Exhibit 10.2

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS EXHIBIT,
MARKED BY [***], HAS BEEN OMITTED PURSUANT TO REGULATION S-K, ITEM 601(b)(10)
BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE
REGISTRANT IF PUBLICLY DISCLOSED.

 

AMENDMENT NO. 3 TO

TERM LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO 3 TO TERM LOAN AND SECURITY AGREEMENT (this “Amendment”) is
dated as of January 17, 2020 by and among SUMMER INFANT, INC. and SUMMER INFANT
(USA), INC., as “Borrowers” (“Borrowers”), the guarantors from time to time
party to the Loan Agreement referenced below (“Guarantors”, and together with
Borrowers, “Obligors”), certain financial institutions from time to time party
to the Loan Agreement referenced below (“Lenders”), and PATHLIGHT CAPITAL LLC,
in its capacity as “Agent” for the Lenders under the Loan Agreement referenced
below (“Agent”).

 

R E C I T A L S:

 

WHEREAS, the Obligors, the Agent, and the Lenders have previously entered into
that certain Term Loan and Security Agreement, dated as of June 28, 2018 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”), pursuant to which the Lenders have made certain loans and
financial accommodations available to the Borrowers;

 

WHEREAS, Borrowers have requested that Agent and Lenders amend certain
provisions of the Loan Agreement and provide certain other accommodations to
Borrowers;

 

WHEREAS, notwithstanding that the Agent and Lenders are under no obligation to
amend the Loan Agreement, the Agent and Lenders are willing to make certain
additional financial accommodations as requested by the Borrowers, such that the
Borrowers, the Agent and Lenders have agreed to amend the Loan Agreement and the
other Loan Documents on the terms and subject to satisfaction of the conditions
set forth in this Agreement; and

 

WHEREAS, each Obligor is entering into this Amendment with the understanding and
agreement that, except as specifically provided herein, none of Agent’s or any
Lender’s rights or remedies as set forth in the Loan Agreement and the other
Loan Documents are being waived or modified by the terms of this Amendment.

 

NOW, THEREFORE, for and in consideration of the premises and mutual agreements
and covenants herein contained and for the purposes of setting forth the terms
and conditions of this Amendment, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be bound, hereby agree as follows:

 

AGREEMENT

 

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.       Acknowledgements and Stipulations. In order to induce the Agent and
Lenders to enter into this Amendment, each Obligor acknowledges, stipulates and
agrees that:

 

a)                   Recitals True and Correct. Each of the Recitals contained
at the beginning of this Amendment is true and correct;

 

 

 

 

b)                  Obligations Outstanding. Borrowers hereby acknowledge and
agree that, in accordance with the terms and conditions of the Loan Documents,
each Borrower is liable to Agent and Lenders for all of the Obligations,
including, without limitation, (a) for all principal and accrued interest owed
under the Loan Documents, whether now due or hereafter accruing; and (b) for all
fees, and all Extraordinary Expenses (including reasonable attorneys’ fees and
expenses) heretofore or hereafter incurred by Agent and/or any Lender in
connection with the protection, preservation, and enforcement by Agent and
Lenders of its/their rights and remedies under the Loan Documents and/or this
Amendment, including, without limitation, the negotiation and preparation of
this Amendment, and any of the other documents, instruments or agreements
executed in connection therewith. As of the close of business on January 16,
2020, the aggregate principal balance of the Term Loan is $16,406,250, exclusive
of accrued and accruing interest, costs and attorneys’ fees and other expenses
chargeable to Obligors under the Loan Documents;

 

c)                   No Defense or Counterclaim. All of the Loans and other
Obligations are not subject to any defense, deduction, offset or counterclaim by
Obligors to Lenders (and, to the extent any Obligor had any such defense,
deduction, offset or counterclaim on the date hereof, the same is hereby waived
by each such Obligor in accordance with Section 8 below);

 

d)                  Loan Documents Binding and Enforceable. The Loan Documents
executed by Obligors are legal, valid and binding obligations enforceable
against each Obligor in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally;

 

e)                   Liens Valid. The Liens granted by Obligors to the Agent,
for the benefit of itself and the Lenders, in the Collateral are valid and duly
perfected, first-priority liens, subject only to any Permitted Encumbrances;

 

f)                   Security Interest Ratification. Each Obligor hereby
ratifies, confirms and reaffirms that all security interests and Liens granted
pursuant to the Loan Documents secure and shall continue to secure the payment
and performance of all of the Obligations and liabilities pursuant to the Loan
Documents, whether now existing or hereafter arising; and

 

g)                  Legal Counsel. Prior to executing this Amendment, Obligors
consulted with and had the benefit of advice of legal counsel of its/their own
selection and has relied upon the advice of such counsel, and in no part upon
the representations of the Agent, any Lender, or any counsel to the Agent or any
Lender, concerning the legal effects of this Amendment or any provision hereof.

