Exhibit 10.8

 

 

 

WINMARK CORPORATION
WIRTH BUSINESS CREDIT, INC.
WINMARK CAPITAL CORPORATION
GROW BIZ GAMES, INC.

 

 

$25,000,000

 

 

5.50% SENIOR SECURED NOTES DUE MAY 14, 2025

 

 

 

--------------------------------------------------------------------------------

 

 

NOTE AGREEMENT

 

 

--------------------------------------------------------------------------------

 

 

Dated as of May 14, 2015

 

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(Not Part of Agreement)

 

 

 

Page

 

 

 

1.                                      AUTHORIZATION OF ISSUE OF NOTES

1

 

 

 

2.                                      PURCHASE AND SALE OF NOTES

1

 

 

 

3.                                      CONDITIONS OF CLOSING

2

 

 

 

3A.

Documents

2

3B.

Opinion of Purchasers’ Special Counsel

4

3C.

Opinion of Issuers’ Counsel

4

3D.

Representations and Warranties; No Default; Satisfaction of Conditions

4

3E.

Purchase Permitted By Applicable Laws; Approvals

4

3F.

Certificates of Insurance

5

3G.

Material Adverse Change

5

3H.

Amendment to Credit Agreement

5

3I.

Fees and Expenses

5

3J.

Structuring Fee

5

3K.

Proceedings

5

 

 

 

4.                                      PREPAYMENTS

6

 

 

 

4A(1).

Required Prepayments

6

4A(2).

Required Prepayment Pursuant to Intercreditor Agreement

6

4B.

Optional Prepayment With Yield-Maintenance Amount

6

4C.

Notice of Optional Prepayment

6

4D.

Partial Payments Pro Rata

7

4E.

Offer of Prepayment with Proceeds of Asset Dispositions

7

4F.

No Acquisition of Notes

8

 

 

 

5.                                      AFFIRMATIVE COVENANTS

8

 

 

 

5A.

Financial Statements

8

5B.

Information Required by Rule 144A

11

5C.

Inspection of Property

11

5D.

Books and Records

11

5E.

Compliance with Law

12

5F.

Maintenance of Insurance

12

5G.

Maintenance of Properties

12

5H.

Payment of Taxes

12

5I.

Corporate Existence

13

5J.

Subsequent Guarantors or Issuers

13

5K.

Further Assurances

13

5L.

Employee Benefit Plans

14

5M.

Environmental Matters

14

 

i

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

5N.

Tax Shelter Registration

14

5O.

Post-Closing Items

15

 

 

 

6.                                      NEGATIVE COVENANTS

15

 

 

 

6A.

Financial Covenants

15

6A(1).

Tangible Net Worth

15

6A(2).

Fixed Charge Coverage Ratio

15

6A(3).

Maximum Leverage

15

6B.

Debt

15

6C.

Liens

16

6D.

Operating Leases

17

6E.

Restricted Payments

17

6F.

Mergers, Consolidations, Acquisitions, Sales

18

6G.

Modification of Organizational Documents

19

6H.

Affiliate Transactions

19

6I.

Unconditional Purchase Obligations

19

6J.

Inconsistent Agreements

19

6K.

Business Activities

20

6L.

Subordinated Debt Documents

20

6M.

Fiscal Year

20

6N.

Control Agreements

20

6O.

Terrorism Sanctions Regulations

20

6P.

Most Favored Lender

20

 

 

 

7.                                      EVENTS OF DEFAULT

21

 

 

 

7A.

Acceleration

21

7B.

Rescission of Acceleration

24

7C.

Notice of Acceleration or Rescission

24

7D.

Other Remedies

25

 

 

 

8.                                     
REPRESENTATIONS, COVENANTS AND WARRANTIES

25

 

 

 

8A(1).

Organization; Subsidiary Preferred Equity

25

8A(2).

Power and Authority

25

8A(3).

Execution and Delivery of Transaction Documents

26

8B.

Financial Statements

26

8C.

Actions Pending

26

8D.

Outstanding Debt

27

8E.

Title to Properties

27

8F.

Taxes

27

8G.

Conflicting Agreements and Other Matters

27

8H.

Offering of Notes

28

 

ii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

8I.

Use of Proceeds

28

8J.

ERISA

28

8K.

Governmental Consent

29

8L.

Compliance with Environmental and Other Laws

29

8M.

Regulatory Status

30

8N.

Permits and Other Operating Rights

30

8O.

Rule 144A

30

8P.

Absence of Financing Statements, Etc.

30

8Q.

Establishment of Security Interest

31

8R.

Foreign Assets Control Regulations, Etc.

31

8S.

Environmental Matters

32

8T.

Disclosure

32

 

 

 

9.                                      REPRESENTATIONS OF EACH PURCHASER

33

 

 

9A.

Nature of Purchase

33

9B.

Source of Funds

33

 

 

 

10.                               DEFINITIONS; ACCOUNTING MATTERS

34

 

 

10A.

Yield-Maintenance Terms

34

10B.

Other Terms

36

10C.

Accounting and Legal Principles, Terms and Determinations

48

 

 

 

11.                               MISCELLANEOUS

48

 

 

11A.

Note Payments

48

11B.

Expenses

49

11C.

Consent to Amendments

50

11D.

Form, Registration, Transfer and Exchange of Notes; Lost Notes

50

11E.

Persons Deemed Owners; Participations

51

11F.

Confidential Information

51

11G.

Survival of Representations and Warranties; Entire Agreement

52

11H.

Successors and Assigns

53

11I.

Independence of Covenants; Beneficiaries of Covenants

53

11J.

Notices

53

11K.

Payments Due on Non-Business Days

53

11L.

Satisfaction Requirement

54

11M.

GOVERNING LAW

54

11N.

SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL

54

11O.

Severability

55

11P.

Descriptive Headings; Advice of Counsel; Interpretation; Time of the Essence

55

11Q.

Counterparts; Facsimile or Electronic Signatures

55

 

iii

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

(continued)

 

 

 

Page

 

 

 

11R.

Severalty of Obligations

55

11S.

Independent Investigation

56

11T.

Directly or Indirectly

56

11U.

Transaction References

56

11V.

Liability of Issuers

56

11W.

Binding Agreement

61

 

iv

--------------------------------------------------------------------------------

 

PURCHASER SCHEDULE

SCHEDULE 6H

—

AFFILIATED TRANSACTION

SCHEDULE 8A(1)

—

SUBSIDIARIES

SCHEDULE 8G

—

LIST OF AGREEMENTS RESTRICTING DEBT

SCHEDULE 8K

—

FILINGS AND RECORDINGS

SCHEDULE 8Q

—

INFORMATION REGARDING THE COMPANY AND SUBSIDIARIES

 

 

 

EXHIBIT A

—

FORM OF NOTE

EXHIBIT B

—

FORM OF DISBURSEMENT DIRECTION LETTER

EXHIBIT C

—

FORM OF OPINION OF ISSUERS’ COUNSEL

 

v

--------------------------------------------------------------------------------

 

WINMARK CORPORATION
WIRTH BUSINESS CREDIT, INC.
WINMARK CAPITAL CORPORATION
GROW BIZ GAMES, INC.
c/o Winmark Corporation
605 Highway 169 North, Suite 400
Minneapolis, MN  55441

 

As of May 14, 2015

 

To Each of the Purchasers Named in the
Purchaser Schedule Attached Hereto

 

Ladies and Gentlemen:

 

The undersigned, Winmark Corporation, a Minnesota corporation (herein called the
“Company”), Wirth Business Credit, Inc., a Minnesota corporation (herein called
“Wirth”), Winmark Capital Corporation, a Minnesota corporation (herein called
“Winmark Capital”), and Grow Biz Games, Inc., a Minnesota corporation (herein
called “Grow Biz”; the Company, Wirth, Winmark Capital, Grow Biz and any other
Person who joins this Agreement as an Issuer pursuant to paragraph 5J are herein
sometimes collectively called the “Issuers”), hereby agree with the purchasers
named in the Purchaser Schedule attached hereto (herein called the “Purchasers”)
as set forth below.  Reference is made to paragraph 10 hereof for definitions of
capitalized terms used herein and not otherwise defined.

 

1.                                      AUTHORIZATION OF ISSUE OF NOTES.  The
Issuers will authorize the issue of their senior secured promissory notes (the
“Notes”) in the aggregate principal amount of $25,000,000, to be dated the date
of issue thereof, to mature May 14, 2025, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become due
and payable at the rate of 5.50% per annum (provided that, during any period
when an Event of Default shall be in existence, at the election of the Required
Holder(s) the outstanding principal balance of the Notes shall bear interest
from and after the date of such Event of Default and until the date such Event
of Default ceases to be in existence at the rate per annum from time to time
equal to the Default Rate) and on overdue payments at the rate per annum from
time to time equal to the Default Rate, and to be substantially in the form of
Exhibit A attached hereto.  The term “Notes” as used herein shall include each
such senior secured promissory note delivered pursuant to any provision of this
Agreement and each such senior secured promissory note delivered in substitution
or exchange for any other Note pursuant to any such provision.

 

2.                                      PURCHASE AND SALE OF NOTES.  The Issuers
hereby agree to sell to each Purchaser and, subject to the terms and conditions
herein set forth, each Purchaser agrees to purchase from the Issuers the
aggregate principal amount of Notes set forth opposite such Purchaser’s name in
the Purchaser Schedule attached hereto at 100% of such aggregate principal
amount.  The Issuers will deliver to each Purchaser, at the offices of Schiff
Hardin LLP at 233

 

--------------------------------------------------------------------------------

 

South Wacker Drive, Suite 6600, Chicago, IL  60606, one or more Notes registered
in such Purchaser’s name (or, if specified in the Purchaser Schedule, in the
name of the nominee(s) for such Purchaser specified in the Purchaser Schedule),
evidencing the aggregate principal amount of Notes to be purchased by such
Purchaser and in the denomination or denominations specified with respect to
such Purchaser in the Purchaser Schedule against payment of the purchase price
thereof by transfer of immediately available funds on the date of closing, which
shall be May 14, 2015 (herein called the “closing” or the “date of closing”),
for credit to the account or accounts as shall be specified in a letter on the
Issuers’ letterhead, in substantially the form of Exhibit B attached hereto,
from the Issuers to the Purchasers delivered prior to the date of closing.

 

3.                                      CONDITIONS OF CLOSING.  Each Purchaser’s
obligation to purchase and pay for the Notes to be purchased by such Purchaser
hereunder is subject to the satisfaction, on or before the date of closing, of
the following conditions:

 

3A.                             Documents.  Such Purchaser shall have received
original counterparts or, if satisfactory to such Purchaser, certified or other
copies  of all of the following, each duly executed and delivered by the party
or parties thereto, in form and substance satisfactory to such Purchaser, dated
the date of closing unless otherwise indicated, and on the date of closing in
full force and effect with no event having occurred and being then continuing
that would constitute a default thereunder or constitute or provide the basis
for the termination thereof:

 

(i)                                     the Note or Notes to be purchased by
such Purchaser in the form of Exhibit A attached hereto;

 

(ii)                                  an Intercreditor and Collateral Agency
Agreement among the Purchasers, the Bank Agent, the Banks and the Collateral
Agent (herein, as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the provisions thereof, called the
“Intercreditor Agreement”);

 

(iii)                               a Security Agreement made by the Issuers in
favor of the Collateral Agent for the benefit of the Banks and the holders of
the Notes (together with any other security agreement pursuant to which the
Notes are secured and with any joinder to such Security Agreement or other
security agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions thereof,
collectively called the “Security Agreements” and individually called a
“Security Agreement”);

 

(iv)                              a Pledge Agreement made by each Issuer owning
any shares of capital stock or other ownership interests in any Subsidiary in
favor of the Collateral Agent for the benefit of the Banks and the holders of
the Notes (together with any other pledge agreement pursuant to which the Notes
are secured and with any joinder to such Pledge Agreement or other pledge
agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the provisions thereof,
collectively called the “Pledge Agreements” and individually called a “Pledge
Agreement”);

 

2

--------------------------------------------------------------------------------

 

(v)                                 all chattel paper, instruments and documents
of title in which the Collateral Agent has been granted a security interest and
are then required under the Collateral Documents to be delivered to the
Collateral Agent, together with the related transfer documents executed in
blank, in each case received by the Collateral Agent, all Uniform Commercial
Code financing statements perfecting the security interests and liens granted to
the Collateral Agent, duly filed in all offices necessary to perfect such
security interests and liens or deemed by such Purchaser to be advisable, and
all such other certificates, documents, agreements, recording and filings
necessary to establish a valid and perfected first priority lien and security
interest (subject only to Liens described in clauses (ii), (iv) and (vi) of
paragraph 6C) in favor of the Collateral Agent in all of the Collateral or
deemed by such Purchaser to be advisable;

 

(vi)                              a certificate signed by the Secretary,
Assistant Secretary or other appropriate senior officer and one other officer of
each Issuer certifying, among other things, (a) as to the names, titles and true
signatures of the officers of such Issuer  authorized to sign the Transaction
Documents to which such Issuer is a party, (b) that attached thereto is a true,
accurate and complete copy of the certificate of incorporation or other
formation document of such Issuer certified by the Secretary of State of the
state of organization of such Issuer as of a recent date, (c) that attached
thereto is a true, accurate and complete copy of the by-laws, operating
agreement or other organizational document of such Issuer which were duly
adopted and are in effect as of the date of closing and have been in effect
immediately prior to and at all times since the adoption of the resolutions
referred to in clause (d), below, (d) that attached thereto is a true, accurate
and complete copy of the resolutions of the board of directors or other managing
body of such Issuer duly adopted at a meeting or by unanimous written consent of
such board of directors or other managing body, authorizing the execution,
delivery and performance of the Transaction Documents to which such Issuer is a
party, and that such resolutions have not been amended, modified, revoked or
rescinded, are in full force and effect and are the only resolutions of the
shareholders, partners or members of such Issuer or of such board of directors
or other managing body or any committee thereof relating to the subject matter
thereof, (e) that the Transaction Documents executed and delivered to such
Purchaser by such Issuer are in the form approved by its board of directors or
other managing body in the resolutions referred to in clause (d), above, and
(f) that no dissolution or liquidation proceedings as to the Company or any
Subsidiary have been commenced or are contemplated;

 

(vii)                           a certificate of corporate or other type of
entity and tax good standing for the Company and each Subsidiary of the Company
from the Secretary of State of the state of its organization and of each state
in which the Company or any Subsidiary of the Company is required to be
qualified to transact business as a foreign organization, in each case dated as
of a recent date;

 

(viii)                        Certified copies of Requests for Information or
Copies (Form UCC-11) or equivalent reports listing all effective financing
statements which name the Company or any Subsidiary of the Company (under its
present name and previous names) as debtor and which are filed in the office of
the Secretary of State (or such other office which is, under the Uniform
Commercial Code as in effect in the applicable jurisdiction, the proper

 

3

--------------------------------------------------------------------------------

 

office in which to file a financing statement under Section 9-501(a)(2) of such
Uniform Commercial Code) of the location (as determined under the Uniform
Commercial Code) of the Company or such Subsidiary of the Company, as
applicable, together with copies of such financing statements, and lien and
judgment search reports from the county recorder of any county in which the
Company or any Subsidiary of the Company maintains an office or in which any
assets of the Company or any Subsidiary of the Company are located; and

 

(ix)                              such other certificates, documents and
agreements as such Purchaser may reasonably request.

 

3B.                             Opinion of Purchasers’ Special Counsel.  Such
Purchaser shall have received from Schiff Hardin LLP, who are acting as special
counsel for the Purchasers in connection with this transaction, a favorable
opinion satisfactory to such Purchaser as to such matters incident to the
matters herein contemplated as it may reasonably request.

 

3C.                             Opinion of Issuers’ Counsel.  Such Purchaser
shall have received from Lindquist & Vennum, LLP, special counsel for the
Issuers, a favorable opinion satisfactory to such Purchaser and substantially in
the form of Exhibit C attached hereto, and each Issuer, by its execution hereof,
hereby requests and authorizes such special counsel to render such opinion and
to allow such Purchaser to rely on such opinion, and understands and agrees that
each Purchaser receiving such an opinion will be relying, and is hereby
authorized to rely, on such opinion.

 

3D.                             Representations and Warranties; No Default;
Satisfaction of Conditions.  The representations and warranties contained in
paragraph 8 hereof and in the other Transaction Documents shall be true on and
as of the date of closing, both before and immediately after giving effect to
the issuance of the Notes on the date of closing and the consummation of any
other transactions contemplated hereby and by the other Transaction Documents
(including, without limitation, the borrowings under the Credit Agreement and
the 2015 Tender Offer); there shall exist on the date of closing no Event of
Default or Default, both before and immediately after giving effect to the
issuance of the Notes on the date of closing and the consummation of any other
transactions contemplated hereby and by the other Transaction Documents
(including, without limitation, the borrowings under the Credit Agreement and
the consummation of the 2015 Tender Offer); each Issuer shall have performed all
agreements and satisfied all conditions required under this Agreement or the
other Transaction Documents to be performed or satisfied on or before the date
of closing; and each Issuer shall have delivered to such Purchaser an Officer’s
Certificate, dated the date of closing, to each such effect.

 

3E.                             Purchase Permitted By Applicable Laws;
Approvals.  The purchase of and payment for the Notes to be purchased by such
Purchaser on the date of closing on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the Issuers) shall not
violate any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation T, U or X of the Board
of Governors of the Federal Reserve System) and shall not subject such Purchaser
to any tax, penalty, liability or other onerous condition under or pursuant to
any applicable law or governmental regulation, and such Purchaser shall have
received such certificates or other evidence as it may request to establish
compliance with this condition.  All necessary authorizations, consents,
approvals, exceptions or

 

4

--------------------------------------------------------------------------------

 

other actions by or notices to or filings with any court or administrative or
governmental body or other Person required in connection with the execution,
delivery and performance of this Agreement, the Notes and the other Transaction
Documents or the consummation of the transactions contemplated hereby or thereby
shall have been issued or made, shall be final and in full force and effect and
shall be in form and substance satisfactory to such Purchaser.

 

3F.                              Certificates of Insurance.  The Issuers shall
have delivered from insurance carriers acceptable to such Purchaser certificates
of insurance in such forms and amounts acceptable to such Purchaser evidencing
insurance required to be maintained under paragraph 5F hereof or under any of
the Collateral Documents under insurance policies with loss payable clauses in
favor of the Collateral Agent and acceptable to such Purchaser.

 

3G.                            Material Adverse Change.  No material adverse
change in the business, condition (financial or otherwise), property, assets,
operations or prospects of the Company and its Subsidiaries, taken as a whole,
since December 27, 2014, shall have occurred or be threatened, as determined by
such Purchaser in its sole judgment.

 

3H.                            Amendment to Credit Agreement.  An amendment to
the Existing Credit Agreement having terms and conditions satisfactory to such
Purchaser shall have been duly executed and delivered by the Issuers, the Bank
Agent and the Banks, and shall be in full force and effect.  All conditions
precedent to the effectiveness of such amendment shall have been satisfied
except to the extent waived with the consent of such Purchaser (and, to the
extent any part of any such condition requires that any matter be satisfactory
to the Bank Agent, the Banks or any portion of the Banks, such matter shall be
satisfactory to such Purchaser).  All necessary authorizations, consents,
approvals, exceptions or other actions by or notices to or filings with any
court or administrative or governmental body or other Person required in
connection with the execution, delivery or performance of the Credit Agreement
(as amended by such amendment) or the consummation of the transactions
contemplated thereby shall be final and in full force and effect and shall be in
form and substance satisfactory to such Purchaser.  Such Purchaser shall have
received a copy of the Credit Agreement and all instruments, documents and
agreements delivered at the closing of making of the initial revolving loan
thereunder, certified by an Officer’s Certificate, dated the date of closing, as
correct and complete.

 

3I.                                 Fees and Expenses.  Without limiting the
provisions of paragraph 11B hereof, the Issuers shall have paid the reasonable
fees, charges and disbursements of special counsel to the Purchaser referred to
in paragraph 3B hereof.

 

3J.                               Structuring Fee.  In consideration of the
time, effort and expense involved in the preparation, negotiation and execution
of this Agreement, the Issuers shall have paid to such Purchaser, by wire
transfer of immediately available funds, such Purchaser’s ratable portion (in
proportion to the aggregate principal amount of the Notes to be purchased by
such Purchaser) of a structuring fee in the aggregate amount, for all
Purchasers, of $25,000.

 

3K.                            Proceedings.  All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incident thereto shall be satisfactory in substance and form to
such Purchaser, and such Purchaser shall have received all

 

5

--------------------------------------------------------------------------------

 

such counterpart originals or certified or other copies of such documents as it
may reasonably request.

 

4.                                      PREPAYMENTS.  The Notes shall be subject
to prepayment only with respect to the required prepayments specified in
paragraphs 4A, the optional prepayments permitted by paragraph 4B, and upon
acceleration pursuant to paragraph 7A.

 

4A(1).              Required Prepayments.  Until the Notes shall be paid in
full, the Issuers shall apply to the prepayment of the Notes, without premium,
the sum of (i) $500,000 on each February 14, May 14, August 14 and November 14
during the period from August 14, 2015 through and including May 14, 2020 and
(ii) $750,000 on each February 14, May 14, August 14 and November 14 during the
period from August 14, 2020 through and including February 14, 2025 and such
principal amounts of the Notes, together with interest thereon to the prepayment
dates, shall become due on such prepayment dates; provided that upon any
prepayment or purchase of the Notes pursuant to paragraph 4F the principal
amount of each required prepayment of the Notes becoming due under this
paragraph 4A(1) on and after the date of such prepayment or purchase shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Notes is reduced as a result of such prepayment or purchase.  The remaining
outstanding principal amount of the Notes, together with any accrued and unpaid
interest thereon, shall become due on May 14, 2025, the maturity date of the
Notes.

 

4A(2).              Required Prepayment Pursuant to Intercreditor Agreement.  If
any amounts are to be applied to the principal of the Notes on any date pursuant
to the terms of the Intercreditor Agreement, such principal amount of the Notes,
together with interest thereon to such date and together with the
Yield-Maintenance Amount, if any, with respect to each Note, shall be due and
payable on such date.  Any partial prepayment of the Notes pursuant to this
paragraph 4A(2) shall be applied in satisfaction of the required payments of
principal thereof (including the required payment of principal due upon the
maturity thereof) in the inverse order of their scheduled due dates.

 

4B.                             Optional Prepayment With Yield-Maintenance
Amount.  The Notes shall be subject to prepayment, in whole at any time or from
time to time in part (in integral multiples of $500,000 and in a minimum amount
of $1,000,000 on any one occurrence), at the option of the Issuers, at 100% of
the principal amount so prepaid plus interest thereon to the prepayment date and
the Yield-Maintenance Amount, if any, with respect to each Note; provided,
however, that no Issuer may prepay the Notes in whole or in part pursuant to
this paragraph 4B without the written consent of the Required Holder(s) if
(i) at the time of such prepayment, or after giving effect thereto, a Default or
Event of Default would exist, or (ii) all or any portion of the funds paid to
the holders of the Notes in such prepayment is or could be required to be shared
with the Bank Agent or the Banks or delivered to the Collateral Agent under the
Intercreditor Agreement.  Any partial prepayment of the Notes pursuant to this
paragraph 4B shall be applied in satisfaction of required payments of principal
thereof (including the required payment of principal due upon the maturity
thereof) in inverse order of their scheduled due dates.

