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EXHIBIT 10.2
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT (this "AMENDMENT"), to the Credit Agreement dated
as of July 30, 1997, among SAFETY 1ST, INC., a Massachusetts corporation
("SAFETY"), SAFETY 1ST HOME PRODUCTS CANADA INC., a Canadian federal corporation
("SAFETY CANADA" and, together with Safety, the "BORROWERS"), each of the
financial institutions from time to time parties thereto as lenders (the
"LENDERS"), BT COMMERCIAL CORPORATION, as agent (in such capacity, the "AGENT")
for the Lenders and BANKERS TRUST COMPANY, as issuer of letters of credit (in
such capacity, the "ISSUING BANK"), is made as of July 4, 1998 among the
Borrowers, the undersigned Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, the Borrowers, the Lenders, the Agent and the Issuing Bank are
parties to the Credit Agreement, dated as of July 30, 1997 (as heretofore
amended on October 29, 1997, January 23, 1998, March 31, 1998 and May 15, 1998
and as the same may be further amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"; capitalized terms used herein shall have
the meanings assigned to them in the Credit Agreement unless otherwise defined
herein);
WHEREAS, Safety 1st (Europe) Limited, a Guarantor and a Subsidiary of
Safety ("SAFETY EUROPE"), desires to enter into a pounds sterling denominated
credit facility with BNY International Limited or another lender and grant liens
on substantially all of its assets to secure its obligations under such credit
facility (the "ENGLISH CREDIT FACILITY");
WHEREAS, in connection with the closing of the English Credit Facility,
the Borrowers have requested that the Agent release its Liens on the assets of
Safety Europe and release Safety Europe from the Guaranty and the Contribution
Agreement;
WHEREAS, the Borrowers have requested that the Lenders agree to amend
the Credit Agreement as set forth herein;
WHEREAS, the Agent and the undersigned Lenders are agreeable to such
requests, but only on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties hereto hereby agree as follows:
SECTION 1. AMENDMENTS TO CREDIT AGREEMENT. Effective as of the date
hereof, but subject to the satisfaction of the conditions precedent set forth in
Section 3, the Credit Agreement is hereby amended as follows:
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(a) The definition of "Guarantors" in Section 1.1 of the Credit
Agreement is amended by deleting "Safety 1st (Europe) Limited,".
(b) The definition of "Inventory Borrowing Base" in Section 1.1 of
the Credit Agreement is amended by deleting "$10,000,000" and substituting
therefor "$12,500,000."
(c) Section 4.8(c)(v) of the Credit Agreement is amended by deleting
"three (3)" and substituting therefor "six (6)."
(d) Section 7.1(a) of the Credit Agreement is amended by inserting
the following at the end thereof:
"(vii) SAFETY EUROPE FINANCIAL INFORMATION. (A) As soon as
available, but not later than one hundred twenty (120) days after the
end of each fiscal year of Safety Europe, Safety Europe's annual
audited financial statements for such year, together with the auditor's
opinion thereon; (B) as soon as available, but not later than twenty
eight (28) days after the end of each month, Safety Europe's unaudited
financial statements for such month, together with a certification by
the financial director of Safety Europe that such financial statements
are true and correct in all material respects; and (C) not later than
five days after the respective dates on which BNY International Limited
("BNYIL") or any other lender to Safety Europe receives the same,
copies of all other financial information provided by Safety Europe to
BNYIL or such other lender."
(e) Clause (vi) of Section 7.2(a) of the Credit Agreement is amended
and restated as follows:
"(vi) Liens on goods of Safety or any of its Subsidiaries, or
documents evidencing title to such goods, which are established in the
ordinary course of such Person's business for the purpose of such
Person receiving interim trade financing; PROVIDED, HOWEVER, that no
such Lien shall extend to or cover any property other than such goods
or documents so financed;"
(f) Section 7.2(a) of the Credit Agreement is amended by (i) deleting
"and" at the end of clause (vii) thereof and (ii) deleting clause (viii) thereof
and substituting therefor the following:
"(viii) leases or subleases of real estate or immovable property
(other than the real estate or immovable property upon which Agent is
granted a mortgage) granted by Safety or any of its Subsidiaries
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to other Persons in the ordinary course of business and not materially
interfering with the conduct of the business of Safety or any of its
Subsidiaries and cash security deposits made pursuant to real estate or
immovable property leases in customary amounts; and
(ix) Liens on the assets of Safety Europe securing the
Indebtedness of Safety Europe permitted under Section 7.2(b)(ix)."
