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EXHIBIT 10.12
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT (this "Amendment") to the Loan and Security Agreement is
entered into as of the 21st day of November, 1997, by and between Azteca
Production International, Inc. (the "Borrower"), and American Eagle Outfitters,
Inc. (the "Lender").
RECITALS:
A. As of June 6, 1997, the Borrower and the Lender executed a certain
Loan and Security Agreement (the "Loan Agreement"), setting forth the terms of
certain extensions of credit to the Borrower; and
B. As of June 6, 1997, the Borrower executed and delivered to the
Lender, inter alia, a commercial loan note in the original principal sum of
Three Million Dollars ($3,000,000.00) (hereinafter the "Note"); and
C. In connection with the Loan Agreement and the Note, the Borrower
executed and delivered to the Lender certain other loan documents, consents,
assignments, security agreements, agreements, instruments and financing
statements in connection with the indebtedness referred to in the Loan Agreement
(all of the foregoing, together with the Note and the Loan Agreement, are
hereinafter collectively referred to as the "Loan Documents"); and
D. The Borrower has requested that the Lender amend and modify certain
terms and covenants in the Loan Agreement, and the Lender is willing to do so
upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and promises contained herein, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, the parties hereto for
themselves and their successors and assigns do hereby agree, represent and
warrant as follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.
2. Section 1, "The Loan," of the Loan Agreement is hereby amended to
recite in its entirety as follows:
1. The Loan. The Lender, subject to the terms and conditions
hereof, will extend credit to the Borrower up to the aggregate
principal sum of $3,000,000.00 (the "Loan"). The Loan shall be
comprised of a demand loan facility up to the sum of
$3,000,000.00.
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The proceeds of the Loan may be advanced in partial amounts
prior to November 25, 1997; provided, however, that the
Lender shall have no obligation to make any advance at any
time that there exists a Pending Default. The principal
balance of the Loan shall not exceed an amount equal to 100%
of Eligible Inventory (the "Borrowing Base"). The Lender, in
its sole discretion, reserves the right upon notice to the
Borrower to decrease the foregoing percentage.
3. Section 3.2, "Terms of Repayment," of the Loan Agreement is hereby
amended to recite in its entirety as follows:
3.2 Terms of Repayment. The Loan shall be evidenced by a
note, or by one or more notes subsequently executed in
substitution therefor, each in substantially the form set
forth in Exhibit A-1 attached to that certain First Amendment
to Loan and Security Agreement between the Borrower and the
Lender dated November 21, 1997. Repayment of the Loan shall
be made in accordance with the terms of the promissory notes
then outstanding pursuant to this Agreement.
4. Section 3.7, "Intercreditor Agreement," of the Loan Agreement is
hereby amended to recite in its entirety as follows:
3.7 Intercreditor Agreement. The Borrower shall cause
Congress Financial Corporation (Western) to enter into a
Subordination Agreement with the Lender that is satisfactory
to the Lender in its sole and absolute discretion.
5. Section 6.10, "No Offset," of the Loan Agreement is hereby amended
to recite in its entirety as follows:
6.10 No Offset. Except to the extent of thirty percent of the
face amount of invoices for goods sold to the Lender by the
Borrower, provided that such goods are accepted by the Lender
in its sole discretion (the "Permitted Offset"), the Borrower
shall not offset against amounts due under the Loan any
amounts due from the Lender to the Borrower for goods sold to
the Lender by the Borrower. Except for the Permitted Offset,
Lender shall not offset against amounts due and owing to the
Borrower for goods sold to the Lender any amounts due and
owing under the Loan.
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6. Conditions of Effectiveness. This Amendment shall become effective
as of November 21, 1997, upon satisfaction of all of the following conditions
precedent:
(a) The Lender shall have received two duly executed copies of the
Amendment, a duly executed promissory note in the form of Exhibit A-1 attached
hereto in substitution for, and replacement of, the Note, and such other
certificates, instruments, documents, agreements, and opinions of counsel as may
be required by the Lender, each of which shall be in form and substance
satisfactory to the Lender and its counsel; and
(b) The representations contained in paragraph 7 below shall be true
and accurate.
7. Representations. The Borrower represents and warrants that after
giving effect to this Amendment (a) each and every one of the representations
and warranties made by or on behalf of the Borrower in the Loan Agreement or the
Loan Documents is true and correct in all respects on and as of the date hereof,
except to the extent that any of such representations and warranties related, by
the expressed terms thereof, solely to a date prior hereto; (b) the Borrower has
duly and properly performed, complied with and observed each of its covenants,
agreements and obligations contained in the Loan Agreement and Loan Documents;
and (c) no event has occurred or is continuing, and no condition exists which
would constitute an Event of Default.
