Document:

Exhibit 10.2

 

[English Translation of
Original Icelandic Language Document]

 

LEASE AGREEMENT

 

The undersigned parties, Festing
ehf., State Reg. No. 550903-4150, of Austurstraeti 17, Reykjavík,
(hereinafter referred to as the “Lessor”) and Íslensk erfðagreining ehf., State
Reg. No. 691295-3549, of Sturlugata 8, Reykjavik, (hereinafter referred to
as the “Lessee”) enter into the following Lease Agreement:

 

1.0.                            The leased property

 

1.1                                 The leased property is Sturlugata 8, Reykjavík with all
appurtenances.  More specifically, the
leased property is a research and office building with a total area of 15,228.6
square meters including two parking facilities situated on the site.

 

1.2                                 The leased property, on the
execution of this Lease Agreement, is owned by a subsidiary of the Lessee,
Vetrargardurinn ehf., State Reg. No. 581201-2490. Concurrently with the
execution of this Lease Agreement, Festing ehf. will buy the leased property
from Vetrargardurinn ehf. pursuant to a separate Purchase Agreement which
constitutes an integral part hereof.

 

1.3                                 The leased property is described in
further detail as follows in the Public Land Record System:

 

	
  Fixed
  No.

  	
   

  	
  Marking

  	
   

  	
  Use

  	
   

  	
  Constr. yr.

  	
   

  	
  Floor plan

  	
   

  
	
  225-6085

  	
   

  	
  01 0101

  	
   

  	
  Research and office

  	
   

  	
  2001

  	
   

  	
  15,228.6m2

  	
   

  
	
   

  	
   

  	
  02 0101

  	
   

  	
  Parking

  	
   

  	
  2001

  	
   

  	
  158.2m2

  	
   

  
	
   

  	
   

  	
  03 0101

  	
   

  	
  Parking

  	
   

  	
  2001

  	
   

  	
  0.0m2

  	
   

  
	
   

  	
   

  	
  04 0101

  	
   

  	
  Gas storage

  	
   

  	
   

  	
   

  	
  0.0m2

  	
   

  

 

	
  Land
  No.

  	
   

  	
  Use

  	
   

  	
  Size

  	
   

  	
  Geocode

  	
   

  
	
  189552

  	
   

  	
  Commerce and service site

  	
   

  	
  18,271.0 m2

  	
   

  	
  0000-01- 1633501

  	
   

  

 

2.0.                            Term of lease and
delivery of property

 

2.1.                              The term of the lease begins on 1 April 2005.
The Lease Agreement has a term of 15 years. In the event that the term of the
lease ends and the Lessee has not notified the Lessor that he does not intend
to renew the lease and no renegotiation has taken place in respect of the
property six months earlier, the Agreement of the parties will be automatically
extended on unchanged terms for successive periods of 5 years.

 

2.2.                              The leased property will be
delivered in its physical state as it is on the date of this Lease Agreement.

 

2.3.                              This Lease Agreement cannot be
terminated during the term of the lease.

 

 

3.0.                            Condition, delivery
and alteration and maintenance of the leased property

 

3.1.                              The leased property is ready for use
as industrial premises, specially designed for the Lessee. The Lessee is
thoroughly familiar with the condition of the lease and has no comments.
Fixtures will become the property of the Lessor at the end of the term of the
lease, regardless of whether their cost is borne by the Lessor or Lessee.

 

3.2.                              All major alterations that the
Lessee intends to make in the premises during the term of the lease or its
equipment, apart from changes in the layout of rooms by means of light
partitions shall be made with the full consent of and in consultation with the
Lessor. All partitions and fixed interior fittings that the Lessee may install
will become the property of the Lessor without reimbursement. The premises
shall be returned with appurtenances, on the close of the lease period, washed
and cleaned and in a condition not worse than at the beginning of the lease
term, excluding normal wear and tear.

 

3.3.                              The Lessee undertakes to treat the
leased property well and to ensure that maintenance of the leased property
inside and outside is in good order. Failure to meet these obligations will
constitute default on the part of the Lessee.

 

3.4.                              The Lessee will assume
responsibility for all maintenance of the leased property, both the inner and
outer surface. The Lessee undertakes to deliver to the Lessor the leased
property in no worse condition at the end of the term of the lease, taking into
account, however, the normal use of the real estate and its increasing age.

 

4.0.                            Lease amount and
payment of rent together with operating cost

 

4.1.                              The agreed rent is ISK 21,420,000 –
twenty-one million four hundred and twenty thousand – per month, adjusted in
accordance with changes in the consumer price index from the base index of April 2005,
which is 241.5 points. The calculation of the rent is based on the capital
structure described in Section 4.3.

