<PAGE>   1
                                                                    Exhibit 10.6

                        CREDIT AGREEMENT AMENDMENT NO. 3

                  THIS CREDIT AGREEMENT AMENDMENT NO. 3, dated as of July __30,
1998 (this "Amendment"), is made by and among Evenflo & Spalding Holdings
Corporation (formerly known as E&S Holdings Corporation), a company organized
under the laws of Delaware (the "Borrower"), the Lenders (as defined below) and
Bank of America National Trust & Savings Association ("Bank of America"), as the
administrative agent (the "Administrative Agent") for the Lenders.
                              W I T N E S S E T H:
                  WHEREAS, the Borrower, the various financial institutions
parties thereto from time to time (collectively, the "Lenders"), Bank of
America, as swing line lender, as fronting lender and as administrative agent
for the Lenders, Merrill Lynch Capital Corporation, as documentation agent for
the Lenders, and NationsBank N.A. South, as syndication agent for the Lenders,
have heretofore entered into that certain Credit Agreement, dated as of
September 30, 1996 (as amended by the First Amendment to Credit Agreement, dated
as of December 11, 1996 and the Second Amendment to Credit Agreement, dated as
of March 31, 1998, the "Existing Credit Agreement"); and

                  WHEREAS, the Borrower has requested, and the Lenders and the
Administrative Agent are willing, subject to the terms and conditions set forth
below, to amend the Existing Credit Agreement as provided below (the Existing
Credit Agreement, as amended pursuant to the terms of this Amendment, being
referred to as the "Amended Credit Agreement"); 

                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Borrower, the Lenders and the
Administrative Agent hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SUBPART 1.1. Certain Definitions. The following terms (whether
or not underscored) when used in this Amendment shall have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):

                  "Administrative Agent" is defined in the preamble.

                  "Amended Credit Agreement" is defined in the second recital.

                  "Amendment" is defined in the preamble.

                  "Amendment Effective Date Certificate" means the amendment
effective date certificate executed and delivered by the Borrower pursuant to
Subpart 3.15, substantially in
<PAGE>   2
the form of Annex I hereto.

                  "Bank of America" is defined in the preamble.

                  "Borrower" is defined in the preamble.

                  "E & S Capital Contribution Agreement" means that Capital
Contribution Agreement to be entered into between the Borrower and Strata
Associates, L.P., an entity organized by KKR, pursuant to which Strata
Associates L.P. will purchase newly issued preferred stock of the Borrower for
an aggregate cash purchase price of at least One Hundred Million Dollars
($100,000,000).

                  "Evenflo" means Evenflo Company, Inc.

                  "Evenflo Collateral" means all of the assets of Evenflo
subject to Liens created in favor of the Administrative Agent pursuant to the
Security Agreement.

                  "Evenflo Pledged Shares" means the shares of stock of Evenflo
pledged to the Administrative Agent pursuant to the Pledge Agreement.

                  "Evenflo Stock Purchase Agreement" means that Stock Purchase
Agreement to be entered into between the Borrower and/or one or more of its
Subsidiaries, one or more affiliates of KKR and certain additional investors,
pursuant to which the Borrower and/or one or more of its Subsidiaries will sell
at least fifty-one percent (51%) of the outstanding capital stock of Evenflo to
one or more affiliates of KKR and certain additional investors, for an aggregate
consideration value of $200,000,000 with $177,000,000 thereof constituting cash
proceeds to the Borrower and/or one or more of its Subsidiaries (the amount of
such cash proceeds, the "Evenflo Stock Purchase Proceeds Amount").

                  "Evenflo Stock Purchase Proceeds Amount" is defined in the
definition of Evenflo Stock Purchase Agreement.

                  "Existing Credit Agreement" is defined in the first recital.

                  "Lenders" is defined in the first recital.

                  "Security Agreement" means that certain Security Agreement,
dated as of March 31, 1998, among the Borrower, the Subsidiary Grantors parties
thereto and the Administrative Agent for the Lenders.

                  "Third Amendment Effective Date" is defined in Subpart 3.1.

                  SUBPART 1.2. Other Definitions. Terms for which meanings are
provided in
<PAGE>   3
the Amended Credit Agreement are, unless otherwise defined herein or the context
otherwise requires, used in this Amendment with such meanings.

                                   ARTICLE II

                                   AMENDMENTS

                  Effective on (and subject to the occurrence of) the Third
Amendment Effective Date, certain provisions of the Existing Credit Agreement
are hereby amended in accordance with this Article II; except expressly as so
amended by this Amendment, the Existing Credit Agreement shall continue in full
force and effect in accordance with its terms.

                  SUBPART 2.1 Amendments to Article I of the Existing Credit
Agreement. Article I of the Existing Credit Agreement ("Definitions") is amended
in accordance with Subparts 2.1.1 and 2.1.2.

                  SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement
("Certain Defined Terms") is amended by inserting in such Section the following
definitions in the appropriate alphabetical order:

                  "Consolidated Senior Debt" means, as of any date of
determination, Consolidated Total Debt as of such date minus all Indebtedness
otherwise included therein that is outstanding on such date under the Senior
Subordinated Indenture and all other Indebtedness expressly subordinated in all
respects pursuant to subordination provisions acceptable to the Agents.

