UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

  March 10, 2020  
  Date of Report (Date of earliest event reported)  
     
  SUMMER INFANT, INC.  
  (Exact Name of Registrant as Specified in Charter)  

 

DELAWARE   001-33346   20-1994619
(State or Other   (Commission File Number)   (IRS Employer
Jurisdiction of Incorporation)       Identification No.)

 

     
  1275 PARK EAST DRIVE  
  WOONSOCKET, RHODE ISLAND 02895  
  (Address of Principal Executive Offices)  (Zip Code)  
     
  (401) 671-6550  
  (Registrant's telephone number, including area code)  

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading
Symbol(s)
Name of each exchange
on which registered
Common Stock, par value $0.0001 SUMR Nasdaq Capital Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

 

Item 1.01.Entry into a Material Definitive Agreement.

 

On March 10, 2020, Summer Infant, Inc. (the “Company”) and Summer Infant (USA), Inc., as borrowers entered into (i) Amendment No. 4 to Second Amended and Restated Loan and Security Agreement among the Company and Summer Infant (USA) Inc., as borrowers, the guarantors from time to time party thereto, the financial institutions from time to time party thereto as lenders, and Bank of America, N.A., as agent for the lenders (the “BofA Amendment”), and (ii) Amendment No. 4 to Term Loan and Security Agreement among the Company and Summer Infant (USA) Inc., as borrowers, the guarantors from time to time party thereto, the financial institutions from time to time party thereto as lenders, and Pathlight Capital LLC, as agent for the lenders (the “Term Loan Amendment”).

 

BofA Amendment. The BofA Amendment amended the terms of the Second Amended and Restated Loan and Security Agreement to, among other things: (a) amend the definition of EBITDA to exclude fees and expenses paid to Winter Harbor and any investment bank retained by the Company; (b) modify the definition of Financial Covenant Trigger Amount so that the amount is (i) $3 million through May 31, 2020, (ii) $3.5 million from June 1 through June 30, 2020, (iii) $3.75 million from July 1 through August 31, 2020, (iv) $4.0 million from September 1 through September 30, 2020, (v) $4.25 million from October 1 through October 31, 2020, (vi) $4.5 million from November 1 through November 30, 2020, and (vii) $5.0 million at any time from and after December 1, 2020; (c) reduce the lenders’ aggregate revolver commitments to $48.0 million; (d) require that the Company meet certain minimum net sales amounts for each period of three consecutive fiscal months, through the three-month period ending December 31, 2020; (e) require that the Company meet a certain minimum EBITDA as of the end of each fiscal month, calculated on a trailing 12-month period; (f) increase the applicable margin and applicable unused line fee rate; and (g) modify certain reporting requirements.

 

Term Loan Amendment. The Term Loan Amendment amended the terms of the Term Loan and Security Agreement to, among other things: (a) amend the definition of Term Loan Borrowing Base to deduct a specified equipment reserve amount from the calculation of the borrowing base; (b) amend the definitions of EBITDA and Financial Covenant Trigger Amount consistent with the BofA Amendment; (c) modify the definition of IP Advance Rate to be 55%, provided that such rate shall be reduced by 1.0% per month on and after the earlier of (i) the due date of the Company’s borrowing base certificate for September 2020 and (ii) the date such borrowing base certificate is delivered; (d) suspend principal payments on the term loan for 2020, such payments to resume in March 2021; (e) require that the Company meet certain financial covenants, consistent with the BofA Amendment; and (f) modify certain reporting requirements, consistent with the BofA Amendment.

 

In addition, pursuant to Term Loan Amendment, beginning on March 10, 2020, the term loan will begin to bear additional interest, to be paid in kind (“PIK interest”) at annual rate of 4.0%, such PIK interest to be payable upon the earliest to occur of (i) the sale or merger of the Company, (ii) the repayment in full of the term loan and termination of commitments, (iii) the occurrence of a default or event of default under the Term Loan and Security Agreement, and (iv) the Company achieving adjusted EBITDA of $12.0 million (calculated on a trailing 12-month basis). If PIK interest becomes due and payable as a result of the Company achieving the adjusted EBITDA event described in clause (iv), then the Company shall pay all outstanding PIK interest accrued as of such date, and PIK interest shall continue to accrue thereafter and be paid on each subsequent anniversary of such event.

 

The foregoing summary of the BofA Amendment and the Term Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of such amendments, copies of which are filed herewith as Exhibit 10.1 and Exhibit 10.2, respectively, and incorporated herein by reference.

 

 

 

 

Item 3.03.Material Modification to Rights of Security Holders.

 

The information contained in Item 5.03 is incorporated by reference into this Item 3.03.

 

Item 5.03.Material Modification to Rights of Security Holders.

 

On March 12, 2020, Summer Infant, Inc. (the “Company”) filed a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware (the “Certificate of Amendment”), that will effect, as of 11:59 p.m. Eastern Time on March 13, 2020 (the “Effective Date”), a 1-for-9 reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding common stock, $0.0001 par value per share (the “Common Stock”).

 

As a result of the Reverse Stock Split, every nine shares of Common Stock issued and outstanding at the effective time will be converted into one share of Common Stock. No cash or fractional shares will be issued in connection with the Reverse Stock Split, and instead the Company will round up to the next whole share in lieu of issuing fractional shares that would otherwise have been issued pursuant to the Reverse Stock Split.

 

The Reverse Stock Split will reduce the number of shares of outstanding Common Stock. The Reverse Stock Split will not change the par value or authorized number of shares of Common Stock. All outstanding equity awards will be adjusted as a result of the Reverse Stock Split, as required by the terms of such equity awards and the Company’s incentive compensation plans.

