EXHIBIT 10.1

AMENDED AND RESTATED
PRIVATE LABEL CONSUMER CREDIT CARD PROGRAM AGREEMENT

This AMENDED AND RESTATED PRIVATE LABEL CONSUMER CREDIT CARD PROGRAM AGREEMENT
is made as of December 14, 2005 by and between GE Money Bank (as successor in
interest to Conseco Finance Corp., “Bank”) and Select Comfort Corporation
(“Select Comfort”) and Select Comfort Retail Corporation (“SCRC” and
collectively with Select Comfort “Retailer”). Certain capitalized terms used in
this Agreement are defined in the attached Appendix A.
 
WHEREAS, Retailer and Bank currently are parties to that certain Revolving
Credit Program Agreement, dated as of May 17, 1999 (as amended by that certain
First Amendment dated February 20, 2001, that certain Second Amendment dated
April 13, 2001, that certain Third Amendment dated June 19, 2002, that certain
Fourth Amendment dated June 23, 2003, that certain Fifth Amendment executed
during 2005, and as may have otherwise been amended from time to time, the
“Prior Program Agreement”).
 
WHEREAS, pursuant to the Prior Program Agreement, Bank and Retailer established
a program (the “Prior Program”) to extend and service customized credit programs
to qualified consumer customers of Retailer for the purchase of products and
services from Retailer.
 
WHEREAS, Retailer desires to continue to make the financing of its products and
services available to its customers through a private label revolving consumer
credit program offered by Bank, and Bank is willing to make such private label
revolving consumer financing available on the terms and subject to the
conditions set forth in this Agreement; and
 
WHEREAS, Retailer and Bank wish, pursuant to this Agreement, to replace the
Prior Program with the Program (as defined in Section 1.1 below) and to amend,
restate and replace the Prior Program Agreement in its entirety.
 
In consideration of the following terms and conditions, and for good and
valuable consideration the receipt and sufficiency of which is acknowledged,
Retailer and Bank agree as follows:
 
ARTICLE 1 - ESTABLISHMENT AND SCOPE OF THE PROGRAM
 
1.1  Bank to Continue Program.   Bank and Retailer are entering into this
Agreement in order to continue to offer a private label revolving consumer
credit program to qualified consumer customers of Retailer for the financing of
purchases of products and services from Retailer, all in accordance with the
terms of this Agreement (collectively, the “Program”).
 
    1.2.     Effect on Prior Program Agreement.   Bank and Retailer acknowledge
and agree that this Agreement amends, restates, replaces and continues the Prior
Program and that the Prior Program Agreement and all Accounts, Accountholders,
Purchases and Credit Cards (as such terms are defined in the Prior Program
Agreement) arising or issued under or accruing in connection with the Prior
Program or the Prior Program Agreement shall, as of the Program Commencement
Date, be subject to and governed by this Agreement, rather than the Prior
Program Agreement. All credit offerings and other features made available to
Cardholders under the Prior Program as of the Program Commencement Date shall
continue to be made available to Retailer’s customers; provided that all such
offerings and features shall be subject in all respects to the terms of this
Agreement, after the Program Commencement Date.
 
    1.3  Scope of the Program.
 
(a)  During the Term, Retailer shall continue to make the Program available to
its customers, including processing Account applications and accepting Credit
Cards in accordance with the Operating Procedures at all Store Locations,
Retailer’s website and Retailer’s direct marketing call center, and Bank will
extend credit directly to Cardholders under the Program to finance purchases
from Retailer.
 

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(b)  The Program is intended to be used by Cardholders for purchases made
primarily for personal, family or household use and Bank does not intend to
extend credit under the Program for purchases made primarily for commercial and
business purposes. Retailer acknowledges that Bank’s obligation to continue to
extend credit under the Program is contingent on Retailer continuing to sell the
type of goods and services generally similar to those sold by Retailer as of the
Program Commencement Date.
 
ARTICLE 2 - RESPONSIBILITIES UNDER THE PROGRAM
 
2.1  Bank’s Responsibilities.   During the Term, Bank’s responsibilities in
conducting the Program include the following:
 
(a)  Extend consumer credit to qualified customers of Retailer in accordance
with this Agreement and the Cardholder Agreements.
 
(b)  Establish (and modify from time to time in its discretion) Cardholder
finance charge rates and other fees and Account terms.
 
(c)  Produce and deliver to Retailer at a central location, Bank’s credit
applications and Cardholder Agreements and other standard Program materials.
 
(d)  Produce and distribute Credit Cards and Credit Card carriers in accordance
with the design utilized under the Prior Program.
 
(e)  Establish (and modify from time to time in its discretion) the credit
criteria used to evaluate applications for Cardholder Agreements.
 
(f)  Promptly determine and communicate its decision with respect to any
application for a Credit Card; and, assign (and modify from time to time in its
discretion) credit lines, authorize charges, and service Accounts.
 
(g)  Prepare and mail periodic billing statements to Cardholders with Active
Accounts.
 
(h)  Provide toll-free numbers and, during Bank’s standard operating hours,
customer service personnel for customer and store inquiries.
 
(i)  Receive and post payments, collect Accounts, and take all further actions
Bank deems necessary or appropriate in connection with Account administration.
 
(j)  Perform its responsibilities under this Agreement and the Program and
conduct its activities as a Bank, to the extent relating to the Program,
including its policies, services, practices, solicitations, and advertising in
compliance with all applicable laws.
 
2.2  Retailer’s Responsibilities. Retailer’s responsibilities in conducting the
Program include the following:
 
(a)  Accept Credit Cards for customer purchases from Retailer at Store Locations
in accordance with and otherwise conduct its activities relating to the Program
in compliance with the Operating Procedures. In the absence of a Credit Card (or
in the case of Absentee Purchases), follow the procedures for Card-Not-Present
Purchases as provided for in the Operating Procedures.
 
(b)  Promote the Program and the use of Credit Cards to its customers, including
by producing customized store signage, media advertising and through other
promotional methods.
 
(c)  Train its personnel sufficiently so as to be able to properly fulfill
Retailer’s responsibilities under the Program.
 
(d)  Except for Account applications sent directly to Bank by applicants,
transmit all Account application information to Bank electronically and
otherwise process and retain such applications in accordance
 
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with the Operating Procedures. With respect to any credit approval mechanism or
process employed by Bank in connection with the Program, Retailer acknowledges
that it is a “service provider” for Bank for purposes of communicating credit
decisions to Retailer’s customers.
 
(e)  Only submit Charge Transaction Data in respect of products or services
reasonably related to the types of products or services offered for sale by
Retailer at Store Locations (or as otherwise permitted hereunder) as of the
Program Commencement Date.
 
(f)  Perform its responsibilities under this Agreement and the Program, and
conduct its activities as a Retailer, including its policies, products,
business, point-of-sale and sales practices, and advertising, in compliance with
all applicable laws.
 
(g)  With respect to documents and forms to be executed by a Cardholder or an
applicant for a Credit Card or which constitute a disclosure required by Bank
and/or applicable law in connection with the Program, only use such documents
and forms that were provided to Retailer, or approved in writing, by Bank (and
only the latest version of such documents), and; refrain from modifying any such
approved documents or forms without Bank’s prior written consent.
 
(h)  Cooperate in the resolution of any Cardholder disputes in any case in which
Bank reasonably determines that such dispute relates to Retailer (or its
products or practices) or the resolution thereof will be facilitated by
Retailer’s cooperation; respond within twenty (20) days to any dispute forwarded
to Retailer from Bank, and; forward to Bank promptly after receipt by Retailer
copies of any communication relating to an Account received from any person.
 
(i)  Maintain a policy for the exchange, return, and adjustment of products and
services which is adequately communicated to customers and is in accordance with
all applicable laws (in connection therewith Retailer represents and warrants
that, as of the Program Commencement Date, the return policy in effect is the
same as that most recently delivered by Retailer to Bank prior thereto); notify
Bank in advance of (if practicable), but in any event within fifteen (15) days
after, any change in such return policy following the Program Commencement Date;
provide a credit to the applicable Account upon the exchange or return of a good
or service financed on such Account (but do not credit an Account in any case
where the purchased good or service was not originally financed on an Account),
and; include the resulting credit in the next transmission of Charge Transaction
Data to Bank (but in no event more than one (1) business day after the credit
was issued).
 
(j)  Retain copies, in either hard copy or digital form, of all Charge Slips and
Credit Slips, whether or not a hard copy was originally produced, for at least
twenty-five (25) months (or such longer period as may be required by law);
except as otherwise provided for herein in connection with disputes or
chargebacks, provide copies of either of the foregoing to Bank within twenty
(20) days after Bank’s request, to the extent received before the end of such
twenty-five (25) month period (or such longer period as may be required by law);
in consultation with Bank, produce and use Charge Slips and Credit Slips which
are able to be captured and reproduced electronically; and, send to Bank (at the
address used immediately prior to the Program Commencement Date), at Retailer’s
expense, all applications and Cardholder Agreements received from customers and
processed by Retailer since the date Retailer last sent such materials to Bank
(provided, that in no event shall Retailer forward such applications and
Cardholder Agreements to Bank less than once per calendar month).  
 
(k)  Maintain connectivity to Bank’s systems in the manner employed prior to the
Program Commencement Date for purposes of processing applications and sending
Charge Transaction Data to Bank.
 
ARTICLE 3 - SETTLEMENT AND PAYMENT TERMS
 
3.1  Settlement Procedures.
 
(a)  Retailer will transmit Charge Transaction Data to Bank daily and otherwise
in accordance with the Operating Procedures. If Charge Transaction Data is
received by Bank’s processing center before 5:00 p.m. (central time) on any
business day, Bank will process the Charge Transaction Data and initiate payment
on the same business day . If the Charge Transaction Data is received after 5:00
p.m. (central time)
 
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on any business day, or at any time on a day other than a business day, Bank
will process the Charge Transaction Data and initiate payment on the first
business day thereafter.
 
(b)  Provided no circumstance exists that would entitle Bank to give notice of
termination of this Agreement pursuant to Section 9.2, upon receipt,
verification and processing of Charge Transaction Data by Bank during the Term,
Bank will remit to Retailer in respect of such Charge Transaction Data an amount
equal to the sum of the total charges identified in such Charge Transaction Data
less the sum of (i) the total amount of any credits included in such Charge
Transaction Data, (ii) the applicable Program Fees, and (iii) at Bank’s option,
any other amounts then owed by Retailer to Bank (including, without limitation,
amounts charged back to Retailer pursuant to Article 7). Bank shall not be
obligated to fund any Charge Transaction Data submitted by Retailer more than
one hundred eighty (180) days after the date of the applicable purchase
transaction.
 
3.2   Bank Payment Terms.
 
(a)  Bank will transfer funds payable to Retailer under this Agreement via
Automated Clearing House (“ACH”) deposit to an account maintained in the name of
Retailer pursuant to written instructions delivered to Bank by Retailer.
 
(b)  Notwithstanding any other provision of this Agreement, Bank will have the
right to net, setoff or recoup any amounts due to it under this Agreement
against any amounts owing to Retailer under this Agreement; provided, that Bank
will provide written notice to Retailer with respect to any setoff or recoupment
not related to Program Fees, chargebacks or credits as provided for in Section
3.1(b). Nothing in this Section or any other provision of this Agreement is
intended to limit Bank’s common law rights of setoff and recoupment.
 
3.3  Retailer Payment Terms. Unless otherwise provided for elsewhere in this
Agreement, any amounts payable by Retailer to Bank under this Agreement will be
due when invoiced by Bank and shall be paid in immediately available funds
within fifteen (15) days after the date of such invoice. Unless the parties
otherwise agree, Retailer will transfer funds payable to Bank under this
Section 3.3 via wire transfer to a deposit account maintained in Bank’s name
pursuant to written instructions delivered to Retailer by Bank.
 
3.4  Program Fees. Retailer shall pay to Bank the Program Fees applicable to
each submission to Bank of Charge Transaction Data.
 
(a)  The Program Fee applicable to all purchases subject to the Base Rate in any
submission of Charge Transaction Data shall be an amount equal to the product of
(a) the Base Rate, and (b) the difference between (i) the aggregate amount of
charges on all Accounts reflected in such Charge Transaction Data (excluding any
charges for which the parties have established a Promotional Rate), less (ii)
the aggregate amount of any credits on Accounts reflected in such Charge
Transaction Data.
 
(b)  The Program Fee applicable to each purchase subject to a Promotional Rate
in any submission of Charge Transaction Data shall be an amount equal to the
product of (a) the applicable Promotional Rate, and (b) the amount of the charge
subject to such promotion.
 
3.5  Program Fee Percentages.
 
(a)  The Program Fee Percentages available under the Program as of the Program
Commencement Date are set forth on Schedule 3.5.
 
(b)  Subject only to the provisions of this Section 3.5(b) and Section 3.6
below, Bank agrees not to alter the Program Fee Percentages described on the
attached Schedule 3.5. Except as provided for in clause (i) below, beginning at
the end of the first Program Year and as of the end of each Program Year
thereafter prior to the termination of the Agreement, the following pricing
amendment provisions will apply:
 
(i)  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
(A)  It is the intention of Bank and Retailer that Promotional Rates for each
Program Year be adjusted annually [*** Confidential portion has been omitted
pursuant to a request for
 
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confidential treatment and has been filed separately with the Commission.]
 
(ii)  At the beginning of each Program Year after the Program Year ending
October 31, 2006, Bank shall adjust the Promotional Rates set forth in
paragraphs D., E., and F. of Schedule 3.5 in accordance with the terms and
conditions set forth therein.
 
(iii)  At the beginning of each Program Year after the Program Year ending
October 31, 2006, Bank shall adjust the Promotional Rate applicable to the “24
Equal Pay” credit based promotion set forth in paragraph G. of Schedule 3.5 in
accordance with the terms and conditions set forth therein.
 
(iv)  At the beginning of each Program Year after the Program Year ending
October 31, 2006, Bank shall adjust the Promotional Rate applicable to the “18
Month NPDI” promotion set forth in paragraph C. of Schedule 3.5 in accordance
with the terms and conditions set forth therein.
 
(v)  At the beginning of each Program Year after the Program Year ending October
31, 2006, Bank shall have the right to adjust any or all Promotional Rates set
forth on Schedule 3.5 if, for the immediately preceding Program Year, Net
Program Sales applicable to Direct Purchases and ECOM Purchases exceed, in the
aggregate, [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.] of
total Net Program Sales for such Program Year. If Bank elects to make any
changes under this clause (v), Retailer shall have the rights set forth in
Section 9.2(m).
 
