Document:

exv10w1

 

EXHIBIT 10.1

AMENDED AND RESTATED CREDIT AGREEMENT

     THIS AGREEMENT is entered into as of August 29, 2006, by and between THE SPORTSMAN’S GUIDE,
INC., a Minnesota corporation (“Borrower”), and WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”).

RECITALS

     Borrower has requested that Bank extend or continue credit to Borrower as described below, and
Bank has agreed to provide such credit to Borrower on the terms and conditions contained herein.

     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I

CREDIT TERMS

     SECTION 1.1. LINE OF CREDIT.

     (a) Line of Credit. Subject to the terms and conditions of this Agreement, Bank
hereby agrees to make advances to Borrower from time to time up to and including March 15, 2007,
not to exceed at any time the aggregate principal amount of Fifteen Million Dollars
($15,000,000.00) (“Line of Credit”), the proceeds of which shall be used for working capital and to
allow for standby and commercial letters of credit. Borrower’s obligation to repay advances under
the Line of Credit shall be evidenced by a promissory note dated August 29, 2006 (“Line of Credit
Note”), all terms of which are incorporated herein by this reference.

     (b) Limitation on Borrowings. The outstanding borrowings under the Line of Credit, to
a maximum of the principal amount set forth above, shall not at any time exceed an aggregate of
Seventy Five percent (75%) of Borrower’s eligible accounts receivable, plus Forty percent (40%) of
the value of Borrower’s eligible inventory and eligible inventory of The Golf Warehouse, Inc., a
Delaware corporation (“TGW”) (exclusive of work in process and inventory which is obsolete,
unsaleable or damaged), with value defined as the lower of cost or market value. All of the
foregoing shall be determined by Bank upon receipt and review of all collateral reports required
hereunder and such other documents and collateral information as Bank may from time to time
require. Borrower acknowledges that said borrowing base was established by Bank with the
understanding that, among other items, the aggregate of all returns, rebates, discounts, credits
and allowances for the immediately preceding three (3) months at all times shall be less than ten
percent (10%) of Borrower’s gross sales for said period. If such dilution of Borrower’s accounts
for the immediately preceding three (3) months at any time exceeds ten percent (10%) of Borrower’s
gross sales for said period, or if there at any time exists any other matters, events, conditions
or contingencies which Bank reasonably believes may affect payment of any Portion of Borrower’s
accounts, Bank, in its sole discretion, may reduce the foregoing advance rate against eligible
accounts receivable to a percentage appropriate to reflect such

 

 

additional dilution and/or establish additional reserves against Borrower’s eligible accounts
receivable.

     As used herein, “eligible accounts receivable” shall consist solely of trade accounts created
in the ordinary course of Borrower’s business, upon which Borrower’s right to receive payment is
absolute and not contingent upon the fulfillment of any condition whatsoever, and in which Bank has
a perfected security interest of first priority, and shall not include:

     (i) any account which is past due more than twice Borrower’s standard selling terms;

     (ii) that portion of any account for which there exists any right of setoff, defense or
discount (except regular discounts allowed in the ordinary course of business to promote
prompt payment) or for which any defense or counterclaim has been asserted;

     (iii) any account which represents an obligation of any state or municipal government
or of the United States government or any political subdivision thereof (except accounts
which represent obligations of the United States government and for which the assignment
provisions of the Federal Assignment of Claims Act, as amended or recodified from time to
time, have been complied with to Bank’s satisfaction);

     (iv) any account which represents an obligation of an account debtor located in a
foreign country;

     (v) any account which arises from the sale or lease to or performance of services for,
or represents an obligation of, an employee, affiliate, partner, member, parent or
subsidiary of Borrower;

     (vi) that portion of any account, which represents interim or progress billings or
retention rights on the part of the account debtor;

     (vii) any account which represents an obligation of any account debtor when twenty
percent (20%) or more of Borrower’s accounts from such account debtor are not eligible
pursuant to (i) above;

     (viii) that portion of any account from an account debtor which represents the amount
by which Borrower’s total accounts from said account debtor exceeds twenty-five percent
(25%) of Borrower’s total accounts;

     (ix) any account deemed ineligible by Bank when Bank in its reasonable discretion, in
its sole discretion, deems the creditworthiness or financial condition of the account
debtor, or the industry in which the account debtor is engaged, to be unsatisfactory.

As used herein, the term “Eligible Inventory” shall mean all of Borrower’s inventory valued at
cost, as reduced by an Eligible Inventory Reserve. “Eligible Inventory Reserve” means the sum of:
(a) for inventory that has been held for one year or more but less than two years, 25% of cost for
such inventory, plus (b) for inventory that has been held for two years or more, 50% of the

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cost of such inventory, plus (c) for The Sportsman’s Guide Outlet, Inc., the greater of five
percent (5.0%) of its inventory or the actual “shrink reserve” for The Sportsman’s Guide Outlet,
Inc. The parties expressly acknowledge and agree that Eligible Inventory shall include any
inventory acquired with the support of a letter of credit, whether or not such inventory is in
transit.

     (c) Letter of Credit Subfeature. As a subfeature under the Line of Credit, Bank
agrees from time to time during the term thereof to issue or cause an affiliate to issue Standby
and commercial letters of credit for the account of Borrower (each, a “Letter of Credit” and
collectively, “Letters of Credit”); provided however, that the aggregate undrawn amount of all
outstanding Letters of Credit shall not at any time exceed Ten Million Dollars ($10,000,000.00).
The form and substance of each Letter of Credit shall be subject to approval by Bank, in its sole
discretion. No Letter of Credit shall have an expiration date subsequent to the maturity date of
the Line of Credit. The undrawn amount of all Letters of Credit shall be reserved under the Line
of Credit and shall not be available for borrowings thereunder. Each Letter of Credit shall be
subject to the additional terms and conditions of the Letter of Credit agreements, applications and
any related documents required by Bank in connection with the issuance thereof. Each drawing paid
under a Letter of Credit shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement applicable to such advances;
provided however, that if advances under the Line of Credit are not available, for any reason, at
the time any drawing is paid, then Borrower shall immediately pay to Bank the full amount drawn,
together with interest thereon from the date such drawing is paid to the date such amount is fully
repaid by Borrower, at the, rate of interest applicable to advances under the Line of Credit. In
such event Borrower agrees that Bank, in its sole discretion, may debit any account maintained by
Borrower with Bank for the amount of any such drawing.

     (d) Borrowing and Repayment. Borrower may from time to time during the term of the
Line of Credit borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject
to all of the limitations, terms and conditions contained herein or in the Line of Credit Note;
provided however, that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth above.

     SECTION 1.2. INTEREST/FEES.

     (a) Interest. The outstanding principal balance of each credit subject hereto shall
bear interest, and the amount of each drawing paid under the Standby Letter of Credit paid to the
date such amount is fully repaid by Borrower, at the rate of interest set forth in each promissory
note or other instrument or document executed in connection therewith.

     (b) Computation and Payment. Interest shall be computed on the basis of a 360-day
year, actual days elapsed. Interest shall be payable at the times and place set forth in each
promissory note or other instrument or document required hereby.

     (c) Commitment Fee. Borrower shall pay to Bank a non-refundable commitment fee for
the Line of Credit equal to Five Thousand Dollars ($5,000), which fee shall be due and payable
contemporaneously with the execution hereof.

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     (d) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to (.250%) per
annum (computed on the basis of a 360-day year, actual days elapsed) on the average daily unused
amount of the Line of Credit, which fee shall be calculated on a quarterly basis by Bank and shall
be due and payable by Borrower in arrears within ten (10) days after each billing is sent by Bank.

