EXHIBIT 10.2
LETTER OF CREDIT AND
SECURITY AGREEMENT
SUPPLEMENT TO FACTORING AGREEMENT
THIS SUPPLEMENT
("Supplement")
made and executed this 15th day of
September, 2006 by and
between IRONCLAD PERFORMANCE WEAR CORPORATION ("Client")
and WELLS FARGO CENTURY, INC. ("Factor").
1.
SUPPLEMENT TO AGREEMENT
1.1
SUPPLEMENT. This
Supplement shall
constitute a supplement to
the Factoring
Agreement, entered
into between Factor
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 Factor
and relating to
indebtedness of Client to Factor, 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 Factor's approval thereof,
Factor will guarantee
payment by Client (i)
to vendors for
purchases made by
Client of which Client may require for 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 Factor, 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
(a
"Letter of Credit"). In each such instance Client will execute a
form of request
for Purchase Guaranty
on Factor's form or application for credit on the form of
such bank requesting Factor 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 and Purchase
Guaranty shall, at
Factor's Option,
be fully reserved
against under the Factoring 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 Factor 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
Factor, in Factor's sole
discretion, may elect.
Client shall,
if Factor so elects in
any Transaction,
deposit with Client either cash or other collateral satisfactory to Factor,
in
such amounts as Factor, in Factor's sole discretion, may require from time to
time, whether prior to any Transaction or at any time or times
thereafter.
<PAGE>
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 Factor, in Factor's sole and absolute discretion. Nothing
herein contained
shall be deemed or
construed to grant to Client any right,
power or authority
to pledge Factor's credit in any manner or to any extent
whatever.
2.5 ISSUANCE.
All Letters of Credit guaranteed by Factor 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
Factor, forthwith
upon demand and in
full, any and all moneys which Factor may
pay or be obligated to pay on, under, in connection with, or by reason of, any
Transaction, including all communication expenses and attorney's
fees.
3.2
INDEMNITIES. Client
shall indemnify Factor and any bank which
may issue any Letter of Credit guaranteed by Factor 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 Factor and them harmless against any and all
claims, losses,
liabilities, expense,
demands and causes of action which may be made, asserted,
or brought against
Factor, or any of them, arising on, under, in connection
with, or by reason of, any Transaction.
3.3 ADDITIONAL
DOCUMENTS.
Client shall,
upon Factor's
request,
execute and deliver to
Client any trust
receipts which
Factor may require
in
connection with the
release to Client of any merchandise or documents and any
financing statements that Factor may, from time to time,
require.
3.4 INSURANCE.
Client shall cause all merchandise which may be the
subject of any
Transaction to be
fully insured under an all risk United States
dollar policy, at
Client's sole cost,
but for Factor's
account and benefit as
Factor's interest may appear, in amounts and by insurance companies
satisfactory
to Factor; and shall
deliver to Factor
forthwith proof of
full payment of all
premiums thereon. Upon
Client's failure or refusal, for any reason, to deliver
any such prepaid
policies to Factor,
Factor 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 Factor, forthwith, the amount of such
premiums so paid by Factor with interest thereon computed as
provided in Section
8.2 hereof.
Client's liability to Factor 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
Factor,
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.
2
<PAGE>
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
Factor may at
any time request will be promptly furnished. In this connection,
Client warrants
and represents
that 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 Factor
naming Client as beneficiary shall 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 Factor
for any purpose will be genuine, correct and complete.
4.
POWER OF ATTORNEY
4.1 SCOPE.
In connection with all Transactions, Client hereby
appoints each officer of Factor'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
Factor'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 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
Factor'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 Factor to
obtain payment of
any monies owed to Factor, or for which Client may thereafter
become liable to
Factor, in any Transaction or otherwise hereunder. The said power and authority
is coupled with an
interest and shall be
irrevocable
until all Transactions
shall have been fully
consummated and all
monies owed to Factor have been paid
in full.
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 Factor,
whether arising under
the Agreement, or
hereunder, or
otherwise,
whether direct
or indirect, liquidated or not, absolute or
3
<PAGE>
contingent, due or not
due, now existing or hereafter arising, Client hereby
pledges to Factor
and grants to Factor 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