 

3.       Amendments to the Loan Agreement.

 

(a)                Section 1.1 of the Loan Agreement is hereby amended as
follows:

 

1)                  The following new definitions shall be added to Section 1.1
of the Loan Agreement:

 

“Third Amendment” means: that certain Amendment No. 3 to Term Loan and Security
Agreement dated as of January 17, 2020 by and among Borrowers, Guarantors, and
Agent.”

 

“Third Amendment Effective Date” means: January 17, 2020.”

 

2)                  The definition of “Financial Covenant Trigger Amount” is
hereby amended and restated as follows:

 

“Financial Covenant Trigger Amount: means, at any time of determination, if
Availability is an amount less than: (a) at any time through and including
February 29, 2020, $4,000,000; (b) at any time from and after March 1, 2020,
$5,000,000.”

 

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3)                  The definition of “IP Advance Rate Reduction Amount” is
hereby amended and restated as follows:

 

““IP Advance Rate Reduction Amount: means, as of each applicable date of
determination, (a) through and including February 29, 2020, a reduction of the
then otherwise applicable IP Advance R ate in an amount equal to 5.0 percentage
points; and (b) on and after March 1, 2020, a reduction of the then otherwise
applicable IP Advance Rate in an amount equal to 10.0 percentage points.”

 

(b)                Section 10.1.17 (Sale or Merger) of the Loan Agreement is
hereby amended by deleting the text of subclause (3) thereof in its entirety and
substituting in its place the following: [***]

 

4.       Updated Business Plan. On or before February 7, 2020, Borrowers and the
Financial Consultant must deliver to Agent and Lenders an updated business plan,
which business plan shall describe those various restructuring initiatives to be
implemented by the Borrowers, and otherwise must be reasonably satisfactory to
Agent, in its discretion.

 

5.       International Machinery and Equipment. On or before February 1, 2020,
Borrowers shall deliver to Agent a detailed listing of all Borrower-owned
machinery and equipment located in China and Mexico, including, but not limited
to, all tools and dyes. Promptly upon Agent’s request, Obligors shall deliver
such instruments and agreements, and shall take such actions, as Agent
reasonably deems necessary and appropriate under Applicable Law to evidence or
perfect its Lien on any Collateral located in China and/or Mexico, or otherwise
to give effect to the intent of the Loan Agreement with respect thereto. Each
Obligor authorizes Agent to file any financing or similar statement pursuant to
Applicable Law covering any Collateral of such Obligor located in China and
Mexico, including, without limitation, machinery and equipment (including any
and all tools and dyes), or words to similar effect.

 

6.       Consent to Revolver Loan Agreement Amendment. Agent and Lenders hereby
consent to the execution and delivery of that certain Amendment No. 3 to Second
Amended and Restated Loan and Security Agreement dated as of January 17, 2020 by
and among Borrowers, the guarantors and lenders party thereto, and the Revolver
Agent (the “Revolver Loan Agreement Amendment”), and the amendments to the
Revolver Loan Agreement set forth therein, which Revolver Loan Agreement
Amendment shall be in the form annexed hereto as Exhibit B and incorporated
herein. The consent of the Agent and Lenders to the Revolver Loan Agreement
Amendment shall also constitute requisite consent under Section 5.2(b) of the
Intercreditor Agreement, to the amendments to the Revolver Loan Agreement
described in the Revolver Loan Agreement Amendment.

 

7.       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.

 

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8.       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.

