Attached files
Exhibit 10.71
FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (the “Amendment”) is dated as of the
28th day of March, 2011, by and among, Dover Saddlery, Inc., a Delaware corporation
(“Dover DE”), Dover Saddlery, Inc., a Massachusetts corporation, Smith Brothers, Inc., a Texas
corporation, Dover Saddlery Retail, Inc., a Massachusetts corporation, Old Dominion Enterprises,
Inc., a Virginia corporation and Dover Saddlery Direct, Inc., a Massachusetts corporation
(hereinafter, each with Dover DE, individually a “Borrower”, and collectively the “Borrowers”) and
RBS Citizens, National Association, a national banking association, with a principal place of
business at 875 Elm Street, Manchester, New Hampshire 03101 (hereinafter the “Lender”);
WHEREAS, Borrowers and Lender are parties to a Loan and Security Agreement dated December 11,
2007 (as the same has been, is being, and may hereafter be amended, renewed, restated and/or
replaced, the “Loan Agreement”) whereby, inter alia, the Borrowers borrowed from
Lender up to Eighteen Million Dollars ($18,000,000.00) in the form of a revolving line of credit
loan; and
WHEREAS, the parties wish to amend the Loan Agreement to, inter alia, modify
the financial covenants, add an accordion feature to the line of credit loan, extend the maturity
date of the revolving credit loan and add a term loan; and
NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein
contained, the parties agree as follows:
1. DEFINITIONS.
Any capitalized term not otherwise defined herein shall have the meaning set forth in the Loan
Agreement.
2. AMENDMENTS.
2.1 The first “WHEREAS” on page 1 is hereby deleted.
2.2 The following amendments will be made to Section 1 of the Loan Agreement, Definitions:
a. Replace the language contained in the parentheses at the end of the definition of Current
Liabilities with the following:
“(whether or not due within twelve (12) months and whether or not
classified as a current liability in accordance with generally
accepted accounting principles)”
b. The definition of “EBITDA” is hereby amended and restated in its entirety to read as
follows:
“ “EBITDA” means earnings before interest, taxes, depreciation, amortization and
other non-cash charges including goodwill impairment calculated in accordance with
generally accepted accounting principles, consistently applied”
c. The definition of “Loan” is hereby amended and restated in its entirety to read as follows:
“ “Loan” means the Term Loan and the Revolving Credit Loan”
d. The definition of Loan Documents is hereby amended by replacing “Note” with “Revolving
Credit Note and Term Note”.
e. The definition of Maturity Date is hereby amended and restated in its entirety to read as
follows:
“ “Maturity Date” means April 30, 2013”
f. The definition of “Note” is hereby amended and restated in its entirety to read as follows:
“ “Note” means either or both of the Revolving Credit Note and/or the Term Note.”
g. The definition of “Obligations” is amended by adding, at the end of the second sentence,
the following: “and/or pursuant to any Hedging Contracts”.
h. Add the following new definitions:
“ “Acquisition” means any acquisition of all or any portion of the business of a
third party, whether such acquisition is an acquisition of the assets of the
business or the acquisition of the ownership interests of the owners of such
business.
“ “Excess Cash Flow” means EBITDA minus (i) cash interest paid on Indebtedness, (ii)
cash taxes paid, (iii) payments of principal scheduled to be paid or paid (whichever
is greater), and (iv) Acquisitions and CAPEX permitted under Section 8.2 of the Loan
Agreement.
“Revolving Credit Loan” means the working capital line of credit loan described in
Section 3 below.
“Revolving Credit Note” means the revolving credit note from Borrowers to Lender
dated December 11, 2007 in the original principal amount of up to Eighteen Million
Dollars ($18,000,000.), currently in the amount of Thirteen Million Dollars
($13,000,000.00), as the same may be amended, renewed, restated and/or replaced from
time to time.