 

4C.                             Notice of Optional Prepayment.  The Issuers
shall give the holder of each Note irrevocable written notice of any prepayment
pursuant to paragraph 4B not less than 10 Business Days prior to the prepayment
date (which shall be a Business Day), specifying such prepayment

 

6

--------------------------------------------------------------------------------

 

date and the aggregate principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment is to
be made pursuant to paragraph 4B.  Notice of prepayment having been given as
aforesaid, the principal amount of the Notes specified in such notice, together
with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, with respect thereto, shall become due and
payable on such prepayment date.  The Issuers shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4B, give
telephonic notice of the principal amount of the Notes to be prepaid and the
prepayment date to each Significant Holder which shall have designated a
recipient of such notices in the Purchaser Schedule attached hereto or by notice
in writing to the Company.

 

4D.                             Partial Payments Pro Rata.  In the case of each
prepayment of less than the entire outstanding principal amount of all Notes
pursuant to paragraph 4A(1), 4A(2) or 4B, the principal amount so prepaid shall
be allocated pro rata to all Notes at the time outstanding in proportion to the
respective outstanding principal amounts thereof.

 

4E.                             Offer of Prepayment with Proceeds of Asset
Dispositions.

 

4E(1).              Notice of Prepayment Event.  Within two Business Days after
receipt of Net Cash Proceeds from any Asset Disposition which Net Cash Proceeds
are in excess of $4,000,000 in the aggregate for all such Asset Dispositions in
any Fiscal Year, the Company shall give written notice thereof to each holder of
the Notes and offer to prepay Notes in an amount equal to the Noteholder Portion
of such excess Net Cash Proceeds pursuant to this paragraph 4E.  Such notice
shall contain and constitute an offer to prepay the Notes as described in
paragraph 4E(2) and shall be accompanied by the certificate described in
paragraph 4E(5).

 

4E(2).              Offer to Prepay.  The offer to prepay Notes contemplated by
paragraph 4E(1) shall be an offer to prepay, in accordance with and subject to
this paragraph 4E, the Notes held by the holders thereof on the earlier of
(i) the date of any mandatory prepayment under the Credit Agreement as a result
of the Asset Disposition giving rise to such offer to prepay, and (ii) the date
any Net Cash Proceeds in respect of such Asset Disposition are received by or on
behalf of the Company or any Subsidiary, but in no event sooner than 15 Business
Days after the date the notice with respect thereto pursuant to paragraph
4E(1) has been given to the holders of the Notes, in an aggregate amount equal
to the Noteholder Portion of the amount by which such Net Cash Proceeds exceed
$4,000,000 in the aggregate during such Fiscal Year.

 

4E(3).              Acceptance; Rejection.  A holder of Notes may accept or
reject an offer to prepay made to such holder pursuant to this paragraph 4E by
causing a notice of such acceptance or rejection to be delivered to the Company
prior to the applicable date on which the Company is required to prepay the
Notes pursuant to paragraph 4E(2) (the “Offer Prepayment Date”).  A failure by a
holder of Notes to so respond to an offer to prepay shall be deemed to
constitute a rejection of such offer by such holder.

 

4E(4).              Prepayment.  Prepayment of the Notes to be prepaid pursuant
to this paragraph 4E shall be in the amount set forth in paragraph 4E(2),
together with interest on such Notes accrued to the date of prepayment (but
without any Yield-Maintenance Amount).  The prepayment pursuant to an offer to
prepay any Notes shall be made on the Offer Prepayment

 

7

--------------------------------------------------------------------------------

 

Date for such offer.  Any partial prepayment of any Note pursuant to this
paragraph 4E(4) shall be applied in satisfaction of the required payments of
principal thereof (including the required payment of principal due upon the
maturity thereof) in the inverse order of their scheduled due dates.

 

4E(5).                      Officer’s Certificate.  Each offer to prepay Notes
pursuant to this paragraph 4E shall be accompanied by a certificate, executed by
a Responsible Officer of the Company and dated the date of such offer,
specifying (i) the anticipated Offer Prepayment Date for such offer, (ii) that
such offer is made pursuant to paragraph 4E(2), (iii) the principal amount of
each Note offered to be prepaid, (iv) the interest that would be due on each
Note offered to be prepaid, accrued to the anticipated Offer Prepayment Date for
such offer, (v) whether or not the conditions of this paragraph 4E have been
fulfilled by the Company, and (vi) in reasonable detail, the nature and date of
the Asset Disposition giving rise to such offer and the Net Cash Proceeds
received in connection therewith.

 

Nothing in this paragraph 4E shall be deemed to constitute a waiver or
modification of any provision of paragraph 6 hereof.

 

4F.                              No Acquisition of Notes.  No Issuer shall, and
each Issuer shall not permit any of its Subsidiaries or Affiliates to, prepay or
otherwise retire in whole or in part prior to their stated final maturity (other
than by prepayment pursuant to paragraph 4A or 4B, upon acceptance of an offer
to prepay pursuant to paragraph 4E or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder unless such Issuer or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase or
otherwise acquire, as the case may be, the same proportion of the aggregate
principal amount of Notes held by each other holder of Notes at the time
outstanding upon the same terms and conditions.  Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by any Issuer or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose
under this Agreement.

 

5.                                      AFFIRMATIVE COVENANTS.  So long as any
Note or other amount due hereunder is outstanding and unpaid, the Issuers
jointly and severally covenant as follows:

 

5A.                             Financial Statements.  Each Issuer covenants
that it will deliver to each Significant Holder in duplicate:

 

(i)                                     promptly when available and in any event
within 30 days after the end of each fiscal month, consolidated balance sheets
of the Company and its Subsidiaries as of the end of such month, together with
consolidated statements of income or operations for such month, together with a
comparison with the corresponding period of the previous Fiscal Year and for the
statements of income a comparison with the budget for such period of the current
Fiscal Year, certified by an authorized financial officer of the Company;

 

(ii)                                  as soon as practicable and in any event
within 45 days after the end of each Fiscal Quarter in each Fiscal Year,
consolidated statements of income and cash flows of the Company and its
Subsidiaries for the period from the beginning of the

 

8

--------------------------------------------------------------------------------

 

current Fiscal Year to the end of such Fiscal Quarter, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such Fiscal
Quarter, setting forth in each case in comparative form figures for the
corresponding period in the preceding Fiscal Year and for the statements of
income a comparison with the budget for such period of the current Fiscal Year,
all in reasonable detail and prepared in accordance with generally accepted
accounting principles applicable to quarterly financial statements and certified
by an authorized financial officer of the Company as fairly presenting, in all
material respects, the financial position of the Company and its Subsidiaries
and their results of operations and cash flows, subject to changes resulting
from year-end adjustments;

 

(iii)                               as soon as practicable and in any event
within 90 days after the end of each Fiscal Year, consolidated statements of
income and cash flows and a consolidated statement of stockholders’ equity of
the Company and its Subsidiaries for such year, and a consolidated balance sheet
of the Company and its Subsidiaries as at the end of such year, setting forth in
each case in comparative form corresponding consolidated figures from the
preceding annual audit and, in the case of the consolidated statements of
income, the budget for such Fiscal Year, all in reasonable detail and prepared
in accordance with generally accepted accounting principles and accompanied by
an unqualified opinion thereon of independent public accountants of recognized
national standing selected by the Company and acceptable to the Required
Holder(s), which unqualified opinion shall state that such financial statements
present fairly, in all material respects, the financial position of the Company
and its Subsidiaries and the results of their operations and cash flows and have
been prepared in accordance with generally accepted accounting principles, that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in such circumstances,
and shall be without limitation as to the scope of the audit;

 

(iv)                              promptly when available and in any event
within 30 days after the end of each Fiscal Year, a copy of the consolidated
operating budget for the following Fiscal Year, certified by an authorized
financial officer of the Company;

 

(v)                                 promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and reports as it
shall send to its public stockholders and copies of all registration statements
(without exhibits) and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission);

 

(vi)                              promptly upon receipt thereof, a copy of each
management letter or other report submitted to the Company or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company or any Subsidiary;

 

(vii)                           simultaneously with the transmission thereof,
copies of all notices, reports, financial statements or other communications
given to the Bank Agent or the Banks under the Credit Agreement, excluding
routine borrowing requests;

 

9

--------------------------------------------------------------------------------

 

(viii)                        promptly upon becoming aware of any of the
following, written notice describing the same and the steps being taken by the
Company or the Subsidiary affected thereby with respect thereto:

 

(a)                                 any litigation, arbitration or governmental
investigation or proceeding not previously disclosed by the Company to the
holders of the Notes which has been instituted or, to the knowledge of the
Company or any Subsidiary, is threatened against the Company or any Subsidiary
or to which any of the properties of any thereof is subject which might
reasonably be expected to have a Material Adverse Effect;

 

(b)                                 the institution of any steps by any member
of the Controlled Group or any other Person to terminate any Pension Plan, or
the failure of any member of the Controlled Group to make a required
contribution to any Pension Plan (if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA) or to any Multiemployer Plan, or the
taking of any action with respect to a Pension Plan which could result in the
requirement that the Company furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan or Multiemployer Plan which could result in the incurrence by any member of
the Controlled Group of any material liability, fine or penalty (including any
claim or demand for withdrawal liability or partial withdrawal from any
Multiemployer Plan), or any material increase in the contingent liability of the
Company with respect to any post-retirement welfare benefit plan or other
employee benefit plan of the Company or another member of the Controlled Group,
or any notice that any Multiemployer Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or the
imposition of an excise tax, that any such plan is or has been funded at a rate
less than that required under Section 412 of the Code, that any such plan is or
may be terminated, or that any such plan is or may become insolvent;

 

(c)                                  any cancellation or material change in any
insurance maintained by the Company or any Subsidiary; or

 

(d)                                 any other event (including (x) any violation
of any Environmental Law or the assertion of any Environmental Claim or (y) the
enactment or effectiveness of any law, rule or regulation) which might
reasonably be expected to have a Material Adverse Effect;

 

(ix)                              promptly following receipt, copies of any
notices (including notices of default or acceleration) received from any holder
or trustee of, under or with respect to any Subordinated Debt; and

 

(x)                                 with reasonable promptness, such other
information as such Significant Holder may reasonably request.

 

10

--------------------------------------------------------------------------------

 

Together with each delivery of financial statements required by clauses (i) and
(iii) above, the Company will deliver to each Significant Holder an Officer’s
Certificate (a) demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of
paragraph 6A and stating that there exists no Event of Default or Default, or,
if any Event of Default or Default exists, specifying the nature and period of
existence thereof and what action the Company proposes to take with respect
thereto and (b) at any time when the Company is not an SEC reporting company,
containing a written statement of the Company’s management setting forth a
discussion of the financial condition, changes in financial condition and
results of operations of the Company and its Subsidiaries.  In the event that
the Company or any Subsidiary has made an election to measure any financial
liability using fair value (which election is being disregarded for purposes of
determining compliance with this Agreement pursuant to paragraph 10C) as to the
period covered by any such financial statement, such Officer’s Certificate as to
such period shall include a reconciliation from generally accepted accounting
principles with respect to such election.  Each Issuer also covenants that
immediately after the Company or any Subsidiary becomes aware of an Event of
Default or Default, it will deliver to each Significant Holder an Officer’s
Certificate specifying the nature and period of existence thereof and what
action the Company or its Subsidiaries proposes to take with respect thereto.

 

5B.                             Information Required by Rule 144A.  Each Issuer
covenants that it will, upon the request of the holder of any Note, provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as such Issuer is subject to and in compliance with the
reporting requirements of section 13 or 15(d) of the Exchange Act.  For the
purpose of this paragraph 5B, the term “qualified institutional buyer” shall
have the meaning specified in Rule 144A under the Securities Act.

 

5C.                             Inspection of Property.  Each Issuer covenants
that it will permit any Person designated by any Significant Holder in writing,
at the Issuers’ expense (provided that so long as no Event of Default or Default
exists, the Issuers shall not be required to reimburse any such Persons for
inspections or audits more frequently than once each Fiscal Year), to visit and
inspect any of the properties of the Company and its Subsidiaries, to examine
the books and financial records of the Company and its Subsidiaries and make
copies thereof or extracts therefrom and to discuss the affairs, finances and
accounts of any of such corporations with the principal officers of each Issuer
and its independent public accountants (and by this provision each Issuer
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries with any such Person), all at such reasonable times
and as often as such Significant Holder may reasonably request.

 

5D.                             Books and Records.  Each Issuer covenants that
it will keep, and cause each of its Subsidiaries to keep, its books and records
in accordance with sound business practices sufficient to allow the preparation
of financial statements in accordance with GAAP and implement and maintain a
cash management system reasonably acceptable to Required Holder(s).

 

11

--------------------------------------------------------------------------------

 

5E.                             Compliance with Law.  Each Issuer covenants that
it will, and will cause each of its Subsidiaries to, comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, the USA PATRIOT Act
and the other laws and regulations that are referred to in paragraph 8R, and
will obtain and maintain in full force and effect all licenses, certificates,
permits, franchises, operating rights and other authorizations from federal,
state, foreign, regional, municipal and other local regulatory bodies or
administrative agencies or governmental bodies having jurisdiction over such
Issuer and its Subsidiaries or any of their respective properties, products or
services necessary to the ownership, operation or maintenance of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in full force and effect such licenses, certificates, permits,
franchises, operating rights and other authorizations could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

5F.                              Maintenance of Insurance.  Each Issuer
covenants that it will, and will cause each of its Subsidiaries to, maintain,
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts as is customary in the case of
entities of established reputations engaged in the same or a similar business
and similarly situated.  The Collateral Agent shall be named as lender loss
payee on all property insurance policies, and the Collateral Agent and all
holders of Notes shall be named as additional insureds on all liability
insurance policies, obtained or maintained by or on behalf of the Company or any
of its Subsidiaries.  Each policy of insurance or endorsement shall contain a
clause requiring the insurer to give not less than 30 days prior written notice
to the Collateral Agent and the holders of the Notes in the event of
cancellation of the policy for any reason whatsoever and a clause specifying
that the interests of the Collateral Agent and the holders of the Notes shall
not be impaired or invalidated by any act or neglect any Issuer or any of its
Subsidiaries.

 

5G.                            Maintenance of Properties.  Each Issuer covenants
that it will, and will cause each of its Subsidiaries to, maintain and keep, or
cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), and from time
to time make, or cause to be made, all needful and proper repairs, renewals and
replacements thereto, so that the business carried on in connection therewith
may be properly conducted at all times, provided that this paragraph 5G shall
not prevent any Issuer or any Subsidiary from discontinuing the operation and
the maintenance of any of its properties if such discontinuance is desirable in
the conduct of its business and such discontinuance could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

 

5H.                            Payment of Taxes.  Each Issuer covenants that it
will, and will cause each of its Subsidiaries to, file all income tax or similar
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges or levies payable by any of them, and to pay
and discharge all amounts payable for work, labor and materials, in each case to
the extent such taxes, assessments, charges, levies and amounts payable have
become due and payable and before they have become delinquent, provided that
neither any Issuer nor any Subsidiary need pay any such tax, assessment, charge,
levy or amount payable if (i) the amount, applicability or

 

12

--------------------------------------------------------------------------------

 

validity thereof is being actively contested by such Issuer or such Subsidiary
on a timely basis in good faith and in appropriate proceedings, and such Issuer
or such Subsidiary has established adequate reserves therefor in accordance with
generally accepted accounting principles on the books of such Issuer or such
Subsidiary or (ii) the nonpayment of all such taxes, assessments, charges,
levies and amounts payable in the aggregate could not reasonably be expected to
have a Material Adverse Effect.

 

5I.                                 Corporate Existence.  The Company will at
all times preserve and keep its corporate existence in full force and effect. 
Subject to paragraph 6F, the Company will at all times preserve and keep in full
force and effect the corporate, limited liability company or partnership, as the
case may be, existence of each of its Subsidiaries.

 

5J.                               Subsequent Guarantors or Issuers.  Each Issuer
covenants that if at any time any Person which is not then an Issuer or a
Guarantor shall become a borrower, co-borrower, obligor or co-obligor under, or
become obligated under a Contingent Liability with respect to any Debt under,
any Primary Bank Facility, then such Issuer will, concurrently therewith, cause
such Person to execute and deliver to the holders of the Notes a guaranty
agreement, in form and substance satisfactory to the Required Holder(s), under
which such Person guaranties the payment and performance of the obligations of
the Issuer under this Agreement, the Notes and the other Transaction Documents
(each such guaranty agreement, together with any other guaranty pursuant to
which the Notes are guarantied and with any joinder to such Guaranty Agreement
or other guaranty, as the same may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the provisions thereof,
collectively called the “Guaranty Agreements” and individually called a
“Guaranty Agreement”), a joinder to a Guaranty Agreement in form and substance
satisfactory to the Required Holder(s) or, if directed by the Required
Holder(s), a joinder to this Agreement, in form and substance satisfactory to
the Required Holder(s), under which such person joins this Agreement, the Notes
and the other Transaction Documents as, and becomes jointly and severally liable
for the obligations of, an Issuer hereunder and thereunder, and will,
concurrently therewith, cause such Person to comply with the provisions of
paragraph 5K hereof.  Each such Guaranty Agreement or such joinder shall be
accompanied by a certificate of the Secretary or Assistant Secretary (or other
appropriate senior officer) of such Person certifying such Person’s charter and
by-laws (or comparable governing documents), resolutions of the board of
directors (or comparable governing body) of such Person authorizing the
execution and delivery of such Guaranty Agreement or such joinder and documents
executed by such Person pursuant to paragraph 5K hereof and incumbency and
specimen signatures of the officers of such Person executing such documents, and
by such other certificates, documents, instruments and legal opinions in
connection therewith as may be reasonably requested by the Required Holder(s),
each in form and substance reasonably satisfactory to the Required Holder(s).

 

5K.                            Further Assurances.  Each Issuer covenants that
it will, and it will cause each of its Subsidiaries to, take such actions as are
necessary or as any holder of the Notes may reasonably request from time to time
to ensure that the obligations of each Issuer and Guarantor under this
Agreement, the Notes and the other Transaction Documents are secured by
substantially all of the assets of the Issuers and the Guarantors (including,
upon the acquisition or creation thereof, any Subsidiary acquired or created
after the date of closing), in each case as any holder of the Notes may
determine, including the execution and delivery of guaranties, security

 

13

--------------------------------------------------------------------------------

 

agreements, pledge agreements, mortgages, deeds of trust, financing statements
and other documents, and the filing or recording of any of the foregoing and the
delivery of certificated securities and other collateral with respect to which
perfection is obtained by possession.

 

5L.                             Employee Benefit Plans.  Each Issuer covenants
that it will, and will cause each of its Subsidiaries to:

 

(i)                                     Maintain, and cause each other member of
the Controlled Group to maintain, each Pension Plan in substantial compliance
with all applicable requirements of law and regulations.

 

(ii)                                  Make, and cause each other member of the
Controlled Group to make, on a timely basis, all required contributions to any
Multiemployer Plan.

 

(iii)                               Not, and not permit any other member of the
Controlled Group to (a) seek a waiver of the minimum funding standards of ERISA,
(b) terminate or withdraw from any Pension Plan or Multiemployer Plan or
(c) take any other action with respect to any Pension Plan that would reasonably
be expected to entitle the PBGC to terminate, impose liability in respect of, or
cause a trustee to be appointed to administer, any Pension Plan, unless the
actions or events described in clauses (a), (b) and (c) individually or in the
aggregate would not have a Material Adverse Effect.

 

5M.                          Environmental Matters.  If any release or
threatened release or other disposal of Hazardous Substances shall occur or
shall have occurred on any real property or any other assets of any Issuer or
any Subsidiary of any Issuer, such Issuer will, or will cause such Subsidiary
to, cause the prompt containment and removal of such Hazardous Materials and the
remediation of such real property or other assets as necessary to comply with
all Environmental Laws and to preserve the value of such real property or other
assets.  Without limiting the generality of the foregoing, each Issuer will, and
will cause each of its Subsidiaries to, comply with any Federal or state
judicial or administrative order requiring the performance at any real property
of any Issuer or any of its Subsidiaries of activities in response to the
release or threatened release of a Hazardous Materials.  To the extent that the
transportation of Hazardous Materials is permitted by this Agreement, the
Company shall, and shall cause its Subsidiaries to, dispose of such Hazardous
Materials, or of any other wastes, only at licensed disposal facilities
operating in compliance with Environmental Laws.

 

5N.                             Tax Shelter Registration.  Each Issuer covenants
that it will notify the holders of any action (or the intention to take an
action) inconsistent with the representation in paragraph 8F(ii).  If an Issuer
so notifies the holders of the Notes, the Company acknowledges and agrees that
holders of the Notes may treat the transactions contemplated hereby (or any
single transaction contemplated hereby) as part of a transaction that is subject
to Treasury Regulation Section 301.6112-1, and holders of the Notes, as
applicable, may maintain the lists and take other actions required by such
Treasury Regulation.  To the extent any holder of the Notes determines to
maintain such list, each Issuer shall cooperate with such holders in obtaining
the information required under such Treasury Regulation.  Within 10 days after
notifying the holders of the Notes under this paragraph 5N, the Company shall
deliver to each holder of the Notes a duly completed copy of IRS Form 8886 or
any successor form.

 

14

--------------------------------------------------------------------------------

 

5O.                            Post-Closing Items.  The Issuers shall use their
commercially reasonable efforts to deliver a Collateral Access Agreement
executed by the lessor of 605 Highway 169 North, Suite 400, Minneapolis, MN
55441 to the holders of Notes and the Collateral Agent within 180 days after the
date of closing.

 

6.                                      NEGATIVE COVENANTS.  So long as any Note
or other amount due hereunder is outstanding and unpaid, the Issuers jointly and
severally covenant as follows:

 

6A.                             Financial Covenants.

 

6A(1).              Tangible Net Worth.  Each Issuer covenants that it will not
permit the Tangible Net Worth of the Company and its Subsidiaries to be:

 

(i)                                     as of May 30, 2015, less than the sum of
Five Million Dollars ($5,000,000) plus fifty percent (50%) of the consolidated
net income of the Company and its Subsidiaries for the fiscal month then ended,
if positive; and

 

(ii)                                  as of the last day of each fiscal month
following the fiscal month ended May 30, 2015, less than the sum of the minimum
Tangible Net Worth from the immediately preceding fiscal month plus fifty
percent (50%) of the consolidated net income of the Company and its Subsidiaries
of the fiscal month then ended, if positive.

 

Notwithstanding the foregoing, the parties acknowledge and agree that the effect
of the 2015 Tender Offer shall be excluded in the foregoing covenant
calculation.

 

6A(2).              Fixed Charge Coverage Ratio.  Each Issuer covenants that it
will not, as of the end of each fiscal month, permit the Fixed Charge Coverage
Ratio of the Company and its Subsidiaries to be less than 2.50 to 1.00.

