SECOND AMENDMENT TO CREDIT AGREEMENT

Exhibit 4.26

SECOND AMENDMENT TO CREDIT AGREEMENT

THIS SECOND AMENDMENT TO CREDIT AGREEMENT (as the same may from time to time be amended, restated or otherwise modified, this “ Amendment ”) is made as of March 20, 2009, and entered into by and among KIDS LINE, LLC, a Delaware limited liability company (“ Kids Line ”), SASSY, INC., an Illinois corporation (“ Sassy ”), LAJOBI, INC., a Delaware corporation (“ LaJobi ”), I & J HOLDCO, INC., a Delaware corporation (“ I & J ”), COCALO, INC., a California corporation (“ CoCaLo ” and together with Kids Line, Sassy, LaJobi and I & J collectively, the “ Borrowers ” and each individually, a “ Borrower ”), RUSS BERRIE AND COMPANY, INC., a New Jersey corporation (“ Parent ”), as a Guarantor (in such capacity, a “ Guarantor ”, and together with the Borrowers, the “ Loan Parties ”) and as the Loan Party Representative for the Borrowers (in such capacity, the “ Loan Party Representative ”), the Lenders (as defined in the Credit Agreement referred to below) party hereto and BANK OF AMERICA, N.A., as successor by merger to LASALLE BANK NATIONAL ASSOCIATION (in its individual capacity, together with its successors and assigns, “ Bank of America ”), as administrative agent (in such capacity, together with its successors and assigns, the “ Administrative Agent ”) for the Lenders party to the Credit Agreement defined below.

RECITALS

WHEREAS, the Borrowers, Loan Party Representative, the Lenders, certain other financial institutions as Lenders and the Administrative Agent have entered into the Amended and Restated Credit Agreement, dated as of April 2, 2008 (as amended, restated or otherwise modified from time to time, the “ Credit Agreement ”; capitalized terms used in this Amendment and not defined in this Amendment shall be defined in accordance with the Credit Agreement), pursuant to which the Lenders have agreed to make loans and other financial accommodations, all upon the terms and conditions set forth in the Credit Agreement;

WHEREAS, as of the date hereof, the Parent has become a Guarantor, and thus a Loan Party, under the Credit Agreement and the Guaranty and Collateral Agreement pursuant to that certain Joinder to Credit Agreement and Guaranty and Collateral Agreement, dated as of the date hereof, among the Parent, as Guarantor, grantor, and Loan Party Representative, and the Administrative Agent (the “ Joinder Agreement ”); and

WHEREAS, the Loan Parties have requested that the Administrative Agent and the Required Lenders amend certain provisions of the Credit Agreement, all on the terms and subject to the conditions of this Amendment.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree as follows:

ARTICLE I
AMENDMENTS

Subject to the terms and conditions set forth in Article II of this Amendment, the Credit Agreement is hereby amended as follows:

1.1 Section 1.1 is hereby amended to add the following definitions in appropriate alphabetical order:

IP Sub means RB Trademark Holdco, LLC, a Delaware limited liability company.

IP Sub IP means the intellectual property owned by IP Sub.

IP Sub License Agreement means the License Agreement dated as of December 23, 2008 between IP Sub and The Russ Companies, Inc., as amended, restated or otherwise modified from time to time, pursuant to which IP Sub licenses the IP Sub IP to The Russ Companies, Inc.

Net Parent Corporate Expenses means (1) for the Computation Period ending March 31, 2009, an amount equal to (A) 3.0 times the aggregate amount of cash corporate expenses incurred by Parent during the Fiscal Quarter ending March 31, 2009 (as determined consistent with past practices), to the extent deducted in determining EBITDA for such Fiscal Quarter, minus (B) $3,000,000, (2) for the Computation Period ending June 30, 2009, an amount equal to (A) 1.0 times the aggregate amount of cash corporate expenses incurred by Parent during the year to date period ending June 30, 2009 (as determined consistent with past practices), to the extent deducted in determining EBITDA for such period, minus (B) $1,750,000 and (3) for the Computation Period ending September 30, 2009, an amount equal to (A) 0.33 times the aggregate amount of cash corporate expenses incurred by Parent during the year to date period ending September 30, 2009 (as determined consistent with past practices), to the extent deducted in determining EBITDA for such period, minus (B) $875,000; provided that the Net Parent Corporate Expenses shall not be less than zero. The calculation of the Net Parent Corporate Expenses for any period shall be set forth in a writing (in reasonable detail) delivered by Parent to the Administrative Agent concurrently with delivery by Parent of the Compliance Certificate relating to such period.

