Exhibit 10.2


 


THIRD AMENDMENT TO CREDIT AGREEMENT


 


This
THIRD AMENDMENT TO 364-DAY REVOLVING CREDIT AGREEMENT dated as of May 19,
2006 (the “Third Amendment”), is executed by and among WINMARK
CORPORATION, a Minnesota corporation (the “Company”),
WINMARK CAPITAL CORPORATION, a Minnesota corporation (“WCC”), WIRTH
BUSINESS CREDIT, INC. (formerly known as Winmark Business Solutions, Inc.),
a Minnesota corporation (“WBC”), GROW BIZ GAMES, INC., a Minnesota
corporation (“Grow-Biz” and, together with the Company, WCC and WBC, the
“Loan Parties” and individually and without distinction, a “Loan
Party”), and LASALLE BANK NATIONAL ASSOCIATION, a national banking
association (the “Lender”).


 


RECITALS


 


A.            The Loan Parties and the Lender are
parties to that certain 364-Day Revolving Credit  Agreement dated as of September 30,
2004, as amended by that certain First
Amendment to 364-Day Revolving Credit Agreement dated as of August 26,
2005, and that certain Second Amendment to 364-Day Revolving Credit Agreement
dated as of March 31, 2006 (as amended, supplemented or modified, the “Credit
Agreement”).


 


B.            The Loan Parties and the Lender wish
to amend the Credit Agreement pursuant to the terms and conditions hereinafter
set forth.


 


NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Loan Parties and the Lender hereby agree as follows:


 


AGREEMENTS


 


1.             DEFINITIONS.  Capitalized words and phrases used herein
without definition shall have the respective meanings ascribed to such words
and phrases in the Credit Agreement.


 


2.             AMENDMENTS.


 


2.1.          Amended
Definition.  Section 1.1 of the
Credit Agreement is hereby amended by amending the existing definition of “Tangible
Net Worth” as it appears therein to read in its entirety as follows:


 


“Tangible Net Worth”:  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, plus, until December 31, 2006, the Stock
Repurchase Amount, 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 Lender), minus Investments
in non-public companies net of cash dividends received in respect of such
Investments.


 


2.2.          New
Definitions.  Section 1.1 of the
Credit Agreement is hereby amended by adding thereto in the proper alphabetical
order the following definitions:


 


“Stock Repurchase”:  The repurchase by the Company from Rush River
Group, LLC of 420,000 shares of the Company’s common stock in accordance with
the Company’s stock repurchase plan and as approved unanimously by the
independent directors of the Company’s board of directors and audit committee.


 


“Stock Repurchase Amount”:  The amount paid by the Company for the Stock
Repurchase, which amount shall not exceed $9,891,000.


 


3.             CONDITIONS PRECEDENT.  This Third Amendment shall become effective
as of the date above first written after receipt by the Lender of, or
compliance by the Loan Parties with, the following:


 


3.1.          Third
Amendment.  This Third Amendment duly
executed by each Loan Party.


 


3.2.          Authorization
Documents.  (a) For each Loan
Party, resolutions of its board of directors (or similar governing body)
approving and authorizing each Loan Party’s execution, delivery and performance
of this Third Amendment and the related Loan Documents to which it is a party
and the transactions contemplated hereby, and (b) for the Company, in
addition to the resolutions required pursuant to Section 3.2(a),
resolutions of the Company’s independent directors of the board of directors
and audit committee approving unanimously and otherwise authorizing the Stock
Repurchase, and the entire board of directors confirming that (i) the
steps necessary to qualify the Stock Repurchase as exempt from the provisions
of Section 16(b) of the Exchange Act have been taken, (ii) all
material facts regarding the Stock Repurchase have been disclosed to the
Company’s board of directors and audit committee, and (iii) the Company’s
board of directors and audit committee are unaware of any omissions of material
facts that would make the statements made with respect to the Stock Repurchase
misleading under the circumstances.


 


3.3.          Other
Conditions.  The Loan Parties shall
have satisfied such other conditions as specified by the Lender, including the
delivery of such other documents, certificates and resolutions as the Lender
may request.