                  "Designated Consolidated EBITDA" means, with respect to the
Borrower for any period, the sum for such period of (a) Consolidated Net Income
plus (b) to the extent deducted in arriving at such Consolidated Net Income, the
sum, without duplication, of (i) Consolidated Interest Expense and non-cash
interest expense, (ii) taxes computed on the basis of income, (iii) depreciation
expense, (iv) amortization expense, including amortization of deferred financing
fees, (v) any expenses or charges resulting from any equity offering or
incurrence of Indebtedness, (vi) the non-cash portion of any non-recurring or
restructuring (or other) charge or reserve and (vii) the cash portion of any
non-recurring or restructuring (or other) charge or reserve; provided, that for
any computation of such amount with respect to a Test Period ending on or after
March 31, 1999, the amount of any such cash portion shall not exceed $7,500,000
for any such Test Period, minus (c) to the extent included in such Consolidated
Net Income, the sum, without duplication, of (i) non-recurring gains and (ii)
non-cash gains, in each case as determined on a consolidated basis for the
Borrower and its Restricted Subsidiaries in accordance with GAAP.

                  "Designated Performance Trigger Event" means the maintenance
by the
<PAGE>   4
Borrower for four consecutive Fiscal Quarters of a ratio of Consolidated Total
Debt to Designated Consolidated EBITDA for each Test Period ending with such
Fiscal Quarter not in excess of 5.50:1.00.

                  "Designated Performance Trigger Event Certificate" means a
certificate substantially in the form of Annex I to the Third Amendment.

                  "Third Amendment" means the Credit Agreement Amendment No. 3,
dated as of July __, 1998, among the Borrower, the Lenders parties thereto and
the Administrative Agent. 

                  SUBPART 2.1.2. The following definitions in Section 1.1 of
the Existing Credit Agreement ("Certain Defined Terms") are amended as follows:

                  (a) "Capital Expenditures": clause (c) of the proviso to the
definition of "Capital Expenditures" is hereby amended by adding the following
immediately before the semi-colon at the end thereof:

                  "or, if, but only if, (i) the Designated Performance Trigger
Event has occurred, (ii) no Event of Default or payment Default has occurred and
is then continuing and (iii) a Designated Performance Trigger Event Certificate
duly executed by a Responsible Officer has been furnished to the Administrative
Agent, the purchase of plant, property or equipment made within one year of the
sale of any asset to the extent purchased with the proceeds of such sale";

                  (b) "Consolidated EBITDA": subclause (viii) of clause (b) is
hereby amended and restated as follows:
"(viii)  the amount of any restructuring charge or reserve";

                  (c) "Interest Period": the definition of "Interest Period" is
hereby amended and restated in its entirety to read as follows:

                  "Interest Period" means, as to any Eurodollar Loan, the period
commencing on the Borrowing Date of such Loan or on the Conversion/Continuation
Date on which the Loan is converted into or continued as an Eurodollar Loan, and
ending on the date one, two, three or six months thereafter (or ending 9 or 12
months thereafter if available to all Lenders making such Loans as determined by
such Lenders in good faith based on prevailing market conditions) as selected by
the Borrower in its Notice of Borrowing or Notice of Conversion/Continuation;
provided that:

                  (i) the Borrower shall not be permitted to select Interest
Periods to be in effect at any one time which have expiration dates occurring on
more that 20 different dates;
<PAGE>   5
                  (ii) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;

                  (iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period;

                  (iv) no Interest Period for any Term Loan shall extend beyond
the Tranche A Term Maturity Date, Tranche B Term Maturity Date, Tranche C Term
Maturity Date or Tranche D Term Maturity Date, as applicable, and no Interest
Period for any Revolving Loan shall extend beyond the Revolving Commitment
Termination Date; and

                  (v) no Interest Period applicable to a Term Loan or portion
thereof shall extend beyond any date upon which is due any scheduled principal
payment in respect of the Term Loans, unless the aggregate principal amount of
Term Loans represented by Base Rate Loans or by Eurodollar Loans having Interest
Periods that will expire on or before such date equals or exceeds the amount of
such principal payment; and

                  d. "Pledge Agreement": the definition of "Pledge Agreement" is
hereby amended and restated in its entirety to read as follows:

                           "Pledge Agreement" means the Amended and Restated
Pledge Agreement, dated as of March 31, 1998, by the Borrower and the other
Pledgors parties thereto in favor of the Administrative Agent for the Lenders,
as the same may be amended, supplemented, restated or otherwise modified from
time to time.

         SUBPART 2.2. Amendment to Article II of the Existing Credit Agreement.
Article II of the Existing Credit Agreement ("The Credits") is amended in
accordance with Subpart 2.2.1.

         SUBPART 2.2.1. Section 2.8 of the Existing Credit Agreement ("Mandatory
Prepayments of Loans") is amended by adding the following at the end of Section
2.8(a):

                  "; provided, however, if, but only if, (i) the Designated
Performance Trigger Event has occurred, (ii) no Event of Default or payment
Default has occurred and is then continuing and (iii) a Designated Performance
Trigger Event Certificate duly executed by a Responsible Officer has been
furnished to the Administrative Agent, then if the Borrower or
<PAGE>   6
any Restricted Subsidiary shall at any time thereafter make a Disposition (other
than a Disposition permitted pursuant to clause (a), (b) or (c) of Section 8.2),
then (i) the Borrower or such Restricted Subsidiary may, within 360 days after
the receipt by the Borrower or such Restricted Subsidiary of the Net Disposition
Proceeds of such Disposition, (A) reinvest up to 100% of such Net Disposition
Proceeds in the businesses described in Section 7.13 (including, subject to the
provisions of clause (h) of Section 8.3, making Acquisitions in such
businesses), unless at the time of such reinvestment an Event of Default or
payment Default has occurred and is then continuing (except in the case where
the Borrower or such Restricted Subsidiary is subject to a definitive agreement
that has been duly and fully executed at a time when no Event of Default or
payment Default existed and pursuant to which it is obligated to use such Net
Disposition Proceeds for a purpose permitted by this proviso), (B) prepay the
Term Loans within such 360-day period in an amount equal to such Net Disposition
Proceeds (or a portion thereof) or (C) retain the amount of such Net Disposition
Proceeds not so applied pending such application and (ii) to the extent such Net
Disposition Proceeds are not so applied during such 360-day period, the Borrower
shall prepay the Term Loans on the Business Day immediately succeeding the last
day of such 360-day period in an aggregate amount equal to the portion of such
Net Disposition Proceeds not so applied".

