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AMENDMENT TO PURCHASE AGREEMENT
THIS AMENDMENT TO PURCHASE AGREEMENT, dated as of July 25, 1996, is
between GANDER MOUNTAIN, INC., ("GMI") GRS, INC., ("GRS") (GMI and GRS
collectively referred to as "Gander Mountain") and HOLIDAY SPORTS, INC.
("Holiday").
RECITALS:
A. Gander Mountain and Holiday Stationstores, Inc. have executed a
Purchase Agreement dated as of July 10, 1996 ("Purchase Agreement").
B. Holiday Stationstores, Inc. assigned its rights (but not its
obligations) under the Purchase Agreement to Holiday.
C. Gander Mountain and Holiday desire to amend the Purchase Agreement (1)
to reduce the purchase price for the Equipment, Improvements and all
intangibles from $7,500,000.00 to $7,300,000.00; and (2) to reduce the purchase
price for the Merchandise Inventory in the Stores on the Closing Date from cost
to cost less $220,000.00.
In consideration of the mutual covenants set forth in the Purchase
Agreement, this Amendment to Purchase Agreement ("Amendment") and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
1. SECTION 1.1.3. Section 1.13 shall be deleted in its entirety and
replaced with the following:
"1.1.3 All items held as inventory for resale to customers and located in
the Stores at the Closing Date excluding (a) any items excluded as nonsalable
or defective as provided in Section 8.2, (b) all items containing any
trademark, service mark or logo owned by Gander Mountain ("Gander Mountain
Private Label Inventory") that Gander Mountain and Holiday mutually agree shall
be excluded, and (c) any items that are the subject of intellectual property
litigation that Gander Mountain is a party to including, but not limited to,
trademark, copyright and patent litigation as set forth on Exhibit G; plus such
additional items of inventory owned by Gander Mountain (chosen and identified
as provided in Section 8.2) as shall be necessary to bring the aggregate "cost"
(as recorded in the books of Gander Mountain) of all the inventory purchased by
Holiday hereunder to not greater than Nine Million Two Hundred Thousand Dollars
($9,200,000.00); provided however, the Merchandise Inventory purchase price
shall be reduced by Two Hundred Twenty Thousand Dollars ($220,000.00) as set
forth in Section 2.1. All the inventory described in the foregoing sentence is
sometimes referred to herein as the "Merchandise Inventory." The Merchandise
Inventory shall be transferred to Holiday free and clear of any liens or
encumbrances."
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2. SECTION 1.2. Section 1.2 shall be deleted in its entirety and replaced
with the following:
"1.2 ASSUMPTION OF OBLIGATIONS. Subject to all the terms and
conditions of this Agreement, Gander Mountain shall assign and transfer
to Holiday all real property leases described in Exhibit J attached
hereto, all operating contracts described in Exhibits C and N attached
hereto, all permits and licenses described in Exhibit E attached hereto
and all contracts relating to the operation of the Stores' business
described in Exhibits C and N hereto and Holiday shall accept and assume
responsibility for all such obligations (collectively referred to as
"Assumed Obligations"); provided, however, Holiday shall not assume any
of the Point-of-Sale leases described in Exhibit D attached hereto ("POS
Leases"); provided, further, however, Holiday shall not assume any of the
billboard leases relating to the Stores ("Billboard Leases"). In
consideration of payment of the Purchase Price and monthly prorata
amounts payable under the POS Leases and Billboard Leases for the Stores
("Monthly Payments") from the Closing Date until the last day of the
sixth full calendar month after the Closing Date ("Removal Date"), Gander
Mountain grants Holiday the right to use the POS equipment and billboards
for the Stores until the Removal Date. If Holiday has use of the POS
equipment and billboards, Holiday shall pay the Monthly Payments.
Holiday shall pay the Monthly Payments to either Gander Mountain or
lessor, at Holiday's sole option. On or after the Removal Date, Gander
Mountain shall, upon reasonable notice to Holiday, remove the POS
equipment from the Stores and change the billboards. Holiday does not
assume any other obligations other than as explicitly assumed under this
Section 1.2."
3. SECTION 2.1. Section 2.1 shall be deleted in its entirety and replaced
with the following:
"2.1 PURCHASE PRICE. The purchase price for the Assets, all
licenses and rights granted herein, and all intangibles including, but
not limited to, goodwill and covenant not to compete ("Purchase Price")
shall be as follows and paid by Holiday to Gander Mountain as follows:
2.1.1 If the Closing Date is prior to August 15, 1996, the
following amounts shall be paid by Holiday to Gander Mountain at
the Closing via wire transfer:
(a) Merchandise Inventory
at cost less $220,000.00 $8,780,000.00 (Estimated)
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(b) Equipment, Improvements, $7,300,000.00
and all intangibles including,
but not limited to, goodwill
and covenant not to compete
(c) Provided, however, that the amount payable by Holiday to
Gander Mountain for the Merchandise Inventory shall be the actual
amount, at Gander Mountain's cost, of Merchandise Inventory in the
Stores on the Closing Date less the amount of Two Hundred Twenty
Thousand Dollars ($220,000.00) provided that such amount of
Merchandise Inventory at cost in the Stores on the Closing Date
does not exceed Nine Million Two Hundred Thousand Dollars
($9,200,000.00).
(d) Provided further, however, that such amount may be reduced
or increased by adjustments to the Purchase Price required pursuant
to the terms of this Agreement, including but not limited to
adjustments required, if any, pursuant to Sections 2.5 (recording
fees), 2.6 (prorations), 2.7 (gift certificates), 6.5 (employee
severance, if required) and 8.2 (inventory service, if required).
2.1.2 If for any reason the Closing Date is on or after August
15, 1996, the amount that Holiday shall pay to Gander Mountain at
Closing via wire transfer, not including any reductions or
increases to the Purchase Price required pursuant to the terms of
this Agreement, will be as follows:
(a) If the Closing Date is before September 15, 1996, Holiday
shall pay to Gander Mountain via wire transfer at the Closing Five
Million Three Hundred Thousand Dollars ($5,300,000.00) for the
Equipment, Improvements and all intangibles and the actual amount,
at Gander Mountain's cost, of Merchandise Inventory in the Stores
on the Closing Date less the amount of Two Hundred Twenty Thousand
Dollars ($220,000.00) provided that such amount of Merchandise
Inventory at cost in the Stores on the Closing Date does not
exceed Nine Million Two Hundrend Thousand Dollars ($9,200,000.00).
(b) If the Closing Date is on or after September 15, 1996, but
before October 15, 1996, Holiday shall pay to Gander Mountain via
wire transfer at the Closing Three Million Three Hundred Thousand
Dollars ($3,300,000.00) for the Equipment, Improvements and all
intangibles and the actual amount, at Gander Mountain's cost, of
Merchandise Inventory in the Stores on the Closing Date less the
amount of Two Hundred Twenty Thousand Dollars ($220,000.00)
provided that such
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amount of Merchandise Inventory at cost in the Stores on the
Closing Date does not exceed Nine Million Two Hundred Thousand
Dollars ($9,200,000.00).
(c) If the Closing Date is on or after October 15, 1996, but
before November 15, 1996, Holiday shall pay to Gander Mountain via
wire transfer at the Closing One Million Three Hundred Thousand
Dollars ($1,300,000.00) for the Equipment, Improvements and all
intangibles and the actual amount, at Gander Mountain's cost, of
Merchandise Inventory in the Stores on the Closing Date less the
amount of Two Hundred Twenty Thousand Dollars ($220,000.00)
provided that such amount of Merchandise Inventory at cost in the
Stores on the Closing Date does not exceed Nine Million Two Hundred
Thousand Dollars ($9,200,000.00).
(d) If the Closing Date is on or after November 15, 1996, but
before December 15, 1996, Holiday shall pay to Gander Mountain via
wire transfer at the Closing the actual amount, at Gander
Mountain's cost, of Merchandise Inventory in the Stores on the
Closing Date less the amount of Two Hundred Twenty Thousand
Dollars ($220,000.00) provided that such amount of Merchandise
Inventory at cost in the Stores on the Closing Date does not
exceed Nine Million Two Hundred Thousand Dollars ($9,200,000.00).
2.1.3 The amount of Five Hundred Thousand Dollars
($500,000.00) shall be loaned by Holiday to GRS ("Loan") at the
Closing via wire transfer. The Loan shall be at six percent (6%)
interest and payable four (4) years from the Closing Date. GMI
shall guarantee the Loan.
2.1.4 The Purchase Price shall be as allocated as set forth in
Exhibit F."