(g) Section 7.2(b) of the Credit Agreement is amended by (i) deleting
"and" at the end of clause (vii) thereof and (ii) deleting clause (viii) thereof
and substituting therefor the following:
"(viii) Indebtedness in an aggregate outstanding principal amount
not to exceed $250,000 owing by Safety Canada to Safety; PROVIDED that
(A) such Indebtedness is used only for general working capital
purposes, (B) such Indebtedness is evidenced by one or more demand
promissory notes in form and substance satisfactory to the Agent, (C)
such promissory notes are pledged to the Agent for the ratable benefit
of the Lenders pursuant to documentation in form and substance
satisfactory to the Agent and (D) such notes are delivered to the Agent
with note powers executed in blank; and
(ix) Indebtedness of Safety Europe under a pounds sterling
denominated credit facility."
(h) Section 7.2(c) of the Credit Agreement is amended by deleting
"Section 7.2(b)" and substituting therefor "Sections 7.2(b)(i) through (viii)."
(i) Section 7.2(d) of the Credit Agreement is amended by (i)
inserting "(other than Safety Europe)" immediately after "except for the merger
of any Subsidiary" and (ii) deleting "any Credit Party may modify" and
substituting therefor "Safety and any of its Subsidiaries may modify."
(j) Clause (v) of Section 7.2(f) of the Credit Agreement is amended
and restated as follows:
"(v) stock or obligations issued to Safety or any of its
Subsidiaries by any Person (or the representative of such Person) in
respect of Indebtedness of such Person owing to Safety or any of its
Subsidiaries in connection with the insolvency, bankruptcy,
receivership or reorganization of such Person or a composition or
readjustment of the debts of such Person; PROVIDED, THAT, the original
of any such stock or instrument evidencing such obligations and
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issued to a Credit Party shall be promptly delivered to the Agent, upon
the Agent's request, together with such stock power, assignment or
endorsement by such Credit Party as the Agent may request;".
(k) Section 7.2(f) of the Credit Agreement is amended by (i) deleting
"and" at the end of clause (vii), (ii) renumbering clause (viii) as clause (ix)
and (iii) inserting immediately after clause (vii) the following:
"(viii) a non-cash equity Investment of up to 200,000 pounds
sterling made by Safety in Safety Europe, which shall be consummated
solely by the conversion into equity of Accounts previously owing by
Safety Europe to Safety in an amount of up to 200,000 pounds sterling;
and"
(l) Section 7.2(t) of the Credit Agreement is amended and restated as
follows:
"(t) [Intentionally Omitted.]"
(m) Section 7.2(u) of the Credit Agreement is amended and restated as
follows:
"(u) MINIMUM CONSOLIDATED EBITDA. Safety will not, for each
period set forth below, permit EBITDA of Safety and its Subsidiaries to
be less than the amount set forth below opposite such period:
Period Amount
------ ------
three fiscal quarters ended October 3, 1998 $12,000,000
four fiscal quarters ended January 2, 1999 16,000,000
four fiscal quarters ended April 3, 1999 17,000,000
four fiscal quarters ended July 3, 1999 18,000,000
four fiscal quarters ended October 2, 1999 19,000,000
four fiscal quarters ended on the last
day of each fiscal quarter thereafter 20,000,000"
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(n) Section 7.2(v) of the Credit Agreement is amended and restated as
follows:
"(v) MINIMUM CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Safety
will not, for each period set forth below, permit Consolidated Fixed
Charge Coverage Ratio to be less than the ratio set forth below
opposite such period:
Period Ratio
------ ------
four fiscal quarters ended July 4, 1998 1.20:1
three fiscal quarters ended October 3, 1998 1.20:1
four fiscal quarters ended on the last day
of each fiscal quarter thereafter 1.20:1"
(o) Section 8.1(e) of the Credit Agreement is amended by inserting
"(including, without limitation, Safety Europe)" immediately after "Safety or
any Subsidiary".
