Document:

Exhibit 10.2

 

EXECUTION COPY

 

AMENDMENT NO. 1 TO

TERM LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO 1 TO TERM LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of March 25, 2019 by and among SUMMER INFANT, INC. and SUMMER INFANT (USA), INC., as “Borrowers” (“Borrowers”), the guarantors from time to time party to the Loan Agreement referenced below (“Guarantors”, and together with Borrowers, “Obligors”), certain financial institutions from time to time party to the Loan Agreement referenced below (“Lenders”), and PATHLIGHT CAPITAL LLC, in its capacity as “Agent” for the Lenders under the Loan Agreement referenced below (“Agent”).

 

WHEREAS, reference is made to that certain Term Loan and Security Agreement dated as of June 28, 2018 by and among Borrowers, Guarantors, Lenders and Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”);

 

WHEREAS, Borrowers have requested that Agent and Lenders amend certain provisions of the Loan Agreement and provide certain other accommodations to Borrowers; and

 

WHEREAS, Agent and Lenders are willing to amend certain provisions of the Loan Agreement and provide certain other accommodations to Borrowers, all as more fully described herein.

 

NOW, THEREFORE, for and in consideration of the premises and mutual agreements and covenants herein contained and for the purposes of setting forth the terms and conditions of this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be bound, hereby agree as follows:

 

1.                                      Capitalized Terms.  Capitalized terms used herein which are defined in the Loan Agreement have the same meanings herein as therein, except to the extent such terms are amended hereby.

 

2.                                      Acknowledgements and Stipulations. In order to induce the Agent and Lenders to enter into this Amendment, each Obligor acknowledges, stipulates and agrees that:

 

a)                                     Recitals True and Correct.  Each of the Recitals contained at the beginning of this Amendment is true and correct;

 

b)                                     Obligations Outstanding.  Borrowers hereby acknowledge and agree that, in accordance with the terms and conditions of the Loan Documents, each Borrower is liable to Agent and Lenders for all of the Obligations, including, without limitation, (a) for all principal and accrued interest owed under the Loan Documents, whether now due or hereafter accruing; and (b) for all fees, and all Extraordinary Expenses (including reasonable attorneys’ fees and expenses) heretofore or hereafter incurred by Agent and/or any Lender in connection with the protection, preservation, and enforcement by Agent and Lenders of its/their rights and remedies under the Loan Documents and/or this Amendment, including, without limitation, the negotiation and preparation of this Amendment, and any of the other documents, instruments or agreements executed in connection therewith.  As of the close of business on March 21, 2019, the aggregate principal balance of the Term Loan is $17,062,500.00, exclusive of accrued and accruing interest, costs and attorneys’ fees and other Credit Party Expenses chargeable to Obligors under the Loan Documents;

 

c)                                      No Defense or Counterclaim.  All of the Loans and other Obligations are not subject to any defense, deduction, offset or counterclaim by Obligors to Lenders (and, to the extent

 

 

any Obligor had any such defense, deduction, offset or counterclaim on the date hereof, the same is hereby waived by each such Obligor in accordance with Section 7 below);

 

d)                                     Loan Documents Binding and Enforceable.  The Loan Documents executed by Obligors are legal, valid and binding obligations enforceable against each Obligor in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally;

 

e)                                      Liens Valid.  The liens granted by Obligors to the Agent, for the benefit of itself and the Lenders, in the Collateral are valid and duly perfected, first-priority liens, subject only to any Permitted Encumbrances;

 

f)                                       Security Interest Ratification.  Each Obligor hereby ratifies, confirms and reaffirms that all Security Interests and Liens granted pursuant to the Loan Documents secure and shall continue to secure the payment and performance of all of the Obligations and liabilities pursuant to the Loan Documents, whether now existing or hereafter arising; and

 

g)                                      Legal Counsel.  Prior to executing this Amendment, Borrowers consulted with and had the benefit of advice of legal counsel of its/their own selection and has relied upon the advice of such counsel, and in no part upon the representation of the Lender, or any counsel to the Lender, concerning the legal effects of this Amendment or any provision hereof.

