**Exhibit10.2**

 

**FIRSTAMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS**

 

THISFIRST AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS (this “Amendment”)is made as of the 30th day of June, 2008 by and between **SUMMERINFANT, INC.**, a Delaware corporation (“SI Holdings”), **SUMMER INFANT (USA), INC.**, a Rhode Island corporation (“SIUSA”), **KIDDOPOTAMUS & COMPANY**, aDelaware corporation (“Kiddopotamus”), , **SUMMERINFANT EUROPE LIMITED**, a private company limited by shares organizedunder the laws of England and Wales with registered number 04322137 (“SIEurope”), **SUMMER INFANT ASIA LIMITED**, a HongKong corporation (“SI Asia”), and **SUMMER INFANT CANADA,LIMITED**, a corporation organized under the laws of the Province ofNew Brunswick, Canada (“SI Canada”, and collectively with SI Holdings,SI USA, Kiddopotamus, SI Europe and SI Asia, the “Original Borrowers”and each individually an “Original Borrower”), certain Lendersidentified on the signature pages hereto (collectively, the “Lenders”and each individually, a “Lender”), and **BANK OFAMERICA, N.A.**, a national banking association, as AdministrativeAgent (in such capacity, the “Agent”).

 

RECITALS:

 

WHEREAS,the Lenders, **BANK OF AMERICA, N.A.**, a nationalbanking association, as Swing Line Lender (the “Swing Line Lender”) andL/C Issuer (the “L/C Issuer”), the Agent and the Original Borrowers areparties to a certain Credit Agreement dated as of April 10, 2008, assupplemented by a Joinder and Security Agreement dated as of April 18,2008, by and among the Lenders, the Agent, the Original Borrowers and KiddoAcquisition Co., Inc., a Rhode Island corporation (as supplemented, the “CreditAgreement”), which Credit Agreement is incorporated herein by reference andmade a part hereof (capitalized terms used herein that are not otherwisedefined herein shall have the meanings set forth in the Credit Agreement); and

 

WHEREAS,the Original Borrowers have applied to the Lenders, the Swing Line Lender, theL/C Issuer and the Agent (collectively, the “Lender Parties”) to makecertain amendments to the Credit Agreement and certain other Loan Documents;and

 

WHEREAS,on or about June 30, 2008, the Lender Parties agreed to effect suchamendments subject to the execution and delivery of an amendment in form andsubstance satisfactory to the Lender Parties to evidence such amendments; and

 

WHEREAS,the Lender Parties and the Original Borrowers desire to amend the CreditAgreement in the manner set forth below.

 

NOW,THEREFORE, for good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       The partieshereto hereby agree that SI Europe, SI Asia and SI Canada shall be and arehereby released as “Borrowers” under the Credit Agreement and the Notes, and as“Grantors” under the Guaranty and Security Agreement of the Original Borrowersin favor of the Agent for the benefit of the Lenders and other Lender Partiesdated as of April 10, 2008 (the “Security Agreement”).  Accordingly, the terms “Borrower”, “Borrowers”, “Loan Party”and “Loan Parties” appearing in the Credit Agreement and the Notes, andthe terms “Grantor” and “Grantors” appearing 

 

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inthe Security Agreement, are hereby amended to delete all references to SIEurope, SI Asia and SI Canada.  Nothingcontained herein is intended to modify, release or discharge any of theobligations, indebtedness or liabilities of SI Holdings, SI USA or Kiddopotamusunder the Credit Agreement, the Notes, the Security Agreement or any other LoanDocuments, and SI Holdings, SI USA and Kiddopotamus (collectively, the “Borrowers”)shall remain obligated under each of the Credit Agreement, the Notes, theSecurity Agreement and all other Loan Documents, and shall remain jointly andseverally liable for the payment and performance of all Obligations.

