8-K - WINA - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 14, 2020

Winmark Corporation

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

(State or Other Jurisdiction of Incorporation)


000-22012	41-1622691
(Commission File Number)	(I.R.S. Employer Identification Number)

605 Highway 169 North , Suite 400 , Minneapolis , Minnesota **** 55441

(Address of Principal Executive Offices) (Zip Code)

( 763 ) 520-8500

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol	Name of each exchange on which registered:
Common Stock, no par value per share	WINA	Nasdaq Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01; 2.03Entry into a Material Definitive Agreement.

Credit Agreement

On October 14, 2020, Winmark Corporation and is subsidiaries’ (collectively, the “Company”) entered into Amendment No. 8 to its Credit Agreement with CIBC Bank USA (formerly known as The PrivateBank and Trust Company) (the “Lender”). The amendment, among other things,

●	Provides the consent of the Lender for the Company’s declaration and payment of a special $3.00 per share cash dividend to its shareholders that the Company announced on October 14, 2020 (the “2020 Special Dividend”);
●	Amends the fixed charge coverage ratio definition to remove the effect of the 2020 Special Dividend.
---	---

The foregoing description of Amendment No. 8 to the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full amendment included hereto as Exhibit 10.1

Note Agreement

On October 14, 2020, the Company also entered into Amendment No. 4 to its Note Agreement with Prudential Investment Management, Inc., its affiliates and managed accounts (collectively, “Prudential”). The amendment, among other things,

●	Provides the consent of Prudential for the 2020 Special Dividend;
●	Amends the fixed charge coverage ratio definition to remove the effect of the 2020 Special Dividend.
---	---

The foregoing description of Amendment No. 4 to the Note Agreement does not purport to be complete and is qualified in its entirety by reference to the full amendment included hereto as Exhibit 10.3

Item 2.02Results of Operations and Financial Condition

On October 14, 2020, the Company announced in a press release its results of operations and financial condition for the third quarter ended September 26, 2020. A copy of the press release is attached as Exhibit 99.1 of this Current Report on Form 8-K.

Item 7.01Regulation FD Disclosure

On October 14, 2020, the Company also announced in a press release that its Board of Directors has approved the payment of a quarterly cash dividend to its shareholders. The quarterly dividend of $0.25 per share will be paid on December 1, 2020 to shareholders of record on the close of business on November 11, 2020. Additionally, the Board of Directors approved the payment of the 2020 Special Dividend. The 2020 Special Dividend will be paid on December 15, 2020 to shareholders of record on the close of business on November 11, 2020. The total amount of the 2020 Special Dividend payment will be approximately $11.2 million based on the current number of shares outstanding. Future regular or special dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report on Form 8-K.

Item 8.01Other Events

On October 14, 2020, the Company announced in a press release that its Board of Directors has approved the payment of a cash dividend to its shareholders. The quarterly dividend of $0.25 per share will be paid on December 1, 2020 to shareholders of record on the close of business on November 11, 2020. Additionally, the Board of Directors approved the payment of the 2020 Special Dividend. The 2020 Special Dividend will be paid on December 15, 2020 to shareholders of record on the close of business on November 11, 2020. The total amount of the 2020 Special Dividend payment will be approximately $11.2 million based on the current number of shares outstanding. Future regular and special dividends will be subject to Board approval. A copy of the press release is attached as Exhibit 99.2 of this Current Report on Form 8-K.

Forward Looking Statements

Certain statements in this Current Report on Form 8-K are forward looking statements made under the safe harbor provision of the Private Securities Litigation Reform Act. Such statements are based on management’s current expectations as of the date of this Report, but involve risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by such forward looking statements. Investors are cautioned to consider these forward looking statements in light of important factors which may result in material variations between results contemplated by such forward looking statements and actual results and conditions. More detailed information about these factors is contained under the headings “Forward Looking Statements” and “Risk Factors” in the Company’s periodic reports filed with the SEC, including the Company’s most recent Annual Report on Form 10-K for the fiscal year ended December 28, 2019 and Quarterly Report on Form 10-Q for the second quarter ended June 27, 2020. We caution investors to not place undue reliance on these forward-looking statements, which speak only as of the date they were made. The Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.

