**Exhibit4.18**

SECOND AMENDMENT TO CREDIT AGREEMENT

ThisSECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as ofAugust 8, 2006 and is entered into by and among Russ Berrie and Company, Inc.(the “Company”), Russ Berrie U.S. Gift, Inc., a Delaware corporation****(“Russ Gift”), Russ Berrie & Co. (West), Inc. (“RussWest”), Russ Berrie and Company Properties, Inc. (“Russ Properties”),Russplus, Inc. (“Russplus”), and Russ Berrie and Company Investments, Inc. (“RussInvestments”) (Russ Gift, Russ West, Russ Properties, Russplus, and RussInvestments are sometimes referred to herein collectively as the “Borrowers”and individually as a “Borrower” and, together with the Company, beingthe “Credit Parties”), the financial institutions that are or may fromtime to time become parties hereto as “Lenders” (and each being a “Lender”),LASALLE BANK NATIONAL ASSOCIATION, in its capacity as “Issuing Bank,”and LASALLE BUSINESS CREDIT, LLC (in its individual capacity, “LaSalle”),as administrative agent (in such capacity, the “Administrative Agent”)for the Lenders.

**RECITALS:**

A.            TheCredit Parties, the Administrative Agent, the Lenders and the Issuing Bank(collectively, the “Parties”) have entered into that certain CreditAgreement dated as of March 14, 2006 (as the same may have been or mayhereafter be amended, restated, supplemented or otherwise modified from time totime, the “Credit Agreement”).

B.            TheCredit Parties have requested that the Administrative Agent and the Lendersamend the Credit Agreement to modify certain of the financial covenants setforth therein.

C.            TheAdministrative Agent, the Lenders and the Issuing Bank are willing to enterinto such amendment subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises andfor other good and valuable consideration, the receipt and adequacy of whichare hereby acknowledged, and subject to the terms and conditions set forthherein, the Parties hereto hereby agree as follows:

**AGREEMENTS:**

SECTION  1           DEFINITIONS.  Unless otherwise defined herein, capitalizedterms used in this Amendment shall have the meanings ascribed to such terms inthe Credit Agreement.

SECTION  2           AMENDMENTS.  Subject to the satisfaction of the conditionsprecedent set forth herein, Section 11.13.2 of the Credit Agreement ishereby amended and restated in its entirety to read as follows:

“11.13.2  Minimum EBITDA.  Not permit EBITDA for the following periodsending as of the last day of the following Fiscal Quarters, to be less than therespective amounts set forth below:

 

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| Period ending:                                                                                         | ** ** | **Minimum EBITDA** | ** **  |
|-------------------------------------------------------------------------------------------------------------|------------|-------------------------|-------------|
| Two Fiscal Quarter  period ending June 30, 2006                                                             |       | $                       | (15,200,000 | ) |
| Three Fiscal Quarter  period ending September 30, 2006                                                      |       | $                       | (13,100,000 | ) |
| Computation Periods  ending as of the last day of each of the following Fiscal Quarters: December  31, 2006 |       | $                       | (14,100,000 | ) |
| March 31, 2007                                                                                              |       | $                       | (10,800,000 | ) |
| June 30, 2007                                                                                               |       | $                       | (8,800,000  | ) |
| September 30, 2007                                                                                          |       | $                       | (6,000,000  | ) |
| December 31, 2007                                                                                           |       | $                       | (500,000    | ) |
| March 31, 2008 and each Fiscal Quarter ending thereafter                                                    |       | $                       | 4,000,000.  | ” |

 

SECTION  3          CONDITIONS; REPRESENTATIONS AND WARRANTIES.  The effectiveness of this Amendment issubject to the satisfaction of the following conditions precedent (unlessspecifically waived in writing by the Administrative Agent):

3.1           The Administrative Agent shall havereceived fully executed copies of this Amendment executed by each of the CreditParties, the Lenders and the Issuing Bank.

3.2           No Event of Default or UnmaturedEvent of Default has occurred and is continuing.

3.3           As of the effective date of thisAmendment, all representations and warranties of the Credit Parties set forthherein shall be true and correct, and all representations and warranties of theCredit Parties set forth in the Credit Agreement shall be true and correct inall material respects (or, with respect to those representations and warrantiesexpressly limited by their terms by materiality or material adverse effectqualifications, all respects) and shall be deemed remade on such date, exceptto the extent any such representation and warranty expressly relates to anearlier date, in which case such representation and warranty shall be true andcorrect in all material respects (or, with respect to those representations andwarranties expressly limited by their terms by materiality or material adverseeffect qualifications, all respects) as to the date to which it relates.

