1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 18, 1995
GANDER MOUNTAIN, INC.
(Exact name of registrant as specified in its charter)
Wisconsin
(State or other jurisdiction or incorporation)
0-14579 39-1742710
(Commission File Number) (I.R.S. Employer I.D. No.)
Highway W, P.O. Box 128
Wilmot, Wisconsin 53192
(Address of Principal Executive Offices) (Zip Code)
414-862-2331
(Registrant's telephone number; including area code)
2
Item 5. Other Events.
On August 18, 1995, Gander Mountain, Inc. entered into a First
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 Harris Trust and Savings Bank, as Banks
and Bank One, Milwaukee, NA as Agent, a copy of which is attached hereto as
Exhibit A and incorporated herein by reference.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GANDER MOUNTAIN, INC.
Date: August ___, 1995
BY____________________________________
Ralph Freitag, Chief Executive Officer
199033
4
EXHIBIT A
FIRST 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
HARRIS TRUST AND SAVINGS BANK
AS BANKS
AND
BANK ONE, MILWAUKEE, NA,
AS AGENT
AUGUST 18, 1995
5
FIRST AMENDMENT TO
THIRD AMENDED AND RESTATED
REVOLVING CREDIT
AND TERM
LOAN AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT is made as of the 18th day of August, 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 HARRIS 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 Revolving Credit and Term Loan Agreement dated
December 11, 1992, as amended by the First Amendment to Revolving Credit and
Term Loan Agreement dated July 2, 1993, as amended and restated pursuant to the
Amended and Restated Revolving Credit and Term Loan Agreement dated as of
November 30, 1993 and as further amended and restated pursuant to the Second
Amended and Restated Revolving Credit and Term Loan Agreement effective as of
April 3, 1994 and as further amended and restated pursuant to the Third Amended
and Restated Revolving Credit and Term Loan Agreement dated as November 22,
1994 (collectively, the "Loan Agreement"), Bank One, Firstar, Harris, LaSalle
and NBD made available to Borrower various credit facilities aggregating up to
a maximum amount of One Hundred Million Dollars ($100,000,000.00) (the "Initial
Credit Facilities"); and
WHEREAS, the Borrower and the Banks desire to amend the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, 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 do hereby agree as follows:
1 . Amendments to Loan Agreement. The Loan Agreement is amended
as hereinafter set forth. All references to Sections are to Sections of the
Third Amended and Restated Loan Agreement dated as of November 22, 1994.
(a) The following are added as definitions in Article I, Section 1:
6
Borrowing Base. "Borrowing Base" shall mean that amount equal to
eighty-five percent (85%) of Eligible Accounts Receivable plus fifty
percent (50%) of Eligible Inventory.
Customer. "Customer" shall mean the account debtor with respect to
any of the Receivables, the prospective purchaser with respect to any
contract right or any party who enters into or proposes to enter into
any contract or other arrangement with Borrower or a Subsidiary
pursuant to which Borrower or such Subsidiary is to deliver any
personal property or perform any services.
Eligible Accounts Receivable. "Eligible Accounts Receivable" shall
mean accounts owing to Borrower or any Subsidiary which are
Receivables included in Collateral and which meet these
specifications:
(a) Sale of Goods or Services Rendered. The
account arose from the performance of services by Borrower or
any Subsidiary, or from a bona fide sale or lease of goods to
a Customer located in the United States, which goods have been
delivered or shipped to the Customer and for which Borrower or
its Subsidiary has genuine invoices, shipping documents or
receipts.
(b) Age and Due Date. The account arose in the
ordinary course of business and is payable not more than sixty
(60) days from the earlier of performance of services,
delivery of goods or date of invoice, provided such account is
not more than ninety (90) days from date of invoice, except in
the case of Borrower's "Easy Pay" accounts, such account is
payable in monthly installments over a period not in excess of
one hundred eighty (180) days and such account is not more
than one hundred eighty (180) days from date of invoice. No
invoice may be dated prior to the performance of the services
or delivery of the goods represented on that invoice.
(c) Past Due Accounts. Accounts arising in the
ordinary course of business payable not more than sixty (60)
days from the earlier of performance of services, delivery of
goods or date of invoice and which are more than ninety (90)
days from the date of invoice (or in the case of Borrower's
"Easy Pay" accounts, accounts payable in monthly installments
over a period not in excess of one hundred eighty (180) days
and which are not more than one hundred eighty (180) days from
date of invoice), represent not more than twenty-five percent
(25%) of the balance owing by a Customer. The above
calculation shall
2
7
be performed on an individual company basis for accounts owing
to each of the Borrower and each Subsidiary provided the
Agent, in its sole discretion, may make the above calculation
on an aggregate basis using accounts owed the Borrower and all
Subsidiaries.
(d) Ownership. It is owned by Borrower or a
Subsidiary free and clear of all encumbrances and security
interests except the security interest of Banks and any
Permitted Liens, and Banks have a first priority security
interest in such account.
(e) No Defenses. It is enforceable against the
Customer for the amount shown as owing in the statements
furnished by Borrower to Banks. It and the transaction out of
which it arose comply with all applicable laws and
regulations. The amount so certified is not subject to any
setoff, credit allowance or adjustment except discount for
prompt payment, nor has the Customer returned the goods or
disputed its liability.
(f) Financial Condition of Customer. Neither
Borrower nor any Subsidiary has notice or knowledge of
anything which would impair the credit standing of the
Customer.
(g) Satisfaction of Banks. Agent on behalf of
Required Banks has not notified Borrower or any Subsidiary,
orally or in writing, that the account or Customer is
unsatisfactory, as determined in Required Banks' reasonable,
good faith judgment.
