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EIGHTH 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
April 1, 1996
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EIGHTH AMENDMENT TO
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND
TERM LOAN AGREEMENT
THIS EIGHTH AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT (this "Eighth Amendment") is made as of
the 1st day of April, 1996, 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 Third Amended and Restated Revolving Credit and
Term Loan Agreement dated as of November 22, 1994 and amended by First
Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated August 18, 1995, Second Amendment (the "Second Amendment") to
Third Amended and Restated Revolving Credit and Term Loan Agreement dated
November 17, 1995, Third Amendment (the "Third Amendment") to Third Amended and
Restated Revolving Credit and Term Loan Agreement dated December 5, 1995,
Fourth Amendment (the "Fourth Amendment") to Third Amended and Restated
Revolving Credit and Term Loan Agreement dated January 23, 1996, Fifth
Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated February 14, 1996, Sixth Amendment to Third Amended and
Restated Revolving Credit and Term Loan Agreement dated March 1, 1996, and
Seventh Amendment to Third Amended and Restated Revolving Credit and Term Loan
Agreement dated March 18, 1996 (collectively, the "Loan Agreement"), the Banks
made available to Borrower credit facilities aggregating up to a maximum amount
of One Hundred Million Dollars ($100,000,000.00); and
WHEREAS, Borrower is in default under section 8.1(m) of the Loan
Agreement requiring that prior to opening a new retail store Borrower and its
Subsidiaries shall have delivered to Banks an executed Landlord Waiver,
Consent, Agreement and Certificate in that Borrower has not delivered such
document for the Onalaska Store (such missing document being referred to herein
as the "Onalaska Waiver"); and
WHEREAS, Borrower has agreed to cure the foregoing default by
delivering the Onalaska Waiver on or before April 15, 1996; and
WHEREAS, Borrower is in default under sections 7.1(i) (Consolidated
Tangible Net Worth), 7.1(k) (Consolidated Leverage Ratio), 7.1(l) (Consolidated
Current Ratio) and 7.1(n) (Profitability) of the Loan Agreement; and
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WHEREAS, Borrower is negotiating an agreement for the sale of
Borrower's catalog division; and
WHEREAS, Borrower has represented to Banks that Borrower expects to
enter into such agreement on or before April 15, 1996, which agreement shall
provide for a closing on or before June 30, 1996; and
WHEREAS, the Borrower has engaged new financial advisors which have
requested additional time to evaluate the Borrower's financial
performance and future operations; and
WHEREAS, Borrower and its financial advisors have prepared and
provided to Banks a projection of Borrower's borrowing requirements during the
period from the date hereof until April 12, 1996; and
WHEREAS, Borrower has requested that Banks extend the existing waiver
of the defaults under sections 7.1(i), 7.1(k), 7.1(l) and 7.1(n) through April
15, 1996; and
WHEREAS, Based on the foregoing, and subject to Borrower's compliance
with all of the terms and conditions of the Loan Agreement as amended hereby,
Banks are willing to grant an extension of waivers and extension of the payment
deadline to April 15, 1996.
A G R E E M E N T
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 hereby agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall
have the meanings ascribed to such terms in the Loan Agreement.
a. Revolving Credit Commitment Termination Date. Section
1.87 of the Loan Agreement is amended in its entirety 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, (b) the date of an
Other Event of Default not expressly waived in writing by the Banks,
or (c) April 15, 1996."
b. Revolving Credit Notes. Section 1.90 of the Loan
Agreement is amended in its entirety to read as follows:
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"1.90 Revolving Credit Notes. "Revolving Credit Notes" shall
mean the five notes dated April 1, 1996 and executed by Borrower in
favor of the respective Banks evidencing the Revolving Credit Loans,
together with all extensions, renewals, substitutions, replacements
and refinancings thereof, the terms of which are incorporated herein
by reference."
c. Term Notes. Section 1.101 of the Loan Agreement is
amended in its entirety to read as follows:
"1.101 Promissory Notes. "Promissory Notes" or "Term Notes"
shall mean the five notes dated April 1, 1996 and executed by Borrower
in favor of the respective Banks evidencing the $19,500,000 Loan,
together with all extensions, renewals, substitutions, replacements
and refinancings thereof, the terms of which are incorporated herein
by reference."