 

4.2                                 Rent shall be paid in advance for
three months each time. The due date of rent shall be the first business day of
each quarter, first on 1 April 2005. The place of payment of the rent is a
bank account specified by the Lessor. Penalty interest will accrue to unpaid
rent from the due date, with no specified final due date. The rent carries
value-added tax, which is added to the said amount.

 

4.3                                 The Lessee may submit the request
that rent falling due after 30 June 2007 should be paid in full or in part
in foreign currencies and/or unindexed Icelandic krónur. The Lessee shall
notify the Lessor of such wishes in writing no later than 15 May 2007 and
specify the wishes for the changed currency structure. The Lessee shall pay to
the Lessor all cost outlays of the change in currency structure of the rent,
where cost outlays refers to the cost incurred by the Lessor from changing the
currency of the capital used to fund the leased property. In the event that the
Lessor is unable to procure the currencies requested by the Lessee, the Lessor
and Lessee shall enter into a separate agreement on the details of the relative
proportions of the foreign currencies. In the event that the Lessee requests a
change in currency, the amount of

 

2

 

the rent shall be based on the
financing costs of the Lessor based on the following capital structure,
regardless of the actual capital structure of the Lessor.

 

•                  80% loans

•                  20% equity ratio

 

Based on the above capital
structure, the following financing cost of the Lessor shall be assumed:

 

•                  One-month LIBOR/EURIBOR/REIBOR interest plus 1.85% margin to bank or
5.7% fixed index-linked interest in Icelandic krónur, indexed to the consumer
price index in April of 2005.

•                  15% discount rate for equity

 

Taking into account the above
criteria, rent shall be determined based on the interest rate two business days
prior to the due date of the rent pursuant to the above and based on the
exchange rate of currencies on the first business day of each quarter.

 

In the event of changes being
made in the criteria for the calculation of rent, such changes shall be laid
down in a separate annex to the Lease Agreement, specifying their proportional
division at each time and stating the time frame for which capital structure is
determined.

 

Rent shall be paid in the
currencies of which the rent is composed at any time.

 

4.4                                 The amount of the rent shall be
reviewed as of the due date 1 July 2010. No later than 10 June 2010
the Lessor shall notify the Lessee of the adjusted amount of the rent. The
adjustment in the amount of the rent shall reflect the cost of financing the
rented premises based on the credit terms current in the financial market and
the required rate of return on equity, taking into account the financial
position and results of the Lessee.

 

4.6                                 The Lessee will pay all the
operating costs and all taxes relating to the rented premises. Thus, the Lessee
shall pay for the use of water, electricity and heating costs in the rented
premises. The Lessee will also pay property tax and all other taxes relating to
the ownership of the leased property.

 

5.0.                            Sub-lease, right of
first refusal to lease or buy

 

5.1.                              The Lessee is permitted to sub-lease
the rented property in part to a third party without the consent of the Lessor,
provided that the sub-leasing does not in any way prejudice the obligations of
the Lessee under this Agreement.

 

5.2.                              The Lessee and companies within the
consolidation of the Lessee shall have the right of first refusal to the
leasing of the leased property following the end of the term of the lease.

 

5.3.                              The Lessee has the right of first
refusal to buy the leased property if the Lessor sells it during the term of
the lease. The Lessor shall invite the Lessee to exercise his right of first
refusal to buy if the Lessor has received an offer which he intends to accept.
The invitation to exercise the right of first refusal shall be submitted by
means of a written notice accompanied by an agreement containing all terms. The
Lessee then has 15 days from the time of delivery of the invitation to exercise
the right of first refusal to decide whether to exercise the right. If the
Lessee decides to exercise the right of first refusal, the Lessee shall have 30
days to finalise a purchase

 

3

 

agreement and pay the purchase
price on the terms of the invitation to exercise the right of first refusal.

 

6.0.                            Insurance,
guarantees and special termination provisions

 

6.1.                              The Lessee undertakes to purchase
insurance from a recognised insurance company, which will cover glass in
windows, appurtenances and interior fittings against water damage, fire etc.
The Lessee will also purchase property owner’s insurance for the property
itself, as well as statutory fire insurance. The Lessor is not liable for any
damage to the property of the Lessee in the leased property resulting from
accidents such as water damage, fire, smoke, etc., unless and only if the
Lessor, or parties for which the Lessor is responsible, have caused the damage
in a culpable manner. The Lessee shall exercise care as regards fire in the
building and ensure that no risk is posed by electrical installations, motors
or other articles which are kept and used in the leased property. The Lessor
does not guarantee delivery of the leased property in a state which meets
regulatory fire prevention requirements in light of the activities conducted in
the building, except in the case of new constructions. The Lessee shall, at his
own cost, undertake all necessary fire prevention measures in the leased
property which the fire protection authorities may require as a result of any
alterations that the Lessee makes in the leased property following delivery.
The liability of the Lessor for any potential damage suffered by the Lessee is
in other respects subject to the general rules of tort.

