THIRD AMENDMENT OF LEASE,
ASSIGNMENT AND ASSUMPTION OF LEASE
AND CONSENT
THIS THIRD AMENDMENT OF LEASE, ASSIGNMENT AND ASSUMPTION OF LEASE AND
CONSENT ("Agreement") is made effective as of the 1st day of January, 1996
("Effective Date"), by and among Rushmore Plaza Partners Limited Partnership, a
South Dakota limited partnership ("Landlord"), Select Comfort Corporation, a
Minnesota corporation ("Assignor"), and Select Comfort Direct Corporation, a
Minnesota corporation ("Assignee").
RECITALS:
A. Opus Corporation, a Minnesota corporation ("Opus"), as Landlord's
predecessor in title, and Assignor, as tenant, made and entered into that
certain Net Lease Agreement dated December 3, 1993 (the "Original Lease"), with
respect to certain property and improvements located thereon in the City of
Plymouth, Hennepin County, Minnesota, more particularly described therein.
B. By that certain Amendment of Lease dated August 10, 1994, by and
between Opus and Assignor (the "First Amendment"), and that certain Second
Amendment of Lease dated May 10, 1995, by and between Landlord and Assignor (the
"Second Amendment"), the parties amended the Original Lease. By that certain
letter agreement dated October 5, 1995, (the "Letter Agreement"), the parties
confirmed certain terms and conditions of the Original Lease, as then amended.
The Original Lease, as amended by the First Amendment and the Second Amendment,
and as confirmed by the Letter Agreement, is hereinafter referred to as the
"Lease".
C. Assignor desires to assign its interest in the Lease to Assignee, and
Assignee desires to assume the obligations of Assignor under the Lease as more
particularly set forth below.
D. Landlord is willing to consent to such assignment and assumption
provided Assignor confirms its continuing obligations under the Lease, and any
extension thereof and any amendment thereto, by so acknowledging herein.
E. The parties desire to enter into this Agreement to amend the Lease to
reflect the foregoing and to make certain other amendments to the Lease as more
particularly set forth below.
NOW, THEREFORE, it is agreed by and among Landlord, Assignor and Assignee,
for valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. ASSIGNMENT AND ASSUMPTION. Assignor hereby grants, conveys, transfers
and assigns to Assignee all of Assignor's rights, title and interest in, to and
under the Lease from and after the Effective Date. Assignee hereby accepts the
foregoing assignment and agrees to assume, pay, perform and discharge all of the
agreements and obligations of Assignor arising under the Lease, including any
and all obligations which have accrued prior to the Effective Date. From and
after the Effective Date, Assignee shall be deemed the Tenant under the Lease as
defined in the Lease. The foregoing assignment shall not operate to release
Assignor from liability for any obligations of Assignor under the Lease now or
hereafter arising, and Assignor shall remain liable for each and every one of
such obligations. Landlord hereby consents to the
foregoing assignment of the Lease from Assignor to Assignee, and waives, for
the purposes of this Agreement and the foregoing assignment only, Assignor's
full compliance with the terms of Article XV of the Original Lease.
2. CONFIRMATION OF ASSIGNOR'S CONTINUING LIABILITY. In confirmation of
Assignor's continuing liability for each and every obligation of Tenant under
the Lease, as hereby further amended, Assignor hereby absolutely and
unconditionally guarantees to Landlord, its successors and assigns, the prompt
and full payment of all rent and all other payments to be made by Tenant under
the Lease, and the full performance and observance by Tenant of all of the other
terms, covenants, conditions and agreements therein provided to be performed and
observed by Tenant, for which the Assignor shall be jointly and severally liable
with Tenant. Assignor agrees that in the event of a default by Tenant under the
Lease beyond the applicable notice and cure period, if any, Landlord may proceed
against Assignor before, after and simultaneously with proceeding against
Tenant. Assignor's agreement hereunder shall not be terminated, affected or
impaired in any manner by reason of: (a) the assertion by Landlord against
Tenant of any of the rights or remedies reserved to Landlord pursuant to the
provisions of the Lease; (b) the commencement of summary or other proceedings
against Tenant; (c) the failure of Landlord to enforce any of its rights against
Tenant; or (d) the granting by Landlord of any extensions of time to Tenant.