Item 9.01Financial Statements and Exhibits

(d)Exhibits

10.1		Amendment No. 8 to Credit Agreement dated October 14, 2020*
10.2		Credit Agreement dated July 13, 2010, among Winmark Corporation and its subsidiaries and CIBC Bank USA (formerly known as The PrivateBank and Trust Company) ^(1)^
10.3		Amendment No. 4 to Note Agreement dated October 14, 2020*
10.4		Note Agreement dated May 14, 2015, among Winmark Corporation and its subsidiaries and Prudential Investment Management, Inc., its affiliates and managed accounts ^(2)^
99.1		Third Quarter Results Press Release dated October 14, 2020*
99.2		Quarterly Cash Dividend and Special Dividend Press Release dated October 14, 2020*
104		Cover Page Interactive Data File (embedded within the Inline XBRL Document and incorporated as Exhibit 101)

*Filed Herewith

(1) Incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q for the fiscal quarter ended June 26, 2010

(2) Incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K filed on May 18, 2015

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	WINMARK CORPORATION

Date: October 14, 2020	By:	/s/Anthony D. Ishaug
	Anthony D. Ishaug
	Chief Financial Officer and Treasurer

Amendment No. 8 (00023229).DOCX

Exhibit 10.1

AMENDMENT NO. 8

CREDIT AGREEMENT

THIS AMENDMENT NO. 8 TO CREDIT AGREEMENT (this “Amendment”) is made as of October 14, 2020, by and among WINMARK CORPORATION, WIRTH BUSINESS CREDIT, INC., WINMARK CAPITAL CORPORATION and GROW BIZ GAMES, INC. (each of the foregoing are referred to herein individually as a “Loan Party” and collectively as the “Loan Parties”), CIBC BANK USA (the “Administrative Agent” and a “Lender”).

RECITALS:

**A.**The Loan Parties, the Administrative Agent and the Lender are parties to that certain Credit Agreement, dated as of July 13, 2010, as amended prior to the date hereof (the “Credit Agreement”).

**B.**Winmark Corporation (the “Company”) has informed the Administrative Agent and the Lender that the Company desires to declare and pay a special dividend to its shareholders in an amount equal to $3.00 per share of common stock (which dividend amount will be paid from cash on hand) on or before December 31, 2020 (the “2020 Special Dividend”).

**C.**The Company has requested that the Administrative Agent and the Lender consent to the 2020 Special Dividend, and the Administrative Agent and the Lender are willing to so consent, as provided herein.

**D.**The Loan Parties, the Administrative Agent and the Lender desire to further amend the Credit Agreement as provided herein.

AGREEMENTS:

IN CONSIDERATION of the premises and mutual covenants herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

**1.**Definitions . Capitalized terms not otherwise defined in this Amendment have the same meanings as set forth in the Credit Agreement.

**2.**Amendment of Section 1.1 . Section 1.1 of the Credit Agreement is hereby amended as follows:

(a)The definition of “Fixed Charge Coverage Ratio” appearing in such Section is hereby amended and restated in its entirety to read as follows:

“Fixed Charge Coverage Ratio”: As of any date of determination and calculated for a trailing twelve month period ending on such date of determination, the ratio of (a) the total EBITDA of the Loan Parties for such period, minus (i) the sum of income taxes paid in cash by the Loan Parties in such period, (ii) the sum of all Capital Expenditures made by the Loan Parties in such period, and (iii) the sum of all distributions (excluding the 2020 Special Dividend) made by the Loan Parties in such period, divided by (b) the sum for such period of (i) cash interest expense plus (ii) all scheduled payments of principal on Debt (excluding, for the avoidance of doubt, any payment pursuant to Section 6).

(b)The following definition is added to such Section in the correct alphabetical order:

“2020 Special Dividend”: Has the meaning given to such term in that certain Amendment No. 8 to Credit Agreement, dated as of October 14, 2020, by and among the Loan Parties, the Agent, and the Lender.