 

6A(3).              Maximum Leverage.  Each Issuer covenants that it will not,
as of the end of each fiscal month, permit the Leverage Ratio to exceed
(x) during the period from the date of closing through fiscal May 2017, 2.50 to
1.00 and (y) fiscal June 2017 and thereafter, 2.25 to 1.00.

 

6B.                             Debt.  Each Issuer covenants that it will not,
and not permit any of its Subsidiaries to, incur, assume or suffer to exist any
Debt, except:

 

(i)                                     Obligations under this Agreement, the
Notes and the other Transaction Documents;

 

(ii)                                  Obligations under the Credit Agreement not
exceeding at any time an aggregate outstanding principal amount of $75,000,000,
but only so long as the Intercreditor Agreement is in full force and effect;

 

(iii)                               Debt secured by Liens permitted by paragraph
6C(iv), and extensions, renewals and refinancings thereof; provided that such
Debt shall not exceed the cost of the applicable property being leased or
acquired and that the aggregate amount of all such Debt at any time outstanding
shall not exceed $500,000;

 

15

--------------------------------------------------------------------------------

 

(iv)                              Debt of the Company to any domestic
Wholly-Owned Subsidiary or Debt of any domestic Wholly-Owned Subsidiary to the
Company or another domestic Wholly-Owned Subsidiary; provided that such Debt
shall be subordinated to the obligations of the Issuers and the Guarantors under
this Agreement, the Notes and the other Transaction Documents, in a manner
reasonably satisfactory to the Required Holder(s);

 

(v)                                 Subordinated Debt;

 

(vi)                              Hedging Obligations incurred for bona fide
hedging purposes and not for speculation;

 

(vii)                           Contingent Liabilities arising with respect to
customary indemnification obligations in favor of sellers in connection with
Acquisitions permitted under paragraph 6F and purchasers in connection with
dispositions permitted under paragraph 6F;

 

(viii)                        other unsecured Debt, in addition to the Debt
listed above, in an aggregate outstanding amount not at any time exceeding
$250,000;

 

(ix)                              Accounts payable and trade debt arising in the
ordinary course of the business of the Company or one of its Subsidiaries; and

 

(x)                                 Any non-recourse obligation of the Company
or one of its Subsidiaries arising from a discounting transaction in the
ordinary course of business.

 

6C.                             Liens.  Each Issuer covenants that it will not,
and not permit any of its Subsidiaries to, create or permit to exist any Lien on
any of its real or personal properties, assets or rights of whatsoever nature
(whether now owned or hereafter acquired), except:

 

(i)                                     Liens for taxes or other governmental
charges not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and, in each case, for
which it maintains adequate reserves;

 

(ii)                                  Liens arising in the ordinary course of
business such as (a) Liens of carriers, warehousemen, mechanics and materialmen
and other similar Liens imposed by law, (b) Liens in the form of deposits or
pledges incurred in connection with worker’s compensation, unemployment
compensation and other types of social security (excluding Liens arising under
ERISA), and (c) Liens created in the ordinary course of business arising from
non-recourse discounting transactions including (without limitation) liens
against (v) the particular lease, (w) all equipment subject to such lease,
(x) all lease collateral for such lease, (y) all warranty and other rights the
Company or one of its Subsidiaries may have with respect to such lease and the
related equipment against the manufacturers of such equipment and against the
sellers and assignors from whom the Company or such Subsidiary may have acquired
such lease and such equipment, (z) proceeds from any and all of the foregoing. 
Upon the written request of the Company, each holder of a Note agrees to
authorize and direct the Collateral Agent to execute a subordination agreement
in form and substance satisfactory to the Required Holder(s) in connection with
liens pursuant to paragraph 6C(ii)(c);

 

16

--------------------------------------------------------------------------------

 

(iii)                               Liens arising in the ordinary course of
business in an aggregate amount of not more than $25,000;

 

(iv)                              subject to the limitation set forth in
paragraph 6B(iii), (a) Liens arising in connection with Capital Leases (and
attaching only to the property being leased), (b) Liens existing on property at
the time of the acquisition thereof by the Company or any of its Subsidiaries
(and not created in contemplation of such acquisition) and (c) Liens that
constitute purchase money security interests on any property securing debt
incurred for the purpose of financing all or any part of the cost of acquiring
such property, provided that any such Lien attaches to such property within 60
days of the acquisition thereof and attaches solely to the property so acquired;

 

(v)                                 attachments, appeal bonds, judgments and
other similar Liens, for sums not exceeding $250,000 in the aggregate arising in
connection with court proceedings, provided the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings;

 

(vi)                              easements, rights of way, restrictions, minor
defects or irregularities in title and other similar Liens not interfering in
any material respect with the ordinary conduct of the business of the Company or
any of its Subsidiaries; and

 

(vii)                           liens in favor of the Collateral Agent arising
under the Collateral Documents to secure the obligations of the Issuers and the
Guarantors under this Agreement, the Notes, the Credit Agreement and the other
Transaction Documents, but only if the Intercreditor Agreement shall be in full
force and effect and applicable thereto.

 

6D.                             Operating Leases.  Each Issuer covenants that it
will not permit the aggregate amount of all rental payments under Operating
Leases made (or scheduled to be made) by the Company and its Subsidiaries (on a
consolidated basis) to exceed $1,000,000 in any Fiscal Year.

 

6E.                             Restricted Payments.  Each Issuer covenants that
it will not, and not permit any of its Subsidiaries to, (i) make any dividend or
distribution to any holders of its Capital Securities, (ii) purchase or redeem
any of its Capital Securities, (iii) pay any management fees or similar fees to
any of its equityholders or any Affiliate thereof, (iv) make any redemption,
prepayment, defeasance, repurchase or any other payment in respect of any
Subordinated Debt, or (v) set aside funds for any of the foregoing. 
Notwithstanding the foregoing, so long as no Event of Default or Default has
occurred and is continuing or would occur as a result of any of the following,
(a) any Subsidiary may pay dividends or make other distributions to the Company
or to a domestic Wholly-Owned Subsidiary, (b) the Company may purchase or redeem
any of its Capital Securities, and may pay regular dividends (defined to be
dividends paid in any fiscal year not to exceed $5,000,000 in the aggregate)
with respect to its Capital Securities, so long as, in each case, after giving
effect to such purchase, redemption or regular dividend the Company will remain
in compliance with all the financial ratios and restrictions set forth in
paragraph 6A, as certified by the Company in form and substance satisfactory to
the Required Holder(s), (c) the Company may consummate the 2015 Tender Offer,
(d) the Company may make payments in respect of Subordinated Debt to the extent
permitted under the applicable Subordination

 

17

--------------------------------------------------------------------------------

 

Agreement, and (e) the Company may grant stock options pursuant to a plan
approved by the shareholders of the Company.

 

6F.                              Mergers, Consolidations, Acquisitions, Sales. 
Each Issuer covenants that it will not, and not permit any of its Subsidiaries
to, (i) be a party to any merger or consolidation, or purchase or otherwise
acquire all or substantially all of the assets or any Capital Securities of any
class of, or any partnership or joint venture interest in, any other Person,
(ii) sell, transfer, convey or lease all or any substantial part of its assets
or Capital Securities (including the sale of Capital Securities of any
Subsidiary) except for sales and leases of inventory in the ordinary course of
business, or (iii) sell or assign with or without recourse any receivables,
except for (a) any such merger, consolidation, sale, transfer, conveyance, lease
or assignment of or by any Wholly-Owned Subsidiary into the Company or into any
other domestic Wholly-Owned Subsidiary; provided that in any such transaction
involving the Company, the Company shall be the continuing or surviving Person;
(b) any such purchase or other acquisition by the Company or any domestic
Wholly-Owned Subsidiary of the assets or Capital Securities of any Wholly-Owned
Subsidiary; (c) sales and dispositions of assets for at least fair market value
(as determined by the Board of Directors of the Company) so long as the net book
value of all assets sold or otherwise disposed of in any Fiscal Year does not
exceed 10% of the net book value of the consolidated assets of the Company and
its Subsidiaries as of the last day of the preceding Fiscal Year; (d) the
discounting of non-recourse leases in the ordinary course of business; and
(e) any Acquisition by the Company or any domestic Wholly-Owned Subsidiary
where:

 

(1)                                 the business or division acquired is for
use, or the Person acquired or invested in is engaged, in a business engaged in
by the Company or one of its Subsidiaries on the date of closing;

 

(2)                                 immediately before and after giving effect
to such Acquisition, no Event of Default or Default shall exist;

 

(3)                                 the aggregate consideration to be paid by
the Company and its Subsidiaries (including any Debt assumed or issued in
connection therewith, the amount thereof to be calculated in accordance with
GAAP) in connection with such Acquisition (or any series of related
Acquisitions) is less than $10,000,000 individually and the aggregate
consideration for all Acquisitions by the Company and its Subsidiaries since
July 13, 2010 does not exceed $20,000,000;

 

(4)                                 immediately after giving effect to such
Acquisition, (x) the Company is in pro forma compliance with all the financial
ratios and restrictions set forth in paragraph 6A and (y) Loan Availability (as
defined in the Credit Agreement, as in effect on the date of closing) minus
Outstandings (as defined in the Credit Agreement, as in effect on the date of
closing) is greater than or equal to $5,000,000;

 

(5)                                 in the case of the Acquisition of any
Person, the Board of Directors of such Person has approved such Acquisition;

 

(6)                                 reasonably prior to such Acquisition, each
holder of a Note shall have received complete executed or conformed copies of
each material document, instrument

 

18

--------------------------------------------------------------------------------

 

and agreement to be executed in connection with such Acquisition together with
all lien search reports and lien release letters and other documents as such
holder may require to evidence the termination of Liens on the assets or
business to be acquired if applicable;

 

(7)                                 not less than 10 Business Days prior to such
Acquisition, each holder of a Note shall have received an acquisition summary
with respect to the Person and/or business or division to be acquired or
invested in, such summary to include a reasonably detailed description thereof
(including financial information) and operating results (including financial
statements for the most recent 12 month period for which they are available and
as otherwise available), the terms and conditions, including economic terms, of
the proposed Acquisition, and the Company’s calculation of pro forma EBITDA
relating thereto;

 

(8)                                 consents have been obtained in favor of the
Collateral Agent to the collateral assignment of rights and indemnities under
the related acquisition documents and opinions of counsel for the Company and
its Subsidiaries and (if delivered to the Company or one of its Subsidiaries)
the selling party in favor of Collateral Agent have been delivered; and

 

(9)                                 the provisions of paragraphs 5J and 5K have
been satisfied.

 

6G.                            Modification of Organizational Documents.  Each
Issuer covenants that it will not permit the charter, by-laws or other
organizational documents of such Issuer or its Subsidiaries to be amended or
modified in any way which could reasonably be expected to materially adversely
affect the interests of any holder of a Note.

 

6H.                            Affiliate Transactions.  Each Issuer covenants
that it will not, and not permit any of its Subsidiaries to, enter into, or
cause, suffer or permit to exist any transaction, arrangement or contract with
any of its other Affiliates (other than the Issuers and the Guarantors) which is
on terms which are less favorable than are obtainable from any Person which is
not one of its Affiliate, except for those listed on Schedule 6H.

 

6I.                                 Unconditional Purchase Obligations.  Each
Issuer covenants that it will not, and not permit any of its Subsidiaries to,
enter into or be a party to any contract for the purchase of materials, supplies
or other property or services if such contract requires that payment be made by
it regardless of whether delivery is ever made of such materials, supplies or
other property or services.

 

6J.                               Inconsistent Agreements.  Each Issuer
covenants that it will not, and not permit any of its Subsidiaries to, enter
into any agreement containing any provision which would (i) be violated or
breached by the issuance and sale of Notes hereunder or by the performance by
any Issuer or Guarantor of any of its obligations hereunder or under any other
Transaction Document, (ii) prohibit the Company or any of its Subsidiaries from
granting to the Collateral Agent, for the ratable benefit of the Banks and the
holders of the Notes, a Lien on any of its assets or (iii) create or permit to
exist or become effective any encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make other distributions to the Company or
any other Subsidiary, or pay any Debt owed to the Company or any other
Subsidiary, (b) make loans

 

19

--------------------------------------------------------------------------------

 

or advances to the Company or any of its Subsidiaries, or (c) transfer any of
its assets or properties to the Company or any of its Subsidiaries, other than
(x) customary restrictions and conditions contained in agreements relating to
the sale of all or a substantial part of the assets of any Subsidiary pending
such sale, provided that such restrictions and conditions apply only to the
Subsidiary to be sold and such sale is permitted hereunder, (y) restrictions or
conditions imposed by any agreement relating to purchase money Debt, Capital
Leases and other secured Debt permitted by this Agreement (other than Debt
permitted under 6B(ii)) if such restrictions or conditions apply only to the
property or assets securing such Debt and (z) customary provisions in leases and
other contracts restricting the assignment thereof.

 

6K.                            Business Activities.  Each Issuer covenants that
it will not, and not permit any of its Subsidiaries to, engage in any line of
business other than the businesses engaged in as of the date of closing and
businesses reasonably related thereto.

 

6L.                             Subordinated Debt Documents.  Each Issuer
covenants that it will not, and not permit any of its Subsidiaries to, amend,
modify or supplement any Subordinated Debt Document in any manner that could
affect or impair the rights of the holders of the Notes contemplated in the
Subordination Agreements or amend, modify or supplement the Subordination
Agreements in any respect, in each case without the prior written consent of the
Required Holder(s).

 

6M.                          Fiscal Year.  Each Issuer covenants that it will
not, and not permit any of its Subsidiaries to, change its Fiscal Year.

 

6N.                             Control Agreements.  Each Issuer covenants that
it will not, and not permit any of its Subsidiaries to, fail to deliver to
Collateral Agent within 30 days after the Collateral Agent’s or any holder of
the Notes request, a Control Agreement for any deposit, checking or brokerage
account opened or maintained by the Company or any of its Subsidiaries.

 

6O.                            Terrorism Sanctions Regulations.  Each Issuer
covenants that it will not, and will not permit any Controlled Entity to,
(i) become (including by virtue of being owned or controlled by a Blocked
Person), own or control a Blocked Person or any Person that is the target of
sanctions imposed by the United Nations or by the European Union, or
(ii) directly or indirectly have any investment in or engage in any dealing or
transaction (including, without limitation, any investment, dealing or
transaction involving the proceeds of any of the Notes) with any Person if such
investment, dealing or transaction (a) would cause the Collateral Agent or any
holder of a Note to be in violation of any law or regulation applicable to the
Collateral Agent or such holder, or (b) is prohibited by or subject to sanctions
under any U.S. Economic Sanctions Laws, or (iii) engage, or permit any
Subsidiary or Affiliate of either to engage, in any activity that could subject
such Person, the Collateral Agent or any holder of a Note to sanctions under
CISADA or any similar (federal or state) law or regulation with respect to Iran
or any other country that is subject to U.S. Economic Sanctions Laws.

 

6P.                              Most Favored Lender.  If, on any date, any
Issuer or any its Subsidiaries shall (i) enter into, assume or otherwise become
bound by or obligated under any Primary Bank Facility which contains one or more
Additional Covenants or Additional Defaults, or (ii) amend any Primary Bank
Facility to include one or more Additional Covenants or Additional Defaults,
then

 

20

--------------------------------------------------------------------------------

 

concurrently therewith (a) such Issuer will notify the holders of the Notes
thereof, and (b) whether or not such Issuer provides such notice, the terms of
this Agreement shall, without any further action on the part of any Issuer or
any holder of the Notes, be deemed to be amended automatically to include each
Additional Covenant and each Additional Default in this Agreement.  Each Issuer
further covenants to promptly execute and deliver at its expense (including,
without limitation, the fees and expenses of counsel for the holders of the
Notes) an amendment to this Agreement in form and substance satisfactory to the
Required Holder(s) evidencing the amendment of this Agreement to include such
Additional Covenants and Additional Defaults in this Agreement, provided that
the execution and delivery of such amendment shall not be a precondition to the
effectiveness of such amendment as provided for in this paragraph 6P, but shall
merely be for the convenience of the parties hereto.

 

7.                                      EVENTS OF DEFAULT.

 

7A.                             Acceleration.  If any of the following events
shall occur and be continuing for any reason whatsoever (and whether such
occurrence shall be voluntary or involuntary or come about or be effected by
operation of law or otherwise):

 

(i)                                     the Issuers default in the payment of
any principal of or Yield-Maintenance Amount payable with respect to any Note
when the same shall become due, either by the terms thereof or otherwise as
herein provided; or

 

(ii)                                  the Issuers default in the payment of any
interest on any Note for more than 5 days after the date due; or

 

(iii)                               any Issuer or any Subsidiary defaults
(whether as primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed (or any
Capitalized Lease Obligation, any obligation under a conditional sale or other
title retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage or any
obligation under notes payable or drafts accepted representing extensions of
credit) beyond any period of grace provided with respect thereto, or any Issuer
or any Subsidiary fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such obligation is created
(or if any other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is to cause, or to
permit the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause, such obligation to become due (or to be repurchased
by any Issuer or any Subsidiary) prior to any stated maturity, provided that the
aggregate amount of all obligations as to which such a payment default shall
occur and be continuing or such a failure or other event causing or permitting
acceleration (or resale to any Issuer or any Subsidiary) shall occur and be
continuing exceeds $250,000; or

 

(iv)                              any representation or warranty made by any
Issuer or any Guarantor herein or in any other Transaction Document or by any
Issuer or any Guarantor or any of its respective officers in any writing
furnished in connection with or pursuant to this

 

21

--------------------------------------------------------------------------------

 

Agreement or any other Transaction Document shall be false or misleading in any
material respect on the date as of which made; or

 

(v)                                 any Issuer fails to perform or observe any
agreement contained in paragraph 5A(iv), 5F, 5I, 5N, 5O or paragraph 6; or

 

(vi)                              any Issuer fails to perform or observe any
other agreement, term or condition contained herein and such failure shall not
be remedied within 30 days after the earlier of (a) any Responsible Officer of
any Issuer obtains actual knowledge thereof or (b) the date notice of such
failure is given to any Issuer by any holder of any Note, or any Issuer or any
Guarantor fails to perform or observe any agreement contained in any other
Transaction Document and such failure shall not be remedied within the grace
period, if any, provided therefor in such Transaction Document (or, if no grace
period is provided therefor in such Transaction Document, within 30 days after
the earlier of (a) the date any Responsible Officer of any Issuer obtains actual
knowledge thereof or (b) the date notice of such failure is given to any Issuer
by any holder of any Note); or

 

(vii)                           any Issuer or any Subsidiary makes an assignment
for the benefit of creditors or is generally not paying its debts as such debts
become due; or

 

(viii)                        any decree or order for relief in respect of any
Issuer or any Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law, whether now or hereafter in effect (herein called
the “Bankruptcy Law”), of any jurisdiction; or

 

(ix)                              any Issuer or any Subsidiary petitions or
applies to any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar official of
any Issuer or any Subsidiary, or of any substantial part of the assets of any
Issuer or any Subsidiary, or commences a voluntary case under the Bankruptcy Law
of the United States or any proceedings (other than proceedings for the
voluntary liquidation and dissolution of a Subsidiary) relating to any Issuer or
any Subsidiary under the Bankruptcy Law of any other jurisdiction; or

 

(x)                                 any such petition or application described
in clause (ix) of this paragraph is filed, or any such case or proceedings
described in clause (ix) of this paragraph 7A are commenced, against any Issuer
or any Subsidiary and any Issuer or such Subsidiary by any act indicates its
approval thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in effect
for more than 60 days; or

 

(xi)                              any order, judgment or decree is entered in
any proceedings against any Issuer decreeing the dissolution of such Issuer and
such order, judgment or decree remains unstayed and in effect for more than 60
days; or

 

(xii)                           any order, judgment or decree is entered in any
proceedings against any Issuer or any Subsidiary decreeing a split-up of such
Issuer or such Subsidiary which

 

22

--------------------------------------------------------------------------------

 

requires the divestiture of assets representing a substantial part, or the
divestiture of the stock of a Subsidiary whose assets represent a substantial
part, of the consolidated assets of the Company and its Subsidiaries (determined
in accordance with generally accepted accounting principles) or which requires
the divestiture of assets, or stock of a Subsidiary, which shall have
contributed a substantial part of the consolidated net income of the Company and
its Subsidiaries (determined in accordance with generally accepted accounting
principles) for any of the three fiscal years then most recently ended, and such
order, judgment or decree remains unstayed and in effect for more than 60 days;
or

 

(xiii)                        one or more final judgments or orders, including,
without limitation, any final order enforcing a binding arbitration decision, in
an aggregate amount in excess of $250,000 is rendered against any Issuer or any
Subsidiary and either (a) enforcement proceedings have been commenced by any
creditor upon any such judgment or order or (b) within 30 days after entry
thereof, any such judgment or order is not discharged or execution thereof
stayed pending appeal, or within 30 days after the expiration of any such stay,
such judgment or order is not discharged; or

 

(xiv)                       (a) any Person institutes steps to terminate a
Pension Plan if as a result of such termination the Company or any member of the
Controlled Group could be required to make a contribution to such Pension Plan,
or could incur a liability or obligation to such Pension Plan, in excess of
$250,000; (b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA; (c) the
Unfunded Liability exceeds twenty percent of the Total Plan Liability; or
(d) there shall occur any withdrawal or partial withdrawal from a Multiemployer
Plan and the withdrawal liability (without unaccrued interest) to Multiemployer
Plans as a result of such withdrawal (including any outstanding withdrawal
liability that the Company or any member of the Controlled Group have incurred
on the date of such withdrawal) exceeds $250,000; or

 

(xv)                          any Guaranty Agreement or any Collateral Document
shall cease to be in full force and effect, or any Issuer or any Guarantor shall
contest or deny the validity or enforceability of, or deny that it has any
liability or obligations under, any Guaranty Agreement or any Collateral
Document, or the Collateral Agent does not have or ceases to have a valid first
priority perfected security interest (subject only to Liens permitted by clauses
(ii), (iv) or (vi) of paragraph 6C) in any Collateral for the benefit of the
holders of the Notes; or

 

(xvi)                       default in the payment when due, or in the
performance or observance of, any material obligation of, or condition agreed to
by, any Issuer or any Guarantor with respect to any material purchase or lease
of goods or services where such default, singly or in the aggregate with all
other such defaults, might reasonably be expected to have a Material Adverse
Effect; or

 

(xvii)                    any subordination provision in any document or
instrument governing Subordinated Debt, or any subordination provision in any
guaranty by any Subsidiary of any Subordinated Debt, shall cease to be in full
force and effect, or any Issuer or any Guarantor or any other Person (including
the holder of any applicable Subordinated Debt)

 

23

--------------------------------------------------------------------------------

 

shall contest in any manner the validity, binding nature or enforceability of
any such provision; or

 

(xviii)                 a Change of Control shall occur; or

 

(xix)                       the occurrence of any event having a Material
Adverse Effect;

 

then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A, any holder of any Note (other than any Issuer or any of its
Subsidiaries or Affiliates) may at its option, by notice in writing to the
Company, declare all of the Notes held by such holder to be, and all of the
Notes held by such holder shall thereupon be and become, immediately due and
payable at par together with interest accrued thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
each Issuer, (b) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to any Issuer, all of the
Notes at the time outstanding shall automatically become immediately due and
payable together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by each Issuer, and (c) if such event is not an Event of Default
specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to any
Issuer, the Required Holder(s) may at its or their option, by notice in writing
to the Company, declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if any, with
respect to each Note, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Issuer.  Each Issuer
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Issuer
(except as herein specifically provided for) and without the occurrence of an
Event of Default and that the provision for payment of Yield-Maintenance Amount
by the Issuer in the event the Notes are prepaid or are accelerated as a result
of an Event of Default is intended to provide compensation for the deprivation
of such right under such circumstances.

