THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT to Loan Agreement is made as of the 14th day of
January, 2000, by and among AARICA HOLDINGS, INC., a Texas corporation
(hereinafter called "Borrower"), CAROL KOLOZS (hereinafter called "Guarantor"),
AARICA SPORT, S.A. de C.V. (hereinafter called "Aarica"), TAIMEX INDUSTRIES,
S.A. de C.V. (hereinafter called "Taimex"), SCHMIDT INTERNATIONAL, LLC, a
Florida limited liability company (hereinafter called "LLC"), and ROBERT E.
SCHMIDT, JR. or his Assigns, (hereinafter called the "Lender").
WHEREAS, Borrower, Guarantor, and Lender entered into that certain Loan
Agreement dated March 8, 1999 (the "Agreement"), whereby Borrower acknowledged
borrowing $240,000.00 through its subsidiary, Taimex ("Original Loan"), and
borrowed an additional $250,000.00, of which $137,500.00 has been repaid
("Second Loan"); and Guarantor guaranteed payment of both the First and Second
Loan; and
WHEREAS, Lender has advanced an additional $100,000.00 on October 6,
1999, $75,000.00 on October 22, 1999, $50,000.00 on December 9, 1999, $75,000.00
on December 14, 1999, and $50,000.00 on January 7, 2000; and
WHEREAS, Borrower has also been provided with letters of credit issued
or provided by Lender or Lender's bank ("Letters of Credit"); and
WHEREAS, Lender desires to assign all of his right, title and interest in
the Loan to LLC; and
WHEREAS, Borrower and/or Aaarica and Taimex desire to borrow from
Lender and Lender desires to lend at Lender's option through its wholly owned
entity, the LLC, to Borrower an additional $1,537,500.00; and
WHEREAS, Borrower, Guarantor, and Lender desire to amend the Agreement
to reflect the additional $1,537,500.00 bringing the total of the third loan to
$1,887,500.00 ("Third Loan"), to agree to the assignment of the loan from Lender
to LLC, and to provide that the security from Borrower, Guarantor, Aarica and
Taimex cover the Original Loan, Second Loan, Third Loan, and the Letters of
Credit.
NOW, THEREFORE, in consideration of the premises herein contained, Ten
Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that the
Agreement be amended as follows:
1. Borrower, Guarantor, Aarica and Taimex hereby agree that Lender may assign
all of his right, title, and interest in the Loan, including the Warrants
granted herein, to LLC.
2. All payments made under the Loan shall be forwarded to Lender at the
following address: c/o Boulder Venture, 330 E. Kilbourn Avenue, Suite 1454,
Milwaukee, WI 53202.
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3. A new paragraph is added to Article I which reads as follows:
Further, the Borrower agrees to borrow from the Lender, and
the Lender agrees to lend to the Borrower, the aggregate sum
of One Million Eight Hundred Eighty-Seven Thousand Five
Hundred Dollars ($1,887,500.00) (the "Third Loan") distributed
as follows:
(1) $100,000.00 on October 6, 1999;
(2) $75,000.00 on October 22, 1999;
(3) $50,000.00 on December 9, 1999;
(4) $75,000.00 on December 14, 1999;
(5) $50,000.00 on January 7, 2000; and
(6) $750,000.00 on January 14, 2000 in the form of wire transfer or bank check
to be evidenced by a $750,000.00 promissory note of Aarica and Taimex (the
"Subsidiary Note").
(7) $787,500.00 to be distributed to Borrower from time to time as necessary for
the operations of Borrower, in such amounts and at such times as determined
solely by Lender.
4. Article II is deleted in its entirety and the following substituted
therefor:
The obligation to repay the Loan shall be evidenced by the
Borrower's Promissory Note, Replacement Promissory Note, Third
Promissory Note, and the Subsidiary Note, hereinafter
collectively called the "Note", all in substantially the form
of "Exhibit "A" hereto attached.
