EXHIBIT 10.14
FIFTH AMENDMENT TO LETTER LOAN AGREEMENT
THIS FIFTH AMENDMENT TO LETTER LOAN AGREEMENT ("Amendment") is made and
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entered into effective the 31st day of January, 1997, by and between DSI TOYS,
INC. f/k/a DIVERSIFIED SPECIALISTS, INC., a Texas corporation (herein called
"Borrower"), and BANK ONE, TEXAS, N.A., with offices in Houston, Texas (herein
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called "Lender").
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R E C I T A L S:
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WHEREAS, Borrower, Lender and Guarantor entered into a Letter Loan
Agreement dated December 11, 1995, as amended by First Amendment to Letter Loan
Agreement dated January 31, 1996, a Second Amendment to Letter Loan Agreement
dated effective August 1, 1996, a Third Amendment to Letter Loan Agreement dated
effective November 14, 1996, and a Fourth Amendment to Letter Loan Agreement
dated effective January 31, 1997 (collectively, the "Loan Agreement"; the terms
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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 modifying and extending the maturity date
of the revolving line of credit and to modify the existing net worth covenant.
A G R E E M E N T:
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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
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hereof, and subject to the satisfaction of the conditions precedent set forth in
Section 2 hereof, hereby amended as follows:
(a) Section 1(a) is deleted in its entirety an the following is substituted
therefor:
(a) On the terms and subject to the conditions set forth in this
letter loan agreement (the "Agreement"), Lender agrees to lend to Borrower
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up to $23,400,000 (the "Loan"). The Loan shall be evidenced by (i) a
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Modification Revolving Promissory Note (the "Revolving Note") in a form
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satisfactory to Lender, duly executed by Borrower in the principal amount
of $9,000,000 and made payable to the order of Lender and (ii) a Promissory
Note (the "Term Note") in a form satisfactory to Lender duly executed by
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Borrower in the principal amount of $14,400,000 and made payable to the
order of Lender. Principal and interest on the Revolving Note shall be due
and payable in the manner and at the times set forth in the Revolving Note
with final maturity on May 31, 1998 (the "Revolving Termination Date").
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The total outstanding advances by Lender under the Revolving Note will not
exceed at any one time the lesser of (i) $9,000,000, or (ii) the Borrower's
Loan Limit, as defined on Schedule "A" annexed hereto. Principal and
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interest
(including any prepayment fee) on the Term Note shall be due and payable in
the manner and at the times set forth in the Term Note with final maturity
on December 11, 2000. The Revolving Note and the Term Note are hereinafter
collectively referred to as the "Notes".
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(b) The following subparagraph (p) is added to Section 5, Affirmative
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Covenants:
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"(p) Borrower shall pay to Lender a commitment fee calculated at
the rate of one-fourth of one percent (1/4%) per annum (determined on a
daily basis and for the actual number of days elapsed based on a 365-day
year) after the date hereof on the average daily unborrowed amount of the
Modification Revolving Promissory Note, payable, in arrears, quarter-
annually commencing on March 25, 1997, and continuing on the first day
of each June, September, December and March thereafter until the Revolving
Note is paid in full. Borrower acknowledges and agrees that such
commitment fee is in consideration of Lender's holding monies in readiness
for Borrower prior to the funding of Borrower's requests for advances and
is not intended as additional compensation for Lender."
(c) Section 6(a) is deleted in its entirety and the following is
substituted therefor:
"(a) Permit its Net Worth to be less than (i) ($2,500,000) from
the date hereof until July 31, 1996, (ii) ($1,500,000) from August 1, 1996
through September 30, 1996, (iii) $100,000 from October 1 1996 through
January 30, 1997, (iv) ($1,400,000) from January 31, 1997 through February
28, 1997, (v) ($3,700,000) from March 1, 1997 through June 30, 1997, (vi)
($2,500,000) from July 1, 1997 through September 30, 1997, and (vii) for
each annual period thereafter beginning October 1, 1997, $1,000,000; as
used herein, the term "Net Worth" shall mean the total consolidated assets
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of Borrower, plus all subordinated debt, plus all notes and accounts
receivable from Xxxxx Xxxx (collectively, the "Xxxx Note"), minus (A) its
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total consolidated liabilities (including contingent liabilities), (B) all
notes receivable from shareholders and affiliates (other than the Xxxx
Note), and (C) other items deducted in arriving at net worth."
2. Conditions of Effectiveness. This Amendment shall become effective
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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) $9,000,000.00 Modification Revolving Promissory Note;
(b) Certificates of the Boards of Directors of Borrower and Xxxxx
Acquisition, L.L.C. ("Guarantor") authorizing the execution, delivery and
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performance of this Amendment, and the matters contemplated hereby;
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(c) Counterparts of the consent appended hereto (the "Consent of
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Guarantor") executed by Guarantor; and
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(d) Any and all other documentation as Lender may reasonably require.
3. Representations and Warranties of Borrower. Borrower represents and
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warrants as follows:
(a) 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) 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.
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(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
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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.
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5. Waiver. As additional consideration for the execution, delivery and
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performance of this Amendment by the parties hereto and to induce Lender to
enter into this Amendment, Borrower and Guarantor warrant and represent 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 (a) the payment of any obligations and indebtedness
under the Notes and/or the Security Instruments or (b) the performance of any of
their obligations with respect to the Notes and/or the Security Instruments, and
in the event any such facts, events, statuses or conditions exist or have
existed, Borrower and Guarantor unconditionally and irrevocably waive any and
all claims and causes of action against Lender and any defenses to their payment
and performance obligations in respect to the Notes and the Security
Instruments.
6. Costs and Expenses. Borrower agrees to pay on demand all costs and
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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
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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.
8. Governing Law. This Amendment shall be governed by and construed in
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accordance with the laws of the State of Texas.
9. Final Agreement. THIS WRITTEN FIFTH AMENDMENT TO LETTER LOAN
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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. DSI TOYS, INC.
By: /s/ XXXXXX X. XXXXXXX By: /s/ M.D. XXXXX
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Name: Xxxxxx X. Xxxxxxx Name: M.D. Xxxxx
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Title: Vice President/Secretary Title: C.E.O.
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LENDER:
BANK ONE, TEXAS, N.A.
By: /s/ XXXX XXXX
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Name: Xxxx Xxxx
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Title: VP
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GUARANTOR:
XXXXX ACQUISITION, L.L.C.
By: /s/ M.D. XXXXX
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Name: M.D. Xxxxx
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Title: President
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to evidence its acknowledgment of the
waiver set forth in Paragraph 5 hereof
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CONSENT OF GUARANTOR
Dated Effective as of January 31, 1997
The undersigned, XXXXX ACQUISITION, L.L.C., as the Guarantor referred to in
the foregoing Amendment, hereby consents to the foregoing Amendment and hereby
confirms and agrees that (i) the guaranty in effect on the date hereof to which
it is a party is, and shall continue to be, in full force and effect and is
hereby confirmed and ratified in all respects except that, upon the
effectiveness of, and on and after the date of, the Amendment, all references in
the guaranty to the Loan Agreement shall mean the Loan Agreement as amended by
the Amendment and (ii) the guaranty does, and shall continue to, guarantee the
payment by the Borrower of its obligations under the Loan Agreement as amended
by the Amendment.
XXXXX ACQUISITION, L.L.C.
By: /s/ M.D. XXXXX
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Name: M.D. Xxxxx
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Title: President
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