 

9.       Waiver; Release. To induce Agent and Lenders to enter into this
Amendment, including providing the waivers provided for herein, and for other
good and valuable consideration, each Borrower hereby forever waives, relieves,
releases, and forever discharges Agent and each Lender, together with its
respective present or former employees, officers, directors, agents,
representatives, attorneys, and each of them, from any and all claims, debts,
liabilities, demands, obligations, promises, acts, agreements, costs and
expenses, actions and causes of action, of every type, kind, nature, description
or character whatsoever, whether known or unknown, suspected or unsuspected,
absolute or contingent, arising out of or in any manner whatsoever connected
with or related to facts, circumstances, issues, controversies or claims, or by
reason of any matter, cause or anything whatsoever existing or arising from the
beginning of time through and including the date of execution of this Amendment
relating to or arising out of the Loan Agreement and any of the Loan Documents
or otherwise, including, without limitation, any actual or alleged act or
omission of or on behalf of Agent and/or any Lender with respect to the Loan
Documents and any security interest, Liens or Collateral in connection
therewith, or the enforcement of any of Agent and/or Lenders’ rights or remedies
thereunder (collectively “Released Claims”). Without limiting the foregoing, the
Released Claims shall include any and all liabilities or claims arising out of
or in any manner whatsoever connected with or related to the Loan Agreement and
the other Loan Documents, this Amendment, the Recitals hereto, any instruments,
agreements or documents executed in connection with any of the foregoing, and/or
the origination, negotiation, administration, servicing and/or enforcement of
any of the foregoing.

 

a)                   By entering into this release, each Borrower recognizes
that no facts or representations are ever absolutely certain and it may
hereafter discover facts in addition to or different from those which it
presently knows or believes to be true, but that it is the intention of each
Borrower hereby to fully, finally and forever settle and release all matters,
disputes and differences, known or unknown, suspected or unsuspected;
accordingly, if any Borrower should subsequently discover that any fact that it
relied upon in entering into this release was untrue, or that any understanding
of the facts was incorrect, no Borrower shall be entitled to set aside this
release by reason thereof, regardless of any claim of mistake of fact or law or
any other circumstances whatsoever. Each Borrower acknowledges that it is not
relying upon and has not relied upon any representation or statement made by
Agent or any Lender with respect to the facts underlying this release or with
regard to any of such party’s rights or asserted rights.

 

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b)                  This release may be pleaded as a full and complete defense
and/or as a cross-complaint or counterclaim against any action, suit, or other
proceeding that may be instituted, prosecuted or attempted in breach of this
release. Each Borrower acknowledges that the release(s) contained herein
constitute(s) a material inducement to Agent and Lenders to enter into this
Amendment, and that Agent and Lenders would not have done so but for Agent’s and
Lenders’ expectation that such release(s) is valid and enforceable in all
events.

 

c)                   Each Borrower hereby represents and warrants to Agent and
Lenders, and Agent and Lenders are relying thereon, as follows:

 

i.               Except as expressly stated in this Amendment, neither Agent nor
any Lender nor any other agent, employee or representative of Agent and/or any
Lender, has made any statement or representation to any Borrower regarding any
fact relied upon by such Borrower in entering into this Amendment;

 

ii.             Each Borrower has made such investigation of the facts
pertaining to this Amendment and all of the matters appertaining thereto, as it
deems necessary;

 

iii.           The terms of this Amendment are contractual and not a mere
recital; and

 

iv.            This Amendment has been carefully read by each Borrower, the
contents hereof are known and understood by each such Borrower, and this
Amendment is signed freely, and without duress, by any Borrower.

 

d)                  Each Borrower further represents and warrants that it is the
sole and lawful owner of all right, title and interest in and to every claim and
every other matter which it releases herein, and that it has not heretofore
assigned or transferred, or purported to assign or transfer, to any person, firm
or entity any claims or other matters herein released. Each Borrower shall
indemnify Agent and each Lender, and defend and hold it/them harmless from and
against all claims based upon or arising in connection with prior assignments or
purported assignments or transfers of any claims or matters released herein.

 

10.       Expenses of Agent and Lenders. Borrowers agree to pay, on demand, all
reasonable costs and expenses incurred by Agent and Lenders in connection with
the preparation, negotiation and execution of this Amendment and any other Loan
Documents executed pursuant hereto and any and all agreements, amendments,
modifications, and supplements to the Loan Agreement, including, without
limitation, the reasonable fees of Agent’s and Lenders’ legal counsel and any
taxes or expenses associated with or incurred in connection with any instrument
or agreement referred to herein or contemplated hereby. Each Borrower
acknowledges that Agent and Lenders may charge any and all such reasonable fees,
costs and expenses to Borrowers’ Loan Account in accordance with the Loan
Agreement, and Agent and Lenders agree to promptly provide all invoices to
Borrowers related to such fees, costs and expenses after charging the Loan
Account therefor.