(vi)  In determining the extent of any adjustment to Promotional Rates provided
for under any of clauses 3.5(b)(ii) through (v) at the beginning of any Program
Year, Bank shall take into account [*** Confidential portion has been omitted
pursuant to a request for confidential treatment and has been filed separately
with the Commission.] for the immediately preceding Program Year as provided for
under 3.5(b)(i).
 
(c)  If Bank and Retailer agree to offer any additional credit-based promotion
not included on Schedule 3.5, Bank will establish in writing, with
acknowledgment by Retailer, the Promotional Rate applicable to the calculation
of the Program Fee payable by Retailer for qualifying purchases, as well as such
other terms and conditions as the parties shall agree. Bank’s approval of any
billing and credit terms for any promotion is not intended to be and will not be
construed to be an approval of any materials used in advertising or soliciting
participation in such promotions.
 
(d)  Any Charge Transaction Data that does not meet the coding requirements
(e.g., transaction code requirements) of any credit-based promotion will
automatically default and be subject to the Base Rate; provided however, that if
Bank honors any such incorrectly coded credit-based promotion, Retailer shall
pay to Bank the incremental difference between the Program Fee at the Base Rate
and the Program Fee applicable to the Promotional Rate honored by Bank.
 
3.6  Interest Rate Adjustor. In addition to Bank’s right to adjust the
Promotional Rates as set forth above, as of the end of each calendar quarter
between the Program Commencement Date and the expiration or termination of the
Agreement, the Promotional Rate for each credit-based promotion then offered to
Cardholders by Bank shall be automatically adjusted if, during such calendar
quarter, a Prime Rate Trigger Movement has occurred. The amount of any such
adjustment shall be calculated as follows: (A) for every Prime Rate Unit by
which the Prime Rate exceeds the Index Rate corresponding to such credit-based
promotion, the Base Retailer Promotion Fee Percentage shall increase by an
amount equal to the number of such Prime Rate Units, multiplied by the Index
Rate Adjustor, and (B) for every Prime Rate Unit by which the Prime Rate is
below the Index Rate corresponding to such credit-based promotion, the Base
Retailer Promotion Fee Percentage shall decrease by an amount equal to the
number of such Prime Rate Units, multiplied by the Index Rate Adjustor. Bank
shall give prompt notice to Retailer of each adjustment. As used herein, the
following terms shall have the following meanings: “Base Retailer Promotion Fee
Percentage” shall mean, with respect to any Program Fee Percentage relating to
any credit-based promotion, the percentage that was offered by Bank to Retailer
at the time such credit-based promotion was first made available under the
Program; “Index Rate” shall mean, (x) for any credit-based promotion set forth
on Schedule 3.5 as of the Program Commencement Date, a Prime Rate of 6.50%, and
(y) for any credit-based promotion established by the parties following the
Program Commencement Date pursuant to Section 3.5(c), the Prime Rate that was in
effect as of the first day such credit-based promotion was made available under
the Program; “Index Rate Adjustor” shall
 
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mean, for any credit-based promotion, the increase or decrease in the
corresponding Program Fee Percentage indicated by the following calculation:
[*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
“Prime Rate Trigger Movement” shall mean, as of the end of any calendar quarter,
after taking into account all movements in the Prime Rate during such quarter,
an increase or decrease in the Prime Rate, relative to the Prime Rate in effect
as of the end of the immediately preceding calendar quarter, equal to at least
one Prime Rate Unit; “Prime Rate Unit” shall mean a .25% (25 basis point)
increment. [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
ARTICLE 4 - OTHER PROGRAM ECONOMICS
 
4.1  Allocation of Program Expenses. Unless otherwise specifically provided in
this Agreement, each party will be responsible for all costs and expenses
incurred by it in connection with complying with its responsibilities under this
Agreement.
 
4.2  Solicitation of Cardholders for Other Products.
 
(a)  Bank (or its designees) may (i) solicit Cardholders for and offer to
Cardholders (or arrange for a third party to solicit and/or provide) financial
or credit products and services offered by Bank or its Affiliates, including
Debt Cancellation Programs and Value-Added Programs (ii) market and offer other
credit and financial products and services (including, without limitation a
general purpose bankcard) to customers at the point of sale or as a companion
product for an established Account, and (iii) solicit Cardholders for and offer
other products and services to Cardholders that do not compete with the products
or services produced or sold by Retailer. Bank may not use the Retailer Marks in
any such solicitation without the express written consent of Retailer and Bank
shall follow any guidelines provided by Retailer in respect thereof.
 
(b)  Bank will be entitled to retain for its account any proceeds generated from
the provision of the goods and services referred to in Section 4.2(a).
 
4.3  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
4.4  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
ARTICLE 5 - PROMOTION OF THE PROGRAM
 
5.1  Annual Marketing Plans. During the Term, Bank and Retailer will work
together in good faith to agree for each Program Year on a marketing plan to
promote the Program and each party agrees to implement such marketing plan. Bank
and Retailer may from time to time also mutually agree on additional specific
marketing activities for the Program (and will not unreasonably withhold consent
to any specific marketing plan proposed by the other party). The costs of
implementing each marketing plan (or for implementing any marketing or
promotional initiatives developed by the parties outside of such plan) shall be
paid for by Retailer unless specifically set forth in such plan.
 
5.2  Responsibility of Retailer to Promote the Program.
 
(a)  Without limiting Retailer’s obligations under any marketing plan, Retailer
will actively support and promote the Program by, among other things:
 
(i)  encouraging the establishment and use of Accounts as a preferred method of
payment for Retailer’s products and services (through, for example, offering
credit-based promotions); and
 
(ii)  providing and utilizing store signage, credit advertisements, promotional
inserts, statement messages and other marketing materials promoting Program.
 
(b)  Retailer will not seek or obtain any special agreement or condition from,
nor discriminate in any way against, Cardholders or any person with respect to
the terms of any Account
 
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transaction. Retailer will not charge any credit surcharge, application,
processing or other Program related fee to Cardholders.
 
ARTICLE 6 - OTHER AGREEMENTS
 
6.1  Ownership of Accounts; Credit Losses.
 
(a)  Bank is and will be the sole and exclusive owner of all Accounts and
Account Documentation, and will be entitled to receive all payments made by
Cardholders on Accounts. Bank shall be identified as the creditor and owner of
the Accounts for all purposes, and Retailer shall not represent or imply
otherwise. Retailer acknowledges that it has no right, title or interest in any
Accounts or Account Documentation and will not, at any time, have any right to
any proceeds or payments made under the Accounts unless Retailer subsequently
purchases or otherwise acquires such Accounts from Bank. Retailer further
acknowledges that neither the Cardholder Information nor any of the Account
Documentation nor any of the information included in the Account Documentation
will be deemed to be Confidential Information of Retailer for purposes of
Section 13.1 hereof. Retailer authorizes and empowers Bank to sign and endorse
Retailer’s name upon any checks, drafts, money orders or other forms of payment
in respect of any Account that may have been issued by the Cardholder in
Retailer’s name. This limited power of attorney conferred in this Section 6.1 is
deemed a power coupled with an interest and will be irrevocable prior to the
Final Liquidation Date.
 
(b)  Bank will bear all credit losses on Accounts (other than as permitted by
Bank’s chargeback rights in Article 7 and other than credit losses incurred
after the Accounts are purchased or otherwise acquired by Retailer or a third
party).
 
6.2  Ownership and Use of Cardholder Information. Bank is the sole and exclusive
owner of all lists of Cardholders and applicants generated by the Program
(including, without limitation, names, addresses, telephone numbers, e-mail
addresses, dates of birth, social security and similar numbers, and account and
similar access numbers) (the “Cardholder Information”). Further, Bank’s
ownership of the Cardholder Information notwithstanding, Retailer may use the
Cardholder contact information (names, addresses, telephone numbers and e-mail
addresses) contained in the Cardholder Information during the Term to promote
the Program and to promote the products and services sold by Retailer under the
Program. During the Term, Bank may use the Cardholder Information to exercise
its rights and fulfill its obligations under this Agreement and with respect to
the administration and liquidation (including sale) of Accounts after the
expiration or earlier termination of the Term. Under no circumstances will
Cardholder Information be deemed to include information received by Retailer
separate or apart from the Program, even if such information is in whole or in
part identical to any such information received by Bank through the Program,
including information received by Bank as part of Credit Card applications. Such
independently developed information shall not be subject to the use restrictions
set forth in this Section 6.2 and may be used by Retailer in any lawful manner.
 
6.3  Cardholder Terms. Bank may establish and modify the ordinary finance charge
rates applicable to credit extended to Cardholders. Bank may also establish (and
modify from time to time) all other terms upon which credit will be extended to
Cardholders, including without limitation, repayment terms, default finance
charges, late fees, overlimit charges, returned check charges, and other
ordinary fees and charges. Bank shall consult with Retailer and give notice to
Retailer prior to amending or modifying the finance charge rates and fees set
forth on Schedule 6.3.
 
6.4  Credit Criteria. Bank shall establish in its discretion and may modify from
time to time any or all of the credit criteria used in evaluating applicants
under the Program (including, without limitation, the creditworthiness of
individual applicants, the range of credit limits to be made available to
individual Cardholders and whether to suspend or terminate the credit privileges
of any Cardholder). Bank will consult with Retailer regarding any changes to the
credit criteria used for the Program which, in Bank’s reasonable opinion, could
reasonably be expected to have a material adverse affect on the Program and will
promptly notify Retailer in writing of any such change.
 
6.5  Operating Procedures. Retailer and Bank acknowledge that, under the Prior
Program Agreement, Bank developed and provided to Retailer, operating procedures
(the “Operating Procedures”) governing the flow of application information and
Charge Transaction Data, the logistics and specific procedures involved in the
establishment and maintenance of Accounts under the Program and settlement
procedures for
 
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charges submitted to Bank. Such Operating Procedures will continue to govern
such issues and procedures under the Program, and Bank may amend them from time
to time upon notice to Retailer; provided, that, except for modifications (i)
required by applicable law, or (ii) which Bank reasonably determines are
necessary or appropriate to comply with (or avoid violation of) applicable
regulatory authority, Bank shall obtain the prior written consent of Retailer
before modifying any terms and conditions of the Operating Procedures the
amendment of which is reasonably likely to result in any material and adverse
(in terms of time or cost) alteration of the methods and procedures through
which Retailer must process applications or charge or credit transactions under,
or otherwise participates in, the Program. The Operating Procedures will include
any supplemental procedures developed or required from time to time by Bank (or
by Bank and Retailer, as the case may be) in connection with Retailer’s request
to provide for purchases through the Retailer Website.
 
6.6  Credit Review Point. Bank shall provide a credit allocation for the Program
in the amount of the Credit Review Point. Following notice to Retailer, Bank
will not be obligated to make any extension of credit under the Program if,
after such extension, Aggregate Outstanding Indebtedness would exceed the Credit
Review Point then in effect (except to the extent set forth in Section
9.2(j)(iii)). If at any time Aggregate Outstanding Indebtedness equals or
exceeds eighty percent (80%) of the Credit Review Point then in effect, the
following terms and conditions shall apply:
 
(a)  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
(b)  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
(i)  Bank may increase the Credit Review Point to an amount that will
accommodate the then outstanding Indebtedness, and anticipated growth in such
Indebtedness (as applicable), based on Bank’s good faith projections. If Bank
selects this option, then Bank’s written notice to Retailer will include the
amount of the increased Credit Review Point.
 
(ii)  Bank may elect not to increase the Credit Review Point.
 
(c)  Following any notice of termination under Section 9.2(j) (or Bank’s
election not to increase the Credit Review Point under clause (ii) above), Bank
shall provide Retailer with reports at the end of each month (such reports to be
included with the standard monthly reporting package being provided to Retailer
by Bank at such time) setting forth the amount of Aggregate Outstanding
Indebtedness as of the end of such month.
 
6.7  Retailer Financial Reports.
 
(a)  If at any time during the Term Retailer is not obligated to, or for any
other reason does not, file periodic financial reports with the Securities and
Exchange Commission pursuant to the reporting requirements of Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended, Retailer will:
 
(i)  As soon as practicable but in any event not more than ninety (90) days
after the end of each fiscal year, deliver to Bank its audited annual financial
statements, including its audited consolidated balance sheet, income statement
and statement of cash flows and financial position.
 
(ii)  As soon as practicable but in any event not more than sixty (60) days
after the end of each fiscal quarter, deliver to Bank its unaudited quarterly
financial statements, including its unaudited consolidated balance sheet, income
statement and statement of cash flows and financial position, accompanied by a
certificate from Retailer’s chief financial officer that such financial
statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis and present fairly the consolidated
financial position of Retailer as of the end of such fiscal quarter and the
results of its operations, subject to normal year end audit adjustments.
 
(b)  Retailer shall maintain, on a consolidated basis, compliance with the
financial covenants set forth in Schedule 6.7; provided, that Retailer’s failure
to satisfy either of such covenants shall constitute a Letter of Credit Event
only and not an event giving rise to a right of termination by Bank.
 
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In addition, as soon as reasonably practicable, but in any event within sixty
(60) days after the end of each fiscal quarter of Retailer, Retailer shall
deliver to Bank a compliance certificate certified by Retailer’s chief financial
officer establishing Retailer’s compliance (or non-compliance) with the
covenants set forth in Schedule 6.7 as of the end of such quarter, and which
shall separately set forth the calculation of its compliance (or non-compliance)
with the covenants set forth in Schedule 6.7.
 
6.8  Inserts and Billing Messages.
 
(a)  For each billing statement sent to Cardholders during a billing cycle
during the Term, Bank will make available to Retailer a space for two (2)
customized messages on the billing statement and Bank will include as many
Retailer inserts into each billing statement as possible (but in no event more
than six (6) without causing the weight of the billing statement package to
exceed one ounce); provided that if Bank is required by law to send a notice in
such month (or if Bank reasonably believes a notice is necessary or desirable to
protect Bank’s interest in the Accounts), then such notice shall take priority
over any proposed insert or statement message as applicable. If Retailer wishes
Bank to include Retailer’s inserts in any billing statements in which the
inclusion of such inserts will cause the postage on such billing statements to
exceed one ounce, then Retailer will provide at least five (5) days prior notice
to Bank to enable Bank to adjust its process and Retailer will pay the
overweight postage charges resulting therefrom. The foregoing notwithstanding,
Bank is not required to include any Retailer statement messages or billing
inserts unless Bank receives such statement messages or copies of the billing
inserts at least fifteen (15) days prior to the calendar month for the scheduled
mailing date. Retailer will provide copies of all billing inserts to Bank at its
own cost.
 
