EXHIBIT 10.2


 


AMENDED AND RESTATED
SECURITY AGREEMENT


 


THIS AMENDED AND RESTATED
SECURITY AGREEMENT, dated as of June 10, 2008 (the “Agreement”),
is made and given by WINMARK CORPORATION, a Minnesota corporation (“Winmark”),
WIRTH BUSINESS CREDIT, INC., a Minnesota corporation (“WBC”), WINMARK
CAPITAL CORPORATION, a Minnesota corporation (“WCC”), and GROW BIZ
GAMES, INC., a Minnesota corporation (“Grow Biz”, and together with
Winmark, WBC and WCC, the “Grantors” or individually, a “Grantor”),to
LASALLE BANK NATIONAL ASSOCIATION (the “Secured Party”), for the ratable
benefit of the Secured Party and the Lenders (as defined below).


 


RECITALS


 


A.            The
Grantors and the Secured Party have entered into a Credit Agreement dated as of
September 30, 2004 (as amended, the “Existing Credit Agreement”)
pursuant to which the Secured Party agreed to extend to the Grantors certain
credit accommodations.


 


B.            As
a condition precedent to the obligation of the Secured Party to extend credit
accommodations pursuant to the terms of the Existing Credit Agreement, the
Grantors executed and delivered to the Secured Party a Security Agreement dated
as of September 30, 2004 (as amended, the “Existing Security Agreement”).


 


C.            The
Grantors and the Secured Party have agreed to amend and restate the Existing
Credit Agreement pursuant to the terms and conditions set forth in that certain
Amended and Restated Revolving Credit Agreement of even date herewith (the “Amended
and Restated Credit Agreement”) by and among the Grantors, each lender from
time to time party thereto (each a “Lender” and collectively, the “Lenders”),
and the Secured Party, as a Lender and as agent for the Lenders.


 


D.            It
is a condition precedent to the obligations of the Secured Party and the
Lenders to extend credit and certain other accommodations pursuant to the terms
of the Amended and Restated Credit Agreement that this Agreement be executed
and delivered by the Grantors.


 


E.             Each
Grantor finds it advantageous, desirable and in its best interests to comply
with the requirement that it execute and deliver this Agreement to the Secured
Party.


 


NOW, THEREFORE, in consideration of the
premises and in order to induce the Lenders and the Secured Party to enter into
the Amended and Restated Credit Agreement and to extend credit and certain
other accommodations to the Grantors thereunder, the Grantors hereby agree with
the Secured Party, for the ratable benefit of the Secured Party and the
Lenders, as follows:


 


Section 1.               Defined
Terms.


 


1(a)         As used in this
Agreement, the following terms shall have the meanings indicated:


 


“Account”:  A right to payment of a monetary obligation,
whether or not earned by performance, (i) for property that has been or is
to be sold, leased (excluding non-recourse 


 

















 


discounted leases), licensed, assigned, or
otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for
a policy of insurance issued or to be issued, (iv) for a secondary
obligation incurred or to be incurred, (v) for energy provided or to be
provided, (vi) for the use or hire of a vessel under a charter or other
contract, (vii) arising out of the use of a credit or charge card or
information contained on or for use with the card, or (viii) as winnings
in a lottery or other game of chance operated, sponsored, licensed or
authorized by a State or governmental unit of a State, or person licensed or
authorized to operate the game by a State or governmental unit of a State.  The term includes health-care insurance
receivables.


 


“Account Debtor”:  A Person who is obligated on or under any
Account, Chattel Paper, Instrument or General Intangible.


 


“Chattel Paper”:  A record or records that evidence both a
monetary obligation and a security interest in specific goods, a security
interest in specific goods and software used in the goods, a security interest
in specific goods and license of software used in the goods, a lease of
specific goods, or a lease of specific goods and license of software used in
the goods.


 


“Collateral”:  All property and rights in property now owned
or hereafter at any time acquired by the Grantors in or upon which a Security
Interest is granted to the Secured Party, for the ratable benefit of the
Secured Party and the Lenders, by the Grantors under this Agreement.


 


“Deposit Account”:  Any demand, time, savings, passbook or
similar account maintained with a bank.


 


“Document”:  A document of title or a warehouse receipt.


 


“Equipment”:  All machinery, equipment, motor vehicles,
furniture, furnishings and fixtures, including all accessions, accessories and attachments
thereto, and any guaranties, warranties, indemnities and other agreements of
manufacturers, vendors and others with respect to such Equipment.


 


“Event of Default”:  As defined in Section 18.


 


“Financing Statement”:  As defined in Section 4.