 

7B.                             Rescission of Acceleration.  At any time after
any or all of the Notes shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) may, by notice in writing to
the Company, rescind and annul such declaration and its consequences if (i) the
Issuers shall have paid all overdue interest on the Notes, the principal of and
Yield-Maintenance Amount, if any, payable with respect to any Notes which have
become due otherwise than by reason of such declaration, and interest on such
overdue interest and overdue principal and Yield-Maintenance Amount at the
Default Rate, (ii) no Issuer shall have paid any amounts which have become due
solely by reason of such declaration, (iii) all Events of Default and Defaults,
other than non-payment of amounts which have become due solely by reason of such
declaration, shall have been cured or waived pursuant to paragraph 11C, and
(iv) no judgment or decree shall have been entered for the payment of any
amounts due pursuant to the Notes or this Agreement.  No such rescission or
annulment shall extend to or affect any subsequent Event of Default or Default
or impair any right arising therefrom.

 

7C.                             Notice of Acceleration or Rescission.  Whenever
any Note shall be declared immediately due and payable pursuant to paragraph 7A
or any such declaration shall be

 

24

--------------------------------------------------------------------------------

 

rescinded and annulled pursuant to paragraph 7B, the Issuers shall forthwith
give written notice thereof to the holder of each Note at the time outstanding.

 

7D.                             Other Remedies.  If any Event of Default or
Default shall occur and be continuing, the holder of any Note may proceed to
protect and enforce its rights under this Agreement, the other Transaction
Documents  and such Note by exercising such remedies as are available to such
holder in respect thereof under applicable law, either by suit in equity or by
action at law, or both, whether for specific performance of any covenant or
other agreement contained in this Agreement or the other Transaction Documents
or in aid of the exercise of any power granted in this Agreement or any
Transaction Document.  No remedy conferred in this Agreement or the other
Transaction Documents upon the holder of any Note or the Collateral Agent is
intended to be exclusive of any other remedy, and each and every such remedy
shall be cumulative and shall be in addition to every other remedy conferred
herein or now or hereafter existing at law or in equity or by statute or
otherwise.

 

8.                                     
REPRESENTATIONS, COVENANTS AND WARRANTIES.  Each Issuer represents, covenants
and warrants as follows:

 

8A(1).              Organization; Subsidiary Preferred Equity.  Each Issuer and
each of its Subsidiaries is duly organized and existing in good standing under
the laws of the jurisdiction in which it is organized.  Each Issuer and each of
its Subsidiaries have duly qualified or been duly licensed, and are authorized
to do business and are in good standing, in each jurisdiction in which the
ownership of their respective properties or the nature of their respective
businesses makes such qualification or licensing necessary and in which the
failure to be so qualified or licensed could be reasonably likely to have a
Material Adverse Effect.  Schedule 8A(1) hereto sets forth, as of the date
hereof, a correct list of each Subsidiary of the Company, its jurisdiction of
incorporation and its ownership.  No Subsidiary has any outstanding shares of
any class of capital stock or other equity interests which has priority over any
other class of capital stock or other equity interests of such Subsidiary as to
dividends or distributions or in liquidation except as may be owned beneficially
and of record by the Company or a Wholly-Owned Subsidiary.  No Subsidiary is a
party to, or otherwise subject to any legal, regulatory, contractual or other
restriction (other than this Agreement and customary limitations imposed by
corporate or limited liability company law or similar statutes) restricting the
ability of such Subsidiary to pay dividends out of profits or make other
distributions of profits to the Company or any of its other Subsidiaries that
owns outstanding shares of capital stock or other equity interests of such
Subsidiary.  All of the outstanding shares of Capital Securities of each Issuer
and each Subsidiary have been duly authorized and issued and are fully paid.  As
of the date of closing no Subsidiary of the Company, other than the Issuers as
of the date of closing, is a borrower, co-borrower, obligor or co-obligor under,
or has a Contingent Liability with respect to any Debt under, the Credit
Agreement.

 

8A(2).              Power and Authority.  Each Issuer and each of its
Subsidiaries has all requisite corporate, limited liability company or
partnership, as the case may be, power to own or hold under lease and operate
their respective properties which it purports to own or hold under lease and to
conduct its business as currently conducted and as currently proposed to be
conducted.

 

25

--------------------------------------------------------------------------------

 

8A(3).              Execution and Delivery of Transaction Documents.  Each
Issuer and each of its Subsidiaries has all requisite corporate, limited
liability company or partnership, as the case may be, power to execute, deliver
and perform its obligations under this Agreement, the Notes and the other
Transaction Documents to which it is a party.  The execution, delivery and
performance of this Agreement, the Notes and the other Transaction Documents has
been duly authorized by all requisite corporate, limited liability company or
partnership, as the case may be, action, and this Agreement, the Notes and the
other Transaction Documents have been duly executed and delivered by authorized
officers of each Issuer and each Subsidiary which is a party thereto and are
valid obligations of each Issuer and each such Subsidiary, legally binding upon
and enforceable against each Issuer and each such Subsidiary in accordance with
their terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

 

8B.                             Financial Statements.  The Company has furnished
each Purchaser with the following financial statements, identified by a
principal financial officer of the Company:  (i) a consolidated balance sheet of
the Company and its Subsidiaries as at the end of Fiscal Year 2012, Fiscal Year
2013 and Fiscal Year 2014 and consolidated statements of income, stockholders’
equity and cash flows of the Company and its Subsidiaries for each such Fiscal
Year, all reported on by Grant Thornton LLP; and (ii) a consolidated balance
sheet of the Company and its Subsidiaries as at February 28, 2015 and
consolidated statements of income, stockholders’ equity and cash flows for the
two-month period ended on such date, prepared by the Company.  Such financial
statements (including any related schedules and/or notes) are true and correct
in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments), have been prepared in
accordance with generally accepted accounting principles consistently followed
throughout the periods involved and show all liabilities, direct and contingent,
of the Company and its Subsidiaries required to be shown in accordance with such
principles.  The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the statements of income,
stockholders’ equity and cash flows fairly present the results of the operations
of the Company and its Subsidiaries and their cash flows for the periods
indicated.  Since February 28, 2015, neither the Company nor any Subsidiary of
the Company has paid or declared any dividend on any shares of its capital stock
or made any other distribution on account of any shares of its capital stock
(other than (1) the payment of the regular quarterly dividend made by the
Company on March 2, 2015 and the declaration of the regularly quarterly dividend
of the Company on April 29, 2015 and (2) dividends or distributions payable
solely to the Company or a Wholly-Owned Subsidiary of the Company) or, other
than pursuant to the 2015 Tender Offer, redeemed, purchased, retired or
otherwise acquired any shares of its capital stock or any warrants, rights or
options to acquire, or securities convertible into or exchangeable for, any
shares of its capital stock (other than from the Company or a Wholly-Owned
Subsidiary of the Company).  There has been no material adverse change in the
business, property or assets, condition (financial or otherwise), operations or
prospects of the Company and its Subsidiaries taken as a whole since
December 27, 2014.

 

8C.                             Actions Pending.  There is no action, suit,
investigation or proceeding pending or, to the knowledge of any Issuer,
threatened against any Issuer or any of its Subsidiaries, or any properties or
rights of any Issuer or any of its Subsidiaries, by or before any court,
arbitrator or

 

26

--------------------------------------------------------------------------------

 

administrative or governmental body which, individually or in the aggregate,
could reasonably be expected to result in any Material Adverse Effect.

 

8D.                             Outstanding Debt.  Neither any Issuer nor any of
its Subsidiaries has outstanding any Debt except as permitted by paragraph 6B. 
There exists no default under the provisions of any instrument evidencing such
Debt or of any agreement relating thereto.

 

8E.                             Title to Properties.  Each Issuer has and each
of its Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title to all of its
other respective properties and assets, including the properties and assets
reflected in the balance sheet as at December 27, 2014 referred to in
paragraph 8B (other than properties and assets disposed of in the ordinary
course of business), subject to no Lien of any kind except Liens permitted by
paragraph 6C.  All leases necessary in any material respect for the conduct of
the respective businesses of each Issuer and its Subsidiaries are valid and
subsisting and are in full force and effect.

 

8F.                              Taxes.

 

(i)                                     Each Issuer has, and each of its
Subsidiaries has, filed all federal, state and other income tax returns which,
to the knowledge of the officers of any Issuer and its Subsidiaries, are
required to be filed, and each has paid all taxes as shown on such returns and
on all assessments received by it to the extent that such taxes have become due,
except such taxes as are being actively contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance with
generally accepted accounting principles.

 

(ii)                                  No Issuer intends to treat any of the
transactions contemplated by any Transaction Document as being a “reportable
transaction” within the meaning of Treasury Regulation Section 1.6011-4.

 

8G.                            Conflicting Agreements and Other Matters. 
Neither any Issuer nor any of its Subsidiaries is a party to any contract or
agreement or subject to any charter, by-law, limited liability company operating
agreement, partnership agreement, or other corporate, limited liability company
or partnership restriction which materially and adversely affects its business,
property or assets, condition (financial or otherwise) or operations.  Neither
the execution nor delivery of this Agreement, the Notes or the other Transaction
Documents, nor the offering, issuance and sale of the Notes, nor fulfillment of
nor compliance with the terms and provisions hereof and of the Notes and the
other Transaction Documents will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default under, or result in
any violation of, or result in the creation of any Lien (other than Liens
created pursuant to the Collateral Documents) upon any of the properties or
assets of any Issuer or any of its Subsidiaries pursuant to, the charter,
limited liability company operating agreement, partnership agreement, by-laws,
limited liability company operating agreement or partnership agreement of any
Issuer or any of its Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders, members or partners), instrument,
order, judgment, decree, statute, law, rule or regulation to which any Issuer or
any of its Subsidiaries is subject.  Neither any Issuer nor any of its
Subsidiaries is a party to, or otherwise subject to any provision contained in,
any instrument evidencing Debt of such Issuer or such Subsidiary, any agreement
relating thereto

 

27

--------------------------------------------------------------------------------

 

or any other contract or agreement (including its charter, by-laws, limited
liability company operating agreement or partnership agreement) which limits the
amount of, or otherwise imposes restrictions on the incurring of, Debt of
Issuers of the type to be evidenced by the Notes except as set forth in the
agreements listed in Schedule 8G attached hereto.

 

8H.                            Offering of Notes.  Neither any Issuer nor any
agent acting on its behalf has, directly or indirectly, offered the Notes or any
similar security of such Issuer for sale to, or solicited any offers to buy the
Notes or any similar security of any Issuer from, or otherwise approached or
negotiated with respect thereto with, any Person other than Institutional
Investors, and neither any Issuer nor any agent acting on its behalf has taken
or will take any action which would subject the issuance or sale of the Notes to
the provisions of section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of any applicable jurisdiction.

 

8I.                                 Use of Proceeds.  Neither any Issuer nor any
of its Subsidiaries owns or has any present intention of acquiring any “margin
stock” as defined in Regulation U (12 CFR Part 221) of the Board of Governors of
the Federal Reserve System (herein called “margin stock”).  The proceeds of sale
of the Notes will be used to finance a portion of the 2015 Tender Offer,
refinance existing Debt, consummate Acquisitions permitted under paragraph 6F,
pay dividends or make repurchases of Capital Securities permitted under
paragraph 6E, or for general corporate purposes.  None of such proceeds will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the purpose of
maintaining, reducing or retiring any Debt which was originally incurred to
purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute the sale or purchase of any Notes a “purpose
credit” within the meaning of such Regulation U.  No Issuer is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock.  Neither any
Issuer nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement, any of the other Transaction Documents or any
Note to violate Regulation T, Regulation U or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the Exchange Act, in
each case as in effect now or as the same may hereafter be in effect.

 

8J.                               ERISA.

 

(i)                                     Each Issuer and each ERISA Affiliate
have operated and administered each Pension Plan in compliance with all
applicable laws except for such instances of noncompliance as have not resulted
in and could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect.  Neither any Issuer nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in section 3 or ERISA), and no event, transaction or condition has occurred or
exists that could, individually or in the aggregate, reasonably be expected to
result in the incurrence of any such liability by any Issuer or any ERISA
Affiliate, or in the imposition of any Lien on any of the rights, properties or
assets of any Issuer or any ERISA Affiliate, in either case pursuant to Title I
or IV of ERISA or to section 430(k) of the Code or to any such penalty or excise
tax provisions under the Code or Federal law or section 4068 of ERISA or by the
granting of a security interest in connection with the amendment of a Plan,
other than such liabilities or Liens as would not be individually or in the
aggregate material

 

28

--------------------------------------------------------------------------------

 

in relation to the business, operations, affairs, financial condition, assets,
properties, or prospects of the Company and its Subsidiaries taken as a whole.

 

(ii)                                  The present value of the aggregate benefit
liabilities under each of the Pension Plans (other than Multiemployer Plans),
determined as of the end of such Pension Plan’s most recently ended plan year on
the basis of the actuarial assumptions specified for funding purposes in such
Pension Plan’s most recent actuarial valuation report, did not exceed the
aggregate current value of the assets of such Pension Plan allocable to such
benefit liabilities.  The term “benefit liabilities” has the meaning specified
in section 4001 of ERISA and the terms “current value” and “present value” have
the meaning specified in section 3 of ERISA.

 

(iii)                               Each Issuer and its ERISA Affiliates have
not incurred withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are material in
relation to the business, operations, affairs, financial condition, assets,
properties, or prospects of the Company and its Subsidiaries taken as a whole.

 

(iv)                              The expected postretirement benefit obligation
(determined as of the last day of the Company’s most recently ended Fiscal Year
in accordance with Financial Accounting Standards Board Accounting Standards
Codification Topic 715-60, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the Issuers and
their Subsidiaries is not material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.

 

(v)                                 The execution and delivery of this Agreement
and the other Transaction Documents and the issuance and sale of the Notes will
be exempt from, or will not involve any transaction which is subject to, the
prohibitions of section 406 of ERISA and will not involve any transaction in
connection with which a penalty could be imposed under section 502(i) of ERISA
or a tax could be imposed pursuant to section 4975 of the Code.  The
representation by the Issuers in the next preceding sentence is made in reliance
upon and subject to the accuracy of each Purchaser’s representation in
paragraph 9B.

 

8K.                            Governmental Consent.  Neither the nature of any
Issuer or of any of its Subsidiaries, nor any of their respective businesses or
properties, nor any relationship between any Issuer or any of its Subsidiaries
and any other Person, nor any circumstance in connection with the offering,
issuance, sale or delivery of the Notes is such as to require any authorization,
consent, approval, exemption or other action by or notice to or filing with any
court or administrative or governmental body (other than routine filings after
the date of closing with the Securities and Exchange Commission and/or state
Blue Sky authorities and other than the filings and recordings necessary to
perfect the Liens in the Collateral intended to be created by the Collateral
Documents described on Schedule 8K hereto) in connection with the execution and
delivery of this Agreement or the other Transaction Documents, the offering,
issuance, sale or delivery of the Notes or fulfillment of or compliance with the
terms and provisions hereof, of the Notes or of the other Transaction Documents.

 

8L.                             Compliance with Environmental and Other Laws. 
Each Issuer and its Subsidiaries and all of their respective properties and
facilities have complied at all times and in

 

29

--------------------------------------------------------------------------------

 

all respects with all federal, state, local, foreign and regional statutes,
laws, ordinances and judicial or administrative orders, judgments, rulings and
regulations, including, without limitation, Environmental Laws, the USA PATRIOT
Act or any of the other laws and regulations that are referred to in paragraph
8R, except, in any such case, where failure to comply, individually or in the
aggregate, could not reasonably be expected to  result in a Material Adverse
Effect.

 

8M.                          Regulatory Status.  Neither any Issuer nor any of
its Subsidiaries is (i) an “investment company” or a company “controlled” by an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended, or an “investment adviser” within the meaning of the Investment
Advisers Act of 1940, as amended, (ii) a “holding company” or a “subsidiary
company” or an “affiliate” of a “holding company” or of a “subsidiary company”
of a “holding company”, within the meaning of the Public Utility Holding Company
Act of 2005, or (iii) a “public utility” within the meaning of the Federal Power
Act, as amended.  Neither any Issuer nor any its Subsidiaries is subject to
regulation as a “public utility” (or any analogous term) under any state or
local law or subject to regulation under the ICC Termination Act of 1995, as
amended.

 

8N.                             Permits and Other Operating Rights.  Each Issuer
and each of its Subsidiaries has all such valid and sufficient certificates of
convenience and necessity, franchises, licenses, permits, operating rights and
other authorizations from federal, state, foreign, regional, municipal and other
local regulatory bodies or administrative agencies or other governmental bodies
having jurisdiction over any Issuer or any of its Subsidiaries or any of its
properties, products or services as are necessary for the ownership, operation
and maintenance of its businesses and properties, as presently conducted and as
proposed to be conducted while the Notes are outstanding, subject to exceptions
and deficiencies which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect, and such certificates of
convenience and necessity, franchises, licenses, permits, operating rights and
other authorizations from federal, state, foreign, regional, municipal and other
local regulatory bodies or administrative agencies or other governmental bodies
having jurisdiction over any Issuer, any of its Subsidiaries or any of its
properties, products or services are free from restrictions or conditions which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, and neither any Issuer nor any of its Subsidiaries is
in violation of any thereof in any material respect.

 

8O.                            Rule 144A.  The Notes are not of the same class
as securities of any Issuer, if any, listed on a national securities exchange,
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system.

 

8P.                              Absence of Financing Statements, Etc.  Except
with respect to the Liens permitted by paragraph 6C hereof and Liens securing
the obligations of the Issuers under the Existing Credit Agreement, which liens
will be assigned to the Collateral Agent upon the date of closing, there is no
financing statement, security agreement, chattel mortgage, real estate mortgage
or other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present or
possible future Lien on, or security interest in, any assets or property of any
Issuer or any Subsidiary or any rights relating thereto.

 

30

--------------------------------------------------------------------------------

 

8Q.                            Establishment of Security Interest.  Schedule 8Q
hereto sets forth as of the date of closing a complete and accurate list of
(i) the name, jurisdiction of organization and organizational identification
number of each Issuer and each of its Subsidiaries, (ii) if any Issuer or any
Subsidiary is not a “registered organization” (as defined in the UCC) organized
under that law of a “State” (as defined in the UCC), the location of its place
of business (if it has only one place of business) or its chief executive office
(if it has more than one place of business), (iii) all real property owned or
leased by any Issuer or any of its Subsidiaries, and (iv) all patents,
trademarks, trade names, service marks, services names or copyrights owned or
licensed by any Issuer or any of its Subsidiaries.  As of the date hereof, all
filings, assignments, pledges and deposits of documents or instruments have been
made, and all other actions have been taken, that are necessary or advisable
under applicable law and are required to be made or taken on or prior to the
date of closing under the provisions of this Agreement and the other Transaction
Documents to create and perfect a security interest in the Collateral in favor
of the Collateral Agent to secure the Notes, the Issuers’ obligations under the
Credit Agreement, subject to no Liens other than Liens permitted under clauses
(ii), (iv) and (vi) of paragraph 6C.  The Collateral and the Collateral Agent’s
rights with respect to the Collateral are not subject to any setoff, claims,
withholdings or other defenses (except any such setoff, claim or defense which
could not, individually or in the aggregate, materially impair the rights of the
Collateral Agent with respect to the Collateral).  An Issuer or a Subsidiary is
the owner of the Collateral described in the Collateral Documents free from any
Lien, security interest, encumbrance and any other claim or demand, except for
Liens permitted under paragraph 6C.

 

8R.                             Foreign Assets Control Regulations, Etc.

 

(i)                                     Neither any Issuer nor any Controlled
Entity is (a) is a Blocked Person, (b) has been notified that its name appears
or may in the future appear on a State Sanctions List or (c) is a target of
sanctions that have been imposed by the United Nations or the European Union.

 

(ii)                                  Neither any Issuer nor any Controlled
Entity (a) has violated, been found in violation of, or been charged or
convicted under, any applicable U.S. Economic Sanctions Laws, Anti-Money
Laundering Laws or Anti-Corruption Laws or (b) to any Issuer’s knowledge, is
under investigation by any Governmental Authority for possible violation of any
U.S. Economic Sanctions Laws, Anti-Money Laundering Laws or Anti-Corruption
Laws.

 

(iii)                               No part of the proceeds from the sale of the
Notes hereunder:

 

(a)                                 constitutes or will constitute funds
obtained on behalf of any Blocked Person or will otherwise be used by any Issuer
or any Controlled Entity, directly or indirectly, (1) in connection with any
investment in, or any transactions or dealings with, any Blocked Person, (2) for
any purpose that would cause any Purchaser to be in violation of any U.S.
Economic Sanctions Laws or (3) otherwise in violation of any U.S. Economic
Sanctions Laws;

 

(b)                                 will be used, directly or indirectly, in
violation of, or cause any Purchaser to be in violation of, any applicable
Anti-Money Laundering Laws; or

 

31

--------------------------------------------------------------------------------

 

(c)                                  will be used, directly or indirectly, for
the purpose of making any improper payments, including bribes, to any
Governmental Official or commercial counterparty in order to obtain, retain or
direct business or obtain any improper advantage, in each case which would be in
violation of, or cause any Purchaser to be in violation of, any applicable
Anti-Corruption Laws.

 

(iv)                              Each Issuer has established procedures and
controls which it reasonably believes are adequate (and otherwise comply with
applicable law) to ensure that such Issuer and each Controlled Entity is and
will continue to be in compliance with all applicable U.S. Economic Sanctions
Laws, Anti-Money Laundering Laws and Anti-Corruption Laws.

 

8S.                               Environmental Matters.  The on-going
operations of each Issuer and each Subsidiary comply in all respects with all
Environmental Laws, except such non-compliance which could not (if enforced in
accordance with applicable law) reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect.  Each Issuer and
each Subsidiary has obtained, and maintained in good standing, all licenses,
permits, authorizations, registrations and other approvals required under any
Environmental Law and required for their respective ordinary course operations,
and for their reasonably anticipated future operations, and each Issuer and
Subsidiary is in compliance with all terms and conditions thereof, except where
the failure to do so could not reasonably be expected to result in material
liability to any Issuer or Subsidiary and could not reasonably be expected to
result, either individually or in the aggregate, in a Material Adverse Effect. 
Neither any Issuer nor any Subsidiary or any of their properties or operations
is subject to, or reasonably anticipates the issuance of, any written order from
or agreement with any Federal, state or local governmental authority, nor
subject to any judicial or docketed administrative or other proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous Materials. 
There are no Hazardous Materials or other conditions or circumstances existing
with respect to any property, arising from operations prior to the date of
closing, or relating to any waste disposal, of any Issuer or Subsidiary that
would reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.  Neither any Issuer nor any Subsidiary has any
underground storage tanks that are not properly registered or permitted under
applicable Environmental Laws or that at any time have released, leaked,
disposed of or otherwise discharged Hazardous Materials.

