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.
“ Collatera
l”: 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 Defaul
t”: 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 Interes t. 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 Le
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