<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File No. 0-21404
_______
______
SAFETY 1ST, INC.
(Exact Name of Registrant as specified in its Charter)
______
Massachusetts 04-2836423
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
210 Boylston Street
Chestnut Hill, Massachusetts 02167
(Address of principal executive (Zip code)
offices)
Registrant's telephone number, including area code:
(617) 964-7744
Indicate by check mark whether the Registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
_____ _____
The aggregate number of Registrant's shares outstanding on October 31,
1996 was 7,155,616 shares of Common Stock, $.01 par value.
___________________
<PAGE> 2
SAFETY 1ST, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS AS OF DECEMBER 31,
1995 AND SEPTEMBER 30, 1996 (UNAUDITED) 3
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995
AND 1996 5
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
AND 1996 6
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
AND 1996 7
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED) 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 14
EXHIBIT INDEX 15
</TABLE>
<PAGE> 3
Page 3
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SAFETY 1ST, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 24,456 $ 509,756
Accounts receivable, less allowance
for doubtful accounts of $1,900,000
and $3,229,639 respectively 26,923,557 28,846,530
Inventory 26,286,881 27,901,915
Prepaid expenses 2,956,653 3,140,357
Prepaid income taxes 2,311,275 5,003,395
Deferred income taxes 882,000 781,544
------------ ------------
Total current assets 59,384,822 66,183,497
------------ ------------
PROPERTY AND EQUIPMENT, net of accumulated
depreciation and amortization of $4,544,025
and $7,769,065 respectively 18,085,001 23,858,657
------------ ------------
OTHER ASSETS:
Deposits 6,261,906 2,660,867
Goodwill, net of amortization of $222,029 -- 8,250,864
Deferred acquisition costs 1,492,678 --
Patents and trademarks, net of amortization of
$217,306 and $315,802 respectively 783,361 821,200
Other 311,023 981,169
------------ ------------
8,848,968 12,714,100
------------ ------------
$ 86,318,791 $102,756,254
============ ============
</TABLE>
The Condensed Balance Sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
The accompanying notes are an integral part of these Condensed Financial
Statements
<PAGE> 4
Page 4
SAFETY 1ST, INC.
CONDENSED BALANCE SHEETS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving credit facility $ 25,390,000 $ 40,946,514
Accounts payable and accrued expenses 12,511,676 15,688,456
Notes payable and current portion of capital lease obligation -- 3,275,871
------------ ------------
Total current liabilities 37,901,676 59,910,841
OTHER LIABILITIES
Capital lease obligation, net of current portion -- 300,627
Deferred income taxes 2,398,000 2,398,000
------------ ------------
Total liabilities 40,299,676 62,609,468
STOCKHOLDERS' EQUITY
Preferred stock, $1.00 par value,
100,000 shares authorized, no
shares outstanding -- --
Common stock, $.01 par value, 15,000,000
shares authorized, 7,150,616 and
7,155,616 issued at December 31, 1995
and September 30, 1996, respectively 71,506 71,556
Additional paid in capital 33,588,361 33,648,308
Retained earnings 12,359,248 6,426,922
------------ ------------
Total stockholders' equity 46,019,115 40,146,786
------------ ------------
$ 86,318,791 $102,756,254
============ ============
</TABLE>
The Condensed Balance Sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
The accompanying notes are an integral part of these Condensed Financial
Statements
<PAGE> 5
Page 5
SAFETY 1ST, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30
-------------------------------
1995 1996
----------- -----------
<S> <C> <C>
Net sales $26,683,167 $28,980,848
Cost of sales 16,617,174 17,766,432
----------- -----------
Gross profit 10,065,993 11,214,416
Selling, general and administrative expenses 6,639,024 9,501,871
----------- -----------
Operating income 3,426,969 1,712,545
Interest expense 412,335 815,836
----------- -----------
Income before income taxes 3,014,634 896,709
Income taxes expense 1,176,000 339,966
----------- -----------
Net income $ 1,838,634 $ 556,743
=========== ===========
Net income per share $ 0.26 $ 0.08
=========== ===========
Shares used in per share calculation 7,133,119 7,378,912
=========== ===========
</TABLE>
The accompanying notes are an integral part of these Condensed Financial
Statements
<PAGE> 6
Page 6
SAFETY 1ST, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
-------------------------------
1995 1996
----------- ------------
<S> <C> <C>
Net sales $80,887,871 $ 89,596,499
Cost of sales 51,004,544 60,377,245
----------- ------------
Gross profit 29,883,327 29,219,254
Selling, general and administrative expenses 19,839,681 36,439,747
----------- ------------
Operating income (loss) 10,043,646 (7,220,493)
Interest expense 698,929 2,325,039
----------- ------------
Income (loss) before income taxes 9,344,717 (9,545,532)
Income taxes expense (benefit) 3,644,000 (3,613,206)
----------- ------------
Net income (loss) $ 5,700,717 $ (5,932,326)
=========== ============
Net income (loss) per share $ .80 $ (.83)
=========== ============
Shares used in per share calculation 7,126,512 7,155,616
=========== ============
</TABLE>
The accompanying notes are an integral part of these Condensed Financial
Statements
<PAGE> 7
Page 7
SAFETY 1ST, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30
---------------------------------
1995 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 5,700,717 $ (5,932,326)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities:
Depreciation 1,665,984 3,190,578
Amortization 65,507 439,328
Write-off property and equipment -- 1,260,554
------------ ------------
Net cash provided by (used in) operating activities
before changes in assets and liabilities: 7,432,208 (1,041,866)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (11,169,785) (5,818,093)
Inventory (11,793,386) 1,471,025
Prepaid expenses (40,859) (307,280)
Prepaid income tax 525,694 (2,822,393)
Deferred income taxes 361,000 100,456
Other assets -- (139,593)
Increase in:
Accounts payable and accrued expenses 1,771,762 2,877,749
------------ ------------
Net cash used in operating activities (12,913,366) (5,679,995)
------------ ------------
Cash flows used in investing activities:
Acquisitions -- (2,195,730)
Acquisition of property and equipment (9,910,595) (3,220,714)
(Increase) decrease in deposits 312,665 (2,405,709)
Acquisition of patents and trademarks (149,386) (136,335)
------------ ------------
Net cash used in investing activities (9,747,316) (7,958,488)
------------ ------------
Cash flows provided by (used in) financing activities:
Net proceeds on revolving credit facility 21,880,000 15,556,514
Repayment of bank debt assumed and notes payable -- (894,499)
Proceeds from exercised stock options 680,556 60,000
Loan acquisition fees -- (598,232)
------------ ------------
Net cash provided by financing activities 22,560,556 14,123,783
------------ ------------
Net increase (decrease) in cash (100,126) 485,300
Cash and cash equivalents - beginning
of period
119,181 24,456
------------ ------------
Cash and cash equivalents - end of period $ 19,055 $ 509,756
============ ============
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for
Interest $ 615,408 $ 2,184,760
============ ============
Taxes $ 2,757,000 $ 57,000
============ ============
Non-Cash investing activities:
Deposits transferred to property and equipment -- $ 6,160,499
============
Capital lease obligation -- $ 486,964
============
</TABLE>
See Note 2 to the financial statements for details of other non-cash
items related to acquisitions
<PAGE> 8
Page 8
The accompanying notes are an integral part of these Condensed Financial
Statements
SAFETY 1ST, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The Company is a developer, marketer and distributor of child safety and
child care, convenience, activity and home security products.
The accompanying unaudited condensed financial statements of the Company
have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission ("SEC"), and, in the opinion of management, reflect
all adjustments (consisting of only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows for the periods presented.
Certain information and footnote disclosures included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed financial
statements should be read in conjunction with the audited financial
statements and notes thereto included in the financial statements filed as
part of the Company's Annual Report on Form 10-K filed for the year ended
December 31, 1995.
In 1995, common stock equivalents are not reflected in the net income per
share computation presented in the condensed statements of income, as the
dilutive effect is less than 3%.
Assets and liabilities of foreign subsidiaries, where the functional
currency is the local currency, are translated at current exchange rates and
the related translation adjustments are reported as a component of
stockholders' equity. Income statement accounts are translated at the
average rates during the period. Foreign currency transaction gains and
losses, as well as translation adjustments for assets and liabilities of
foreign subsidiaries where the functional currency is the dollar, are
included in net income.
The results of the operations for the nine months ended September 30, 1996
are not necessarily indicative of the operating results for the full year.
NOTE 2. ACQUISITIONS
On January 4, 1996, the Company acquired all of the outstanding stock of
EEZI Group Holdings Ltd., a United Kingdom manufacturer and distributor of
child care products, now named Safety 1st (Europe) Ltd., for cash of
$265,000, issuance of notes payable of $1,650,000 (subject to post-closing
adjustments), and payment of acquisition costs of $1,291,000, of which
$1,109,000 was paid in 1995. In addition, the acquisition agreement provides
that if Safety 1st (Europe) Ltd. were to exceed certain net income
thresholds during the first five years subsequent to the acquisition date,
the purchase price would be increased by not more than $3,200,000
(subsequently adjusted to an amount not more than $2,700,000); however, due
to lower than anticipated pre-acquisition earnings by EEZI Group Holdings,
the Company believes that its obligation under this provision will be
significantly less than the maximum potential. The fair value of assets
acquired, including goodwill, was $3,573,000 and liabilities assumed was
$158,000. The acquisition has been recorded using the purchase method of
accounting. The excess of the aggregate purchase price over the fair value
of net assets acquired ($2,729,000) was recognized as goodwill and is being
amortized over 25 years. The net assets acquired primarily included
inventory and fixed assets.
On March 15, 1996, effective February 1, 1996, the Company acquired all of
the outstanding stock of Orleans Juvenile Products Inc., the Canadian
distributor of the Company's products, for cash of $1,067,000, issuance of
notes payable of $1,651,000, and payment of acquisition costs of $845,000,
of which $384,000 was paid in 1995. The fair value of assets acquired,
including goodwill, was $9,632,000 and liabilities assumed was $6,058,000.
<PAGE> 9
Page 9
NOTE 2. ACQUISITIONS (continued)
The acquisition was accounted for as a purchase, and accordingly, the
purchase price was allocated to the net assets acquired based upon their
estimated fair value. The excess of the purchase price over the fair value
of assets acquired ($5,519,000) was recognized as goodwill and is being
amortized over 25 years. The net assets acquired primarily included
accounts receivable, inventory, accounts payable and bank debt.
The above allocations of the purchase price to the net assets acquired were
based on preliminary estimates and may be revised at a later date.
The accompanying consolidated statements of income reflect the operating
results of the acquired entities since the effective date of the
acquisitions. Pro forma financial statements have not been presented as
these acquisitions are not considered material to the 1995 results of
operations.
NOTE 3. OTHER MATTERS
The Stock Option Committee of the Board of Directors voted on July 30, 1996,
to amend certain stock option agreements by changing the exercise price to
$6.50 per share. These agreements covered 629,756 shares with original
exercise prices ranging from $12.00 to $27.00 per share.
On September 18, 1996, the Board of Directors adopted, subject to
stockholder approval, the 1996 Employee and Director Stock Option Plan (the
"Employee and Director Plan"). Under the terms of the Employee and Director
Plan, the Company may grant incentive and nonqualified stock options to
employees, directors, advisors and consultants of the Company and its
subsidiaries. A total of 500,000 shares of common stock have been reserved
for issuance under the Employee and Director Plan. Options are exercisable
within ten years (5 years for greater than 10% shareholders with respect to
incentive stock options) of the date of grant at a price determined by the
Board of Directors or a committee of the Board of Directors.
On September 18, 1996, the Board of Directors adopted, subject to
stockholder approval, the 1996 Nonqualified Stock Option Plan (the
"Nonqualified Plan"). Under the terms of the Nonqualified Plan, the Company
may grant nonqualified stock options to directors, employees, advisors,
consultants, vendors, sales representatives, distributors, suppliers,
business partners and service providers of the Company and its subsidiaries,
and others who may contribute to the success of the Company or its
subsidiaries. A total of 500,000 shares of common stock have been reserved
for issuance under the Nonqualified Plan. Options are exercisable within ten
years of the date of grant at a price determined by the Board of Directors
or a committee of the Board of Directors.
On October 18, 1996, the Company and its lenders completed negotiation of a
restructured credit facility and entered into a Third Amendment to Loan
Agreement (the "Third Amendment"). The Forbearance Agreement dated August 2,
1996, between the Company and its lenders, as amended from time to time
thereafter, was terminated pursuant to the terms of the Third Amendment.
Under the terms of the Third Amendment, the credit facility is amended to
provide, among other matters, as follows: the Company's maximum credit
facility is reduced from $50 million to $49 million and now consists of (i)
a revolving credit facility in the maximum amount of $31.3 million with
interest charged at an annual rate of prime plus 1 percentage point, (ii) a
term loan in the amount of $14.7 million with interest charged at an annual
rate of prime plus 1-1/2 percentage points, and (iii) a revolver cushion
credit facility in the maximum amount of currently $1 million, increasing on
December 1, 1996 to $2 million and increasing on February 1, 1997 to $3
million, with interest charged at an annual rate of prime plus 3 percentage
points; the expiration or maturity date is amended from May 31, 1998 to May
31, 1997; the LIBOR rate option is suspended; existing financial covenants
are amended and new financial covenants are added; the Company issued the
lenders 50,000 warrants to purchase the Company's common stock at an
exercise price of $10 per share, but if the shares underlying the warrants
are not registered by December 31, 1996, the warrants terminate and the
Company must pay its lenders a $250,000 fee; and the limited personal
guaranty of the Company's indebtedness under the credit facility, provided
by Michael Lerner, the Company's President and Chief Executive Officer, is
increased in amount.
In connection with the acquisition and restructuring of the credit facility,
the Company has incurred $598,000 through September 30, 1996 in loan
acquisition fees which are being amortized through May, 1997. At September
30, 1996, the unamortized balance was $479,000.
A lawsuit was filed on August 17, 1995 in the United States District Court
for the District of Massachusetts against the Company and various of its
senior executives alleging certain violations of the securities laws. The
action, filed by Sandra Esner, seeks certification as a class. On July 17,
1996 the parties executed a Memorandum of Understanding settling the action,
and on October 28, 1996, the parties executed a Settlement Stipulation with
respect thereto. The Court has scheduled a final settlement hearing for
January 29, 1997. The amount of payment required to be made by the Company
pursuant to the settlement will not be material. Although the Company
believes that it has meritorious defenses to the action and continues to
disclaim any wrongdoing, it believes that the settlement in is the best
interest of the Company and its stockholders.
<PAGE> 10
Page 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Statement of Forward-Looking Information:
The Company may occasionally make forward-looking statements and estimates, such
as forecasts and projections of the Company's future performance or statements
of management's plans and objectives. These forward-looking statements may be
contained in SEC filings, Annual Reports to Shareholders, Press Releases and
oral statements, among others, made by the Company. Actual results could differ
materially from those in such forward-looking statements. Therefore, no
assurances can be given that the results in such forward-looking statements will
be achieved. Important factors that could cause the Company's actual results to
differ from those contained in such forward-looking statements include, among
others, those factors set forth in Exhibit 99 to the Company's Report on Form
10-Q for the period ended March 31, 1996, and incorporated herein by reference.
Results of Operations:
Three Months Ended September 30, 1996 and 1995
Net sales for the three months ended September 30, 1996 increased 8.6% to
approximately $28,981,000 from $26,683,000 in the comparable period in 1995.
The increase in net sales is due to the increase in sales of existing juvenile
products (consisting of bulk and peggable products) and home security products
and sales of new products introduced for sale in 1996.
Gross profit for the three months ended September 30, 1996 increased 11.4% to
approximately $11,214,000 from $10,066,000 in the comparable period in 1995.
Gross profit as a percentage of net sales, including approximately $1,200,000
of close-out sales at lower margins, was 38.7% for the three months ended
September 30, 1996 as compared to 37.7% for the three months ended September
30, 1995.
Selling, general and administrative expenses were approximately $9,502,000 in
the third quarter of 1996 compared to $6,639,000 in the third quarter of 1995,
an increase of 43.1%. As a percentage of net sales, selling, general and
administrative expenses were 32.8% for the quarter versus 24.9% of sales for the
comparable period last year. Approximately 70% of the additional expenses was
attributed to payroll and payroll related costs relating to the continued
building of the Company's infrastructure. The remaining increase is primarily
attributed to an increase in legal and professional fees and in rent and
utilities due to the growth of the Company.
Operating income for the third quarter of 1996 was $1,713,000, or 5.9% of net
sales. Operating income for the comparable period last year was $3,427,000, or
12.8% of net sales.
Interest expenses increased from $412,000 for the three months ended September
30, 1995 to $816,000 for the same period in 1996 due primarily to additional
borrowings under the line of credit.
Nine Months Ended September 30, 1996 and 1995
Net sales for the nine months ended September 30, 1996, increased 10.7% to
$89,596,000 from $80,888,000 in the comparable period in 1995, due to increases
in sales of existing juvenile products (consisting of bulk and peggable
products) home security and hardware products, and sales of new products
introduced for sale in 1996.
Gross profit decreased 2.2% to approximately $29,219,000 from $29,883,000 in the
comparable period in 1995. Gross profit as a percentage of net sales decreased
to 32.6% compared to 36.9% for the nine months ended September 30, 1996 largely
due to a charge of $3,466,000 ($4,100,000 previously reported) taken in the
second quarter of 1996 for inventory valuation adjustments primarily related to
the Company's plans to discontinue lower margin products and a charge of
$1,765,000 for vendor credits and customer credit adjustments.
