AMENDMENT NO. 5 TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT (this
"AMENDMENT"), is entered into on and as of this 1st day of July, 2001, 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 has requested a temporary extension of the seasonal
inventory advances provided at SECTION 2.2 of the Loan Agreement, during the
month of July, 2001.
NOW, THEREFORE, in consideration of the premises herein contained 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 SEASONAL INVENTORY ADVANCES. Effective as of the date
hereof, SECTION 2.2(b)(iv) of the Loan Agreement is hereby amended and
restated to read in its entirety as follows:
"(iv) during the period commencing July 1, 2001, and
extending through July 31, 2001, the sum of: (A) ten percent (10%)
of the Value of Eligible Inventory; and (B) ten percent (10%) of
the Value of Eligible In-Transit Inventory."
ARTICLE III
RATIFICATIONS, REPRESENTATIONS, WARRANTIES AND COVENANTS
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
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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 FEE PAYABLE TO LENDER PAYMENT OF LEGAL AND OTHER EXPENSES.
Upon the execution of this Amendment by Lender, Borrower hereby agrees to pay
to Lender a fee in the amount of $5,000.00. In addition and 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.
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
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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 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,
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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.
[Signature Page Follows]
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Executed as of this 1st day of July, 2001.
DSI TOYS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Financial officer
SUNROCK CAPITAL CORP.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
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