Exhibit 10.4

 

EXHIBIT G

 

MANAGEMENT SERVICES AGREEMENT

 

THIS MANAGEMENT SERVICES AGREEMENT (this “Agreement”) is made and entered into
as of                         , 2009, by and between Select Comfort Corporation,
a Minnesota corporation (the “Company”), and Sterling Fund Management, LLC, a
Delaware limited liability company (“SFM”).

 

WHEREAS, on the terms and subject to the conditions contained in this Agreement,
the Company desires to receive certain management, consulting and financial
services from SFM, and SFM desires to perform such services for the Company.

 

NOW, THEREFORE, in consideration of the foregoing premises and the respective
mutual agreements, covenants, representations and warranties contained in this
Agreement, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

 

1.                                      APPOINTMENT OF SFM.  ON THE TERMS AND
CONDITIONS PROVIDED IN THIS AGREEMENT, THE COMPANY APPOINTS SFM, AND SFM ACCEPTS
APPOINTMENT, AS A MANAGEMENT CONSULTANT AND FINANCIAL ADVISOR TO THE COMPANY AND
ITS SUBSIDIARIES, INCLUDING THE BUSINESS OF ANY CORPORATIONS HEREAFTER FORMED OR
ACQUIRED BY THE COMPANY OR ANY SUCH SUBSIDIARY.

 

2.                                      SERVICES OF SFM.  SFM WILL RENDER
MANAGEMENT, CONSULTING AND FINANCIAL SERVICES TO THE COMPANY AND ITS
SUBSIDIARIES, WHICH SERVICES WILL INCLUDE ADVICE AND ASSISTANCE CONCERNING ANY
AND ALL ASPECTS OF THE OPERATIONS, PLANNING AND FINANCING OF THE COMPANY AND ITS
SUBSIDIARIES (THE “SERVICES”), AS NEEDED FROM TIME TO TIME, INCLUDING ADVISING
THE COMPANY AND ITS SUBSIDIARIES IN THEIR RELATIONSHIPS WITH BANKS AND OTHER
FINANCIAL INSTITUTIONS AND WITH ACCOUNTANTS, ATTORNEYS, FINANCIAL ADVISORS AND
OTHER PROFESSIONALS.  SFM WILL CAUSE ITS EMPLOYEES AND AGENTS TO PROVIDE THE
COMPANY AND ITS SUBSIDIARIES WITH THE BENEFIT OF THEIR SPECIAL KNOWLEDGE, SKILL
AND BUSINESS EXPERTISE TO THE EXTENT RELEVANT TO THE BUSINESS AND AFFAIRS OF THE
COMPANY AND ITS SUBSIDIARIES.  IN ADDITION, SFM WILL RENDER ADVICE AND
ASSISTANCE IN CONNECTION WITH ANY ACQUISITIONS, DISPOSITIONS OR FINANCING
TRANSACTIONS UNDERTAKEN BY THE COMPANY AND ITS SUBSIDIARIES.

 

3.                                      REIMBURSEMENT OF EXPENSES.  THE COMPANY
WILL REIMBURSE SFM FOR ALL REASONABLE AND DOCUMENTED OUT-OF-POCKET EXPENSES
INCURRED BY SFM IN THE PERFORMANCE OF THE SERVICES; PROVIDED THAT SFM OBTAINS
PRIOR WRITTEN APPROVAL OF THE COMPANY FOR ANY SUCH EXPENSES. SFM WILL NOT BE
OBLIGATED TO MAKE ANY ADVANCE TO, OR FOR THE ACCOUNT OF, THE COMPANY OR TO PAY
ANY SUMS, EXCEPT OUT OF FUNDS HELD IN ACCOUNTS MAINTAINED BY THE COMPANY, NOR
WILL SFM BE OBLIGATED TO INCUR ANY LIABILITY OR OBLIGATION FOR THE ACCOUNT OF
THE COMPANY WITHOUT ASSURANCE THAT THE NECESSARY FUNDS FOR THE DISCHARGE OF THE
LIABILITY OR OBLIGATION WILL BE PROVIDED.