Further, the Loan shall be secured by Guarantor's Amended and
Restated Guaranty and Amended and Restated Stock Pledge
Agreement, as well as an Amended and Restated Guaranty from
each of Aarica and Taimex, a Guaranty of Borrower of the
Subsidiary Note and an Amended and Restated Security Agreement
granting Lender a security interest in the accounts receivable
and inventory of each.
5. The paragraph constituting Article V is to be labeled Section 5.01 and
is amended to read as follows:
Borrower anticipates making a public offering of its stock
(the "Offering"). Lender shall have the option to convert any
unpaid principal and/or interest on the Original Loan to stock
of the Borrower at eighty percent (80%) of the offering price.
In addition, Borrower grants Lender the option to redeem such
converted shares within twenty-four (24) months after the
conversion and Borrower shall be required to redeem such
converted shares at the conversion price payable in cash
within thirty (30) days of receipt of Lender's written notice
of his exercise of his option to redeem the converted shares.
The option to convert the Original Loan and the option to
redeem granted in this Section 5.01 shall not expire until
such time as the Loan is paid in full.
6. There is added to Article V a Section 5.02 which reads as follows:
Lender shall have the option to convert the original principal
amount of the Second Loan to stock of the Borrower at the
conversion rate of $2.00 per share, assuming Lender pays to
Borrower any amounts previously repaid to Lender on the Second
Loan. The option to convert the Second Loan granted hereby
must be exercised on or before August 31, 2000 ("Second
Option").
7. There is added to Article V a Section 5.03 which reads as follows:
Lender, Guarantor and Borrower shall enter into a Common Stock
Purchase Warrant granting Lender Warrants to purchase 200,000
common shares of Borrower at $.01 per share ("Warrant
Shares"). In the event Lender does not realize a return on the
Warrant Shares at the time of the Offering in an amount equal
to or greater than the original principal amount of the Third
Loan, then Lender shall be entitled to exercise Warrants to
purchase common stock of Borrower from Guarantor at $.01 per
share ("Guarantor Shares") until the aggregate return realized
by Lender on the Warrant Shares and Guarantor Shares equals or
exceeds $2,000,000.00 ("Third Option"). Lender has received a
form of Warrant which Lender has approved and will deliver to
Borrower.
8. There is added to Article V a Section 5.04 which reads as follows:
The parties agree that Lender's conversion rate in the Second
Option and purchase price in the Third Option were agreed to
based upon Borrower making an Offering of at least
$10,000,000.00 with an offering price of $10.00 per share
("Anticipated Offering"). In the event the Anticipated
Offering is not made by Borrower, then the conversion rate in
the Second Option and the per share purchase price in the
Third Option shall be adjusted proportionately to the actual
Offering made by Borrower.
9. Paragraph (1) and (2) of Section 9.01 are amended to read as follows:
(1) Default shall be made in the payment of any installment of
principal or of interest upon the Note for a period of five
(5) days after it has become due and payable, whether at
maturity, by notice of intention to repay, or otherwise; or
(2) Default shall be made in the due observance or performance
of any term, covenant, or provision of the Note and other loan
documents, and such default has continued unremedied for a
period of five (5) days; or
10. Section 11.01 is amended to read as follows:
The Borrower agrees to pay for all of Lender's reasonable
attorneys' fees and expenses incurred in connection with the
preparation of this Amendment, the amended loan documents, and
the perfection of the security interests required by the
amended loan documents, plus all fees (including attorneys'
fees) and costs, including prepayment penalties associated
with Lender obtaining a loan from Marine Bank and Savings.
11. Section 11.04 is amended to read as follows:
In the event that any installment of principal and/or interest
is received by the Lender more than five (5) days after the
due date, a late payment charge of five percent (5%) of the
payment due will be added in addition to interest at the rate
provided herein. The Borrower agrees to pay the charge and
interest, and failure to do so after five (5) days' notice
shall constitute an Event of Default under Article X of this
Agreement. This charge shall be in addition to all other
rights and remedies available to the Lender at law, in equity,
or under this Agreement.
