EXHIBIT 4
GUARANTY
This Guaranty is made as of the 6th day of June, 2001, by
Select Comfort Retail Corporation, a Minnesota corporation, Select Comfort
Direct Corporation, a Minnesota corporation, Select Comfort SC Corporation, a
Minnesota corporation, Direct Call Centers, Inc., a Minnesota Corporation,
and xxxxxxxxxxxxx.xxx corporation, a Minnesota corporation (individually, a
"Guarantor" and collectively, the "Guarantors"), in favor of St. Xxxx Venture
Capital VI, LLC, a Delaware limited liability company, as agent for the
holders of the Notes referred to below (the "Collateral Agent").
WHEREAS, Select Comfort Corporation, a Minnesota
corporation (the "Company"), and the Purchasers named in Schedule 1 to the
Note Purchase Agreement referred to below, as such Schedule 1 is amended or
deemed amended from time to time in accordance with the terms of the Note
Purchase Agreement (the "Purchasers"), have entered into a Note Purchase
Agreement dated the date hereof (as amended, modified or supplemented from
time to time, the "Note Purchase Agreement") pursuant to which the Purchasers
have purchased or will purchase from the Company those certain Senior Secured
Convertible Notes of the Company payable to the Purchasers, or their
registered assigns, in the aggregate original principal amount of up to
$12,000,000 (together with any note or notes issued in exchange or
substitution therefor, collectively, the "Notes").
WHEREAS, pursuant to the terms of the Note Purchase
Agreement, each of the Subsidiaries (as defined in the Note Purchase
Agreement) of the Company is required to guaranty the Notes and the
obligations of the Company under the Note Purchase Agreement by executing and
delivering to the Collateral Agent this Guaranty.
WHEREAS, the Guarantors are wholly-owned Subsidiaries of
the Company.
WHEREAS, as wholly-owned Subsidiaries of the Company, the
Guarantors expect to receive substantial economic benefits from the issuance
and sale of the Notes under the Note Purchase Agreement.
NOW, THEREFORE, the Guarantors, in consideration of the
premises and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby agree as follows:
1. All capitalized terms that are used but not otherwise
defined herein shall have the respective meanings given them in the Note
Purchase Agreement.
2. Each of the Guarantors hereby absolutely and
unconditionally jointly and severally guarantees the full and prompt payment
when due, whether at maturity or earlier by reason of acceleration or
otherwise, of (i) the principal of and interest on the Notes; and (ii) each
and every other sum now or hereafter owing to any of the holders of the Notes
under the Note Purchase Agreement, the Notes or any of the other Transaction
Documents,
including any renewals, extensions or modifications thereof (all of said sums
being hereinafter called the "Indebtedness").
3. The Guarantors will jointly and severally pay all
reasonable and documented costs and expenses (including without limitation
reasonable attorneys' fees and disbursements) paid or incurred by the
Collateral Agent in endeavoring to collect the Indebtedness or in enforcing
this Guaranty.
4. No act or thing need occur to establish the liability of
the Guarantors hereunder, and, with the exception of full payment, no act or
thing (including without limitation a discharge in bankruptcy of the
Indebtedness and/or the running of the statute of limitations) relating to
the Indebtedness which, but for this provision, could act as a release of the
liabilities of the Guarantors hereunder, shall in any way exonerate the
Guarantors or affect, impair, reduce or release this Guaranty and the
liability of the Guarantors hereunder.
5. The liability of a Guarantor hereunder and under the
other Transaction Documents to which such Guarantor is a party shall not be
affected or impaired in any way by any of the following acts or things (which
the Collateral Agent and the holders of the Indebtedness, or any of them, are
hereby expressly authorized to do, omit or suffer from time to time without
notice to or consent of the Guarantors): (i) any acceptance of collateral
security or other guarantors, accommodation parties or sureties for any or
all Indebtedness; (ii) any extensions or renewal of any Indebtedness (whether
or not for longer than the original period) or any modification of the
interest rate, maturity or other terms of any Indebtedness; (iii) any waiver
or indulgence granted to the Company or any delay or lack of diligence in the
enforcement of the Notes or any other Indebtedness; (iv) any full or partial
release of, compromise or settlement with, or agreement not to xxx, the
Company or any other guarantor or other person liable on any Indebtedness;
(v) any release, surrender, cancellation or other discharge of any
Indebtedness (other than discharge upon payment or conversion in full of the
Indebtedness in accordance with its terms) or the acceptance of any
instrument in renewal or substitution for any instrument evidencing
Indebtedness; (vi) any failure to obtain collateral security (including
rights of setoff) for any Indebtedness, or to see to the proper or sufficient
creation and perfection thereof, or to establish the priority thereof, or to
preserve, protect, insure, care for, exercise or enforce any collateral
security for any of the Indebtedness; (vii) any modification, alteration,
substitution, exchange, surrender, cancellation, termination, release or
other change, impairment, limitation, loss or discharge of any collateral
security for any of the Indebtedness; (viii) any assignment, sale, pledge or
other transfer of any of the Indebtedness; or (ix) any manner, order or
method of application of any payments or credits on any Indebtedness. Each of
the Guarantors waives any and all defenses and discharges available to a
surety, guarantor, or accommodation co-obligor, dependent on its character as
such.
