LETTER OF CREDIT AND SECURITY AGREEMENT Supplement to Loan, Security and Bulk Purchase Agreement
LETTER
OF CREDIT AND
SECURITY
AGREEMENT
THIS
SUPPLEMENT
(“Supplement”) made and executed this 30th day of April, 2008 by and
between INFOSONICS CORPORATION (“Client”) and XXXXX FARGO CENTURY, INC.
(“WFC”).
1. Supplement
to Agreement
1.1 Supplement.
This
Supplement shall constitute a supplement to the Loan, Security and Bulk Purchase
Agreement, entered into between WFC and Client and any other agreements
documents amendments or supplements executed in connection therewith
(collectively, the “Agreement”.) All of the terms and conditions of the
Agreement which are not inconsistent with the terms and conditions of this
Supplement shall apply with full force and effect to all Transactions covered
by
this Supplement. This Supplement shall be deemed to be guaranteed by all
guaranties and secured by all pledge and security agreements in favor of WFC
and
relating to indebtedness of Client to WFC, notwithstanding anything to the
contrary in any such document or agreement.
2. Transactions
2.1 Purchase
Guaranty; Letter of Credit.
From
time to time, upon Client’s request but subject, in each instance, to WFC’s
approval thereof, WFC will guarantee payment by Client (i) to vendors for
purchases made by Client in the regular course of Client’s business (a “Purchase
Guaranty”); or (ii) to banks under letters of credit to be opened by Client in a
bank designated by WFC, in Client’s name and for Client’s account, and any
drafts or acceptances thereunder, for the purchase of merchandise required
by
Client in the regular course of Client’s business or on a standby basis (a
“Letter of Credit”); provided,
that,
in any event, the aggregate of all Purchase Guaranties and Letters of Credit
issued and outstanding at any time shall not exceed $10,000,000. In each such
instance Client will execute a form of request for Purchase Guaranty on WFC’s
form or application for credit on the form of such bank requesting WFC to
deliver same to the bank and to cause it to issue an irrevocable Letter of
Credit in conformity with the application. Each Letter of Credit shall be fully
reserved against under the Agreement.
2.2 Scope.
The
term “Transaction”, whenever used in this Supplement, shall mean and include any
such Letter of Credit or Purchase Guaranty which may be made or issued by WFC
hereunder, or any drafts and acceptances thereunder, any air release, steamship
guaranty or other indemnity issued in connection with any Letter of Credit,
all
merchandise which may be the subject of any such Purchase Guaranty or Letter
of
Credit so guaranteed and all documents and instruments of every kind relating
thereto, including, without limitation, all documents of title, transport,
indebtedness and payment, or evidencing any thereof.
2.3 Terms.
Each
Transaction hereunder shall be in such form and shall contain such terms,
conditions and provisions as WFC, in WFC’s sole discretion, may elect. Client
shall, if WFC so elects in any Transaction, deposit with Client either cash
or
other collateral satisfactory to WFC, in such amounts as WFC, in WFC’s sole
discretion, may require from time to time, prior to any
Transaction.
1
2.4 Limitations.
Notwithstanding anything to the contrary herein, the total amount of
Transactions hereunder which may be outstanding at any time may be limited
by
WFC, in WFC’s sole and absolute discretion. Nothing herein contained shall be
deemed or construed to grant to Client any right, power or authority to pledge
WFC’s credit in any manner or to any extent whatever.
2.5 Issuance.
All
Letters of Credit guaranteed by WFC hereunder shall be issued in Client’s
name.
3. Client’s
Obligations; Representations and Warranties
3.1 Payment.
Client
shall promptly pay, satisfy and discharge, in full, as and when due, all debts,
liabilities and obligations of any kind incurred by Client in connection with
each and every Transaction, including, without limitation, all fees and charges
of any bank; and Client shall pay to WFC, forthwith upon demand and in full,
any
and all moneys which WFC may pay or be obligated to pay on, under, in connection
with, or by reason of, any Transaction, including all attorney’s fees, if
any.
3.2 Indemnities.
Client
shall indemnify WFC and any bank which may issue any Letter of Credit guaranteed
by WFC hereunder or any air release, steamship guarantee or other indemnity
and
any correspondent of any such bank which may have any connection with any
Transaction or any drafts or acceptances thereunder or any air release,
steamship guarantee or other indemnity, and hold WFC and them harmless against
any and all third party claims, losses, liabilities, expense, demands and causes
of action ("Claims") which may be made, asserted, or brought against WFC, or
any
of them, arising on, under, in connection with, or by reason of, any
Transaction, except for Claims arising from WFC's acts or
omissions.