Russ Berrie B Purchase Agreement means that certain Purchase Agreement dated as of December 23, 2008 between the Parent and The Russ Companies, Inc. pursuant to which the Parent sold its interests in the Russ Berrie B Entities and related assets to The Russ Companies, Inc.

Second Amendment Effective Date means March 20, 2009.

1.2 The definitions of Acquired Debt , Base Rate , Consolidated Net Income , Domestic Wholly-Owned Subsidiary , EBITDA , Fiscal Year , Fixed Charge Coverage Ratio , Interest Expense , Loan Documents , Loan Party , Subsidiary , Total Debt and Wholly-Owned Subsidiary set forth in Section 1.1 are each hereby replaced in their entirety with the following, respectively:

Acquired Debt means mortgage Debt or Debt with respect to Capital Leases of a Person existing at the time such Person became a Subsidiary or assumed by any Loan Party or a Domestic Wholly-Owned Subsidiary of a Loan Party pursuant to a Permitted Acquisition (and not created or incurred in connection with or in anticipation of such Permitted Acquisition) which would be permitted pursuant to Section 11.4(d) .

Base Rate : for any day, a per annum rate equal to the greater of (a) the Prime Rate for such day; (b) the Federal Funds Rate for such day, plus 0.50%; or (c) LIBOR Rate for a 30 day interest period as determined on such day, plus 1.0%.

Consolidated Net Income means, with respect to the Parent and its consolidated Subsidiaries, on a consolidated basis, for any period, the net income (or loss) of the Parent and its consolidated Subsidiaries for such period, in each case, determined in accordance with GAAP, but excluding any extraordinary after-tax gains and losses, any non-recurring gains or losses, or any non-cash gains or losses from Asset Dispositions, any non-cash restructuring charges, any tax refunds, net operating losses or other net tax benefits and any after-tax gains and losses from discontinued operations.

Domestic Wholly-Owned Subsidiary means any wholly-owned direct or indirect Subsidiary of a Loan Party which is organized under the laws of any state in the United States of America. Unless the context otherwise requires, each reference to a Domestic Wholly-Owned Subsidiary herein shall be a reference to a Domestic Wholly-Owned Subsidiary of the Parent.

EBITDA means, with respect to the Parent and its consolidated Subsidiaries, (1) for any period (or portion thereof) including any Fiscal Quarter ending on or prior to December 31, 2008, the following amount as calculated on a consolidated basis for Kids Line, Sassy, I&J and their respective consolidated Subsidiaries for such period (or such portion thereof) and (2) for any period (or portion thereof) including any Fiscal Quarter ending after December 31, 2008, the following amount as calculated on a consolidated basis for the Parent and its consolidated Subsidiaries for such period (or such portion thereof): (A) Consolidated Net Income for such period (as adjusted as set forth below where applicable), plus (B) with respect to any period which includes the Fiscal Quarter ended on December 31, 2008, $651,000, plus ( minus ) (C) to the extent deducted (added) in determining such Consolidated Net Income, (i) Interest Expense, (ii) income tax expense, (iii) depreciation, (iv) amortization, (v) other non-cash charges (gains), (vi) if expensed, reasonable costs, expenses and fees incurred in connection with the negotiation, execution and delivery of the Loan Documents and the financings contemplated thereby, (vii) if expensed, reasonable costs, expenses and fees incurred in connection with the negotiation, execution and delivery of the Acquisition Documents and the transactions contemplated thereby, but not to exceed $5,000,000, in aggregate, (viii) if expensed, the reasonable fees and expenses paid to any Independent Director required to be retained by the Borrowers pursuant to the terms of this Agreement and incremental auditor’s fees and expenses relating to the preparation of separate audited financial statements of the Borrowers (distinct from those of the Parent) as required pursuant to Section 10.1.1(a), (ix) non-cash transaction losses (gains) due solely to fluctuations in currency values, in each case, during such period, and (x) if expensed and incurred prior to March 31, 2009, severance, termination and other similar payments made by the Parent in connection with the reductions in force effected in connection with the sale of the Russ Berrie B Entities pursuant to the Russ Berrie B Purchase Agreement in an amount not to exceed $500,000 in the aggregate for all periods. It being agreed however that (X) for purposes of calculating the Total Debt to EBITDA Ratios for Section 11.13.2, EBITDA of I&J and its consolidated Subsidiaries for the Computation Period ending December 31, 2008 shall be deemed to equal actual EBITDA of I&J and its consolidated Subsidiaries for the nine (9) month period ending December 31, 2008 multiplied by 1.33 and (Y) with respect to the Computation Periods ending March 31, 2009, June 30, 2009 and September 30, 2009, EBITDA shall be reduced (but not increased) by the amount of the Net Parent Corporate Expenses for such period.