Selling general and administrative expenses were approximately $19,840,000
during the nine months ended September 30, 1995. For the same period ending
September 30, 1996, selling, general, and administrative expenses were
<PAGE> 11
Page 11
approximately $36,440,000. This increase of approximately $16,600,000 was
partly attributed to (i) a charge of $3,355,000 relating to increases in the
reserves for customer credits on accounts receivable, (ii) additional charges of
$3,320,000 ($1,780,000 previously reported) related to write-offs of design,
packaging and product development costs normally amortized evenly over the year
and additional legal, professional, and other accruals, and (iii) a write down
of molds and other capital assets in the amount of $1,260,000 ($2,800,000
previously reported) relating primarily to the planned discontinuance of
certain product lines. Selling, general and administrative expenses also
increased due to increases in payroll and payroll related costs associated with
the continued development of the Company's infrastructure, and increases in
legal and professional fees and rent and utilities.
As a result of the above factors, the Company incurred an operating loss of
$5,932,000 for the nine months ended September 30, 1996 versus operating income
of $5,701,000 during the same period in 1995.
Net interest expenses increased from $699,000 for the nine months ended
September 30, 1995 to $2,325,000 for the same period in 1996 due to increased
borrowings.
Liquidity and Capital Resources
Net cash used in operations decreased from $12,913,000 for the nine months ended
September 30, 1995 to $5,680,000 for the nine months ended September 30, 1996.
Accounts receivable increased approximately $5,818,000 to $28,847,000 at
September 30, 1996. This increase was primarily due to increased sales offset
by certain accounts receivable reserve adjustments. Inventory decreased by
$1,471,000 to $27,902,000 at September 30, 1996 due to an inventory valuation
adjustment, offset by an increase in the inventory balance.
Cash flows used in investing activities was $7,958,000 as a result of the
acquisition of Orleans Juvenile Products, Inc. and EEZI Group Holdings Limited
for cash and issuance of notes payable as well as the continued purchase of
property and equipment, mainly molds for new products to be introduced in 1997
as well as the purchase and implementation of an integrated computer system
expected to be fully operational by early 1997. During 1996, net cash provided
by financing activities was $14,124,000, primarily related to proceeds from the
Company's revolving credit facility.
On October 18, 1996, the Company and its lenders completed negotiation of a
restructured credit facility and entered into a Third Amendment to Loan
Agreement (the "Third Amendment"). The Forbearance Agreement dated August 2,
1996, between the Company and its lenders, as amended from time to time
thereafter, was terminated pursuant to the terms of the Third Amendment. Under
the terms of the Third Amendment, the credit facility is amended to provide,
among other matters, as follows: the Company's maximum credit facility is
reduced from $50 million to $49 million and now consists of (i) a revolving
credit facility in the maximum amount of $31.3 million with interest charged at
an annual rate of prime plus 1 percentage point, (ii) a term loan in the amount
of $14.7 million with interest charged at an annual rate of prime plus 1-1/2
percentage points, and (iii) a revolver cushion credit facility in the maximum
amount of currently $1 million, increasing on December 1, 1996 to $2 million and
increasing on February 1, 1997 to $3 million, with interest charged at an
annual rate of prime plus 3 percentage points; the expiration or maturity date
is amended from May 31, 1998 to May 31, 1997; the LIBOR rate option is
suspended; existing financial covenants are amended and new financial covenants
are added; the Company issued the lenders 50,000 warrants to purchase the
Company's common stock at an exercise price of $10 per share, but if the shares
underlying the warrants are not registered by December 31, 1996, the warrants
terminate and the Company must pay its lenders a $250,000 fee; and the limited
personal guaranty of the Company's indebtedness under the credit facility,
provided by Michael Lerner, the Company's President and Chief Executive Officer,
is increased in amount. The Company believes the restructured credit facility
will be sufficient to meet the Company's working capital and capital expenditure
requirements through May, 1997. The Company anticipates being able to obtain new
financing arrangements at that time.
<PAGE> 12
Page 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
A lawsuit was filed on August 17, 1995 in the United States District Court
for the District of Massachusetts against the Company and various of its senior
executives alleging certain violations of the securities laws. The action, filed
by Sandra Esner, seeks certification as a class. On July 17, 1996 the parties
executed a Memorandum of Understanding settling the action, and on October 28,
1996, the parties executed a Settlement Stipulation with respect thereto. The
Court has scheduled a final settlement hearing for January 29, 1997. The amount
of payment required to be made by the Company pursuant to the settlement will
not be material. Although the Company believes that it has meritorious defenses
to the action and continues to disclaim any wrongdoing, it believes that the
settlement in is the best interest of the Company and its stockholders.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are filed as part of this report:
EXHIBIT DESCRIPTION
10.1 Third Amendment to Loan Agreement dated October 18,
1996, among Registrant (and various of its
affiliates), Fleet National Bank, The First
National Bank of Boston and USTrust, amending Loan
Agreement dated March 28, 1996, as amended
10.2 Credit Note in principal amount of $15,650,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of Fleet
National Bank
10.3 Credit Note in principal amount of $9,390,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of The First
National Bank of Boston
10.4 Credit Note in principal amount of $6,260,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of USTrust
10.5 Term Note in principal amount of $7,350,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of Fleet
National Bank
10.6 Term Note in principal amount of $4,410,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of The First
National Bank of Boston
10.7 Term Note in principal amount of $2,940,000.00
dated October 18, 1996, executed by Registrant (and
various of its affiliates), in favor of USTrust
<PAGE> 13
Page 13
10.8 Revolver Cushion Note in principal amount of $1,500,000.00
dated October 18, 1996, executed by Registrant (and various
of its affiliates), in favor of Fleet National Bank
10.9 Revolver Cushion Note in principal amount of $900,000.00
dated October 18, 1996, executed by Registrant (and various
of its affiliates), in favor of The First National Bank of
Boston
10.10 Revolver Cushion Note in principal amount of $600,000.00
dated October 18, 1996, executed by Registrant (and various
of its affiliates), in favor of USTrust
10.11 Letter Agreement dated October 18, 1996, executed by
Registrant (and various of its affiliates), in favor of
Fleet National Bank, The First National Bank of Boston, and
USTrust
10.12 Warrant dated October 18, 1996 to purchase 25,000 shares of
Registrant issued to Fleet National Bank
10.13 Warrant dated October 18, 1996 to purchase 15,000 shares of
Registrant issued to The First National Bank of Boston
10.14 Warrant dated October 18, 1996 to purchase 10,000 shares of
Registrant issued to USTrust
10.15 1996 Employee and Director Stock Option Plan adopted as of
September 18, 1996
10.16 1996 Nonqualified Stock Option Plan adopted as of
September 18, 1996
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
99 Important Factors Regarding Forward-Looking Statements
(Included as Exhibit 99 to Registrant's 10-Q for the period
ended March 31, 1996, and incorporated herein by reference).
Reports on Form 8-K
The Company filed a Report on Form 8-K on September 20, 1996, which
disclosed that the Company and its lenders entered into a Second
Amendment to Forbearance Agreement to extend the Forbearance
Termination Date (as defined in the Agreement) from September 6, 1996
until September 20, 1996.
The Company filed a Report on Form 8-K on October 11, 1996, which
disclosed that the Company and its lenders entered into a Third, a
Fourth and a Fifth Amendment to Forbearance Agreement to extend the
Forbearance Termination Date (as defined in the Agreement) from
September 20, 1996, until September 27, 1996, October 4, 1996, and
October 11, 1996, respectively.
<PAGE> 14
Page 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Safety 1st, Inc.
a Massachusetts corporation
Date: November 14, 1996 By: /s/ Michael Lerner
________________________ _______________________________
Michael Lerner
President and
Chief Executive Officer
(Principal Executive Officer)
Date: November 14, 1996 By: /s/ Richard Caturano
________________________ _______________________________
Richard Caturano
Chief Financial Officer
(Principal Financial Officer)
<PAGE> 15
Page 15
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
10.1 Third Amendment to Loan Agreement dated October
18, 1996, among Registrant (and various of its
affiliates), Fleet National Bank, The First
National Bank of Boston and USTrust, amending Loan
Agreement dated March 28, 1996, as amended
10.2 Credit Note in principal amount of $15,650,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of Fleet
National Bank
10.3 Credit Note in principal amount of $9,390,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of The
First National Bank of Boston
10.4 Credit Note in principal amount of $6,260,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of
USTrust
10.5 Term Note in principal amount of $7,350,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of Fleet
National Bank
10.6 Term Note in principal amount of $4,410,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of The
First National Bank of Boston
10.7 Term Note in principal amount of $2,940,000.00
dated October 18, 1996, executed by Registrant
(and various of its affiliates), in favor of
USTrust
10.8 Revolver Cushion Note in principal amount of
$1,500,000.00 dated October 18, 1996, executed by
Registrant (and various of its affiliates), in
favor of Fleet National Bank
10.9 Revolver Cushion Note in principal amount of
$900,000.00 dated October 18, 1996, executed by
Registrant (and various of its affiliates), in
favor of The First National Bank of Boston
10.10 Revolver Cushion Note in principal amount of
$600,000.00 dated October 18, 1996, executed by
Registrant (and various of its affiliates), in
favor of USTrust
10.11 Letter Agreement dated October 18, 1996, executed
by Registrant (and various of its affiliates), in
favor of Fleet National Bank, The First National
Bank of Boston, and USTrust
10.12 Warrant dated October 18, 1996 to purchase 25,000 shares of
Registrant issued to Fleet National Bank
<PAGE> 16
Page 16
10.13 Warrant dated October 18, 1996 to purchase 15,000 shares of
Registrant issued to The First National Bank of Boston
10.14 Warrant dated October 18, 1996 to purchase 10,000 shares of
Registrant issued to USTrust
10.15 1996 Employee and Director Stock Option Plan adopted
September 18, 1996
10.16 1996 Nonqualified Stock Option Plan adopted
September 18, 1996
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
99 Important Factors Regarding Forward-Looking Statements
(Included as Exhibit 99 to Registrant's 10-Q for the period
ended March 31, 1996, and incorporated herein by reference).
<PAGE> 1
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 210 Boylston Street, Chestnut Hill, Massachusetts; 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 Michael Lerner ("Lerner") 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:
<PAGE> 2
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
2
<PAGE> 3
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 Michael Lerner 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):
<TABLE>
<CAPTION>
Period Amount
------ ------
<S> <C>
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
</TABLE>
"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
3
<PAGE> 4
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
4
<PAGE> 5
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
5
<PAGE> 6
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
6
<PAGE> 7
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
7
<PAGE> 8
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 Nardella & Taylor 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:
8
<PAGE> 9
<TABLE>
<CAPTION>
Amount Period
------ ------
<S> <C> <C>
$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
</TABLE>
* 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:
<TABLE>
<CAPTION>
EBITDA Date
------ ----
<S> <C> <C>
$ 631,615.00 9/30/96
$1,407,690.00 10/31/96
</TABLE>
9
<PAGE> 10
<TABLE>
<S> <C>
$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
</TABLE>
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:
<TABLE>
<CAPTION>
Working Capital Date
--------------- ----
<S> <C>
$ 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
</TABLE>
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
10
<PAGE> 11
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
11
<PAGE> 12
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 David Ferrari
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
12
<PAGE> 13
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
13
<PAGE> 14
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, Lerner has agreed to execute (i) a Second Amendment to
Limited Guaranty wherein Lerner's liability under the Limited Guaranty
executed by Lerner 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 Lerner 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 Lerner (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 Lerner's 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 Lerner 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
14
<PAGE> 15
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.
15
<PAGE> 16
WITNESS OUR HANDS AND SEALS THIS 18TH DAY OF OCTOBER, 1996.
BORROWERS
SAFETY 1ST, INC.
By:____________________________________
Michael Lerner, President
SAFETY 1st (EUROPE) LIMITED
By:____________________________________
Michael Lerner, Director
By:____________________________________
Michael Bernstein, Director
SAFETY 1ST HOME PRODUCTS CANADA, INC.
By:____________________________________
Michael Lerner, President
3232301 CANADA, INC.
By:____________________________________
Michael Lerner, President
SAFETY 1ST INTERNATIONAL, INC.
By:____________________________________
Michael Lerner, President
16
<PAGE> 17
BANKS:
FLEET NATIONAL BANK
By:____________________________________
DEBORAH LAWRENCE, Vice President
THE FIRST NATIONAL BANK OF BOSTON
By:____________________________________
PETER HALEY, Vice President
USTRUST
By:____________________________________
THOMAS J. BYRNE, Senior Vice President
GUARANTOR:
______________________________________
MICHAEL LERNER
17
<PAGE> 18
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Michael Lerner, 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, Michael Lerner, 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, Michael Lerner, 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, Michael Lerner, 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:
18
<PAGE> 19
COMMONWEALTH OF MASSACHUSETTS
Middlesex, ss October 18, 1996
Then personally appeared the above-named, Michael Lerner, 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 Deborah Lawrence, 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 Peter Haley, 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, Thomas J. Byrne, 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:
19
<PAGE> 1
EXHIBIT 10.2
CREDIT NOTE
$15,650,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to Fleet National Bank ("Bank"), or order, the
principal amount of Fifteen Million Six Hundred Fifty Thousand Dollars
($15,650,000.00) on or before May 31, 1997, with interest from the date hereof
on the said principal balance from time to time outstanding. The aggregate
principal balance outstanding shall bear interest thereon at a per annum rate
equal to the rate from time to time established and made effective by the Bank
as its Prime Rate (as hereinafter defined) plus one (1%) percent, payable
monthly in arrears on the first day of each month, commencing November 1, 1996,
as set forth in the Loan Agreement among the Bank and each of Safety 1st, Inc.,
Safety 1st International Inc., 3232301 Canada Inc., Safety 1st Home Products
Canada Inc. and Safety 1st (Europe) Limited dated March 28, 1996 as amended
and/or modified from time to time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise,
<PAGE> 2
or in transit to or from the Bank or any of its banking or lending affiliates or
any such participant, or in the possession of any third party acting on the
Bank's behalf (regardless of the reason the Bank had received same or whether
the Bank has conditionally released the same) shall at all times constitute
security for all of the liabilities and obligations of the undersigned and any
endorser and guarantor hereof to the Bank and may be applied or set off against
such liabilities and obligations of the undersigned, any endorser or guarantor
hereof to the Bank at any time, whether or not such are then due, whether or not
demand has been made and whether or not other collateral is then available to
the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from
2
<PAGE> 3
any other person also obligated, unless and until all liabilities, obligations
and indebtedness to the Bank of the person from whom contribution is sought have
been satisfied in full. The release or compromise by the Bank of any collateral
shall not release any person obligated on account of this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
3
<PAGE> 4
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
4
<PAGE> 1
EXHIBIT 10.3
CREDIT NOTE
$9,390,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to The First National Bank of Boston ("Bank"), or
order, the principal amount of Nine Million Three Hundred Ninety Thousand
Dollars ($9,390,000.00) on or before May 31, 1997, with interest from the date
hereof on the said principal balance from time to time outstanding. The
aggregate principal balance outstanding shall bear interest thereon at a per
annum rate equal to the rate from time to time established and made effective by
the Bank as its Prime Rate (as hereinafter defined) plus one (1%) percent,
payable monthly in arrears on the first day of each month, commencing November
1, 1996, as set forth in the Loan Agreement among the Bank and each of Safety
1st, Inc., Safety 1st International Inc., 3232301 Canada Inc., Safety 1st Home
Products Canada Inc. and Safety 1st (Europe) Limited dated March 28, 1996 as
amended and/or modified from time to time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
<PAGE> 2
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
2
<PAGE> 3
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
3
<PAGE> 4
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
4
<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.4
CREDIT NOTE
$6,260,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to USTrust ("Bank"), or order, the principal amount of
Six Million Two Hundred Sixty Thousand Dollars ($6,260,000.00) on or before May
31, 1997, with interest from the date hereof on the said principal balance from
time to time outstanding. The aggregate principal balance outstanding shall bear
interest thereon at a per annum rate equal to the rate from time to time
established and made effective by the Bank as its Prime Rate (as hereinafter
defined) plus one (1%) percent, payable monthly in arrears on the first day of
each month, commencing November 1, 1996, as set forth in the Loan Agreement
among the Bank and each of Safety 1st, Inc., Safety 1st International Inc.,
3232301 Canada Inc., Safety 1st Home Products Canada Inc. and Safety 1st
(Europe) Limited dated March 28, 1996 as amended and/or modified from time to
time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
<PAGE> 2
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
-2-
<PAGE> 3
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
-3-
<PAGE> 4
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
-4-
<PAGE> 5
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.5
TERM NOTE
$7,350,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to Fleet National Bank ("Bank"), or order, the
principal amount of Seven Million Three Hundred Fifty Thousand Dollars
($7,350,000.00) on or before May 31, 1997, with interest from the date hereof on
the said principal balance from time to time outstanding. The aggregate
principal balance outstanding shall bear interest thereon at a per annum rate
equal to the rate from time to time established and made effective by the Bank
as its Prime Rate (as hereinafter defined) plus one and one-half (1.5%) percent,
payable monthly in arrears on the first day of each month, commencing November
1, 1996. This Term Note is issued pursuant to Section 2.5 of the Loan Agreement
among the Bank and each of Safety 1st, Inc., Safety 1st International Inc.,
3232301 Canada Inc., Safety 1st Home Products Canada Inc. and Safety 1st
(Europe) Limited dated March 28, 1996 as amended and/or modified from time to
time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
In addition to the monthly interest payment required hereunder, the
Borrower shall make the following principal payments to the Bank on the dates
specified below:
<TABLE>
<CAPTION>
Amount Date
------ ----
<S> <C>
$ 300,000.00 10/30/96
$ 450,000.00 11/30/96
$ 450,000.00 12/30/96
$1,000,000.00 2/28/97
</TABLE>
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand
<PAGE> 2
shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall
-2-
<PAGE> 3
accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effective do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by
mailing a copy thereof by registered or certified mail, postage prepaid, return
receipt requested, to such Borrowers,
-3-
<PAGE> 4
endorsees or guarantees address shown below or as notified to the Bank and (
ii) by serving the same upon such agent, and agrees that such service shall in
every respect be deemed effective service upon such Borrower, endorser or
guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
-4-
<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.6
TERM NOTE
$4,410,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to The First National Bank of Boston ("Bank"), or
order, the principal amount of Four Million Four Hundred Ten Thousand Dollars
($4,410,000.00) on or before May 31, 1997, with interest from the date hereof on
the said principal balance from time to time outstanding. The aggregate
principal balance outstanding shall bear interest thereon at a per annum rate
equal to the rate from time to time established and made effective by the Bank
as its Prime Rate (as hereinafter defined) plus one and one-half (1.5%) percent,
payable monthly in arrears on the first day of each month, commencing November
1, 1996. This Term Note is issued pursuant to Section 2.5 of the Loan Agreement
among the Bank and each of Safety 1st, Inc., Safety 1st International Inc.,
3232301 Canada Inc., Safety 1st Home Products Canada Inc. and Safety 1st
(Europe) Limited dated March 28, 1996 as amended and/or modified from time to
time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
In addition to the monthly interest payment required hereunder, the
Borrower shall make the following principal payments to the Bank on the dates
specified below:
<TABLE>
<CAPTION>
Amount Date
<S> <C>
$ 180,000.00 10/30/96
$ 270,000.00 11/30/96
$ 270,000.00 12/30/96
$ 600,000.00 2/28/97
</TABLE>
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand
<PAGE> 2
shall be applied first, to any costs, expenses or charges then owed to the Bank
by the Borrower; second, to accrued and unpaid interest; and third, to the
unpaid principal balance hereof. Any payments so received after demand shall be
applied in such manner as the Bank may determine. The Borrower hereby authorizes
the Bank to charge any deposit account which the Borrower may maintain with the
Bank for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall
-2-
<PAGE> 3
accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers,
-3-
<PAGE> 4
endorsees or guarantees address shown below or as notified to the Bank and (ii)
by serving the same upon such agent, and agrees that such service shall in every
respect be deemed effective service upon such Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
-4-
<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.7
TERM NOTE
$2,940,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to USTrust ("Bank"), or order, the principal amount of
Two Million Nine Hundred Forty Thousand Dollars ($2,940,000.00) on or before May
31, 1997, with interest from the date hereof on the said principal balance from
time to time outstanding. The aggregate principal balance outstanding shall bear
interest thereon at a per annum rate equal to the rate from time to time
established and made effective by the Bank as its Prime Rate (as hereinafter
defined) plus one and one-half (1.5%) percent, payable monthly in arrears on the
first day of each month, commencing November 1, 1996. This Term Note is issued
pursuant to Section 2.5 of the Loan Agreement among the Bank and each of Safety
1st, Inc., Safety 1st International Inc., 3232301 Canada Inc., Safety 1st Home
Products Canada Inc. and Safety 1st (Europe) Limited dated March 28, 1996 as
amended and/or modified from time to time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
In addition to the monthly interest payment required hereunder, the
Borrower shall make the following principal payments to the Bank on the dates
specified below:
<TABLE>
<CAPTION>
Amount Date
<S> <C>
$120,000.00 10/30/96
$180,000.00 11/30/96
$180,000.00 12/30/96
$400,000.00 2/28/97
</TABLE>
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank
<PAGE> 2
by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the
-2-
<PAGE> 3
rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii)
-3-
<PAGE> 4
by serving the same upon such agent, and agrees that such service shall in every
respect be deemed effective service upon such Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
-4-
<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.8
REVOLVER CUSHION NOTE
$1,500,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to Fleet National Bank ("Bank"), or order, the
principal amount of One Million Five Hundred Thousand Dollars ($1,500,000.00) on
or before May 31, 1997, with interest from the date hereof on the said principal
balance from time to time outstanding. The aggregate principal balance
outstanding shall bear interest thereon at a per annum rate equal to the rate
from time to time established and made effective by the Bank as its Prime Rate
(as hereinafter defined) plus three (3%) percent, payable monthly in arrears on
the first day of each month, commencing November 1, 1996, as set forth in the
Loan Agreement among the Bank and each of Safety 1st, Inc., Safety 1st
International Inc., 3232301 Canada Inc., Safety 1st Home Products Canada Inc.