 

As previously disclosed, at the Company’s Special Meeting of Stockholders held on March 5, 2020, the stockholders of the Company voted to approve the Reverse Stock Split. The Board of Directors subsequently determined the final reverse stock split ration and approved and authorized the filing of the Certificate of Amendment.

 

Trading of the Common Stock on a Reverse Stock Split-adjusted basis is anticipated to begin at the opening of trading on March 16, 2020.

 

The summary of the Certificate of Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Amendment, a copy of which is filed herewith as Exhibit 3.1 and is incorporated herein by reference.

 

Item 7.01.Regulation FD Disclosure.

 

On March 12, 2020, the Company issued a press release with respect to the Reverse Split Stock. A copy of the press release is furnished herewith as Exhibit 99.1.

 

 

 

 

Item 9.01.Financial Statements and Exhibits.

 

(d)       Exhibits

 

Exhibit    
No.   Description
     
3.1   Certificate of Amendment to Amended and Restated Certificate of Incorporation of Summer Infant, Inc.
     
10.1*   Amendment No. 4 to Second Amended and Restated Loan and Security Agreement, dated as of March 10, 2020, among Summer Infant, Inc. and Summer Infant (USA) Inc., as borrowers, the guarantors from time to time party thereto, the financial institutions from time to time party thereto as lenders, and Bank of America, N.A., as agent for the lenders
     
10.2*   Amendment No. 4 to Term Loan and Security Agreement, dated as of March 10, 2020, among Summer Infant, Inc. and Summer Infant (USA) Inc., as borrowers, the guarantors from time to time party thereto, the financial institutions from time to time party thereto as lenders, and Pathlight Capital LLC, as agent for the lenders
     
99.1   Press release dated March 12, 2020.

 

 

 

*Portions of this exhibit have been omitted for confidential treatment pursuant to Regulation S-K, Item 601(b)(10).

 

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  SUMMER INFANT, INC.
     
Date:  March 12, 2020 By: /s/ Paul Francese
    Paul Francese
    Senior Vice President and Chief Financial Officer

 

 

 

Exhibit 3.1

 

Certificate of Amendment
to
Amended and Restated Certificate of Incorporation
of
Summer Infant, Inc.

 

Pursuant to Section 242 of the General Corporation Law of the State of Delaware

 

Summer Infant, Inc. (hereinafter, the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, hereby certifies that:

 

1.                  The name of the Corporation is Summer Infant, Inc.

 

2.                  The Certificate of Incorporation of the Corporation was originally filed with the Secretary of State of the State of Delaware on December 9, 2004, under the name “KBL Healthcare Acquisition Corp. II,” and was amended and restated by the filing of the Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware on February 8, 2005, further amended and restated by the filing of the Amended and Restated Certificate of Incorporation on March 29, 2005, further amended and restated by the filing of the Amended and Restated Certificate of Incorporation on March 6, 2007 and changing the name of the Corporation to “Summer Infant, Inc.,” further amended by the filing of a Certificate of Amendment of the Amended and Restated Certificate of Incorporation on June 3, 2010 and further amended by the filing of a Certificate of Amendment of the Amended and Restated Certificate of Incorporation on June 24, 2014 (as amended, the “Restated Certificate”).

 

3.                  This Certificate of Amendment to the Restated Certificate shall become effective as of 11:59 p.m. (EDT), on March 13, 2020.

 

4.                  The Restated Certificate is hereby amended by deleting Article FOURTH in its entirety and substituting in lieu thereof the following:

 

“FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 50,000,000 of which 49,000,000 shares shall be Common Stock, having a par value of $0.0001 per share, and 1,000,000 shares shall be Preferred Stock, having a par value of $0.0001 per share.

 

A.                Preferred Stock. The Board of Directors is expressly granted authority to issue shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the GCL. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any series thereof, unless a vote of any such holders is required pursuant to any Preferred Stock Designation.

 

 

 

 

B.                 Common Stock. Except as otherwise required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess all voting power and each share of Common Stock shall have one vote.

 

Effective as of 11:59 p.m. (EDT) on March 13, 2020 (the “Effective Time”), each nine (9) shares of Common Stock issued and outstanding immediately prior to the Effective Time shall be combined and changed into one (1) validly issued, fully paid and non-assessable share of Common Stock without any further action by the Corporation or any holder thereof, subject to the treatment of fractional share interests as described below (the “Reverse Stock Split”). The Reverse Stock Split shall occur without any further action on the part of the Company or the holder thereof and whether or not certificates representing such holder’s shares prior to the Reverse Stock Split are surrendered for cancellation. No fractional interest in a share of Common Stock shall be deliverable upon the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional shares of Common Stock because they hold a number of shares not evenly divisible by the Reverse Stock Split ratio will automatically be entitled to receive an additional fraction of a share of Common Stock to round up to the next whole share. Each certificate that immediately prior to the Effective Time represented shares of Common Stock (“Old Certificate”), shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the Old Certificate shall have been combined, plus any additional fraction of a share of Common Stock to round up to the next whole share.”

 

5.                  The foregoing amendment of the Restated Certificate has been duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

 

IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed this 12th day of March, 2020.

 

  SUMMER INFANT, INC.
     
  By: /s/ Paul Francese
  Name: Paul Francese
  Title: Senior Vice President and Chief Financial Officer

 

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Exhibit 10.1

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS EXHIBIT, MARKED BY [***],
HAS BEEN OMITTED PURSUANT TO REGULATION S-K, ITEM 601(b)(10) BECAUSE IT IS NOT
MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF
PUBLICLY DISCLOSED.