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3.4           All proceedings taken in connectionwith the transactions contemplated by this Amendment and all documents,instruments and other legal matters incident thereto shall be reasonablysatisfactory to the Administrative Agent.

3.5           The Administrative Agent shall havereceived payment from the Credit Parties in immediately available funds of afee (the “Amendment Fee”) in the amount of $15,000.

SECTION4            REAFFIRMATION.

Each of the Credit Parties hereby expressly reaffirmsand assumes all of their obligations and liabilities to the AdministrativeAgent, the Lenders and the Issuing Bank as set forth in the Credit Agreementand the other Loan Documents and agree to be bound by and abide by and operateand perform under and pursuant to and comply fully with all of the terms,conditions, provisions, agreements, representations, undertakings, warranties,indemnities, grants of security interests and covenants contained in the CreditAgreement and the other Loan Documents, as such obligations and liabilities maybe modified by this Amendment, as though the Credit Agreement and the otherLoan Documents were being re-executed on the date hereof, except to the extentthat such terms expressly relate to an earlier date.  The Credit Parties hereby ratify, confirm andaffirm without condition, all liens and security interests granted to theAdministrative Agent pursuant to the Credit Agreement and the other LoanDocuments and such liens and security interests shall continue to secure theObligations under the Credit Agreement as amended by this Amendment, and allextensions, renewals, refinancings, amendments or modifications of any of the foregoing.

SECTION 5            GENERALPROVISIONS.

5.1           No Changes. Except asexpressly provided in this Amendment, the terms and provisions of the CreditAgreement shall remain in full force and effect and are hereby affirmed,confirmed and ratified in all respects.

5.2           Fees and Costs.  In addition to the Amendment Fee, the CreditParties hereby jointly and severally agree to reimburse the AdministrativeAgent for all of its reasonable out-of-pocket legal fees and expenses incurredin the preparation and documentation of this Amendment and related documents.

5.3           Governing Law.  This Amendment shall be construed inaccordance with and governed by the internal laws (without regard to theconflicts of law provisions, other than Section 5-1401 of the New York GeneralObligations Law) of the State of New York.

5.4           Counterparts.  This Amendment may be executed in one or morecounterparts, each of which shall constitute an original, but all of whichtaken together shall be one and the same instrument.  This Amendment may also be executed byfacsimile and each facsimile signature hereto shall be deemed for all purposesto be an original signatory page.

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5.5           References.  On or after the effective date hereof, eachreference in the Credit Agreement to this “Agreement,” “hereof,” “herein”  or words of like import and all references tothe Credit Agreement in any other agreement, shall in either case unless thecontext otherwise requires, be deemed to refer to the Credit Agreement asamended hereby.

## 5.6           Successors.  This Amendment shall be binding on and inureto the benefit of the Parties hereto and their respective successors andassigns.

5.7           Section Headings.  Section headings used in this Amendment arefor convenience of reference only and shall not affect the construction of thisAmendment.

[Remainder of PageIntentionally Left Blank]

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IN WITNESSWHEREOF, the parties hereto have caused this Amendment to be executed by theirrespective officers thereunto duly authorized and delivered as of the datefirst written above.

**CREDIT PARTIES:**

**RUSS BERRIE AND COMPANY, INC.**,a New Jersey corporation, as the Loan Party Representative

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

**RUSS BERRIE U.S. GIFT, INC.**,a Delaware corporation

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

**RUSS BERRIE & CO. (WEST),INC.,**a California corporation

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

**RUSSBERRIE AND COMPANY PROPERTIES, INC.**, a New Jersey corporation

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

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**RUSSPLUS,INC.**, a New Jersey corporation

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

**RUSSBERRIE AND COMPANY INVESTMENTS, INC.**, a New Jerseycorporation

By: /s/  Andrew R. Gatto

Name: Andrew R. Gatto

Title: Presidentand Chief Executive Officer

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**ADMINISTRATIVE AGENT:**

**LASALLE BUSINESS CREDIT**,**LLC,**as Administrative Agent

By: /s/ Peter M. Walther

Name: Peter M. Walther

Title: VicePresident

**ISSUINGBANK:**

**LASALLEBANK NATIONAL ASSOCIATION,** as Issuing Bank

By: /s/ Peter M. Walther

Name: Peter M. Walther

Title: VicePresident

 

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