“Tangible Assets” means, for any period, all current assets, fixed assets and other
tangible assets of Borrowers (net of all reserves and allowances) computed in
accordance with generally accepted accounting principles applied in a fashion
consistent with the principles utilized to prepare the most recent audited financial
statements of Borrowers delivered to Lender, but exclusive of all intangible assets,
including, but not limited to, goodwill, leasehold improvements (net of accumulated
depreciation), patents, trade names, trade secrets, trademarks and the like and
excluding loans to/from Affiliates.
“Tangible Net Worth” means Tangible Assets minus Indebtedness.
“Term Loan” means the term loan described in Section 3.A below.
“Term Note” means the term promissory note from Borrowers to Lender of even date
herewith in the original principal amount of up to Five Million Five Hundred
Thousand Dollars ($5,500,000.00), as the same may be amended, renewed, restated
and/or replaced from time to time.”
2.3 Section 3 is hereby amended by (a) replacing “Note” with “Revolving Credit Note” wherever
it appears and (b) replacing “Loan” with “Revolving Credit Loan” wherever it appears.
2.4 Section 3.1. Section 3.1 is hereby amended and restated in its entirety to read
as follows:
“3.1 Lender hereby establishes, for a period commencing the date hereof and expiring on
the Maturity Date, a revolving line of credit in Borrowers’ favor in the amount of Thirteen
Million Dollars ($13,000,000.00). Borrower shall have the right, annually, on or before
each review date (April 30) to request Lender to increase the Revolving Credit Loan in One
Million Dollar ($1,000,000.00) increments up to Twenty Million Dollars ($20,000,000.00). If
the request is granted by Lender (which shall be at Lender’s sole and absolute discretion
and may be denied whether or not Borrowers are in full compliance with their obligations
under the Loan Documents), the increase shall be effective on such annual review date (April
30) and the terms and conditions of the increased revolving credit shall be the same
except that (a) Lender and Borrower shall amend the Revolving Credit Note to
reflect the increased principal amount and (b) Borrower shall pay, at the time of the
approval by Lender of the request, an accordion fee equal to 0.10% of the increased amount
per annum plus an administrative fee of $1,000 for each increase. For example, if the
approved increase is $5,000,000.00, the accordion fee is $1,000 plus $5,000 per annum. As
used in this Section 3, “Borrowers’ Availability” means an amount equal to the revolving
line of credit approved by Lender, reduced by the face amount of any Letters of Credit
issued by the Lender and/or its Affiliates. All advances made by Lender under the Revolving
Credit Loan, shall be payable as provided in the Revolving Credit Note which is incorporated
hereby by reference;”
2.5 Add the following new Section 3.10:
“3.10 Borrower shall pay an annual origination fee for the Revolving Credit Loan equal
to 0.10% of the maximum principal amount of the Revolving Credit Loan.” In the event the
Revolving Credit Loan is increased pursuant to the accordion feature described in 3.1 above,
Borrower will not be required to pay an additional annual
origination fee for the portion of the Revolving Credit Loan which was added during the
first year it was added. For example, if on April 30, 2013, the Lender renews the Thirteen
Million Dollar ($13,000,000.00) Revolving Line of Credit Loan and approves an accordion
increase in the amount of Five Million Dollars ($5,000,000.00), Borrower will pay Lender an
origination fee equal to Thirteen Thousand Dollars ($13,000.00), an accordion fee equal to
Five Thousand Dollars ($5,000.00) and an administrative fee equal to One Thousand Dollars
($1,000.00). If Lender renews the Eighteen Million Dollar ($18,000,000.00) Revolving Line
of Credit Loan on April 30, 2014, Borrower will pay an origination fee equal to Eighteen
Thousand Dollars ($18,000.00).”
2.6 Add the following new Section 3.11:
“3.11 It is the Lender’s expectation that, on or before the next review date (April 30,
2012), Borrower will obtain a landlord consent and waiver, in form and substance
satisfactory to Lender, for the warehouse facility located at 525 Great Road, Littleton,
Massachusetts.”