 

AMENDMENT NO. 4 TO

SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO 4 TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of March 10, 2020 by and among SUMMER INFANT, INC. and SUMMER INFANT (USA), INC., as “Borrowers” under the Loan Agreement referenced below (“Borrowers”), the guarantors from time to time party to the Loan Agreement referenced below (“Guarantors”, and together with Borrowers, “Obligors”), BANK OF AMERICA, N.A., in its capacity as the sole existing “Lender” under the Loan Agreement referenced below (the “Sole Lender”), and BANK OF AMERICA, N.A., in its capacity as “Agent” for the Lenders under the Loan Agreement referenced below (“Agent”).

 

R E C I T A L S:

 

WHEREAS, reference is made to that certain Second Amended and Restated Loan and Security Agreement dated as of June 28, 2018, as previously amended, by and among Obligors, Sole Lender and Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Agent and Sole Lender have made certain loans and financial accommodations available to the Borrowers;

 

WHEREAS, Obligors have requested that Agent and Sole Lender amend certain provisions of the Loan Agreement to, among other things, reduce the aggregate Revolver Commitments of all Lenders to $48,000,000,‎ and provide certain other accommodations to Obligors;

 

WHEREAS, notwithstanding that Agent and Sole Lender are under no obligation to amend the Loan Agreement, Agent and Sole Lender are willing to make certain additional financial accommodations as requested by Obligors, such that Obligors, Agent and Sole Lender have agreed to amend the Loan Agreement and the other Loan Documents on the terms and subject to satisfaction of the conditions set forth in this Agreement; and

 

WHEREAS, each Obligor is entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement and the other Loan Documents are being waived or modified by the terms of this Amendment.

 

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:

 

AGREEMENT

 

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 Sole Lender 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. Obligors hereby acknowledge and agree that, in accordance with the terms and conditions of the Loan Documents, each Obligor 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;

 

(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 11 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, Obligors 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 representations of Agent or Sole Lender, or any counsel to Agent or Sole Lender, concerning the legal effects of this Amendment or any provision hereof.

 

3.       Amendments to the Loan Agreement.

 

(a)                Section 1.1 of the Loan Agreement is hereby amended as follows:

 

1)                  The following new definitions shall be added to Section 1.1 of the Loan Agreement:

 

Fourth Amendment: that certain Amendment No. 4 to Second Amended and Restated Loan and Security Agreement dated as of the Fourth Amendment Effective Date by and among Borrowers, Guarantors, Sole Lender and Agent.”

 

Fourth Amendment Effective Date: the effective date of the Fourth Amendment which effective date is March 10, 2020.”

 

2)                  The definition of “Applicable Margin or Applicable Unused Line Fee Rate” in Section 1.1 of the Loan Agreement is hereby amended and restated as follows:

 

2

 

 

Applicable Margin or Applicable Unused Line Fee Rate: with respect to any Type of Loan, the margin set forth below, or with respect to the unused line fees payable under Section 3.2.1, the rate per annum set forth below, in each case, as determined for the most recently ended Fiscal Quarter:

 

Level  Average Quarterly
Availability
  Base Rate
Revolver
Loans
   LIBOR
Revolver
Loans
   Applicable
Unused Line
Fee Rate
 
I  > $30,000,000   1.50%   2.50%   0.50%
II  < $30,000,000   1.75%   2.75%   0.50%

 

 

Until Agent shall have received the Revolver Borrowing Base Certificates for each week through the week ending March 28, 2020, the Applicable Margin and the Applicable Unused Line Fee Rate shall be determined as if Level II were applicable (plus or minus, if applicable, 25 basis points in accordance with the following paragraph). Thereafter, the Applicable Margin and the Applicable Unused Line Fee Rate shall be determined based upon Average Quarterly Availability for each Fiscal Quarter as determined by Agent based upon the Revolver Borrowing Base Certificates delivered pursuant to Section 8.1 for each week during such Fiscal Quarter, which determination shall be effective on the first day of the calendar month after receipt by Agent of the Revolver Borrowing Base Certificate for the last week in such Fiscal Quarter. If any financial statement, Revolver Borrowing Base Certificate, Term Loan Borrowing Base Certificate or Compliance Certificate due in the preceding month has not been received, then, at the option of Agent or Required Lenders, the Applicable Margin and the Applicable Unused Line Fee Rate shall be determined as if Level II were applicable, from such day until the first day of the calendar month following actual receipt.

 

Notwithstanding the foregoing, (i) in the event that the Fixed Charge Coverage Ratio is at any time (regardless of whether a Financial Covenant Testing Period is in effect) less than 1.00 to 1.00, the Applicable Margin for Base Rate Revolver Loans and LIBOR Revolver Loans shall each be increased by 25 basis points from the amounts set forth in the table above; and (ii) in the event that the Leverage Ratio is at any time less than 3.75 to 1.00, the Applicable Margin for Base Rate Revolver Loans and LIBOR Revolver Loans shall each be reduced by 25 basis points from the amounts set forth in the table above; provided, that (x) the reductions described in clause (ii) of this sentence shall automatically cease to be in effect if any Event of Default has occurred and is continuing and (y) if any calculation of Leverage Ratio or Fixed Charge Coverage Ratio is at any time restated or otherwise revised or if the information set forth in any Compliance Certificate otherwise proves to be false or incorrect such that the Applicable Margin would have been higher than was otherwise in effect during any period, without constituting a waiver of any Default or Event of Default arising as a result thereof, interest due under this Agreement shall be immediately recalculated at such higher rate for any such applicable periods and shall be due and payable on demand.”