and Safety 1st (Europe) Limited dated March 28, 1996 as amended and/or modified
from time to time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank
<PAGE> 2
for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
-2-
<PAGE> 3
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
-3-
<PAGE> 4
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
-4-
<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.9
REVOLVER CUSHION NOTE
$900,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to The First National Bank of Boston ("Bank"), or
order, the principal amount of Nine Hundred Thousand Dollars ($900,000.00) on or
before May 31, 1997, with interest from the date hereof on the said principal
balance from time to time outstanding. The aggregate principal balance
outstanding shall bear interest thereon at a per annum rate equal to the rate
from time to time established and made effective by the Bank as its Prime Rate
(as hereinafter defined) plus three (3%) percent, payable monthly in arrears on
the first day of each month, commencing November 1, 1996, as set forth in the
Loan Agreement among the Bank and each of Safety 1st, Inc., Safety 1st
International Inc., 3232301 Canada Inc., Safety 1st Home Products Canada Inc.
and Safety 1st (Europe) Limited dated March 28, 1996 as amended and/or modified
from time to time (the ("Loan Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank
<PAGE> 2
for any payment required hereunder.
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
-2-
<PAGE> 3
amount.
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
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<PAGE> 4
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
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<PAGE> 5
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.10
REVOLVER CUSHION NOTE
$600,000.00 October 18, 1996
Boston, Massachusetts
For value received, the undersigned (the "Borrower"), jointly and
severally, promise to pay to USTrust ("Bank"), or order, the principal amount of
Six Hundred Thousand Dollars ($600,000.00) on or before May 31, 1997, with
interest from the date hereof on the said principal balance from time to time
outstanding. The aggregate principal balance outstanding shall bear interest
thereon at a per annum rate equal to the rate from time to time established and
made effective by the Bank as its Prime Rate (as hereinafter defined) plus three
(3%) percent, payable monthly in arrears on the first day of each month,
commencing November 1, 1996, as set forth in the Loan Agreement among the Bank
and each of Safety 1st, Inc., Safety 1st International Inc., 3232301 Canada
Inc., Safety 1st Home Products Canada Inc. and Safety 1st (Europe) Limited dated
March 28, 1996 as amended and/or modified from time to time (the ("Loan
Agreement").
Prime Rate means the rate per annum from time to time established by
Fleet National Bank as the Prime Rate, it being understood that such rate is a
reference rate, not necessarily the lowest, established from time to time, which
serves as the basis upon which effective interest rates are calculated for loans
making reference thereto. The effective interest rate applicable to
undersigned's loans shall change on the date of each change in the Prime Rate.
Principal and interest shall be payable at the Bank's main office in
lawful money of the United States of America without set-off, deduction or
counterclaim. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year.
This Note is a revolving note and subject to the foregoing the Borrower
may, at its option, at any time prior to demand borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of the Loan Agreement;
provided, however, that the principal balance outstanding shall at no time
exceed the face amount of the Note.
At the option of the holder, this Note shall become immediately due and
payable without notice or demand upon the occurrence of an Event of Default (as
defined in the Loan Agreement).
Any payments received by the Bank on account of this Note prior to
demand shall be applied first, to any costs, expenses or charges then owed to
the Bank by the Borrower; second, to accrued and unpaid interest; and third, to
the unpaid principal balance hereof. Any payments so received after demand shall
be applied in such manner as the Bank may determine. The Borrower hereby
authorizes the Bank to charge any deposit account which the Borrower may
maintain with the Bank for any payment required hereunder.
<PAGE> 2
Any and all deposits or other sums at any time credited by or due to
the undersigned or any endorser or guarantor hereof from the Bank or any of its
banking or lending affiliates, or any bank acting as a participant under any
loan arrangement between the Bank and the Borrower, any endorser or guarantor
hereof, and any cash, securities, instruments or other property of the
undersigned in the possession of the Bank or any of its banking or lending
affiliates, or any bank acting as a participant under any loan arrangement
between the Bank and the Borrower, any endorser or guarantor hereof, whether for
safekeeping or otherwise, or in transit to or from the Bank or any of its
banking or lending affiliates or any such participant, or in the possession of
any third party acting on the Bank's behalf (regardless of the reason the Bank
had received same or whether the Bank has conditionally released the same) shall
at all times constitute security for all of the liabilities and obligations of
the undersigned and any endorser and guarantor hereof to the Bank and may be
applied or set off against such liabilities and obligations of the undersigned,
any endorser or guarantor hereof to the Bank at any time, whether or not such
are then due, whether or not demand has been made and whether or not other
collateral is then available to the Bank.
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other right of such
holder, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Borrower and every other maker and every endorser or guarantor of this Note,
regardless of the time, order or place of signing, waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of payment or any other indulgence, to any substitution, exchange or
release of Collateral and to the addition or release of any other party or
person primarily or secondarily liable.
The Borrower and each endorser and guarantor of this Note shall
indemnify, defend and hold the Bank and its directors, officers, employees,
agents and attorneys harmless against any claim brought or threatened against
the Bank by the Borrower, by any endorser or guarantor, or by any other person
(as well as from attorneys' reasonable fees and expenses in connection
therewith) on account of the Bank's relationship with the Borrower or any
endorser or guarantor hereof (each of which may be defended, compromised,
settled or pursued by the Bank with counsel of the Bank's selection, but at the
expense of the Borrower and any endorser and/or guarantor).
The Borrower and each endorser and guarantor of this Note agrees to
pay, upon demand, costs of collection of the principal of and interest on this
Note, including without limitation reasonable attorneys' fees. At the option of
the Bank, after the occurrence of an Event of Default or after demand, interest
shall accrue at a rate per annum equal to the aggregate of Two (2%) percent plus
the rate provided for herein. If any payment due under this Note is unpaid for
Ten (10) days or more, the Borrower shall pay, in addition to any other sums due
under this Note (and without limiting the holder's other remedies on account
thereof, a late charge equal to Five (5%) percent of the amount of such unpaid
amount.
-2-
<PAGE> 3
This Note shall be binding upon the Borrower and each endorser and
guarantor hereof and upon their respective heirs, successors, assigns and
representatives, and shall inure to the benefit of the Bank and its successors,
endorsees and assigns.
The liabilities of the Borrower and any endorser or guarantor of this
Note are joint and several; provided, however, the release by the Bank of the
Borrower or any one or more endorser or guarantor shall not release any other
person obligated on account of this Note. Any and all present and future debts
of the Borrower to any endorser or guarantor of this Note are subordinated to
the full payment and performance of all present and future debts and obligations
of the Borrower to the Bank. Each reference in this Note to the Borrower, any
endorser and any guarantor is to such person individually and also to all such
persons jointly. No person obligated on account of this Note may seek
contribution from any other person also obligated, unless and until all
liabilities, obligations and indebtedness to the Bank of the person from whom
contribution is sought have been satisfied in full. The release or compromise by
the Bank of any collateral shall not release any person obligated on account of
this Note.
The Borrower and each endorser and guarantor hereof each authorizes the
Bank to complete this Note if delivered incomplete in any respect. A
photographic or other reproduction of this Note may be made by the Bank, and any
such reproduction shall be admissible in evidence with the same effect of the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence.
This Note is delivered to the Bank at one of its offices in
Massachusetts, shall be governed by the laws of the Commonwealth of
Massachusetts, and shall take effect as a sealed instrument.
The Borrower and each endorser and guarantor of this Note each
irrevocably submits to the nonexclusive jurisdiction of any federal or state
court sitting in Boston, Massachusetts, over any suit, action or proceeding
arising out of or relating to this Agreement. Each Borrower, endorser or
guarantor irrevocably waives, to the fullest extent it may effectively do so
under applicable law, any objection it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that the same has been brought in an inconvenient forum. Each
Borrower, endorser or guarantor irrevocably appoints the Secretary of State of
the Commonwealth of Massachusetts as its authorized agent to accept and
acknowledge on its behalf any and all process which may be served in any such
suit, action or proceeding, consents to such process being served (i) by mailing
a copy thereof by registered or certified mail, postage prepaid, return receipt
requested, to such Borrowers, endorsees or guarantees address shown below or as
notified to the Bank and (ii) by serving the same upon such agent, and agrees
that such service shall in every respect be deemed effective service upon such
Borrower, endorser or guarantor.
EACH BORROWER, ENDORSER AND GUARANTOR AND BANK EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY, AND AFTER AN OPPORTUNITY TO CONSULT WITH LEGAL
COUNSEL, WAIVE ANY AND ALL RIGHTS TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
-3-
<PAGE> 4
IN CONNECTION WITH THIS NOTE, THE OBLIGATIONS, ALL MATTERS CONTEMPLATED HEREBY
AND DOCUMENTS EXECUTED IN CONNECTION HEREWITH. EACH BORROWER, ENDORSER AND
GUARANTOR CERTIFIES THAT NEITHER THE BANK NOR ANY OF ITS REPRESENTATIVES, AGENTS
OR COUNSEL HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT IN
THE EVENT OF ANY SUCH PROCEEDING SEEK TO ENFORCE THIS WAIVER OF RIGHT TO TRIAL
BY JURY.
-4-
<PAGE> 5
Executed as an instrument under seal as of October 18, 1996.
Witness Borrower:
Safety 1st, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st International, Inc.
____________________________________ By:____________________________________
Michael Lerner, President
Witness Borrower:
Safety 1st (Europe) Limited
____________________________________ By:_________________________________
Witness Borrower:
3232301 Canada Inc.
____________________________________ By:_________________________________
Witness Borrower:
Safety 1st Home Products Canada, Inc.
____________________________________ By:_________________________________
-5-
<PAGE> 1
EXHIBIT 10.11
October 18, 1996
Fleet National Bank, as Agent
One Federal Street
Boston, Massachusetts 02110
Re: Loan Arrangement With Safety 1st, Inc. and Its Subsidiaries
Ladies and Gentlemen:
Fleet National Bank, The First National Bank of Boston and USTrust
(collectively, the "Banks") have entered into a certain loan arrangement with
Safety 1st, Inc., Safety 1st International, Inc., Safety 1st (Europe) Limited,
3232301 Canada Inc., and Safety 1st Home Products Canada, Inc. (collectively,
the "Borrowers") which loan arrangement is evidenced by, among other documents
and instruments, a certain Loan Agreement dated as of March 28, 1996, as amended
(the "Agreement"). The Borrowers have requested that the Bank amend and
restructure certain of the terms and conditions of the Loan Agreement, and the
Banks have agreed to so amend the loan arrangement, as set forth in a certain
Third Amendment to Loan Agreement of even date herewith (the "Third Amendment").
However, the Banks' agreement to enter into the Third Amendment is subject to
and in consideration of the representations and warranties made in this letter
by the Borrowers.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Borrowers each acknowledge and
agree that any and all collateral and security granted by the Borrowers to the
Banks in connection with the Loan Agreement remains in full force and effect and
continues to secure all Obligations (as such term is defined in the Loan
Agreement, as amended by the Third Amendment) of the Borrowers to the Banks.
Without limiting the foregoing, the Borrowers each specifically acknowledge and
agree that each of the documents listed below continue to secure all Obligations
of the Borrowers to the Bank:
- SECURITY AGREEMENT dated March 28, 1996 granted by Safety 1st,
Inc.
- SECURITY AGREEMENT dated March 28, 1996 granted by Safety 1st
International, Inc.
- DEBENTURE dated March 28, 1996 granted by Safety 1st (Europe)
Limited
- HYPOTHEC dated March 28, 1996 granted by 3232301 Canada Inc.
- HYPOTHEC dated March 28, 1996 granted by Safety 1st Home
Products Canada, Inc.
- COLLATERAL ASSIGNMENT OF PATENTS dated March 28, 1996 granted
by Safety 1st, Inc.
- APPLICATION TO REGISTER RIGHTS dated March 28, 1996 granted by
Safety 1st (Europe) Limited
- COLLATERAL ASSIGNMENT OF TRADEMARKS dated March 28, 1996
granted by
<PAGE> 2
Safety 1st, Inc.
- APPLICATION TO REGISTER RIGHTS acquired under registered
design - Safety 1st (Europe) Limited
The Borrowers further acknowledge and agree that all collateral and
other security granted in any and all documents executed by each of the
Borrowers including, without limitation, those listed above, would secure all
Obligations of the Borrowers to the Bank under the Loan Agreement, as same may
be further amended, modified or restated from time to time, even in the absence
of the foregoing representation.
It is intended that this letter take effect as an instrument under seal
as of the date first written above.
SAFETY 1ST, INC.
By:_________________________
Michael Lerner, President
SAFETY 1ST INTERNATIONAL, INC.
By:__________________________
Michael Lerner, President
SAFETY FIRST (EUROPE) LIMITED
By:___________________________
Michael Lerner, Director
3232301 CANADA INC.
By:___________________________
Michael Lerner, President
SAFETY 1ST HOME PRODUCTS CANADA, INC.
By:____________________________
Michael Lerner, CEO
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<PAGE> 1
EXHIBIT 10.12
WARRANT
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES WHICH MAY BE ACQUIRED UPON
THE EXERCISE OF THIS COMMON STOCK PURCHASE WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN OPINION SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
ACT.
Void after October 18, Right to Purchase 25,000 Shares of
2003, or otherwise as pro- Common Stock, $0.01 par value,
vided herein per share (subject to adjustment) of
Safety 1st, Inc.
SAFETY 1ST, INC.
COMMON STOCK PURCHASE WARRANT
Safety 1st, Inc., a Massachusetts corporation (the "Company"), for
value received and subject to the terms set forth below, hereby grants to Fleet
National Bank, a national banking association, its registered successors and
assigns (the "Holder"), the right to purchase from the Company at any time or
from time to time before 3:00 P.M., Boston, Massachusetts time, on October 18,
2003, 25,000 fully paid and non-assessable shares of the Common Stock, par value
$0.01 per share, of the Company, at the purchase price of $10.00 per share (the
"Exercise Price"). The Exercise Price and the number and character of such
shares of Common Stock purchasable pursuant to the rights granted under this
Warrant are subject to adjustment as provided herein.