 


“Fixtures”:  Goods that have become so related to
particular real property that an interest in them arises under real property
law.


 


“General Intangibles”:  Any personal property (other than goods,
Accounts, Chattel Paper, Deposit Accounts, Documents, Instruments, Investment
Property, Letter of Credit Rights and money) including things in action,
contract rights, payment intangibles, software, corporate and other business
records, inventions, designs, patents, patent applications, service marks,
trademarks, trade names, trade secrets, internet domain names, engineering
drawings, good will, registrations, copyrights, licenses, franchises, customer
lists, tax refund claims, royalties, licensing and product rights, rights to
the retrieval from third parties of electronically processed and recorded data
and all rights to payment resulting from an order of any court.


 


“Instrument”:  A negotiable instrument or any other writing
which evidences a right to the payment of a monetary obligation and is not
itself a security agreement or lease and is of a type which is transferred in
the ordinary course of business by delivery with any necessary endorsement or
assignment.


 


“Inventory”:  Goods, other than farm products, which are
leased by a person as lessor, are held by a person for sale or lease or to be
furnished under a contract of service, are furnished by a person under a
contract of service, or consist of raw materials, work in process, or materials
used or consumed in a business or incorporated or consumed in the production of
any of the foregoing 


 


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and supplies, in each case wherever the same
shall be located, whether in transit, on consignment, in retail outlets,
warehouses, terminals or otherwise, and all property the sale, lease or other
disposition of which has given rise to an Account and which has been returned
to the Grantors or repossessed by the Grantors or stopped in transit.


 


“Investment Property”:  A security, whether certificated or
uncertificated, a security entitlement, a securities account and all financial
assets therein, a commodity contract or a commodity account.


 


“Letter of Credit Right”:  A right to payment or performance under a
letter of credit, whether or not the beneficiary has demanded or is at the time
entitled to demand payment or performance.


 


“Lien”:  Any security interest, mortgage, pledge,
lien, charge, encumbrance, title retention agreement or analogous instrument or
device (including the interest of the lessors under capitalized leases), in, of
or on any assets or properties of the Person referred to.


 


“Obligations”:  (a) All indebtedness, liabilities and
obligations of the Grantors to the Secured Party and the Lenders of every kind,
nature or description under the Amended and Restated Credit Agreement,
including the Grantors’ obligation on any promissory note or notes under the
Amended and Restated Credit Agreement, and any note or notes hereafter issued
in substitution or replacement thereof, (b) all liabilities of the
Grantors under this Agreement, and (c) in all of the foregoing cases
whether due or to become due, and whether now existing or hereafter arising or
incurred.


 


“Person”:  Any individual, corporation, partnership,
limited partnership, limited liability company, joint venture, firm,
association, trust, unincorporated organization, government or governmental
agency or political subdivision or any other entity, whether acting in an
individual, fiduciary or other capacity.


 


“Security Interest”:  As defined in Section 2.


 


1(b)         All
other terms used in this Agreement which are not specifically defined herein
shall have the meaning assigned to such terms in Article 9 of the Uniform
Commercial Code as in effect in the State of Minnesota.


 


1(c)         Unless
the context of this Agreement otherwise clearly requires, references to the
plural include the singular, the singular, the plural and “or” has the
inclusive meaning represented by the phrase “and/or.”  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation.”  The words “hereof,” “herein,” “hereunder” and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. 
References to Sections are references to Sections in this Amended and
Restated Security Agreement unless otherwise provided.


 


Section 2.               Grant of Security Interest.  As security for the payment and performance
of all of the Obligations, each Grantor hereby grants to the Secured Party, for
the ratable benefit of the Secured Party and the Lenders, a security interest
(the “Security Interest”) in all of such Grantor’s rights, titles, and
interests in and to the following, whether now or hereafter owned, existing,
arising or acquired and wherever located:


 


2(a)         All Accounts.


 


2(b)         All Chattel Paper.


 


2(c)         All Deposit Accounts.


 


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2(d)         All Documents.


 


2(e)         All Equipment.


 


2(f)          All Fixtures.


 


2(g)         All General Intangibles.


 


2(h)         All Instruments.


 


2(i)          All Inventory.


 


2(j)          All Investment Property.


 


2(k)         All Letter of Credit Rights.


 


2(l)          To
the extent not otherwise included in the foregoing, all other rights to the
payment of money, including rents and other sums payable to any Grantor under
lease, rental agreements and other Chattel Paper; all books, correspondence,
credit files, records, invoices, bills of lading, and other documents relating
to any of the foregoing, including, without limitation, all tapes, cards,
disks, computer software, computer runs, and other papers and documents in the
possession or control of any Grantor or any computer bureau from time to time
acting for any Grantor; all rights in, to and under all policies insuring the
life of any officer, director, stockholder or employee of any Grantor, the proceeds
of which are payable to any Grantor; all accessions and additions to, parts and
appurtenances of, substitutions for and replacements of any of the foregoing;
and all proceeds (including insurance proceeds) and products thereof.


 


Section 3.               Grantors
Remain Liable.  Anything herein to
the contrary notwithstanding, (a) the Grantors shall remain liable under
the Accounts, Chattel Paper, General Intangibles and other items included in
the Collateral to the extent set forth therein to perform all of their duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Secured Party of any of the rights
hereunder shall not release any Grantor from any of its duties or obligations
under the Accounts or any other items included in the Collateral, and (c) the
Secured Party shall have no obligation or liability under Accounts, Chattel
Paper, General Intangibles and other items included in the Collateral by reason
of this Agreement, nor shall the Secured Party be obligated to perform any of
the obligations or duties of any Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.


 


Section 4.               Title to Collateral.  Each Grantor has (or will have at the time it
acquires rights in Collateral hereafter acquired or arising) and will maintain
so long as the Security Interest may remain outstanding, title to each item of
Collateral (including the proceeds and products thereof), free and clear of all
Liens except the Security Interest and except Liens permitted by the Amended
and Restated Credit Agreement.  No
Grantor will license any Collateral.  The
Grantors will defend the Collateral against all claims or demands of all
Persons (other than the Secured Party) claiming the Collateral or any interest
therein.  As of the date of execution of
this Amended and Restated Security Agreement, no effective financing statement
or other similar document used to perfect and preserve a security interest
under the laws of any jurisdiction (a “Financing Statement”) covering
all or any part of the Collateral is on file in any recording office, except
such as may have 


 


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been filed (a) in favor of the Secured
Party, relating to this Agreement or the Existing Security Agreement, or (b) to
perfect Liens permitted by the Amended and Restated Credit Agreement.


 


Section 5.               Disposition of Collateral.  No Grantors will sell, lease or otherwise
dispose of, or discount or factor with or without recourse, any Collateral,
except for sales of items of Inventory in the ordinary course of business and
dispositions of Equipment which are immediately replaced with comparable
replacement equipment.


 


Section 6.               Names, Offices, Locations,
Jurisdiction of Organization.  The
Grantors’ legal names (as set forth in their constituent documents filed with
the appropriate governmental official or agency) are as set forth in the
opening paragraph hereof.  The
jurisdiction of organization of the Grantors is the state of Minnesota, and the
organizational numbers of the Grantors are set forth on the signature page of
this Agreement.  The Grantors will from
time to time at the request of the Secured Party provide the Secured Party with
current good standing certificates and/or state-certified constituent documents
from the appropriate governmental officials. 
The chief places of business and chief executive offices of the Grantors
are located at the addresses set forth on the signature page hereof.  The Grantors will not locate or relocate any
item of Collateral into any jurisdiction in which an additional Financing
Statement would be required to be filed to maintain the Secured Party’s
perfected security interest in such Collateral. 
The Grantors will not change their name, the location of their chief
place of business or chief executive offices or their corporate structure
(including without limitation, their jurisdiction of organization) unless the
Secured Party has been given at least 30 days prior written notice thereof and
the Grantors have executed and delivered to the Secured Party such Financing
Statements and other instruments required or appropriate to continue the
perfection of the Security Interest.


 


Section 7.               Rights to Payment.  Except as the Grantors may otherwise advise
the Secured Party in writing, each Account, Chattel Paper, Document, General
Intangible and Instrument constituting or evidencing Collateral is (or, in the
case of all future Collateral, will be when arising or issued) the valid,
genuine and legally enforceable obligation of the Account Debtor or other
obligor named therein or in the Grantors’ records pertaining thereto as being
obligated to pay or perform such obligation. 
Without the Secured Party’s prior written consent, no Grantor will agree
to any modifications, amendments, subordinations, cancellations or terminations
of the obligations of any such Account Debtors or other obligors except in the
ordinary course of business.  Each
Grantor will perform and comply in all material respects with all their
obligations under any items included in the Collateral and exercise promptly
and diligently their rights thereunder.


 


Section 8.               Further Assurances;
Attorney-in-Fact.