                  SUBPART 2.3. Amendments to Article VII of the Existing Credit
Agreement. Article VII of the Existing Credit Agreement ("Affirmative
Covenants") is amended in accordance with Subpart 2.3.1.s 2.3.1 through 2.3.2.

                  SUBPART 2.3.1. Section 7.1 of the Existing Credit Agreement
("Financial Statements") is amended by deleting the words "promptly after
available, but not later than 30 days after the end of each calendar month,"
appearing at the beginning of clause (c) thereof and inserting in replacement
thereof the following:

"other than with respect to a calendar month the end of which coincides with the
end of a Fiscal Quarter, promptly after available, but not later than 30 days
after the end of each such calendar month,".

                  SUBPART 2.3.2. Section 7.14 of the Existing Credit Agreement
("End of the Fiscal Year") is amended by inserting the following immediately
after the words "September 30 of each year" on the second line therein:

                  "prior to the Third Amendment Effective Date and thereafter on
December 31 of each year".

                  SUBPART 2.4. Amendments to Article VIII of the Existing Credit
Agreement. Article VIII of the Existing Credit Agreement ("Negative Covenants")
is amended in accordance with Subparts 2.4.1 through 2.4.6.
<PAGE>   7
                  SUBPART 2.4.1. Section 8.1 of the Existing Credit Agreement
("Limitation on Liens") is amended by amending and restating clause (q) thereof
in its entirety to read as follows: 

"(i) Liens on the plant located in Chicopee, Massachusetts, existing on the date
hereof and securing an aggregate principal amount not to exceed $6,500,000 and
(ii) additional Liens (other than Liens on any collateral securing the
Obligations) securing obligations of the Borrower and its Restricted
Subsidiaries so long as the aggregate amount of the obligations so secured does
not exceed $18,500,000 at any time outstanding;".

                  SUBPART 2.4.2. Section 8.2 of the Existing Credit Agreement
("Consolidations and Mergers; Sales of Assets") is amended by (i) replacing the
phrase "Closing Date" in clause (d) thereof with the phrase "Third Amendment
Effective Date" and (ii) deleting the Dollar amount "$250,000,000" in clause (d)
thereof and inserting the following in replacement thereof :

                  "the excess, if any, of $250,000,000 over the Evenflo Stock
                  Purchase Proceeds Amount (as defined in the Third Amendment)".

                  Section 8.3 of the Existing Credit Agreement ("Loans,
Acquisitions and Investments") is amended as follows:

                  (a) clause (h) thereof is amended and restated in its entirety
         to read as follows:

                  "(h) Investments by the Borrower or any Subsidiary
         constituting one or more Acquisitions in an aggregate amount not to
         exceed $10,000,000 (any such Acquisition, a "Pre-Trigger Permitted
         Acquisition") or, if, but only if, (i) the Designated Performance
         Trigger Event has occurred, (ii) no Event of Default or payment Default
         has occurred and is then continuing and (iii) a Designated Performance
         Trigger Event Certificate duly executed by a Responsible Officer has
         been furnished to the Administrative Agent, Investments by the Borrower
         or any Subsidiary constituting an Acquisition (any such Acquisition
         occurring after the date upon which each of the conditions set forth in
         subclauses (i), (ii) and (iii) of this clause (h) immediately above
         have been duly satisfied, a "Designated Permitted Acquisition";
         Designated Permitted Acquisitions, together with Pre-Trigger Permitted
         Acquisitions, "Permitted Acquisitions"), so long as (i) the aggregate
         consideration paid in respect of all Permitted Acquisitions after the
         Third Amendment Effective Date does not exceed $50,000,000, (ii) such
         Acquisition and all transactions related thereto are consummated in
         accordance with applicable law, (iii) in the case of an Acquisition of
         capital stock or other equity interest by the Borrower or a Subsidiary,
         such Acquisition results in the
<PAGE>   8
         issuer of such capital stock or other equity interest becoming a
         Subsidiary and such Subsidiary (other than a Foreign Subsidiary)
         executes an appropriate supplement to the Guaranty for the purposes of
         becoming a Guarantor thereunder, (iv) no capital stock or other equity
         interest or assets acquired in connection with such Acquisition shall
         be subject to any Lien (other than Liens permitted by Section 8.1), (v)
         neither the Borrower nor any other Restricted Subsidiary shall assume
         or incur, directly or indirectly, any Indebtedness in connection with
         such Acquisition (other than Indebtedness otherwise permitted by
         Section 8.4), (vi) after giving effect to such Acquisition, no Event of
         Default or payment Default shall have occurred and be continuing and
         (vii) the Borrower shall have delivered to the Administrative Agent
         prior to the consummation of such Acquisition (A) financial statements
         prepared on a Pro Forma Basis for the period of four consecutive Fiscal
         Quarters ending with the Fiscal Quarter then last ended for which
         financial statements and the Compliance Certificate relating thereto
         have been delivered to the Administrative Agent pursuant to Sections
         7.1 and 7.2 and (B) a certificate of the Borrower executed by its chief
         financial officer demonstrating that the financial results reflected in
         such financial statements would comply with the requirements of Section
         8.6 for the Fiscal Quarter in which such Investment is to be made.";
         and

         (b) clause (i) thereof is amended and restated in its entirety to read
         as follows:

                  "(i) so long as no Event of Default or payment Default exists
         and is continuing at the time of the making of such Investment (or
         would occur immediately after giving effect thereto), additional
         Investments by the Borrower or its Restricted Subsidiaries in an
         aggregate amount not to exceed $10,000,000 at any time; provided,
         however, that any such Investments shall be made exclusively from the
         net cash proceeds realized from the substantially contemporaneous
         purchase of capital stock of the Borrower by KKR or its affiliates;".

