Exhibit 4.5
SELECT COMFORT CORPORATION
AMENDMENT NUMBER 1 TO
SERIES E
STOCK PURCHASE AGREEMENT
AND
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This Amendment Number 1 to the Series E Stock Purchase Agreement and the
Amended and Restated Registration Rights Agreement is made this 25th day of
April, 1996, to be effective as of the 28th day of December, 1995, among Select
Comfort Corporation, a Minnesota corporation (the "COMPANY"), and each of the
Investors, as defined in the Series E Purchase Agreement, as defined below.
WHEREAS, the Company and the Investors entered into that certain Series E
Stock Purchase Agreement dated as of December 28, 1995 (the "SERIES E PURCHASE
AGREEMENT") providing for the issuance by the Company of an aggregate of 857,143
shares of its Series E Convertible Preferred Stock for a purchase price of
$10.50 per share, and that certain Amended and Restated Registration Rights
Agreement dated as of December 28, 1995 (the "REGISTRATION RIGHTS AGREEMENT");
and
WHEREAS, the Company and the Investors desire to amend, effective as of
December 28, 1995, the Series E Purchase Agreement, pursuant to the terms and
conditions of Section 15.1 thereof, and the Registration Rights Agreement, all
as more fully set forth herein; and
WHEREAS, terms used herein with an initial capital letter, unless otherwise
expressly defined herein, shall have the meaning given to such terms in the
Series E Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:
1. AMENDMENT OF SERIES E PURCHASE AGREEMENT. Pursuant to the provisions
of Section 15.1 of the Series E Purchase Agreement, and subject to the
conditions to closing of the transactions contemplated hereby as set forth
below, the Series E Purchase Agreement is hereby modified and amended as
follows:
1.1 GRANT OF WARRANTS. Section 3 of the Series E Purchase Agreement shall
be modified and amended to read in its entirety as follows:
"3. SALE AND PURCHASE OF SHARES OF SERIES E PREFERRED AND COMMON
STOCK PURCHASE WARRANTS. Subject to the terms and conditions hereof, the
Company agrees to sell to each Series E Purchaser, and each Series E
Purchaser severally agrees to purchase from the Company in accordance with
this Agreement, the number of shares of Series E Preferred set forth
opposite such purchaser's name on Schedule 1 attached to the Series E
Purchase Agreement, together with one (1) common stock purchase warrant
(each such warrant to be in the form of EXHIBIT 1.1 attached to this
Amendment Number 1 and entitling the holder thereof to purchase one (1)
share of Common Stock from the Company at an exercise price of $5.25 per
share of Common Stock (all such warrants are
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referred to herein collectively as the "WARRANTS" and all such shares
of Common Stock purchasable upon exercise of the Warrants are referred
to herein collectively as the "WARRANT STOCK")) for each five (5)
shares of Series E Preferred purchased by such purchaser, rounded to
the nearest whole number of Warrants, for an aggregate purchase price of
Ten Dollars and 50 Cents ($10.50) per share of Series E Preferred. The
parties hereto agree that of the purchase price for the shares of Series
E Preferred, $.01 per share of Warrant Stock covered by the Warrants
shall be allocated to the purchase of the Warrants."
1.2 AMENDMENT OF ARTICLES. A new Section 3.1 shall be added to the Series
E Purchase Agreement, which new Section 3.1 shall read in its entirety as
follows:
"3.1 FURTHER AMENDMENT OF ARTICLES OF INCORPORATION. The Restated
Articles, as amended by the Articles Amendment adopted pursuant to the
Series E Purchase Agreement (the "RESTATED ARTICLES"), shall be further
amended to contain the provisions set forth in the amendment of the
Restated Articles in the form of EXHIBIT 1.2 attached to this Amendment
Number 1 (the "AMENDMENT"). The Company hereby undertakes to use its
reasonable best efforts to obtain the approval of the shareholders of the
Company of the Amendment as soon as practicable."
2. CLOSING. The closing of the transactions necessary to effect the
provisions of this Amendment Number 1 (the "SECOND CLOSING") shall take place as
soon as practicable following the satisfaction of the conditions to closing set
forth in Section 4 below (the date on which such closing takes place shall be
referred to herein as the "SECOND CLOSING DATE") at the offices of ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Plaza VII, Suite 3400, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other place or different day as may be mutually
acceptable to the Series E Purchasers and the Company. At the Second Closing,
the Company shall issue and deliver to each of the Series E Purchasers (i) a
common stock purchase warrant in the form of Exhibit 1.1 representing the right
to purchase one (1) share of Common Stock at an exercise price of $5.25 per
share of Common Stock for each five (5) shares of Series E Preferred purchased
by such Series E Purchaser, and (ii) evidence of approval of the adoption and
effectiveness of the Amendment in such form as may be reasonably requested by
the Series E Purchasers.