 

3.                                      Waiver/Deferral.  Borrowers have requested that Agent and Lenders agree to defer any calculation and/or implementation of the IP Advance Rate Reduction Amount, if any, until Borrowers’ delivery to Agent of the monthly financial statements required under Section 10.1.2(c) for the September 2019 Fiscal Month (rather than upon Borrowers’ monthly financial statements for the September 2018 Fiscal Month period).  Agent and Lenders have agreed to make the requested accommodation; however, each Borrower hereby acknowledges and agrees that except as specifically provided herein, nothing in this Section or anywhere in this Amendment shall be deemed or otherwise construed as a waiver by the Agent or any Lender of any of its/their rights and remedies pursuant to the Loan Agreement and/or any Loan Document(s), and/or with respect to any Default or Event of Default thereunder.

 

4.                                      Amendments to the Loan Agreement.  Section 1.1 of the Loan Agreement is hereby amended as follows:

 

(a)                                 The definition of “Availability” is hereby amended and restated as follows:

 

““Availability” shall have the meaning ascribed to such term in the Revolver Loan Agreement.”

 

(b)                                 The definition of “Capital Lease” is hereby amended and restated as follows:

 

““Capital Lease: any lease of property by an Obligor or any of its Subsidiaries which, in accordance with GAAP, should be reflected as a capital lease on the consolidated balance sheet of the Obligors and their Subsidiaries; provided that, notwithstanding the foregoing, (i) in no event shall any lease that would have been categorized as an operating lease as determined in accordance with GAAP prior to giving effect to the Accounting Standards Codification Topic 842, Leases, or any other changes in GAAP subsequent to the Restatement Date, be considered a “Capital Lease” for purposes of this Agreement and (ii) the Lease dated

 

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March 24, 2009 between Faith Realty II, LLC and SI USA shall not constitute a “Capital Lease” for purposes of this Agreement.”

 

(c)                                  The definition of “EBITDA” is hereby amended by amending and restating clause (b)(xv) as follows:

 

“(xv) earn-out and severance payments; provided that the sum of the aggregate amounts added back pursuant to clauses (b)(xii), (b)(xiii), (b)(xiv) and (b)(x) shall not exceed (A) $1,480,000 in the aggregate for any period of twelve consecutive months ending on or prior to April 30, 2020 (of which not more than $480,000 shall be attributable to severance payments and related expenses anticipated to be incurred between February 1, 2019 and April 30, 2019), and (B) $1,000,000 in the aggregate for any period of twelve consecutive months ending on or after May 31, 2020;”

 

(d)                                 The definition of “Eligible Account” is hereby amended by amending and restating clause (f) as follows:

 

“(f) with respect to any Account owing by the Target Companies, when aggregated with other Accounts owing by the Target Companies, it exceeds 35%, provided, however, that, if at any time, the corporate credit rating of Target Corporation falls below “A” (by S&P), “A-” (by Fitch) or “A2” (by Moody’s), Agent shall have the right, in its sole discretion, to decrease such maximum percentage (provided further, that only the amount of Accounts in excess of the percentage set forth in this clause (f) (or such lower percentage as shall be specified by Agent in accordance with the foregoing proviso) shall be deemed ineligible under this clause (f));”

 

(e)                                  The definition of “Fee Letter” is hereby amended and restated as follows:

 

““Fee Letter” that certain fee letter dated as of May 25, 2018 among Agent and Company, as amended and restated by that certain Amended Fee Letter dated March 25, 2019.”

 

(f)                                   The definition of “IP Advance Rate Reduction Amount” is hereby amended and restated as follows:

 

““IP Advance Rate Reduction Amount:  means, as of each applicable date of determination, if EBITDA for the immediately preceding twelve Fiscal Months (such calculation commencing with the Borrowers’ delivery to Agent of the monthly financial statements required under Section 10.1.2(c) for the September 2019 Fiscal Month, and as of each applicable date of determination thereafter) is less than (x) $7,500,000 or (y) $9,000,000 commencing with the delivery of the monthly financials for the December 2019 Fiscal Month and thereafter, the IP Advance Rate will reduce by 10.0 percentage points from the then applicable IP Advance Rate; provided, that if after an IP Advance Rate Reduction Amount is implemented EBITDA is greater than $9,000,000 for two (2) consecutive measurement periods, the IP Advance Rate will increase by 10.0 percentage points from the then applicable IP Advance Rate for such time