12. Section 11.08 is amended to change the notice address of Borrower and
Lender and to add the following addresses for notices to Taimex and Aarica:
If to Aarica and Taimex: AARICA SPORT, S.A. de C.V.
TAIMEX INDUSTRIES, S.A. de C.V.
1080 Howell Branch Road
Winter Park, FL 32789
with a copy to: Jim Schnorf, Esq.
Continental Capital
195 Wekiva Springs Road, Suite 200
Longwood, FL 32779
If to Borrower: AARICA HOLDINGS, INC.
1080 Howell Branch Road
Winter Park, FL 32789
with a copy to: Jim Schnorf, Esq.
Continental Capital
195 Wekiva Springs Road, Suite 200
Longwood, FL 32779
If to Lender: Robert E. Schmidt, Jr.
4340 W. Hillsborough Ave., #212
Tampa, FL 33614
13. There is added to Article XII Sections 11.09, 11.10, and 11.11, 11.12
which read as follows:
11.09 Lender shall be appointed as a Director of Borrower
effective as of the date hereof and shall remain a Director of
Borrower until such time as the Loan is paid in full. The
number of directors of Borrower shall not be increased during
such time.
11.10 As additional consideration for the Loan, Lender shall
receive, at Lender's option, a ten percent (10%) ownership
interest in any and all future ventures, businesses,
enterprises, or entities in which Guarantor is to acquire at
least a fifty percent ownership interest, other than Borrower.
11.11 As soon as practicable after the date hereof, Borrower
shall purchase a life insurance policy on Guarantor in the
amount of not less than $3,000,000.00, naming Lender as the
sole Beneficiary. Such policy shall be maintained by Borrower
until the Loan is paid in full.
11.12 To the extent Lender or its counsel should, in their
reasonable opinion, at any time during the term of the Loan,
require any additional documents to be executed by the
Borrower, its affiliates, or the Guarantors to carry out the
provisions of this Agreement and the loan documents, including
without limitation, the Notes, the Guarantees, the Security
Agreement, and financing statements, the Borrowers and the
Guarantors shall immediately comply with said request and
execute such documents. In regard to said matters, the
Borrower, in accordance with this Agreement, shall pay any
reasonable additional attorneys' fees incurred by the Lender
in said matters. If the Borrower or Guarantors should fail to
execute any such documents, the Borrower and Guarantors do
hereby designate and appoint the Lender as their attorney in
fact to execute such documents on behalf of the Borrower and
Guarantors. The failure of the Borrower or Guarantors to
comply with the provisions of this section shall be and
constitute, at the Lender's option, a default under the Loan.
Except as modified by this Amendment, the Agreement shall remain
unchanged and in full force and effect, and the parties reaffirm and ratify
their respective obligations thereunder.
The recitals hereto, which the parties acknowledge are true and
correct, are hereby incorporated herein by reference. This Amendment may be
executed in one or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors, grantees, heirs, and
assigns. This Amendment shall be construed and interpreted in accordance with,
and governed by, the laws of the State of Florida.
GUARANTORS: BORROWER:
AARICA HOLDINGS, INC., a Texas
corporation
/s/ Carol Kolozs
Carol Kolozs
By: /s/ Carol Kolozs_____
----------------------
Carol Kolozs, President
AARICA SPORT, S.A. de C.V.
By: /s/ Carol Kolozs______
Carol Kolozs, President
TAIMEX INDUSTRIES, S.A. de C.V.
By: /s/ Carol Kolozs_____
Carol Kolozs, President
LENDER:
/s/ Robert E. Schmidt, Jr.
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Robert E. Schmidt, Jr.
SCHMIDT INTERNATIONAL, LLC
By:/s/ Robert E. Schmidt, Jr._____
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Robert E. Schmidt, Jr., Member