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THIRD AMENDMENT TO
THIRD AMENDED
AND RESTATED
REVOLVING CREDIT
AND
TERM LOAN AGREEMENT
BY AND BETWEEN
GANDER MOUNTAIN, INC.,
as Borrower
AND
BANK ONE, MILWAUKEE, NA
FIRSTAR BANK MILWAUKEE, N.A.
LASALLE NATIONAL BANK,
NBD BANK (formerly known as NBD BANK, N.A.), and
XXXXXX TRUST AND SAVINGS BANK
as Banks
AND
BANK ONE, MILWAUKEE, NA,
as Agent
December 5, 1995
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EXHIBIT 10.11
THIRD AMENDMENT TO
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND
TERM LOAN AGREEMENT
THIS THIRD AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT (this "Third Amendment") is made as of the 5th day of
December, 1995, by and between BANK ONE, MILWAUKEE, NA, as Bank and agent for
the Banks, FIRSTAR BANK MILWAUKEE, N.A., LASALLE NATIONAL BANK, NBD BANK,
formerly known as NBD BANK, N.A. and XXXXXX TRUST AND SAVINGS BANK, as Banks,
and GANDER MOUNTAIN, INC., a Wisconsin corporation, as Borrower.
R E C I T A L S
WHEREAS, pursuant to a Third Amended and Restated Revolving Credit and
Term Loan Agreement dated as of November 22, 1994 and amended by First
Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated August 18, 1995 and Second Amendment (the "Second Amendment")
to Third Amended and Restated Revolving Credit and Term Loan Agreement dated
November 17, 1995 (collectively, the "Loan Agreement"), the Banks made
available to Borrower credit facilities aggregating up to a maximum amount of
One Hundred Million Dollars ($100,000,000.00); and
WHEREAS, Borrower is in default under section 8.1(m) of the Loan
Agreement requiring that prior to opening a new retail store Borrower and its
Subsidiaries shall have delivered to Banks (i) a copy of the executed lease for
the retail store, (ii) an executed Collateral Assignment of the Lease and an
executed Landlord Waiver, Consent, Agreement and Certificate ("Landlord
Waiver"), (iii) a certificate of insurance, and (iv) financing statements; and
WHEREAS, Borrower has agreed to cure the foregoing defaults by
delivering the Leases, Collateral Assignments, insurance certificates and
financing statements prior to the date hereof and by delivering the Landlord
Waivers on or before December 31, 1995; and
WHEREAS, Borrower is in default under sections 7.1(i) (Consolidated
Tangible Net Worth), 7.1(k) (Consolidated Leverage Ratio) and 7.1(n)
(Profitability) of the Loan Agreement; and
WHEREAS, Borrower has requested that Banks extend the existing waiver
of the defaults under sections 7.1(i), 7.1(k) and 7.1(n) through January 31,
1996 in order to allow Borrower to further pursue sale of GMO's catalog
business; and
WHEREAS, Banks are willing to extend such waiver but only if Borrower
complies with the terms of this Third Amendment.
NOW, THEREFORE, in consideration of the mutual covenants,
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conditions and agreements set forth herein and in the Loan Agreement and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.
2. Waiver. (a) Banks temporarily waive the defaults under sections
7.1(i), 7.1(k) and 7.1(n) of the Loan Agreement previously disclosed to Banks
for the period from the date hereof until January 31, 1996 (the "Waiver
Period") and temporarily waive the default caused by Borrower's failure to
deliver Landlord Waivers for the period from the date hereof until December 31,
1995. The waiver does not extend beyond December 31, 1995 for the Landlord
Waivers or beyond January 31, 1996 for the defaults under sections 7.1(i),
7.1(k) and 7.1(n), and Banks do not waive any other default or any increase in
the level of noncompliance with sections 7.1(i), 7.1(k) and 7.1(n) of the Loan
Agreement. The Banks reserve the right to exercise any rights and remedies
available to Agent or any Bank prior to the end of any waiver period if any
other default comes to the attention of Banks or if any information comes to
the Banks' attention showing that Borrower's level of noncompliance with
section 7.1(i), 7.1(k) or 7.1(n) is greater than that previously disclosed to
Banks.
(b) Borrower shall pay the waiver fee described in section
2(b) of the Second Amendment to Banks as provided in the Second Amendment but
if not paid sooner, such fee shall be paid together with the payment of the
Obligations on January 31, 1996.
