EXHIBIT
10.2


 


MODIFICATION
AGREEMENT


 


This
MODIFICATION AGREEMENT (this “Agreement”) is made and entered into as of
October 22, 2009, by and between Winmark Corporation, a Minnesota
corporation (“Winmark”) and BridgeFunds, LLC, a Nevada limited liability
company (“BridgeFunds”).


 


Reference
is made to the Securities Purchase Agreement, dated as of October 13,
2004, as amended (the “Purchase Agreement”), by and between Winmark and
BridgeFunds Limited, a Nevada corporation (“BridgeFunds Limited”),
pursuant to which, among other things, Winmark purchased from BridgeFunds
Limited (i) the Initial Note on October 13, 2004 in the principal
amount of $500,000, (ii) the Second Note on February 8, 2005 in the
principal amount of $500,000, (iii) the Third Note on May 20, 2005 in
the principal amount of $500,000, (iv) the Fourth Note on May 15,
2006 in the principal amount of $500,000, and (v) a seven-year warrant numbered W-1 (the “Warrant”)
to purchase 256,741 shares of common stock.  The Initial Note, Second Note, Third Note and
Fourth Note are sometimes referred to herein as the “Notes” and each
individually as a “Note”. 
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Purchase Agreement.


 


Pursuant
to a Contribution Agreement and Bill of Sale dated August 23, 2007 (a) BridgeFunds
Limited assigned all of its assets, properties and rights (including, without
limitation, those rights arising under the Purchase Agreement, the Notes and
the Warrant) to BridgeFunds, and (b) BridgeFunds assumed all the
obligations and liabilities of BridgeFunds Limited (including, without
limitation, those obligations and liabilities under the Purchase Agreement, the
Notes and the Warrant).


 


BridgeFunds
proposes to enter into an Asset Purchase Agreement (the “Rewind Purchase
Agreement”) with BridgeFunds Rewind LLC (“Rewind”), pursuant to
which Rewind will purchase the platform assets of BridgeFunds.  Following such purchase, A. Mark Berlin, Jr.
may resign as a Manager of BridgeFunds and from any positions he holds as an
officer of BridgeFunds, including from his office as BridgeFunds’ President and
Chief Executive Officer.  BridgeFunds
also proposes to enter into a Sub-Servicing Agreement with Rewind (the “Sub-Servicing
Agreement”, and together with the Rewind Purchase Agreement, the “Transaction
Documents”) pursuant to which Rewind will act as sub-servicer under each
separate Servicing Agreement between BridgeFunds and its subsidiaries.


 


1        BridgeFunds
agrees and acknowledges that (a) the execution, delivery and performance
of the Transaction Documents by BridgeFunds and Rewind, and the consummation of
the transactions contemplated by the Transaction Documents, would entitle
Winmark to declare the entire outstanding principal amount of each Note, and unpaid
accrued interest thereon, immediately due and payable pursuant to Section 5.2(ii) of
such Note, and could constitute events causing the termination of the term of
the Warrant under Section 1(a)(ii) or 1(a)(iii) of the Warrant,
and (b) the resignation of A. Mark Berlin, Jr. would entitle Winmark
to declare the 


 

















 


entire outstanding principal
amount of each Note, and unpaid accrued interest thereon, immediately due and
payable pursuant to Section 5.2(iii) of such Note.


 


2                       BridgeFunds agrees and acknowledges that (a) the
execution, delivery and performance of the Transaction Documents by BridgeFunds
and Rewind, and the consummation of the transactions contemplated by the
Transaction Documents, would entitle Winmark to declare the entire outstanding
principal amount of each Note, and unpaid accrued interest thereon, immediately
due and payable pursuant to Section 5.2(ii) of such Note, and could
constitute events causing the termination of the term of the Warrant under Section 1(a)(ii) or
1(a)(iii) of the Warrant, and (b) the resignation of A. Mark Berlin, Jr.
would entitle Winmark to declare the entire outstanding principal amount of
each Note, and unpaid accrued interest thereon, immediately due and payable
pursuant to Section 5.2(iii) of such Note.