(b)  The form of customized messages and all billing inserts will comply with
Bank’s specifications as provided to Retailer from time to time, and Bank shall
have the right to reject any message or billing statement that Bank reasonably
believes is detrimental to the image of the Bank or the Program. For the
avoidance of doubt, for purposes of Retailer’s rights under this Section, only
billing inserts and statement messages regarding the Program, or goods and
services available for purchase from Retailer under the Program, shall qualify
for inclusion in Cardholder billing statements.
 
6.9  Extended Warranties. Retailer will not be permitted to finance on Accounts
extended warranties, service contracts, gift certificates, cash cards or stored
value cards without the prior written approval of Bank. With respect to any of
the foregoing, if Retailer seeks Bank’s consent to finance such products under
the Program, Retailer agrees to review with Bank its offering of and procedures
concerning the sale and fulfillment of such products. Retailer understands that
any third party insurer of any extended warranty program proposed by Retailer
shall be subject to financial review by Bank and must otherwise be reasonably
acceptable to Bank. Even where approved by Bank, Retailer shall be responsible
for ensuring that any extended warranties, service contracts, gift certificates,
cash cards or stored value cards fully comply with all applicable laws. Nothing
in this Section 6.9 shall restrict Retailer from selling products subject to
normal manufacturer’s warranties included in the standard purchase price as long
as no additional seller’s warranties are provided.
 
6.10  Third Party Participation. As of the date of this Agreement, Retailer
represents and warrants that no Affiliate of Retailer is engaged in the business
of selling goods or services to retail consumers other than those Affiliates, if
any, whose existence and retail consumer sales activities have been disclosed to
Bank prior to the date hereof. Retailer shall not after the Program Commencement
Date permit any Affiliate to charge any purchase to an Account or to submit any
Charge Transaction Data to Bank without (i) the prior written consent of Bank;
(ii) such Affiliate having entered into a written agreement with Bank to be a
“Retailer” hereunder (on such modified terms and conditions as Bank may
require); and (iii) such Affiliate having executed or authorized the filing of
such additional documents (including but not limited to UCC financing
statements) as Bank may require. Retailer has not and will not permit any
licensee, subtenant or third party operating in or from a Store Location to
accept Credit Cards for purchases by Cardholders without first obtaining Bank’s
prior written approval.
 
6.11  Sales Taxes and Related Record Retention.
 
(a)  Retailer will pay when due any sales taxes relating to the sale of goods or
services financed on Accounts. Retailer agrees that Bank shall be entitled to
any and all recoveries of taxes of any type that were imposed on the sale of
goods or services attributable to any Account that Bank determines to be
non-collectable during the Term through any and all potential means, including,
but not limited to, refunds,
 
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deductions, credits or audit offsets. Retailer shall cooperate with Bank in the
recovery of any and all such taxes by such means as Bank reasonably determines,
including but not limited to executing any and all forms or other documentation
deemed necessary by Bank or required by any taxing authority, and retaining and
timely producing all supporting documentation and data relative to such
Accounts; provided, that Retailer shall have no such obligation to cooperate to
the extent Retailer reasonably determines that doing so will result in Retailer
violating any applicable law. Bank acknowledges and agrees that (i) Retailer
shall have no obligation to independently pursue the recovery of any such taxes
in the absence of a written request from Bank, and (ii) Bank shall not be
entitled to recover any such taxes from Retailer except to the extent Retailer
shall have recovered such taxes from the applicable taxing authority. Bank shall
reimburse Retailer for all reasonable expenses incurred by Retailer for copying,
mailing or transmitting such documentation or data at the direction of Bank as
contemplated by this Agreement.
 
(b)  Retailer will retain a record of each purchase included in any Charge
Transaction Data submitted to Bank under the Program for at least four (4) years
from the date of each purchase (which record may be maintained in electronic
format, but must show the Account number, amount of sales, use or excise tax
included in each such purchase and the street address of the Store Location
where each such purchase was made (or a store number or other information from
which the street address of the location of the sale can be readily
ascertained)). Retailer will provide such information to Bank within twenty (20)
days after Bank’s request.
 
6.12  Use of Names and Marks. Retailer hereby grants Bank a nonexclusive,
royalty-free, non-transferable (provided that such restriction shall not limit
Bank’s right to use contractors and Affiliates to produce the branded materials
contemplated hereby) license to use the Retailer Marks within the geographic
region contemplated hereby (which, for purposes of Retail Purchases, shall mean
the United States of America) in connection with the continuing administration
and operation of the Program and the ownership and liquidation of the Accounts
(including, without limitation, the exercise by Bank of all of its rights under
this Agreement and under applicable law, and the fulfillment of all of Bank’s
obligations under this Agreement and under applicable law). Without the prior
written consent of Bank, Retailer may not use Bank’s (or any Affiliate thereof)
names or any related marks, logos or similar proprietary designations; provided,
that Retailer may use Bank’s business name, in the nominative sense, in
connection with any credit disclosure verbiage included in any advertising of
the Program (or any credit-based promotion offered thereunder) by Retailer.
 
6.13  Intellectual Property. All technology, software, or other material
developed, invented, created or authored by either party in connection with the
Program shall belong solely and exclusively to the developing party, including
all intellectual property rights relating thereto.
 
6.14  Securitization. Bank and its Affiliates may securitize, participate or
otherwise convey or transfer an interest in, or pledge or create a lien in
respect of, any or all of the Accounts and/or Indebtedness at any time during
the Term; provided, that no such action will adversely effect any of the rights
of Retailer to purchase the Accounts and Indebtedness in accordance with the
terms of this Agreement. Retailer agrees to cooperate with Bank and its
Affiliates and use commercially reasonable efforts (without being required to
incur any material out-of-pocket costs) to assist Bank and its Affiliates in
connection with any such matter.
 
6.15  Grant of Security Interest/Precautionary Filing.
 
(a)  Both (i) against the possibility that it is determined that Article 9 of
the UCC applies or may apply to the transactions contemplated hereby, and
(ii) to secure payment of and performance by Retailer of any and all
indebtedness, liabilities or obligations, now existing or hereafter arising
pursuant to this Agreement, including indebtedness, liabilities and obligations
that may be deemed to exist in the event of the applicability of Article 9 of
the UCC to, and any recharacterization of, any transactions contemplated hereby,
Retailer grants to Bank a security interest in all of Retailer’s right, title
and interest, if any, now existing or hereafter arising in all (i) Accounts,
Account Documentation and Indebtedness, (ii) all deposits, credit balances and
reserves on Bank’s books relating to any such Accounts (including the Collateral
Account), (iii) all goods financed on Accounts and returned to Retailer by
Cardholders for which Retailer has not repaid Bank, and (iv) all proceeds of any
of the foregoing.
 
(b)  Retailer represents and warrants that it has not and will not grant any
security interest to or authorize the filing of any financing statement in favor
of any person that attaches to or covers any of the
 
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property set forth in the preceding subsection (a) or that would attach to or
cover such property, if contrary to the intent of the parties to this Agreement,
Retailer was determined to have any rights therein, other than any security
interests or financing statements that have lapsed or been terminated.
 
(c)  Retailer agrees to cooperate fully with Bank, as Bank may reasonably
request, in order to give effect to the security interests granted by this
Section 6.15. Retailer hereby authorizes Bank to file such UCC-l or comparable
statements as Bank deems necessary or appropriate to perfect such security
interests. Retailer represents and warrants that as of the date hereof the
following is the true and correct corporate name, state of organization, and
principal place of business of Select Comfort and SCRC, respectively: (i) Select
Comfort Corporation; incorporated in the State of Minnesota; principal place of
business, 6105 Trenton Lane North, Suite 100, Minneapolis, Minnesota, 55442;
and, Select Comfort Retail Corporation; incorporated in the State of Minnesota;
principal place of business, 6105 Trenton Lane North, Suite 200, Minneapolis,
Minnesota, 55442. Retailer agrees to provide Bank with thirty (30) days’ prior
written notice of any change in any of the foregoing corporate name, or any
state of incorporation.
 
(d)  Unless Bank shall have otherwise consented in writing, Retailer shall not
create, assume or suffer to exist any lien on any of its right, title or
interest under this Agreement or in the proceeds thereof. Without limiting the
foregoing, Bank hereby consents to the security interest of the Working Capital
Lender in this Agreement and such proceeds; provided, that Retailer acknowledges
that such security interest is subject in all respects to any and all rights of
Bank hereunder or under applicable law to set-off, net or recoup amounts due
Bank against amounts due Retailer.
 
6.16  In-Store Payments. Retailer shall not accept any payment on an Account.
Retailer will make available to Cardholders at all Store Locations (and at such
other locations or venues at or through which Cardholders may seek information
about the Program) the address to be used for making payments on Accounts
directly to Bank. If notwithstanding the foregoing, Retailer inadvertently
receives any payment on an Account, Retailer agrees that it will receive and
hold such payment in trust for Bank and will promptly (but not later than three
(3) business days after Retailer realizes it has received such payment) deliver
such payment to Bank in the form received together with such endorsements or
other documents of assignment as may be necessary to permit Bank to receive the
benefit thereof to the same extent as if payment had been made directly to Bank.
 
6.17  Relationship Managers. Bank and Retailer shall each designate one employee
(with sufficient authority to facilitate decision-making on behalf of Bank and
Retailer, respectively, and with sufficient knowledge and experience to
effectively and efficiently manage the relationship contemplated hereby) who
shall be charged with day-to-day administrative responsibility for the Program
(each, a “Relationship Manager”) during the Term, and who shall make available a
sufficient amount of his or her working time, attention, skill, and efforts
necessary to furthering the interests of the Program. Either party may replace
its Relationship Manager at any time upon notice to the other party, so long as
the replacement Relationship Manager meets the foregoing qualifications.
 
6.18  Direct and ECOM Purchases. Retailer will process all Direct Purchases, all
ECOM Purchases and all applications received via telephone or through the mail
in accordance with the terms of this Agreement, the Operating Procedures, and
any specific procedures governing such transactions developed by Bank and
Retailer. Without limiting the foregoing, (i) if a prospective Cardholder is
submitting an application via telephone, Retailer will ensure that all consumer
credit disclosures, as provided to Retailer by Bank from time to time, have been
provided to the prospective Cardholder as part of such telephone call. Retailer
shall continue to provide such disclosures consistent with the manner in which
such disclosures were provided under the Prior Program as of the Program
Commencement Date (as such disclosures and/or delivery procedures may be amended
from time to time by Bank in its reasonable discretion), and (ii) Retailer will
cause all such applications to be separately tagged with a special processing
indicator and all Direct Purchases and all ECOM Purchases to be separately
tagged with a unique sale number. 
 
6.19  Letter of Credit. 
 
(a)  Subject to Section 6.19(c), at any time following the occurrence of a
Letter of Credit Event, Bank may require that Retailer deliver to Bank within
ten (10) days after Bank’s request an Eligible Letter of Credit in an amount
equal to the Letter of Credit Amount. If, at any time, an event shall occur
which would
 
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cause any Letter of Credit previously delivered to Bank to cease to be an
Eligible Letter of Credit or no longer to be in an amount equal to or greater
than the Letter of Credit Amount, then within ten (10) days after the earlier of
(i) the date on which Retailer first learns of the occurrence of such event; or
(ii) the date on which Retailer first receives notice thereof from Bank,
Retailer shall cause a substitute Eligible Letter of Credit to be issued and
delivered to Bank in a face amount equal to or greater than the Letter of Credit
Amount. On or before thirty (30) days prior to the expiration of each Letter of
Credit provided to Bank, Retailer shall cause a substitute Eligible Letter of
Credit to be issued and delivered to Bank in a face amount equal to or greater
than the Letter of Credit Amount.
 
(b)  Any amounts drawn under a Letter of Credit hereunder in excess of the
amounts due Bank hereunder shall be held by Bank in a non-interest bearing
account on Bank’s books (the “Collateral Account”) and shall secure Retailer’s
full and prompt payment of all further amounts due hereunder. If Retailer fails
to pay any amounts hereunder when due, Bank may immediately, and without prior
notice to Retailer, further draw on the Letter of Credit or, if applicable,
debit any such unpaid amount from any amounts then remaining in the Collateral
Account. In addition, if Retailer fails to provide a substitute or replacement
Eligible Letter of Credit as required by this Section 6.19, Bank may draw on the
full amount available under the Letter of Credit, apply any amounts received in
such drawing against Retailer’s outstanding obligations hereunder, and credit
the Collateral Account with the amount equal to any remaining balance. Retailer
hereby grants Bank a security interest in the Collateral Account, which security
interest shall be in addition to any right of setoff or recoupment that Bank may
otherwise have under this Agreement or applicable law.
 
(c)  If, following Retailer’s delivery of an Eligible Letter of Credit to Bank
in compliance with the terms of this Section 6.19, Retailer is able to obtain
and maintain compliance with the financial covenants set forth in Schedule 6.7
for a period of three (3) consecutive fiscal quarters of Retailer, then Bank
shall return the Letter of Credit and/or any proceeds in the Collateral Account
within thirty (30) days after the end of the applicable fiscal quarter.
 
(d)  The obligations under this Section 6.19 shall apply at all times until the
earlier of (i) six (6) months after the expiration or earlier termination of the
Term, and (ii) the sale of the Accounts to Retailer (or its designee) pursuant
to Section 10.1, at which time, Bank shall surrender any outstanding Letter of
Credit to Retailer and pay to Retailer an amount equal to the amount remaining
in the Collateral Account, if any. Such surrender or repayment shall be
accompanied by an accounting of credit and debit activity for the Collateral
Account, if any.
 
(e)  Bank agrees to pay for the fees required by the issuing bank for any Letter
of Credit requested by Bank hereunder; provided, that the maximum amount payable
by Bank in respect of each such fee shall not exceed 1.5% of the applicable
Letter of Credit Amount.
 