2. Waiver. (a) Banks temporarily waive the defaults previously
disclosed to Banks under sections 7.1(i), 7.1(k), 7.1(l) and 7.1(n) of the Loan
Agreement and section 5 of the Third Amendment, as amended, for the period from
the date hereof until April 15, 1996 and temporarily waive the default caused
by Borrower's failure to deliver the Onalaska Waiver for the period from the
date hereof until April 15, 1996. The waiver does not extend beyond April 15,
1996 for the Onalaska Waiver or beyond April 15, 1996 for the defaults under
sections 7.1(i), 7.1(k), 7.1(l) and 7.1(n) of the Loan Agreement or section 5
of the Third Amendment, as amended, and Banks do not waive any other default or
any increase in the level of noncompliance with sections 7.1(i), 7.1(k), 7.1(l)
and 7.1(n) of the Loan Agreement or section 5 of the Third Amendment, as
amended. The Banks reserve the right to exercise any rights and remedies
available to Agent or any Bank prior to the end of any waiver period if any
other default comes to the attention of Banks or if any information comes to
the Banks' attention showing that Borrower's level of noncompliance with
section 7.1(i), 7.1(k), 7.1(l) or 7.1(n) of the Loan Agreement or section 5 of
the Third Amendment, as amended, is greater than that previously disclosed to
Banks.
(b) Borrower shall pay the waiver fee described in section
2(b) of the Second Amendment to Banks as provided in the Second Amendment, but
if not paid sooner, such fee and all Loans and other Obligations shall be paid
in full on April 15, 1996.
3. Payments. Section 2.1.2 of the Loan Agreement is amended in its
entirety to read as follows:
"2.1.2 Payments. Interest on the $19,500,000 Loan shall be
paid to Bank One as Agent in arrears on the first day of each month.
Borrower shall pay the entire principal
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balance of the $19,500,000 Loan plus all accrued but unpaid interest
on April 15, 1996."
4. The Revolving Credit Loans. The language added to section 2.2 of
the Loan Agreement pursuant to section 4 of the Second Amendment, as amended in
section 3 of the Third Amendment and section 3 of the Fourth Amendment, is
further amended in its entirety to read as follows:
"Limitations on Borrowing. In addition to complying with all other
provisions of this section 2.2:
(a) Borrower shall not permit the outstanding
balance of the Revolving Credit Facility (including the
undrawn amount of unexpired letters of credit) to exceed
$56,000,000. Banks waive any noncompliance with section
7.1(t) of the Loan Agreement that may occur as a result of
borrowings within the limits imposed by this section 2.2(a).
(b) Borrower shall not permit the outstanding
balance of the Revolving Credit Facility (including the
undrawn amount of unexpired letters of credit) to exceed 69%
of Eligible Inventory.
(c) If Eligible Accounts Receivable are less than
$6,000,000, then an amount equal to the difference between
$6,000,000 and actual Eligible Accounts Receivable shall be
deducted from the amount that would otherwise be available for
borrowing under paragraphs 2.2(a) and 2.2(b) above.
(d) During the period from and after April 1, 1996,
all Receipts and other proceeds of Collateral or Subsidiary
Collateral shall be paid to Agent to reduce the outstanding
balance of the Revolving Credit Facility, and (i) the amount
advanced from time to time under the Revolving Credit Facility
shall not be greater than the projections of borrowing
requirements made by the Borrower and previously delivered to
the Agent, and (ii) in no event shall the aggregate advances
during such period exceed $4,150,000.
In addition to all other remedies available to Banks upon the
occurrence of an Event of Default, the Banks shall not be obligated to
make any advance or issue any letter of credit if after such advance
or issuance Borrower would not be in compliance with section 2.2(a),
2.2(b) or 2.2(d) above."
The paragraph in section 3 of the Third Amendment captioned "Effect of Harris
Reserve" remains in full force and effect and
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is not amended hereby.
5. Notes. Section 2.2.2 of the Loan Agreement is amended in its
entirety to read as follows:
"2.2.2 Note. The Revolving Loans are evidenced by five
Revolving Credit Notes dated April 1, 1996 in the original aggregate
principal amount of $56,000,000 payable to the order of the respective
Banks."