 

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as trailing twelve month EBITDA is greater than $9,000,000; provided, further, that in the event the IP Advance Rate is increased in accordance with the immediately preceding clause following a prior reduction thereof as provided herein, the IP Advance Rate may be further reduced if at any subsequent measurement date trailing twelve month EBITDA is determined to be less than $9,000,000; provided, further, that in no event shall the IP Advance Rate be greater than 60%.”

 

(g)                                  The definition of “Revolver Borrowing Base” is hereby amended and restated as follows:

 

““Revolver Borrowing Base: the “Revolver Borrowing Base” as such term is defined in the Revolver Loan Agreement or any equivalent term used to describe the obligations arising thereunder and in connection therewith, as amended by that certain First Amendment to Second Amended and Restated Loan Agreement, dated March 25, 2019, between and among the Revolver Lenders, Revolver Agent, and Borrowers.”

 

5.                                      Amended Prepayment Premium.  Contemporaneous with the execution and delivery of this Amendment, Borrowers and Term Agent shall enter into and deliver an amendment to the Fee Letter (“Amended Fee Letter”), which Amended Fee Letter shall be in the form annexed hereto as Exhibit A and incorporated herein.

 

6.                                      Consent to Revolver Loan Agreement Amendment.  Agent and Lenders hereby consent to the execution and delivery of that certain First Amendment to Second Amended and Restated Loan and Security Agreement dated as of March 25, 2019 by and among Borrowers, the guarantors and lenders party thereto, and the Revolver Agent (the “Revolver Loan Agreement Amendment”), and the amendments to the Revolver Loan Agreement set forth therein, which Revolver Loan Agreement Amendment shall be in the form annexed hereto as Exhibit B and incorporated herein.  The consent of the Agent and Lenders to the Revolver Loan Agreement Amendment shall also constitute requisite consent under Section 5.2(b) of the Intercreditor Agreement, to the amendments to the Revolver Loan Agreement described in the Revolver Loan Agreement Amendment.

 

7.                                      No Default; Representations and Warranties, Etc.  Obligors hereby represent, warrant and confirm that: (a) after giving effect to this Amendment, all representations and warranties of Obligors in the Loan Agreement and the other Loan Documents are true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date hereof as if made on such date (except to the extent that such representations and warranties expressly relate to or are stated to have been made as of an earlier date, in which case, such representations and warranties shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date); (b) after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing; and (c) the execution, delivery and performance by Obligors of this Amendment and all other documents, instruments and agreements executed and delivered in connection herewith or therewith (i) have been duly authorized by all necessary action on the part of Obligors (including any necessary shareholder consents or approvals), (ii) do not violate, conflict with or result in a default under and will not violate or conflict with or result in a default under any applicable law or regulation, any term or provision of the organizational documents of any Obligor or any term or provision of any material indenture, agreement or other instrument binding on any Obligor or any of its assets, and (iii) do not require the consent of any Person which has not been obtained.

 

8.                                      Ratification and Confirmation.  Obligors hereby ratify and confirm all of the terms and provisions of the Loan Agreement and the other Loan Documents and agree that all of such terms and

 

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provisions, as amended hereby, remain in full force and effect.  Without limiting the generality of the foregoing, Obligors hereby acknowledge and confirm that all of the “Obligations” under and as defined in the Loan Agreement are valid and enforceable and are secured by and entitled to the benefits of the Loan Agreement and the other Loan Documents, and Obligors hereby ratify and confirm the grant of the liens and security interests in the Collateral in favor of Agent, for the benefit of itself and Lenders, pursuant to the Loan Agreement and the other Loan Documents, as security for the Obligations.