 

7.0. General
provisions

 

7.1.                              This Lease Agreement is subject to
the provisions of the Rental Act No. 36/1994, with subsequent amendments,
as applicable, to the extent that the obligations and rights of the parties are
not otherwise laid down herein.

 

7.2.                              This Lease Agreement is made in two
identical copies, one copy to be held by each party.

 

7.3.                              In witness whereof, the Lessor and
the Lessee attach their signatures hereto in the presence of two witnesses.

 

7.4.                              This Agreement is effective as of 1.
April 2005.

 

Reykjavík, 29 March 2005

 

	
   

  	
  For Festing
  ehf.

  	
   

  	
  For Íslensk erfðagreining ehf.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Jóhann
  Halldórsson [sign]

  	
   

  	
   

  	
  Tómas Sigurðsson
  [sign.]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Witnesses:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Ingvi Hrafn Oskarsson [sign]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
								

 

4

 

By its signature of this
Agreement, Íslandsbanki hf., as the holder of all mortgages secured by the
rented premises, confirms that the bank has reviewed the substance of the
Agreement and for its part consents that the rights of the Lessee pursuant to
this Lease Agreement precede the mortgages of Íslandsbanki in the order of
precedence of  secured rights, cf. Item
11 in Article 28 of Act No. 90/1991.

 

 

Reykjavík, 31 March 2005

 

5Exhibit No. 4.4

 

AMENDMENT NUMBER TWO

TO FINANCING AGREEMENT

 

This AMENDMENT
NUMBER TWO TO FINANCING AGREEMENT (this “Amendment”) is
entered into as of March 31, 2005, by and among RUSS BERRIE AND COMPANY, INC., a New Jersey corporation (the “Borrower”),
the lenders party to the Financing Agreement referenced below (each a “Lender”
and collectively, the “Lenders”), ABLECO
FINANCE LLC, a Delaware limited liability company (“Ableco”),
as collateral agent for the Lenders (in such capacity, together with any successor
collateral agent, the “Collateral Agent”), and Ableco, as administrative
agent for the Lenders (in such capacity, together with any successor
administrative agent, the “Administrative Agent” and together with the
Collateral Agent, each an “Agent” and collectively, the “Agents”),
with reference to the following:

 

WHEREAS, Borrower,
each subsidiary of the Borrower listed as a “Guarantor” on the signature pages thereto,
the Lenders and the Agents are parties to that certain Financing Agreement,
dated as of December 15, 2004 (as amended, restated, supplemented, or
otherwise modified from time to time, the “Financing Agreement”),
pursuant to which Lenders have made certain loans and financial accommodations
available to Borrower;

 

WHEREAS, Borrower has requested
that the Lenders and the Agents make certain amendments to the Financing
Agreement; and

 

WHEREAS, subject to the terms
and conditions set forth herein, the Lenders and the Agents are willing to make
such amendments, as set forth herein.

 

NOW, THEREFORE, in consideration
of the foregoing and the mutual covenants herein contained, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.             Defined Terms.  Capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Financing Agreement, as amended hereby.

 

2.             Amendment to Financing Agreement.  The Financing Agreement is hereby amended as
follows:

 

(a)           Section 1.01 of the Financing
Agreement is hereby amended by adding the following defined terms “Additional
March 2005 Prepayment”, “Amendment Number Two”, “Australia
Subsidiary Pledge Agreement”, and “First Quarter 2005 Dividend” in
alphabetical order:

 

 

“Additional March 2005 Prepayment” means
the prepayment of principal in respect of the Term Loan in the amount of
$18,250,000 made by the Borrower in accordance with Section 3(d) of
Amendment Number Two.

 

“Amendment Number Two” means that certain
Amendment Number Two to Financing Agreement dated as of March 31, 2005.

 

“Australia Subsidiary Pledge Agreement” means
that certain Limited Pledge Agreement dated as of March 29, 2005, between
the Borrower and the Collateral Agent providing for the pledge by the Borrower
of 65% of the stock of Russ Australia Pty. Limited.

 

“First Quarter 2005 Dividend”
has the meaning specified therefor in Section 7.02(s).

