EXHIBIT 10.22
SECOND AMENDMENT TO AMENDED AND
RESTATED LETTER LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LETTER LOAN AGREEMENT
("AMENDMENT") is made and entered into effective the 30th day of September,
1998, by and between DSI TOYS, INC., a Texas corporation (herein called
"BORROWER"), BANK ONE, TEXAS, N.A., with offices in Houston, Texas (herein
called "LENDER").
R E C I T A L S:
WHEREAS, Borrower and Lender entered into an Amended and Restated Letter
Loan Agreement dated October ___, 1997, and a First Amendment to Amended and
Restated Letter Loan Agreement dated effective January 31, 1998 (collectively,
the "LOAN AGREEMENT"; the terms defined therein being used herein as therein
defined unless otherwise defined herein); and
WHEREAS, Borrower and Lender desire to amend certain terms and provisions
of the Loan Agreement, which include (i) modifying some existing financial
covenants, and (ii) amending certain other terms and provisions of the Loan
Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual promises herein contained
and other good and valuable consideration, the receipt of which is hereby
acknowledged, Borrower and Lender hereby agree to amend the Loan Agreement as
hereinafter set forth.
1. AMENDMENT TO LOAN AGREEMENT. The Loan Agreement is, effective the date
hereof, and subject to the satisfaction of the conditions precedent set forth in
Section 2 hereof, hereby amended as follows:
(a) Section 5(o), AFFIRMATIVE COVENANTS, of the Loan Agreement is amended
by deleting the same in its entirety and substituting the following therefor:
"(o) Borrower shall timely make the payments to advertisers, as set
forth in the schedule below (without prepayment):
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Nickelodeon
Month/Year Xxxxxx Broadcasting Network Totals
=============----------------------------------------===============
09/98 $63,803.04 $131,808.70 $195,611.74
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10/98 $64,281.53 $120,000.00 $184,281.53
=============----------------------------------------===============
11/98 $64,763.64 $120,000.00 $184,763.64
=============----------------------------------------===============
12/98 $65,249.37 $120,000.00 $185,249.37
=============----------------------------------------===============
01/99 $65,738.74 $120,000.00 $185,738.74
=============----------------------------------------===============
02/99 $66,231.78 $120,000.00 $186,231.78
=============----------------------------------------===============
03/99 $66,728.52 $250,000.00 $316,728.52
=============----------------------------------------===============
04/99 $67,228.98 $250,000.00 $317,228.98
=============----------------------------------------===============
05/99 $67,733.20 $250,000.00 $317,733.20
=============----------------------------------------===============
06/99 $68,241.20 $250,000.00 $318,241.20
=============----------------------------------------===============
07/99 $250,000.00 $250,000.00
=============----------------------------------------===============
08/99 $250,000.00 $250,000.00
=============----------------------------------------===============
09/99 $250,000.00 $250,000.00
=============----------------------------------------===============
10/99 $250,000.00 $250,000.00
=============----------------------------------------===============
11/99 $250,000.00 $250,000.00
=============----------------------------------------===============
12/99 $250,000.00 $250,000.00
====================================================================
TOTALS: $660,000.00 $3,231,808.70 $3,891,808.70
====================================================================
Borrower will promptly notify Lender if it cannot adhere to its
payment obligations relating to this advertising payment schedule."
(b) Section 5, AFFIRMATIVE COVENANTS, is hereby modified by including the
following additional subparagraph (p), Year 2000 Compliance:
"(p) YEAR 2000 COMPLIANCE. Borrower shall perform all acts
reasonably necessary to ensure that (i) Borrower and any business in
which Borrower holds a substantial interest, and (ii) all customers,
suppliers and vendors that are material to Borrower's business,
become Year 2000 Compliant in a timely manner. Such acts shall
include, without limitation, performing a comprehensive review and
assessment of all of Borrower's systems and adopting a detailed
plan, with itemized budget, for the remediation, monitoring and
testing of such systems. As used in this paragraph, "Year 2000
Compliant" shall mean, in regard to any entity, that all software,
hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such
entity, will properly perform date sensitive functions before,
during and after the year 2000. Borrower shall, immediately upon
request, provide to Bank such certifications or other evidence of
Borrower's compliance with the terms of this paragraph as Bank may
from time to time require."
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(c) Section 11, MISCELLANEOUS, is hereby modified by including the
following additional subparagraph (m), Jury Waiver:
"(m) JURY WAIVER. THE UNDERSIGNED AND BANK (BY ITS ACCEPTANCE
HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED AND BANK ARISING OUT OF
OR IN ANY WAY RELATED TO THIS DOCUMENT ANY OTHER LOAN DOCUMENT, OR
ANY RELATIONSHIP BETWEEN BANK AND THE UNDERSIGNED. THIS PROVISION IS
A MATERIAL INDUCEMENT TO BANK TO PROVIDE THE FINANCING DESCRIBED
HEREIN OR IN THE OTHER LOAN DOCUMENT."
(d) Section 11, MISCELLANEOUS, is hereby modified by including the
following additional subparagraph (n), Arbitration:
"(n) ARBITRATION. Bank and Borrower agree that upon the written
demand of either party, whether made before or after the institution
of any legal proceedings, but prior to the rendering of any judgment
in that proceeding, all disputes, claims and controversies between
them, whether individual, joint or class in nature, arising from the
Revolving Note or the Term Note, any Loan Document or otherwise,
including without limitation contract disputes and tort claims.,
shall be resolved by binding arbitration pursuant to the Commercial
Rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision
shall be conducted in the city nearest the Borrower's address having
an AAA regional office, or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any
Collateral shall constitute a waiver of this arbitration agreement
or be prohibited by this arbitration agreement. This arbitration
provision shall not limit the right of either party during any
dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the
purposes of realizing upon, preserving, protecting, foreclosing upon
or proceeding under forcible entry and detainer for possession of,
any real or personal property, and any such action shall not be
deemed an election of remedies. Such remedies include, without
limitation, obtaining injunctive relief or a temporary restraining
order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership, or
exercising any rights relating to personal property, including
exercising the right of set-off, or taking
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or disposing of such property with or without judicial process
pursuant to the Uniform Commercial Code. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of an act,
or exercise of any right or remedy concerning any Collateral,
including any claim to rescind, reform or otherwise modify any
agreement relating to the Collateral, shall also be arbitrated;
provided, however that no arbitrator shall have the right or the
power to enjoin or restrain any act of either party. Judgment upon
any award rendered by any arbitrator may be entered in any court
having jurisdiction. The statute of limitations, estoppel, waiver,
laches and similar doctrines which would otherwise be applicable in
an action brought by a party shall be applicable in any arbitration
proceeding, and the commencement of an arbitration proceeding shall
be deemed the commencement of any action for these purposes. The
Federal Arbitration Act (Title 9 of the United States Code) shall
apply to the construction, interpretation, and enforcement of this
arbitration provision."
2. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective when,
and only when, Lender shall have received counterparts of this Amendment
executed by Borrower, and Section 1 hereof shall become effective when, and only
when, Lender shall have additionally received all of the following:
(a) Certificate of the Boards of Directors of Borrower authorizing
the execution, delivery and performance of this Amendment, and the matters
contemplated hereby; and
(b) Any and all other documentation as Lender may reasonably
require.
3. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents and
warrants as follows:
(a) That Borrower is duly authorized and empowered to execute,
deliver and perform this Amendment and all other instruments referred to or
mentioned herein to which it is a party, and all action on its part
requisite for the due execution, delivery and the performance of this
Amendment has been duly and effectively taken. This Amendment, when
executed and delivered, will constitute valid and binding obligations of
Borrower enforceable in accordance with its terms. This Amendment does not
violate any provisions of Borrower's Articles of Incorporation, By-Laws, or
any contract, agreement, law or regulation to which Borrower is subject,
and does not require the consent or approval of any regulatory authority or
governmental body of the United States or any state.