 

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4.                                      OTHER ACTIVITIES OF SFM; INVESTMENT
OPPORTUNITIES.  THE COMPANY ACKNOWLEDGES AND AGREES THAT NEITHER SFM NOR ANY OF
ITS EMPLOYEES, OFFICERS, DIRECTORS, AFFILIATES OR ASSOCIATES WILL DEVOTE ITS,
HIS OR HER FULL TIME AND BUSINESS EFFORTS TO THE DUTIES OF SFM SPECIFIED IN THIS
AGREEMENT, BUT ONLY SO MUCH OF SUCH TIME AND EFFORTS AS SFM REASONABLY DEEMS
NECESSARY OR APPROPRIATE.  THE COMPANY FURTHER ACKNOWLEDGES AND AGREES THAT SFM
AND ITS AFFILIATES AND ASSOCIATES ARE OR MAY BE ENGAGED IN THE BUSINESS OF
INVESTING IN, ACQUIRING AND/OR MANAGING BUSINESSES FOR THEIR OWN RESPECTIVE
ACCOUNTS AND FOR THE ACCOUNT OF OTHER UNAFFILIATED PARTIES AND THAT, SUBJECT TO
SFM’S OBLIGATIONS UNDER ARTICLE 10 HEREOF, NO ASPECT OR ELEMENT OF THESE
ACTIVITIES WILL BE DEEMED TO BE ENGAGED IN FOR THE BENEFIT OF THE COMPANY NOR TO
CONSTITUTE A CONFLICT OF INTEREST OR BREACH OF ANY DUTY HEREUNDER.  SFM WILL BE
REQUIRED TO BRING ONLY THOSE INVESTMENTS AND/OR BUSINESS OPPORTUNITIES TO THE
ATTENTION OF THE COMPANY WHICH SFM, IN ITS SOLE DISCRETION, DEEMS APPROPRIATE.

 

5.                                      COMPENSATION OF SFM.

 

5.1                                 MANAGEMENT FEE.  DURING THE TERM OF THIS
AGREEMENT, IN CONSIDERATION FOR THE SERVICES TO BE RENDERED HEREUNDER, SFM WILL
RECEIVE AN ANNUAL FEE OF $500,000 (“BASE COMPENSATION”), PAYABLE TO SFM BY THE
COMPANY IN ARREARS ON A QUARTERLY BASIS.  THE BASE COMPENSATION SHALL BE PAID
WITHIN 10 BUSINESS DAYS OF THE END OF THE PRECEDING CALENDAR QUARTER.  THE BASE
COMPENSATION SHALL INCREASE AS OF JANUARY 1 OF EACH YEAR DURING THE TERM OF THIS
AGREEMENT BY THE POSITIVE PERCENTAGE CHANGE, IF ANY, IN THE CPI FROM THE MONTH
OF JANUARY OF THE PRECEDING YEAR TO THE MONTH OF JANUARY OF SUCH YEAR.  FOR
PURPOSES HEREOF, “CPI,” FOR ANY MONTH OF JANUARY, MEANS THE CONSUMER PRICE INDEX
FOR ALL URBAN CONSUMERS, U.S. CITY AVERAGE, ALL ITEMS, NOT SEASONALLY ADJUSTED,
FOR SUCH MONTH AND COMPILED UPON DATA (WITH THE BASE 1982-84 EQUALS 100) FOR
SUCH MONTH (THE “INDEX”).  IN THE EVENT THAT PUBLICATION OR ISSUANCE OF THE
INDEX IS DISCONTINUED OR SUSPENDED, THE CPI SHALL BE AN INDEX PUBLISHED OR
ISSUED BY THE UNITED STATES DEPARTMENT OF LABOR OR ANY BUREAU OR AGENCY THEREOF
THAT COMPUTES INFORMATION FROM SUBSTANTIALLY THE SAME STATISTICAL CATEGORIES AND
SUBSTANTIALLY THE SAME GEOGRAPHIC AREAS AS THOSE COMPUTED IN THE INDEX AND THAT
WEIGHTS SUCH CATEGORIES IN A SUBSTANTIALLY SIMILAR WAY TO THE WEIGHTING OF THE
INDEX AS OF THE DATE HEREOF.  IN THE EVENT THAT THE INDEX IS CALCULATED UPON A
BASE YEAR OTHER THAN 1982-84, SUCH ADJUSTMENTS TO THE CPI FOR EACH CALENDAR YEAR
SHALL BE CALCULATED AS NECESSARY TO ENSURE THAT THE CPI FOR EACH SUCH CALENDAR
YEAR IS BASED ON THE SAME INDEX.