 

(b)                                 Section 1.01 of the Financing
Agreement is hereby amended by amending and restating the defined terms “Backup
Letter of Credit Requirement Termination Date” and “Loan Document”
in their entirety as follows:

 

“Backup Letter of Credit Requirement Termination
Date” means the first day upon which all Obligations and any other amounts
owing to the Agents and the Lenders under the Loan Documents have been
indefeasibly paid in full (as defined in Section 4.04(d)) and all
Commitments of the Lenders have been terminated.

 

“Loan
Document” means this Agreement, the Australia Subsidiary Pledge Agreement,
any Guaranty, any Security Agreement, any Mortgage, any Intercompany
Subordination Agreement, the Seller Subordination Agreement, the Backup Letter
of Credit, any UCC Filing Authorization Letter and any other agreement,
instrument, and other document executed and delivered pursuant hereto or
thereto or otherwise evidencing or securing the Term Loan, or any other
Obligation.

 

(c)                                  The defined term “Excess Cash
Flow” in Section 1.01 of the Financing Agreement is hereby amended by
adding the phrase “including without limitation the Additional March 2005
Prepayment” after “all scheduled and mandatory cash principal payments on the
Term Loan made during such period,” in clause (B) of such defined term.

 

(d)                                 The defined term “Fixed Charge
Coverage Ratio” in Section 1.01 of the Financing Agreement is hereby
amended by adding the phrase “which shall not include the Additional March 2005
Prepayment” after “during such fiscal quarter” in clause (A) of such
defined term.

 

(e)                                  Section 2.04(a) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(a)                                  Term
Loan.  The Term Loan shall bear
interest on the principal amount thereof from time to time outstanding, from
the date of the making of the Term

 

2

 

Loan until such principal amount is repaid, as
follows: (i) if the relevant portion of the Term Loan is a LIBOR Rate
Loan, at a rate per annum equal to the LIBOR Rate plus 8.00 percentage points,
and (ii) otherwise, at a rate per annum equal to the Reference Rate plus
5.25 percentage points; provided that if TTM EBITDA of the Borrower and
its Subsidiaries equals or exceeds the applicable amount set forth opposite the
fiscal quarter end appearing below, the Term Loan shall bear interest on the
principal amount thereof outstanding during the immediately following fiscal
quarter, as follows: if the relevant portion of the Term Loan is a LIBOR Rate
Loan, at a rate per annum equal to the LIBOR Rate plus 7.00 percentage points,
and (ii) otherwise, at a rate per annum equal to the Reference Rate plus
4.25 percentage points:

 

	
  Fiscal Quarter End

  	
   

  	
  TTM EBITDA

  	
   

  
	
  March 31, 2005

  	
   

  	
  $

  	
  29,000,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  $

  	
  34,000,000

  	
   

  
	
  September 30, 2005

  	
   

  	
  $

  	
  39,000,000

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  44,000,000

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  September 30, 2007 and thereafter

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

(f)                                    Section 2.05(c)(ii) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(ii)                                  Immediately
upon receipt of any proceeds of any Disposition by any Loan Party or its
Subsidiaries other than a Permitted Disposition (other than a Permitted
Disposition of the type described in clauses (b) and (c) of the
definition of Permitted Disposition), the Borrower shall prepay the outstanding
principal amount of the Term Loan in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such Disposition; provided,
however, that there shall be no prepayment required out of the Net Cash
Proceeds of the Exempt Foreign Dispositions except the Additional March 2005
Prepayment.  Nothing contained in this
clause (ii) shall permit any Loan Party or any of its Subsidiaries to make
a Disposition of any property other than a Permitted Disposition.

 

(g)                                 Section 2.05(c)(iv) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(iv)                              Upon
the receipt by any Loan Party or any of its Subsidiaries of any Extraordinary
Receipts in excess of the first $25,000 of such Extraordinary Receipts received
in any Fiscal Year, the Borrower shall prepay the outstanding principal of the

 

3

 