 

9.                                      Waiver; Release.  To induce Agent and Lenders to enter into this Amendment, including providing the waivers provided for herein, and for other good and valuable consideration, each Borrower hereby forever waives, relieves, releases, and forever discharges Agent and each Lender, together with its respective present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims, or by reason of any matter, cause or anything whatsoever existing or arising from the beginning of time through and including the date of execution of this Amendment relating to or arising out of the Loan Agreement and any of the Loan Documents or otherwise, including, without limitation, any actual or alleged act or omission of or on behalf of Agent and/or any Lender with respect to the Loan Documents and any security interest, Liens or Collateral in connection therewith, or the enforcement of any of Agent and/or Lenders’ rights or remedies thereunder (collectively “Released Claims”). Without limiting the foregoing, the Released Claims shall include any and all liabilities or claims arising out of or in any manner whatsoever connected with or related to the Loan Agreement and the other Loan Documents, this Amendment, the Recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing, and/or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing.

 

a)                                     By entering into this release, each Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of each Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if any Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, no Borrower shall be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Each Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Agent or any Lender with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.

 

b)                                     This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Each Borrower acknowledges that the release(s) contained herein constitute(s) a material inducement to Agent and Lenders to enter into this Amendment, and that Agent and Lenders would not have done so but for Agent’s and Lenders’ expectation that such release(s) is valid and enforceable in all events.

 

c)                                      Each Borrower hereby represents and warrants to Agent and Lenders, and Agent and Lenders are relying thereon, as follows:

 

i.                                Except as expressly stated in this Amendment, neither Agent nor any Lender nor any other agent, employee or representative of Agent and/or any Lender, has

 

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made any statement or representation to any Borrower regarding any fact relied upon by such Borrower in entering into this Amendment;

 

ii.                             Each Borrower has made such investigation of the facts pertaining to this Amendment and all of the matters appertaining thereto, as it deems necessary;

 

iii.                          The terms of this Amendment are contractual and not a mere recital; and

 

iv.                         This Amendment has been carefully read by each Borrower, the contents hereof are known and understood by each such Borrower, and this Amendment is signed freely, and without duress, by any Borrower.

 

d)                                     Each Borrower further represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released.  Each Borrower shall indemnify Agent and each Lender, and defend and hold it/them harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters released herein.

 

10.                               Amendment Fee.  For the accommodations reflected in this Amendment, Borrowers shall pay to Agent, for the ratable benefit of itself and the Lenders, a one-time amendment fee in an amount equal to 1.5% of the aggregate amount of the Term Loan (the “Amendment Fee”).  Such Amendment Fee shall be fully earned on the date hereof and payable by Borrowers (a) fifty percent (50%) upon the execution and delivery of this Amendment and (b) fifty percent (50%) on September 30, 2019.  The Amendment Fee is in addition to any other fee set forth in the Loan Documents and shall not be refundable or subject to setoff for any reason whatsoever.

 

11.                               Expenses of Lender.  Borrowers agree to pay, on demand, all reasonable costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all agreements, amendments, modifications, and supplements to the Loan Agreement, including, without limitation, the reasonable fees of Agent’s and Lender’s legal counsel and any taxes or expenses associated with or incurred in connection with any instrument or agreement referred to herein or contemplated hereby. Each Borrower acknowledges that Agent and Lenders may charge any and all such reasonable fees, costs and expenses to Borrowers’ Loan Account in accordance with the Loan Agreement, and Agent and Lenders agree to promptly provide all invoices to Borrowers related to such fees, costs and expenses after charging the Loan Account therefor.

 

12.                               Conditions to Effectiveness of Amendment.  This Amendment shall become effective as of the date when, and only when, each of the following conditions precedent shall have been satisfied or waived in writing by Agent (such date being defined as the “Effective Date”):

 

(a)                                 Agent shall have received counterparts to this Amendment, duly executed by Agent, Lenders constituting “Required Lenders”, and Obligors;

 

(b)                                 Agent shall have received a true and complete copy of the fully executed Revolver Loan Agreement Amendment;

 

(c)                                  Agent shall have received a true and complete copy of the fully executed Amended Fee Letter; and

 

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(d)                                 Borrowers shall have paid Agent, for the ratable benefit of itself and the Lenders, the Amendment Fee.

