EXHIBIT 2
GUARANTY
This Guaranty is made as of the 1st day of May, 2001, by Select
Comfort Retail Corporation, a Minnesota corporation, and Select Comfort
Direct Corporation, a Minnesota corporation (individually, a "Guarantor" and
collectively, the "Guarantors"), for the benefit of St. Xxxx Venture Capital
VI, LLC, a Delaware limited liability company (the "Lender").
WHEREAS, the Lender is prepared to loan funds to Select Comfort
Corporation, a Minnesota corporation (the "Company"), which loan will be
evidenced by a Demand Note of the Company dated the date hereof payable to
the order of the Lender in the original principal amount of $2,000,000
(together with any note or notes issued in exchange or substitution therefor,
the "Note").
WHEREAS, as a condition to the making of such loan, the Guarantors,
each of which is a wholly-owned subsidiary of the Company, are required to
guaranty the Note by executing and delivering to the Lender this Guaranty.
WHEREAS, as wholly-owned subsidiaries of the Company, the Guarantors
expect to receive substantial economic benefits from such loan.
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. 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 Note; and (ii) each and every other
sum now or hereafter owing to the Lender under the Note or under any of the
other agreements entered into by the Company or either Guarantor in
connection therewith (collectively, the "Transaction Documents"), including
any renewals, extensions or modifications thereof (all of said sums being
hereinafter called the "Indebtedness").
2. The Guarantors will jointly and severally pay all costs and
expenses (including without limitation reasonable attorneys' fees and
disbursements) paid or incurred by the Lender in endeavoring to collect the
Indebtedness or in enforcing this Guaranty.
3. 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.
4. 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 Lender is 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 Note 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 in
full of the Indebtedness or conversion in full of the Note in accordance with
its terms and payment in full of any other Indebtedness) 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.
5. 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 in full. Without
limiting the generality of the foregoing, the Guarantors will not assert
against the Lender 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 Lender 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 Lender from enforcing such
deficiency against the Company or the other Guarantor. The liability of a
Guarantor hereunder and under any of the 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 Lender any
claim, defense or setoff available to either of the Guarantors against the
Company.
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6. 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 Lender 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 Note or any of the
other Transaction Documents. The Lender shall not 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.
7. Whenever, at any time or from time to time, either Guarantor
shall make any payment hereunder to the Lender, such Guarantor shall notify
the Lender in writing that such payment is made under this Guaranty for such
purpose. If any payment applied by the Lender to the Indebtedness (whether
from the Company, either 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.
8. No payment by either Guarantor pursuant to any provision hereof
or of any of the other Transaction Documents to which such Guarantor is a
party shall entitle such Guarantor, by subrogation to the rights of the
Lender or otherwise, to any payment by the Company or the other Guarantor, or
out of the property of the Company or the other Guarantor, until all of the
Indebtedness has been fully paid and discharged. Neither 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.
9. Each of the Guarantors represents and warrants to the Lender 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.
10. 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.
11. This Guaranty shall be binding upon the Guarantors and their
respective successors and assigns, and shall inure to the benefit of the
Lender and its successors and assigns, including without limitation each
holder from time to time of the Indebtedness.
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12. 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 LENDER, IN ANY OTHER COURT IN
WHICH THE LENDER 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 12, AND EACH OF THE
GUARANTORS WAIVE ITS RIGHT TO TRIAL BY JURY.
13. This Guaranty contains the entire agreement among the Lender 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 Lender. 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 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 Xxxxxxx
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Title: Senior Vice President
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SELECT COMFORT DIRECT
CORPORATION
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Senior Vice President
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