**3.**Amendment of Section 11.4 . Section 11.4 of the Credit Agreement is hereby amended, by amending and restating clause (ii) appearing in such section in its entirety to read as follows:

(ii) the Company may purchase or redeem any of its Capital Securities, and may pay regular dividends (defined to be dividends paid in any fiscal year not to exceed $10,000,000 in the aggregate) with respect to its Capital Securities, so long as, in each case, after giving effect to such purchase, redemption or regular dividend the Company will remain in compliance with all the financial ratios and restrictions set forth in Sections 11.15, 11.16 and 11.17, as certified by the Company in form and substance satisfactory to Agent and the Required Lenders;

**4.**Consent to 2020 Special Dividend . Pursuant to Section 11.4 of the Credit Agreement, the Administrative Agent and the Lender hereby consent to the declaration and payment of the 2020 Special Dividend, provided that at the time of the payment of the 2020 Special Dividend, no Unmatured Event of Default or Event of Default then exists or could result therefrom (after taking into account the effect of this Amendment).

**5.**Conditions to Effectiveness **.**The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent:

(a)The Administrative Agent shall have received a counterpart signature page to this Amendment, duly executed by the Loan Parties and the Lender.

(b)The Lender and the Administrative Agent shall have received an amendment to the Note Agreement, dated May 14, 2015 (as amended) with Prudential, in

form and substance acceptable to the Lender and the Administrative Agent, duly executed by Prudential and the Loan Parties.

(c)The Administrative Agent shall have received such officer’s certificate and related certificates of good standing and organizational documents, in each case respecting the Loan Parties, as the Administrative Agent may request.

**6.**Representations and Warranties. To induce the Administrative Agent and the Lender to enter into this Amendment, the Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and the Lender as follows:

(a)The execution, delivery and performance by the Loan Parties of this Amendment and any other documents required to be executed and/or delivered by the Loan Parties by the terms of this Amendment have been duly authorized by all necessary corporate action, do not require any approval or consent of, or any registration, qualification or filing with, any government agency or authority or any approval or consent of any other person, do not and will not conflict with, result in any violation of or constitute any default under, any provision of the Loan Parties’ organizational documents, any agreement binding on or applicable to the Loan Parties or any of their property, or any law or governmental regulation or court decree or order, binding upon or applicable to the Loan Parties or of any of their property and will not result in the creation or imposition of any Lien in or on any of their property pursuant to the provisions of any agreement applicable to the Loan Parties or any of their property, other than Liens in favor of the Administrative Agent.

(b)Both before and after giving effect to this Amendment, the representations and warranties contained in the Credit Agreement are true and correct as of the date hereof, as though made on the date hereof, except to the extent that such representations and warranties relate solely to an earlier date.

(c)There does not exist any Unmatured Event of Default or Event of Default.

**7.**No Waiver. This Amendment is not intended to operate as, and shall not be construed as, a waiver of any Unmatured Event of Default or Event of Default whether known to the Administrative Agent and/or the Lender, or unknown, as to which all rights and remedies of the Administrative Agent and the Lender shall remain reserved.

**8.**Binding Nature of Loan Documents . Each Loan Party acknowledges and agrees that the terms, conditions and provisions of the Credit Agreement and of each Loan Document are fully binding and enforceable agreements, and are not subject to any defense, counterclaim, set off or other claim of any kind or nature. Each Loan Party hereby reaffirms and restates its duties, obligations and liability under the Credit Agreement, as amended hereby, and each other Loan Document.

**9.**Reference to the Loan Documents . From and after the date of this Amendment, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference to the “Credit Agreement” or “Agreement”, “thereunder”, “thereof”, “therein” or words of like import referring to the Credit Agreement in any other Loan Document, shall mean and be a reference to the Credit Agreement as amended hereby.

**10.**Release . Each Loan Party hereby releases, acquits, and forever discharges each of the Administrative Agent and the Lender and each and every past and present subsidiary, affiliate, stockholder, officer, director, agent, servant, employee, representative, and attorney of any of them from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, which any Loan Party may have or claim to have now or which may hereafter arise out of or be connected with any act of commission or omission of the Administrative Agent and/or the Lender existing or occurring prior to the date of this Amendment or any instrument executed prior to the date of this Amendment including, without limitation, any claims, liabilities or obligations arising with respect to the indebtedness evidenced by any Loan Document. The provisions of this Section shall survive payment of all Obligations and shall be binding upon the Loan Parties and shall inure to the benefit of the Administrative Agent and the Lender and their respective successors and assigns.

**11.**Estoppel . Each Loan Party represents and warrants that there are no known claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character or nature whatsoever, fixed or contingent, which any Loan Party may have or claim to have against the Administrative Agent and/or the Lender, which might arise out of or be connected with any act of commission or omission of the Administrative Agent and/or the Lender existing or occurring on or prior to the date of this Amendment, including, without limitation, any claims, liabilities or obligations arising with respect to the indebtedness evidenced by any Loan Document.