     (e) Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon the issuance of
each Letter of Credit equal to (1.25%) per annum (computed on the basis of a 360-day year, actual
days elapsed) of the face amount thereof, and (ii) fees upon the payment or negotiation of each
drawing under any Letter of Credit and fees upon the occurrence of any other activity with respect
to any Letter of Credit (including without limitation, the transfer, amendment or cancellation of
any Letter of Credit) determined in accordance with Bank’s standard fees and charges then in effect
for such activity.

     SECTION 1.3. COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect all principal,
interest and fees due under each credit subject hereto by charging Borrower’s deposit account
number 6355031049 with Bank, or any other deposit account maintained by Borrower with Bank, for the
full amount thereof. Should there be insufficient funds in any such deposit account to pay all
such sums when due, the full amount of such deficiency shall be immediately due and payable by
Borrower.

     SECTION 1.4. COLLATERAL.

     As security for all indebtedness of Borrower to Bank subject hereto, Borrower hereby grants to
Bank security interests of first priority in all Borrower’s accounts receivable and other rights to
payment, general intangibles, inventory and equipment.

As security for all indebtedness of Borrower to Bank subject hereto, Borrower shall cause TGW to
grant to Bank security interests of first priority in all accounts receivable and other rights to
payment, general intangibles, inventory and equipment.

All of the foregoing shall be evidenced by and subject to the terms of such security agreements,
financing statements, deeds of trust and other documents as Bank shall reasonably require, all in
form and substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for
all costs and expenses incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals, audits and title insurance.

     SECTION 1.5. BANKING RELATIONSHIP. The Borrower’s primary operating accounts shall be
maintained at the Bank or one of its affiliates.

ARTICLE II

REPRESENTATIONS AND WARRANTIES

     Borrower makes the following representations and warranties to Bank, which representations and
warranties shall survive the execution of this Agreement and shall continue

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in full force and effect until the full and final payment, and satisfaction and discharge, of
all obligations of Borrower to Bank subject to this Agreement.

     SECTION 2.1. LEGAL STATUS. Borrower is a corporation, duly organized and existing and in good
standing under the laws of the State of Minnesota, and is qualified or licensed to do business (and
is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such
qualification or licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

     SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract,
instrument and other document required hereby or at any time hereafter delivered to Bank in
connection herewith (collectively, the “Loan Documents”) have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will constitute legal, valid and
binding agreements and obligations of Borrower or the party which executes the same, enforceable in
accordance with their respective terms.

     SECTION 2.3. NO VIOLATION. The execution, delivery and performance by Borrower of each of the
Loan Documents do not violate any provision of any law or regulation, or contravene any provision
of the Articles of Incorporation or By-Laws of Borrower, or result in any breach of or default
under any contract, obligation, indenture or other instrument to which Borrower is a party or by
which Borrower may be bound.

     SECTION 2.4. LITIGATION. There are no pending, or to the best of Borrower’s knowledge
threatened, actions, claims, investigations, suits or proceedings by or before any governmental
authority, arbitrator, court or administrative agency which could have a material adverse effect on
the financial condition or operation of Borrower other than those disclosed by Borrower to Bank in
writing prior to the date hereof.

     SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of Borrower dated
June 30, 2006, a true copy of which has been delivered by Borrower to Bank prior to the date
hereof, (a) is complete and correct and presents fairly the financial condition of Borrower, (b)
discloses all liabilities of Borrower that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent,
and (c) has been prepared in accordance with generally accepted accounting principles consistently
applied. Since the date of such financial statement there has been no material adverse change in
the financial condition of Borrower, nor has Borrower mortgaged, pledged, granted a security
interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.

     SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments or
adjustments of its income tax payable with respect to any year.

     SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or instrument to
which Borrower is a party or by which Borrower may be bound that requires the subordination in
right of payment of any of Borrower’s obligations subject to this Agreement to any other obligation
of Borrower.

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     SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter possess, all
permits, consents, approvals, franchises and licenses required and rights to all trademarks, trade
names, patents, and fictitious names, if any, necessary to enable it to conduct the business in
which it is now engaged in compliance with applicable law.

     SECTION 2.9. ERISA. Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time (“ERISA”); Borrower has not violated any provision of any defined employee pension
benefit plan (as defined in ERISA) maintained or contributed to by Borrower (each, a “Plan”); no
Reportable Event as defined in ERISA has occurred and is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under ERISA with respect
to each Plan; and each Plan will be able to fulfill its benefit obligations as they come due in
accordance with the Plan documents and under generally accepted accounting principles.

     SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowed
money, any purchase money obligation or any other material lease, commitment, contract, instrument
or obligation.

ARTICLE III

CONDITIONS

     SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any
credit contemplated by this Agreement is subject to the fulfillment to Bank’s satisfaction of all
of the following conditions:

     (a) Approval of Bank Counsel. All legal matters incidental to the extension of credit
by Bank shall be satisfactory to Bank’s counsel.

     (b) Documentation. Bank shall have received, in form and substance satisfactory to
Bank, each of the following, duly executed:

     (i) This Agreement and each promissory note or other instrument or document required
hereby.

     (ii) Certificate of Authority (Borrower).

     (iii) Certificate of Authority (TGW).

     (iv) Continuing Security Agreement: Rights to Payment & Inventory (Borrower).

     (v) Security Agreement: Equipment.

     (vi) Amendment to third Party Security Agreement: Rights to Payment and Inventory
(TGW).

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     (vii) Amendment to Third Party Security Agreement: Equipment (TGW).

     (viii) Amendment to UCC Financing Statement (TGW).

     (ix) Such other documents as Bank may require under any other Section of this
Agreement.

     (c) Financial Condition. There shall have been no material adverse change, as
determined by Bank, in the financial condition or business of Borrower.

     (d) Insurance. Borrower shall have delivered to Bank evidence of insurance coverage
on all Borrower’s property, in form, substance, amounts, covering risks and issued by companies
satisfactory to Bank, and where required by Bank, with loss payable endorsements in favor of Bank.

     SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each
extension of credit requested by Borrower hereunder shall be subject to the fulfillment to Bank’s
satisfaction of each of the following conditions:

     (a) Compliance. The representations and warranties contained herein and in each of
the other Loan Documents shall be true on and as of the date of the signing of this Agreement and
on the date of each extension of credit by Bank pursuant hereto, with the same effect as though
such representations and warranties had been made on and as of each such date, and on each such
date, no Event of Default as defined herein, and no condition, event or act which with the giving
of notice or the passage of time or both would constitute such an Event of Default, shall have
occurred and be continuing or shall exist.

     (b) Documentation. Bank shall have received all additional documents which may be
required in connection with such extension of credit.

ARTICLE IV

AFFIRMATIVE COVENANTS

     Borrower covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of
all obligations of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing:

     SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or other
liabilities due under any of the Loan Documents at the times and place and in the manner specified
therein, and immediately upon demand by Bank, the amount by which the outstanding principal balance
of any credit subject hereto at any time exceeds any limitation on borrowings applicable thereto.

     SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in accordance with
generally accepted accounting principles consistently applied, and permit any

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representative of Bank, at any reasonable time, to inspect, audit and examine such books and
records, to make copies of the same, and to inspect the properties of Borrower.

     SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form and detail
satisfactory to Bank:

     (a) not later than 120 days after and as of the end of each fiscal year, an unaudited
consolidated financial statement of Borrower, prepared by the Borrower, to include balance sheet,
income statement, statement of cash flow and management letter including management’s discussion
and analysis (if any);

     (b) not later than 30 days after and as of the end of each month, a consolidated financial
statement of Borrower, prepared by Borrower, to include balance sheet and income statement;

     (c) not later than 30 days after and as of the end of each month, a borrowing base
certificate, and an inventory collateral report;

     (d) not later than 30 days after and as of the end of each month, a certificate of the
president or chief financial officer of Borrower that said financial statements are accurate and
that there exists no Event of Default nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute an Event of Default;

     (e) from time to time such other information as Bank may reasonably request.

