FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT (the "Amendment") dated as of February 1st, 1999 is
between THE SPORTSMAN'S GUIDE, INC. (the "Borrower"), NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION ("Norwest") and M&I MARSHALL & ILSLEY BANK ("M&I") (M&I
and Norwest each referred to herein as a "Bank" and collectively as "Banks"),
and Norwest as agent for the Banks (in such capacity, the "Agent").
BACKGROUND
The Borrower and the Banks entered into a Credit Agreement (the "Agreement")
dated June 26, 1998, pursuant to which the Banks extended to the Borrower a
$20,000,000.00 revolving line of credit (the "Line").
The Borrower has requested that the Banks modify the covenant contained in
Section 7.2 of the Agreement as described herein. The Banks are willing to
grant this request subject to the terms and conditions of this First
Amendment. Capitalized terms not otherwise defined in this First Amendment
shall have the meaning given them in the Agreement.
In consideration of the premises, the Banks and the Borrower agree that the
Agreement is hereby amended as follows:
1. Section 2.5 of the Agreement is hereby deleted in its entirety and
restated as follows:
2.5 INTEREST RATES. (a) Interest on that portion of the outstanding
principal of the Revolving Notes comprised of Base Rate Borrowings shall
be calculated at an annual rate equal to the Base Rate in effect from
time to time less one-half of one percent (0.50%) (PROVIDED, that such
deduction from the Base Rate shall decrease to 0.30% for the period from
February 1, 1999 until the later of February 1, 2000 or the receipt by
the Banks of a Compliance Certificate showing net income of the Borrower
of not less than $2,000,000 on a rolling four-quarters basis), and shall
change as and when the Base Rate changes. Interest shall be calculated
on the basis of the actual number of days elapsed in a year of 360 days.
(b) Interest on the unpaid principal of LIBOR Borrowings shall be
calculated for each Interest Period at a fixed annual rate equal to the
sum of the Reserve Adjusted LIBOR Rate determined for such Interest
Period plus one and eight-tenths percent (1.80%) (PROVIDED, that such
margin shall increase to 2.00% for the period from February 1, 1999
until the later of February 1, 2000 or the receipt by the Banks of a
Compliance Certificate showing net income of the Borrower of not less
than $2,000,000 on a rolling four-quarters basis). Interest shall be
calculated on the basis of the actual number of days elapsed in a year
of 360 days.
2. Section 2.11 (b) of the Agreement is hereby deleted in its entirety and
restated as follows:
(b) FEES AND EXPENSES. The Borrower shall pay to the Agent a credit
fee of 1.80% (PROVIDED, that such fee shall increase to 2.00% for the
period from February 1, 1999 until the later of February 1, 2000 or the
receipt by the Banks of a Compliance Certificate showing net income of
the Borrower of not less than $2,000,000 on a rolling four-quarters
basis) per annum on the face amount of each Standby L/C, and calculated
on the basis of actual days elapsed in a 360-day year, with a minimum
fee of $300.00. The Service Fee and a $300.00 minimum fee shall be
retained by the Agent and the balance shall be paid
by the Agent to the Banks according to their respective Line
Percentages. This fee shall be paid in advance and is in addition to all
other fees or expenses provided for in the L/C Application, which shall
be for the account of the Agent.
3. Section 2.12(b) of the Agreement is hereby deleted in its entirety and
restated as follows:
(b) FEES AND EXPENSES. The Agent's standard operational charges and
fees will be charged for each Documentary L/C and shall be for the
account of the Agent. In addition, the Borrower shall pay to the Agent
a credit fee of 1.80% per annum on the face amount of each Documentary
L/C and time draft (PROVIDED, that such fee shall increase to 2.00% for
the period from February 1, 1999 until the later of February 1, 2000 or
the receipt by the Banks of a Compliance Certificate showing net income
of the Borrower of not less than $2,000,000 on a rolling four-quarters
basis), calculated on the basis of actual days elapsed in a 360-day
year. The Service Fee shall be retained by the Agent and the balance
shall be paid by the Agent to the Banks according to their respective
Line Percentages. This fee shall be paid in advance at the time of
issuance of each Documentary L/C, based upon the combined tenor of the
Documentary L/C and any related time drafts and is in addition to all
other fees or expenses provided for in the L/C Application, which shall
be for the account of the Agent.
4. Section 7.2(c) of the Agreement is hereby deleted in its entirety and
restated as follows:
(c) NET INCOME. Achieve on a rolling four quarters basis a minimum Net
Income of $900,000 for the quarters ending December 31, 1998 through
October 3, 1999 and $2,000,000 as of each fiscal quarter end thereafter.
5. The Borrower hereby represents and warrants to the Banks as follows:
A. The Agreement as amended by this First Amendment remains in
full force and effect.
B. Other than as set forth above, the Borrower has no knowledge of
any default under the terms of the Agreement or any note evidencing any
of the obligations of the Borrower that are documented in the Agreement,
or of any event that with notice or the lapse of time or both would
constitute a default under the Agreement or any such notes.
C. The execution, delivery and performance of this First Amendment
is within its corporate powers, have been duly authorized and are not in
contravention of law or the terms of the Borrower's articles of
incorporation or by-laws, or of any undertaking to which the Borrower is
a party or by which it is bound.
6. Except as modified by this First Amendment, the Agreement remains
unchanged and in full force and effect.
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IN WITNESS WHEREOF, the Banks, the Agent and the Borrower have executed this
First Amendment as of the date and year first above written.
NORWEST BANK MINNESOTA, THE SPORTSMAN'S GUIDE, INC.
NATIONAL ASSOCIATION, AS AGENT
BY: /s/ Thomas L. Falck BY: /s/ Charles Lingen
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THOMAS L. FALCK
VICE PRESIDENT AND SENIOR BANKER ITS: CFO
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NORWEST BANK MINNESOTA, M&I MARSHALL & ILSLEY BANK
NATIONAL ASSOCIATION
BY: /s/ Thomas L. Falck BY: /s/ Doug Pudvah
--------------------------------- ---------------------------------
THOMAS L. FALCK
VICE PRESIDENT AND SENIOR BANKER ITS: VP
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AND BY: /s/ J.M. Howard, Jr.
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ITS: VP
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