 

5.2                                 SUBORDINATION.  NOTWITHSTANDING THE
FOREGOING, SFM AGREES TO SUBORDINATE ITS RIGHT TO PAYMENT OF THE BASE
COMPENSATION IF AND TO THE EXTENT REQUIRED BY THE PRIMARY SECURED LENDER AND ANY
OTHER SECURED CREDITORS OF THE COMPANY PURSUANT TO THE TERMS AND CONDITIONS OF
THOSE CREDIT AGREEMENTS THEN IN EFFECT, PROVIDED THAT, IF AT ANY TIME ALL OR ANY
PORTION OF THE BASE COMPENSATION IS DEFERRED PURSUANT TO SFM’S OBLIGATION TO
SUBORDINATE UNDER THIS SECTION 5.2, OR THE BASE COMPENSATION OR ANY OTHER AMOUNT
PAYABLE HEREUNDER (IN THE AGGREGATE, THE “UNPAID AMOUNTS”) IS OTHERWISE NOT PAID
IN A TIMELY MANNER, THEN ANY SUCH ACCRUED UNPAID AMOUNTS SHALL ACCRUE INTEREST
FROM AND AFTER THE DATE ON WHICH THEY WERE OTHERWISE PAYABLE AT AN ANNUAL RATE
EQUAL TO THE PRIME RATE PLUS FIVE PERCENT (5%) CALCULATED ON THE BASIS OF A
360-DAY YEAR AND FOR THE ACTUAL NUMBER OF CALENDAR DAYS ELAPSED PRIOR TO PAYMENT
THEREOF.  THE TERM “PRIME RATE,” AS USED HEREIN, SHALL MEAN A FLUCTUATING
INTEREST RATE PER ANNUM EQUAL TO THE RATE OF INTEREST ANNOUNCED PUBLICLY FROM
TIME TO TIME BY CITIBANK, N.A. AS ITS BASE RATE, PROVIDED THAT IF, AT ANY TIME,
SFM IS UNABLE TO DETERMINE SUCH RATE, SFM MAY CHOOSE SUCH

 

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OTHER PUBLISHED VERSION OF THE PREVAILING PRIME RATE OF INTEREST AS SFM SHALL
DEEM APPROPRIATE IN ITS REASONABLE DISCRETION.

 

6.                                      TERM.  THIS AGREEMENT WILL COMMENCE AS
OF                     , 2009 AND WILL REMAIN IN EFFECT UNTIL THE EARLIER OF
                    , 2012 OR SUCH TIME AS STERLING CAPITAL PARTNERS III, L.P.,
A DELAWARE LIMITED PARTNERSHIP, AND ANY OTHER AFFILIATE OR ASSOCIATE OF SFM NO
LONGER BENEFICIALLY OWN, IN THE AGGREGATE, GREATER THAN TWENTY PERCENT (20%) OF
THE THEN OUTSTANDING VOTING SECURITIES OF THE COMPANY OR ANY ENTITY OR ENTITIES
WHICH, DIRECTLY OR INDIRECTLY, BENEFICIALLY OWN, IN THE AGGREGATE, A MAJORITY OF
THE THEN OUTSTANDING VOTING SECURITIES OF THE COMPANY.

 

7.                                      STANDARD OF CARE.  SFM (INCLUDING ANY
PERSON OR ENTITY ACTING FOR OR ON BEHALF OF SFM) WILL PERFORM THE SERVICES USING
SUCH SKILL, CARE, QUALITY AND EFFICIENCY AS IT EXERCISES IN PERFORMING THE SAME
OR SIMILAR SERVICES FOR ITSELF AND THOSE ENTITIES IN WHICH SFM OWNS A MAJORITY
OF THE VOTING SECURITIES.  SFM (INCLUDING ANY PERSON OR ENTITY ACTING FOR OR ON
BEHALF OF SFM) WILL NOT BE LIABLE FOR ANY MISTAKES OF FACT, ERRORS OF JUDGMENT,
FOR LOSSES SUSTAINED BY THE COMPANY OR ANY SUBSIDIARY OR FOR ANY ACTS OR
OMISSIONS OF ANY KIND, UNLESS A COURT OF COMPETENT JURISDICTION FINALLY
DETERMINES THAT SFM (INCLUDING ANY PERSON OR ENTITY ACTING FOR OR ON BEHALF OF
SFM) DID NOT PERFORM THE SERVICES WITH REASONABLE SKILL, CARE, AND QUALITY
CONSISTENT WITH PREVAILING INDUSTRY STANDARDS AND PROFESSIONAL NORMS, AND IN
ACCORDANCE WITH APPLICABLE LAW.  THIS SECTION 7 SHALL SURVIVE ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT.