 

11.       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 (such date
being defined as the “Effective Date”):

 

(a)                Agent shall have received counterparts to this Amendment,
duly executed by Agent, Lenders constituting “Required Lenders”, and Obligors;
and

 

(b)                Agent shall have received a true and complete copy of the
fully executed Revolver Loan Agreement Amendment.

 

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

 

13.       Miscellaneous.

 

a)                   Further Assurances. The Borrowers shall take such further
actions, and execute and deliver to the Agent and Lenders such additional
assignments, agreements, supplements, powers and instruments, as Agent and/or
Lenders may deem necessary or appropriate, wherever required by law, in order to
perfect, preserve and protect the security interest in the Collateral and the
rights and interests granted to the Agent and Lenders under the Loan Agreement
and the other Loan Documents, or to permit the Agent and Lenders to exercise and
enforce their rights, powers and remedies with respect to any Collateral.
Without limiting the generality of the foregoing, but subject to applicable law,
the Borrowers shall make, execute endorse, acknowledge, file or refile and/or
deliver to Agent from time to time upon request such lists, descriptions and
designations of the Collateral, copies of warehouse receipts, receipts in the
nature of warehouse receipts, bills of lading, documents of title, vouchers,
invoices, schedules confirmatory assignments, supplements, additional security
agreements, conveyances, financing statements, transfer endorsements, powers of
attorney, certificates, reports, and other assurances or instruments.

 

b)                  Full Force and Effect; Entire Agreement. Except to the
extent expressly provided in this Amendment, the terms and conditions of the
Loan Agreement and each other Loan Document shall remain in full force and
effect. This Amendment, the Loan Agreement and the other Loan Documents
constitute and contain the entire agreement of the parties hereto and supersede
any and all prior agreements, negotiations, correspondence, understandings and
communications between the parties, whether written or oral, respecting the
subject matter hereof.

 

c)                   Non-Waiver. Except as specifically provided herein, none of
this Amendment or Agent’s and/or any Lender’s continued making of Term Loans or
other extensions of credit at any time extended to Borrowers in accordance with
this Amendment, the Loan Agreement, and the other Loan Documents shall be deemed
a waiver of or consent to any Default or Event of Default. Borrowers agree that
any such Default and/or Event of Default, if any, shall not be deemed to have
been waived, released or cured by virtue of Term Loans or other extensions of
credit at any time extended to Borrowers, or by Agent’s and/or any Lender’s
agreements provided for herein. Nothing in this Amendment shall restrict Agent’s
or any Lender’s ability to take or refrain from taking or exercise any right
that may exist under the Loan Documents.

 

d)                  Counterparts. This Amendment 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 Agreement by telecopy or other electronic means shall be as effective as
delivery of a manually executed counterpart of this Amendment.

 

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e)                   No Third Parties Benefited. This Amendment is made and
entered into for the sole benefit of the Borrowers, Agent and the Lenders, and
their permitted successors and assigns, and except as otherwise expressly
provided in this Amendment, 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.

 

f)                   Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY,
DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED
UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS
CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES
THEREOF (BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

g)                  Severability. In case any provision in or obligation under
this Amendment shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

 

h)                  Jury Trial Waiver. BORROWERS, AGENT AND LENDERS EACH HEREBY
WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING UNDER THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THIS
AMENDMENT IN RESPECT OF THIS AMENDMENT OR THE OTHER LOAN DOCUMENTS OR THE
RELATED TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS OF
BORROWERS, THE COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO
THIS AMENDMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION,
COLLECTION OR ENFORCEMENT OF THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER IN CONTRACT, TORT, EQUITY OR
OTHERWISE. BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES THAT ANY
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT SUCH BORROWER PARTY OR LENDER MAY FILE AN ORIGINAL
COUNTERPART OF THIS AMENDMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO A TRIAL BY JURY.

 

i)                    Loan Document. This Amendment shall be deemed to be a Loan
Document for all purposes.

 

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

 

[Signature Page to Amendment No. 3 to Term Loan and Security Agreement]

 

 

 

 

  AGENT:         PATHLIGHT CAPITAL LLC,   as Agent         By /s/ Kyle Shonak  
  Name: Kyle Shonak     Title: Managing Director         LENDERS:        
PATHLIGHT CAPITAL LLC,   as a Lender         By /s/ Kyle Shonak     Name: Kyle
Shonak     Title: Managing Director

 

[Signature Page to Amendment No. 3 to Term Loan and Security Agreement]