3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. To induce the
Investors to enter into this Amendment Number 1, the Company hereby represents
and warrants to the Investors that:
3.1 AUTHORITY. The Company has the requisite corporate power and
authority to issue the Warrants and the Warrant Stock and to otherwise
perform its obligations under this Amendment Number 1 and the Warrants.
This Amendment Number 1 has been duly authorized by all necessary corporate
action on behalf of the Company, has been duly executed and delivered by an
authorized officer of the Company, and is a valid and binding agreement on
the part of the Company that is enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and
to judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies. All
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corporate actions necessary to the authorization, creation, issuance and
delivery of the Warrants, and the approval and effectiveness of the
Amendment, will be taken by the Company and its shareholders on or prior
to the Second Closing Date. Each of the Warrants when issued pursuant
to the terms of this Amendment Number 1 will be a valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and to
judicial limitations on the enforcement of the remedy of specific
performance and other equitable remedies.
3.2 FINANCIAL STATEMENTS. The audited financial statements of the
Company as of December 31, 1995, which are attached hereto as EXHIBIT 3.2,
are in accordance with the books and records of the Company, present fairly
the financial position of the Company as of the dates thereof and the
results of operations for the periods covered thereby and, except as
disclosed in the footnotes to such financial statements, have been prepared
in accordance with generally accepted accounting principles applied on a
basis consistent with prior accounting periods. The balance sheet as of
December 31, 1995 (i) discloses all of the debts, liabilities and
obligations of any nature (whether absolute, accrued or contingent and
whether due or to become due) of the Company which, individually or in the
aggregate, are material and which in accordance with generally accepted
accounting principles would be required to be disclosed in such balance
sheet, and the omission of which would, in the aggregate, have a material
adverse impact on the Company, and (ii) includes appropriate reserves
required in accordance with generally accepted accounting principles for
all taxes and other liabilities accrued but not yet payable as of such
date. Since the date of such financial statements, the Company has
conducted its business only in the ordinary course of business consistent
with past practices.
3.3 VALID ISSUANCE OF WARRANTS AND WARRANT STOCK. The Warrants, when
issued pursuant to the terms of this Amendment Number 1, will be duly
authorized, validly issued and outstanding, fully paid and nonassessable,
free and clear of all pledges, liens, encumbrances, and restrictions,
except as set forth in Section 6 below. The shares of Warrant Stock have
been reserved for issuance and, when issued upon exercise of the Warrants,
will be duly authorized, validly issued and outstanding, fully paid and
nonassessable, free and clear of all pledges, liens, encumbrances and
restrictions, except as set forth in Section 6 below. The Warrants to be
delivered by the Company hereunder and the certificates representing the
Warrant Stock to be delivered upon the exercise of the Warrants will be
genuine, and the Company has no knowledge of any fact that which would
impair the validity thereof.
3.4 SECURITIES LAWS. Based in part upon the representations of the
Series E Purchasers in the Series E Purchase Agreement, no consent,
authorization, approval, permit or order of or filing with any governmental
or regulatory authority is required under current laws and regulations in
connection with the execution and delivery of this Amendment Number 1 or
the offer, issuance, sale or delivery of the Warrants or the offer of the
Warrant Stock, other than the filing of an amendment to the Company's Form
D filed pursuant to Regulation D under the Securities Act in connection
with the Series E Purchase Agreement, and the qualification thereof, if
required, under applicable state
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securities laws, which qualification has been or will be effected as a
condition of the Second Closing. Under the circumstances contemplated
by this Agreement, the offer, issuance, sale and delivery of the
Warrants and the offer of the Warrant Stock will not, under current
laws and regulations, require compliance with the prospectus delivery
or registration requirements of the Securities Act.
3.5 DISCLOSURE. The Company has not knowingly withheld from the
Series E Purchasers any material facts relating to the assets, business,
operations, financial condition or prospects of the Company. No
representation or warranty in this Amendment Number 1 or in any written
certificate, schedule, statement or other document prepared by or on behalf
of the Company and furnished or to be furnished by the Company to a Series
E Purchaser pursuant hereto or in connection with the transactions
contemplated herein contains or will contain any untrue statement of a
material fact or omits or will omit to state any material fact required to
be stated herein or therein or necessary to make the statements herein or
therein not misleading.