                  SUBPART 2.4.4. Section 8.4 of the Existing Credit Agreement
("Limitation on Indebtedness") is amended as follows:

(a) clause (h) thereof is amended and restated in its entirety to read as
follows:

                  "(h) unsecured Indebtedness of the Borrower (i) which does not
         have any scheduled principal payment (including any sinking fund
         requirement) prior to the Tranche D Term Maturity Date, (ii) which has
         pricing terms, covenants, representations and defaults, which, taken as
         a whole, are not more burdensome or restrictive on the Borrower than
         the pricing terms, covenants, representations and defaults provided in
         this Agreement and (iii) all net proceeds of which are immediately
         applied pursuant to Section 2.8(c) to the payment of Loans and certain
         other
<PAGE>   9
                  Indebtedness owed to the Lenders;";

(b) clause (l) thereof is amended by deleting (i) the Dollar amount
"$25,000,000" and inserting in replacement thereof "$50,000,000" and (ii) the
word "unsecured" therefrom; and

(c) clause (m) thereof is deleted in its entirety.

                  SUBPART 2.4.5. Section 8.5 of the Existing Credit Agreement
("Restricted Payments") is amended as follows:

(a) the following shall be inserted immediately after the words "Senior
Subordinated Notes" appearing in the fifth line of Section 8.5:

                  "(it being agreed that the contribution of Senior Subordinated
                  Notes by a holder thereof concurrently with the exchange of
                  such Senior Subordinated Notes for the Borrower's capital
                  stock shall not constitute such a redemption)"; and

(b) clause (e) thereof is amended by inserting the following at the end thereof:
"together with such other management and/or employee stock plans, stock
subscription agreements or shareholder agreements having comparable stock
repurchase terms; provided that the aggregate amount of stock repurchased under
such other management and/or employee stock plans, stock subscription agreements
or shareholder agreements shall not exceed 3% of the Common Stock outstanding on
the Third Amendment Effective Date (as defined in the Third Amendment)".

                  SUBPART 2.4.6. Section 8.6 of the Existing Credit Agreement
("Financial Covenants") is amended as follows:

                  (a) the table appearing in clause (a) thereof is amended by
         (i) deleting the line beginning "June 30, 1998" appearing therein and
         (ii) deleting the portion of such table appearing after such line and
         replacing it with the following table:

<TABLE>
<CAPTION>
DATE                       RATIO
----                       -----
<S>                     <C>
December 31, 1999       1.00:1.00
March 31, 2000          1:00:1.00
June 30, 2000           1.00:1.00
September 30, 2000      1.00:1.00
December 31, 2000       1.25:1.00
March 31, 2001          1.25:1.00
June 30, 2001           1.25:1.00
</TABLE>
<PAGE>   10
<TABLE>
<CAPTION>
<S>                     <C>  <C>
September 30, 2001      1.25:1.00
December 31, 2001       1.45:1.00
March 31, 2002          1.45:1.00
June 30, 2002           1.45:1.00
September 30, 2002      1.45:1.00
December 31, 2002       1.65:1.00
March 31, 2003          1.65:1.00
June 30, 2003           1.65:1.00
September 30, 2003      1.65:1.00
December 31, 2003
and the last day of
each March, June,
September and
December thereafter     2.00:1.00
</TABLE>

(b) the table appearing in clause (b) thereof is amended by (i) deleting the
line beginning "June 30, 1998" appearing therein and (ii) deleting the portion
of such table appearing after such line and replacing it with the following
table:

<TABLE>
<CAPTION>
DATE                    RATIO
<S>                     <C>
December 31, 1999       1.00:1.00
March 31, 2000          1:00:1.00
June 30, 2000           1.00:1.00
September 30, 2000      1.00:1.00
December 31, 2000       1.15:1.00
March 31, 2001          1.15:1.00
June 30, 2001           1.15:1.00
September 30, 2001      1.15:1.00
December 31, 2001       1.15:1.00
March 31, 2002          1.15:1.00
June 30, 2002           1.15:1.00
September 30, 2002      1.15:1.00
December 31, 2002       1.15:1.00
March 31, 2003          1.15:1.00
June 30, 2003           1.15:1.00
September 30, 2003      1.15:1.00
December 31, 2003       1.15:1.00
</TABLE>
<PAGE>   11
(c) clause (c) thereof is amended and restated in its entirety to read as
follows:
"(c) the ratio of Consolidated Senior Debt as at the last day of any Test Period
ending on or about any date set forth below to Consolidated EBITDA for such Test
Period, to be greater than or equal to the ratio set forth opposite such date:

<TABLE>
<CAPTION>
DATE                       RATIO
----                       -----
<S>                        <C>
December 31, 1999          6.00:1.00
March 31, 2000             6.00:1.00
June 30, 2000              6.00:1.00
September 30, 2000         6.00:1.00
December 31, 2000          4.50:1.00
March 31, 2001             4.50:1.00
June 30, 2001              4.50:1.00
September 30, 2001         4.50:1.00
December 31, 2001          4.00:1.00
March 31, 2002             4.00:1.00
June 30, 2002              4.00:1.00
September 30, 2002         4.00:1.00
December 31, 2002          3.00:1.00
March 31, 2003             3.00:1.00
June 30, 2003              3.00:1.00
September 30, 2003         3.00:1.00
December 31, 2003
and the last day of
March, June,
September and
December thereafter        2.50:1.00"
</TABLE>
<PAGE>   12
                                   ARTICLE III
                           CONDITIONS TO EFFECTIVENESS

         SUBPART 3.1. Third Amendment Effective Date. This Amendment, and the
amendments and modifications contained herein, shall be and become effective on
the date (the "Third Amendment Effective Date") when each of the conditions set
forth in this Article III shall have been fulfilled to the satisfaction of the
Agents.