 

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3)                  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; provided, further that the limitations on fees and expenses in this clause (xv) and in clause (xii) shall not apply to any fees and expenses of Winter Harbor and any investment bank retained by the Borrowers;”

 

4)                  The definition of “Financial Covenant Trigger Amount” is hereby amended and restated as follows:

 

Financial Covenant Trigger Amount: (a) at any time through and including May 31, 2020, $3,000,000; (b) at any time from and after June 1, 2020 through and including June 30, 2020, $3,500,000; (c) at any time from and after July  1, 2020 through and including August 31, 2020, $3,750,000; (d) at any time from and after September 1, 2020 through and including September 30, 2020, $4,000,000; (e) at any time from and after October 1, 2020 through and including October 31, 2020, $4,250,000; (f) at any time from and after November 1, 2020 through and including November 30, 2020, $4,500,000; and (g) at any time from and after December 1, 2020, $5,000,000.”

 

5)                  The definition of “Revolver Commitments” is hereby amended and restated as follows:

 

Revolver Commitments: the aggregate Revolver Commitments of all Lenders. As of the Fourth Amendment Effective Date, the aggregate Revolver Commitments shall be reduced to $48,000,000.”

 

(b)                Section 10.1.14 of the Loan Agreement is hereby amended by replacing clause (c) threreof in its entirety with the following new clause (c) thereto:

 

“(c)       [***]

 

(c)                Section 10.3 of the Loan Agreement is hereby amended by adding the following new Sections 10.3.2 and 10.3.3 thereto:

 

10.3.2       Minimum Net Sales. Obligors and their Subsidiaries shall achieve “Net Sales” (as computed in accordance with the February 2020 Budget (as defined in the Fourth Amendment)) for each period of three consecutive fiscal months set forth below of not less than the Minimum Net Sales amounts set forth below opposite such period:

 

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Three Fiscal Month Period  Minimum Net Sales  
January – March 2020  $           [***]  
February – April 2020  $ [***]  
March – May 2020  $ [***]  
April – June 2020  $ [***]  
May – July 2020  $ [***]  
June – August 2020  $ [***]  
July – September 2020  $ [***]  
August – October 2020  $ [***]  
September – November 2020  $ [***]  
October – December 2020  $ [***]  

 

10.3.3       EBITDA. Obligors and their Subsidiaries shall achieve EBITDA for each ‎period of twelve consecutive fiscal months ending on the last day of ‎each fiscal month set forth below of not less than the Minimum EBITDA ‎amounts set forth below opposite such date:‎

 

Trailing Twelve Month Period Ending   Minimum EBITDA  
March 28, 2020   $ [***]  
April 30, 2020   $ [***]  
May 29, 2020   $ [***]  
June 30, 2020   $ [***]  
July 31, 2020   $ [***]  
August 31, 2020   $ [***]  
September 30, 2020   $ [***]  
October 30, 2020   $ [***]  
November 30, 2020   $ [***]  
December 31, 2020   $ [***]  

 

4.       Revolver Commitments; Schedule 1.1(a). Effective as of the Fourth Amendment Effective Date, the aggregate Revolver Commitments of all Lenders shall be reduced to $48,000,0000. Effective as of the Fourth Amendment Effective Date, Schedule 1.1(a) to the Loan Agreement is hereby replaced in its entirety with Schedule 1.1(a) attached to this Amendment.

 

5.       Business Plan; Additional Reporting Requirements. Borrowers have delivered to the Agent and Lenders an updated business plan, which updated business plan was initially delivered on February 7, 2020 and was updated as of February 12, 2020 to provide monthly performance details (the “February 2020 Budget”). From and after the Fourth Amendment Effective Date, not later than 3:00 p.m. (Eastern time) on the fifteenth (15th) Business Day after the conclusion of each month, commencing on March 2020, Borrowers shall furnish to Agent a report (the “Budget Performance Report”) that sets forth the actual results for the following line items set forth in the February 2020 Budget: (i) “Net Sales”; and (ii) “Adjusted EBITDA”, with each such Budget Performance Report being prepared as of the end of each such monthly reporting period.

 

6.       Investment Banker Engagement. In the event that, following the Fourth Amendment Effective ‎Date, Borrowers determine to engage an investment banker (“I-Banker”) to conduct a marketing ‎process for a sale and/or merger of the business and/or its assets, the terms of any such ‎engagement, including, without limitation, any fees and/or expenses to be paid thereunder, shall be ‎subject to the prior review and approval of the Agent, in its exclusive discretion. Upon any such ‎engagement, Borrowers further hereby: (A) authorize Agent to communicate directly with the I-‎Banker regarding all matters relating to the services to be rendered by I-Banker to the Borrowers, ‎including, without limitation, to discuss all financial reports, business information, findings and ‎recommendations of the I-Banker, prospects for a sale transaction, contacts made or to be made, ‎terms and term sheets, and such other matters as Agent shall request from time-to-time; (B) agree to ‎authorize and direct the I-Banker to communicate directly with Agent regarding all matters relating ‎to the services to be rendered by the I-Banker to the Borrowers in connection with the ongoing ‎solicitation for a sale transaction, and to provide Agent with copies (with a copy to Borrowers) of ‎all reports, term sheets and other information prepared or reviewed by the I-Banker; and (C) agree ‎to provide Agent with a bi-weekly report concerning the status of the ongoing efforts to complete a ‎sale transaction. From and after the Fourth Amendment Effective Date, Borrowers shall provide ‎copies of all sale transaction-related term sheets and/or letters of intent (whether preliminary, ‎interim or final in form and content) to Agent not later than one (1) Business Day following ‎Borrowers’ or I-Banker’s receipt of same.‎

 

5

 

 

7.       Amendment Fee. For the accommodations reflected in this Amendment, Borrowers shall pay to Agent, for the benefit of itself and Sole Lender, a one-time amendment fee in an amount equal to $50,000 (the “Amendment Fee”). Borrowers agree that such Amendment Fee shall be shall be fully earned by the Agent and Sole Lender on the date hereof and payable by Borrowers to the Agent and Sole Lender upon the earliest to occur of (i) a ‎sale or merger of the Borrowers and/or a sale of a material portion of the Borrowers’ assets, (ii) the repayment in full of the Revolver Loans and the termination of the Revolver Commitments and (iii) the ‎occurrence of a Default or Event of Default‎. The Amendment Fee is in addition to any other fee set forth in the Loan Documents and shall not be refundable for any reason whatsoever.