(h) Affiliates. It is not due from an Affiliate.
(i) Government As Customer. It is not due from
the United States government or any of its departments,
agencies or instrumentalities, unless the Borrower or the
Subsidiary, as the case may be, has complied with the Federal
Assignment of Claims Act.
(j) Certification to Banks. Borrower has
certified to Agent for Banks its existence and amount pursuant
to section 7.1 of this Agreement.
(k) Other Excluded Accounts. The accounts are
not officer loans, volume rebates, subsidy advertising, Sears
or United Kingdom receivables, stock subscription receivables
or ineligible column credits.
3
8
Eligible Inventory. "Eligible Inventory" shall mean Inventory
included in Collateral which meets these specifications:
(a) Ownership. It is owned by Borrower or a
Subsidiary free of all encumbrances and security interests
except the security interest of Banks and any Permitted Liens,
and Banks have a first priority security interest in such
Inventory.
(b) Other Financing. No financing statement is
on file covering it or its products or proceeds except the
financing statement in favor of Agent for the benefit of Banks
and any financing statements evidencing Permitted Liens.
(c) Documents. If it is represented or covered
by documents of title, Borrower or a Subsidiary is the owner
of the documents free of all encumbrances and security
interests except the security interest of Banks and any
Permitted Liens, and Banks have a first priority security
interest in such documents.
(d) Location. It is located at the Borrower's
warehouse in Wilmot, Wisconsin, in a trailer on the Borrower's
premises located in Wilmot, Wisconsin, at the leased warehouse
located in Kenosha, Wisconsin, or at a retail store identified
in Exhibit 9 attached hereto.
(e) Condition. It is in good condition, it has
not materially declined in value and, in the case of goods
held for sale, it is new and unused (except as Banks may
otherwise consent in writing).
(f) Satisfaction of Banks. Agent on behalf of
Required Banks has not notified Borrower or any Subsidiary,
orally or in writing, that any of the Eligible Inventory is
unsatisfactory, as determined in the Required Banks'
reasonable, good faith judgment.
(g) Certification to Banks. Borrower has
certified to Agent for Banks its existence, location, amount
and lower of cost on a FIFO basis (determined in accordance
with GAAP in effect on the date of this Agreement) or
wholesale market value, pursuant to section 7.1 of this
Agreement. Capitalized Freight costs shall be excluded when
determining the value of the Inventory.
(h) Other Excluded Inventory. The Inventory is not
Inventory reserves, clearance center Inventory, Inventory
4
9
samples, prepaid Inventory not on site, returned goods,
shipping supplies, discontinued/reconditioned items, spare gun
parts or prepaid fabric commitments.
Index Borrowings. "Index Borrowings" shall mean the aggregate
principal amount of Revolving Credit Loans outstanding to the extent
that such aggregate principal amount is equal to or less than the
Borrowing Base.
Operating Profit. "Operating Profit" shall mean revenues (i) less
cost of goods sold and (ii) less Operating Expenses. "Operating
Expenses" shall include catalog expenses, retail store expenses,
merchandising, fulfillment and general and administrative expenses,
all determined in accordance with GAAP and consistent with financial
statements and projections previously furnished to Banks.
Overadvance Borrowings. Overadvance Borrowings shall mean the
aggregate principal amount of Revolving Credit Loans outstanding in
excess of the Borrowing Base.
Overadvance Limit. "Overadvance Limit" shall mean the maximum amount
of Overadvance Borrowings permitted from time to time under this
Agreement. The Overadvance Limit shall be the lesser of (i) thirty
percent (30%) of Eligible Inventory or (ii) the amount set forth below
for the time period indicated:
Monthly Accounting Period Overadvance Limit
------------------------- -----------------
July, 1995 $22,800,000
August, 1995 20,500,000
September, 1995 16,800,000
October, 1995 13,800,000
November, 1995 14,000,000
December, 1995 11,000,000
January, 1996 14,600,000
February, 1996 18,200,000
March, 1996 20,500,000
April, 1996 23,500,000
May, 1996 25,100,000
June, 1996 0
and thereafter
(b) Section 1.27 is amended to read as follows:
1.27 Consolidated Current Ratio. "Consolidated Current
Ratio" shall mean, as of any date, the relationship, expressed as a
numerical ratio, which Consolidated Current Assets bear
5
10
to Consolidated Current Liabilities. For purposes of calculating the
Consolidated Current Ratio only, the principal amount of the Term Loan
outstanding shall be excluded from the amount of Consolidated Current
Liabilities.
(c) Section 1.51 is amended to read as follows:
1.51 Interest Period. "Interest Period" shall mean with
respect to any LIBOR Based Borrowing, the period commencing on the
date of such Borrowing and ending either one (1) month, two (2)
months, three (3) months or six (6) months thereafter as indicated in
the Notice of Borrowing.
