EXHIBIT 10.18

SECURED PROMISSORY NOTE

$7,500,000    

Providence, Rhode Island

July 19, 2005

LOAN:

FOR VALUE RECEIVED, Summer Infant, Inc., a Rhode Island corporation, Summer
Infant Europe Limited, a private company limited by shares organized under the
laws of England and Wales with registered number 04322137, and Summer Infant
Asia Limited, a Hong Kong corporation (collectively the “Borrower”), jointly and
severally, unconditionally promise to pay to Bank of America, N.A., a national
banking association (“Bank”), or order, at its offices at 111 Westminster
Street, Providence, Rhode Island, or at such other place as may be designated in
writing by Bank, the principal sum of Seven Million Five Hundred Thousand
Dollars ($7,500,000), or, if less, the aggregate unpaid principal amount of
advances made by Bank to Borrower under that certain Revolving Credit Agreement
between the Borrower and Bank dated as of even date (the “Loan Agreement”),
together with interest in arrears from the date hereof on the unpaid principal
balance hereunder, computed daily, at the RATE per annum indicated below payable
in accordance with the particular PAYMENT SCHEDULE indicated below.

DEFINITIONS:

“Alternate LIBOR Fixed Rate” shall mean a rate per annum equal to the Alternate
LIBOR Rate plus one and three-fourths percent (1.75%).

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“Alternate LIBOR Rate” shall mean, as of any LIBOR Effective Date and for any
particular LIBOR Interest Period, a rate (rounded upward, if necessary, to the
nearest one-hundred thousandth of a percentage point) determined on the basis of
the rates for deposits in U.S. Dollars offered by the Reference Banks at
approximately 11:00 a.m., London time, on the date that is two London Banking
Days preceding the applicable LIBOR Effective Date (as hereinafter defined), for
a term equal to the LIBOR Interest Period commencing on that LIBOR Effective
Date and in an amount equal to the LIBOR Portion. The Bank will request the
principal London office of each of the Reference Banks to provide a quotation of
its U.S. Dollar deposit offered rate. If at least two such quotations are
provided, the rate as of that LIBOR Effective Date will be the arithmetic mean
of the quotations. If fewer than two quotations are provided as requested, the
rate for that date will be determined on the basis of the rates quoted by major
banks in New York City selected by the Bank at approximately 11:00 am., New York
City time, on the date that is two (2) London Banking days preceding the
applicable LIBOR Effective Date, for loans in U.S. Dollars to leading European
banks for a period equal to the LIBOR Interest Period commencing on that LIBOR
Effective Date and in an amount equal to the LIBOR Portion.

“Authorized Person” shall mean a person designated from time to time in writing
by Borrower.

 

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“Banking Day” shall mean, in respect of any city, any day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) in that city.

“Election” means an election by the Borrower to have a LIBOR Fixed Rate apply to
a Revolving Loan Advance, or a portion thereof, pursuant to the terms and
conditions of this Note.

“Fixed Rate Loan” means any Revolving Loan Advance, or that portion thereof,
which bears interest at a LIBOR Fixed Rate.

“Floating Rate Loan” means any Revolving Loan Advance, or that portion thereof,
which bears interest at a rate calculated with reference to the Prime Rate.

“Floating Rate” shall mean an annual rate of interest equal to the Prime Rate
less one-fourth of one percent (.25%).

“Legal Requirement” shall mean any requirement imposed upon the Bank by any law
of the United States of America or by any regulation, order, interpretation,
ruling or official directive (whether or not having the force of law) of the
Board of Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, or any other board or governmental or administrative agency of the
United States of America, or any political subdivision of any thereof.

“LIBOR Fixed Rate” shall mean a rate per annum equal to the LIBOR Rate plus one
and three-fourths percent (1.75%).

 

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“LIBOR Effective Date” means that date specified in a written notice from
Borrower to Bank given not less than two (2) London Banking Days prior to such
date, indicating Borrower’s election to pay interest hereunder based on a LIBOR
Fixed Rate commencing as of such date, subject to the terms and conditions
hereof.

