Item 1.01.
Entry into a Material Definitive Agreement.
On October 16, 2017, Summer Infant, Inc. (the Company) and its subsidiaries, Summer Infant (USA), Inc., Summer Infant Canada, Limited and Summer Infant Europe Limited (collectively, the Summer Entities), entered into an amendment and waiver (the Loan Amendment) to that certain Amended and Restated Loan and Security Agreement, originally dated as of April 21, 2015, among the Summer Entities, Bank of America, N.A., as agent, certain financial institutions party to the agreement from time to time as lenders, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole book runner (as amended on December 10, 2015, May 24, 2016 and February 17, 2017, the Loan Agreement).
The parties entered into the Loan Amendment as a result of the bankruptcy filing by Toys R Us, Inc. on September 18, 2017. Under the terms of the Loan Agreement, all rights to payment owing to the Company from Toys R Us for goods sold no longer constituted Eligible Accounts (as such term is defined in the Loan Agreement) because of the Toys R Us bankruptcy filing, and as a result the aggregate revolver loans under the Loan Agreement exceeded the applicable revolver borrowing base under the Loan Agreement requiring overadvances to be made under the Loan Agreement.
Pursuant to the Loan Amendment, the lenders waived any violations of the Loan Agreement that may have occurred as a result of the overadvances, and certain provisions of the Loan Agreement were amended to provide additional flexibility to the Company in light of the Toys R Us bankruptcy filing, including:
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an amendment to the definition of EBITDA with respect to payments owed to the Company from Toys R Us accounts prior to September 18, 2017 that can be added back to the calculation of EBITDA;
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amendments to the definition of Eligible Account in order to (i) increase the amount of eligible accounts owing from Walmart or Amazon and (ii) to permit the Agent, in its discretion, to include Toys R Us accounts as Eligible Accounts;
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an amendment to the definition of Revolver Borrowing Base to include a temporary overadvance amount to be added into the calculation of the Revolver Borrowing Base; and
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amendments to the maximum leverage ratio for the fiscal quarters ending September 30 and December 30, 2017.
The foregoing summary of the Loan Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Loan Amendment, a copy of which is filed herewith as Exhibit 10.1 and is incorporated herein by reference.
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