3. The Revolving Credit Loans. The language added to section 2.2 of
the Loan Agreement pursuant to section 4 of the Second Amendment is amended in
its entirety to read as follows:
"Limitations on Borrowing during the Waiver Period. In
addition to complying with all other provisions of this section 2.2:
(a) Borrower shall not permit the outstanding balance
of the Revolving Credit Facility (including the undrawn amount
of unexpired letters of credit) to exceed (i) on or after
December 5, 1995 through and including December 8, 1995,
$63,300,000, (ii) after December 8, 1995 through and including
December 28, 1995, $60,000,000, (iii) after December 28, 1995
through and including January 12, 1996, $62,000,000, and (iv)
after January 12, 1996 through and including
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January 31, 1996, $60,000,000. Banks waive any noncompliance
with section 7.1(t) of the Loan Agreement that may occur as a
result of borrowings within the limits imposed by this section
2.2(a).
(b) Borrower shall not permit the outstanding balance
of the Revolving Credit Facility (including the undrawn amount
of unexpired letters of credit) to exceed (i) on or before
December 19, 1995, 70% of Eligible Inventory, (ii) after
December 19, 1995 through and including December 28, 1995, 75%
of Eligible Inventory, (iii) after December 28, 1995 and
through and including January 12, 1996, 80% of Eligible
Inventory, and (iv) after January 12, 1996 through and
including January 31, 1996, 78% of Eligible Inventory.
(c) If Eligible Accounts Receivable are less than
the following amounts (the "Projected Eligible Accounts
Receivable"): (a) on or before December 31, 1995, $9,900,000,
or (b) on or after January 1, 1996, $7,500,000, then an amount
equal to the difference between Projected Eligible Accounts
Receivable and actual Eligible Accounts Receivable shall be
deducted from the amount that would otherwise be available for
borrowing under paragraphs 2.2(a) and 2.2(b) above.
In addition to all other remedies available to Banks upon the
occurrence of an Event of Default, the Banks shall not be obligated to
make any advance or issue any letter of credit if after such advance
or issuance Borrower would not be in compliance with section 2.2(a) or
2.2(b) above.
Effect of Xxxxxx Reserve. Xxxxxx is reserving amounts under
the Charge It Card Plan Merchant Agreement between Borrower and Xxxxxx
(the "Merchant Agreement"). Xxxxxx and Banks intend to attempt to
negotiate, and if agreement is reached enter into, an Intercreditor
Agreement pursuant to which Xxxxxx will transfer the funds that would
otherwise have been held in such reserve for application to the
Revolving Credit Loans and the Banks will grant to Xxxxxx an indemnity
acceptable to Xxxxxx against credit card chargebacks and other
obligations of Borrower, GRS and GMO. In such event, the amounts
contained in section 2.2(a) above shall be reduced from time to time
by the maximum amount payable by Banks under such indemnity. The
provisions contained in this paragraph shall be applicable regardless
of whether the credit card purchases processed by Xxxxxx arise from
sales of Borrower, GRS or GMO. Neither Xxxxxx nor any Bank shall have
any obligations under this paragraph unless
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and until a written agreement, satisfactory to them in their sole
discretion, has been executed and delivered; provided, however, that
(a) Borrower, GRS and GMO agree that Banks have and are hereby granted
a security interest in all amounts held by Xxxxxx, and all rights of
Borrower, GRS or GMO against Xxxxxx, and (b) Xxxxxx agrees that (i)
Xxxxxx is and shall remain the agent and bailee of Banks to the extent
of any funds in the reserve held by Xxxxxx exceeding the amount needed
to pay amounts owing to Xxxxxx under the Merchant Agreement, (ii)
Xxxxxx is not acting as agent or bailee for any party other than
Banks, and (iii) Xxxxxx will not pay any such excess amounts to any
party other than Agent unless such other party has a legal right to
such excess amounts prior to the rights of Banks."
4. Update Regarding Sale. On Tuesday and Friday of each week,
and at other times upon request, Borrower shall provide Agent with a report
regarding the progress of (a) Borrower's efforts to sell all or a portion of
the assets of Borrower, GRS and/or GMO, (b) any efforts to obtain a
contribution of capital to Borrower, and (c) any actual, potential or proposed
change of ownership or control of Borrower, GRS or GMO, which report shall be
in writing upon the request of Agent and shall be supplemented from time to
time with additional updated reports or other information upon the request of
Agent.
5. Sale of Catalog Division. Borrower shall continue to pursue the
sale of the catalog business (the "Catalog Business") of Borrower and GMO as
proposed by Borrower and in accordance with the schedule prepared by Borrower,
and the failure of Borrower to achieve any of the following shall be an Other
Event of Default:
(a) On or before December 18, 1995, Borrower shall receive
one or more offers to purchase the Catalog Business, choose among the
offers it has received, and provide to Agent all of the terms of the
offer chosen by Borrower.
