Exhibit
10.2


 


FIRST
AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS


 


THIS
FIRST AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS (this “Amendment”)
is made as of the 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
INFANT EUROPE LIMITED, a private company limited by shares organized
under the laws of England and Wales with registered number 04322137 (“SI
Europe”), SUMMER INFANT ASIA LIMITED, a Hong
Kong corporation (“SI Asia”), and SUMMER INFANT CANADA,
LIMITED, a corporation organized under the laws of the Province of
New 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 Lenders
identified on the signature pages hereto (collectively, the “Lenders”
and each individually, a “Lender”), and BANK OF
AMERICA, N.A., a national banking association, as Administrative
Agent (in such capacity, the “Agent”).


 


RECITALS:


 


WHEREAS,
the Lenders, BANK OF AMERICA, N.A., a national
banking association, as Swing Line Lender (the “Swing Line Lender”) and
L/C Issuer (the “L/C Issuer”), the Agent and the Original Borrowers are
parties to a certain Credit Agreement dated as of April 10, 2008, as
supplemented by a Joinder and Security Agreement dated as of April 18,
2008, by and among the Lenders, the Agent, the Original Borrowers and Kiddo
Acquisition Co., Inc., a Rhode Island corporation (as supplemented, the “Credit
Agreement”), which Credit Agreement is incorporated herein by reference and
made a part hereof (capitalized terms used herein that are not otherwise
defined 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, the
L/C Issuer and the Agent (collectively, the “Lender Parties”) to make
certain amendments 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 the execution and delivery of an amendment in form and
substance satisfactory to the Lender Parties to evidence such amendments; and


 


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


 


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


 


1.                                       The parties
hereto hereby agree that SI Europe, SI Asia and SI Canada shall be and are
hereby released as “Borrowers” under the Credit Agreement and the Notes, and as
“Grantors” under the Guaranty and Security Agreement of the Original Borrowers
in favor of the Agent for the benefit 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 


 

















 


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

  



 


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


 


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


 


““Borrowing Base Availability” means an amount which shall not
exceed the aggregate Dollar Equivalent of (i) eighty-five percent (85%) of
Total Eligible Toys R Us 


 


2

















 


Receivables
outstanding from time to time, plus (ii) eighty-five percent (85%) of
Total Eligible Target Receivables outstanding from time to time, plus (iii) eighty
percent (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 Domestic
Inventory and Intransit Inventory shall not exceed the lesser of (A) fifty
percent (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 credit
issued hereunder.”


 


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


 


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


 


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


 


5.                                       The Borrowers
and the Agent shall execute such agreements and documents as the Agent shall
reasonably require in order to limit the security interests granted by the
Borrowers in the capital stock of SI Asia, SI Europe and SI Canada to a pledge
of not more than sixty-five percent (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 additional agreements as the Agent shall reasonably request
from time to time to grant and perfect such security interests in such portion
of the capital stock of each of such subsidiaries.  Except for the modification set forth in the
preceding sentence, all other security interests granted by the Borrowers in
and to the Collateral described in the Security Agreement shall remain in full
force and effect and are in all respects hereby ratified and affirmed by the
Borrowers.


 


6.                                       The Borrowers
shall 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 references
to the Credit Agreement in the Note and the Security Documents shall be deemed
to refer to the Credit Agreement, as amended 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 to the
Notes, as amended by this Amendment. 
This Amendment shall constitute a “Loan Document” as defined in the
Credit Agreement.


 


8.                                       The Borrowers
hereby warrant that all of the representations and warranties contained in Article III
of the Credit Agreement are true and correct as of the date hereof and that no
Event of Default has occurred and is continuing or would result by the
execution of this Amendment 


 


3

















 


or
would constitute such an Event of Default but for the requirement that notice
be given or time elapse or both.


 


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


 


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


 


(The next page is the signature page.)


 


4

















 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed 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

  



 

















 


	
   

  	
  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

  



 

















 


ANNEX A


 


EXHIBIT F


 


FORM OF BORROWING BASE CERTIFICATE


 


SUMMER
INFANT


 


MONTH-END
COLLATERAL 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

  	
  $

  



 

















 


	
  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)

  	
  $

  
					



 


The
undersigned represents and warrants that:


 


(A)                              The information provided above and in the
accompanying supporting documentation is true and correct, and complies fully
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 Bank
of America (the “Bank”).


 

















 


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


 


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


 


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


 


 


Summer Infant, Inc.


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: