Exhibit 10.8

 

AMENDMENT NO. 10 TO

LOAN AND SECURITY AGREEMENT

 

THIS AMENDMENT NO. 10 TO LOAN AND SECURITY AGREEMENT (this “Amendment”), is
entered into on and as of this 14th day of August, 2002, by and between SUNROCK
CAPITAL CORP., a Delaware corporation (“Lender”), and DSI TOYS, INC., a Texas
corporation (“Borrower”).

 

RECITALS

 

A.            Borrower and Lender have entered into that certain Loan and
Security Agreement, dated as of February 2, 1999 (as the same has been, and may
hereafter be, amended, modified, supplemented or restated from time to time, the
“Loan Agreement”).

 

B.            Borrower desires to guaranty a portion of the obligations owing by
DSI (HK) Limited to Standard Chartered Bank pursuant to one or more limited
guaranties with substantially the terms set forth in that certain Limited
Guarantee attached hereto as Exhibit A (the “Limited Guarantee”).

 

C.            Lender has agreed to consent to the execution and delivery of the
Limited Guarantee, subject to the terms set forth herein.

 

NOW, THEREFORE, in consideration of the premises herein contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

 

ARTICLE I

Definitions

 

1.01        Capitalized terms used in this Amendment, to the extent not
otherwise defined herein, shall have the same meanings as in the Loan Agreement,
as amended hereby.

 

ARTICLE II

Amendments

 

2.01        Amendment to Events of Default.  Effective as of the date hereof,
Sections 10.1(n) and 10.1(o) of the Loan Agreement are hereby amended and
restated in their entirety to read as follows:

 

“(n)         DSI (HK) Limited shall fail to maintain its existing credit
facilities with Dao Heng Bank Limited or Standard Chartered Bank, in each case
upon such terms and conditions as Lender may find adequate to provide financing
for the continued operations of DSI (HK) Limited without further support from
Borrower;

 

(o)           Any claim or demand for payment or performance shall be made on,
or asserted against, Borrower in respect of any guarantee or other agreement
executed

 

1

--------------------------------------------------------------------------------

 

by Borrower in connection with any credit facility maintained by DSI (HK)
Limited, including, but not limited to, any claim under Borrower’s partial
guaranty of any indebtedness incurred, or to be incurred, by DSI (HK) Limited
and owing to either Dao Heng Bank Limited or Standard Chartered Bank; or”

 

2.02        Additional Event of Default.  Effective as of the date hereof, a new
Section 10.1(p) is hereby added to the Loan Agreement:

 

“(p)         Borrower shall make any payment to the holders of the subordinated
indebtedness permitted pursuant to Sections 9.9(b) or 9.9(c) of this Agreement
at a time when such payments are not permitted under the subordination
agreements entered into between Lender and the holders of such subordinated
indebtedness and acknowledged by Borrower.”

 

ARTICLE III

Ratifications, Representations and Warranties, Covenants and Consent

 

3.01        Ratifications. Except as expressly amended hereby, the terms and
provisions of the Loan Agreement are ratified and confirmed and shall continue
in full force and effect.  Borrower and Lender agree that the Loan Agreement, as
amended hereby, and each agreement and instrument executed in connection
herewith, are, and shall continue to be, legal, valid, binding and enforceable
in accordance with their respective terms.

 

3.02        Representations and Warranties.  Borrower hereby represents and
warrants to Lender that (a) the execution, delivery and performance of this
Amendment has been authorized by all requisite corporate action on the part of
Borrower and does not violate the Articles of Incorporation or Bylaws of
Borrower; (b) the representations and warranties contained in the Loan
Agreement, are true and correct on and as of the date hereof; (c) as of the date
hereof no Event of Default under the Loan Agreement is continuing and no event
or condition exists that with the giving of notice or the lapse of time, or
both, would be an Event of Default; and (d) Borrower is in full compliance with
all covenants and agreements contained in the Loan Agreement and each agreement
and instrument entered into in connection therewith.

