Exhibit 10.1

 

Execution Version

 

FOURTH AMENDMENT AND WAIVER TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This FOURTH AMENDMENT AND WAIVER TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this “Amendment”) is dated as of October 16, 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, that certain Second Amendment to
Amended and Restated Loan and Security Agreement dated as of May 24, 2016, and
that certain Third Amendment and Waiver to Amended and Restated Loan and
Security Agreement dated as of February 17, 2017 (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Loan
Agreement”);

 

WHEREAS, on September 18, 2017, Toys “R” Us, Inc. announced that it had
commenced Insolvency Proceedings (the “Toys “R” Us Insolvency Proceedings”), and
as a result of the Toys “R” Us Insolvency Proceedings, Accounts owing from the
Toys “R” Us Companies (the “Toys “R” Us Accounts”) no longer constitute Eligible
Accounts; and

 

WHEREAS, after deducting the Toys “R” Us Accounts from Eligible Accounts, the
aggregate Revolver Loans outstanding during the period from September 18, 2017
through the date of this Amendment have exceeded the Revolver Borrowing Base,
resulting in Revolver Overadvances (the “Toys “R” Us Revolver Overadvances”);

 

WHEREAS, Borrowers have requested that Agent and Lenders waive any violations of
the Loan Agreement that are directly attributable to the Toys “R” Us Revolver
Overadvances and that Agent and Lenders amend certain provisions of the Loan
Agreement to, among other things, temporarily increase the Revolver Borrowing
Base to account for the failure of the Toys “R” Us Accounts to constitute
Eligible Accounts, increase the maximum percentage of Accounts owing from the
Amazon Companies and the Wal-Mart Companies that may be included as Eligible
Accounts, and increase the maximum permitted Leverage Ratio for the period of
four Fiscal Quarters ending September 30, 2017; and

 

WHEREAS, Lenders and Agent are willing to waive any violations of the Loan
Agreement that are directly attributable to the Toys “R” Us Revolver
Overadvances and 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.

 

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2.                                      Waiver of Violations Directly
Attributable to Toys “R” US Revolver Overadvances.  Subject to the satisfaction
of the terms and conditions set forth in this Amendment, Agent and Lenders
hereby waive any violations of the Loan Agreement that occurred during the
period from September 18, 2017 through the date of this Amendment (the
“Overadvance Waiver Period”) and that are directly attributable to the failure
of Toy “R” Us Accounts to constitute Eligible Accounts.  The parties agree that
(a) the foregoing waiver is limited solely to violations of the Loan Agreement
occurring during the Overadvance Waiver Period that are directly attributable to
the failure of Toy “R” Us Accounts to constitute Eligible Accounts 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 “EBITDA” is hereby amended
by deleting the word “and” following the end of clause (b)(xix), relabeling
clause “(b)(xx)” as clause “(b)(xxi)”, and inserting a new clause (b)(xx) as
follows:

 

“(xx) 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, the aggregate amount of Accounts owing from the Toys “R” Us Companies
attributable to goods delivered by Borrowers to the Toys “R” Us Companies prior
to September 18, 2017 (the date on which Toys “R” Us, Inc. commenced Insolvency
Proceedings) written off as uncollectible by Borrowers during such period; and”

 

(b)                                 The definition of “Eligible Account” is
hereby amended by deleting clauses (e) and (f) of such definition in their
entirety and replacing such clauses with the following:

 

“(e) with respect to any Account owing from the Amazon Companies, when
aggregated with other Accounts owing from the Amazon Companies, it exceeds 45%
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));

 

(f) with respect to any Account owing from the Wal-Mart Companies, when
aggregated with other Accounts owing from the Wal-Mart Companies, it exceeds 35%
of the aggregate Eligible Accounts, (provided, that only the amount of Accounts
in excess of the percentage set forth in this clause (f) shall be deemed
ineligible under this clause (f))”

 

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

 

“(j) an Insolvency Proceeding has been commenced by or against the Account
Debtor (provided that, Agent may, in its Permitted Discretion, elect to permit
certain Accounts as determined by Agent from time to time, in its Permitted
Discretion, that are owing from an Account Debtor that is the subject of

 

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Insolvency Proceedings to be included as Eligible Accounts notwithstanding this
clause (j) if Agent shall have determined, in its Permitted Discretion, that
(i) the applicable Account Debtor has been authorized to pay such Accounts in
full, whether through entry of a critical vendor order or approval of the
payment on any other basis, or (ii) the Accounts arise subsequent to the
commencement of the Insolvency Proceeding and are payable by the Account Debtor
in the ordinary course of business; provided, further, that, so long as Toys “R”
Us, Inc. remains the subject of Insolvency Proceedings, (x) the aggregate amount
of Accounts owing from the Toys “R” Us Companies that may be included as
Eligible Accounts shall not exceed $3,000,000 and (y) no Account owing from any
of the Toys “R” Us Companies shall be included as an Eligible Account if it is
unpaid for more than 45 days after the original invoice date); or the Account
Debtor has failed, has suspended or ceased doing business, is liquidating,
dissolving or winding up its affairs, is not Solvent, or is subject to any
Sanction or on any specially designated nationals list maintained by OFAC; or
the Borrower is not able to bring suit or enforce remedies against the Account
Debtor through judicial process;”