3. SECTION 2.7. Section 2.7 shall be added and state the following:
"2.7 GIFT CERTIFICATES. The Purchase Price payable by Holiday to
Gander shall be reduced by the amount of $25,000.00 for Gander Mountain
proprietary gift certificates redeemable at the Stores. Holiday shall
redeem Gander Mountain proprietary gift certificates brought to the
Stores after the Closing Date, but dated prior to the Closing Date;
provided, however, Holiday shall not be required to redeem more than
$25,000.00 of such gift certificates."
4. EXHIBIT F. Exhibit F shall be deleted in its entirety and replaced
with the Exhibit F attached to this Amendment as Attachment 1.
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5. EXHIBIT N. Exhibit N attached to this Amendment as Attachment 2 shall
be added to the Purchase Agreement.
All other terms and conditions of the Purchase Agreement shall remain in
full force and effect.
GANDER MOUNTAIN, INC. HOLIDAY SPORTS, INC.
By______________________ By___________________________________
David J. Lubar, Chairman Lynn M. Anderson, Assistant Secretary
GRS, INC.
By______________________
David J. Lubar, Chairman
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ATTACHMENT 1 TO
AMENDMENT TO PURCHASE AGREEMENT
EXHIBIT F TO
PURCHASE AGREEMENT
PURCHASE PRICE ALLOCATION
Merchandise Inventory*
at cost less $220,000.00 $ 8,780,000 (Estimated)
Equipment,
Improvements,
and all intangibles including,
but not limited to, goodwill
and covenant not to compete $ 7,300,000
-----------
TOTAL PURCHASE PRICE $16,080,000
(*Merchandise Inventory to be at Gander Mountain's cost less $220,000.00.
Merchandise Inventory at cost to be not greater than $9,200,000.)
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PURCHASE AGREEMENT
THIS AGREEMENT, dated as of July 10, 1996, is between GANDER MOUNTAIN,
INC., a Wisconsin corporation, P.O. Box 128, Highway W, Wilmot, Wisconsin 53192
("GMI") and GRS, INC., a Wisconsin corporation, and a wholly owned subsidiary
of GMI, P. O. Box 128, Highway W, Wilmot, Wisconsin 53192 ("GRS") (collectively
referred to as "Gander Mountain"; each reference herein to Gander Mountain
shall be deemed a reference to each and any of GMI and GRS) and HOLIDAY
STATIONSTORES, INC., a Minnesota corporation, 4567 West 80th Street,
Minneapolis, Minnesota 55437 ("Holiday").
RECITALS:
A. Gander Mountain owns and operates seventeen (17) retail
sporting goods stores doing business as "Gander Mountain."
B. Gander Mountain desires to sell to Holiday five (5) of its
retail sporting goods stores located in Duluth, Maple Grove and Waite Park,
Minnesota and Eau Claire and Onalaska, Wisconsin which stores are specifically
listed on Exhibit A attached hereto ("Stores").
C. Gander Mountain owns the inventories in the Stores which
includes, but is not limited to, hunting, fishing and camping equipment and
clothing. Gander Mountain also owns supplies in the Stores. Gander Mountain
owns or holds under valid leases the furniture, equipment and fixtures used in
the operation of the Stores. Gander Mountain leases the land and improvements
upon which the Stores are located.
D. Holiday desires to purchase the assets of the Stores from
Gander Mountain.
The parties are willing to do so upon the satisfaction of certain
conditions precedent, including without limitation the agreement of the parties
to execute and perform this Agreement and every other agreement referred to in
this Agreement which is to be executed by any party (together with this
Agreement, "Operative Documents").
In consideration of the mutual covenants set forth in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
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1. SALE AND PURCHASE OF ASSETS
1.1 SALE AND PURCHASE OF ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date Gander Mountain shall sell,
convey, assign, transfer and deliver to Holiday, and Holiday shall purchase,
accept and assume possession of the following property (collectively referred
to as "Assets"):
1.1.1 All Gander Mountain's right and title to and
interest in the leases and the real property identified on Exhibit B
attached hereto ("Leased Properties").
1.1.2 All appurtenances or fixtures owned by Gander
Mountain and located on the Leased Properties; provided, however, that
the foregoing shall be subject to all terms and conditions of the
lease agreements pursuant to which Gander Mountain leases its interest
therein (collectively referred to as "Improvements").
1.1.3 All items held as inventory for resale to customers
and located in the Stores at the Closing Date excluding (a) any items
excluded as nonsalable or defective as provided in Section 8.2, (b)
all items containing any trademark, service mark or logo owned by
Gander Mountain ("Gander Mountain Private Label Inventory") that
Gander Mountain and Holiday mutually agree shall be excluded, and (c)
any items that are the subject of intellectual property litigation
that Gander Mountain is a party to including, but not limited to,
trademark, copyright and patent litigation as set forth on Exhibit G;
plus such additional items of inventory owned by Gander Mountain
(chosen and identified as provided in Section 8.2) as shall be
necessary to bring the aggregate "cost" (as recorded in the books of
Gander Mountain) of all the inventory purchased by Holiday hereunder
to at least Nine Million Dollars ($9,000,000.00) and not greater than
Nine Million Two Hundred Thousand Dollars ($9,200,000.00). All the
inventory described in the foregoing sentence is sometimes referred to
herein as the "Merchandise Inventory." The Merchandise Inventory
shall be transferred to Holiday free and clear of any liens or
encumbrances.
1.1.4 All supplies located in the Stores at the Closing
Date ("Supplies Inventory"). The Supplies Inventory shall be
transferred to Holiday free and clear of any liens or encumbrances.
1.1.5 All Gander Mountain's right, title and interest in
all equipment, machines, materials, furniture and other personal
property used in connection with the Stores' business and located on
the Leased Properties on the Closing Date, excluding the Merchandise
Inventory and Supplies Inventory; provided, however, that with respect
to all such personal property which is leased by Gander Mountain, the
foregoing shall be subject to all terms and conditions of the lease
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agreement(s) pursuant to which Gander Mountain leases its interests
therein (collectively referred to as "Equipment").
1.2 ASSUMPTION OF OBLIGATIONS. Subject to all the terms and
conditions of this Agreement, Gander Mountain shall assign and transfer to
Holiday all real property leases described in Exhibit J attached hereto, all
operating contracts described in Exhibit C attached hereto, all permits and
licenses described in Exhibit E attached hereto and all contracts relating to
the operation of the Stores' business described in Exhibit C hereto and Holiday
shall accept and assume responsibility for all such obligations (collectively
referred to as "Assumed Obligations"); provided, however, Holiday shall not
assume any of the Point-of-Sale leases described in Exhibit D attached hereto
("POS Leases"). In consideration of payment of the Purchase Price and monthly
prorata amounts payable under the POS Leases for the Stores ("Monthly
Payments") from the Closing Date until the last day of the sixth full calendar
month after the Closing Date ("POS Removal Date"), Gander Mountain grants
Holiday the right to use the POS equipment for the Stores until the POS Removal
Date. Holiday shall pay the Monthly Payments to either Gander Mountain or
lessor, at Holiday's sole option. On or after the POS Removal Date, Gander
Mountain shall, upon reasonable notice to Holiday, remove the POS equipment
from the Stores. Holiday does not assume any other obligations other than as
explicitly assumed under this Section 1.2
1.3 PERMITS AND LICENSES. Holiday hereby acknowledges that
notwithstanding anything herein to the contrary:
1.3.1 Gander Mountain shall not assign, convey or
otherwise transfer to Holiday any permits and licenses which are not
transferable, whether by their own terms or pursuant to applicable
legal requirements; and
1.3.2 Holiday shall be solely responsible for obtaining,
and paying all costs, in obtaining replacements for such permits and
licenses in Holiday's name; provided that Gander Mountain shall
cooperate with Holiday in Holiday's efforts to obtain such permits and
licenses.
At Closing, Gander Mountain agrees to assign, convey and transfer to
Holiday all permits and licenses which are transferrable, which permits and
licenses are listed on Exhibit E.
2. PURCHASE PRICE
2.1 PURCHASE PRICE. The purchase price for the Assets, all
licenses and rights granted herein, and all intangibles including, but not
limited to, goodwill and covenant not to compete ("Purchase Price") shall be as
follows and paid by Holiday to Gander Mountain as follows:
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2.1.1 If the Closing Date is prior to August 15, 1996,
the following amounts shall be paid by Holiday to Gander Mountain at
the Closing via wire transfer:
(a) Merchandise Inventory $9,000,000.00
(b) Equipment, Improvements, $7,500,000.00
and all intangibles including,
but not limited to, goodwill
and covenant not to compete
(c) Provided, however, that the amount payable by
Holiday to Gander Mountain for the Merchandise Inventory may
be increased from Nine Million Dollars ($9,000,000.00) to the
actual amount, at Gander Mountain's cost, of Merchandise
Inventory in the Stores on the Closing Date provided that such
amount does not exceed Nine Million Two Hundred Thousand
Dollars ($9,200,000.00).
(d) Provided further, however, that such amount
may be reduced or increased by adjustments to the Purchase
Price required pursuant to the terms of this Agreement,
including but not limited to adjustments required, if any,
pursuant to Sections 2.5 (recording fees), 2.6 (prorations),
6.5 (employee severance, if required) and 8.2 (inventory
service, if required).
2.1.2 If for any reason the Closing Date is on or after
August 15, 1996, the amount that Holiday shall pay to Gander Mountain
at Closing via wire transfer, not including any reductions or
increases to the Purchase Price required pursuant to the terms of this
Agreement, will be as follows:
(a) If the Closing Date is before September 15,
1996, Holiday shall pay to Gander Mountain Fourteen Million
Five Hundred Thousand Dollars ($14,500,000.00) via wire
transfer at the Closing.
(b) If the Closing Date is on or after September
15, 1996, but before October 15, 1996, Holiday shall pay to
Gander Mountain Twelve Million Five Hundred Thousand Dollars
($12,500,000.00) via wire transfer at the Closing.
(c) If the Closing Date is on or after October
15, 1996, but before November 15, 1996, Holiday shall pay to
Gander Mountain Ten Million Five Hundred Thousand Dollars
($10,500,000.00) via wire transfer at the Closing.
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(d) If the Closing Date is on or after November
15, 1996, but before December 15, 1996, Holiday shall pay to
Gander Mountain Nine Million Dollars ($9,000,000.00) via wire
transfer at the Closing.
2.1.3 The reductions in payment from Holiday to Gander
Mountain referred to in Sections 2.1.2 (a) through 2.1.2 (d) shall be
reduced from the amount of the Purchase Price which is allocated to
Equipment, Improvements, and all intangibles as set forth in Section
2.1.1 and on Exhibit F.
2.1.4 The amount of Five Hundred Thousand Dollars
($500,000.00) shall be loaned by Holiday to GRS ("Loan") at the
Closing via wire transfer. The Loan shall be at six percent (6%)
interest and payable four (4) years from the Closing Date. GMI shall
guarantee the Loan.
2.1.5 The Purchase Price shall be as allocated as set
forth in Exhibit F.
2.2 PRICE FOR SUPPLIES INVENTORY. In addition to the Purchase
Price, Holiday shall pay to Gander Mountain at the Closing via wire transfer an
amount equal to the cost (as recorded on the books of Gander Mountain) of the
Supplies Inventory on the Closing Date.
2.3 HART-SCOTT-RODINO FILING FEE. Holiday shall pay the filing
fee of $45,000.00 for the Hart-Scott-Rodino filing.
2.4 PAYMENT FOR TITLE COMMITMENTS; SURVEYS. Holiday shall be
responsible for the cost of title insurance commitments and surveys ordered by
Holiday.
2.5 RECORDING FEES. Holiday shall pay all recording fees payable
as a result of the public recordation of real estate documents executed and
delivered to Holiday pursuant to the terms of this Agreement. Gander Mountain
shall pay all recording fees payable as a result of any releases of liens or
other encumbrances required to be obtained by Gander Mountain pursuant to the
terms of this Agreement.
2.6 PRORATIONS. All real and personal property taxes and
assessments for prior years for the Stores which are unpaid at the time of the
Closing shall be paid by Gander Mountain, as is applicable. The current real
and personal property taxes and assessments assessed for the calendar year in
which the Closing takes place shall be prorated between Holiday and Gander
Mountain, as is applicable, and adjusted on the Closing Date on a calendar year
basis. The parties shall prorate and allow Gander Mountain, as is applicable,
credit for any insurance, utilities and/or licenses which will be transferred
to Holiday and which have been prepaid by Gander Mountain.
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3. REPRESENTATIONS AND WARRANTIES OF GANDER MOUNTAIN
Gander Mountain makes the following representations and warranties to
Holiday:
3.1 CORPORATE STATUS AND AUTHORITY. GMI and GRS are corporations
duly incorporated and validly existing under the laws of the State of Wisconsin
and each has filed its most current required annual report. GMI and GRS have
all requisite corporate power and authority to lease the Leased Properties and
to carry on the Stores' business as presently conducted. GMI and GRS have all
requisite corporate power and authority to execute and deliver this Agreement
and the other Operative Documents and to perform their obligations hereunder
and thereunder, and the execution, delivery and performance of this Agreement
and the Operative Documents have been duly authorized by all necessary
corporate action on the part of GMI and GRS.
3.2 ENFORCEABILITY. This Agreement does, and each of the other
Operative Documents when executed and delivered shall, constitute a legal,
valid and binding obligation of GMI and GRS, enforceable in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other similar laws and judicial decisions of general applicability relating to
or affecting creditors' rights and to general principles of equity.
3.3 QUALIFICATION. GRS is and on the Closing Date will be, duly
qualified to do business and in good standing in the State of Minnesota.
3.4 GOVERNMENTAL CONSENTS. Except as contemplated in Section
5.2.1, no consent, waiver, approval or authorization of, or designation,
declaration or filing with, any governmental authority is or has been required
on the part of GMI and GRS in connection with the execution and delivery of
this Agreement or with the consummation of the transaction contemplated hereby.
3.5 INVENTORY; EQUIPMENT. The Merchandise Inventory, Supplies
Inventory and Gander Mountain's entire interest in the Equipment will be
transferred by GRS on the Closing Date free and clear of any liens, security
interests and encumbrances. Taken as a whole, the Equipment will, as of the
Closing Date, be in proper working order, normal wear and tear excepted, and
sufficient to the operation of the Stores. Gander Mountain will have Nine
Million Dollars ($9,000,000.00) of Merchandise Inventory in the Stores on the
Closing Date.
3.6 NO BREACH, ETC. The execution, delivery and performance of
this Agreement and the other Operative Documents by GMI and GRS and the
consummation by GMI and GRS of the transactions contemplated hereby and thereby
shall not result in:
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3.6.1 Any conflict with or breach or violation of or
default under the articles of incorporation or bylaws of GMI and GRS;
and
3.6.2 Except for any consents required under the
contracts or leases to be assigned hereunder, any conflict with or
breach or violation of or default under, or result in the acceleration
of, or entitle any person to accelerate (whether after the giving of
notice or lapse of time or both), any obligation under any contract or
applicable legal requirements.
3.7 COMPLIANCE; PERMITS; UTILITIES; TAXES; PENDING CONDEMNATIONS.
Each Leased Property and the Stores' business are in compliance in all material
respects with all applicable legal requirements and no written notice of any
violation of applicable legal requirements has been received from any
governmental agency and Gander Mountain has all rights of ingress and egress
necessary to each Leased Property and the Stores' business. Before Closing,
Gander Mountain shall provide Holiday with written notice of any such
noncompliance with the legal requirements or other applicable legal
restrictions set forth in this Section:
3.7.1 No written notice of any default under, or
violation of, any permit, restrictive covenant, easement or utility
agreement has been received by Gander Mountain. Before Closing,
Gander Mountain shall provide Holiday with a copy of all written
notices of any default under, or violation of, any operating
agreement, Assumed Obligation, permit, restrictive easement, easement
or utility agreement.
3.7.2 Gander Mountain is not in default in payment of
gas, electric and telephones for the Stores.
3.7.3 Gander Mountain is not in default in payment of any
federal, state or local taxes related to the Stores, including, but
not limited to, sales and use, payroll, unemployment or workers'
compensation. Gander Mountain has either prepaid such taxes related
to the Stores or has a sufficient reserve or escrow to pay such taxes
related to the Stores.
3.7.4 To Gander Mountain's knowledge, no condemnation
action is pending or threatened against any Leased Property.
3.7.5 To Gander Mountain's knowledge, no hazardous
materials are present on, in or under the Leased Properties or Stores
and, to Gander Mountain's knowledge, no hazardous materials have been
present on, in or under the Leased Properties or Stores; provided,
however, that Gander Mountain maintains in inventory in the ordinary
course of business certain materials deemed to be "hazardous,"
including black powder and certain substances used in gunsmithing.
There are no underground or aboveground storage tanks on the Leased
Properties.