 

8T.                             Disclosure.  Neither this Agreement, any other
Transaction Document nor any other document, certificate or statement furnished
to any Purchaser by or on behalf of any Issuer in connection herewith or
therewith contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein and
therein not misleading.  There is no fact or facts  peculiar to any Issuer or
any of its Subsidiaries which materially adversely affects or in the future may
(so far as any Issuer can now  reasonably foresee), individually or in the
aggregate, reasonably be expected to materially adversely affect the business,
property or assets, or financial condition of such Issuer or any of its
Subsidiaries and which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to each Purchaser by or on
behalf of the Issuers prior to the date hereof in connection with the
transactions contemplated hereby.  Any financial projections delivered to any
Purchaser on or prior to the date hereof are reasonable based on the assumptions
stated therein and the best information available to the officers of the
Issuers.  The Issuers have delivered to the Purchasers a true, correct and
complete copies of the Existing Credit Agreement,

 

32

--------------------------------------------------------------------------------

 

each Subordinated Debt Document, each Subordination Agreement and all amendments
to each of the foregoing, in each case as in effect on the date of closing.

 

9.                                      REPRESENTATIONS OF EACH PURCHASER.  Each
Purchaser represents as follows:

 

9A.                             Nature of Purchase.  Such Purchaser is not
acquiring the Notes to be purchased by it hereunder with a view to or for sale
in connection with any distribution thereof within the meaning of the Securities
Act, provided that the disposition of such Purchaser’s property shall at all
times be and remain within its control.

 

9B.                             Source of Funds.  At least one of the following
statements is an accurate representation as to each source of funds (a “Source”)
to be used by such Purchaser to pay the purchase price of the Notes to be
purchased by such Purchaser hereunder:

 

(i)                                     the Source is an “insurance company
general account” (as that term is defined in the United States Department of
Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the
reserves and liabilities (as defined by the annual statement for life insurance
companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on
behalf of any employee benefit plan together with the amount of the reserves and
liabilities for the general account contract(s) held by or on behalf of any
other employee benefit plans maintained by the same employer (or affiliate
thereof as defined in PTE 95-60) or by the same employee organization in the
general account do not exceed 10% of the total reserves and liabilities of the
general account (exclusive of separate account liabilities) plus surplus as set
forth in the NAIC Annual Statement filed with such Purchaser’s state of
domicile; or

 

(ii)                                  the Source is a separate account that is
maintained solely in connection with such Purchaser’s fixed contractual
obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate
account (or to any participant or beneficiary of such plan (including any
annuitant)) are not affected in any manner by the investment performance of the
separate account; or

 

(iii)                               the Source is either (a) an insurance
company pooled separate account, within the meaning of PTE 90-1, or (b) a bank
collective investment fund, within the meaning of PTE 91-38 and, except as
disclosed by such Purchaser to the Company in writing pursuant to this clause
(iii), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment fund; or

 

(iv)                              the Source constitutes assets of an
“investment fund” (within the meaning of Part VI of PTE 84-14 (the “QPAM
Exemption”)) managed by a “qualified professional asset manager” or “QPAM”
(within the meaning of Part VI of the QPAM Exemption), no employee benefit
plan’s assets that are managed by the QPAM in such

 

33

--------------------------------------------------------------------------------

 

investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, represent more than 20% of
the total client assets managed by such QPAM, the conditions of Part I(c) and
(g) of the QPAM Exemption are satisfied, neither the QPAM nor a person
controlling or controlled by the QPAM maintains an ownership interest in the
Company that would cause the QPAM and the Company to be “related” within the
meaning of Part VI(h) of the QPAM Exemption and (i) the identity of such QPAM
and (ii) the names of any employee benefit plans whose assets in the investment
fund, when combined with the assets of all other employee benefit plans
established or maintained by the same employer or by an affiliate (within the
meaning of Part VI(c)(1) of the QPAM Exemption) of such employer or by the same
employee organization, represent 10% or more of the assets of such investment
fund, have been disclosed to the Company in writing pursuant to this clause
(iv); or

 

(v)                                 the Source constitutes assets of a “plan(s)”
(within the meaning of Part IV(h) of PTE 96-23 (the “INHAM Exemption”)) managed
by an “in-house asset manager” or “INHAM” (within the meaning of Part IV(a) of
the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM
Exemption are satisfied, neither the INHAM nor a person controlling or
controlled by the INHAM (applying the definition of “control” in
Part IV(d)(3) of the INHAM Exemption) owns a 10% or more interest in the Company
and (a) the identity of such INHAM and (b) the name(s) of the employee benefit
plan(s) whose assets constitute the Source have been disclosed to the Company in
writing pursuant to this clause (v); or

 

(vi)                              the Source is a governmental plan; or

 

(vii)                           the Source is one or more employee benefit
plans, or a separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in writing
pursuant to this clause (vii); or

 

(viii)                        the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.

 

As used in this paragraph 9B, the terms “employee benefit plan”, “governmental
plan”, and “separate account” shall have the respective meanings assigned to
such terms in Section 3 of ERISA.

 

10.                               DEFINITIONS; ACCOUNTING MATTERS.  For the
purpose of this Agreement, the terms defined in paragraphs 10A and 10B (or
within the text of any other paragraph) shall have the respective meanings
specified therein and all accounting matters shall be subject to determination
as provided in paragraph 10C.

 

10A.                      Yield-Maintenance Terms.

 

“Called Principal” shall mean, with respect to any Note, the principal of such
Note that is to be prepaid pursuant to paragraph 4A(2) or 4B or is declared to
be or otherwise becomes due and payable pursuant to paragraph 7A, as the context
requires.

 

34

--------------------------------------------------------------------------------

 

“Discounted Value” shall mean, with respect to the Called Principal of any Note,
the amount obtained by discounting all Remaining Scheduled Payments with respect
to such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (as converted to reflect
the periodic basis on which interest on such Note is payable, if interest is
payable other than on a semi-annual basis) equal to the Reinvestment Yield with
respect to such Called Principal.

 

“Reinvestment Yield” shall mean, with respect to the Called Principal of any
Note, 1.00% over the yield to maturity implied by (i) the ask-side yields
reported as of 10:00 a.m. (New York City local time) on the Business Day next
preceding the Settlement Date with respect to such Called Principal for the most
recent actively traded on the run U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date on the display designated as “Page PX1” on Bloomberg Financial
Markets (or such other display as may replace Page PX1 on Bloomberg Financial
Markets or, if Bloomberg Financial Markets shall cease to report such yields or
shall cease to be Prudential Capital Group’s customary source of information for
calculating yield-maintenance amounts on privately placed notes, then such
source as is then Prudential Capital Group’s customary source of such
information), or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable (including by way
of interpolation), the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (or any comparable
successor publication) for U.S. Treasury securities having a constant maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date.  In the case of each determination under clause (i) or (ii) of
the preceding sentence, such implied yield shall be determined, if necessary, by
(a) converting U.S. Treasury bill quotations to bond equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the applicable U.S. Treasury security with the maturity closest to
and greater than such Remaining Average Life and (2) the applicable U.S.
Treasury security with the maturity closest to and less than such Remaining
Average Life.  The Reinvestment Yield shall be rounded to that number of decimal
places as appears in the coupon of the applicable Note.

 

“Remaining Average Life” shall mean, with respect to the Called Principal of any
Note, the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products obtained
by multiplying (a) each Remaining Scheduled Payment of such Called Principal
(but not of interest thereon) by (b) the number of years (calculated to the
nearest one-twelfth year) which will elapse between the Settlement Date with
respect to such Called Principal and the scheduled due date of such Remaining
Scheduled Payment.

 

“Remaining Scheduled Payments” shall mean, with respect to the Called Principal
of any Note, all payments of such Called Principal and interest thereon that
would be due on or after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date.

 

35

--------------------------------------------------------------------------------

 

“Settlement Date” shall mean, with respect to the Called Principal of any Note,
the date on which such Called Principal is to be prepaid pursuant to
paragraph 4A(2) or 4B or is declared to be or otherwise becomes due and payable
pursuant to paragraph 7A, as the context requires.

 

“Yield-Maintenance Amount” shall mean, with respect to any Note, an amount equal
to the excess, if any, of the Discounted Value of the Called Principal of such
Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on) the Settlement Date with respect to
such Called Principal.  The Yield-Maintenance Amount shall in no event be less
than zero.

 

10B.                      Other Terms.

 

“Acquisition” shall mean any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of all or substantially
all of any business or division of a Person, (b) the acquisition of all or any
portion of the Capital Securities of any Person, (c) a merger or consolidation
or any other combination with another Person (other than a Person that is
already a Subsidiary), or (d) any other Investment in a Person; provided,
however, that an Investment in publicly-traded securities of a Person shall not
constitute an Acquisition so long as such Investment does not result in (i) the
acquisition of all or substantially all of the assets or Capital Securities of
such Person, or (ii) a merger, consolidation or other combination with such
Person.

 

“Additional Covenant” shall mean any affirmative or negative covenant or similar
restriction applicable to any Issuer or any Subsidiary of any Issuer (regardless
of whether such provision is labeled or otherwise characterized as a covenant),
including any defined terms as used therein, the subject matter of which either
(i) is similar to that of any covenant in paragraph 5 or 6 of this Agreement, or
related definitions in this paragraph 10B, but contains one or more percentages,
amounts, formulas or other provisions that are more restrictive as to any Issuer
or any Subsidiary of any Issuer or more beneficial to the holder or holders of
the Debt to which the document containing such covenant or similar restriction
relates than as set forth herein (and such covenant or similar restriction shall
be deemed an Additional Covenant only to the extent that it is more restrictive
or more beneficial) or (ii) is different from the subject matter of any covenant
in paragraph 5 or 6 of this Agreement, or the related definitions in this
paragraph 10B.

 

“Additional Default” shall mean any provision contained in any Primary Bank
Facility, including any defined terms as used therein, which permits the holder
or holders of any Debt thereunder or any agent or trustee for such holder to
accelerate (with the passage of time or giving of notice or both) the maturity
thereof or otherwise require any Issuer or any Subsidiary of any Issuer to
purchase such Debt prior to the stated maturity thereof (or automatically causes
such Debt to so accelerate or be required to be purchased) and which either
(i) is similar to any Default or Event of Default contained in paragraph 7A of
this Agreement, or related definitions in this paragraph 10B, but contains one
or more percentages, amounts, formulas or other provisions that are more
restrictive as any Issuer or any Subsidiary of any Issuer, have a shorter grace
period or are more beneficial to the holders of such Debt than as set forth
herein (and such provision shall be deemed an Additional Default only to the
extent that it is more restrictive, has

 

36

--------------------------------------------------------------------------------

 

a shorter grace period or is more beneficial) or (ii) is different from the
subject matter of any Default or Event of Default contained in paragraph 7A of
this Agreement, or the related definitions in this paragraph 10B.

 

“Affiliate” shall mean (i) with respect to any Person, (a) any other Person
directly or indirectly Controlling, Controlled by, or under direct or indirect
common Control with, such first Person, or (b) any officer or director of such
Person and (ii) with respect to Prudential, shall include any managed account,
investment fund or other vehicle for which Prudential or any Affiliate of
Prudential then acts as investment advisor or portfolio manager.

 

“Anti-Corruption Laws” shall mean any law or regulation in a U.S. or any
non-U.S. jurisdiction regarding bribery or any other corrupt activity, including
the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act 2010.

 

“Anti-Money Laundering Laws” shall mean any law or regulation in a U.S. or any
non-U.S. jurisdiction regarding money laundering, drug trafficking,
terrorist-related activities or other money laundering predicate crimes,
including the Currency and Foreign Transactions Reporting Act of 1970 (otherwise
known as the Bank Secrecy Act), the USA PATRIOT Act.

 

“Asset Disposition” shall mean the sale, lease, assignment or other transfer for
value (each, a “Disposition”) by the Company or any of its Subsidiaries to any
Person (other than the Company or a Subsidiary) of any asset or right of the
Company or such Subsidiary (including, the loss, destruction or damage of any
thereof or any actual or threatened (in writing to the Company or any
Subsidiary) condemnation, confiscation, requisition, seizure or taking thereof)
other than (i) the Disposition of any asset which is to be replaced, and is in
fact replaced, within 30 days with another asset performing the same or a
similar function and (ii) the sale or lease of inventory in the ordinary course
of business.

 

“Bank Agent” shall mean The Private Bank and Trust Company as agent for the
Banks under the Credit Agreement, and its successors and assigns in that
capacity.

 

“Banks” shall mean The Private Bank and Trust Company, BMO Harris Bank N.A., and
each other lender from time to time party to the Credit Agreement, and their
respective successors and assigns.

 

“Bankruptcy Law” shall have the meaning given in clause (viii) of paragraph 7A.

 

“Blocked Person” shall mean (i) a Person whose name appears on the list of
Specially Designated Nationals and Blocked Persons published by OFAC, (ii) a
Person, entity, organization, country or regime that is blocked or a target of
sanctions that have been imposed under U.S. Economic Sanctions Laws or (iii) a
Person that is an agent, department or instrumentality of, or is otherwise
beneficially owned by, controlled by or acting on behalf of, directly or
indirectly, any Person, entity, organization, country or regime described in
clause (i) or (ii).

 

37

--------------------------------------------------------------------------------

 

“Business Day” shall mean any day other than a Saturday, a Sunday or a day on
which commercial banks in New York City are required or authorized to be closed.

 

“Capital Expenditures” shall mean all expenditures which, in accordance with
GAAP, would be required to be capitalized and shown on the consolidated balance
sheet of the Company, including expenditures in respect of Capital Leases, but
excluding expenditures made in connection with the replacement, substitution or
restoration of assets to the extent financed (a) from insurance proceeds (or
other similar recoveries) paid on account of the loss of or damage to the assets
being replaced or restored or (b) with awards of compensation arising from the
taking by eminent domain or condemnation of the assets being replaced.

 

“Capital Lease” shall mean with respect to any Person, any lease of (or other
agreement conveying the right to use) any real or personal property by such
Person that, in conformity with GAAP, is accounted for as a capital lease on the
balance sheet of such Person.

 

“Capital Securities” shall mean with respect to any Person, all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person’s capital, whether now outstanding or
issued or acquired after the date of closing, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.

 

“Capitalized Lease Obligation” shall mean as to any Person, all rental
obligations of such Person, as lessee under a Capital Lease which are or will be
required to be capitalized on the books of such Person.

 

“Change of Control” shall mean the occurrence of any of the following events: 
(i) any Person or two or more Persons acting in concert acquiring beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly,
of Capital Securities of the Company representing 50% or more of the combined
voting power of all Capital Securities of the Company entitled to vote in the
election of directors; (ii) any Person or two or more Persons acting in concert
acquiring by contract or otherwise, or entering into a contract or arrangement
which upon consummation will result in its or their acquisition of, control over
Capital Securities of the Company representing 50% or more of the combined
voting power of all Capital Securities of the Company entitled to vote in the
election of directors; or (iii) the Company shall cease to, directly or
indirectly, own and control 100% of each class of the outstanding Capital
Securities of each Subsidiary.

 

“CISADA” shall mean the Comprehensive Iran Sanctions Accountability and
Divestment Act.

 

“closing” or “date of closing” shall have the meaning given in paragraph 2
hereof.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

38

--------------------------------------------------------------------------------

 

“Collateral” shall mean all accounts, accounts receivable, inventory, machinery,
equipment, general intangibles, real estate, fixtures and all other tangible or
intangible property, real, personal or mixed, of any Issuer or any of its
Subsidiaries, whether now owned or hereafter acquired and whether now or
hereafter existing.

 

“Collateral Access Agreement” shall mean an agreement in form and substance
reasonably satisfactory to Required Holder(s) pursuant to which a mortgagee or
lessor of real property on which collateral is stored or otherwise located, or a
warehouseman, processor or other bailee of Inventory or other property owned by
any Issuer or any Guarantor, acknowledges the Liens of the Collateral Agent and
waives any Liens held by such Person on such property, and, in the case of any
such agreement with a mortgagee or lessor, permits the Collateral Agent
reasonable access to and use of such real property following the occurrence and
during the continuance of an Event of Default to assemble, complete and sell any
collateral stored or otherwise located thereon, or any one or more of them.

 

“Collateral Agent” shall mean The Private Bank and Trust Company, in its
capacity as collateral agent under the Intercreditor Agreement, and its
successor and assigns in that capacity.

 

“Collateral Documents” shall mean the Security Agreements, the Pledge
Agreements, any Control Agreement, any Collateral Access Agreements and any
other agreement, document or instrument in effect on the date of closing or
executed by any Issuer or any Guarantor after the date of closing under which
any Issuer or any Guarantor has granted a lien upon or security interest in any
property or assets to the Collateral Agent to secure all or any part of the
obligations of the Issuers under this Agreement or the Notes or of any Guarantor
under any Guaranty Agreement, and all financing statements, certificates,
documents and instruments relating thereto or executed or provided in connection
therewith, each as amended, restated, supplemented or otherwise modified from
time to time.

 

“Contingent Liability” shall mean with respect to any Person, each obligation
and liability of such Person and all such obligations and liabilities of such
Person incurred pursuant to any agreement, undertaking or arrangement by which
such Person:  (i) guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
dividend, obligation or other liability of any other Person in any manner (other
than by endorsement of instruments in the course of collection), including any
indebtedness, dividend or other obligation which may be issued or incurred at
some future time; (ii) guarantees the payment of dividends or other
distributions upon the Capital Securities of any other Person; (c) undertakes or
agrees (whether contingently or otherwise):  (i) to purchase, repurchase, or
otherwise acquire any indebtedness, obligation or liability of any other Person
or any or any property or assets constituting security therefor, (ii) to advance
or provide funds for the payment or discharge of any indebtedness, obligation or
liability of any other Person (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain solvency, assets,
level of income, working capital or other financial condition of any other
Person, or (iii) to make payment to any other Person other than for value
received; (d) agrees to lease property or to purchase securities, property or
services from such other Person with the purpose or intent of assuring the owner
of

 

39

--------------------------------------------------------------------------------

 

such indebtedness or obligation of the ability of such other Person to make
payment of the indebtedness or obligation; (e) to induce the issuance of, or in
connection with the issuance of, any letter of credit for the benefit of such
other Person; or (f) undertakes or agrees otherwise to assure a creditor against
loss.  The amount of any Contingent Liability shall (subject to any limitation
set forth herein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the indebtedness, obligation or other
liability guaranteed or supported thereby.

 

“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.  A
person shall be deemed to be “controlled by” any other Person if such other
Person possesses, directly or indirectly, power to vote 5% or more of the
securities (on a fully diluted basis) having ordinary voting power for the
election of directors or managers of such Person.  “Controlling” and
“Controlled” shall have the meanings correlative thereto.

 

“Control Agreement” shall mean an account control agreement, in form and
substance satisfactory to Required Holder(s), among the Collateral Agent, the
applicable Issuer or Guarantor and the depository or securities intermediary for
any deposit, checking or brokerage account opened or maintained by an Issuer or
Guarantor.

 

“Controlled Entity” shall mean (i) any of the Subsidiaries of any Issuer and any
of their or any Issuers’ respective Controlled Affiliates and (ii) if any Issuer
has a parent company, such parent company and its Controlled Affiliates.

 

“Controlled Group” shall mean all members of a controlled group of corporations,
all members of a controlled group of trades or businesses (whether or not
incorporated) under common control and all members of an affiliated service
group which, together with the Company or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code or Section 4001 of ERISA.

 

“Credit Agreement” shall mean the Existing Credit Agreement, as amended by the
amendment thereto contemplated by paragraph 3H, and as further amended,
restated, supplemented or otherwise modified from time to time.

 

“Debt” shall mean with respect to any Person, without duplication, (i) all
indebtedness of such Person, (ii) all borrowed money of such Person, whether or
not evidenced by bonds, debentures, notes or similar instruments, (iii) all
obligations of such Person as lessee under Capital Leases which have been or
should be recorded as liabilities on a balance sheet of such Person in
accordance with GAAP, not including obligations of an Issuer or a Guarantor
under non-recourse discounted leases, (iv) all obligations of such Person to pay
the deferred purchase price of property or services (excluding trade accounts
payable in the ordinary course of business), (v) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness shall have
been assumed by such Person; provided that if such Person has not assumed or
otherwise become liable for such indebtedness, such indebtedness shall be
measured at the fair market value of such property securing such indebtedness at
the time of determination, (vi) all obligations, contingent or otherwise, with
respect to the face amount of all

 

40

--------------------------------------------------------------------------------

 

letters of credit (whether or not drawn), bankers’ acceptances and similar
obligations issued for the account of such Person, (vii) all Hedging Obligations
of such Person, (viii) all Contingent Liabilities of such Person and (ix) all
Debt of any partnership of which such Person is a general partner.

 

“Default” shall mean any of the events specified in paragraph 7A, whether or not
any requirement for such event to become an Event of Default has been satisfied.

 

“Default Rate” shall mean, with respect to any Note, a rate per annum from time
to time equal to the lesser of (i) the maximum rate permitted by applicable law,
and (ii) the greater of (a) 7.50%, or (b) 2.00% over the rate of interest
publicly announced by JPMorgan Chase Bank, National Association, from time to
time in New York City as its Prime Rate.

 

“Depreciation” shall mean the total amounts added to depreciation, amortization,
obsolescence, valuation and other proper reserves, as reflected on the Company’s
financial statements and determined in accordance with GAAP.

 

“EBITDA” shall mean for any period, the Company’s and the Subsidiaries’ “Income
from Operations” (as set forth on their consolidated income statement) plus
leasing related cash interest expense, plus Depreciation, plus amortization,
plus compensation expense related to the granting of stock options.

 

“Environmental Claims” shall mean all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental Law, or
for release or injury to the environment.

 

“Environmental Laws” shall mean any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to Hazardous Materials.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“ERISA Affiliate” shall mean any member of the same Controlled Group of any
Issuer.

 

“Event of Default” shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

“Existing Credit Agreement” shall mean the Credit Agreement, dated as of
July 13, 2010, among the Issuers, the Bank Agent and the Banks, as amended by
Amendment

 

41

--------------------------------------------------------------------------------

 

No. 1 thereto, dated as of January 30, 2012, Amendment No. 2 thereto, dated as
of February 29, 2012, and Amendment No. 3 thereto, dated as of
February 21, 2014.

 

“Fiscal Quarter” shall mean a fiscal quarter of a Fiscal Year.

 

“Fiscal Year” shall mean the fiscal year of the Company and its Subsidiaries,
which period shall be the 12-month period ending on the last Saturday of each
year.  References to a Fiscal Year with a number corresponding to any calendar
year (e.g., “Fiscal Year 2015”) refer to the Fiscal Year ending on the last
Saturday of such calendar year.