“LIBOR Interest Period” shall mean, as to each Fixed Rate Loan, the period
commencing on the date of the making of such Fixed Rate Loan or the conversion
of a Floating Rate Loan into a Fixed Rate Loan or the continuation of a Fixed
Rate Loan as a Fixed Rate Loan, as the case may be, and ending thirty (30) days
thereafter, as offered by the Bank; provided that any such LIBOR Interest Period
which would otherwise end on a day which is not a Business Day (as defined
below) shall be extended to the next succeeding Business Day; and provided
further that no LIBOR Interest Period may commence on any day which is not a
Business Day.

“LIBOR Portion” shall mean, in connection with an Election to accrue interest at
a LIBOR Fixed Rate, the principal amount of any Advance, or that portion
thereof, subject to such Election.

“LIBOR Rate” means, in relation to a LIBOR Interest Period, the rate per annum
as determined on the basis of the offered rates for deposits in U.S. Dollars in
an amount equal (as nearly as may be) to the LIBOR Portion as of the LIBOR
Effective Date and for a period equal to such LIBOR Interest Period which
appears on the Telerate Page 3750 as of 11:00 a.m. London time, on the date that
is two London Banking Days preceding the LIBOR Effective Date, as adjusted from
time to time pursuant to paragraphs I and 2 of the

 

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TERMS AND CONDITIONS below. If the LIBOR Rate described above does not appear on
the Telerate on any applicable interest determination date, all references
herein to the LIBOR Rate and the LIBOR Fixed Rate shall mean the Alternate LIBOR
Rate and the Alternate LIBOR Fixed Rate, respectively (both as defined above).
Each determination by the Bank of any LIBOR Rate shall, in the absence of
manifest error, be conclusive.

“Loan Agreement” means that certain Revolving Credit Agreement between Borrower
and Bank dated as of even date.

“Maturity Date” means April 30, 2006.

“Prime Rate” means the variable per annum rate of interest designated from time
to time by Bank as its Prime Rate, with such rate changing on the same day on
which any change in the Prime Rate is effective without notice or demand of any
kind. The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate being charged to any customer.

“Reference Banks” means four major banks in the London interbank market, as
selected by the Bank.

“Reserves” shall mean any reserve, reserve asset, capital reserve, minimum
capital requirement, special deposit, insurance premium or assessment required
by any Legal Requirement to be maintained or paid by the Bank for or with
respect to (a) any deposits purchased in the London interbank foreign currency
deposits market, (b) any deposit represented by a certificate of deposit

 

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issued by the Bank, (c) loans made with the proceeds of any such deposits, or
(d) the principal amount of or interest on the LIBOR Portion hereunder bearing
interest at the LIBOR Rate, including any reserves imposed under Regulation D
and any amounts payable to the Federal Deposit Insurance Corporation (the
“FDIC”) or any successor thereto for insurance by the FDIC for time deposits
made in dollars.

“Revolving Loan Advance” shall have the meaning given that term in the Loan
Agreement.

“Tax” shall mean, in relation to the LIBOR Portion and applicable LIBOR Rate,
any tax, levy, impost, duty, deduction, withholding or other charges of whatever
nature required by any Legal Requirement (a) to be paid by the Bank or (b) to be
withheld or deducted from any payment otherwise required hereby to be made by
the Borrower to the Bank, provided that the term “Tax” shall not include any
taxes imposed upon the net income of the Bank by the United States of America,
the United Kingdom, Canada, the Bahamas or any political subdivision thereof.

“Telerate” means, when used in connection with any designated page and the
determination of any LIBOR Rate, the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service,
or such other service as may be nominated as the information vendor, for the
purpose of displaying rates or prices comparable to the LIBOR Rate).

 

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“U.S. Dollars” means the lawful currency of the United States of America.

RATE:

All Advances shall constitute Floating Rate Loans unless the Borrower shall have
made an Election to have a Revolving Loan Advance bear interest at a LIBOR Fixed
Rate.

The rate of interest payable on Floating Rate Loans shall be a floating rate per
annum equal to the Floating Rate. The rate of interest payable on Fixed Rate
Loans will be the LIBOR Fixed Rate applicable thereto.

