Exhibit 10.4

 

July 14, 2020

 

 

Summer Infant, Inc.

1275 Park East Drive

Woonsocket, RI 02895

Attn: Ed Schwartz Chief Financial Officer     Re:         ABL Credit Agreement
and Term Loan Agreements

 

Gentlemen:

 

Reference is hereby made to the following agreements:

 

(a)            the Second Amended and Restated Loan and Security Agreement dated
as of June 28, 2018 (as previously amended and as the same may be further
amended, restated, supplemented or otherwise modified from time to time, the
“ABL Credit Agreement”), by and among Summer Infant, Inc. and Summer Infant
(USA), Inc., as “Borrowers” (the “Borrowers”), the guarantors from time to time
party thereto (the “Guarantors”, and together with the Borrowers, the
“Obligors”), Bank of America, N.A., as the sole lender (the “ABL Lender”), and
Bank of America in its capacity as “Agent” for the ABL Lenders from time to time
party to ABL Credit Agreement (in such capacity, the “ABL Agent”);

 

(b)            the Term Loan and Security Agreement, dated as of June 28, 2018
(as previously amended and as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the “Term
Loan Agreement”), by and among the Borrowers, the other Obligors, certain
financial institutions from time to time party thereto as “Lenders” (the “Term
Lenders”), and Pathlight Capital LLC, in its capacity as “Agent” for the Term
Lenders under the Term Loan Agreement (the “Term Loan Agent”); and

 

(c)            the Intercreditor Agreement, dated as of June 28, 2018 (as
previously amended and as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the
“Intercreditor Agreement”), by and among the ABL Agent, the Term Loan Agent, the
Borrowers and the other Obligors.

 

Clause (d) of the definition of “Eligible Account” in the ABL Credit Agreement
limits the maximum percentage of Accounts owing from the Amazon Companies to 45%
of the aggregate Eligible Accounts. The Borrowers have requested that the ABL
Agent and ABL Lender agree to increase the maximum percentage of Accounts owing
from the Amazon Companies to 55% of the aggregate Eligible Accounts for a
temporary period as more fully set forth herein.

 

Section 5.2(a)(4) of the Intercreditor Agreement requires the consent of the
Term Loan Agent to changes to the “Revolving Borrowing Base” (as such term is
defined in the ABL Credit Agreement) or the component definitions thereof if
such change would result in an increase in the ABL Revolver Borrowing Base (as
such term is defined in the Intercreditor Agreement), and, accordingly, the
Borrowers have requested the consent of the Term Loan Agent to the proposed
increase in the maximum percentage of Accounts owing the Amazon Companies that
may be included as Eligible Accounts under the ABL Credit Agreement.

 

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Notwithstanding that none of the ABL Agent, the ABL Lender or the Term Loan
Agent are under any obligation to agree (or to consent to) any increase in the
maximum percentage of Accounts owing from the Amazon Companies that may be
included as “Eligible Accounts” under the ABL Credit Agreement, the ABL Agent,
the ABL Lender and the Term Loan Agent willing to agree (and to consent to) a
temporary increase in the maximum percentage of Accounts owing from the Amazon
Companies that may be included as “Eligible Accounts” under the ABL Credit
Agreement, all on the terms and subject to satisfaction of the conditions set
forth below.

 

In furtherance thereof:

 

1.            The ABL Agent and ABL Lender agree that during the period from the
date of this letter agreement through November 15, 2020, the maximum percentage
of Accounts owing from the Amazon Companies that may be included as “Eligible
Accounts” under the ABL Credit Agreement shall be increased from 45% to 55%;
provided that (a) on November 16, 2020, the maximum percentage of Accounts owing
from the Amazon Companies that may be included as “Eligible Accounts” under the
ABL Credit Agreement shall automatically be reduced back to 45%, and (b) 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 ABL Agent shall have the right, in its
sole discretion to decrease the maximum percentage of Accounts owing from the
Amazon Companies that may be included as “Eligible Accounts” under the ABL
Credit Agreement to such maximum percentage as the ABL Agent, in its sole
discretion, shall specify.

 

2.            The Term Loan Agent consents to the increase in the maximum
percentage of Accounts owing from the Amazon Companies that may be included as
“Eligible Accounts” under the ABL Credit Agreement as provided in the foregoing
paragraph 1.

 

3.            The Obligors hereby represent, warrant and confirm that: (a) all
representations and warranties of the Obligors in the ABL Credit Agreement and
the other ABL Documents (as such term is defined in the Intercreditor
Agreement), and in the Term Loan Agreement and the other Term Documents (as such
term is defined in the Intercreditor Agreement), 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) no Default or Event of Default (as such terms are
defined in the ABL Credit Agreement) has occurred and is continuing; and (c) no
Default or Event of Default (as such terms are defined in the Term Loan
Agreement) has occurred and is continuing.