3.6 CHANGES, DIVIDENDS, ETC. Except for the transactions
contemplated by this Amendment Number 1, since December 31, 1995 the
Company has not: (a) incurred any debts, obligations or liabilities,
absolute, accrued or contingent and whether due or to become due, except
liabilities incurred in the ordinary course of business, which
(individually or in the aggregate) will not materially and adversely affect
the business, properties or prospects of the Company; (b) paid any
obligation or liability other than, or discharged or satisfied any liens or
encumbrances other than those securing, current liabilities, in each case
in the ordinary course of business; (c) declared or made any payment or
distribution to its stockholders as such, or purchased or redeemed any of
its shares of capital stock or other securities (other than in connection
with the exercise of stock options in accordance with the terms thereof),
or obligated itself to do so; (d) mortgaged, pledged or subjected to lien,
charge, security interest or other encumbrance any of its assets, tangible
or intangible, except in the ordinary course of business; (e) sold,
transferred or leased any of its assets except in the ordinary course of
business; (f) canceled or compromised any debt or claim, or waived or
released any right of material value except in the ordinary course of
business; (g) suffered any physical damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting the
properties, business or prospects of the Company; (h) entered into any
transaction other than in the ordinary course of business (except that the
Company has executed a letter of intent to conduct a joint test marketing
plan in Japan and the Company is negotiating the terms of a consulting
agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇); (i) encountered any labor difficulties or
labor union organizing activities; (j) issued or sold any shares of capital
stock or other securities or granted any options, warrants or other
purchase rights with respect thereto other than contemplated by this
Amendment Number 1, except for the grant of an aggregate of 206,000 options
to purchase shares of Common Stock at a price of $5.25 per share; (k) made
any acquisition or disposition of any material assets or become involved in
any other material transaction, other than for fair value in the ordinary
course of business; (l) increased the compensation payable, or to become
payable, to any of its directors or employees, or made any bonus payment or
similar arrangement with any directors or employees or increased the scope
or nature of any fringe benefits provided for its employees or directors,
except in the ordinary course of business; or (m) agreed to do any of the
foregoing other than pursuant hereto.
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3.7 CAPITALIZATION. The Company will be authorized by its Restated
Articles, upon approval of the Amendment and the filing thereof with the
Secretary of State, to issue 25,000,000 shares of Common Stock, $0.01 par
value, 4,458,852 shares of Series A Preferred, $1.00 par value, 2,400,000
shares of Series B Preferred, $1.25 par value, 2,292,635 shares of Series C
Preferred, $1.00 par value, 2,083,332 shares of Series D Preferred, $1.00
par value, and 857,143 shares of Series E Preferred, $1.00 par value.
Immediately prior to the Second Closing Date there were 1,677,076 shares of
Common Stock, 4,458,852 shares of Series A Preferred, 2,400,000 shares of
Series B Preferred, 2,292,635 shares of Series C Preferred, 2,083,332
shares of Series D Preferred and 857,143 shares of Series E Preferred
issued and outstanding. All shares outstanding immediately prior to the
Second Closing Date have been duly authorized and validly issued and are
fully paid and nonassessable. The Company holds no shares in its treasury.
Except for such shares of Common Stock and shares of Series A Preferred,
Series B Preferred, Series C Preferred, Series D Preferred and Series E
Preferred, the Company has no other authorized series or class of capital
stock and, except for the Warrants and outstanding options to purchase an
aggregate of 1,723,046 shares of Common Stock, has no outstanding options,
warrants or other rights to acquire securities of the Company. Except as
set forth in the Amended and Restated Registration Rights Agreement and the
Restated Articles, as amended by the Amendment, the Company is not subject
to any obligation to register or redeem any outstanding Securities of the
Company.
3.8 REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES. Except as
modified by the representations and warranties set forth above in this
Section 3, the Company hereby reaffirms that the representations and
warranties of the Company set forth in the Series E Purchase Agreement were
true and correct in all material respects as of the date of the Series E
Purchase Agreement.
4. CONDITIONS TO CLOSING. The obligation of the Company and the Series E
Purchasers to consummate the transactions contemplated by this Amendment Number
1 is subject to the fulfillment prior to or on the Closing Date of the
applicable conditions set forth in this Section 4. In the event that any such
condition is not satisfied to the satisfaction of the Company and the Series E
Purchasers, then neither the Company nor any Series E Purchaser shall be
obligated to proceed with the consummation of the Second Closing.