The Borrower may elect to (i) obtain a Revolving Loan Advance with interest
thereon based on a LIBOR Fixed Rate, (ii) convert a Floating Rate Loan to a
Fixed Rate Loan, or (iii) continue a maturing Fixed Rate Loan effective as of
the last day of the LIBOR Interest Period applicable thereto as a new Fixed Rate
Loan, subject to the following terms and conditions:

 

  (a) Each request for the making, conversion into or continuation of a Fixed
Rate Loan shall be for a minimum amount of One Hundred Thousand Dollars
($100,000), and in integral multiples One Thousand Dollars ($1,000). An Election
shall be made by the Borrower giving to the Lender written or telephonic notice
within the time periods and containing the information described below (a “Fixed
Rate Notice”).

 

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  (b) In the case of a proposed Fixed Rate Loan, the Borrower may request the
Lender for a quote as to a LIBOR Fixed Rate at any time and from time to time
for an applicable LIBOR Interest Period and amount; the Fixed Rate Notice
applicable thereto must be received by the Lender not later than 3:00 p.m.
(Providence time) on the Business Day two days prior to the first day of the
LIBOR Interest Period to be applicable and must specify the amount of principal
to constitute a Fixed Rate Loan, the duration of the proposed LIBOR Interest
Period, and the proposed commencement date and the final date of such LIBOR
Interest Period. No later than 4:00 p.m. of the Business Day prior to the
commencement of the LIBOR Interest Period of such proposed Fixed Rate Loan, the
Borrower will confirm the Fixed Rate Notice in writing if it has previously been
communicated by telephone, and the Lender will confirm to the Borrower the
applicable LIBOR Fixed Rate. If such confirmation does not occur, the Lender may
treat the Fixed Rate Notice as having been rescinded.

 

  (c) Any Fixed Rate Notice shall, upon receipt by the Lender and upon written
confirmation as described above, become irrevocable and binding on the Borrower,
and the Borrower shall, upon demand by the Lender, indemnify the Lender against
any loss or expense incurred by the Lender as a result of any failure by the
Borrower to accept any requested Fixed Rate Loan, including, without limitation,
any loss or expense incurred by reason of the liquidation or redeployment of
deposits or other funds required by the Lender to fund or maintain the Fixed
Rate Loan to be made by the Lender.

 

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  (d) Each Fixed Rate Loan will automatically (unless a Fixed Rate Notice shall
have been given as set forth herein) convert on the last day of the LIBOR
Interest Period applicable thereto into a Floating Rate Loan.

 

  (e) As to any Fixed Rate Loan, the Borrower may not elect to switch from
calculating interest thereon from a fixed rate to a floating rate until the
expiration of the LIBOR Interest Period applicable thereto.

 

  (f) The Borrower may not elect any LIBOR Interest Period for a Fixed Rate Loan
with a maturity subsequent to the Maturity Date.

 

  (g) No more than five (5) Fixed Rate Loans may be outstanding at any one time.

Interest will be calculated on the basis of the actual number of days elapsed
over a year of 360 days. Whenever an Event of Default is in existence under this
Note, the rate of interest on the unpaid principal and interest shall, at the
option of Bank, be at the Default Rate (hereinafter defined).

All agreements between Borrower and Bank are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of
maturity of the indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to

 

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Bank for the use or the forbearance of the indebtedness evidenced hereby exceed
the maximum permissible under applicable law. As used herein, the term
“applicable law” shall mean the law in effect as of the date hereof, provided,
however that in the event there is a change in the law which results in a higher
permissible rate of interest, then this Note shall be governed by such new law
as of its effective date. In this regard, it is expressly agreed that it is the
intent of Borrower and Bank in the execution, delivery and acceptance of this
Note to contract in strict compliance with the laws of the State of Rhode Island
from time to time in effect. If, under or from any circumstances whatsoever,
fulfillment of any provision hereof shall involve transcending the limit of such
validity prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
any circumstances whatsoever Bank should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between Borrower and Bank.

PAYMENT SCHEDULE:

In the event that any payment of principal and/or interest shall not be received
by Bank within TEN (10) days of the due date, the Borrower shall, to the extent
permitted by law, pay Bank not later than one (1) month thereafter a late charge
of FIVE (5%) percent of the overdue payment.

 

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All payments shall be applied first to the payment of all fees, expenses and
other amounts due to the Bank (excluding principal and interest), then to
accrued interest, and the balance on account of outstanding principal; provided,
however, that after the occurrence of an Event of Default (as defined below),
payments will be applied to the obligations of Borrower to Bank as Bank
determines in its sole discretion.