**12.**Expenses . Without in any way limiting the generality of Section 16.5 of the Credit Agreement, the Loan Parties, jointly and severally, hereby agree to pay to the Administrative Agent all of the Administrative Agent’s reasonable legal fees and expenses incurred in connection with this Amendment, the Credit Agreement and/or any other Loan Document, which amount shall be due and payable upon execution of this Amendment.

**13.**Captions . The captions or headings herein are for convenience only and in no way define, limit or describe the scope or intent of any provision of this Amendment.

**14.**Counterparts . This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Any executed counterpart of this Amendment delivered by facsimile or other electronic transmission to a party hereto shall constitute an original counterpart of this Amendment.

**15.**No Other Modification . Except as expressly amended by the terms of this Amendment, all other terms of the Credit Agreement shall remain unchanged and in full force and effect.

THE PARTIES HAVE EXECUTED this Amendment No. 8 to Credit Agreement in the manner appropriate to each as of the date and year first above written.

LOAN PARTIES:

WINMARK CORPORATION

By: /s/Brett D. Heffes

Name: Brett D. Heffes

Title: Chairman of the Board and Chief Executive Officer

WIRTH BUSINESS CREDIT, INC.

By: /s/Brett D. Heffes

Name: Brett D. Heffes

Title: President

WINMARK CAPITAL CORPORATION

By: /s/Brett D. Heffes

Name: Brett D. Heffes

Title: President

GROW BIZ GAMES, INC.

By: /s/Brett D. Heffes

Name: Brett D. Heffes

Title: President

(Signatures continue on next page.) ADMINISTRATIVE AGENT

AND A LENDER:

CIBC BANK USA

By: /s/Leanne Manning

Name: Leanne Manning

Title: Managing Director

Amendment No.4 (00023230).DOCX

Exhibit 10.3

October 14, 2020

WINMARK CORPORATION

WIRTH BUSINESS CREDIT, INC.

WINMARK CAPITAL CORPORATION

GROW BIZ GAMES, INC.

c/o Winmark Corporation

605 Highway 169 North, Suite 400

Minneapolis, MN 55441

Re:	Consent and Amendment No. 4 to Note Agreement

Ladies and Gentlemen:

Reference is made to the Note Agreement dated as of May 14, 2015 (as amended from time to time, the “Note Agreement”), among Winmark Corporation, a Minnesota corporation (the “Company”), Wirth Business Credit, Inc., a Minnesota corporation (“Wirth”), Winmark Capital Corporation, a Minnesota corporation (“Winmark Capital”), Grow Biz Games, Inc., a Minnesota corporation (“Grow Biz”; the Company, Wirth, Winmark Capital, Grow Biz and any other Person who joins the Note Agreement as an Issuer pursuant to paragraph 5J, collectively, the “Issuers”), The Prudential Insurance Company of America (“PICA”), Pruco Life Insurance Company (“Pruco”) and Prudential Retirement Guaranteed Cost Business Trust (“PRG”), PAR U Hartford Life Insurance Comfort Trust (“PAR”; PICA, Pruco, PRG and PAR, collectively, the “Holders”). Capitalized terms used herein that are not otherwise defined herein shall have the meaning specified in the Note Agreement.

The Issuers have requested that the Holders (i) agree to certain amendments to the Note Agreement as set forth below and (ii) consent to a proposed one-time special dividend by the Company to its shareholders in an amount equal to $3.00 per share of common stock (which dividend amount will be paid from cash on hand) on or before December 31, 2020. Subject to the terms and conditions hereof, the Holders are willing to agree to such requests (the “2020 Special Dividend”). Accordingly, and in accordance with the provisions of paragraph 11C of the Note Agreement, the parties hereto agree as follows:

**SECTION 1.**Amendments to the Note Agreement. From and after the Effective Date (as defined in Section 4 hereof), the Note Agreement is amended as follows:

1.1Clause (b) of paragraph 6E is hereby amended by deleting the reference to “$6,000,000 contained therein and inserting “$10,000,000” in lieu thereof.

