Exhibit 10.14

 

THIRD AMENDMENT AND WAIVER TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This THIRD AMENDMENT AND WAIVER TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Amendment”) is dated as of February 17, 2017 by and among
SUMMER INFANT, INC. and SUMMER INFANT (USA), INC., as “Borrowers” under the Loan
Agreement referenced below (“Borrowers”), SUMMER INFANT CANADA, LIMITED and
SUMMER INFANT EUROPE LIMITED, as “Guarantors” under the Loan Agreement
referenced below (“Guarantors” and together with the Borrowers, the “Obligors”),
the “Lenders” party to the Loan Agreement referenced below (“Lenders”), and BANK
OF AMERICA, N.A., in its capacity as “Agent” for the Lenders under the Loan
Agreement referenced below (“Agent”).

 

WHEREAS, Borrowers, Guarantors, Lenders and Agent are parties to that certain
Amended and Restated Loan and Security Agreement dated as of April 21, 2015, as
amended by that certain Amendment to Amended and Restated Loan and Security
Agreement dated as of December 10, 2015, and as further amended by that certain
Second Amendment to Amended and Restated Loan and Security Agreement dated as of
May 24, 2016 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”);

 

WHEREAS, Obligors have previously advised Agent that Obligors require additional
time to deliver the projections of Borrowers’ consolidated balance sheets,
results of operations, cash flow and Availability for Fiscal Year 2017 (the
“2017 Projections”); and

 

WHEREAS, Borrowers, Guarantors, Lenders and Agent desire to amend certain
provisions of the Loan Agreement, all as more fully described herein.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements contained
herein, the parties agree that the Loan Agreement is hereby amended as follows:

 

1.                                      Capitalized Terms.  Capitalized terms
used herein which are defined in the Loan Agreement have the same meanings
herein as therein, except to the extent such terms are amended hereby.

 

2.                                      Agreement to Extend Delivery Date for
2017 Projections.  Subject to the satisfaction of the terms and conditions set
forth in this Amendment, the Agent and Lenders hereby (a) waive the requirements
pursuant to clause (f) of Section 10.1.2 of the Loan Agreement that Obligors
deliver the 2017 Projections no later than 30 days prior to the end of Fiscal
Year 2016, and (b) agree that the date for delivery by Obligors of the 2017
Projections shall be extended to March 1, 2017.  Obligors hereby expressly
acknowledge and agree that (i) not later than March 1, 2017, the Obligors shall
cause to be delivered to the Agent the 2017 Projections and (ii) in the event
the Agent fails to receive the 2017 Projections on or before March 1, 2017, such
failure shall constitute an Event of Default under the Loan Agreement.  The
parties agree that (a) the foregoing waiver is limited solely to the Obligors’
obligation pursuant to clause (f) of Section 10.1.2 of the Loan Agreement to
deliver the 2017 Projections no later than 30 days prior to the end of Fiscal
Year 2016 and (b) that nothing herein shall be construed as a waiver of any
other provision of the Loan Agreement.

 

3.                                      Amendments to Section 1.1 of the Loan
Agreement.  Section 1.1 of the Loan Agreement is hereby amended as follows:

 

(a)                                 The definition of “Availability” is hereby
amended and restated in its entirety, as follows:

 

--------------------------------------------------------------------------------

 

“Availability: at any time, (a) the lesser of (i) the aggregate Revolver
Commitments at such time and (ii) the Revolver Borrowing Base, at such time
minus (b) the Revolver Exposure at such time.  Notwithstanding the foregoing,
solely for purposes of determining whether a Cash Dominion Period is in effect,
Availability shall be increased by the amount of the FILO Reserve in effect at
such time.”