 

13.                               Reservation of Rights.  This Amendment shall be limited precisely as written and, except as expressly set forth herein, neither the fact of Agent and Lenders’ agreement to enter into this Amendment nor any other term or provisions herein shall, or shall be deemed or construed to, (i) be a consent to any forbearance, waiver, amendment or modification of any term, provision or condition of the Loan Documents, (ii) affect, impair, operate as a waiver of, or prejudice any right, power or remedy which Agent and Lenders may now or hereafter have pursuant to the Loan Documents or any other document, agreement, security agreement or instrument executed in connection with or related to the Loan Documents, or at law or in equity or by statute including, without limitation, with regard to any existing or hereafter arising Event of Default, (iii) impose upon Agent or any Lender any obligation, express or implied, to consent to any amendment or further modification of the Loan Documents, or (iv) be a consent to any waiver of any existing Event of Default.  Agent and Lenders hereby expressly reserve all rights, powers and remedies specifically given to it under the Loan Documents or now or hereafter existing at law, in equity or by statute.

 

14.                               Miscellaneous.

 

a)                                     Further Assurances.  The Borrowers shall take such further actions, and execute and deliver to the Agent and Lenders such additional assignments, agreements, supplements, powers and instruments, as Agent and/or Lenders may deem necessary or appropriate, wherever required by law, in order to perfect, preserve and protect the security interest in the Collateral and the rights and interests granted to the Agent and Lenders under the Loan Agreement and the other Loan Documents, or to permit the Agent and Lenders to exercise and enforce their rights, powers and remedies with respect to any Collateral.  Without limiting the generality of the foregoing, but subject to applicable law, the Borrowers shall make, execute endorse, acknowledge, file or refile and/or deliver to Agent from time to time upon request such lists, descriptions and designations of the Collateral, copies of warehouse receipts, receipts in the nature of warehouse receipts, bills of lading, documents of title, vouchers, invoices, schedules confirmatory assignments, supplements, additional security agreements, conveyances, financing statements, transfer endorsements, powers of attorney, certificates, reports, and other assurances or instruments.

 

b)                                     Full Force and Effect; Entire Agreement.  Except to the extent expressly provided in this Amendment, the terms and conditions of the Loan Agreement and each other Loan Document shall remain in full force and effect.  This Amendment, the Loan Agreement and the other Loan Documents constitute and contain the entire agreement of the parties hereto and supersede any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.

 

c)                                      Non-Waiver. Except as specifically provided herein, none of this Amendment or Agent’s and/or any Lender’s continued making of Term Loans or other extensions of credit at any time extended to Borrowers in accordance with this Amendment, the Loan Agreement, and the other Loan Documents shall be deemed a waiver of or consent to any Default or Event of Default.  Borrowers agree that any such Default and/or Event of Default, if any, shall not be deemed to have been waived, released or cured by virtue of Term Loans or other extensions of credit at any time extended to Borrowers, or by Agent’s and/or any Lender’s agreements provided for herein.  Nothing in this Amendment shall restrict Agent’s or any Lender’s ability to take or refrain from taking or exercise any right that may exist under the Loan Documents.

 

d)                                     Counterparts.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts taken

 

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together shall constitute but one and the same instrument.  Delivery of an executed counterparty of a signature page of this Agreement by telecopy or other electronic means shall be as effective as delivery of a manually executed counterpart of this Amendment.

 

e)                                      No Third Parties Benefited.  This Amendment is made and entered into for the sole benefit of the Borrowers, Agent and the Lenders, and their permitted successors and assigns, and except as otherwise expressly provided in this Amendment, no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Amendment.

 

f)                                       Governing Law. THIS AMENDMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN CONTRACT OR TORT OR OTHERWISE) BASED UPON, ARISING OUT OF OR RELATING TO THIS AMENDMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF (BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

g)                                      Severability.  In case any provision in or obligation under this Amendment shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