1.2Paragraph 10B is hereby amended by amending and restating the definition of “Fixed Charge Coverage Ratio” contained therein in its entirety to read as follows:

“Fixed Charge Coverage Ratio” shall mean as of any date of determination and calculated for a trailing twelve month period ending on such date of determination, the ratio of (a) the total EBITDA of the Company and its Subsidiaries for such period, minus (i) the sum of income taxes paid in cash by the Company and its Subsidiaries in such period, (ii) the sum of all Capital Expenditures made by the Company and its Subsidiaries in such period, and (iii) the sum of all distributions (excluding the 2020 Special Dividend) made by the Company and its Subsidiaries in such period, divided by (b) the sum for such period of (i) cash interest expense plus (ii) all scheduled payments of principal on Debt (excluding, for the avoidance of doubt, any payment pursuant to Section 6 of the Credit Agreement).

1.3Paragraph 10B is hereby further amended by inserting the following defined term therein in appropriate alphabetical order:

“2020 Special Dividend” shall have the meaning given to such term in that certain Consent and Amendment No. 4 to Note Agreement dated as of October 14, 2020 by and among the Issuers, Prudential and the Purchasers.

SECTION 2. Consent. Effective on the Effective Date (as defined in Section 4 below), the Holders hereby consent to the 2020 Special Dividend; provided that at the time of the payment of the 2020 Special Dividend, no Default or Event of Default then exists or could result therefrom (after taking into account the effect of this letter amendment). The foregoing consent shall be limited precisely as written and shall relate solely to the Note Agreement in the manner and to the extent described herein, and nothing in this letter agreement shall be deemed to (a) constitute a consent to or waiver of any Defaults or Events of Defaults existing under the Note Agreement or the other Transaction Documents, (b) constitute a consent to any matter other than the 2020 Special Dividend or (c) prejudice any right or remedy that Prudential or any Holder may now have or may have in the future under or in connection with the Note Agreement or any other Transaction Document.

**SECTION 3.**Representations and Warranties. ****Each Issuer represents and warrants that (a) the execution and delivery of this letter by each Issuer has been duly authorized by all necessary corporate action on behalf of the Issuers, this letter has been executed and delivered by a duly authorized officer of the Issuers, as applicable, and this letter constitutes legal, valid and binding obligations of the Issuers, enforceable against the Issuers in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law), (b) each representation and warranty set forth in paragraph 8 of the Note Agreement and the other Transaction Documents to which it is a party is true and correct as of the date of execution and delivery of this letter by the Issuers with the same effect as if made on such date, before and after giving effect to this letter (except to the extent such representations and warranties expressly refer

to an earlier date, in which case they were true and correct as of such earlier date), (c) no Event of Default or Default exists or has occurred and is continuing on the date hereof, before and after giving effect to this letter and (d) neither any Issuer nor any Subsidiary has paid or agreed to pay, and neither any Issuer nor any Subsidiary will pay or agree to pay, any fees or other consideration to any Person in connection with the amendment referenced in Section 4.1(ii) hereof, other than reimbursement of out-of-pocket fees and expenses of their own legal counsel and legal counsel to the Banks and the Bank Agent.

SECTION 4. Conditions Precedent. The amendments in Section 1 of this letter shall become effective as of the date (the “Effective Date”) that each of the following conditions has been satisfied:

4.1Documents.Each Holder shall have received original counterparts or, if satisfactory to such Holder, certified or other copies of all of the following, in form and substance satisfactory to such Holder, dated the date hereof unless otherwise indicated, and on the date hereof in full force and effect:

(i)counterparts of this letter executed by the Issuers and the Holders;

(ii)a copy of an amendment to the Credit Agreement, duly executed by the Issuers, the Bank Agent and the Banks, and the conditions precedent to the effectiveness of such amendment shall have been satisfied and such amendment shall be in full force and effect;