Term Loan in an amount equal to 100% of such
Extraordinary Receipts, net of any customary and reasonable expenses
(including, without limitation, any attorney, accountant or other professional
fees) incurred in collecting such Extraordinary Receipts; provided, however,
that there shall be no prepayment required out of the Borrower’s receipt of
United States federal income tax refunds attributable to its fiscal year ended December 31,
2004 except the Additional March 2005 Prepayment.  Any payments required to be made under this Section 2.05(c)(iv) shall
be applied as set forth in Section 2.05(d); provided, however,
that so long as no Default or Event of Default has occurred and is continuing
or would result therefrom, the Borrower may, on or prior to the date of any
insurer’s payment of the proceeds of Extraordinary Receipts in the form of
proceeds of insurance, by written notice to the Agents, request that the amount
of the required prepayment, as set forth in this Section 2.05(c)(iv),
not occur at such time and that such proceeds instead be used to repair,
replace or restore the casualty which precipitated receipt of such proceeds of
insurance, with such notice setting forth in particular the proposed usage of
such proceeds of insurance.  If such notice
is timely given and if, in the reasonable judgment of the Collateral Agent, the
Loan Parties have Cash and Cash Equivalents and/or casualty and business
interruption insurance proceeds in amounts sufficient to ensure that Borrower
will be able to make payment as and when due of the Obligations that will be
payable during the period of repair, replacement, or restoration, the
Collateral Agent shall notify the applicable insurer to permit payment of such
proceeds to Borrower, and Borrower shall be relieved of its obligation to make
such mandatory prepayment at such time. 
If, within 270 days after the date of the Borrower’s receipt of the
proceeds of such Extraordinary Receipts, the Borrower provides the
Administrative Agent reasonably detailed reporting indicating that the Borrower
has invested all or a portion of such proceeds in assets used or useful in the
business of the Borrower as it exists as of the date hereof, then the required
prepayment shall be reduced on a dollar-for-dollar basis with the amount of the
proceeds so invested; provided further, however, that if, on such
270th day all or any portion of such proceeds have not been so
invested, the portion remaining shall be used to make the required prepayment
(as set forth above) as of such 270th day.

 

(h)                                 Section 2.09 of the Financing Agreement
is hereby amended by deleting subsection (e) thereof in its entirety.

 

(i)                                     Section 7.02(s) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(s)                                  Dividends
by the Borrower.  Declare or pay a
dividend with respect to the common shares of the Borrower’s Capital Stock,
except that Borrower may declare and pay such dividend in cash in an aggregate
amount (subject to the limitations set forth below) not to exceed $6,250,000
during any fiscal quarter of the Borrower, but only to the extent that (i) except
with respect to the dividend to be declared by the Borrower on March 31,
2005 and paid by the Borrower during the month of April, 2005 (the “First
Quarter 2005 Dividend”), no Default or Event of Default shall have occurred
and be continuing either before or after giving effect to such declaration and
payment; (ii)

 

4

 

except with respect to the First Quarter 2005
Dividend, at the time of declaration of such dividends, the chief financial
officer of Borrower shall have certified in writing to the Administrative Agent
that as of such date and after due investigation and inquiry, such chief
financial officer has no reason to believe that, after giving effect to the
payment of such dividends, Borrower will not be in compliance with any of the
financial covenants set forth in Section 7.03 as of the end of the
fiscal quarter in which such dividends are to be paid (or in the case of the
financial covenant contained in Section 7.03(e), as of the end of
each fiscal month occurring in the fiscal quarter in which such dividends shall
be paid); and (iii) except with respect to the First Quarter 2005
Dividend, Consolidated EBITDA of the Borrower and its Subsidiaries for the
fiscal quarter immediately preceding the fiscal quarter in which such dividend
is to be paid, equals or exceeds the applicable amount set forth opposite such
immediately preceding fiscal quarter end appearing below:

 

	
  Fiscal Quarter Ending

  	
   

  	
  Fiscal Quarter Minimum

  Consolidated EBITDA

  	
   

  
	
  December 31, 2004

  	
   

  	
  Not Applicable

  	
   

  
	
  March 31, 2005

  	
   

  	
  2,500,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  2,200,000

  	
   

  
	
  September 30, 2005

  	
   

  	
  15,900,000

  	
   

  
	
  December 31, 2005

  	
   

  	
  18,800,000

  	
   

  
	
  March 31, 2006

  	
   

  	
  8,900,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  8,600,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  24,100,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  21,000,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  11,100,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  9,500,000

  	
   

  
	
  September 30, 2007 and thereafter

  	
   

  	
  28,300,000

  	
   

  

 

provided, further,
notwithstanding the foregoing or any other provision of this Agreement (a) the
Borrower may declare and pay only the December 2004 Dividend in the fiscal
quarter ending December 31, 2004; (b) the amount of the First Quarter
2005 Dividend shall be no greater than either (i) ten cents ($0.10) per
share or (ii) $2,100,000; and (c) with respect to quarterly dividends
that are declared by Borrower during the second, third and fourth fiscal
quarters of 2005 (to be paid either during such quarters or during the
immediately following quarters), each such dividend may be declared and paid
only if (in addition to compliance with the other requirements of this Section 7.02(s))
Borrower has the Dollar Equivalent Amount of Qualified Cash of at least
$55,000,000 after giving effect to the payment of such dividend and, in such
event, the amount of each such quarterly dividend shall be no greater than
either five cents ($0.05) per share (subject to corresponding adjustment for
stock splits, stock dividends and recapitalizations) or (ii) $1,050,000.