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3.8 LITIGATION. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of Gander Mountain,
threatened by any person before any court, governmental department, commission,
board, agency or authority against Gander Mountain that:
3.8.1 Has or would have, if adversely determined, an
effect on a Leased Property; or
3.8.2 Challenges or may challenge the validity of this
Agreement or any of the Operative Documents or seeks to enjoin or
otherwise restrain the transaction contemplated herein or materially
and adversely affects Gander Mountain's ability to perform its
obligations hereunder and under the Operative Documents. All lawsuits
and notices of governmental investigations with respect to any of the
Assets or the Stores' business or Gander Mountain's business are
listed on Exhibit G attached hereto.
3.9 DEFAULT UNDER ASSUMED OBLIGATIONS. Gander Mountain has
delivered to Holiday true, complete and correct copies of the Assumed
Obligations listed on Exhibits B, C and D and there are no material oral
agreements or amendments with respect thereto and Gander Mountain has no
knowledge of default by any other parties. Gander Mountain is not in default
under any such contract which is material to the operation of any Store, nor
has any event occurred which, with notice or lapse of time or both, would
constitute a default by Gander Mountain under any such Assumed Obligation.
3.10 COLLECTIVE BARGAINING AGREEMENTS. There are no collective
bargaining agreements applicable to Gander Mountain's employees. Gander
Mountain has no knowledge of union organizing efforts at the Stores.
3.11 CORPORATE OPERATION. All of the Stores are operated by GRS.
3.12 BROKERS. Gander Mountain has authorized a broker, Smith
Barney, Inc., to act on its behalf with respect to the transaction contemplated
by this Agreement, and any brokers' or agents' fees or commissions incurred by
Gander Mountain with respect thereto shall be paid solely by Gander Mountain.
No other broker, finder or agent will be entitled to a fee or commission with
respect to this Agreement.
3.13 ENVIRONMENTAL LAWS. To Gander Mountain's knowledge, the
Leased Properties are in compliance with all environmental laws at each Leased
Property.
3.14 NO AGREEMENTS. Gander Mountain represents that no lease,
contract for sale, option or right of first refusal with respect to any of the
Assets shall exist at the date of this Agreement or at the time of the Closing.
Gander Mountain otherwise makes no other warranty or representation with
respect to the Assets, it being the understanding
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of the parties that the Assets shall be leased or transferred to Holiday by
Gander Mountain on an "AS IS, WHERE IS" basis.
3.15 FINANCIAL INFORMATION ACCURACY. Gander Mountain represents
that all financial and related information provided to Holiday prior to
execution of this Agreement and listed on Exhibit L was prepared in accordance
with the books and records of Gander Mountain; presents fairly the financial
condition of Gander Mountain at the balance sheet dates and the sales and
results of its operations and cash flows for the periods therein specified in
all material respects; and has, in all material respects, been prepared in
accordance with generally accepted accounting principles applied on a basis
consistent with prior accounting periods. If the Closing Date is on or after
August 15, 1996, then Gander Mountain represents that since July 1, 1996, there
has been no unexpected material adverse change in the sales trend for these
stores compared to the month-to-date changes reflected on the retail sales and
margin report listed on Exhibit L.
3.16 TAX RETURNS AND AUDITS. All required federal, state and local
tax returns or appropriate extension requests of Gander Mountain have been
filed, and all federal, state and local taxes required to be paid with respect
to such returns have been paid or due provision for the payment thereof has
been made. Gander Mountain is not delinquent in the payment of any such tax or
in the payment of any assessment or governmental charge. Except for matters
which have been closed prior to the date of this Agreement or as to which all
claimed deficiencies have been paid in full:
3.16.1 Gander Mountain has not received notice of any tax
deficiency proposed or assessed against it;
3.16.2 Gander Mountain has not executed any waiver of any
statute of limitations on the assessment or collection of any tax,
except for federal returns for 1987-1992 and State of Wisconsin
returns for 1986-1990; and
3.16.3 None of Gander Mountain's tax returns have been
audited by governmental authorities in a manner to bring such audits
to Gander Mountain's attention. Gander Mountain does not have any tax
liabilities except those incurred in the ordinary course of business
since July 1, 1995.
3.17 DEFINITION OF "KNOWLEDGE". The "knowledge" of Gander Mountain
for purposes of the representations and warranties in Sections 3.7.4, 3.7.5,
3.10 and 3.13 shall mean the actual knowledge of either David Lubar, Chairman,
or Ralph Freitag, Chief Executive Officer, of Gander Mountain, without specific
investigation.
3.18 GANDER MOUNTAIN CATALOG NAME. In partial consideration of
payment of the Purchase Price, Gander Mountain will not use or license the use
of the name "Gander Mountain" or any related trademarks, trade names, service
marks and registrations on mail order catalogs or other direct marketing
techniques to any customer
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within the area comprising a fifty (50) mile radius from each Store and the
Burger Brothers store in Rochester, Minnesota for a period commencing on the
Closing Date and continuing until May 16, 2003. Holiday shall be entitled, as
a matter of right, in any court of competent jurisdiction, to a mandatory
injunction restraining and enjoining Gander Mountain, pending litigation, as
well as upon final determination thereof, from attempting to violate or
violating this Section. The right of Holiday to such injunctive relief shall
be cumulative with and in addition to any other rights, remedies or actions
which Holiday may have against Gander Mountain.
3.19 EMPLOYEE BENEFIT PLANS. Gander Mountain has certain benefit
plans for its Employees ("Benefit Plans"). Holiday does not assume any of the
Benefits Plans or any obligations under these Benefit Plans.
3.20 EMPLOYEES. Gander Mountain currently operates the Stores and
employs employees ("Employees") in the ordinary course of the Stores'
operation. Gander Mountain is not in default in any payment to any Employee,
specifically including but not limited to salary and bonuses, if any.
4. REPRESENTATIONS AND WARRANTIES OF HOLIDAY
Holiday makes the following representations and warranties to Gander
Mountain:
4.1 CORPORATE STATUS AND AUTHORITY. Holiday is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Minnesota. Holiday has all requisite power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and as proposed to be conducted. Holiday has all requisite power and authority
to execute and deliver this Agreement and the other Operative Documents and to
perform its obligations hereunder and thereunder, and the execution, delivery
and performance of this Agreement and the Operative Documents have been duly
authorized by all necessary action on the part of Holiday.
4.2 ENFORCEABILITY. This Agreement does, and each of the other
Operative Documents when executed and delivered shall, constitute a legal,
valid and binding obligation of Holiday enforceable in accordance with its
terms subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other similar laws and judicial decisions of general applicability relating to
or affecting creditors' rights and to general principles of equity.
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4.3 QUALIFICATION. Holiday and/or a wholly-owned subsidiary of
it, will on the Closing Date be, duly qualified to do business and authorized
to do business in the State of Wisconsin.
4.4 GOVERNMENTAL CONSENTS. Except as contemplated in Section
5.2.1, no consent, waiver, approval or authorization of, or designation,
declaration or filing with, any governmental authority is or has been required
on the part of Holiday in connection with the execution and delivery of this
Agreement or by Holiday in connection with the consummation of the transaction
contemplated hereby.
4.5 NO BREACH, ETC. The execution, delivery and performance of
this Agreement and the other Operative Documents by Holiday and the
consummation by Holiday of the transactions contemplated hereby and thereby
will not result in:
4.5.1 Any conflict with or breach or violation of or
default under the articles of incorporation or bylaws of
Holiday; and
4.5.2 To Holiday's knowledge, any conflict with or breach
or violation of or default under any obligation under any agreement to
which Holiday is a party or any applicable legal requirement, which
conflict, breach, violation, default or acceleration would limit
Holiday's ability to perform its obligations hereunder and under the
other Operative Documents.
4.6 LITIGATION. There is no claim, action, suit, proceeding or
governmental investigation pending or, to the knowledge of Holiday, threatened
by any person before any court, governmental department, commission, board,
agency or authority against Holiday that challenges or may challenge the
validity of this Agreement or any of the Operative Documents or seeks to enjoin
or otherwise restrain the transaction contemplated herein or materially and
adversely affects Holiday's ability to perform its obligations hereunder and
under the Operative Documents.
4.7 BROKERS. All negotiations relating to this Agreement and the
transaction contemplated hereby have been conducted without the intervention of
any person acting on behalf of Holiday in such a manner as to give rise to any
valid claim against Gander Mountain or Holiday for any brokers' or finders'
commission, fee or similar compensation.
4.8 FUNDING. Holiday has access to the cash necessary to complete
the transaction contemplated by this Agreement.
