SEVENTH AMENDMENT TO CREDIT AGREEMENT
Exhibit
10.1
THIS
SEVENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is entered into
as of
April 21, 2008, by and between INFOSONICS CORPORATION, a Maryland corporation
("Borrower"), and XXXXX FARGO HSBC TRADE BANK, NATIONAL ASSOCIATION ("Trade
Bank").
RECITALS
WHEREAS,
Borrower is currently indebted to Trade Bank pursuant to the terms and
conditions of that certain Credit Agreement between Borrower and Trade Bank
dated as of October 6, 2005 as amended from time to time ("Credit
Agreement").
WHEREAS,
Borrower is in default under the terms of the Credit Agreement for failure
to
meet the Pre-Tax Profit requirement of Exhibit A - Addendum to Credit Agreement
for the fiscal quarter ending March 31, 2008 (the “Existing Default”);
WHEREAS, Trade
Bank and Borrower have agreed to certain changes in the terms and conditions
set
forth in the Credit Agreement and have agreed to amend the Credit Agreement
to
reflect said changes.
NOW,
THEREFORE, for valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, subject to the terms and conditions described herein,
the
parties hereto agree that the Credit Agreement shall be amended as follows;
provided,
however,
that
nothing shall terminate any security interests or other documents in favor
of
Trade Bank, all of which shall remain in full force and effect unless expressly
amended hereby:
1. The
first
sentence of Article I.
CREDIT
FACILITY,
Section
1.2 Credit
Extension Limit
is
hereby deleted in its entirety, and the following substituted
therefor:
“On
or
before April 29, 2008, the aggregate outstanding amount of all Credit Extensions
may at no time exceed the lesser of (a) Thirty Seven Million Dollars
($37,000,000) or (b) the Borrowing Base in effect from time to time; and
on and
after April 30, 2008, the aggregate outstanding amount of all Credit Extensions
may at no time exceed the lesser of (a) Thirty Million Dollars ($30,000,000)
or
(b) the Borrowing Base in effect from time to time (“Overall Credit
Limit”).”
2. EXHIBIT
B - REVOLVING CREDIT FACILITY SUPPLEMENT
shall be
deleted in its entirety, and the attached EXHIBIT
B - REVOLVING CREDIT FACILITY SUPPLEMENT,
a all
terms of which are incorporated herein by this reference, shall be substituted
therefor.
3. Conditions
Precedent. The
obligation of Trade Bank to amend the terms and
conditions
of the Credit Agreement as provided herein, is subject to the fulfillment
to
Trade Bank’s satisfaction of all of the following conditions by no later than
April 22, 2008:
(a)
Trade
Bank shall have received, in form and substance satisfactory to Trade
Bank,
each of the following, duly executed:
(i)
|
This
Amendment.
|
(ii)
|
Revolving
Credit Loans Note
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(iii)
|
Such
other documents as Trade Bank may require under any other section
of this
Amendment.
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(b)
Other
Fees and Costs.
In
addition to Borrower’s obligations under the Credit Agreement
and the other Loan Documents, Borrower shall have paid to Trade Bank
the full
amount of all costs and expenses, including reasonable attorneys’ fees
(including the allocated costs of Trade Bank’s in-house counsel) expended or
incurred by Trade Bank in connection with the negotiation and preparation
of
this Amendment, for which Trade Bank has made demand.
(e) Interest.
Interest under the Prior Revolving Credit Loan Note shall have been paid
current.
4. General
Release.