(d) Section 1.64 is amended to read as follows:
1.64 Other Event of Default. "Other Event of Default"
shall mean any one of the following: (a) the Borrower shall fail to
pay on the due date any installment of the principal of or interest
upon any of the Notes; (b) any Subsidiary shall fail to pay on the due
date any installment of the principal of or interest on any note or
other obligation due the Borrower; (c) there shall be a default in the
performance or observance of any of the covenants and agreements
contained in Sections 7.1(b), 7.1(c), 7.1(d), 7.1(i), 7.1(k), 7.1(l),
7.1(m), 7.1(n), 7.1(r), 7.1(s), 7.1(t), 7.1(u), 7.1(v), 7.1(w),
8.1(a), 8.1(b), 8.1(c), 8.1(d), 8.1(f), 8.1(g), 8.1(i), 8.1(j),
8.1(l), 8.1(m), 8.1(n) or 8.1(o) of this Agreement; (d) there shall be
a default in the performance or observance of any of the covenants and
agreements contained in Sections 7.1(a), 7.1(e), 7.1(f), 7.1(g), or
8.1(e) of this Agreement and if susceptible to remedy in the Required
Banks reasonable judgment such failure shall continue and remain
uncured for a period of five (5) days after such default shall become
or should have become known to the Borrower; (e) there shall be a
default in the performance or observance of any of the covenants and
agreements contained in Sections 7.1(h), 7.1(o), 7.1(p), 7.1(q),
8.1(h) or 8.1(k) of this Agreement, and if susceptible to remedy in
the Required Banks reasonable judgment, such failure shall continue
and remain uncured for a period of twenty (20) days after such default
shall become or should have become known to the Borrower; (f) there
shall be a default in the performance or observance of any of the
other covenants and agreements contained in this Agreement; (g)
Borrower or any Subsidiary shall default in the performance or the
observance of any of the covenants and agreements contained in any of
the Collateral Documents beyond any grace period, if any, as provided
therein; (h) any representation or warranty made by the Borrower or
any Subsidiary herein or in any Collateral Documents or in any
6
11
document or financial statement delivered pursuant hereto shall prove
to have been false in any material respect as of the time when made or
given except in the case of financial forecasts previously delivered
to the Banks and then only if such financial forecasts were knowingly
or intentionally misstated; (i) if an event of default as defined in
any other mortgage, indenture, note, agreement, guaranty, surety or
instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness in an aggregate amount of Two
Hundred Fifty Thousand Dollars ($250,000) or more of the Borrower or
any Subsidiary, whether such indebtedness now exists or shall
hereafter be created, shall occur and shall permit the acceleration of
such indebtedness; (j) if any of the Collateral Documents shall not be
in full force and effect with respect to all or any portion of the
Collateral; (k) the entry against the Borrower or any Subsidiary of
one or more judgments or decrees involving an aggregate liability of
Two Hundred Fifty Thousand Dollars ($250,000) or more, which has or
have become non-appealable and which remains undischarged, unsatisfied
and unstayed for more than forty-five (45) days in the event a notice
of entry of judgement is filed or ninety (90) days in the event a
notice of entry of judgement is not filed, whether or not consecutive,
or the issuance and levy of a writ of attachment or garnishment
against the property of the Borrower or any Subsidiary in an action
claiming Two Hundred Fifty Thousand Dollars ($250,000) or more, and
which is not released or appealed and bonded in a manner satisfactory
to the Banks; or (1) any Subsidiary shall default in the performance
or the observance of any of the covenants and agreements contained in
any of the Subsidiary Documents beyond any grace period, if any, as
provided therein.
(e) Section 1.83 is amended to read as follows:
1.83 Restricted Payments. "Restricted Payments" shall
mean (a) any cash dividend or other cash distribution on any shares of
the Borrower's capital stock (common or preferred), (b) except for
payments which may be due under a Preferred Rights Stock Agreement not
to exceed $40,000 in the aggregate, any payment (including, without
limitation, the setting aside of assets or the deposit of funds
therefor) on account of the purchase, redemption, retirement or
acquisition of (i) any shares of the Borrower's capital stock or (ii)
any option, warrant or other right to acquire shares of the Borrower's
capital stock, (c) except for repayments of principal or interest on
the GMO Note and GRS Note, any prepayment of principal or interest on
account of debt for borrowed money (other than the Loans) or any
purchase, defeasance,
7
12
redemption, retirement or acquisition of any principal or
interest on such debt (including, without limitation, the setting
aside of assets or the deposit of funds therefor), or (d) any payment
of management or consulting fees to an Affiliate of the Borrower or
any Subsidiary or any shareholder of the Borrower except for the
purchase of goods or services from an Affiliate provided any such
transaction is on no less favorable terms as would be available in the
market place in general.
(f) Section 1.86 is amended to read as follows:
1.86 Revolving Credit Commitment. "Revolving Credit
Commitment" shall mean the commitment of the Banks to make Revolving
Credit Loans pursuant to this Agreement up to a maximum principal
amount outstanding as follows: Seventy Million Dollars ($70,000,000)
from (a) November 22, 1994 until June 30, 1995, (b) December 1, 1995
until June 30, 1996 and (c) December 1, 1996 until January 5, 1997;
and Eighty Million Dollars ($80,000,000) from (a) July 1, 1995 until
November 30, 1995, and (b) July 1, 1996 until November 30, 1996. Bank
One's Revolving Credit Commitment shall be equal to 29.6875% of the
Revolving Credit Commitment less the face amount of all unexpired
letters of credit issued by Bank One under the Revolving Credit
Facility. LaSalle's Revolving Credit Commitment shall be equal to
17.1875% of the Revolving Credit Commitment, Firstar's Revolving
Credit Commitment shall be equal to 15.625% of the Revolving Credit
Commitment and NBD's Revolving Credit Commitment shall be equal to
21.875% of the Revolving Credit Commitment less the face amount of all
unexpired letters of credit issued by NBD under the Revolving Credit
Facility and Harris' Revolving Credit Commitment shall be equal to
15.625% of the Revolving Credit Commitment.
(g) Section 1.87 is amended to read as follows:
1.87 Revolving Credit Commitment Termination Date.
"Revolving Credit Commitment Termination Date" shall mean the earlier
of (a) the date of an Automatic Event of Default or (b) the date of an
Other Event of Default not expressly waived in writing by the Banks or
(c) January 5, 1997.
