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EXHIBIT 10.2
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FIFTH AMENDMENT TO LOAN AGREEMENT
This Fifth Amendment to Loan Agreement (the "Fifth 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, that certain Amendment to Loan Agreement dated May 10, 1996,
that certain Third Amendment to Loan Agreement dated as of October 18, 1996 and
that certain Fourth Amendment to Loan Agreement dated as of November 29, 1996
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(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, Xxxxxxx Xxxxxx ("Xxxxxx") has executed and delivered a certain
Limited Guaranty and a certain Third Party Pledge Agreement each dated as of
August 2, 1996, as each has been amended, wherein, subject to the terms of the
Limited Guaranty, Xxxxxx guarantied the Obligations of the Borrowers to the
Banks and pledged certain collateral as security therefor; and
WHEREAS, the Banks and the Borrowers have agreed to amend the Loan
Agreement as set forth herein:
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 "Net Outstanding Amount of Base Accounts" is
hereby amended by adding the following text at the end thereof:
"; provided, however, that on December 6, 1996, the Net
Outstanding Amount of Base Accounts shall be increased up to a
maximum amount of $775,000.00 in Accounts Receivable arising
from bulk sales or other dispositions of inventory outside the
ordinary course. This increase in the Net Outstanding Amount
of Base Accounts shall thereafter decrease on a dollar for
dollar basis for each amount due the Banks under section
5.32(a) as a result of receipt of proceeds from bulk sales of
inventory or other dispositions of inventory outside the
ordinary course. Notwithstanding the
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provisions of section 5.32, the first proceeds received under
section 5.32(a) shall be utilized to repay the Revolving Loans
made pursuant to the increase in Net Outstanding Amount of
Base Accounts (and accordingly reduce the permitted increase
in Net Outstanding Amount of Base Accounts provided for
hereunder) as set forth in the immediately preceding sentence.
No further value will be recognized in the Net Outstanding
Amount of Base Accounts from Accounts Receivable arising from
bulk sales or other dispositions of inventory outside the
ordinary course once proceeds have been received in amount
equal to the increase in Net Outstanding Amount of Base
Accounts provided for herein."
2. The definition of Working Capital is hereby deleted in its
entirety and shall be replaced by the following:
"Working Capital" shall mean the aggregate of the Borrowers' (i) cash,
(ii) Inventory and (iii) Accounts Receivable, less (iv) current
liabilities, including the Loans, but excluding the notes payable
(including accrued interest) to the sellers in connection with the
acquisition of Safety 1st (Europe) Limited and Orleans Juvenile
Products Inc.
3. As a condition precedent to the Banks' agreement to enter into
this Amendment, Xxxxxx has agreed to execute (i) a Third 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 $10,500,000.00, and (ii) a certain Third Amendment to
Third Party Pledge Agreement wherein the value of the securities pledged by
Xxxxxx to secure the guaranty shall be increased to $10,500,000.00.
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4. The Banks hereby waive:
(a) compliance under section 5.31 at September 30, 1996, October
31, 1996 and November 30, 1996;
(b) any rights in connection with the inadvertent inclusion of
certain accounts receivable on the Borrowing Base Report submitted to
the Banks.
Nothing contained herein shall constitute a waiver of any Events of Default
which may hereafter arise, or are unknown to the Bank as of the date hereof, nor
a waiver of any of the Banks' rights and remedies in connection therewith, all
of which remain in full force and effect.
5. The provisions of section 2.1.3 of the Loan Agreement are
hereby modified to provide that, notwithstanding any provision contained
therein, the maximum amount available to be borrowed as Revolver Cushion Loans
shall be $1,000,000.00.
6. Section 5.22 of the Loan Agreement is hereby modified to
provide that the required ratio thereunder for the month ending November 30,
1996 shall be 2.35 to 1.0. The original terms of the covenant shall govern for
all other testing periods.
7. Section 5.23 of the Loan Agreement is hereby modified to
provide that the required Consolidated Tangible Net Worth thereunder for the
month ending November 30, 1996 shall be $27,300,000.00. The original terms of
the covenant shall govern for all other testing periods.
8. Section 5.25 of the Loan Agreement is hereby modified to
provide that the required ratio thereunder for the three month period ending
November 30, 1996 shall be -3.5 to 1.0. The original terms of the covenant shall
govern for all other testing periods.
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9. Section 5.30 of the Loan Agreement is hereby modified to
provide that the required consolidated EBITDA thereunder for the three month
period ending November 30, 1996 shall be - $600,000.00. The original terms of
the covenant shall govern for all other testing periods.
10. In connection with the warrants issued by Safety 1st to the
Banks pursuant to paragraph 39(b) of the Third Amendment to Loan Agreement dated
October 18, 1996 (the "Third Amendment"), Safety 1st acknowledges and agrees
that the Banks shall have the unilateral right after December 31, 1996, subject
to the second sentence hereof, to receive a $250,000.00 fee from Safety 1st upon
receipt of which fee the Banks shall return the warrants or any shares received
under the warrants to Safety 1st. In the event Safety 1st shall have previously
paid the $250,000.00 fee to the Banks required under paragraph 39 of the Third
Amendment, the Banks shall have no ability to request the fee set forth
hereinabove.
11. 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.
12. 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
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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) any thing or matter prior to the execution
of this Amendment related to any of the foregoing.
13. 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 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.
14. 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.
15. 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 6TH DAY OF DECEMBER, 1996.
BORROWERS
SAFETY 1ST, INC.
By:
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Xxxxxxx Xxxxxx, President
SAFETY 1st (EUROPE) LIMITED
By:
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Xxxxxxx Xxxxxx, Director
By:
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Xxxxxxx Xxxxxxxxx, Director
SAFETY 1ST HOME PRODUCTS CANADA, INC.
By:
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Xxxxxxx Xxxxxx, President
3232301 CANADA, INC.
By:
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Xxxxxxx Xxxxxx, President
SAFETY 1ST INTERNATIONAL, INC.
By:
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Xxxxxxx Xxxxxx, President
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BANKS:
FLEET NATIONAL BANK
By:
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XXXXXXX XXXXXXXX, Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:
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XXXXX XXXXX, Vice President
USTRUST
By:
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XXXXXX X. XXXXX, Senior Vice President
GUARANTOR:
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XXXXXXX XXXXXX
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COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss December __, 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,
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, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss December __, 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,
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, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss December __, 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,
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, Notary Public
My Commission Expires:
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COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss December __, 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,
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, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss December __, 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,
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, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss December __, 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,
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, Notary Public
My Commission Expires:
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COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss December __, 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,
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, Notary Public
My Commission Expires:
COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss December __, 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,
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, Notary Public
My Commission Expires:
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