 


3                       Subject to the agreements, conditions,
covenants and arrangements described below, Winmark hereby (a) consents to
and approves of (i) the execution, delivery and performance of the
Transaction Documents by BridgeFunds and Rewind, in substantially the form presented
by BridgeFunds to Winmark prior to the date of this Agreement, and (ii) the
consummation of the transactions contemplated by the Transaction Documents, (b) agrees
that Winmark shall not, at any time, declare any or all of the indebtedness or
other obligations of BridgeFunds or any of the affiliates of BridgeFunds,
including without limitation the entire outstanding principal amount of any of
the Notes and unpaid accrued interest thereon, immediately due and payable
under Section 5.2(ii) or 5.2(iii) of each such Note due solely
to the execution, delivery or performance of the Transaction Documents, or the
resignation of A. Mark Berlin, Jr. from his position as a Manager, the
President, the Chief Executive Officer or any other office of BridgeFunds, (c) agrees
that none of the transactions contemplated by the Transaction Documents nor the
resignation of A. Mark Berlin, Jr. from his position as a Manager, the
President, the Chief Executive Officer or any other office of BridgeFunds shall
be deemed to (i) constitute a “Mandatory Prepayment Event”, as such term
is defined in Section 5.2 of each Note, under any such Note, or an “Event
of Default”, as such term is defined in Section 3 of each Note, under any
such Note or (ii) otherwise give rise to any remedy of Winmark under any
Note or the Purchase  Agreement,
and (d) waives the notice required by Sections 1(a)(ii) and 1(a)(iii) of
the Warrant with respect to the transactions contemplated by the Transaction
Documents.


 


4                       Subject to the agreements, conditions, covenants
and arrangements described below, BridgeFunds and Winmark hereby agree (a) that
the maturity date in clause (i) of the first paragraph of each Note will
be changed to September 30, 2010, and (b) that BridgeFunds will on
the third Business Day of each month commencing in November, 2009 (each a “Payment
Date”) make payments on the Notes and the Bridge Notes in an amount equal
to Available Cash Flow for the month ending immediately prior to each such
Payment Date.  Such payments will be
allocated between the Notes and the Bridge Notes pro rata
in the same ratio that the outstanding principal amount of the Notes (whether
or not then due and payable) bears to the outstanding principal amount of the
Bridge Notes then due and payable. 
Payments allocated to the Notes will be applied first to accrued and
unpaid interest on the Notes, and then to the outstanding principal amount of
the Notes.  All payments on the Notes
will allocated among the Notes pro rata in
accordance with the outstanding 


 


2

















 


principal amounts thereof.  “Available Cash Flow” means, for any
month, (a) all payments and distributions received by BridgeFunds from its
subsidiaries during such month, minus (b) the sum of (1) the
monthly fixed fees payable to Rewind under the Sub-Servicing Agreement during
such month (including any past due amounts from any prior month), (2) 
reimbursable out-of-pocket expenses payable to Rewind under the Sub-Servicing
Agreement during such month (including any past due amounts from any prior
month), (3) other ordinary and necessary operating expenses of BridgeFunds
for such month (including any expenses incurred in connection with the
consummation of the transactions contemplated in this Agreement or the Transaction
Documents and unpaid or past due amounts from any prior month), and (4) amounts
required to fund or replenish the $100,000 reserve fund under the Sub-Servicing
Agreement during such month. “Bridge Notes” means collectively, (a) that
certain Note of BridgeFunds dated June 30, 2009 in the principal amount of
$100,000, payable to High Ridge Advisors, (b) that certain Note of
BridgeFunds dated June 30, 2009 in the principal amount of $100,000,
payable to Scott H. Anderson, (c) that certain Note of BridgeFunds dated July 23,
2009 in the principal amount of $100,000, payable to RBC Capital Markets Corp,
FBO William Hartfiel III IRA, (d) that certain Note of BridgeFunds dated July 27,
2009 in the principal amount of $50,000, payable to Richard T. and Mary K. Ostlund,
and (e) that certain Note of BridgeFunds dated September 17, 2009 in
the principal amount of $100,000, payable to Eugene W. Shatz.


 


5        Amendment to Section 2 of each of the
Notes.  The first sentence of Section 2 of each
of the Notes is hereby amended to provide that (i) the interest rate shall
be fifteen percent (15%) per annum effective as of the date of this Agreement,
and (ii) in lieu of quarterly payments of interest, BridgeFunds will pay
interest to Winmark monthly on each Payment Date to the extent of Available
Cash Flow allocated to the Notes pursuant to Section 4 of this
Agreement.  All other provisions in Section 2
of the Notes shall continue in full force and effect.


 


6                       Additional Events of Default. 
BridgeFunds and Winmark further agree that in addition to the Events of
Default of Sections 3(i), (ii), (iii), and (iv) of each of the Notes,
which shall continue in full force and effect, subject to the modifications for
the events contemplated above, the breach by BridgeFunds of any of the covenants
or agreements in this Agreement will constitute an Event of Default under each
of the Notes.