(iii)a Secretary’s Certificate signed by the Secretary or an Assistant Secretary and one other officer of each Issuer certifying, among other things, (a) as to the names, titles and true signatures of the officers of such Issuer, as the case may be, authorized to sign the Transaction Documents to which such Issuer, as the case may be, is a party (or certifying that such officers remain unchanged from the relevant document certified on the date of that certain Amendment No. 3 to Note Agreement dated as of September 2, 2020 (the “Third Amendment”)), (b) that attached thereto is a true, accurate and complete copy of the certificate of incorporation or other formation document of such Issuer, as the case may be, certified by the Secretary of State of the state of organization of such Issuer, as the case may be, as of a recent date (or certifying that such certificate of incorporation or other formation document remains unchanged from the relevant document certified on the date of the Third Amendment), (c) that attached thereto is a true, accurate and complete copy of the by-laws, operating agreement or other organizational document of such Issuer, as the case may be, which were duly adopted and are in effect as of the Effective Date and have been in effect immediately prior to and at all times since the adoption of the resolutions referred to in clause (d), below (or certifying that such by-laws, operating agreement or other organization document remains unchanged from the relevant document certified on the date of the Third Amendment), (d) that attached thereto is a true, accurate and complete copy of the resolutions of the board of directors or other managing body of such Issuer, as the case may be, duly adopted at a meeting or by unanimous written consent of such board of directors or other managing body, authorizing the execution, delivery and performance of the Transaction Documents to which such Issuer, as the case may be, is a party, and that such resolutions have not been amended, modified, revoked or rescinded,

are in full force and effect and are the only resolutions of the shareholders, partners or members of such Issuer, as the case may be, or of such board of directors or other managing body or any committee thereof relating to the subject matter thereof (or certifying that resolutions of the Issuers remain unchanged from the relevant document certified on the date of the Third Amendment), and (e) that no dissolution or liquidation proceedings as to such Issuer have been commenced or are contemplated; provided however, that the Officers’ Certificate delivered to the Bank Agent and Bank in a form satisfactory the Holders shall satisfy this condition;

(iv)a certificate of corporate or other type of entity and tax good standing for each Issuer and each of its Subsidiaries from the Secretary of State or other appropriate governmental official of the jurisdiction of organization of such Issuer or such Subsidiary and of each jurisdiction in which such Issuer or such Subsidiary is required to be qualified to transact business as a foreign organization, in each case dated as of a recent date; provided however, that the Officers’ Certificate delivered to the Bank Agent and Bank in containing such good standing certificate shall satisfy this condition; and

(v)an Officer’s Certificate certifying, after giving effect to the amendments contemplated hereby and the amendment to the Credit Agreement referenced in Section 4.1(ii) above, as to the matters set forth in Section 1 hereof.

4.2Fees and Expenses. The Issuers shall have paid the reasonable fees, charges and disbursements of Taft Stettinius & Hollister LLP, special counsel to the Purchasers, incurred in connection with this letter agreement.

4.3Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated by this letter and all documents incident thereto shall be satisfactory to each Holder and its counsel, and each such Holder shall have received all such counterpart originals or certified or other copies of such documents as they may reasonably request.

**SECTION 5.**Reference to and Effect on Note Agreement; Ratification of Transaction Documents. Upon the effectiveness of the amendments in Section 1 of this letter, each reference to the Note Agreement in any other document, instrument or agreement shall mean and be a reference to the Note Agreement as modified by this letter. Except as specifically set forth in Section 1, the Note Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. Except as expressly amended hereby, each of the Note Agreement and the other Transaction Documents are hereby ratified and confirmed in all respects and shall continue in full force and effect. Except as specifically stated in this letter, the execution, delivery and effectiveness of this letter shall not (a) amend the Note Agreement or any Note, (b) operate as a waiver of any right, power or remedy of any holder of the Notes, or (c) constitute a waiver of, or consent to any departure from, any provision of the Note Agreement or any Note at any time. The execution, delivery and effectiveness of this letter shall not be construed as a course of dealing or other implication that any holder of the Notes has agreed to or is prepared to grant any consents or agree to any waiver to the Note Agreement in the future, whether or not under similar circumstances.

**SECTION 6.**Release . Each of the Issuers hereby absolutely and unconditionally releases and forever discharges each Purchaser, and any and all participants, parent corporations, subsidiary corporations, affiliated corporations, insurers, indemnitors, successors and assigns thereof, together with all of the present and former directors, officers, agents and employees of any of the foregoing, from any and all claims, counterclaims, demands or causes of action of any kind, nature or description, whether arising in law or equity or upon contract or tort or under any state or federal law or otherwise, which the Issuers has had, now has or has made claim to have against any such person for or by reason of any act, omission, matter, cause or thing whatsoever arising from the beginning of time to and including the date of this letter, whether such claims, counterclaims, demands or causes of action are matured or unmatured or known or unknown.