 

(b)                                 The definition of “Availability Reserve” is
hereby amended by deleting the word “and” following the end of clause (i),
relabeling clause “(j)” as clause “(k)”, and inserting a new clause (j) as
follows:

 

“(j) the FILO Reserve; and”

 

(c)                                  The definition of “Eligible Account” is
hereby amended by deleting clause (e) of such definition in its entirety and
replacing such clause with the following:

 

“(e) with respect to any Account owing by the Amazon Companies, when aggregated
with other Accounts owing by Amazon.com, Inc., it exceeds 35% of the aggregate
Eligible Accounts, provided, however, that if, at any time, the corporate credit
rating of Amazon.com, Inc. falls below “BBB-” (by S&P or Fitch) or “Baa3” (by
Moody’s), the Agent shall have the right, in its sole discretion to decrease
such maximum percentage (provided further, that only the amount of Accounts in
excess of the percentage set forth in this clause (e) (or such lower percentage
as shall be specified by Agent in accordance with the foregoing proviso) shall
be deemed ineligible under this clause (e));”

 

(d)                                 The definition of “Eligible Account” is
hereby amended by deleting clause (i) of such definition in its entirety and
replacing such clause with the following:

 

“(i) it is owing by a creditor or supplier, or is otherwise subject to a
potential offset, counterclaim, dispute, deduction, discount, recoupment,
reserve, defense, chargeback, credit or allowance (but ineligibility shall be
limited to the amount thereof), provided, that, the foregoing ineligibility
shall not apply to the Permitted Contra Accounts in an amount up to the
Permitted Contra Amount;”

 

(e)                                  The definition of “EBITDA” is hereby
amended by deleting clause (b)(xii) of such definition in its entirety and
replacing such clause with the following:

 

“(xii) (1) solely with respect to the calculation of the Fixed Charge Coverage
Ratio and the Leverage Ratio pursuant to Section 10.3.1 and 10.3.2,
respectively, hereof, fees and expenses of advisors and independent consultants
retained by Obligors in connection with the Former Management Litigation;
provided, that the aggregate amount of such fees and expenses added back to
EBITDA pursuant to this clause (b)(xii) shall not exceed (A) $3,500,000 in the
aggregate for the period of four consecutive Fiscal Quarters ending October 1,
2016, (B) $2,500,000 in the aggregate for the period of four consecutive Fiscal
Quarters ending December 31, 2016, and (C) $1,250,000 in the aggregate for the
period of four consecutive Fiscal Quarters ending April 1, 2017; and (2) without
duplication to the foregoing clause (1), fees and expenses of advisors and
independent consultants retained by Obligors and approved by Agent in its
Permitted Discretion, provided, that the aggregate amount of such fees and
expenses added back to EBITDA pursuant to this clause (2) shall not exceed
$250,000 during any Fiscal Quarter;”

 

2

--------------------------------------------------------------------------------

 

(f)                                   The definition of “EBITDA” is hereby
amended by deleting the word “and” following the end of clause (b)(xvii),
relabeling clause “(b)(xviii)” as clause “(b)(xx)”, and inserting new clauses
(b)(xviii) and (b)(xix) as follows:

 

“(xviii) solely with respect to the calculation of the Fixed Charge Coverage
Ratio and the Leverage Ratio pursuant to Section 10.3.1 and 10.3.2,
respectively, hereof, charges incurred in connection with Borrower exiting
certain “Born Free” product lines during the 2016 Fiscal Year; provided, that
the aggregate amount of such charges added back to EBITDA pursuant to this
clause (b)(xviii) shall not exceed (A) $795,000 in the aggregate for the period
of four consecutive Fiscal Quarters ending April 1, 2017, (B) $445,000 in the
aggregate for the period of four consecutive Fiscal Quarters ending July 1,
2017, (C) $236,000 in the aggregate for the period of four consecutive Fiscal
Quarters ending September 30, 2017, and (D) zero in the aggregate for the period
of four consecutive Fiscal Quarters ending December 30, 2017;

 

(xix) solely with respect to the calculation of the Fixed Charge Coverage Ratio
and the Leverage Ratio pursuant to Section 10.3.1 and 10.3.2, respectively,
hereof, cash payments of bonus compensation made to officers and/or employees of
the Obligors; provided, that the aggregate amount of such bonus payments added
back to EBITDA pursuant to this clause (b)(xix) shall not exceed $550,000 in the
aggregate for the period of four consecutive Fiscal Quarters ending December 30,
2017; and”

 

(g)                                  The definition of “Fixed Charges” is hereby
amended and restated in its entirety, as follows:

 

“Fixed Charges: the sum of interest expense (other than payment-in-kind),
principal payments made on Borrowed Money (including, without limitation, the
Term Loans, but excluding the Revolver Loans unless such principal payment of
the Revolver Loans is accompanied by a permanent reduction in the Revolver
Commitments and excluding the FILO Loans unless such principal payment of the
FILO Loans is accompanied by a permanent reduction in the FILO Commitments), and
Distributions made.  Notwithstanding the foregoing, any principal payments made
in connection with the first three (3) scheduled reductions to the Aggregate
FILO Commitment Amount as provided for in the definition of “Aggregate FILO
Commitment Amount” in Section 1.1 shall not constitute “Fixed Charges” for
purposes hereof.”