3.3 Additional
Documents.
Client
shall, upon WFC’s request, execute and deliver to Client any trust receipts
which WFC may reasonably require in connection with the release to Client of
any
merchandise or documents and any financing statements that WFC may, from time
to
time, reasonably require.
3.4 Insurance.
Client
shall cause all merchandise which may be the subject of any Transaction to
be
appropriately insured under an all risk United States dollar policy, at Client’s
sole cost, but for WFC’s account and benefit as WFC’s interest may appear, in
amounts and by insurance companies reasonably satisfactory to WFC; and shall
deliver to WFC forthwith proof of full payment of all premiums thereon if
requested by WFC. Upon Client’s failure or refusal, for any reason, to deliver
any such prepaid policies to WFC, WFC shall have the right, but not the
obligation, to procure such policies and to pay the premiums thereon for
Client’s account; and Client shall pay to WFC, forthwith, the amount of such
premiums so paid by WFC with interest thereon computed as provided in Section
8.2 hereof. Client’s liability to WFC hereunder shall not be affected, impaired,
released, or discharged, in whole or in part, by reason of any loss, theft,
or
destruction of, or depreciation or damage to, any merchandise which is not
fully
covered by the proceeds of insurance thereon actually received by WFC,
regardless of the cause of any such loss, theft, destruction, depreciation
or
damage, or absence or nonreceipt of insurance proceeds and whether such
nonreceipt of insurance proceeds is caused by the failure of the insurer to
pay
claims or otherwise.
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3.5 Importation.
Client
agrees that any necessary import, export or other licenses or certificates
for
the import or handling of the Collateral (as defined in Section 5.1 hereof)
will
have been promptly procured; all foreign and domestic governmental laws and
regulations in regard to the shipment and importation of the Collateral, or
the
financing thereof will have been promptly and fully complied with; and any
certificates in that regard that WFC may at any time reasonably request that
are
necessary for WFC in connection with the performance of its services hereunder
will be promptly furnished. In this connection, Client warrants and represents
that, to its knowledge as of the date of shipment, all shipments made under
any
such Letters of Credit are in accordance with the governmental laws and
regulations of the countries in which the shipments originate and terminate,
and
are not prohibited by any such laws and regulations.
3.6 Taxes
and Duties.
Client
assumes all risk, liability and responsibility for, and agrees to pay and
discharge, all present and future local, state, federal or foreign taxes,
duties, or levies. Any embargo, restriction, law, custom or regulation of any
country, state, city, or other political subdivision, where the Collateral
is or
may be located, or wherein payments are to be made, or wherein drafts may be
drawn, negotiated, accepted, or paid, shall be solely Client’s risk, liability
and responsibility.
3.7 Solvency.
Client
is and will continue to be solvent.
3.8 Genuineness.
Each
Letter of Credit Client presents to WFC naming Client as beneficiary shall,
to
Client's knowledge, be genuine, correct and complete and will not have been
drawn against except to the extent stated to Client in writing at the time
of
such presentation; and all invoices, receipts and other documents and
instruments of every kind which Client presents, displays, or delivers to WFC
for any purpose will, to Client's knowledge, be genuine, correct and
complete.
4. Power
of Attorney
4.1 Scope.
In
connection with all Transactions, Client hereby appoints each officer of WFC’s
corporation as Client’s attorney-in-fact, with full power and authority in each
of them (i) to sign and endorse Client’s name upon all Title Documents; (ii) in
Client’s name or WFC’s, to complete any Transaction, to obtain, execute and
deliver all necessary or proper documents in connection therewith and to collect
the proceeds thereof; (iii) upon any material default under the Agreement,
or
this Supplement, or in any Transaction, to cancel, rescind, terminate, modify,
amend, or adjust in any other way, in whole or in part, any pending Transaction;
and (iv) upon Client’s refusal to do so following WFC’s request, in Client’s
name and for Client’s account, to do any and all other acts and things which may
be necessary or proper in connection with this Supplement or any Transaction,
or
both, or to enable WFC to obtain payment of any monies owed to WFC, or for
which
Client may thereafter become liable to WFC, in any Transaction or otherwise
hereunder. The said power and authority is coupled with an interest and shall
be
irrevocable (except as to future Transactions) until all Transactions shall
have
been fully consummated and all monies owed to WFC have been paid in
full.
