SPORTSMANS GUIDE INC
AMENDED/RESTATED CREDIT AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>c72662exv10w1.txt
<DESCRIPTION>AMENDED/RESTATED CREDIT AND SECURITY AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.1

================================================================================


                              AMENDED AND RESTATED
                          CREDIT AND SECURITY AGREEMENT

                                  BY AND AMONG

                           THE SPORTSMAN'S GUIDE, INC.
                       THE SPORTSMAN'S GUIDE OUTLET, INC.

                                       AND

                WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION

                                   ----------

                                SEPTEMBER 5, 2002


================================================================================





<PAGE>
                                Table of Contents

<Table>
<S>                                                                                                             <C>
ARTICLE I  DEFINITIONS............................................................................................1
    Section 1.1 Definitions.......................................................................................1
    Section 1.2 Other Definitional Terms; Rules of Interpretation................................................11

ARTICLE II  AMOUNT AND TERMS OF THE CREDIT FACILITY..............................................................12
    Section 2.1 Existing Advances................................................................................12
    Section 2.2 Revolving Advances...............................................................................12
    Section 2.3 Seasonal Inventory Overadvance Component.........................................................12
    Section 2.4 Procedures for Borrowing.........................................................................13
    Section 2.5 Existing Letters of Credit.......................................................................13
    Section 2.6 Letters of Credit................................................................................13
    Section 2.7 Payment of Amounts Drawn Under Letters of Credit; Obligation of Reimbursement....................14
    Section 2.8 Special Account..................................................................................15
    Section 2.9 Obligations Absolute.............................................................................15
    Section 2.10 Inventory Appraisals; Minimum Availability......................................................15
    Section 2.11 Interest; Interest Rate Margins; Default Interest; Participations; Usury........................16
    Section 2.12 Time for Interest Payments; Payment on Non-Banking Days; Computation of Interest and Fees.......17
    Section 2.13 Fees............................................................................................17
    Section 2.14 Increased Costs; Capital Adequacy...............................................................19
    Section 2.15 P.O. Box; Credit Card Receivables; Collateral Account; Application of Payments..................20
    Section 2.16 Voluntary Prepayment; Reduction of the Maximum Line; Termination of the Credit Facility by
    Borrowers....................................................................................................22
    Section 2.17 Mandatory Prepayment............................................................................22
    Section 2.18 Revolving Advances to Pay Obligations...........................................................22
    Section 2.19 Use of Proceeds.................................................................................22
    Section 2.20 Liability Records...............................................................................22

ARTICLE III  SECURITY INTEREST; OCCUPANCY; SETOFF................................................................23
    Section 3.1 Grant of Security Interest.......................................................................23
    Section 3.2 Notification of Account Debtors and Other Obligors...............................................23
    Section 3.3 Assignment of Insurance..........................................................................23
    Section 3.4 Occupancy........................................................................................23
    Section 3.5 License..........................................................................................24
    Section 3.6 Financing Statement..............................................................................24
    Section 3.7 Accommodation Party Defenses Waived..............................................................25
    Section 3.8 Setoff...........................................................................................25

ARTICLE IV  CONDITIONS OF LENDING................................................................................26
    Section 4.1 Conditions Precedent to Initial Revolving Advance and Initial Letter of Credit...................26
</Table>



<PAGE>
<Table>
<S>                                                                                                             <C>
    Section 4.2 Conditions Precedent to Each Advance and Letter of Credit........................................26

ARTICLE V  REPRESENTATIONS AND WARRANTIES........................................................................27
    Section 5.1 Corporate Existence and Power; Name; Chief Executive Office; Inventory and Equipment Locations;
    Identification Numbers.......................................................................................27
    Section 5.2 Capitalization...................................................................................27
    Section 5.3 Authorization of Borrowing; No Conflict as to Law or Agreements..................................27
    Section 5.4 Legal Agreements.................................................................................28
    Section 5.5 Subsidiaries.....................................................................................28
    Section 5.6 Financial Condition; No Adverse Change...........................................................28
    Section 5.7 Litigation.......................................................................................28
    Section 5.8 Regulation U.....................................................................................28
    Section 5.9 Taxes............................................................................................29
    Section 5.10 Titles and Liens................................................................................29
    Section 5.11 Intellectual Property Rights....................................................................29
    Section 5.12 Plans...........................................................................................30
    Section 5.13 Default.........................................................................................30
    Section 5.14 Environmental Matters...........................................................................30
    Section 5.15 Submissions to Lender...........................................................................31
    Section 5.16 Financing Statements............................................................................31
    Section 5.17 Rights to Payment...............................................................................32
    Section 5.18 Financial Solvency..............................................................................32

ARTICLE VI  BORROWERS' COVENANTS.................................................................................33
    Section 6.1 Reporting Requirements...........................................................................33
    Section 6.2 Financial Covenants..............................................................................36
    Section 6.3 Liens............................................................................................37
    Section 6.4 Indebtedness.....................................................................................37
    Section 6.5 Guaranties.......................................................................................38
    Section 6.6 Investments and Subsidiaries.....................................................................38
    Section 6.7 Dividends........................................................................................38
    Section 6.8 Salaries.........................................................................................39
    Section 6.9 Books and Records; Inspection and Examination....................................................39
    Section 6.10 Account Verification............................................................................39
    Section 6.11 Compliance with Laws............................................................................39
    Section 6.12 Payment of Taxes and Other Claims...............................................................40
    Section 6.13 Maintenance of Properties.......................................................................40
    Section 6.14 Insurance.......................................................................................40
    Section 6.15 Preservation of Existence.......................................................................41
    Section 6.16 Delivery of Instruments, etc. ..................................................................41
    Section 6.17 Sale or Transfer of Assets; Licensing of Property; Suspension of Business Operations............41
    Section 6.18 Landlord's Disclaimers..........................................................................41
</Table>


Table of Contents

                                      -ii-



<PAGE>
<Table>
<S>                                                                                                             <C>
    Section 6.19 Consolidation and Merger; Asset Acquisitions....................................................41
    Section 6.20 Sale and Leaseback..............................................................................41
    Section 6.21 Restrictions on Nature of Business..............................................................42
    Section 6.22 Accounting......................................................................................42
    Section 6.23 Discounts, etc. ................................................................................42
    Section 6.24 Plans...........................................................................................42
    Section 6.25 Place of Business; Name.........................................................................42
    Section 6.26 Constituent Documents...........................................................................42
    Section 6.27 Performance by the Lender.......................................................................42

ARTICLE VII  EVENTS OF DEFAULT, RIGHTS AND REMEDIES..............................................................43
    Section 7.1 Events of Default................................................................................43
    Section 7.2 Rights and Remedies..............................................................................45
    Section 7.3 Certain Notices..................................................................................46

ARTICLE VIII  MISCELLANEOUS......................................................................................46
    Section 8.1 Restatement of Old Credit Agreement..............................................................46
    Section 8.2 Release..........................................................................................46
    Section 8.3 No Waiver; Cumulative Remedies...................................................................47
    Section 8.4 Amendments, Etc. ................................................................................47
    Section 8.5 Addresses for Notices, Etc. .....................................................................47
    Section 8.6 Servicing of Credit Facility.....................................................................48
    Section 8.7 Further Documents................................................................................48
    Section 8.8 Collateral.......................................................................................49
    Section 8.9 Costs and Expenses...............................................................................49
    Section 8.10 Indemnity.......................................................................................49
    Section 8.11 Participants....................................................................................50
    Section 8.12 Execution in Counterparts.......................................................................50
    Section 8.13 Retention of Borrowers' Records.................................................................50
    Section 8.14 Binding Effect; Assignment; Complete Agreement; Exchanging Information..........................50
    Section 8.15 Severability of Provisions......................................................................51
    Section 8.16 Headings........................................................................................51
    Section 8.17 Governing Law; Jurisdiction, Venue; Waiver of Jury Trial........................................51
</Table>

Table of Contents

                                     -iii-


<PAGE>




               AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT

                          Dated as of September 5, 2002

                  This Amended and Restated Credit and Security Agreement is
made by and among The Sportsman's Guide, Inc., a Minnesota corporation
("Guide"), The Sportsman's Guide Outlet, Inc., a Minnesota corporation ("Outlet"
and with "Guide", the "Borrowers" and each a "Borrower"), and Wells Fargo Bank
Minnesota, National Association, a national banking association (the "Lender").

                                    RECITALS

                  Guide and the Lender are parties to the Old Credit Agreement,
pursuant to which the Lender extended certain revolving and term credit
facilities as indicated therein. The Borrowers have requested certain amendments
to the Old Credit Agreement and the Lender and the Borrowers desire to amend and
restate the Old Credit Agreement to reflect such amendments.

                  Accordingly, the Borrowers and the Lender hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.1 Definitions. For all purposes of this Agreement,
except as otherwise expressly provided:

                  "Accounting Period" means a four or five week fiscal period of
         the Borrowers.

                  "Accounts" means for a Person, all of that Person's accounts,
         as such term is defined in the UCC, including each and every right of
         that Person to the payment of money, whether such right to payment now
         exists or hereafter arises, whether such right to payment arises out of
         a sale, lease or other disposition of goods or other property, out of a
         rendering of services, out of a loan, out of the overpayment of taxes
         or other liabilities, or otherwise arises under any contract or
         agreement, whether such right to payment is created, generated or
         earned by that Person or by a third party who subsequently transfers
         its interest to that Person, whether such right to payment is or is not
         already earned by performance, and howsoever such right to payment may
         be evidenced, together with all other rights and interests (including
         all Liens) which that Person may at any time have by law or agreement
         against any account debtor or other obligor obligated to make any such
         payment or against any property of such account debtor or other
         obligor; all including but not limited to all present and future
         accounts, contract rights, loans and obligations receivable, chattel
         papers, bonds, notes and




<PAGE>
         other debt instruments, tax refunds and rights to payment in the nature
         of general intangibles.

                  "Advance" means a Revolving Advance.

                  "Affiliate" means, with respect to any specified Person, any
         other Person directly or indirectly controlling or controlled by or
         under direct or indirect common control with such specified Person. For
         the purposes of this definition, "control," when used with respect to
         any specified Person, means the power to direct the management and
         policies of such Person, directly or indirectly, whether through the
         ownership of voting securities, by contract or otherwise; and the terms
         "controlling" and "controlled" have meanings correlative to the
         foregoing.

                  "Agreement" means this Amended and Restated Credit and
         Security Agreement, as amended, supplemented or restated from time to
         time.

                  "Availability" means the difference of (i) the Borrowing Base
         and (ii) the sum of (A) the outstanding principal balance of the
         Revolving Note and (B) the L/C Amount.

                  "Banking Day" means a day on which the Federal Reserve Bank of
         New York is open for business.

                  "Base Rate" means the rate publicly announced from time to
         time by the San Francisco office of Wells Fargo Bank, National
         Association as its "base rate" or "prime rate" or, if such bank ceases
         to announce a rate so designated, any similar successor rate designated
         by the Lender.

                  "Borrowing Base" means, at any time, the lesser of:

                           (a) the Maximum Line; or

                           (b) subject to change from time to time in the
                  Lender's reasonable discretion, the sum of:

                                    (i) 80% of Eligible Accounts; plus

                                    (ii) the Inventory Advance Rate times
                           Eligible Inventory; plus

                                    (iii) the Seasonal Inventory
                           Overadvance Component; less

                                    (iv) the Landlord's Disclaimer Reserve.

                  "Capital Expenditures", as to any Person, means any
         expenditure of money for the capital lease, purchase or other
         acquisition of any capital asset.



Sportsman's Guide Credit and Security Agreement


                                      -2-
<PAGE>

                  "Change of Control" means the occurrence of any of the
         following events:

                           (i) Any event, transaction or occurrence, or series
                  thereof, where any Person or "group" (as such term is used in
                  Sections 13(d) and 14(d) of the Securities Exchange Act 1934)
                  is or becomes the "beneficial owner" (as defined in Rules
                  13d-3 and 13d-5 under the Exchange Act, except that a person
                  will be deemed to have "beneficial ownership" of all
                  securities that such person has the right to acquire, whether
                  such right is exercisable immediately or only after the
                  passage of time) of twenty-five percent (25%) or more of the
                  assets, or economic or voting rights associated with ownership
                  of a Borrower, and such Person or Group was not the beneficial
                  owner of such assets or rights immediately prior to such
                  event, transaction or occurrence, or series thereof.

                           (ii) During any consecutive two-year period,
                  individuals who at the beginning of such period constituted
                  the board of directors of a Borrower (together with any new
                  directors whose election to such board of directors, or whose
                  nomination for election by the stockholders of a Borrower, was
                  approved by a vote of 66 2/3% of the directors then still in
                  office who were either directors at the beginning of such
                  period or whose election or nomination for election was
                  previously so approved) cease for any reason to constitute a
                  majority of the board of directors of a Borrower then in
                  office.

                           (iii) Any Borrower is liquidated or dissolved or
                  adopts a plan of liquidation or dissolution.

                  "Collateral" means all of each Borrower's Accounts, chattel
         paper, deposit accounts, documents, Equipment, General Intangibles,
         goods, instruments, Inventory, Investment Property, letter-of-credit
         rights, letters of credit, all sums on deposit in any Collateral
         Account, and any items in any lockbox or the P.O. Box; together with
         (i) all substitutions and replacements for and products of any of the
         foregoing; (ii) in the case of all goods, all accessions; (iii) all
         accessories, attachments, parts, equipment and repairs now or hereafter
         attached or affixed to or used in connection with any goods; (iv) all
         warehouse receipts, bills of lading and other documents of title now or
         hereafter covering such goods; (v) all collateral subject to the Lien
         of any Security Document; (vi) any money, or other assets of the
         Borrowers that now or hereafter come into the possession, custody, or
         control of the Lender; (vii) all sums on deposit in the Special
         Account; and (viii) proceeds of any and all of the foregoing.

                  "Collateral Account" has the meaning given in the Collateral
         Account Agreement.

                  "Collateral Account Agreement" means the Collateral Account
         Agreement dated as of December 27, 1999, by and among Guide, Wells
         Fargo Bank Minnesota, National Association, in its capacity as
         collateral account agent, and the Lender.



Sportsman's Guide Credit and Security Agreement


                                      -3-
<PAGE>

                  "Commitment" means the Lender's commitment to make Advances
         to, and to cause the Issuer to issue Letters of Credit for the account
         of, the Borrower pursuant to Article II.

                   "Constituent Documents" means with respect to any Person, as
         applicable, such Person's certificate of incorporation, articles of
         incorporation, by-laws, certificate of formation, articles of
         organization, limited liability company agreement, management
         agreement, operating agreement, shareholder agreement, partnership
         agreement or similar document or agreement governing such Person's
         existence, organization or management or concerning disposition of
         ownership interests of such Person or voting rights among such Person's
         owners.

                  "Credit Facility" means the credit facility being made
         available to the Borrowers by the Lender pursuant to Article II.

                  "Debt" of any Person means all items of indebtedness or
         liability which in accordance with GAAP would be included in
         determining total liabilities as shown on the liabilities side of a
         balance sheet of that Person on a consolidated basis as of the date as
         of which Debt is to be determined. For purposes of determining a
         Person's aggregate Debt at any time, "Debt" shall also include the
         aggregate payments required to be made by such Person at any time under
         any lease that is considered a capitalized lease in accordance with
         GAAP.

                  "Default" means an event that, with giving of notice or
         passage of time or both, would constitute an Event of Default.

                  "Default Period" means any period of time beginning on the day
         a Default or Event of Default occurs and ending on the date the Lender
         notifies the Borrowers in writing that such Default or Event of Default
         has been cured or waived.

                  "Default Rate" means (i) for Advances bearing interest at the
         Floating Rate, an annual rate equal to two percent (2%) over the
         Floating Rate, which rate shall change when and as the Floating Rate
         changes and (ii) for Advances bearing interest at the Seasonal
         Inventory Overadvance Rate, an annual rate equal to two percent (2%)
         over the Seasonal Inventory Overadvance Rate, which rate shall change
         when and as the Seasonal Inventory Overadvance Rate changes.

                  "Director" means a director if a Person is a corporation, a
         governor if a Person is a limited liability company, or a general
         partner if a Person is a partnership.

                  "ERISA" means the Employee Retirement Income Security Act of
         1974.

                  "ERISA Affiliate" means any trade or business (whether or not
         incorporated) that is a member of a group which includes a Borrower and
         which is treated as a single employer under Section 414 of the IRC.