2.7 Add the following new Section 3.A:
“3.A.1 Lender hereby establishes, a term loan in Borrowers’ favor in the amount of Five
Million Five Hundred Thousand Dollars ($5,500,000.00). There shall be two (2) advances
under the Term Loan; one in the amount of Three Million Nine Hundred Thousand Dollars
($3,900,000.00) (“Advance 1”) and the second in the amount of One Million Six Hundred
Thousand Dollars ($1,600,000.00) (“Advance 2”). Borrowers must enter into a Hedging
Contract with respect to Advance 1. All advances made by Lender under the Loan, shall be
payable as provided in the Term Note which is incorporated hereby by reference;
3.A.2 Prior to the making of any advance under the Term Loan, Borrowers shall have
satisfied the requirements set forth in Section 9 of the Loan Agreement and Section 3.A of
this Amendment. At the time of each advance made under or pursuant to this Agreement,
Borrowers shall immediately become indebted to Lender for the amount thereof. Borrowers
agree to indemnify and hold Lender harmless for any action, loss or expense taken or
incurred by Lender in reliance upon any telephone request for an advance under the Loan,
which Lender in good faith believes to have been made by a duly authorized representative of
Borrowers. Each request for an advance under the Loan shall constitute a confirmation by
Borrowers that all representations, warranties and covenants contained in any of the Loan
Documents remain true and correct as though made at the time of the proposed borrowing;
3.A.3 An account shall be opened on the books of Lender (hereinafter the “Term Loan
Account”), in which account a record shall be kept of the advances made by Lender to
Borrowers under or pursuant to the Term Loan, and all payments made by or on behalf of
Borrowers with respect to the Term Loan;
3.A.4 Lender may also keep a record (either in the Term Loan Account or elsewhere, as
Lender may from time to time elect) of all interest, service charges, costs, expenses and
other debits owed Lender on account of the Term Loan contemplated hereby and of all credits
against such amounts so owed;
3.A.5 All credits against Borrowers’ indebtedness indicated in the Term Loan Account
shall be conditional upon final payment to Lender of the items giving rise to such credits.
The amount of any item credited against the Term Loan Account which is not so paid or which
is charged back against Lender for any reason may be charged as a debit to the Term Loan
Account, may be charged back against any deposit account maintained by Borrowers with
Lender, and shall be an obligation, in each instance whether or not the item so charged back
or not so paid is returned; and
3.A.6 Any statement rendered by Lender to Borrowers shall be considered correct and
accepted by Borrowers, and shall be conclusively binding upon Borrowers unless Borrowers
provide Lender written objection thereto within ninety (90) business days from the mailing
of such statement, which written objection shall indicate, with particularity, the reason
for such objection.”
3.A.7 Borrower will pay Lender an origination fee equal to seventy five (75) basis
points ($41,250.00).
2.8 Schedule 6.11 (all real estate owned or leased by Borrower) is replaced in its entirety
with the Schedule 6.11 attached hereto.
2.9 Schedule 6.12 (all Proprietary Rights) is hereby replaced in its entirety with the
Schedule 6.12 attached hereto.
2.10 Section 7.9. Section 7.9 is hereby amended and restated in its entirety to read
as follows:
“7.9 Borrowers shall, on a consolidated basis, observe the following financial
covenants as and when tested hereunder:
7.9.1 maintain a ratio of Funded Debt to EBITDA of not more than the following, which
shall be tested and measured quarterly on a trailing four (4) quarter basis:
| • | 2.75:1.00 commencing with the measurement on March 31, 2011; |
| • | 2.50:1.00 commencing with the measurement on December 31, 2013; |
| • | 2.25:1.00 commencing with the measurement on December 31, 2014; |
| • | 2.00:1.00 commencing with the measurement on December 31, 2015 and, thereafter, continuing to lower said ratio by 0.25 at each fiscal year end.” |
For purposes of this covenant, Funded Debt shall exclude debt incurred under Hedging
Contracts.
7.9.2 Intentionally Deleted.
7.9.3 maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, which shall
be tested and measured quarterly on a trailing four (4) quarter basis.