 

“Fixed Charge Coverage Ratio” shall mean as of any date of determination and
calculated for a trailing twelve month period ending on such date of
determination, the ratio of (a) the total EBITDA of the Company and its
Subsidiaries for such period, minus (i) the sum of income taxes paid in cash by
the Company and its Subsidiaries in such period, (ii) the sum of all Capital
Expenditures made by the Company and its Subsidiaries in such period, and
(iii) the sum of all dividends and distributions made by the Company and its
Subsidiaries in such period, divided by (b) the sum for such period of (i) cash
interest expense plus (ii) all scheduled payments of principal on Debt
(excluding, for the avoidance of doubt, any payment pursuant to Section 6 of the
Credit Agreement).

 

“GAAP” or “generally accepted accounting principles” shall have the meaning
given in paragraph 10C.

 

“Governmental Authority” shall mean

 

(a)                                 the government of

 

(i)                                     the United States of America or any
state or other political subdivision thereof, or

 

(ii)                                  any other jurisdiction in which the
Company or any Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any Subsidiary, or

 

(b)                                 any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, any such government.

 

“Governmental Official” shall mean any governmental official or employee,
employee of any government-owned or government-controlled entity, political
party, any official of a political party, candidate for political office,
official of any public international organization or anyone else acting in an
official capacity.

 

“Grow Biz” shall have the meaning given in the introductory paragraph of this
Agreement.

 

“Guarantor” shall mean each other Person which may from time to time execute a
Guaranty Agreement.

 

42

--------------------------------------------------------------------------------

 

“Guaranty Agreement” and “Guaranty Agreements” shall have the meaning given in
paragraph 5J hereof.

 

“Hazardous Materials” shall mean any and all pollutants, toxic or hazardous
wastes or other substances that might pose a hazard to health and safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage or filtration of which is
or shall be restricted, prohibited or penalized by any applicable law including,
but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar
restricted, prohibited or penalized substances.

 

“Hedging Agreement” shall mean any interest rate, currency or commodity swap
agreement, cap agreement or collar agreement, and any other agreement or
arrangement designed to protect a Person against fluctuations in interest rates,
currency exchange rates or commodity prices.

 

“Hedging Obligation” shall mean with respect to any Person, any liability of
such Person under any Hedging Agreement.  The amount of any Person’s obligation
in respect of any Hedging Obligation shall be deemed to be the incremental
obligation that would be reflected in the financial statements of such Person in
accordance with GAAP.

 

“including” shall mean, unless the context clearly requires otherwise,
“including without limitation”, whether or not so stated.

 

“Issuers” shall have the meaning given in the introductory paragraph to this
Agreement.

 

“Institutional Investor” shall mean any insurance company, commercial,
investment or merchant bank, finance company, mutual fund, registered money or
asset manager, savings and loan association, credit union, registered investment
advisor, pension fund, investment company, licensed broker or dealer, “qualified
institutional buyer” (as such term is defined under Rule 144A promulgated under
the Securities Act) or “accredited investor” (as such term is defined in
Regulation D promulgated under the Securities Act).

 

“Intercreditor Agreement” shall have the meaning given in
paragraph 3A(ii) hereof.

 

“Investment” shall mean with respect to any Person, any investment in another
Person, whether by acquisition of any Capital Security, by making any loan or
advance, or by making an Acquisition.

 

“Leverage Ratio” shall mean as of any date of determination, the ratio of
(i) Debt of the Company and its Subsidiaries on such date minus consolidated
Subordinated Debt of the Company and its Subsidiaries on such date minus
non-recourse Debt of the Company and its Subsidiaries on such date in connection
with discounting activities of the Company and its Subsidiaries divided by
(ii) EBITDA of the Company and its Subsidiaries for the trailing twelve month
period ending on such date.

 

43

--------------------------------------------------------------------------------

 

“Lien” shall mean any mortgage, pledge, security interest, encumbrance, minimum
or compensating balance arrangement, lien (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, any lease in the nature thereof
(including Capital Leases), and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction), or any other
type of preferential arrangement for the purpose, or having the effect, of
protecting a creditor against loss or securing the payment or performance of an
obligation.

 

“Material Adverse Effect” shall mean a (i) material adverse change in, or a
material adverse effect upon, the financial condition, operations, assets,
business, properties or prospects of the Issuers taken as a whole, (ii) material
impairment of the ability of any Issuer or Guarantor to perform any of its
respective obligations under this Agreement the Notes or any other Transaction
Document or (iii) material adverse effect upon any substantial portion of the
collateral under the Collateral Documents or upon the legality, validity,
binding effect or enforceability against any Issuer or Guarantor of this
Agreement, the Notes or any other Transaction Document.

 

“Multiemployer Plan” shall mean any Plan which is a “multiemployer plan” (as
such term is defined in section 4001(a)(3) of ERISA).

 

“Net Cash Proceeds” shall mean, with respect to any Asset Disposition, the
aggregate cash proceeds (including cash proceeds received pursuant to policies
of insurance or by way of deferred payment of principal pursuant to a note,
installment receivable or otherwise, but only as and when received) received by
the Company or any Subsidiary pursuant to such Asset Disposition net of (i) the
direct costs relating to such sale, transfer or other disposition (including
sales commissions and legal, accounting and investment banking fees), (ii) taxes
paid or reasonably estimated by the Company and its Subsidiaries to be payable
as a result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements) and (iii) amounts required to be
applied to the repayment of any Debt secured by a Lien on the asset subject to
such Asset Disposition (other than the Senior Indebtedness (as defined in the
Intercreditor Agreement)).

 

“Noteholder Portion” shall mean, with respect to any event giving rise to an
offer to prepay pursuant to paragraph 4E, a percentage expressed as a fraction,
the numerator of which equals the aggregate outstanding principal amount of the
Notes on the date of such event and the denominator of which equals the sum of
the aggregate outstanding principal amount of the Notes on such date plus the
aggregate principal amount of the Debt outstanding under the Credit Agreement on
such date.

 

“Notes” shall have the meaning given in paragraph 1 hereof.

 

“OFAC” shall mean Office of Foreign Assets Control, United States Department of
the Treasury.

 

“OFAC Sanctions Program” shall mean any economic or trade sanction that OFAC is
responsible for administering and enforcing.  A list of OFAC Sanctions Programs
may be found at
http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx.

 

44

--------------------------------------------------------------------------------

 

“Officer’s Certificate” shall mean a certificate signed in the name of an Issuer
by its President, one of its Vice Presidents or its Treasurer.

 

“Operating Lease” shall mean any lease of (or other agreement conveying the
right to use) any real or personal property by the Company or any of its
Subsidiaries, as lessee, other than any Capital Lease.

 

“PBGC” shall mean the Pension Benefit Guaranty Corporation, or any successor or
replacement entity thereto under ERISA.

 

“Pension Plan” shall mean a “pension plan”, as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA or the minimum
funding standards of ERISA (other than a Multiemployer Pension Plan), and as to
which the Company or any member of the Controlled Group may have any liability,
including any liability by reason of having been a substantial employer within
the meaning of Section 4063 of ERISA at any time during the preceding five
years, or by reason of being deemed to be a contributing sponsor under
Section 4069 of ERISA.

 

“Person” shall mean and include an individual, a partnership, a joint venture, a
corporation, a trust, a limited liability company, an unincorporated
organization and a government or any department or agency thereof.

 

“Pledge Agreement” and “Pledge Agreements” shall have the meaning given in
paragraph 3A(iv) hereof.

 

“Primary Bank Facility” shall mean (i) the Credit Agreement or (ii) any credit
facility that replaces or refinances the Credit Agreement or any other Primary
Bank Facility.

 

“Prudential” shall mean The Prudential Insurance Company of America.

 

“Purchasers” shall have the meaning given in the introductory paragraph hereof.

 

“Required Holder(s)” shall mean the holder or holders of more than 50% of the
aggregate principal amount of the Notes from time to time outstanding.

 

“Responsible Officer” of any Issuer shall mean the chief executive officer,
chief operating officer, chief financial officer or chief accounting officer of
such Issuer or any other officer of such Issuer involved principally in its
financial administration or its controllership function.

 

“Securities Act” shall mean the Securities Act of 1933, as amended.

 

“Security Agreement” and “Security Agreements” shall have the meaning given in
paragraph 3A(iii) hereof.

 

“Significant Holder” shall mean (i) each Purchaser, so long as such Purchaser or
any of its Affiliates shall hold (or be committed under this Agreement to
purchase) any Note, or

 

45

--------------------------------------------------------------------------------

 

(ii) any other Person which, together with its Affiliates, is the holder of at
least 5% of the aggregate principal amount of the Notes from time to time
outstanding.

 

“State Sanctions List” shall mean a list that is adopted by any state
Governmental Authority within the United States of America pertaining to Persons
that engage in investment or other commercial activities in Iran or any other
country that is a target of economic sanctions imposed under U.S. Economic
Sanctions Laws.

 

“Subordinated Debt” shall mean any unsecured Debt of the Company which has
subordination terms, covenants, pricing and other terms which have been approved
in writing by the Required Holder(s).

 

“Subordinated Debt Documents” shall mean all documents and instruments relating
to the Subordinated Debt and all amendments and modifications thereof approved
by the Required Holder(s).

 

“Subordination Agreements” shall mean the provisions of all subordination
agreements executed by a holder of Subordinated Debt in favor of the holders of
the Notes, from time to time after the date of closing.

 

“Subsidiary” shall mean, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries or such
Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in profits or capital thereof is owned by such Person or one
or more of its Subsidiaries or such Person and one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major business actions
without the approval of such Person or one or more of its Subsidiaries).  Unless
the context otherwise clearly requires, any reference to a “Subsidiary” is a
reference to a Subsidiary of the Company.

 

“Tangible Net Worth” shall mean as of any date of determination, the sum of the
amounts set forth on the balance sheet of the Company and the Subsidiaries as
total shareholder equity of the Company and the Subsidiaries, plus any
Subordinated Debt, minus the book value of all intangible assets of the Company
and the Subsidiaries (including all such items as goodwill, trade names, service
marks, copyrights, patents, licenses, deferred items, unamortized debt discount,
prepaid expenses and any other items deemed intangible by the Required
Holder(s)), minus Investments in non-public companies net of cash dividends
received in respect of such Investments.

 

“Total Plan Liability” shall mean at any time, the present value of all vested
and unvested accrued benefits under all Pension Plans, determined as of the then
most recent valuation date for each Pension Plan, using PBGC actuarial
assumptions for single employer plan terminations.

 

“Transaction Documents” shall mean this Agreement, the Notes, the Intercreditor
Agreement, the Issuers’ Acknowledgment to Intercreditor Agreement, the Guaranty
Agreements, the Collateral Documents and the other agreements, documents,
certificates and

 

46

--------------------------------------------------------------------------------

 

instruments now or hereafter executed or delivered by any Issuer, any Guarantor
or any Subsidiary or Affiliate of any Issuer or any Guarantor in connection with
this Agreement.

 

“Transferee” shall mean any direct or indirect transferee of all or any part of
any Note purchased by any Purchaser under this Agreement.

 

“2015 Tender Offer” shall mean a tender offer for shares of the Company’s common
stock, with the aggregate tender offer price funded with a combination of cash,
the proceeds of the Notes and borrowings under the Credit Agreement in an
aggregate purchase amount not to exceed $75,000,000 pursuant to the terms of the
offer to purchase for cash dated April 15, 2015 and filed with the Securities
and Exchange Commission; provided that immediately after giving effect the
purchase of common stock pursuant to such tender offer, (i) no Default or Event
of Default shall have occurred and be continuing, (ii) the Tangible Net Worth of
the Company and its Subsidiaries is not less than $5,000,000 and (iii) the
Company would be entitled to borrow at least $4,000,000 in revolving loans under
the Credit Agreement.

 

“UCC” shall mean the Uniform Commercial Code as in effect in the State of
Illinois.

 

“Unfunded Liability” shall mean the amount (if any) by which the present value
of all vested and unvested accrued benefits under all Pension Plans exceeds the
fair market value of all assets allocable to those benefits, all determined as
of the then most recent valuation date for each Pension Plan, using PBGC
actuarial assumptions for single employer plan terminations.

 

“USA PATRIOT Act” shall mean United States Public Law 107-56, Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time in
effect.

 

“U.S. Economic Sanctions Laws” shall mean those laws, executive orders, enabling
legislation or regulations administered and enforced by the United States
pursuant to which economic sanctions have been imposed on any Person, entity,
organization, country or regime, including the Trading with the Enemy Act, the
International Emergency Economic Powers Act, the Iran Sanctions Act, the Sudan
Accountability and Divestment Act and any other OFAC Sanctions Program.

 

“Voting Stock” shall mean, with respect to any corporation, any shares of stock
of such corporation whose holders are entitled under ordinary circumstances to
vote for the election of directors of such corporation (irrespective of whether
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).

 

“Wholly-Owned Subsidiary” shall mean any Subsidiary of the Company all of the
outstanding capital stock or other equity interests of every class of which is
owned by the Company or another Wholly-Owned Subsidiary of the Company, and
which has outstanding no options, warrants, rights or other securities entitling
the holder thereof (other than the Company or a Wholly-Owned Subsidiary) to
acquire shares of capital stock or other equity interests of such Subsidiary.

 

47

--------------------------------------------------------------------------------

 

“Winmark Capital” shall have the meaning given in the introductory paragraph of
this Agreement.

 

“Wirth” shall have the meaning given in the introductory paragraph of this
Agreement.

 

10C.                      Accounting and Legal Principles, Terms and
Determinations.  All references in this Agreement to “GAAP” or “generally
accepted accounting principles” shall be deemed to refer to generally accepted
accounting principles in effect in the United States at the time of application
thereof. Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to accounting matters
hereunder shall be made, and all unaudited financial statements and certificates
and reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles, applied
on a basis consistent with the most recent audited consolidated financial
statements of the Company and its Subsidiaries delivered pursuant to clause
(iii) of paragraph 5A or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of paragraph 8B;
provided that if the Company notifies the holders of the Note that the Company
(or any other Issuer) wishes to amend any covenant in paragraph 6 (or any
related definition) to eliminate or to take into account the effect of any
change in GAAP on the operation of such covenant (or if the Required
Holder(s) notify the Company that the Required Holder(s) wish to amend paragraph
6 (or any related definition) for such purpose), then the Issuers’ compliance
with such covenant shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either
such notice is withdrawn or such covenant (or related definition) is amended in
a manner satisfactory to the Company and the Required Holder(s) and the Company
shall provide to the holders of the Notes financial statements and any other
documents required under this Agreement or as reasonably requested hereunder
setting forth a reconciliation between calculations of such ratio or requirement
made before and after giving effect to such change in GAAP.  Any reference
herein to any specific citation, section or form of law, statute, rule or
regulation shall refer to such new, replacement or analogous citation,
section or form should such citation, section or form be modified, amended or
replaced.  For purposes of determining compliance with this Agreement
(including, without limitation, Article 5, Article 6 and the definition of
“Debt”), any election by the Company to measure any financial liability using
fair value (as permitted by Financial Accounting Standards Board Accounting
Standards Codification Topic No. 825-10-25 — Fair Value Option, International
Accounting Standard 39 — Financial Instruments: Recognition and Measurement or
any similar accounting standard) shall be disregarded and such determination
shall be made as if such election had not been made.

 

11.                               MISCELLANEOUS.

 

11A.                      Note Payments.  Each Issuer agrees that, so long as
any Purchaser shall hold any Note, it will make payments of principal of,
interest on and any Yield-Maintenance Amount payable with respect to such Note,
and any other amounts becoming due hereunder or under any other Transaction
Document, which comply with the terms of this Agreement, by wire transfer of
immediately available funds for credit (not later than 12:00 noon, New York City
time, on the date due) to such Purchaser’s account or accounts as specified in
the Purchaser Schedule attached hereto, or such other account or accounts in the
United States as such Purchaser may

 

48

--------------------------------------------------------------------------------

 

from time to time designate in writing, notwithstanding any contrary provision
herein or in any Note with respect to the place of payment.  Each Purchaser
agrees that, before disposing of any Note, such Purchaser will make a notation
thereon (or on a schedule attached thereto) of all principal payments previously
made thereon and of the date to which interest thereon has been paid.  Each
Issuer agrees to afford the benefits of this paragraph 11A to any Transferee
which shall have made the same agreement as each Purchaser has made in this
paragraph 11A.  No holder shall be required to present or surrender any Note or
make any notation thereon, except that upon the written request of the Company
made concurrently with or reasonably promptly after the payment or prepayment in
full of any Note, the applicable holder shall surrender such Note for
cancellation, reasonably promptly after such request, to the Company at its
principal office.

 

11B.                      Expenses.  Whether or not the transactions
contemplated hereby shall be consummated, each Issuer jointly and severally
agrees to pay, and save each Purchaser and any Transferee harmless against
liability for the payment of, all out-of-pocket expenses arising in connection
with such transactions, including:

 

(i)                                     (a) all stamp and documentary taxes and
similar charges, (b) costs of obtaining a private placement number from Standard
and Poor’s Ratings Group for the Notes and (c) fees and expenses of brokers,
agents, dealers, investment banks or other intermediaries or placement agents,
in each case as a result of the execution and delivery of this Agreement or the
other Transaction Documents or the issuance of the Notes;

 

(ii)                                  document production and duplication
charges and the reasonable fees and expenses of any special counsel engaged by
such Purchaser or such Transferee in connection with (a) this Agreement, any of
the other Transaction Documents and the transactions contemplated hereby or
thereby and (b) any subsequent proposed waiver, amendment or modification of, or
proposed consent under, this Agreement or any other Transaction Document,
whether or not such proposed waiver, amendment, modification or consent shall be
effected or granted;

 

(iii)                               the costs and expenses, including attorneys’
and financial advisory fees, incurred by such Purchaser or such Transferee in
enforcing (or determining whether or how to enforce or cause the Collateral
Agent to enforce) any rights under this Agreement, the Notes or any other
Transaction Document (including, without limitation, to protect, collect, lease,
sell, take possession of, release or liquidate any of the Collateral) or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or any other Transaction
Document or the transactions contemplated hereby or thereby or by reason of your
or such Transferee’s having acquired any Note, including without limitation
costs and expenses incurred in any workout, restructuring or renegotiation
proceeding or bankruptcy case;

 

(iv)                              all costs and expenses, including without
limitation reasonable attorneys’ fees, of preparing, recording and filing all
financing statements, instruments and other documents to create, perfect and
fully preserve and protect the Liens granted in the Collateral Documents and the
rights of the holders of the Notes or of the Collateral Agent for the benefit of
the holders of the Notes; and

 

49

--------------------------------------------------------------------------------

 

(v)                                 any judgment, liability, claim, order,
decree, cost, fee, expense, action or obligation resulting from the consummation
of the transactions contemplated hereby, including the use of the proceeds of
the Notes by the Issuers.

 

The Issuers also jointly and severally agree to promptly pay or reimburse each
Purchaser or holder of a Note (upon demand, in accordance with each such
Purchaser’s or holder’s written instruction) for all fees and costs paid or
payable by such Purchaser or holder to the Capital Markets & Investment Analysis
Office of the National Association of Insurance Commissioners in connection with
the initial filing of this Agreement and all related documents and financial
information, and all subsequent annual and interim filings of documents and
financial information related to this Agreement, with such Capital Markets &
Investment Analysis Office or any successor organization acceding to the
authority thereof.

 

The obligations of the Issuers under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any Purchaser or
Transferee and the payment of any Note.

 

11C.                      Consent to Amendments.  This Agreement may be amended,
and the Issuers may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, if the Issuers shall obtain the
written consent to such amendment, action or omission to act, of the Required
Holder(s) except that, without the written consent of the holder or holders of
all Notes at the time outstanding, no amendment to this Agreement shall
(i) change the maturity of any Note, or change the principal of, or the rate,
method of computation  or time of payment of interest on or any
Yield-Maintenance Amount payable with respect to any Note, or affect the time,
amount or allocation of any prepayments, in each case in any manner detrimental
to, or disproportionate with respect to, any holder of a Note, or (ii) change
the proportion of the principal amount of the Notes required with respect to any
consent, amendment, waiver or declaration.  Each holder of any Note at the time
or thereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent.  No course of dealing between any Issuer or any Guarantor and the
holder of any Note nor any delay in exercising any rights hereunder or under any
other Transaction Document Note shall operate as a waiver of any rights of any
holder of any Note.  Without limiting the generality of the foregoing, no
negotiations or discussions in which any holder of any Note may engage regarding
any possible amendments, consents or waivers with respect to this Agreement or
any other Transaction Document shall constitute a waiver of any Default or Event
of Default, any term of this Agreement or any other Transaction Documents or any
rights of any such holder under this Agreement or any other Transaction
Document.  As used herein and in the Notes, the term “this Agreement” and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.

 

11D.                      Form, Registration, Transfer and Exchange of Notes;
Lost Notes.  The Notes are issuable as registered notes without coupons in
denominations of at least $100,000, except as may be necessary to (i) reflect
any principal amount not evenly divisible by $100,000 or (ii) enable the
registration of transfer by a holder of its entire holding of Notes; provided,
however, that no such minimum denomination shall apply to Notes issued upon
transfer by any holder of the Notes to Prudential or any of Prudential’s
Affiliates or to any other entity or group of

 

50

--------------------------------------------------------------------------------

 

Affiliates with respect to which the Notes so issued or transferred shall be
managed by a single entity.  The Company shall keep at its principal office a
register in which the Issuers shall provide for the registration of Notes and of
transfers of Notes.  Upon surrender for registration of transfer of any Note at
the principal office of the Company, each Issuer shall promptly, at its expense,
execute and deliver one or more new Notes of like tenor and of a like aggregate
principal amount, registered in the name of such transferee or transferees.  At
the option of the holder of any Note, such Note may be exchanged for other Notes
of like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company.  Whenever any Notes are so surrendered for exchange, each Issuer
agrees that it shall promptly, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive.  Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the holder
of such Note or such holder’s attorney duly authorized in writing.  Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange.  Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder’s unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, each Issuer will make
and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note.

 

11E.                      Persons Deemed Owners; Participations.  Prior to due
presentment for registration of transfer, the Issuers may treat the Person in
whose name any Note is registered as the owner and holder of such Note for the
purpose of receiving payment of principal of, interest on and any
Yield-Maintenance Amount payable with respect to such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Issuers
shall not be affected by notice to the contrary.  Subject to the preceding
sentence, the holder of any Note may from time to time grant participations in
such Note to any Person on such terms and conditions as may be determined by
such holder in its sole and absolute discretion.