 


4.             CONDITION SUBSEQUENT.  In connection with distribution of the
proceeds of the Loan which will be used to consummate the Stock Repurchase, the
Company shall deliver to the Lender, as a condition to the making of such Loan
and in accordance with Section 12.2.2 of the Credit Agreement, a
certificate executed by an officer of the Company on behalf of the 


 

















 


Company, certifying as to, after giving effect to the Stock Repurchase,
(i) the matters set forth in Section 12.2.1 of the Credit Agreement, (ii) the
Company’s compliance with Section 10.4 of the Credit Agreement, and (iii) that
the Stock Repurchase does not violate any federal or state securities laws.


 


5.             CONSENT.


 


5.1.          Stock
Repurchase.  Subject to the terms of
this Third Amendment,  including the
conditions precedent set forth in Section 3 hereof and the conditions
subsequent set forth in Section 4 hereof, the Lender hereby consents to
the Stock Repurchase and agrees with the Company that, notwithstanding anything
to the contrary in Section 11.7 of the Credit Agreement, the Company may
consummate the Stock Repurchase.


 


5.2.          Limited
Consent.  Each Loan Party agrees that
the consent set forth in Section 5.1 hereof shall be limited to the
precise meaning of the words as written therein and shall not be deemed (a) to
be a waiver or modification of any other term or condition of the Loan
Documents, or (b) to prejudice any right or remedy that the Lender may now
have or may in the future have under or in connection with the Loan
Documents.  Each Loan Party acknowledges
and agrees that the consent and amendments set forth herein are provided by the
Lender as an accommodation to the Loan Parties. 
The provisions of this Third Amendment, including Section 5.1
hereof, shall not be deemed to be a course of action upon which any Loan Party
may rely in the future, and each Loan Party hereby expressly waives any claim
to such effect.


 


6.             REPRESENTATIONS AND WARRANTIES.  Each Loan Party hereby certifies, represents
and warrants to the Lender on the date hereof after giving effect to this Third
Amendment that:


 


6.1.          Authorization.  Each Loan Party is duly authorized to execute
and deliver this Third Amendment and each other Loan Document executed by such
Loan Party in connection herewith (the “Amendment Documents”), and is
and will continue to be duly authorized to borrow monies under the Credit
Agreement and to perform its obligations under the Credit Agreement and each
other Loan Document.


 


6.2.          No
Conflicts; No Consent.  The execution
and delivery of this Third Amendment and the performance by any Loan Party of
its obligations hereunder and the Amendment Documents to which it is a party do
not and will not (a) require any consent or approval of any governmental
agency or authority (other than any consent or approval which has been obtained
and is in full force and effect), (b) conflict with (i) any provision
of law,  (ii) the charter, by-laws
or other organizational documents of such Loan Party, or (iii) any
agreement, indenture, instrument or other document, or any judgment, order or
decree, which is binding upon such Loan Party or any of its properties, or (c) require,
or result in, the creation or imposition of any Lien on any asset of any Loan
Party (other than Liens in favor of the Lender created pursuant to the
Collateral Documents).


 

















 


6.3.          Validity
and Binding Effect.  Each of the
Third Amendment and each Amendment Document is a legal, valid and binding
obligation of each Loan Party, enforceable against such Loan Party in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other similar laws of general application affecting
the enforcement of creditors’ rights or by general principles of equity
limiting the availability of equitable remedies.


 


6.4.          Compliance
with Credit Agreement.  The
representation and warranties set forth in Section 9 of the Credit
Agreement are true and correct with the same effect as if such representations
and warranties had been made on the date hereof, with the exception that all
references to the financial statements shall mean the financial statements most
recently delivered to the Lender and except for such changes as are
specifically permitted under the Credit Agreement.


 


6.5.          No
Event of Default.  No Unmatured Event
of Default or Event of Default has occurred and is continuing.


 


6.6.          Stock
Repurchase.  No Loan Party has
grounds to believe that the Stock Repurchase is in violation of any federal or
state securities laws, and no Loan Party has provided any information to the
Lender to such effect.