**SECTION 7.**Expenses . Each Issuer hereby confirms its obligations under the Note Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly after request by any holder of the Notes, all reasonable out-of-pocket costs and expenses, including attorneys’ fees and expenses, incurred by any holder of the Notes in connection with this letter agreement or the transactions contemplated hereby, in enforcing any rights under this letter agreement, or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this letter agreement or the transactions contemplated hereby. The obligations of the Issuers under this Section 7 shall survive transfer by any holder of any Note and payment of any Note. ****

**SECTION 8.**Governing Law . THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS AGREEMENT TO BE CONSTRUED OR ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER JURISDICTION).

SECTION 9. Counterparts; Section Titles. This letter may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which when taken together shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page to this letter by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart of this letter. The section titles contained in this letter are and shall be without substance, meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

(Signature Page Follows)

Very truly yours,

THE PRUDENTIAL INSURANCE COMPANY

OF AMERICA

By: /s/Anna Sabiston

Second Vice President

PRUCO LIFE INSURANCE COMPANY

By: /s/Anna Sabiston

Assistant Vice President

PRUDENTIAL RETIREMENT GUARANTEED COST BUSINESS TRUST

By:Prudential Retirement Insurance and Annuity Company, as Grantor

By:PGIM, Inc., as Investment Manager

By: /s/Anna Sabiston

Vice President

PAR U HARTFORD LIFE INSURANCE

COMFORT TRUST

By:	Prudential Arizona Reinsurance Universal Company, as Grantor

By:	PGIM, Inc., as Investment Manager

By: /s/Anna Sabiston

Name: Ann Sabiston

Title: Vice President

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

WINMARK CORPORATION

By: /s/Anthony D. Ishaug Name: Anthony D. Ishaug Title: Executive Vice President and Chief Financial Officer

WIRTH BUSINESS CREDIT, INC.

By: /s/Anthony D. Ishaug Name: Anthony D. Ishaug Title: Chief Financial Officer and Treasurer

WINMARK CAPITAL CORPORATION

By: /s/Anthony D. Ishaug Name: Anthony D. Ishaug Title: Chief Financial Officer and Treasurer

GROW BIZ GAMES, INC.

By: /s/Anthony D. Ishaug Name: Anthony D. Ishaug Title: Chief Financial Officer, Treasurer and Secretary

2020 2nd Qtr Results (00022559).DOCX

Exhibit 99.1

Contact:Brett D. Heffes

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

THIRD QUARTER RESULTS

Minneapolis, MN (October 14, 2020) - Winmark Corporation (Nasdaq: WINA) announced today net income for the quarter ended September 26, 2020 of $9,358,800 (or $2.43 per share diluted) compared to net income of $9,113,800 (or $2.24 per share diluted) in the third quarter of 2019. For the nine months ended September 26, 2020, net income was $21,731,000 (or $5.63 per share diluted) compared to net income of $23,687,900 (or $5.76 per share diluted) for the same period last year.

Winmark Corporation creates, supports and finances business. At September 26, 2020, there were 1,262 franchises in operation under the brands Plato’s Closet®, Once Upon A Child®, Play It Again Sports®, Style Encore® and Music Go Round®. An additional 35 retail franchises have been awarded but are not open.

This press release contains forward-looking statements within the meaning of the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), relating to future events or the future financial performance of the Company. Such forward-looking statements are only predictions or statements of intention subject to risks and uncertainties and actual events or results could differ materially from those anticipated. Because actual result may differ, shareholders and prospective investors are cautioned not to place undue reliance on such forward-looking statements.

WINMARK CORPORATION

CONDENSED BALANCE SHEETS

(unaudited)


	September 26, 2020		December 28, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	8,267,400	$	25,130,300
Restricted cash		50,000		50,000
Receivables, net		1,947,600		1,669,500
Net investment in leases - current		10,514,200		12,800,100
Income tax receivable		—		497,900
Inventories		85,100		86,000
Prepaid expenses		1,158,800		968,100
Total current assets		22,023,100		41,201,900

Net investment in leases – long-term		5,090,800		12,505,500
Property and equipment, net		2,439,100		2,772,600
Operating lease right of use asset		3,301,800		3,595,200
Goodwill		607,500		607,500
Other assets		458,300		492,500
Deferred income taxes		1,918,000		667,000
	$	35,838,600	$	61,842,200