 

11F.                       Confidential Information.  For the purposes of this
paragraph 11F, “Confidential Information” means information delivered to any
Purchaser by or on behalf of the Issuers or any Subsidiary in connection with
the transactions contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or otherwise
adequately identified when received by such Purchaser as being confidential
information of the Issuers or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to such
Purchaser prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by such Purchaser or any person acting
on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other
than through disclosure by any Issuer or any Subsidiary or (d) constitutes
financial statements delivered to such Purchaser under paragraph 5A that are
otherwise publicly available.  Each Purchaser will maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser, provided that such Purchaser may deliver or
disclose Confidential Information to (i) its directors, officers, employees,
agents, attorneys, trustees and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment

 

51

--------------------------------------------------------------------------------

 

represented by its Notes), (ii) its auditors, financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this paragraph 11F,
(iii) any other holder of any Note or any other security of any Issuer, (iv) any
Institutional Investor to which it sells or offers to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this paragraph 11F), (v) any Person from which it offers to purchase any
security of any Issuer (if such Person has agreed in writing prior to its
receipt of such Confidential Information to be bound by the provisions of this
paragraph 11F), (vi) any federal or state regulatory authority having
jurisdiction over such Purchaser, (vii) the National Association of Insurance
Commissioners or any successor thereto (the “NAIC”) or the Capital Markets &
Investment Analysis Office of the NAIC or any successor to such Office or, in
each case, any similar organization, or any nationally recognized rating agency
that requires access to information about such Purchaser’s investment portfolio,
or (viii) any other Person to which such delivery or disclosure may be necessary
or appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to such Purchaser, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which such Purchaser is a
party or (z) if an Event of Default has occurred and is continuing, to the
extent such Purchaser may reasonably determine such delivery and disclosure to
be necessary or appropriate in the enforcement or for the protection of the
rights and remedies under such Purchaser’s Notes, this Agreement or any other
Transaction Document.  Each holder of a Note, by its acceptance of a Note, will
be deemed to have agreed to be bound by and to be entitled to the benefits of
this paragraph 11F as though it were a party to this Agreement.  On reasonable
request by the Company in connection with the delivery to any holder of a Note
of information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with the Company
embodying the provisions of this paragraph 11F.

 

In the event that as a condition to receiving access to information relating to
any Issuer or any of its Subsidiaries in connection with the transactions
contemplated by or otherwise pursuant to this Agreement, any Purchaser or holder
of a Note is required to agree to a confidentiality undertaking (whether through
IntraLinks, another secure website, a secure virtual workspace or otherwise)
which is different from this paragraph 11F, this paragraph 11F shall not be
amended thereby and, as between such Purchaser or such holder and the Issuers,
this paragraph 11F shall supersede any such other confidentiality undertaking.

 

11G.                     Survival of Representations and Warranties; Entire
Agreement.  All representations and warranties contained herein or in any other
Transaction Documents or made in writing by or on behalf of any Issuer or any
Guarantor in connection herewith or therewith shall survive the execution and
delivery of this Agreement, the other Transaction Documents and the Notes, the
transfer by any Purchaser of any Note or portion thereof or interest therein and
the payment of any Note, and may be relied upon by any Transferee, regardless of
any investigation made at any time by or on behalf of any Purchaser or any
Transferee.  Subject to the preceding sentence, this Agreement, the other
Transaction Documents and the Notes embody the entire agreement and
understanding between the Purchasers and the Issuers with respect to the subject
matter hereof and supersede all prior agreements and understandings relating to
such subject matter.

 

52

--------------------------------------------------------------------------------

 

11H.                     Successors and Assigns.  All covenants and other
agreements in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including, without limitation, any Transferee) whether so
expressed or not.

 

11I.                          Independence of Covenants; Beneficiaries of
Covenants.  All covenants hereunder and in the other Transaction Documents shall
be given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted by
an exception to, or otherwise be in compliance within the limitations of, 
another covenant shall not (i) avoid the occurrence of a Default or Event of
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by the holder of any Note to prohibit through equitable
action or otherwise the taking of any action by any Issuer or any of its
Subsidiaries which would result in a Default or Event of Default.  The covenants
of the Issuers contained in this Agreement are intended to be only for the
benefit of the Purchasers and the holders from time to time of the Notes, and
their respective successors and assigns (including, without limitation, any
Transferee), and are not intended to be for the benefit of, or enforceable by,
any other Person.

 

11J.                        Notices.  All written communications provided for
hereunder shall be sent by first class mail or nationwide overnight delivery
service (with charges prepaid) and (i) if to any Purchaser, addressed to such
Purchaser at the address specified for such communications in the Purchaser
Schedule attached hereto, or at such other address as such Purchaser shall have
specified to the Company in writing, (ii) if to any other holder of any Note,
addressed to such other holder at such address as such other holder shall have
specified to the Company in writing or, if any such other holder shall not have
so specified an address to the Company, then addressed to such other holder in
care of the last holder of such Note which shall have so specified an address to
the Company, and (iii) if to any Issuer, addressed to it c/o the Company at 605
Highway 169 North, Suite 400, Minneapolis, Minnesota 55441, Attention:  Chief
Financial Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing; provided, however, that any such
communication to any Issuer may also, at the option of the holder of any Note,
be delivered by any other means either to any Issuer at its address specified
above or to any officer of any Issuer.  To the extent any Purchaser or other
holder of a Note has provided the same address for delivery of information or
notices under Agreement as another Purchaser or other holder of a Note, then
only one set of copies is required for both such Persons.

 

11K.                     Payments Due on Non-Business Days.  Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of, interest on or Yield-Maintenance Amount payable with respect to any Note
that is due on a date other than a Business Day shall be made on the next
succeeding Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business Day;
provided that if the maturity date of, or any date for a principal prepayment
on, any Note is other than a Business Day, then all payments due on such Note on
such maturity date or principal prepayment date that are to be made on such next
succeeding Business Day shall include such additional days elapsed in the
computation of the interest payable on such next succeeding Business Day.

 

53

--------------------------------------------------------------------------------

 

11L.                      Satisfaction Requirement.  If any agreement,
certificate or other writing, or any action taken or to be taken, is by the
terms of this Agreement required to be satisfactory to any Purchaser, to any
holder of a Note or to the Required Holder(s), the determination of such
satisfaction shall be made by such Purchaser, such holder or the Required
Holder(s), as the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.

 

11M.                   GOVERNING LAW.  THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES UNDER THIS AGREEMENT
OR IN CONNECTION WITH ANY CLAIMS OR DISPUTES ARISING OUT OF OR RELATING TO THIS
AGREEMENT (WHETHER SOUNDING IN CONTRACT OR TORT) SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD
OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH,
OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER
JURISDICTION).

 

11N.                      SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.  ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, THE NOTES OR ANY
OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS
IN COOK COUNTY, ILLINOIS, OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF
ILLINOIS AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH ISSUER HEREBY
IRREVOCABLY ACCEPTS, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS
WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING.  EACH ISSUER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN PARAGRAPH 11J
OR TO CT CORPORATION SYSTEM AT 208 SOUTH LASALLE STREET, CHICAGO, ILLINOIS 
60604, SUCH SERVICE TO BECOME EFFECTIVE UPON RECEIPT.  EACH ISSUER AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN ANY OTHER JURISDICTION BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER OF
A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY ISSUER IN ANY OTHER
JURISDICTION.  EACH ISSUER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS
OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS BROUGHT IN ANY OF THE AFORESAID COURTS AND HEREBY FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY
SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.  TO THE EXTENT THAT ANY ISSUER HAS OR MAY HEREAFTER

 

54

--------------------------------------------------------------------------------

 

ACQUIRE IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OF NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION, EXECUTION OR OTHERWISE WITH RESPECT TO ITSELF OR ITS
PROPERTY), EACH ISSUER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.  EACH
ISSUER AND EACH PURCHASER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY
(INCLUDING IN CONNECTION WITH ANY CLAIMS OR DISPUTES RELATING THERETO, WHETHER
SOUNDING IN CONTRACT OR TORT).

 

11O.                     Severability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

11P.                       Descriptive Headings; Advice of Counsel;
Interpretation; Time of the Essence.  The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.  Each party to this Agreement represents to
the other parties to this Agreement that such party has been represented by
counsel in connection with this Agreement and the other Transaction Documents,
that such party has discussed this Agreement and the other Transaction Documents
with its counsel and that any and all issues with respect to this Agreement and
the other Transaction Documents have been resolved as set forth herein and
therein.  No provision of this Agreement or any other Transaction Document shall
be construed against or interpreted to the disadvantage of any party hereto by
any court or other governmental or judicial authority by reason of such party
having or being deemed to have structured, drafted or dictated such provision. 
Time is of the essence in the performance of this Agreement and the other
Transaction Documents.

 

11Q.                     Counterparts; Facsimile or Electronic Signatures.  This
Agreement may be executed in any number of counterparts (or counterpart
signature pages), each of which counterparts shall be an original but all of
which together shall constitute one instrument.  Delivery of an executed
counterpart of a signature page to this Agreement by facsimile or electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement.

 

11R.                      Severalty of Obligations.  The sales of Notes to the
Purchasers are to be several sales, and the obligations of the Purchasers under
this Agreement are several obligations.  No failure by any Purchaser to perform
its obligations under this Agreement shall relieve any other Purchaser or any
Issuer of any of its obligations hereunder, and no Purchaser shall be
responsible for the obligations of, or any action taken or omitted by, any other
Purchaser hereunder.

 

55

--------------------------------------------------------------------------------

 

11S.                        Independent Investigation.  Each Purchaser
represents to and agrees with each other Purchaser that it has made its own
independent investigation of the condition (financial and otherwise), prospects
and affairs of the Issuers and its Subsidiaries in connection with its purchase
of the Notes hereunder and has made and shall continue to make its own appraisal
of the creditworthiness of the Issuers.  No holder of Notes shall have any
duties or responsibility to any other holder of Notes, either initially or on a
continuing basis, to make any such investigation or appraisal or to provide any
credit or other information with respect thereto.  No holder of Notes is acting
as agent or in any other fiduciary capacity on behalf of any other holder of
Notes.

 

11T.                      Directly or Indirectly.  Where any provision in this
Agreement refers to actions to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be applicable whether the action in
question is taken directly or indirectly by such Person.

 

11U.                      Transaction References.  The Issuers agree that
Prudential Capital Group may (a) refer to its role in originating the purchase
of the Notes from the Issuers as well as the identity of the Issuers and the
aggregate principal amount and issue date of the Notes on its internet site or
in marketing materials, press releases, published “tombstone” announcements or
any other print or electronic medium and (b) display any Issuer’s corporate logo
in conjunction with any such reference.

 

11V.                      Liability of Issuers.

 

(i)                                     The obligations of the Issuers under
this Agreement, the Notes and the other Transaction Documents are joint and
several primary obligations of each Issuer regardless of which Issuer actually
receives the proceeds of any Notes or the manner in which the Issuers, any
Purchaser or any holder thereof accounts for such Notes on its books and
records.  Each Issuer agrees that it is receiving or will receive a direct
pecuniary benefit for each Note issued hereunder.

 

(ii)                                  Each Issuer hereby waives, to the fullest
extent permitted by law:

 

(a)                                 notice of the creation, renewal or accrual
of any liability of an Issuer, present or future, or of the reliance of such
holder of Notes upon this Agreement (it being understood that every Debt,
liability and obligation described in this Agreement, the Notes or the other
Transaction Documents shall conclusively be presumed to have been created,
contracted or incurred in reliance upon the execution of this Agreement, the
Notes and the other Transaction Documents);

 

(b)                                 demand of payment by any holder of Notes
from an Issuer or any other Person indebted in any manner on or for any of the
Debt, liabilities or obligations hereby guaranteed; and

 

(c)                                  presentment for the payment by any holder
of Notes or any other Person of the Notes or any other instrument, protest
thereof and notice of its dishonor to any party thereto and to such Issuer.

 

56

--------------------------------------------------------------------------------

 

The obligations of each Issuer under this Agreement, the Notes and the other
Transaction Documents and the rights of any holder of Notes to enforce such
obligations by any proceedings, whether by action at law, suit in equity or
otherwise, shall not be subject to any reduction, limitation, impairment or
termination (other than by indefeasible payment in full in cash of the Notes and
the obligations of the Issuers under this Agreement and the other Transaction
Documents), whether by reason of any claim of any character whatsoever or
otherwise and shall not be subject to any defense, set-off, counterclaim (other
than any compulsory counterclaim), recoupment or termination whatsoever.

 

(iii)                               Except as otherwise expressly provided in
this Agreement, the obligations of the Issuers hereunder and under the Notes and
the other Transaction Documents shall be binding upon the Issuers and their
successors and assigns, and shall remain in full force and effect until the
entire principal, interest and premium, if any, on the Notes and all other sums
due under this Agreement shall have been paid and such obligations shall not be
affected, modified or impaired upon the happening from time to time of any
event, including without limitation any of the following, whether or not with
notice to or the consent of the Issuers:

 

(a)                                 the genuineness, validity, regularity or
enforceability of the Notes, this Agreement and the other Transaction Documents
or any other agreement or any of the terms of any thereof, the continuance of
any obligation on the part of any Issuer or any other Person on or in respect of
the Notes or under this Agreement, the other Transaction Documents or any other
agreement or the power or authority or the lack of power or authority of any
Issuer to issue the Notes or any Issuer to execute and deliver this Agreement or
any other agreement or to perform any of its obligations hereunder or the
existence or continuance of any Issuer or any other Person as a legal entity; or

 

(b)                                 any default, failure or delay, willful or
otherwise, in the performance by an Issuer or any other Person of any
obligations of any kind or character whatsoever under the Notes, this Agreement,
the other Transaction Documents or any other agreement; or

 

(c)                                  any creditors’ rights, bankruptcy,
receivership or other insolvency proceeding of any Issuer or any other Person or
in respect of the property of an Issuer or any other Person or any merger,
consolidation, reorganization, dissolution, liquidation, the sale of all or
substantially all of the assets of or winding up of an Issuer or any other
Person; or

 

(d)                                 impossibility or illegality of performance
on the part of any Issuer or any other Person of its obligations under the
Notes, this Agreement, the other Transaction Documents or any other agreements;
or

 

(e)                                  in respect of an Issuer or any other
Person, any change of circumstances, whether or not foreseen or foreseeable,
whether or not imputable to an Issuer or any other Person, or other
impossibility of performance through fire, explosion, accident, labor
disturbance, floods, droughts, embargoes, wars (whether or not declared), civil
commotion, acts of God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any Federal or state
regulatory body or agency, change of law or any other causes affecting
performance, or any other force majeure,

 

57

--------------------------------------------------------------------------------

 

whether or not beyond the control of an Issuer or any other Person and whether
or not of the kind hereinbefore specified; or

 

(f)                                   any attachment, claim, demand, charge,
Lien, order, process, encumbrance or any other happening or event or reason,
similar or dissimilar to the foregoing, or any withholding or diminution at the
source, by reason of any taxes, assessments, expenses, Debt, obligations or
liabilities of any character, foreseen or unforeseen, and whether or not valid,
incurred by or against an Issuer or any other Person or any claims, demands,
charges or Liens of any nature, foreseen or unforeseen, incurred by an Issuer or
any other Person, or against any sums payable in respect of the Notes, under
this Agreement or any other Transaction Document, so that such sums would be
rendered inadequate or would be unavailable to make the payments herein
provided; or

 

(g)                                  any order, judgment, decree, ruling or
regulation (whether or not valid) of any court of any nation or of any political
subdivision thereof or any body, agency, department, official or administrative
or regulatory agency of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder or prevent, or in
any way adversely affect, the performance by an Issuer or any other Person of
its respective obligations under or in respect of the Notes, this Agreement or
any other agreement; or

 

(h)                                 the failure of any Issuer to receive any
benefit from or as a result of its execution, delivery and performance of this
Agreement; or

 

(i)                                     any failure or lack of diligence in
collection or protection, failure in presentment or demand for payment, protest,
notice of protest, notice of default and of nonpayment, any failure to give
notice to any Issuer of failure of an Issuer or any other Person to keep and
perform any obligation, covenant or agreement under the terms of the Notes, this
Agreement, any other Transaction Document or any other agreement or failure to
resort for payment to an Issuer or to any other Person or to any other Agreement
or to any property, security, Liens or other rights or remedies; or

 

(j)                                    the acceptance of any additional security
or other agreement, the advance of additional money to an Issuer or any other
Person, the renewal or extension of the Notes or amendments, modifications,
consents or waivers with respect to the Notes, this Agreement, any other
Transaction Document or any other agreement, or the sale, release, substitution
or exchange of any security for the Notes; or

 

(k)                                 any merger or consolidation of an Issuer or
any other Person into or with any other Person or any sale, lease, transfer or
other disposition of any of the assets of an Issuer or any other Person to any
other Person, or any change in the ownership of any shares of an Issuer or any
other Person or any release of any issuer; or

 

(l)                                     any defense whatsoever that:  (i) an
Issuer or any other Person might have to the payment of the Notes (principal,
Yield-Maintenance Amount, if any, or interest), other than indefeasible payment
thereof in Federal or other immediately available funds, or (ii) an Issuer or
any other Person might have to the performance or observance of any

 

58

--------------------------------------------------------------------------------

 

of the provisions of the Notes, this Agreement, any other Transaction Document
or any other agreement, whether through the satisfaction or purported
satisfaction by an Issuer or any other Person of its debts due to any cause such
as bankruptcy, insolvency, receivership, merger, consolidation, reorganization,
dissolution, liquidation, winding-up or otherwise, other than the defense of
indefeasible payment in full in cash of the Notes; or

 

(m)                             any act or failure to act with regard to the
Notes, this Agreement, any other Transaction Document or any other agreement or
anything which might vary the risk of any Issuer or any other Person; or

 

(n)                                 any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any Issuer or any other
Person in respect of the obligations of any Issuer or other Person under this
Agreement or any other agreement, other than the defense of indefeasible payment
in full in cash of the Notes;

 

provided that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Agreement and the Notes and the parties hereto that the obligations of each
Issuer shall be absolute and unconditional and shall not be discharged, impaired
or varied except by the indefeasible payment in full in cash of the principal
of, premium, if any, and interest on the Notes in accordance with their
respective terms whenever the same shall become due and payable as in the Notes
provided and all other sums due and payable under this Agreement, at the place
specified in and all in the manner and with the effect provided in the Notes and
this Agreement, as each may be amended or modified from time to time.  Without
limiting the foregoing, it is understood that repeated and successive demands
may be made and recoveries may be had hereunder as and when, from time to time,
an Issuer shall default under or in respect of the terms of the Notes or this
Agreement and that notwithstanding recovery hereunder for or in respect of any
given default or defaults by an Issuer under the Notes, this Agreement or any
other Transaction Document shall remain in full force and effect and shall apply
to each and every subsequent default.

 

(iv)                              To the extent of any payments made under this
Agreement or any Note, each Issuer making such payment shall have a right of
contribution from the other Issuer, but such Issuer covenants and agrees that
such right of contribution shall be subordinate in right of payment to the
rights of the holder of Notes for which full payment has not been made or
provided for and, to that end, such Issuer agrees not to claim or enforce any
such right of contribution unless and until all of the Notes and all other sums
due and payable under this Agreement and the Notes have been fully and
irrevocably paid and discharged.

 

(v)                                 Each Issuer agrees that to the extent an
Issuer or any other Person makes any payment on any Note, which payment or any
part thereof is subsequently invalidated, voided, declared to be fraudulent or
preferential, set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, receiver, or any other Person under any bankruptcy code,
common law, or equitable cause, then and to the extent of such payment, the
obligation or the part thereof intended to be satisfied shall be revived and
continued in full force and effect with respect to the Issuers’ obligations
hereunder, as if said payment had not been made.  The liability

 

59

--------------------------------------------------------------------------------

 

of the Issuers hereunder and under the Notes shall not be reduced or discharged,
in whole or in part, by any payment to any holder of a Note from any source that
is thereafter paid, returned or refunded in whole or in part by reason of the
assertion of a claim of any kind relating thereto, including, but not limited
to, any claim for breach of contract, breach of warranty, preference,
illegality, invalidity, or fraud asserted by any account debtor or by any other
Person.

 

(vi)                              No holder of a Note shall be under any
obligation:  (a) to marshal any assets in favor of the Issuers or in payment of
any or all of the liabilities of any Issuer under or in respect of the Notes or
the obligations of the Companies hereunder or (b) to pursue any other remedy
that the Issuers may or may not be able to pursue themselves and that may
lighten the Issuers’ burden, any right to which each Issuer hereby expressly
waives.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.  SIGNATURES ON THE
FOLLOWING PAGE.]

 

60

--------------------------------------------------------------------------------

 

11W.                  Binding Agreement.  When this Agreement is executed and
delivered by the Issuers and each of the Purchasers it shall become a binding
agreement between the Issuers and each of the Purchasers.

 

 

Very truly yours,

 

 

 

WINMARK CORPORATION

 

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

President

 

 

 

 

 

 

 

WIRTH BUSINESS CREDIT, INC.

 

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Treasurer

 

 

 

 

 

 

 

WINMARK CAPITAL CORPORATION

 

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Chief Financial Officer and Treasurer

 

 

 

 

 

 

 

GROW BIZ GAMES, INC.

 

 

 

 

 

By:

/s/ Brett D. Heffes

 

Name:

Brett D. Heffes

 

Title:

Treasurer

 

[Signature Page to Note Agreement]

 

--------------------------------------------------------------------------------

 

The foregoing Agreement is
hereby accepted as of the
date first above written.

 

THE PRUDENTIAL INSURANCE COMPANY

 

OF AMERICA

 

 

 

 

 

By:

/s/ Jason Boe

 

 

Vice President

 

 

 

 

 

PRUCO LIFE INSURANCE COMPANY

 

 

 

 

 

By:

/s/ Jason Boe

 

 

Assistant Vice President

 

 

 

 

 

PRUDENTIAL RETIREMENT GUARANTEED

 

COST BUSINESS TRUST

 

 

 

By:

Prudential Investment Management, Inc.

 

 

(as Investment Manager)

 

 

 

 

 

 

By:

/s/ Jason Boe

 

 

 

Vice President

 

 

[Signature Page to Note Agreement]

 

--------------------------------------------------------------------------------

 

PURCHASER SCHEDULE

 

 

 

 

 

Aggregate
Principal
Amount of Notes
to be Purchased

 

Note
Denominations

 

 

 

 

 

 

 

 

 

 

 

THE PRUDENTIAL INSURANCE COMPANY OF AMERICA

 

$

20,450,000.00

 

$

7,950,000.00

 

 

 

 

 

 

 

$

12,500,000.00

 

(1)

 

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Address for all notices relating to payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

 

Attention: Manager, Billings and Collections

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Address for all other communications and notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Prudential Insurance Company of America

c/o Prudential Capital Group

60 S. 6th Street, Suite 3700

Minneapolis, Minnesota 55402-4422

 

Attention: Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

Address for Delivery of Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

Tax Identification No.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

Purchaser Schedule - 1

--------------------------------------------------------------------------------

 

 

 

 

 

Aggregate
Principal
Amount of Notes
to be Purchased

 

Note
Denomination

 

 

 

 

 

 

 

 

 

 

 

PRUCO LIFE INSURANCE COMPANY

 

$

3,500,000.00

 

$

3,500,000.00

 

 

 

 

 

 

 

 

 

(1)

 

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Address for all notices relating to payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pruco Life Insurance Company

c/o The Prudential Insurance Company of America

c/o Investment Operations Group

Gateway Center Two, 10th Floor

100 Mulberry Street

Newark, NJ 07102-4077

 

Attention: Manager, Billings and Collections

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Address for all other communications and notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pruco Life Insurance Company

c/o Prudential Capital Group

60 S. 6th Street, Suite 3700

Minneapolis, Minnesota 55402-4422

 

Attention: Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

Address for Delivery of Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

Tax Identification No.:

 

Provided to Issuers under separate cover

 

 

 

 

 

 

Purchaser Schedule - 2

--------------------------------------------------------------------------------

 

 

 

 

 

Aggregate
Principal
Amount of Notes
to be Purchased

 

Note
Denomination

 

 

 

 

 

 

 

 

 

 

 

PRUDENTIAL RETIREMENT GUARANTEED COST BUSINESS TRUST

 

$

1,050,000.00

 

$

1,050,000.00

 

 

 

 

 

 

 

 

 

(1)

 

All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(2)

 

Address for all notices relating to payments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pru & Co

c/o Prudential Investment Management, Inc.