(h) Section 2.1.1(a) is amended to read as follows:
2.1.1(a) The Term Loans shall bear interest in the case of
Bank One at the Reference Rate, floating daily, and in the case of
Harris, LaSalle, Firstar and NBD at the Prime Rate, floating daily,
until maturity. Borrower, at its option, may elect to convert all or
a portion of the Term Loans to a LIBOR Based Borrowing. Any LIBOR
8
13
Based Borrowing shall be shared between the Banks on the basis of each
Bank's Term Loan Percentage. The interest rate for any LIBOR Term
Loan shall be equal to LIBOR plus 2.50%.
(i) Section 2.1.1(b) is amended to read as follows:
(b) All requests for LIBOR Based Borrowings under the
Term Loan ("Notice of Term Loan LIBOR Borrowing") shall be made to
Bank One. A Notice of Term Loan LIBOR Borrowing may be made by a
telephone call from any person designated in writing by the Borrower
to Bank One. All Notices of Term Loan LIBOR Borrowings shall
indicate: (i) the date of the Borrowing; (ii) the aggregate amount of
the Borrowing; and (iii) the Interest Period. If Bank One so
requests, Borrower shall confirm in writing, by telecopy or telefax to
Bank One, the Notice of Term Loan LIBOR Borrowing on the same day as
the oral Notice of Term Loan LIBOR Borrowing. Any Notice of Term Loan
LIBOR Borrowing received by Bank One before 11:00 a.m. on any Business
Day shall be honored on the next succeeding Business Day. Any Notice
of Term Loan LIBOR Borrowing received by Bank One after 11:00 a.m. on
any Business Day may or may not be honored on the next succeeding
Business Day and in any event shall be honored on the second Business
Day after receipt of the Notice of Term Loan LIBOR Borrowing. All
Term Loan LIBOR Borrowings shall be in minimum increments of One
Million Dollars ($1,000,000). The Interest Period for any Notice of
Term Loan LIBOR Borrowings may not extend beyond January 5, 1997.
Upon receipt of a Notice of Term Loan LIBOR Borrowing, Bank
One shall promptly notify each Bank in writing by telecopy or telefax
of the contents thereof and of such Bank's ratable share of such
Borrowing and such Notice of Term Loan LIBOR Borrowing shall not
thereafter be revocable by the Borrower. Bank One shall notify each
Bank by 3:00 p.m. of all Notice of Term Loan LIBOR Borrowings received
by Bank One before 11:00 a.m. Bank One shall notify each Bank by
10:00 a.m. on the next succeeding Business Day of all Notice of Term
Loan LIBOR Borrowings received after 11:00 a.m. Any Term Loan which
is a LIBOR Based Borrowing shall automatically convert to a Prime Rate
Borrowing at the end of an Interest Period unless Borrower gives Bank
One a Notice of Term Loan LIBOR Borrowing in accordance with the terms
of this section.
(j) Section 2.1.2 is amended to read as follows:
2.1.2 Payments. Until January 5, 1997, the Borrower shall
pay interest on the Term Loan to Bank One as agent as
9
14
follows: (a) for all LIBOR Based Borrowings, Borrower shall pay
interest in arrears at the end of each Interest Period, except if the
Interest Period exceeds three (3) months then at three month
intervals; and (b) for all non-LIBOR Based Borrowings in arrears on
the day following the end of each quarter (March 1, June 1, September
1 and December 1) with the first payment due on December 1, 1994.
Commencing on March 1, 1996, Borrower shall make quarterly payments of
principal at the times indicated below to Bank One as Agent on behalf
of each Bank in an amount equal to each Bank's Term Loan Percentage of
the following principal amounts:
Date Due Principal Amount
-------- ----------------
March 1, 1996 $ 500,000
June 1, 1996 $ 500,000
September 1, 1996 $ 500,000
December 1, 1996 $ 500,000
January 5, 1997
all remaining
principal plus
accrued interest
(k) Section 2.1.3 is amended to read as follows:
2.1.3 Prepayments. Except for that part of the Term Loan
which is a LIBOR Based Borrowing, prepayments on the Term Loan shall
be allowed at any time without fee or penalty. All prepayments on the
Term Loan shall be made to Bank One, as agent for the Banks and shall
be shared by the Banks according to the Banks Term Loan Percentage.
Any principal repaid or prepaid on the Term Loan may not be
reborrowed.
Any partial prepayment may be in any amount at any time. At
the time of making any prepayment, the Borrower shall pay all accrued
interest on the amount prepaid. All prepayments shall be applied in
the reverse order of maturity of principal payments payable on the
Term Loan.
Any portion of the Term Loan which is a LIBOR Based Borrowing
can only be repaid at the end of an applicable Interest Period, except
in the case of a prepayment after and during an Event of Default or as
required by Section 2.4.8 of this Agreement. In the case of a
prepayment after and during an Event of Default the Borrower shall
reimburse the Banks for any loss or expense (as reasonably determined
by the Banks) resulting to the Banks as the result of such prepayment.