5. CONDITIONS PRECEDENT
5.1 PREAMBLE. The respective obligations of Gander Mountain and
Holiday set forth herein regarding the consummation of the transaction
contemplated by this Agreement shall be subject to the fulfillment, on or
before the Closing Date, in the case
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of Gander Mountain, of the conditions set forth in Section 5.3, and in the case
of Holiday of the conditions set forth in Section 5.4. Any of the following
conditions may be waived in whole or in part by the party whose obligation to
perform at the Closing is subject to such condition. Such waiver of the breach
of a representation or warranty (but not a covenant) shall be deemed to
constitute a waiver of any liability the breaching party hereto may have
hereunder with respect to such breach, provided that the breaching party shall
have disclosed the inaccuracy of the representation or warranty to the other
party prior to the Closing.
5.2 MUTUAL CONDITIONS TO OBLIGATIONS OF GANDER MOUNTAIN AND
HOLIDAY. The following are conditions precedent to obligations of both Gander
Mountain and Holiday under this Agreement:
5.2.1 HART-SCOTT-RODINO COMPLIANCE. On the Closing Date,
to the extent required by law, all premerger notification filings
required under the Hart-Scott-Rodino Act have been made, and the
thirty (30) day waiting period required thereby shall have been the
subject of early termination or shall have expired without a request
from any appropriate governmental agency for additional information
or, if additional information has been requested, the extended waiting
period shall have expired and no party shall have received any notice
from the Federal Trade Commission ("FTC") or the Department of Justice
("DOJ") that the transaction contemplated by this Agreement violates
Section 5 of the Federal Trade Commission Act or Section 7 of the
Clayton Act.
5.2.2 ABSENCE OF LITIGATION. No order, stay, judgment or
decree (excluding any of the same relating to any action, suit or
proceeding instituted by Gander Mountain or Holiday against another
party hereto) shall have been issued and be in effect by any court
restraining or prohibiting the Closing and no legitimate action, suit
or proceeding, reasonably cognizable under the then-current facts,
(excluding any of the same instituted by Gander Mountain or Holiday
against another party hereto) shall be pending (or threatened by any
governmental or regulatory body) (a) seeking to restrain or prohibit
(or questioning the validity or legality of) the consummation of the
transaction contemplated by this Agreement or seeking material damages
in connection therewith; or (b) regarding the ownership, operation or
use of any of the Assets or the Stores' business; provided that before
any determination is made to the effect that this condition has not
been satisfied, Gander Mountain and Holiday shall use reasonable
efforts and take such other actions as may be reasonably necessary,
each at its own expense, to have such order, stay, judgment or decree
lifted or dismissed and any such action, suit or proceeding dismissed
or terminated.
5.2.3 BULK SALES. On the Closing Date, to the extent
required by law, all bulk sales notices required to be given under
state law(s) have been made and the waiting period(s) required thereby
shall have expired.
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5.2.4 ASSETS. On the Closing Date, all of the Assets are
available for sale and have not been destroyed by casualty, taken by
condemnation or in any way diminished or impaired.
5.3 CONDITIONS TO OBLIGATIONS OF GANDER MOUNTAIN. The following
are conditions precedent to the obligations of Gander Mountain under this
Agreement:
5.3.1 The representations and warranties of Holiday in
Section 4 shall be true and correct in all material respects at and as
of the Closing with the same effect as though made at and as of the
Closing. Holiday shall have duly performed and complied in all
material respects with all agreements contained herein required to be
performed or complied with by Holiday at or before the Closing.
5.3.2 Holiday shall have taken all of the actions
required by this Agreement to be taken by it at or prior to
the Closing.
5.4 CONDITIONS TO OBLIGATIONS OF HOLIDAY. The following are
conditions precedent to the obligations of Holiday under this Agreement:
5.4.1 The representations and warranties of Gander
Mountain in Section 3 shall be true and correct in all material
respects when made and shall be true and correct in all material
respects at and as of the Closing with the same effect as though made
at and as of the Closing. Gander Mountain shall have duly performed
and complied in all material respect with all agreements contained
herein required to be performed or complied with by Gander Mountain at
or before the Closing.
5.4.2 Gander Mountain shall have taken all of the actions
required by this Agreement to be taken by Gander Mountain at or prior
to the Closing.
5.4.3 Each lessor of POS Leases and of the Leased
Properties shall have executed a consent to Gander Mountain's
assignment of Gander Mountain's leasehold interest in the Leased
Properties and in such leased Equipment and executed an Estoppel
Certificate relating thereto. Each Lessor of the Leased Properties
shall have executed an amendment to the lease (a) modifying any
restrictive covenant that would potentially interfere with Holiday's
gasoline/convenience store business; (b) substituting a net worth
statement in excess of a certain amount for the tenant's financial
statement; and (c) substituting Holiday as the tenant.
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6. OBLIGATIONS OF GANDER MOUNTAIN
6.1 CONDUCT OF BUSINESS. During the time from the date of this
Agreement until Closing ("Interim Period"), if any, Gander Mountain shall,
except to the extent Holiday shall have given its prior written consent to do
otherwise:
6.1.1 Carry on the Stores' business substantially in the
same manner in which it is presently being conducted;
6.1.2 Not sell, lease or otherwise transfer or encumber
title to any of the Assets other than the sale of inventory in the
ordinary course of the Stores' business;
6.1.3 Use reasonable efforts to obtain the transfer of
all transferable Permits and any consent of other parties to Holiday's
assumption of the contracts described in Sections 1.2 and 1.3 and of
the leases of the leased personal property and the Leased Properties
which consents are required in connection with the conveyance and
transfer of the Assets to Holiday; and
6.1.4 Maintain the Assets in substantially the same
condition as on the date hereof, ordinary wear and tear
excepted.
6.2 ACCESS AND INFORMATION. During the Interim Period, Holiday
may reasonably request and Gander Mountain shall give, or cause to be given to
Holiday and its employees, agents and representatives, reasonable access,
during normal business hours and at Holiday's cost and expense, to building
plans, surveys, as-built drawings, diagrams, wiring diagrams, warranties and
environmental site assessments, pertaining to the Leased Properties or the
Stores' business. To the extent legally permissible, on or after the Closing
Date, Gander Mountain shall also give to Holiday the names and addresses of all
Gander Mountain credit card customers within the area comprising a fifty (50)
mile radius from each Store. Gander Mountain shall permit Holiday, at
Holiday's cost and expense, to make copies of such records (except as
prohibited by any agreement relating to the Stores' business) contained in the
records of Gander Mountain to the extent access thereto is permitted above.
During the Interim Period, after giving Gander Mountain reasonable prior
written notice, Holiday shall have the right, at its expense, to enter the
Leased Premises at any reasonable time during normal business hours to inspect
the Assets. Holiday shall conduct such activities so as to minimize any
interference with the Stores' business.
6.3 HART-SCOTT-RODINO. If required by law, within three (3)
business days from the date hereof, Gander Mountain shall submit to the FTC and
the DOJ, all of its filings required to commence the "waiting period" under the
Hart-Scott-Rodino Act in connection with the transaction contemplated by this
Agreement. If a request for additional information is made of Gander Mountain
pursuant to the Hart-Scott- Rodino Act, Gander
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Mountain shall use reasonable efforts to cause compliance with such request as
soon as practicable after receipt of such request. Holiday shall pay the
filing fee associated with actions required to comply with the
Hart-Scott-Rodino Act.
6.4 SALES AND USE TAXES DUE PRIOR TO THE EFFECTIVE TIME. Gander
Mountain agrees to timely prepare and timely file all sales and use tax returns
with respect to transactions occurring on or before the Closing in connection
with the Stores' business and timely pay all sales and use taxes applicable to
the sales reported on such tax returns. If at any time following the Closing
Date there shall be assessed against Holiday any sales or use taxes
attributable to the transactions occurring in connection with the Stores'
business prior to the Closing Date, then promptly after its receipt of notice
of such assessment, but in no event less than ten (10) days prior to the
expiration of the appeal or protest period, Holiday shall notify Gander
Mountain of same, and Gander Mountain, unless Gander Mountain contests the
assessment, shall within ten (10) days after receipt of such notification pay
to Holiday an amount equal to such assessed sales or use taxes and any
penalties and interest applicable thereto. Holiday shall be obligated to apply
such amounts paid by Gander Mountain toward the payment of such assessed sales
and use taxes and any penalties and interest applicable thereto. Nothing
herein shall prevent Gander Mountain from contesting in good faith any such
assessments of such sales or use taxes.
6.5 TERMINATION OF EMPLOYEES. On or before the Closing Date,
Gander Mountain agrees it will notify all of its Employees at the Stores that
their employment is terminated, to be effective as of the Closing Date.
