banks to
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be applied in reduction of (A) the outstanding principal balance due
under the Term Loans, then (B) to the outstanding of Revolver Cushion
Loans, and then (C) to the balance of the outstanding Revolving Loans.
The Borrowers shall supply the Agent with copies of all tax returns of
the Borrowers, shall (if permissible under law) direct any taxing
authority to remit any such refunds directly to the Agent and shall
take any other action as may be requested by the Agent in order to
collect such refund. To the extent the Borrowers directly receive any
such refunds, same will be immediately delivered to the Banks to be
applied as set forth herein and a copy of any such refund will be
immediately telecopied to the Banks"
(ii) (A) The first $2,000,000.00 of tax refunds received by
the Borrowers shall be delivered to the Banks to be applied in
accordance with subparagraph (b)(i), above.
(B) The next $3,000,000.00 of tax refunds received by
the Borrowers shall be held in escrow by the Banks but shall be
released to the Borrowers to fund operating expenses upon the following
terms and conditions:
(a) No Event of Default has occurred and is then
existing;
(b) The Borrowers supply a covenant compliance
certificate to the Banks evidencing the Borrowers' compliance with all
the financial covenants set forth herein; in the event the release of
such funds is requested during the first fifteen (15) days of any
calendar month, the covenant compliance certificate shall be based on
the financial data existing as of the last day of the immediately
preceding month; in the event the release of such funds is requested
during any day after the fifteenth (15th) day of any calendar month,
the covenant compliance certificate shall be based on the financial
data determined as of the end of the then pending calendar month.
(C) Any proceeds of tax refunds received by the
Borrowers in excess of the amounts set forth in (A) and (B), above,
shall be delivered to the Banks to be applied in the manner set forth
in subparagraph (b)(i), above.
26. The Agreement is hereby amended by inserting the following new Section
5.33 which shall read as follows: "Section 5.33 Inventory Reserve. For
the purposes of calculating availability under the Borrowing Base, the
Inventory reserve currently maintained by the Borrowers in the amount
of $2,922,753.00 shall be reduced by an amount no greater than 50 cents
for each dollar of Inventory sold in any bulk sale or other disposition
of Inventory
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outside of the ordinary course. In calculating the financial covenants
set forth herein, any reduction in the amount of the Inventory reserve
referenced above will be determined in accordance with GAAP in a manner
consistent with the past practices used by the Borrowers to prepare the
projections supplied to the Banks."
27. The Agreement is hereby amended by inserting the following new Section
5.34 which shall read as follows: "Section 5.34 Consultants. The
Borrowers shall continue to employ the services of a financial and
business consultant acceptable to the Banks in their reasonable
discretion, with the costs and expenses of such consultants to be borne
by the Borrower. The Borrowers will provide their full cooperation with
such consultants in order to enable the consultants to conduct their
activities. The Banks hereby acknowledge and agree that Xxxxx Xxxxxxx
of Argus Management shall be deemed an acceptable consultant until the
Borrowers are notified in writing by the Agent to the contrary. The
Borrowers acknowledge and agree that the Banks shall have the right of
independent access to and communication with such consultants to obtain
financial and other information relating to the Borrowers."
28. Section 6.1(a) of the Agreement is hereby amended by deleting the
following text beginning on line 3 thereof: "which failure continues
for five (5) business days from the due date of such amount, except
that there shall be no cure period for repayments of the principal of a
Loan or reimbursement for Letters of Credit;"
29. Section 6.1(b) is hereby amended by adding the words "the Term Notes or
the Revolver Cushion Notes" on line 4 thereof after the words "the
Credit Notes,".
30. Section 6.1(c) of the Agreement is hereby amended by deleting the
following text beginning on line 4 thereof. "and such default continues
for more than ten (10) business days from the Agent's or any Bank's
dispatch of notice to Safety 1st, unless such default has been cured
(if cure is possible) to the Agent's or such Bank's satisfaction within
such period, or the Borrowers have within such period commenced and
continue actions to cure such default (if cure is possible) and
complete such cure within thirty (30) days of such notice from the
Agent or any Bank;"
31. Section 7.2 of the Agreement is hereby amended by inserting the words
"the Term Notes, the Revolver Cushion Notes." after the words "the
Credit Notes" on line 5 thereof.