(l) Section 2.2 is amended to read as follows:
2.2 The Revolving Credit Loans. From time to time prior
to the Revolving Credit Commitment Termination Date, each Bank
10
15
severally agrees to make Revolving Credit Loans on the terms and
conditions set forth in this Agreement. The maximum aggregate
principal outstanding under the Revolving Credit Loans shall not
exceed the lesser of (i) the Revolving Credit Commitment or (ii) the
sum of the Borrowing Base plus the applicable Overadvance Limit, and
the amount of a Bank's Revolving Credit Loans outstanding at any one
time shall never exceed the amount of a Bank's Revolving Credit
Commitment. All Revolving Credit Loans shall be made by the Banks in
the percentage that their respective Revolving Credit Commitment bears
to the total Revolving Credit Commitment unless and until one Bank has
reached the maximum of its Revolving Credit Commitment, at which time
any remaining Revolving Credit Loans shall be made in such percentage
that each of the remaining Banks Revolving Credit Commitment bears to
the total Revolving Credit Commitment of the remaining Banks. All
Overadvance Borrowings shall be allocated to a Bank in the proportion
that such Bank's Revolving Credit Commitment bears to the aggregate
amount of the Revolving Credit Commitment. All Revolving Credit Loans
shall be evidenced by a Revolving Credit Note, the Borrower being
obligated, however, to pay only the amount of Revolving Credit Loans
actually made, together with interest on the amount of Revolving
Credit Loans actually made to the Borrower which remain outstanding
from time to time. The Borrower may borrow, repay and reborrow under
the Revolving Credit Commitment subject to all of the terms and
conditions of this Agreement.
In calculating the maximum aggregate amount outstanding under
the Revolving Credit Facility, the undrawn amount of all unexpired
letters of credit shall be considered outstanding on the Revolving
Credit Facility. In the event the amount outstanding under the
Revolving Credit Facility (including the undrawn amount of all
unexpired letters of credit) exceeds the lesser of (i) the Revolving
Credit Commitment or (ii) the sum of the Borrowing Base plus the
applicable Overadvance Limit, the Borrower shall immediately repay the
Revolving Credit Loans so that the principal outstanding under the
Revolving Credit Loans does not exceed the lesser of (i) the Revolving
Credit Commitment or (ii) the Borrowing Base plus the applicable
Overadvance Limit.
(m) Section 2.2.3 is amended to read as follows:
2.2.3 Interest Rates. Each non-LIBOR Based Borrowing which
is an Index Borrowing shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate equal to: (a) in the case of Bank One
Revolving Credit Loans at the
11
16
Reference Rate, floating daily; and (b) in the case of Harris,
LaSalle, Firstar and NBD Revolving Credit Loans at the Prime Rate,
floating daily. Each non-LIBOR Based Borrowing which is an
Overadvance Borrowing shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate equal to: (a) in the case of Bank One
Revolving Credit Loans at the Reference Rate plus one-half of one
percent (0.5%), floating daily; and (b) in the case of Harris,
LaSalle, Firstar and NBD Revolving Credit Loans at the Prime Rate plus
one-half of one percent (0.5%), floating daily.
All LIBOR Based Borrowings which are Index Borrowings shall
bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due at LIBOR plus
two and one-half percent (2.50%). All LIBOR Based Borrowings which
are Overadvance Borrowings shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made
until it becomes due at LIBOR plus three percent (3.00%). Any LIBOR
Based Borrowing not repaid at the end of the Interest Period shall
automatically become a Prime Rate Borrowing unless Borrower gives Bank
One a Notice of Borrowing for such amount in accordance herewith.
Principal on LIBOR Based Borrowings may not be prepaid prior to the
end of the applicable Interest Period, except in the case of a
prepayment after and during an Event of Default or as required by
Section 2.4.8 of this Agreement. In the case of a prepayment after
and during an Event of Default, the Borrower shall reimburse the Banks
for any loss or expense (as reasonably determined by the Banks)
resulting to the Banks as the result of such prepayment.
Interest on all Revolving Credit Loans shall be paid to Bank One as
Agent as follows: (a) for all LIBOR Based Borrowings, Borrower shall
pay interest in arrears on the day following the end of each Interest
Period except if the Interest Period exceeds three (3) months then at
three month intervals; and (b) for all non-LIBOR Based Borrowings in
arrears on the day following the end of each quarter (March 1, June 1,
September 1 and December 1).
The Borrowing Base Certificate received for a month end shall
be used for the next succeeding month (i) to determine the interest
rate to be applied for Revolving Credit Loans for such month; and (ii)
to test compliance with the Overadvance Limit established for such
month.
(n) Section 2.2.5 is amended to read as follows:
12
17
2.2.5 Fee. In consideration of Banks making the Revolving
Credit Facility available, Borrower shall pay directly to Banks an
annual facility fee equal to three-eighths of one percent (0.375%) of
the Revolving Credit Commitment, payable quarterly in arrears,
commencing on August 18, 1995, payable to each of the Banks in such
percentage as each Banks Revolving Credit Commitment bears to the
total Revolving Credit Commitment. The facility fee shall be billed
by Bank One on behalf of the Banks quarterly in arrears. The Borrower
shall make payments directly to Bank One and Bank One shall pay each
of the Banks its ratable share within one Business Day thereafter.
Borrower shall pay directly to Bank One an annual Agent Fee
of $15,000 payable on December 1, 1995 and on December 1, 1996. In
addition, Borrower shall pay Bank One an Administrative Agency Fee of
$7,500 per annum in quarterly installments in advance commencing as of
August 18, 1995.
An amendment fee in the amount of One Hundred Twenty-five Thousand
Dollars ($125,000) shall be due Banks on August 18, 1995, in
connection with the amendment of this Agreement, payable in full on
the Closing Date, to be shared by the Banks in proportion to their
total commitment to lend under this Agreement.
(o) Section 2.3 is deleted in its entirety.