     SECTION 4.4. COMPLIANCE. Preserve and maintain all licenses, permits, governmental approvals,
rights, privileges and franchises necessary for the conduct of its business; and comply with the
provisions of all documents pursuant to which Borrower is organized and/or which govern Borrower’s
continued existence and with the requirements of all laws, rules, regulations and orders of any
governmental authority applicable to Borrower and/or its business.

     SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower, including but not limited to
fire, extended coverage, public liability, flood, property damage and workers’ compensation, with
all such insurance carried with companies and in amounts satisfactory to Bank, and deliver to Bank
from time to time at Bank’s reasonable request schedules setting forth all insurance then in
effect.

     SECTION 4.6. FACILITIES. Keep all properties useful or necessary to Borrower’s business in
good repair and condition, and from time to time make necessary repairs, renewals and replacements
thereto so that such properties shall be fully and efficiently preserved and maintained.

     SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes and assessments,
except such (a) as Borrower may in good faith contest or as to which a bona fide

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dispute may arise, and (b) for which Borrower has made provision, to Bank’s satisfaction, for
eventual payment thereof in the event Borrower is obligated to make such payment.

     SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any litigation pending or
threatened against Borrower which such equitable relief against the Borrower or a monetary recovery
against the Borrower in excess of $500,000.

     SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower’s financial condition as follows using
generally accepted accounting principles consistently applied and used consistently with prior
practices (except to the extent modified by the definitions herein):

     (a) Current Ratio not at any time less than 1.0 to 1.0, with “Current Ratio” defined as total
current assets (minus any intercompany receivables) divided by total current liabilities.

     (b) Tangible Net Worth not at any time less than $5,000,000.00 commencing August 29, 2006,
with “Tangible Net Worth” defined as the aggregate of total book net worth plus subordinated debt
plus subordinated intercompany payables less any intangible assets. The parties expressly
acknowledge and agree that intercompany receivables shall be deemed to be intangible assets.

     (c) Quarterly income before taxes not less than $1,000,000.00 determined as of each fiscal
quarter end.

     SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5) days after the
occurrence of each such event or matter) give written notice to Bank in reasonable detail of: (a)
the occurrence of any Event of Default, or any condition, event or act which with the giving of
notice or the passage of time or both would constitute an Event of Default; (b) any change in the
name or the organizational structure of Borrower; (c) the occurrence and nature of any Reportable
Event or Prohibited Transaction, each as defined in ERISA, or any funding deficiency with respect
to any Plan; or (d) any termination or cancellation of any insurance policy which Borrower is
required to maintain, or any uninsured or partially uninsured loss through liability or property
damage, or through fire, theft or any other cause affecting Borrower’s property.

ARTICLE V

NEGATIVE COVENANTS

     Borrower further covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until payment in full of
all obligations of Borrower subject hereto, Borrower will not without Bank’s prior written consent:

     SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any credit extended hereunder except
for the purposes stated in Article I hereof.

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     SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in fixed assets in any
fiscal year in excess of an aggregate of $3,000,000.00.

     SECTION 5.3. LEASE EXPENDITURES. Incur operating lease expense (excluding facility rent
expense) in any fiscal year in excess of an aggregate of $500,000.00.

     SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or
liabilities resulting from borrowings, loans or advances, whether secured or unsecured, matured or
unmatured, liquidated or unliquidated, joint or several, except (a) the liabilities of Borrower to
Bank, (b) any other liabilities of Borrower existing as of, and disclosed to Bank prior to, the
date hereof; provided that Borrower shall be permitted to grant purchase money security interest
relating to the acquisition of machinery and equipment to the extent permitted under Section 5.2
above, and (c) indebtedness of Borrower to third parties that has been subordinated to the
indebtedness of the Borrower to the Bank on terms and conditions, and pursuant to a subordination
agreement (“Subordination Agreement”) acceptable to the Bank.

     SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Other than the “Merger” (as defined
below) Merge into or consolidate with any other entity; make any substantial change in nature of
Borrower’s business as conducted as of the date hereof; acquire all or substantially all of the
assets of any other entity for a purchase price in excess of One Million Dollars; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of Borrower’s assets
except in the ordinary curse of business. The Bank hereby consents to the merger (“Merger”) of
Panther Subcorp, Inc., a Minnesota corporation, (“Panther”), a wholly-owned subsidiary of VLP
Corporation, a Delaware Corporation (“VLP”) with and into the Borrower, with the Borrower
continuing as the surviving corporation of the Merger, all pursuant to that certain Agreement and
Plan of Merger made and entered into as of May 4, 2006, by and between VLP, Panther and the
Borrower.

     SECTION 5.6. GUARANTIES. Guarantee or become liable in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the ordinary course of
business), accommodation endorser or otherwise for, nor pledge or hypothecate any assets of
Borrower as security for, any liabilities or obligations of any other person or entity, except any
of the foregoing in favor of Bank.

     SECTION 5.7. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments in
any person or entity, except any of the foregoing existing as of, and disclosed to Bank prior to,
the date hereof.

     SECTION 5.8. DIVIDENDS, DISTRIBUTIONS. Declare or pay any dividend or distribution either in
cash, stock or any other property on Borrower’s stock now or hereafter outstanding, nor redeem,
retire, repurchase or otherwise acquire any shares of any class of Borrower’s stock now or
hereafter outstanding without the prior written consent of Bank, except that, so long as no Event
of Default has occurred, the Borrower may make distributions for any fiscal year of the Borrower in
an amount up to one hundred percent (100%) of the Borrower’s “After Tax Earnings” for such fiscal
year. “After Tax Earnings” means the Borrower’s after tax net income for such period determined in
accordance with generally accepted accounting principles.

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     SECTION 5.9. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a security interest
in, or lien upon, all or any portion of Borrower’s assets now owned or hereafter acquired, except
any of the foregoing in favor of Bank or which is existing as of, and disclosed to Bank in writing
prior to, the date hereof and except for purchase money security interests relating to the
acquisition of machinery and equipment to the extent permitted under Section 5.2 above.

ARTICLE VI

EVENTS OF DEFAULT

     SECTION 6.1. The occurrence of any of the following shall constitute an “Event of Default”
under this Agreement:

     (a) Borrower shall fail to pay when due any principal, interest, fees or other amounts payable
under any of the Loan Documents.

     (b) Any financial statement or certificate furnished to Bank in connection with, or any
representation or warranty made by Borrower or any other party under this Agreement or any other
Loan Document shall prove to be incorrect, false or misleading in any material respect when
furnished or made.

     (c) Any default in the performance of or compliance with any obligation, agreement or other
provision contained herein or in any other Loan Document (other than those referred to in
subsections (a) and (b) above), and with respect to any such default which by its nature can be
cured, such default shall continue for a period of twenty (20) days from its occurrence.

     (d) Any default in the payment or performance of any obligation, or any defined event of
default, under the terms of any contract or instrument (other than any of the Loan Documents)
pursuant to which Borrower, any guarantor hereunder or any general partner or joint venturer in any
Borrower which is a partnership or joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a “Third Party Obligor”) has incurred any debt or other
liability to any person or entity, including Bank.