 

3.03        Covenant to Pay Legal and Other Expenses.  As provided in the Loan
Agreement, Borrower agrees to pay on demand all costs and expenses incurred by
Lender in connection with the preparation, negotiation and execution of this
Amendment, including, without limitation, the costs and fees of Lender’s legal
counsel, and all costs and expenses incurred by Lender in connection with the
enforcement or preservation of any rights under the Loan Agreement, as amended
hereby, or any agreement, document or instrument executed in connection
therewith.  The fee, costs and expenses referred to in this Section 3.03 may be
charged by Lender to Borrower’s loan account at the option of Lender.

 

3.04        Consent to Execution of the Limited Guarantee.  Lender hereby
consents to Borrower’s (a) execution of the Limited Guarantee upon the terms set
forth on Exhibit A hereto and (b) incurrence of the contingent obligations
evidenced thereby; provided, however, the consent herein provided shall not
extend to any future increase in the aggregate amount of such

 

2

--------------------------------------------------------------------------------

 

obligations thereby guaranteed, which at all times shall be limited to less than
HKD 19,000,000 in the aggregate, plus interest in respect thereof and costs of
collection under the Limited Guarantee.  Any increase in the amount guaranteed
shall be constitute an Event of Default under the Loan Agreement without notice
or opportunity to cure.

 

ARTICLE IV

Miscellaneous Provisions

 

4.01        Survival of Representations and Warranties.  All representations and
warranties made herein and in the Loan Agreement shall survive the execution and
delivery of this Amendment, and no investigation by Lender shall affect the
representations and warranties or the right of Lender to rely upon them.

 

4.02        Reference to Loan Agreement.  The Loan Agreement, as amended hereby,
and all other agreements, documents or instruments now or hereafter executed and
delivered pursuant to the terms thereof are hereby amended so that any reference
in the Loan Agreement or such other agreements, documents and instruments shall
mean a reference to the Loan Agreement, as amended hereby.

 

4.03        Severability.  Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.

 

4.04        Successors and Assigns.  This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.

 

4.05        Counterparts.  This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.

 

4.06        Headings.  The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

 

4.07        Applicable Law.   THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE
IN AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS.

 

4.08        Final Agreement.   THE FINANCING AGREEMENTS (INCLUDING THE LOAN
AGREEMENT AND THIS AMENDMENT), AS AMENDED HEREBY, REPRESENT THE ENTIRE
EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF ON THE DATE
THIS AMENDMENT IS EXECUTED.  THE FINANCING AGREEMENTS, AS AMENDED HEREBY, MAY
NOT

 

3

--------------------------------------------------------------------------------

 

BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.  NO MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY
PROVISION OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER AND LENDER.

 

4.09        Release.  BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE OBLIGATIONS (AS DEFINED IN THE LOAN AGREEMENT) OR TO SEEK
AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM LENDER.  BORROWER
HEREBY VOLUNTARILY AND KNOWINGLY RELEASES AND FOREVER DISCHARGES LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED,
SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT LAW OR IN
EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS AMENDMENT IS
EXECUTED, WHICH THE BORROWER MAY NOW OR HEREAFTER HAVE AGAINST LENDER, ITS
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND
IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY LOANS (AS DEFINED IN
THE LOAN AGREEMENT), INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,
CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST IN EXCESS OF THE
HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER
THE LOAN AGREEMENT OR ANY FINANCING AGREEMENT, DOCUMENT OR INSTRUMENT ENTERED
INTO IN CONNECTION THEREWITH.

 

4

--------------------------------------------------------------------------------

 

Executed as of the day and year set forth first above.

 

 

DSI TOYS, INC.

 

 

 

 

 

 

 

By:

/s/

Robert L. Weisgarber

 

 

Name:

 

Robert L. Weisgarber

 

 

Title:

 

CFO

 

 

 

 

 

 

 

 

SUNROCK CAPITAL CORP.

 

 

 

 

 

 

 

By:

/s/

Y. Renee Hannah

 

 

Name:

 

Y. Renee Hannah

 

 

Title:

 

Account Executive

 

 

5

--------------------------------------------------------------------------------

 

Exhibit A

 

(See Attached Limited Guarantee)

 

6

--------------------------------------------------------------------------------