 

5

 

(j)                                     ection 7.03(c) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(c)                                  TTM
EBITDA.  Permit TTM EBITDA of the
Borrower and its Subsidiaries as of the last day of each fiscal quarter set
forth below to be less than the applicable amount set forth below:

 

	
  Fiscal Quarter End

  	
   

  	
  TTM EBITDA

  	
   

  
	
  December 31, 2004

  	
   

  	
  $

  	
  29,000,000

  	
   

  
	
  March 31, 2005

  	
   

  	
  $

  	
  27,500,000

  	
   

  
	
  June 30, 2005

  	
   

  	
  $

  	
  31,000,000

  	
   

  
	
  September 30, 2005

  	
   

  	
  $

  	
  33,000,000

  	
   

  
	
  December 31, 2005

  	
   

  	
  $

  	
  36,000,000

  	
   

  
	
  March 31, 2006

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  50,000,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  52,000,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  55,000,000

  	
   

  
	
  September 30, 2007 and thereafter

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

(k)                                  Section 7.03(e) of the
Financing Agreement is hereby amended and restated in its entirety as follows:

 

(e)                                  Minimum
Qualified Cash.  Permit the Dollar
Equivalent Amount of Qualified Cash to be, as of the end of each fiscal month,
less than the applicable amount set forth below opposite the Funded Debt Ratio most
recently reported in the certificate of Authorized Officer of Borrower required
to be delivered pursuant to Section 7.01(a)(iv):

 

	
  Funded
  Debt Ratio

  	
   

  	
  Minimum
  Qualified Cash

  	
   

  
	
  Equal to or greater than 2.75:1

  	
   

  	
  $

  	
  45,000,000

  	
   

  
	
  Less than 2.75:1 but equal to or greater
  than 2.50:1

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
  Less than 2.50:1 but equal to or greater
  than 2.00:1

  	
   

  	
  $

  	
  20,000,000

  	
   

  
	
  Less than 2.00:1

  	
   

  	
  $

  	
  0

  	
   

  

 

provided, however,
that if the Borrower fails to provide the certificate of Authorized Officer of
the Borrower as required by Section 7.01(a)(iv) containing
the Funded Debt Ratio, on or before the date when due thereunder, the minimum
Dollar Equivalent Amount of Qualified Cash required hereunder shall be
$45,000,000 until the date five Business Days after the appropriate certificate
of Authorized Officer containing the Funded Debt Ratio is actually furnished as
so required.

 

6

 

3.                                       Conditions Precedent to Amendment. 
The satisfaction of each of the following shall constitute conditions
precedent to the effectiveness of this Amendment and each and every provision
hereof:

 

(a)                                  The Administrative Agent shall have
received this Amendment, duly executed by the parties hereto, and the same
shall be in full force and effect.

 

(b)                                 The Administrative Agent shall have
received a reaffirmation and consent substantially in the form attached hereto
as Exhibit A, duly executed and delivered by each Guarantor.

 

(c)                                  The Administrative Agent shall have
received, on behalf of the Lenders, the principal payment of $1,750,000 that is
due and payable in respect of the Term Loan on March 31, 2005 pursuant to Section 2.03(a) of
the Financing Agreement.

 

(d)                                 The Administrative Agent shall have
received, on behalf of the Lenders, a prepayment of principal in respect of the
Term Loan in the amount of $18,250,000, which shall be applied by the Lenders
in accordance with Section 2.05(d) of the Financing Agreement.

 

(e)                                  The Administrative Agent shall have
received, on behalf of the Lenders in accordance with their respective Pro Rata
Shares (after giving effect to the payments referenced in clauses (c) and (d) above),
an amendment fee of $787,500 in the aggregate.

 

(f)                                    The representations and warranties
herein and in the Financing Agreement and the other Loan Documents shall be
true and correct in all material respects on and as of the date hereof (after
giving effect to the transactions contemplated herein), as though made on such
date (except to the extent that such representations and warranties relate
solely to an earlier date).

 

(g)                                 No Default or Event of Default shall
have occurred and be continuing on the date hereof (after giving effect to the
transactions contemplated herein), nor shall result from the consummation of
the transactions contemplated herein.