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company under this Amendment Number 1 shall be true in
all material respects as of the Second Closing Date with the same effect as
though made on and as of the Second Closing Date.
4.2 AMENDMENT OF ARTICLES OF INCORPORATION. As of the Second Closing
Date, the shareholders of the Company shall have approved the Amendment in
accordance with the Restated Articles and applicable law and the Amendment
shall have become effective as an amendment of the Restated Articles.
4.3 COMPLIANCE WITH AMENDMENT NUMBER 1. The Company shall have
performed and complied with all agreements or conditions required by this
Amendment
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Number 1 to be performed and complied with by it prior to or as of the
Second Closing Date.
4.4 CERTIFICATE OF OFFICERS. The Company shall have delivered to the
Series E Purchasers a certificate, dated as of the Second Closing Date,
executed by the President and the Chief Financial Officer of the Company,
certifying to the satisfaction of the conditions specified in Sections 4.1,
4.2 and 4.3 above.
4.5 OPINION OF THE COMPANY'S COUNSEL. The Company shall have
delivered to each Series E Purchaser an opinion, satisfactory to each of
the Series E Purchasers, of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the
Company, dated as of the Second Closing Date, to the effect that:
(a) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Minnesota,
and has the corporate power and authority to own and hold the
properties owned and leased by it and to carry on the business in
which it is engaged. The Company has the corporate power and
authority to enter into this Amendment Number 1 and to issue and sell
the Warrants and the Warrant Stock, and to carry out the provisions of
this Amendment Number 1;
(b) This Amendment Number 1 and the Warrants have been duly
authorized, executed and delivered by the Company, are the legal,
valid and binding agreements of the Company and are enforceable
against the Company in accordance with their respective terms, subject
to applicable bankruptcy, insolvency, moratorium, reorganization, and
other similar laws affecting the enforcement of creditors' rights
generally and to judicial limitations on the enforcement of the remedy
of specific performance and other equitable remedies;
(c) The Warrants have been duly authorized, validly issued and
delivered by the Company and are fully paid, non-assessable and free
and clear of any liens, charges, claims and encumbrances except any
created under this Amendment Number 1 or by or through the Series E
Purchasers. The Warrants are in valid and sufficient form and the
holders of the Warrants are entitled to the rights set forth in the
Warrants;
(d) The amendment of the Restated Articles to include the
provisions set forth in the Amendment has been adopted by all
necessary corporate action, the Amendment has been duly filed with the
Secretary of State of the State of Minnesota, no other or additional
filing or recording is necessary in order to amend the Restated
Articles to include the provisions set forth in the Amendment, and the
holders of the shares of Series E Preferred are entitled to the
rights, preferences and provisions of the Restated Articles, as
amended by the Amendment;
(e) All corporate proceedings required by law or by the
provisions of this Amendment Number 1 to be taken by the Board of
Directors and shareholders of the Company on or prior to the Second
Closing Date in connection with the
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execution and delivery of this Amendment Number 1 and the adoption of
the Amendment, and the issuance and delivery of the Warrants and the
Warrant Stock have been duly and validly taken;
(f) The Company is authorized by its Restated Articles, as
amended by the Amendment, to issue 25,000,000 shares of Common Stock,
$0.01 par value, 4,458,852 shares of Series A Preferred, $1.00 par
value, 2,400,000 shares of Series B Preferred, $1.25 par value,
2,292,635 shares of Series C Preferred, $1.00 par value, 2,083,332
shares of Series D Preferred, $1.00 par value, and 857,143 shares of
Series E Preferred, $1.00 par value. Immediately prior to the Second
Closing Date there were (to the best of such counsel's knowledge)
1,677,076 shares of Common Stock, 4,458,852 shares of Series A
Preferred, 2,400,000 shares of Series B Preferred, 2,292,635 shares of
Series C Preferred, 2,083,332 shares of Series D Preferred and 857,143
shares of Series E Preferred issued and outstanding. All shares
outstanding immediately prior to the Second Closing Date have been
duly authorized and validly issued and are fully paid and
nonassessable. To the best of such counsel's knowledge, the Company
holds no shares in its treasury. Except for such shares of Common
Stock and shares of Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series E Preferred, the Company has
no other authorized series or class of capital stock and, to the best
of such counsel's knowledge, except for the Warrants and outstanding
options to purchase an aggregate of 1,723,046 shares of Common Stock,