32. Section 7.4 of the Agreement is hereby amended by deleting the text
"After the occurrence of an Event of Default," at the beginning of line
1 thereof.
33. Section 8.11 of the Agreement is hereby amended by inserting the words
"the Term Notes, the Revolver Cushion
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Notes." after the words "the Credit Notes" on line 10 thereof.
34. Section 8.13 of the Agreement is hereby amended by deleting all
references to "Maximum Credit" and replacing same with "Loans".
35. Section 9.1 of the Agreement is hereby amended by inserting the words
"the Term Notes, the Revolver Cushion Notes," after the words "the
Credit Notes" on line 2 thereof.
36. All references in the following sections of the Agreement to the term
"Revolving Loans" are hereby deleted and shall be replaced with the
term "Revolving Credit Loans."
Section Section
4.2 8.3(d)
8.3(b) 8.4
8.3(c) 8.5
37. All references in the following definitions in Section 1 of the
Agreement to "Revolving Loans" are hereby deleted and shall be replaced
with the term "Revolving Credit Loans."
Definition
Revolving Credit Commitment
38. The Agreement is hereby amended by attaching the following new Exhibits
thereto in the form annexed hereto:
Exhibit 2.1.3(b) Revolver Cushion Note
Exhibit 2.1.3(c) Cushion Loan Request
Exhibit 2.5 Term Note
39. (a) The Borrowers shall pay to the Banks a restructuring fee in the
amount of $50,000.00 which is due and payable and agreed to be fully
earned on the date of this Amendment and which the Borrowers agree may
be charged to any loan or deposit account maintained with the Banks.
The Bank shall share the restructuring fee in accordance with their
Commitment Percentages.
(b) In addition, on or before October 31, 1996, Safety 1st shall issue
to the Banks warrants to purchase 50,000 shares of the stock of Safety 1st, with
Safety 1st undertaking such action as may be necessary to provide that the stock
to be obtained under the warrants shall be publicly tradeable by the Banks after
December 31, 1996, upon exercise of their rights under the warrants. The initial
exercise price of the warrants shall be determined based on the market price of
Safety 1st's
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stock as of the close of business on October 17, 1996. In the event Safety 1st
shall be unable to issue stock which meet the requirements of this Section 39 on
or before December 31, 1996, the Borrowers shall be required to pay to the Banks
an additional restructuring fee of $250,000.00, with the Banks returning the
warrants to Safety 1st upon receipt of the additional fee and Safety 1st's
undertaking to register the shares shall be terminated. The warrants shall
otherwise be on terms and conditions acceptable to the Banks and their counsel
and shall be held by the Banks in accordance with their Commitment Percentages.
40. As a condition precedent to the Banks' agreement to enter into this
Amendment, Xxxxxx has agreed to execute (i) a Second Amendment to
Limited Guaranty wherein Xxxxxx'x liability under the Limited Guaranty
executed by Xxxxxx dated August 2, 1996 of the obligations of the
Borrowers to the Bank shall be increased to $7,500,000.00, and (ii) a
certain Second Amendment to Third Party Pledge Agreement wherein the
value of the securities pledged by Xxxxxx to secure the guaranty shall
be increased to $7,500,000.00.
41. Except as expressly modified by this Amendment, all of the terms,
conditions and provisions of the Loan Agreement remain in full force
and effect and are expressly ratified and confirmed by the Borrowers
and the Banks. The Borrowers and the Banks hereby acknowledge and agree
that the Forbearance Agreement is hereby deemed terminated and of no
further force and effect.
42. The Borrowers and Xxxxxx (and their successors and assigns) hereby
release, waive and forever relinquish all claims, demands, obligations,
liabilities and causes of action of whatever kind or nature, whether
known or unknown, which any of them may have or might assert now or in
the future, against the Banks, their officers, directors, employees,
agents, attorneys and accountants, directly or indirectly, arising out
of, based upon, or in any manner connected with, (i) any transaction,
event, action, failure to act or occurrence of any sort or type,
whether known or unknown, which existed, occurred or was taken,
permitted or begun prior to the execution of this Amendment relating to
or arising from the Loan Arrangement; (ii) any discussions,
commitments, negotiations, conversations or communications with respect
to the Borrowers' and Xxxxxx'x respective Obligations prior to the
execution of this Amendment; or (iii) anything or matter prior to the
execution of this Amendment related to any of the foregoing.