8. Amendment to Loan Agreement. (a) Upon the effectiveness of Section 2
through Section 5 hereof, each reference in the Loan Agreement to "Loan and
Security Agreement," "Loan Agreement," "Agreement," the prefix "herein,"
"hereof," or words of similar import, and each reference in the Loan Documents
to the Loan Agreement, shall mean and be a reference to the Loan Agreement as
amended hereby. (b) Except as modified herein, all of the representations,
warranties, terms, covenants and conditions of the Loan Agreement, the Loan
Documents and all other agreements executed in connection therewith shall remain
as written originally and in full force and effect in accordance with their
respective terms, and nothing herein shall affect, modify, limit or impair any
of the rights and powers which the Lender may have thereunder. The amendment set
forth herein shall be limited precisely as provided for herein, and shall not be
deemed to be a waiver of, amendment of, consent to or modification of any of the
Lender's rights under or of any other term or provisions of the Loan Agreement,
any Loan Document, or other agreement executed in connection therewith, or of
any term or provision of any other instrument referred to therein or herein or
of any transaction or future action on the part of the Borrower which would
require the consent of the Lender, including, without limitation, waivers of
Events of Default which may exist after giving effect hereto. The Borrower
ratifies and confirms each term, provision, condition and covenant set forth in
the Loan Agreement and the Loan Documents and acknowledges that the agreement
set forth therein continue to be legal, valid and binding agreements, and
enforceable in accordance with their respective terms.
9. No Waiver. Nothing in this Amendment shall be construed to waive,
modify, or cure any default or Event of Default that exists or may exist under
the Loan Agreement or the Loan Documents.
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10. Authority. The Borrower hereby represents and warrants to the
Lender that (a) the Borrower has legal power and authority to execute and
deliver the within Amendment; (b) the officer executing the within Amendment on
behalf of the Borrower has been duly authorized to execute and deliver the same
and bind the Borrower with respect to the provisions provided for herein; (c)
the execution and delivery hereof by the Borrower and the performance and
observance by the Borrower of the provisions hereof do not violate or conflict
with the articles of incorporation, regulations or by-laws of the Borrower or
any law applicable to the Borrower or result in the breach of any provision of
or constitute a default under any agreement, instrument or document binding upon
or enforceable against the Borrower; and (d) this Amendment constitutes a valid
and legally binding obligation upon the Borrower in every respect.
11. Counterparts. This Amendment may be executed in two or more
counterparts, each of which, when so executed and delivered, shall be an
original, but all of which together shall constitute one and the same document.
Separate counterparts may be executed with the same effect as if all parties had
executed the same counterparts.
12. Costs and Expenses. The Borrower agrees to pay on demand in
accordance with the terms of the Loan Agreement all costs and expenses of the
Lender in connection with the preparation, reproduction, execution and delivery
of this Amendment and all other loan documents entered into in connection
herewith, including the reasonable fees and out-of-pocket expenses of the
Lender's counsel with respect thereto.
13. Governing Law. This Amendment shall be governed by and construed in
accordance with the law of the State of Ohio.
IN WITNESS WHEREOF, the Borrower and the Lender have hereunto
set their hands as of the date first set forth above.
THE BORROWER:
AZTECA PRODUCTION INTERNATIONAL, INC.
By: /s/ Hubert Guez
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Its: President
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THE LENDER:
AMERICAN EAGLE OUTFITTERS, INC.
By: /s/ George Kolber
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Its: Vice Chairman - COO
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CONSENT OF GUARANTORS
Each of the undersigned, being guarantors of the Borrower's
indebtedness to the Lender pursuant to certain guaranty agreements with the
Lender, hereby consents and agrees to be bound by the terms, conditions and
execution of the above Amendment and hereby further agrees that his obligations
shall be continuing as provided in said guaranty agreements and said guaranty
agreements shall remain as written originally and continue in full force and
effect in all respects.
/s/ Hubert Guez
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Hubert Guez
/s/ Paul Guez
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Paul Guez
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EXHIBIT A-1
AMERICAN EAGLE OUTFITTERS, INC.
COMMERCIAL LOAN NOTE
BUSINESS PURPOSE
$3,000,000.00 November 21, 1997
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
American Eagle Outfitters, Inc. (hereinafter called the "Lender," which term
shall include any holder hereof), at such place as the Lender may designate or,
in the absence of such designation, at any of the Lender's offices, the sum of
Three Million Dollars ($3,000,000.00) or so much as shall have been advanced by
the Lender and not repaid (hereinafter called the "Principal Sum"), together
with interest as hereinafter provided. The proceeds of the loan evidenced hereby
may be advanced in partial amounts during the term of this note (this "Note")
prior to the earlier of demand or November 25, 1997. Each such advance shall be
made to the undersigned upon receipt by the Lender of the undersigned's
application therefor and disbursement instructions, which shall be in such form
as the Lender shall from time to time prescribe. The Lender shall be entitled to
rely on any oral or telephonic communication requesting an advance and/or
providing disbursement instructions hereunder, which shall be received by it in
good faith from anyone reasonably believed by the Lender to be the undersigned,
or the undersigned's authorized agent. The undersigned agrees that all advances
made by the Lender will be evidenced by entries made by the Lender into its
electronic data processing system and/or internal memoranda maintained by the
Lender. The undersigned further agrees that the sum or sums shown on the most
recent printout from the Lender's electronic data processing system, the grid
attached hereto, or on such memoranda shall be rebuttably presumptive evidence
of the amount of the Principal Sum and of the amount of any accrued interest.