has no outstanding options, warrants or other rights to acquire
securities of the Company. To the best of such counsel's knowledge,
except as set forth in the Amended and Restated Registration Rights
Agreement and the Restated Articles, as amended by the Amendment, the
Company is not subject to any obligation to register or redeem any
outstanding Securities of the Company;
(g) The requisite number of shares of Warrant Stock, based upon
the terms of the Warrants in effect as of the Second Closing Date,
have been validly authorized and reserved for issuance upon exercise
of the Warrants, and when issued upon such exercise in accordance with
the terms and conditions of the Warrants and those of this Amendment
Number 1 the Warrant Stock will be duly authorized and issued and will
be fully paid and nonassessable. To the best of such counsel's
knowledge, no security-holder of the Company is entitled to preemptive
or similar rights to purchase the Warrants or the Warrant Stock
contemplated to be issued pursuant to this Amendment Number 1;
(h) Assuming the accuracy of the representations made by the
Series E Purchasers in Article 7 of the Series E Purchase Agreement,
the Company has obtained the approval or consent of all governmental
agencies or bodies required for the legal and valid execution and
delivery of this Amendment Number 1 and the legal and valid offer,
issuance and sale of the Warrants and the offer of the Warrant Stock
to the Series E Purchasers through exercise by them of the Warrants
and for the performance of the obligations of the Company under all
provisions of this Amendment
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Number 1. Assuming the accuracy of the representations made by the
Series E Purchasers in Article 7 of the Series E Purchase
Agreement, the execution, delivery and performance of this
Amendment Number 1, and the offer, issuance and sale of the
Warrants and the Warrant Stock and the consummation of the
transactions contemplated by this Amendment Number 1 will not
result in any breach or violation of the terms or provisions of, or
constitute a default under, the Restated Articles, as amended by
the Amendment, or the Restated Bylaws of the Company or any
statute, rule or regulation affecting the Company or its business.
To the best of such counsel's knowledge, the execution, delivery
and performance of this Amendment Number 1 by the Company, the
offer, issuance and sale of the Warrants and the Warrant Stock and
the consummation of the transactions contemplated by this Amendment
Number 1 will not result in any violation of any agreement or other
instrument of which such counsel is aware to which the Company is a
party or by which it is bound or to which any of its properties,
assets or business is subject or any judgment, decree or order;
(i) Assuming the accuracy of the representations made by the
Series E Purchasers in Article 7 of the Series E Purchase Agreement,
the offer, sale, issuance and delivery of the Warrants and the offer
of the Warrant Stock to the Series E Purchasers through exercise by
them of the Warrants under the circumstances contemplated by this
Amendment Number 1 are exempt from the registration and prospectus
delivery requirements of the Securities Act and all applicable state
securities laws; and
(j) Except for ▇▇▇▇▇▇▇, et. al., vs. Select Comfort Corporation,
such counsel has no knowledge of any litigation, proceeding or
governmental investigation pending or threatened against the Company
or its properties or business.
4.6 SUPPORTING DOCUMENTS. Legal counsel for the Series E Purchasers
shall have received the following:
(a) A copy of the resolutions of the Board of Directors of the
Company authorizing and approving the execution, delivery and
performance of this Amendment Number 1, and a copy of resolutions of
the Board of Directors and stockholders of the Company authorizing and
approving the Amendment, all such resolutions to be certified by the
Secretary of the Company;
(b) A Certificate of Incumbency executed by the Secretary of the
Company certifying the names, titles and signatures of the officers
authorized to execute this Amendment Number 1 and further certifying
that the Amendment has been duly filed and has become a part of the
Restated Articles, and that the Restated Bylaws have not been further
amended or modified except as contemplated hereby; and
(c) Such additional supporting documentation and other
information with respect to the transactions contemplated hereby as
legal counsel for the Series E Purchasers may reasonably request.
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4.7 QUALIFICATION UNDER STATE SECURITIES LAWS. All registrations,
qualifications, permits and approvals required under applicable state
securities laws for the lawful execution and delivery of this Amendment
Number 1 and the offer, sale, issuance and delivery of the Warrants to the
Series E Purchasers at the Second Closing and the offer of the Warrant
Stock shall have been obtained.
4.8 BOARD OF DIRECTORS. The Company shall have taken such actions as
shall be appropriate to elect to and maintain on its Board of Directors the
persons contemplated by Section 5 hereof.