Interest only shall be paid monthly commencing on August 1, 2005 and continuing
on the same day of each successive calendar month thereafter, until payment in
full of the principal hereof, principal shall be paid at the times and upon the
conditions set forth in the Loan Agreement.

If this Note or any payment hereunder becomes due on a day which is not a
Business Day (as defined below), the due date of this Note or payment shall be
extended to the next succeeding Business Day, and such extension of time shall
be included in computing interest and fees in connection with such payment. As
used in this Note, “Business Day” shall mean any day other than a Saturday,
Sunday or day which shall be in the State of Rhode Island a legal holiday or day
on which banking institutions are authorized or required to close.

All payments shall be made by Borrower to Bank in lawful currency of the United
States of America in immediately available funds, without counterclaim or setoff
and free and clear of, and without any deduction or withholding for, any taxes
or other payments.

 

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ADDITIONAL TERMS AND CONDITIONS:

 

1. If at any time during the term of this Note, the Bank shall be required by
any Legal Requirement (other than legal requirements imposed specifically on the
Bank and not applicable to national banks or FDIC-insured banks generally) to
maintain any Reserves in respect of any LIBOR Portion, other than Reserves
existing as of the date of the applicable Date of Determination, the LIBOR Rate
shall be adjusted to reflect all additional costs incurred or to be incurred by
the Bank in maintaining such Reserves. Such costs shall be computed by
determining the amount by which such Legal Requirement effectively increases the
cost to the Bank of obtaining deposits of U.S. Dollars in the London foreign
currency deposits market in amounts equal to the LIBOR Portion. The
determination by the Bank of the amount of such costs and the allocation, if
any, of such costs among the Borrower and other customers of the Bank that have
arrangements with the Bank similar to the Borrower’s LIBOR Rate arrangement, if
done in good faith and, with respect to such allocation, on an equitable basis,
shall, in the absence of manifest error, be conclusive.

 

2.

It is the understanding of the Borrower and the Bank that the Bank shall receive
payments of amounts of principal of and interest on this Note with respect to
the LIBOR Portion from time to time bearing interest under the LIBOR Rate free
and clear of, and without deduction for, any Taxes. If (a)(i) the Bank shall be
subject to any such Tax in respect of any such amount, or (ii) the Borrower
shall be required to withhold or deduct any such Tax from any such amount, and
(b) such Tax shall not have existed as of the date of the applicable LIBOR
Effective Date, the LIBOR Rate shall be adjusted to reflect all additional costs
(including, without limitation, any Taxes due to such adjustment) incurred or to
be incurred by the Bank in connection with the payment by the Bank or the
withholding by the Borrower of such Tax (including, without limitation, any
penalties or interest or expenses),

 

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and the Borrower shall provide the Bank with a statement detailing the amount of
any such Tax actually paid by the Borrower. The determination by the Bank of the
amount of such costs shall, in the absence of manifest error, be conclusive, and
at the Borrower’s request, the Bank shall demonstrate the basis for such
determination. If after any such adjustment and payment of the same by the
Borrower, any part of any Tax paid by the Bank is subsequently recovered by the
Bank, the Bank shall reimburse the Borrower to the extent of the amount so
recovered. A certificate of an officer of the Bank setting forth the amount of
such recovery and the basis therefor shall, in the absence of manifest error, be
conclusive.

 

3. Notwithstanding anything herein to the contrary, the following conditions
must be met in order for the Bank to make the LIBOR Rate available to the
Borrower:

(a) There shall have occurred no change in applicable law which might make it
unlawful in the opinion of counsel for the Bank to obtain deposits of U.S.
Dollars in the London interbank foreign deposits market;

(b) As of a LIBOR Effective Date, there shall exist no Event of Default (as
defined below) which is not waived by the Bank.

(c) The Bank shall not have determined in good faith that it is unable to
determine a LIBOR Rate in respect of a LIBOR Interest Period and the Bank shall
not have determined that it is unable to obtain deposits of U.S. dollars in the
London interbank foreign currency deposits market in the applicable amounts and
for such LIBOR Interest Period.