In
consideration of the benefits provided to Borrower under the terms and
provisions hereof, Borrower hereby agrees as follows ("General
Release"):
(a) Borrower,
for itself and on behalf of its successors and assigns, does hereby release,
acquit and forever discharge Trade Bank, all of Trade Bank's predecessors
in
interest, and all of Trade Bank's past and present officers, directors,
attorneys, affiliates, employees and agents, of and from any and all claims,
demands, obligations, liabilities, indebtedness, breaches of contract, breaches
of duty or of any relationship, acts, omissions, misfeasance, malfeasance,
causes of action, defenses, offsets, debts, sums of money, accounts,
compensation, contracts, controversies, promises, damages, costs, losses
and
expenses, of every type, kind, nature, description or character, whether
known
or unknown, suspected or unsuspected, liquidated or unliquidated, each as
though
fully set forth herein at length (each, a "Released Claim" and collectively,
the
"Released Claims"), that Borrower now has or may acquire as of the later
of: (i)
the date this Amendment becomes effective through the satisfaction (or waiver
by
Trade Bank) of all conditions hereto; or (ii) the date that Borrower has
executed and delivered this Amendment to Trade Bank (hereafter, the "Release
Date"), including without limitation, those Released Claims in any way arising
out of, connected with or related to any and all prior credit accommodations,
if
any, provided by Trade Bank, or any of Trade Bank's predecessors in interest,
to
Borrower, and any agreements, notes or documents of any kind related thereto
or
the transactions contemplated thereby or hereby, or any other agreement or
document referred to herein or therein.
(b) Borrower
hereby acknowledges, represents and warrants to Trade Bank as
follows:
(i)
Borrower
understands the meaning and effect of Section 1542 of the California
Civil
Code
which provides:
"Section
1542. GENERAL
RELEASE; EXTENT.
A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH
THE DEBTOR."
(ii) With
regard to Section 1542 of the California Civil Code, Borrower agrees to assume
the risk of any and all unknown, unanticipated or misunderstood defenses
and
Released Claims which are released by the provisions of this General Release
in
favor of Trade Bank, and Borrower hereby waives and releases all rights and
benefits which it might otherwise have under Section 1542 of the California
Civil Code with regard to the release of such unknown, unanticipated or
misunderstood defenses and Released Claims.
(c) Each
person signing below on behalf of Borrower acknowledges that he or she has
read
each of the provisions of this General Release. Each such person fully
understands that this General Release has important legal consequences and
each
such person realizes that they are releasing any and all Released Claims
that
Borrower may have as of the Release Date. Borrower hereby acknowledges that
it
has had an opportunity to obtain a lawyer's advice concerning the legal
consequences of each of the provisions of this General Release.
(d) Borrower
hereby specifically acknowledges and agrees that: (i) none of the
provisions of this General Release shall be construed as or constitute an
admission of any liability on the part of Trade Bank; (ii) the provisions
of this General Release shall constitute an absolute bar to any Released
Claim
of any kind, whether any such Released Claim is based on contract, tort,
warranty, mistake or any other theory, whether legal, statutory or equitable;
and (iii) any attempt to assert a Released Claim barred by the provisions
of this General Release shall subject Borrower to the provisions of applicable
law setting forth the remedies for the bringing of groundless, frivolous
or
baseless claims or causes of action.
5. Waiver
of Certain Defaults.
Borrower has failed to comply with certain financial covenants contained
in the
Credit Agreement. Subject to the terms and conditions set forth herein, and
subject to the satisfaction of all conditions precedent contained herein,
Trade
Bank hereby waives the Existing Default for the period ending March 31, 2008.
The foregoing waiver shall not be deemed to constitute a waiver of any other
provision of the Credit Agreement nor is it a waiver of any subsequent breach
of
the same provisions.
6. Miscellaneous.
Except
as specifically provided herein, all terms and conditions of the Credit
Agreement shall remain in full force and effect, without waiver or modification.
All terms defined in the Credit Agreement shall have the same meaning when
used
in this Amendment. This Amendment and the Credit Agreement shall be read
together, as one document. This Amendment may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to
be an
original, and all of which when taken together shall constitute one and the
same
Amendment.
7. Reaffirmation;
Certification.
Borrower hereby remakes all representations and warranties contained in the
Credit Agreement and reaffirms all covenants set forth therein. Borrower
further
certifies that as of the date of this Amendment there exists no Event of
Default
(other than the Existing Default) as defined in the Credit Agreement, nor
any
condition, act or event which with the giving of notice or the passage of
time
or both would constitute an Event of Default (other than the Existing
Default).
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as
of the day and year first written above.
INFOSONICS CORPORATION, | XXXXX FARGO HSBC TRADE BANK, | ||
a Maryland corporation |
NATIONAL
ASSOCIATION
|
||
By:
/s/ Xxxx
Xxxxxxxx
Title:
Chief Financial
Officer
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By:
/s/ Xxxxx
Xxx
Title:
Vice
President/Principal
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