Sportsman's Guide Credit and Security Agreement


                                      -4-
<PAGE>

                  "Eligible Accounts" means all unpaid Accounts owed to each
         Borrower, net of any credits, except the following shall not in any
         event be deemed Eligible Accounts:

                           (i) That portion of (a) any Borrower's "Buyer's Club
                  4 Pay Plan" Accounts for which payments are delinquent and (b)
                  list rental Accounts unpaid 120 days or more after the invoice
                  date;

                           (ii) That portion of Accounts that is disputed or
                  subject to a claim of offset or a contra account;

                           (iii) Accounts constituting (a) proceeds of
                  copyrightable material unless such copyrightable material
                  shall have been registered with the United States Copyright
                  Office, or (b) proceeds of patentable inventions unless such
                  patentable inventions have been registered with the United
                  States Patent and Trademark Office;

                           (iv) That portion of Accounts not yet earned by the
                  final delivery of goods or rendition of services to the
                  customer;

                           (v) Accounts owed by any unit of government, whether
                  foreign or domestic other than that portion of Accounts owed
                  by such units of government for which the Borrowers have
                  provided evidence satisfactory to the Lender that (A) the
                  Lender has a first priority perfected security interest and
                  (B) such Accounts may be enforced by the Lender directly
                  against such unit of government under all applicable laws;

                           (vi) Accounts owed by an account debtor located
                  outside the United States which are not (A) backed by a bank
                  letter of credit naming the Lender as beneficiary or assigned
                  to the Lender, in the Lender's possession or control, and with
                  respect to which a control agreement concerning the
                  letter-of-credit rights is in effect, and acceptable to the
                  Lender in all respects, in its sole discretion, or (B) covered
                  by a foreign receivables insurance policy acceptable to the
                  Lender in its sole discretion;

                           (vii) Accounts owed by an account debtor that is
                  insolvent, the subject of bankruptcy proceedings or has gone
                  out of business;

                           (viii) Accounts owed by a shareholder, Subsidiary,
                  Affiliate, officer or employee of a Borrower;

                           (ix) Accounts not subject to a duly perfected
                  security interest in the Lender's favor or which are subject
                  to any Lien in favor of any Person other than the Lender;

                           (x) That portion of Accounts that has been
                  restructured, extended, amended or modified;

                           (xi) That portion of Accounts that constitutes
                  advertising, finance charges, service charges or sales or
                  excise taxes;


Sportsman's Guide Credit and Security Agreement


                                      -5-
<PAGE>

                           (xii) List rental Accounts owed by an account debtor,
                  regardless of whether otherwise eligible, if 10% or more of
                  the total amount due under Accounts from such debtor is
                  ineligible under clauses (i), (ii) or (x) above;

                           (xiii) "Buyer's Club 4 Pay Plan Accounts" owed by an
                  account debtor, regardless of whether otherwise eligible, if
                  10% or more of the total amount due under Accounts from such
                  debtor is ineligible under clauses (ii) or (x) above; and

                           (xiv) Accounts, or portions thereof, otherwise deemed
                  ineligible by the Lender in its sole discretion.

                  "Eligible Inventory" means all Inventory of each Borrower
         reduced by any Eligible Inventory Reserve; provided, however, that the
         following shall not in any event be deemed Eligible Inventory:

                           (i) Inventory that is: in-transit unless such
                  Inventory is acquired with the support of a documentary Letter
                  of Credit and the Lender or a Person who has agreed to act as
                  the Lender's agent has possession of all duplicate original
                  documents of title covering such Inventory; located at any
                  warehouse, job site or other premises not approved by the
                  Lender in writing; located outside of the states, or
                  localities, as applicable, in which the Lender has filed
                  financing statements to perfect a first priority security
                  interest in such Inventory; covered by any negotiable or
                  non-negotiable warehouse receipt, bill of lading or other
                  document of title; on consignment from or to any Person or
                  subject to any bailment;

                           (ii) Supplies, packaging, maintenance parts or sample
                  Inventory;

                           (iii) Inventory that is damaged or not currently
                  saleable in the normal course of the applicable Borrower's
                  operations;

                           (iv) Inventory that a Borrower has returned, has
                  attempted to return, is in the process of returning or intends
                  to return to the vendor thereof;

                           (v) Inventory that is perishable or live;

                           (vi) Inventory that is subject to a security interest
                  in favor of any Person other than the Lender;

                           (vii) Inventory that has been held for two (2) years
                  or more to the extent the value thereof, after applying the
                  Eligible Inventory Reserve, exceeds $1,000,000; and

                           (viii) Inventory otherwise deemed ineligible by the
                  Lender in its sole discretion.


Sportsman's Guide Credit and Security Agreement


                                      -6-
<PAGE>

                           "Eligible Inventory Reserve" means the sum of:

                                    (A) For Inventory that has been held for one
                           (1) year or more but less than two (2) years,
                           twenty-five percent (25%) of cost for such Inventory;
                           plus

                                    (B) For Inventory that has been held for two
                           (2) years or more, fifty percent (50%) of cost for
                           such Inventory; plus

                                    (C) For Outlet, the greater of five percent
                           (5%) of Outlet Inventory or the actual "shrink
                           reserve" for Outlet.

                  "Environmental Law" means any federal, state, local or other
         governmental statute, regulation, law or ordinance dealing with the
         protection of human health and the environment.

                  "Equipment" means, as to any Person, all of that Person's
         equipment, as such term is defined in the UCC, whether now owned or
         hereafter acquired, including but not limited to all present and future
         machinery, vehicles, furniture, fixtures, manufacturing equipment, shop
         equipment, office and recordkeeping equipment, parts, tools, supplies,
         and including specifically the goods described in any equipment
         schedule or list herewith or hereafter furnished to the Lender by that
         Person.

                  "Event of Default" has the meaning specified in Section 7.1.

                  "Existing Letters of Credit" has the meaning specified in
         Section 2.5.

                  "Existing Revolving Advances" has the meaning specified in
         Section 2.1.

                  "Financial Covenants" means the covenants set forth in Section
         6.2.

                  "Floating Rate" means an annual rate equal to the Base Rate
         plus the applicable Margin, which rate shall change when and as the
         Base Rate changes.

                  "Funding Date" has the meaning given in Section 2.2.

                  "GAAP" means generally accepted accounting principles, applied
         on a basis consistent with the accounting practices applied in the
         financial statements described in Section 5.6.

                  "General Intangibles" means, as to any Person, all of that
         Person's general intangibles, as such term is defined in the UCC,
         whether now owned or hereafter acquired, including all present and
         future Intellectual Property Rights, customer or supplier lists and
         contracts, manuals, operating instructions, permits, franchises, the
         right to use that Person's name, and the goodwill of the Person's
         business.



Sportsman's Guide Credit and Security Agreement


                                      -7-
<PAGE>

                  "Gross Equity Proceeds" means the gross cash proceeds actually
         received by Guide from sale of additional common or preferred stock or
         convertible instruments of Guide.

                  "Gross Margin" means the percentage of cost of goods sold to
         net sales, as determined on a consolidated basis in accordance with
         GAAP, where "net sales" means retail sales, plus store sales, plus
         customer-list-rental income and PIP income, less returns and allowances
         and "cost of goods sold" means retail cost of goods sold plus store
         cost of goods sold, less cost of goods sold for returns.

                  "Hazardous Substances" means pollutants, contaminants,
         hazardous substances, hazardous wastes, petroleum and fractions
         thereof, and all other chemicals, wastes, substances and materials
         listed in, regulated by or identified in any Environmental Law.

                  "IRC" means the Internal Revenue Code of 1986.

                  "Infringe" means when used with respect to Intellectual
         Property Rights means any infringement or other violation of
         Intellectual Property Rights.

                  "Intellectual Property Rights" means all actual or prospective
         rights arising in connection with any intellectual property or other
         proprietary rights, including all rights arising in connection with
         copyrights, patents, service marks, trade dress, trade secrets,
         trademarks, trade names or mask works.

                  "Inventory" means, as to any Person, all of that Person's
         inventory, as such term is defined in the UCC, whether now owned or
         hereafter acquired, whether consisting of whole goods, spare parts or
         components, supplies or materials, whether acquired, held or furnished
         for sale, for lease or under service contracts or for manufacture or
         processing, and wherever located.

                  "Inventory Advance Rate" has the meaning given in Section
         2.10.

                  "Inventory Days" as of any date means the product of (A) the
         number of days that have elapsed in the fiscal year as of such date
         times (B) the ratio of (i) Inventory at the lower of cost or market
         value as of such date to (ii) the fiscal year-to-date cost of goods
         sold, determined on a consolidated basis for all Borrowers.

                  "Investment Property" means, as to any Person, all of that
         Person's investment property, as such term is defined in the UCC,
         whether now owned or hereafter acquired, including but not limited to
         all securities, security entitlements, securities accounts, commodity
         contracts, commodity accounts, stocks, bonds, mutual fund shares, money
         market shares and U.S. Government securities.

                  "Issuer" means the Issuer of any Letter of Credit.



Sportsman's Guide Credit and Security Agreement

                                      -8-
<PAGE>

                  "L/C Amount" means the sum of (i) the aggregate face amount of
         any issued and outstanding Letters of Credit and (ii) the unpaid amount
         of the Obligation of Reimbursement.

                  "L/C Application" means an application and agreement for
         letters of credit in the Lender's then-current standard form.

                  "Landlord's Disclaimer Reserve" has the meaning specified in
         Section 6.18.

                  "Letter of Credit" has the meaning specified in Section 2.6.

                  "Licensed Intellectual Property" has the meaning given in
         Section 5.11(b).

                  "Lien" means any security interest, mortgage, deed of trust,
         pledge, lien, charge, encumbrance, title retention agreement or
         analogous instrument or device, including the interest of each lessor
         under any capitalized lease and the interest of any bondsman under any
         payment or performance bond, in, of or on any assets or properties of a
         Person, whether now owned or hereafter acquired and whether arising by
         agreement or operation of law.

                  "Loan Documents" means this Agreement, the Note and the
         Security Documents.

                  "Margin" means an amount determined pursuant to Section 2.11
         that is added to the Base Rate to determine the Floating Rate and the
         Seasonal Inventory Overadvance Rate.

                  "Maturity Date" means May 31, 2005.

                  "Maximum Line" means $15,000,000, unless said amount is
         reduced pursuant to Section 2.16, in which event it means such lower
         amount.

                  "Minimum Interest Charge" has the meaning given in Section
         2.11(d).

                  "Net Income" means after-tax consolidated net income from
         continuing operations as determined in accordance with GAAP.

                  "Note" means the Revolving Note.

                  "Obligations" means the Note and each and every other debt,
         liability and obligation of every type and description which any
         Borrower may now or at any time hereafter owe to the Lender, whether
         such debt, liability or obligation now exists or is hereafter created
         or incurred, whether it arises in a transaction involving the Lender
         alone or in a transaction involving other creditors of a Borrower, and
         whether it is direct or indirect, due or to become due, absolute or
         contingent, primary or secondary, liquidated or unliquidated, or sole,
         joint, several or joint and several, and including the Obligation of
         Reimbursement and all indebtedness of each Borrower arising under



Sportsman's Guide Credit and Security Agreement


                                      -9-
<PAGE>
         this Agreement, the Note, any L/C Application completed by a Borrower,
         or any other loan or credit agreement or guaranty between a Borrower
         and the Lender, whether now in effect or hereafter entered into.

                  "Obligation of Reimbursement" has the meaning given in Section
         2.7(a).

                  "Officer" means with respect to a Person, an officer if that
         Person is a corporation, a manager if that Person is a limited
         liability company, or a general partner if that Person is a
         partnership.

                  "Old Credit Agreement" means that certain Credit and Security
         Agreement dated as of December 27, 1999, by and between Guide and the
         Lender.

                  "Old Revolving Note" means Guide's Revolving Promissory Note
         dated as of December 27, 1999, payable to the order of the Lender in
         the original principal amount of $25,000,000.

                  "Owner" means with respect to a Person, each Person having
         legal or beneficial title to an ownership interest in such Person or a
         right to acquire such an interest.

                  "Permitted Lien" has the meaning given in Section 6.3.

                  "Person" means any individual, corporation, partnership, joint
         venture, limited liability company, association, joint-stock company,
         trust, unincorporated organization or government or any agency or
         political subdivision thereof.

                  "Plan" means an employee benefit plan (as defined in Section
         3(3) of ERISA) maintained for employees of a Borrower or any ERISA
         Affiliate.

                  "Premises" means all premises where any Borrower conducts its
         business or has any rights of possession, including (without
         limitation) the premises legally described in Exhibit C attached
         hereto.

                  "Reportable Event" means a reportable event (as defined in
         Section 4043 of ERISA), other than an event for which the 30-day notice
         requirement under ERISA has been waived in regulations issued by the
         Pension Benefit Guaranty Corporation.

                  "Revolving Advance" has the meaning given in Section 2.2.

                  "Revolving Note" means the Borrowers' revolving promissory
         note, payable to the order of the Lender in substantially the form of
         Exhibit A hereto and any note or notes issued in substitution therefor,
         as the same may hereafter be amended, supplemented or restated from
         time to time.

                  "Seasonal Inventory Overadvance" has the meaning given in
         Section 2.3(c).



Sportsman's Guide Credit and Security Agreement

                                      -10-
<PAGE>

                  "Seasonal Inventory Overadvance Component" has the meaning
         given in Section 2.3.

                  "Seasonal Inventory Overadvance Rate" means the sum of the
         Base Rate and the Margin applicable to Seasonal Inventory Overadvances.

                  "Security Documents" means this Agreement, the Collateral
         Account Agreement, any lockbox agreement, the Trademark Security
         Agreement and any other document delivered to the Lender from time to
         time to secure the Obligations, as the same may hereafter be amended,
         supplemented or restated from time to time.

                  "Security Interest" has the meaning given in Section 3.1.

                  "Servicer" means Wells Fargo Business Credit, Inc., a
         Minnesota corporation, or such other Person as the Lender may from time
         to time designate.

                  "Special Account" means a specified cash collateral account
         maintained by the Lender in connection with Letters of Credit, as
         contemplated by Section 2.8.

                  "Subsidiary" means any corporation of which more than 50% of
         the outstanding shares of capital stock having general voting power
         under ordinary circumstances to elect a majority of the board of
         directors of such corporation, irrespective of whether or not at the
         time stock of any other class or classes shall have or might have
         voting power by reason of the happening of any contingency, is at the
         time directly or indirectly owned by a Borrower, by a Borrower and one
         or more other Subsidiaries, or by one or more other Subsidiaries.

                  "Termination Date" means the earliest of (i) the Maturity
         Date, (ii) the date the Borrowers terminate the Credit Facility, or
         (iii) the date the Lender demands payment of the Obligations after an
         Event of Default pursuant to Section 7.2.

                  "Trademark Security Agreement" means the Trademark Security
         Agreement by Guide in favor of the Lender dated as of December 27,
         1999.

                  "UCC" means the Uniform Commercial Code as in effect from time
         to time in the state designated in Section 8.17 as the state whose laws
         shall govern this Agreement, or in any other state whose laws are held
         to govern this Agreement or any portion hereof.

                  Section 1.2 Other Definitional Terms; Rules of Interpretation.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All accounting terms not otherwise
defined herein have the meanings assigned to them in accordance with GAAP. All
terms defined in the UCC and not otherwise defined herein have the meanings
assigned to them in the UCC. References to Articles, Sections, subsections,
Exhibits, Schedules and the like, are to Articles, Sections and subsections of,
or




Sportsman's Guide Credit and Security Agreement


                                      -11-
<PAGE>

Exhibits or Schedules attached to, this Agreement unless otherwise expressly
provided. The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation". Unless the context in which used
herein otherwise clearly requires, "or" has the inclusive meaning represented by
the phrase "and/or". Defined terms include in the singular number the plural and
in the plural number the singular. Reference to any agreement (including the
Loan Documents), document or instrument means such agreement, document or
instrument as amended or modified and in effect from time to time in accordance
with the terms thereof (and, if applicable, in accordance with the terms hereof
and the other Loan Documents), except where otherwise explicitly provided, and
reference to any promissory note includes any promissory note which is an
extension or renewal thereof or a substitute or replacement therefor. Reference
to any law, rule, regulation, order, decree, requirement, policy, guideline,
directive or interpretation means as amended, modified, codified, replaced or
reenacted, in whole or in part, and in effect on the determination date,
including rules and regulations promulgated thereunder.

                                   ARTICLE II

                     AMOUNT AND TERMS OF THE CREDIT FACILITY

                  Section 2.1 Existing Advances. The Lender has made revolving
advances to Guide (the "Existing Revolving Advances"), Guide's obligation to pay
which is evidenced by the Old Revolving Note. As of the date of this Agreement,
the outstanding principal balance of the Existing Revolving Advances was $-0-,
with interest fully paid.

                  Section 2.2 Revolving Advances. The Lender agrees to make
advances to the Borrowers from time to time from the date all of the conditions
set forth in Section 4.1 are satisfied (the "Funding Date") to the Termination
Date, on the terms and subject to the conditions herein set forth (the
"Revolving Advances"). The Lender shall have no obligation to make a Revolving
Advance to the extent the amount of the requested Revolving Advance exceeds
Availability. The Borrowers' obligation to pay the Revolving Advances shall be
evidenced by the Revolving Note and shall be secured by the Collateral as
provided in Article III. Within the limits set forth in this Section 2.2, the
Borrowers may borrow, prepay pursuant to Section 2.16 and reborrow.

                  Section 2.3 Seasonal Inventory Overadvance Component. At the
Borrowers' request, the Lender may, in its sole discretion, agree to increase
the Borrowing Base by the lesser of $2,000,000 or two and one half percent
(2.5%) of Eligible Inventory during the period from August 15th through November
15th of each year (the "Seasonal Inventory Overadvance Component") on the
following terms and conditions:

                  (a) the Borrowers shall notify the Lender at least 10 days in
         advance of its intent to request that the Seasonal Inventory
         Overadvance Component be made available during any year;

                  (b) the Appraised Liquidation Rate shall be not less than 48%;
         and



Sportsman's Guide Credit and Security Agreement


                                      -12-
<PAGE>

                  (c) interest on that portion of the sum of the outstanding
         principal balance of the Revolving Advances and the L/C Amount that
         exceeds the difference of the Borrowing Base less the Seasonal
         Inventory Overadvance Component (the "Seasonal Inventory Overadvance")
         shall bear interest at the Seasonal Inventory Overadvance Rate.

                  Section 2.4 Procedures for Borrowing. The Borrowers shall
comply with the following procedures in requesting Revolving Advances under
Section 2.2:

                  (a) The Borrowers shall make each request for a Revolving
         Advance to the Lender before 11:00 a.m. (Minneapolis, Minnesota time)
         of the day of the requested Revolving Advance. Requests may be made in
         writing or by telephone, specifying the date of the requested Revolving
         Advance and the amount thereof. Each request shall be by (i) any
         officer of a Borrower; or (ii) any person designated as a Borrower's
         agent by any officer of a Borrower in a writing delivered to the
         Lender; or (iii) any person whom the Lender reasonably believes to be
         an officer of a Borrower or such a designated agent.