 


8(a)         The Grantors agree
that from time to time, at their expense, they will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be necessary or that the Secured Party may reasonably request, in
order to perfect and protect the Security Interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its
rights and remedies hereunder with respect to any Collateral (but any failure
to request or assure that the Grantors execute and deliver such instrument or
documents or to take such action shall not affect or impair the validity,
sufficiency or enforceability of this Agreement and the Security Interest,
regardless of whether any such item was or was not executed and delivered or
action taken in a similar context or on a prior occasion).  Without limiting the generality of the
foregoing, the Grantors will, promptly and from time to time at the request of
the Secured Party: (i) execute and file such Financing Statements or
continuation statements in respect thereof, or 


 


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amendments thereto, and such other instruments or notices (including
fixture filings with any necessary legal descriptions as to any goods included
in the Collateral which the Secured Party determines might be deemed to be
fixtures, and instruments and notices with respect to vehicle titles), as may
be necessary or desirable, or as the Secured Party may request, in order to
perfect, preserve, and enhance the Security Interest granted or purported to be
granted hereby; (ii) obtain from any bailee holding any item of Collateral
an acknowledgement, in form satisfactory to the Secured Party that such bailee
holds such collateral for the benefit of the Secured Party; (iii) obtain
from any securities intermediary, or other party holding any item of
Collateral, control agreements in form satisfactory to the Secured Party (iv) and
deliver and pledge to the Secured Party, for the ratable benefit of the Secured
Party and the Lenders, all Instruments and Documents, duly indorsed or
accompanied by duly executed instruments of transfer or assignment, with full
recourse to the Grantors, all in form and substance satisfactory to the Secured
Party; (v) obtain waivers, in form satisfactory to the Secured Party, of
any claim to any Collateral from any landlords or mortgagees of any property
where any Inventory or Equipment is located.


 


8(b)         Each
Grantor hereby authorizes the Secured Party to file one or more Financing
Statements or continuation statements in respect thereof, and amendments
thereto, relating to all or any part of the Collateral without the signatures
of such Grantor where permitted by law. 
The Grantors irrevocably waive any right to notice of any such
filing.  A photocopy or other
reproduction of this Agreement or any Financing Statement covering the
Collateral or any part thereof shall be sufficient as a Financing Statement
where permitted by law.


 


8(c)         The
Grantors will furnish to the Secured Party from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Secured Party may reasonably
request, all in reasonable detail and in form and substance reasonably
satisfactory to the Secured Party.


 


8(d)         In furtherance, and
not in limitation, of the other rights, powers and remedies granted to the
Secured Party in this Agreement, each Grantor hereby appoints the Secured Party
such Grantor’s attorney-in-fact, with full authority in the place and stead of
such Grantor and in the name of such Grantor or otherwise, from time to time in
the Secured Party’s good faith discretion, to take any action (including the
right to collect on any Collateral) and to execute any instrument that the
Secured Party may reasonably believe is necessary or advisable to accomplish the
purposes of this Agreement, in a manner consistent with the terms hereof.


 


Section 9.               Taxes
and Claims.  The Grantors will
promptly pay all taxes and other governmental charges levied or assessed upon
or against any Collateral or upon or against the creation, perfection or
continuance of the Security Interest, as well as all other claims of any kind
(including claims for labor, material and supplies) against or with respect to
the Collateral, except to the extent (a) such taxes, charges or claims are
being contested in good faith by appropriate proceedings, (b) such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any of the Collateral or any interest therein and (c) such taxes,
charges or claims are adequately reserved against on the Grantors’ books in
accordance with generally accepted accounting principles.


 


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Section 10.             Books and Records.  The Grantors will keep and maintain at their
own cost and expense satisfactory and complete records of the Collateral,
including a record of all payments received and credits granted with respect to
all Accounts, Chattel Paper and other items included in the Collateral.


 


Section 11.             Inspection, Reports,
Verifications.  The Grantors will at
all reasonable times permit the Secured Party or its representatives to examine
or inspect any Collateral, any evidence of Collateral and the Grantors’ books
and records concerning the Collateral, wherever located.  The Grantors will from time to time when
requested by the Secured Party furnish to the Secured Party a report on its
Accounts, Chattel Paper, General Intangibles and Instruments, naming the
Account Debtors or other obligors thereon, the amount due and the aging
thereof.  The Secured Party or its
designee is authorized to contact Account Debtors and other Persons obligated
on any such Collateral from time to time to verify the existence, amount and/or
terms of such Collateral.


 


Section 12.             Notice of Loss.  The Grantors will promptly notify the Secured
Party of any loss of or material damage to any material item of Collateral or
of any substantial adverse change, known to the Grantors, in any material item
of Collateral or the prospect of payment or performance thereof.


 


Section 13.             Insurance.  The Grantors will keep the Inventory and
Equipment insured against “all risks” for the full replacement cost thereof
subject to a deductible not exceeding $25,000 and with an insurance company or
companies satisfactory to the Secured Party, the policies to protect the
Secured Party as its interests may appear, with such policies or certificates
with respect thereto to be delivered to the Secured Party at its request.  Each such policy or the certificate with
respect thereto shall provide that such policy shall not be canceled or allowed
to lapse unless at least 30 days prior written notice is given to the Secured
Party.


 


Section 14.             Lawful Use; Fair Labor Standards
Act.  The Grantors will use and keep
the Collateral, and will require that others use and keep the Collateral, only
for lawful purposes, without violation of any federal, state or local law,
statute or ordinance.  All Inventory of
the Grantors as of the date of this Agreement that was produced by any Grantor
or with respect to which any Grantor performed any manufacturing or assembly
process was produced by any Grantor (or such manufacturing or assembly process
was conducted) in compliance in all material respects with all requirements of
the Fair Labor Standards Act, and all Inventory produced, manufactured or
assembled by any Grantor after the date of this Agreement will be so produced,
manufactured or assembled, as the case may be.


 


Section 15.             Action by the Secured Party.  If any Grantor at any time fails to perform
or observe any of the foregoing agreements, the Secured Party shall have (and
the Grantors hereby grant to the Secured Party) the right, power and authority
(but not the duty) to perform or observe such agreement on behalf and in the
name, place and stead of such Grantor (or, at the Secured Party’s option, in
the Secured Party’s name) and to take any and all other actions which the
Secured Party may reasonably deem necessary to cure or correct such failure
(including, without limitation, the payment of taxes, the satisfaction of
Liens, the procurement and maintenance of insurance, the execution of
assignments, security agreements and Financing Statements, and the indorsement
of instruments); and the Grantors shall thereupon pay to the Secured Party on
demand the amount of all monies expended and all costs and expenses (including
reasonable attorneys’ fees and legal expenses) incurred by the Secured Party in
connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Secured Party, together with
interest thereon from the date expended or incurred at the highest lawful rate
then applicable to any 


 


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of the Obligations, and all such monies
expended, costs and expenses and interest thereon shall be part of the
Obligations secured by the Security Interest.


 


Section 16.             Insurance Claims.  As additional security for the payment and
performance of the Obligations, each Grantor hereby assigns to the Secured
Party, for the ratable benefit of the Secured Party and the Lenders, any and
all monies (including proceeds of insurance and refunds of unearned premiums)
due or to become due under, and all other rights of the Grantors with respect
to, any and all policies of insurance now or at any time hereafter covering the
Collateral or any evidence thereof or any business records or valuable papers
pertaining thereto.  At any time, whether
before or after the occurrence of any Event of Default, the Secured Party may
(but need not), in the Secured Party’s name or in a Grantor’s name, execute and
deliver proofs of claim, receive all such monies, indorse checks and other
instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy.  Notwithstanding any of the foregoing, so long
as no Event of Default exists the Grantors shall be entitled to all insurance
proceeds with respect to Equipment or Inventory provided that such proceeds are
applied to the cost of replacement Equipment or Inventory.


 


Section 17.             The Secured Party’s Duties.  The powers conferred on the Secured Party
hereunder, for the ratable benefit of the Secured Party and the Lenders, are
solely to protect their interests in the Collateral and shall not impose any
duty upon them to exercise any such powers. 
The Secured Party shall be deemed to have exercised reasonable care in
the safekeeping of any Collateral in its possession if such Collateral is
accorded treatment substantially equal to the safekeeping which the Secured
Party accords its own property of like kind. 
Except for the safekeeping of any Collateral in its possession and the
accounting for monies and for other properties actually received by it
hereunder, the Secured Party shall have no duty, as to any Collateral, as to
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not
the Secured Party has or is deemed to have knowledge of such matters, or as to
the taking of any necessary steps to preserve rights against any Persons or any
other rights pertaining to any Collateral. 
The Secured Party will take action in the nature of exchanges,
conversions, redemptions, tenders and the like requested in writing by the Grantors
with respect to the Collateral in the Secured Party’s possession if the Secured
Party in its reasonable judgment determines that such action will not impair
the Security Interest or the value of the Collateral, but a failure of the
Secured Party to comply with any such request shall not of itself be deemed a
failure to exercise reasonable care with respect to the taking of any necessary
steps to preserve rights against any Persons or any other rights pertaining to
any Collateral.


 


Section 18.             Default.  Each of the following occurrences shall
constitute an Event of Default under this Agreement:  (a) any Grantor shall fail to observe or
perform any covenant or agreement applicable to the Grantors under this
Agreement; or (b) any representation or warranty made by any Grantor in
this Agreement or any schedule, exhibit, supplement or attachment hereto or in
any financial statements, or reports or certificates heretofore or at any time
hereafter submitted by or on behalf of the Grantors to the Secured Party or any
Lender shall prove to have been false or materially misleading when made; or (c) any
Event of Default shall occur under the Amended and Restated Credit Agreement.


 


Section 19.             Remedies on Default.  Upon the occurrence of an Event of Default
and at any time thereafter:


 


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19(a)       The
Secured Party may exercise and enforce any and all rights and remedies
available upon default to a secured party under Article 9 of the Uniform
Commercial Code as in effect in the State of Minnesota


 


19(b)       The
Secured Party shall have the right to enter upon and into and take possession
of all or such part or parts of the properties of the Grantors, including
lands, plants, buildings, Equipment, Inventory and other property as may be
necessary or appropriate in the judgment of the Secured Party to permit or
enable the Secured Party to manufacture, produce, process, store or sell or
complete the manufacture, production, processing, storing or sale of all or any
part of the Collateral, as the Secured Party may elect, and to use and operate
said properties for said purposes and for such length of time as the Secured
Party may deem necessary or appropriate for said purposes without the payment
of any compensation to the Grantors therefor. 
The Secured Party may require the Grantors to, and the Grantors hereby
agree that they will, at their expense and upon request of the Secured Party
forthwith, assemble all or part of the Collateral as directed by the Secured
Party and make it available to the Secured Party at a place or places to be
designated by the Secured Party.


 


19(c)       Any
disposition of Collateral may be in one or more parcels at public or private
sale, at any of the Secured Party’s offices or elsewhere, for cash, on credit,
or for future delivery, and upon such other terms as the Secured Party may
reasonably believe are commercially reasonable. 
The Secured Party shall not be obligated to dispose of Collateral
regardless of notice of sale having been given, and the Secured Party may
adjourn any public or private sale from time to time by announcement made at
the time and place fixed therefor, and such disposition may, without further
notice, be made at the time and place to which it was so adjourned.


 


19(d)       The
Secured Party, for the ratable benefit of the Secured Party and the Lenders, is
hereby granted a license or other right to use, without charge, all of the
Grantors’ property, including, without limitation, all of the Grantors’ labels,
trademarks, copyrights, patents and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale and selling any Collateral, and the Grantors’ rights under
all licenses and all franchise agreements shall inure to the benefit of the
Secured Party, for the ratable benefit of the Secured Party and the Lenders,
until the Obligations are paid in full.


 


19(e)       If
notice to the Grantors of any intended disposition of Collateral or any other
intended action is required by law in a particular instance, such notice shall
be deemed commercially reasonable if given in the manner specified for the
giving of notice in 0 hereof at least ten calendar days prior to the date of
intended disposition or other action, and the Secured Party may exercise or
enforce any and all other rights or remedies available by law or agreement
against the Collateral, against the Grantors, or against any other Person or
property.  The Secured Party (i) may
dispose of the Collateral in its then present condition or following such
preparation and processing as the Secured Party deems commercially reasonable, (ii) shall
have no duty to prepare or process the Collateral prior to sale, (iii) may
disclaim warranties of title, possession, quiet enjoyment and the like, and (iv) may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and none of the foregoing actions shall be
deemed to adversely affect the commercial reasonableness of the disposition of
the Collateral.


 


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Section 20.             Remedies as to Certain Rights to
Payment.  Upon the occurrence of an
Event of Default and at any time thereafter the Secured Party may notify any
Account Debtor or other Person obligated on any Accounts or other Collateral
that the same have been assigned or transferred to the Secured Party, for the
ratable benefit of the Secured Party and the Lenders, and that the same should
be performed as requested by, or paid directly to, the Secured Party, as the
case may be.  The Grantors shall join in
giving such notice, if the Secured Party so requests.  The Secured Party may, in the Secured Party’s
name or in a Grantor’s name, demand, sue for, collect or receive any money or
property at any time payable or receivable on account of, or securing, any such
Collateral or grant any extension to, make any compromise or settlement with or
otherwise agree to waive, modify, amend or change the obligation of any such
Account Debtor or other Person.  If any
payments on any such Collateral are received by a Grantor after an Event of
Default has occurred, such payments shall be held in trust by such Grantor as
the property of the Secured Party, for the ratable benefit of the Secured Party
and the Lenders, and shall not be commingled with any funds or property of such
Grantor and shall be forthwith remitted to the Secured Party for application on
the Obligations.