 


7                       Mandatory Prepayments.


 


a.             Section 5.2(i) of each of
the Notes is amended and restated in its entirety to read as follows:


 


(i)  The
consummation of a transaction or series of related transactions pursuant to
which there is a change of (a) possession, directly or indirectly, of the
power to direct or cause the direction of management of policies of the Company
(whether through ownership of securities or other ownership interests, by
contract or otherwise); and/or (b) ownership, directly or indirectly, of
more than twenty five (25%) of the outstanding equity interests of the Company;
or


 


b.             The following new Section 5.2(v) is
added to each of the Notes:


 


3

















 


(v)  a majority of
the Board of Managers of BridgeFunds, LLC who are managers as of October 22,
2009 cease to be managers of BridgeFunds, LLC, or a majority of board of
directors of BridgeFunds Limited who are directors as of October 22, 2009
cease to be directors of BridgeFunds Limited; or


 


c.             The following new Section 5.2(vi) is
added to each of the Notes:


 


(vi)  if A. Mark
Berlin, Jr. ceases to be a Member or a Manager of BridgeFunds Rewind LLC.


 


8                       Additional Covenants.


 


8. (i)               Until the
principal and interest on the Notes has been paid in full, BridgeFunds shall
not:


 


(i) make any principal
payments (including any past due amounts) on the Bridge Notes except in
accordance with Section 4 of this Agreement;


 


(ii) declare,
set aside or pay any dividends on, or make any other distributions in respect
of its equity interests or securities;


 


(iii) purchase,
redeem or otherwise acquire any of its equity interests or securities, nor
purchase, redeem or otherwise acquire any equity interests or securities of any
of its subsidiaries;


 


(iv) 
enter into any amendment to the Sub-Servicing Agreement without the consent of
Winmark, such consent not to be unreasonably withheld or delayed;


 


(v) 
hold any equity
interest in any other entity or subsidiary other than those subsidiaries that
BridgeFunds holds any equity interest in as of the date of this Agreement; or


 


(vi)  engage in any
business other than as reasonably necessary to collect outstanding receivables
of it and its subsidiaries, and to liquidate and wind up its business.


 


8. (i)     BridgeFunds shall pay the
reasonable legal expenses and costs of Winmark’s outside counsel in connection
with the preparation of this Agreement not to exceed $5,000.


 


8. (i)     Promptly
following the execution and delivery of the Transaction Documents, BridgeFunds
will deliver to Winmark copies of the executed Transaction Documents which
shall not be materially different from drafts provided to Winmark prior to the
date hereof.


 


9                       Representations and Warranties.  Each
of BridgeFunds and Winmark hereby represent and warrant to each other as
follows:


 


4

















 


9. (i)     It has all requisite power
and authority to execute this Agreement and any other agreements or instruments
required hereunder and to perform all of its obligations hereunder and
thereunder, and this Agreement and all such agreements and instruments have
been duly executed and delivered by it and constitute its legal, valid and
binding obligations enforceable in accordance with its terms.


 


9. (i)     The execution, delivery and
performance by it of this Agreement and any other agreements or instruments
required hereunder have been duly authorized by all necessary corporate action
and do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or
regulation or of any order, writ, injunction or decree presently in effect,
having applicability to it, or its articles of incorporation, organization,
association or similar charter, the operating agreement, or similar by-laws, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
it is a party or by which it or its properties may be bound or affected.


 


10      No Waiver.  Except as
set forth in this Agreement, the execution of this Agreement and the acceptance
of all other agreements and instruments related thereto shall not be deemed a
waiver of any Event of Default under the Notes or a waiver of any breach,
default, or event of default under any other document or agreement, whether or
not known to Winmark and whether or not existing on the date of this Agreement.


 


11      No Assignment; Counterparts; Entire Agreement. 
Winmark and BridgeFunds agree and acknowledge that Winmark shall not be
permitted to assign its right, title and interest in and under any Note to any
other person unless such person agrees in writing to all of the terms and
conditions of this Agreement.  This
Agreement may be executed in any number of counterparts, each of which will be
deemed to be an original, and all of which will constitute one and the same
instrument.  This Agreement constitutes
the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes all prior written and oral negotiations,
agreements and understandings with respect thereto.  The terms and conditions of this Agreement
embody the full extent of the parties’ reasonable expectations regarding the
matter described herein.


 


12      Other Agreement Remain in Force. 
Except as set forth in this Agreement, all obligations, covenants and
agreements of the parties under each of the Notes and the Purchase Agreement
remain in full force and effect.


 


[Signatures follow]


 


5

















 


IN
WITNESS WHEREOF, each of Winmark and BridgeFunds has caused this Agreement to
be executed on the date first written above by its respective officer or other
representative thereunder duly authorized.


 


	
   

  	
   

  	
  WINMARK
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Anthony D. Ishaug

  
	
   

  	
   

  	
  Name:
  Anthony D. Ishaug

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BRIDGEFUNDS,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth Klein

  
	
   

  	
   

  	
  Name:
  Kenneth Klein

  
	
   

  	
   

  	
  Title:
  Manager