5. DIRECTOR REPRESENTATION; SHAREHOLDER VOTING AGREEMENT.
5.1 REPLACEMENT OF SECTION 10 OF THE SERIES E PURCHASE AGREEMENT,
SECTION 10 OF THE SERIES D PURCHASE AGREEMENT, SECTION 10 OF THE SERIES C
PURCHASE AGREEMENT, SECTION 10 OF THE SERIES B PURCHASE AGREEMENT AND
SECTION 8.7 OF THE SERIES A PURCHASE AGREEMENT. This Section 5 replaces
Section 10 of each of the Series E Purchase Agreement, the Series D
Purchase Agreement, the Series C Purchase Agreement and the Series B
Purchase Agreement and Section 8.7 of the Series A Purchase Agreement in
their entirety and such Section 10 of each of the Series E Purchase
Agreement, the Series D Purchase Agreement, the Series C Purchase Agreement
and the Series B Purchase Agreement and Section 8.7 of the Series A
Purchase Agreement shall be of no further force or effect whatsoever.
5.2 COMPOSITION OF BOARD. Effective upon the closing of the
transactions contemplated by this Amendment Number 1, the Company's Board
of Directors shall consist of twelve (12) members. One (1) of the members
of the Board of Directors shall be the Chief Executive Officer of the
Corporation as appointed by the Board of Directors from time to time. The
holders of Series A Preferred shall have the right to elect three (3)
directors; (i) one of whom shall be designated by Saint ▇▇▇▇; (ii) one of
whom shall be designated by Cherry Tree; and (iii) one of whom shall be
designated by CVP. The holders of Series B Preferred shall have the right
to elect one (1) director, who shall be designated by Apex. The holders of
Series C Preferred shall have the right to elect one (1) director, who
shall be designated by KCB BV. The holders of Series D Preferred shall
have the right to elect one (1) director, who shall be elected by a
majority vote of the outstanding shares of Series D Preferred. The holders
of Series E Preferred shall have the right to elect one (1) director, who
shall be elected by a majority vote of the outstanding shares of Series E
Preferred. The remaining four (4) directors shall be elected by a majority
vote of all outstanding shares of the Company's capital stock voting
together as a single class on an as-if-converted basis. Each of the Series
E Purchasers hereby consents to the election of ▇▇▇▇▇ ▇▇▇▇▇▇ as the
director to be elected by the holders of Series E Preferred, his term to
continue until his successor is duly elected and qualified in accordance
with the Restated Articles, as amended, the Restated Bylaws, as amended,
and applicable law. Each of the Investors hereby further consents to the
amendment of the Restated Bylaws to increase the size of the Board of
Directors to up to twelve (12) members.
5.3 AGREEMENT TO VOTE SHARES. The Investors hereby agree to vote
their shares of Series A Preferred, Series B Preferred, Series C Preferred,
Series D Preferred,
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Series E Preferred, Conversion Stock, Warrant Stock, Common Stock or
any other capital stock of the Company now owned or hereafter acquired
by them in favor of the election of the persons designated by the
respective shareholders as provided in Section 5.2 above.
5.4 LOSS OF RIGHT TO DESIGNATE DIRECTOR. At such time as any of
Saint ▇▇▇▇, Cherry Tree, CVP, Apex or KCB BV shall hold less than twenty
percent (20%) of the Securities originally purchased by such Investor
pursuant to the Series A Purchase Agreement (in the case of Saint ▇▇▇▇,
Cherry Tree and CVP), Series B Purchase Agreement (in the case of Apex) or
Series C Purchase Agreement (in the case of KCB BV), such Investor shall
lose its right to designate a nominee for director. The director then
serving as such Investor's designee shall be removed and such directorship
shall be filled by the vote of the holders of 75% of the Series A Preferred
(in the case of Saint ▇▇▇▇, Cherry Tree or CVP) or of the Series B
Preferred (in the case of Apex) or of the Series C Preferred (in the case
of KCB BV).
5.5 VOTING AGREEMENT. This Section 5 constitutes a Shareholder
Voting Agreement pursuant to Section 302A.455 of the Minnesota Business
Corporation Act.
5.6 TERMINATION OF VOTING AGREEMENT. The obligations of the parties
under this Section 5, notwithstanding any provisions hereof apparently to
the contrary, shall terminate and shall be of no further force or effect at
the earlier of (a) the date that the Company makes a Qualified Public
Offering, or (b) the date that there are no longer any shares of Preferred
Stock issued and outstanding.