 

h)                                     Jury Trial Waiver.  BORROWERS, AGENT AND LENDERS EACH HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES TO THIS AMENDMENT IN RESPECT OF THIS AMENDMENT OR THE OTHER LOAN DOCUMENTS OR THE RELATED TRANSACTIONS, INCLUDING, WITHOUT LIMITATION, THE OBLIGATIONS OF BORROWERS, THE COLLATERAL, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT TO THIS AMENDMENT, OR THE VALIDITY, PROTECTION, INTERPRETATION, ADMINISTRATION, COLLECTION OR ENFORCEMENT OF THIS AMENDMENT OR ANY OF THE OTHER LOAN DOCUMENTS, WHETHER NOW EXISTING OR HEREAFTER ARISING, WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.  BORROWERS, GUARANTORS, AGENT AND LENDERS EACH HEREBY AGREES THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT SUCH BORROWER PARTY OR LENDER MAY FILE AN ORIGINAL COUNTERPART OF THIS AMENDMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO A TRIAL BY JURY.

 

i)                                         Loan Document.  This Amendment shall be deemed to be a Loan Document for all purposes.

 

[Remainder of page intentionally left blank]

 

[Signatures begin on the following page]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment which shall be deemed to be a sealed instrument as of the date first above written.

 

	
 
    	
BORROWERS:
    
	
 
    	
 
    
	
 
    	
SUMMER   INFANT, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Messner
    
	
 
    	
 
    	
Name:
    	
Mark Messner
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SUMMER INFANT   (USA), INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Messner
    
	
 
    	
 
    	
Name:
    	
Mark Messner
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
GUARANTORS:
    
	
 
    	
 
    
	
 
    	
SUMMER INFANT CANADA,   LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Messner
    
	
 
    	
 
    	
Name:
    	
Mark Messner
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
SUMMER INFANT EUROPE   LIMITED
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Messner
    
	
 
    	
 
    	
Name:
    	
Mark Messner
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    

 

[Signature Page to Amendment No. 1 to Term Loan and Security Agreement]

 

 

	
 
    	
AGENT:
    
	
 
    	
 
    
	
 
    	
PATHLIGHT CAPITAL LLC,   as Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Katie Hendricks
    
	
 
    	
 
    	
Name: Katie Hendricks
    
	
 
    	
 
    	
Title: Managing   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LENDERS:
    
	
 
    	
 
    
	
 
    	
PATHLIGHT CAPITAL LLC,   as Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Katie Hendricks
    
	
 
    	
 
    	
Name: Katie Hendricks
    
	
 
    	
 
    	
Title: Managing   Director
    

 

[Signature Page to Amendment No. 1 to Term Loan and Security Agreement]Document

FIRST AMENDMENT 
TO
LOAN AND SECURITY AGREEMENT

This First Amendment to Loan and Security Agreement (this “Amendment”) is entered into as of  May 2, 2019, by and among SILICON VALLEY BANK, a California corporation (“Bank”), MITEK SYSTEMS, INC., a Delaware corporation (“Parent”), and IDCHECKER, INC., a California corporation (together with Parent, each a “Co-Borrower” and collectively, “Co-Borrowers”).
Recitals
A.Bank and Co-Borrowers have entered into that certain Loan and Security Agreement dated as of May 3, 2018 (as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).  Bank has extended credit to Co-Borrowers for the purposes permitted in the Loan Agreement.
B.Co-Borrowers have requested that Bank amend the Loan Agreement to extend the Revolving Line Maturity Date.
C.Bank has agreed to so amend the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
Agreement
        Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1.Definitions.  Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2.Amendment to Loan Agreement.  
2.1 Section 13 (Definitions).  The following term and its respective definition hereby is amended and restated in its entirety in Section 13.1 of the Loan Agreement to read as follows:
 “Revolving Line Maturity Date” is September 30, 2020.
3.Limitation of Amendment.
3.1 This Amendment is effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in

 the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
4.Representations and Warranties.  Each Co-Borrower represents and warrants to Bank as follows:
4.1 (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;
4.2 Co-Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement;
4.3 The organizational documents of Co-Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Co-Borrower of this Amendment and the performance by Co-Borrower of its obligations under the Loan Agreement have been duly authorized by all necessary action on the part of Co-Borrower;
4.5 The execution and delivery by Co-Borrower of this Amendment and the performance by Co-Borrower of its obligations under the Loan Agreement do not and will not contravene (a) any law or regulation binding on or affecting Co-Borrower, (b) any contractual restriction with a Person binding on Co-Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Co-Borrower, or (d) the organizational documents of Co-Borrower;
4.6 The execution and delivery by Co-Borrower of this Amendment and the performance by Co-Borrower of its obligations under the Loan Agreement do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Co-Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Co-Borrower and is the binding obligation of Co-Borrower, enforceable against Co-Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.
5.Prior Agreement.  The Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect.  This Amendment is not a novation and the terms and conditions of this Amendment shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents.  In the event of any conflict or inconsistency between this Amendment and the terms of such documents, the terms of this Amendment shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.
6.Each Co-Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:

2

(a) Except as expressly stated in this Amendment, neither Bank nor any agent, employee or representative of Bank has made any statement or representation to Co-Borrower regarding any fact relied upon by Co-Borrower in entering into this Amendment.
(b) Co-Borrower has made such investigation of the facts pertaining to this Amendment and all of the matters appertaining thereto, as it deems necessary.
(c) The terms of this Amendment are contractual and not a mere recital.
(d) This Amendment has been carefully read by Co-Borrower, the contents hereof are known and understood by Co-Borrower, and this Amendment is signed freely, and without duress, by Co-Borrower.
7.Ratification of Perfection Certificate.  Each Co-Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated on or prior to the Effective Date and acknowledges, confirms and agrees that the disclosures and information such Co-Borrower provided to Bank in such Perfection Certificate have not changed, as of the date hereof.
8.Integration.  This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.
9.Counterparts.  This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
10.Conditions to Effectiveness.  This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of (i) this Amendment by each party hereto, and (ii) an updated Corporate Borrowing Certificate from each Co-Borrower in the form attached hereto, and (b) Co-Borrowers’ payment of (i) an amendment fee in an amount equal to Thirty-Five Thousand Dollars ($35,000), and (ii) all Bank Expenses due and owing as of the date hereof, which, in either case, may be debited from any of Co-Borrowers’ accounts at Bank.
11.Miscellaneous.
11.1 This Amendment shall constitute a Loan Document under the Loan Agreement; the failure to comply with the covenants contained herein shall constitute an Event of Default under the Loan Agreement; and all obligations included in this Amendment (including, without limitation, all obligations for the payment of principal, interest, fees, and other amounts and expenses) shall constitute obligations under the Loan Agreement and secured by the Collateral.
11.2 Each provision of this Amendment is severable from every other provision in determining the enforceability of any provision.
12.Governing Law.  This Amendment and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of California.
[Balance of Page Intentionally Left Blank]

3

In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.

									
		CO-BORROWERS:

MITEK SYSTEMS, INC.	
		By	/s/ Jeffrey C. Davison
		Name:	Jeffrey C. Davison
		Title:	Chief Financial Officer
			
		IDCHECKER, INC.	
		By	/s/ Jeffrey C. Davison
		Name:	Jeffrey C. Davison
		Title:	Chief Financial Officer
			
		BANK:

SILICON VALLEY BANK	
		By	/s/ Kadie Sobel
		Name:	Kadie Sobel
		Title:	Director

CORPORATE BORROWING CERTIFICATE

Co-Borrower:  MITEK SYSTEMS, INC., a California corporation Date:  May 2, 2019
Bank:  SILICON VALLEY BANK

I hereby certify as follows, as of the date set forth above:
1. I am the Secretary, Assistant Secretary or other officer of Co-Borrower .   My title is as set forth below.

2. Co-Borrower’s exact legal name is set forth above.  Co-Borrower is a corporation existing under the laws of the State of Delaware.

3. Attached hereto are true, correct and complete copies of Co-Borrower’s Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Co-Borrower is incorporated as set forth above.  Such Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Co-Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action).  Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Silicon Valley Bank (“Bank”) may rely on them until Bank receives written notice of revocation from Co-Borrower.

Resolved, that any one of the following officers or employees of Co-Borrower, whose names, titles and signatures are below, may act on behalf of Co-Borrower:
																		
	Name		Title		Signature	Authorized to Add or Remove Signatories

	Scipio M. Carnecchia		Chief Executive Officer		/s/ Scipio M. Carnecchia	þ
	Jeffrey C. Davison		Chief Financial Officer		/s/ Jeffrey C. Davison	þ
	Trevor Renfield		VP, Corporate Controller		/s/ Trevor Renfield	þ
						□

Resolved Further, that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Co-Borrower.