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Notes payable, net	$	4,236,100	$	3,736,100
Accounts payable		1,272,700		1,015,000
Income tax payable		472,500		—
Accrued liabilities		2,478,000		2,783,100
Discounted lease rentals		1,522,500		2,680,700
Deferred revenue		1,675,200		1,717,000
Total current liabilities		11,657,000		11,931,900
Long-Term Liabilities:
Notes payable, net	$	18,691,700	$	21,868,800
Discounted lease rentals		763,000		836,900
Deferred revenue		7,270,000		7,858,500
Operating lease liabilities		5,417,500		5,846,100
Other liabilities		873,100		1,051,700
Total long-term liabilities		33,015,300		37,462,000
Shareholders’ Equity (Deficit):
Common stock, no par, 10,000,000 shares authorized,<br>3,735,437 and 3,947,858 shares issued and outstanding		7,717,800		11,929,300
Retained earnings (accumulated deficit)		(16,551,500)		519,000
Total shareholders’ equity (deficit)		(8,833,700)		12,448,300
	$	35,838,600	$	61,842,200

Winmark Corporation

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Quarter Ended				Nine Months Ended
	September 26, 2020		September 28, 2019		September 26, 2020		September 28, 2019
Revenue:
Royalties	$	14,210,000	$	13,808,800	$	33,188,300	$	38,223,400
Leasing income		2,695,800		4,375,500		12,040,800		12,733,800
Merchandise sales		631,200		704,500		1,746,800		2,037,300
Franchise fees		335,400		377,400		1,064,900		1,183,100
Other		404,600		414,700		1,225,700		1,238,700
Total revenue		18,277,000		19,680,900		49,266,500		55,416,300
Cost of merchandise sold		598,200		671,700		1,662,000		1,924,400
Leasing expense		510,900		572,400		2,443,700		1,642,000
Provision for credit losses		(339,600)		(55,500)		164,300		23,900
Selling, general and administrative expenses		5,009,700		6,217,600		15,719,100		19,637,900
Income from operations		12,497,800		12,274,700		29,277,400		32,188,100
Interest expense		(345,700)		(406,200)		(1,409,600)		(1,348,700)
Interest and other income (expense)		9,200		500		27,700		(5,900)
Income before income taxes		12,161,300		11,869,000		27,895,500		30,833,500
Provision for income taxes		(2,802,500)		(2,755,200)		(6,164,500)		(7,145,600)
Net income	$	9,358,800	$	9,113,800	$	21,731,000	$	23,687,900
Earnings per share - basic	$	2.51	$	2.39	$	5.86	$	6.19
Earnings per share - diluted	$	2.43	$	2.24	$	5.63	$	5.76
Weighted average shares outstanding - basic		3,730,490		3,808,863		3,710,112		3,829,329
Weighted average shares outstanding - diluted		3,857,702		4,065,301		3,857,754		4,112,318

Ex_99.1_2017_2nd_Qtr_Dividend.DOCX

Exhibit 99.2

Contact:Brett D. Heffes

763/520-8500

FOR IMMEDIATE RELEASE

WINMARK CORPORATION ANNOUNCES

QUARTERLY CASH DIVIDEND AND SPECIAL DIVIDEND

Minneapolis, MN (October 14, 2020) - Winmark Corporation (Nasdaq: WINA) announced today that its Board of Directors has approved the payment of a quarterly cash dividend to shareholders. The quarterly dividend of $0.25 per share will be paid on December 1, 2020 to shareholders of record on the close of business on November 11, 2020. Additionally, the Board of Directors has approved the payment of a special dividend to shareholders. The special dividend of $3.00 per share will be paid on December 15, 2020 to shareholders of record on the close of business on November 11, 2020. The total amount of the special dividend payment will be approximately $11.2 million based on the current number of shares outstanding. It is anticipated that Winmark will use cash on hand to finance the special dividend. Future dividends will be subject to Board approval.

Brett D. Heffes, Chairman and Chief Executive Officer, stated “Today’s announcement of a $3 per share special dividend is our latest step in returning capital to our shareholders. Our strong balance sheet and favorable cash flow characteristics allow us to provide shareholders with this dividend, while preserving financial and operational flexibility for the future.”