 

8.       Consent to Term Loan Agreement Amendment. Agent and Sole Lender hereby consent to the execution and delivery of that certain Amendment No. 4 to Term Loan and Security Agreement dated as of the date hereof by and among Obligors, the lenders party thereto, and the Term Loan Agent (the “Term Loan Agreement Amendment”), and the amendments to the Term Loan Agreement set forth therein. The consent of the Agent and Sole Lender to the Term Loan Agreement Amendment shall also constitute requisite consent under Section 5.2(b) of the Intercreditor Agreement, to the amendments to the Term Loan Agreement described in the Term Loan Agreement Amendment.

 

9.       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.

 

10.       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 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.

 

6

 

 

11.       Waiver; Release. To induce Agent and Sole Lender to enter into this Amendment, including providing the waivers provided for herein, and for other good and valuable consideration, each Obligor hereby forever waives, relieves, releases, and forever discharges Agent and Sole 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 Sole 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 Sole Lender’s 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 Obligor 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 Obligor hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if any Obligor 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 Obligor 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 Sole 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 Obligor acknowledges that the release(s) contained herein constitute(s) a material inducement to Agent and Sole Lender to enter into this Amendment, and that Agent and Sole Lender would not have done so but for Agent’s and Sole Lenders’ expectation that such release(s) is valid and enforceable in all events.

 

(c)                Each Obligor hereby represents and warrants to Agent and Sole Lender, and Agent and Sole Lenders are relying thereon, as follows:

 

i.              Except as expressly stated in this Amendment, neither Agent nor Sole Lender nor any other agent, employee or representative of Agent and/or Sole Lender, has made any statement or representation to any Obligor regarding any fact relied upon by such Obligor in entering into this Amendment;

 

ii.             Each Obligor 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 Obligor, the contents hereof are known and understood by each such Obligor, and this Amendment is signed freely, and without duress, by any Obligor.

 

7

 

 

(d)                Each Obligor 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 Obligor shall indemnify Agent and Sole 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.

 

12.       Expenses of Agent and Sole Lender. Borrowers agree to pay, on demand, all reasonable costs and expenses incurred by Agent and Sole 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 Sole Lenders’ 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 Sole Lender may charge any and all such reasonable fees, costs and expenses to Borrowers’ Loan Account in accordance with the Loan Agreement, and Agent and Sole Lender agree to promptly provide all invoices to Borrowers related to such fees, costs and expenses after charging the Loan Account therefor.

 

13.       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, Sole Lender, and Obligors; and

 

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

 

14.       Reservation of Rights. This Amendment shall be limited precisely as written and, except as expressly set forth herein, neither the fact of Agent and Sole Lender’s 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 Sole Lender 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 Sole 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 Sole Lender each hereby expressly reserves 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.

 

8

 

 

15.       Miscellaneous.

 

(a)                Further Assurances. The Obligors 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 Obligors 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. Obligors 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 Sole Lender’s agreements provided for herein. Nothing in this Amendment shall restrict Agent’s or Sole 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 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 Obligors, 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).

 

9

 

 

(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, GUARANTORS, AGENT AND SOLE LENDER 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 SOLE LENDER 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 OBLIGOR 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]

 

10

 

 

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/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer
   
   
  SUMMER INFANT (USA), INC.
   
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer
   
   
  GUARANTORS:
   
  SUMMER INFANT CANADA, LIMITED
   
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer
   
   
  SUMMER INFANT EUROPE LIMITED
   
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer

 

[Signature Page to Amendment No. 4 to Second Amended and Restated Loan and Security Agreement]

 

 

 

 

  AGENT:
   
  BANK OF AMERICA, N.A.,
  as Agent
   
   
  By /s/ Cynthia Stannard
    Name: Cynthia Stannard
    Title: Senior Vice President
   
   
  LENDER:
   
  BANK OF AMERICA, N.A.,
  as Sole Lender
   
   
  By /s/ Cynthia Stannard
    Name: Cynthia Stannard
    Title: Senior Vice President

 

[Signature Page to Amendment No. 4 to Second Amended and Restated Loan and Security Agreement]

 

 

 

 

SCHEDULE 1.1(a)

to

Second Amended and Restated Loan and Security Agreement

 

COMMITMENTS OF LENDERS

 

Lender  Revolver
Commitment
   Total
Commitments
   Applicable
Percentage
 
Bank of America, N.A.  $48,000,000   $48,000,000    100.0000%
                
TOTALS:  $48,000,000   $48,000,000    100.0000%

 

 

 

Exhibit 10.2

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS EXHIBIT, MARKED BY [***],
HAS BEEN OMITTED PURSUANT TO REGULATION S-K, ITEM 601(b)(10) BECAUSE IT IS NOT
MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE REGISTRANT IF
PUBLICLY DISCLOSED.

 

AMENDMENT NO. 4 TO

TERM LOAN AND SECURITY AGREEMENT

 

This AMENDMENT NO 4 TO TERM LOAN AND SECURITY AGREEMENT (this “Amendment”) is dated as of March 10, 2020 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”).