This Warrant is subject to the following provisions:
1. Definitions. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) "Common Stock" means all stock of any class or classes
(however designated) of the Company, authorized upon the Issue Date or
thereafter, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended by
the happening of such a contingency).
<PAGE> 2
(b) "Issue Date" means October 18, 1996.
(c) "Market Price" means, as to shares of the Common Stock:
(i) if the shares of the Common Stock are listed on any national securities
exchange or quoted on the National Association of Security Dealers, Inc.
Automated Quotation System, ("NASDAQ") National Market System ("NMS"), the
average of the daily closing prices for the fifteen (15) consecutive business
days commencing twenty (20) business days before the day in question (the
"Trading Period"); (ii) if the shares of the Common Stock are not listed on any
national securities exchange or quoted on NASDAQ/NMS but otherwise are quoted on
the NASDAQ, the average of the high and low bids as reported by NASDAQ for the
Trading Period; or (iii) if the shares of the Common Stock are neither listed on
any national securities exchange nor quoted on NASDAQ, the higher of (x) the
Exercise Price then in effect, or (y) the tangible book value per share of
Common Stock as of the end of the Company's immediately preceding fiscal year.
(d) "Other Securities" means any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
other) which the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock.
(e) "Person" means, without limitation, an individual, a
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, or a government or any department or agency thereof.
(f) "This Warrant" means, collectively, this Warrant and all
other stock purchase warrants issued in exchange therefor or replacement
thereof.
2. Exercise of Warrant.
2.1 Exercise Period. The Holder may exercise this Warrant, in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time after the Issue Date and prior to 3:00 P.M. Boston,
Massachusetts time on October 18, 2003.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been
exercised at such time as the Company has received all of the following items
(the "Exercise Date"):
2
<PAGE> 3
(i) a completed Subscription Agreement as
described in Section 2.3 hereof, executed by the Person exercising all or part
of the purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in
the name of the Purchaser, an Assignment or Assignments in the form set forth in
Exhibit B hereto, evidencing the assignment of this Warrant to the Purchaser
together with any documentation required pursuant to Section 6(a) hereof; and
(iv) a check payable to the order of the
Company in an amount equal to the product of the Exercise Price multiplied by
the number of shares of Common Stock being purchased upon such exercise.
(b) As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within ten (10) days after the
Exercise Date, the Company at its expense will cause to be issued in the name of
and delivered to the Holder hereof, or as the Holder (upon payment by the Holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and non-assessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled upon such exercise, together
with any other stock or other securities and property (including cash, where
applicable) to which the Holder is entitled upon exercise.
(c) Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company at its
expense will, within ten (10) days after the Exercise Date, issue and deliver to
or upon the order of the Holder hereof a new Warrant or Warrants of like tenor,
in the name of the Holder or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock remaining issuable under
this Warrant.
(d) The Common Stock (or Other Securities) issuable
upon the exercise of this Warrant will be deemed to have been issued to the
Purchaser on the Exercise Date, and the Purchaser will be deemed for all
purposes to have become the record holder of such Common Stock (or Other
Securities) on the Exercise Date.
(e) The issuance of certificates for shares of Common
Stock (or Other Securities) upon exercise of this Warrant will be made without
charge to the Holder or the Purchaser for any issuance tax in respect thereof or
any other cost incurred by the
3
<PAGE> 4
Company in connection with such exercise and the related issuance of Shares of
Common Stock (or Other Securities).
2.3 Subscription Agreement. The Subscription Agreement will be
substantially in the form set forth in Exhibit A hereto, except that if the
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant are not to be issued in the name of the Holder hereof, the Subscription
Agreement will also state the name of the Person to whom the certificates for
the shares of Common Stock (or Other Securities) are to be issued, and if the
number of shares of Common Stock (or Other Securities) to be issued does not
include all the shares of Common Stock (or Other Securities) issuable hereunder,
it will also state the name of the Person to whom a new Warrant for the
unexercised portion of the rights hereunder is to be delivered.
2.4 Fractional Shares. If a fractional share of Common Stock
would, but for the provisions of Section 2.1 hereof, be issuable upon exercise
of the rights represented by this Warrant, the Company will, within ten (10)
days after the Exercise Date, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share, in an amount equal to the Market
Price of such fractional share as of the close of business on the Exercise Date.
3. Adjustments; Cancellation.
3.1 Stock Splits, Etc. If the Company shall at any time after
the Issue Date subdivide its outstanding Common Stock or Other Securities, by
split-up or otherwise, or combine its outstanding Common Stock or Other
Securities, or issue additional shares of its capital stock in payment of a
stock dividend in respect of its Common Stock or Other Securities, the number of
shares issuable on the exercise of the unexercised portion of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of combination, and the
Exercise Price then applicable to shares covered by the unexercised portion of
this Warrant shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of
combination.
3.2 Reclassification, Reorganization, Etc. In case of any
reclassification, capital reorganization or change of the outstanding Common
Stock or Other Securities (other than as a result of a subdivision, combination
or stock dividend), then, as a condition of such reclassification,
reorganization or change, lawful provision shall be made so that the Holder of
this Warrant shall have the right at any time prior to the expiration of this
Warrant to purchase, at a total price not to exceed that payable
4
<PAGE> 5
upon the exercise of the unexercised portion of this Warrant, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization or change by a holder of the number of shares
of Common Stock or Other Securities of the Company as to which this Warrant was
exercisable immediately prior to such reclassification, reorganization or
change, and in any such case appropriate provision shall be made with respect to
the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Exercise Price and of the number of shares purchasable upon exercise of
this Warrant) shall thereafter be applicable in relation to any shares of stock,
and other securities and property, thereafter deliverable upon exercise hereof.
Notwithstanding the foregoing, in the event that the Company is merged into or
consolidated with another Person, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing fifty percent (50%) of the voting power of
the Company, or in case of any sale or conveyance to one or more Persons of the
property of the Company as an entirety or substantially as an entirety, the
Company may terminate this Warrant by giving the Holder hereof written notice
thereof. Such notice shall specify the date (at least thirty (30) days
subsequent to the date on which notice is given) on which, at 3:00 P.M., Boston,
Massachusetts time, this Warrant shall terminate. Notwithstanding any such
notice, this Warrant shall remain exercisable, and otherwise in full force and
effect, until such time of termination.
3.3 Dividends. In case the Company shall, at any time or from
time to time after the Issue Date, pay any dividend or make any other
distribution upon its Common Stock (or Other Securities) payable in cash,
property or securities of a corporation other than the Company, then forthwith
upon the payment of such dividend, or the making of such other distribution, as
the case may be, the Exercise Price then in effect shall be reduced by the
amount of such dividend or other distribution in respect of each outstanding
share of Common Stock (or Other Securities). The Board of Directors of the
Company shall determine the fair value of any dividend or other distribution
made upon Common Stock of the Company payable in property or securities of a
corporation other than the Company.
3.4 Adjustment for Issue of Stock at Less than Exercise Price.
In case the Company shall, at any time or from time to time after the Issue
Date, issue or agree to issue by warrants, convertible securities, stock options
or otherwise, any of its Common Stock or Other Securities, including treasury
shares, (other than any shares issued in transactions to which Section 3.1 or
3.2
5
<PAGE> 6
of this Warrant applies), for a consideration per share less than the Exercise
Price per share in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale, or agreement to issue or sell, said
Exercise Price shall be reduced to a price (calculated to the nearest cent)
determined by dividing (x) an amount equal to (A) the product obtained by
multiplying the number of shares of the Company's Common Stock outstanding (or
then deemed to be outstanding as herein provided) immediately prior to such
issue by the Exercise Price in effect at such time plus (B) the consideration
received by the Company upon such issue by (y) the number of shares of the
Company's Common Stock outstanding (or then deemed to be outstanding as herein
provided) immediately after such issue. Whenever the Exercise Price is adjusted
as provided in this Section 3.4, the aggregate number of shares of Common Stock
(or Other Securities) which the holder of this Warrant shall thereafter be
entitled to purchase at such adjusted Exercise Price shall be increased to the
number of shares determined by multiplying the number of shares of Common Stock
(or Other Securities) issuable upon exercise of this Warrant immediately prior
to such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and dividing the product so obtained by such adjusted Exercise
Price. For the purposes of this Section 3.4, the number of shares of Common
Stock (or Other Securities) deemed to be outstanding at any given time shall
exclude shares in the treasury of the Company but shall include all shares
issuable or to become issuable under any agreements, warrants (including this
Warrant), convertible securities, stock options, similar rights or otherwise
(hereinafter in this Section 3.4 referred to as "Options"). Notwithstanding
anything contained herein to the contrary, the provisions of this Section 3.4
shall not apply with respect to options granted to any management or other key
employee of the Company in a compensatory or incentive transaction or otherwise
pursuant to a stock option plan (or with respect to the issuance of any Common
Stock or Other Securities upon the exercise of such options). The Board of
Directors of the Company shall determine the fair value of the amount of
consideration other than money received by the Company upon the issue by it of
any of its securities. Such Board shall, in case any Common Stock (or Other
Securities) or Options for the purchase thereof are issued with other stock,
securities or assets of the Company, determine what part of the consideration
received therefor is applicable to the issue of the Common Stock (or Other
Securities) or Options for the purchase thereof. If, as provided herein, the
Exercise Price is adjusted as a consequence of the Company's issuance of
Options, no further adjustment of the Exercise price shall be made upon the
subsequent issuance of Common Stock (or Other Securities) upon the exercise of
such Options. To the extent that Options expire without having been exercised,
the Exercise Price computed upon their issuance, and any subsequent adjustments
based thereon, shall, upon such expiration, be
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<PAGE> 7
recomputed to take into account only the shares of Common Stock (or Other
Securities) actually issued upon the exercise of such Options. In any such
recomputation, the consideration applicable to the shares of Common Stock (or
Other Securities) issued shall be the aggregate consideration which was received
by the Company upon the issuance of such Options, whether or not exercised, plus
the additional consideration actually received by the Company upon the exercise
thereof. No recomputation shall have the effect of increasing the Exercise Price
by an amount in excess of the adjustment thereof made in respect of the issuance
of the expired Options.
3.5 Certificate of Adjustment. Whenever the Exercise Price or
the number of shares issuable hereunder is adjusted, as herein provided, the
Company shall promptly deliver to the registered Holder of this Warrant a
certificate of the Treasurer of the Company, which certificate shall state (i)
the Exercise Price and the number of shares of Common Stock (or Other
Securities) issuable hereunder after such adjustment, (ii) the facts requiring
such adjustment, and (iii) the method of calculation for such adjustment and
increase or decrease.
3.6 Small Adjustments. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
in the Exercise Price of at least one percent; provided, however, that any
adjustments which by reason of this Section 3.5 are not required to be made
immediately shall be carried forward and taken into account at the time of
exercise of this Warrant or any subsequent adjustment in the Exercise Price
which, singly or in combination with any adjustment carried forward, is required
to be made under Sections 3.1, 3.2, 3.3 or 3.4.
4. No Dilution or Impairment. The Company will not, by amendment of its
corporate charter or By-Laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against dilution, or other impairment. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any shares of
Stock (or Other Securities) receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise of this Warrant to exceed
the amount payable therefor upon such exercise, and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue
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<PAGE> 8
fully paid and non-assessable shares of Common Stock (or Other Securities) upon
the exercise of this Warrant.
5. Reservation of Stock, etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of this Warrant.
6. Purchase Rights. If at any time the Company grants, issues or sells
any rights or options to subscribe for or to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (or Other Securities) (the "Purchase Rights"), then the Holder of
this Warrant will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock (or Other
Securities) acquirable upon exercise of this Warrant had this Warrant been fully
exercised immediately prior to the date on which a record was taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record was
taken, the date as of which the record holders of Common Stock (or Other
Securities) were determined for the grant, issuance or sale of such Purchase
Rights.
7. Disposition of This Warrant, Common Stock, Etc.
(a) The Holder of this Warrant and any transferee hereof or of
the Common Stock (or Other Securities) with respect to which this Warrant may be
exercisable, by their acceptance hereof, hereby understand and agree that this
Warrant and the Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consideration) without an
effective registration statement under the Act or an opinion satisfactory to the
Company of counsel satisfactory to the Company and/or submission to the Company
of such other evidence as may be satisfactory to counsel to the Company, in each
such case, to the effect that any such transfer shall not be in violation of the
Act. It shall be a condition to the transfer of this Warrant that any transferee
thereof deliver to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Warrant.
(b) The stock certificates of the Company that will evidence
the shares of Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable will be imprinted with a conspicuous legend in
substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE COMPANY
AND/OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT."
provided, however, that, if the shares of Common Stock (or Other Securities)
with respect to which this Warrant has been exercised are registered in
accordance with the provisions of the Act by the date contemplated by Section
39(b) of that certain Third Amendment to Loan Agreement of even date herewith,
any stock certificates of the Company issued in connection herewith and bearing
the foregoing legend will, upon written request of the Holder, be replaced with
a certificate(s) not bearing the foregoing legend.
8. Rights and Obligations of Warrant Holder. The Holder of this Warrant
shall not, by virtue hereof, be entitled to any voting rights or other rights as
a stockholder of the Company. No provision of this Warrant, in the absence of
affirmative actions by the Holder to purchase Common Stock (or Other Securities)
of the Company by exercising this Warrant, and no enumeration in this Warrant of
the rights or privileges of the Holder, will give rise to any liability of such
Holder for the Exercise Price of Common Stock (or Other Securities) acquirable
by exercise hereof or as a stockholder of the Company.
9. Transfer of Warrants. Subject to compliance with the restrictions on
transfer applicable to this Warrant referred to in Section 7 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in substantially the form attached hereto as Exhibit B), to
the Company, and the Company at its expense will issue and deliver to or upon
the order of the Holder hereof a new Warrant or Warrants in such denomination or
denominations as may be requested, but otherwise of like tenor, in the name of
the Holder or as the Holder (upon payment of any applicable transfer taxes) may
direct.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company
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<PAGE> 10
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
10. Company Records. Until this Warrant is transferred on the books of
the Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
11. Miscellaneous.
11.1 Notices. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class mail,
postage prepaid, to such address as may have been furnished to the Company in
writing by such Holder, or, until an address is so furnished, to and at the
address of the last Holder of this Warrant who has so furnished an address to
the Company. All communications from the Holder of this Warrant to the Company
shall be mailed by first class mail, postage prepaid, to the Company at 210
Boylston Street, Chestnut Hill, Massachusetts 02167, or such other address as
may have been furnished to the Holder in writing by the Company.
11.2 Amendment and Waiver. Except as otherwise provided
herein, this Warrant and any term hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such amendment, waiver, discharge or termination is sought.
11.3 Governing Law; Descriptive Headings. This Warrant shall
be construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
Dated: October 18, 1996
SAFETY 1ST, INC.
By:________________________________
Michael Lerner, President
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<PAGE> 11
EXHIBIT A
SUBSCRIPTION AGREEMENT
[To be signed only upon exercise of Warrant]
To: Safety 1st, Inc. Date: _________________
The undersigned, the Holder of the within Warrant, pursuant to the
provisions set forth in the within Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and agrees to
subscribe for and purchase thereunder, __________ shares of the Common Stock (or
Other Securities) covered by such Warrant and herewith makes payment of
$________ therefor, and requests that the certificates for such shares be issued
in the name of, and delivered to, ________________, whose address is
__________________________________. If said number of shares is less than all
the shares covered by such Warrant, a new Warrant shall be registered in the
name of the undersigned and delivered to the address stated below.
Signature:______________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant or on the form of
Assignment attached as Exhibit
B thereto.)
Address:_______________________________
_______________________________
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<PAGE> 12
EXHIBIT B
ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Common Stock (or Other Securities) covered thereby
set forth below, unto:
Name of Assignee Address No. of Shares
Dated:_____________________ Signature:______________________________
(Signature must conform in all
respects to name of Holder as
specified on the face of the
Warrant.
Address:______________________________
______________________________
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<PAGE> 1
EXHIBIT 10.13
WARRANT
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES WHICH MAY BE ACQUIRED UPON
THE EXERCISE OF THIS COMMON STOCK PURCHASE WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN OPINION SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
ACT.
Void after October 18, Right to Purchase 15,000 Shares of
2003, or otherwise as pro- Common Stock, $0.01 par value,
vided herein per share (subject to adjustment) of
Safety 1st, Inc.
SAFETY 1ST, INC.
COMMON STOCK PURCHASE WARRANT
Safety 1st, Inc., a Massachusetts corporation (the "Company"), for
value received and subject to the terms set forth below, hereby grants to The
First National Bank of Boston, a national banking association, its registered
successors and assigns (the "Holder"), the right to purchase from the Company at
any time or from time to time before 3:00 P.M., Boston, Massachusetts time, on
October 18, 2003, 15,000 fully paid and non-assessable shares of the Common
Stock, par value $0.01 per share, of the Company, at the purchase price of
$10.00 per share (the "Exercise Price"). The Exercise Price and the number and
character of such shares of Common Stock purchasable pursuant to the rights
granted under this Warrant are subject to adjustment as provided herein.
This Warrant is subject to the following provisions:
1. Definitions. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) "Common Stock" means all stock of any class or classes
(however designated) of the Company, authorized upon the Issue Date or
thereafter, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended by
the happening of such a contingency).
<PAGE> 2
(b) "Issue Date" means October 18, 1996.
(c) "Market Price" means, as to shares of the Common Stock:
(i) if the shares of the Common Stock are listed on any national securities
exchange or quoted on the National Association of Security Dealers, Inc.