(p) The following is added as Section 7.1(a)(9)
7.1(a)(9) Monthly, within ten (10) days after the end of each
month (except for the certificate due for the month of August, 1995
by September 13, 1995), and after an Event of Default, as often as
Agent or Banks may request, a report in the form required by Agent
and attached hereto as Exhibit 10 ("Borrowing Base Certificate")
showing the current status and value of the Borrowing Base and
reflecting the amount of Eligible Accounts Receivable and Eligible
Inventory as of the end of the prior month, certified by an officer
of Borrower. The report shall also certify that no Event of Default
has occurred and that no condition exists which, with notice or the
lapse of time or both, would constitute an Event of Default. Nothing
in this Agreement shall prevent the Borrower from submitting these
reports more often.
Borrower shall also provide to the Agent a weekly report by 5:00 p.m.
on Wednesday of the following week showing merchandise receipts into
the Borrower's Wilmot, Wisconsin
13
18
warehouse and sales activity for the prior week, in a form reasonably
acceptable to the Agent. Borrower shall also provide to the Agent a
monthly informational report in the form of the Borrowing Base
Certificate within two (2) days of each month end showing the status
of the Borrowing Base as of the end of the prior month.
(q) Section 7.1(i) is amended to read as follows:
(i) Consolidated Tangible Net Worth. The Borrower shall
maintain Consolidated Tangible Net Worth of more than the amount set
forth below, as of the end of the fiscal month ended closest to the
date shown, as disclosed by the financial statements of Borrower for
such fiscal month:
Date of the Fiscal
------------------
Month Ending Closest
--------------------
Thereto Consolidated Tangible Net Worth
------- -------------------------------
July 31, 1995 26,000,000
August 31, 1995 26,100,000
September 30, 1995 27,600,000
October 31, 1995 28,500,000
November 30, 1995 30,200,000
December 31, 1995 34,400,000
January 31, 1996 32,500,000
February 28, 1996 31,300,000
March 31, 1996 29,600,000
April 30, 1996 28,300,000
May 31, 1996 27,400,000
June 30, 1996 26,400,000
(r) Section 7.1(j) is deleted in its entirety.
(s) Section 7.1(k) is amended to read as follows:
(k) Consolidated Leverage Ratio. The Borrower shall
maintain its Consolidated Leverage Ratio to be not greater than the
ratio indicated at the respective dates indicated below:
Leverage Ratio Date of the fiscal month ending
-------------- closest thereto
-------------------------------
5.80 July 31, 1995
6.00 August 31, 1995
5.70 September 30, 1995
5.50 October 31, 1995
14
19
4.70 November 30, 1995
3.50 December 31, 1995
3.70 January 31, 1996
3.70 February 28, 1996
3.90 March 31, 1996
4.20 April 30, 1996
4.40 May 31, 1996
5.00 June 30, 1996
(t) Section 7.1(l) is amended to read as follows:
(l) Consolidated Current Ratio. The Borrower shall
maintain its Consolidated Current Ratio to be not less than 1:05:1 at
all times.
(u) Section 7.1(m) is amended to read as follows:
(m) Bank Accounts. Except as otherwise permitted by this
section, until such time as the Loans are repaid in full and all other
obligations due all of the Banks are satisfied in full, Borrower and
each of its Subsidiaries shall maintain all bank accounts (savings,
checking, depository, payroll, disbursements and cash management
services and accounts) at the Banks. Borrower may maintain a payroll
and refund account with the Bank of Richmond provided the balance in
said account does not exceed One Million Dollars ($1,000,000.00) on
the date payroll checks are issued and Seven Hundred Fifty Thousand
Dollars ($750,000.00) at all other times. Borrower and GRS may
maintain a depository account with a local bank for its retail stores
provided adequate arrangements and procedures (satisfactory to Banks)
are implemented concerning these accounts which arrangements may
include by way of illustration and not limitation maximum account
balance restrictions. All of Borrower's and Subsidiaries' existing
bank accounts are listed on Exhibit 11 attached hereto. Neither
Borrower nor its Subsidiaries shall open any new bank accounts
without written notice to Banks. Sweeps of the cash in all bank
accounts for retail stores shall be made at least weekly for deposit
into Borrower's account at LaSalle.
(v) Section 7.1(n) is amended to read as follows:
(n) Profitability of Borrower. For Borrower, on a
consolidated basis, Operating Profit shall be not less than the amount
set forth below, calculated as of the date set forth for the
three-month period ending on such date:
Three-month Fiscal Period Ending
15
20
as of the Date Closest Thereto O p e r a t i n g
------------------------------ -----------------
Profit
------
July 31, 1995 ( 5,041,000)
August 31, 1995 ( 2,600,000)
September 30, 1995 1,900,000
October 31, 1995 6,100,000
November 30, 1995 8,100,000
December 31, 1995 12,000,000
January 31, 1996 7,800,000
February 28, 1996 3,400,000
March 31, 1996 (6,400,000)
April 30, 1996 (5,400,000)
May 31, 1996 (4,700,000)
June 30, 1996 (3,000,000)
(w) Section 7.1(r) is amended to read as follows:
(r) Prepayment of Revolving Credit Loans. If the
Revolving Credit Loans shall ever exceed the lesser of (i) the
Revolving Credit Commitment or (ii) the sum of the Borrowing Base plus
the applicable Overadvance Limit, the Borrower shall immediately repay
the Revolving Credit Loans so that the outstanding Revolving Credit
Loans are equal to or less than the lesser of (i) the Revolving Credit
Commitment and (ii) the sum of the Borrowing Base plus the applicable
Overadvance Limit.
(x) Section 7.1(t) is amended to read as follows:
(t) Clean-down. For a period of at least thirty
(30) consecutive days during the period from December 15, 1995 through
February 1, 1996, the Borrower shall cause the aggregate unpaid
principal balance on direct borrowings under the Revolving Credit
Loans (excluding the undrawn amount of unexpired letters of credit) to
be equal to or less than Fifty Million Dollars ($50,000,000.00).