Holiday intends, but (except as otherwise specifically provided herein) is not
required, to interview the Employees at the Stores and extend offers of
employment to those individuals that Holiday deems acceptable according to
Holiday's normal employment standards; provided, however, Holiday shall hire
all of the Employees as of the Closing Date of the Eau Claire, Wisconsin and
Onalaska, Wisconsin Stores, and Holiday shall make an offer of employment to
all of the Employees of the Duluth, Maple Grove and Waite Park, Minnesota
Stores who submit an application for employment to Holiday prior to the Closing
Date. Holiday may interview prior to the Closing Date any existing Employee of
the Stores for purposes of employment by Holiday. Holiday may hire any
existing Employees of the Stores effective as of 12:01 a.m. CST on the Closing
Date. Gander Mountain shall not offer to transfer any Employee to any other
store owned or controlled by Gander Mountain unless and until Holiday declines
to extend an offer of employment to such person. Any person employed by
Holiday shall be an "employee-at-will" and nothing herein is intended to
obligate Holiday to extend an offer of employment or to employ any Employee for
any length of time. For any Gander Mountain Employee hired by Holiday, the
original date of hire shall be honored by Holiday for all purposes except for
participation in Holiday's profit sharing plan which includes the 401(k) plan.
All Employees hired by Holiday shall be entitled to all vacation time accrued
while working for Gander Mountain. If otherwise eligible under the terms of
Holiday's health insurance plan, all Employees hired will be covered by such
health insurance as of the date of hire
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by Holiday; all "pre-existing conditions" limitations, as that term is defined
in the plan, will not be waived. For any Gander Mountain Employee who submits
an application to Holiday but is not extended an offer of employment by Holiday
on or before the Closing Date, Holiday shall pay to Gander Mountain at Closing
an amount equal to the severance pay, vacation pay, personal pay and
medical/dental pay of all Employees not extended offers of employment by
Holiday. Holiday shall have no obligation for any severance pay, vacation pay,
sick pay, personal pay, medical/dental pay or any other pay for any Gander
Mountain Employee who does not submit an application for employment by Holiday
who does not accept such offer on or before the Closing Date.
7. OBLIGATIONS OF HOLIDAY
7.1 HART-SCOTT-RODINO. If required by law, within three (3)
business days from the date hereof, Holiday shall submit to the FTC and the
DOJ, all filings for Holiday required to commence the "waiting period" under
the Hart-Scott-Rodino Act in connection with the transaction contemplated by
this Agreement. If a request for additional information is made to Holiday
pursuant to the Hart-Scott-Rodino Act, Holiday shall use reasonable efforts to
comply with such request as soon as practicable after receipt of such request.
Holiday shall pay the filing fee associated with actions required to comply
with the Hart-Scott-Rodino Act.
8. CLOSING
8.1 CLOSING DATE. The closing ("Closing") shall take place at a
location to be designated by Holiday on July 23, 1996 ("Closing Date");
provided, however, that the Closing Date may be postponed to a later business
day by Gander Mountain or Holiday as is reasonably necessary in order for such
party to comply with the provisions of Sections 5.2.1, 5.2.3, 5.4.3 and 6.1.3
hereof, which postponement is subject to the provisions of Section 10.1.2.
Time is of the essence for the Closing Date. All documents shall be dated to
be effective as of 12:01 a.m. CST on the Closing Date. Any amounts to be paid
by either party shall be transferred via wire transfer before 3:00 p.m. CST on
the Closing Date. Failure to close on the Closing Date shall result in
adjustments to the Purchase Price as set forth in Section 2.1.3.
8.2 INVENTORY; PHYSICAL INVENTORY. On or prior to the Closing
Date, Holiday shall designate whether either a physical inventory of the
Merchandise Inventory and Supplies Inventory shall be conducted by an outside
inventory service or whether another inventory method shall be used ("Physical
Inventory"). If Holiday designates a physical inventory be conducted and the
Closing Date is prior to August 15, 1996, Holiday shall pay all costs incurred
of an outside inventory service with respect to conducting a physical
inventory. If Holiday designates a physical inventory be conducted and the
Closing Date is on or after August 15, 1996, Gander Mountain and Holiday shall
each pay one-half of all costs incurred of an outside inventory service with
respect to conducting a physical inventory.
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8.2.1 Gander Mountain shall immediately provide to
Holiday a list of all Merchandise Inventory in the Stores and a list
of all other available inventory owned by Gander Mountain for Holiday
to select from for shipment to the Stores prior to Closing to bring
the aggregate "cost" (as recorded in the books of Gander Mountain) of
the Merchandise Inventory to Nine Million Dollars ($9,000,000.00).
Holiday shall, as soon as reasonably practical after the date hereof
and prior to the Closing Date, provide a list to Gander Mountain of
the inventory it has selected and identified to be shipped to the
Stores prior to the Closing and Gander Mountain agrees to do so, at
its cost and expense.
8.2.2 Subject to Sections 8.2.3 and 8.2.4, Holiday shall,
prior to Closing, make the sole determination as to (a) any nonsalable
items; (b) any defective items; and (c) any items related to
intellectual property litigation that Gander Mountain is a party to
including, but not limited to, trademark, copyright and patent
litigation.
8.2.3 "Defective" means the Merchandise Inventory item
does not perform the function it is intended to perform.
8.2.4 "Nonsalable" means the Merchandise Inventory item
is outdated or out-of-code or other similar situation rendering it
nonsalable. Nonsalable does not mean nonseasonal items. Nonsalable
Merchandise Inventory excluded from the Merchandise Inventory shall
not exceed a total of $50,000.00.
8.2.5 Gander Mountain and Holiday shall cooperate on the
Gander Mountain Private Label Inventory.
8.2.6 Upon completion of the Physical Inventory, Gander
Mountain and Holiday shall enter into a written certification of the
Physical Inventory results and Merchandise Inventory and Supplies
Inventory purchase price for each Store ("Certification").
8.3 CLOSING. Among other terms and conditions, the obligations of
Gander Mountain and Holiday to consummate the transaction contemplated by this
Agreement shall be conditioned upon the mutual agreement of all parties as to
the form of each of the Operative Documents referenced in this Section 8.3. At
the Closing, Gander Mountain and/or Holiday shall execute and deliver the
following:
8.3.1 Bill of Sale - Inventory (Exhibit H-1);
8.3.2 Bill of Sale - Equipment (Exhibit H-2);
8.3.3 Promissory Note (Exhibit I);
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8.3.4 Real Estate Lease Assignment and Assumption
Agreement (Exhibit J);
8.3.5 Estoppel Certificates as required by Section 5.4.3.
8.3.6 Amendments to Real Estate Leases as required by
Section 5.4.3;
8.3.7 Resale Exemption Certificates;
8.3.8 Corporate resolutions of GMI, GRS and Holiday, in
form and substance mutually satisfactory, authorizing the action to be
taken by each party pursuant to this Agreement and the Operative
Documents;
8.3.9 Such documents required to complete the transfer of
the Alcohol, Tobacco and Firearms ("ATF") licenses; and
8.3.10 Such other documents as GMI, GRS and/or Holiday
and/or First American Title Company may reasonably request to complete
the transaction contemplated by this Agreement.
Each party shall pay for those documents required to be delivered or
escrowed by it and each party shall pay its own professional fees and expenses.
9. OTHER OBLIGATIONS
9.1 GRANT OF RETAIL LICENSE. In partial consideration of the
payment of the Purchase Price, Gander Mountain hereby grants to Holiday the
exclusive right to reproduce, display, broadcast, publish and otherwise use the
trade names, trademarks, service marks, trade dress and other signage, decor,
logos and designs currently owned by Gander Mountain, including, without
limitation, the mark "Gander Mountain" and those listed on Exhibit M attached
hereto and any and all registrations therefore (all of the foregoing
hereinafter collectively referred to as the "Marks"), on and in connection with
the Stores and the retail sale of any of the Assets and any advertising,
promotion and distribution relating thereto, whether alone or in combination
with other marks, subject to the terms and conditions hereinafter specified.
9.2 TERMS AND CONDITIONS RELATING TO LICENSE.
9.2.1 The license granted in Section 9.1 above shall
continue until the last day of the sixth full calendar month after the
Closing Date, at which time it will expire. Upon the expiration of
the license Holiday shall cease all further uses of the Marks, except
that Holiday shall have the right to continue to reproduce, display,
broadcast, publish and otherwise use the Marks thereafter only as
necessary to sell off (excluding any advertisements and promotion to
sell off) any
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Gander Mountain Private Label Inventory in the ordinary course of
Holiday's business. Holiday will use reasonable efforts to sell the
Gander Mountain Private Label Inventory expeditiously, provided,
however, such efforts shall not obligate Holiday to sell the Gander
Mountain Private Label Inventory out of season.