 

8.                                      INDEMNIFICATION OF SFM.  THE COMPANY
WILL INDEMNIFY AND HOLD HARMLESS SFM AND ITS PRESENT AND FUTURE OFFICERS,
DIRECTORS, AFFILIATES, EMPLOYEES, CONTROLLING PERSONS, AGENTS AND
REPRESENTATIVES (“INDEMNIFIED PARTIES”) FROM AND AGAINST ALL LOSSES, CLAIMS,
LIABILITIES, SUITS, COSTS, DAMAGES AND EXPENSES (INCLUDING ATTORNEYS’ FEES)
ARISING FROM THEIR PERFORMANCE OF THE SERVICES HEREUNDER, EXCEPT AS A RESULT OF
THEIR WILLFUL MISCONDUCT ENGAGED IN BY THEM IN BAD FAITH OR NEGLIGENCE.  THE
COMPANY WILL REIMBURSE THE INDEMNIFIED PARTIES ON A MONTHLY BASIS FOR ANY COST
OF DEFENDING OR INVESTIGATING ANY ACTUAL OR THREATENED ACTION OR PROCEEDING, OR
ANY COST OF APPEARING AS A WITNESS IN ANY SUCH ACTION OR PROCEEDING (INCLUDING
ATTORNEYS’ FEES AND EXPENSES) SUBJECT TO AN UNDERTAKING FROM ANY SUCH
INDEMNIFIED PARTY TO REPAY THE COMPANY IF SUCH PARTY IS DETERMINED NOT TO BE
ENTITLED TO INDEMNITY.  THIS SECTION 8 SHALL SURVIVE ANY TERMINATION OR
EXPIRATION OF THIS AGREEMENT.

 

9.                                      COMPANY REPRESENTATIONS.  THE COMPANY
HEREBY REPRESENTS AND WARRANTS TO SFM THAT (I) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT BY THE COMPANY DOES NOT CONFLICT WITH, BREACH,
VIOLATE OR CAUSE A DEFAULT UNDER ANY CONTRACT, AGREEMENT, INSTRUMENT, ORDER,
JUDGMENT OR DECREE TO WHICH THE COMPANY IS A PARTY OR BY WHICH IT IS BOUND AND
(II) UPON THE EXECUTION AND DELIVERY OF THIS AGREEMENT BY SFM, THIS AGREEMENT
SHALL BE THE VALID AND BINDING OBLIGATION OF THE COMPANY, ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS.

 

10.                               CONFIDENTIALITY.

 

10.1                           PROPRIETARY INFORMATION.  “PROPRIETARY
INFORMATION” MEANS ALL INFORMATION WHICH IS DIRECTLY OR INDIRECTLY DISCLOSED TO
ANY PARTY HEREUNDER, REGARDLESS OF THE FORM IN WHICH IT IS DISCLOSED, RELATING
IN ANY WAY TO A PARTY’S CUSTOMERS, DISTRIBUTORS, PRODUCTS, MARKETS, PROCEDURES,
PROCESSES, METHODS, DESIGNS, STRATEGIES, KNOW-HOW, PLANS, INTELLECTUAL PROPERTY,
ASSETS, LIABILITIES, COSTS, EXPENSES, REVENUES, PROFITS (EXCEPT TO THE EXTENT
REQUIRED TO BE DISCLOSED

 

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IN ACCORDANCE WITH APPLICABLE LAW), OR OTHER INFORMATION PROVIDED BY OR RELATED
TO THE OFFICERS, DIRECTORS, AND PERSONNEL OF EITHER PARTY OR THE PARTY’S
BUSINESS IN GENERAL.

 

10.2                           NON-DISCLOSURE.  SFM AND COMPANY ACKNOWLEDGE AND
AGREE THAT EACH OTHER’S PROPRIETARY INFORMATION IS CONFIDENTIAL AND
PROPRIETARY.  WITHOUT A PARTY’S EXPRESS PRIOR WRITTEN CONSENT, THE PARTIES AGREE
NOT TO USE ANY OF SUCH PARTY’S PROPRIETARY INFORMATION FOR ANY PURPOSE OTHER
THAN AS REQUIRED FOR PERFORMANCE HEREUNDER.  WITHOUT A PARTY’S EXPRESS PRIOR
WRITTEN CONSENT, THE PARTIES FURTHER AGREE NOT TO DISCLOSE OR PROVIDE ANY OF
SUCH PARTY’S PROPRIETARY INFORMATION TO ANY THIRD PARTY AND TO TAKE ALL
NECESSARY MEASURES TO PREVENT ANY SUCH DISCLOSURE BY THEIR RESPECTIVE OFFICERS,
DIRECTORS, MANAGERS, OR PERSONNEL.  THE FOREGOING OBLIGATIONS OF NON-DISCLOSURE
AND CONFIDENTIALITY WILL SURVIVE TERMINATION OF THIS AGREEMENT.  FOLLOWING
TERMINATION OF THIS AGREEMENT, THE PARTIES WILL PROMPTLY RETURN ALL PROPRIETARY
INFORMATION (AND REPRODUCTIONS THEREOF) OBTAINED HEREUNDER.

 

10.3                           PUBLIC INFORMATION; COURT ORDER.  “PROPRIETARY
INFORMATION” DOES NOT INCLUDE ANY INFORMATION:  (I) THAT WAS GENERALLY KNOWN TO
THE PUBLIC AT THE TIME OF DISCLOSURE, OR THEREAFTER BECOMES PUBLICLY KNOWN OTHER
THAN AS THE RESULT OF A BREACH BY THE RECEIVING PARTY OF ITS OBLIGATIONS UNDER
THIS AGREEMENT OR ANY OTHER CONFIDENTIALITY OBLIGATION BETWEEN THE PARTIES;
(II) THAT WAS ALREADY KNOWN TO THE RECEIVING PARTY AT THE TIME OF DISCLOSURE
OTHER THAN AS A RESULT OF ANY PERSON’S BREACH (INCLUDING THE RECEIVING PARTY’S)
OF ANY LEGAL OBLIGATION TO THE DISCLOSING PARTY; (III) THAT BECOMES KNOWN TO THE
RECEIVING PARTY THROUGH DISCLOSURE BY SOURCES OTHER THAN THE DISCLOSING PARTY
HAVING A LEGAL RIGHT TO DISCLOSE SUCH PROPRIETARY INFORMATION; OR (IV) THAT IS
REQUIRED TO BE DISCLOSED BY THE RECEIVING PARTY TO COMPLY WITH APPLICABLE LAW;
PROVIDED, HOWEVER, THAT IN SUCH CASE THE RECEIVING PARTY SHALL PROMPTLY NOTIFY
THE DISCLOSING PARTY SO THAT THE DISCLOSING PARTY MAY SEEK AN APPROPRIATE
PROTECTIVE ORDER OR OTHER REMEDY AND TAKE REASONABLE AND LAWFUL ACTION TO AVOID
OR MINIMIZE THE EXTENT OF SUCH DISCLOSURE.

 

10.4                           LEGAL ACTION.  AT THE REQUEST OF A PARTY, THE
PARTIES WILL COOPERATE FULLY WITH EACH OTHER IN ANY AND ALL LEGAL ACTIONS TAKEN
BY THE OTHER TO PROTECT THE REQUESTING PARTY’S RIGHTS IN ITS PROPRIETARY
INFORMATION.  THE PARTY SEEKING TO PROTECT SUCH RIGHTS WILL BEAR ALL COSTS AND
EXPENSES REASONABLY INCURRED BY ANY OTHER PARTY IN THE COURSE OF COOPERATING IN
SUCH LEGAL ACTION.

