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




 




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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




 




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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




 




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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.




 




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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


  	

   


  





 




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Exhibit A




 




(See Attached Limited

Guarantee)




 




6