                  (b) Upon fulfillment of the applicable conditions set forth in
         Article IV, the Lender shall disburse the proceeds of the requested
         Revolving Advance by crediting the same to the applicable Borrower's
         demand deposit account maintained with the Lender unless the Lender and
         that Borrower shall agree in writing to another manner of disbursement.
         Upon the Lender's request, the applicable Borrower shall promptly
         confirm each telephonic request for an Advance by executing and
         delivering an appropriate confirmation certificate to the Lender. The
         Borrowers shall repay all Advances even if the Lender does not receive
         such confirmation and even if the person requesting an Advance was not
         in fact authorized to do so. Any request for an Advance, whether
         written or telephonic, shall be deemed to be a representation by the
         Borrowers that the conditions set forth in Section 4.2 have been
         satisfied as of the time of the request.

                  Section 2.5 Existing Letters of Credit. The Lender has caused
the Issuer to issue letters of credit under the Old Credit Agreement which are
presently outstanding (the "Existing Letters of Credit). Upon execution and
delivery of this Agreement, the Existing Letters of Credit shall be deemed to be
Letters Of Credit issued pursuant to Section 2.6.

                  Section 2.6 Letters of Credit.

                  (a) The Lender agrees, on the terms and subject to the
         conditions herein set forth, to cause an Issuer to issue, from the
         Funding Date to the Termination Date, one or more irrevocable standby
         or documentary letters of credit (each, a "Letter of Credit") for each
         Borrower's account. The Lender shall have no obligation to cause any
         Letter of Credit to be issued if the face amount of the Letter of
         Credit to be issued, would exceed the lesser of:

                           (i) $10,000,000 less the L/C Amount, or

                           (ii) Availability.


Sportsman's Guide Credit and Security Agreement

                                      -13-
<PAGE>


         Each Letter of Credit, if any, shall be issued pursuant to a separate
         L/C Application entered into between the applicable Borrower and the
         Issuer, completed in a manner satisfactory to the Issuer. The terms and
         conditions set forth in each such L/C Application shall supplement the
         terms and conditions hereof, but if the terms of any such L/C
         Application and the terms of this Agreement are inconsistent, the terms
         hereof shall control.

                  (b) No Letter of Credit shall be issued with an expiry date
         later than the Termination Date in effect as of the date of issuance.

                  (c) Any request to issue a Letter of Credit under this Section
         2.6 shall be deemed to be a representation by the Borrowers that the
         conditions set forth in Section 4.2 have been satisfied as of the date
         of the request.

                  Section 2.7 Payment of Amounts Drawn Under Letters of Credit;
Obligation of Reimbursement. The Borrowers shall reimburse the Lender for all
draws under any Letter of Credit in accordance with the applicable L/C
Application and as follows:

                  (a) The Borrowers shall pay to the Lender on the day a draft
         is honored under any Letter of Credit a sum equal to all amounts drawn
         under such Letter of Credit plus any and all reasonable charges and
         expenses that the Lender may pay or incur relative to such draw and the
         applicable L/C Application, plus interest on all such amounts, charges
         and expenses as set forth below (the Borrowers' obligation to pay all
         such amounts is herein referred to as the "Obligation of
         Reimbursement").

                  (b) Whenever a draft is submitted under a Letter of Credit,
         the Lender shall make a Revolving Advance in the amount of the
         Obligation of Reimbursement and shall apply the proceeds of such
         Revolving Advance thereto. Such Revolving Advance shall be repayable in
         accordance with and be treated in all other respects as a Revolving
         Advance hereunder.

                  (c) If a draft is submitted under a Letter of Credit when the
         Borrowers are unable, because a Default Period exists or for any other
         reason, to obtain a Revolving Advance to pay the Obligation of
         Reimbursement, the Borrowers shall pay to the Lender on demand and in
         immediately available funds, the amount of the Obligation of
         Reimbursement together with interest, accrued from the date of the
         draft until payment in full at the Default Rate. Notwithstanding the
         Borrowers' inability to obtain a Revolving Advance for any reason, the
         Lender is irrevocably authorized, in its sole discretion, to make a
         Revolving Advance in an amount sufficient to discharge the Obligation
         of Reimbursement and all accrued but unpaid interest thereon.

                  (d) The Borrowers' obligation to pay any Revolving Advance
         made under this Section 2.7, shall be evidenced by the Revolving Note
         and shall bear interest as provided in Section 2.11.



Sportsman's Guide Credit and Security Agreement

                                      -14-
<PAGE>

                  Section 2.8 Special Account. If the Credit Facility is
terminated for any reason whatsoever while any Letter of Credit is outstanding,
the Borrowers shall thereupon pay the Lender in immediately available funds for
deposit in the Special Account an amount equal to the L/C Amount. The Special
Account shall be an interest bearing account maintained for the Lender by any
financial institution acceptable to the Lender. Any interest earned on amounts
deposited in the Special Account shall be credited to the Special Account.
Amounts on deposit in the Special Account may be applied by the Lender at any
time or from time to time to the Obligations in the Lender's sole discretion,
and shall not be subject to withdrawal by the Borrowers so long as the Lender
maintains a security interest therein. The Lender agrees to transfer any balance
in the Special Account to the Borrowers at such time as the Lender is required
to release its security interest in the Special Account under applicable law.

                  Section 2.9 Obligations Absolute. The Borrowers' obligations
arising under Section 2.7 shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of Section 2.7, under all
circumstances whatsoever, including (without limitation) the following
circumstances:

                  (a) any lack of validity or enforceability of any Letter of
         Credit or any other agreement or instrument relating to any Letter of
         Credit (collectively the "Related Documents");

                  (b) any amendment or waiver of or any consent to departure
         from all or any of the Related Documents;

                  (c) the existence of any claim, setoff, defense or other right
         which a Borrower may have at any time, against any beneficiary or any
         transferee of any Letter of Credit (or any persons or entities for whom
         any such beneficiary or any such transferee may be acting), or other
         person or entity, whether in connection with this Agreement, the
         transactions contemplated herein or in the Related Documents or any
         unrelated transactions;

                  (d) any statement or any other document presented under any
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect whatsoever;

                  (e) payment by or on behalf of the Lender under any Letter of
         Credit against presentation of a draft or certificate which does not
         strictly comply with the terms of such Letter of Credit; or

                  (f) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing.

                  Section 2.10 Inventory Appraisals; Minimum Availability. The
Lender may from time to time (and will, no less than once each year) obtain at
the Borrowers' expense an appraisal of Inventory by an appraiser acceptable to
the Lender in its sole discretion. The advance rate applicable to Eligible
Inventory (the "Inventory Advance Rate") shall be the



Sportsman's Guide Credit and Security Agreement


                                      -15-
<PAGE>

Appraised Liquidation Rate, provided, however, that if the Appraised Liquidation
Rate is less than 45%, the Inventory Advance Rate shall remain at 45% so long as
no Default Period exists and Availability is not less than $5,000,000.
"Appraised Liquidation Rate" means 90% of the ratio of (A) the most recent
appraised forced liquidation value of Inventory to (B) the book value of
Inventory as shown on the Borrowers' financial statements less reserves on the
date of the appraisal.

                  Section 2.11 Interest; Interest Rate Margins; Default
Interest; Participations; Usury.

                  (a) MARGIN FOR REVOLVING ADVANCES. The interest rate margin to
         be added to the Base Rate to determine the Floating Rate applicable to
         Revolving Advances (other than Seasonal Inventory Overadvances) shall
         be zero percent (-0-%). This Margin shall be reduced to negative one
         half of one percent (-0.5%) effective the first day of the first month
         after Guide receives at least $3,000,000 in Gross Equity Proceeds.

                  (b) MARGIN FOR SEASONAL INVENTORY OVERADVANCES. The interest
         rate margin to be added to the Base Rate to determine the Seasonal
         Inventory Overadvance Rate applicable to Seasonal Inventory
         Overadvances shall be three percent (3.0%).

                  (c) REVOLVING NOTE. Except as set forth in Section 2.11(d) and
         (e), that portion of the outstanding principal balance of the Revolving
         Note not constituting Seasonal Inventory Overadvances shall bear
         interest at the Floating Rate and that portion of the outstanding
         principal balance of the Revolving Note constituting Seasonal Inventory
         Overadvances shall bear interest at the Seasonal Inventory Overadvance
         Rate.

                  (d) MINIMUM INTEREST CHARGE. Notwithstanding the interest
         payable pursuant to Section 2.11(c), the Borrowers shall pay to the
         Lender interest and letter-of-credit fees under Section 2.13(c) of not
         less than $145,000 per calendar year beginning after December 31, 2001
         (the "Minimum Interest Charge") during the term of this Agreement,
         prorated for partial years. If the actual interest charge for any year
         is less than the Minimum Interest Charge (the difference of the Minimum
         Interest Charge and the actual interest charge being the "Shortfall"),
         the Borrowers shall make the Lender whole for its lost profit on the
         Shortfall by paying to the Lender an amount equal to the lesser of the
         Shortfall or the product of (i) the Shortfall times (ii) the ratio of
         (A) difference between (1) the average Floating Rate during such year
         and (2) the Lender's average cost of funds for such year to (B) the
         average Floating Rate during such year minus 100 basis points.

                  (e) DEFAULT INTEREST RATE. At any time from and after the
         first day of any fiscal quarter during which or with respect to which a
         Default Period exists, in the Lender's sole discretion and without
         waiving any of its other rights and remedies, the principal of the
         Advances outstanding from time to time shall bear interest at the


Sportsman's Guide Credit and Security Agreement

                                      -16-
<PAGE>

         Default Rate, effective for any periods designated by the Lender from
         time to time during that Default Period.

                  (f) PARTICIPATIONS. If any Person shall acquire a
         participation in the Advances or the Obligation of Reimbursement, the
         Borrowers shall be obligated to the Lender to pay the full amount of
         all interest calculated under this Section 2.11, along with all other
         fees, charges and other amounts due under this Agreement, regardless if
         such Person elects to accept interest with respect to its participation
         at a lower rate than the Floating Rate, or otherwise elects to accept
         less than its prorata share of such fees, charges and other amounts due
         under this Agreement.

                  (g) USURY. In any event no rate change shall be put into
         effect which would result in a rate greater than the highest rate
         permitted by law.

                  Section 2.12 Time for Interest Payments; Payment on
Non-Banking Days; Computation of Interest and Fees

                  (a) TIME FOR INTEREST PAYMENTS. Interest shall be due and
         payable in arrears on the last day of each month and on the Termination
         Date.

                  (b) PAYMENT ON NON-BANKING DAYS. Whenever any payment to be
         made hereunder shall be stated to be due on a day which is not a
         Banking Day, such payment may be made on the next succeeding Banking
         Day, and such extension of time shall in such case be included in the
         computation of interest on the Advances or the fees hereunder, as the
         case may be.

                  (c) COMPUTATION OF INTEREST AND FEES. Interest accruing on the
         outstanding principal balance of the Advances, Obligation of
         Reimbursement and fees hereunder outstanding from time to time shall be
         computed on the basis of actual number of days elapsed in a year of 360
         days.

                  Section 2.13 Fees.

                  (a) EXTENSION FEE. The Borrowers shall pay to the Lender a
         fully earned and non-refundable extension fee of $75,000, due and
         payable upon the execution of this Agreement.

                  (b) ANNUAL FACILITY FEE. The Borrowers shall pay to the Lender
         an annual facility fee of $18,750, which shall be deemed fully earned
         and non-refundable on the date of this Agreement and on each
         anniversary of the date of this Agreement, but which shall be payable
         in equal quarterly installments on the last day of each calendar
         quarter beginning September 30, 2002.

                  (c) LETTER OF CREDIT FEES. The Borrowers shall pay to the
         Lender a fee with respect to each Letter of Credit, if any, accruing on
         a daily basis and computed at the annual rate of two percent (2.0%) of
         the aggregate amount that may then be drawn on





Sportsman's Guide Credit and Security Agreement

                                      -17-
<PAGE>

         all issued and outstanding Letters of Credit assuming compliance with
         all conditions for drawing thereunder (the "Aggregate Face Amount"),
         from and including the date of issuance of such Letter of Credit until
         such date as such Letter of Credit shall terminate by its terms or be
         returned to the Lender, due and payable monthly in arrears on the first
         day of each month and on the Termination Date; provided, however that
         from and after the first day of any fiscal quarter during which or with
         respect to which a Default Period exists, in the Lender's sole
         discretion and without waiving any of its other rights and remedies,
         such fee shall increase to four percent (4.0%) of the Aggregate Face
         Amount. The foregoing fee shall be in addition to any and all fees,
         commissions and charges of any Issuer of a Letter of Credit with
         respect to or in connection with such Letter of Credit.

                  (d) AUDIT FEES. The Borrowers shall pay to the Lender, on
         demand, audit fees in connection with any audits or inspections
         conducted by the Lender of any Collateral or the Borrowers' operations
         or business at the rates established from time to time by the Lender as
         its audit fees together with all actual out-of-pocket costs and
         expenses incurred in conducting any such audit or inspection.
         Notwithstanding the preceding sentence, except during Default Periods,
         (i) the Borrowers shall not have to reimburse the Lender for more than
         four audits or inspections per year and (ii) the number of audits for
         which the Borrowers must reimburse the Lender shall be reduced by one
         for each period of three consecutive months during which the
         outstanding principal balance of the Obligations is zero, provided that
         if no audit has been conducted within three months of the date the
         Borrowers desire to obtain a Revolving Advance or have a Letter of
         Credit issued, the Lender may require that an audit be conducted (at
         the Borrowers' expense) as a condition precedent to making the
         Revolving Advance or issuing the Letter of Credit.

                  (e) INVENTORY APPRAISALS. The Borrowers shall reimburse the
         Lender on demand for the cost of one appraisal of their Inventory per
         year; provided, however, that during Default Periods, the Borrowers
         shall reimburse the Lender on demand for the cost of up to four
         appraisals of its Inventory per year.

                  (f) TERMINATION AND LINE REDUCTION FEES. If the Credit
         Facility is terminated (i) by the Lender during a Default Period that
         begins before a Maturity Date, (ii) by the Borrowers as of a date other
         than a Maturity Date, the Borrowers shall pay to the Lender a fee in an
         amount equal to a percentage of the Maximum Line (or the reduction
         thereof, as the case may be) as follows: (x) three percent (3.0%) if
         the termination or reduction occurs on or before the first anniversary
         of the Funding Date; (y) two percent (2.0%) if the termination or
         reduction occurs after the first anniversary of the Funding Date but on
         or before the second anniversary of the Funding Date and (z) one
         percent (1.0%) if the termination or reduction occurs after the second
         anniversary of the Funding Date but on or before the Maturity Date.

                  (g) WAIVER OF TERMINATION AND LINE REDUCTION FEES. The
         Borrowers will not be required to pay the termination or line reduction
         fees otherwise due under this




Sportsman's Guide Credit and Security Agreement


                                      -18-
<PAGE>

         Subsection (f) if such termination or line reduction is made because of
         refinancing by the Lender or an affiliate of the Lender and the terms
         of such refinancing require the Borrowers to pay termination and line
         reduction fees in a commensurate amount.

                  (h) OTHER FEES. The Lender may from time to time, upon five
         (5) days prior notice to the Borrowers during a Default Period, charge
         additional fees for Revolving Advances made and Letters of Credit
         issued in excess of Availability, for late delivery of reports, in lieu
         of imposing interest at the Default Rate, and for other reasons. The
         Borrowers' request for a Revolving Advance or the issuance of a Letter
         of Credit at any time after such notice is given and such five (5) day
         period has elapsed shall constitute the Borrowers' agreement to pay the
         fees described in such notice.

                  (i) FUTURE RESTRUCTURING/ORIGINATION FEES. The Borrowers shall
         not be required to pay any restructuring or origination fees in
         connection with an increase of the Maximum Line from $15,000,000 up to
         $25,000,000, provided, that, (i) amendments to the Loan Documents in
         connection with any such increase in the Maximum Line are executed and
         delivered within two years of the date of this Agreement, (ii) the
         foregoing shall not preclude the Lender from collecting costs and fees
         in connection with increasing the Maximum Line to an amount greater
         than $25,000,000 or for any other requested change, and (iii) the
         foregoing shall not limit the Lender's discretion in approving or
         denying any such increase.

                  Section 2.14 Increased Costs; Capital Adequacy.

                  (a) INCREASED COSTS; CAPITAL ADEQUACY. If the Lender
         determines at any time that its Return has been reduced as a result of
         any Rule Change, the Lender may so notify the Borrowers and require the
         Borrowers, beginning fifteen (15) days after such notice, to pay it the
         amount necessary to restore its Return to what it would have been had
         there been no Rule Change. The Lender shall send the initial notice as
         promptly as practicable after the Lender learns that its Return has
         been reduced. Such notice shall include a demand for payment of the
         amount necessary to restore the Lender's Return for the quarter in
         which the notice is sent, and shall state in reasonable detail the
         cause for the reduction in its Return and its calculation of the amount
         of such reduction. Thereafter, the Lender may send a new notice during
         each calendar quarter setting forth the calculation of the reduced
         Return for that quarter and including a demand for payment of the
         amount necessary to restore its Return for that quarter. The Lender's
         calculation in any such notice shall be conclusive and binding absent
         demonstrable error.

                  (b) DEFINITIONS. For purposes of this Section 2.14:

                           (i) "Capital Adequacy Rule" means any law, rule,
                  regulation, guideline, directive, requirement or request
                  regarding capital adequacy, or the interpretation or
                  administration thereof by any governmental or regulatory
                  authority, central bank or comparable agency, whether or not
                  having the force





Sportsman's Guide Credit and Security Agreement

                                      -19-
<PAGE>

                  of law, that applies to any Related Lender, including rules
                  requiring financial institutions to maintain total capital in
                  amounts based upon percentages of outstanding loans, binding
                  loan commitments and letters of credit.