43. As of the date hereof, the Borrowers and Xxxxxx represent and warrant
that they have no offsets, claims, or other defenses to payment of full
of their obligations to the Banks relating to or arising from the Loan
Arrangement, and
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reaffirm that all of the representations and warranties made by them in
the Loan Documents remain true and correct. Without limiting the
foregoing, the Borrowers specifically warrant and represent there has
been no occurrence of litigation or other activity of the nature set
forth in Section 5.14 of the Loan Agreement which would require
notification from the Borrowers to the Bank.
44. The Borrowers shall take such actions, and execute and deliver to the
Banks such documents and agreements as the Banks may require to
evidence the agreements contained herein to confirm all Collateral
granted to the Banks for the Obligations, and the Banks shall take such
actions and execute and deliver such documents and agreements as may be
required to evidence their agreements contained herein.
45. This Amendment and the documents delivered in connection herewith
represent the entire agreement among the parties with respect to the
subject matter hereof, and shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts as an
agreement under seal.
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WITNESS OUR HANDS AND SEALS THIS 18TH DAY OF OCTOBER, 1996.
BORROWERS
SAFETY 1ST, INC.
By:____________________________________
Xxxxxxx Xxxxxx, President
SAFETY 1st (EUROPE) LIMITED
By:____________________________________
Xxxxxxx Xxxxxx, Director
By:____________________________________
Xxxxxxx Xxxxxxxxx, Director
SAFETY 1ST HOME PRODUCTS CANADA, INC.
By:____________________________________
Xxxxxxx Xxxxxx, President
3232301 CANADA, INC.
By:____________________________________
Xxxxxxx Xxxxxx, President
SAFETY 1ST INTERNATIONAL, INC.
By:____________________________________
Xxxxxxx Xxxxxx, President
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BANKS:
FLEET NATIONAL BANK
By:____________________________________
XXXXXXX XXXXXXXX, Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:____________________________________
XXXXX XXXXX, Vice President
USTRUST
By:____________________________________
XXXXXX X. XXXXX, Senior Vice President
GUARANTOR:
______________________________________
XXXXXXX XXXXXX
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COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Xxxxxxx Xxxxxx, individually
and as President of Safety 1st, Inc., and acknowledged the foregoing instrument
to be his free act and deed and the free act and deed of Safety 1st, Inc.,
before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Xxxxxxx Xxxxxx, the Director
of Safety 1st (Europe) Limited, and acknowledged the foregoing instrument to be
his free act and deed on behalf of Safety 1st (Europe) Limited, before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex , ss October 18, 1996
Then personally appeared the above-named, Xxxxxxx Xxxxxx, the President
of Safety 1st Home Products Canada, Inc., and acknowledged the foregoing
instrument to be his free act and deed on behalf of Safety 1st Home Products
Canada, Inc., before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Xxxxxxx Xxxxxx, the President
of 3232301 Canada, Inc., and acknowledged the foregoing instrument to be his
free act and deed on behalf of 3232301 Canada, Inc., before me,
_____________________________________________
, Notary Public
My Commission Expires:
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COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Xxxxxxx Xxxxxx, the President
of Safety 1st International, Inc., and acknowledged the foregoing instrument to
be his free act and deed on behalf of Safety 1st International, Inc., before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss October 18, 1996
Then personally appeared the above-named Xxxxxxx Xxxxxxxx, the Vice
President of Fleet National Bank, and acknowledged the foregoing instrument to
be her free act and deed on behalf of Fleet National Bank, before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss October 18, 1996
Then personally appeared the above-named Xxxxx Xxxxx, the Vice
President of The First National Bank of Boston, and acknowledged the foregoing
instrument to be his free act and deed on behalf of The First National Bank of
Boston, before me,
_____________________________________________
, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss October 18, 1996
Then personally appeared the above-named, Xxxxxx X. Xxxxx, the Senior
Vice President of USTrust, and acknowledged the foregoing instrument to be free
act and deed on behalf of USTrust, before me,
_____________________________________________
, Notary Public
My Commission Expires:
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