R E C I T A L S:

 

WHEREAS, the Obligors, the Agent, and the Lenders have previously entered into that certain Term Loan and Security Agreement, dated as of June 28, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which the Lenders have made certain loans and financial accommodations available to the Borrowers;

 

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

 

WHEREAS, notwithstanding that the Agent and Lenders are under no obligation to amend the Loan Agreement, the Agent and Lenders are willing to make certain additional financial accommodations as requested by the Borrowers, such that the Borrowers, the Agent and Lenders have agreed to amend the Loan Agreement and the other Loan Documents on the terms and subject to satisfaction of the conditions set forth in this Agreement; and

 

WHEREAS, each Obligor is entering into this Amendment with the understanding and agreement that, except as specifically provided herein, none of Agent’s or any Lender’s rights or remedies as set forth in the Loan Agreement and the other Loan Documents are being waived or modified by the terms of this Amendment.

 

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:

 

AGREEMENT

 

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. Obligors hereby acknowledge and agree that, in accordance with the terms and conditions of the Loan Documents, each Obligor 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 9, 2020, the aggregate principal balance of the Term Loan is $16,406,250, exclusive of accrued and accruing interest, costs and attorneys’ fees and other 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 10 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, Obligors 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 representations of the Agent, any Lender, or any counsel to the Agent or any Lender, concerning the legal effects of this Amendment or any provision hereof.

 

3.            Amendments to the Loan Agreement.

 

(a)           Section 1.1 of the Loan Agreement is hereby amended as follows:

 

1)            The following new definitions shall be added to Section 1.1 of the Loan Agreement:

 

Equipment Reserve” means, effective (A) upon the earlier to occur of the (i) due date for the delivery of the Borrowing Base Certificate for March 2020 (as determined by Section 8.1 hereof), and (ii) date of delivery of the Borrowing Base Certificate due for March 2020, an amount equal to $200,000; and (B) upon the earlier to occur of the (i) due date for the delivery of the Borrowing Base Certificate for June 2020 (as determined by Section 8.1 hereof), and (ii) date of delivery of the Borrowing Base Certificate due for June 2020, an amount equal to $400,000.

 

Fourth Amendment” means: that certain Amendment No. 4 to Term Loan and Security Agreement dated as of March 10, 2020 by and among Borrowers, Guarantors, and Agent.”

 

2

 

 

Fourth Amendment Effective Date” means: March 10, 2020.”

 

2)            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; provided, further that the limitations on fees and expenses in this clause (xv) and in clause (xii) shall not apply to any fees and expenses of Winter Harbor and any investment bank retained by the Borrowers;”

 

3)            The definition of “Financial Covenant Trigger Amount” is hereby amended and restated as follows:

 

Financial Covenant Trigger Amount: (a) at any time through and including May 31, 2020, $3,000,000; (b) at any time from and after June 1, 2020 through and including June 30, 2020, $3,500,000; (c) at any time from and after July 1, 2020 through and including August 31, 2020, $3,750,000; (d) at any time from and after September 1, 2020 through and including September 30, 2020, $4,000,000; (e) at any time from and after October 1, 2020 through and including October 31, 2020, $4,250,000; (f) at any time from and after November 1, 2020 through and including November 30, 2020, $4,500,000; and (g) at any time from and after December 1, 2020, $5,000,000.”

 

4)           The definition of “IP Advance Rate” is hereby amended and restated by deleting the text thereof in its entirety and substituting in its place the following:

 

““IP Advance Rate: means fifty-five percent (55%); provided, that effective as of the earlier of (i) the due date for the delivery of the Borrowing Base Certificate for September 2020 (as determined by Section 8.1 hereof), and (ii) the date of delivery of the Borrowing Base Certificate due for September 2020, and continuing monthly thereafter, the IP Advance Rate shall be reduced by one percent (1.0%) per month from the rate then in effective for the immediately preceding month.”

 

5)            The definition of “Term Loan Borrowing Base” is hereby amended and restated as follows:

 

““Term Loan Borrowing Base: on any date of determination, an amount equal to the sum of (a) the Accounts Formula Amount, plus (b) the Inventory Formula Amount, plus (c) the IP Formula Amount, plus (d) the Equipment Formula Amount; provided, that in no event shall the Equipment Formula Amount exceed $1,000,000 at any one time, minus (e) the IP Reserve, minus (f) the Equipment Reserve. If any amount in this definition is stated in a currency other than Dollars on any date, then such amount on such date shall be equal to the Dollar Equivalent of such amount in such other currency.”

 

3

 

 

(b)          Section 2.1.6 (Repayment of Term Loans) of the Loan Agreement is hereby amended by deleting the text of clause (a) thereof in its entirety and substituting in its place the following:

 

““(a) Commencing on December 1, 2018, and continuing on the first Business Day of each December, March, June and September during the term hereof, Borrowers shall make quarterly principal reduction payments in respect of the Term Loans to the Agent for the ratable account of the Lenders, in the amount of $218,750.00; provided, that anything herein to the contrary notwithstanding, no such principal reduction payments shall be required to be made for the quarters commencing March, June, September and December 2020; provided, further, that in the event prior to the Fourth Amendment Effective Date Borrowers shall have made payment of the March 2020 principal reduction payment, then Agent shall refund and return said payment to Borrowers not later than ten (10) days after the Fourth Amendment Effective Date (or if the 10th day is not a Business Day, then the next succeeding Business Day), and the Borrowers’ loan account shall be adjusted to reflect the principal balance of Term Loans outstanding on the Fourth Amendment Effective Date as if such principal reduction payment had not been made/received.”