6. Each of the Guarantors waives any and all defenses,
claims, setoffs and discharges of the Company, or any other obligor,
pertaining to the Indebtedness, except the defense of discharge by payment or
conversion in full of the Indebtedness in accordance with its terms. Without
limiting the generality of the foregoing, the Guarantors will not assert
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against the Collateral Agent any defense of waiver, release, discharge in
bankruptcy, statute of limitations, res judicata, statute of frauds,
anti-deficiency statute, fraud, ultra xxxxx acts, usury, illegality or
unenforceability which may be available to the Company in respect of the
Indebtedness, or any setoff available against the Collateral Agent, the
holders of the Indebtedness, or any of them, to the Company, whether or not
on account of a related transaction, and each of the Guarantors expressly
agrees that it shall be and remain liable for any deficiency remaining after
foreclosure of any security interest securing any Indebtedness,
notwithstanding provisions of Minnesota or other law that may prevent the
Collateral Agent or any of the holders of the Indebtedness from enforcing
such deficiency against the Company or any other Guarantor. The liability of
a Guarantor hereunder and under any other Transaction Documents to which such
Guarantor is a party shall not be affected or impaired by any voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of, or
other similar event or proceeding affecting, the Company or any of the
Company's assets. The Guarantors will not assert against the Collateral Agent
any claim, defense or setoff available to any of the Guarantors against the
Company.
7. The Guarantors also hereby waive: (i) presentment,
demand for payment, notice of dishonor or nonpayment, and protest of the
Indebtedness; (ii) notice of the acceptance hereof by the Collateral Agent
and of the creation and existence of all Indebtedness; and (iii) notice of
any amendment to or modification of any of the terms and provisions of the
Notes, the Note Purchase Agreement or any of the other Transaction Documents.
None of the Collateral Agent or the holders of the Indebtedness shall be
required to first resort for payment of the Indebtedness to the Company or
any other persons, or their properties or estates, or to any collateral,
property, liens or other rights or remedies whatsoever.
8. Whenever, at any time or from time to time, any
Guarantor shall make any payment hereunder to the Collateral Agent, such
Guarantor shall notify the Collateral Agent in writing that such payment is
made under this Guaranty for such purpose. If any payment applied by the
Collateral Agent or any of the holders of the Indebtedness to the
Indebtedness (whether from the Company, any of the Guarantors, or otherwise)
is thereafter set aside, recovered, rescinded or required to be returned for
any reason (including, without limitation, the bankruptcy, insolvency or
reorganization of the Company or any other obligor), the Indebtedness to
which such payment was applied shall for the purposes of this Guaranty be
deemed to have continued in existence, notwithstanding such application, and
this Guaranty shall be enforceable as to such Indebtedness as fully as if
such application had never been made.
9. No payment by any Guarantor pursuant to any provision
hereof or of any other Transaction Documents to which such Guarantor is a
party shall entitle such Guarantor, by subrogation to the rights of the
holders of the Indebtedness or otherwise, to any payment by the Company or
any of the other Guarantors, or out of the property of the Company or any of
the other Guarantors, until all of the Indebtedness has been fully paid and
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discharged. None of the Guarantors will exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to it as to
any of the Indebtedness, or against any person liable therefor, or as to any
collateral security therefor, unless and until all of the Indebtedness has
been fully paid and discharged.
10. Each of the Guarantors represents and warrants to the
Collateral Agent that it (i) is not insolvent as of the date hereof, and
shall not become insolvent as a result of the execution and delivery of this
Guaranty, (ii) is not engaged in business or a transaction, or about to
engage in business or a transaction, for which its property is an
unreasonably small capital, and (iii) does not intend to incur, or believe
that it will incur, debts that would be beyond its ability to pay as such
debts mature.
11. This Guaranty shall be a continuing, absolute,
unconditional and irrevocable guaranty and shall be in force and be binding
upon the Guarantors until all of the Indebtedness is fully paid and
discharged.
12. This Guaranty shall be binding upon the Guarantors and
their respective successors and assigns, and shall inure to the benefit of
the Collateral Agent and its successors and assigns (including without
limitation any successor Collateral Agent under and as defined in the Note
Purchase Agreement).
13. EACH OF THE GUARANTORS AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS GUARANTY OR ANY OF THE OTHER
TRANSACTION DOCUMENTS TO WHICH SUCH GUARANTOR IS A PARTY SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
HENNEPIN, STATE OF MINNESOTA OR, AT THE SOLE OPTION OF THE COLLATERAL AGENT,
IN ANY OTHER COURT IN WHICH THE COLLATERAL AGENT SHALL INITIATE LEGAL OR
EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE
MATTER IN CONTROVERSY AND PERSONAL JURISDICTION OVER SUCH GUARANTOR. EACH OF
THE GUARANTORS WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13, AND EACH OF THE GUARANTORS WAIVE ITS RIGHT TO TRIAL BY JURY.
14. This Guaranty contains the entire agreement among the
Collateral Agent and the Guarantors with respect to the subject matter
hereof. This Guaranty may not be amended or waived, except by a writing
signed by the Guarantors and the Collateral Agent. This Guaranty shall be
governed, construed and interpreted in accordance with the laws of the State
of Minnesota, without giving effect to principles of conflicts of law. If any
provision of this Guaranty is held to be invalid, illegal or unenforceable in
any respect by a court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect
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any other provision hereof. All representations and warranties contained
herein shall survive the execution and delivery of this Guaranty. This
Guaranty may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and
the same agreement.
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IN WITNESS WHEREOF, the Guarantors have executed this
Guaranty as of the day and year first above written.
SELECT COMFORT RETAIL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
SELECT COMFORT DIRECT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
SELECT COMFORT SC CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
DIRECT CALL CENTERS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
XXXXXXXXXXXXX.XXX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
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