6. Conditions to Amendment. This Eighth Amendment shall not be
effective until it shall have been fully executed and delivered and all of the
following have been delivered to Banks, executed as appropriate, in form and
substance satisfactory to Banks:
(a) Revolving Credit Notes;
(b) Promissory Notes;
(c) Reaffirmation of Corporate Guaranty of GRS;
(d) Reaffirmation of Corporate Guaranty of GMO;
(e) Closing Certificates with Corporate Resolutions for Borrower,
GRS and GMO; and
(f) Legal opinion of Borrower s counsel as to the enforceability
of this Eighth Amendment and the Reaffirmations of Corporate
Guaranty delivered herewith.
7. Continuation of Agreements. Except as expressly amended and
modified herein, the Loan Agreement shall remain in full force and effect and
except as expressly amended and modified herein, the Notes shall remain in full
force and effect. All of the Collateral Documents, including but not limited
to the Security Agreement, the Mortgage, the Collateral Pledge Agreement and
Assignment of Security Interest, the Amended and Restated General Intangibles
Mortgage, the Subsidiary Guaranties and the Subsidiary Security Documents shall
remain in full force and effect as security for the Obligations, including but
not limited to the Revolving Credit Notes dated April 1, 1996 and the
Promissory Notes dated April 1, 1996, and all of the Collateral and Subsidiary
Collateral as defined in the Loan Agreement, the real estate encumbered by the
Mortgage, the Subsidiary Notes, and the Stock of GRS and GMO, shall secure all
of the Obligations, including but not limited to the Revolving Credit Notes
dated April 1, 1996 and the Promissory Notes dated April 1, 1996.
8. Bank Not Obligated to Continue Financing. Borrower acknowledges
that subject to the terms hereof, Banks have agreed
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to allow Borrower until April 15, 1996 to pursue sale of the catalog division
and/or begin other financial restructuring, but in any event, Banks have not
agreed and are not obligated (a) to continue to provide financing to Borrower
after April 15, 1996 regardless of Borrower's favorable progress, if any,
toward sale of the catalog division, or (b) to consent to a sale of the catalog
division on terms previously disclosed to Banks.
9. Release of Secured Party. Each of Borrower, GRS and GMO hereby:
(a) acknowledges that its obligations under the documents listed in section 7
hereof exist and are enforceable in accordance with their terms; and (b)
releases and waives any and all existing claims, counterclaims and causes of
action against Banks under the Loan Agreement, under any of the documents
listed in section 7 hereof, or otherwise relating to the Borrower as borrower,
GRS and GMO as subsidiaries of Borrower and guarantors, and Banks as lenders,
and which (i) are known to Borrower, GRS or GMO on the date hereof, or (ii)
exist on the date hereof based upon facts existing and known to Borrower, GRS
or GMO on the date hereof.
10. Expenses. Borrower shall pay the reasonable legal fees and
expenses of counsel for Bank One with respect to this Eighth Amendment and all
related documentation 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.
11. Entire Agreement This Eighth Amendment, together with the Loan
Agreement, as amended hereby, constitutes the entire agreement of the Banks and
Borrower pertaining to the subject matter hereof and supersedes all prior or
contemporaneous agreements of the Banks and Borrower, whether oral or written,
other than the Loan Agreement, in connection therewith. This Eighth Amendment
may be amended or modified only in writing, executed by all of the parties.
This Eighth 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 Eighth
Amendment or in the Loan Agreement as amended hereby;
(b) an obligation on the part of any Bank to enter into any future
amendment of the Loan Agreement;
(c) except as expressly set forth herein and for the period
provided herein, the waiver of any existing Event of Default
or of any subsequent Event of Default under the Loan Agreement
as amended hereby;
(d) the waiver of any right or remedy available to Banks
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under the Loan Agreement or any of the Collateral Documents;
or
(e) the commitment, agreement or obligation of any Bank to delay
the exercise of any right or remedy available to a Bank in the
future.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
BANK ONE, MILWAUKEE, NA
By
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LASALLE NATIONAL BANK
By
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FIRSTAR BANK MILWAUKEE, N.A.
By
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HARRIS TRUST AND SAVINGS BANK
By
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NBD BANK
By
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GANDER MOUNTAIN, INC.
By
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The undersigned have read the foregoing and agree to be bound by all
of the terms and conditions contained therein except that the undersigned shall
not be directly obligated on any of the Loans except as otherwise provided in
the Loan Agreement as amended hereby, the Subsidiary Documents, the Subsidiary
Guaranties or any other agreement to which Borrower, GRS or GMO is a party.
GMO, INC.
By
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GRS, INC.
By
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