ARTICLE 7 - CHARGEBACKS
 
7.1  Chargeback Rights. Subject to Section 7.2, Bank will have the right to
chargeback to Retailer the principal balance relating to any Indebtedness, if
with respect to the corresponding charge or credit or the related Charge
Transaction Data or the underlying transaction:
 
(a)  The Cardholder disputes a charge and Retailer cannot provide Bank with the
applicable Charge Slip that resolves the dispute within twenty (20) days after
Bank’s request;
 
(b)  The Cardholder or any person disputes the existence of an Account and
Retailer cannot provide Bank with an executed application that resolves the
dispute within twenty (20) days after Bank’s request (Bank having reasonably
determined after a review of its records that it does not have such Cardholder
application in its possession);
 
(c)  The Cardholder disputes the amount of an Account and/or refuses to pay
alleging dissatisfaction with products or services received, a breach of any
warranty or representation by Retailer in connection with the transaction, or an
offset or counterclaim based on an act or omission of Retailer, provided that
any such dispute(s) constitutes a bona fide claim presented by a Cardholder in
good faith in the reasonable opinion of Bank;
 
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(d)  The Cardholder disputes a charge or the amount or existence of an Account
and/or otherwise refuses to pay and Retailer failed to comply with any Operating
Procedure(s) with respect to the corresponding charge, credit, or Account
(provided that any such dispute(s) constitutes a bona fide claim presented by a
Cardholder in good faith in the reasonable opinion of Bank), or Bank determines
that any charge, credit or Account was subject to any acts of fraud performed by
or in collusion with Retailer’s employees, contractors or agents;
 
(e)  The Cardholder disputes the amount or existence of, or otherwise refuses to
pay, all or any portion of the Indebtedness resulting from a Card-Not-Present
Purchase; provided that any such dispute or refusal constitutes a bona fide
claim presented by a Cardholder in good faith in the reasonable opinion of Bank;
or
 
(f)  Bank determines that any warranty made by Retailer pursuant to Section 11.2
was false or inaccurate in any respect when made.
 
(g)  Such charge, credit, Charge Transaction Data or the underlying transaction
relates to any purchases financed on an Account opened pursuant to an Internet
Application, and (i) the Cardholder asserts that the Cardholder or an authorized
user did not make or authorize the purchase in dispute, or (ii) any person
asserts that such person’s name, social security number or other identifying
information was used to make any purchase (or to open an Account on which such
purchase was made) and that such person did not make or authorize the purchase
or open the Account in dispute, or (iii) Bank determines in good faith that a
purchase was transacted or an Account was opened in a suspicious or fraudulent
manner.
 
In its reasonable discretion, Bank may compromise and settle any claim made by
any Cardholder (including claims made on behalf of an authorized user) relating
to such Cardholder’s Account. No such compromise or settlement will impair
Bank’s right to chargeback under this Section 7.1 any portion of such Account
not paid pursuant to any such settlement or compromise. If the full amount or
any portion of any charge is charged back, Bank will assign all rights to
payment for the amount charged back to Retailer upon the request of Retailer,
without recourse or warranty, except that such rights are free and clear of any
lien or encumbrance of Bank.
 
7.2  Fraud Losses on Accounts. 
 
(a)  Notwithstanding Bank’s right to chargeback to Retailer any Indebtedness
under Section 7.1, if Bank determines in its reasonable discretion that the
basis for such chargeback right constitutes Uncontrollable Fraud, then, with
respect to each such incidence of Uncontrollable Fraud during any Program Year
(and without limiting Retailer’s obligation with respect to amounts payable for
any other reason under Section 7.1, including without limitation amounts payable
as a result of fraud performed by or in collusion with Retailer’s employees,
contractors or agents), Bank’s right to chargeback the related charge or credit
under Section 7.1 shall be limited to fifty percent (50%) of the aggregate
amount otherwise subject to chargeback until the Fraud Cap then in effect for
such Program Year has been reached. Once the Fraud Cap has been reached for any
Program Year, Retailer shall be responsible and liable for all subsequent
chargebacks attributable to Uncontrollable Fraud and shall pay Bank such amount
as set forth in Section 7.2(b). As used herein, the following terms shall have
the following meanings: (i) “Uncontrollable Fraud” shall mean acts of fraud
perpetrated by persons other than employees, contractors or agents of Retailer,
which acts of fraud occur despite Retailer’s full compliance with this Agreement
and the Operating Procedures then in effect (in calculating fraud losses, an
incident of Uncontrollable Fraud will be attributed to the Program Year in which
the fraudulent act was discovered); and (ii) “Fraud Cap” means, for any Program
Year, an amount equal to [*** Confidential portion has been omitted pursuant to
a request for confidential treatment and has been filed separately with the
Commission.]. For purposes of this Section, Bank acknowledges and agrees that,
with respect to its chargeback rights under Sections 7.1(b) and 7.1(g) in
connection with any Account application the information for which was provided
over the telephone or through the Internet, so long as Retailer followed any
applicable Operating Procedures with respect to the completion of such
application, Bank’s chargeback rights shall be subject to the Uncontrollable
Fraud provisions of this Section 7.2 notwithstanding that Retailer cannot
provide to Bank a copy of such application.
 
(b) To the extent, for any Program Year, Bank’s losses resulting from
Uncontrollable Fraud exceed the Fraud Cap for such Program Year, Retailer shall
pay to Bank promptly upon demand, the amount by which such losses exceed the
Fraud Cap.
 
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ARTICLE 8 - EXCLUSIVITY
 
8.1  Exclusivity. 
 
(a)  Retailer will not (and will cause its Affiliates not to) either within the
United States or in connection with Direct Purchases or ECOM Purchases of
merchandise priced by Retailer in United States Dollars (or otherwise intended
by Retailer for purchase by consumers residing within the United States)
(i) directly or indirectly, accept for payment, promote, sponsor, solicit,
permit solicitation of, or make available to retail consumer customers of
Retailer or any of its Affiliates or otherwise provide, any consumer credit or
charge program that bears, uses or refers to any trade names of Retailer, or in
any way competes with the Program, other than (A) any program offered by Bank or
an Affiliate of Bank, (B) any generally accepted multi-purpose credit or charge
cards or by generally accepted multi-purpose debit or secured cards in each
case, such as American Express, MasterCard, Visa and Discover cards (provided
that none of the cards referred to in this clause (B) may be
“co-branded,”“sponsored” or “co-sponsored” with Retailer or bear Retailer’s name
or marks), or (C) a Second Source Program, or (ii) promote any other charge or
credit payment vehicle not otherwise prohibited hereby (e.g. general purpose
credit cards) more favorably than Accounts and Credit Cards as a method for the
payment of Retailer’s goods and services. Without limiting the foregoing, if
Retailer shall have exercised its termination rights under Section 9.2(l) and
for any reason Retailer thereafter determines not to implement its Internal
Program, the provisions of this Section 8.1 shall continue to apply through
fifth anniversary of the Program Commencement Date.
 
(b)  Until the expiration or termination of the Term, if Retailer desires to
make arrangements for the provision by any person of any consumer credit program
for the financing of purchases from Retailer or its Affiliates in Canada, then
Retailer shall engage in good faith discussions with Bank regarding the
possibility of Bank (or an Affiliate of Bank) providing such program.
 
(c)  The provisions of Section 8.1(a) notwithstanding,
 
(i)  following the date of any notice of termination by either party under
Section 9.1 or 9.2, in order to provide for an orderly transition to a potential
replacement financing arrangement, Retailer may initiate negotiations for such
replacement program; provided that Retailer shall not (x) except as may be
required under applicable securities laws, announce such replacement program
earlier than ninety (90) days prior to the scheduled end of the Term (provided,
that no such announcement or other activity shall in any way portray Bank or the
Program in a negative fashion), or (y) begin accepting applications or
processing transactions under such replacement programs earlier than the end of
the Term.
 
(ii)  Retailer may operate a consumer financing program otherwise precluded
under Section 8.1(a) if Retailer’s participation therein arises as a result of
Retailer’s acquisition (whether through merger, stock purchase or asset
purchase) of an unrelated third party, which entity was, at the time of such
acquisition, party to a contract for the provision of a consumer financing
program (in each case, an “Acquired Program”). Retailer shall notify Bank of the
acquisition at the earliest reasonably practicable date following the public
announcement of the acquisition and shall thereafter provide Bank with such
information regarding the Acquired Program as Bank may reasonably request in
order to ascertain the extent to which Bank is able to integrate the Acquired
Program into the Program.
 
(iii)  Within sixty (60) days following receipt by Bank of the requested
information, Bank will notify Retailer whether (A) it agrees to integrate the
Acquired Program into the Program upon the same terms and conditions then
prevailing under the Program; (B) it proposes additional or separate Program Fee
Percentages for the Acquired Program, in which case the notice from Bank will
include such additional or separate Program Fee Percentages; or (C) it declines
to do either of the above. If the scheduled expiration date of the Acquired
Program is less than sixty (60) days after the date of receipt by Bank of the
requested information, then Bank may nonetheless inform Retailer of its
intention to integrate the Acquired Program so long as such notice is given not
less than fifteen (15) days prior to such expiration date. Retailer may, in its
sole discretion, extend the Acquired Program for such period of time as Retailer
may deem necessary or appropriate to allow for additional time for evaluation;
provided, that if Bank notifies Retailer of its intention to integrate the
Acquired Program into the Program, Retailer shall not thereafter initiate or
agree to any such extension.
 
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(iv)  If Bank notifies Retailer that it agrees to integrate the Acquired Program
into the Program upon the same terms and conditions then prevailing under the
Program, then Retailer and Bank shall execute all such further documents and
instruments and do all such further things as may be reasonably necessary and
practicable to integrate the Acquired Program into the Program under such
prevailing terms and conditions to be effective following the expiration or
termination of the Acquired Program.
 
(v)  If Bank notifies Retailer that it proposes additional or separate Program
Fee Percentages for the Acquired Program, then Bank and Retailer shall engage in
good faith discussions regarding such proposed terms. If the parties do not
reach agreement on any such proposed terms, or if Bank declines to provide any
proposed terms, then Retailer may (A) continue indefinitely the Acquired Program
with the existing provider; (B) take the Acquired Program in-house; or (C)
engage any other party to provide a program to replace the Acquired Program.
 
(vi)  During any period that the Acquired Program is operated separately from
the Program and in any of the cases described in clause (v) above, Retailer may
(A) re-brand the Acquired Program using any of the Retailer’s Marks (provided
that Retailer shall differentiate the branding of the Acquired Program to the
extent that Retailer determines may be necessary or desirable to avoid confusion
with the Program, but in no event shall such re-branding result in the Acquired
Program using the same overall credit card design as is used for the Program);
and (B) expand the Acquired Program to additional retail locations that were not
Store Locations immediately prior to the effective date of the acquisition of
any Acquired Program, but only if such additional retail locations will carry
product lines that are consistent with the concept of the retail locations and
product lines included in the Acquired Program (it being understood that any
additional retail locations that will carry product lines that are consistent
with the product lines carried by the Retailer prior to the acquisition of the
Acquired Program shall be included in the Program). For the avoidance of doubt,
(I) an Acquired Program shall not be used to finance Retail Purchases, Direct
Purchases or ECOM Purchases; provided, that Bank acknowledges that an Acquired
Program may include separate retail locations and separate telephone and/or
internet sales and/or application acquisition channels and the foregoing
limitation shall not prohibit the use of such separate retail locations or other
sales and/or account acquisition channels, and (II) if Retailer shall from time
to time decide to offer new or additional product lines at Store Locations, Bank
shall extend the Program and the ability of Cardholders to finance such newly
added goods and/or services so long as such goods and/or services are generally
similar to those sold by Retailer as of the Program Commencement Date.
 
(vii)  If Bank elects to cease remitting payments to Retailer pursuant to
Section 3.1(b), based on the existence of a right of termination pursuant to
Section 9.2, Retailer may immediately thereafter begin accepting applications
and/or processing transactions under a replacement program and the exclusivity
provisions of this Section 8.1 shall be permanently cancelled and terminated.
 
ARTICLE 9 - TERM/TERMINATION
 
9.1  Program Term. This Agreement shall continue until February 15, 2011 and
shall automatically renew for additional two (2) year terms (each such period, a
“Term”), unless either party shall give written notice to the other party at
least twelve (12) months prior to the end of the scheduled expiration of such
Term of its intention to terminate the Program.
 
9.2  Termination of Agreement. Notwithstanding anything in Section 9.1 to the
contrary, this Agreement may be terminated prior to the end of any Term as
provided below:
 
(a)  Except with respect to breaches of the provisions of Section 6.19 (which
are addressed in Section 9.2(o)), if a party breaches any covenant or agreement
contained in this Agreement (i) which does not involve the payment of money to
the other party hereto and such breach continues for a period of thirty (30)
days after the non-breaching party has given written notice of the breach, or
(ii) which involves the payment of money to the other party hereto and such
breach continues for a period of three (3) days after the non-breaching party
has given written notice of the breach, then, in either case, the non-breaching
party shall have the right to terminate this Agreement. The foregoing
clause (ii) notwithstanding, the failure of a party to make a payment due
hereunder shall not give rise to a termination right in the other party if the
amount which such party has failed to pay is less than $50,000 and such party,
acting in good faith, has delivered a written notice to the other party
contesting its obligation to make such payment. In any case, to be effective, a
termination notice must be delivered within sixty (60) days after the expiration
of the applicable cure periods set
 
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forth above. This Agreement will terminate one hundred and twenty (120) days
after delivery of such notice of termination.
 
(b)  If any representation or warranty made by a party proves not to have been
true and correct in all material respects as of the date when made, then the
other party shall have the right to terminate this Agreement; provided, however,
that breaches by Retailer under Section 11.2 shall not give rise to a right of
termination hereunder unless such breaches have, in Bank’s reasonable
determination become chronic and/or persistent, and Retailer has not, after
written notice from Bank, cured such breaches and resolved or corrected, to
Bank’s reasonable satisfaction, any underlying systems, personnel, or other
problem(s) giving rise to such breaches, in each case within thirty (30) days
after written notice by Bank. In order to be effective, the notice of
termination must be delivered within sixty (60) days after the date such other
party first becomes aware that such representation or warranty is not true and
correct (or, in the case of chronic and/or persistent breaches under Section
11.2, within sixty (60) days after the date on which Bank reasonably determined
that such breaches under Section 11.2 have become chronic or persistent). This
Agreement will terminate one hundred and twenty (120) days after delivery of
such notice of termination.
 