The undersigned promises to pay the Principal Sum and the interest thereon at
the time and in the manner hereinafter provided in this Note.
This Note is executed and the advances contemplated hereunder are to be
made pursuant to a Loan and Security Agreement by and between the undersigned
and the Lender dated as of June 6, 1997, and all amendments, modifications and
supplements thereto from time to time (hereinafter called the "Loan Agreement"),
and all the covenants, representations, agreements, terms and conditions
contained therein, including but not limited to additional conditions of
default, are incorporated herein as if fully rewritten. This Note is given in
substitution for, and replacement of, that certain Commercial Loan Note dated
June 6, 1997, executed and delivered to Lender by the undersigned.
INTEREST
Interest will accrue on the unpaid balance of the Principal Sum until
paid at a rate of interest equal to the Effective Rate. As used herein,
"Effective Rate" shall mean seven percent (7%) per annum plus the Margin. As
used herein, "Margin" shall mean, as of the last day of immediately
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preceding calendar month, the difference between (a) 8.50 percent and (b) the
rate of interest announced by National City Bank, Columbus as its prime rate as
of such date. The Effective Rate shall be adjusted as of the first day of each
calendar month.
At the election of the Lender, upon the occurrence of an "Event of
Default" pursuant to the Loan Agreement, interest will accrue on the unpaid
balance of the Principal Sum and unpaid interest, if any, until paid at the rate
of ten percent (10%) per annum.
All interest shall be calculated on the basis of a 360 day year for the
actual number of days the Principal Sum or any part thereof remains unpaid.
MANNER OF PAYMENT
The Principal Sum shall be payable ON DEMAND; provided, however, that
if the Principal Sum is not sooner demanded, the Principal Sum shall be due and
payable on April 1, 1998. Thirty percent of the face amount of each invoice for
goods that are sold to the Lender by the undersigned (provided that such goods
are accepted by the Lender in its sole discretion) shall by applied by the
Lender as a payment of the Principal Sum. In addition, installments of the
Principal Sum shall be due and payable on the first of each month, beginning
December 1, 1997, and continuing on the first day of each month thereafter.
Except for the final installment, which shall be for the unpaid balance of the
Principal Sum, each such installment shall be in the amount of the lesser of
(a) the difference between (i) $300,000.00, and (ii) thirty percent of
the face amount of all goods sold to the Lender by the undersigned
during the month preceding the date such installment is due, provided
that such goods are accepted by the Lender in its sole discretion, or
(b) the unpaid balance of the Principal Sum.
Accrued interest shall be due and payable monthly beginning on December 1, 1997,
and continuing on the first day of each month thereafter, and at maturity,
whether by demand, acceleration or otherwise.
LATE CHARGE
Any installment or other payment not made within 10 days of the date
such payment or installment is due shall be subject to a late charge equal to 5%
of the amount of the installment or payment.
SECURITY
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This Note is secured by the security interests granted by or referred
to in the Loan Agreement and by the assignments and the mortgages or other
security documents dated June 6, 1997, or given contemporaneously herewith.
DEFAULT
Without limiting the right of the Lender to demand payment of the
Principal Sum and all accrued interest thereon at any time, upon the occurrence
of any of the following events:
(a) the undersigned fails to make any payment of interest or of
the Principal Sum on or before the date such payment is due;
(b) an "Event of Default" under the Loan Agreement shall have
occurred;
the Lender may, at its option, without notice or demand, accelerate the maturity
of the obligations evidenced hereby, which obligations shall become immediately
due and payable. In the event the Lender shall institute any action for the
enforcement or collection of the obligations evidenced hereby, the undersigned
agrees to pay all costs and expenses of such action, including reasonable
attorneys' fees, to the extent permitted by law.
GENERAL PROVISIONS
The undersigned, and any indorser, surety, or guarantor, hereby
severally waive presentment, notice of dishonor, protest, notice of protest, and
diligence in bringing suit against any party hereto, and consent that, without
discharging any of them, the time of payment may be extended an unlimited number
of times before or after maturity without notice. The Lender shall not be
required to pursue any party hereto, including any guarantor, or to exercise any
rights against any collateral herefor before exercising any other such rights.
The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.
The captions used herein are for reference only and shall not be deemed
a part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.
WAIVER OF RIGHT TO TRIAL BY JURY
THE UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER
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THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED
IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE UNDERSIGNED OR THE LENDER WITH RESPECT TO THIS
NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT THE UNDERSIGNED OR THE LENDER MAY FILE AN ORIGINAL COUNTERPART
OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF
THE UNDERSIGNED TO THE WAIVER OF THE RIGHT OF THE UNDERSIGNED TO TRIAL BY JURY.
Borrower:
AZTECA PRODUCTION INTERNATIONAL, INC.
By: /s/ Hubert Guez
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Its: President
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