 

10.5                           RIGHT TO EQUITABLE RELIEF.   THE PARTIES
ACKNOWLEDGE THAT A BREACH OF ARTICLE 10 OF THIS AGREEMENT MAY RESULT IN
IMMEDIATE AND IRREPARABLE INJURY TO THE NON-BREACHING PARTY FOR WHICH AN AWARD
OF MONEY DAMAGES WOULD BE INADEQUATE.  THE BREACHING PARTY AGREES, THEREFORE,
THAT THE NON-BREACHING PARTY WILL HAVE THE RIGHT TO OBTAIN EQUITABLE RELIEF,
INCLUDING AN INJUNCTION TO SPECIFICALLY ENFORCE THE TERMS OF THIS AGREEMENT, AND
TO OBTAIN ANY OTHER LEGAL OR EQUITABLE REMEDIES THAT MAY BE AVAILABLE TO IT.

 

11.                               SUCCESSORS AND ASSIGNS.  THIS AGREEMENT IS
INTENDED TO BIND AND INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY SFM, THE
COMPANY AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, EXCEPT THAT WITHOUT THE
PRIOR WRITTEN CONSENT OF SFM, THE COMPANY WILL NOT ASSIGN, TRANSFER OR CONVEY
ANY OF ITS RIGHTS, DUTIES OR INTEREST UNDER THIS AGREEMENT, NOR WILL IT DELEGATE
ANY OF THE OBLIGATIONS OR DUTIES REQUIRED TO BE KEPT OR PERFORMED BY IT
HEREUNDER.

 

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12.                               NOTICES.  ANY NOTICES, REQUESTS, DEMANDS AND
OTHER COMMUNICATIONS REQUIRED OR PERMITTED TO BE GIVEN UNDER THIS AGREEMENT WILL
BE IN WRITING AND, EXCEPT AS OTHERWISE SPECIFIED IN WRITING, WILL BE GIVEN BY
PERSONAL DELIVERY, FACSIMILE TRANSMISSION, EXPRESS COURIER SERVICE OR BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED:

 

If to the Company:

 

Select Comfort Corporation

9800 59th Avenue North

Minneapolis, Minnesota 55442

Attention:  Mark Kimball

 

If to SFM:

 

Sterling Fund Management, LLC
1033 Skokie Boulevard, Suite 600
Northbrook, Illinois 60062
Attention:  Office of General Counsel

 

or to such other addresses as either party hereto may from time to time give
notice of (complying as to delivery with the terms of this Section 11) to the
other. Notice by registered or certified mail will be effective three days after
deposit in the United States mail.  Notice by any other permitted means will be
effective upon receipt.

 

13.                               SEVERABILITY.  IF ANY TERM OR PROVISION OF
THIS AGREEMENT OR THE APPLICATION THEREOF TO ANY PERSON OR CIRCUMSTANCE WILL, TO
ANY EXTENT, BE INVALID OR UNENFORCEABLE, THE REMAINDER OF THIS AGREEMENT, OR THE
APPLICATION OF SUCH TERM OR PROVISION TO PERSONS OR CIRCUMSTANCES OTHER THAN
THOSE WHICH ARE INVALID OR UNENFORCEABLE, WILL NOT BE AFFECTED THEREBY, AND EACH
TERM AND PROVISION OF THIS AGREEMENT WILL BE VALID AND BE ENFORCED TO THE
FULLEST EXTENT PERMITTED BY LAW.

 