 

(c)           Section 3.1.1 (Rates and Payment of Interest) of the Loan Agreement is hereby amended by adding the following new clause (d) thereto:

 

““(d) Commencing as of the Fourth Amendment Effective Date, in addition to any other interest payable under this Agreement, there shall accrue additional interest, to be paid in kind (“PIK”) at the per annum rate of four percent (4.0%) (hereinafter, the “PIK Rate” and “PIK Interest”, respectively); provided, that Borrowers shall make payment, in cash, of all accrued PIK Interest upon the earlier to occur of (i) sale or merger of the Borrowers and/or a sale of a material portion of the Borrowers’ assets, (ii) the indefeasible repayment in full of the Term Loans and the termination of the Commitments, (iii) the occurrence of a Default or Event of Default, or (iv) Borrowers’ achieving Adjusted EBITDA of $12.0 million (calculated on a trailing twelve month basis) (the earlier of (i), (ii), (iii) or (iv) being the “PIK Trigger Event”); provided, further, that (x) upon the occurrence of a PIK Trigger Event resulting from Borrowers achieving Adjusted EBITDA of $12.0 million (calculated on a trailing twelve month basis) as set forth in clause (iv) above, and (y) Borrowers’ payment of all outstanding PIK Interest accrued through the date of such PIK Trigger Event, PIK Interest shall continue to accrue at the PIK Rate and be paid, in cash, on each subsequent anniversary of such PIK Trigger Event.”

 

(d)           Section 10.1.17 (Sale or Merger) of the Loan Agreement is hereby amended by [***].

 

(e)           Section 10.3 of the Loan Agreement is hereby amended by adding the following new Sections 10.3.2 and 10.3.3 thereto:

 

4

 

 

“10.3.2 Minimum Net Sales. Obligors and their Subsidiaries shall achieve “Net Sales” (as computed in accordance with the February 2020 Budget (as defined in the Fourth Amendment)) for each period of three consecutive fiscal months set forth below of not less than the Minimum Net Sales amounts set forth below opposite such period:

 

Three Fiscal Month Period  Minimum Net Sales  
January – March 2020  $           [***]  
February – April 2020  $ [***]  
March – May 2020  $ [***]  
April – June 2020  $ [***]  
May – July 2020  $ [***]  
June – August 2020  $ [***]  
July – September 2020  $ [***]  
August – October 2020  $ [***]  
September – November 2020  $ [***]  
October – December 2020  $ [***]  

  

10.3.3 EBITDA. Obligors and their Subsidiaries shall achieve EBITDA for each period of twelve consecutive fiscal months ending on the last day of each fiscal month set forth below of not less than the Minimum EBITDA amounts set forth below opposite such date:

 

Trailing Twelve Month Period Ending   Minimum EBITDA  
March 28, 2020   $ [***]  
April 30, 2020   $ [***]  
May 29, 2020   $ [***]  
June 30, 2020   $ [***]  
July 31, 2020   $ [***]  
August 31, 2020   $ [***]  
September 30, 2020   $ [***]  
October 30, 2020   $ [***]  
November 30, 2020   $ [***]  
December 31, 2020   $ [***]  

 

4.            Business Plan; Additional Reporting Requirements. Borrowers have delivered to the Agent and Lenders an updated business plan dated February 7, 2020, which updated business plan was initially delivered on February 7, 2020 and was updated as of February 12, 2020 to provide monthly performance details (the “February 2020 Budget”). From and after the Fourth Amendment Effective Date, not later than 3:00 p.m. (Eastern time) on the 15th Business Day after the conclusion of each month, commencing on March 2020. Borrower Agent shall furnish to the Agent a report (the “Budget Performance Report”) that sets forth the actual results for the following line items set forth in the February 2020 Budget: (i) “Net Sales”; and (ii) “Adjusted EBITDA”, with each such Budget Performance Report being prepared as of the end of each such monthly reporting period.

 

5.             Investment Banker Engagement. In the event following the Fourth Amendment Effective Date Borrowers determine to engage an investment banker (“I-Banker”) to conduct a marketing process for a sale and/or merger of the business and/or its assets, the terms of any such engagement, including, without limitation, any fees and/or expenses to be paid thereunder, shall be subject to the prior review and approval of the Agent, in its exclusive discretion. Upon any such engagement, Borrowers further hereby: (A) authorize Agent to communicate directly with the I-Banker regarding all matters relating to the services to be rendered by I-Banker to the Borrowers, including, without limitation, to discuss all financial reports, business information, findings and recommendations of the I-Banker, prospects for a sale transaction, contacts made or to be made, terms and term sheets, and such other matters as Agent shall request from time-to-time; (B) agree to authorize and direct the I-Banker to communicate directly with Agent regarding all matters relating to the services to be rendered by the I-Banker to the Borrowers in connection with the ongoing solicitation for a sale transaction, and to provide Agent with copies (with a copy to Borrowers) of all reports, term sheets and other information prepared or reviewed by the I-Banker; and (C) agree to provide Agent with a bi-weekly report concerning the status of the ongoing efforts to complete a sale transaction. From and after the Fourth Amendment Effective Date, Borrowers shall provide copies of all sale transaction-related term sheets and/or letters of intent (whether preliminary, interim or final in form and content) to Agent not later than one (1) Business Day following Borrowers’ or I-Banker’s receipt of same.

 

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6.             Amendment Fee. For the accommodations reflected in this Amendment, Borrowers shall pay to Agent, for the benefit of itself and the Lenders, a one-time amendment fee in an amount equal to $500,000 (the “Amendment Fee”). Borrowers agree that such Amendment Fee shall be fully earned on the date hereof and payable by Borrowers upon the earlier to occur of (i) a sale or merger of the Borrowers and/or a sale of a material portion of the Borrowers’ assets, (ii) the indefeasible repayment in full of the Term Loans and the termination of the Commitments, (iii) the occurrence of a Default or Event of Default. The Amendment Fee is in addition to any other fee set forth in the Loan Documents and shall not be refundable for any reason whatsoever.