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5. Security
5.1 Collateral.
As
collateral security for the full payment, performance and discharge of any
and
all of Client’s debts, obligations and liabilities to WFC, whether arising under
the Agreement, or hereunder, or otherwise, whether direct or indirect,
liquidated or not, absolute or contingent, due or not due, now existing or
hereafter arising, Client hereby pledges to WFC and grants to WFC a general
lien
upon and continuing security interest in and a right to set-off against, all
now
existing and hereafter arising Documents of Title, and goods and inventory,
together with all credit balances, equities other property, tangible or
intangible, now or hereafter existing in any of Client’s accounts with WFC,
including, but not limited to, Client’s account with WFC hereunder and under the
Agreement and all property and securities of every kind and nature which have
been or at any time hereafter may be delivered to or otherwise come into WFC’s
possession, custody or control, as collateral security, or for safekeeping,
or
for any other or different purpose of any kind or which shall be in transit
to
WFC or set apart for WFC by anyone for WFC, in any way, by Client or for
Client’s account, or in which Client may have any interest, whether WFC shall
accept the same for the purpose for which delivered or not, and any and all
proceeds of said property and securities and every part thereof (“Collateral”);
with the right to WFC, in WFC’s discretion, to resort first to any part of said
security and to apply any proceeds thereof to Client’s Obligations in such order
and amounts as WFC may elect. Recourse to security shall not be
required.
5.2 Additional
Security.
As
further security for the payment of all of Client’s debts, obligations and
liabilities hereunder, Client shall, in connection with each Transaction, assign
to WFC the purchase order, selling order, letter of credit in Client’s favor and
all other instruments in connection with the Transaction which WFC may require;
and all of the same shall be deemed to have been automatically assigned to
WFC
and shall become WFC’s property immediately upon the occurrence of each
Transaction and without any formal assignment thereof. All invoices, cash,
checks, drafts, notes, documents, bills of lading, warehouse, shipping and
dock
receipts, and other title, payment, or other instruments pertaining to each
Transaction (collectively, “Title Documents”) and the merchandise relating
thereto shall be deemed to be WFC’s sole property and in furtherance thereof,
Client, upon the occurrence and during the continuation of an Event of Default,
shall instruct all suppliers, shippers, carriers, forwarders, warehouses, banks
and other persons holding or receiving any of such Title Documents or
merchandise to deliver the same to WFC or upon WFC’s order. If any of the Title
Documents shall come into Client’s possession, Client shall hold same in trust
for WFC and shall forthwith deliver the same to WFC in their original form.
Unless WFC instructs otherwise, upon the occurrence and during the continuation
of an Event of Default, Client may dispose of merchandise imported by Client
in
connection with Transactions in the ordinary course of Client’s
business.
5.3 Additional
Rights.
Any
rights, remedies, duties or obligations granted or undertaken by Client to
any
bank in any application for Letters of Credit, or any standing agreement
relating to Letters of Credit or otherwise, shall be deemed to have been granted
to WFC and apply in all respects to WFC and shall be in addition to any rights,
remedies, duties or obligations contained herein
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6. Steamship
Guaranties and Airway Releases
6.1 Guaranties
and Releases.
From
time to time, merchandise purchased by Client under Letters of Credit may arrive
at a designated location before receipt and availability of the Documents of
Title that would permit Client to obtain possession of the merchandise. Upon
Client’s request but subject, in each instance, to WFC’s approval thereof, which
shall not be unreasonably withheld, delayed or conditioned, WFC will cause
WFC’s
banks to issue air releases, steamship guarantees or other such indemnities
on
Client’s behalf in respect of Letters of Credit opened through such banks to
induce carriers to release to Client shipments of merchandise without
presentation of the original bills of lading or other evidence of shipment
properly endorsed. Upon issuance of such air way releases, steamship guarantees
or other indemnities, Client irrevocably and unconditionally waives any and
all
discrepancies, mistakes, defects or omissions in any of the documents presented
or to be presented to WFC’s banks for negotiation or acceptance in connection
therewith and Client hereby agrees to indemnify WFC and hold WFC harmless from
and against any and all consequences which may result from the issuance of
such
air releases, steamship guaranties or other indemnities. Upon issuance of an
airway release, steamship guarantee or other indemnity, WFC shall have the
right
prior to presentation, negotiation or acceptance of documents at WFC’s banks
under the related Letters of Credit to charge to Client’s account the face
amount of such outstanding airway releases, steamship guarantees or
indemnities.
7. WFC’s
Responsibility
7.1 Limitation
of Liability.
