As of June 30, 2012, Kid Brands, Inc. (the "Company") was not in compliance with the consolidated leverage ratio covenant under its then-existing credit agreement (the "2011 Credit Agreement"). As a result, such credit agreement was amended on August 13, 2012, among other things, to waive such non-compliance, amend the financial covenants applicable to the Company for future periods, and in consideration therefor, amend the terms of the 2011 Credit Agreement.

On August 13, 2012, KID, specified domestic subsidiaries consisting of Kids Line, LLC, Sassy, Inc., LaJobi, Inc., CoCaLo, Inc., I&J Holdco, Inc., and RB Trademark Holdco, LLC (the "Licensor"), the owner of specified intellectual property previously licensed to the buyer of the Company's former gift business (such entities collectively with KID and such other future created or acquired domestic subsidiaries that are designated as borrowers from time to time, the "Borrowers"), executed a Waiver and First Amendment to Credit Agreement and First Amendment to Security Agreement (the "2012 Credit Agreement"), with certain financial institutions (the "Lenders"), including Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer. The obligations of the Borrowers under the 2012 Credit Agreement are joint and several. The 2012 Credit Agreement amends and restates the 2011 Credit Agreement.

The 2012 Credit Agreement provides for: (i) an aggregate maximum $52.0 million revolving credit facility (the "2012 Revolver"), subject to a $47.0 million availability cap (which may be increased in $1.0 million increments up to a maximum of $5.0 million under specified circumstances), and borrowing base limitations based on 80% of eligible receivables, plus the lesser of $20.0 million and 55% of the value of eligible inventory (minus specified reserves, including, for rent and dilution); (ii) a $5.0 million sub-facility for letters of credit; (iii) a sub-facility for swing-line loans in a maximum amount of $5.0 million; and (iv) a $23.0 million term loan (the "2012 Term Loan"). Upon execution of the 2012 Credit Agreement, $23.0 million of the amount outstanding under the 2011 Credit Agreement was converted into the 2012 Term Loan, and the remaining amounts continued as outstanding under the 2012 Revolver. KID's previous ability to increase the amount of its revolver by up to $35.0 million under specified conditions was eliminated from the 2012 Credit Agreement.

Upon submission of the borrowing base certificate due on September 20, 2012, the Borrowers are required to make an immediate principal repayment in respect of the 2012 Term Loan in an amount equal to the amount by which the sum of the availability under the 2012 Revolver plus the Borrowers' cash and cash equivalents on such date exceeds $5.0 million. If at any time thereafter, the borrowing base is increased as a result of specified increases in eligible inventory, the Borrowers will be required to make an additional principal pay-down in the amount of such increase. Commencing September 30, 2012, the Borrowers are required to make monthly amortization payments on the 2012 Term Loan based on a 5-year amortization schedule (after giving effect to the September 20, 2012 payment described above). Amounts repaid on the 2012 Term Loan may not be reborrowed.

The 2012 Revolver and the 2012 Term Loan bear interest, at the Borrowers' option, at a specified base rate (the highest of (x) the Administrative Agent's prime rate, (y) the Federal Funds rate plus 0.50%, and (c) a specified Eurodollar base rate plus 1.0%), or a specified Eurodollar rate based on specified British Bankers Association LIBOR, plus (in each case) applicable margins, and in the case of the 2012 Term Loan commencing on December 15, 2012, an in-kind interest rate of 2% ("PIK Interest"), which may be accrued to the outstanding principal of the 2012 Term Loan. With respect to the 2012 Revolver, applicable margins range from 1.75% to 3.00% on Eurodollar rate loans and from 0.75% to 2.00% on base rate loans, based on the Company's Consolidated Leverage Ratio (as defined below) for the applicable trailing twelve-month period. With respect to the 2012 Term Loan, the applicable margin is 8.0% on Eurodollar rate loans and 7.0% on base rate loans; provided further, that if the 2012 Term Loan and all interest accrued thereon other than PIK Interest is paid in full on or prior to December 15, 2012, the PIK Interest will be waived.

During the continuance of any default under the 2012 Credit Agreement, the applicable margin shall increase by 2% (subject, in all cases other than a default in the payment of principal, to the written consent of Lenders holding a majority of the commitments (the "Required Lenders") and prior written notice to KID).

The Borrowers may prepay the 2012 Revolver, the 2012 Term Loan and any swing-line loans at any time and from time to time without premium or penalty, and without a corresponding commitment reduction in the case of the 2012 Revolver. The unutilized portion of the 2012 Revolver may be reduced or terminated by the Borrowers at any time and from time to time without premium or penalty.

Commencing no later than November 15, 2012, substantially all cash, other than cash set aside for the benefit of employees (and certain other exceptions), will be swept and applied to repayment of the 2012 Revolver.

Under the terms of the 2012 Credit Agreement, the Company is required to comply with the following financial covenants (the "2012 Financial Covenants"): (a) a maximum Consolidated Leverage Ratio (defined below) for the trailing twelve month period as of the end of each month in the following amounts: July 31, 2012: 6.25 to 1.0; August 31, 2012: 7.75 to 1.0; September 30, 2012: 6.75 to 1.0; October 31, 2012: 6.50 to 1.0; November 30, 2012: 5.75 to 1.0; December 31, 2012: 4.50 to 1.0; January 31, 2013: 5.00 to 1.0: February 28, 2013: 5.00 to 1.0; March 31, 2013: 4.25 to 1.0; April 30, 2013: 5.00 to 1.0; May 31, 2013:
4.25 to 1.0; June 30, 2013: 3.75 to 1.0; July 31, 2013: 4.00 to 1.0; August 31, 2013: 4:00 to 1.0; September 30, 2013: 3.50 to 1.0; October 31, 2013: 3.75 to 1.0; November 30, 2013: 3.75 to 1.0; and December 31, 2013 (and each trailing 12-month period thereafter): 3.25 to 1.0; and (b) a minimum Consolidated Fixed Charge Coverage Ratio (defined below) as of the end of each month in the following amounts: for the three months ending July 31, 2012: 1.50 to 1.0; for the three months ending August 31, 2012: 1.50 to 1.0; for the three months . . .

As described in Item 1.01 of this Current Report on Form 8-K, effective immediately upon the execution of the 2012 Credit Agreement by the respective parties thereto, the terms and conditions of the 2011 Credit Agreement were amended as set forth in, and restated in their entirety and superseded by, the 2012 Credit Agreement. A description of the material terms of the 2011 Credit Agreement is located in KID's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012 under the heading "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Debt Financings - 2011 Credit Agreement", and in Note 4 to the Notes to Unaudited Consolidated Financial Statements therein.

The disclosures required by this Item are set forth in Item 1.01 above, which is incorporated herein by reference thereto.

(d) Exhibits

The following exhibit is filed with this report:

10.44    Waiver, First Amendment to Credit Agreement and First Amendment to
         Security Agreement, dated August 13, 2012, among Kids Brands, Inc., its
         domestic subsidiaries party thereto, the Lenders party thereto and Bank
         of America, N.A., as Administrative Agent.