 

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In the event that a LIBOR Rate is not available, then the indebtedness evidenced
by this Note shall bear interest at a per annum rate equal to the Prime Rate
less one-fourth of one percent.

 

4. Throughout the term of this Note, the determination of a LIBOR Rate on each
Date of Determination shall be irrevocable and binding upon the Borrower.

 

5. Borrower may elect to prepay, upon three (3) days prior written notice, the
principal outstanding hereunder subject to the following conditions:

 

  (i) During any period in which a Floating Rate is being charged, the principal
outstanding hereunder may be prepaid in full or in part without premium or
penalty.

 

  (ii) During any period in which a LIBOR Rate is being charged, the principal
outstanding hereunder may be prepaid only on the last day of a LIBOR Interest
Period. Borrower shall pay to Bank, upon request of Bank, such amount or amounts
as shall be sufficient (in the reasonable opinion of Bank) to compensate it for
any loss, cost or expense incurred as a result of (i) any such payment on a date
other than the last day of a LIBOR Interest Period or (ii) any failure by
Borrower to borrow based on a LIBOR Rate on the date specified in Borrower’s
notice to Bank. Without limiting the foregoing, Borrower shall pay to Bank a
“yield maintenance fee” in an amount computed as follows: The current rate for
United States Treasury securities (bills on a discounted basis shall be
converted to a bond equivalent) with a maturity date closest to the last day of
the then LIBOR Interest Period shall be subtracted from the LIBOR Rate in effect
at the time of prepayment. If the result is zero or a negative number, there
shall be no

 

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prepayment premium. If the result is a positive number, then the resulting
percentage shall be multiplied by the amount of the principal balance being
prepaid. The resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the then LIBOR Interest Period. Said amount shall be
reduced to present value calculated by using the number of days remaining in the
then LIBOR Interest Period and using the above referenced United States Treasury
securities rate. The resulting amount shall be the yield maintenance fee due to
Bank upon the prepayment of a LIBOR loan. Said yield maintenance fee shall be
due and payable, as aforesaid, if the payment of principal due and owing
hereunder is accelerated on account of an Event of Default (hereinafter
described) hereunder

 

6.

Borrower: (i) waives presentment, demand, notice of demand, protest, notice of
protest and notice of nonpayment and any other notice required to be given under
the law to Borrower, in connection with the delivery, acceptance, performance,
default or enforcement of this Note, of any indorsement or guaranty of this Note
or of any document or instrument evidencing any security for payment of this
Note; (ii) consents to any and all delays, extensions, renewals or other
modifications of this Note or waivers of any term hereof or release or discharge
by Bank of any guarantor or release, substitution or exchange of any security
for the payment hereof or the failure to act on the part of Bank or any
indulgence shown by Bank, from time to time and in one or more instances
(without notice to or further assent from Borrower), and agrees that no such
action, failure to act or failure to exercise

 

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any right or remedy, on the part of Bank shall in any way affect or impair the
obligations of Borrower or be construed as a waiver by Bank of, or otherwise
affect, any of Bank’s rights under this Note, under any indorsement or guaranty
of this Note or under any document or instrument evidencing any security for
payment of this Note; and (iii) agrees to pay, on demand, all costs and expenses
of collection of this Note or of any indorsement or any guaranty hereof and/or
the enforcement of Bank’s rights with respect to, or the administration,
supervision, preservation, protection of, or realization upon, any property
securing payment hereof, including reasonable attorneys’ fees.

 

7. This Note is delivered in and shall be construed under the internal laws (and
not the law of conflicts or choice of law) of the State of Rhode Island, and in
any litigation in connection with, or enforcement of, this Note or of any
indorsement or guaranty of this Note or any security given for payment hereof,
Borrower CONSENTS TO AND CONFERS PERSONAL JURISDICTION ON COURTS OF THE STATE OF
RHODE ISLAND OR OF THE FEDERAL GOVERNMENT SITTING THEREIN, AND EXPRESSLY WANES
ANY OBJECTIONS AS TO VENUE IN ANY OF SUCH COURTS. The term “Bank” as used in
this Note shall include Bank’s successors, indorsees and assigns.