(c)  If a party (i) is no longer Solvent; (ii) generally does not pay its debts
as such debts become due, or admits in writing its inability to pay its debts
generally; (iii) makes a general assignment for the benefit of its creditors,
(iv) has any proceeding instituted by or against it seeking to adjudicate it
bankrupt or insolvent or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency, or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property; or (v) takes any corporate action to authorize
any of the actions set forth above in (i) through (iv) above, then the other
party shall have the right to terminate this Agreement. In order to be
effective, the notice of termination must be delivered within one hundred and
eighty (180) days after such other party becomes aware of the occurrence of such
event; provided, that in the case of an occurrence under clause (iv), this
Agreement shall terminate automatically unless the parties shall mutually agree
in writing to continue the Program. In any case in which notice is required for
termination, this Agreement will terminate upon delivery of such notice.
 
(d)  If, with respect to Retailer, any of the following events occur, then Bank
shall have the right to terminate this Agreement: (i) any person or group of
persons acting in concert acquires, after the date of this Agreement, beneficial
ownership of fifty percent (50%) or more of the combined voting power of the
then outstanding voting securities of Retailer entitled to vote generally in the
election of directors; (ii) the stockholders of Retailer approve a
reorganization, merger or consolidation (each a “Reorganization”), in each case
through which the persons who were the respective beneficial owners of the
voting securities of Retailer immediately prior to such Reorganization do not
beneficially own, following such Reorganization, directly or indirectly, more
than fifty percent (50%) of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
corporation, as a result of such Reorganization; or (iii) all or substantially
all of the assets or property of Retailer are sold or otherwise disposed of in
one transaction or series of related transactions. In order to be effective, the
notice of termination must be delivered within one hundred and eighty (180) days
after Bank becomes aware of the occurrence of such event. This Agreement will
terminate one hundred and twenty (120) days after delivery of such notice of
termination.
 
(e)  If a party is in default under any material loan agreement, indenture or
other instrument relating to any indebtedness for borrowed money and such
default gives any person, either with or without notice and without giving
effect to any extension of any grace period, the right to accelerate such
indebtedness, then the non-defaulting party hereunder shall have the right to
terminate this Agreement. In order to be effective, the notice of termination
must be delivered within ninety (90) days after such non-defaulting party
becomes aware of the occurrence of such event. This Agreement will terminate
thirty (30) days after delivery of such notice, unless the underlying default is
cured during such thirty (30) day period.
 
(f)  If a material adverse change has occurred in the operations, financial
condition, business or prospects of a party hereto, which the other party has
determined, in good faith, has had, or is reasonably likely to have, a material
adverse effect on the ongoing operation or continued viability of the Program,
then the other party shall have the right to terminate this Agreement. In order
to be effective, the notice of termination must be delivered within ninety (90)
days after the terminating party makes such determination. This Agreement will
terminate sixty (60) days after delivery of such notice of termination.
 
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(g)  Bank shall have the right to terminate the Agreement upon written notice if
(i) usury rates for the State of Utah (or any other State in which the Bank may
choose to locate) change, laws regulating Bank’s rate or fee structure change,
or federal or state laws, regulations or other authority preempt the exportation
of Bank’s rate or fee structure; (ii) Bank determines, in good faith, that any
of the foregoing has had, or is reasonably likely to have, a material adverse
effect on Bank’s ability to provide the Program or perform the transactions
contemplated hereby or on Program economics; (iii) Bank has sought to engage
Retailer in a good-faith renegotiation of the terms of this Agreement; (iv) the
parties hereto have not agreed to modifications to the terms of this Agreement
that Bank reasonably believes necessary to prevent a material adverse effect on
the economics of the Program or on Bank (or on its ability to perform the
transactions contemplated by this Agreement) resulting from the change in usury
rates or other laws regulating Bank’s rate or fee structure or the exportation
thereof; and (v) either Bank is required to initiate changes to the Program to
comply with applicable law or more than one hundred and twenty (120) days have
passed since Bank first sought to engage Retailer in a good faith renegotiation
of the terms of this Agreement.
 
(h)  If any judicial or administrative agency or body determines that the
Program does not qualify (or if Bank reasonably determines that there is a
material risk that the Program will not qualify, in which case Bank shall
promptly notify Retailer of such determination) as an “open-end” credit facility
under Regulation Z, 12 C.F.R. 226.2(a)(20), then Bank shall have the right to
terminate this Agreement. In order to be effective, the notice of termination
must be delivered within sixty (60) days after such determination. This
Agreement will terminate upon delivery of such notice of termination.
 
(i)  If a final judgment or judgments for the payment of money in excess of One
Million Dollars ($1,000,000) is rendered against Retailer and the same is not
either (i) covered by insurance where the insurer has affirmatively and
expressly accepted liability therefore or (ii) vacated, stayed, bonded, paid, or
discharged prior to expiration of the applicable appeal period, then Bank shall
have the right to terminate this Agreement. In order to be effective, the notice
of termination must be delivered within sixty (60) days after Bank becomes aware
of the occurrence of such event. This Agreement will terminate one hundred and
twenty (120) days after delivery of such notice of termination.
 
(j)  Retailer shall have the following termination rights with respect to the
Credit Review Point:
 
(i)  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]
 
(ii)  Upon receipt of Bank’s notice to Retailer regarding its election whether
or not to increase the Credit Review Point then in effect pursuant to
Section 6.6(b), Retailer may terminate this Agreement without cause. In order to
be effective, Retailer’s notice of termination must be delivered within thirty
(30) days after Bank notifies Retailer pursuant to Section 6.6(b). This
Agreement will then terminate in accordance with the terms of clause (iii)
below.
 
(iii)  If Retailer has given notice of its intention to terminate this Agreement
pursuant to either of clauses (i) or (ii) above, or if Bank has elected not to
increase the Credit Review Point pursuant to Section 6.6, this Agreement will
terminate one hundred and twenty (120) days after Aggregate Outstanding
Indebtedness reaches ninety five percent (95%) of the Credit Review Point (even
if during such period Aggregate Outstanding Indebtedness exceeds the Credit
Review Point).
 
(k)  Either Bank or Retailer shall have the right to terminate the Agreement
upon written notice to the other party hereto, if the performance by the other
party of its obligations under this Agreement is prevented or materially
impeded, without ability to cure, for a period of not less than 60 consecutive
days by a Force Majeure Event. Without derogating from the foregoing sixty (60)
day period applicable to the establishment of a termination right due to a Force
Majeure Event, the termination notice required hereunder may be given by the
affected party at any time following the onset of a Force Majeure Event, but in
any event must provide at least thirty (30) days’ prior notice of the effective
date of any such termination.
 
(l)  Retailer shall have the right to terminate the Agreement upon not less than
180 days prior written notice (which termination notice may not have an
effective date earlier than the third anniversary of the Program Commencement
Date) if Retailer has established a private label credit program substantially
 
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similar to the Program and through which Retailer will be extending the
financing directly (including through a wholly-owned subsidiary) to consumers to
finance the purchase of goods and services from Retailer (the “Internal
Program”). Without limiting Retailer’s obligation to provide the foregoing
written notice to Bank, the Program shall not terminate more than ten (10) days
prior to the implementation of the Internal Program; provided, that, if so
requested by Retailer, Bank shall use its commercially reasonable efforts to
terminate the Program on the business day immediately preceding the
implementation of an Internal Program (or such greater number of days (not
exceeding ten (10)), as Retailer may request).
 
(m)  Retailer shall have the right to terminate the Agreement as set forth below
if, during any Program Year, Bank elects to increase the Promotional Rates set
forth on Schedule 3.5 pursuant to clause (v) of Section 3.5(b) (in each case
“New Pricing”); provided, that Retailer may not elect to terminate this
Agreement under this Section 9.2(m) unless it has completed the “Competitive
Pricing Procedures”. For purposes of this Section 9.2(m), “Competitive Pricing
Procedures” means the following procedures, which shall be implemented if
Retailer asserts that such New Pricing is materially non-competitive. In such
case, Retailer will have sixty (60) days from the date of Bank’s notice to
Retailer setting forth the proposed New Pricing to obtain a bona fide written
proposal from an issuer of private label credit programs (“Competing Offer”) and
to submit such Competing Offer to Bank. If Retailer fails to submit a Competing
Offer within such period, then Retailer’s option to terminate this Agreement as
a result of such New Pricing will expire. If Retailer presents Bank with a
Competing Offer and Bank does not meet the Competing Offer (in an aggregate
economic sense, taking into account all proposed terms of any Competing Offer
relative to all terms of the Program), then over the sixty (60) day period
following Bank’s receipt of the Competing Offer (the “Negotiation Period”),
Retailer and Bank will use commercially reasonable efforts to negotiate mutually
agreeable New Pricing. If Retailer and Bank are unable to agree on New Pricing
by the end of the Negotiation Period, then Retailer may, during the thirty (30)
days immediately following the end of the Negotiation Period, give a written
notice of termination to Bank. This Agreement will terminate sixty (60) days
after any such termination notice. In each case, regardless of whether Retailer
terminates this Agreement, the New Pricing shall become effective immediately
upon Bank’s notice thereof to Retailer (unless Bank’s notice of New Pricing
indicates a later date) and shall remain effective until the Final Liquidation
Date or the date when Bank and Retailer agree on other pricing.

(n)  [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]

(o)  Bank shall have the right to terminate the Agreement upon not less than
thirty (30) days prior written notice if Retailer fails to provide a Letter of
Credit as provided for in Section 6.19.
 
ARTICLE 10 - POST TERM PROVISIONS

10.1  Purchase of Accounts by Retailer upon Termination.

(a)  Retailer will have the option to purchase, or to arrange for the purchase
of, not less than all of the Accounts and related Indebtedness (other than
Accounts that have been written-off by Bank) exercisable as provided in Sections
10.1(b) and 10.1(c) below, for a purchase price payable in immediately available
funds in an amount equal to [*** Confidential portion has been omitted pursuant
to a request for confidential treatment and has been filed separately with the
Commission.].
 
(b)  Retailer’s option to purchase, or arrange for the purchase of, the Accounts
and Indebtedness under Section 10.1(a) may be exercised as follows:
 
(i)  If the Agreement is expiring based on either party’s decision not to renew
it under Section 9.1, Retailer may exercise its purchase option by giving notice
of such election within one hundred and eighty (180) days prior to the
expiration of the Agreement. Retailer must thereafter complete such purchase on
the first business day after the expiration of this Agreement.
 
(ii)  If the Agreement terminates pursuant to Section 9.2 following the delivery
of a termination notice by Retailer, Retailer must exercise its option by giving
notice of such election with such
 
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termination notice. Retailer must thereafter complete such purchase within one
hundred twenty (120) days after the effective date of such termination.
 
(iii)  If the Agreement terminates pursuant to Section 9.2 following the
delivery of a termination notice by Bank, Retailer may exercise its option by
giving notice of such election within thirty (30) days following delivery of
such notice of termination. Retailer must thereafter complete such purchase
within ninety (90) days after the effective date of such termination.
 
(c)  Anything in Section 10.1(a) or (b) to the contrary notwithstanding, if,
after giving notice of its intent to purchase or cause a third party to purchase
the Accounts and Indebtedness, Retailer subsequently decides not to pursue such
purchase of the Accounts and Indebtedness, Retailer shall have no obligation to
complete the purchase of the Accounts; provided, that (x) Retailer shall notify
Bank, in writing, as soon as Retailer decides not to go forward with such
purchase, and (y) Retailer shall reimburse Bank for all costs and expenses
incurred by Bank as of the date of such notice in connection with the sale of
the Accounts and Indebtedness (subject to the limitations contained in Section
10.1(d)(iii)). Any notice given by Retailer under this Section 10.1(c) shall be
irrevocable and shall relieve Bank of any further obligation under this
Agreement to sell the Accounts and Indebtedness pursuant to Section 10.1 to
Retailer or any third party with whom Retailer has made arrangements to purchase
the Accounts and Indebtedness.
 
(d)  If Retailer notifies Bank of Retailer’s intention to purchase, or arrange
for the purchase of, the Accounts and Indebtedness under Sections 10.1(a) and
(b):
 
(i)  Bank shall use its commercially reasonable efforts to provide Retailer or
its designee with such materials as are customary for the industry to conduct
due diligence.
 
(ii)  Retailer and Bank agree to work in good faith to prepare the necessary
purchase documents on terms and conditions that are reasonable and customary for
the industry.
 
(iii)  Retailer will bear all of its expenses in converting the Accounts and
Indebtedness to itself or its designee and [*** Confidential portion has been
omitted pursuant to a request for confidential treatment and has been filed
separately with the Commission.]of Bank’s costs of responding to due diligence
requests and its deconversion costs (including third party expenses and material
internal costs of Bank, including the hourly cost of Bank’s personnel’s time);
provided, that prior to any such reimbursement, Bank shall provide Retailer with
a reasonably detailed statement of such external and internal expenses.
 
10.2  Bank’s Rights If Retailer Does Not Purchase Accounts. If Retailer does not
exercise its option to purchase, or arrange for the purchase of, the Accounts
and Indebtedness under Section 10.1 upon the expiration or earlier termination
of the Agreement, Bank will have the right, in addition to and without waiving
any other rights it may have under the terms of this Agreement or applicable
law, to (a) liquidate any or all of the Accounts, (b) convert the Accounts to
another credit or charge program maintained by Bank or any of its Affiliates, or
(c) sell the Accounts, whether by securitization or otherwise to any third
party; provided, that Bank shall not sell the Accounts to any third party which
is in the business of manufacturing or selling beds and related accessories.
Following the termination or expiration of the Term, at Bank’s election Bank may
continue to provide purchase authorizations and extend financing under the
Program on Accounts existing as of the effective date of such termination or
expiration (it being understood that no new Accounts shall be opened after such
effective date) for up to one hundred twenty (120) days in order to effect the
conversion solicitation contemplated above and Retailer shall accept the Credit
Cards for such period for purposes of such add-on purchases; provided that such
one hundred twenty (120) day period shall be extended an additional day for each
day after such expiration or termination during which Retailer retains the right
to purchase the Accounts under Section 10.1 (up to the number of days preceding
the expiration of the applicable notice period under Section 10.1(b)(ii) or
(iii), as the case may be). Retailer will cooperate with Bank and take any
action reasonably requested by Bank, and Bank may use the Retailer Marks, if
any, to communicate with Cardholders and authorized users, in connection with
any such liquidation, conversion, substitution or sale.
 