 


7.             AFFIRMATION OF CREDIT AGREEMENT;
FURTHER REFERENCES; AFFIRMATION OF SECURITY INTEREST.  The Lender and each Loan Party each
acknowledge and affirm that the Credit Agreement, as hereby amended, is hereby
ratified and confirmed in all respects and all terms, conditions and provisions
of the Credit Agreement, except as amended by this Amendment, shall remain
unmodified and in full force and effect. 
All references in any document or instrument to the Credit Agreement are
hereby amended and shall refer to the Credit Agreement as amended by this Third
Amendment.  Each Loan Party confirms to
the Lender that the Obligations are and continue to be secured by the security
interest granted by the Loan Parties in favor of the Lender under the
Collateral Documents, and all of the terms, conditions, provisions, agreements,
requirements, promises, obligations, duties, covenants and representations of
the Company or any other Loan Party under such documents and any and all other
documents and agreements entered into with respect to the obligations under the
Credit Agreement are incorporated herein by reference and are hereby ratified and
affirmed in all respects by each Loan Party.


 


8.             GENERAL.


 


8.1.          Governing
Law; Severability.  This Third
Amendment and each Amendment Document shall be a contract made under and
governed by the internal laws of the State of Minnesota applicable to contracts
made and to be performed entirely within such state, without regard to conflict
of laws principles.  The provisions of Section 15.17
and 15.18 of the Credit Agreement are hereby incorporated herein by
reference.  Wherever possible each
provision of this Third Amendment and each Amendment Document shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Third Amendment or any Amendment 


 

















 


Document
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Third Amendment or such Amendment Document.


 


8.2.          Successors
and Assigns.  This Third Amendment
shall be binding upon each Loan Party, the Lender, and their respective
successors and assigns, and shall inure to the benefit of each Loan Party and
the Lender, and the successors and assigns of the Lender.


 


8.3.          Expenses.  The Loan Parties, jointly and severally,
shall pay all reasonable costs and expenses in connection with the preparation
of this Third Amendment and the Amendment Documents including, without
limitation, reasonable attorneys’ fees and time charges of attorneys who may be
employees of the Lender or any affiliate or parent of the Lender.  The Loan Parties shall pay any and all stamp
and other taxes, UCC search fees, filing fees and other reasonable costs and
expenses in connection with the execution and delivery of this Third Amendment
and the Amendment Documents, and agrees to save the Lender harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such costs and expenses.


 


8.4.          Counterparts.  This Third Amendment may be executed in any
number of counterparts, all of which shall constitute one and the same
agreement.


 


[The next page is the signature page.]


 

















 


IN WITNESS WHEREOF, the parties hereto have executed
this Third Amendment as of the date first above written.


 


	
   

  	
  WINMARK
  CORPORATION,

  
	
   

  	
  a Minnesota
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/   Brett D. Heffes

  	
   

  
	
   

  	
  Name: Brett D.
  Heffes

  
	
   

  	
  Title: Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WIRTH
  BUSINESS CREDIT, INC.,

  
	
   

  	
  formerly known
  as Winmark Business Solutions, 

  Inc., a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/    Brett D. Heffes

  	
   

  
	
   

  	
  Name: Brett D.
  Heffes

  
	
   

  	
  Title: Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WINMARK
  CAPITAL CORPORATION,

  
	
   

  	
  a Minnesota
  corporation

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/    Brett D. Heffes

  	
   

  
	
   

  	
  Name: Brett D.
  Heffes

  
	
   

  	
  Title: Chief
  Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GROW
  BIZ GAMES, INC.,

  
	
   

  	
  a Minnesota
  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/    Mark T. Hooley

  	
   

  
	
   

  	
  Name: Mark T.
  Hooley

  
	
   

  	
  Title: Vice
  President and General Counsel

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LASALLE
  BANK NATIONAL ASSOCIATION,

  
	
   

  	
  a national
  banking association

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/     Peter N. Pricco

  	
   

  
	
   

  	
  Name:

  	
  Peter N. Pricco

  
	
   

  	
  Title:

  	
  Vice President