7.9.4 maintain a ratio of Current Assets to Current Liabilities of not less than
1.20:1.00, which shall be tested and measured quarterly.
7.9.5 Intentionally Deleted.
7.9.6 maintain a ratio of Indebtedness to Tangible Net Worth of no more than 2.00 to
1.00, measured quarterly. For purposes of this covenant Indebtedness shall exclude Hedging
Contracts.”
2.11 Add the following new affirmative covenant as new Section 7.17:
“7.17 Borrowers will use best efforts to obtain landlord consents and waivers, in form
and substance satisfactory to Lender, in all retail locations described in Schedule 6.11.
Lender acknowledges that it has a consent for the Virginia store.”
2.12 Add the following negative covenant as new Section 8.13:
“8.13 Borrower shall not add any additional retail stores or cause to be placed any
Collateral anywhere other than the locations shown on Schedule 6.11 unless Borrower (a)
amends its Collateral Assignment of Leasehold Rights to add said location, (b) provides
Lender with a landlord waiver and consent in form and substance reasonably satisfactory to
Lender, (c) provides Lender with a copy of the lease for such location.”
2.13 Section 7.16. The last sentence of Section 7.16 is hereby amended and restated
in its entirety to read as follows:
“In addition, Borrowers shall pay Lender an unused line fee equal to the daily unused amount
of the Revolving Credit Loan billed quarterly in arrears. The fee shall be in the amount
shown on the chart below:
| Ratio Total Funded Debt to EBITDA | UNUSED FEE | |||
greater than 2.75 to 1.00 |
0.25 | % | ||
equal to or less than 2.75 to 1.00 but greater than 2.25 to 1.00 |
0.25 | % | ||
equal to or less than 2.25 to 1.00 but greater than 1.50 to 1.00 |
0.20 | % | ||
equal to or less than 1.50 to 1.00 |
0.20 | %” | ||
2.14 Amend Section 8.2 by (a) changing “acquisitions” in line 5 to “Acquisitions” and (b)
replacing subsections (i) — (iv) inclusive in their entirety with the following:
| “(i) | Two Million Dollars ($2,000,000.00) in calendar year 2011 | ||
| (ii) | Three Million One Hundred Thousand Dollars ($3,100,000.00) in calendar year 2012 | ||
| (iii) | Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00) in calendar year 2013 |
| (iv) | Three Million Two Hundred Seventy Five Thousand Dollars in calendar year 2014 ($3,275,000.00) | ||
| (v) | One Million Three Hundred Seventy Five Thousand Dollars in calendar year 2015 (1,375,000.00) | ||
| (vi) | Two Million Four Hundred Thousand Dollars ($2,400,000.00) in calendar year 2016 | ||
| (vii) | Two Million Four Hundred Thousand Dollars ($2,400,000.00) in calendar year 2017 |
2.15 Section 10.1 shall be amended by replacing “on the Note” with “on either Note.”
3. CONDITIONS TO AMENDMENT.
This Amendment is subject to the condition (in addition to all requirements of the Loan
Agreement and all other Loan Documents, as they may be amended) that each of the following shall
have been delivered or performed to the satisfaction of Lender:
3.1 Execution and/or delivery of those matters required to be furnished on the Closing Agenda
attached hereto as Exhibit A.
3.2 Payment of an origination fee to Lender for the extension of the Revolving Line of Credit
Loan through April 30, 2013 in the amount of Thirteen Thousand Dollars ($13,000.00) and an
origination fee for the Term Note equal to Forty One Thousand Two Hundred Fifty Dollars
($41,250.00) [75 basis points].
3.3 Borrowers will pay all of Lender’s costs and expenses incurred in preparation of this
Amendment and the documents and instruments executed herewith.
4. RATIFICATION.
In all other respects, the Loan Agreement remains in full force and effect, and Borrowers
agree to be bound thereby. Except as specifically amended herein, the terms and conditions of the
Loan Agreement shall remain in full force and effect. Borrowers confirm and agree that the
amendments contained herein shall in no way be construed as an obligation on the part of Lender to
further amend or extend the Loan Agreement or any other Loan Documents. This Amendment is not a
novation.