10.3  Survival Provisions.
 
(a)  Except as is expressly provided to the contrary in this Agreement, all of
the terms, conditions and covenants of this Agreement (including the applicable
provisions of Section 2.2 that relate to
 
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Retailer’s retail practices, Cardholder transactions, billing, customer
servicing, settlement, chargeback and dispute handling) will continue in effect
following the expiration or termination of the Term until the Final Liquidation
Date.
 
(b)  In addition, all warranties, representations and indemnities contained in
this Agreement, and the parties’ obligations under Sections 6.1 (Ownership of
Accounts), 6.2 (Ownership and Use of Cardholder Information), 6.11 (Sales Taxes
and Related Record Retention), 6.13 (Intellectual Property), and Articles 10 and
13, will survive the termination of this Agreement and the Final Liquidation
Date.
 
ARTICLE 11 - REPRESENTATIONS AND WARRANTIES
 
11.1  Representations and Warranties. Each party makes the following
representations and warranties to the other party as of the date of this
Agreement, and Retailer makes such representations and warranties on and as of
each date on which Charge Transaction Data is transmitted to Bank:
 
(a)  Such party is duly organized, validly existing, and in good standing under
the laws of its jurisdiction of incorporation or organization, as the case may
be.
 
(b)  Such party has the requisite organizational power and authority to conduct
its business as presently conducted and hereafter contemplated to be conducted
and to execute, deliver and perform this Agreement.
 
(c)  This Agreement has been duly executed and delivered by such party, and
constitutes the legal, valid, and binding obligation of such party, enforceable
against such party in accordance with its terms.
 
(d)  The execution and delivery of this Agreement by such party and the
consummation of the transactions contemplated hereby do not and will not
(i) conflict with the organizational documents of such party, (ii) conflict
with, or result in a breach of any provisions of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default)
under any material agreement of such party; or (iii) constitute a violation of
any material order, judgment or decree to which such party is bound. No consent,
approval, permit, waiver, authorization, notice or filing is required to be made
or obtained in connection with the execution, delivery and performance by such
party of this Agreement.
 
(e)  All information furnished by such party to the other for purposes of or in
connection with this Agreement is true and correct in all material respects and
no such information omits to state a material fact necessary to make the
information so furnished not misleading. Except as disclosed to the other party
(or, in the case of Retailer, as described from time to time in Retailer’s
periodic filings with the Securities and Exchange Commission), there is no fact
known to such party (including, without limitation, threatened or pending
litigation) that could materially and adversely affect the financial condition,
business, property, or prospects of such party.
 
11.2  Presentment Warranties. With respect to each submission of Charge
Transaction Data to Bank, Retailer represents and warrants as follows with
respect to such Charge Transaction Data and each underlying transaction:
 
(a)  All purchases included in the Charge Transaction Data constitute bona fide,
arms-length sales by Retailer of the goods or services described therein in the
ordinary course of Retailer’s business; Retailer has delivered to the Cardholder
(or its designee) or shipped via third party from its manufacturing plant
directly to the Cardholder (or its designee) all the products and fully
performed all the services covered by the Charge Transaction Data;
 
(b)  The charges included in the Charge Transaction Data did not involve a cash
advance or goods or services not listed in the applicable invoice or receipt;
only goods and services sold by Retailer (which shall be deemed to include
applicable sales tax and delivery charges) are included in the Charge
Transaction Data; the charges represent the entire purchase price of the goods
and services identified in the Charge Transaction Data other than an additional
partial-payment by a Cardholder, including by cash or check, or financed by any
means other than the Account;
 
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(c)  To the best of Retailer’s knowledge, the goods and services covered by the
Charge Transaction Data were sold by Retailer to Cardholders or authorized users
for personal, family or household purposes;
 
(d)  Except for Card-Not-Present-Purchases, Retailer obtained a signed invoice
or receipt for each charge included in the Charge Transaction Data;
 
(e)  All “purchases” (which, for purposes hereof, shall be deemed to have
occurred on the date Retailer has delivered to the Cardholder (or its designee)
or shipped via third party from its manufacturing plant directly to the
Cardholder (or its designee) the item(s) financed on such Cardholder’s Account)
included in the Charge Transaction Data occurred no earlier than five (5) days
prior to the submission of such Charge Transaction Data; and all transactions
included in the Charge Transaction Data were conducted in accordance with the
Operating Procedures, this Agreement and all applicable laws; and
 
(f)  Each invoice or receipt included in the Charge Transaction Data (or, in the
case of Absentee Purchases, the purchase information in the Charge Transaction
Data) is not invalid, illegible, inaccurate or incomplete and has not been
materially altered since being signed or submitted by the Cardholder; the
Account number and name of the Cardholder has been accurately printed on each
Charge Slip and has been included in each transmission of Charge Transaction
Data; Retailer has obtained a valid authorization from Bank for each purchase
(unless otherwise waived by Bank).
 
ARTICLE 12 - INDEMNIFICATION
 
12.1  Indemnification by Retailer. Retailer agrees to indemnify and hold
harmless Bank, its Affiliates, and their respective employees, officers,
directors and agents, from and against any and all Damages to the extent such
Damages arise out of, are connected with, or result from:
 
(a)  Any breach by Retailer of any of the terms, covenants, representations,
warranties or other provisions contained in this Agreement;
 
(b)  Any products or services sold by Retailer (including, without limitation,
any failure to provide the service as promised, any product defects, or product
liability or warranty claims relating thereto);
 
(c)  Any act or omission, where there was a duty to act, by Retailer or its
employees, officers, directors or agents including without limitation, the
failure of Retailer to comply with any law, rule or regulation applicable to
Retailer;
 
(d)  Any advertisements, solicitations or other promotions of the Program or of
goods or services eligible for purchase under the Program conducted by or on
behalf of Retailer (excluding those conducted by Bank);
 
(e)  The acquisition by Retailer from Bank, in connection with a charge or
credit to an Account, of a Cardholder’s Account number by telephone or by some
other means;
 
(f)  Bank’s use of the Retailer Marks in accordance with the terms of this
Agreement;
 
(g)  Any activities, acts or omissions of any third party to whom Cardholder
Information is transferred or made available by or on behalf of Retailer,
including without limitation, information transferred or made available to a
third party by Bank on Retailer’s behalf; or
 
(h)  Third party claims asserted with respect to Retailer’s operation of any
Acquired Program, including any advertising or disclosures in connection
therewith.
 
The foregoing indemnity obligation of Retailer shall not apply to any Damages of
Bank to the extent caused by the gross negligence, willful misconduct or illegal
acts of Bank.
 
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12.2  Indemnification by Bank. Bank agrees to indemnify and hold harmless
Retailer, its Affiliates, and their respective employees, officers, directors
and agents, from and against any and all Damages to the extent such Damages
arise out of, are connected with or result from:
 
(a)  Any breach by Bank of any of the terms, covenants, representations,
warranties or other provisions contained in this Agreement;
 
(b)  Any act or omission, where there was a duty to act, by Bank or its
employees, officers, directors, or agents, including without limitation, the
failure of Bank to comply with any law, rule or regulation applicable to Bank,
including the provisions of the Gramm-Leach-Bliley Act;
 
(c)  Any failure of the form of credit applications or Cardholder Agreement as
prepared by Bank, or the failure of any other form of document prepared by Bank
for presentation to any Account applicant or Cardholder (including billing
statements and changes in terms notices) to comply with, as applicable, the
Consumer Credit Protection Act, the Truth in Lending Act, the Fair Debt
Collection Practices Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act and the regulations implementing each
of them;
 
(d)  Any advertisements, solicitations or other promotions by or on behalf of
Bank (other than those conducted by Retailer) of the Program; or
 
(e)  Any activities, acts or omissions of any third party to whom Cardholder
Information is transferred or made available by or on behalf of Bank.
 
The foregoing indemnity obligation of Bank shall not apply to any Damages of
Retailer to the extent caused by the gross negligence, willful misconduct or
illegal acts of Retailer.
 
12.3  Indemnification Procedures.
 
(a)  A party entitled to indemnification will give prompt written notice to the
indemnifying party of any claim, assertion, event, condition or proceeding by
any third party concerning any liability or damage as to which it may request
indemnification under this Article 12. The failure to give such notice will not
relieve the indemnifying party from liability hereunder unless and solely to the
extent the indemnifying party did not know of such third party claim and such
failure results in the forfeiture by the other party of substantial rights and
defenses.
 
(b)  An indemnifying party will have the right, upon written notice to the
indemnified party, to conduct at its expense the defense against such third
party claim in its own name, or, if necessary, in the name of the indemnified
party. When the indemnifying party assumes the defense, the indemnified party
will have the right to approve the defense counsel and the indemnified party
will have no liability for any compromise or settlement of any third party claim
that is effected without its prior written consent (such consent not to be
unreasonably withheld), unless the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party and such compromise or settlement
includes a release of each indemnified party from any liabilities arising out of
the third party claim. If the indemnifying party delivers a notice electing to
conduct the defense of the third party claim, the indemnified party will, at the
indemnifying party’s expense, cooperate with and make available to the
indemnifying party such assistance, personnel, witnesses and materials as the
indemnifying party may reasonably request. If the indemnifying party does not
deliver a notice electing to conduct the defense of the third party claim, the
indemnified party will have the sole right to conduct such defense and the
indemnified party may pay, compromise or defend such third party claim or
proceeding at the indemnifying party’s expense. Regardless of which party
defends the third party claim, the other party will have the right at its sole
expense to participate in the defense assisted by counsel of its own choosing.
 
ARTICLE 13 - MISCELLANEOUS
 
13.1  Confidentiality. 
 
(a) All material and information supplied by one party to another party under
this Agreement, including, but not limited to, information concerning a party’s
marketing plans, objectives or financial
 
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results (“Confidential Information”), is confidential and proprietary. All such
information will be used by each party solely in the performance of its
obligations and exercise of its rights pursuant to this Agreement. Each party
will receive Confidential Information from the other party in confidence and
will not disclose such Confidential Information to any third party, except
(i) as contemplated under this Agreement; (ii) as may be agreed upon in writing
by the party providing such Confidential Information; (iii) in the case of Bank
to an Affiliate of Bank (provided, that Bank shall ensure that such Affiliate is
aware of and agrees to be bound by (and shall be responsible for any failure of
such Affiliate to adhere to) the confidentiality obligations to which Bank is
subject with respect to Confidential Information); (iv) in the case of Retailer
to an Affiliate of Retailer (provided, that Retailer shall ensure that such
Affiliate is aware of and agrees to be bound by (and shall be responsible for
any failure of such Affiliate to adhere to) the confidentiality obligations to
which Retailer is subject with respect to Confidential Information); (v) to the
extent necessary, in exercising or enforcing its rights; or (vi) as required by
law. Each party will use its reasonable best efforts to ensure that its
respective officers, employees, and agents take such action as will be necessary
or advisable to preserve and protect the confidentiality of Confidential
Information. Upon written request after the Final Liquidation Date, each party
will destroy or return to the party providing such Confidential Information all
such Confidential Information in its possession or control. Confidential
Information will not include information in the public domain and information
lawfully obtained from a third party.

(b) Section 13.1(a) to the contrary notwithstanding, if Retailer is obligated to
file periodic reports with the Securities and Exchange Commission, then Retailer
shall have the right to file a copy of this Agreement with the applicable
commission or governmental agency to the extent necessary, in Retailer’s
reasonable opinion, to comply with any applicable disclosure laws or regulations
(including any reporting requirement of the Securities Exchange Commission), or
any listing requirement of any stock exchange, including NASDAQ, applicable to
Retailer. Because Retailer has indicated that it will be filing a copy of this
Agreement pursuant to the preceding sentence, Retailer shall (i) file such copy
with such requested redactions as Bank shall have provided to Retailer not later
than two (2) days after the execution of this Agreement, and (ii) file a
confidential treatment request in a form reasonably acceptable to Bank.
 
13.2  Binding Effect. This Agreement is binding upon and inures to the benefit
of the parties hereto and their respective successors and permitted assigns.
 
13.3  Assignment. Neither Bank nor Retailer may assign its rights or delegate
its obligations under this Agreement without the prior written consent of the
other party, which consent will not be unreasonably withheld, provided that Bank
may, without such consent (i) assign all or part of its rights and delegate some
or all of its obligations under this Agreement to an Affiliate; (ii) engage
third parties to perform some or all of Bank’s obligations under this Agreement,
including, without limitation the servicing and administration of Accounts; and
(iii) assign all or some of its rights hereunder to any person acquiring any or
all Accounts after the termination or expiration of this Agreement.
Notwithstanding any assignment, Bank will remain liable for all of its
obligations under this Agreement. The preceding sentence notwithstanding,
Retailer may, without Bank’s consent, upon not less than sixty (60) day’s prior
written notice to Bank, assign its rights and obligations under this Agreement
to an Affiliate of Retailer so long as (i) the combined financial strength of
Retailer and such Affiliate is not materially less than that of Retailer prior
to such assignment, as reasonably determined by Bank, and (ii) such Affiliate
executes such documents as Bank may reasonably request to establish such
Affiliate as a party hereto, and (iii) such Affiliate is not a competitor of
Bank and sells products that are reasonably similar to those sold by Retailer.
Notwithstanding any such assignment or delegation, each of Bank and Retailer
shall remain primarily liable to the other party with respect to all of the
obligations and liabilities arising under this Agreement.
 
13.4  Governing Law. Except to the extent superceded by federal law applicable
to banks or savings associations, this Agreement and all rights and obligations
hereunder, including, but not limited to, matters of construction, validity and
performance, shall be governed by and construed in accordance with the laws of
the State of Utah. THE PARTIES HERETO WAIVE THEIR RIGHT TO REQUEST A TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OF LAW, TRIBUNAL, OR OTHER
LEGAL PROCEEDING ARISING OUT OF OR INVOLVING THIS AGREEMENT, OR ANY DOCUMENT
DELIVERED IN CONNECTION HEREWITH, OR RELATING TO ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
 
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13.5  Privacy.
 
(a)  Retailer and Bank will only use, maintain and/or disclose Cardholder
Information in compliance with all applicable privacy and security laws and with
the policies set forth in this Section 13.5 and related disclosures made by Bank
(collectively, the “Bank Privacy Disclosures”), and each will ensure that
persons to whom it transfers Cardholder Information do the same. Retailer
acknowledges that it is subject to the reuse and redisclosure provisions of the
Gramm-Leach-Bliley Act (the “Gramm-Leach-Bliley Act” as defined in Title V,
Subtitle A of 15 U.S.C. 6801 et seq. (as it may be amended from time to time)
and the implementing privacy and security regulations issued pursuant to the
Gramm-Leach-Bliley Act (as the same may be amended from time to time)), and that
it will ensure that Cardholder Information received from Bank under the “private
label exception” found in the Gramm-Leach-Bliley Act is used only in connection
with the Program and for no other purpose.
 