         SUBPART 3.2. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this Amendment, duly executed and delivered on
behalf of the Borrower and each of the Majority Lenders.

         SUBPART 3.3. Resolutions; Incumbency. The Administrative Agent shall
have received (i) copies of the resolutions of the board of directors of the
Borrower authorizing the execution, delivery and performance of this Amendment,
each other Loan Document to be delivered by the Borrower in connection herewith
and the transactions contemplated hereby and thereby, certified as of the Third
Amendment Effective Date by the Secretary or an Assistant Secretary of the
Borrower, together with a certificate of the Secretary or Assistant Secretary of
the Borrower dated the Third Amendment Effective Date, certifying the names and
true signatures of the officers of the Borrower authorized to execute, deliver
and perform, as applicable, this Amendment, and such other Loan Documents to be
delivered by it in connection herewith; and (ii) copies of the resolutions of
the board of directors of each Subsidiary authorizing the delivery, execution
and performance by such Subsidiary of the Loan Documents to be delivered by it
in connection herewith, certified as of the Third Amendment Effective Date by
the Secretary or an Assistant Secretary of such Subsidiary, together with a
certificate of the Secretary or Assistant Secretary of such Subsidiary dated the
Third Amendment Effective Date, certifying the names and true signatures of the
officers of such Subsidiary authorized to execute, deliver and perform such Loan
Documents.

         SUBPART 3.4. Organization Documents. The Administrative Agent shall
have received the articles or certificate of incorporation and the bylaws of
each of the Obligors for which such documents have not previously been delivered
and certified, in each case, as in effect on the Third Amendment Effective Date,
certified by the Secretary or Assistant Secretary of such Person as of the Third
Amendment Effective Date, together with a certification that any documents which
were previously delivered are in full force and effect and have not, since the
date of such delivery, been amended.

         SUBPART 3.5. Approvals. All necessary material governmental,
shareholders' and third-party approvals in connection with the execution,
delivery and performance of this Amendment and the other Loan Documents
delivered in connection herewith shall have been obtained.
<PAGE>   13
         SUBPART 3.6. Other Loan Documents. The Administrative Agent shall have
received an affirmation and consent by each of the Guarantors.

         SUBPART 3.6. Evenflo Stock Purchase Agreement. The Evenflo Stock
Purchase Agreement shall have been duly executed and delivered and shall be in
full force and effect.

         SUBPART 3.8. E&S Capital Contribution Agreement. The E&S Capital
Contribution Agreement shall have been duly executed and delivered and shall be
in full force and effect.

         SUBPART 3.9. Fairness Opinion. The Administrative Agent and the Lenders
shall have received a fairness opinion from a nationally recognized investment
bank, in form and substance acceptable to the Agents, with respect to the sale
by the Borrower of at least fifty-one percent (51%) of the outstanding capital
stock of Evenflo.

         SUBPART 3.10. Sale of Evenflo Shares. The Borrower shall have
consummated (or contemporaneously herewith will consummate) the sale of at least
fifty-one percent (51%) of the outstanding capital stock of Evenflo pursuant to
the Evenflo Stock Purchase Agreement, which Stock Purchase Agreement shall not
have been amended nor shall any provision thereof have been waived by any party
thereto, in each case unless such amendment or waiver is not adverse in any
material respect to the interests of the Lenders, and the Evenflo Stock Purchase
Agreement shall have been approved by the Board of Directors of the Borrower
(which approval shall not have been rescinded or withdrawn).

         SUBPART 3.11. Borrower Capital Contribution. The Borrower shall have
received at least $100,000,000 in cash proceeds from the purchase of preferred
stock of the Borrower by KKR affiliates and (a) $75,000,000 of such proceeds
shall have been applied by the Borrower in the manner set forth in Schedule 3.11
to the Third Amendment to prepay permanently all amounts outstanding under the
Liquidity Facility, including, without limitation, any and all principal,
accrued and unpaid interest and fees in respect thereof, with the remainder of
such proceeds having been applied by the Borrower toward the permanent
prepayment of the Term Loans, including, without limitation, any and all
principal, accrued and unpaid interest and fees in respect thereof, in
accordance with the terms and provisions of the Amended Credit Agreement and (b)
$25,000,000 of such proceeds shall have been applied by the Borrower toward the
prepayment of the Revolving Loans, including, without limitation, any and all
principal, accrued and unpaid interest and fees in respect thereof, in
accordance with the terms and provisions of the Amended Credit Agreement.

         SUBPART 3.12. Mandatory Prepayments. The Administrative Agent shall
have received, for the benefit of the Lenders, at least Two Hundred Fifty-Two
Million Dollars
<PAGE>   14
($252,000,000) in cash, which amount shall have been permanently applied by the
Borrower in accordance with Schedule 3.11 and Schedule 3.12 to the Third
Amendment against amounts outstanding under the Liquidity Facility, including,
without limitation, any and all principal, accrued and unpaid interest and fees
in respect thereof, with the remainder of such amount having been applied by the
Borrower toward the permanent prepayment of the Term Loans, including, without
limitation, any and all principal, accrued and unpaid interest and fees in
respect thereof, in accordance with the terms and provisions of the Amended
Credit Agreement.