 

(h)                                 The following new defined terms are hereby
inserted in Section 1.1 of the Loan Agreement in the appropriate alphabetical
order:

 

“FILO Reserve: $1,250,000, provided, that such amount shall be reduced to zero
at such time as the principal payment in connection with the scheduled permanent
reduction to the Aggregate FILO Commitment Amount to occur on October 21, 2017
is made.

 

Permitted Contra Accounts: any Accounts owing from ANA Global or Norco Plastics.

 

Permitted Contra Amount: with respect to any Permitted Contra Accounts, an
aggregate amount equal to $500,000 with respect to all such Accounts, provided,
that, the Permitted Contra Amount shall be reduced to zero on June 30, 2017.”

 

3

--------------------------------------------------------------------------------

 

4.                                      Amendments to Section 10.1.2(j) of the
Loan Agreement.  Section 10.1.2(j) of the Loan Agreement is hereby amended and
restated in its entirety, as follows:

 

“(j)                              Reserved.”

 

5.                                      Amendment to Section 10.3.2 of the Loan
Agreement.  Section 10.3.2 of the Loan Agreement is hereby amended and restated
in its entirety, as follows:

 

“10.3.2                                Maximum Leverage Ratio.  As of the end of
each Fiscal Quarter, maintain a Leverage Ratio of not greater than the ratio set
forth below opposite such Fiscal Quarter:

 

Four Fiscal Quarters Ending

 

Maximum Leverage Ratio

December 31, 2016

 

5.25 to 1.00

April 1, 2017

 

5.50 to 1.00

July 1, 2017

 

5.50 to 1.00

September 30, 2017

 

5.50 to 1.00

December 30, 2017

 

5.00 to 1.00

April 1, 2018 and thereafter

 

3.75 to 1.00

 

6.                                      No Default; Representations and
Warranties, Etc.  Obligors hereby represent, warrant and confirm that: (a) all
representations and warranties of Obligors in the Loan Agreement and the other
Loan Documents are true and correct in all material respects (without
duplication of any materiality qualifier contained therein) on and as of the
date hereof as if made on such date (except to the extent that such
representations and warranties expressly relate to or are stated to have been
made as of an earlier date, in which case, such representations and warranties
shall be true and correct in all material respects (without duplication of any
materiality qualifier contained therein) as of such earlier date); (b) after
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing; and (c) the execution, delivery and performance by Obligors of
this Amendment and all other documents, instruments and agreements executed and
delivered in connection herewith or therewith (i) have been duly authorized by
all necessary action on the part of Obligors (including any necessary
shareholder consents or approvals), (ii) do not violate, conflict with or result
in a default under and will not violate or conflict with or result in a default
under any applicable law or regulation, any term or provision of the
organizational documents of any Obligor or any term or provision of any material
indenture, agreement or other instrument binding on any Obligor or any of its
assets, and (iii) do not require the consent of any Person which has not been
obtained.

 

7.                                      Ratification and Confirmation.  Obligors
hereby ratify and confirm all of the terms and provisions of the Loan Agreement
and the other Loan Documents and agree that all of such terms and provisions, as
amended hereby, remain in full force and effect.  Without limiting the
generality of the foregoing, Obligors hereby acknowledge and confirm that all of
the “Obligations” under and as defined in the Loan Agreement are valid and
enforceable and are secured by and entitled to the benefits of the Loan
Agreement and the other Loan Documents, and Obligors hereby ratify and confirm
the grant of the liens and security interests in the Collateral in favor of
Agent, for the benefit of itself and Lenders, pursuant to the Loan Agreement and
the other Loan Documents, as security for the Obligations.

 

8.                                      Conditions to Effectiveness of
Amendment.  This Amendment shall become effective as of the date when, and only
when, each of the following conditions precedent shall have been satisfied or
waived in writing by Agent:

 

(a)                                 Agent shall have received counterparts to
this Amendment, duly executed by Agent, Lenders and Obligors.