(b)  Retailer and Bank will each establish and maintain appropriate
administrative, technical and physical safeguards to protect the security,
confidentiality and integrity of the Cardholder Information. These safeguards
will be designed to protect the security, confidentiality and integrity of the
Cardholder Information, ensure against any anticipated threats or hazards to its
security and integrity, and protect against unauthorized access to or use of
such information or associated records which could result in substantial harm or
inconvenience to any Cardholder or applicant.
 
(c)  Retailer and Bank will each ensure that any third party to whom it
transfers or discloses Cardholder Information signs a written contract with the
transferor in which such third party agrees to (i) restrict its use of
Cardholder Information to the use specified in the written contract; (ii) to
comply with all applicable laws (including, without limitation, privacy and
security laws and the reuse and redisclosure provisions of the
Gramm-Leach-Bliley Act) and the Bank Privacy Disclosures, and (iii) implement
and maintain appropriate safeguards as stated in paragraph (b) above.
Information transferred by Bank on Retailer’s behalf and following Retailer’s
request will be considered information transferred by Retailer hereunder.
Retailer agrees to transfer or make available to third parties only such
Cardholder Information as is reasonably necessary to carry out the contemplated
task.
 
(d)  Retailer and Bank shall notify the other party immediately following
discovery or notification of any actual or threatened breach of security of the
systems maintained by the Retailer and Bank, respectively. The party that
suffers the breach of security (the “Affected Party”) agrees to take action
immediately, at its own expense, to investigate the actual or threatened breach,
to identify and mitigate the effects of any such breach and to implement
reasonable and appropriate measures in response to such breach. The Affected
Party also will provide the other party with all available information regarding
such breach to assist that other party in implementing its information security
response program and, if applicable, in notifying affected Cardholders. For the
purposes of this subsection (d), the term “breach of security” or “breach” means
the unauthorized access to or acquisition of any record containing personally
identifiable information relating to a Cardholder, whether in paper, electronic,
or other form, in a manner that renders misuse of the information reasonably
possible or that otherwise compromises the security, confidentiality, or
integrity of the information.
 
(e)  Notwithstanding anything else contained in this Agreement, neither Bank nor
Retailer will, and neither of them will be obligated to, take any action that
either of them believes in good faith would violate, or is reasonably likely to
cause either of them to violate, any applicable law (including, without
limitation, privacy and security laws and the reuse and redisclosure provisions
of the Gramm-Leach-Bliley Act) or the Bank Privacy Disclosures, or that would
cause either of them to become a “consumer reporting agency” for purposes of the
federal Fair Credit Reporting Act, as it may be amended from time to time.
 
(f)  Retailer and Bank, respectively, will use reasonable measures designed to
properly dispose of all records containing personally identifiable information
relating to Cardholders, whether in paper, electronic, or other form, including
adhering to policies and procedures that require the destruction or erasure of
electronic media containing such personally identifiable information so that the
information cannot practicably be read or reconstructed.
 
13.6  Financial Accommodation. Retailer acknowledges that this Agreement is a
“financial accommodation” contract (as such term is used in Section 365(c)(2) of
Title 11 of the United States Code) for the benefit of Retailer.
 
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13.7  No Third Party Beneficiaries. Except as otherwise expressly set forth in
this Agreement, this Agreement does not confer upon any person, other than the
parties, any rights or remedies under this Agreement.
 
13.8  Amendments. This Agreement may not be amended except by written instrument
signed by Retailer and Bank.
 
13.9  No Partnership. Nothing contained in this Agreement will be construed to
constitute Retailer and Bank as partners, joint venturers, principal and agent,
or employer and employee.
 
13.10  Notices. All notices and communications given under this Agreement must
be in writing and must be sent by hand, by facsimile (with verbal confirmation
of receipt), by certified mail, return receipt requested, or by nationally
recognized overnight courier service addressed to the party to whom such notice
or other communication is to be given or made at such party’s address as set
forth below and will be deemed given one (1) business day after being sent, as
follows:
 
if to Retailer:
 
if to Bank:
 
Select Comfort Corporation
6105 Trenton Lane North
Minneapolis, Minnesota 55442
Facsimile: (763) 551-7826
Attn: Chief Financial Officer
GE Money Bank
4246 South Riverboat Road
Suite 200
Salt Lake City, Utah 84123-2551
Facsimile: (801) 517-5269
Attn: President
 
with a copy to:
 
Select Comfort Corporation
6105 Trenton Lane North
Minneapolis, Minnesota 55442
Facsimile: (763) 551-6888
Attn: General Counsel
 
with a copy to:
 
GE Retail Sales Finance
950 Forrer Boulevard
Kettering, OH 45420
Facsimile: (937) 534-3982
Attn: Counsel

 
provided, however, that a party may notify the other party in writing (in
accordance with the notice provisions in this Section) from time to time of an
alternative address for notices under this Section and, in such case, notices
hereunder will be effective if sent to the last address so designated.
 
13.11  Incorporation of Appendices. Each of the Appendices attached hereto is
hereby incorporated by reference.
 
13.12  Nonwaiver; Remedies Cumulative; Severability. All remedies are cumulative
and not exclusive, and no delay in exercising a right will be deemed a waiver
thereof. If any provision of this Agreement is held to be invalid, void or
unenforceable, all other provisions will remain valid and be enforced and
construed as if such invalid provision were never a part of this Agreement.
 
13.13  Damages Waiver. Notwithstanding anything to the contrary in this
Agreement, Bank and Retailer shall not be liable to the other under or in
connection with this Agreement or the Program for any indirect or consequential
or other damages relating to prospective profits, income, anticipated sales or
investments, or goodwill, or for any punitive or exemplary damages; provided,
that the damages limitation set forth in this Section 13.13 shall not apply to
any Damages arising out of the failure of the parties under any of Sections
9.2(l)(but only to the extent such Section requires ongoing adherence to Section
8.1), 13.1 or 13.5, or from Damages which result from an obligation of Bank or
Retailer to pay any third party damages claims to the extent such third party
claims otherwise fall under Bank’s or Retailer’s respective indemnity
obligations hereunder.
 
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13.14  Joint and Several Obligations. Each obligation of Retailer hereunder
shall be a joint and several obligation of each of Select Comfort and SCRC. For
purposes of this Agreement, (i) any discretionary action or election that is
authorized or permitted to Retailer hereunder (e.g., purchase of the Accounts or
termination of this Agreement) may be made or taken only by Select Comfort, and
(ii) notice given or demand made upon any of the Retailer parties shall be
deemed to be notice given to or demand made upon all of the Retailer parties.
Retailer covenants for the benefit of Bank to enter into such agreements and to
make such other arrangements as may be necessary to provide Select Comfort the
power and authority to exercise all rights provided to Retailer hereunder and to
ensure that each of the Retailer parties receives copies of all such notices or
demands from any other Retailer party. Whenever this Agreement requires that
payments be made to Retailer, Bank may make such payments directly to Select
Comfort, which shall receive such payment in trust for itself and all other
parties entitled to all or any portion thereof. Bank shall have no obligation to
ensure and no liability for the correct application of any payments made by it
among the Retailer parties. Bank may exercise its chargeback rights under
Article 7 against any of the Retailer parties, regardless of which of them
originated the corresponding Account or purchase transaction.
 
13.15  Entire Agreement. This Agreement (together with the schedules, exhibits
and appendices attached to this Agreement) is the entire agreement of the
parties with respect to the subject matter of this Agreement and supersedes all
other prior understandings, writings and agreements whether written or oral,
including the Prior Program Agreement. In that regard, Bank and Retailer
acknowledge and agree that as of the Program Commencement Date, this Agreement
replaces the Prior Program Agreement and that all Accounts, transactions,
Accountholders, Purchases and Credit Cards (as defined in the Prior Program
Agreement) and all other matters arising under or accruing in connection with
the Prior Program Agreement, regardless of the date thereof, shall be subject to
and governed by this Agreement.
 
13.16  Further Assurances. Retailer and Bank agree to execute all such further
documents and instruments and to do all such further things as any other party
may reasonably request in order to give effect to and to consummate the
transactions contemplated by this Agreement.
 
13.17  Multiple Counterparts. This Agreement may be executed in any number of
multiple counterparts, all of which will constitute but one and the same
original.
 
IN WITNESS WHEREOF, Retailer and Bank have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the date first
above written.
 

 
SELECT COMFORT CORPORATION
 
 
 
By:   /s/ Mark A. Kimball
Name:  Mark A. Kimball
Title:    SVP & General Counsel
GE MONEY BANK
 
 
 
By:   /s/ William E. Ellingwood 
Name:  William E. Ellingwood
Title:  SVP
 
SELECT COMFORT RETAIL CORPORATION
 
By:   /s/ Mark A. Kimball
Name: Mark A. Kimball
Title: SVP & General Counsel
 

 

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Appendix A
Definitions

A. Certain Defined Terms. As used in this Agreement, the following terms will
have the following meanings:
 
“Absentee Purchase” means a purchase of any of products or services from
Retailer charged to an Account where the Account information necessary to effect
the purchase is provided on the telephone, by mail or through a Retailer
Website.
 
“Account” means the legal relationship established by and between a Cardholder
and Bank pursuant to a Cardholder Agreement, together with all Indebtedness
owing thereunder from time to time and any current or future guaranties,
security or other credit support therefor.
 
“Account Documentation” means any and all Account information, credit
applications, Cardholder Agreements, Charge Transaction Data, Charge Slips,
Credit Slips, payments, credit information and documents or forms of any type
and in any media relating to the Program, excluding materials used for
advertising or solicitations.
 
“Active Account” means, as of any given date, any Account (other than an Account
that has been written off in accordance with Bank’s write-off policies) that had
a debit or credit balance at any time after the beginning of the complete
billing cycle immediately preceding such date.
 
“Affiliate” means, with respect to any person, each person that controls, is
controlled by or is under common control with such person. For the purpose of
this definition, “control” of a person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise.
 
“Aggregate Outstanding Indebtedness” means, as of any date of determination, an
amount equal to the aggregate amount of Indebtedness on all Accounts (other than
Accounts that have been written off by Bank) as of such date.
 
 
“Agreement” means this Private Label Consumer Credit Card Program Agreement,
including all schedules and appendices, as it may be amended from time to time.
 
 
“Average Aggregate Outstanding Indebtedness” means with respect to any period,
(i) the sum of the Aggregate Outstanding Indebtedness on each day during such
period divided by (ii) the number of days in such period.
 
“Bank” has the meaning given to it in the recitals.
 
“Bank’s Required Net Revenue” shall mean, for each Program Year, the product of
Average Aggregate Outstanding Indebtedness for such Program Year, multiplied by
the percentage corresponding to such Program Year as set forth below:
 
Year 1 - [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]%
Year 2 - [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]%
Year 3 - [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]%
Year 4 - [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]%
Year 5 - [*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]%
 
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“Base Rate” means the percentage set by Bank used in calculating the Program Fee
payable in connection with each submission by Retailer to Bank of Charge
Transaction Data pertaining to purchases not made pursuant to a credit-based
promotion. The initial Base Rates available under the Program are set forth on
Schedule 3.5.
 
“Card-Not-Present Purchases” means a purchase of Retailer’s products and/or
services financed on an Account (i) where the person transacting such purchase
does not present a Credit Card relating to such Account, but states that he or
she is a Cardholder or an authorized user, and Retailer does not do all of the
following: (a) check such person’s identification, (b) confirm such person’s
identity and status as a Cardholder or an authorized user prior to such purchase
in accordance with the Operating Procedures, and (c) obtain such person’s
signature on the invoice; or (ii) where such purchase constitutes an Absentee
Purchase.
 
“Cardholder” means any natural person who has entered into a Cardholder
Agreement with Bank or which is or may become obligated under or with respect to
an Account.
 
“Cardholder Agreement” means the open-end revolving credit agreement, in either
tangible or electronic form, between Bank and each Cardholder pursuant to which
such Cardholder and its authorized user(s), if any, may make purchases on credit
provided by Bank.
 
“Cardholder Information” has the meaning given to it in Section 6.2.
 
“Charge Slip” means a sales receipt, register receipt tape or other invoice or
documentation, in each case, which may include any electronic or digital format
capable of reproduction in perceivable form, and evidencing a charge to an
Account. The extent to which a Charge Slip must be signed by the Cardholder is
set forth in the Operating Procedures.
 
“Charge Transaction Data” means Account and related Cardholder and/or authorized
user identification and transaction information transmitted by Retailer to Bank
with regard to a charge or a credit to an Account.
 
“Confidential Information” has the meaning given to it in Section 13.1.
 
“Credit Card” means the plastic card issued by Bank under the Program
exclusively for use with the Program which evidences the right of a Cardholder
and, if the Cardholder has so designated, any authorized user(s) to make
purchases of goods and services from Retailer under the Program.
 
“Credit Review Point” means Three Hundred Forty Five Million Dollars
($345,000,000) or such other higher amount as Bank, in its sole discretion, may
from time to time specify to Retailer in writing.
 
“Credit Slip” means a sales credit receipt, register receipt, tape or other
invoice or documentation, in each case, which may include any electronic or
digital format capable of reproduction in perceivable form, and evidencing a
credit to an Account.
 
“Damages” means any and all losses, liabilities, costs, and expenses (including,
without limitation, reasonable attorneys’ fees and expenses, reasonable
out-of-pocket costs, interest and penalties), settlements, equitable relief,
judgments, damages, claims (including, without limitation, counter and
cross-claims, and allegations whether or not proven) demands, offsets, defenses,
actions, or proceedings by whomsoever asserted.
 
“Debt Cancellation Program” means any program which may be offered through Bank
pursuant to Section 4.2 under which Bank, any Affiliate of Bank, or any third
party makes available debt cancellation coverage to Cardholders.
 
“Direct Purchases” means purchases of good and services from Retailer and
financed on Accounts which purchases are transacted by Retailer through its call
center. Direct Purchases specifically exclude ECOM Purchases.
 
“ECOM Purchases” means purchases of good and services from Retailer and financed
on Accounts which purchases are transacted by Retailer through its call center,
but only to the extent such call center
 
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received the call through the “800” number referred to on the Retailer Website
(which 800 number is separate from any numbers provided for Direct Purchases).
 