9.2.2 Holiday agrees that it will not use the Marks on or
in connection with the sale of any goods or services through any
direct marketing to consumers through catalogs or similar printed
materials or electronic media (including without limitation, any
catalogs on the Internet), through telemarketing or through similar
marketing materials intended to reach consumers directly (but shall
not include, without limitation, any traditional secondary
advertising, such as in newspapers or magazines or any materials
inserted therein, via television or radio, or on any signage or
billboards).
9.2.3 Holiday agrees to use the Marks in a manner
consistent with the quality of the goods and services currently being
offered by Gander Mountain under the Marks at Gander Mountain's own
retail stores operating under the mark "Gander Mountain."
9.2.4 Gander Mountain shall not use and shall not permit
any other person or entity to use any of the Marks on or in connection
with any retail sporting goods store or similar store located anywhere
within a fifty (50) mile radius of any of the Stores and the Burger
Brothers Store in Rochester, Minnesota for a period of five (5) years
from and after the Closing Date.
9.2.5 Gander Mountain represents and warrants that
subject only to the Trademark License Agreement described in this
sentence that it is the exclusive owner of all rights in and to the
Marks, that the Marks are not the subject of any threatened or pending
litigation, that it has the right to grant the licenses set forth
herein, that Holiday's exercise of its rights under the licenses
granted herein will not violate or infringe the rights of any other
person or entity (including, without limitation, any rights of any
bank or lender or the rights of Cabela's Incorporated under the
Trademark License Agreement between Cabela's Incorporated and Gander
Mountain, Inc. and GMO, Inc. dated May 16, 1996).
9.2.6 Holiday, in exercising the rights in this Section
9, agrees that it will not state or imply to any person or party that
Gander Mountain itself or any of the Gander Mountain stores not
included in this transaction plan to cease operations.
10. TERMINATION
10.1 TERMINATION. Subject to Section 10.2, this Agreement and the
transaction contemplated hereby may be terminated and abandoned:
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10.1.1 At any time prior to the Closing Date by mutual
written consents of Holiday and Gander Mountain;
10.1.2 By written notice from either party to the other if
the Closing shall not have occurred prior to August 15, 1996 for any
reason whatsoever other than the mutual written agreement of the
parties hereto to extend the Closing Date past such deadline;
10.1.3 By either party if a final non-appealable judgment
has been entered against such party restraining, prohibiting,
declaring illegal or awarding substantial damages in connection with
the transaction contemplated hereby; or
10.1.4 In any event this Agreement will automatically
terminate on December 15, 1996, if the Closing has not
occurred.
10.2 LIMITATION ON RIGHT TO TERMINATE. A party shall not be
allowed to exercise any right of termination pursuant to Section 10.1 hereof if
the event giving rise to the termination right shall be due to the willful
failure of such party seeking to terminate this Agreement to perform or observe
in any material respect any of the covenants or agreements set forth herein to
be performed or observed by such party.
10.2.1 If this Agreement is terminated as permitted under
Section 10.1 hereof, such termination shall be without liability of or
to any party to this Agreement or any shareholder, director, officer,
trustee, employee, agent, servant, consultant, representative of such
party; provided, if, with the intent to avoid consummating the
transaction contemplated in this Agreement, any party (or a person
associated therewith) deliberately fails to fulfill a condition to the
performance of any other party or to perform a covenant of this
Agreement or deliberately breaches this Agreement, then such party
shall be liable to the other party in damages. Notwithstanding the
foregoing, however, or any other provision hereof, if Gander Mountain
shall refuse to close the transactions provided for herein because it
has received an offer from a third party providing for a sale of
assets, merger, business combination or similar transaction, or for a
significant equity investment in Gander Mountain, on terms which a
majority of the Board of Directors of GMI in good faith believe are
materially more favorable to Gander Mountain than the transaction
provided for herein, then Gander Mountain shall pay to Holiday, as
liquidated damages for, and the sole remedy for, such refusal and
resulting termination, the sum of One Hundred Thousand Dollars
($100,000.00).
10.2.2 If this Agreement is terminated for any reason,
Holiday shall not make any offer of employment to any Gander Mountain
employees for a period of two (2) years from and after the date of
this Agreement without the written consent of Gander Mountain. In
addition, Holiday shall destroy all materials
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received from Gander Mountain containing information about Gander
Mountain not available to the general public, and all copies thereof,
all analyses thereof, and all internal materials containing any of the
foregoing; and Holiday agrees in such case neither to use any such
information for any purpose, nor to disclose the same to any third
person under any circumstances whatsoever.
11. ADDITIONAL COVENANTS
11.1 BULK SALES ACT COMPLIANCE. Gander Mountain shall assist
Holiday in complying with the terms of the bulk sales provisions of the Uniform
Commercial Code as enacted in the State of Wisconsin. Further, Gander Mountain
agrees to indemnify and hold Holiday harmless from and against all claims,
demands, causes of action, liabilities, losses or other costs (including
reasonable attorneys' fees) that may be asserted against Holiday, or any
personal property conveyed to Holiday hereby, by any "creditor" (as such term
is defined in the bulk sales statute referenced herein) of Gander Mountain with
respect to obligations incurred by Gander Mountain, unless expressly assumed by
Holiday.
11.2 COVENANT NOT TO COMPETE-GANDER MOUNTAIN. In partial
consideration of payment of the Purchase Price, neither Gander Mountain nor any
affiliated company shall use the name Gander Mountain for any retail use nor
operate a retail sporting goods store within the area comprising a fifty (50)
mile radius from each Store and the Burger Brothers store in Rochester,
Minnesota for a period of five (5) years from and after the Closing Date.
Holiday shall be entitled, as a matter of right, in any court of competent
jurisdiction, to a mandatory injunction restraining and enjoining Gander
Mountain, pending litigation, as well as upon final determination thereof, from
attempting to violate or violating this Section. The right of Holiday to such
injunctive relief shall be cumulative with and in addition to any other rights,
remedies or actions which Holiday may have against Gander Mountain.
11.3 COVENANT NOT TO COMPETE-HOLIDAY. Neither Holiday nor any
affiliated company shall use the name Holiday or permit the use of the name
Burger Brothers for any sporting goods retail use, except for its
gasoline/convenience stores, nor directly or indirectly own any interest in,
manage, control or in any manner operate a retail sporting goods store within
the area comprising a fifty (50) mile radius from the presently existing twelve
(12) Gander Mountain Stores not included in this Agreement and as listed on
Exhibit K attached hereto for a period of five (5) years from and after the
Closing Date. Gander Mountain shall be entitled, as a matter of right, in any
court of competent jurisdiction, to a mandatory injunction restraining and
enjoining Holiday, pending litigation, as well as upon final determination
thereof, from attempting to violate or violating this Section. The right of
Gander Mountain to such injunctive relief shall be cumulative with and in
addition to any other rights, remedies or actions which Gander Mountain may
have against Holiday.
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11.4 DUTY TO INSURE. The duty to insure the Real Estate and the
other Assets and all risk, liability and responsibility for all loss or damage
to the Assets, and for all claims by third parties arising out of the use or
ownership of the Assets, and the duty to defend, indemnify and hold the other
party harmless against any such claims (except for claims based on the other
party's active negligence, wrongdoing or misconduct) shall be Gander Mountain's
with respect to events occurring before the Closing Date and shall be Holiday's
with respect to events occurring from and after the Closing Date. Holiday
shall have the right to terminate this Agreement prior to the Closing Date if a
material portion of the Assets are sold, lost or destroyed prior to the Closing
Date.
11.5 SALES TAX. The parties shall take all necessary steps to
ensure that the purchase and sale of the Assets hereunder shall be exempt from
all sales and use taxes. Without limiting the generality of the foregoing,
Holiday shall provide to Gander Mountain such resale certificates as Gander
Mountain may request.
11.6 CABELA'S AGREEMENTS. Gander Mountain has provided Holiday
with copies of a Trademark License Agreement and a Noncompetition Agreement
(collectively, the "Cabela's Agreements"), each dated May 16, 1996, between
Gander Mountain and Cabela's Incorporated. Holiday agrees that, in using names
provided by Gander Mountain in accordance with Section 6.2 and in using Gander
Mountain's name and trademark as provided in Section 9.1, and in all other
respects, Holiday shall not cause Gander Mountain to breach either of the
Cabela's Agreements.