     (e) The filing of a notice of judgment lien against Borrower or any Third Party Obligor, or
the recording of any abstract of judgment against Borrower or any Third Party Obligor in any county
in which Borrower or such Third Party Obligor has an interest in real property; or the service of a
notice of levy and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any Third Party Obligor, or the entry of a judgment against Borrower or any
Third Party Obligor in excess of $50,000.00.

     (f) Borrower or any Third Party Obligor shall become insolvent, or shall suffer or consent to
or apply for the appointment of a receiver, trustee, custodian or liquidator of itself or any of
its property, or shall generally fail to pay its debts as they become due, or shall make a general
assignment for the benefit of creditors; Borrower or any Third Party Obligor shall file a voluntary
petition in bankruptcy, or seeking reorganization, in order to effect a plan or other arrangement
with creditors or any other relief under the Bankruptcy Reform Act, Title 11 of the United States
Code, as amended or recodified from time to time (“Bankruptcy Code”), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any

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involuntary petition or proceeding pursuant to the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief for debtors is filed or
commenced against Borrower or any Third Party Obligor, or Borrower or any Third Party Obligor shall
file an answer admitting the jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any Third Party Obligor shall be adjudicated a bankrupt, or an
order for relief shall be entered against Borrower or any Third Party Obligor by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state or federal law
relating to bankruptcy, reorganization or other relief for debtors.

     (g) There shall exist or occur any event or condition which Bank in good faith reasonably
believes impairs, or is substantially likely to impair, the prospect of payment or performance by
Borrower of its obligations under any of the Loan Documents.

     (h) The death or incapacity of any individual Borrower or Third Party Obligor. The
dissolution or liquidation of any Borrower or Third Party Obligor which is a corporation,
partnership, joint venture or other type of entity; or Borrower or any such Third Party Obligor, or
any of its directors, stockholders or members, shall take action seeking to effect the dissolution
or liquidation of such Borrower or Third Party Obligor.

     (i) Any change in ownership of an aggregate of twenty-five percent (25%) or more of the common
stock of Borrower.

     (j) The Borrower shall take or participate in any action which would be prohibited under the
provisions of any Subordination Agreement or make any payment on any “Subordinated Indebtedness”
(as defined in any Subordination Agreement) that any person was not entitled to receive under the
provisions of the Subordination Agreement.

     SECTION 6.2. REMEDIES. Upon the occurrence of any Event of Default: (a) all indebtedness of
Borrower under each of the Loan Documents, any term thereof to the contrary notwithstanding, shall
at Banks option and without notice become immediately due and payable without presentment, demand,
protest or notice of dishonor, all of which are hereby expressly waived by each Borrower; (b) the
obligation, if any, of Bank to extend any further credit under any of the Loan Documents shall
immediately cease and terminate; and (c) Bank shall have all rights, powers and remedies available
under each of the Loan Documents, or accorded by law, including without limitation the right to
resort to any or all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law. All rights, powers and
remedies of Bank may be exercised at any time by Bank and from time to time after the occurrence of
an Event of Default, are cumulative and not exclusive, and shall be in addition to any other
rights, powers or remedies provided by law or equity.

ARTICLE VII

MISCELLANEOUS

     SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as a waiver of such right,
power or remedy; nor shall any single or partial exercise of any such

- 12 -

 

right, power or remedy preclude, waive or otherwise affect any other or further exercise
thereof or the exercise of any other right, power or remedy. Any waiver, permit, consent or
approval of any kind by Bank of any breach of or default under any of the Loan Documents must be in
writing and shall be effective only to the extent set forth in such writing.

     SECTION 7.2. NOTICES. All notices, requests and demands which any party is required or may
desire to give to any other party under any provision of this Agreement must be in writing
delivered to each party at the following address:

	 	 	 	 	 
	 

	 	BORROWER:
	 	THE SPORTSMAN’S GUIDE, INC.
	 

	 	 	 	411 Farwell Avenue
	 

	 	 	 	South St. Paul, Minnesota 55075
	 

	 	 	 	Attention: Charles B. Lingen
	 

	 	 	 	Facsimile: (651) 552-5345
	 
	 	 	 	 
	 

	 	BANK:
	 	WELLS FARGO BANK, NATIONAL ASSOCIATION
	 

	 	 	 	430 North Wabasha Street, Suite 302
	 

	 	 	 	St. Paul, Minnesota 55101
	 

	 	 	 	Attention: Jeffrey L. Collier
	 

	 	 	 	Facsimile: (651) 205-8538

or to such other address as any party may designate by written notice to all other parties. Each
such notice, request and demand shall be deemed given or made as follows: (a) if sent by hand
delivery, upon delivery; (b) if sent by mail, upon: the earlier of the date of receipt or three (3)
days after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.

     SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon
demand the full amount of all payments, advances, charges, costs and expenses, including reasonable
attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house
counsel), expended or incurred by Bank in connection with (a) the negotiation and preparation of
this Agreement and the other Loan Documents, Bank’s continued administration hereof and thereof,
and the preparation of any amendments and waivers hereto and thereto, (b) the enforcement of Bank’s
rights and/or the collection of any amounts which become due to Bank under any of the Loan
Documents, and (c) the prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other person) relating to
any Borrower or any other person or entity.

     SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the heirs, executors, administrators, legal representatives, successors and assigns of
the parties; provided however, that Borrower may not assign or transfer its interest hereunder
without Bank’s prior written consent. Bank reserves the right to sell, assign, transfer, negotiate
or grant participations in all or any part of, or any interest in, Bank’s rights and benefits under
each of the Loan Documents. In connection therewith, Bank

- 13 -

 

may disclose all documents and information which Bank now has or may hereafter acquire
relating to-any credit subject hereto, Borrower or its business, or any collateral required
hereunder.

     SECTION 7.5. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents
constitute the entire agreement between Borrower and Bank with respect to each credit subject
hereto and supersede all prior negotiations, communications, discussions and correspondence
concerning the subject matter hereof. This Agreement may be amended or modified only in writing
signed by each party hereto.

     SECTION 7.6. NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for the
sole protection and benefit of the parties hereto and their respective permitted successors and
assigns, and no other person or entity shall be a third party beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any other of the Loan
Documents to which it is not a party.

     SECTION 7.7. TIME. Time is of the essence of each and every provision of this Agreement and
each other of the Loan Documents.

     SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of such provision or
any remaining provisions of this Agreement.

     SECTION 7.9. COUNTERPARTS. This Agreement may be executed, in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original, and all of which when
taken together shall constitute one and the same Agreement.

     SECTION 7.10. GOVERNING LAW. This Agreement shall be governed by and construed in accordance
with the laws of the State of Minnesota.

     SECTION 7.11. ARBITRATION.

     (a) Arbitration. The parties hereto agree, upon demand by any party, to submit to
binding arbitration all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents), whether in tort, contract
or otherwise arising out of or relating to in any way (i) the loan and related Loan Documents which
are the subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation, inducement,
enforcement, default or termination; or (ii) requests for additional credit.

     (b) Governing Rules. Any arbitration proceeding will (i) proceed in a location in
Minnesota selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law
provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such
other administrator as the parties shall mutually agree upon, in accordance with the AAA’s
commercial dispute resolution procedures, unless the claim or Counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the

- 14 -

 

arbitration shall be conducted in accordance with the AAA’s optional procedures for large,
complex commercial disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to, as applicable, as the
“Rules”). If there is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to submit to arbitration
following a demand by any other party shall bear all costs and expenses incurred by such other
party in compelling arbitration of any dispute. Nothing contained herein shall be deemed to be a
waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. § 91 or any
similar applicable state law.