         SUBPART 3.13. Evenflo Capital Structure. The net book value of the
excess of all outstanding capital stock of Evenflo over the outstanding capital
stock of Evenflo to be purchased by one or more affiliates of KKR and certain
additional investors pursuant to the Evenflo Stock Purchase Agreement shall be
at least $19,000,000.

         SUBPART 3.14. Filings. All UCC and intellectual property filings
(including foreign intellectual property filings) necessary or, in the opinion
of the Administrative Agent, desirable to perfect and/or to maintain the
perfection of the Liens (as defined in the Loan Documents) provided for in the
Loan Documents shall have been executed by the Borrower and each applicable
Subsidiary and delivered to the Administrative Agent for filing at the
Borrower's expense.

         SUBPART 3.15. Amendment Effective Date Certificate. The Administrative
Agent shall have received the Amendment Effective Date Certificate, dated the
Third Amendment Effective Date and duly executed and delivered by an Authorized
Officer of the Borrower, in which certificate the Borrower shall agree and
acknowledge that the statements made therein shall be deemed to be true and
correct (in all material respects) representations and warranties of the
Borrower made as of such date, and, at the time each such certificate is
delivered, such statements shall in fact be true and correct.

         SUBPART 3.16. Legal Opinions. The Administrative Agent shall have
received (a) a favorable legal opinion of (i) Simpson Thacher & Bartlett,
special counsel to the Obligors and (ii) the General Counsel to the Borrower, in
each case, addressed to the Administrative Agent and the Lenders and dated the
date that each of the conditions set forth in this Article III (other than
Subparts 3.7 through 3.13 and clause (b) of this Subpart 3.16) have been
fulfilled to the satisfaction of the Agents, substantially in the forms of Annex
A-1 and Annex A-2, respectively and (b) a favorable legal opinion of (i) Simpson
Thacher & Bartlett, special counsel to the Obligors and (ii) the General Counsel
to the Borrower, in each case, addressed to the Administrative Agent and the
Lenders and dated the Third Amendment Effective Date, substantially in the forms
of Annex A-1 and Annex A-2, respectively.

         SUBPART 3.17. Fees and Expenses. The Administrative Agent shall have
<PAGE>   15
received all costs, fees (including, for each Lender party hereto, an amendment
fee in the amount set forth in the Fee Letter Agreement by and between the
Borrower and the Administrative Agent of even date herewith) and expenses due
and payable pursuant to Subpart 5.4 (to the extent then invoiced) and pursuant
to the Existing Credit Agreement (including all previously invoiced fees and
expenses).

         SUBPART 3.18. Partial Effectiveness. Notwithstanding the foregoing, the
amendments contained in subclauses (a), (b) and (c) of Subpart 2.4.6, and
Subpart 2.3.1 shall become effective upon the satisfaction when each of the
conditions set forth in this Article III (other than Subparts 3.7 through 3.13
and clause (b) of Subpart 3.16) have been 3.13fulfilled to the satisfaction of
the Agents; provided that such effectiveness shall be automatically rescinded as
if such amendments never took place, if such remaining conditions set forth in
Subparts 3.7 through 3.13 and clause (b) of Subpart 3.16 are not duly satisfied
by August 15, 1998.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

SUBPART 4.1. Representations and Warranties. In order to induce the Lenders and
the Administrative Agent to enter into this Amendment, the Borrower hereby
represents and warrants to each Agent and each Lender, as of the date hereof, as
follows:

         (a) the representations and warranties contained in Article VI of the
Existing Credit Agreement (after giving effect to the amendments set forth
herein) and in each of the other Loan Documents are true and correct in all
material respects on and as of such date, as though made on and as of such date
(except to the extent such representations and warranties expressly refer to an
earlier date, in which case they shall be true and correct in all material
respects as of such earlier date and except as covered by clause (c) below);

         (b) no Default or Event of Default exists (after giving effect to the
amendments or modifications set forth in Article II) or would result from the
amendments or modifications set forth in Article II or the other transactions
contemplated hereby;

         (c) except as disclosed to the Lenders on July 2, 1998 or as disclosed
in the Bank Book, no Material Adverse Change has occurred since September 30,
1997 and no material adverse change has occurred since September 30, 1997 with
respect to the business, assets, operations, results of operations, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries, taken as a whole; and

         (d) neither the Borrower nor any of its Subsidiaries is subject to any
material litigation or governmental proceeding with respect to the transactions
contemplated hereby and no injunction or restraining order exists with respect
to such transactions.
<PAGE>   16
SUBPART 4.2. Full Disclosure. (a) All factual information (taken as a whole)
heretofore or contemporaneously furnished by or on behalf of the Borrower or any
of its Subsidiaries in writing to any Agent and/or any Lender on or before the
Third Amendment Effective Date (including all information contained herein and
in the other Loan Documents delivered in connection herewith) for purposes of or
in connection with this Amendment or any transactions contemplated herein is
true and complete in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided, it being understood and agreed that for purposes of
this clause (a), such factual information shall not include projections and pro
forma financial information.

(b) The projections and pro forma financial information contained in the factual
information referred to in clause (a) above were or are based on good faith
estimates and assumptions believed to be reasonable at the time made, it being
recognized by the Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ significantly from the projected results.

                                    ARTICLE V

                                  MISCELLANEOUS

         SUBPART 5.1. Full Force and Effect; Limited Amendment. Except as
expressly amended hereby, all of the representations, warranties, terms,
covenants, conditions and other provisions of the Existing Credit Agreement and
the other Loan Documents shall remain unamended and unwaived and shall continue
to be, and shall remain, in full force and effect in accordance with their
respective terms. The amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein and shall not be
deemed to be an amendment to, consent to or modification of any other term or
provision of the Existing Credit Agreement, any other Loan Document referred to
therein or herein or of any transaction or further or future action on the part
of the Borrower or any other Obligor which would require the consent of the
Lenders under the Existing Credit Agreement or any of the other Loan Documents.