Attn: Private Placement Trade Management

PRIAC Administration

Gateway Center Four, 7th Floor

100 Mulberry Street

Newark, NJ 07102

 

 

 

 

 

 

 

 

 

 

 

 

 

(3)

 

Address for all other communications and notices:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Prudential Retirement Guaranteed Cost Business Trust

c/o Prudential Capital Group

60 S. 6th Street, Suite 3700

Minneapolis, Minnesota 55402-4422

 

Attention: Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

(4)

 

Address for Delivery of Notes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provided to Issuers under separate cover

 

 

 

 

 

 

 

 

 

 

 

 

 

(5)

 

Tax Identification No.:

 

Provided to Issuers under separate cover

 

 

 

 

 

 

Purchaser Schedule - 3

--------------------------------------------------------------------------------

 

SCHEDULE 6G

 

AFFILIATED TRANSACTIONS

 

None.

 

6C-1

--------------------------------------------------------------------------------

 

SCHEDULE 8A(1)

 

SUBSIDIARIES

 

Name

 

Jurisdiction of
Organization

 

Ownership

 

 

 

 

 

 

 

Grow Biz Games, Inc.

 

Minnesota

 

100

%

 

 

 

 

 

 

Wirth Business Credit, Inc.

 

Minnesota

 

100

%

 

 

 

 

 

 

Winmark Capital Corporation

 

Minnesota

 

100

%

 

8A(1)-1

--------------------------------------------------------------------------------

 

SCHEDULE 8G

 

LIST OF AGREEMENTS RESTRICTING DEBT

 

Credit Agreement dated July 13, 2010 among the Issuers, The PrivateBank and
Trust Company, as a Lender and Administrative Agent, and the Lenders a party
thereto, and related loan documents, and amendments thereto.

 

8G-1

--------------------------------------------------------------------------------

 

SCHEDULE 8K

 

FILINGS AND RECORDINGS

 

1.              Office of the Minnesota Secretary of State.

 

8K-1

--------------------------------------------------------------------------------

 

SCHEDULE 8Q

 

INFORMATION REGARDING THE ISSUERS AND THEIR SUBSIDIARIES

 

8Q (i):

 

Name

 

Jurisdiction of
Organization

 

Organizational Number

 

 

 

 

 

 

 

Winmark Corporation

 

Minnesota

 

5Z-841

 

Grow Biz Games, Inc.

 

Minnesota

 

9T-371

 

Wirth Business Credit, Inc.

 

Minnesota

 

854020-5

 

Winmark Capital Corporation

 

Minnesota

 

854020-6

 

 

8Q (ii):

 

None.

 

8Q (iii):

 

1.                                      Property
Type:                                                   Winmark Corporation
headquarters  (Leased)

 

Property Location:                              605 Highway 169 North, Suite 400

Minneapolis, MN  55441

 

Lessor:                                                                                            
Ax Waterford L.P.

c/o CBRE, Inc.

4400 West 78th Street, Suite 200

Minneapolis, MN  55435

 

Property Type:                                                   Winmark Capital
Corporation Office Space  (Leased)

 

Property Location:                              222 East Carrillo Street,
Suite 209

Santa Barbara, CA  93101

 

Lessor:                                                                                            
East Carrillo, L.P.

c/o The Towbes Group, Inc.

21 E. Victoria Street, Suite 200

Santa Barbara, CA  93101

 

8Q-1

--------------------------------------------------------------------------------

 

8Q (iv):

 

1.                                      On August 30, 2000, the Company (f/k/a
Grow Biz International, Inc.) signed a Trademark License Agreement (“Agreement”)
with Hollis Technologies, Inc., a Florida limited liability company (“Hollis”),
granting Hollis the use of the COMPUTER RENAISSANCE AND DESIGN trademarks (U.S.
Reg. No. 1,875,949, Canada TM 474,198 and Japan trademark No. 4,313,894) for
term of twenty (20) years, with automatic successive renewals of ten (10) years
each.  In addition, per the Agreement, Hollis may request, and the Company will
grant to Hollis, a license for the use of the CIRCULAR ARROWS DESIGN trademark
under the same terms and conditions.

 

2.                                      In 2001 and 2002, the Company entered
into Trademark License Agreements with 14 former ReTool® franchises and a former
employee of Winmark for the license of the RETOOL (U.S. Reg. No. 2,304,808) and
RETOOL AND DESIGN (U.S. Reg. No. 2,267,043) trademarks for a period of 10 years
with an option to renew for an additional ten (10) year period.

 

3.                                      See Exhibit I attached hereto for a list
of registered trademarks.

 

8Q-2

--------------------------------------------------------------------------------

 

Exhibit I

 

WINMARK CORPORATION REGISTERED TRADEMARKS

 

TRADEMARK

 

COUNTRY

 

APPL. #

 

CLASS

 

REG. #

 

REG. DATE

 

DECL. OF USE FILED

 

EXP. DATE

 

WINMARK

 

USA

 

76-339,144

 

35

 

2,728,008

 

6/17/03

 

Renewed

 

6/17/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WINMARK

 

USA

 

78-683,252

 

36, 37, 38, 39, 42

 

3,137,283

 

8/29/06

 

12/19/11

 

8/29/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WINMARK BUSINESS SOLUTIONS

 

USA

 

78-326,272

 

35

 

2,906,674

 

11/30/04

 

Renewed

 

11/30/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WINMARK CAPITAL

 

USA

 

78-405,795

 

36

 

3,184,450

 

1/12/06

 

3/6/12

 

1/12/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WIRTH BUSINESS CREDIT

 

USA

 

78-722,246

 

35, 36, 37, 38, 39, 42

 

3,320,486

 

10/23/07

 

1/8/13

 

12/23/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEASEMANAGER

 

USA

 

78-257,794

 

36

 

2,983,934

 

9/9/05

 

Renewed

 

9/9/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PEERSPHERE

 

USA

 

77-387992

 

38,42

 

3,609,933

 

4/21/09

 

Not Renewing

 

4/21/19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

O LOGO DESIGN

 

USA

 

74-662,893

 

35,42

 

2,550,186

 

3/19/02

 

Renewed

 

3/19/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

O LOGO DESIGN

 

CANADA

 

890,859

 

 

 

531,253

 

8/16/00

 

Renewed

 

8/16/30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUY. SELL. REPEAT.

 

USA

 

77-718317

 

35

 

3,765,266

 

3/23/10

 

 

 

3/23/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELL. BUY. REPEAT.

 

USA

 

77-718320

 

35

 

3,759,215

 

3/9/10

 

 

 

3/9/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY IT AGAIN SPORTS (and design)

 

USA

 

74-184,959

 

42

 

1,738,778

 

12/8/92

 

Renewed

 

12/8/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY IT AGAIN SPORTS

 

USA

 

73-780,009

 

42

 

1,562,785

 

10/24/89

 

Renewed

 

10/24/19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY IT AGAIN SPORTS

 

CANADA

 

683,688

 

 

 

407,459

 

1/29/93

 

Renewed

 

1/29/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY SAFE PLAY HARD PLAY IT AGAIN PLAY IT AGAIN SPORTS

 

USA

 

74-580,446

 

42

 

1,950,617

 

1/23/96

 

Renewed

 

1/23/26

 

 

--------------------------------------------------------------------------------

 

TRADEMARK

 

COUNTRY

 

APPL. #

 

CLASS

 

REG. #

 

REG. DATE

 

DECL. OF USE FILED

 

EXP. DATE

 

SPORTS EQUIPMENT THAT’S USED BUT NOT USED UP

 

USA

 

74-407,964

 

42

 

1,874,326

 

1/17/95

 

Renewed

 

1/17/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BUY, SELL TRADE NEW AND USED GEAR (for PIAS and MGR)

 

USA

 

77-440060

 

42

 

Abandoned registration app.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REUSE.RECYCLE.REPLAY.

 

USA

 

85-049345

 

35

 

3,913,486

 

2/1/11

 

 

 

2/1/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EDGEVANTAGE

 

USA

 

85-781,530

 

37

 

4,506,805

 

4/1/14

 

 

 

4/1/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EDGEVANTAGE

 

CANADA

 

1,619,323

 

 

 

884425

 

10/20/14

 

 

 

10/20/29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY IT AGAIN SPORTS EVERYBODY PLAYS

 

USA

 

86-137,377

 

35

 

Abandoned registration app.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVERYBODY PLAYS PLAY IT AGAIN SPORTS

 

USA

 

86,204,901

 

35

 

4,626,375

 

10/21/14

 

 

 

10/21/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OFFICIAL SPONSOR OF ALL THOSE WHO PLAY

 

USA

 

86-137,378

 

35

 

4,626,270

 

10/21/14

 

 

 

10/21/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLAY IT AGAIN SPORTS EVERYBODY PLAYS

 

CANADA

 

1,671,675

 

 

 

Abandoned registration app.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OFFICIAL SPONSOR OF ALL THOSE WHO PLAY

 

CANADA

 

1,671,674

 

 

 

 

 

PENDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EVERYBODY PLAYS PLAY IT AGAIN SPORTS

 

CANADA

 

1,683,001

 

 

 

 

 

PENDING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MUSIC GO ROUND

 

USA

 

74-407,988

 

35

 

1,933,637

 

11/7/95

 

Renewed

 

11/7/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MUSIC GO ROUND (and design)

 

USA

 

74-595,598

 

35,42

 

1,938,398

 

11/28/95

 

Renewed

 

11/28/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MUSIC GO ROUND (and design)

 

USA

 

75-806,705

 

35

 

2,413,870

 

12/19/00

 

Renewed

 

12/19/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MUSIC GO ROUND

 

USA

 

74-389,491

 

42

 

1,857,397

 

10/4/94

 

Renewed

 

10/4/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MUSIC GO ROUND

 

CANADA

 

740,108

 

 

 

472,787

 

3/18/97

 

Renewed

 

3/18/27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRO CUSTOM

 

USA

 

74-638,321

 

15

 

2,352,130

 

5/23/00

 

Renewed

 

5/23/20

 

 

I-2

--------------------------------------------------------------------------------

 

TRADEMARK

 

COUNTRY

 

APPL. #

 

CLASS

 

REG. #

 

REG. DATE

 

DECL. OF USE FILED

 

EXP. DATE

 

PRO CUSTOM

 

CANADA

 

797,464

 

 

 

553,444

 

11/15/01

 

 

 

11/15/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RE-USE. RECYCLE. ROCK

 

USA

 

77-718562

 

35

 

3,761,853

 

3/16/10

 

 

 

3/16/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YOUR ULTIMATE USED GEAR RESOURCE

 

USA

 

77-718860

 

42

 

3,690,852

 

9/29/09

 

1/23/15

 

9/29/19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ORIGINAL AND UNSIGNED

 

USA

 

86-137,377

 

41

 

4,646,272

 

11/25/14

 

 

 

11/25/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD

 

USA

 

74-130,870

 

35

 

1,668,930

 

12/17/91

 

Renewed

 

12/17/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD (and design)

 

USA

 

74-358,788

 

42

 

1,821,841

 

2/15/94

 

Renewed

 

2/15/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD (and design)

 

USA

 

74-470,445

 

16,21,25

 

1,872,459

 

1/10/95

 

Not Renewing

 

1/10/15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD (and design)

 

USA

 

74-407,962

 

35

 

1,856,930

 

10/4/94

 

Renewed

 

10/4/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD (and design)

 

CANADA

 

729,770

 

 

 

447,287

 

9/8/95

 

Renewed

 

9/8/25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ONCE UPON A CHILD

 

EUROPE

 

011188729

 

25, 35

 

011188729

 

2/11/13

 

 

 

9/30/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KIDS STUFF WITH PREVIOUS EXPERIENCE

 

USA

 

74-407,961

 

42

 

1,926,022

 

10/10/95

 

Renewed

 

10/10/15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

KIDS’ STUFF WITH PREVIOUS EXPERIENCE

 

CANADA

 

817,083

 

 

 

515,845

 

8/31/99

 

Renewed

 

8/31/29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET

 

USA

 

75-440,438

 

35

 

2,211,282

 

12/15/98

 

Renewed

 

12/15/18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET

 

USA

 

78-781590

 

35

 

3,176,822

 

11/28/06

 

3/5/12

 

11/28/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET (AND DESIGN)

 

USA

 

78-784675

 

35

 

3,201,210

 

1/23/07

 

3/12/12

 

1/23/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET (AND DESIGN)

 

USA

 

85-094606

 

35

 

3,908,174

 

1/18/11

 

 

 

1/18/21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET

 

CANADA

 

1,302,695

 

 

 

695,576

 

10/4/07

 

 

 

10/4/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET (AND DESIGN)

 

CANADA

 

1,492,667

 

 

 

807,932

 

9/29/11

 

 

 

9/29/26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET

 

EUROPE

 

011321197

 

25,35

 

011321197

 

4/15/13

 

 

 

11/30/22

 

 

I-3

--------------------------------------------------------------------------------

 

TRADEMARK

 

COUNTRY

 

APPL. #

 

CLASS

 

REG. #

 

REG. DATE

 

DECL. OF USE FILED

 

EXP. DATE

 

PLATO’S CLOSET BRAND TEEN WEAR AND DESIGN

 

CANADA

 

1,017,819

 

 

 

545,218

 

5/16/01

 

 

 

5/16/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET CHANGE YOUR CLOTHES

 

USA

 

78-871939

 

35

 

3,407,132

 

4/1/08

 

Not Renewing

 

4/1/18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PLATO’S CLOSET CHANGE YOUR CLOTHES

 

CANADA

 

1,300,139

 

 

 

731,773

 

1/6/09

 

Not Renewing

 

1/6/24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECYCLE YOUR STYLE

 

USA

 

85-552285

 

35

 

4,256,651

 

12/11/12

 

 

 

12/11/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECYCLE YOUR STYLE

 

CANADA

 

1,567,647

 

 

 

860,573

 

9/18/13

 

 

 

9/18/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YOUR STORE. YOUR STYLE.

 

USA

 

85-624584

 

35

 

4,250,197

 

11/27/12

 

 

 

11/27/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YOUR STORE. YOUR STYLE.

 

CANADA

 

1,577,573

 

 

 

848,667

 

4/16/13

 

 

 

4/16/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YOUR STYLE. YOUR STORE.

 

USA

 

85-624579

 

35

 

4,246,067

 

11/20/12

 

 

 

11/20/22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YOUR STYLE. YOUR STORE.

 

CANADA

 

1,577,574

 

 

 

848,668

 

4/16/13

 

 

 

4/16/28

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETOOL (and design)*

 

USA

 

75-496,931

 

35

 

2,267,043

 

8/3/99

 

Renewed

 

8/3/19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETOOL

 

USA

 

75-467,230

 

35

 

2,304,808

 

12/28/99

 

Renewed

 

12/28/19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETOOL (and design)

 

CANADA

 

882,608

 

 

 

539,715

 

1/16/01

 

Not Renewing

 

1/16/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RETOOL

 

CANADA

 

882,609

 

 

 

524,445

 

3/8/00

 

Not Renewing

 

3/8/15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPUTER RENAISSANCE (and design)

 

USA

 

74-595,597

 

35,42

 

1,975,949

 

5/28/96

 

Renewed

 

5/28/16

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STYLE ENCORE

 

USA

 

85-841,074

 

35

 

4,426,761

 

10/29/13

 

 

 

10/29/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STYLE ENCORE

 

CANADA

 

1,613,038

 

 

 

873,846

 

3/19/14

 

 

 

3/19/29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STYLE ENCORE (and design)

 

USA

 

85-867,462

 

35

 

4,426,768

 

10/29/13

 

 

 

10/29/23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STYLE ENCORE (and design)

 

CANADA

 

1,617,026

 

 

 

878,196

 

5/20/14

 

 

 

5/20/29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STYLE ENCORE (and design) Color

 

USA

 

85,901,630

 

35

 

4,450,612

 

12/17/13

 

 

 

12/17/23

 

 

I-4

--------------------------------------------------------------------------------

 

TRADEMARK

 

COUNTRY

 

APPL. #

 

CLASS

 

REG. #

 

REG. DATE

 

DECL. OF USE FILED

 

EXP. DATE

 

STYLE ENCORE

 

EUROPE

 

012459061

 

25,35

 

012459061

 

4/25/14

 

 

 

12/31/2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FASHION THAT FITS YOUR LIFE

 

USA

 

86,173,524

 

35

 

4,572,474

 

7/22/14

 

 

 

7/22/24

 

 

I-5

--------------------------------------------------------------------------------

 

 

EXHIBIT A

 

[FORM OF NOTE]

 

WINMARK CORPORATION
WIRTH BUSINESS CREDIT, INC.
WINMARK CAPITAL CORPORATION
GROW BIZ GAMES, INC.

5.50% SENIOR SECURED NOTE DUE MAY 14, 2025

 

No.

 

[Date]

$

 

PPN: 97424* AA2

 

FOR VALUE RECEIVED, the undersigned, WINMARK CORPORATION, a corporation
organized and existing under the laws of the State of Minnesota (herein called
the “Company”), Wirth Business Credit, Inc., a corporation organized and
existing under the laws of the State of Minnesota (herein called “Wirth”),
Winmark Capital Corporation, a corporation organized and existing under the laws
of the State of Minnesota (herein called “Winmark Capital”), and Grow Biz
Games, Inc., a corporation organized and existing under the laws of the State of
Minnesota (“Grow Biz”; the Company, Wirth, Winmark Capital and Grow Biz being
collectively called the “Issuers”), hereby jointly and severally promise to pay
to                                                         
                                                      , or registered assigns,
the principal sum of                                                    DOLLARS
on May 14, 2025, with interest (computed on the basis of a 360-day year—30-day
month) (a) on the unpaid balance thereof at the rate of 5.50% per annum from the
date hereof, payable quarterly on the 14th day of February, May, August and
November in each year, commencing with the February 14, May 14, August 14 or
November 14 next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) (i) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of Yield-Maintenance
Amount, any overdue payment of interest (to the extent permitted by applicable
law), and (ii) during any period when an Event of Default shall be in existence,
at the election of the Required Holder(s), on the entire principal amount
hereof, at a rate per annum from time to time equal to the Default Rate, payable
quarterly as aforesaid (or, at the option of the registered holder hereof, on
demand).  The “Default Rate” shall mean a rate per annum from time to time equal
to the lesser of (i) the maximum rate permitted by applicable law, and (ii) the
greater of (a) 7.50% or (b) 2.00% over the rate of interest publicly announced
by JPMorgan Chase Bank, National Association, from time to time in New York City
as its Prime Rate.

 

Payments of principal of, interest on and any Yield-Maintenance Amount payable
with respect to this Note are to be made at the main office of JPMorgan Chase
Bank in New York City or at such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.

 

This Note is one of a series of Senior Secured Notes (herein called the “Notes”)
issued pursuant to a Note Agreement, dated as of May 14, 2015 (herein called the
“Agreement”),

 

A-1

--------------------------------------------------------------------------------

 

among the Issuers and the original purchasers of the Notes named in the
Purchaser Schedule attached thereto and is entitled to the benefits thereof.

 

This Note is a registered Note and, as provided in the Agreement, upon surrender
of this Note for registration of transfer, duly endorsed, or accompanied by a
written instrument of transfer duly executed, by the registered holder hereof or
such holder’s attorney duly authorized in writing, a new Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Issuers
may treat the person in whose name this Note is registered as the owner hereof
for the purpose of receiving payment and for all other purposes, and the Issuers
shall not be affected by any notice to the contrary.

 

The Issuers jointly and severally agrees to make required prepayments of
principal on the dates and in the amounts specified in the Agreement.  This Note
is also subject to optional prepayment, in whole or from time to time in part,
on the terms specified in the Agreement, but not otherwise.

 

This Note is secured by, and entitled to the benefits of, the Collateral
Documents.  Reference is made to the Collateral Documents for a statement
concerning the terms and conditions governing the collateral security for the
obligations of the Issuers hereunder.

 

Each Issuer and any and all endorsers, guarantors and sureties severally waive
demand, presentment for payment, notice of dishonor or default, notice of intent
to accelerate, notice of acceleration (except to the extent required in the
Agreement), protest and diligence in collecting in connection with this Note,
whether now or hereafter required by applicable law.

 

In case an Event of Default shall occur and be continuing, the principal of this
Note may be declared or otherwise become due and payable in the manner and with
the effect provided in the Agreement.

 

Capitalized terms used herein which are defined in the Agreement and not
otherwise defined herein shall have the meanings as defined in the Agreement.

 

A-2

--------------------------------------------------------------------------------

 

THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF ILLINOIS AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE (EXCLUDING ANY
CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS NOTE TO BE CONSTRUED OR
ENFORCED IN ACCORDANCE WITH THE LAWS OF ANY OTHER JURISDICTION).

 

 

WINMARK CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

WIRTH BUSINESS CREDIT, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

WINMARK CAPITAL CORPORATION

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

GROW BIZ GAMES, INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

A-3

--------------------------------------------------------------------------------

 

EXHIBIT B

 

[FORM OF DISBURSEMENT DIRECTION LETTER]

 

[On Issuers’ Letterhead - place on one page]

 

[Date]

 

The Prudential Insurance Company of America
Pruco Life Insurance Company
Prudential Retirement Guaranteed Cost Business Trust
c/o Prudential Capital Group
60 S. 6th Street, Suite 3700

Minneapolis, Minnesota 55402-4422

 

Re:          5.50% Senior Secured Notes due May 14, 2025 (the “Notes”)

 

Ladies and Gentlemen:

 

Reference is made to that certain Note Agreement (the “Note Agreement”), dated
May 14, 2015, among the undersigned and you.  Capitalized terms used herein
shall have the meanings assigned to such terms in the Note Agreement.

 

You are hereby irrevocably authorized and directed to disburse the $25,000,000
purchase price of the Notes by wire transfer of immediately available funds to
[bank name and address], ABA #                            , for credit to the
account of the                             , account no.
                          .

 

Disbursement when so made shall constitute payment in full of the purchase price
of the Notes and shall be without liability of any kind whatsoever to you.

 

 

Very truly yours,

 

 

 

 

WINMARK CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

B-1

--------------------------------------------------------------------------------

 

 

WIRTH BUSINESS CREDIT, INC.

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

WINMARK CAPITAL CORPORATION

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

GROW BIZ GAMES, INC.

 

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

B-2

--------------------------------------------------------------------------------

 

EXHIBIT C

 

[FORM OF OPINION OF ISSUERS’ COUNSEL]

 

(See Attached)

 

C-1

--------------------------------------------------------------------------------