     (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure. The arbitration
requirement does not limit the right of any party to (i) foreclose against real or personal
property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of
collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such
as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after
the pendency of any arbitration proceeding. This exclusion does not constitute a waiver of the
right or obligation of any party to submit any dispute to arbitration or reference hereunder,
including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii)
of this paragraph.

     (d) Arbitrator Qualifications and Powers. Any arbitration proceeding in which the
amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected
according to the Rules, and who shall not render an award of greater than $5,000,000.00. Any
dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote
of a panel of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations. The arbitrator will be a neutral attorney licensed
in the State of Minnesota or a neutral retired judge of the state or federal judiciary of
Minnesota, in either case with a minimum of ten years experience in the substantive law applicable
to the subject matter of the dispute to be arbitrated. The arbitrator will determine whether or
not an issue is arbitratable and will give effect to the statutes of limitation in determining any
claim. In any arbitration proceeding the arbitrator will decide (by documents only or with a
hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to
dismiss for failure to state a claim or motions for summary adjudication. The arbitrator shall
resolve all disputes in accordance with the substantive law of Minnesota and may grant any remedy
or relief that a court of such state could order or grant within the scope hereof and such
ancillary relief as is necessary to make effective any award. The arbitrator shall also have the
power to award recovery of all costs and fees, to impose sanctions and to take such other action as
the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the Minnesota Rules of Civil Procedure or other applicable law. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction. The institution
and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests such action for judicial relief.

     (e) Discovery. In any arbitration proceeding discovery will be permitted in
accordance with the Rules. All discovery shall be expressly limited to matters directly relevant
to the dispute being arbitrated and must be completed no later than 20 days before the hearing

- 15 -

 

date and within 180 days of the filing of the dispute with the AAA. Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject to final
determination by the arbitrator upon a showing that the request for discovery is essential for the
party’s presentation and that no alternative means for obtaining information is available.

     (f) Class Proceedings and Consolidations. The resolution of any dispute arising
pursuant to the terms of this Agreement shall be determined by a separate arbitration proceeding
and such dispute shall not be consolidated with other disputes or included in any class proceeding.

     (g) Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs and
expenses of the arbitration proceeding.

     (h) Miscellaneous. To the maximum extent practicable, the AAA, the arbitrators and
the parties shall take all action required to conclude any arbitration proceeding within 180 days
of the filing of the dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for disclosures of
information by a party required in the ordinary course of its business or by applicable law or
regulation. If more than one agreement for arbitration by or between the parties potentially
applies to a dispute, the arbitration provision most directly related to the Loan Documents or the
subject matter of the dispute shall control. This arbitration provision shall survive termination,
amendment or expiration of any of the Loan Documents or any relationship between the parties.

     (i) Prior Agreement. This Agreement amends, restates and supersedes and replaces in
its entirety that certain Credit Agreement dated June 29, 2004 (the “Prior Agreement”), which Prior
Agreement is of no further force or effect.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first written above.

	 	 	 	 	 	 	 	 	 	 	 
	THE SPORTSMAN’S GUIDE, INC.	 	 	 	WELLS FARGO BANK,

NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 /s/ Charles Lingen	 	 	 	By:	 	 /s/ Thomas Skalitzky	 	 
	 

	 	 
	 	 	 	 	 	 	 	 
	Title:

	 	 Executive Vice President & CFO
	 	 	 	Title:
	 	 Vice President
	 	 
	 

	 	 
	 	 	 	 	 	 	 	 

- 16 -

 

AMENDED AND RESTATED REVOLVING LINE OF CREDIT NOTE

			
	 	 	 
	$15,000,000.00
	 	St. Paul, Minnesota

August 29, 2006

     FOR VALUE RECEIVED, the undersigned THE SPORTSMAN’S GUIDE, INC. (“Borrower”) promises to pay
to the order of WELLS FARGO BANK, NATIONAL ASSOCIATION (“Bank”) at its office at 430 North Wabasha
Street, Suite 302, St. Paul Minnesota 55101, or at such other place as the holder hereof may
designate, in lawful money of the United States of America and in immediately available funds, the
principal sum of Fifteen Million Dollars ($15,000,000.00), or so much thereof as may be advanced
and be outstanding, with interest thereon, to be computed on each advance from the date of its
disbursement asset forth herein.

DEFINITIONS:

     As used herein, the following terms shall have the meanings set forth after each, and any
other term defined in this Note shall have the meaning set forth at the place defined:

     (a) “Business Day” means any day except a Saturday, Sunday or any other day on which
commercial banks in Minnesota are authorized or required by law to close.

     (b) “Fixed Rate Term” means a period commencing on a Business Day and continuing for 1 day
during which all or a portion of the outstanding principal balance of this Note bears interest
determined in relation to LIBOR; provided however, that no Fixed Rate Term shall extend beyond the
scheduled maturity date hereof. If any Fixed Rate Term would end on a day which is not a Business
Day, then such Fixed Rate Term shall be extended to the next succeeding Business Day.

     (c) “LIBOR’ means the rate per annum determined pursuant to the following formula:

	 	 	 	 	 	 	 
	 

	 	LIBOR =
	 	Base LIBOR
 

100% - LIBOR Reserve Percentage
	 	 

     (i) “Base LIBOR” means the rate per annum for United States dollar deposits quoted by Bank as
the Inter-Bank Market Offered Rate, with the understanding that such rate is quoted by Bank for the
purpose of calculating effective rates of interest for loans making reference thereto, on the first
day of a Fixed Rate Term for delivery of funds on said date for a period of time approximately
equal to the number of days in such Fixed Rate Term and in an amount approximately equal to the
principal amount to which such Fixed Rate Term applies. Borrower understands and agrees that Bank
may base its quotation of the Inter-Bank Market Offered Rate upon such offers or other market
indicators of the Inter-Bank Market as Bank in its discretion deems appropriate including, but not
limited to, the rate offered for U.S. dollar deposits on the London Inter-Bank Market.

 

 

     (ii) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for “Eurocurrency Liabilities” (as
defined in Regulation D of the Federal Reserve Board, as amended), adjusted by Bank for expected
changes in such reserve percentage during the applicable Fixed Rate Term.

     (d) “Base Rate” means at any time the rate of interest most recently announced within Bank at
its principal office as its Base Rate, with the understanding that the Base Rate is one of Bank’s
base rates and serves as the basis upon which effective rates of interest are calculated for those
loans making reference thereto, and is evidenced by the recording thereof after its announcement in
such internal publication or publications as Bank may designate.

INTEREST:

     (a) Interest. The outstanding principal balance of this Note shall bear interest
(computed on the basis of a 360-day year, actual days elapsed) either (i) at a fluctuating rate per
annum three quarters of one percent (.75%) below the Base Rate in effect from time to time, or (ii)
at a fixed rate per annum determined by Bank to be one and three quarters percent (1.75%) above
LIBOR in effect on the first day of the applicable Fixed Rate Term. When interest is determined in
relation to the Base Rate, each change in the rate of interest hereunder shall become effective on
the date each Base Rate change is announced within Bank. With respect to each LIBOR selection
hereunder, Bank is hereby authorized to note the date, principal amount, interest rate and Fixed
Rate Term applicable thereto and any payments made thereon on Bank’s books and records (either
manually or by electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