         SUBPART 5.2. Loan Document Pursuant to Existing Credit Agreement. This
Amendment is a Loan Document executed pursuant to the Existing Credit Agreement
and shall be construed, administered and applied in accordance with all of the
terms and provisions of the Existing Credit Agreement (and, following the date
hereof, the Amended Credit Agreement). Any breach of any representation or
warranty or covenant or agreement
<PAGE>   17
contained in this Amendment shall be deemed to be an Event of Default for all
purposes of the Existing Credit Agreement and the other Loan Documents.

         SUBPART 5.3. Direction. By the execution hereof by the Majority
Lenders, the Administrative Agent is hereby authorized and directed by the
Majority Lenders to (i) release (a) Evenflo from its obligations under the
Guaranty, (b) the Evenflo Collateral from the Liens created in favor of the
Administrative Agent pursuant to the Security Agreement and (c) the Evenflo
Pledged Shares sold pursuant to the Evenflo Stock Purchase Agreement from the
pledge thereof to the Administrative Agent pursuant to the Pledge Agreement and
take all actions reasonably necessary to implement the provisions hereof,
including all actions referred to in Subpart 5.6 below and (ii) amend the Pledge
Agreement in accordance with Subpart 5.5 below.

         SUBPART 5.4. Release; Termination. Subject to (a) the receipt by the
Administrative Agent of the $252,000,000 referred to in Subpart 3.12 above and
the application by the Borrower of such amount in accordance with such Subpart
and (b) the receipt by the Borrower of the $100,000,000 referred to in Subpart
3.11 above and the application by the Borrower of such amount in accordance with
such Subpart, (i) the Administrative Agent hereby releases (A) Evenflo from its
obligations under the Guaranty, (B) the Evenflo Collateral from the Liens
created in favor of the Administrative Agent pursuant to the Security Agreement
and (C) the Evenflo Pledged Shares sold pursuant to the Evenflo Stock Purchase
Agreement from the pledge thereof to the Administrative Agent pursuant to the
Pledge Agreement and (ii) the Liquidity Facility is hereby terminated in all
respects.

         SUBPART 5.5. Amendments to Pledge Agreement. Subject to (a) the receipt
by the Administrative Agent of the $252,000,000 referred to in Subpart 3.12
above and the application by the Borrower of such amount in accordance with such
Subpart and (b) the receipt by the Borrower of the $100,000,000 referred to in
Subpart 3.11 above and the application by the Borrower of such amount in
accordance with such Subpart, Section 8 of the Pledge Agreement ("Transfers and
Other Liens; Additional Collateral; Documents; Etc.") is amended as follows:

(a) subclause (ii) of clause (b) thereof is amended and restated in its entirety
to read as follows:

         "(ii)(A) fail to pledge hereunder, immediately upon the issuance
thereof, any and all additional shares of stock or other securities of each such
issuer (other than Evenflo) of Pledged Shares and (B) fail to pledge hereunder,
immediately upon the issuance thereof to Pledgor, any and all additional shares
of stock or other securities of Evenflo of Pledged Shares and";
<PAGE>   18
(b) subclause (iii) of clause (b) thereof is amended by inserting the following
words immediately after the phrase "permit the issuance of any additional shares
of stock of such issuer" appearing therein:

         "(other than Evenflo)"; and

(c) clause (c) thereof is amended by:

                  (i) inserting the following immediately after the word
"permit" appearing both in the first line thereof and in the fifth line thereof:

                           "(to the extent within its legal power)"; and

         (ii)  inserting the following at the end thereof:

                           ", in each case with respect to Evenflo covered by
this clause (c) unless all holders of the common stock of Evenflo are accorded
equal treatment as such thereunder".

         SUBPART 5.6. Further Assurances. (i) The Administrative Agent shall, at
the sole cost and expense of the Borrower, take such action, including executing
and delivering such other and further documents and instruments as may be
reasonably requested and prepared by the Borrower, to (a) to evidence the
releases contained in Subpart 5.4, including delivering any Uniform Commercial
Code partial termination statements requested and prepared by the Borrower (or
by the Administrative Agent on behalf of the Borrower) and (b) otherwise
implement fully or evidence further the provisions of this Amendment and (ii)
the Borrower shall, at its sole cost and expense, take such action, including
executing and delivering such other and further documents and instruments as may
be reasonably requested from time to time, to implement fully or evidence
further the provisions of this Amendment.

         SUBPART 5.7. Fees and Expenses. The Borrower shall pay all reasonable
out-of-pocket expenses incurred by the Administrative Agent in connection with
the preparation, negotiation, execution and delivery of this Amendment and the
documents and transactions contemplated hereby, including the reasonable fees
and disbursements of Wachtell, Lipton, Rosen & Katz, as counsel for the
Administrative Agent.

         SUBPART 5.8. Headings. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provisions hereof.

         SUBPART 5.9. Counterparts. This Amendment may be executed in any number
of separate counterparts, each of which, when so executed, shall be deemed an
<PAGE>   19
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

         SUBPART 5.10. Cross-References. References in this Amendment to any
Article or Subpart are, unless otherwise specified or otherwise required by the
context, to such Article or Subpart of this Amendment.

         SUBPART 5.11. Successors and Assigns. This Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

         SUBPART 5.12. No Third Parties Benefited. This Amendment is made and
entered into for the sole protection and legal benefit of the Borrower, the
Lenders, each Agent and the Agent-Related Persons, and their permitted
successors and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Amendment or any of the other Loan Documents.