Automated Quotation System, ("NASDAQ") National Market System ("NMS"), the
average of the daily closing prices for the fifteen (15) consecutive business
days commencing twenty (20) business days before the day in question (the
"Trading Period"); (ii) if the shares of the Common Stock are not listed on any
national securities exchange or quoted on NASDAQ/NMS but otherwise are quoted on
the NASDAQ, the average of the high and low bids as reported by NASDAQ for the
Trading Period; or (iii) if the shares of the Common Stock are neither listed on
any national securities exchange nor quoted on NASDAQ, the higher of (x) the
Exercise Price then in effect, or (y) the tangible book value per share of
Common Stock as of the end of the Company's immediately preceding fiscal year.
(d) "Other Securities" means any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
other) which the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock.
(e) "Person" means, without limitation, an individual, a
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, or a government or any department or agency thereof.
(f) "This Warrant" means, collectively, this Warrant and all
other stock purchase warrants issued in exchange therefor or replacement
thereof.
2. Exercise of Warrant.
2.1 Exercise Period. The Holder may exercise this Warrant, in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time after the Issue Date and prior to 3:00 P.M. Boston,
Massachusetts time on October 18, 2003.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been
exercised at such time as the Company has received all of the following items
(the "Exercise Date"):
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<PAGE> 3
(i) a completed Subscription Agreement as
described in Section 2.3 hereof, executed by the Person exercising all or part
of the purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in
the name of the Purchaser, an Assignment or Assignments in the form set forth in
Exhibit B hereto, evidencing the assignment of this Warrant to the Purchaser
together with any documentation required pursuant to Section 6(a) hereof; and
(iv) a check payable to the order of the
Company in an amount equal to the product of the Exercise Price multiplied by
the number of shares of Common Stock being purchased upon such exercise.
(b) As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within ten (10) days after the
Exercise Date, the Company at its expense will cause to be issued in the name of
and delivered to the Holder hereof, or as the Holder (upon payment by the Holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and non-assessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled upon such exercise, together
with any other stock or other securities and property (including cash, where
applicable) to which the Holder is entitled upon exercise.
(c) Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company at its
expense will, within ten (10) days after the Exercise Date, issue and deliver to
or upon the order of the Holder hereof a new Warrant or Warrants of like tenor,
in the name of the Holder or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock remaining issuable under
this Warrant.
(d) The Common Stock (or Other Securities) issuable
upon the exercise of this Warrant will be deemed to have been issued to the
Purchaser on the Exercise Date, and the Purchaser will be deemed for all
purposes to have become the record holder of such Common Stock (or Other
Securities) on the Exercise Date.
(e) The issuance of certificates for shares of Common
Stock (or Other Securities) upon exercise of this Warrant will be made without
charge to the Holder or the Purchaser for any issuance tax in respect thereof or
any other cost incurred by the
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<PAGE> 4
Company in connection with such exercise and the related issuance of Shares of
Common Stock (or Other Securities).
2.3 Subscription Agreement. The Subscription Agreement will be
substantially in the form set forth in Exhibit A hereto, except that if the
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant are not to be issued in the name of the Holder hereof, the Subscription
Agreement will also state the name of the Person to whom the certificates for
the shares of Common Stock (or Other Securities) are to be issued, and if the
number of shares of Common Stock (or Other Securities) to be issued does not
include all the shares of Common Stock (or Other Securities) issuable hereunder,
it will also state the name of the Person to whom a new Warrant for the
unexercised portion of the rights hereunder is to be delivered.
2.4 Fractional Shares. If a fractional share of Common Stock
would, but for the provisions of Section 2.1 hereof, be issuable upon exercise
of the rights represented by this Warrant, the Company will, within ten (10)
days after the Exercise Date, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share, in an amount equal to the Market
Price of such fractional share as of the close of business on the Exercise Date.
3. Adjustments; Cancellation.
3.1 Stock Splits, Etc. If the Company shall at any time after
the Issue Date subdivide its outstanding Common Stock or Other Securities, by
split-up or otherwise, or combine its outstanding Common Stock or Other
Securities, or issue additional shares of its capital stock in payment of a
stock dividend in respect of its Common Stock or Other Securities, the number of
shares issuable on the exercise of the unexercised portion of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of combination, and the
Exercise Price then applicable to shares covered by the unexercised portion of
this Warrant shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of
combination.
3.2 Reclassification, Reorganization, Etc. In case of any
reclassification, capital reorganization or change of the outstanding Common
Stock or Other Securities (other than as a result of a subdivision, combination
or stock dividend), then, as a condition of such reclassification,
reorganization or change, lawful provision shall be made so that the Holder of
this Warrant shall have the right at any time prior to the expiration of this
Warrant to purchase, at a total price not to exceed that payable
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<PAGE> 5
upon the exercise of the unexercised portion of this Warrant, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization or change by a holder of the number of shares
of Common Stock or Other Securities of the Company as to which this Warrant was
exercisable immediately prior to such reclassification, reorganization or
change, and in any such case appropriate provision shall be made with respect to
the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Exercise Price and of the number of shares purchasable upon exercise of
this Warrant) shall thereafter be applicable in relation to any shares of stock,
and other securities and property, thereafter deliverable upon exercise hereof.
Notwithstanding the foregoing, in the event that the Company is merged into or
consolidated with another Person, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing fifty percent (50%) of the voting power of
the Company, or in case of any sale or conveyance to one or more Persons of the
property of the Company as an entirety or substantially as an entirety, the
Company may terminate this Warrant by giving the Holder hereof written notice
thereof. Such notice shall specify the date (at least thirty (30) days
subsequent to the date on which notice is given) on which, at 3:00 P.M., Boston,
Massachusetts time, this Warrant shall terminate. Notwithstanding any such
notice, this Warrant shall remain exercisable, and otherwise in full force and
effect, until such time of termination.
3.3 Dividends. In case the Company shall, at any time or from
time to time after the Issue Date, pay any dividend or make any other
distribution upon its Common Stock (or Other Securities) payable in cash,
property or securities of a corporation other than the Company, then forthwith
upon the payment of such dividend, or the making of such other distribution, as
the case may be, the Exercise Price then in effect shall be reduced by the
amount of such dividend or other distribution in respect of each outstanding
share of Common Stock (or Other Securities). The Board of Directors of the
Company shall determine the fair value of any dividend or other distribution
made upon Common Stock of the Company payable in property or securities of a
corporation other than the Company.
3.4 Adjustment for Issue of Stock at Less than Exercise Price.
In case the Company shall, at any time or from time to time after the Issue
Date, issue or agree to issue by warrants, convertible securities, stock options
or otherwise, any of its Common Stock or Other Securities, including treasury
shares, (other than any shares issued in transactions to which Section 3.1 or
3.2
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<PAGE> 6
of this Warrant applies), for a consideration per share less than the Exercise
Price per share in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale, or agreement to issue or sell, said
Exercise Price shall be reduced to a price (calculated to the nearest cent)
determined by dividing (x) an amount equal to (A) the product obtained by
multiplying the number of shares of the Company's Common Stock outstanding (or
then deemed to be outstanding as herein provided) immediately prior to such
issue by the Exercise Price in effect at such time plus (B) the consideration
received by the Company upon such issue by (y) the number of shares of the
Company's Common Stock outstanding (or then deemed to be outstanding as herein
provided) immediately after such issue. Whenever the Exercise Price is adjusted
as provided in this Section 3.4, the aggregate number of shares of Common Stock
(or Other Securities) which the holder of this Warrant shall thereafter be
entitled to purchase at such adjusted Exercise Price shall be increased to the
number of shares determined by multiplying the number of shares of Common Stock
(or Other Securities) issuable upon exercise of this Warrant immediately prior
to such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and dividing the product so obtained by such adjusted Exercise
Price. For the purposes of this Section 3.4, the number of shares of Common
Stock (or Other Securities) deemed to be outstanding at any given time shall
exclude shares in the treasury of the Company but shall include all shares
issuable or to become issuable under any agreements, warrants (including this
Warrant), convertible securities, stock options, similar rights or otherwise
(hereinafter in this Section 3.4 referred to as "Options"). Notwithstanding
anything contained herein to the contrary, the provisions of this Section 3.4
shall not apply with respect to options granted to any management or other key
employee of the Company in a compensatory or incentive transaction or otherwise
pursuant to a stock option plan (or with respect to the issuance of any Common
Stock or Other Securities upon the exercise of such options). The Board of
Directors of the Company shall determine the fair value of the amount of
consideration other than money received by the Company upon the issue by it of
any of its securities. Such Board shall, in case any Common Stock (or Other
Securities) or Options for the purchase thereof are issued with other stock,
securities or assets of the Company, determine what part of the consideration
received therefor is applicable to the issue of the Common Stock (or Other
Securities) or Options for the purchase thereof. If, as provided herein, the
Exercise Price is adjusted as a consequence of the Company's issuance of
Options, no further adjustment of the Exercise price shall be made upon the
subsequent issuance of Common Stock (or Other Securities) upon the exercise of
such Options. To the extent that Options expire without having been exercised,
the Exercise Price computed upon their issuance, and any subsequent adjustments
based thereon, shall, upon such expiration, be
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<PAGE> 7
recomputed to take into account only the shares of Common Stock (or Other
Securities) actually issued upon the exercise of such Options. In any such
recomputation, the consideration applicable to the shares of Common Stock (or
Other Securities) issued shall be the aggregate consideration which was received
by the Company upon the issuance of such Options, whether or not exercised, plus
the additional consideration actually received by the Company upon the exercise
thereof. No recomputation shall have the effect of increasing the Exercise Price
by an amount in excess of the adjustment thereof made in respect of the issuance
of the expired Options.
3.5 Certificate of Adjustment. Whenever the Exercise Price or
the number of shares issuable hereunder is adjusted, as herein provided, the
Company shall promptly deliver to the registered Holder of this Warrant a
certificate of the Treasurer of the Company, which certificate shall state (i)
the Exercise Price and the number of shares of Common Stock (or Other
Securities) issuable hereunder after such adjustment, (ii) the facts requiring
such adjustment, and (iii) the method of calculation for such adjustment and
increase or decrease.
3.6 Small Adjustments. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
in the Exercise Price of at least one percent; provided, however, that any
adjustments which by reason of this Section 3.5 are not required to be made
immediately shall be carried forward and taken into account at the time of
exercise of this Warrant or any subsequent adjustment in the Exercise Price
which, singly or in combination with any adjustment carried forward, is required
to be made under Sections 3.1, 3.2, 3.3 or 3.4.
4. No Dilution or Impairment. The Company will not, by amendment of its
corporate charter or By-Laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against dilution, or other impairment. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any shares of
Stock (or Other Securities) receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise of this Warrant to exceed
the amount payable therefor upon such exercise, and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue
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<PAGE> 8
fully paid and non-assessable shares of Common Stock (or Other Securities) upon
the exercise of this Warrant.
5. Reservation of Stock, etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of this Warrant.
6. Purchase Rights. If at any time the Company grants, issues or sells
any rights or options to subscribe for or to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (or Other Securities) (the "Purchase Rights"), then the Holder of
this Warrant will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock (or Other
Securities) acquirable upon exercise of this Warrant had this Warrant been fully
exercised immediately prior to the date on which a record was taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record was
taken, the date as of which the record holders of Common Stock (or Other
Securities) were determined for the grant, issuance or sale of such Purchase
Rights.
7. Disposition of This Warrant, Common Stock, Etc.
(a) The Holder of this Warrant and any transferee hereof or of
the Common Stock (or Other Securities) with respect to which this Warrant may be
exercisable, by their acceptance hereof, hereby understand and agree that this
Warrant and the Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consideration) without an
effective registration statement under the Act or an opinion satisfactory to the
Company of counsel satisfactory to the Company and/or submission to the Company
of such other evidence as may be satisfactory to counsel to the Company, in each
such case, to the effect that any such transfer shall not be in violation of the
Act. It shall be a condition to the transfer of this Warrant that any transferee
thereof deliver to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Warrant.
(b) The stock certificates of the Company that will evidence
the shares of Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable will be imprinted with a conspicuous legend in
substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE COMPANY
AND/OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT."
provided, however, that, if the shares of Common Stock (or Other Securities)
with respect to which this Warrant has been exercised are registered in
accordance with the provisions of the Act by the date contemplated by Section
39(b) of that certain Third Amendment to Loan Agreement of even date herewith,
any stock certificates of the Company issued in connection herewith and bearing
the foregoing legend will, upon written request of the Holder, be replaced with
a certificate(s) not bearing the foregoing legend.
8. Rights and Obligations of Warrant Holder. The Holder of this Warrant
shall not, by virtue hereof, be entitled to any voting rights or other rights as
a stockholder of the Company. No provision of this Warrant, in the absence of
affirmative actions by the Holder to purchase Common Stock (or Other Securities)
of the Company by exercising this Warrant, and no enumeration in this Warrant of
the rights or privileges of the Holder, will give rise to any liability of such
Holder for the Exercise Price of Common Stock (or Other Securities) acquirable
by exercise hereof or as a stockholder of the Company.
9. Transfer of Warrants. Subject to compliance with the restrictions on
transfer applicable to this Warrant referred to in Section 7 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in substantially the form attached hereto as Exhibit B), to
the Company, and the Company at its expense will issue and deliver to or upon
the order of the Holder hereof a new Warrant or Warrants in such denomination or
denominations as may be requested, but otherwise of like tenor, in the name of
the Holder or as the Holder (upon payment of any applicable transfer taxes) may
direct.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company
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or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
10. Company Records. Until this Warrant is transferred on the books of
the Company, the Company may treat the registered Holder hereof as the absolute
owner hereof for all purposes, notwithstanding any notice to the contrary.
11. Miscellaneous.
11.1 Notices. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class mail,
postage prepaid, to such address as may have been furnished to the Company in
writing by such Holder, or, until an address is so furnished, to and at the
address of the last Holder of this Warrant who has so furnished an address to
the Company. All communications from the Holder of this Warrant to the Company
shall be mailed by first class mail, postage prepaid, to the Company at 210
Boylston Street, Chestnut Hill, Massachusetts 02167, or such other address as
may have been furnished to the Holder in writing by the Company.
11.2 Amendment and Waiver. Except as otherwise provided
herein, this Warrant and any term hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such amendment, waiver, discharge or termination is sought.
11.3 Governing Law; Descriptive Headings. This Warrant shall
be construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
Dated: October 18, 1996
SAFETY 1ST, INC.
By:_________________________________
Michael Lerner, President
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EXHIBIT A
SUBSCRIPTION AGREEMENT
[To be signed only upon exercise of Warrant]
To: Safety 1st, Inc. Date: _________________
The undersigned, the Holder of the within Warrant, pursuant to the
provisions set forth in the within Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and agrees to
subscribe for and purchase thereunder, __________ shares of the Common Stock (or
Other Securities) covered by such Warrant and herewith makes payment of
$________ therefor, and requests that the certificates for such shares be issued
in the name of, and delivered to, ________________, whose address is
__________________________________. If said number of shares is less than all
the shares covered by such Warrant, a new Warrant shall be registered in the
name of the undersigned and delivered to the address stated below.
Signature:_______________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant or on the form of
Assignment attached as Exhibit B
thereto.)
Address:_______________________________________
_______________________________________
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EXHIBIT B
ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Common Stock (or Other Securities) covered thereby
set forth below, unto:
Name of Assignee Address No. of Shares
Dated: __________________ Signature:_______________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant.)
Address: _______________________________________
_______________________________________
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<PAGE> 1
EXHIBIT 10.14
WARRANT
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES WHICH MAY BE ACQUIRED UPON
THE EXERCISE OF THIS COMMON STOCK PURCHASE WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR AN OPINION SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
ACT.
Void after October 18, Right to Purchase 10,000 Shares of
2003, or otherwise as pro- Common Stock, $0.01 par value,
vided herein per share (subject to adjustment) of
Safety 1st, Inc.
SAFETY 1ST, INC.
COMMON STOCK PURCHASE WARRANT
Safety 1st, Inc., a Massachusetts corporation (the "Company"), for
value received and subject to the terms set forth below, hereby grants to
USTrust, a Massachusetts trust company, its registered successors and assigns
(the "Holder"), the right to purchase from the Company at any time or from time
to time before 3:00 P.M., Boston, Massachusetts time, on October 18, 2003,
10,000 fully paid and non-assessable shares of the Common Stock, par value $0.01
per share, of the Company, at the purchase price of $10.00 per share (the
"Exercise Price"). The Exercise Price and the number and character of such
shares of Common Stock purchasable pursuant to the rights granted under this
Warrant are subject to adjustment as provided herein.
This Warrant is subject to the following provisions:
1. Definitions. As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) "Common Stock" means all stock of any class or classes
(however designated) of the Company, authorized upon the Issue Date or
thereafter, the holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended by
the happening of such a contingency).
<PAGE> 2
(b) "Issue Date" means October 18, 1996.
(c) "Market Price" means, as to shares of the Common Stock:
(i) if the shares of the Common Stock are listed on any national securities
exchange or quoted on the National Association of Security Dealers, Inc.
Automated Quotation System, ("NASDAQ") National Market System ("NMS"), the
average of the daily closing prices for the fifteen (15) consecutive business
days commencing twenty (20) business days before the day in question (the
"Trading Period"); (ii) if the shares of the Common Stock are not listed on any
national securities exchange or quoted on NASDAQ/NMS but otherwise are quoted on
the NASDAQ, the average of the high and low bids as reported by NASDAQ for the
Trading Period; or (iii) if the shares of the Common Stock are neither listed on
any national securities exchange nor quoted on NASDAQ, the higher of (x) the
Exercise Price then in effect, or (y) the tangible book value per share of
Common Stock as of the end of the Company's immediately preceding fiscal year.
(d) "Other Securities" means any stock (other than Common
Stock) and other securities of the Company or any other Person (corporate or
other) which the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, upon the exercise of this Warrant, in lieu of
or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock.