Fiscal Year means the fiscal year of the Parent and its consolidated Subsidiaries, which period shall be the 12-month period ending on December 31st of each calendar year. References to a Fiscal Year with a number corresponding to any calendar year (e.g., “ Fiscal Year 2007 ”) refer to the Fiscal Year ending on December 31st of such calendar year.

Fixed Charge Coverage Ratio means, with respect to the Parent and its consolidated Subsidiaries on a consolidated basis as of the last day of any Fiscal Quarter for the Computation Period (or such shorter period as set forth below) then ending, the ratio of (a) EBITDA for such period minus the sum of (i) all unfinanced Capital Expenditures of such Persons incurred during such period, (ii) all cash taxes paid by the Parent on or after the Second Amendment Effective Date on behalf of itself and its consolidated Subsidiaries during such period, (iii) all cash dividends or distributions made prior to the Second Amendment Effective Date by Borrowers to the Parent during such period for the sole purpose of permitting the Parent to pay income taxes on behalf of Borrowers and (iv) all cash dividends paid on or after the Second Amendment Effective Date by the Parent during such period, to (b) the sum for such period for the Parent and its consolidated Subsidiaries on a consolidated basis of all scheduled interest and principal payments of Debt, including the principal component of any Capital Lease (in each case, whether or not in fact paid during such period), paid (or which should have been paid) in cash. It being agreed however that with respect to Fiscal Quarters ending on or prior to December 31, 2008, the Fixed Charge Coverage Ratio shall be calculated using a Computation Period commencing as of April 2, 2008 and running through and including the last day of such Fiscal Quarter then ending.

Interest Expense means for any period the consolidated interest expense of the Parent and its consolidated Subsidiaries, on a consolidated basis, for such period (including all imputed interest on Capital Leases).

Loan Documents means this Agreement, the Notes, the Letters of Credit, the Master Letter of Credit Agreement, the L/C Applications, the Agent Fee Letter, the Perfection Certificate, the Collateral Documents, the Environmental Indemnity, the Post-Closing Letter, the subordination agreements, if any, relating to any Subordinated Debt, any Joinder Agreement substantially in the form of Exhibit G hereto pursuant to which any Person becomes a Borrower or Guarantor and all other documents, instruments and agreements delivered in connection with any of the foregoing, in each case, as the same may be amended, restated, supplemented or otherwise modified from time to time.

Loan Party means, collectively, each Borrower and each Guarantor (including the Parent in its capacity as a Guarantor), and Loan Parties means all such Persons, collectively. So long as the Loan Parties are in compliance in all material respects with each of the provisions hereof and of the other Loan Documents, solely as such provisions relate to IP Sub, IP Sub shall not be or be required to become a Loan Party.

Subsidiary means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which such Person owns, directly or indirectly, such number of outstanding Capital Securities as have more than 50% of the ordinary voting power for the election of directors or other managers of such corporation, partnership, limited liability company or other entity. Unless the context otherwise requires, each reference to Subsidiaries herein shall be a reference to Subsidiaries of the Parent.

Total Debt means the outstanding principal amount of all Debt (including Debt of Capital Leases plus undrawn face amount of all Letters of Credit) of the Parent and its consolidated Subsidiaries on a consolidated basis.