         SUBPART 5.13. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>   20
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered in New York, New York by their proper and duly authorized
officers as of the day and year first above written.

EVENFLO & SPALDING HOLDINGS CORPORATION (formerly known as E&S Holdings
Corporation), as the Borrower

By
Name:
Title:


BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Administrative Agent

By
Name:  Patrick W. Zetzman
Title:  Vice President

BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION

By
Name:  Debra Seiter
Title:  Vice President


MERRILL LYNCH CAPITAL
CORPORATION

By
Name:
Title:

MERRILL LYNCH DEBT STRATEGIES
FUND, INC.
By
Name:
Title:
<PAGE>   21
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO

By: Merrill Lynch Asset Management, L.P., 
as Investment Advisor
By
Name:
Title:


MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By
Name:
Title:


MERRILL LYNCH PRIME RATE
PORTFOLIO

By: Merrill Lynch Asset Management, L.P., 
as Investment Advisor
By
Name:
Title:


INCOME STRATEGIES PORTFOLIO
(c/o Merrill Lynch Asset Management)

By
Name:
Title:


SENIOR HIGH INCOME PORTFOLIO, INC.

By
Name:
Title:

[Credit Agreement Amendment No. 3 Signature Page]
<PAGE>   22
DEBT STRATEGIES FUND II, INC.

By
Name:
Title:


SENIOR DEBT PORTFOLIO
(c/o Boston Management and Research Co.)

By
Name:
Title:


NATIONSBANK N.A. SOUTH

By
Name:
Title:

THE BANK OF NOVA SCOTIA
By
Name:
Title:

BANKERS TRUST COMPANY
By
Name:
Title:

SOCIETE GENERALE
By
Name:
Title:

WELLS FARGO BANK, N.A.
By
Name:
Title:

ROYAL BANK OF CANADA
By
Name:
Title:

[Credit Agreement Amendment No. 3 Signature Page]

<PAGE>   23
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By
Name:
Title:

VAN KAMPEN CLO I, LTD.
By: VAN KAMPEN AMERICAN CAPITAL
    MANAGEMENT INC., as Collateral
    Manager
By
Name:
Title:

FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By
Name:
Title:

THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By
Name:
Title:

LTCB TRUST COMPANY
By
Name:
Title:

MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By
Name:
Title:

OAK HILL SECURITIES FUND, L.P.
By: Oak Hill Securities GenPar, L.P., its
    General Partner
By: Oak Hill Securities MGP, Inc., its
    General Partner
By
Name:
Title:

[Credit Agreement Amendment No. 3 Signature Page]
<PAGE>   24
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST
By
Name:
Title:

AERIES FINANCE, LTD.
By
Name:
Title:

THE CHASE MANHATTAN BANK
By
Name:
Title:

TORONTO DOMINION BANK
By
Name:
Title:

ALLIANCE CAPITAL
By
Name:
Title:

BANK OF TOKYO -- MITSUBISHI TRUST
COMPANY
By
Name:
Title:

BANQUE PARIBAS
By
Name:
Title:

BANK BOSTON, N.A. f/k/a
BAYBANK, N.A.
By
Name:
Title:

CAPTIVA FINANCE, LTD
By
Name:
Title:

CREDIT AGRICOLE INDOSUEZ
By
Name:
Title:

[Credit Agreement Amendment No. 3 Signature Page]

<PAGE>   25
CREDIT LYONNAIS NEW YORK BRANCH
By
Name:
Title:

CYPRESS TREE INVESTMENT
PARTNERS I, LTD
By: Cypress Tree Investment
    Management Co., as Portfolio
    Manager
By
Name:
Title:

THE DAI-ICHI KANGYO BANK, LTD.
By
Name:
Title:

DLJ CAPITAL FUNDING, INC.
By
Name:
Title:

GOLDMAN SACHS CREDIT PARTNERS L.P.
By
Name:
Title:

KZH HOLDING CORPORATION III
By
Name:
Title:

LEHMAN SYNDICATED LOANS, INC.
By
Name:
Title:

MEDICAL LIABILTY MUTUAL
INSURANCE CO.

By: Chancellor LGT Senior Secured 
    Management, Inc., Invesco Senior 
    Secured  Management, Inc., as
    Investment Manager

[Credit Agreement Amendment No. 3 Signature Page]
<PAGE>   26
By
Name:
Title:

ML CBO IV, (CAYMAN) LTD.
By: Protective Asset Management CompanyHighland Capital Management, L.P.,
    as Collateral Manager
By
Name:
Title:

MORGAN STANLEY SENIOR
FUNDING, INC.
By
Name:
Title:

NATIONAL CITY BANK
By
Name:
Title:

STATE STREET BANK AND TRUST
COMPANY
By
Name:
Title:

ORIX USA CORPORATION
By
Name:
Title:

PAMCO CAYMAN, LTD.
By: Protective Asset Management
    Company, as Management Company, 
    as By: Highland Capital Management, 
           L.P., as Collateral Manager
By
Name:
Title: Acknowledged and agreed with 
       respect to Subpart 5.5:

EVENFLO & SPALDING HOLDINGS
CORPORATION
SPALDING & EVENFLO COMPANIES, INC.
EVENFLO COMPANY, INC.

[Credit Agreement Amendment No. 3 Signature Page]
<PAGE>   27
ETONIC WORLDWIDE CORPORATION
LISCO, INC.
SPALDING SPORTS CENTERS, INC.
ETONIC LISCO, INC.
LISCO FURNITURE, INC.
LISCO FEEDING, INC.
LISCO SPORTS, INC.
By
Name:
Title:

S&E FINANCE CO., INC.
By
Name:
Title:

[Credit Agreement Amendment No. 3 Signature Page]