 

2.                                       The followingdefinitions of “Applicable Rate”, “Borrowing Base Availability”, “Letterof Credit” and “Pledging Borrowers” set forth in **Section 1.01** of the Credit Agreement are hereby amendedto read in their entirety as follows

 

““Applicable Rate” means, from time to time,the following percentages per annum, based upon the Funded Debt to EBITDA Ratio(the “Financial Covenant”) as set forth in the most recent ComplianceCertificate received by Agent pursuant to Section 6.02(b):

 

Applicable Rate

 
| **Pricing  Level** | ** ** | **Funded Debt to EBITDA  Ratio**  | ** ** | **Applicable Rate for  Eurodollar Rate Loans and  Letters of Credit** | ** ** | **Applicable Rate For  Base Rate Loans** |
|--------------------|------------|-----------------------------------|------------|-----------------------------------------------------------------------|------------|------------------------------------------|
| 1.                 |       | <2.75:1.00                     |       | 1.50%                                                                 |       | -0-                                      |
| 2.                 |       | >2.75:1.00 but £3.25:1.00 |       | 1.75%                                                                 |       | 0.25%                                    |
| 3.                 |       | >3.25:1.00                     |       | 2.00%                                                                 |       | 0.50%                                    |

 

Any increase or decreasein the Applicable Rate resulting from a change in the Financial Covenant shallbecome effective as of the first Business Day of the month immediatelyfollowing the date a Compliance Certificate is delivered pursuant to Section 6.02(b);provided, however, that if a Compliance Certificate is notdelivered when due in accordance with such Section, then Pricing Level 3 shallapply as of the first Business Day of the month following the date suchCompliance Certificate was required to have been delivered.  The Applicable Rate in effect from theClosing Date through June 30, 2008 shall be determined based upon PricingLevel 3.

 

Notwithstanding anything to the contrary containedin this definition, (i) the determination of the Applicable Rate for anyperiod shall be subject to the provisions of Section 2.10(b); and (ii) atany time the Borrowers’ Funded Debt to EBITDA ratio exceeds 3.25:1.00 and theAggregate Commitments are calculated using the Overadvance Amount, theApplicable Rate set forth in this definition shall increase by one quarter ofone percent (0.25%) for the longer of (A) ninety (90) days from the datethat the Aggregate Commitments began to be calculated using the OveradvanceAmount; or (B) the delivery of a Borrowing Base Certificate which showsthat such overadvance has been eliminated.”

 

““Borrowing Base Availability” means an amount which shall notexceed the aggregate Dollar Equivalent of (i) eighty-five percent (85%) ofTotal Eligible Toys R Us 

 

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Receivablesoutstanding from time to time, plus (ii) eighty-five percent (85%) ofTotal Eligible Target Receivables outstanding from time to time, plus (iii) eightypercent (80%) of Eligible Domestic Receivables outstanding from time to time;plus (iv) sixty percent (60%) of the value of Eligible Domestic Inventory;plus (v) fifty-five percent (55%) of the value of Intransit Inventory; provided,however, the amount available for Loans against Eligible DomesticInventory and Intransit Inventory shall not exceed the lesser of (A) fiftypercent (50%) of Borrowing Base Availability under (i) through (v) above,and (B) Twenty-Three Million Dollars ($23,000,000).

 

““Letter of Credit” means any standby letter of credit and any commercial letter of creditissued hereunder.”

 

“Pledging Borrowers” means, collectively, SI Holdings, SI USA,Kiddopotamus and any future Borrower that pledges Collateral for theObligations pursuant to a first-priority perfected security interest.”

 

3.                                       The definitionsof “Eligible Foreign Inventory” and “Eligible Foreign Receivable”set forth in **Section 1.01** of the CreditAgreement are hereby deleted from the Credit Agreement in their entirety.

 

4.                                       Exhibit F to the CreditAgreement is hereby amended to read in its entirety in the form of Annex Aattached hereto and made in part hereof.

 

5.                                       The Borrowersand the Agent shall execute such agreements and documents as the Agent shallreasonably require in order to limit the security interests granted by theBorrowers in the capital stock of SI Asia, SI Europe and SI Canada to a pledgeof not more than sixty-five percent (65%) of the capital stock of each of suchsubsidiaries held by the Borrowers, and the Borrowers shall execute and deliverto the Agent such additional agreements as the Agent shall reasonably requestfrom time to time to grant and perfect such security interests in such portionof the capital stock of each of such subsidiaries.  Except for the modification set forth in thepreceding sentence, all other security interests granted by the Borrowers inand to the Collateral described in the Security Agreement shall remain in fullforce and effect and are in all respects hereby ratified and affirmed by theBorrowers.