(p) Section 8.1(f) of the Credit Agreement is amended by deleting
"any Credit Party" and substituting therefor "Safety or any Subsidiary".
(q) Section 8.1(h) of the Credit Agreement is amended by deleting
"any Credit Party" and substituting therefor "Safety or any Subsidiary".
(r) Section 8.1 of the Credit Agreement is amended by deleting clause
(l) thereof and substituting therefor the following:
"(l) a Change in Control shall have occurred; or
(m) the aggregate unpaid amount of all Accounts of the Credit
Parties owing by Safety Europe shall exceed $2,000,000 at any time (it
being understood that if any such Account is denominated in a currency
other than Dollars, for purposes of this clause (m), such Account shall
be converted into Dollars at the Rate of Exchange on the date that such
Account is calculated)."
(s) Schedule 2 of the Credit Agreement is amended by deleting "20%"
from each place it appears and substituting therefor "25%."
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SECTION 2. RELEASE OF SAFETY EUROPE. Effective as of the date hereof,
but subject to the satisfaction of the conditions precedent set forth in Section
3, the Agent hereby (a) releases the Liens on all of the assets of Safety Europe
created in favor of the Agent for the ratable benefit of the Lenders and the
Issuing Bank under the Collateral Documents and (b) releases Safety Europe from
any liabilities and obligations under the Guaranty and the Contribution
Agreement. The undersigned Lenders hereby authorize the Agent, and the Agent
hereby agrees, to execute all such further documents and take all such further
actions, at the joint and several expense of the Borrowers, as the Borrowers
shall reasonably request to carry out the purpose and intent of the immediately
preceding sentence.
SECTION 3. EFFECTIVENESS.
(a) This Amendment (other than Sections 1(a), (d) through (k), (o)
through (r) and 2) shall become effective upon the Agent's receipt of this
Amendment, duly executed by the Borrowers and the Majority Lenders and duly
consented to by the Guarantors (excluding Safety Europe).
(b) Sections 1(a), (d) through (k), (o) through (r) and 2 shall
become effective upon the satisfaction of the condition precedent set forth in
Section 3(a) and upon the Agent's receipt of the following, in each case on or
before September 18, 1998 and in form and substance satisfactory to the Agent:
(i) certified copies of the loan agreement and other material
documentation relating to the English Credit Facility;
(ii) evidence that the English Credit Facility has closed in
accordance with the terms of the documentation described in clause (i)
above;
(iii) evidence that Safety Europe has applied the proceeds of
the initial loan under the English Credit Facility to repay (A)
Indebtedness owing to Safety and Safety's Subsidiaries in an aggregate
principal amount of not less than 121,466 pounds sterling plus accrued
and unpaid interest thereon since August 1, 1998 and (B) Accounts owing
by it to Safety in an aggregate amount of not less than $1,000,000; and
(iv) a certificate signed by an Authorized Officer of Safety
certifying that (i) the representations and warranties contained in
Section 4 are true and correct on and as of the date of such
certificate as though made on and as of such date, (ii) the
representations and warranties contained in Section 6.1 of the Credit
Agreement are true and
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correct on and as of the date of such certificate as though made on and
as of such date, except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case
such representations and warranties shall have been true and correct on
and as of such earlier date) and (iii) no Default or Event of Default
has occurred and is continuing.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. Each of
the Borrowers represents and warrants as follows:
(a) The execution, delivery and performance by each Borrower of this
Amendment, the Credit Agreement as amended hereby and any documents delivered in
connection herewith to which such Borrower is a party (i) are within such
Borrower's corporate powers and authority, have been duly authorized by all
necessary corporate action and do not contravene (A) such Borrower's Governing
Documents (including, without limitation, the certificate of designation for any
preferred stock of a Borrower), (B) any Requirement of Law applicable to it or
any of its properties or (C) any franchise, license, permit, indenture,
contract, lease, agreement, instrument or other commitment to which it is a
party or by which it or any of its properties are bound, and (ii) will not
result in or require the creation or imposition of any Lien upon or with respect
to any property now owned or hereafter acquired by any Borrower (other than
Liens permitted by the Credit Agreement).