 

(h)                                 No injunction, writ, restraining
order, or other order of any nature prohibiting, directly or indirectly, the
consummation of the transactions contemplated herein shall have been issued and
remain in force by any Governmental Authority against Borrower, any Guarantor,
any Agent, or any Lender.

 

4.                                       Representations and Warranties. 
Borrower represents and warrants to the Agents and the Lenders that (a) the
execution, delivery, and performance of this Amendment and of the Financing
Agreement, as amended hereby, (i) are within its powers, (ii) have
been duly authorized by all necessary action, and (iii) are not in
contravention of any law, rule, or regulation applicable to it, or any order,
judgment, decree, writ, injunction, or award of any

 

7

 

arbitrator, court, or Governmental
Authority, or of the terms of its governing documents, or of any contract or
undertaking to which it is a party or by which any of its properties may be
bound or affected; (b) this Amendment and the Financing Agreement, as
amended hereby, are legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms; and (c) no
Default or Event of Default has occurred and is continuing on the date hereof
(after giving effect to the transactions contemplated herein) or as of the date
upon which the conditions precedent set forth herein are satisfied (after
giving effect to the transactions contemplated herein).

 

5.                                       Choice of Law. 
The validity of this Amendment, its construction, interpretation and
enforcement, the rights of the parties hereunder, shall be determined under,
governed by, and construed in accordance with the laws of the State of New
York.

 

6.                                       Counterpart Execution. 
This Amendment may be executed in any number of counterparts, all of
which when taken together shall constitute one and the same instrument, and any
of the parties hereto may execute this Amendment by signing any such
counterpart.  Delivery of an executed
counterpart of this Amendment by telefacsimile or electronic mail shall be
equally as effective as delivery of an original executed counterpart of this
Amendment.  Any party delivering an
executed counterpart of this Amendment by telefacsimile or electronic mail also
shall deliver an original executed counterpart of this Amendment, but the
failure to deliver an original executed counterpart shall not affect the
validity, enforceability, and binding effect of this Amendment.

 

7.                                       Effect on Loan Documents.

 

(a)                                  The Financing Agreement, as amended
hereby, and each of the other Loan Documents shall be and remain in full force
and effect in accordance with their respective terms and hereby are ratified
and confirmed in all respects.  The
execution, delivery, and performance of this Amendment shall not operate,
except as expressly set forth herein, as a modification or waiver of any right,
power, or remedy of any Agent or any Lender under the Financing Agreement or
any other Loan Document.  The waivers,
consents, and modifications herein are limited to the specifics hereof, shall
not apply with respect to any facts or occurrences other than those on which
the same are based, shall not excuse future non-compliance with the Loan
Documents, and shall not operate as a consent to any further or other matter
under the Loan Documents.

 

(b)                                 Upon and after the effectiveness of
this Amendment, each reference in the Financing Agreement to “this Agreement”, “hereunder”,
“herein”, “hereof” or words of like import referring to the Financing Agreement,
and each reference in the other Loan Documents to “the Financing Agreement”, “thereunder”,
“therein”, “thereof” or words of like import referring to the Financing
Agreement, shall mean and be a reference to the Financing Agreement as modified
and amended hereby.

 

(c)                                  To the extent that any terms and
conditions in any of the Loan Documents shall contradict or be in conflict with
any terms or conditions of the Financing Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed

 

8

 

modified or amended accordingly to reflect
the terms and conditions of the Financing Agreement as modified or amended
hereby.

 

(d)                                 This Amendment is a Loan Document.

 

8.                                       Entire Agreement. 
This Amendment embodies the entire understanding and agreement between
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior or contemporaneous agreements or understandings with respect to
the subject matter hereof, whether express or implied, oral or written.

 

[signature
page follows]

 

9

 

IN WITNESS WHEREOF, the parties have entered into this
Amendment as of the date first above written.

 

 

	
   

  	
  RUSS
  BERRIE AND COMPANY, INC.,

  
	
   

  	
  a New Jersey
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name:

  	
  John D.
  Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  ABLECO
  FINANCE LLC.,

  
	
   

  	
  a Delaware
  limited liability company, as the

  Collateral Agent and the Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin
  Genda

  
	
   

  	
  Name:

  	
  Kevin Genda

  
	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ABELCO
  FINANCE LLC.,

  
	
   

  	
  a Delaware limited
  liability company, as a

  Lender, on behalf of itself and its affiliate assigns

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin
  Genda

  
	
   

  	
  Name: Kevin
  Genda

  
	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO FOOTHILL, INC., a

  California corporation, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  P. Shughrue

  
	
   

  	
  Name: Thomas
  P. Shughrue

  
	
   