14.                               NO WAIVER.  THE FAILURE OF THE COMPANY OR SFM
TO SEEK REDRESS FOR ANY VIOLATION OF, OR TO INSIST UPON THE STRICT PERFORMANCE
OF, ANY TERM OR CONDITION OF THIS AGREEMENT WILL NOT PREVENT A SUBSEQUENT ACT BY
THE COMPANY OR SFM, WHICH WOULD HAVE ORIGINALLY CONSTITUTED A VIOLATION OF THIS
AGREEMENT BY THE COMPANY OR SFM, FROM HAVING ALL THE FORCE AND EFFECT OF ANY
ORIGINAL VIOLATION.  THE FAILURE BY THE COMPANY OR SFM TO INSIST UPON THE STRICT
PERFORMANCE OF ANY ONE OF THE TERMS OR CONDITIONS OF THE AGREEMENT OR TO
EXERCISE ANY RIGHT, REMEDY OR ELECTIONS HEREIN CONTAINED OR PERMITTED BY LAW
WILL NOT CONSTITUTE OR BE CONSTRUED AS A WAIVER OR RELINQUISHMENT FOR THE FUTURE
OF SUCH TERM, CONDITION, RIGHT, REMEDY OR ELECTION, BUT THE SAME WILL CONTINUE
AND REMAIN IN FULL FORCE AND EFFECT.  EXCEPT TO THE EXTENT THAT THE COMPANY’S
RIGHTS OF TERMINATION ARE LIMITED HEREIN, ALL RIGHTS AND REMEDIES THAT THE
COMPANY OR SFM MAY HAVE AT LAW, IN EQUITY OR OTHERWISE UPON BREACH OF ANY TERM
OR CONDITION OF THIS AGREEMENT, WILL BE DISTINCT, SEPARATE AND CUMULATIVE RIGHTS
AND REMEDIES AND NO ONE OF THEM, WHETHER EXERCISED BY THE COMPANY OR SFM OR NOT,
WILL BE DEEMED TO BE IN EXCLUSION OF ANY OTHER RIGHT OR REMEDY OF THE COMPANY OR
SFM.

 

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15.                               ENTIRE AGREEMENT; AMENDMENT; CERTAIN TERMS. 
THIS AGREEMENT CONTAINS THE ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
RESPECT TO THE MATTERS HEREIN CONTAINED AND SUPERSEDES AND PREEMPTS ANY PRIOR
UNDERSTANDINGS, AGREEMENTS OR REPRESENTATIONS BY OR AMONG THE PARTIES, WRITTEN
OR ORAL, WHICH MAY HAVE RELATED TO THE SUBJECT MATTER HEREOF IN ANY WAY.  THE
PROVISIONS OF THIS AGREEMENT MAY BE AMENDED ONLY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY AND SFM. THE TERMS AFFILIATE AND ASSOCIATE WILL HAVE THE MEANING
ATTRIBUTED TO THOSE TERMS BY THE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION.

 

16.                               SFM AN INDEPENDENT CONTRACTOR.  SFM AND THE
COMPANY AGREE THAT SFM SHALL PERFORM THE SERVICES HEREUNDER AS AN INDEPENDENT
CONTRACTOR, RETAINING CONTROL OVER AND RESPONSIBILITY FOR ITS OWN OPERATIONS AND
PERSONNEL.  NEITHER SFM NOR ITS PRINCIPALS, MEMBERS, DIRECTORS, OFFICERS OR
EMPLOYEES SHALL BE CONSIDERED EMPLOYEES OR AGENTS OF THE COMPANY AS A RESULT OF
THIS AGREEMENT NOR SHALL ANY OF THEM HAVE AUTHORITY TO CONTRACT IN THE NAME OF
OR BIND THE COMPANY, EXCEPT AS EXPRESSLY AGREED TO IN WRITING BY THE COMPANY.

 

17.                               COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED
AND DELIVERED BY EACH PARTY HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN
SO EXECUTED AND DELIVERED SHALL BE DEEMED AN ORIGINAL AND BOTH OF WHICH TAKEN
TOGETHER SHALL CONSTITUTE ONE AND THE SAME AGREEMENT.

 

18.                               CHOICE OF LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE
STATE OF DELAWARE.

 

19.                               CONSENT TO JURISDICTION.  THE COMPANY AND SFM
HEREBY IRREVOCABLY AGREE THAT ANY SUIT, ACTION, PROCEEDING OR CLAIM AGAINST IT
ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT, OR ANY JUDGMENT ENTERED
BY ANY COURT IN RESPECT THEREOF, MAY BE BROUGHT OR ENFORCED IN THE STATE OR
FEDERAL COURTS LOCATED IN THE STATE OF DELAWARE AND THE COMPANY HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY PROCEEDING BROUGHT IN THE STATE
OF DELAWARE AND FURTHER IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH PROCEEDING
HAS BEEN BROUGHT IN ANY INCONVENIENT FORUM.

 

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IN WITNESS WHEREOF, this Management Services Agreement has been duly executed as
of the date first above written.

 

 

 

SELECT COMFORT CORPORATION

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

STERLING FUND MANAGEMENT, LLC

 

 

 

 

 

By:

 

 

Name: R. Christopher Hoehn-Saric

 

Title: Senior Managing Director

 

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