                           (ii) "L/C Rule" means any law, rule, regulation,
                  guideline, directive, requirement or request regarding letters
                  of credit, or the interpretation or administration thereof by
                  any governmental or regulatory authority, central bank or
                  comparable agency, whether or not having the force of law,
                  that applies to any Related Lender, including those that
                  impose taxes, duties or other similar charges, or mandate
                  reserves, special deposits or similar requirements against
                  assets of, deposits with or for the account of, or credit
                  extended by any Related Lender, on letters of credit.

                           (iii) "Related Lender" includes (but is not limited
                  to) the Lender, the Issuer, any parent of the Lender, any
                  assignee of any interest of the Lender hereunder and any
                  participant in the Credit Facility.

                           (iv) "Return", for any period, means the percentage
                  determined by dividing (i) the sum of interest and ongoing
                  fees earned by the Lender under this Agreement during such
                  period, by (ii) the average capital the Lender is required to
                  maintain during such period as a result of its being a party
                  to this Agreement, as determined by the Lender based upon its
                  total capital requirements and a reasonable attribution
                  formula that takes account of the Capital Adequacy Rules and
                  L/C Rules then in effect, costs of issuing or maintaining any
                  Advance or Letter of Credit and amounts received or receivable
                  under this Agreement or the Note with respect to any Advance
                  or Letter of Credit. Return may be calculated for each
                  calendar quarter and for the shorter period between the end of
                  a calendar quarter and the Termination Date.

                           (v) "Rule Change" means any change in any Capital
                  Adequacy Rule or L/C Rule occurring after the date of this
                  Agreement, or any change in the interpretation or
                  administration thereof by any governmental or regulatory
                  authority, but the term does not include any changes that at
                  the Funding Date are scheduled to take place under the
                  existing Capital Adequacy Rules or L/C Rules or any increases
                  in the capital that the Lender is required to maintain to the
                  extent that the increases are required due to a regulatory
                  authority's assessment of the Lender's financial condition.

                  Section 2.15 P.O. Box; Credit Card Receivables; Collateral
Account; Application of Payments.

                  (a) P.O. BOX; LOCKBOX AND COLLATERAL ACCOUNT.

                           (i) The Borrowers will irrevocably direct all present
                  and future Account debtors (except account debtors whose
                  payments arise from credit cards) and other Persons obligated
                  to make payments constituting Collateral to make such payments
                  directly to a designated post-office box (the "P.O. Box").





Sportsman's Guide Credit and Security Agreement

                                      -20-
<PAGE>

                  All of the Borrowers' invoices, account statements and other
                  written or oral communications directing, instructing,
                  demanding or requesting payment of any Account or any other
                  amount constituting Collateral shall conspicuously direct that
                  all payments be made to the P.O. Box and shall include the
                  P.O. Box address. Upon request by the Lender during any
                  Default Period, the Borrowers shall instruct all account
                  debtors to pay all Accounts directly to a lockbox.

                           (ii) The Borrowers shall instruct all present and
                  future credit card processors to deposit all funds payable to
                  the Borrowers under all present and future agreements between
                  the Borrowers and such credit card processors directly into
                  the Collateral Account. The Borrowers shall deposit in the
                  Collateral Account or, at the Lender's option, deliver to the
                  Lender all collections on Accounts and all other proceeds of
                  Collateral which are received in the P.O. Box, and/or which
                  the Borrowers may receive directly notwithstanding its
                  direction to Account debtors and other obligors to make
                  payments to the P.O. Box, immediately upon receipt thereof, in
                  the form received, except for any necessary endorsement of the
                  Borrowers.

                           (iii) All items deposited in the Collateral Account
                  shall be subject to final payment. If any such item is
                  returned uncollected, the Borrowers will immediately pay the
                  Lender, or, for items deposited in the Collateral Account, the
                  bank maintaining such account, the amount of that item, or
                  such bank at its discretion may charge any uncollected item to
                  the Borrowers' commercial account or other account. The
                  Borrowers shall be liable as an endorser on all items
                  deposited in the Collateral Account, whether or not in fact
                  endorsed by the Borrowers.

                  (b) APPLICATION OF PAYMENTS.

                           (i) The Borrowers may, from time to time, in
                  accordance with the Collateral Account Agreement, cause funds
                  in the Collateral Account to be transferred to the Lender's
                  general account for payment of the Obligations. Except as
                  provided in the preceding sentence, amounts deposited in the
                  Collateral Account shall not be subject to withdrawal by the
                  Borrowers, except after full payment and discharge of all
                  Obligations.

                           (ii) All payments to the Lender shall be made in
                  immediately available funds and shall be applied to the
                  Obligations upon receipt by the Lender. Funds received from
                  the Collateral Account shall be deemed to be immediately
                  available. The Lender may hold all payments not constituting
                  immediately available funds for two (2) additional days before
                  applying them to the Obligations.

                  (c) If the Collateral Account is so established, the Borrowers
         shall promptly deposit all payments on Receivables received by it into
         the Collateral Account. Until so deposited or paid to the Lender, the
         Borrowers shall hold all





Sportsman's Guide Credit and Security Agreement

                                      -21-
<PAGE>

         payments on Receivables in trust for and as the property of the Lender
         and shall not commingle such payments with any of its other funds or
         property.

                  Section 2.16 Voluntary Prepayment; Reduction of the Maximum
Line; Termination of the Credit Facility by Borrowers. Except as otherwise
provided herein, the Borrowers may prepay the Revolving Advances in whole at any
time or from time to time in part. The Borrowers may terminate the Credit
Facility or reduce the Maximum Line at any time if (i) the Borrowers give the
Lender at least 30 days' prior written notice and (ii) the Borrowers pay the
Lender the prepayment, termination or line reduction fees in accordance with
Section 2.13(f). Any reduction in the Maximum Line must be in an amount not less
than $1,000,000 or an integral multiple thereof. If the Borrowers reduce the
Maximum Line to zero, all Obligations shall be immediately due and payable. Upon
termination of the Credit Facility and payment and performance of all
Obligations, the Lender shall release or terminate the Security Interest and the
Security Documents to which the Borrowers are entitled by law.

                  Section 2.17 Mandatory Prepayment. Without notice or demand,
if the sum of the outstanding principal balance of the Revolving Advances plus
the L/C Amount shall at any time exceed the Borrowing Base, the Borrowers shall
(i) first, immediately prepay the Revolving Advances to the extent necessary to
eliminate such excess; and (ii) if prepayment in full of the Revolving Advances
is insufficient to eliminate such excess, pay to the Lender in immediately
available funds for deposit in the Special Account an amount equal to the
remaining excess. Any payment received by the Lender under this Section 2.17 or
under Section 2.16 may be applied to the Obligations, in such order and in such
amounts as the Lender, in its discretion, may from time to time determine.

                  Section 2.18 Revolving Advances to Pay Obligations.
Notwithstanding anything in Section 2.2, the Lender may, in its discretion at
any time or from time to time, without the Borrowers' request and even if the
conditions set forth in Section 4.2 would not be satisfied, make a Revolving
Advance in an amount equal to the portion of the Obligations from time to time
due and payable.

                  Section 2.19 Use of Proceeds. The Borrowers shall use the
proceeds of Advances, and each Letter of Credit, if any, for ordinary working
capital purposes.

                  Section 2.20 Liability Records. The Lender may maintain from
time to time, at its discretion, liability records as to the Obligations. All
entries made on any such record shall be presumed correct until the Borrowers
establish the contrary. Upon the Lender's demand, the Borrowers will admit and
certify in writing the exact principal balance of the Obligations that the
Borrowers then assert to be outstanding. Any billing statement or accounting
rendered by the Lender shall be conclusive and fully binding on the Borrowers
unless the Borrowers give the Lender specific written notice of exception within
30 days after receipt.




Sportsman's Guide Credit and Security Agreement

                                      -22-
<PAGE>

                                   ARTICLE III

                      SECURITY INTEREST; OCCUPANCY; SETOFF

                  Section 3.1 Grant of Security Interest. Each Borrower hereby
pledges, assigns and grants to the Lender a security interest (collectively
referred to as the "Security Interest") in the Collateral, as security for the
payment and performance of the Obligations.

                  Section 3.2 Notification of Account Debtors and Other
Obligors. The Lender may at any time (whether or not a Default Period then
exists) notify any account debtor of any Borrower or other Person obligated to
pay an amount due that such right to payment has been assigned or transferred to
the Lender for security and shall be paid directly to the Lender. The applicable
Borrower will join in giving such notice if the Lender so requests. At any time
after a Borrower or the Lender gives such notice to an account debtor or other
obligor, the Lender may, but need not, in the Lender's name or in the applicable
Borrower's name, (a) demand, sue for, collect or receive any money or property
at any time payable or receivable on account of, or securing, any such right to
payment, or grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligations (including
collateral obligations) of any such account debtor or other obligor; and (b) as
the applicable Borrower's agent and attorney-in-fact, notify the United States
Postal Service to change the address for delivery of that Borrower's mail to any
address designated by the Lender, otherwise intercept that Borrower's mail, and
receive, open and dispose (to the extent such mail constitutes Collateral) of
that Borrower's mail, applying all Collateral as permitted under this Agreement
and holding all other mail for that Borrower's account or promptly forwarding
such mail to that Borrower's last known address.

                  Section 3.3 Assignment of Insurance. As additional security
for the payment and performance of the Obligations, the Borrowers hereby assign
to the Lender any and all monies (including, without limitation, proceeds of
insurance and refunds of unearned premiums) due or to become due under, and all
other rights of the Borrowers with respect to, any and all policies of insurance
now or at any time hereafter covering the Collateral or any evidence thereof or
any business records or valuable papers pertaining thereto, and the Borrowers
hereby direct the issuer of any such policy to pay all such monies directly to
the Lender. At any time, whether or not a Default Period then exists, the Lender
may (but need not), in the Lender's name or in the applicable Borrower's name,
execute and deliver proof of claim, receive all such monies, endorse checks and
other instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy.

                  Section 3.4 Occupancy.

                  (a) Each Borrower hereby irrevocably grants to the Lender the
         right to take exclusive possession of the Premises at any time during a
         Default Period.

                  (b) The Lender may use the Premises only to hold, process,
         manufacture, sell, use, store, liquidate, realize upon or otherwise
         dispose of goods that are





Sportsman's Guide Credit and Security Agreement

                                      -23-
<PAGE>

         Collateral and for other purposes that the Lender may in good faith
         deem to be related or incidental purposes.

                  (c) The Lender's right to hold the Premises shall cease and
         terminate upon the earlier of (i) payment in full and discharge of all
         Obligations and termination of the Commitment, and (ii) final sale or
         disposition of all goods constituting Collateral and delivery of all
         such goods to purchasers.

                  (d) The Lender shall not be obligated to pay or account for
         any rent or other compensation for the possession, occupancy or use of
         any of the Premises; provided, however, that if the Lender does pay or
         account for any rent or other compensation for the possession,
         occupancy or use of any of the Premises, the Borrowers shall reimburse
         the Lender promptly for the full amount thereof. In addition, the
         Borrowers will pay, or reimburse the Lender for, all taxes, fees,
         duties, imposts, charges and expenses at any time incurred by or
         imposed upon the Lender by reason of the execution, delivery,
         existence, recordation, performance or enforcement of this Agreement or
         the provisions of this Section 3.4.

                  Section 3.5 License. Without limiting the generality of the
Trademark Security Agreement, the Borrowers hereby grant to the Lender a
non-exclusive, worldwide and royalty-free license to use or otherwise exploit
all trademarks, franchises, trade names, copyrights and patents of the Borrowers
for the purpose of selling, leasing or otherwise disposing of any or all
Collateral during any Default Period.

                  Section 3.6 Financing Statement. Each Borrower authorizes the
Lender to file from time to time where permitted by law, such financing
statements against collateral described as "all personal property" or "all
assets" or describing specific items of collateral including commercial tort
claims, as the Lender deems necessary or useful to perfect the Security
Interest. A carbon, photographic or other reproduction of this Agreement or of
any financing statements signed by the Borrower is sufficient as a financing
statement and may be filed as a financing statement in any state to perfect the
security interests granted hereby. For this purpose, the following information
is set forth:

         NAME, ADDRESS AND EMPLOYER IDENTIFICATION NUMBER OF DEBTOR:

                  The Sportsman's Guide, Inc.
                  411 Farwell Avenue
                  South St. Paul, Minnesota 55075

                  Federal Employer Identification No. 41-1293081
                  Organizational Identification No. 2Y349

                  The Sportsman's Guide Outlet, Inc.
                  411 Farwell Avenue
                  South St. Paul, Minnesota 55075




Sportsman's Guide Credit and Security Agreement

                                      -24-
<PAGE>

                  Federal Employer Identification No. 45-0472540
                  Organizational Identification No. 11Y292

         NAME, ADDRESS AND EMPLOYER IDENTIFICATION NUMBER OF SECURED PARTY:

                  Wells Fargo Bank Minnesota, National Association
                  Sixth Street and Marquette Avenue
                  MAC N9312-040
                  Minneapolis, Minnesota 55479-0095

                  Federal Tax Identification No. 41-1592157

                  Section 3.7 Accommodation Party Defenses Waived. The parties
intend that each Borrower shall be fully liable, jointly and severally, for all
Obligations. Nonetheless, in case a court finds that any Borrower is not such a
primary obligor with respect to all or any part of the Obligations, the
Borrowers expressly waive the benefit of any and all defenses and discharges
available to a guarantor, surety, endorser or accommodation party dependent on
an obligor's character as such. Without limiting the generality of the
foregoing, the liability of the Borrowers hereunder shall not be affected or
impaired in any way by any of the following acts or things (which the Lender is
hereby expressly authorized to do, omit or suffer from time to time without
notice to or consent of anyone): (i) any acceptance of collateral security,
guarantors, accommodation parties or sureties for any Obligations; (ii) any
extension or renewal of any Obligations (whether or not for longer than the
original period) or any modification of the interest rate, maturity or other
terms of any Obligations; (iii) any waiver or indulgence granted to any
Borrower, and any delay or lack of diligence in the enforcement of the
Obligations; (iv) any full or partial release of, compromise or settlement with,
or agreement not to sue, any Borrower, Guarantor or other person liable on any
Obligations; (v) any release, surrender, cancellation or other discharge of any
Obligations or the acceptance of any instrument in renewal or substitution for
any instrument evidencing any Obligations; (vi) any failure to obtain collateral
security (including rights of setoff) for any Obligations, or to see to the
proper or sufficient creation and perfection thereof, or to establish the
priority thereof, or to preserve, protect, insure, care for, exercise or enforce
any collateral security for any Obligations; (vii) any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or other
change, impairment, limitation, loss or discharge of any Collateral, Guarantor
Collateral or other collateral security for the Obligations; (viii) any
assignment, sale, pledge or other transfer of any of Obligations; or (ix) any
manner, order or method of application of any payments or credits on any
Obligations.

                  Section 3.8 Setoff. The Lender may at any time or from time to
time during any Default Period, at its sole discretion and without demand and
without notice to anyone, setoff any liability owed to any Borrower by the
Lender, whether or not due, against any Obligation, whether or not due. In
addition, each other Person holding a participating interest in any Obligations
shall have the right to appropriate or setoff any deposit or other liability
then owed by such Person to any Borrower, whether or not due, and apply the same
to the





Sportsman's Guide Credit and Security Agreement

                                      -25-
<PAGE>

payment of said participating interest, as fully as if such Person had lent
directly to such Borrower the amount of such participating interest.

                                   ARTICLE IV

                              CONDITIONS OF LENDING

                  Section 4.1 Conditions Precedent to Initial Revolving Advance
and Initial Letter of Credit. The Lender's obligation to make the initial
Revolving Advance or to cause the initial Letter of Credit to be issued shall be
subject to the condition precedent that the Lender shall have received all of
the following, each in form and substance satisfactory to the Lender:

                  (a) This Agreement, properly executed by the Borrowers.

                  (b) The Note, properly executed by the Borrowers.

                  (c) Amended and Restated Collateral Account Agreement,
         properly executed by the Borrowers.

                  (d) A certificate of each Borrower's secretary certifying as
         to (i) the resolutions of each Borrower's Directors and if required,
         Owners, authorizing the execution, delivery and performance of the Loan
         Documents, (ii) each Borrower's Constituent Documents, and (iii) the
         signatures of each Borrower's Officers or agents authorized to execute
         and deliver the Loan Documents and other instruments, agreements and
         certificates, including Advance requests, on such Borrower's behalf.

                  (e) For each Borrower, a current certificate issued by the
         Secretary of State of its jurisdiction of organization, certifying that
         it is in good standing in such State.

                  (f) Evidence that each Borrower is duly licensed or qualified
         to transact business in all jurisdictions where the character of the
         property owned or leased or the nature of the business transacted by it
         makes such licensing or qualification necessary.

                  (g) An opinion of counsel to each Borrower, addressed to the
         Lender.

                  (h) Payment of the fees and commissions due through the date
         of the initial Advance or Letter of Credit under Section 2.13 and
         expenses incurred by the Lender through such date and required to be
         paid by the Borrowers under Section 8.9, including all legal expenses
         incurred through the date of this Agreement.

                  (i) Such other documents as the Lender in its sole discretion
         may require.