 

(d)                                 The definition of “Revolver Borrowing Base”
is hereby amended and restated in its entirety, as follows:

 

“Revolver Borrowing Base: on any date of determination, an amount equal to the
sum of (a) the Accounts Formula Amount, plus (b) the Inventory Formula Amount,
plus (c) the Temporary Overadvance Amount, minus (d) the Availability Reserve
established by Agent in its Permitted Discretion, provided, however, that
(i) Eligible In-Transit Inventory shall in no event contribute more than
$7,000,000 (after giving effect to the Inventory Formula Amount) to the Revolver
Borrowing Base at any time and (ii) Eligible Accounts owing to and Eligible
Inventory held by the UK Guarantors shall not contribute more than an aggregate
of $6,000,000 (after giving effect to the Account Formula Amount and Inventory
Formula Amount, respectively) to the Revolver Borrowing Base at any time.  If
any amount in this definition is stated in a currency other than Dollars on any
date, then such amount on such date shall be equal to the Dollar Equivalent of
such amount in such other currency.”

 

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

 

“Fourth Amendment Effective Date:  the date on which that certain Fourth
Amendment and Waiver to Amended and Restated Loan and Security Agreement became
effective, which date is October 16, 2017.”

 

“Temporary Overadvance Amount: means the following amounts during the following
periods:

 

Applicable Period

 

Temporary
Overadvance Amount

 

Fourth Amendment Effective Date - October 21, 2017

 

$

3,000,000

 

October 22 - 28, 2017

 

$

3,000,000

 

October 29 — November 4, 2017

 

$

3,000,000

 

November 5 - 11, 2017

 

$

2,750,000

 

November 12 - 18, 2017

 

$

2,750,000

 

November 19 - 25, 2017

 

$

2,500,000

 

November 26 — December 2, 2017

 

$

2,500,000

 

December 3 — 9, 2017

 

$

2,000,000

 

From and after December 10, 2017

 

$

0

 

 

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4.                                      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

September 30, 2017

 

6.00 to 1.00

December 30, 2017

 

5.50 to 1.00

April 1, 2018 and thereafter

 

3.75 to 1.00

 

5.                                      No Default; Representations and
Warranties, Etc.  Obligors hereby represent, warrant and confirm that: (a) after
giving effect to this Amendment, 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.

 

6.                                      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.

 

7.                                      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.

 

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(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), an amendment fee in an amount equal to 12.5 basis points multiplied by
such 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 Fourth 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.

 

8.                                      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]

 

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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/ William Mote

 

Name:

William Mote

 

Title:

CFO

 

 

 

SUMMER INFANT (USA), INC.

 

 

 

 

 

 

By:

/s/ William Mote

 

Name:

William Mote

 

Title:

CFO

 

 

 

 

 

GUARANTORS

 

 

 

SUMMER INFANT CANADA, LIMITED

 

 

 

 

 

 

By:

/s/ William Mote

 

Name:

William Mote

 

Title:

CFO

 

 

 

SUMMER INFANT EUROPE LIMITED

 

 

 

 

 

 

By:

/s/ William Mote

 

Name:

William Mote

 

Title:

CFO

 

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

 

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AGENT

 

 

 

BANK OF AMERICA, N.A., as Agent

 

 

 

 

 

By

/s/ Cynthia G. Stannard

 

Name:

Cynthia G. Stannard

 

Title:

Senior Vice President

 

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

 

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LENDER

 

 

 

BANK OF AMERICA, N.A., as Lender

 

 

 

 

 

By

/s/ Cynthia G. Stannard

 

Name:

Cynthia G. Stannard

 

Title:

Senior Vice President

 

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

 

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LENDER

 

 

 

 

 

CITIZENS BUSINESS CAPITAL,

 

A DIVISION OF CITIZENS ASSET FINANCE, INC.,

 

as Lender

 

 

 

 

 

By

/s/ Peter Yelle

 

Name:

Peter Yelle

 

Title:

VP

 

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

 

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LENDER

 

 

 

 

 

KEYBANK NATIONAL ASSOCIATION, as Lender

 

 

 

 

 

By

/s/ Peter Drooff

 

Name:

Peter Drooff

 

Title:

Vice President

 

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

 

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