5. REAFFIRMATION.
Borrowers reaffirm each and every representation and warranty made by them in the Loan
Agreement. Borrowers and Lender hereby agree and confirm that Borrowers have prior to this
Amendment delivered to Lender the information and disclosures in accordance with the reporting
requirements of the Loan Agreement.
6. AUTHORITY.
Borrowers warrant that it has full power and authority, and has taken all necessary corporate
and other action and procured all necessary consents to execute and deliver this Amendment and
perform its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed on their
behalf by the persons signing below who are thereunto duly authorized, as of the day and year first
above-written.
| BORROWERS: | ||||||
| DOVER SADDLERY, INC. | ||||||
| (a Delaware Corporation) | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| DOVER SADDLERY, INC. | ||||||
| (a Massachusetts Corporation) | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| SMITH BROTHERS, INC. | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| DOVER SADDLERY RETAIL, INC. | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| OLD DOMINION ENTERPRISES, INC. | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| DOVER SADDLERY DIRECT, INC. | ||||||
/s/ John M. Sullivan
|
By: | /s/ Stephen L. Day
|
||||
| Title: | ||||||
| LENDER: | ||||||
| RBS CITIZENS, NATIONAL ASSOCIATION | ||||||
/s/ Susan A. Manchester
|
By: | /s/ Gary Hatfield
|
||||
| Title: | ||||||
SCHEDULE 6.11
Locations of Collateral
595 Washington Street, Wellesley, Norfolk County, Massachusetts 02482
683 Yorklyn Road, Hockessin, New Castle County, Delaware 19707
16 Atkinson Depot Road, Plaistow, Rockingham County, New Hampshire 03865
1041 Maryland Route 2 N, Gambrillis, Anne Arundel County, Maryland 21054
10 Fila Way, Sparks, Baltimore County, Maryland 21152
43717 John Mosby Highway, Chantilly, Fairfax County, Virginia 20152
242 Zan Road, Seminole Square, Charlottesville, Albemarle County, Virginia 22901
484 Maury River Road, Lexington, Rockbridge County, Virginia 24450
7529 Campbell Road, Dallas County, Dallas, Texas 75248
2541 White Mountain Highway, North Conway, Carroll County, New Hampshire
525 Great Road, Littleton, Massachusetts 01460
4127 Mesa Drive, Denton, Denton County, Texas 76207
3150 U.S. Highway 22, Suite #8, Branchburg, NJ 08876
670 North Main Street, Suite 112, Alpharetta, GA 30009
1340 B Ten Rod Road, North Kingstown, RI 02852
1120 South, Twenty Mile Road, Parker, CO 80134
SCHEDULE 6.12
Intellectual Property Schedule
Trademark Registrations
| Status of | ||||||||||||||
| Section | Current | |||||||||||||
| Registration | Date of | 8/15 | Renewal | |||||||||||
| Mark | Jurisdiction | or Serial No. | Registration | Filings | Date | Goods | ||||||||
The Source
|
United States | 26619525 | 12/17/2002 | n/a (filed in 2008) |
12/17/2012 | Retail store and mail order services | ||||||||
Professional Horseman Supply |
United States | 28526694 | 6/15/2004 | n/a (filed in 2010) | 6/15/2014 | Retail store services, mail and Internet order services | ||||||||
Riding Sport
|
United States | 3008491 | 10/25/2005 | 10/25/2011 | 10/25/2015 | Clothing | ||||||||
Open Range
|
United States | 3,169,751 | 11/7/2006 | 11/7/2012 | 11/7/2016 | Equestrian Products | ||||||||
Dover Saddlery
|
United States | 2,619,416 | 9/17/2002 | n/a (filed in 2008) | 9/17/2012 | Retail store featuring equestrian related products |
||||||||