WFC
shall not be liable or responsible, in any manner or to any extent, for any
damage caused by faithfully and dutifully following Client’s instructions or
those contained in any Letter of Credit or Purchase Guaranty in connection
with
or relating to any Transaction or waivers of discrepancies issued hereunder
and
any drafts or acceptances under any such Transaction, or any Documents of Title,
transport, payment, or indebtedness or any other instruments or documents,
whether or not transferred to WFC hereunder, or the completion of execution
of
any Transaction; or for any loss or depreciation of, or damage to, any
merchandise, Documents of Title, transport, payment, or indebtedness of any
other documents or instruments, regardless of the cause of any thereof (except
for Claims caused by the acts of omissions of WFC). Except as set forth in
this
Agreement, all Transactions hereunder shall be entirely without recourse against
WFC in any event.
7.2 Reliance.
WFC and
any bank shall have the right to rely upon any oral (if from an officer of
Client), telecopy or other facsimile instruction or communication received
from
Client in connection with any proposed modifications, deviations, extensions
or
other actions affecting a Transaction, including, without limitation, waivers
of
discrepancies. WFC retains WFC’s independent right to refuse any documents
presented containing discrepancies despite the fact that WFC has contacted
Client and Client has accepted such discrepancies.
7.3 Waiver
of Discrepancies.
WFC
reserves the sole right, after consulting with Client, in WFC’s reasonable
discretion, to waive any discrepancies, defects or mistakes in any of the
documents presented to WFC or WFC’s banks for negotiation or
acceptance.
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8. Fees
8.1 Compensation.
In
addition to any commissions, discount, interest, charges, fees or expenses
charged to WFC for Client’s account by any bank, or by WFC under Schedule 1
hereto, in connection with any Transaction (all of which will be charged to
Client’s account and when made by the bank shall be conclusive on Client absent
manifest error), Client shall pay to WFC, as compensation for the issuance
of
Purchase Guaranties or Letters of Credit by WFC hereunder and for all services
which WFC may render hereunder, the following:
(a) As
to
commercial Letters of Credit:
(i) an
issuance (opening) charge equal to 0.125% of the full face amount of each
commercial Letter of Credit; plus
(ii) 0.125%
of
the amount of each increase of any such commercial Letter of Credit;
plus
(iii) a
charge
equal to not less than 0.125% on each negotiation under each commercial Letter
of Credit.
(b) As
to
standby Letters of Credit, a 2.0% per annum fee on the full face amount of
each
standby Letter of Credit, payable on the issuance date and on each anniversary
of the issuance date during the term thereof.
(c) As
to
Purchase Guaranties:
(i) an
issuance (opening) charge equal to 0.125% of the full face amount of each
Purchase Guaranty; plus
(ii) a
charge
equal to not less than 0.125% on each negotiation under each Purchase
Guaranty.
8.2 Interest.
In
addition to the foregoing, interest shall be computed at a rate to be fixed
as
provided in the Agreement, on all funds actually paid by WFC to any bank,
supplier, or other party on, under, by reason of, or in connection with any
Letter of Credit or Purchase Guaranty issued by WFC hereunder or any Transaction
covered thereby.
8.3 Reserved.
8.4 Standard
Charges.
Attached hereto as Schedule 1 are the standard commissions, charges, fees and
expenses of our banks (including our standard processing charge per item) as
of
the date hereof, which Schedule may be amended from time to time upon written
notice to you.
8.5 Costs.
Client
shall reimburse WFC for all reasonable and necessary out-of-pocket costs and
expenses (including legal fees and disbursements) incurred by WFC in connection
with the execution and delivery of this Supplement and perfection of WFC’s
security interest in the Collateral, or to obtain or enforce payment of any
of
Client’s Obligations to WFC hereunder.
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9. WFC’s
Remedies
9.1 Remedies.
In the
event of any default by Client under the Agreement or hereunder, WFC shall
have
the right to sell, at public or private sale, all Collateral and documents
relating thereto which WFC may hold as security and shall generally have all
of
the rights and remedies of a secured party under the Uniform Commercial Code
and
in accordance with Section 7.2 of the Agreement.
10. Miscellaneous
10.1 Term.
The
term of this Supplement shall commence on the date hereof and shall continue
until the term of the Agreement ends under the provisions thereof.
