Exhibit
4.18


SECOND AMENDMENT TO CREDIT AGREEMENT


This
SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
August 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. (“Russ
West”), Russ Berrie and Company Properties, Inc. (“Russ Properties”),
Russplus, Inc. (“Russplus”), and Russ Berrie and Company Investments, Inc. (“Russ
Investments”) (Russ Gift, Russ West, Russ Properties, Russplus, and Russ
Investments are sometimes referred to herein collectively as the “Borrowers”
and individually as a “Borrower” and, together with the Company, being
the “Credit Parties”), the financial institutions that are or may from
time 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.            The
Credit Parties, the Administrative Agent, the Lenders and the Issuing Bank
(collectively, the “Parties”) have entered into that certain Credit
Agreement dated as of March 14, 2006 (as the same may have been or may
hereafter be amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”).


B.            The
Credit Parties have requested that the Administrative Agent and the Lenders
amend the Credit Agreement to modify certain of the financial covenants set
forth therein.


C.            The
Administrative Agent, the Lenders and the Issuing Bank are willing to enter
into such amendment subject to the terms and conditions set forth herein.


NOW, THEREFORE, in consideration of the premises and
for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and subject to the terms and conditions set forth
herein, the Parties hereto hereby agree as follows:


AGREEMENTS:


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


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


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


 















 


 




	
  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 is
subject to the satisfaction of the following conditions precedent (unless
specifically waived in writing by the Administrative Agent):


3.1           The Administrative Agent shall have
received fully executed copies of this Amendment executed by each of the Credit
Parties, the Lenders and the Issuing Bank.


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


3.3           As of the effective date of this
Amendment, all representations and warranties of the Credit Parties set forth
herein shall be true and correct, and all representations and warranties of the
Credit Parties set forth in the Credit Agreement shall be true and correct in
all material respects (or, with respect to those representations and warranties
expressly limited by their terms by materiality or material adverse effect
qualifications, all respects) and shall be deemed remade on such date, except
to the extent any such representation and warranty expressly relates to an
earlier date, in which case such representation and warranty shall be true and
correct in all material respects (or, with respect to those representations and
warranties expressly limited by their terms by materiality or material adverse
effect qualifications, all respects) as to the date to which it relates.



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


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


SECTION
4            REAFFIRMATION.


Each of the Credit Parties hereby expressly reaffirms
and assumes all of their obligations and liabilities to the Administrative
Agent, the Lenders and the Issuing Bank as set forth in the Credit Agreement
and the other Loan Documents and agree to be bound by and abide by and operate
and 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 Credit
Agreement and the other Loan Documents, as such obligations and liabilities may
be modified by this Amendment, as though the Credit Agreement and the other
Loan Documents were being re-executed on the date hereof, except to the extent
that such terms expressly relate to an earlier date.  The Credit Parties hereby ratify, confirm and
affirm without condition, all liens and security interests granted to the
Administrative Agent pursuant to the Credit Agreement and the other Loan
Documents and such liens and security interests shall continue to secure the
Obligations under the Credit Agreement as amended by this Amendment, and all
extensions, renewals, refinancings, amendments or modifications of any of the foregoing.


SECTION 5            GENERAL
PROVISIONS.


5.1           No Changes. Except as
expressly provided in this Amendment, the terms and provisions of the Credit
Agreement 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 Credit
Parties hereby jointly and severally agree to reimburse the Administrative
Agent for all of its reasonable out-of-pocket legal fees and expenses incurred
in the preparation and documentation of this Amendment and related documents.


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


5.4           Counterparts.  This Amendment may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
taken together shall be one and the same instrument.  This Amendment may also be executed by
facsimile and each facsimile signature hereto shall be deemed for all purposes
to be an original signatory page.



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


5.6           Successors.  This Amendment shall be binding on and inure
to the benefit of the Parties hereto and their respective successors and
assigns.


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


[Remainder of Page
Intentionally Left Blank]



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IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized and delivered as of the date
first 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: President
and Chief Executive Officer


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


By: /s/  Andrew R. Gatto


Name: Andrew R. Gatto


Title: President
and Chief Executive Officer


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


By: /s/  Andrew R. Gatto


Name: Andrew R. Gatto


Title: President
and Chief Executive Officer


RUSS
BERRIE AND COMPANY PROPERTIES, INC., a New Jersey corporation


By: /s/  Andrew R. Gatto


Name: Andrew R. Gatto


Title: President
and Chief Executive Officer



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RUSSPLUS,
INC., a New Jersey corporation


By: /s/  Andrew R. Gatto


Name: Andrew R. Gatto


Title: President
and Chief Executive Officer


RUSS
BERRIE AND COMPANY INVESTMENTS, INC., a New Jersey
corporation


By: /s/  Andrew R. Gatto


Name: Andrew R. Gatto


Title: President
and 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: Vice
President


ISSUING
BANK:


LASALLE
BANK NATIONAL ASSOCIATION, as Issuing Bank


By: /s/ Peter M. Walther


Name: Peter M. Walther


Title: Vice
President


 



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