                  Section 4.2 Conditions Precedent to Each Advance and Letter of
Credit. The Lender's obligation to make any Advance or cause any Letter of
Credit to be issued shall be subject to the further conditions precedent that on
such date:




Sportsman's Guide Credit and Security Agreement

                                      -26-
<PAGE>
                  (a) the representations and warranties contained in Article V
         are correct on and as of the date of such Advance or issuance of Letter
         of Credit as though made on and as of such date, except to the extent
         that such representations and warranties relate solely to an earlier
         date; and

                  (b) no event has occurred and is continuing, or would result
         from such Advance or the issuance of such Letter of Credit, as the case
         may be, which constitutes a Default or an Event of Default.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

                  The Borrowers represent and warrant to the Lender as follows:

                  Section 5.1 Corporate Existence and Power; Name; Chief
Executive Office; Inventory and Equipment Locations; Identification Numbers.
Each Borrower is a corporation, duly organized, validly existing and in good
standing under the laws of the State of its organization and is duly licensed or
qualified to transact business in all jurisdictions where the character of the
property owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary. No dissolution or termination of any
Borrower has occurred, and no notice of dissolution or articles of termination
have been filed with respect to any Borrower. Each Borrower has all requisite
power and authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under, the Loan Documents. For each Borrower, (i) during its existence, it has
done business solely under the names set forth in Schedule 5.1, (ii) its chief
executive office and principal place of business is located at the address set
forth in Schedule 5.1, (iii) all of its records relating to its business or the
Collateral are kept at that location, (iv) all of its Inventory and Equipment is
located at that location or at one of the other locations set forth in Schedule
5.1, and (v) its tax identification and organizational identification numbers
are correctly set forth in Section 3.6.

                  Section 5.2 Capitalization. Schedule 5.2 constitutes a correct
and complete list of all ownership interests in each Borrower and rights to
acquire ownership interests equal to or exceeding five percent (5.0%).

                  Section 5.3 Authorization of Borrowing; No Conflict as to Law
or Agreements. The execution, delivery and performance by each Borrower of the
Loan Documents and the borrowings from time to time hereunder have been duly
authorized by all necessary corporate action and do not and will not (i) require
any consent or approval of each Borrower's Owners; (ii) require any
authorization, consent or approval by, or registration, declaration or filing
with, or notice to, any governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, or any third party, except such
authorization, consent, approval, registration, declaration, filing or notice as
has been obtained, accomplished or given prior to the date hereof; (iii) violate
any provision of any law, rule or regulation (including, without limitation,
Regulation X of the Board of





Sportsman's Guide Credit and Security Agreement

                                      -27-
<PAGE>

Governors of the Federal Reserve System) or of any order, writ, injunction or
decree presently in effect having applicability to any Borrower or its
Constituent Documents; (iv) result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other material agreement, lease
or instrument to which any Borrower is a party or by which it or its properties
may be bound or affected; or (v) result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than the Security Interest)
upon or with respect to any of the properties now owned or hereafter acquired by
any Borrower.

                  Section 5.4 Legal Agreements.

                  (a) The Old Credit Agreement constitutes the legal, valid and
         binding obligation of Guide, enforceable against Guide in accordance
         with its terms. Guide has no claim, defense or offset to enforcement of
         the Old Credit Agreement.

                  (b) This Agreement constitutes and, upon due execution by the
         Borrowers, the other Loan Documents will constitute, the legal, valid
         and binding obligations of the Borrowers, enforceable against the
         Borrowers in accordance with their respective terms.

                  Section 5.5 Subsidiaries. Except for Outlet, the Borrowers
have no Subsidiaries.

                  Section 5.6 Financial Condition; No Adverse Change. Guide has
heretofore furnished to the Lender audited financial statements dated as of
December 31, 2001, and unaudited interim financial statements dated as of April
30, 2002, and those statements fairly present Guide's financial condition as of
the dates thereof and the results of its operations and cash flows for the
periods then ended and were prepared in accordance with generally accepted
accounting principles. Since the date of the most recent financial statements,
there has been no material adverse change in the Borrowers' business, properties
or condition (financial or otherwise).

                  Section 5.7 Litigation. There are no actions, suits or
proceedings pending or, to any Borrower's knowledge, threatened against or
affecting any Borrower or any of its Affiliates or the properties of any
Borrower or any of its Affiliate before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
which, if determined adversely to such Borrower or any of its Affiliates, would
have a material adverse effect on the financial condition, properties or
operations of such Borrower or any of its Affiliates.

                  Section 5.8 Regulation U. No Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Advance will be used
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.




Sportsman's Guide Credit and Security Agreement

                                      -28-
<PAGE>

                  Section 5.9 Taxes. Each Borrower and its Affiliates has paid
or caused to be paid to the proper authorities when due all federal, state and
local taxes required to be withheld by each of them. Each Borrower and its
Affiliates have filed all federal, state and local tax returns which to the
knowledge of the Officers of such Borrower or any of its Affiliates, as the case
may be, are required to be filed, and each Borrower and its Affiliates have paid
or caused to be paid to the respective taxing authorities all taxes as shown on
said returns or on any assessment received by any of them to the extent such
taxes have become due.

                  Section 5.10 Titles and Liens. Each Borrower has good and
absolute title to all Collateral described in the collateral reports provided to
the Lender and all other Collateral, properties and assets reflected in the
latest financial statements referred to in Section 5.6 and all proceeds thereof,
free and clear of all mortgages, security interests, liens, adverse claims and
encumbrances, except for Permitted Liens. No financing statement naming any
Borrower as debtor is on file in any office except to perfect only Permitted
Liens.

                  Section 5.11 Intellectual Property Rights.

                  (a) OWNED INTELLECTUAL PROPERTY. Schedule 5.11 is a complete
         list of all patents, applications for patents, trademarks, applications
         for trademarks, service marks, applications for service marks, mask
         works, trade dress and copyrights for which any Borrower is the
         registered owner (the "Owned Intellectual Property"). Except as
         disclosed on Schedule 5.11, (i) each Borrower owns its Owned
         Intellectual Property free and clear of all restrictions (including
         covenants not to sue a third party), court orders, injunctions,
         decrees, writs or Liens, whether by written agreement or otherwise,
         (ii) no Person other than a Borrower owns or has been granted any right
         in the Owned Intellectual Property, (iii) all Owned Intellectual
         Property is valid, subsisting and enforceable and (iv) each Borrower
         has taken all commercially reasonable action necessary to maintain and
         protect the Owned Intellectual Property.

                  (b) INTELLECTUAL PROPERTY RIGHTS LICENSED FROM OTHERS.
         Schedule 5.11 is a complete list of all agreements under which each
         Borrower has licensed Intellectual Property Rights from another Person
         ("Licensed Intellectual Property") other than readily available,
         non-negotiated licenses of computer software and other intellectual
         property used solely for performing accounting, word processing and
         similar administrative tasks ("Off-the-shelf Software") and a summary
         of any ongoing payments each Borrower is obligated to make with respect
         thereto. Except as disclosed on Schedule 5.11 and in written agreements
         (copies of which have been given to the Lender), each Borrower's
         licenses to use the Licensed Intellectual Property are free and clear
         of all restrictions, Liens, court orders, injunctions, decrees, or
         writs, whether by written agreement or otherwise. Except as disclosed
         on Schedule 5.11, no Borrower is obligated or under any liability
         whatsoever to make any payments of a material nature by way of
         royalties, fees or otherwise to any owner of, licensor of, or other
         claimant to, any Intellectual Property Rights.



Sportsman's Guide Credit and Security Agreement

                                      -29-
<PAGE>

                  (c) OTHER INTELLECTUAL PROPERTY NEEDED FOR BUSINESS. Except
         for Off-the-shelf Software and as disclosed on Schedule 5.11, the Owned
         Intellectual Property and the Licensed Intellectual Property constitute
         all Intellectual Property Rights used or necessary to conduct each
         Borrower's business as it is presently conducted or as each Borrower
         reasonably foresees conducting it.

                  (d) INFRINGEMENT. Except as disclosed on Schedule 5.11, no
         Borrower has any knowledge of, and no Borrower has received any written
         claim or notice alleging, any material Infringement of another Person's
         Intellectual Property Rights (including any written claim that a
         Borrower must license or refrain from using the Intellectual Property
         Rights of any third party) nor, to any Borrower's knowledge, is there
         any threatened claim or any reasonable basis for any such claim.

                  Section 5.12 Plans. Except as disclosed to the Lender in
writing prior to the date hereof, no Borrower nor any ERISA Affiliate (i)
maintains or has maintained any Pension Plan, (ii) contributes or has
contributed to any Multiemployer Plan or (iii) provides or has provided
post-retirement medical or insurance benefits with respect to employees or
former employees (other than benefits required under Section 601 of ERISA,
Section 4980B of the IRC or applicable state law). No Borrower nor any ERISA
Affiliate has received any notice or has any knowledge to the effect that it is
not in full compliance with any of the requirements of ERISA, the IRC or
applicable state law with respect to any Plan. No Reportable Event exists in
connection with any Pension Plan. Each Plan which is intended to qualify under
the IRC is so qualified, and no fact or circumstance exists which may have an
adverse effect on the Plan's tax-qualified status. No Borrower nor any ERISA
Affiliate has (i) any accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the IRC) under any Plan, whether or not waived, (ii)
any liability under Section 4201 or 4243 of ERISA for any withdrawal, partial
withdrawal, reorganization or other event under any Multiemployer Plan or (iii)
any liability or knowledge of any facts or circumstances which could result in
any liability to the Pension Benefit Guaranty Corporation, the Internal Revenue
Service, the Department of Labor or any participant in connection with any Plan
(other than routine claims for benefits under the Plan).

                  Section 5.13 Default. Each Borrower is in compliance with all
provisions of all agreements, instruments, decrees and orders to which it is a
party or by which it or its property is bound or affected, the breach or default
of which could have a material adverse effect on any Borrower's financial
condition, properties or operations.

                  Section 5.14 Environmental Matters.

                  (a) To each Borrower's best knowledge, there are not present
         in, on or under the Premises any Hazardous Substances in such form or
         quantity as to create any liability or obligation for the Borrowers or
         the Lender under common law of any jurisdiction or under any
         Environmental Law, and no Hazardous Substances have ever been stored,
         buried, spilled, leaked, discharged, emitted or released in, on or
         under the Premises in such a way as to create any such liability.




Sportsman's Guide Credit and Security Agreement

                                      -30-
<PAGE>

                  (b) To each Borrower's best knowledge, no Borrower has ever
         disposed of Hazardous Substances in such a manner as to create any
         liability under any Environmental Law.

                  (c) There are not and there never have been, during any
         Borrower's occupancy, any requests, claims, notices, investigations,
         demands, administrative proceedings, hearings or litigation, relating
         in any way to the Premises or a Borrower, alleging liability under,
         violation of, or noncompliance with any Environmental Law or any
         license, permit or other authorization issued pursuant thereto. To each
         Borrower's best knowledge, no such matter is threatened or impending.

                  (d) To each Borrower's best knowledge, each Borrower's
         businesses are and have in the past always been conducted in accordance
         with all Environmental Laws and all licenses, permits and other
         authorizations required pursuant to any Environmental Law and necessary
         for the lawful and efficient operation of such businesses are in each
         Borrower's possession and are in full force and effect. No permit
         required under any Environmental Law is scheduled to expire within 12
         months and there is no threat that any such permit will be withdrawn,
         terminated, limited or materially changed.

                  (e) To each Borrower's best knowledge, the Premises are not
         and never have been listed on the National Priorities List, the
         Comprehensive Environmental Response, Compensation and Liability
         Information System or any similar federal, state or local list,
         schedule, log, inventory or database.

                  (f) Each Borrower has delivered to Lender all environmental
         assessments, audits, reports, permits, licenses and other documents
         describing or relating in any way to the Premises or its businesses.

                  Section 5.15 Submissions to Lender. All financial and other
information provided to the Lender by or on behalf of the Borrowers in
connection with the Borrowers' request for the Credit Facility is true and
correct in all material respects and, as to projections, valuations or proforma
financial statements, present a good faith opinion as to such projections,
valuations and proforma condition and results.

                  Section 5.16 Financing Statements. Each Borrower has provided
to the Lender signed financing statements or authorized financing statements
sufficient when filed to perfect the Security Interest and the other security
interests created by the Security Documents. When such financing statements are
filed in the offices noted therein, the Lender will have a valid and perfected
security interest in all Collateral and all other collateral described in the
Security Documents which is capable of being perfected by filing financing
statements. None of the Collateral or other collateral covered by the Security
Documents is or will become a fixture on real estate, unless a sufficient
fixture filing is in effect with respect thereto.




Sportsman's Guide Credit and Security Agreement

                                      -31-
<PAGE>

                  Section 5.17 Rights to Payment. Each right to payment and each
instrument, document, chattel paper and other agreement constituting or
evidencing Collateral or other collateral covered by the Security Documents is
(or, in the case of all future Collateral or such other collateral, will be when
arising or issued) the valid, genuine and legally enforceable obligation,
subject to no defense, setoff or counterclaim, of the account debtor or other
obligor named therein or in the applicable Borrower's records pertaining thereto
as being obligated to pay such obligation.

                  Section 5.18 Financial Solvency. Both before and after giving
effect to the transactions contemplated in the Loan Documents, no Borrower or
any of its Affiliates:

                  (a) was or will be insolvent, as that term is used and defined
         in Section 101(32) of the United States Bankruptcy Code and Section 2
         of the Uniform Fraudulent Transfer Act;

                  (b) has unreasonably small capital or is engaged or about to
         engage in a business or a transaction for which any remaining assets of
         the Borrower or such Affiliate are unreasonably small;

                  (c) by executing, delivering or performing its obligations
         under the Loan Documents or other documents to which it is a party or
         by taking any action with respect thereto, intends to, nor believes
         that it will, incur debts beyond its ability to pay them as they
         mature;

                  (d) by executing, delivering or performing its obligations
         under the Loan Documents or other documents to which it is a party or
         by taking any action with respect thereto, intends to hinder, delay or
         defraud either its present or future creditors; and

                  (e) at this time contemplates filing a petition in bankruptcy
         or for an arrangement or reorganization or similar proceeding under any
         law any jurisdiction, nor, to the best knowledge of the Borrowers, is
         the subject of any actual, pending or threatened bankruptcy, insolvency
         or similar proceedings under any law of any jurisdiction.




Sportsman's Guide Credit and Security Agreement

                                      -32-
<PAGE>

                                   ARTICLE VI

                              BORROWERS' COVENANTS

                  So long as the Obligations shall remain unpaid, or the Credit
Facility shall remain outstanding, the Borrowers will comply with the following
requirements, unless the Lender shall otherwise consent in writing:

                  Section 6.1 Reporting Requirements. The Borrowers will
deliver, or cause to be delivered, to the Lender each of the following, which
shall be in form and detail acceptable to the Lender:

                  (a) as soon as available, and in any event within 90 days
         after the end of each fiscal year of each Borrower, its audited
         financial statements with the unqualified opinion of independent
         certified public accountants selected by such Borrower and acceptable
         to the Lender, which annual financial statements shall include its
         balance sheet as at the end of such fiscal year and the related
         statements of income, retained earnings and cash flows for the fiscal
         year then ended, prepared on a consolidating and consolidated basis to
         include any Subsidiaries of such Borrower, all in reasonable detail and
         prepared in accordance with GAAP, together with (i) copies of all
         management letters prepared by such accountants; (ii) a report signed
         by such accountants stating that in making the investigations necessary
         for said opinion they obtained no knowledge, except as specifically
         stated, of any Default or Event of Default hereunder and all relevant
         facts in reasonable detail to evidence, and the computations as to,
         whether or not such Borrower is in compliance with the Financial
         Covenants; and (iii) a certificate of such Borrower's chief financial
         officer, vice president of finance or controller stating that such
         financial statements have been prepared in accordance with GAAP, fairly
         represent such Borrower's financial position and the results of its
         operations, and whether or not such officer has knowledge of the
         occurrence of any Default or Event of Default hereunder and, if so,
         stating in reasonable detail the facts with respect thereto;

                  (b) as soon as available and in any event within 20 days after
         the end of each Accounting Period, an unaudited/internal balance sheet
         and statements of income and retained earnings of each Borrower as at
         the end of and for such Accounting Period and for the fiscal
         year-to-date period then ended, prepared on a consolidating and
         consolidated basis to include any Subsidiaries, in reasonable detail
         and stating in comparative form the figures for the corresponding date
         and periods in the previous year, all prepared in accordance with GAAP,
         subject to year-end audit adjustments; and accompanied by a certificate
         of such Borrower's chief financial officer, vice president of finance
         or controller, substantially in the form of Exhibit B hereto stating
         (i) that such financial statements have been prepared in accordance
         with GAAP, subject to year-end audit adjustments, and fairly represent
         such Borrower's financial position and the results of its operations,
         (ii) whether or not such officer has knowledge of the occurrence of any
         Default or Event of Default hereunder not





Sportsman's Guide Credit and Security Agreement

                                      -33-
<PAGE>

         theretofore reported and remedied and, if so, stating in reasonable
         detail the facts with respect thereto, and (iii) all relevant facts in
         reasonable detail to evidence, and the computations as to, whether or
         not such Borrower is in compliance with the Financial Covenants;

                  (c) within 15 days after the end of each Accounting Period or
         more frequently if the Lender so requires, agings of each Borrower's
         accounts receivable and its accounts payable, an inventory
         certification report for each Borrower, and a calculation of each
         Borrower's Accounts, Eligible Accounts, Inventory and Eligible
         Inventory as at the end of such month or shorter time period;

                  (d) at least 30 days before the beginning of each fiscal year
         of each Borrower, the projected balance sheets and income statements
         for each Accounting Period of such year, each in reasonable detail,
         representing each Borrower's good faith projections and certified by
         each Borrower's chief financial officer as being the most accurate
         projections available and identical to the projections used by the
         Borrowers for internal planning purposes, together with such supporting
         schedules and information as the Lender may in its discretion require;

                  (e) immediately after the commencement thereof, notice in
         writing of all litigation and of all proceedings before any
         governmental or regulatory agency affecting any Borrower of the type
         described in Section 5.14 or which seek a monetary recovery against any
         Borrower in excess of $100,000;