10.2 Waiver.
Client
waives presentment, demand, protest, notice of nonpayment and notice of protest
as to all instruments, as well as any and all other notices to which Client
might otherwise be entitled. WFC’s failure to enforce any right or remedy
hereunder or WFC’s waiver of any default hereunder shall not constitute a waiver
of any such right of remedy or of any subsequent default. This Supplement shall
be binding upon and inure to the benefit of Client’s and WFC’s respective
successors and assigns
10.3 Recapture.
To the
extent WFC, or any beneficiary of a Transaction to whom WFC may owe an
obligation receives payment on account of the Obligations herein described,
which payment is thereafter set aside or required to be repaid by WFC in whole
or in part, then, to the extent of any sum not finally retained by WFC or such
beneficiary (regardless of whether such sum is recovered from WFC by Client,
Client’s estate or trustee or any party acting for, on behalf of or through
Client or as Client’s representative), Client’s obligations to WFC shall be
reinstated and the security interests created hereby shall remain in full force
and effect (or be reinstated) until Client shall have made payment to WFC,
which
payment shall be due on demand.
10.4 Entire
Agreement.
This
Supplement contains WFC’s sole and entire understanding and agreement with
respect to its entire subject matter, and all prior negotiations, disclaimers,
commitments, agreements and understandings heretofore had between WFC and Client
with respect thereto are hereby merged herein. This Supplement cannot be changed
or terminated orally.
10.5 Governing
Law.
This
Supplement is executed and delivered in the State of California and shall be
governed, construed and interpreted, as to validity, enforcement and in all
other respects, in accordance with the law of the State of California.
Termination of this Agreement shall not affect Obligations on Transactions
having their inception prior thereto.
10.6 Waiver
of Jury Trial and Reference.
EACH OF
CLIENT AND WFC HEREBY AGREE THAT THIS SUPPLEMENT SHALL BE SUBJECT TO THE TERMS
OF SECTIONS 9.7 AND 9.8 OF THE AGREEMENT.
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IN
WITNESS WHEREOF, the parties hereto have executed this Supplement as of the
day
and year first above written.
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XXXXX
FARGO CENTURY, INC.
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By:
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/S/
Xxxxxx Ram
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Name:
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Xxxxxx
Ram
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Title:
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CEO
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INFOSONICS
CORPORATION
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By:
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/s/ Xxxxx Xxxxxxxx | |
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Name:
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Xxxxx Xxxxxxxx | |
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Title:
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Executive Vice President, Western Region | |
AUTHORIZED
SIGNATURES OF
INFOSONICS
CORPORATION,
INC.
April
30,
2008
Xxxxx
Fargo Century, Inc.
000
Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxx, XX 00000
Gentlemen:
The
names
of the persons authorized, to make, sign and deliver on behalf of this
Corporation, Letters of Credit, Purchase Guaranties, amendments to Letters
of
Credit and amendments to Purchase Guarantees, authorize the waiver of
discrepancies, and authorize the issuance of air releases and/or steamship
indemnities, relative to this Corporation’s Loan, Security and Bulk Purchase
Agreement, and any Supplement thereto, with Xxxxx Fargo Century, Inc., are
as
follows:
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NAME
(PRINT)
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SIGNATURE
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Xxxx
Xxxxxxxx
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CFO
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/s/ Xxxx Xxxxxxxx |
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(Signature)
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Xxxxxx
Ram
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CEO
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/s/ Xxxxxx Ram |
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(Signature)
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Xxxx
Xxxxx
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VP
Finance
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/s/ Xxxx Xxxxx |
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(Signature)
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Very
truly yours,
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INFOSONICS
CORPORATION
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By:
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/s/
Xxxxxx Ram
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Name:
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Xxxxxx Ram | |
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Title:
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CEO | |
SCHEDULE
1
LETTER
OF CREDIT AND SECURITY AGREEMENT
BANK
FEE SCHEDULE-
AS
OF April 30, 2008
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Issuance
(Opening)
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$100
Flat
|
|
Cable
Notification
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$
25 Per Page
|
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Amendment
Fee
|
$
75 Flat (1-3)
|
|
$100
Flat (After 3)
|
|
|
Acceptance
Commission
|
1.5%
p.a.
|
|
Minimum
$125
|
|
|
Negotiation
Commission
|
Refer
to L/C Supplement Agreement/
|
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$100
Minimum
|
|
|
Processing
Fee
|
$100
Per Invoice Negotiated
|
|
Discrepancy
Fee
|
$150
Per Discrepancy
|
|
Document
Against Payment
|
1/8%
Flat
|
|
$100
Minimum
|
|
|
Expiration
Commission
|
1/8%
Flat/
|
|
$100
Minimum
|
|
|
Authorization
to Pay/
|
1/8%
Flat/
|
|
Reinstatement
of Expired
|
$100
Minimum
|
|
Letter
of Credit
|
|
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Letter
of Indemnity
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$100
Flat to Issue and
|
|
(Steamship
Guarantee)
|
$
50 Flat for Each 30 Days
|
|
Outstanding
|
|
|
Air
Release
|
$100
Flat
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