(y) The following is added as Section 7.1(w):
(w) Adjustments to Covenants. As an accommodation to the
Borrower, the Banks have not set certain of the covenants in this
Agreement for periods commencing on and after July 1, 1996. The
Borrower and Banks shall agree upon the terms of Sections 7.1(i),
7.1(k), 7.1(l), 7.1(n), 7.1(t), 8.1(n) and the Overadvance Limit not
later than March 31, 1996, and the failure of the Banks and the
Borrower to agree by such date shall be an Event of Default.
16
21
(z) Section 8.1(m) is amended to read as follows:
(m) Retail Store Expansion. Borrower and its Subsidiaries
shall not engage in any Retail Store Expansion, provided, however,
with respect to Retail Store leases executed on or before June 15,
1995, as shown on Exhibit 9 attached hereto, Borrower and/or GRS may
incur construction costs for leasehold improvements and related
capital expenditures and store opening costs associated with opening
a new Retail Store. All Retail Store Expansion shall be carried out
by GRS or Borrower. Subject to the foregoing limitation on Retail
Store Expansion, with respect to any Retail Store Expansion, prior to
opening such store for business Borrower shall have delivered to the
Banks: (i) a copy of the executed lease for the retail store, (ii) an
executed Collateral Assignment of Lease and an executed Landlord
Waiver, Consent, Agreement and Certificate in the form of Exhibits 7
and 8 respectively, (iii) a certificate of insurance for such retail
store with lender loss payable endorsements in favor of the Banks and
(iv) duly executed financing statement or statements in form
acceptable to the Banks.
(aa) The following is added as Section 8.1(n):
(n) Capital Expenditures. The Borrower shall not make any
Capital Expenditures in excess of $7,200,000 for its fiscal year
ending June 30, 1996.
(bb) The following is added as Section 8.1(o):
(o) Prohibition of Preferred Stock Conversion. The
Borrower shall not convert any of its Preferred Stock to Subordinated
Debt.
(cc) Section 11.2 is amended to read as follows:
11.2 Assignability; Successors. The Borrower's rights and
liabilities under this Agreement are not assignable or delegable, in
whole or in part, without the prior written consent of the Banks.
Subject to the right to grant participations as provided in Section
11.8 below, the rights and liabilities of a Bank under this Agreement
are not assignable or delegable, in whole or in part, without the
prior written consent of all of the other Banks. Subject to the
preceding sentence, the provisions of this Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the
Banks.
17
22
(dd) Section 11.18 is deleted in its entirety.
(ee) The following is added as Section 11.19:
11.19 Limitation of Liability. THE BORROWER AND THE BANKS
HEREBY WAIVE ANY RIGHT EACH OF THEM MAY HAVE TO CLAIM OR RECOVER FROM
THE OTHER PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE OR SIMILAR DAMAGES,
OTHER THAN ACTUAL AND/OR CONSEQUENTIAL DAMAGES.
(ff) Exhibit 9 in the form attached hereto as Exhibit 9 (amended) is
substituted for Exhibit 9 to the Loan Agreement and shall designate stores
which are open and stores which are to be opened, as of the date of this
Amendment.
(gg) Exhibit 10 in the form attached hereto ("Borrowing Base
Certificate") is made Exhibit 10 to the Loan Agreement.
(hh) Exhibit 11 in the form attached hereto ("List of Bank Accounts")
is made Exhibit 11 to the Loan Agreement.
2. References. All capitalized terms used herein shall have the
meanings given to them in the Loan Agreement as amended hereby. All references
to the Loan Agreement in the Collateral Documents shall be deemed to be
references to the Loan Agreement as amended hereby.
3. Conditions to Amendment. This Amendment is subject to the
satisfaction of the following conditions:
(a) The representations and warranties contained in Article VI of the
Loan Agreement shall be true and correct on and as of the date hereof.
(b) Banks shall have received from Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C., counsel for Borrower, a favorable opinion, dated as
of the date hereof, covering such matters incident to the transactions
contemplated by this Amendment as Banks may reasonably request.
(c) All other fees, costs and expenses which are due and payable
obligations of Borrower to the Banks shall have been paid or arrangements
satisfactory to the Agent shall have been made on or before the date hereof,
including, but not limited to, 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, Harris,
LaSalle and Firstar.
18
23
(d) The Banks shall have received a certificate, certified by the
Secretary of Borrower on behalf of the Borrower to be true and correct and in
full force and effect on the date hereof, certifying, among other things, the
accuracy and completeness of (i) the Articles of Incorporation and By-Laws of
Borrower; (ii) resolutions of the Board of Directors of Borrower authorizing
the issuance, execution and delivery of this Amendment; (iii) the names and
titles of the officer or officers of Borrower authorized to sign this Agreement
and the Collateral Documents, and to obtain Loans hereunder, together with true
signatures of such officers; and (iv) such other matters as may be reasonably
required by the Banks. The Closing Certificate shall be substantially in the
form of Exhibit 4 attached to the Loan Agreement.
(e) Borrower, GMO and GRS shall be in compliance with all the terms,
conditions and provisions of the Loan Agreement as amended hereby, the
Subsidiary Documents, the Subsidiary Security Documents, the Subsidiary Notes
and of each of the Collateral Documents to be observed, satisfied or performed
by each of them, respectively, and on the date hereof no event has occurred and
is continuing that constitutes an Event of Default or an Unmatured Event of
Default.
(f) Banks shall have received a Borrowing Base Certificate in the
form attached hereto as Exhibit 10, executed by an officer of the Borrower.