                  (f) as promptly as practicable (but in any event not later
         than five business days) after an Officer of any Borrower obtains
         knowledge of the occurrence of any breach, default or event of default
         under any Security Document or any event which constitutes a Default or
         Event of Default hereunder, notice of such occurrence, together with a
         detailed statement by a responsible Officer of the applicable Borrower
         of the steps being taken by such Borrower to cure the effect of such
         breach, default or event;

                  (g) as soon as possible, and in any event within 30 days after
         any Borrower knows or has reason to know that any Reportable Event with
         respect to any Pension Plan has occurred, a statement of its chief
         financial officer setting forth details as to such Reportable Event and
         the action which the Borrowers propose to take with respect thereto,
         together with a copy of the notice of such Reportable Event to the
         Pension Benefit Guaranty Corporation;

                  (h) as soon as possible, and in any event within 10 days after
         any Borrower fails to make any quarterly contribution required with
         respect to any Pension Plan under Section 412(m) of the IRC, a
         statement of its chief financial Officer setting forth details as to
         such failure and the action which the Borrowers propose to take with
         respect thereto, together with a copy of any notice of such failure
         required to be provided to the Pension Benefit Guaranty Corporation;




Sportsman's Guide Credit and Security Agreement

                                      -34-
<PAGE>

                  (i) as soon as possible, and in any event with 10 days after
         any Borrower knows or has reason to know that it has or is reasonably
         expected to have any liability under Section 4201 or 4243 of ERISA for
         any withdrawal, partial withdrawal, reorganization or other event under
         any Multiemployer Plan, a statement of its chief financial Officer
         setting forth details as to such liability and the action which
         Borrowers propose to take with respect thereto;

                  (j) promptly upon knowledge thereof, notice of (i) any
         disputes or claims by any Borrower's customers exceeding $100,000 in
         the aggregate during any fiscal year; and (ii) any change in the
         persons constituting any Borrower's Officers and Directors;

                  (k) promptly upon knowledge thereof, notice of any loss of or
         material damage to any Collateral or other collateral covered by the
         Security Documents or of any substantial adverse change in any
         Collateral or such other collateral or the prospect of payment thereof;

                  (l) promptly upon knowledge thereof, notice of any commercial
         tort claims any Borrower may bring against any person, including the
         name and address of each defendant, a summary of the facts, an estimate
         of the applicable Borrower's damages, copies of any complaint or demand
         letter submitted by such Borrower, and such other information as the
         Lender may request;

                  (m) (i) 30 days prior written notice of any Borrower's intent
         to acquire material Intellectual Property Rights; and except for
         transfers permitted under Section 6.17, 30 days prior written notice of
         its intent to dispose of material Intellectual Property Rights; and
         upon request, shall provide the Lender with copies of all applicable
         documents and agreements;

                           (ii) promptly upon knowledge thereof, notice of (A)
                  any Infringement of its Intellectual Property Rights by
                  others, (B) claims that it is Infringing another Person's
                  Intellectual Property Rights and (C) any threatened
                  cancellation, termination or material limitation of its
                  Intellectual Property Rights; and

                           (iii) promptly upon Lender's request, copies of all
                  registrations and filings with respect to its Intellectual
                  Property Rights;

                  (n) promptly upon their distribution, copies of all financial
         statements, reports and proxy statements which any Borrower shall have
         sent to its stockholders;

                  (o) promptly after the sending or filing thereof, copies of
         all regular and periodic reports which any Borrower shall file with the
         Securities and Exchange Commission or any national securities exchange;



Sportsman's Guide Credit and Security Agreement

                                      -35-
<PAGE>

                  (p) promptly upon knowledge thereof, notice of any Borrower's
         violation of any law, rule or regulation, the non-compliance with which
         could materially and adversely affect such Borrower's business or its
         financial condition; and

                  (q) from time to time, with reasonable promptness, any and all
         receivables schedules, collection reports, deposit records, equipment
         schedules, copies of invoices to account debtors, shipment documents
         and delivery receipts for goods sold, and such other material, reports,
         records or information as the Lender may request.

                  Section 6.2 Financial Covenants.

                  (a) MINIMUM FISCAL YEAR-TO-DATE NET INCOME. The Borrowers will
         achieve fiscal year-to-date Net Income, determined as of the end of
         each fiscal quarter ending on or about the dates listed below, of not
         less than the amount set forth opposite such date:



<Table>
<Caption>
 FISCAL QUARTER ENDING ON OR             MINIMUM FISCAL YEAR-TO-DATE
            ABOUT                                 NET INCOME
<S>                                      <C>
          6/30/2002                                $(500,000)
          9/30/2002                                $(500,000)
         12/31/2002                                $ 500,000
</Table>

                   (b) MAXIMUM INVENTORY DAYS. The Borrowers shall maintain an
         Inventory level, determined as of the end of each fiscal quarter ending
         on or about the dates listed below, of not more than the number of
         Inventory Days set forth opposite such date:


<Table>
<Caption>
Fiscal quarter ending on or about         Maximum Inventory Days
<S>                                       <C>
            6/30/2002                           120
            9/30/2002                           160
           12/31/2002                           105
</Table>

                   (c) QUARTERLY GROSS MARGIN. The Borrowers will achieve a
         Gross Margin, determined as of the end of each fiscal quarter ending on
         or about the dates listed below, of not less than the amount set forth
         opposite such date:


<Table>
<Caption>
 FISCAL QUARTER ENDING ON OR
            ABOUT                          GROSS MARGIN
<S>                                        <C>
          6/30/2002                             35%
          9/30/2002                             36%
         12/31/2002                             36%
</Table>




Sportsman's Guide Credit and Security Agreement

                                      -36-
<PAGE>

                  (d) CAPITAL EXPENDITURES. The Borrowers will not incur or
         contract to incur on a consolidated basis, Capital Expenditures of more
         than $900,000 in the aggregate in the fiscal year 2002.

                  Section 6.3 Liens.

                  (a) No Borrower will, or will permit any Subsidiary to,
         create, incur or suffer to exist any Lien upon any of its assets now
         owned or hereafter acquired, to secure any indebtedness; excluding,
         however, from the operation of the foregoing, the following
         (collectively, "Permitted Liens"):

                           (i) in the case of any Borrower's property which is
                  not Collateral or other collateral described in the Security
                  Documents, covenants, restrictions, rights, easements and
                  minor irregularities in title which do not materially
                  interfere with its business or operations as presently
                  conducted;

                           (ii) mortgages, deeds of trust, pledges, liens,
                  security interests and assignments in existence on the date
                  hereof and listed in Schedule 6.3 hereto, securing
                  indebtedness for borrowed money permitted under Section 6.4;

                           (iii) the Security Interest and liens and security
                  interests created by the Security Documents; and

                           (iv) purchase money security interests relating to
                  the acquisition of machinery and equipment not exceeding the
                  lesser of cost or fair market value thereof , not exceeding
                  $2,000,000 for any one purchase or $3,000,000 in the aggregate
                  for all Borrowers during any fiscal year and so long as no
                  Default Period is then in existence and none would exist
                  immediately after such acquisition.

                  (b) No Borrower will, or will permit any Subsidiary to, amend
         any financing statements in favor of the Lender except as permitted by
         law. Any authorization by the Lender to any Person to amend financing
         statements in favor of the Lender shall be in writing.

                  Section 6.4 Indebtedness. No Borrower will, or will permit any
Subsidiary to, incur, create, assume or permit to exist any indebtedness or
liability on account of deposits or advances or any indebtedness for borrowed
money or letters of credit issued on its behalf, or any other indebtedness or
liability evidenced by notes, bonds, debentures or similar obligations, except:

                  (a) indebtedness arising hereunder;

                  (b) indebtedness in existence on the date hereof and listed in
         Schedule 6.4 hereto; and

                  (c) indebtedness relating to liens permitted in accordance
         with Section 6.3.




Sportsman's Guide Credit and Security Agreement

                                      -37-
<PAGE>

                  Section 6.5 Guaranties. No Borrower will, or will permit any
Subsidiary to, assume, guarantee, endorse or otherwise become directly or
contingently liable in connection with any obligations of any other Person,
except:

                  (a) the endorsement of negotiable instruments for deposit or
         collection or similar transactions in the ordinary course of business;
         and

                  (b) guaranties, endorsements and other direct or contingent
         liabilities in connection with the obligations of other Persons, in
         existence on the date hereof and listed in Schedule 6.4 hereto.

                  Section 6.6 Investments and Subsidiaries.

                  (a) No Borrower will, or will permit any Subsidiary to,
         purchase or hold beneficially any stock or other securities or
         evidences of indebtedness of, make or permit to exist any loans or
         advances to, or make any investment or acquire any interest whatsoever
         in, any other Person, including specifically but without limitation any
         partnership or joint venture, except:

                           (i) investments in direct obligations of the United
                  States of America or any agency or instrumentality thereof
                  whose obligations constitute full faith and credit obligations
                  of the United States of America having a maturity of one year
                  or less, commercial paper issued by U.S. corporations rated
                  "A-1" or "A-2" by Standard & Poors Corporation or "P-1" or
                  "P-2" by Moody's Investors Service or certificates of deposit
                  or bankers' acceptances having a maturity of one year or less
                  issued by members of the Federal Reserve System having
                  deposits in excess of $100,000,000 (which certificates of
                  deposit or bankers' acceptances are fully insured by the
                  Federal Deposit Insurance Corporation);

                           (ii) travel advances or loans to Officers and
                  employees not exceeding at any one time an aggregate of
                  $100,000 for all Borrowers and Subsidiaries;

                           (iii) Guide's investment in Outlet not exceeding its
                  investment as of the date hereof and the net proceeds of any
                  offering of Guide's equity securities for the purpose of
                  financing such company; and

                           (iv) advances in the form of progress payments,
                  prepaid rent not exceeding two months or security deposits.

                  (b) No Borrower will, or will permit any Subsidiary to, create
         or permit to exist any Subsidiary other than Outlet.

                  Section 6.7 Dividends. Except as set forth below, no Borrower
will, or will permit any Subsidiary to, declare or pay any dividends (other than
dividends payable solely in stock of the Borrower) on any class of its stock or
make any payment on account of the purchase, redemption or other retirement of
any shares of such stock or make any





Sportsman's Guide Credit and Security Agreement

                                      -38-
<PAGE>

distribution in respect thereof, either directly or indirectly. Subsidiaries may
pay dividends and distributions to the Borrowers.

                  Section 6.8 Salaries. No Borrower will, or will permit any
Subsidiary to, pay excessive or unreasonable salaries, bonuses, commissions,
consultant fees or other compensation.

                  Section 6.9 Books and Records; Inspection and Examination.
Each Borrower will, and will cause each Subsidiary to, keep accurate books of
record and account for itself pertaining to the Collateral and pertaining to its
business and financial condition and such other matters as the Lender may from
time to time request in which true and complete entries will be made in
accordance with GAAP and, upon the Lender's request, will permit any officer,
employee, attorney or accountant for the Lender to audit, review, make extracts
from or copy any and all corporate and financial books and records at all times
during ordinary business hours, to send and discuss with account debtors and
other obligors requests for verification of amounts owed to it, and to discuss
its affairs with any of its Directors, Officers and designated employees or
agents. Each Borrower hereby irrevocably authorizes all accountants and third
parties to disclose and deliver to the Lender, at its expense, all financial
information, books and records, work papers, management reports and other
information in their possession regarding the Borrowers and their Subsidiaries.
Each Borrower will permit the Lender, or its employees, accountants, attorneys
or agents, to examine and inspect any Collateral, other collateral covered by
the Security Documents or any other property of such Borrower or its
Subsidiaries at any time during ordinary business hours.

                  Section 6.10 Account Verification. The Lender may at any time
and from time to time send or require any Borrower to send requests for
verification of accounts or notices of assignment to account debtors and other
obligors. The Lender may also at any time and from time to time telephone
account debtors and other obligors to verify accounts.

                  Section 6.11 Compliance with Laws.

                  (a) Each Borrower will, and will cause its Subsidiaries to,
         (i) comply with the requirements of applicable laws and regulations,
         the non-compliance with which would materially and adversely affect its
         business or its financial condition and (ii) use and keep the
         Collateral, and require that others use and keep the Collateral, only
         for lawful purposes, without violation of any federal, state or local
         law, statute or ordinance.

                  (b) Without limiting the foregoing undertakings, each Borrower
         will, and will cause each Subsidiary to, comply with all applicable
         Environmental Laws and obtain and comply with all permits, licenses and
         similar approvals required by any Environmental Laws, and will not
         generate, use, transport, treat, store or dispose of any Hazardous
         Substances in such a manner as to create any liability or obligation
         under the common law of any jurisdiction or any Environmental Law.




Sportsman's Guide Credit and Security Agreement

                                      -39-
<PAGE>

                  Section 6.12 Payment of Taxes and Other Claims. Each Borrower
will, and will cause each Subsidiary to, pay or discharge, when due, (a) all
taxes, assessments and governmental charges levied or imposed upon it or upon
its income or profits, upon any properties belonging to it (including, without
limitation, the Collateral) or upon or against the creation, perfection or
continuance of the Security Interest, prior to the date on which penalties
attach thereto, (b) all federal, state and local taxes required to be withheld
by it, and (c) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien or charge upon any of its properties;
provided, that no Borrower or Subsidiary will be required to pay any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which proper reserves
have been made.

                  Section 6.13 Maintenance of Properties.

                  (a) Each Borrower will, and will cause each Subsidiary to,
         keep and maintain the Collateral, the other collateral covered by the
         Security Documents and all of its other properties necessary or useful
         in its business in good condition, repair and working order (normal
         wear and tear excepted) and will from time to time replace or repair
         any worn, defective or broken parts; provided, however, that nothing in
         this Section 6.13 shall prevent a Borrower or Subsidiary from
         discontinuing the operation and maintenance of any of its properties if
         such discontinuance is, in its judgment, desirable in the conduct of
         its business and not disadvantageous in any material respect to the
         Lender as holder of the Obligations. Each Borrower will, and will cause
         each Subsidiary to, take all commercially reasonable steps necessary to
         protect and maintain its Intellectual Property Rights.

                  (b) Each Borrower will, and will cause each Subsidiary to,
         defend the Collateral against all Liens, claims or demands of all
         Persons (other than the Lender) claiming the Collateral or any interest
         therein. Each Borrower will, and will cause each Subsidiary to, keep
         all Collateral free and clear of all Liens except Permitted Liens. Each
         Borrower will, and will cause each Subsidiary to, take all commercially
         reasonable steps necessary to prosecute any Person Infringing its
         Intellectual Property Rights and to defend itself against any Person
         accusing it of Infringing any Person's Intellectual Property Rights.

                  Section 6.14 Insurance. Each Borrower will, and will cause
each Subsidiary to, obtain and at all times maintain insurance with insurers
believed by it to be responsible and reputable, in such amounts and against such
risks as may from time to time be required by the Lender, but in all events in
such amounts and against such risks as is usually carried by companies engaged
in similar business and owning similar properties in the same general areas in
which it operates. Without limiting the generality of the foregoing, each
Borrower will, and will cause each Subsidiary to, at all times maintain business
interruption insurance including coverage for force majeure and keep all
tangible Collateral insured against risks of fire (including so-called extended
coverage), theft, collision (for Collateral consisting of motor vehicles) and
such other risks and in such amounts as the Lender may reasonably





Sportsman's Guide Credit and Security Agreement

                                      -40-
<PAGE>

request, with any loss payable to the Lender to the extent of its interest, and
all policies of such insurance shall contain a lender's loss payable endorsement
for the Lender's benefit acceptable to the Lender. All policies of liability
insurance required hereunder shall name the Lender as an additional insured.

                  Section 6.15 Preservation of Existence. Each Borrower will,
and will cause each Subsidiary to, preserve and maintain its existence and all
of its rights, privileges and franchises necessary or desirable in the normal
conduct of its business and shall conduct its business in an orderly, efficient
and regular manner.

                  Section 6.16 Delivery of Instruments, etc. Upon request by the
Lender, each Borrower will, and will cause each Subsidiary to, promptly deliver
to the Lender in pledge all instruments, documents and chattel papers
constituting Collateral, duly endorsed or assigned by it.

                  Section 6.17 Sale or Transfer of Assets; Licensing of
Property; Suspension of Business Operations. No Borrower will, or will permit
any Subsidiary to, sell, lease, assign, transfer or otherwise dispose of (i) the
stock of any Subsidiary, (ii) all or a substantial part of its assets, or (iii)
any Collateral or any interest therein (whether in one transaction or in a
series of transactions) to any other Person other than the sale of Inventory in
the ordinary course of business. No Borrower will, or will permit any Subsidiary
to, liquidate, dissolve or suspend business operations. No Borrower will, or
will permit any Subsidiary to, transfer any part of its ownership interest in
any Intellectual Property Rights, or permit any agreement under which it has
licensed Licensed Intellectual Property to lapse, except that a Borrower or
Subsidiary may transfer such rights or permit such agreements to lapse if it
shall have reasonably determined that the applicable Intellectual Property
Rights are no longer useful in its business. If a Borrower or Subsidiary
transfers any Intellectual Property Rights for value, it will pay over the
proceeds to the Lender for application to the Obligations. No Borrower will, or
will permit any Subsidiary to, license any other Person to use any of its
Intellectual Property Rights, except for grants of licenses in the ordinary
course of its business in connection with sales of Inventory or provision of
services to its customers.

                  Section 6.18 Landlord's Disclaimers. Until the Borrowers
deliver to the Lender, true and correct copies of any and all leases pursuant to
which the Borrowers are leasing the Premises, together with a landlord's
disclaimer and consent with respect to each lease, the Lender shall reserve an
amount equal to three months rent owed under the leases (the "Landlord's
Disclaimer Reserve").