12. INDEMNIFICATION
12.1 INDEMNIFICATION BY GANDER MOUNTAIN. Except as otherwise
provided in Section 10.2.1, Gander Mountain agrees to indemnify Holiday and to
hold Holiday harmless from and against any and all liabilities, losses and
other claims (including reasonable attorneys' fees) arising out of or relating
to the inaccuracy of any of the warranties, representations or breach of any
covenants made by Gander Mountain pursuant to this Agreement or any Operative
Documents, or arising out of or relating to the operation of the Stores before
the Closing Date, other than Assumed Obligations, including without limitation
all liabilities, losses and claims with respect to federal, state and local tax
and other obligations, with respect to the employment of personnel and with
respect to obligations pursuant to service, leases and other contracts
applicable to the Stores.
12.2 INDEMNIFICATION BY HOLIDAY. Except as otherwise provided in
Section 10.2.1, Holiday agrees to indemnify Gander Mountain and to hold Gander
Mountain harmless from and against any and all liabilities, losses and other
claims (including reasonable attorneys' fees) arising out of or relating to the
inaccuracy of any of the warranties, representations or the breach of any
covenants made by Holiday pursuant to this Agreement or any Operative
Documents, or arising out of or relating to the operation of the Stores from
and after the Closing Date, including without limitation all
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liabilities, losses and claims with respect to federal, state and local tax and
other obligations, with respect to the employment of personnel and with respect
to Assumed Obligations.
12.3 LIMITATIONS ON INDEMNIFICATION.
12.3.1 TIME LIMITATION. No claim or action shall be
brought under this Section 12 for breach of a representation or
warranty after the lapse of twelve (12) months following the Closing,
except that Gander Mountain's representations and warranties in
Section 3.5 concerning title to the Merchandise Inventory, Supplies
Inventory and the owned Equipment shall be unaffected by this time
limitation.
12.3.2 AMOUNT LIMITATION. Except with respect to claims
for breaches of representations or warranties contained in Sections
3.12 or 4.7, an indemnified party shall not be entitled to
indemnification under this Section 12 for breach of representation or
warranties unless the aggregate of the indemnifying party's
indemnification obligations hereunder (but for this subsection 12.3.2)
exceeds $100,000.00; but in such event, the indemnified party shall be
entitled to indemnification in full for all breaches.
12.3.3 INSURANCE OFFSET. The obligation of a party to
indemnify any claim under this Section 12 shall be reduced by the full
amount of any insurance collectible by the indemnified party with
respect to such claim or the underlying facts under any applicable
policy or policies.
13. MISCELLANEOUS
13.1 SEVERABILITY. All of the provisions of this Agreement are
distinct and severable, and if any provision shall be determined to be illegal,
void or unenforceable, such determination shall not affect the validity,
legality or enforceability of any other provisions of this Agreement.
13.2 GOVERNING LAW. The provisions of this Agreement shall be
governed by and construed in accordance with the laws of the State of
Minnesota.
13.3 BINDING AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the parties and their heirs, representatives,
successors and assigns.
13.4 PROHIBITION ASSIGNMENT. This Agreement may not be assigned by
Holiday; provided, however, that Holiday may assign its rights (but not its
obligations) under this Agreement to a subsidiary entity.
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13.5 AMENDMENT. This Agreement may only be amended in a writing
signed by all parties.
13.6 SURVIVAL. This Agreement shall remain in full force and
effect until all obligations of each party to this Agreement between Gander
Mountain and Holiday have been fully satisfied in accordance with the terms of
each such agreement. The terms and conditions of this Agreement shall survive,
continue in full force and effect, and shall be enforceable after the closing
of the transaction contemplated by this Agreement.
13.7 NO THIRD PARTY BENEFICIARIES. This Agreement is only for the
benefit of the parties to this Agreement and not for the benefit of any third
party beneficiaries.
13.8 NOTICE. Any notice to be given by one party hereto shall be
personally delivered, sent by registered or certified mail or sent by a
nationally recognized courier service that issues a receipt to the other
parties hereto at the addresses in this Section (or to such other address as
may be designated by notice to the other parties), and shall be deemed given
upon the earlier of personal delivery, the date postmarked, delivery to such
courier or the refusal to accept such service:
If to Holiday:
Holiday Stationstores, Inc.
4567 West 80th Street
Minneapolis, Minnesota 55437
Attention: President
with a copy to:
Holiday Stationstores, Inc.
4567 West 80th Street
Minneapolis, Minnesota 55437
Attention: Legal Department
If to Gander Mountain:
Gander Mountain, Inc.
P.O. Box 128
Highway W
Wilmot, Wisconsin 53192
Attention: President
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with a copy to:
Foley & Lardner
First Wisconsin Center
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
Attention: John M. Olson
13.9 AUTHORITY. Each party has caused this Agreement and the
Operative Documents to be executed and represents and warrants that their
signatory has been and is on the date of this Agreement and the Operative
Documents duly authorized by all necessary and appropriate corporate action to
execute this Agreement and the Operative Documents.
13.10 PUBLICITY. Any press release or announcement concerning the
transaction contemplated hereby shall be issued by joint agreement of the
parties hereto, unless a release or announcement by a party hereto, acting
alone, is required by applicable legal requirements.
13.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument.
13.12 TIME OF ESSENCE. Time is of the essence of this Agreement.
13.13 SCOPE. The parties understand and agree that Holiday is only
purchasing or leasing, as is applicable, certain of Gander Mountain's personal
and real property assets and that, except as specifically set out herein, this
Agreement shall not be construed to be in any manner whatsoever an assumption
by Holiday of any debts, obligations or liabilities of Gander Mountain which
are owing with respect to the operation of the Stores prior to the Closing
Date, including without limitation any obligations with respect to:
13.13.1 Payroll, payroll tax, any other form of withholding
tax, union obligations or employee benefits;
13.13.2 Sales and use tax, income tax, real or personal
property tax or other obligations owing to the State of Minnesota,
State of Wisconsin or to any other city, county, state or federal
authority;
13.13.3 All vendor payables; and
13.13.4 All other obligations of Gander Mountain's business
which are owing with respect to the operation of the Stores prior to
the Closing Date.
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Gander Mountain agrees to pay all such obligations in the ordinary
course of business, except for those specific obligations which are assumed by
Holiday under the Contracts Assignment and Assumption Agreement.
13.14 JOINT AND SEVERAL LIABILITY. GMI and GRS are jointly and
severally liable for any and all obligations of any such party hereunder.
13.15 NO MERGER. This Agreement does not constitute a merger,
consolidation or any other relationship other than seller and buyer. This
Agreement is not intended to cause or create a joint venture.
IN AGREEMENT, the parties have executed this Agreement as of the date
first above written.
GANDER MOUNTAIN, INC. HOLIDAY STATIONSTORES, INC.
By By Gerald A. Erickson
-------------------------------- ------------------------------------
Title Title Vice President
----------------------------- ---------------------------------
GRS, INC.
By
--------------------------------
Title
-----------------------------
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Gander Mountain agrees to pay all such obligations in the ordinary
course of business, except for those specific obligations which are assumed by
Holiday under the Contracts Assignment and Assumption Agreement.
13.14 JOINT AND SEVERAL LIABILITY. GMI and GRS are jointly and
severally liable for any and all obligations of any such party hereunder.
13.15 NO MERGER. This Agreement does not constitute a merger,
consolidation or any other relationship other than seller and buyer. This
Agreement is not intended to cause or create a joint venture.
IN AGREEMENT, the parties have executed this Agreement as of the date
first above written.
GANDER MOUNTAIN, INC. HOLIDAY STATIONSTORES, INC.
By David J. Lubar By
-------------------------------- ------------------------------------
Title Chairman Title Vice President
----------------------------- ---------------------------------
GRS, INC.
By David J. Lubar
--------------------------------
Title
-----------------------------
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EXHIBITS
EXHIBIT DESCRIPTION
- ------- -----------
Exhibit A Store List (Included)
Exhibit B Leased Properties
Exhibit C Contracts to be Assumed by Holiday
Exhibit D POS Leases
Exhibit E Permits and Licenses to be Assumed by Holiday
Exhibit F Purchase Price Allocation
Exhibit G Litigation
Exhibit H-1 Bill of Sale - Inventory
Exhibit H-2 Bill of Sale - Equipment
Exhibit I Promissory Note
Exhibit J Real Estate Lease Assignment and Assumption Agreement
Exhibit K Store List (Excluded)
Exhibit L Financial Information List
Exhibit M Gander Mountain Marks
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