Second Amendment to Loan and Security Agreement



  
 Exhibit 10.2

  
 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

  
 THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of July 6, 2004, is entered into by and among SHARPER IMAGE CORPORATION, a Delaware corporation (“Borrower”), each of the lenders that is a signatory to this Amendment (together with its
successors and permitted assigns, individually, “Lender” and, collectively, “Lenders”), and WELLS FARGO RETAIL FINANCE, LLC, a Delaware limited liability company, as the arranger and administrative agent for the
Lenders (in such capacity, together with its successors, if any, in such capacity, “Agent” and together with the Lenders, collectively, the “Lender Group”), in light of the following: 
  
 WHEREAS, Borrower and the Lender Group are parties to that certain
Loan and Security Agreement, dated as of October 31, 2003 (as amended, restated, supplemented, or modified from time to time, the “Loan Agreement”); 
  

WHEREAS, Borrower has requested that the Loan Agreement be amended as set forth herein; and 
  
 WHEREAS, subject to the satisfaction of the conditions set forth
herein, the Lender Group is willing to so consent to the amendment of the Loan Agreement. 
  
 NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and upon the terms and conditions set forth herein, the parties hereby agree as follows:

  
 SECTION 1. RELATION TO THE LOAN AGREEMENT; DEFINITIONS.

  
 1.1 Relation to Loan
Agreement. This Amendment constitutes an integral part of the Loan Agreement and shall be deemed to be a Loan Document for all purposes. Upon the effectiveness of this Amendment, on and after the date hereof each reference in the Loan
Agreement to “this Agreement,” “hereunder,” “hereof,” or words of like import referring to the Loan Agreement, and each reference in the other Loan Documents to “the Loan Agreement,” “thereunder,”
“thereof or words of like import referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended hereby. 
  
 1.2 Capitalized Terms. Capitalized terms used herein without definition shall have the meanings specified in the Loan
Agreement. 
  
 SECTION 2. AMENDMENT TO LOAN AGREEMENT.

  
 2.1 Amendments to Section
1.1. Clause (a) in the definition of “Borrowing Base” set forth in Section 1.1 of the Agreement is hereby amended and restated in its entirety to read as follows: 
  
 “(a) the sum of 
  









 (i) 85% of the amount of Eligible Accounts consisting of Credit Card Receivables,
plus 
  
 (ii) from and after the Account
Availability Activation Date, 85% of the amount of Eligible Accounts (other than Credit Card Receivables), less the amount, if any, of the Dilution Reserve, plus”. 
  
 2.2 Amendments to Section 6.3. Section 6.3(c) of the Loan Agreement is hereby amended
and restated in its entirety as follows: 
  
 “(c) as soon as available, but in any event within 30 days after the start of each of Borrower’s fiscal years, copies of Borrower’s Projections, in form and substance (including as to scope and underlying assumptions)
satisfactory to Agent, in its sole discretion, for the forthcoming fiscal year, month by month, certified by the chief financial officer or VP of Finance of Borrower as being prepared in good faith based on assumptions believed to be reasonable at
the time of preparation thereof,”. 
  
 2.3 Amendments to Section 6.8. Section 6.8(a) of the Loan Agreement is hereby amended by deleting the fourth sentence thereof (commencing with “Subject to Section 3,2 as to timing”) and replacing
it with the following: 
  
 “Subject to Section 3.2 as
to timing, Borrower shall deliver copies of all such policies to Agent with a satisfactory lender’s loss payable endorsement (subject to Section 6.8(d) with respect to Deferred Compensation Life Insurance) naming Agent as sole
loss payee (or, to the extent required by the applicable insurer, naming Borrower as loss payee, provided, that in each such case Borrower shall at all times maintain instructions in effect with such insurer (which instructions Borrower shall not
change without Agent’s prior written consent) directing payment of all amounts to Borrower, as such loss payee, directly to the Concentration Account) or additional insured, as appropriate.” 
  
 2.4 Amendments to Schedule 6.2. Schedule
6.2 to the Loan Agreement is hereby amended as follows: 
  
 (a) Clause (ii) of the proviso to the first sentence of item (a) of Schedule 6.2 is hereby deleted and replaced with the following: 
  
 “(ii) prior to the Account Availability Activation Date, such borrowing base certificate may exclude calculations and
detail to the extent relating solely to Eligible Accounts other than Credit Card Receivables.”; 
  

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 (b) The “and” appearing at the end of item (b)(i) is hereby deleted, and item
(b)(ii) is hereby deleted and replaced with the following new items (b)(ii) and (b)(iii): 
  
 “(ii) notice of all claims, offsets, or disputes asserted by Account Debtors with respect to Borrower’s and its Subsidiaries’ Credit Card Receivables, and 
  
 (iii) from and after the Account Availability Activation Date, notice of
all claims, offsets, or disputes asserted by Account Debtors with respect to Borrower’s and its Subsidiaries’ Corporate Wholesale Receivables or Consumer Installment Sales Receivables.”; 
  
 (c) Item (c)(ii)(A) is hereby deleted and replaced with
“(A) [Intentionally Omitted]”; 
  
 (d)
Item (c)(ii)(M) is hereby deleted and replaced with “(M) [Intentionally Omitted]”; and 
  
 (e) Item (f)(iii) is hereby renumbered to become item (f)(iv), the “and” appearing at the end of item (f)(ii) is hereby deleted,
and a new item (f)(iii) is hereby inserted reading in full as follows: 
  
 “(iii) accounts payable aging analysis; and”. 
  