 

6.                                       The Borrowersshall pay all reasonable expenses incurred by the Agent in the drafting,negotiation and closing of the documents and transactions contemplated hereby,including the reasonable fees and disbursements of the Agent’s counsel.

 

7.                                       All referencesto the Credit Agreement in the Note and the Security Documents shall be deemedto refer to the Credit Agreement, as amended by this Amendment and any otheramendments which may be executed.  Allreferences in the Loan Documents to “the Notes” shall be deemed to refer to theNotes, as amended by this Amendment. This Amendment shall constitute a “Loan Document” as defined in theCredit Agreement.

 

8.                                       The Borrowershereby warrant that all of the representations and warranties contained in Article IIIof the Credit Agreement are true and correct as of the date hereof and that noEvent of Default has occurred and is continuing or would result by theexecution of this Amendment 

 

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orwould constitute such an Event of Default but for the requirement that noticebe given or time elapse or both.

 

9.                                       This Amendmentmay be executed in several counterparts, each of which when executed anddelivered is an original, but all of which together shall constitute oneinstrument.  In making proof of thisAmendment, it shall not be necessary to produce or account for more than onesuch counterpart executed by the party against whom enforcement of thisAmendment is sought.

 

10.                                 Except asmodified and amended hereby, the Credit Agreement shall remain in full force andeffect and is in all other respects ratified and confirmed by the Borrowers,the Lenders and the Agent.

 

**(The next page is the signature page.)**

 

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INWITNESS WHEREOF, the parties hereto have caused this Amendment to be dulyexecuted as of the day and year first above written.

 
|   | **BANK OF AMERICA, N.A., as Administrative Agent**                        |
|--------|---------------------------------------------------------------------------|
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | */s/  Brenda Little* |
|   |                                                                      | Brenda  H. Little, Vice President |
|   |                                                                      |   |
|   | **BANK OF AMERICA, N.A., as a Lender, Swing Line Lender and  L/C Issuer** |
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | */s/  David Angell* |
|   |                                                                      | David  J. Angell, Senior Vice President |
|   |                                                                      |   |
|   | **RSB  CITIZENS, NATIONAL ASSOCIATION, as a Lender**                      |
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | */s/  Robert Kent* |
|   |                                                                      | Name:  Robert R. Kent |
|   |                                                                      | Title:   Senior Vice President |
|   |                                                                      |   |
|   | **BANK  RHODE ISLAND, as a Lender**                                       |
|   |                                                                      |   |
|   |                                                                      |   |
|   | By:                                                                       | */s/  Peter J. Difilippo* |
|   |                                                                      | Name:  Peter J. Difilippo |
|   |                                                                      | Title:   Senior Vice President |

 

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|   | BORROWERS:                           |
|--------|--------------------------------------|
|   |                                 |   |
|   | **SUMMER  INFANT (USA), INC.**       |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Jason  P. Macari, President |
|   |                                 |   |
|   | **SUMMER  INFANT, INC.**             |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Jason  P. Macari, President |
|   |                                 |   |
|   |                                 |   |
|   | **KIDDOPOTAMUS &  COMPANY** |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Title: |
|   |                                 |   |
|   | Acknowledged  and Agreed:            |
|   |                                 |   |
|   | **SUMMER  INFANT EUROPE LIMITED**    |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Jason  P. Macari, President |
|   |                                 |   |
|   | **SUMMER  INFANT ASIA LIMITED**      |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Jason  P. Macari, President |
|   |                                 |   |
|   | **SUMMER  INFANT CANADA LIMITED**    |
|   |                                 |   |
|   |                                 |   |
|   | By:                                  | */s/  Jason Macari* |
|   |                                 | Jason  P. Macari, President |

 

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**ANNEX A**

 

***EXHIBIT F***

 

**FORM OF BORROWING BASE CERTIFICATE**

 

**SUMMERINFANT**

 

**MONTH-ENDCOLLATERAL REPORT AND BORROWING CERTIFICATE**

 

For theMonth-ending

 