 

7.             Consent to Revolver Loan Agreement Amendment. Agent and Lenders hereby consent to the execution and delivery of that certain Amendment No. 4 to Second Amended and Restated Loan and Security Agreement dated as of March 10, 2020 by and among the Obligors 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.

 

8.             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.

 

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9.             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 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.

 

10.          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 Obligor 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 Obligor 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 Obligor hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if any Obligor 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 Obligor 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 Obligor 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 Obligor 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.

 

7

 

 

 

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

 

ii.         Each Obligor 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 Obligor, the contents hereof are known and understood by each such Obligor, and this Amendment is signed freely, and without duress, by any Obligor.

 

d)            Each Obligor 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 Obligor 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.

 

11.          Expenses of Agent and Lenders. Borrowers agree to pay, on demand, all reasonable costs and expenses incurred by Agent and Lenders 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 Lenders’ 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; and

 

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

 

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.

 

8

 

 

14.           Miscellaneous.

 

a)             Further Assurances. The Obligors 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 Obligors 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 Obligors 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 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 Obligors, 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.

 

9

 

 

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, GUARANTORS, 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 OBLIGOR 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/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer

 

  SUMMER INFANT (USA), INC.
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer

 

  GUARANTORS:
   
  SUMMER INFANT CANADA, LIMITED
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer

 

  SUMMER INFANT EUROPE LIMITED
   
  By: /s/ Paul Francese
    Name: Paul Francese
    Title: Chief Financial Officer

 

[Signature Page to Amendment No. 4 to Term Loan and Security Agreement]

 

 

 

 

  AGENT:
   
  PATHLIGHT CAPITAL LLC,
  as Agent
   
  By /s/ Kyle Shonak
    Name: Kyle Shonak
    Title: Managing Director

 

  LENDER:
   
  PATHLIGHT CAPITAL LLC,
  as a Lender
   
  By /s/ Kyle Shonak
    Name: Kyle Shonak
    Title: Managing Director

 

[Signature Page to Amendment No. 4 to Term Loan and Security Agreement]

 

 

 

 

 

Exhibit 99.1

 

PRESS RELEASE

 

 

SUMR Brands Announces Implementation of Reverse Stock Split

 

One-for-Nine Stock Consolidation to Take Effect March 16, 2020

 

WOONSOCKET, R.I., March 12, 2020 – SUMR Brands ("SUMR Brands" or the "Company") (NASDAQ: SUMR), a global leader in premium infant and juvenile products, today announced that it has filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to effect a 1-for-9 reverse stock split of its common stock to become effective at 11:59 p.m. EDT on March 13, 2020, and the Company’s common stock is expected to begin trading on a post-split basis at the open of trading on March 16, 2020. The Company undertook the reverse stock split to regain compliance with the $1.00 per share minimum price bid requirement for continued listing on the Nasdaq Capital Market.

 

As previously announced, the Company’s stockholders approved the proposal authorizing the Board of Directors to implement the reverse stock split at a ratio within a range from 1-for-3 to 1-for-20 shares and to amend the Company’s Amended and Restated Certificate of Incorporation to effect the stock split, and the Board of Directors subsequently approved a final ratio of 1-for-9 shares.

 

The reverse stock split will reduce the number of the Company’s outstanding shares of common stock from approximately 18,978,684 to approximately 2,108,743 shares, and any fractional shares otherwise issuable as a result of the reverse stock split will be rounded up to the nearest whole share.

 

At market open on March 16, 2020, the Company’s common stock will continue to be traded on the Nasdaq Capital Market under the symbol “SUMR” but will begin trading under the new CUSIP number, 865646301.

 

The Company’s transfer agent, Continental Stock Transfer & Trust Company, Inc., will send specific instructions to stockholders holding stock certificates regarding the exchange of certificates. Stockholders who hold their shares in brokerage accounts or “street name” are not required to take any action as their shares will automatically be adjusted to reflect the reverse stock split. Continental Stock Transfer can be reached at (917) 262-2378.

 

About SUMR Brands, Inc.

 

Based in Woonsocket, Rhode Island, the Company is a global leader of premium juvenile brands driven by a commitment to people, products, and purpose. The Company is made up of a diverse group of experts with a passion to make family life better by selling proprietary, innovative products across several core categories. For more information about the Company, please visit www.sumrbrands.com.

 

Forward-Looking Statements

 

This press release contains certain forward-looking statements based on our current expectations, forecasts and assumptions. Forward-looking statements can be identified by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will” and “would” or similar words, and include, without limitation, statements regarding the expected post-split trading date of the Company’s common stock and whether the reverse stock split will result in the Company regaining compliance with Nasdaq’s continued listing requirements. Forward-looking statements involve risks and uncertainties and our actual results may differ materially from those stated or implied in such forward-looking statements. Factors that could contribute to such differences include, but are not limited to: the potential failure by the Company to increase its total market capitalization following the reverse stock split, to maintain an increased per share stock price over the long term, or to generate investor interest; the potential adverse effect of the reduced number of shares outstanding following the reverse stock split on the liquidity of the Company’s common stock; and other risk factors disclosed in our Annual Report on Form 10-K filed on February 20, 2019 and our other filings with the SEC, including our Form 10-Qs and current reports on Form 8-K. We assume no obligation to update the information included in this press release, whether as a result of new information, future events or otherwise.

 

Company Contact:

Chris Witty

Investor Relations

646-438-9385

cwitty@darrowir.com