Smith Brothers
|
United States | 3,312,648 | 10/16/2007 | 10/16/2013 | 10/17/2017 | Retail store featuring equestrian related products |
||||||||
SB Smith Brothers
|
United States | 3,246,536 | 5/29/2007 | 5/29/2013 | 5/29/2017 | Retail store featuring equestrian related products |
||||||||
SB Smith Brothers
|
United States | 2,392,982 | 10/10/2000 | Done (2006) |
10/10/2001 10/10/2020 |
Horse related equipment and supplies | ||||||||
Smith Brothers
|
United States | 3,312,648 | 10/16/2007 | 10/16/2013 | 10/16/2017 | Lariat ropes and piggin strings | ||||||||
Dover
Saddlery
|
Japan | 5,037,161 | 3/10/2007 | n/a | 3/30/2017 | Retail store featuring equestrian related products |
||||||||
Dover Saddlery
|
Europe | 2,873,537 | 9/25/2002 | n/a | 9/25/2012 | Retail store featuring equestrian related products |
||||||||
Trademark Applications
| Status of | Current | |||||||||||
| Registration | Date of | Section 8/15 | Renewal | |||||||||
| Mark | Jurisdiction | or Serial No. | Registration | Filings | Date | Goods | ||||||
Wylde Abandoned |
United States | 78/785,715 | Pending | n/a | n/a | Equestrian products | ||||||
Rider’s
International
|
United States | 77/218,698 3,388,431 |
Registered | 2/26/2014 | 2/26/2018 | Equestrian products, namely, saddles |
||||||
The Circuit
|
United States | 77/279,381 3,434,919 |
Registered | 5/27/2014 | 5/27/2018 | Leather goods and clothing | ||||||
Riding Sport
|
United States | 77/211,849 3,582,163 |
Registered | 3/3/2015 | 3/3/2019 | Equestrian goods, namely breeches and clothing |
Copyright Registrations
| Current | ||||||||||
| Registration | Date of | Renewal | ||||||||
| Mark | Jurisdiction | or Serial No. | Registration | Date | Goods | |||||
Dover Saddlery 1998-1999 Catalog, The Source |
United States | TX 5-123-079 | January 3, 2000 | n/a/ | Dover Saddlery 1998-1999 Catalog, The Source |
|||||
Smith Brothers Catalog P62B-2004 Barrel Racer’s Edition |
United States | TX-6 014-324 | July 8, 2004 | n/a | Smith Brothers Catalog — P62B-2004 Barrel Racer’s Edition | |||||
Smith Brothers Catalog P62R-2004 Ropin Edition |
United States | TX-6 014-325 | July 8, 2004 | n/a | Smith Brothers Catalog — P62R-2004 Ropin Edition | |||||
Smith Brothers Catalog P62S-2004 Western Show Edition |
United States | TX-6 010-183 | July 7, 2004 | n/a | Smith Brothers Catalog — P62S-2004 Western Show Edition | |||||
Smith Brothers Catalog P62G-2004 Summer Sale |
United States | TX 6 010-184 | July 7, 2004 | n/a | Smith Brothers Catalog — P62G — 2004 Summer Sale |
Inventions
Dover Saddlery, Inc. owns all rights to an invention entitled “STORE OPTIMIZATION
MODEL” which may be patentable.
License Agreement
License Agreement by and between Saddlery, Inc. and Weatherbeeta PTY LTD, an
Australian Corporation, for the trademarks “Millers” and “Miller’s Harness” as follows:
U.S. Registration No. 1,087,381
U.S. Registration No. 1,608,811
U.S. Registration No. 0,885,095
Canadian Registration No. 240,890
Mexican Registration No. 504,551
Brazilian Registration No. 816641200
Brazilian Registration No. 816641196
Brazilian Registration No. 817201564 (pending); and
Brazilian Registration No. 817201572
U.S. Registration No. 1,608,811
U.S. Registration No. 0,885,095
Canadian Registration No. 240,890
Mexican Registration No. 504,551
Brazilian Registration No. 816641200
Brazilian Registration No. 816641196
Brazilian Registration No. 817201564 (pending); and
Brazilian Registration No. 817201572