EXHIBIT 10.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, OFFERED FOR SALE
OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THIS
NOTE UNDER THE ACT OR AN OPINION OF COUNSEL THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT.
SELECT COMFORT CORPORATION
NOTE DUE SEPTEMBER 28, 2006
Amount: $5,000,000.00 Date: September 28, 2001
Rate: 12% Maturity: September 28, 2006
FOR VALUE RECEIVED, the undersigned, SELECT COMFORT CORPORATION, a
Minnesota corporation (the "Company"), and SELECT COMFORT RETAIL CORPORATION,
SELECT COMFORT DIRECT CORPORATION, SELECT COMFORT SC CORPORATION, DIRECT CALL
CENTERS, INC., AND XXXXXXXXXXXXX.XXX CORPORATION, all of which are Minnesota
corporations, (the "Subsidiaries") (the Company and the Subsidiaries being each
a "Loan Party" and collectively the "Loan Parties"), hereby jointly and
severally promise to pay to MEDALLION CAPITAL, INC. ("Lender"), a Minnesota
corporation and a licensee under the Small Business Investment Act of 1958, at
its office at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000,
the principal amount of Five Million Dollars ($5,000,000) together with interest
on the unpaid principal balance from the date hereof at the rate of 12% per
annum, provided that in the event of a Default as defined in the Loan Agreement
referred to below which continues for 90 consecutive days, the unpaid principal
balance shall bear interest at a rate equal to the lesser of 19% per annum or
the maximum amount permitted by law from the date of such Default until the
Default is waived by the Lender in writing or cured to the satisfaction of the
Lender. Interest calculations shall be based on a 360-day year and a 10 year
amortization schedule.
Interest shall accrue without payment until October 1, 2001. Thereafter,
principal and interest shall be due and payable as provided in the attached
amortization schedule, with the final installment of principal and interest due
on September 28, 2006, in the amount necessary to repay in full the unpaid
principal and interest. All payments received will be first applied to unpaid
interest with any remainder being applied toward principal reduction.
This Note has been delivered in conjunction with a Loan Agreement dated
September 28, 2001, by and among the Company, the Lender and the Loan Parties
referred to therein. Any capitalized terms in this Note shall have the same
meaning as set forth in the Loan Agreement.
This Note is subject to prepayment in whole or part at any time at the
option of the Company. In the case of any prepayment of less than the total
principal amount outstanding on the Note, the prepayment shall be applied first
to the interest owed and then to installments of
1
principal in the inverse order of their maturity. In the event of prepayment of
principal, the following prepayment fees shall apply:
Percent of Prepaid Principal
Prepayment Date Due as Prepayment Penalty
------------------------ -----------------------------
September 28, 2002 5%
September 28, 2003 4%
September 28, 2004 3%
September 28, 2005 2%
July 28, 2006 1%
Notwithstanding the foregoing, Xxxxxx agrees to waive the prepayment fee
(i) if the closing sale price of the Company's common stock (as reported on
NASDAQ) is $4.00 or more per share for the 90 consecutive calendar day period
immediately prior to such prepayment, or (ii) if all of the shares obtained upon
exercise of the Warrant have actually been sold for an average price of $4.00
per share (without deduction for selling costs).
Upon the occurrence of any Default (as defined in the Loan Agreement) the
Lender shall have all the rights and remedies provided in the Loan Agreement and
the other agreements securing this Note.
The Company agrees, if this Note is placed in the hands of an attorney for
collection after the occurrence of a Default, to pay reasonable attorneys' fees
and other costs as permitted by law. The Company waives demand for payment,
presentment, notice of dishonor, notice of non-payment, diligence in collecting,
grace, notice and protest. No release of any security for this Note or extension
of time for payment of this Note shall release or modify the liability of the
Company under this Note.
This Note shall be governed by the laws of the State of Minnesota and shall
be binding upon the Company, its successors and assigns, and shall inure to the
benefit of the holder hereof, its successors and assigns.
SELECT COMFORT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
SELECT COMFORT RETAIL CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
SELECT COMFORT DIRECT CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
2
SELECT COMFORT SC CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
DIRECT CALL CENTERS, INC.
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXXXXXX.XXX CORPORATION
By: /s/ Xxxx X. Xxxxxxx
------------------------------------------
Xxxx X. Xxxxxxx, Senior Vice President
3
09/26/2001 Page 1
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Select Comfort
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Compound Period......: Monthly
Nominal Annual Rate..: 12.000 %
Effective Annual Rate: 12.683 %
Periodic Rate........: 1.0000 %
Daily Rate...........: 0.03333 %
CASH FLOW DATA
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Event Start Date Amount Number Period End Date
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1 Loan 09/28/2001 5,000,000.00 1
2 Payment 11/01/2001 Interest Only 24 Monthly 10/01/2003
3 Payment 11/01/2003 71,735.47 36 Monthly 10/01/2006
4 Payment 10/01/2006 4,063,703.80 1
AMORTIZATION SCHEDULE - Normal Amortization, 360 Day Year
Date Payment Interest Principal Balance
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Loan 09/28/2001 5,000,000.00
1 11/01/2001 55,050.00 55,050.00 0.00 5,000,000.00
2 12/01/2001 50,000.00 50,000.00 0.00 5,000,000.00
2001 Totals 105,050.00 105,050.00 0.00 5,000,000.00
3 01/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
4 02/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
5 03/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
6 04/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
7 05/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
8 06/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
9 07/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
10 08/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
11 09/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
12 10/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
13 11/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
14 12/01/2002 50,000.00 50,000.00 0.00 5,000,000.00
2002 Totals 600,000.00 600,000.00 0.00
15 01/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
16 02/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
17 03/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
18 04/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
19 05/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
20 06/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
21 07/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
22 08/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
23 09/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
24 10/01/2003 50,000.00 50,000.00 0.00 5,000,000.00
25 11/01/2003 71,735.47 50,000.00 21,735.47 4,978,264.53
26 12/01/2003 71,735.47 49,782.65 21,952.82 4,956,311.71
2003 Totals 643,470.94 599,782.65 43,688.29
09/26/2001 Page 2
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Select Comfort
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Date Payment Interest Principal Balance
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27 01/01/2004 71,735.47 49,563.12 22,172.35 4,934,139.36
28 02/01/2004 71,735.47 49,341.39 22,394.08 4,911,745.28
29 03/01/2004 71,735.47 49,117.45 22,618.02 4,889,127.26
30 04/01/2004 71,735.47 48,891.27 22,844.20 4,866,283.06
31 05/01/2004 71,735.47 48,662.83 23,072.64 4,843,210.42
32 06/01/2004 71,735.47 48,432.10 23,303.37 4,819,907.05
33 07/01/2004 71,735.47 48,199.07 23,536.40 4,796,370.65
34 08/01/2004 71,735.47 47,963.71 23,771.76 4,772,598.89
35 09/01/2004 71,735.47 47,725.99 24,009.48 4,748,589.41
36 10/01/2004 71,735.47 47,485.89 24,249.58 4,724,339.83
37 11/01/2004 71,735.47 47,243.40 24,492.07 4,699,847.76
38 12/01/2004 71,735.47 46,998.48 24,736.99 4,675,110.77
2004 Totals 860,825.64 579,624.70 281,200.94
39 01/01/2005 71,735.47 46,751.11 24,984.36 4,650,126.41
40 02/01/2005 71,735.47 46,501.26 25,234.21 4,624,892.20
41 03/01/2005 71,735.47 46,248.92 25,486.55 4,599,405.65
42 04/01/2005 71,735.47 45,994.06 25,741.41 4,573,664.24
43 05/01/2005 71,735.47 45,736.64 25,998.83 4,547,665.41
44 06/01/2005 71,735.47 45,476.65 26,258.82 4,521,406.59
45 07/01/2005 71,735.47 45,214.07 26,521.40 4,494,885.19
46 08/01/2005 71,735.47 44,948.85 26,786.62 4,468,098.57
47 09/01/2005 71,735.47 44,680.99 27,054.48 4,441,044.09
48 10/01/2005 71,735.47 44,410.44 27,325.03 4,413,719.06
49 11/01/2005 71,735.47 44,137.19 27,598.28 4,386,120.78
50 12/01/2005 71,735.47 43,861.21 27,874.26 4,358,246.52
2005 Totals 860,825.64 543,961.39 316,864.25
51 01/01/2006 71,735.47 43,582.47 28,153.00 4,330,093.52
52 02/01/2006 71,735.47 43,300.94 28,434.53 4,301,658.99
53 03/01/2006 71,735.47 43,016.59 28,718.88 4,272,940.11
54 04/01/2006 71,735.47 42,729.40 29,006.07 4,243,934.04
55 05/01/2006 71,735.47 42,439.34 29,296.13 4,214,637.91
56 06/01/2006 71,735.47 42,146.38 29,589.09 4,185,048.82
57 07/01/2006 71,735.47 41,850.49 29,884.98 4,155,163.84
58 08/01/2006 71,735.47 41,551.64 30,183.83 4,124,980.01
59 09/01/2006 71,735.47 41,249.80 30,485.67 4,094,494.34
60 10/01/2006 71,735.47 40,944.94 30,790.53 4,063,703.81
61 10/01/2006 4,063,703.80 0.01 4,063,703.81 0.00
2006 Totals 4,781,058.50 422,811.98 4,358,246.52
Grand Totals 7,851,230.72 2,851,230.72 5,000,000.00