EOS INTERNATIONAL INC
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<TYPE>EX-10.89
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Ex 10.89 - Amendment No. 3 to Revolving Credit and Security Agreement
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AMENDMENT NO. 3</FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TO</FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REVOLVING CREDIT AND
SECURITY AGREEMENT</FONT></H1>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS
AMENDMENT NO. 3 (this &#147;<U>Amendment</U>&#148;) is entered into as of July 21, 2002,
by and among DISCOVERY TOYS, INC., a California corporation (&#147;<U>Borrower</U>&#148;),
PNC BANK, NATIONAL ASSOCIATION (&#147;<U>PNC</U>&#148;), the undersigned financial
institutions which are now or which hereafter become a party to the Loan Agreement
(collectively, the <U>&#147;Lenders</U>&#148;and individually, a &#147;<U>Lender</U>&#148;),
and PNC as agent for Lenders (PNC, in such capacity, &#147;<U>Agent</U>&#148;).  </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BACKGROUND</FONT></H1>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower,
Agent and Lenders are parties to a Revolving Credit and Security Agreement dated as of
June 1, 1999 (as amended by Amendment No. 2 dated as of April 25, 2002, Amendment No. 1
dated as of June 1, 2001 and as same may be further amended, restated, supplemented or
otherwise modified from time to time, the &#147;<U>Loan</U> <U>Agreement</U>&#148;) pursuant to
which Agent and Lenders provide Borrower with certain financial accommodations.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower
has requested that Agent and Lenders (i) permit Borrowers to upstream funds to EOS
International, Inc. and (ii) amend provisions of the Loan Agreement as hereafter
provided. Agent and Lenders are willing to do so on the terms and conditions hereafter
set forth.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, in consideration of any loan or advance or grant of credit heretofore or
hereafter made to or for the account of Borrower by Agent and Lenders, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Definitions</U>.
All capitalized terms not otherwise defined herein shall have the meanings given to them
in the Loan Agreement. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Amendment
to Loan Agreement</U>. Subject to satisfaction of the conditions precedent set forth in
Section 3, the Loan Agreement is hereby amended as
follows: </FONT></P>

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<TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a)  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Section
1.2 is amended as follows: </FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(i)  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=82%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
following defined term is added in its appropriate alphabetical order: </FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
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<TD WIDTH=82%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147; <U>Overadvances</U>&#148;shall
mean at any time the aggregate amount of outstanding Advances in excess of the Formula
Amount calculated assuming the Seasonal Overadvance Amount is zero.  </FONT></TD>
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<TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(ii)  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=82%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
following defined terms are amended in their entirety to provide as follows: </FONT></TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Seasonal
Overadvance Amount</U>&#148;shall mean during the Seasonal Overadvance Period the amount
set forth below opposite the period corresponding thereto:  </FONT></P>

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     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD>
     <TD WIDTH="10%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD>
     <TD WIDTH="36%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">July 1, 2002 - July 31, 2002</FONT></TD>
     <TD WIDTH="25%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD WIDTH="17%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$&nbsp;&nbsp;&nbsp;600,000</FONT></TD>
        <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">August 1, 2002 - August 31, 2002</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,500,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">September 1, 2002 - October 31, 2002</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$1,750,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">November 1, 2002 - November 30, 2002</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$&nbsp;&nbsp;&nbsp;700,000</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
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     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1"></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">December 1, 2002 and at all times thereafter</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;0</FONT></TD>
        <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="-1">&nbsp;</FONT></TD></TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Term</U>&#148;shall
mean the Closing date through July 31, 2003.  </FONT></P>

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<TD WIDTH=3% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b)  </FONT></TD>
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<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Section
7.10 of the Loan Agreement is hereby amended by inserting the following sentence at the
end thereof to provide as follows: </FONT></TD>
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<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#147; Notwithstanding
the foregoing, Borrower shall be prohibited from paying management fees due under clause
(a) above and upstreaming funds to dreamlife after June 30, 2002 under clause (c) above
if, after giving effect to such payments, there would be outstanding Overadvances.&#148; </FONT></TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conditions of Effectiveness</U>. This Amendment shall become effective upon satisfaction
of the following conditions precedent: Agent shall have received (i) four (4) copies of
this Amendment executed by Borrower and Lenders; (ii) an amendment fee in the amount of
$25,000, which amount shall be paid by Agent charging Borrower&#146;s loan account with a
Revolving Advance for such amount; and (iii) such other certificates, instruments,
documents, agreements and opinions of counsel as may be required by Agent or its counsel,
each of which shall be in form and substance satisfactory to Agent and its counsel.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Representations
and Warranties</U>. Borrower hereby represents and warrants as follows: </FONT></P>


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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Amendment and the Loan Agreement, as amended hereby, constitute legal, valid and
binding obligations of Borrower and are enforceable against Borrower in accordance with
their respective terms.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the effectiveness of this Amendment, Borrower hereby reaffirms all covenants,
representations and warranties made in the Loan Agreement to the extent the same are not
amended hereby and agrees that all such covenants, representations and warranties shall
be deemed to have been remade as of the effective date of this Amendment.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Borrower has no defense, counterclaim or offset with respect to the Loan Agreement. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Effect
on the Loan Agreement</U>. </FONT></P>


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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon the effectiveness of <U>Section 2</U>&nbsp;hereof, each reference in the Loan Agreement to
&#147;this Agreement,&#148; &nbsp;&#147;hereunder,&#148;&nbsp;&#147;hereof,&#148;&nbsp;&#147;herein&#148;&nbsp;or
words of like import shall mean and be a reference to the Loan Agreement as amended
hereby.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as specifically amended herein, the Loan Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith, shall
remain in full force and effect, and are hereby ratified and confirmed.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The execution, delivery and effectiveness of this Amendment shall not operate as a waiver
of any right, power or remedy of Agent or Lenders, nor constitute a waiver of any
provision of the Loan Agreement, or any other documents, instruments or agreements
executed and/or delivered under or in connection therewith.  </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Governing
Law</U>. This Amendment shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns and shall be governed by and construed
in accordance with the laws of the State of New York. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Headings</U>.
Section headings in this Amendment are included herein for convenience of reference only
and shall not constitute a part of this Amendment for any other purpose. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Counterparts; Facsimile</U>. This Amendment may be executed by the parties hereto in one or
more counterparts, each of which shall be deemed an original and all of which when taken
together shall constitute one and the same agreement. Any signature delivered by a party
by facsimile transmission shall be deemed to be an original signature hereto. </FONT></P>


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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first
written above.  </FONT></P>

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<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DISCOVERY TOYS, INC., as Borrower</B><BR><BR>
<BR>By: JACK B. HOOD<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name:&nbsp;&nbsp;Jack B. Hood<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:&nbsp;&nbsp;Chief Financial Officer</FONT></TD>
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<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>PNC BANK, NATIONAL ASSOCIATION, as Agent and Lender</B><BR><BR>
<BR>By: ROBIN AURIOLA<BR>&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name&nbsp;&nbsp;Robin Auriola:<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:&nbsp;&nbsp;Vice President</FONT></TD>
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