(e) "Person" means, without limitation, an individual, a
partnership, a corporation, a trust, a joint venture, an unincorporated
organization, or a government or any department or agency thereof.
(f) "This Warrant" means, collectively, this Warrant and all
other stock purchase warrants issued in exchange therefor or replacement
thereof.
2. Exercise of Warrant.
2.1 Exercise Period. The Holder may exercise this Warrant, in
whole or in part (but not as to a fractional share of Common Stock), at any time
and from time to time after the Issue Date and prior to 3:00 P.M. Boston,
Massachusetts time on October 18, 2003.
2.2 Exercise Procedure.
(a) This Warrant will be deemed to have been
exercised at such time as the Company has received all of the following items
(the "Exercise Date"):
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(i) a completed Subscription Agreement as
described in Section 2.3 hereof, executed by the Person exercising all or part
of the purchase rights represented by this Warrant (the "Purchaser");
(ii) this Warrant;
(iii) if this Warrant is not registered in
the name of the Purchaser, an Assignment or Assignments in the form set forth in
Exhibit B hereto, evidencing the assignment of this Warrant to the Purchaser
together with any documentation required pursuant to Section 6(a) hereof; and
(iv) a check payable to the order of the
Company in an amount equal to the product of the Exercise Price multiplied by
the number of shares of Common Stock being purchased upon such exercise.
(b) As soon as practicable after the exercise of this
Warrant in full or in part, and in any event within ten (10) days after the
Exercise Date, the Company at its expense will cause to be issued in the name of
and delivered to the Holder hereof, or as the Holder (upon payment by the Holder
of any applicable transfer taxes) may direct, a certificate or certificates for
the number of fully paid and non-assessable shares of Common Stock (or Other
Securities) to which the Holder shall be entitled upon such exercise, together
with any other stock or other securities and property (including cash, where
applicable) to which the Holder is entitled upon exercise.
(c) Unless this Warrant has expired or all of the
purchase rights represented hereby have been exercised, the Company at its
expense will, within ten (10) days after the Exercise Date, issue and deliver to
or upon the order of the Holder hereof a new Warrant or Warrants of like tenor,
in the name of the Holder or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may request, calling in the aggregate on the face or
faces thereof for the number of shares of Common Stock remaining issuable under
this Warrant.
(d) The Common Stock (or Other Securities) issuable
upon the exercise of this Warrant will be deemed to have been issued to the
Purchaser on the Exercise Date, and the Purchaser will be deemed for all
purposes to have become the record holder of such Common Stock (or Other
Securities) on the Exercise Date.
(e) The issuance of certificates for shares of Common
Stock (or Other Securities) upon exercise of this Warrant will be made without
charge to the Holder or the Purchaser for any issuance tax in respect thereof or
any other cost incurred by the
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<PAGE> 4
Company in connection with such exercise and the related issuance of Shares of
Common Stock (or Other Securities).
2.3 Subscription Agreement. The Subscription Agreement will be
substantially in the form set forth in Exhibit A hereto, except that if the
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant are not to be issued in the name of the Holder hereof, the Subscription
Agreement will also state the name of the Person to whom the certificates for
the shares of Common Stock (or Other Securities) are to be issued, and if the
number of shares of Common Stock (or Other Securities) to be issued does not
include all the shares of Common Stock (or Other Securities) issuable hereunder,
it will also state the name of the Person to whom a new Warrant for the
unexercised portion of the rights hereunder is to be delivered.
2.4 Fractional Shares. If a fractional share of Common Stock
would, but for the provisions of Section 2.1 hereof, be issuable upon exercise
of the rights represented by this Warrant, the Company will, within ten (10)
days after the Exercise Date, deliver to the Purchaser a check payable to the
Purchaser in lieu of such fractional share, in an amount equal to the Market
Price of such fractional share as of the close of business on the Exercise Date.
3. Adjustments; Cancellation.
3.1 Stock Splits, Etc. If the Company shall at any time after
the Issue Date subdivide its outstanding Common Stock or Other Securities, by
split-up or otherwise, or combine its outstanding Common Stock or Other
Securities, or issue additional shares of its capital stock in payment of a
stock dividend in respect of its Common Stock or Other Securities, the number of
shares issuable on the exercise of the unexercised portion of this Warrant shall
forthwith be proportionately increased in the case of a subdivision or stock
dividend, or proportionately decreased in the case of combination, and the
Exercise Price then applicable to shares covered by the unexercised portion of
this Warrant shall forthwith be proportionately decreased in the case of a
subdivision or stock dividend, or proportionately increased in the case of
combination.
3.2 Reclassification, Reorganization, Etc. In case of any
reclassification, capital reorganization or change of the outstanding Common
Stock or Other Securities (other than as a result of a subdivision, combination
or stock dividend), then, as a condition of such reclassification,
reorganization or change, lawful provision shall be made so that the Holder of
this Warrant shall have the right at any time prior to the expiration of this
Warrant to purchase, at a total price not to exceed that payable
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<PAGE> 5
upon the exercise of the unexercised portion of this Warrant, the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, reorganization or change by a holder of the number of shares
of Common Stock or Other Securities of the Company as to which this Warrant was
exercisable immediately prior to such reclassification, reorganization or
change, and in any such case appropriate provision shall be made with respect to
the rights and interests of the Holder of this Warrant to the end that the
provisions hereof (including, without limitation, provisions for the adjustment
of the Exercise Price and of the number of shares purchasable upon exercise of
this Warrant) shall thereafter be applicable in relation to any shares of stock,
and other securities and property, thereafter deliverable upon exercise hereof.
Notwithstanding the foregoing, in the event that the Company is merged into or
consolidated with another Person, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing fifty percent (50%) of the voting power of
the Company, or in case of any sale or conveyance to one or more Persons of the
property of the Company as an entirety or substantially as an entirety, the
Company may terminate this Warrant by giving the Holder hereof written notice
thereof. Such notice shall specify the date (at least thirty (30) days
subsequent to the date on which notice is given) on which, at 3:00 P.M., Boston,
Massachusetts time, this Warrant shall terminate. Notwithstanding any such
notice, this Warrant shall remain exercisable, and otherwise in full force and
effect, until such time of termination.
3.3 Dividends. In case the Company shall, at any time or from
time to time after the Issue Date, pay any dividend or make any other
distribution upon its Common Stock (or Other Securities) payable in cash,
property or securities of a corporation other than the Company, then forthwith
upon the payment of such dividend, or the making of such other distribution, as
the case may be, the Exercise Price then in effect shall be reduced by the
amount of such dividend or other distribution in respect of each outstanding
share of Common Stock (or Other Securities). The Board of Directors of the
Company shall determine the fair value of any dividend or other distribution
made upon Common Stock of the Company payable in property or securities of a
corporation other than the Company.
3.4 Adjustment for Issue of Stock at Less than Exercise Price.
In case the Company shall, at any time or from time to time after the Issue
Date, issue or agree to issue by warrants, convertible securities, stock options
or otherwise, any of its Common Stock or Other Securities, including treasury
shares, (other than any shares issued in transactions to which Section 3.1 or
3.2
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<PAGE> 6
of this Warrant applies), for a consideration per share less than the Exercise
Price per share in effect immediately prior to the time of such issue or sale,
then forthwith upon such issue or sale, or agreement to issue or sell, said
Exercise Price shall be reduced to a price (calculated to the nearest cent)
determined by dividing (x) an amount equal to (A) the product obtained by
multiplying the number of shares of the Company's Common Stock outstanding (or
then deemed to be outstanding as herein provided) immediately prior to such
issue by the Exercise Price in effect at such time plus (B) the consideration
received by the Company upon such issue by (y) the number of shares of the
Company's Common Stock outstanding (or then deemed to be outstanding as herein
provided) immediately after such issue. Whenever the Exercise Price is adjusted
as provided in this Section 3.4, the aggregate number of shares of Common Stock
(or Other Securities) which the holder of this Warrant shall thereafter be
entitled to purchase at such adjusted Exercise Price shall be increased to the
number of shares determined by multiplying the number of shares of Common Stock
(or Other Securities) issuable upon exercise of this Warrant immediately prior
to such adjustment by the Exercise Price in effect immediately prior to such
adjustment, and dividing the product so obtained by such adjusted Exercise
Price. For the purposes of this Section 3.4, the number of shares of Common
Stock (or Other Securities) deemed to be outstanding at any given time shall
exclude shares in the treasury of the Company but shall include all shares
issuable or to become issuable under any agreements, warrants (including this
Warrant), convertible securities, stock options, similar rights or otherwise
(hereinafter in this Section 3.4 referred to as "Options"). Notwithstanding
anything contained herein to the contrary, the provisions of this Section 3.4
shall not apply with respect to options granted to any management or other key
employee of the Company in a compensatory or incentive transaction or otherwise
pursuant to a stock option plan (or with respect to the issuance of any Common
Stock or Other Securities upon the exercise of such options). The Board of
Directors of the Company shall determine the fair value of the amount of
consideration other than money received by the Company upon the issue by it of
any of its securities. Such Board shall, in case any Common Stock (or Other
Securities) or Options for the purchase thereof are issued with other stock,
securities or assets of the Company, determine what part of the consideration
received therefor is applicable to the issue of the Common Stock (or Other
Securities) or Options for the purchase thereof. If, as provided herein, the
Exercise Price is adjusted as a consequence of the Company's issuance of
Options, no further adjustment of the Exercise price shall be made upon the
subsequent issuance of Common Stock (or Other Securities) upon the exercise of
such Options. To the extent that Options expire without having been exercised,
the Exercise Price computed upon their issuance, and any subsequent adjustments
based thereon, shall, upon such expiration, be
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<PAGE> 7
recomputed to take into account only the shares of Common Stock (or Other
Securities) actually issued upon the exercise of such Options. In any such
recomputation, the consideration applicable to the shares of Common Stock (or
Other Securities) issued shall be the aggregate consideration which was received
by the Company upon the issuance of such Options, whether or not exercised, plus
the additional consideration actually received by the Company upon the exercise
thereof. No recomputation shall have the effect of increasing the Exercise Price
by an amount in excess of the adjustment thereof made in respect of the issuance
of the expired Options.
3.5 Certificate of Adjustment. Whenever the Exercise Price or
the number of shares issuable hereunder is adjusted, as herein provided, the
Company shall promptly deliver to the registered Holder of this Warrant a
certificate of the Treasurer of the Company, which certificate shall state (i)
the Exercise Price and the number of shares of Common Stock (or Other
Securities) issuable hereunder after such adjustment, (ii) the facts requiring
such adjustment, and (iii) the method of calculation for such adjustment and
increase or decrease.
3.6 Small Adjustments. No adjustment in the Exercise Price
shall be required unless such adjustment would require an increase or decrease
in the Exercise Price of at least one percent; provided, however, that any
adjustments which by reason of this Section 3.5 are not required to be made
immediately shall be carried forward and taken into account at the time of
exercise of this Warrant or any subsequent adjustment in the Exercise Price
which, singly or in combination with any adjustment carried forward, is required
to be made under Sections 3.1, 3.2, 3.3 or 3.4.
4. No Dilution or Impairment. The Company will not, by amendment of its
corporate charter or By-Laws or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all action as may be
necessary or appropriate in order to protect the rights of the Holder of this
Warrant against dilution, or other impairment. Without limiting the generality
of the foregoing, the Company (a) will not permit the par value of any shares of
Stock (or Other Securities) receivable upon the exercise of this Warrant to
exceed the amount payable therefor upon such exercise of this Warrant to exceed
the amount payable therefor upon such exercise, and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue
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<PAGE> 8
fully paid and non-assessable shares of Common Stock (or Other Securities) upon
the exercise of this Warrant.
5. Reservation of Stock, etc., Issuable on Exercise of Warrant. The
Company will at all times reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable upon the exercise of this Warrant.
6. Purchase Rights. If at any time the Company grants, issues or sells
any rights or options to subscribe for or to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (or Other Securities) (the "Purchase Rights"), then the Holder of
this Warrant will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such Holder could have
acquired if such Holder had held the number of shares of Common Stock (or Other
Securities) acquirable upon exercise of this Warrant had this Warrant been fully
exercised immediately prior to the date on which a record was taken for the
grant, issuance or sale of such Purchase Rights, or, if no such record was
taken, the date as of which the record holders of Common Stock (or Other
Securities) were determined for the grant, issuance or sale of such Purchase
Rights.
7. Disposition of This Warrant, Common Stock, Etc.
(a) The Holder of this Warrant and any transferee hereof or of
the Common Stock (or Other Securities) with respect to which this Warrant may be
exercisable, by their acceptance hereof, hereby understand and agree that this
Warrant and the Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable have not been registered under the Securities Act of
1933, as amended (the "Act"), and may not be sold, pledged, hypothecated,
donated, or otherwise transferred (whether or not for consideration) without an
effective registration statement under the Act or an opinion satisfactory to the
Company of counsel satisfactory to the Company and/or submission to the Company
of such other evidence as may be satisfactory to counsel to the Company, in each
such case, to the effect that any such transfer shall not be in violation of the
Act. It shall be a condition to the transfer of this Warrant that any transferee
thereof deliver to the Company its written agreement to accept and be bound by
all of the terms and conditions of this Warrant.
(b) The stock certificates of the Company that will evidence
the shares of Common Stock (or Other Securities) with respect to which this
Warrant may be exercisable will be imprinted with a conspicuous legend in
substantially the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
SATISFACTORY TO THE COMPANY OF COUNSEL SATISFACTORY TO THE COMPANY
AND/OR SUBMISSION TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE
SATISFACTORY TO COUNSEL TO THE COMPANY, IN EACH SUCH CASE, TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT."
provided, however, that, if the shares of Common Stock (or Other Securities)
with respect to which this Warrant has been exercised are registered in
accordance with the provisions of the Act by the date contemplated by Section
39(b) of that certain Third Amendment to Loan Agreement of even date herewith,
any stock certificates of the Company issued in connection herewith and bearing
the foregoing legend will, upon written request of the Holder, be replaced with
a certificate(s) not bearing the foregoing legend.
8. Rights and Obligations of Warrant Holder. The Holder of this Warrant
shall not, by virtue hereof, be entitled to any voting rights or other rights as
a stockholder of the Company. No provision of this Warrant, in the absence of
affirmative actions by the Holder to purchase Common Stock (or Other Securities)
of the Company by exercising this Warrant, and no enumeration in this Warrant of
the rights or privileges of the Holder, will give rise to any liability of such
Holder for the Exercise Price of Common Stock (or Other Securities) acquirable
by exercise hereof or as a stockholder of the Company.
9. Transfer of Warrants. Subject to compliance with the restrictions on
transfer applicable to this Warrant referred to in Section 7 hereof, this
Warrant and all rights hereunder are transferable, in whole or in part, without
charge to the registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in substantially the form attached hereto as Exhibit B), to
the Company, and the Company at its expense will issue and deliver to or upon
the order of the Holder hereof a new Warrant or Warrants in such denomination or
denominations as may be requested, but otherwise of like tenor, in the name of
the Holder or as the Holder (upon payment of any applicable transfer taxes) may
direct.
9. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company
9
<PAGE> 10
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
10. Company Records. Until this Warrant is transferred on the
books of the Company, the Company may treat the registered Holder
hereof as the absolute owner hereof for all purposes, notwithstanding any
notice to the contrary.
11. Miscellaneous.
11.1 Notices. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class mail,
postage prepaid, to such address as may have been furnished to the Company in
writing by such Holder, or, until an address is so furnished, to and at the
address of the last Holder of this Warrant who has so furnished an address to
the Company. All communications from the Holder of this Warrant to the Company
shall be mailed by first class mail, postage prepaid, to the Company at 210
Boylston Street, Chestnut Hill, Massachusetts 02167, or such other address as
may have been furnished to the Holder in writing by the Company.
11.2 Amendment and Waiver. Except as otherwise provided
herein, this Warrant and any term hereof may be amended, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such amendment, waiver, discharge or termination is sought.
11.3 Governing Law; Descriptive Headings. This Warrant shall
be construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect any of the terms hereof.
Dated: October 18, 1996
SAFETY 1ST, INC.
By:____________________________________
Michael Lerner, President
10
<PAGE> 11
EXHIBIT A
SUBSCRIPTION AGREEMENT
[To be signed only upon exercise of Warrant]
To: Safety 1st, Inc. Date: _________________
The undersigned, the Holder of the within Warrant, pursuant to the
provisions set forth in the within Warrant, hereby irrevocably elects to
exercise the purchase rights represented by such Warrant for, and agrees to
subscribe for and purchase thereunder, __________ shares of the Common Stock (or
Other Securities) covered by such Warrant and herewith makes payment of
$________ therefor, and requests that the certificates for such shares be issued
in the name of, and delivered to, ________________, whose address is
__________________________________. If said number of shares is less than all
the shares covered by such Warrant, a new Warrant shall be registered in the
name of the undersigned and delivered to the address stated below.
Signature:________________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant or on the form of
Assignment attached as Exhibit B
thereto.)
Address: ________________________________________
________________________________________
11
<PAGE> 12
EXHIBIT B
ASSIGNMENT
[To be signed only upon transfer of Warrant]
For value received, the undersigned hereby sells, assigns and transfers
all of the rights of the undersigned under the within Warrant with respect to
the number of shares of the Common Stock (or Other Securities) covered thereby
set forth below, unto:
Name of Assignee Address No. of Shares
Dated: __________________ Signature:_______________________________________
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant.)
Address: _______________________________________
_______________________________________
12
<PAGE> 1
EXHIBIT 10.15
SAFETY 1ST, INC.
1996 EMPLOYEE AND DIRECTOR STOCK OPTION PLAN
1. PURPOSE
The purpose of this Stock Option Plan (the "Plan") is to advance the
interests of Safety 1st, Inc. (the "Company") by enhancing its ability to
attract and retain employees, directors, advisors and consultants of the Company
and its subsidiaries through ownership of shares of the Company's common stock,
$.01 par value per share ("Stock").