 SECTION 3. REPRESENTATIONS AND WARRANTIES. 
  
 3.1 Representations and warranties. 
  
 Borrower hereby represents and warrants to the Lender Group that: 
  
 (a) It has the requisite power and authority to execute and
deliver this Amendment and to perform its obligations hereunder and under the Loan Documents to which it is a party. The execution, delivery, and performance by it of this Amendment and the performance by it of each Loan Document to which it is a
party (i) have been duly approved by all necessary action and no other proceedings are necessary to consummate such transactions; and (ii) are not in contravention of (A) any law, rule, or regulation, or any order, judgment, decree, writ,
injunction, or award of any arbitrator, court or Governmental Authority binding on it, (B) the terms of its organizational documents, or (C) any provision of any contract or undertaking to which it is a party or by which any of its properties may be
bound or affected; 
  
 (b) This Amendment has
been duly executed and delivered by Borrower. This Amendment and each Loan Document to which Borrower is party are the legal, valid and binding obligation of Borrower, enforceable against such Borrower in accordance with its terms, and is in full
force and effect except as such validity and enforceability is limited by the laws of insolvency and bankruptcy, laws affecting creditors’ rights and principles of equity applicable hereto; 
  
 (c) No injunction, writ, restraining order, or other order
of any nature prohibiting, directly or indirectly, the consummation of the transactions contemplated herein has 

  

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been issued and remains in force by any Governmental Authority against Borrower or any member of the Lender Group; 
  
 (d) No Default or Event of Default has occurred and is
continuing on the date hereof or as of the date of the effectiveness of this Amendment; and 
  
 (e) The representations and warranties in the Loan Agreement and the other Loan Documents are true and correct in all material respects on
and as of the date hereof, as though made on such date (except to the extent that such representations and warranties relate solely to an earlier date). 
  
 SECTION 4. MISCELLANEOUS. 
  
 4.1 Conditions to Effectiveness. The satisfaction of each of the following shall constitute conditions precedent to the
effectiveness of this Amendment and each and every provision hereof: 
  
 (a) The representations and warranties in the Loan Agreement and the other Loan Documents shall be true and correct in all respects on and as of the date hereof, as though made on such date (except to the extent that
such representations and warranties relate solely to an earlier date); 
  
 (b) No Default or Event of Default shall have occurred and be continuing on the date hereof or as of the date of the effectiveness of this Amendment; and 
  
 (c) No injunction, writ, restraining order, or other order of any nature prohibiting, directly or
indirectly, the consummation of the transactions contemplated herein shall have been issued and remain in force by any Governmental Authority against Borrower or the Lender Group. 
  
 4.2 Entire Amendment; Effect of Amendment. This Amendment, and terms and provisions hereof,
constitute the entire agreement among the parties pertaining to the subject matter hereof and supersedes any and all prior or contemporaneous amendments relating to the subject matter hereof. Except for the amendments to the Loan Agreement expressly
set forth in Section 2 hereof, the Loan Agreement and other Loan Documents shall remain unchanged and in full force and effect. The execution, delivery, and performance of this Amendment shall not operate as a waiver of or, except as expressly set
forth herein, as an amendment of, any right, power, or remedy of the Lender Group as in effect prior to the date hereof. The amendments and other agreements set forth herein are limited to the specifics hereof, shall not apply with respect to any
facts or occurrences other than those on which the same are based, shall not excuse future non-compliance with the Loan Agreement, and shall not operate as a consent to any further or other matter, under the Loan Documents. To the extent any terms
or provisions of this Amendment conflict with those of the Loan Agreement or other Loan Documents, the terms and provisions of this Amendment shall control. This Amendment is a Loan Document. 
  

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 4.3 Counterparts; Telefacsimile. This Amendment may be executed in
any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Amendment by signing any such counterpart. Delivery of an executed counterpart of this Amendment by
telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile also shall deliver an original executed counterpart of
this Amendment, but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment. 
  
 4.4 Fees, Costs and Expenses. Borrower agrees to pay on demand all reasonable fees,
costs and expenses in connection with the preparation, execution, delivery, administration, modification and amendment of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable
fees and out-of-pocket expenses of counsel for the Agent with respect thereto and with respect to advising the Agent as to their rights and responsibilities hereunder and thereunder. 
  
 4.5 Cross-References. References in
this Amendment to any Section are, unless otherwise specified, to such Section of this Amendment. 
  
 4.6 Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. 
  
 4.7
GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICT OF LAWS PRINCIPLES. 
  
 [signature page follows] 
  

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 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered as of the date
first written above. 
  

			
	 SHARPER IMAGE CORPORATION,
 a Delaware
corporation

	
	


	 By:
	 	Jeffrey P. Forgan
	 Title:
	 	Executive Vice President and Chief Financial Officer
	
	 WELLS FARGO RETAlL FINANCE, LLC,
 a
Delaware limited liability company, as Agent and as a Lender

		
	By:	 	 



	 Title:
	 	Senior Vice President


  
 [Signature
Page to Second Amendment]