(b) That the representations and warranties made by Borrower in the
Loan Agreement are true and correct as of the date of this Amendment.
(c) No event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
4. REFERENCE TO AND EFFECT ON THE SECURITY INSTRUMENTS.
(a) Upon the effectiveness of Section 1 hereof, on and after the
date hereof each reference in the Loan Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import, and each reference
in the other Security Instruments (hereinafter defined) to the Loan
Agreement, shall mean and be a reference to the Loan Agreement as amended
hereby.
(b) Except as specifically amended above, the Loan Agreement and all
other instruments securing or guaranteeing Borrower's obligations to Lender
(the "SECURITY INSTRUMENTS") shall remain in full force and effect and are
hereby ratified and confirmed. Without limiting the generality of the
foregoing, the Security Instruments and all collateral described therein do
and shall continue to secure the payment of all obligations of Borrower
under the Loan Agreement, as amended hereby, and under the other Security
Instruments.
(c) The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of Lender under any of the Security Instruments, nor
constitute a waiver of any provision of any of the Security Instruments.
5. WAIVER. As additional consideration for the execution, delivery and
performance of this Amendment by the parties hereto and to induce Lender to
enter into this Amendment, Borrower warrants and represents to Lender that no
facts, events, statuses or conditions exist or have existed which, either now or
with the passage of time or giving of notice, or both, constitute or will
constitute a basis for any claim or cause of action against Lender or any
defense to (i) the payment of any obligations and indebtedness under the Note
and/or the Security Instruments or (ii) the performance of any of its
obligations with respect to the Note and/or the Security Instruments, and in the
event any such facts, events, statuses or conditions exist or have existed,
Borrower unconditionally and irrevocably waives any and all claims and causes of
action against Lender and any defenses to its payment and performance
obligations in respect to the Note and the Security Instruments.
6. COSTS AND EXPENSES. Borrower agrees to pay on demand all costs and
expenses of Lender in connection with the preparation, reproduction, execution
and delivery of this Amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
counsel for Lender. In addition, Borrower shall pay any and all fees payable or
determined to be payable in connection with the execution and delivery, filing
or recording of this Amendment and the other instruments and documents to be
delivered hereunder, and agrees to save Lender harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees.
7. EXECUTION IN COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.
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8. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Texas.
9. DUE ON MATURITY. THIS LOAN IS PAYABLE IN FULL AT MATURITY. BORROWER MUST
REPAY THE ENTIRE OUTSTANDING PRINCIPAL BALANCE OF THE LOAN AND ANY UNPAID
INTEREST THEN DUE. LENDER IS UNDER NO OBLIGATION TO REFINANCE THE LOAN AT THAT
TIME, AND DOES NOT PLAN TO REFINANCE THE LOAN AT THAT TIME. BORROWER WILL,
THEREFORE, BE REQUIRED TO MAKE PAYMENT OUT OF OTHER ASSETS THAT BORROWER MAY
OWN, OR BORROWER WILL HAVE TO FIND A LENDER, WHICH IS WILLING TO LEND BORROWER
THE MONEY TO MAKE SUCH PAYMENT.
10. FINAL AGREEMENT. THIS WRITTEN SECOND AMENDMENT TO AMENDED AND RESTATED
LETTER LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed in multiple counterparts, each of which is an original instrument
for all purposes, all as of the day and year first above written.
BORROWER:
DSI TOYS, INC.
By: /s/ M. D. XXXXX
Name: M. D. XXXXX
Title: CHIEF EXECUTIVE OFFICER
LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ XXXX XXXXXXXX
Name: XXXX XXXXXXXX
Title: VICE PRESIDENT
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