 

4.            Obligors hereby ratify and confirm all of the terms and provisions
of the ABL Credit Agreement, the other ABL Documents, the Term Loan Agreement
and the other Term Documents, and agree that all of such terms and provisions,
as amended hereby, remain in full force and effect.

 

5.            The agreements provided in this letter agreement shall become
effective as of the date when, and only when, the ABL Agent shall have received
counterparts to this letter agreement, duly executed by the ABL Agent, the ABL
Lender, the Term Loan Agent and the Obligors.

 

6.            The agreements provided by this letter agreement shall be limited
precisely as written and, except as expressly set forth herein, neither the fact
of the agreements of the ABL Agent, the ABL Lender and the Term Loan Agent to
enter into this letter agreement nor any other term or provision herein shall,
or shall be deemed or construed to, (i) be a consent to any forbearance, waiver,
amendment or modification of any term, provision or condition of the ABL Credit
Agreement, the other ABL Documents, the Term Loan Agreement or the other Term
Documents, (ii) affect, impair, operate as a waiver of, or prejudice any right,
power or remedy which the ABL Agent, the ABL Lender, the Term Loan Agent or the
Term Lenders may now or hereafter have pursuant to the ABL Credit Agreement, the
other ABL Documents, the Term Loan Agreement or the other Term Documents or any
other document, agreement, security agreement or instrument executed in
connection with or related to the ABL Credit Agreement, the other ABL Documents,
the Term Loan Agreement or the other Term Documents, or at law or in equity or
by statute including, without limitation, with regard to any existing or
hereafter arising Default or Event of Default under the ABL Credit Agreement or
under the Term Loan Agreement, (iii) impose upon the ABL Agent, the ABL Lender,
the Term Loan Agent or any Term Lender any obligation, express or implied, to
consent to any amendment or further modification of the the ABL Credit
Agreement, the other ABL Documents, the Term Loan Agreement or the other Term
Documents, or (iv) be a consent to any waiver of any existing Default or Event
of Default under the ABL Credit Agreement or under the Term Loan Agreement. The
ABL Agent, the ABL Lender, the Term Loan Agent and the Term Lenders hereby
expressly reserve all rights, powers and remedies specifically given to it or
them under the ABL Credit Agreement, the ABL Documents, the Term Loan Agreement
or the Term Documents or now or hereafter existing at law, in equity or by
statute.

 

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7.            The Obligors hereby confirm that prior to executing this letter
agreement, the Obligors consulted with and had the benefit of advice of legal
counsel of their own selection and have relied upon the advice of such counsel,
and in no part upon the representations of the ABL Agent, the ABL Lender, the
Term Loan Agent, any Term Lender or any counsel to the ABL Agent, the ABL
Lender, the Term Loan Agent or any Term Lender, concerning the legal effects of
this letter agreement or any provision hereof.

 

8.            The Borrowers agree to pay, on demand, all reasonable costs and
expenses incurred by the ABL Agent, the ABL Lender and the Term Loan Agent in
connection with the preparation, negotiation and execution of this letter
agreement, including, without limitation, the reasonable fees of legal counsel
to the ABL Agent, the ABL Lender and the Term Loan Agent and any taxes or
expenses associated with or incurred in connection with any instrument or
agreement referred to herein or contemplated hereby.

 

9.            This letter agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts taken together shall constitute but one and
the same instrument. Delivery of an executed counterparty of a signature page of
this letter agreement by electronic means shall be as effective as delivery of a
manually executed counterpart of this letter agreement.

 

10.          This letter agreement shall be deemed to be an ABL Document and a
Term Document for all purposes.

 

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Please confirm your agreement to the foregoing matters by counter-signing a copy
of this Letter in the space provided therefor below and thereafter returning a
fully executed copy hereof to the undersigned at your earliest opportunity.

 

  Yours etc.,           BANK OF AMERICA, N.A.,   as ABL Agent and ABL Lender    
      By /s/ Cynthia G. Stannard     Name: Cynthia G. Stannard     Title: Senior
Vice President           PATHLIGHT CAPITAL LLC,   as Term Loan Agent          
By /s/ Katie Hendricks     Name: Katie Hendricks     Title: Managing Director

 

 

[Signatures continue on the following page]

 

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BORROWERS:

 

SUMMER INFANT, INC.           By: /s/ Ed Schwartz       Name: Ed Schwartz      
Title: Chief Financial Officer       SUMMER INFANT (USA), INC.           By: /s/
Ed Schwartz       Name: Ed Schwartz       Title: Chief Financial Officer      
GUARANTORS:       SUMMER INFANT CANADA, LIMITED           By: /s/ Ed Schwartz  
    Name: Ed Schwartz       Title: Chief Financial Officer       SUMMER INFANT
EUROPE LIMITED           By: /s/ Ed Schwartz       Name: Ed Schwartz      
Title: Chief Financial Officer   

 

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