 

4

--------------------------------------------------------------------------------

 

(b)                                 Borrowers shall have paid to Agent, for the
account of each Lender (including Bank of America, N.A., in its capacity as a
Lender) that executes and delivers to Agent by 3:00 p.m. New York City time on
February    , 2017 a counterpart to this Amendment (each such Lender, an
“Approving Lender”), an amendment fee in an amount equal to 12.5 basis points
multiplied by such Approving Lender’s Commitment.

 

(c)                                  Borrowers shall have paid all other fees
and amounts due and payable to Agent and its legal counsel in connection with
the Loan Agreement, this Amendment and the other Loan Documents, including,
(i) the fees payable pursuant to that certain Amendment Fee Letter dated as of
the date hereof between Borrowers and Agent, and (ii) to the extent invoiced,
all out-of-pocket expenses required to be reimbursed or paid by Borrowers under
the Loan Agreement.

 

9.                                      Miscellaneous.

 

(a)                                 Except to the extent specifically amended
hereby, the Loan Agreement, the other Loan Documents and all related documents
shall remain in full force and effect.

 

(b)                                 This Amendment may be executed in any number
of counterparts, each of which, when executed and delivered, shall be an
original, but all counterparts shall together constitute one instrument.

 

(c)                                  Borrowers shall reimburse Agent for, or pay
directly, all reasonable out-of-pocket costs and expenses of Agent (including,
without limitation, the reasonable fees and expenses of Agent’s legal counsel)
in connection with the preparation, negotiation, execution and delivery of this
Amendment and the other Loan Documents, within 30 days of Borrowers’ receipt of
invoices (in reasonably sufficient detail) setting forth such costs and
expenses.

 

(d)                                 This Amendment shall be governed by the laws
of the State of New York and shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.

 

{Remainder of page intentionally left blank; signatures begin on the following
page]

 

5

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall
be deemed to be a sealed instrument as of the date first above written.

 

 

BORROWERS

 

 

 

SUMMER INFANT, INC.

 

 

 

 

 

 

 

By:

/s/ Mark Messner

 

Name:

Mark Messner

 

Title:

CEO

 

 

 

 

SUMMER INFANT (USA), INC.

 

 

 

 

 

 

 

By:

/s/ Mark Messner

 

Name:

Mark Messner

 

Title:

CEO

 

 

 

 

 

 

 

GUARANTORS

 

 

 

 

SUMMER INFANT CANADA, LIMITED

 

 

 

 

 

 

 

By:

/s/ Mark Messner

 

Name:

Mark Messner

 

Title:

CEO

 

 

 

 

SUMMER INFANT EUROPE LIMITED

 

 

 

 

 

 

 

By:

/s/ Mark Messner

 

Name:

Mark Messner

 

Title:

CEO

 

[Signature Page to Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement]

 

--------------------------------------------------------------------------------

 

 

AGENT

 

 

 

BANK OF AMERICA, N.A., as Agent

 

 

 

 

 

By

/s/ Cynthia G. Stannard

 

Name: Cynthia G. Stannard

 

Title: Senior Vice President

 

[Signature Page to Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement]

 

--------------------------------------------------------------------------------

 

 

LENDER

 

 

 

BANK OF AMERICA, N.A., as Lender

 

 

 

 

 

By

/s/ Cynthia G. Stannard

 

Name: Cynthia G. Stannard

 

Title: Senior Vice President

 

[Signature Page to Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement]

 

--------------------------------------------------------------------------------

 

 

LENDER

 

 

 

 

 

CITIZENS BUSINESS CAPITAL,

 

A DIVISION OF CITIZENS ASSET FINANCE, INC.,

 

as Lender

 

 

 

 

 

By

/s/ Peter Velle

 

Name: Peter Velle

 

Title: VP

 

[Signature Page to Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement]

 

--------------------------------------------------------------------------------

 

 

LENDER

 

 

 

 

 

KEYBANK NATIONAL ASSOCIATION, as Lender

 

 

 

 

 

 

By

/s/ Peter Drooff, VP

 

Name: Peter Drooff

 

Title: Vice President

 

[Signature Page to Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement]

 

--------------------------------------------------------------------------------