(g) Banks shall have received the reaffirmation of the Corporate
Guarantee Agreement executed by GRS and GMO.
4. No Other Amendments. Except as expressly amended and modified
hereby, the Loan Agreement shall remain in full force and effect, and except as
expressly amended and modified in accordance with the terms of the Agreement,
the Note shall remain in full force and effect.
5. Representations and Warranties. The Borrower hereby represents and
warrants to the Banks as follows:
(a) All of the representations and warranties contained in Article VI
of the Loan Agreement are true and correct on and as of the date hereof.
(b) Exhibit (9) (amended) attached hereto is true and correct as
of the date hereof, and there are no other Retail Store Leases existing on the
date hereof.
19
24
(c) Exhibit 11 attached hereto is true and correct as of the date
hereof, and there are no other bank accounts of Borrower or any Subsidiary
existing on the date hereof.
(d) The Borrower has the power, authority and legal right to
execute and deliver this Amendment and to perform its obligations hereunder
without any notice, consent, approval or authorization and the Borrower shall
have taken on or before the date hereof all appropriate and necessary corporate
action to authorize the execution of this Amendment.
(e) The execution and delivery of this Amendment and the
performance hereunder do not violate any provison of law or any regulation or
any provision of the Borrower's charter or by-laws and will not result in the
breach of or constitute a default under or require any consent under any
indenture, agreement or instrument to which the Borrower is a party or by which
the Borrower or any of its property may be bound or affected.
(f) After execution and delivery of this Amendment to the Banks,
the Loan Agreement will continue to constitute a legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms, except as
the enforceability of the Loan Agreement may be limited by any applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally.
(g) No Event of Default has occurred and is continuing under the
Loan Agreement as of the date hereof. Borrower, GMO and GRS are in compliance
with all the terms, conditions and provisions of the Loan Agreement, the
Subsidiary Documents, the Subsidiary Security Documents, the Subsidiary Notes
and of each of the Collateral Documents to be observed, satisfied or performed
by each of them, respectively, as of the date hereof.
6. Entire Agreement. This Amendment, together with the Loan
Agreement, as amended hereby, constitute the entire agreement of Banks and
Borrower pertaining to the subject matter hereof and supersede all prior or
contemporaneous agreements of the Banks and Borrower, whether oral or written,
other than the Loan Agreement, in connection therewith. This Amendment may be
amended or modified only in writing, executed by all of the parties. This
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 Amendment or in the
Loan Agreement as amended hereby;
20
25
(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, 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.
7. Voluntary Agreement; Acknowledgements. The Borrower represents,
warrants and agrees that the Borrower is fully aware of the terms contained in
this Amendment and has voluntarily and without coercion or duress of any kind
entered into this Amendment. The Borrower irrevocably ratifies, affirms and
acknowledges that: (i) the Borrower has not done anything to adversely affect
the validity, perfection or enforceability of the Banks' first security
interests in the Collateral; (ii) this Agreement and the Loan Agreement as
amended hereby are the valid and binding obligations of the Borrower,
enforceable in accordance with their respective terms and free from any offset,
defense, recoupment or counterclaim, in law or in equity, of any kind or
nature, except as limited by bankruptcy, insolvency or similar laws generally
affecting the enforcement of creditors' rights; (iii) the Agent and Banks have
fully performed all of their respective obligations and duties under previously
existing agreements as between the Borrower, on the one hand, and the Agent and
the Banks on the other; and (iv) all actions taken by the Agent and the Banks
prior to the date of this Agreement have been reasonable and appropriate under
the circumstances, and within the Agent and the Banks' rights.
8. Release. IN CONSIDERATION OF THE AGREEMENTS AND UNDERSTANDINGS SET
FORTH HEREIN, THE BORROWER, FOR ITSELF AND ITS SUBSIDIARIES AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, ATTORNEYS,
SUCCESSORS AND ASSIGNS, HEREBY RELEASES THE BANKS, THE AGENT, THEIR OFFICERS,
DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, ATTORNEYS, SUCCESSORS AND ASSIGNS,
FROM AND AGAINST ANY AND ALL LIABILITY, CLAIM, RIGHT OR CAUSE OF ACTION WHICH
PREVIOUSLY EXISTED OR NOW EXISTS, WHETHER KNOWN OR UNKNOWN, ARISING FROM OR IN
ANY WAY RELATED TO THE LOAN AGREEMENT. BY WAY OF EXAMPLE AND WITHOUT
LIMITATION, THE FOREGOING INCLUDES ANY CLAIMS IN ANY WAY RELATED TO ACTIONS
TAKEN OR NOT TAKEN BY THE BANKS OR THE AGENTS UNDER OR RELATING TO THE LOANS
MADE PURSUANT TO
21
26
THE LOAN AGREEMENT, THIS AMENDMENT AND THE LETTER AGREEMENT DATED JUNE 26,
1995.
[SIGNATURES START ON NEXT PAGE]
22
27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BORROWER:
GANDER MOUNTAIN, INC.
a Wisconsin corporation
By:__________________________________
Title:____________________________
BANKS:
BANK ONE, MILWAUKEE, NA, as a Bank and
as Agent
By:__________________________________
Ronald J. Carey, Vice President
LASALLE NATIONAL BANK
By:__________________________________
Kent A. Hammerstrom,
First Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By:___________________________________
Title:_____________________________
NBD BANK
By:___________________________________
Timothy G. Skillman, Vice President
23
28
HARRIS TRUST AND SAVINGS BANK
By:___________________________________
Title:_____________________________
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
herein.
GRS, Inc.
By:_____________________________
Title:_______________________
GMO, INC.
By:_____________________________
Title:_______________________
24