The Plan is intended to accomplish these goals by enabling the Company to
grant incentive stock options ("Incentive Stock Options"), as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and options
that do not qualify as Incentive Stock Options ("Nonstatutory Stock
Options")(Incentive Stock Options and Nonstatutory Stock Options are hereafter
individually referred to as an "Option" and collectively referred to as
"Options").
2. ADMINISTRATION
The Plan will be administered by the Company's Board of Directors (the
"Board"). The Board may, in its discretion, delegate some or all of its powers
with respect to the Plan to a committee (the "Committee"), in which event all
references (as appropriate) to the Board hereunder shall be deemed to refer to
the Committee. The Committee, if one is appointed, shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members.
The Board will have authority, not inconsistent with the express provisions
of the Plan and in addition to other authority granted under the Plan, to (a)
grant Options at such time or times as it may choose; (b) determine the size of
each Option, including
<PAGE> 2
the number of shares of Stock subject to the Option; (c) determine the terms and
conditions of each Option; (d) waive compliance by a Participant (as defined
below) with any obligations to be performed by the Participant under an Option
and waive any term or condition of an Option; (e) amend or cancel an existing
Option in whole or in part (and if an Option is canceled, grant another Option
in its place on such terms as the Board shall specify), except that the Board
may not, without the consent of the holder of an Option, take any action under
this clause with respect to such Option if such action would adversely affect
the rights of such holder; (f) prescribe the form or forms of instruments that
are required or deemed appropriate under the Plan, including any written notices
and elections required of Participants, and change such forms from time to time;
(g) adopt, amend and rescind rules and regulations for the administration of the
Plan; and (h) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Board, and all other determinations and
actions of the Board made or taken under authority granted by any provision of
the Plan, will be conclusive and will bind all parties. Nothing in this Section
shall be construed as limiting the power of the Board to make adjustments under
Section 7.3 or Section 8.6.
2
<PAGE> 3
3. EFFECTIVE DATE AND TERM OF PLAN
The Plan will become effective upon its adoption by the Company's full
Board of Directors (the "Effective Date"), provided that the Company's
stockholders shall approve the Plan within twelve (12) months after the
Effective Date. Options may be granted prior to stockholder approval provided
that the Options will be subject to such approval and will not be exercisable
until such approval is granted. If the Company's stockholders do not approve the
Plan within the 12-month period, the Plan and all Options granted under the Plan
shall terminate and be of no further force or effect.
Unless earlier terminated as a result of the failure of the Company's
stockholders to approve the Plan as provided above, the Plan shall terminate (i)
when the total amount of Stock with respect to which Options may be granted
shall have been issued upon the exercise of Options, (ii) by action of the Board
pursuant to Section 9 hereof, or (iii) ten (10) years after the Effective Date,
whichever shall occur first.
No Options may be granted under the Plan after its termination, but Options
previously granted may extend beyond that date.
4. SHARES SUBJECT TO THE PLAN
Subject to the adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be five
hundred thousand (500,000). If any Option terminates or expires without having
been exercised in full, the number of shares of Stock as to which such Option
was not exercised will be available for future grants.
Stock delivered under the Plan may be either authorized but unissued Stock
or previously issued Stock acquired by the Company and held in treasury. No
fractional shares of Stock will be delivered under the Plan.
3
<PAGE> 4
5. ELIGIBILITY AND PARTICIPATION
Employees ("Employees"), directors, advisors and consultants of the Company
and its subsidiaries shall be eligible to receive Options and participate under
the Plan ("Participants"), provided that Incentive Stock Options may only be
granted to employees and to directors who are also employees. A "subsidiary" for
purposes of the Plan means any corporation in which the Company owns, directly
or indirectly, stock possessing 50% or more of the total combined voting power
of all classes of stock, as more particularly defined in Section 424(f) of the
Code.
6. GRANT OF OPTIONS
6.1. NATURE OF OPTIONS.
An Option is an agreement entitling the recipient on exercise thereof to
purchase Stock at a specified exercise price. Both Incentive Stock Options and
Nonstatutory Stock Options may be granted under the Plan.
6.2. EXERCISE PRICE.
The exercise price of an Option will be determined by the Board subject to
the following:
(a) The exercise price of an Incentive Stock Option shall not be less
than 100% (110% in the case of an Incentive Stock Option granted to a
ten-percent shareholder) of the fair market value of the Stock subject to
the Option, determined as of the time the Option is granted. A "ten-percent
shareholder" is any person who at the time of grant owns, directly or
indirectly, or is deemed to own by reason of the attribution rules of
Section 424(d) of the Code, stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of any of
its parents or subsidiaries.
(b) In no case may the exercise price paid for Stock which is part of
an original issue of authorized Stock be less than the par value per share
of the Stock.
4
<PAGE> 5
(c) The Board may reduce the exercise price of an Option at any time
after the time of grant, but in the case of an Option originally awarded as
an Incentive Stock Option, only with the consent of the Participant.
6.3. DURATION OF OPTIONS.
The latest date on which an Option may be exercised will be the tenth
anniversary (fifth anniversary, in the case of an Incentive Stock Option granted
to a ten-percent shareholder) of the day immediately preceding the date the
Option was granted, or such earlier date as may have been specified by the Board
at the time the Option was granted.
6.4. EXERCISE OF OPTIONS.
An Option will become exercisable at such time or times, and on such
conditions, as the Board may specify. The Board may at any time accelerate the
time at which all or any part of the Option may be exercised. Any exercise of an
Option must be in writing, signed by the proper person and delivered or mailed
to the Company, accompanied by (a) any documents required by the Board and (b)
payment in full in accordance with Section 6.7 below for the number of shares
for which the Option is exercised.
6.5. OPTIONS TO PERSONS SUBJECT TO SECTION 16.
The Board may take any action it deems necessary to comply with Section 16
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any one or more of the following actions to provide that Options
granted to an executive officer, director or beneficial owner of more than ten
percent (10%) of the Company's Stock (a "Section 16 Insider") shall be exempt
under Section 16(b) of the Exchange Act:
(a) The Board may restrict the shares of Stock issuable upon exercise
of an Option by a Section 16 Insider by providing that such shares may not be
sold or transferred (except that such shares may be issued upon exercise of the
Option) for a period of six (6) months following the grant of such Option;
and/or
(b) The Board may require that the grant of an Option to a Section 16
Insider be approved by the Company's full Board of
5
<PAGE> 6
Directors or a committee of the Board of Directors composed solely of two or
more Non-Employee Directors, as such term is defined in Section 16b-3 of the
Rules promulgated under Section 16 of the Exchange Act.
6.6. $100,000 LIMITATION.
To the extent that the aggregate fair market value of stock with respect to
which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under the Plan and all other plans of the
Company and all parents and subsidiaries of the Company) exceeds $100,000, such
Options shall be deemed Nonstatutory Stock Options.
6.7. PAYMENT FOR STOCK.
Stock purchased on exercise of an Option must be paid for as follows:
(a) By cash or check (acceptable to the Company in accordance with
guidelines established for this purpose), bank draft or money order payable to
the order of the Company; or
(b) If so permitted by the instrument evidencing the Option (or in the
case of an Option which is not an Incentive Stock Option, by the Board at or
after grant of the Option) any one or more of the following:
(1) by delivery of shares of Stock which have been outstanding
for at least six (6) months (unless the Board expressly
approves a shorter period) and which have a fair market
value on the last business day preceding the date of
exercise equal to the exercise price;
(2) by delivery of a promissory note of the Participant to the
Company, payable on such terms as are specified by the
Board;
(3) by delivery of an unconditional and irrevocable undertaking
by a broker to deliver promptly to the Company sufficient
funds to pay the exercise price;
6
<PAGE> 7
(4) by the withholding of shares of Stock otherwise deliverable
upon exercise which have a fair market value on the date of
exercise at least equal to the exercise price; or
(5) by any combination of the permissible forms of payment;
provided, that if the stock delivered upon exercise of the
Option is an original issue of authorized Stock, at least so
much of the exercise price as represents the par value of
such Stock must be paid other than by the Option holder's
personal check or promissory note.
6.8. DISCRETIONARY PAYMENTS.
If the market price of shares of Stock subject to an Option exceeds the
exercise price of the Option at the time of its exercise, the Board may cancel
the Option and cause the Company to pay in cash or in shares of Stock (at a
price per share equal to the fair market value per share) to the person
exercising the Option an amount equal to the difference between the fair market
value of the Stock which would have been purchased pursuant to the exercise
(determined on the date the Option is cancelled) and the aggregate exercise
price which would have been paid. The Board may exercise its discretion to take
such action only if it has received a written request from the person exercising
the Option, but such a request will not be binding on the Board.
6.9. NOTICE TO EMPLOYEE AND OPTION AGREEMENT.
Upon granting an Option, the Board shall notify the person to whom the
Option shall be granted and shall deliver to such person a written instrument in
accordance with Section 8.1. An award of an Option shall immediately expire if
the person to whom the Board has decided to grant an Option shall not have (and
no Option shall be exercisable unless and until such person has) signed the
written instrument and returned it to the Company within thirty days after it
has been delivered to such individual. The written instrument may contain such
provisions that are consistent with this Plan as the Board may, in its
discretion, determine.
7
<PAGE> 8
7. EVENTS AFFECTING OPTIONS
7.1. DEATH.
Upon the death of a Participant, all Options held by the Participant
immediately prior to death, to the extent then exercisable, may be exercised by
the Participant's executor or administrator or the person or persons to whom the
Option is transferred by will or the applicable laws of descent and
distribution, at any time within the one (1) year period ending with the first
anniversary of the Participant's death (or such shorter or longer period as the
Board may determine), and shall thereupon terminate. In no event, however, shall
an Option remain exercisable beyond the latest date on which it could have been
exercised without regard to this Section 7. Except as otherwise determined by
the Board, all Options held by a Participant immediately prior to death that are
not then exercisable shall terminate at death.
7.2. TERMINATION OF SERVICE (OTHER THAN BY DEATH).
If a Participant who is an Employee and/or a director ceases to be an
Employee and/or a director for any reason other than death, or if there is a
termination (other than by reason of death) of the relationship in respect of
which a consultant or advisor was granted an Option hereunder (such termination
of the employment or other relationship being hereinafter referred to as a
"Status Change"), except as otherwise determined by the Board, all Options
held by the Participant that were not exercisable immediately prior to the
Status Change shall terminate at the time of the Status Change. Any Options that
were exercisable immediately prior to the Status Change will continue to be
exercisable for a period of three months (or such shorter or longer period as
the Board may determine), and shall thereupon terminate, unless the Option
provides by its terms for immediate termination in the event of a Status Change
or unless the Status Change results from a discharge for cause which in the
opinion of the Board casts such discredit on the Participant as to justify
immediate termination of the Option. In no event, however, shall an Option
remain exercisable beyond the latest date on which it could have been exercised
without regard to this Section 7. For purposes of this Section, in the case of a
Participant who is an Employee, a Status Change shall not be deemed to have
resulted by reason of (i) a sick leave or other bona fide
8
<PAGE> 9
leave of absence approved for purposes of the Plan by the Board, so long as the
Employee's right to reemployment is guaranteed either by statute or by contract,
or (ii) a transfer of employment between the Company and a subsidiary or
affiliate, or to the employment of a corporation (or a parent or subsidiary
corporation of such corporation) issuing or assuming an option in a transaction
to which Section 424(a) of the Code applies.
7.3. CERTAIN CORPORATE TRANSACTIONS.
In the event of a consolidation or merger in which the Company is not the
surviving corporation or which results in the acquisition of substantially all
of the Company's outstanding Stock by a single person or entity or by a group of
persons and/or entities acting in concert or a consolidation or a merger where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such consolidation or merger do not own after such
consolidation or merger shares representing fifty percent (50%) of the voting
power of the Company, or in the event of the sale or transfer of substantially
all the Company's assets or a dissolution or liquidation of the Company (a
"covered transaction"), all outstanding Options will terminate as of the
effective date of the covered transaction, and the following rules shall apply:
(a) The Board may in its sole discretion, by providing therefor at the time
of the grant of the Option or, subject to Sections 7.3 (b) and (c) below, by
taking appropriate action at any other time prior to the effective date of the
covered transaction, make outstanding Options exercisable in full.
(b) If an outstanding Option is subject to performance or other conditions
(other than conditions relating to the mere passage of time and continued
employment) which will not have been satisfied at the time of the covered
transaction, the Board may in its sole discretion remove such conditions. If the
Board does not do so, however, such Option will terminate as of the date of the
covered transaction notwithstanding Section 7.3(a) above.
(c) With respect to an outstanding Option held by a Participant who,
following the covered transaction, will be employed by or otherwise providing
services to a corporation which is a surviving or acquiring corporation in such
transaction or an
9
<PAGE> 10
affiliate of such a corporation, the Board may, in lieu of the action described
in Section 7.3(a) above (but subject to prior contractual obligations), arrange
to have such surviving or acquiring corporation or affiliate grant to the
Participant a replacement option which, in the judgment of the Board, is
substantially equivalent to the Option.
8. GENERAL PROVISIONS
8.1. DOCUMENTATION OF OPTIONS.
Options will be evidenced by such written instruments, if any, as may be
prescribed by the Board from time to time. Such instruments may be in the form
of agreements to be executed by both the Participant and the Company, or
certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.
8.2. RIGHTS AS A STOCKHOLDER, DIVIDEND EQUIVALENTS.
Except as specifically provided by the Plan, the receipt of an Option will
not give a Participant rights as a stockholder. A Participant will obtain
stockholder rights, subject to any limitations imposed by the Plan or the
instrument evidencing the Option, only upon actual receipt of Stock. However,
the Board may, on such conditions as it deems appropriate, provide that a
Participant will receive a benefit in lieu of cash dividends that would have
been payable on any or all Stock subject to the Participant's Option had such
Stock been outstanding. Without limitation, the Board may provide for payment to
the Participant of amounts representing such dividends, either currently or in
the future, or for the investment of such amounts on behalf of the Participant.
8.3. CONDITIONS ON DELIVERY OF STOCK.
The Company will not be obligated to deliver any shares of Stock pursuant
to the Plan or to remove any restrictions from shares previously delivered under
the Plan (a) until all conditions of the Option have been satisfied or removed,
(b) until, in the opinion of the Company's counsel, all applicable federal and
state laws and regulations have been complied with, including, without
10
<PAGE> 11
limitation, the Securities Act of 1933, as amended (the "Securities Act"), and
the Exchange Act, (c) if the outstanding Stock is at the time listed on any
stock exchange, until the shares to be delivered have been listed or authorized
to be listed on such exchange upon official notice of issuance, and (d) until
all other legal matters in connection with the issuance and delivery of such
shares have been approved by the Company's counsel. If the sale of Stock has not
been registered under the Securities Act, the Company may require, as a
condition to exercise of the Option, such representations or agreements as
counsel for the Company may consider appropriate to avoid violation of the
Securities Act and may require that the certificates evidencing such Stock bear
an appropriate legend restricting transfer.
If an Option is exercised by the Participant's legal representative, the
Company will be under no obligation to deliver Stock pursuant to such exercise
until the Company is satisfied as to the authority of such representative.
8.4. TAX WITHHOLDING.
The Board will have the right to require a Participant receiving an Option
or Stock underlying an Option (or other appropriate person) to remit to the
Company an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements") arising in connection
therewith, or to make other arrangements satisfactory to the Board. If and to
the extent that such withholding is required, the Board may permit a Participant
or such other person to elect at such time and in such manner as the Board
provides to have the Company hold back from the shares to be delivered, or to
deliver to the Company, Stock having a value calculated to satisfy the
withholding requirement.
If at the time an Incentive Stock Option is exercised the Board determines
that the Company could be liable for withholding requirements with respect to a
disposition of the Stock received upon exercise, the Board may require as a
condition of exercise that the person exercising the Incentive Stock Option
agree (a) to inform the Company promptly of any disposition (within the meaning
of Section 424(c) of the Code) of Stock received upon exercise, and (b) to give
such security as the Board deems adequate to meet the potential liability of the
Company for the withholding requirements and to augment such security from time
to time in any amount
11
<PAGE> 12
reasonably deemed necessary by the Board to preserve the adequacy of such
security.
8.5. NONTRANSFERABILITY OF OPTIONS.
Options may not be transferred by a Participant other than by will or by
the laws of descent and distribution, and are exercisable, during a
Participant's lifetime, only by such Participant.
8.6. ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or other change in the Company's capitalization, or other
increase or reduction of the number of shares of Stock outstanding without
receiving compensation therefore in money, services or property, after the
effective date of the Plan, the Board will make any appropriate adjustments to
the maximum number of shares that may be delivered under the Plan under Section
4 above.
(b) In any event referred to in Section 8.6(a), the Board will also make
any appropriate adjustments to the number and kind of shares of stock or
securities subject to Options then outstanding or subsequently granted, any
exercise prices relating to Options and any other provision of Options affected
by such change. The Board may also make such adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Board that adjustments are
appropriate to avoid distortion in the operation of the Plan.
8.7. EMPLOYMENT RIGHTS, ETC.
Neither the adoption of the Plan nor the grant of Options will confer upon
any person any right to continued retention by the Company or any subsidiary as
an Employee or otherwise, or affect in any way the right of the Company or any
subsidiary to terminate an employment, service or other relationship at any
time. Except as specifically provided by the Board in any particular case, the
loss of existing or potential profit in Options granted under the Plan will not
constitute an element of damages in the event of termination of an employment,
service or other relationship even if
12
<PAGE> 13
the termination is in violation of an obligation of the Company to the
Participant.
9. EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
Neither adoption of the Plan nor the grant of Options to a Participant will
affect the Company's right to grant to such Participant options that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock may be issued to
Employees.
The Board may at any time or times amend the Plan or any outstanding Option
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Options, provided that (except to
the extent expressly required or permitted by the Plan) no such action will,
without the approval of the stockholders of the Company, effectuate a change for
which stockholder approval is required in order for the Plan to continue to
qualify to grant Incentive Stock Options under Section 422 of the Code.