(b) This Amendment, the Credit Agreement as amended hereby and any
documents delivered in connection herewith to which such Borrower is a party
constitute the legal, valid and binding obligations of such Borrower enforceable
against such Borrower in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting creditor's rights generally and general principles of equity.
(c) Since June 30, 1998 there has occurred no change, occurrence,
development or event which has had or could reasonably be expected to have a
Material Adverse Effect.
(d) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
SECTION 5. REFERENCE TO AND EFFECT ON THE CREDIT DOCUMENTS.
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(a) Upon the effectiveness of this Amendment, on and after the date
hereof, each reference in the Credit Agreement to (i) "this Agreement,"
"hereunder," "hereof," "herein" and words of like import, and such words or
words of like import in each reference in the Credit Documents, shall mean and
be a reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended hereby, all of the terms and
provisions of the Credit Agreement and the other Credit Documents shall remain
in full force and effect and are hereby ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as an amendment to or a waiver
of any right, power or remedy of the Agent or the Lenders under any of the
Credit Documents, or constitute an amendment to or a waiver of any provision of
any of the Credit Documents.
(d) This Amendment shall be deemed to be a Credit Document for all
purposes.
SECTION 6. EXECUTION IN COUNTERPARTS; ETC. This Amendment may be
executed in counterparts each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute one
and the same instrument. This Amendment and each of the other documents
delivered in connection herewith may be executed and delivered by telecopier
with the same force and effect as if the same was a fully executed and delivered
original manual counterpart.
SECTION 7. COSTS, EXPENSES AND TAXES. The Borrowers shall jointly and
severally pay any and all stamp and other taxes payable or determined to be
payable in connection with the execution and delivery of this Amendment and the
documents contemplated hereby or delivered in connection herewith, and agrees to
hold the Lenders harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes. The
Borrowers shall jointly and severally pay for all of the reasonable
out-of-pocket expenses incurred by the Agent in connection with the preparation,
negotiation and closing of this Amendment, including, without limitation, the
reasonable fees and expenses of Luskin, Xxxxx & Xxxxxx LLP, counsel to the Agent
SECTION 8. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF (OTHER
THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
BORROWERS
SAFETY 1ST, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Name:
Title:
SAFETY 1ST HOME PRODUCTS CANADA INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------------
Name:
Title:
AGENT
BT COMMERCIAL CORPORATION,
as Agent
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
LENDERS
BT COMMERCIAL CORPORATION
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
LASALLE NATIONAL BANK
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Senior Vice President
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BNY FINANCIAL CORPORATION
By: /s/ Xxxxxxx Xxxx
--------------------------------
Name: Xxxxxxx Xxxx
Title: V.P.
SUMMIT COMMERCIAL/GIBRALTAR CORP.
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxx
Title: EVP
FINOVA CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
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Each of the undersigned Credit Parties hereby consents to this
Amendment and acknowledges that the execution, delivery and performance of this
Amendment does not in any way affect such Credit Party's obligation under any
Credit Document to which it is a party, all of which obligations are ratified
and confirmed, remain absolute and unconditional and are not subject to any
defense, setoff or counterclaim.
SAFETY 1ST INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Name:
Title:
3232301 CANADA, INC.
By: /s/ Xxxxxxx X. Xxxx
--------------------------
Name:
Title:
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