Assignor's agreement hereunder shall be absolute and unconditional and shall be
in full force and effect with respect to any extension, renewal, amendment,
addition, assignment, sublease, transfer or other modification of the Lease,
whether or not Assignor shall have knowledge or have been notified of or agreed
or consented thereto. If Landlord at any time is compelled to take action, by
legal proceedings or otherwise, to enforce or compel compliance with the terms
hereof, Assignor shall, in addition to any other rights or remedies to which
Landlord may be entitled hereunder or as a matter of law or in equity, pay to
Landlord all costs, including reasonable attorneys' fees, incurred or expended
by Landlord in connection therewith. In the event the Lease is disaffirmed by a
Trustee in Bankruptcy for Tenant, Assignor agrees that it shall, at the election
of Landlord, either assume the Lease and perform all of the covenants, terms and
conditions of Tenant thereunder or enter into a new lease, which new lease shall
be in form and substance identical to the Lease, except that the renewal options
set forth in Section 1.2 of the Lease shall be available to Assignor. All
duties and obligations of Assignor hereunder shall be binding upon the
successors and assigns of Assignor. Assignor agrees that, to the extent that
the Tenant makes a payment or payments to the Landlord or the Landlord receives
any proceeds of collateral, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or otherwise is required to be repaid to the Tenant, its estate, trustee,
receiver or any other party, including, without limitation, under any bankruptcy
law, state or federal law, common law or equitable cause, then to the extent of
such payment or repayment, the obligations of Tenant or part thereof which has
been paid, reduced or satisfied by such amount shall be reinstated and continued
in full force and effect as of the date such initial payment, reduction or
satisfaction occurred.
3. EXTENSION OPTION. The final grammatical paragraph of Section 1.2 of
the Lease is hereby deleted, and the following is hereby inserted in place
thereof:
The options in this Section 1.2 are personal to Select Comfort Direct
Corporation, and an option for a Renewal Term, whether or not
exercised, shall be of no effect if Select Comfort Direct Corporation
assigns this lease.
4. SECURITY DEPOSIT. Section 3.6 of the Lease (as amended by Section 5
of the Second Amendment) is hereby deleted, and the following is hereby inserted
in place thereof:
Section 3.6 Security Deposit. Select Comfort Corporation has paid a
security deposit in the amount of $257,833.00 (the "Security
Deposit"). The Security Deposit shall be held by Landlord as security
for the performance by Tenant of Tenant's covenants and obligations
under this Lease. Such deposit shall not be considered an advance
payment of Base Rent or Additional Rent or a measure of Landlord's
damages in case of default by Tenant. If the shareholders' equity as
shown on Select Comfort Corporation's consolidated balance sheet as of
the end of any fiscal quarter of the company ending prior to May 31,
1999, exceeds $25,000,000.00, the amount of the Security Deposit shall
be reduced to $150,000.00. If the shareholders' equity as shown on
Select Comfort Corporation's consolidated balance sheet as of the end
of any fiscal quarter of the company ending after May 31, 1999,
exceeds $25,000,000.00, the amount of the Security Deposit shall be
reduced to $100,000.00. Landlord shall refund the appropriate amount
to Select Comfort Corporation promptly upon being furnished evidence
reasonably satisfactory to Landlord that the shareholders' equity as
shown on Select Comfort Corporation's consolidated balance sheet is in
excess of $25,000.000.00. Upon the occurrence of any Event of Default
by Tenant, Landlord may, from time to time, without prejudice to any
other remedy, use the Security Deposit to the extent necessary to make
good any arrearages of Base Rent, Additional Rent and any other
damage, injury , expense or liability caused to Landlord by such Event
of Default. Following any such application of the Security Deposit,
Tenant shall pay to Landlord on demand the amount so applied in order
to restore the Security Deposit to its original amount or to such
reduced amount as may then be applicable as provided above. Provided
there exists no Event of Default hereunder, any remaining balance of
the Security Deposit shall be returned by Landlord to Tenant upon
expiration or earlier termination of this Lease. If Landlord
transfers its interest in the Demised Premises during the term of this
Lease, Landlord shall assign the Security Deposit to the transferee
and thereafter shall have no further liability for the return of the
Security Deposit. Landlord shall pay interest on the Security Deposit
at the rate of six percent per annum, payable semi-annually on July 1
and January 1 of each year during the term, except that, if there is
an uncured Event of Default hereunder, interest shall be added to the
Security Deposit.
5. NOTICES. Section 20.4 of the Lease is amended to provide that notices
to the Tenant shall be sent to the following address:
Select Comfort Direct Corporation
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▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
3400 Plaza VII
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▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
6. MISCELLANEOUS.
a. The provisions of this Agreement shall be binding on, and shall inure
to the benefit of, the parties hereto and their respective successors and
permitted assigns.
b. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument.
c. The effective date of this Agreement shall be the Effective Date as
defined above.
7. CONFIRMATION. Except as amended by this Agreement, the Lease is
hereby ratified and confirmed, and the provisions thereof shall remain in full
force and effect.
IN AGREEMENT, the parties hereto have executed this Agreement as of the
Effective Date.
LANDLORD: RUSHMORE PLAZA PARTNERS
LIMITED PARTNERSHIP,
a South Dakota limited partnership
By: ▇▇▇▇▇▇▇▇▇ RUSHMORE PLAZA
CIVIC CENTER, INC.
Its: General Partner
By: /s/
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Its: Vice President
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ASSIGNOR: SELECT COMFORT CORPORATION,
a Minnesota corporation
By: /s/
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Its: Vice President, Tax and Insurance
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ASSIGNEE: SELECT COMFORT DIRECT
CORPORATION, a Minnesota corporation
By: /s/
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Its: Vice President
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