     (b) Selection of Interest Rate Options. At any time any portion of this Note bears
interest determined in relation to LIBOR, it may be continued by Borrower at the end of the Fixed
Rate Term applicable thereto so that all or a portion thereof bears interest determined in relation
to the Base Rate or to LIBOR for a new Fixed Rate Term designated by Borrower. At any time any
portion of this Note bears interest determined in relation to the Base Rate, Borrower may convert
all or a portion thereof so that it bears interest determined in relation to LIBOR for a Fixed Rate
Term designated by Borrower. At such time as Borrower requests an advance hereunder or wishes to
select a LIBOR option for all or a portion of the outstanding principal balance hereof, and at the
end of each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest rate
option selected by Borrower; (ii) the principal amount subject thereto; and (iii) for each LIBOR
selection, the length of the applicable Fixed Rate Term. Any such notice may be given by telephone
(or such other electronic method as Bank may permit) so long as, with respect to each LIBOR
selection, (A) if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such notice is given to Bank
prior to 10:00 a.m. on the first day of the Fixed Rate Term, or at a later time during any Business
Day if Bank, at it’s sole option but without obligation to do so, accepts Borrower’s notice and
quotes a fixed rate to Borrower. If Borrower does not immediately accept a fixed rate when quoted
by Bank, the quoted rate shall expire and any subsequent LIBOR request from Borrower shall be
subject to a redetermination by Bank of the applicable fixed rate. If no specific designation of
interest is made at the time any advance is requested hereunder or at the end of any Fixed Rate
Term, Borrower shall be deemed

 

 

to have made a Base Rate interest selection for such advance or the principal amount to which
such Fixed Rate Term applied.

     (c) Taxes and Requlatory Costs. Borrower shall pay to Bank immediately upon demand,
in addition to any other amounts due or to become due hereunder, any and all (i) withholdings,
interest equalization taxes, stamp taxes or other taxes (except income and franchise taxes) imposed
by any domestic or foreign governmental authority and related in any manner to LIBOR, and (ii)
future, supplemental, emergency or other changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar requirements or costs imposed by
any domestic or foreign governmental authority or resulting from compliance by Bank with any
request or directive (whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are not included in
the calculation of LIBOR. In determining which of the foregoing are attributable to any LIBOR
option available to Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.

     (d) Payment of Interest. Interest accrued on this Note shall be payable on the last
day of each month, commencing August 31, 2006.

     (e) Default Interest. From and after the maturity date of this Note, or such earlier
date as all principal owing hereunder becomes due and payable by acceleration or otherwise, the
outstanding principal balance of this Note shall bear interest until paid in full at an increased
rate per annum (computed on the basis of a 360-day year, actual days elapsed) equal to four percent
(4%) above the rate of interest from time to time applicable to this Note.

BORROWING AND REPAYMENT:

     (a) Borrowing and Repayment. Borrower may from time to time during the term of this
Note borrow, partially or wholly repay its outstanding borrowings, and reborrow, subject to all of
the limitations, terms and conditions of this Note and of any document executed in connection with
or governing this Note; provided however, that the total outstanding borrowings under this Note
shall not at any time exceed the principal amount stated above. The unpaid principal balance of
this obligation at any time shall be the total amounts advanced hereunder by the holder hereof less
the amount of principal payments made hereon by or for any Borrower, which balance may be endorsed
hereon from time to time by the holder. The outstanding principal balance of this Note shall be
due and payable in full on March 15, 2007.

     (b) Advances. Advances hereunder, to the total amount of the principal sum stated
above, may be made by the holder at the oral or written request of (i) Charles Lingen or Tom
Glowaski, any one acting alone, who are authorized to request advances and direct the disposition
of any advances until written notice of the revocation of such authority is received by the holder
at the office designated above, or (ii) any person, with respect to advances deposited to the
credit of any deposit account of any Borrower, which advances, when so deposited, shall be
conclusively presumed to have been made to or for the benefit of each Borrower regardless of the
fact that persons other than those authorized to request advances may have authority to draw

 

 

against such account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by any Borrower.

     (c) Application of Payments. Each payment made on this Note shall be credited first,
to any interest then due and second, to the outstanding principal balance hereof. All payments
credited to principal shall be applied first, to the outstanding principal balance of this Note
which bears interest determined in relation to the Base Rate, if any, and second, to the
outstanding principal balance of this Note which bears interest determined in relation to LIBOR,
with such payments applied to the oldest Fixed Rate Term first.

PREPAYMENT:

     (a) Borrower may prepay principal at any time, in any amount and without penalty.

EVENTS OF DEFAULT:

     This Note is made pursuant to and is subject to the terms and conditions of that certain
Amended and Restated Credit Agreement between Borrower and Bank dated as of August 29, 2006, as
amended from time to time (the “Credit Agreement”). Any default in the payment or performance of
any obligation under this Note, or any defined event of default under the Credit Agreement, shall
constitute an “Event of Default” under this Note.

MISCELLANEOUS:

     (a) Remedies. Upon the occurrence of any Event of Default, the holder of this Note,
at the holder’s option, may declare all sums of principal and interest outstanding hereunder to be
immediately due and payable without presentment, demand, notice of nonperformance, notice of
protest, protest or notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall immediately cease
and terminate. Each Borrower shall pay to the holder immediately upon demand the full amount of
all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to
include outside counsel fees and all allocated costs of the holder’s in-house counsel), expended or
incurred by the holder in connection with the enforcement of the holder’s rights and/or the
collection of any amounts which become due to the holder under this Note, and the prosecution or
defense of any action in any way related to this Note, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested matter or motion
brought by Bank or any other person) relating to any Borrower or any other person or entity.

     (b) Governing Law. This Note shall be governed by and construed in accordance with
the laws of the State of Minnesota.

     (c) Prior Note. This Note is issued in replacement, renewal and amendment, but not in
repayment, of that certain Revolving Line of Credit Note dated June 29, 2004, executed by the
Borrower and payable to the order of the Lender in the original principal amount of $15,000,000.

 

 

     IN WITNESS WHEREOF, the undersigned has executed this Note as of the date first written above.

THE SPORTSMAN’S GUIDE, INC.

	 	 	 	 	 	 	 
	By:
	 	 /s/ Charles Lingen	 	 	 	 
	

	 	 

	 	 	 	 
	Title:
	 	 Executive Vice President
& CFOexv10w2

 

EXHIBIT 10.2

USD 40,000,000

REVOLVING CREDIT AGREEMENT

dated as of August 25th, 2006

between

REDCATS S.A.

as Lender

and

The Sportsman’s Guide, Inc.

as Borrower

Page 1 of 10

 

REVOLVING CREDIT AGREEMENT,

Between

REDCATS S.A., a Société Anonyme duly organized and existing under the laws of France,

Hereinafter called the ‘Lender’, and

The Sportsman’s Guide Inc., a corporation duly organized and existing under the laws of the State
of Minnesota, United States of America,

Hereinafter called the ‘Borrower’,

WHEREAS the Borrower has requested that the Lender provide credit to the Borrower for its general
financing purpose as described below, and the Lender has agreed to provide such credit to the
Borrower on the terms and conditions contained herein.

WHEREAS, certain affiliates of the Lender and the Borrower have entered into a Merger Agreement (as
defined below), and in connection with the transactions contemplated therein, wish to enter into
this Revolving Credit Agreement (the “Credit Agreement”).

Accordingly, the parties hereto agree as follows:

1. DEFINITIONS

     1.1. Definitions

The following terms, as used herein, have the following meanings:

“Advance” means an advance made or to be made by the Lender to the Borrower under this Agreement
or, as the context may require, the principal amount thereof from time to time outstanding.

“Advance Period” means in relation to any Advance, the period selected for which it is drawn; any
Advance Period can be of 1 (one), 2 (two), 3 (three) or 6 (six) months.

“Applicable Margin” means, for any day, 1.35% per annum.

“Borrower” means The Sportsman’s Guide Inc., a corporation duly organized and existing under the
laws of the State of Minnesota, United States of America.