 


Section 21.             Application of Proceeds.  All cash proceeds received by the Secured
Party in respect of any sale of, collection from, or other realization upon all
or any part of the Collateral may, in the discretion of the Secured Party, be
held by the Secured Party as collateral for, or then or at any time thereafter
be applied in whole or in part by the Secured Party against, all or any part of
the Obligations (including, without limitation, any expenses of the Secured
Party payable pursuant to this Agreement).


 


Section 22.             Costs and Expenses; Indemnity.  The Grantors will pay or reimburse the Secured
Party on demand for all out-of-pocket expenses (including in each case all
filing and recording fees and taxes and all reasonable fees and expenses of
counsel and of any experts and agents) incurred by the Secured Party or any
Lender in connection with the creation, perfection, protection, satisfaction,
foreclosure or enforcement of the Security Interest and the preparation,
administration, continuance, amendment or enforcement of this Agreement, and
all such costs and expenses shall be part of the Obligations secured by the
Security Interest.  The Grantors shall
indemnify and hold the Secured Party and each Lender harmless from and against
any and all claims, losses and liabilities (including reasonable attorneys’
fees) growing out of or resulting from this Agreement and the Security Interest
hereby created (including enforcement of this Agreement) or the Secured Party’s
or any Lender’s actions pursuant hereto, except claims, losses or liabilities
resulting from the Secured Party’s or such Lender’s gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction.  Any liability of the
Grantors to indemnify and hold the Secured Party and each Lender harmless
pursuant to the preceding sentence shall be part of the Obligations secured by
the Security Interest.  The obligations
of the Grantors under this Section shall survive any termination of this
Agreement.


 


Section 23.             Waivers; Remedies; Marshalling.  This Agreement can be waived, modified,
amended, terminated or discharged, and the Security Interest can be released,
only explicitly in a writing signed by the Secured Party.  A waiver so signed shall be effective only in
the specific instance and for the specific purpose given.  Mere delay or failure to act shall not
preclude the exercise or enforcement of any rights and remedies available to
the Secured Party.  All rights and
remedies of the Secured Party shall be cumulative and may be exercised singly
in any order or sequence, or concurrently, at the Secured Party’s option, and
the exercise or enforcement of any such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other.  The Grantors hereby waive all requirements of
law, if any, relating to the marshalling of assets which would be applicable in
connection with the enforcement by the Secured Party of its remedies hereunder,
absent this waiver.


 


10

















 


Section 24.             Notices.  Any notice or other communication to any
party in connection with this Agreement shall be in writing and shall be sent
by manual delivery, facsimile transmission, overnight courier or United States
mail (postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing. 
All periods of notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending thereof if sent by
facsimile transmission, from the first business day after the date of sending
if sent by overnight courier, or from four days after the date of mailing if
mailed.


 


Section 25.             Grantors Acknowledgments.
Each Grantor hereby acknowledges that (a) it has been advised by counsel
in the negotiation, execution and delivery of this Agreement, (b) neither
the Secured Party nor any Lender has any fiduciary relationship to any Grantor,
the relationship being solely that of debtors and creditors, and (c) no
joint venture exists between the Grantors and the Secured Party, or any Grantor
and the Secured Party or any Lender.


 


Section 26.             Continuing Security Interest;
Assignments under Amended and Restated Credit Agreement.  This Agreement shall (a) create a
continuing security interest in the Collateral and shall remain in full force
and effect until payment in full of the Obligations and the expiration of the
obligations, if any, of the Secured Party and the Lenders to extend credit and
certain other accommodations to the Grantors, (b) be binding upon the
Grantors, their successors and assigns, and (c) inure to the benefit of,
and be enforceable by, the Secured Party, the Lenders and their successors,
transferees, and assigns.  Without
limiting the generality of the foregoing clause (c), the Secured Party may
assign or otherwise transfer all or any portion of its rights and obligations
under the Amended and Restated Credit Agreement to any other Persons to the
extent and in the manner provided in the Amended and Restated Credit Agreement
and may similarly transfer all or any portion of its rights under this Amended
and Restated Security Agreement to such Persons.


 


Section 27.             Termination of Security Interest.  Upon payment in full of the Obligations and
the expiration of any obligation of the Secured Party and the Lenders to extend
credit and certain other accommodations to the Grantors, the Security Interest
granted hereby shall terminate.  Upon any
such termination, the Secured Party will return to the Grantors such of the
Collateral then in the possession of the Secured Party as shall not have been
sold or otherwise applied pursuant to the terms hereof and execute and deliver
to the Grantors such documents as the Grantors shall reasonably request to
evidence such termination.  Any reversion
or return of Collateral upon termination of this Agreement and any instruments
of transfer or termination shall be at the expense of the Grantors and shall be
without warranty by, or recourse on, the Secured Party.  As used in this Section, “Grantors” includes
any assigns of a Grantor, any Person holding a subordinate security interest in
any of the Collateral or whoever else may be lawfully entitled to any part of
the Collateral.


