**Exhibit 10.2**

 

**FIRSTAMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS**

 

THIS FIRST AMENDMENT TOCREDIT AGREEMENT AND LOAN DOCUMENTS (this “ Amendment “) is made as ofthe 30th day of June, 2008 by and between**SUMMER INFANT, INC.** , a Delaware corporation (“ SI Holdings “),**  SUMMER INFANT(USA), INC.** , a Rhode Island corporation (“ SI USA “),**  KIDDOPOTAMUS &COMPANY** , a Delaware corporation (“ Kiddopotamus “), ,**  SUMMER INFANTEUROPE LIMITED** , a private company limited by shares organized underthe laws of England and Wales with registered number 04322137 (“ SI Europe“),** SUMMER INFANT ASIA LIMITED** , a Hong Kong corporation (“ SIAsia “), 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 OF AMERICA, N.A.** , a national banking association, asAdministrative Agent (in such capacity, the “ Agent “).

 

RECITALS:

 

WHEREAS, the Lenders,**BANK OF AMERICA, N.A.**, a national bankingassociation, as Swing Line Lender (the “ Swing Line Lender “) and L/CIssuer (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 “Credit Agreement “), which Credit Agreement is incorporated herein byreference and made a part hereof (capitalized terms used herein that are nototherwise defined herein shall have the meanings set forth in the CreditAgreement); and

 

WHEREAS, the OriginalBorrowers have applied to the Lenders, the Swing Line Lender, the L/C Issuerand the Agent (collectively, the “ Lender Parties “) to make certainamendments to the Credit Agreement and certain other Loan Documents; and

 

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

 

WHEREAS, the LenderParties and the Original Borrowers desire to amend the Credit Agreement in themanner set forth below.

 

NOW, THEREFORE, for goodand valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto hereby agree as follows:

 

1.          The parties hereto hereby agree that SI Europe, SIAsia and SI Canada shall be and are hereby released as “Borrowers” under theCredit Agreement and the Notes, and as “Grantors” under the Guaranty andSecurity Agreement of the Original Borrowers in favor of the Agent for thebenefit of the Lenders and other Lender Parties dated 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, and the terms “ Grantor“ and “ Grantors “ appearing

 

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in the SecurityAgreement, are hereby amended to delete all references to SI Europe, SI Asiaand SI Canada.  Nothing contained herein is intended to modify, release ordischarge any of the obligations, indebtedness or liabilities of SI Holdings,SI USA or Kiddopotamus under the Credit Agreement, the Notes, the SecurityAgreement or any other Loan Documents, and SI Holdings, SI USA and Kiddopotamus(collectively, the “ Borrowers “) shall remain obligated under each ofthe Credit Agreement, the Notes, the Security Agreement and all other LoanDocuments, and shall remain jointly and severally liable for the payment andperformance of all Obligations.

 

2.          The following definitions of “Applicable Rate”,“Borrowing Base Availability”, “ Letter of Credit “ and “Pledging Borrowers “ set forth in**Section 1.01**  of the Credit Agreement are hereby amended toread in their entirety as follows

 

““ApplicableRate” means, from time to time, the following percentages per annum, basedupon the Funded Debt to EBITDA Ratio (the “ Financial Covenant “) as setforth in the most recent Compliance Certificate 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%                                           |       |

 

Anyincrease or decrease in the Applicable Rate resulting from a change in theFinancial Covenant shall become effective as of the first Business Day of themonth immediately following the date a Compliance Certificate is deliveredpursuant to Section 6.02(b) ;  provided ,  however , that if a Compliance Certificateis not delivered when due in accordance with such Section, then Pricing Level 3shall apply as of the first Business Day of the month following the date suchCompliance Certificate was required to have been delivered.  TheApplicable Rate in effect from the Closing Date through June 30, 2008shall be determined based upon Pricing Level 3.

 

Notwithstandinganything to the contrary contained in this definition, (i) thedetermination of the Applicable Rate for any period shall be subject to theprovisions of Section 2.10(b) ; and (ii) at any time theBorrowers’ Funded Debt to EBITDA ratio exceeds 3.25:1.00 and the Aggregate Commitmentsare calculated using the Overadvance Amount, the Applicable Rate set forth inthis definition shall increase by one quarter of one percent (0.25%) for thelonger of (A) ninety (90) days from the date that the AggregateCommitments began to be calculated using the Overadvance Amount; or (B) thedelivery of a Borrowing Base Certificate which shows that such overadvance hasbeen eliminated.”