(b) On or before December 19, 1995, Borrower shall deliver to
Agent a written term sheet, letter of intent, accepted offer or other
preliminary document describing the terms of the proposed sale of the
Catalog Business, which document (i) shall be on terms acceptable to
Banks in their sole discretion, including that it shall provide for a
sale of the Catalog Business at a price that is acceptable to Banks
taking into account the assets to be included in the sale, the
liabilities to be assumed by the buyer and the other terms and
conditions of sale, (ii) shall provide for a cash sale to close on or
before January 31, 1996, (iii) shall contain no financing contingency
or a financing contingency
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which must be waived on or before December 26, 1995, (iv) shall be
from a buyer reasonably acceptable to Banks, and (v) shall be accepted
and signed by Borrower, GMO and the buyer.
(c) If the document delivered pursuant to section 5(b) above
provides for a financing contingency, such contingency shall be waived
on or before December 26, 1995.
(d) Borrower shall deliver to Agent on or before January 12,
1996 a fully executed definitive agreement for sale of the Catalog
Business in form and substance reasonably acceptable to Banks.
(e) On or before January 31, 1996, (i) Borrower shall close
the sale of the Catalog Business, (ii) Borrower shall pay the Loans
and all other Obligations in full and (1) cause all outstanding
letters of credit issued or confirmed by Banks to be replaced and
canceled or (2) provide Agent with cash or equivalent security
acceptable to Banks to ensure that Banks will be reimbursed for any
amounts paid by reason of a draw on any outstanding letter of credit
or otherwise owing by reason of any outstanding letter of credit, and
(iii) Borrower shall provide Xxxxxx with any reserve or other security
required by Xxxxxx as a result of the termination of the indemnity, if
any, entered into in accordance with section 2.2 of the Loan
Agreement.
6. Conditions to Amendment. This Third Amendment shall not be
effective until it shall have been fully executed and delivered and all of the
following have been delivered to Banks, executed as appropriate, in form and
substance satisfactory to Banks:
(a) The Second Amendment; and
(b) All documents required to be delivered upon execution of the
Second Amendment, which documents shall also cover and include
this Third Amendment.
7. Continuation of Agreements. Except as expressly amended and
modified herein, the Loan Agreement shall remain in full force and effect and
except as expressly amended and modified herein, the Notes shall remain in full
force and effect. All of the Collateral Documents, including but not limited
to the Security Agreement, the Mortgage, the Collateral Pledge Agreement and
Assignment of Security Interest, the Amended and Restated General Intangibles
Mortgage, the Subsidiary Guaranties and the Subsidiary Security Documents shall
remain in full force and effect as security for the Obligations and all of the
Collateral and Subsidiary Collateral as defined in the Loan Agreement, the real
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estate encumbered by the Mortgage, the Subsidiary Notes, and the Stock of GRS
and GMO, shall secure all of the Obligations.
8. Expenses. Borrower shall pay the reasonable legal fees and
expenses of counsel for Bank One and, in addition, the reasonable legal fees
and expenses, not exceeding Five Thousand Dollars ($5,000) per Bank, for each
of NBD, Xxxxxx, LaSalle and Firstar.
9. Entire Agreement This Third Amendment, together with the Loan
Agreement, as amended hereby, constitutes the entire agreement of the Banks and
Borrower pertaining to the subject matter hereof and supersedes all prior or
contemporaneous agreements of the Banks and Borrower, whether oral or written,
other than the Loan Agreement, in connection therewith. This Third Amendment
may be amended or modified only in writing, executed by all of the parties.
This Third Amendment shall not constitute, nor shall it be deemed to
constitute:
(a) The commitment or agreement of Banks to extend credit in any
amount in the future, except as provided in this Third
Amendment or in the Loan Agreement as amended hereby;
(b) an obligation on the part of any Bank to enter into any future
amendment of the Loan Agreement;
(c) except as expressly set forth herein and for the period
provided herein, the waiver of any existing Event of Default
or of any subsequent Event of Default under the Loan Agreement
as amended hereby;
(d) the waiver of any right or remedy available to Bank under the
Loan Agreement or any of the Collateral Documents; or
(e) the commitment, agreement or obligation of any Bank to delay
the exercise of any right or remedy available to a Bank in the
future.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BANK ONE, MILWAUKEE, NA
By ___________________________
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LASALLE NATIONAL BANK
By ___________________________
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FIRSTAR BANK MILWAUKEE, N.A.
By ___________________________
XXXXXX TRUST AND SAVINGS BANK
By ___________________________
NBD BANK
By ___________________________
GANDER MOUNTAIN, INC.
By ___________________________
The undersigned have read the foregoing and agree to be bound by all
of the terms and conditions contained therein except that the undersigned shall
not be directly obligated on any of the Loans except as otherwise provided in
the Loan Agreement as amended hereby, the Subsidiary Documents, the Subsidiary
Guaranties or any other agreement to which Borrower, GRS or GMO is a party.
GMO, INC.
By ___________________________
GRS, INC.
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By ___________________________
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