  	
  Title: Vice
  President

  
						

 

A-1

 

	
   

  	
  AZURE
  FUNDING, a company organized

  under the laws of the Cayman Islands, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

A-2

 

Exhibit A

 

REAFFIRMATION AND CONSENT

 

Dated as of March 31, 2005

 

Reference hereby is made to that certain Amendment
Number Two to Financing Agreement, dated as of the date hereof (the “Amendment”),
among RUSS BERRIE AND COMPANY, INC.,
a New Jersey corporation (the “Borrower”), the lenders from time to time
party thereto (each a “Lender” and collectively, the “Lenders”), ABLECO FINANCE LLC, a Delaware limited
liability company (“Ableco”), as collateral agent for the Lenders (in
such capacity, together with any successor collateral agent, the “Collateral
Agent”), and Ableco, as administrative agent for the Lenders (in such
capacity, together with any successor administrative agent, the “Administrative
Agent” and together with the Collateral Agent, each an “Agent” and
collectively, the “Agents”). 
Capitalized terms used herein shall have the meanings ascribed to them
in that Financing Agreement, dated as of December 15, 2004 (as amended,
restated, supplemented, or otherwise modified from time to time, the “Financing
Agreement”), among Borrower, each subsidiary of the Borrower listed as a “Guarantor”
on the signature pages thereto, Agents, and the Lenders.  Each of the undersigned hereby (a) represents
and warrants that the execution and delivery of this Reaffirmation and Consent
are within its powers, have been duly authorized by all necessary action, and
are not in contravention of any law, rule, or regulation applicable to it, or
any order, judgment, decree, writ, injunction, or award of any arbitrator,
court, or Governmental Authority, or of the terms of its governing documents,
or of any contract or undertaking to which it is a party or by which any of its
properties may be bound or affected, (b) consents to the amendment of the
Financing Agreement set forth in the Amendment and any waivers granted therein;
(c) acknowledges and reaffirms all obligations owing by it to the Agents
and Lenders under any Loan Document to which it is a party; (d) agrees
that each Loan Document to which it is a party is and shall remain in full
force and effect, and (e) ratifies and confirms its consent to any
previous amendments of the Financing Agreement and any previous waivers granted
with respect to the Financing Agreement. 
Although each of the undersigned have been informed of the matters set
forth herein and have acknowledged and agreed to same, each of the undersigned
understands that the Agents and Lenders shall have no obligation to inform the
undersigned of such matters in the future or to seek the undersigned’s
acknowledgement or agreement to future amendments, waivers, or modifications,
and nothing herein shall create such a duty.

 

IN WITNESS WHEREOF, the undersigned have
executed this Reaffirmation and Consent as of the date first set forth above.

 

[signature
pages follow]

 

R-1

 

	
   

  	
  KIDS LINE, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Wille

  
	
   

  	
  Name: John D. Wille

  
	
   

  	
  Title: Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SASSY, INC.,

  
	
   

  	
  an Illinois corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Wille

  
	
   

  	
  Name: John D. Wille

  
	
   

  	
  Title: Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RUSS BERRIE & CO.
  (WEST), INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Wille

  
	
   

  	
  Name: John D. Wille

  
	
   

  	
  Title: Vice President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RBCACQ, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Wille

  
	
   

  	
  Name: John D. Wille

  
	
   

  	
  Title: Vice President and

  Chief Financial Officer

  

 

[Signature page to Reaffirmation and Consent]

 

R-2

 

	
   

  	
  RUSS
  BERRIE AND COMPANY

  
	
   

  	
  PROPERTIES,
  INC.,

  
	
   

  	
  a New Jersey
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RUSSPLUS,
  INC.,

  
	
   

  	
  a New Jersey
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FLUF N’
  STUF, INC.,

  
	
   

  	
  a
  Pennsylvania corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RBTACQ,
  INC.,

  
	
   

  	
  an Ohio
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  

 

[Signature page to Reaffirmation and Consent]

 

R-3

 

	
   

  	
  RUSS
  BERRIE AND COMPANY

  
	
   

  	
  INVESTMENTS,
  INC.,

  
	
   

  	
  a New Jersey
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BOA
  DONE, INC.,

  
	
   

  	
  a West
  Virginia corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  P/F
  DONE, INC.,

  
	
   

  	
  a
  Pennsylvania corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John
  D. Wille

  
	
   

  	
  Name: John
  D. Wille

  
	
   

  	
  Title: Vice
  President and

  Chief Financial Officer

  

 

[Signature page to Reaffirmation and Consent]

 

R-4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00084-of-00352.parquet"}]]