 

““BorrowingBase Availability” means an amount which shall not exceed the aggregateDollar Equivalent of (i) eighty-five percent (85%) of Total Eligible ToysR Us

 

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Receivables outstandingfrom time to time, plus (ii) eighty-five percent (85%) of Total EligibleTarget 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 Loansagainst Eligible Domestic Inventory and Intransit Inventory shall not exceedthe lesser of (A) fifty percent (50%) of Borrowing Base Availability under(i) through (v) above, and (B) Twenty-Three Million Dollars($23,000,000).

 

““Letterof Credit” means any standby letter of credit and any commercial letter ofcredit issued hereunder.”

 

“PledgingBorrowers” means, collectively, SI Holdings, SI USA, Kiddopotamus and anyfuture Borrower that pledges Collateral for the Obligations pursuant to afirst-priority perfected security interest.”

 

3.          The definitions of “Eligible Foreign Inventory”and “Eligible Foreign Receivable” set forth in**Section 1.01**  ofthe Credit Agreement are hereby deleted from the Credit Agreement in theirentirety.

 

4.          Exhibit F to the Credit Agreement is hereby amended to read inits entirety in the form of Annex A attached hereto and made in parthereof.

 

5.          The Borrowers and the Agent shall execute suchagreements and documents as the Agent shall reasonably require in order tolimit the security interests granted by the Borrowers in the capital stock ofSI Asia, SI Europe and SI Canada to a pledge of not more than sixty-fivepercent (65%) of the capital stock of each of such subsidiaries held by the Borrowers,and the Borrowers shall execute and deliver to the Agent such additionalagreements as the Agent shall reasonably request from time to time to grant andperfect such security interests in such portion of the capital stock of each ofsuch subsidiaries.  Except for the modification set forth in the precedingsentence, all other security interests granted by the Borrowers in and to theCollateral described in the Security Agreement shall remain in full force andeffect and are in all respects hereby ratified and affirmed by the Borrowers.

 

6.          The Borrowers shall pay all reasonable expensesincurred by the Agent in the drafting, negotiation and closing of the documentsand transactions contemplated hereby, including the reasonable fees anddisbursements of the Agent’s counsel.

 

7.          All references to the Credit Agreement in the Note andthe Security Documents shall be deemed to refer to the Credit Agreement, asamended by this Amendment and any other amendments which may be executed. All references in the Loan Documents to “the Notes” shall be deemed to refer tothe Notes, as amended by this Amendment.  This Amendment shall constitutea “Loan Document” as defined in the Credit Agreement.

 

8.          The Borrowers hereby warrant that all of therepresentations and warranties contained in Article III of the CreditAgreement are true and correct as of the date hereof and that no Event ofDefault has occurred and is continuing or would result by the execution of thisAmendment

 

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or would constitute suchan Event of Default but for the requirement that notice be given or time elapseor both.

 

9.          This Amendment may be executed in severalcounterparts, each of which when executed and delivered is an original, but allof which together shall constitute one instrument.  In making proof ofthis Amendment, it shall not be necessary to produce or account for more thanone such counterpart executed by the party against whom enforcement of thisAmendment is sought.

 

10.        Except as modified and amended hereby, the CreditAgreement shall remain in full force and effect and is in all other respectsratified and confirmed by the Borrowers, the Lenders and the Agent.

 

**(Thenext page is the signature page.)**

 

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IN WITNESS WHEREOF, theparties hereto have caused this Amendment to be duly executed as of the day andyear 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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**ANNEXA**

 

***EXHIBIT F***

 

**FORM OFBORROWING BASE CERTIFICATE**

 

**SUMMERINFANT**

 

**MONTH-ENDCOLLATERAL REPORT AND BORROWING CERTIFICATE**

 

For the Month-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 inthe accompanying supporting documentation is true and correct, and compliesfully with 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 adverse change in the financial condition oroperations of the undersigned, and

 

(ii)          There is no event which is, or with notice or lapse of time or both would be, adefault under the Agreement

 

Summer Infant, Inc.

 

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

 

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