Resolved Further, that such individuals may, on behalf of Co-Borrower:

Borrow Money.  Borrow money from Bank.
Execute Loan Documents.  Execute any loan documents Bank requires. 
Grant Security.  Grant Bank a security interest in any of Co-Borrower’s assets.
Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Co-Borrower has an interest and receive cash or otherwise use the proceeds.
Apply for Letters of Credit.  Apply for letters of credit from Bank.
Enter Derivative Transactions.  Execute spot or forward foreign exchange contracts, interest rate swap agreements, or other derivative transactions.
Issue Warrants.  Issue warrants for Co-Borrower’s capital stock.
Further Acts.  Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Co-Borrower’s right to a jury trial) they believe to be necessary to effect these resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 

5. The persons listed above are Co-Borrower’s officers or employees with their titles and signatures shown next to their names.

MITEK SYSTEMS, INC.

						
	By:	/s/ Scipio M. Carnecchia
	Name:	Scipio M. Carnecchia
	Title:	Chief Executive Officer

        *** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Co-Borrower.

        I, Jason Gray the General Counsel__ of Co-Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

						
	By:	/s/ Jason Gray
	Name:	Jason Gray
	Title:	General Counsel

CORPORATE BORROWING CERTIFICATE

Co-Borrower:  IDCHECKER, INC., a California corporation    Date:  May 2, 2019
Bank:  SILICON VALLEY BANK

I hereby certify as follows, as of the date set forth above:
1. I am the Secretary, Assistant Secretary or other officer of Co-Borrower.   My title is as set forth below.

2. Co-Borrower’s exact legal name is set forth above.  Co-Borrower is a corporation existing under the laws of the State of California.

3. Attached hereto are true, correct and complete copies of Co-Borrower’s Articles of Incorporation (including amendments), as filed with the Secretary of State of the state in which Co-Borrower is incorporated as set forth above.  Such Articles of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof.

4. The following resolutions were duly and validly adopted by Co-Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action).  Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Silicon Valley Bank (“Bank”) may rely on them until Bank receives written notice of revocation from Co-Borrower.

Resolved, that any one of the following officers or employees of Co-Borrower, whose names, titles and signatures are below, may act on behalf of Co-Borrower:
																		
	Name		Title		Signature	Authorized to Add or Remove Signatories

	Scipio M. Carnecchia		Chief Executive Officer		/s/ Scipio M. Carnecchia	þ
	Jeffrey C. Davison		Chief Financial Officer		/s/ Jeffrey C. Davison	þ
	Trevor Renfield		VP, Corporate Controller		/s/ Trevor Renfield	þ
						□

Resolved Further, that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Co-Borrower.

Resolved Further, that such individuals may, on behalf of Co-Borrower:

Borrow Money.  Borrow money from Bank.
Execute Loan Documents.  Execute any loan documents Bank requires. 
Grant Security.  Grant Bank a security interest in any of Co-Borrower’s assets.
Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Co-Borrower has an interest and receive cash or otherwise use the proceeds.
Apply for Letters of Credit.  Apply for letters of credit from Bank.
Enter Derivative Transactions.  Execute spot or forward foreign exchange contracts, interest rate swap agreements, or other derivative transactions.
Issue Warrants.  Issue warrants for Co-Borrower’s capital stock.
Further Acts.  Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Co-Borrower’s right to a jury trial) they believe to be necessary to effect these resolutions.

Resolved Further, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified. 

5. The persons listed above are Co-Borrower’s officers or employees with their titles and signatures shown next to their names.

IDCHECKER, INC.

						
	By:	/s/ Scipio M. Carnecchia
	Name:	Scipio M. Carnecchia
	Title:	Chief Executive Officer

        *** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Co-Borrower.

        I, Jason Gray the General Counsel of Co-Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

						
	By:	/s/ Jason Gray
	Name:	Jason Gray
	Title:	General Counsel

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