REVOLVING FACILITY

 
| **DOMESTIC  ACCOUNTS RECEIVABLE****(Excluding Target/Toys R Us)** |
|-------------------------------------------------------------------|
|                                                              |   |   |
| 1.)                                                               | End of Month Balance | $ |
|                                                              |   |   |
| 2.)                                                               | Ineligible Accounts  Receivable, Determined without Duplication | $ |
|                                                              |   |   |
| 3.)                                                               | Net Eligible Accounts  Receivable | $ |
|                                                              |   |   |
| **ELIGIBLE  TARGET RECEIVABLES**                                  |
|                                                              |   |   |
| 4.)                                                               | End of Month Balance | $ |
|                                                              |   |   |
| 5.)                                                               | Ineligible Accounts  Receivable, Determined without Duplication | $ |
|                                                              |   |   |
| 6.)                                                               | Net Eligible Accounts  Receivable | $ |
|                                                              |   |   |
| 7.)                                                               | Total Eligible Target  Receivables (98% of Line 6) | $ |
|                                                              |   |   |
| **ELIGIBLE  TOYS R US RECEIVABLES**                               |
|                                                              |   |   |
| 8.)                                                               | End of Month Balance | $ |
|                                                              |   |   |
| 9.)                                                               | Ineligible Accounts  Receivable, Determined without Duplication | $ |
|                                                              |   |   |
| 10.)                                                              | Net Eligible Accounts  Receivable | $ |
|                                                              |   |   |
| 11.)                                                              | Total Eligible Toys R Us  Receivables (86% of Line 10) | $ |
|                                                              |   |   |
| **DOMESTIC  INVENTORY**                                           |
|                                                              |   |   |
| 12.)                                                              | Month Ending Inventory  Balance | $ |
|                                                              |   |   |
| 13.)                                                              | Less: Ineligible  Domestic Inventory | $ |
|                                                              |   |   |
| 14.)                                                              | Eligible Inventory | $ |

 

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| **IN-TRANSIT  INVENTORY** |
|---------------------------|
|                      |   |   |
| 15.)                      | Month Ending Inventory  Balance | $ |
|                      |   |   |
| 16.)                      | Less: Ineligible  In-Transit Inventory | $ |
|                      |   |   |
| 17.)                      | Eligible In-Transit  Inventory | $ |
|                      |   |   |
| **BORROWING  BASE**       |
|                      |   |   |
| 18.)                      | a) | Domestic Accounts  Receivable (80% of Line 3) | $ |
|                      |   |   |   |
|                      | b) | Target Receivables (85%  of Line 7) | $ |
|                      |   |   |   |
|                      | c) | Toys R Us Receivables  (85% of Line 11) | $ |
|                      |   |   |   |
|                      | d) | Domestic Inventory (60%  of Line 14) | $ |
|                      |   |   |   |
|                      | e) | Intransit Inventory  (55% of Line 17) | $ |
|                      |   |   |
| 19.)                      | Inventory Availability  (Lesser of Lines 18d + 18e OR $23,000,000) | $ |
|                      |   |   |
| 20.)                      | Gross Availability  (Lines 18a + 18b + 18c + 19) | $ |
|                      |   |   |
| 21.)                      | Lesser of Line 20 or  $46,000,000 (Line Limit) | $ |
|                      |   |   |
| **LOAN  DETAIL**          |
|                      |   |   |
|                      | Prime Rate | $ |   |
|                      |   |   |   |
|                      | LIBOR | $ |   |
|                      |   |   |   |
|                      | Other | $ |   |
|                      |   |   |
| 22.)                      | Total Loans Outstanding  at Month-End | $ |
|                      |   |   |
| 23.)                      | Net Borrowing Base  Availability (Line 21 minus Line 22) | $ |
|                           |  |  |  |  |

 

**Theundersigned represents and warrants that:**

 

(A)                              The information provided above and in theaccompanying supporting documentation is true and correct, and complies fullywith the conditions, terms and covenants of the Credit Agreement dated April 10,2008 as amended to the date (the “Agreement”) between the undersigned and Bankof America (the “Bank”).

 

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(B)                                Since the date of the last financialstatement or certification furnished to the Bank.

 

(i)            There has been no material adversechange in the financial condition or operations of the undersigned, and

 

(ii)           There is no event which is, or withnotice or lapse of time or both would be, a default under the Agreement

 

 

Summer Infant, Inc.

 

 
| By:    |        |   |
|--------|-------------|--------|
|   | Print Name: |   |   |
|   | Title:      |   |   |
|   |        |   |   |
| Date:  |        |   |
|        |             |        |  |  |  |

 

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