6. RESTRICTIONS ON TRANSFER OF SECURITIES.
6.1 RESTRICTIONS. The Warrants and the Warrant Stock are only
transferable pursuant to (a) a public offering registered under the
Securities Act, (b) Rule 144 of the Commission (or any similar rule then in
effect) if such rule is available, and (c) subject to the conditions
specified elsewhere in this Section 6, any other legally available means of
transfer.
6.2 LEGEND. Each Warrant and each certificate representing shares of
Warrant Stock shall be endorsed with a legend substantially similar to the
following:
The securities represented by this certificate have been issued
without registration under the Securities Act of 1933 or under any
state securities laws, and may not be sold, transferred or pledged in
the absence of an effective registration statement under applicable
federal and state securities laws or an opinion of counsel
satisfactory to the company that the transfer is exempt from
registration under applicable federal and state securities laws.
6.3 REMOVAL OF LEGEND. Any legend endorsed on a certificate pursuant
to Section 6.2 hereof shall be removed, and the Company shall issue a
certificate without such legend to the holder of such security, if such
security is being disposed of pursuant to a registration under the
Securities Act or pursuant to Rule 144 or any similar rule then in effect
or if such holder provides the Company with an opinion of counsel
satisfactory to the Company to the effect that a transfer of such security
may be made without
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registration. In addition, if the holder of such security delivers to the
Company an opinion of such counsel to the effect that no subsequent
transfer of such security will require registration under the Securities
Act, the Company will promptly upon such contemplated transfer deliver
new certificates evidencing such security that do not bear the legend
set forth in Section 6.2.
The aforesaid legend shall also be removed with respect to Securities held
for at least three years (including, with respect to the Warrant Stock
issued upon the cashless conversion of a Warrant, the period during which
the related Warrant had been held) by a person who has not been an
affiliate of the Company (as defined in Rule 144 under the Securities Act)
during the three months preceding the request for removal of such legend.
The foregoing legend removal requirement is based on Rule 144(k) under the
Securities Act as currently in force, and assumes that such Rule (or a
successor thereto) in substantially its current form shall be in effect at
the time of any such request for legend removal.
7. MISCELLANEOUS.
7.1 AMENDMENT OF REGISTRATION RIGHTS AGREEMENT. The Registration
Rights Agreement is hereby modified and amended as follows:
(a) The term "HOLDERS" as used therein shall be deemed to
include the holders as of the date of this Amendment Number 1 of
Warrants or Warrant Stock, and any subsequent legal or beneficial
owner of Warrants or Warrant Stock who has become a party to the
Amended and Restated Registration Rights Agreement in accordance with
Section 14 thereof.
(b) The term "REGISTRABLE COMMON" as used therein shall be
deemed to include (i) any shares of Common Stock then outstanding
which were issued upon exercise or conversion of any Warrant issued
hereunder; (ii) any shares of Common Stock then issuable upon
conversion of then-outstanding Warrants, (iii) any shares of Common
Stock then outstanding which were issued as, or were issued directly
or indirectly upon the conversion of other Securities (as defined in
the Registration Rights Agreement) issued as, a dividend or other
distribution with respect to, or in replacement of, the Warrants or
other Registrable Common (as defined in the Registration Rights
Agreement), and (iv) any shares of Common Stock then issuable directly
or indirectly upon the conversion or exercise of other Securities
issued as a dividend or other distribution with respect to, or in
replacement of, the Warrants or other Registrable Common.
7.2 WAIVER OF PREEMPTIVE RIGHTS. Each of the Investors hereby waives
any and all preemptive rights that the Investors or any holders of
Preferred Stock of the Company may have pursuant to the Restated Articles
or otherwise in connection with the offer, issuance and sale by the Company
of any shares of its Series E Preferred, the Conversion Stock, the Warrants
and the Warrant Stock pursuant to the Series E Purchase Agreement and this
Amendment Number 1.
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7.3 CHANGES, WAIVERS, ETC. Neither this Amendment Number 1 nor any
provision hereof may be changed, waived, discharged or terminated orally,
but only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought,
except to the extent provided in Section 15.1 of the Series E Purchase
Agreement.
7.4 PARTIES IN INTEREST. All the terms and provisions of this
Amendment Number 1 shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto,
whether so expressed or not, and, in particular, shall inure to the benefit
of and be enforceable by the holder or holders from time to time of any of
the Series E Preferred, the Conversion Stock, the Warrants or the Warrant
Stock.