 

8. The occurrence of any one or more of the following events shall constitute an
Event of Default under this Note:

(a) default in the payment of any installment of the principal of, or fees or
interest on, this Note after the date when the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment or by
acceleration or otherwise, and the continuance of such default for a period of
ten (10) days after such due date;

 

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(b) default, after the expiration of any applicable grace periods, in the due
observance or performance of any covenant, promise or provision contained in any
other agreement of the Borrower in favor of Bank, including, without limitation,
any other promissory note, loan agreement, mortgage deed, or security document;

(c) any Event of Default shall occur and be continuing as defined under any of
the Security Documents, or as defined under the Loan Agreement.

 

9. Whenever an Event of Default is in existence under this Note, the entire
balance outstanding hereunder and all other liabilities, indebtedness and
obligations of Borrower to Bank (however acquired or evidenced) shall, at the
option of Bank, become forthwith due and payable, without presentment, notice,
protest or demand of any kind (all of which are expressly waived by Borrower)
for the payment of the whole or any part hereof. Whenever an Event of Default is
in existence under this Note (whether or not Bank has accelerated payment of
this Note), or after maturity or after judgment has been rendered on this Note,
to the extent permitted by law, the rate of interest on the unpaid principal
shall, at the option of Bank, be increased to four percent (4%) over the rate
which would otherwise be applicable (the “Default Rate”). Failure at any time to
exercise either of the aforesaid options or any other rights of Bank hereunder
shall not constitute a waiver thereof, nor shall it be a bar to exercise of
either of the aforesaid options or rights at a later date.

 

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10. In the event any one or more of the provisions of this Note shall for any
reason be held to be invalid, illegal or unenforceable, in whole or in part or
in any respect or in the event that any one or more of the provisions of this
Note operate or would prospectively operate to invalidate this Note, then and in
either of those events, such provision or provisions only shall be deemed null
and void and shall not affect any other provision of this Note and the remaining
provisions of this Note shall remain operative and in full force and effect and
shall in no way be affected, prejudiced or disturbed thereby.

 

11. BORROWER AND BANK (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR
ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR
ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF BANK RELATING TO THE
ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT
NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. BORROWER CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF BANK HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT BANK WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER. THIS WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR BANK TO
ACCEPT THIS NOTE AND MAKE THE LOAN.

 

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12. Bank may at any time pledge or assign all or any portion of its rights under
this Note to any of the twelve (12) Federal Reserve Banks organized under
Section 4 of the Federal Reserve Act, 12 U.S .C. Section 341. No such pledge or
assignment or enforcement thereof shall release Bank from its obligations under
any of the loan documents evidencing or securing this Note.

 

13. Bank shall have the unrestricted right at any time and from time to time,
and without the consent of or notice to Borrower, to grant to one or more banks
or other financial institutions (each a “Participant”) participating interests
in the obligations evidenced hereby. In the event of any such grant by Bank of a
participating interest to a Participant, whether or not upon notice to Borrower,
Bank shall remain responsible for the performance of its obligations hereunder
and Borrower shall continue to deal solely and directly with Bank in connection
with Bank’s rights and obligations hereunder. Bank may furnish any information
concerning Borrower in its possession from time to time to prospective
Participants, provided that Bank shall require any such prospective Participant
to agree in writing to maintain the confidentiality of such information.

 

14.

Borrower shall pay on demand all expenses of Bank in connection with the
preparation, administration, default, collection, waiver or amendment of loan
terms, or in connection with Bank’s exercise, preservation or enforcement of any
of its rights, remedies or options hereunder, including, without limitation,
fees of outside legal counsel or the allocated costs of in-house legal counsel,
accounting, consulting, brokerage or other similar professional fees or
expenses, and any fees or expenses associated with travel or other costs
relating to any appraisals or examinations conducted in connection with the loan
or any collateral

 

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therefor, and the amount of all such expenses shall, until paid, bear interest
at the rate applicable to principal hereunder (including any default rate) and
be an obligation secured by any collateral.

 

15. Upon receipt of an affidavit of an officer of Bank as to the loss, theft,
destruction or mutilation of the Note or any other security document which is
not of public record, and, in the case of any such loss, theft, destruction or
mutilation, upon cancellation of such Note or other security document, Borrower
will issue, in lieu thereof, a replacement Note or other security document in
the same principal amount thereof and otherwise of like tenor.