A “Change of Control” shall be deemed to have occurred if any partnership or equity interest in the
Borrower shall be owned by any Person other than PPR or a subsidiary or subsidiaries directly or
indirectly owned by PPR.

“Debt” of any Person means at any date, without duplication, (i) all obligations of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary course of business,
(iv) all obligations of such Person as lessee which are capitalized in accordance with generally
accepted accounting principles, (v) all obligations of such Person as an account party in respect
of letters of
credit and bankers’ acceptances, (vi) all Debt of others secured by a Lien on any asset of such

Page 2 of 10

 

Person, whether or not such Debt is assumed by such Person, and (vii) all Debt of others guaranteed
by such Person. The amount of any Debt described in clause (vi) above shall be deemed to be limited
to the fair market value of the assets on which a Lien has been granted to secure such Debt unless
such Debt has been assumed or guaranteed by such Person.

“Default” means any condition or event which constitutes an Event of Default or which with the
giving of notice or lapse of time or both would, unless cured or waived, become an Event of
Default.

“Domestic Business Day” means any day except (i) a Saturday, a Sunday or any other day on which
commercial banks in New York City, USA are authorized by law to close, (ii) a Saturday, a Sunday or
any other day on which commercial banks in Paris, France are authorized by law to close.

“Effective
Date” means 28 August, 2006.

“Event of Default” has the meaning set forth in Section 5.01.

“Governmental Authority” means any federal, state, local or foreign court or governmental agency,
authority, instrumentality or regulatory body.

“Interest Period” means a period of one or two or three or six months commencing on a Business day
(or of such other duration as the Borrower and the Lender may agree), provided that:

(a) the first Interest Period shall commence on the Effective Date;

(b) no Interest Period shall expire after the relevant Maturity Date;

“Investment” means any investment in any Person, whether by means of share purchase, capital
contribution, loan, time deposit or otherwise.

“Lender” means Redcats, a Société Anonyme, existing and duly organized under the laws of France.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind in respect of such asset.

“Loan” means the amount, which the Lender has agreed to lend to the Borrower under this Agreement,
or the principal amount thereof outstanding from time to time.

“London Interbank Offered Rate” or “LIBOR” has the meaning set forth in Section 2.

“Maturity Date” means December 31st 2009.

“Merger Agreement” means the Agreement and Plan of Merger among VLP Corporation, Panther Subcorp,
Inc, and The Sportsman’s Guide, Inc. dated May 4, 2006

A “Material Adverse Effect” with respect to the Borrower shall be deemed to occur if there shall
have been a material adverse effect on (a) the business, financial condition or results of
operations of the Borrower and its subsidiaries, taken as a whole, except to the extent that such
adverse effect results from (i) changes in general economic conditions in the United States which
conditions do not affect The Sportsman’s Guide Inc. and its subsidiaries, taken as a whole,
disproportionately; (ii) changes in GAAP; (iii) general changes affecting the industry in which the
Borrower and its subsidiaries operate that do not disproportionately affect the Borrower and its
subsidiaries, taken as a whole; or (iv) the execution and delivery of the Merger Agreement, the
public announcement of the Merger Agreement or any transactions contemplated by the Merger
Agreement; (b) the ability of the Borrower to perform its obligations under this Credit Agreement;
or (c) the ability of the Borrower to reimburse the loan extended pursuant to this Credit
Agreement.

Page 3 of 10

 

“Obligations” means the due and punctual payment by the Borrower of the principal of and interest
on the Loan, when and as due, whether at maturity, by acceleration, or upon one or more dates set
for prepayment.

“Person” means an individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.

“PPR” means PPR, Société Anonyme, a French corporation duly organized and existing under the laws
of France and which main location is at 10 avenue Hoche, 75008 Paris, France.

“Subsidiary” means any corporation or other entity (including any partnership) of which securities
or other ownership interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly or indirectly
owned by the Borrower.

“USD” means United States Dollar, the lawful currency of the United States of America.

“Utilisation” means utilisation of the Loan.

“Utilisation Date” means the date on which a Utilisation is, or is scheduled to be made.

     1.2. Accounting Terms and Determinations.

Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with generally accepted accounting principles
as in effect from time to time, applied on a basis consistent (except for changes concurred in by
the Borrower’s independent public accountants) with the most recent unaudited consolidated
financial statements of the Borrower and its Consolidated Subsidiaries delivered to the Lender.

2. THE CREDIT

     2.1. Commitment to Lend

The Lender agrees, on the terms and conditions set forth in this Agreement, to make a loan to the
Borrower from time to time until the Maturity Date in an aggregate principal amount not exceeding
USD 40,000,000 (forty million United States Dollars).

Any Advance repaid by the Borrower may be re-borrowed.

     2.2. Interest Rate

(a) The Loan shall bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the applicable London Interbank
Offered Rate for the Interest Period considered plus the Applicable Margin (the “Interest Rate”).

Such interest shall be payable for each Interest Period on the last day of such Interest Period.

The “London Interbank Offered Rate” applicable to any Interest Period means the rate appearing on
Reuters on the page “LIBOR= “ (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the Lender from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits in the London
interbank market)

Page 4 of 10

 

at approximately 11:00 A.M., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to
such Interest Period.
In the event that such rate is not available at such time for any reason, then the “London
Interbank Offered Rate” with respect for such Interest Period shall be the rate at which dollar
deposits of USD 5,000,000 and for a maturity comparable to such Interest Period are offered by the
principal London office of the bank Société Générale, in immediately available funds in the London
interbank market at approximately 11:00 am, London time, two Domestic Business Days prior to the
commencement of such Interest Period.

(b) Any overdue principal of and, to the extent permitted by law, overdue interest on the Loan
shall bear interest, payable on demand, for each day from and including the date payment thereof
was due to but excluding the date of actual payment, at a rate per annum equal to the sum of 2%
plus the Applicable Margin at the time plus the London Interbank Offered Rate applicable to such
Loan.

(c) The Lender shall determine each Interest Rate applicable to the Loan hereunder. The Lender
shall give prompt notice to the Borrower by telecopy or by email, of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of manifest error.

     2.3. Notice of Utilisation of the Loan

If no Event of Default has occurred and is subsisting, the Borrower may utilise the Loan by mean of
Advance by delivering to the Lender a Notice of Utilisation no later than 11.00am (Paris time) on
the five (5) business days prior to the proposed Utilisation Date.

Each Notice of Utilisation shall specify, the proposed Utilisation Date, the amount of the proposed
Utilisation, the duration of the Advance Period being one, two, three or six months (or of such
other duration as the Borrower and the Lender may agree), provided that (i) no such Advance Period
shall expire after the relevant Termination Date, (ii) the amount of the proposed Utilisation be a
minimum amount of USD 5,000,000 or, if more, in integral multiples of USD 1,000,000.

     2.4. Method of Advance renewal

If the Lender makes a new Advance on a day on which the Borrower is to repay all or any part of an
outstanding Advance, the Lender shall apply the proceeds of its new Advance to make such repayment
and only an amount equal to the difference (if any) between the amount being borrowed and the
amount being repaid shall be made (a) available by the Lender, or (b) remitted by the Borrower to
the Lender, as the case may be.

     2.5. Mandatory Repayment

The Borrower shall repay the Loan on the Maturity Date.

On the date of the repayment of the Loan pursuant to this Section, the Borrower shall pay interest
accrued on the principal amount repaid to the day of repayment.

Prior to the date of the mandatory repayment pursuant to this Section, the Borrower shall, give
written notice to the Lender not later than 12:00 pm (noon) (Paris time) on the third Domestic
Business Day prior to the date of the repayment.