7.5 CHOICE OF LAW. The laws of Minnesota shall govern the validity
of this Amendment Number 1, the construction of its terms and the
interpretation of the rights and duties of the parties hereunder.
7.6 FORCE OF AMENDMENT. Except as specifically amended hereby, the
Series E Purchase Agreement and the Registration Rights Agreement shall
remain in full force and effect.
7.7 COUNTERPARTS. This Amendment Number 1 may be executed
concurrently in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
7.8 SEVERABILITY. Should any one or more of the provisions of this
Amendment Number 1 or of any agreement entered into pursuant to this
Amendment Number 1 be determined to be illegal or unenforceable, all other
provisions of this Amendment Number 1 and of each other agreement entered
into pursuant to this Amendment Number 1, shall be given effect separately
from the provision or provisions determined to be illegal or unenforceable
and shall not be affected thereby.
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IN WITNESS WHEREOF, the Company has caused this Amendment Number 1 to be
executed by its duly authorized representative and each of the Investors has
caused this Amendment Number 1 to be executed by signing in counterpart the
acceptance form attached to this Amendment Number 1.
SELECT COMFORT CORPORATION,
a Minnesota corporation
By: /s/
-------------------------------------
Its: CEO
-------------------------------------
ST. ▇▇▇▇ FIRE AND MARINE
INSURANCE CO., a Minnesota corporation
By: /s/
-------------------------------------
Its:
-------------------------------------
CHERRY TREE VENTURES IV,
a Minnesota Limited Partnership
By: /s/
-------------------------------------
Its General Partner
CONSUMER VENTURE PARTNERS I, L.P.,
a Delaware Limited Partnership
By: Consumer Venture Associates, L.P.,
Its General Partner
By: /s/
-------------------------------------
Its General Partner
CONSUMER VENTURE PARTNERS II, L.P.,
a Delaware Limited Partnership
By: Consumer Venture Associates II, L.P.,
Its General Partner
By: /s/
-------------------------------------
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Its General Partner
APEX INVESTMENT FUND, L.P.,
a Delaware Limited Partnership
By: Apex Management Partnership,
Its General Partner
By: Stellar Investment Co.,
Its Managing General Partner
By: /s/
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
THE PRODUCTIVITY FUND II, L.P.,
a Delaware Limited Partnership
By: First Analysis Management Company II,
Its General Partner
By: First Analysis Corporation,
Its General Partner
By: /s/
-------------------------------------
Its:
-------------------------------------
KCB BV, L.P.,
a California Limited Partnership
By: KCB BV, INC.,
Its General Partner
By: /s/
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
NORWEST EQUITY PARTNERS IV,
a Minnesota Limited Partnership
By: Itasca Partners
Its General Partner
By: /s/
-------------------------------------
Its: Partner
-------------------------------------
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NORWEST EQUITY PARTNERS V,
a Minnesota Limited Partnership
By: Itasca Partners V
Its General Partner
By: /s/
-------------------------------------
Its: Partner
-------------------------------------
▇▇▇▇▇▇▇▇ INVESTMENTS,
a General Partnership
By: /s/
-------------------------------------
Its General Partner
H & Q SELECT COMFORT INVESTORS L.P.,
a limited partnership
By: H & Q Select Comfort Investors L.L.C.
Its General Partner
By: /s/
-------------------------------------
Its:
-------------------------------------
H & Q LONDON VENTURES
By: /s/
-------------------------------------
Its:
-------------------------------------
MARQUETTE VENTURE PARTNERS II, L.P.,
a limited partnership
By: /s/
-------------------------------------
Its: Authorized Signatory
MVP II AFFILIATES FUND, L.P.,
a limited partnership
By: /s/
-------------------------------------
Its: Authorized Signatory
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▇▇▇▇▇ LIMITED PARTNERSHIP
By: /s/
-------------------------------------
Its:
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED, CUSTODIAN OF
▇▇▇▇ ▇. ▇▇▇▇▇ DECEDENT ▇▇▇
By:/s/
-------------------------------------
Its:
-------------------------------------
BAYVIEW INVESTORS, LTD.
By:/s/
-------------------------------------
Its:
-------------------------------------
ALEX. ▇▇▇▇▇ & SONS
EMPLOYEES VENTURE FUND LP
By:/s/
-------------------------------------
Its:
-------------------------------------
▇▇▇▇▇▇▇▇▇▇ ASSOCIATES, 1992 L.P.
By:/s/
-------------------------------------
Its:
-------------------------------------
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