 

16. No portion of the proceeds of the loan evidenced by this Note shall be used,
in whole or in part, for the purpose of purchasing or carrying any “margin
stock” as such term is defined in Regulation U of the Board of Governors of the
Federal Reserve System.

 

17.

Bank shall have the unrestricted right at any time or from time to time, and
without Borrower’s consent, to assign all or any portion of its rights and
obligations hereunder to one or more banks or other financial institutions
(each, an “Assignee”), and Borrower, upon its or its counsel’s satisfactory
review, agrees that it shall execute, or cause to be executed, such documents,
including, without limitation, amendments to this Note and to any other
documents, instruments and agreements executed in connection herewith as Bank
shall deem necessary to effect the foregoing Bank agrees to reimburse Borrower
for its reasonable legal expenses incurred in connection with the execution of
any such documentation. In addition, at the request of Bank and any such
Assignee, Borrower shall issue one or more new promissory notes, as applicable,
to any such Assignee and, if Bank has

 

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retained any of its rights and obligations hereunder following such assignment,
to Bank, which new promissory notes shall be issued in replacement of, but not
in discharge of, the liability evidenced by this Note and held by Bank prior to
such assignment and shall reflect the amount of the respective loans held by
such Assignee and Bank after giving effect to such assignment, provided,
however, that in no event shall the amount due under the subsequent notes exceed
the amount due under this Note. Upon the execution and delivery of appropriate
assignment documentation, amendments and any other documentation required by
Bank in connection with such assignment, and the payment by Assignee of the
purchase price agreed to by Bank, and such Assignee, such Assignee shall have
all of the rights and obligations of Bank hereunder (and under any and all other
guaranties, documents, instruments and agreements executed in connection
herewith) to the extent that such rights and obligations have been assigned by
Bank pursuant to the assignment documentation between Bank and such Assignee.
Bank may furnish any information concerning Borrower in its possession from time
to time to prospective Assignees, provided that Bank shall require any such
prospective Assignee to agree in writing to maintain the confidentiality of such
information.

 

18. This Note is intended by the parties as the final, complete and exclusive
statement of the transactions evidenced by this Note. All prior or
contemporaneous promises, agreements and understandings, whether oral or
written, are deemed to be superseded by this Note, and no party is relying on
any promise, agreement or understanding not set forth in this Note. This Note
may not be amended or modified except by a written instrument describing such
amendment or modification executed by Borrower and Bank.

 

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  19. By mutual agreement of Borrower and Bank, Bank may effect payment of any
sums due hereunder by means of debiting any of Borrower’s demand deposit
accounts with Bank.

SECURITY:

Borrower hereby grants to Bank, a continuing lien, security interest and right
of setoff as security for all liabilities and obligations to Bank, whether now
existing or hereafter arising, upon and against all deposits, credits,
collateral and property, now or hereafter in the possession, custody,
safekeeping or control of Bank or any entity under the control of bank of
America Corporation and its successors and assigns, or in transit to any of
them. At any time, without demand or notice (any such notice being expressly
waived by Borrower), Bank may set off the same or any part thereof and apply the
same to any liability or obligation of Borrower even though unmatured and
regardless of the adequacy of any other collateral securing this Note. ANY AND
ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO
ANY OTHER COLLATERAL WHICH SECURES THIS NOTE, PRIOR TO EXERCISING ITS RIGHTS OF
SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER, ARE
HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

 

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This Note is also secured by and entitled to the benefits of a Guaranty, a
Security Agreement, and a Debenture, all dated as of even date (collectively
herein the “Security Documents”).

 

WITNESS:       BORROWER:     Summer Infant, Inc.

/s/ Steven Rosenbaum

    By:  

/s/ Mark D. Gorton

    Name:   Mark D. Gorton     Title:   VP Finance     Summer Infant Europe
Limited

/s/ Steven Rosenbaum

    By:  

/s/ Mark D. Gorton

    Name:   Mark D. Gorton     Title:   Financing Officer     Summer Infant Asia
Limited

/s/ Steven Rosenbaum

    By:  

/s/ Mark D. Gorton

    Name:   Mark D. Gorton     Title:   Financing Officer    

6 Blackstone Valley Place, Suite 206A

Lincoln, RI -02865

 

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