Wholly-Owned Subsidiary means, as to any Person, a Subsidiary all of the Capital Securities of which (except directors’ qualifying Capital Securities) are at the time directly or indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such Person. Unless the context otherwise requires, each reference to a Wholly-Owned Subsidiary herein shall be a reference to a Wholly-Owned Subsidiary of the Parent.

1.3 The pricing grid set forth in the definition of Applicable Margin in Section 1.1 is hereby replaced in its entirety with the following grid:

1.4 The definition of Applicable Margin in Section 1.1 is hereby further amended by adding the following sentence immediately after the pricing grid:

Until the financial statements and corresponding Compliance Certificate shall have been delivered to the Administrative Agent pursuant to Section 10.1.2(a) and Section 10.1.3 for the Fiscal Quarter ending September 30, 2009, the Applicable Margin shall not be more favorable than Level II, and may, if applicable, be Level I.

1.5 Clause (d) of the definition of Change of Control set forth in Section 1.1 is hereby replaced it in its entirety with the following:

(d) the Parent ceases to own and control, directly or indirectly, 100% of the shares of the Capital Securities of the Loan Parties (other than the Parent), unless otherwise permitted hereunder,

1.6 The definition of Material Adverse Effect set forth in Section 1.1 is hereby amended by adding the following clause at the end thereof immediately preceding the period:

; it being agreed that none of (x) the sale of the Russ Berrie B Entities pursuant to the Russ Berrie B Purchase Agreement, (y) the termination of the distribution agreement between Sassy and MAM Babyartikel GmbH of Vienna, Austria, effective as of March 26, 2008 and the non-cash charge related thereto taken in the Fiscal Quarter ended December 31, 2008 or (z) the non-cash goodwill impairment charge of up to $140,000,000 taken in the Fiscal Quarter ended December 31, 2008 shall be considered in the determination as to whether a Material Adverse Effect has occurred.

1.7 Section 6.2.2(a) (Mandatory Prepayments) is hereby amended to replace clause (iv) thereof with the following:

(iv) Concurrently with the receipt by IP Sub of Net Cash Proceeds from any Asset Disposition, in an amount equal to 100% of such Net Cash Proceeds. For purposes of this clause (iv), the definition of Net Cash Proceeds relating to Asset Dispositions of any property of any Loan Party shall be deemed to apply to Asset Dispositions of any property of IP Sub.

1.8 The first sentence of Section 6.4.3 (Term Loan) is hereby replaced in its entirety with the following:

The principal amount of the Term Loan shall be repaid in quarterly installments equal to (i) $3,600,000 on the last day of each Fiscal Quarter beginning with the Fiscal Quarter ended June 30, 2008 and ending with the Fiscal Quarter ended December 31, 2008 and (ii) $3,250,000 on the last day of each Fiscal Quarter beginning with the Fiscal Quarter ended March 31, 2009, and the final installment in the aggregate amount of the unpaid principal balance of the Term Loan shall be repaid on the Scheduled Termination Date.

1.9 The representation and warranty set forth in clause (i) of the second sentence of Section 9.7 (Ownership of Properties; Liens) is hereby replaced in its entirety with the following:

(i) The Parent owns good title to the Capital Securities of Kids Line, Sassy, I & J and IP Sub.

1.10 Section 9 (Representations and Warranties) is hereby amended by adding a new Section 9.27 at the end thereof which reads as follows:

9.27 Activities of IP Sub . IP Sub does not (a) own any material properties or assets other than the IP Sub IP and its rights under the License Agreement, (b) have any Subsidiaries, Investments, Debt or other material liabilities, (c) have any Liens on its assets or (d) conduct any operations or business other than activities related to its corporate existence, activities relating to the maintenance and licensing of the IP Sub IP including the payment of registration fees for the IP Sub IP, maintenance and renewal of registrations of the IP Sub IP, defending or initiating claims relating to the IP Sub IP, receiving royalties under IP Sub License Agreement, conducting other activities permitted by the License Agreement, defending, asserting or enforcing its rights under IP Sub License Agreement and any other activities relating to the foregoing in this clause (d).

1.11 The interim financial reports required to be delivered to the Administrative Agent pursuant to Section 10.1.2 (Interim Reports) shall be required with respect to the Parent and its consolidated Subsidiarie