* * *
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<PAGE> 1
EXHIBIT 10.16
SAFETY 1ST, INC.
1996 NONQUALIFIED STOCK OPTION PLAN
1. Purpose of the Plan.
-------------------
This 1996 Nonqualified Stock Option Plan (the "Plan") of Safety 1st,
Inc., a Massachusetts corporation (the "Company"), is designed to provide
additional incentive to present and future directors, employees and other
parties who may contribute to the success of the Company or its subsidiaries.
The Company intends that this purpose will be effected by the granting of stock
options (individually an "Option" and collectively "Options") under the Plan,
which will afford each recipient an opportunity to acquire a proprietary
interest or increase his, her or its existing proprietary interest in the
Company through the acquisition of shares of the Company's Common Stock, $.01
par value per share (the "Common Stock"). By encouraging stock ownership, the
Company seeks to attract and retain on a continuing basis relationships with
persons and entities of exceptional competence and seeks to furnish an added
incentive for them to increase their efforts on behalf of the Company.
2. Administration.
--------------
The Plan will be administered by the Company's Board of Directors (the
"Board"). The Board may, in its discretion, delegate some or all of its powers
with respect to the Plan to a committee (the "Committee"), in which event all
references (as appropriate) to the Board hereunder shall be deemed to refer to
the Committee. The Committee, if one is appointed, shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. All questions of interpretation and application of the Plan,
of Options granted hereunder and of the value of shares of Common Stock subject
to an Option, shall be subject to the determination of the Board, which
determination shall be final and binding.
<PAGE> 2
3. Nature of Options.
-----------------
The Options granted under the Plan will not qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
4. Option Shares
-------------
The stock subject to the Options and other provisions of the Plan shall
be the Common Stock. The total amount of the Common Stock with respect to which
Options may be granted shall not exceed in the aggregate five hundred thousand
(500,000) shares; provided, however, that the class and aggregate number of
shares which may be subject to Options granted hereunder shall be subject to
adjustment in accordance with the provisions of Section 17 hereof. Such shares
may be treasury shares or authorized but unissued shares. In the event that an
outstanding Option shall expire or terminate prior to exercise, the shares of
Common Stock allocable to the unexercised portion of such Option may again be
subject to an Option under the Plan.
5. Authority to Grant Options.
--------------------------
The Board may grant Options from time to time to such Participants (as
defined in Section 6 below) as it shall determine. Subject to any applicable
limitations set forth in the Plan or established from time to time by the Board,
the number of shares of Common Stock to be covered by an Option shall be as
determined by the Board.
6. Eligibility.
-----------
Options may be granted to directors, employees, advisors, consultants,
vendors, sales representatives, distributors, suppliers, business partners and
service providers of the Company and its subsidiaries, and others who may
contribute to the success of the Company or its subsidiaries ("Participants").
2
<PAGE> 3
7. Option Price.
------------
The price at which shares may be purchased pursuant to Options shall be
specified by the Board at the time the Option is granted.
8. Duration of Options.
-------------------
The Board in its discretion may provide that an Option shall be
exercisable during any specified period of time from the date such Option is
granted, but in no event shall such period of time be greater than ten years.
9. Amount Exercisable; Vesting of Shares Purchased; Repurchase of
--------------------------------------------------------------
Unvested Shares.
---------------
Each Option may be exercised, so long as it is valid and outstanding,
from time to time in part or as a whole, subject to any limitations with respect
to the number of shares for which the Option may be exercised at a particular
time and to such other conditions as the Board in its discretion may specify
upon granting the Option.
The Board may in its discretion provide upon the grant of an Option
hereunder that the Company shall have an option to repurchase, upon such terms
and conditions as determined by the Board, all or any number of shares purchased
upon exercise of such Option. The repurchase price per share payable by the
Company shall be such amount or be determined by such formula as is fixed by the
Board at the time the Option for the shares subject to repurchase is granted. In
the event the Board shall grant Options subject to the Company's repurchase
option, the certificates representing the shares purchased pursuant to such
Option shall carry a legend satisfactory to counsel for the Company referring to
the Company's repurchase option.
10. Options to Persons Subject to Section 16.
----------------------------------------
The Board may take any action it deems necessary to comply with Section
16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including any one or more of the following actions to provide that Options
granted to an executive officer, director or beneficial owner of more than ten
percent (10%) of the
3
<PAGE> 4
Company's Stock (a "Section 16 Insider") shall be exempt under Section 16(b) of
the Exchange Act:
(a) The Board may restrict the shares of Stock issuable upon
exercise of an Option by a Section 16 Insider by providing that such shares may
not be sold or transferred (except that such shares may be issued upon exercise
of the Option) for a period of six (6) months following the grant of such
Option; and/or
(b) The Board may require that the grant of an Option to a
Section 16 Insider be approved by the Company's full Board of Directors or a
committee of the Board of Directors composed solely of two or more Non-Employee
Directors, as such term is defined in Section 16b-3 of the Rules promulgated
under Section 16 of the Exchange Act.
11. Exercise of Options.
-------------------
Subject to the provisions of Section 13 hereof, Options shall be
exercised by the delivery of written notice to the Company setting forth the
number of shares with respect to which the Option is to be exercised, together
with
(a) Cash or check (acceptable to the Company in accordance
with guidelines established for this purpose), bank draft or money order payable
to the order of the Company; or
(b) If so permitted by the instrument evidencing the Option or
by the Board at or after grant of the Option, any one or more of the following:
(1) shares of Common Stock which have been outstanding
for at least six (6) months (unless the Board
expressly approves a shorter period) and which have
a fair market value on the last business day
preceding the date of exercise equal to the exercise
price;
(2) a promissory note of the Participant to the Company,
payable on such terms as are specified by the Board;
(3) an unconditional and irrevocable undertaking by a
broker to deliver promptly to the Company sufficient
funds to pay the exercise price;
4
<PAGE> 5
(4) the withholding of shares of Common Stock otherwise
deliverable upon exercise which have a fair market
value on the date of exercise at least equal to the
exercise price; or
(5) any combination of the permissible forms of payment.
As promptly as practicable after receipt of such written notification and
payment, the Company shall deliver to the Participant certificates for the
number of shares with respect to which such Option has been so exercised, issued
in the Participant's name; provided, however, that such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Participant, at the address specified pursuant to this Section 11.
The Board will have the right to require a Participant receiving an
Option or Common Stock underlying an Option (or other appropriate person) to
remit to the Company an amount sufficient to satisfy all federal, state and
local withholding tax requirements (the "withholding requirements") arising in
connection therewith, or to make other arrangements satisfactory to the Board.
If and to the extent that such withholding is required, the Board may permit a
Participant or such other person to elect at such time and in such manner as the
Board provides to have the Company hold back from the shares to be delivered, or
to deliver to the Company, Common Stock having a value calculated to satisfy the
withholding requirement.
12. Transferability of Options.
--------------------------
Options shall not be transferable by a Participant otherwise than by
will or under the laws of descent and distribution, and shall be exercisable,
during a Participant's lifetime, only by such Participant, unless otherwise
permitted by the Board.
13. Employment Relationship; Business Relationship.
----------------------------------------------
An employment relationship between the Company and a Participant shall be deemed
to exist during any period in which such Participant is employed by the Company.
A business relationship
5
<PAGE> 6
between the Company and a Participant shall be deemed to exist during any period
in which such Participant renders services as a consultant or on an independent
contractor basis to the Company or is otherwise in a business relationship with
the Company.
14. Requirements of Law.
-------------------
The Company shall not be required to sell or issue any shares under an
Option if the issuance of such shares shall constitute a violation by the
Participant or by the Company of any provision of any law, regulation or order
of any governmental authority. Without limiting the generality of the foregoing,
upon exercise of an Option, the Company shall not be required to issue such
shares unless the Board has received evidence satisfactory to it to the effect
that the holder of such Option will not transfer such shares except pursuant to
a registration statement in effect under the Securities Act of 1933, as now in
effect or hereafter amended (the "Securities Act"), and under the applicable
securities laws of any State, unless the Company has received an opinion of
counsel satisfactory to the Company, in form and substance satisfactory to the
Company, to the effect that such registration is not required. Any determination
in this connection by the Board shall be final, binding and conclusive. In the
event the shares issuable on exercise of an Option are not registered under the
Securities Act, the Company may imprint the following legend or any other legend
which counsel for the Company considers necessary or advisable to comply with
the Securities Act or other applicable laws:
"The shares of stock represented by this certificate have
not been registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or transferred
except upon such registration or upon receipt by the Corporation
of an opinion of counsel satisfactory to the Corporation, in form
and substance satisfactory to the Corporation, that registration
is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act; and in the event any
shares are so registered, the Company may remove any legend on certificates
representing such shares. The Company shall not be obligated to take any other
affirmative action
6
<PAGE> 7
in order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any other law, regulation or order of any governmental
authority.
15. No Rights as Stockholder.
------------------------
No Participant shall have rights as a stockholder with respect to
shares covered by an Option until the date of issuance of a stock certificate
for such shares; and, except as otherwise provided in Section 17 hereof, no
adjustment for dividends, or otherwise, shall be made if the record date
therefor is prior to the date of issuance of such certificate.
16. No Obligation to Create or Maintain Relationship.
------------------------------------------------
The granting of an Option shall not impose upon the Company any
obligation to employ or continue to employ, to retain the services of or to
continue to retain the services of, or to create a relationship with or maintain
a relationship with, any Participant; and the right of the Company to terminate
the employment or services of, or relationship with, a Participant shall not be
diminished or affected by reason of the fact that an Option has been granted to
such Participant.
17. Changes in the Company's Capital Structure.
------------------------------------------
The existence of outstanding Options shall not affect in any way the
right or power of the Company or its stockholders to make or authorize, without
limitation, any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of Common Stock, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of
7
<PAGE> 8
the Common Stock outstanding, without receiving compensation therefor in money,
services or property, then (i) the number, class, and per share price of shares
of stock subject to outstanding Options hereunder shall be appropriately
adjusted in such a manner as to entitle a Participant to receive upon exercise
of an Option, for the same aggregate cash consideration, the same total number
and class of shares as such Participant would have received as a result of the
event requiring the adjustment had such Participant exercised his, her or its
Option in full immediately prior to such event; and (ii) the number and class of
shares with respect to which Options may be granted under this Plan shall be
adjusted by substituting for the total number of shares of Common Stock then
reserved that number and class of shares of stock that would have been received
by the owner of an equal number of outstanding shares of Common Stock as the
result of the event requiring the adjustment.
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in which (i) the
Company shall be the surviving corporation, and (ii) the stockholders of the
Company immediately prior to such merger or consolidation own after such merger
or consolidation shares representing at least fifty percent (50%) of the voting
power of the Company, each holder of an outstanding Option shall, at no
additional cost, be entitled upon exercise of such Option to receive (subject to
any required action by stockholders) in lieu of the number of shares as to which
such Option shall then be so exercisable, the number and class of shares of
stock or other securities to which such holder would have been entitled pursuant
to the terms of the agreement of merger or consolidation if, immediately prior
to such merger or consolidation, such holder had been the holder of record of a
number of shares of Common Stock equal to the number of shares as to which such
Option shall be so exercised.
If the Company is merged into or consolidated with another corporation
under circumstances where the Company is not the surviving corporation, or if
there is a merger or consolidation where the Company is the surviving
corporation but the stockholders of the Company immediately prior to such merger
or consolidation do not own after such merger or consolidation shares
representing fifty percent (50%) of the voting power of the Company, or if the
Company is liquidated, or sells or otherwise disposes of substantially all its
assets to another corporation while unexercised Options remain outstanding under
the Plan, (i) subject
8
<PAGE> 9
to the provisions of clause (iii) below, after the effective date of such
merger, consolidation, liquidation, sale or disposition, as the case may be,
each holder of an outstanding Option shall be entitled, upon exercise of such
Option, to receive, in lieu of shares of Common Stock, shares of such stock or
other securities, cash or property as the holders of shares of Common Stock
received pursuant to the terms of the merger, consolidation, liquidation, sale
or disposition; (ii) the Board may accelerate the time for exercise of all
unexercised and unexpired Options to and after a date prior to the effective
date of such merger, consolidation, liquidation, sale or disposition, as the
case may be, specified by the Board; or (iii) all outstanding Options may be
canceled by the Board as of the effective date of any such merger,
consolidation, liquidation, sale or disposition provided that (x) notice of such
cancellation shall be given to each holder of an Option and (y) each holder of
an Option shall have the right to exercise such Option to the extent that the
same is then exercisable or, if the Board shall have accelerated the time for
exercise of all unexercised and unexpired Options, in full during the 30-day
period preceding the effective date of such merger, consolidation, liquidation,
sale or disposition.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock then
subject to outstanding Options.
18. Amendment or Termination of Plan.
--------------------------------
The Board may modify, revise or terminate the Plan at any time and from
time to time.
19. Written Agreement.
-----------------
Each Option granted hereunder shall be embodied in a written option
agreement which shall be subject to the terms and conditions prescribed above
and shall be signed by the President, any Vice President or the Treasurer of the
Company for and in the name and
9
<PAGE> 10
on behalf of the Company. Such an option agreement shall contain such other
provisions as the Board in its discretion shall deem advisable.
20. Effective Date and Duration of Plan.
-----------------------------------
The Plan shall become effective upon its adoption by the Board of
Directors (the "Effective Date"), provided that the Company's stockholders shall
approve the Plan within twelve (12) months after the Effective Date. Options may
be granted prior to stockholder approval provided that the Options will be
subject to such approval and will not be exercisable until such approval is
granted. If the Company's stockholders do not approve the Plan within the
12-month period, the Plan and all Options granted under the Plan shall terminate
and be of no further force or effect.
Unless earlier terminated as a result of the failure of the Company's
stockholders to approve the Plan as provided above, the Plan shall terminate (i)
when the total amount of the Common Stock with respect to which Options may be
granted shall have been issued upon the exercise of Options; (ii) by action of
the Board pursuant to Section 18 hereof; or (iii) ten (10) years after the
Effective Date, whichever shall first occur.
No Options may be granted under the Plan after the Plan's termination,
but Options previously granted may extend beyond that date.
* * *
10
<PAGE> 1
EXHIBIT 11
SAFETY 1ST, INC.
PRIMARY NET INCOME
PER SHARE AND FULLY DILUTED
NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
September 30
----------------------------
1995 1996
---------- ----------
<S> <C> <C>
PRIMARY NET INCOME PER SHARE
Net income available for common
shares and common stock equivalent
shares deemed to have a dilutive effect $1,838,634 $ 556,743
Primary net income per share $ .25 $ .08
SHARES USED IN COMPUTATION
Weighted average common shares
outstanding 7,133,119 7,155,616
Common stock equivalents - stock options 186,940 200,809
---------- ----------
Total 7,320,059 7,356,425
========== ==========
FULLY DILUTED NET INCOME PER SHARE
Net income available for common
shares and common stock equivalent
shares deemed to have a dilutive
effect $1,838,634 $ 556,743
Fully diluted net income per share $ .25 $ .08
SHARES USED IN COMPUTATION
Weighted average common shares
outstanding 7,133,119 7,155,616
Common stock equivalents - stock options 186,940 223,296
---------- ----------
Total 7,320,059 7,378,912
========== ==========
</TABLE>
Note: The net income per share computation presented in the condensed
statement of income in 1995 does not reflect common stock
equivalents, as the dilutive effect is less then 3%.
<PAGE> 2
EXHIBIT 11 Continued
SAFETY 1ST, INC.
PRIMARY NET INCOME
PER SHARE AND FULLY DILUTED
NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1995 1996
<S> <C> <C>
NET INCOME (LOSS) PER SHARE
Net income (loss) available for common shares
and common stock equivalent shares
deemed to have dilutive effect $5,700,717 $(5,932,326)
Primary net income (loss) per share $ .78 $ (.83)
SHARES USED IN COMPUTATION
Weighted average common shares outstanding 7,126,512 7,155,616
Common stock equivalents - stock options 220,864 --
---------- -----------
Total 7,347,376 7,155,616
========== ===========
FULLY DILUTED NET INCOME (LOSS) PER SHARE
Net income (loss) available for common shares and common stock equivalent
shares deemed to have a dilutive
effect $5,700,717 $(5,932,326)
Fully diluted net income per share $ .78 $ (.83)
SHARES USED IN COMPUTATION
Weighted average common shares
outstanding 7,133,119 7,155,616
Common stock equivalents - stock options 186,940 --
---------- -----------
Total 7,320,059 7,155,616
========== ===========
</TABLE>
Note: For the nine months ended September 30, 1995, the net income per
share computation presented in the condensed statement of income
does not reflect common stock equivalents, as the dilutive effect
is less then 3%.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from Safety 1st
Form 100 for the quarterly period ended September 30, 1996 and is qualified in
its entirety by reference to such Form 100.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 509,756
<SECURITIES> 0
<RECEIVABLES> 25,616,891
<ALLOWANCES> 3,229,639
<INVENTORY> 27,901,915
<CURRENT-ASSETS> 66,183,497
<PP&E> 31,627,722
<DEPRECIATION> 77,690,651
<TOTAL-ASSETS> 102,756,254
<CURRENT-LIABILITIES> 59,910,841
<BONDS> 0
0
0
<COMMON> 71,556
<OTHER-SE> 40,075,229
<TOTAL-LIABILITY-AND-EQUITY> 102,756,254
<SALES> 28,980,848
<TOTAL-REVENUES> 28,980,848
<CGS> 17,766,432
<TOTAL-COSTS> 17,766,432
<OTHER-EXPENSES> 9,501,871
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 815,836
<INCOME-PRETAX> 896,709
<INCOME-TAX> 339,966
<INCOME-CONTINUING> 556,743
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 556,743
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
