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EXHIBIT 10.2
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of August 2, 2000, is made by and between The
Sportsman's Guide, Inc., a Minnesota corporation (the "Borrower"), and Xxxxx
Fargo Bank Minnesota, National Association, f/k/a Norwest Bank Minnesota,
National Association, a national banking association (the "Lender").
Recitals
The Borrower and the Lender have entered into Credit and Security
Agreement dated as of December 27, 1999, as amended by a First Amendment to
Credit and Security Agreement dated as of May , 2000 (the "Credit Agreement").
Capitalized terms used in these recitals have the meanings given to them in the
Credit Agreement unless otherwise specified.
The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are
defined in the Credit Agreement shall have the same meanings as defined therein,
unless otherwise defined herein. In addition, Section 1.1 of the Credit
Agreement is amended by adding or amending, as the case may be, the following
definitions:
"`Borrowing Base' means, at any time the lesser of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's
sole discretion, the sum of:
(i) 80% of Eligible Accounts, plus
(ii) 55% of Eligible Inventory, plus
(iii) the Overadvance Component, less
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(iv) the Landlord's Disclaimer Reserve."
"`Default Rate' means (i) for Advances bearing interest at the Floating
Rate, an annual rate equal to two percent (2%) over the Floating Rate, which
rate shall change when and as the Floating Rate changes and (ii) for Advances
bearing interest at the Overadvance Floating Rate, an annual rate equal to two
percent (2%) over the Overadvance Floating Rate, which rate shall change when
and as the Overadvance Floating Rate changes.
"`Floating Rate' means an annual rate equal to the Prime Rate plus the
Revolving Margin, which annual rate shall change when and as the Prime Rate
changes."
`Margin' - deleted.
"`Overadvance' means that portion of the outstanding principal balance
of the Revolving Advances that exceeds the difference of the Borrowing Base less
the Overadvance Component."
"`Overadvance Component' means $2,000,000 from the Second Amendment
Effective Date until November 15, 2000 and $-0- thereafter."
"`Overadvance Floating Rate' means an annual rate equal to the sum of
the Prime Rate plus the Overadvance Margin, which annual rate shall change when
and as the Prime Rate changes."
"`Overadvance Margin' means an amount determined pursuant to Section
2.7(a-1) that is added to the Prime Rate to determine the Overadvance Floating
Rate."
"`Revolving Margin' means an amount determined pursuant to Section
2.7(a) that is added to the Prime Rate to determine the Floating Rate."
"`Second Amendment Effective Date' means the date all conditions
precedent to effectiveness of the Second Amendment have been satisfied or waived
by the Lender."
2. Margins and Interest Rate. Section 2.7 of the Credit Agreement is
amended (i) by amending Subsection (a) to read as follows, (ii) by adding the
following new Subsection (a-1) immediately thereafter and (iii) by amending
Subsection (b) to read as follows:
(a) REVOLVING MARGIN. The interest rate margin ("Revolving
Margin") to be added to the Prime Rate to determine the Floating Rate
is zero
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percent (0%) as of May 19, 2000, subject to change when the Lender
receives and approves the Borrower's audited financial statements for
its fiscal year ending on or about December 31, 2000 (the "Year 2000
Financial Statements"), at which time the Revolving Margin shall be
adjusted, effective as of the first day of the Borrower's 2001 fiscal
year, as follows: if the Year 2000 Financial Statements show that the
Borrower's Net Income was:
(A) less than $(1,000) but greater than or equal to $(500,000),
"Revolving Margin" shall mean one quarter of one percent
(0.25%); and
(B) less than $(500,000) but greater than or equal to
$(1,000,000), "Revolving Margin" means one half of one
percent (0.5%);
(C) greater than $1,000,000, "Revolving Margin" means negative
one half of one percent (-0.50%);
otherwise, the Revolving Margin shall remain unchanged. If the
Revolving Margin is increased according to the foregoing and the
Borrower is thus determined to have underpaid interest since the
beginning of its 2001 fiscal year, the Borrower shall pay such
deficiency on demand."
"(a-1) OVERADVANCE MARGIN. The interest rate margin ("Overadvance
Margin") to be added to the Prime Rate to determine the Overadvance Floating
Rate shall be:
(i) two percent (2.0%) for that portion of the Overadvance which
is less than or equal to $1,000,000;
(ii) three percent (3.0%) for that portion of the Overadvance
which is greater than $1,000,000 but less than or equal to
$1,500,000; and
(iii) four percent (4.0%) for that portion of the Overadvance
which is greater than $1,500,000 but less than or equal to
$2,000,000."
"(b) REVOLVING NOTE. Except as set forth in Sections 2.7(d) and 2.7(f),
that portion of the outstanding principal balance of the Revolving Note not
constituting Overadvances shall bear interest at the Floating Rate and that
portion of the outstanding principal balance of the Revolving Note constituting
Overadvances shall bear interest at the Overadvance Rate."
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3. No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.
4. Amendment Fee. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $5,000 in
consideration of the Lender's execution of this Amendment.
5. Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with each of
the following, each in substance and form acceptable to the Lender in its sole
discretion:
(a) Payment of the fee described in Paragraph 4.
(b) Such other matters as the Lender may require.
6. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to execute this
Amendment and to perform all of its obligations hereunder, and this
Amendment has been duly executed and delivered by the Borrower and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of this
Amendment have been duly authorized by all necessary corporate action and do
not (i) require any authorization, consent or approval by any governmental
department, commission, board, bureau, agency or instrumentality, domestic
or foreign, (ii) violate any provision of any law, rule or regulation or of
any order, writ, injunction or decree presently in effect, having
applicability to the Borrower, or the articles of incorporation or by-laws
of the Borrower, or (iii) result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected.
(c) All of the representations and warranties contained in Article V
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except to the extent that such representations
and warranties relate solely to an earlier date.
7. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all
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references in the Security Documents to the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended hereby.
8. No Waiver. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.
9. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.
10. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Credit
Agreement, the Security Documents and all other documents contemplated thereby,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under paragraph 4 hereof.
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11. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BANK MINNESOTA, THE SPORTSMAN'S GUIDE, INC.
NATIONAL ASSOCIATION, f/k/a
Norwest Bank Minnesota, National
Association By /S/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Its Chief Financial Officer
By /S/ Xxxxx Xxxxxxxxxxx
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Xxxxx Xxxxxxxxxxx
Its Vice President
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