     2.6. Optional Prepayment

The Borrower may, upon notice to the Lender prior to 12:00 pm (noon) (Paris time) five Domestic
Business Days, prepay any amount at any time, in amounts aggregating USD 5,000,000 or any larger
multiple of USD 1,000,000, by paying the principal amount to be prepaid together with accrued
interest thereon to the date of prepayment.

Page 5 of 10

 

In such case, the Borrower will also pay to the Lender a penalty equal to the difference between
the amount of interest due between the Optional Prepayment date and the end of the Interest Period
previously requested by the Borrower and the amount of interest generated by the Lender by
depositing such principal amount on the market for the period commencing on the Optional Prepayment
date and ending on the end of the Interest Period.

     2.7. General Provisions as to Payments

The Borrower shall make each payment of principal of, and interest on, the Loan hereunder, not
later than 9:00 am (New York City time) on the date when due, in funds immediately available in
Paris City, to the Lender at its address set forth on the signature pages hereof.

Without limiting the foregoing, and notwithstanding any provision contained in this Agreement to
the contrary, no payment may be made by the Borrower on account of the principal of, or interest on
the Loan if the making of such payment would constitute an Event of Default under the terms of
Section 6.1 of the Amended and Restated Credit Agreement originally
dated August 29, 2006 among
the Borrower and Wells Fargo Bank or any extension.

     2.8. Non Business Days

If any sum becomes due for payment under this Credit Agreement on a day which is not a Domestic
Business Day, such payment shall, subject as otherwise provided herein, be made on the next
succeeding business day and the amount of any interest, commissions or commitment or other fees
shall, if not already taken into account, be adjusted accordingly.

     2.9. Funding losses

If any prepayment of principal with respect to the Loan is made on any day other than the last day
of the Interest Period applicable thereto, the Borrower shall reimburse the Lender within 15 days
after demand for any resulting loss or expense incurred by it.

     2.10. Computation of Interest

Interest based on the Loan hereunder shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day but excluding the last day).

3. REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants that:

     3.1. Existence and Power

The Borrower is a corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization, and has all powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its business as now conducted or
proposed to be conducted.

     3.2. Binding Effect

This agreement constitutes a valid and binding agreement of the Borrower, enforceable in accordance
with its terms.

     3.3. Taxes

Page 6 of 10

 

The Borrower has filed or caused to be filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by it.

     3.4. Not an Investment Company

The Borrower is not an “investment company”, nor is it controlled by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended.

4. COVENANTS

The Borrower agrees that, so long as the Lender has any commitment hereunder or any amount
payable under the Loan remains unpaid:

     4.1. Information

The Borrower will deliver to the Lender, as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, consolidated and consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and the related
consolidated and consolidating statements of income and cash flows for such fiscal year.

Within five days after any officer of the Borrower obtains knowledge of any Default, if such
Default is then continuing, a certificate of the chief financial officer or the chief accounting
officer of the Borrower setting forth the details thereof and the action which the Borrower is
taking or proposes to take with respect thereto.

     4.2. Compliance with Laws

The Borrower will comply with ordinances, rules, regulations, and requirements of governmental
authorities (including, without limitation, Environmental and Safety Laws and ERISA and the rules
and regulations thereunder) except where the necessity of compliance therewith is contested in good
faith by appropriate proceedings or where the failure to comply, either alone or combined with
other failures to comply, could not have a material adverse effect.

5. DEFAULTS

If one or more of the following events (“Events of Default”) shall have occurred and be
continuing:

(a) the Borrower shall fail to pay (i) when due any principal of the Loan, or (ii) within five
Domestic Business Days of the date due, any interest on the loan or any other amount payable
hereunder;

(b) the Borrower or any Subsidiary shall fail to observe or perform any covenant or agreement
contained in this Credit Agreement for 10 days after written notice thereof has been given to the
Borrower by the Lender;

(c) the Borrower or any Subsidiary shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any substantial part of its
property;

(d) an involuntary case or other proceeding shall be commenced against the Borrower or any
Subsidiary seeking liquidation, reorganization or other relief with respect to it or its Debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its

Page 7 of 10

 

property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days;

(e) a Change of Control shall occur;

(f) the Borrower has not become a direct or indirect subsidiary of the Lender by August 31 2006;

then, and in every such event, the Lender may, by written notice to the Borrower terminate the Loan
upon receipt of such notice. The Loan shall thereupon become, immediately due and payable (in whole
or, in the sole discretion of the Lender, from time to time in part) without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the Borrower, provided that
in the case of either of the Events of Default specified in clause (c), (d) or (f) above with
respect to the Borrower or any subsidiary without any notice to the Borrower or any other act by
the Lender, the Loan (together with accrued interest thereon) shall become immediately due and
payable (in whole) without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.

6. CHANGE IN CIRCUMSTANCES

     6.1. Illegality

If, on or after the date of this Agreement, the adoption of any applicable law, rule or regulation
by any governmental authority, central bank or comparable agency charged with the interpretation,
or compliance by the Lender with any request or directive of any such authority shall make it
impossible for the Lender to maintain its Loan, the parties agree to meet as soon as possible in
order to find a solution for both parties.

     6.2. Taxes

(a) For the purposes of this Section, the following terms have the following meanings:

“Taxes” means any and all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings with respect to any payment by the Borrower pursuant to this Agreement.

“Other Taxes” means any present or future stamp or documentary taxes and any other excise or
property taxes, or similar charges or levies, which arise from any payment made pursuant to this
Agreement or from the execution of this Agreement.

(b) Any and all payments by the Borrower to or for the account of the Lender, shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Borrower shall be required by law to
deduct any Taxes or Other Taxes from any such payments, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make such
deductions, (iii) the Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

7. MISCELLANEOUS

     7.1. Notices

Page 8 of 10

 

All notices, requests and other communications to any party hereunder shall be in writing and shall
be given to such party at its address or telecopy number set forth on the signature pages hereof.

     7.2. No Waivers

No failure or delay by the Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided
by law.

     7.3. Amendments and Waivers

Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed or otherwise approved in writing by the Borrower and the Lender

     7.4. Successors and Assigns

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may not assign or
otherwise transfer any of its rights under this Agreement without the prior written consent of the
Lender.

     7.5. New York Law

THIS AGREEMENT AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.

     7.6. Interest Rate Limitation

Notwithstanding anything herein, if at any time the applicable interest rate, as provided for
herein, charged by the Lender, shall exceed the maximum lawful rate (the “Maximum Rate”) which may
be charged by the Lender in accordance with applicable law, the rate of interest payable under this
Agreement, shall be limited to the Maximum Rate.

[Page
intentionally left blank — signature page follows]

Page 9 of 10

 

IN WITNESS WHEREOF, The parties hereto have caused this Credit Agreement to be duly
executed in two (2) counterparts.

	 	 	 
	THE SPORTSMAN’S GUIDE, INC.

	 	REDCATS S.A.
	 
	 	 
	/s/
Charles B. Lingen
	 	/s/ Philippe Gautier
	Name : Charles B. LINGEN
	 	Name: Philippe GAUTIER
	Title: Executive Vice President of Finance

	 	Title: Director Corporate
Finance
	and Administration and Chief Financial Officer

	 	 
	 
	 	 
	

	 	/s/ Patrick Starck
	 

	 	Name: Patrick STARCK
	 

	 	Title: Tax Director
	 
	 	 
	Address:

	 	Address:
	411 Farwell Avenue

	 	B.P. 44 — 110 rue de Blanchemaille
	South St. Paul, Minnesota 55075

	 	59051 ROUBAIX CEDEX 1
	UNITED STATES OF AMERICA

	 	FRANCE

Page 10 of 10

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