                  Section 6.19 Consolidation and Merger; Asset Acquisitions. No
Borrower will or will permit any Subsidiary to, consolidate with or merge into
any Person, or permit any other Person to merge into it, or acquire (in a
transaction analogous in purpose or effect to a consolidation or merger) all or
substantially all the assets of any other Person.

                  Section 6.20 Sale and Leaseback. No Borrower will, or will
permit any Subsidiary to, enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any real or personal property, whether now
owned or hereafter acquired, and then or






Sportsman's Guide Credit and Security Agreement

                                      -41-
<PAGE>

thereafter rent or lease as lessee such property or any part thereof or any
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred.

                  Section 6.21 Restrictions on Nature of Business. No Borrower
will, or will permit any Subsidiary to, engage in any line of business
materially different from that in which it is presently engaged and will not
purchase, lease or otherwise acquire assets not related to its business.

                  Section 6.22 Accounting. No Borrower will, or will permit any
Subsidiary to, adopt any material change in accounting principles other than as
required by GAAP. No Borrower will, or will permit any Subsidiary to, adopt,
permit or consent to any change in its fiscal year.

                  Section 6.23 Discounts, etc. No Borrower will, or will permit
any Subsidiary to, at any time (whether before or after notice from the Lender)
modify, amend, subordinate, cancel or terminate the obligation of any account
debtor or other obligor.

                  Section 6.24 Plans. Unless disclosed to the Lender pursuant to
Section 5.12, no the Borrower, any Subsidiary or any ERISA Affiliate will (i)
adopt, create, assume or become a party to any Pension Plan, (ii) incur any
obligation to contribute to any Multiemployer Plan, (iii) incur any obligation
to provide post-retirement medical or insurance benefits with respect to
employees or former employees (other than benefits required by law) or (iv)
amend any Plan in a manner that would materially increase its funding
obligations.

                  Section 6.25 Place of Business; Name. No Borrower will, or
will permit any Subsidiary to, transfer its chief executive office or principal
place of business, or move, relocate, close or sell any business location. No
Borrower will, or will permit any Subsidiary to, permit any tangible Collateral
or any records pertaining to the Collateral to be located in any state or area
in which, in the event of such location, a financing statement covering such
Collateral would be required to be, but has not in fact been, filed in order to
perfect the Security Interest. No Borrower will, or will permit any Subsidiary
to, change its name.

                  Section 6.26 Constituent Documents. No Borrower will, or will
permit any Subsidiary to, amend its Constituent Documents. No Borrower will, or
will permit any Subsidiary to, become an S Corporation within the meaning of the
IRC.

                  Section 6.27 Performance by the Lender. If a Borrower at any
time fails to perform or observe any of the foregoing covenants contained in
this Article VI or elsewhere herein, and if such failure shall continue for a
period of ten calendar days after the Lender gives such Borrower written notice
thereof (or in the case of the agreements contained in Sections 2.15, 6.12 or
6.14, immediately upon the occurrence of such failure, without notice or lapse
of time), the Lender may, but need not, perform or observe such covenant on
behalf and in the name, place and stead of such Borrower (or, at the Lender's
option, in the Lender's name) and may, but need not, take any and all other
actions which the Lender may





Sportsman's Guide Credit and Security Agreement

                                      -42-
<PAGE>
reasonably deem necessary to cure or correct such failure (including, without
limitation, the payment of taxes, the satisfaction of security interests, liens
or encumbrances, the performance of obligations owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments); and the Borrowers shall thereupon pay to the Lender on demand
the amount of all monies expended and all costs and expenses (including
reasonable attorneys' fees and legal expenses) incurred by the Lender in
connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Lender, together with interest
thereon from the date expended or incurred at the Default Rate. To facilitate
the Lender's performance or observance of such covenants of the Borrowers, each
Borrower hereby irrevocably appoints the Lender, or the Lender's delegate,
acting alone, as its attorney in fact (which appointment is coupled with an
interest) with the right (but not the duty) from time to time to create,
prepare, complete, execute, deliver, endorse or file in its name and on its
behalf any and all instruments, documents, assignments, security agreements,
financing statements, applications for insurance and other agreements and
writings required to be obtained, executed, delivered or endorsed by it under
this Section 6.27.

                                   ARTICLE VII

                     EVENTS OF DEFAULT, RIGHTS AND REMEDIES

                  Section 7.1 Events of Default. "Event of Default", wherever
used herein, means any one of the following events:

                  (a) Default in the payment of the Obligations when they become
         due and payable;

                  (b) Failure to pay when due any amount specified in Section
         2.7 relating to the Obligation of Reimbursement, or failure to pay
         immediately when due or upon termination of the Credit Facility any
         amounts required to be paid for deposit in the Special Account under
         Section 2.8;

                  (c) Default in the payment of any fees, commissions, costs or
         expenses required to be paid by any Borrower under this Agreement;

                  (d) Default in the performance, or breach, of any covenant or
         agreement of any Borrower contained in this Agreement;

                  (e) Any Financial Covenant shall become inapplicable due to
         the lapse of time and the failure to amend any such covenant to cover
         future periods;

                  (f) A Change of Control shall occur with respect to any
         Borrower;

                  (g) Any Borrower shall be or become insolvent, or admit in
         writing its inability to pay its debts as they mature, or make an
         assignment for the benefit of





Sportsman's Guide Credit and Security Agreement

                                      -43-
<PAGE>

         creditors; or any Borrower shall apply for or consent to the
         appointment of any receiver, trustee, or similar officer for it or for
         all or any substantial part of its property; or such receiver, trustee
         or similar officer shall be appointed without its application or
         consent; or any Borrower shall institute (by petition, application,
         answer, consent or otherwise) any bankruptcy, insolvency,
         reorganization, arrangement, readjustment of debt, dissolution,
         liquidation or similar proceeding relating to it under the laws of any
         jurisdiction; or any such proceeding shall be instituted (by petition,
         application or otherwise) against a Borrower; or any judgment, writ,
         warrant of attachment or execution or similar process shall be issued
         or levied against a substantial part of the property of a Borrower;

                  (h) A petition shall be filed by or against any Borrower under
         the United States Bankruptcy Code naming such Borrower as debtor;

                  (i) Any representation or warranty made by any Borrower in
         this Agreement or by any Borrower (or by any of its Officers) in any
         agreement, certificate, instrument or financial statement or other
         statement contemplated by or made or delivered pursuant to or in
         connection with this Agreement shall prove to have been incorrect in
         any material respect when deemed to be effective;

                  (j) The rendering against any Borrower of an arbitration
         award, final judgment, decree or order for the payment of money in
         excess of $100,000 and the continuance of such judgment, decree or
         order unsatisfied and in effect for any period of 30 consecutive days
         without a stay of execution;

                  (k) A default under any bond, debenture, note or other
         evidence of indebtedness of any Borrower owed to any Person other than
         the Lender, or under any indenture or other instrument under which any
         such evidence of indebtedness has been issued or by which it is
         governed, or under any lease of any of the Premises, and the expiration
         of the applicable period of grace, if any, specified in such evidence
         of indebtedness, indenture, other instrument or lease;

                  (l) Any Reportable Event, which the Lender determines in good
         faith might constitute grounds for the termination of any Pension Plan
         or for the appointment by the appropriate United States District Court
         of a trustee to administer any Pension Plan, shall have occurred and be
         continuing 30 days after written notice to such effect shall have been
         given to the Borrowers by the Lender; or a trustee shall have been
         appointed by an appropriate United States District Court to administer
         any Pension Plan; or the Pension Benefit Guaranty Corporation shall
         have instituted proceedings to terminate any Pension Plan or to appoint
         a trustee to administer any Pension Plan; or any Borrower or any ERISA
         Affiliate shall have filed for a distress termination of any Pension
         Plan under Title IV of ERISA; or any Borrower or any ERISA Affiliate
         shall have failed to make any quarterly contribution required with
         respect to any Pension Plan under Section 412(m) of the IRC, which the
         Lender determines in good faith may by itself, or in combination with
         any such failures that





Sportsman's Guide Credit and Security Agreement

                                      -44-
<PAGE>

         the Lender may determine are likely to occur in the future, result in
         the imposition of a Lien on any Borrower's assets in favor of the
         Pension Plan; or any withdrawal, partial withdrawal, reorganization or
         other event occurs with respect to a Multiemployer Plan which results
         or could reasonably be expected to result in a material liability of
         any Borrower to the Multiemployer Plan under Title IV of ERISA;

                  (m) An event of default shall occur under any Security
         Document or under any other security agreement, mortgage, deed of
         trust, assignment or other instrument or agreement securing the
         Obligations;

                  (n) Any Borrower shall liquidate, dissolve, terminate or
         suspend its business operations or otherwise fail to operate its
         business in the ordinary course, or sell all or substantially all of
         its assets, without the Lender's prior written consent;

                  (o) Any Borrower shall fail to pay, withhold, collect or remit
         any tax or tax deficiency when assessed or due (other than any tax
         deficiency which is being contested in good faith and by proper
         proceedings and for which it shall have set aside on its books adequate
         reserves therefor) or notice of any state or federal tax liens shall be
         filed or issued;

                  (p) Default in the payment of any amount owed by any Borrower
         to the Lender other than any indebtedness arising hereunder;

                  (q) Any event or circumstance with respect to any Borrower
         shall occur such that the Lender shall believe in good faith that the
         prospect of payment of all or any part of the Obligations or the
         performance by a Borrower under the Loan Documents is impaired or any
         material adverse change in the business or financial condition of a
         Borrower shall occur; or

                  (r) Any breach, default or event of default by or attributable
         to any Affiliate of a Borrower under any agreement between such
         Affiliate and the Lender.

                  Section 7.2 Rights and Remedies. During any Default Period,
the Lender may exercise any or all of the following rights and remedies:

                  (a) the Lender may, by notice to the Borrowers, declare the
         Obligations to be forthwith due and payable, whereupon all Obligations
         shall become and be forthwith due and payable, without presentment,
         notice of dishonor, protest or further notice of any kind, all of which
         the Borrowers hereby expressly waive;

                  (b) the Lender may, without notice to the Borrowers and
         without further action, apply any and all money owing by the Lender to
         any Borrower, including without limitation any funds on deposit with
         the Lender, whether or not matured, to the payment of the Obligations;




Sportsman's Guide Credit and Security Agreement

                                      -45-
<PAGE>
                  (c) the Lender may make demand upon the Borrowers and,
         forthwith upon such demand, the Borrowers will pay to the Lender in
         immediately available funds for deposit in the Special Account pursuant
         to Section 2.17 an amount equal to the aggregate maximum amount
         available to be drawn under all Letters of Credit then outstanding,
         assuming compliance with all conditions for drawing thereunder;

                  (d) the Lender may exercise and enforce any and all rights and
         remedies available upon default to a secured party under the UCC,
         including, without limitation, the right to take possession of
         Collateral, or any evidence thereof, proceeding without judicial
         process or by judicial process (without a prior hearing or notice
         thereof, which the Borrowers hereby expressly waive) and the right to
         sell, lease or otherwise dispose of any or all of the Collateral (with
         or without giving any warranties as to the Collateral, title to the
         Collateral or similar warranties), and, in connection therewith, the
         Borrowers will on demand assemble the Collateral and make it available
         to the Lender at a place to be designated by the Lender which is
         reasonably convenient to both parties;

                  (e) the Lender may exercise and enforce its rights and
         remedies under the Loan Documents; and

                  (f) the Lender may exercise any other rights and remedies
         available to it by law or agreement.

Notwithstanding the foregoing, upon the occurrence of an Event of Default
described in subsections (g) or (h) of Section 7.1, the Obligations shall be
immediately due and payable automatically without presentment, demand, protest
or notice of any kind.

                  Section 7.3 Certain Notices. If notice to the Borrowers of any
intended disposition of Collateral or any other intended action is required by
law in a particular instance, such notice shall be deemed commercially
reasonable if given (in the manner specified in Section 8.5) at least ten
calendar days before the date of intended disposition or other action.

                                  ARTICLE VIII

                                  MISCELLANEOUS

                  Section 8.1 Restatement of Old Credit Agreement. This
Agreement is executed for the purpose of amending and restating the Old Credit
Agreement.

                  Section 8.2 Release. Each Borrower hereby absolutely and
unconditionally releases and forever discharges the Lender, any participants and
any and all parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing, from any and all claims, demands or causes of action of
any kind, nature or description, whether arising in law or equity or upon
contract or





Sportsman's Guide Credit and Security Agreement

                                      -46-
<PAGE>

tort or under any state or federal law or otherwise, which it has had, now has
or has made claim to have against any such Person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Agreement, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

                  Section 8.3 No Waiver; Cumulative Remedies. No failure or
delay by the Lender in exercising any right, power or remedy under the Loan
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy under the
Loan Documents. The remedies provided in the Loan Documents are cumulative and
not exclusive of any remedies provided by law.

                  Section 8.4 Amendments, Etc. No amendment, modification,
termination or waiver of any provision of any Loan Document or consent to any
departure by any Borrower therefrom or any release of a Security Interest shall
be effective unless the same shall be in writing and signed by the Lender, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No notice to or demand on any Borrower
in any case shall entitle the Borrowers to any other or further notice or demand
in similar or other circumstances.

                  Section 8.5 Addresses for Notices, Etc. Except as otherwise
expressly provided herein, all notices, requests, demands and other
communications provided for under the Loan Documents shall be in writing and
shall be (a) personally delivered, (b) sent by first class United States mail,
(c) sent by overnight courier of national reputation, or (d) transmitted by
telecopy, in each case addressed or telecopied to the party to whom notice is
being given at its address or telecopier number as set forth below next to its
signature or, as to each party, at such other address or telecopier number as
may hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy, except that notices or requests
to the Lender pursuant to any of the provisions of Article II shall not be
effective until received by the Lender. All requests under Section 9-210 of the
UCC (i) shall be made in a writing signed by a person authorized under Section
2.4(a), (ii) shall be personally delivered, sent by registered or certified
mail, return receipt requested, or by overnight courier of national reputation
(iii) shall be deemed to be sent when received by the Lender and (iv) shall
otherwise comply with the requirements of Section 9-210. Each Borrower requests
that the Lender respond to all such requests which on their face appear to come
from an authorized individual and releases the Lender from any liability for so
responding. The Borrowers shall pay Lender the maximum amount allowed by law for
responding to such requests.




Sportsman's Guide Credit and Security Agreement

                                      -47-
<PAGE>

                  Section 8.6 Servicing of Credit Facility.

                  (a) The Lender has entered into a servicing agreement (the
         "Servicing Agreement") with the Servicer to service and enforce the
         Loan Documents and collect the Obligations on the Lender's behalf.
         Pursuant to the Servicing Agreement, the Lender has authorized the
         Servicer to take certain actions, perform certain duties and exercise
         certain powers on the Lender's behalf under the provisions of the Loan
         Documents and any other instruments and agreements referred to in this
         Agreement.

                  (b) The Servicer shall have no duties or responsibilities to
         any Borrower, but only to the Lender and then only as expressly set
         forth in the Servicing Agreement. Without limiting the generality of
         the foregoing, the Servicer shall have no obligation to make any loans
         or advances to the Borrowers. Neither the Servicer nor any of its
         officers, directors, employees or agents shall be liable for any action
         taken or omitted by them hereunder or in connection herewith, unless
         caused by its or their willful misconduct. The Servicer's duties shall
         be mechanical and administrative in nature; nothing in this Agreement,
         express or implied, is intended to or shall be so construed as to
         impose upon the Servicer any obligations with respect to the Loan
         Documents except as expressly set forth herein. No Borrower will in any
         way be construed to be a third party beneficiary of any relationship
         between the Servicer and the Lender.

                  (c) The Servicer shall be entitled to rely, and shall be fully
         protected in relying, upon any communication whether written or oral
         believed by it to be genuine and correct and to have been signed, sent
         or made by the proper Person, and, with respect to all legal matters
         pertaining to this Agreement and its duties hereunder, upon advice of
         counsel selected by it.

                  (d) The Borrowers shall be entitled to rely upon any
         communication whether written or oral sent or made by the Servicer for
         and on behalf of the Lender with respect to all matters pertaining to
         the Loan Documents and the Borrowers' duties and obligations hereunder,
         unless and until the Borrowers receive written notice from the Lender
         that the Servicer is no longer servicing the Credit Facility.

                  (e) The Servicer shall hold and be the custodian of the Loan
         Documents on the Lender's behalf for so long as the Servicer is
         servicing the Credit Facility.

                  (f) The Servicing Agreement may be terminated at any time
         without prior notice to or consent of the Borrowers. Upon termination
         of the Servicing Agreement and failure to replace the Servicing
         Agreement with a new servicing agreement, all references herein to the
         Servicer shall thereafter mean and refer to the Lender.

                  Section 8.7 Further Documents. The Borrowers will from time to
time execute and deliver or endorse any and all instruments, documents,
conveyances, assignments, security agreements, financing statements and other
agreements and writings that the Lender may reasonably request in order to
secure, protect, perfect or enforce the Security Interest or





Sportsman's Guide Credit and Security Agreement

                                      -48-
<PAGE>

the Lender's rights under the Loan Documents (but any failure to request or
assure that the Borrowers execute, deliver or endorse any such item shall not
affect or impair the validity, sufficiency or enforceability of the Loan
Documents and the Security Interest, regardless of whether any such item was or
was not executed, delivered or endorsed in a similar context or on a prior
occasion).

                  Section 8.8 Collateral. This Agreement does not contemplate a
sale of accounts, contract rights or chattel paper, and, as provided by law, the
Borrowers are entitled to any surplus and shall remain liable for any
deficiency. The Lender's duty of care with respect to Collateral in its
possession (as imposed by law) shall be deemed fulfilled if it exercises
reasonable care in physically keeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third person,
and the Lender need not otherwise preserve, protect, insure or care for any
Collateral. The Lender shall not be obligated to preserve any rights any
Borrower may have against prior parties, to realize on the Collateral at all or
in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.