 


Section 28.             Governing Law and Construction.  THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY
OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MINNESOTA,
WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, EXCEPT TO THE
EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE MANDATORILY
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF MINNESOTA. 
Whenever possible, each provision of this Agreement and any other
statement, instrument or transaction contemplated hereby or relating hereto
shall be interpreted in such manner as to be effective and valid under such
applicable law, but, if any provision of this Agreement or any other statement,
instrument or transaction contemplated hereby or relating hereto 


 


11

















 


shall be held to be prohibited or invalid
under such applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto.


 


Section 29.             Consent to Jurisdiction. 
AT THE OPTION OF THE SECURED PARTY, THIS AGREEMENT MAY BE ENFORCED
IN ANY FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN MINNEAPOLIS,
MINNESOTA; AND EACH GRANTOR CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH
COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IN THE EVENT A GRANTOR COMMENCES ANY ACTION
IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING
DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE
SECURED PARTY AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO
ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.


 


Section 30.             Waiver of Notice and Hearing. 
EACH GRANTOR HEREBY WAIVES ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND
PRIOR TO THE EXERCISE BY THE SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE
COLLATERAL WITHOUT JUDICIAL PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR
LEVY UPON THE COLLATERAL WITHOUT PRIOR NOTICE OR HEARING.  EACH GRANTOR ACKNOWLEDGES THAT IT HAS BEEN
ADVISED BY COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS
AGREEMENT.


 


Section 31.             Waiver of Jury Trial. 
EACH OF THE GRANTORS AND THE SECURED PARTY, BY ITS ACCEPTANCE OF THIS
AGREEMENT, IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.


 


Section 32.             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which when so executed and delivered shall be deemed
an original, but all such counterparts together shall constitute but one and
the same instrument.


 


Section 33.             General.  All representations and warranties contained
in this Agreement or in any other agreement between the Grantors, the Secured
Party and the Lenders shall survive the execution, delivery and performance of
this Agreement and the creation and payment of the Obligations.  The Grantors waive notice of the acceptance
of this Agreement by the Secured Party. 
Captions in this Agreement are for reference and convenience only and
shall not affect the interpretation or meaning of any provision of this
Agreement.


 


Section 34.             Existing Security Agreement.  This Agreement amends and restates in its
entirety the Existing Security Agreement, provided that the obligations of the
Grantors under the Existing Security Agreement shall continue under this
Agreement unabated, and shall not in any event be terminated, extinguished or
annulled, but shall hereafter be governed by this Agreement.


 


[The next page is the signature page.]


 


12

















 


IN WITNESS WHEREOF, the Grantors have caused
this Amended and Restated Security Agreement to be duly executed and delivered
by their officers thereunto duly authorized as of the date first above written.


 


 


	
   

  	
  WINMARK CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett D. Heffes

  
	
   

  	
  Title:

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Winmark’s
  Tax ID # 14-1622691

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WIRTH BUSINESS CREDIT, INC..

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett D. Heffes

  
	
   

  	
  Title:

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  WBC’s
  Tax ID # 41-1905691

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WINMARK CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett D. Heffes

  
	
   

  	
  Title:

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  WCC’s
  Tax ID # 41-1905693

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GROW BIZ GAMES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brett D. Heffes

  
	
   

  	
  Name:

  	
  Brett D. Heffes

  
	
   

  	
  Title:

  	
  Chief Financial Officer and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  Grow
  Biz’s Tax ID # 14-1882187

  



 


Address
for Notices to Grantors:


 


c/o
Winmark Corporation


4200
Dahlberg Drive

Suite 100

Minneapolis, MN 55422-4837


Attention:  Vice President and General Counsel


Telephone:  (763) 520-8500


Fax:  (763) 520-8410


 

















 


	
   

  	
  ACKNOWLEDGED
  AND ACCEPTED:

  
	
   

  	
   

  	
   

  
	
   

  	
  LASALLE
  BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Quinn Richardson

  
	
   

  	
  Name:

  	
  A.
  Quinn Richardson

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
				



 


Address
for the Secured Party:


 


LaSalle
Bank National Association


135
South LaSalle Street, Suite 1152


Chicago,
IL  60603


Attention:  Quinn Richardson


Telephone:  (312) 992-2160


Facsimile:  (312) 904-6546