                  Section 8.9 Costs and Expenses. The Borrowers shall pay on
demand all costs and expenses, including (without limitation) reasonable
attorneys' fees, incurred by the Lender in connection with the Obligations, this
Agreement, the Loan Documents, any Letters of Credit, and any other document or
agreement related hereto or thereto, and the transactions contemplated hereby,
including without limitation all such costs, expenses and fees incurred in
connection with the negotiation, preparation, execution, amendment,
administration, performance, collection and enforcement of the Obligations and
all such documents and agreements and the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest.

                  Section 8.10 Indemnity. In addition to the payment of expenses
pursuant to Section 8.9, the Borrowers shall indemnify, defend and hold harmless
the Lender, and any of its participants, parent corporations, subsidiary
corporations, affiliated corporations, successor corporations, and all present
and future officers, directors, employees, attorneys and agents of the foregoing
(the "Indemnitees") from and against any of the following (collectively,
"Indemnified Liabilities"):

                           (i) any and all transfer taxes, documentary taxes,
                  assessments or charges made by any governmental authority by
                  reason of the execution and delivery of the Loan Documents or
                  the making of the Advances;

                           (ii) any claims, loss or damage to which any
                  Indemnitee may be subjected if any representation or warranty
                  contained in Section 5.14 proves to be incorrect in any
                  respect or as a result of any violation of the covenant
                  contained in Section 6.11(b); and

                           (iii) any and all other liabilities, losses, damages,
                  penalties, judgments, suits, claims, costs and expenses of any
                  kind or nature whatsoever (including, without limitation, the
                  reasonable fees and disbursements of





Sportsman's Guide Credit and Security Agreement

                                      -49-
<PAGE>

                  counsel) in connection with the foregoing and any other
                  investigative, administrative or judicial proceedings, whether
                  or not such Indemnitee shall be designated a party thereto,
                  which may be imposed on, incurred by or asserted against any
                  such Indemnitee, in any manner related to or arising out of or
                  in connection with the making of the Advances and the Loan
                  Documents or the use or intended use of the proceeds of the
                  Advances.

If any investigative, judicial or administrative proceeding arising from any of
the foregoing is brought against any Indemnitee, upon such Indemnitee's request,
the Borrowers, or counsel designated by the Borrowers and satisfactory to the
Indemnitee, will resist and defend such action, suit or proceeding to the extent
and in the manner directed by the Indemnitee, at the Borrowers' sole costs and
expense. Each Indemnitee will use its best efforts to cooperate in the defense
of any such action, suit or proceeding. If the foregoing undertaking to
indemnify, defend and hold harmless may be held to be unenforceable because it
violates any law or public policy, the Borrowers shall nevertheless make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law. The Borrowers' obligation
under this Section 8.10 shall survive the termination of this Agreement and the
discharge of the Borrowers' other obligations hereunder.

                  Section 8.11 Participants. The Lender and its participants, if
any, are not partners or joint venturers, and the Lender shall not have any
liability or responsibility for any obligation, act or omission of any of its
participants. All rights and powers specifically conferred upon the Lender may
be transferred or delegated to any of the Lender's participants, successors or
assigns.

                  Section 8.12 Execution in Counterparts. This Agreement and
other Loan Documents may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.

                  Section 8.13 Retention of Borrowers' Records. The Lender and
Servicer shall have no obligation to maintain any electronic records or any
documents, schedules, invoices, agings, or other papers delivered to them by the
Borrowers or in connection with the Loan Documents for more than four months
after receipt.

                  Section 8.14 Binding Effect; Assignment; Complete Agreement;
Exchanging Information. The Loan Documents shall be binding upon and inure to
the benefit of the Borrowers and the Lender and their respective successors and
assigns, except that no Borrower will have the right to assign its rights
thereunder or any interest therein without the Lender's prior written consent.
This Agreement, together with the Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and supersedes
all prior agreements, written or oral, on the subject matter hereof. Without
limiting the Lender's right to share information regarding each Borrower and its
Affiliates with the Lender's participants, accountants, lawyers and other
advisors, the Lender, Wells





Sportsman's Guide Credit and Security Agreement

                                      -50-
<PAGE>
Fargo & Company, and all direct and indirect subsidiaries of Wells Fargo &
Company, may exchange among themselves any and all information they may have in
their possession regarding each Borrower and its Affiliates, and each Borrower
waives any right of confidentiality it may have with respect to such exchange of
such information.

                  Section 8.15 Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.

                  Section 8.16 Headings. Article and Section headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.

                  Section 8.17 Governing Law; Jurisdiction, Venue; Waiver of
Jury Trial. The Loan Documents shall be governed by and construed in accordance
with the substantive laws (other than conflict laws) of the State of Minnesota.
The parties hereto hereby (i) consent to the personal jurisdiction of the state
and federal courts located in the State of Minnesota in connection with any
controversy related to this Agreement; (ii) waive any argument that venue in any
such forum is not convenient, (iii) agree that any litigation initiated by the
Lender or any Borrower in connection with this Agreement or the other Loan
Documents shall be venued in either the District Court of Hennepin County,
Minnesota, or the United States District Court, District of Minnesota, Fourth
Division; and (iv) agree that a final judgment in any such suit, action or
proceeding may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.

THE BORROWERS AND THE LENDER WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
THIS AGREEMENT AND THE NOTE OR THE RELATIONSHIPS ESTABLISHED HEREUNDER.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.


<Table>
<S>                                                          <C>
The Sportsman's Guide, Inc.                                  THE SPORTSMAN'S GUIDE, INC.
411 Farwell Avenue                                           THE SPORTSMAN'S GUIDE OUTLET, INC.
South St. Paul, Minnesota 55075
Telecopier:  (651) 552-5345
Attention: Charles B. Lingen
                                                             By /s/ Charles B. Lingen
                                                                --------------------------------------
With a copy to:                                                   Charles B. Lingen
Bruce A. Teeters, Esq.                                            Its Executive Vice President and CFO
Chernesky, Heyman & Kress P.L.L.
10 Courthouse Plaza SW, Suite 1100
Dayton, Ohio 45402
Telecopier: (937) 449-2821
</Table>




Sportsman's Guide Credit and Security Agreement

                                      -51-
<PAGE>
<Table>
<S>                                                          <C>
Wells Fargo Bank Minnesota, National Association             WELLS FARGO BANK MINNESOTA,
Sixth Street and Marquette Avenue                              NATIONAL ASSOCIATION
MAC N9312-040
Minneapolis, Minnesota 55479-0095                            By /s/ Perry T. Larson
Telecopier:  (612) 673-8589                                     -------------------------------
Attention: Kerri L. Nelson                                      Perry T. Larson
                                                                Its Vice President
</Table>






Sportsman's Guide Credit and Security Agreement

                                      -52-
<PAGE>




                                Table of Exhibits

                  Exhibit A                  Form of Revolving Note

                  Exhibit B                  Form of Compliance Certificate

                  Exhibit C                  Premises

























<PAGE>










                                    Exhibit A to Amended and Restated Credit and
                                    Security Agreement

                                 REVOLVING NOTE

$15,000,000                                              Minneapolis, Minnesota
                                                              September 5, 2002

                  For value received, the undersigned, The Sportsman's Guide,
Inc., a Minnesota corporation, and The Sportsman's Guide Outlet, Inc., a
Minnesota corporation (the "Borrowers"), hereby promise to pay on the
Termination Date under the Credit Agreement (defined below), to the order of
Wells Fargo Bank Minnesota, National Association, a national banking association
(the "Lender"), at its office in Minneapolis, Minnesota, or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Fifteen Million Dollars and No Cents ($15,000,000) or, if less, the aggregate
unpaid principal amount of all Revolving Advances made by the Lender to the
Borrowers under the Credit Agreement (defined below) together with interest on
the principal amount hereunder remaining unpaid from time to time, computed on
the basis of the actual number of days elapsed and a 360-day year, from the date
hereof until this Note is fully paid at the rate from time to time in effect
under the Amended and Restated Credit and Security Agreement of even date
herewith (as the same may hereafter be amended, supplemented or restated from
time to time, the "Credit Agreement") by and between the Lender and the
Borrowers. The principal hereof and interest accruing thereon shall be due and
payable as provided in the Credit Agreement. This Note may be prepaid only in
accordance with the Credit Agreement.

                  This Note is issued pursuant, and is subject, to the Credit
Agreement, which provides, among other things, for acceleration hereof. This
Note is the Revolving Note referred to in the Credit Agreement. This Note is
secured, among other things, pursuant to the Credit Agreement and the Security
Documents as therein defined, and may now or hereafter be secured by one or more
other security agreements, mortgages, deeds of trust, assignments or other
instruments or agreements. To the extent this Note evidences an obligation to
pay Existing Revolving Advances, this Note is issued in substitution for and
replacement of but not in payment of the Old Revolving Note.

                  The Borrowers shall pay all costs of collection, including
reasonable attorneys' fees and legal expenses if this Note is not paid when due,
whether or not legal proceedings are commenced.




Sportsman's Guide Revolving Note

                                      -2-
<PAGE>
                  Presentment or other demand for payment, notice of dishonor
and protest are expressly waived.

                                       THE SPORTSMAN'S GUIDE, INC.
                                       THE SPORTSMAN'S GUIDE OUTLET, INC.

                                       By
                                          --------------------------------------
                                            Charles B. Lingen
                                            Its Executive Vice President and CFO





Sportsman's Guide Revolving Note

                                      -3-
<PAGE>
                                    Exhibit B to Amended and Restated Credit and
                                    Security Agreement

                             COMPLIANCE CERTIFICATE

To:                        Kerri L. Nelson
                           Wells Fargo Bank Minnesota, National Association

Date:                      __________________, 200_

Subject:                   The Sportsman's Guide, Inc.
                           The Sportsman's Guide Outlet, Inc.
                           Financial Statements

                  In accordance with our Amended and Restated Credit and
Security Agreement dated as of September 5, 2002 (the "Credit Agreement"),
attached are the financial statements of The Sportsman's Guide, Inc. and The
Sportsman's Guide Outlet, Inc. (the "Borrowers") as of and for ________________,
200__ (the "Reporting Date") and the fiscal year-to-date period then ended (the
"Current Financials"). All terms used in this certificate have the meanings
given in the Credit Agreement.

                  I certify that the Current Financials have been prepared in
accordance with GAAP, subject to year-end audit adjustments, and fairly present
the Borrowers' financial condition and the results of their operations as of the
Reporting Date.

                  Events of Default. (Check one):

        [ ]       The undersigned does not have knowledge of the occurrence of a
                  Default or Event of Default under the Credit Agreement not
                  previously reported to the Lender.

        [ ]       The undersigned has knowledge of the occurrence of a Default
                  or Event of Default under the Credit Agreement not previously
                  reported to the Lender and attached hereto is a statement of
                  the facts with respect to thereto. The Borrowers acknowledge
                  that pursuant to Section 2.11(e) of the Credit Agreement, the
                  Lender may impose the Default Rate at any time effective as of
                  the first day of the fiscal quarter in which the Default or
                  Event of Default occurred.

                  Financial Covenants. I further hereby certify as follows:

                  1. Minimum Fiscal Year-To-Date Net Income. Pursuant to Section
         6.2(a) of the Credit Agreement, the Borrowers' fiscal year-to-date Net
         Income during the fiscal quarter ending on the Reporting Date was
         $____________, which [ ] satisfies [ ] does not satisfy the requirement
         that such amount be not less than the amount set forth below:


<PAGE>




<Table>
<Caption>
 FISCAL QUARTER ENDING ON OR              MINIMUM FISCAL YEAR-TO-DATE
            ABOUT                                  NET INCOME
<S>                                       <C>
          6/30/2002                                $(500,000)
          9/30/2002                                $(500,000)
         12/31/2002                                $ 500,000
</Table>


                  2. Maximum Inventory Days. Pursuant to Section 6.2(b) of the
         Credit Agreement, the turnover rate for Inventory as of the Reporting
         Date was ________ Inventory Days which [ ] satisfies [ ] does not
         satisfy the requirement that such amount be not more than _____ on the
         Reporting Date as set forth in the table below:




<Table>
<Caption>
 FISCAL QUARTER ENDING ON OR
            ABOUT                       MAXIMUM INVENTORY DAYS
<S>                                     <C>
          6/30/2002                             120
          9/30/2002                             160
         12/31/2002                             105
</Table>

                  3. Minimum Quarterly Gross Margin. Pursuant to Section 6.2(c)
         of the Credit Agreement, as of the Reporting Date, the Borrowers' Gross
         Margin was ______% which [ ] satisfies [ ] does not satisfy the
         requirement that such percentage be not less than that set forth below:




<Table>
<Caption>
 FISCAL QUARTER ENDING ON OR
            ABOUT                          GROSS MARGIN
<S>                                             <C>
          6/30/2002                             35%
          9/30/2002                             36%
         12/31/2002                             36%
</Table>

                  4. Capital Expenditures. Pursuant to Section 6.2(d) of the
         Credit Agreement, for the fiscal year-to-date period ending on the
         Reporting Date, the Borrowers have expended or contracted to expend,
         for Capital Expenditures, $__________________ in the aggregate, which
         [ ] satisfies [ ] does not satisfy the requirement that such
         expenditures not exceed $900,000 in the aggregate during such fiscal
         year.

                  5. Salaries. As of the Reporting Date, the Borrowers [ ] are
         [ ] are not in compliance with Section 6.8 of the Credit Agreement
         concerning salaries.



Sportsman's Guide Compliance Certificate

                                      -2-
<PAGE>
                  Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.

                                            THE SPORTSMAN'S GUIDE, INC.
                                            THE SPORTSMAN'S GUIDE OUTLET, INC.



                                            By
                                               ----------------------------
                                               Its
                                                   ------------------------





Sportsman's Guide Compliance Certificate

                                      -3-
<PAGE>
                                    Exhibit C to Amended and Restated Credit and
                                    Security Agreement

                                    PREMISES

                  The Premises referred to in the Amended and Restated Credit
and Security Agreement are legally described as follows:



                  I. 411 FARWELL AVENUE SOUTH, SAINT PAUL, MINNESOTA 55075

         Legal Description of Land: All that part of Government Lot 2, Section
         34, Township 28, Range 23, described as follows: Beginning at a point
         233.00 feet south of the Northwest Corner of said Government Lot 2 and
         934.76 feet East of the West line of above-mentioned Government Lot 2,
         which point is established with an Iron Monument; thence continuing
         East 398.91 feet to the West Right-of-Way line (Radius of curve 1547.69
         feet) to an Iron Monument; thence South 40 09' E a distance of 182.79
         feet, along said Right-of-Way line, to an Iron Monument; thence West,
         parallel with aforesaid North line of Government Lot 2 a distance of
         567.27 feet to an Iron Monument thence North, parallel with the West
         line of Government Lot 2 a distance of 195.43 feet to the point of
         beginning.

         That part of Government Lot 2 of Section 34, Township 28, Range 23,
         described as follows, to-wit: Commencing at the intersection of the
         northerly line of the Chicago, Milwaukee, St. Paul and Pacific Railroad
         and the west line of said Government Lot 2, thence northerly along said
         west line to its intersection with the southerly right-of-way line of
         S.T.H. No. 13, thence Northeasterly along said Southeasterly
         right-of-way line to a point which is 233 feet south of the North line
         of said Government Lot 2, thence East parallel with the North line of
         said Government Lot 2, to a point which is 934.76 feet East of the West
         line of said Government Lot 2, thence South parallel to the West line
         of said Government Lot 2, a distance of 195.43 feet thence East
         parallel to the North line of said Government Lot 2, to a point which
         is 1002.03 feet East of the West line of said Government Lot 2, thence
         south and parallel to the West line of said Government Lot 2, a
         distance of 895.60 feet to a point on the Northerly right-of-way of the
         Chicago, Milwaukee, St. Paul and Pacific Railroad, thence Northwesterly
         along said Northerly right-of-way line to the point of beginning.


                  II. 2360 PILOT KNOB ROAD, MENDOTA HEIGHTS, MINNESOTA

         That part of the NE 1/4 of Section 27, T 28 N, R 22 W described as
         follows:

<PAGE>

         Commencing at the Southeast corner of said NE 1/4; thence S 89 degrees
         26' 30" W, along the South line of said NE 1/4, 50 feet to the West R/W
         line of the Chicago & North Western Rwy.; thence N 0 degrees 00' W,
         along said R/W line 177.43 feet to the point of beginning of the
         property to be described; thence S 63 degrees 25' W, 356.37 feet;
         thence N 26 degrees 35' W, 429 feet; thence S 63 degrees 25' W, 100
         feet; thence N 26 degrees 35' W 48 feet; thence S 63 degrees 25' W, 287
         feet to the Northeasterly R/W line of the Stockyards Road (a private
         road with a R/W 25 feet on each side of the centerline); thence N 26
         degrees 35' W, along said R/W line 563.01 feet to the Southeasterly R/W
         line of Armour Ave. (a private road 66 feet wide); thence N 63 degrees
         26' E, along said R/W line 977.32 feet to the Westerly R/W line of the
         Chicago & North Western Rwy.; thence S 26 degrees 32' E along said R/W
         line 356.53 feet; thence Southerly along said R/W line on a curve
         concave to the West, central angle 26 degrees 32', radius of 918.9
         feet, arc distance of 425.54 feet; thence S 0 degrees 00' E, along said
         R/W line 305.04 feet to the point of beginning, containing 776,592
         square feet or 17.828 acres more or less.


         The bearings for this description are based on an assumed bearing of N
         0 degrees 00' E on the East line of said NE 1/4 of Section 27.



                                      -2-

</TEXT>
</DOCUMENT>