“Eligible Letter of Credit” shall mean a standby irrevocable Letter of Credit in
form reasonably acceptable to Bank, satisfying the following conditions:
 
(i)  the Letter of Credit shall not expire earlier than the first anniversary of
the date of issuance or the date of any renewal thereof;
 
(ii)  the Letter of Credit shall be issued or confirmed by a bank reasonably
acceptable to Bank which is chartered under the laws of the United States and
maintains offices located in the continental United States;
 
(iii)  the Letter of Credit shall expressly permit multiple draws;
 
(iv)  the Letter of Credit shall be assignable and transferable;
 
(v)  payment under the Letter of Credit shall be made at the issuing or
confirming bank’s counters at one or more offices located in the continental
United States upon presentation of a draft with an accompanying certificate from
any officer of the Letter of Credit beneficiary to the effect either:
 
(A) that Retailer has failed to renew the Letter of Credit or provide a
substitute Letter of Credit in accordance with Section 6.19 of this Agreement
and that the amount of the draft is less than or equal to the full undrawn
amount of the Letter or Credit; or
 
(B) that Retailer has failed to pay any amounts due under this Agreement and
that the amount of the draft is equal to or less than the past due amounts; or
 
(C) that Retailer has filed for (or is the subject of an involuntary procedure
with respect to) bankruptcy or similar protection and the amount of the draft is
less than or equal to the full undrawn amount of the Letter of Credit.
 
“Final Liquidation Date” will mean the first day after the termination or
expiration of this Agreement on which Bank no longer owns any Active Accounts.
 
“Force Majeure Event” means any of the following: acts of God, fire, earthquake,
explosion, accident, terrorism, war, nuclear disaster, riot, material changes in
applicable laws or regulations, including, but not limited to, a change in state
or federal law, or other event beyond a party’s reasonable control, rendering it
illegal, impossible or untenable for such party to perform as contemplated in,
or to offer the Program on the terms contemplated under, this Agreement.
 
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect on the Program Commencement Date, consistently applied.

“Indebtedness” means any and all amounts owing from time to time with respect to
an Account whether or not billed, including, without limitation, any unpaid
balance, finance charges (inclusive of finance charges subject to possible
reversals due to unexpired credit-based promotions), late charges, and NSF fees.

“Internal Program” has the meaning given to it in Section 9.2(l).
 
“Letter of Credit” means each letter of credit provided by Retailer to Bank in
support of Retailer’s obligations under this Agreement, as the same may be
amended from time to time.
 
“Letter of Credit Amount” means, as of the date of a request by Bank for a
Letter of Credit under Section 6.19, the sum of the following [*** Confidential
portion has been omitted pursuant to a request for confidential treatment and
has been filed separately with the Commission.].
 
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“Letter of Credit Event” means the failure of Retailer to satisfy and fully
perform each financial covenant contained on the attached Schedule 6.7.
 
“Loan Loss Reserve” means a loan loss reserve established and maintained by Bank
on its books in such amounts as are necessary in Bank’s opinion to offset
expected net write-offs on Accounts or to reflect changes in experience
consistent with GAAP. Amounts allocated to the loan loss reserve may be
determined by Bank in its discretion and may be changed by Bank from time to
time after review of Bank’s internal reserve policies. Loan loss reserve amounts
may also be changed by Bank as required by applicable law, regulation or changes
in GAAP.
 
“Net Program Sales” means, for any given period, the aggregate amount of sales
to Cardholders resulting in charges to Accounts during such period less
aggregate credits to Accounts during such period, in each case as reflected in
the Charge Transaction Data.
 
“Operating Procedures” has the meaning given in Section 6.5.
 
“Prime Rate” shall mean, as of any date of determination, the highest bank prime
or reference loan rate as published in the Wall Street Journal in its “Money
Rates” section (or if The Wall Street Journal shall cease to be published or to
publish such rates, in such other publication as Bank may, from time to time,
specify) on such date, or if The Wall Street Journal is not published on such
date, on the last day before such date on which The Wall Street Journal is
published, whether or not such rate is actually ever charged or paid by any
entity.
 
“Prior Program” has the meaning given to it in the recitals hereto.
 
“Prior Program Agreement” has the meaning given to it in the recitals hereto.
 
“Program” has the meaning given to it in Section 1.1.
 
“Program Commencement Date” means December 14, 2005, or such other date as the
parties shall mutually agree in writing.
 
“Program Fee” means a fee payable in connection with each submission by Retailer
to Bank of Charge Transaction Data pertaining to a purchase financed on an
Account, calculated as set forth in Section 3.4.
 
“Program Fee Percentage” means the percentage set by Bank and used in
calculating the Program Fees, including the Base Rate and the Promotional Rates.
As of the Program Commencement Date, the Program Fee Percentages are set forth
on Schedule 3.5. Pursuant to the provisions of Sections 3.5 and 3.6, Bank may,
under certain circumstances, reset the Program Fee Percentages by written notice
to Retailer and such reset Program Fee Percentage will be used in calculating
the Program Fee in respect of all Charge Transaction Data submitted in respect
of any Accounts at any time thereafter (until such Program Fee Percentage is
again reset in accordance with the terms hereof.).
 
“Program Year” means the twelve month period between November 1st of any
calendar year and October 31st of the immediately succeeding calendar year. The
period between October 31, 2010 and February 2011 shall constitute the beginning
of another Program Year for all purposes of this Agreement; provided, that any
rights of either party which vest based upon the conclusion of a full twelve
month Program Year shall not vest unless the initial Term hereof is extended as
provided for in Section 9.1.
 
“Promotional Rate” means the percentage set by Bank used in calculating the
Program Fee payable in connection with each submission by Retailer to Bank of
Charge Transaction Data pertaining to a purchase that is subject to an approved
credit-based promotion. The initial Promotional Rates available under the
Program are set forth on Schedule 3.5.
 
“Retail Purchase” means purchases of goods and services from Retailer and
financed on Accounts which purchases are transacted at a Store Location.
 
“Retailer” means, jointly and severally, each of Select Comfort and SCRC, and
their respective successors and permitted assigns. Unless the context otherwise
suggests, (a) all references to “Retailer” shall
 
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mean each of the above-referenced parties and shall also mean all of such
parties in the aggregate, (b) all duties, liabilities and obligations of
Retailer hereunder shall be the joint and several obligations of each party
listed above, and (c) all representations and warranties made by Retailer
hereunder shall be deemed to have been made by each of the above-referenced
parties individually, as well as by all such parties collectively.
 
“Retailer Marks” means the names and any related marks, tradestyles, trademarks,
service marks, logos or similar proprietary designations that have been used in
connection with the Prior Program, or as they may be amended by Retailer from
time to time hereafter.
 
“Retailer Website” means the internet website with the internet address
www.selectcomfort.com, and any other internet website maintained, operated or
controlled by Retailer that Bank agrees in writing may constitute the Retailer
Website.
 
“Second Source Program” means any consumer credit program that is available only
to persons who submitted properly completed credit applications to, and were
rejected by, Bank immediately preceding such person’s application to such other
credit program.
 
“Select Comfort” has the meaning given in the preamble paragraph hereto, and
includes such entities successors and permitted assigns.
 
“SCRC” has the meaning given in the preamble paragraph hereto, and includes such
entities successors and permitted assigns.
 
“Solvent” means, as to any person, (i) that the present fair salable value of
such person’s assets exceeds the total amount of its liabilities; (ii) that such
person is generally able to pay its debts as they come due; and (iii) that such
person does not have unreasonably small capital to carry on such person’s
business as theretofore operated and as thereafter contemplated. The phrase
“present fair salable value of such person’s assets” means that value that could
be obtained if such person’s assets were sold within a reasonable time in one or
more arm’s-length transactions in an existing and not theoretical market.
 
“Store Location” means those retail stores owned or operated by Retailer within
the United States; provided, that Store Locations shall not include any retail
location acquired by Retailer as part of an Acquired Program or any retail
location opened subsequent to the acquisition of an Acquired Program to the
extent provided for in Section 8.1(c)(vi)(B).
 
“Term” has the meaning given to it in Section 9.1.
 
“Value-Added Program” means any products or services that enhance the features
of the Program or an Account.
 
“Working Capital Lender” means Bank of America, N.A., or any successor thereto
under that certain Credit Agreement dated as of May 23, 2003.
 
B. Miscellaneous. As used in this Agreement, (i) all references to the plural
number shall include the singular number (and vice versa); (ii) all references
to the masculine gender shall include the feminine gender (and vice versa) and
(iii) all references to
“herein,”“hereof,”“hereunder,”“hereinbelow,”“hereinabove” or like words shall
refer to this Agreement as a whole and not to any particular section, subsection
or clause contained in this Agreement. References herein to any document
including, without limitation, this Agreement shall be deemed a reference to
such document as it now exists, and as from time to time hereafter the same may
be amended. References herein to a “person” or “persons” shall be deemed to be
references to an individual, corporation, limited liability company,
partnership, trust, unincorporated association, joint venture, joint-stock
company, or any other form of entity. Captions of the sections of this Agreement
are for convenience of reference only and are not intended as a summary of such
sections and do not affect, limit, modify or construe the contents thereof.
 

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Appendix B
Additional Terms and Conditions Applicable to Internet Transactions
In addition to the other terms and conditions of this Agreement, the following
supplemental terms and conditions will apply to all Internet Applications.
 
A. Internet Applications; Link to Bank Webpage. Retailer shall maintain a logo
advertisement on the Retailer Website, which logo advertisement shall contain an
imbedded link to a webpage hosted by Bank or its agent (the “Bank Webpage”). If
the link contained in such logo advertisement does not link directly to the Bank
Webpage, Retailer shall be responsible for the content of any intermediate links
and shall ensure such intermediate link clearly indicates that it is hosted by
Retailer and not Bank. If for any reason the logo advertisement referred to
above shall cease to be displayed on the Retailer Website’s homepage or in the
agreed upon manner, Retailer shall immediately notify Bank. Retailer shall not
permit any link to the Bank Webpage to exist: (i) on the Retailer Website at any
time other than during the Term; or (ii) on any internet website (other than the
Retailer Website) maintained, operated or controlled by Retailer or under any
Retailer Mark.
 
B. Bank Webpage. Bank shall have the sole right to determine the design and
content of the Bank Webpage. During the Term: (i) Bank shall maintain and
operate the Bank Webpage; (ii) each of Bank and Retailer shall use reasonable
efforts to conform their respective websites to be reasonably compatible; and
(iii) Bank shall provide to Retailer prior notification of planned changes in
the Bank Webpage to permit Retailer to make any required changes in the Retailer
Website.
 
C. Security. Bank agrees that the direct access medium or method used to store,
present or transmit Internet Applications, terms and conditions, and/or Account
information will be secured in a manner which ensures that such information
cannot be altered, viewed or captured by an unauthorized party.
 
D. Fraud Mitigation. The parties acknowledge that the infrastructure required
for Internet Application processing is dynamic and agree to cooperate in
implementing enhancements and developments with respect to the operation and
security of Internet Application processing under the Program. Retailer and Bank
agree to cooperate in a commercially reasonable manner by committing systems and
other resources, and by providing information with respect to the development,
establishment and implementation of fraud mitigation strategies in connection
with Internet Applications. Retailer and Bank further agree to use commercially
reasonable efforts to implement such mitigation strategies as are developed from
time to time.
 
E. Definitions. As used in this Appendix, the following terms shall have the
following meanings:
 
“Internet Application” means any application which is received by Bank through
any of the following: (a) the Retailer Website; or (b) any electronic means
other than facsimile or telephone, including, without limitation, the Internet,
e-mail, kiosks located within or without of a Store Location, wireless devices
other than telephones, and other electronic data transmission devices.
 

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SCHEDULE 3.5
To
Credit Card Program Agreement
Initial Revised Program Fee Percentages

[*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]

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SCHEDULE 3.6
To
Credit Card Program Agreement
Illustrative Chart of Cost of Funds Adjustments

[*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]

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SCHEDULE 4.3
To
Credit Card Program Agreement
 

[*** Confidential portion has been omitted pursuant to a request for
confidential treatment and has been filed separately with the Commission.]

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SCHEDULE 6.3
To
Credit Card Program Agreement

Initial Terms Offered to Cardholders

Ÿ  
APR -

–  
Variable Rate equal to the Prime Rate     + 15.90%

-  
Maximum Standard Rate          24.75%

-  
Minimum Standard Rate          21.90%

-  
Default Rate                  26.99%

Ÿ  
Finance Charge Calculation

–  
2 Cycle ADB

–  
Finance Charges on Finance Charge & Fees

–  
Minimum Finance Charge of $1.00 per statement

Ÿ  
Repayment Terms - 3% of outstanding balance or $15.00, whichever is greater

Ÿ  
Late Payment Fee shall be as follows:

           New Balance
Late Payment Fee
           Under $100
$15
           $100-$999.99
$29
           $1000 or above
$35

Ÿ  
Other Fees - $30 on NSF checks

  $30 on Overlimit

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SCHEDULE 6.7
To
Credit Card Program Agreement

Financial Covenants

(1) CONSOLIDATED NET WORTH. Retailer shall, as of the end of each fiscal quarter
of Retailer, cause consolidated Net Worth to be equal to or greater than the sum
of (a) $40,000,000 plus (b) an amount equal to 50% of the Consolidated Net
Income earned in each fiscal quarter after December 28, 2002 (with no deduction
for a net loss in any such fiscal quarter). The foregoing to the contrary
notwithstanding, if at any time Retailer and the Working Capital Lender agree to
alter the foregoing quarterly consolidated Net Worth amount, such revised
consolidated Net Worth shall be incorporated into this Schedule 6.7 and shall
supercede and replace the foregoing consolidated Net Worth requirement so long
as such revised requirement does not provide for quarterly consolidated Net
Worth of Retailer below (a) $60,000,000 plus (b) an amount equal to 50% of
Consolidated Net Income earned in each fiscal quarter after the effective date
of such revision (with no deduction for a net loss in any such fiscal quarter).

(2) CONSOLIDATED FIXED CHARGE COVERAGE RATIO. Retailer shall, as of the end of
each fiscal quarter of Retailer, cause the Consolidated Fixed Charge Coverage
Ratio to be equal to or greater than 1.25:1.

"Attributable Indebtedness" means, on any date, (a) in respect of any capital
lease of any person, the capitalized amount thereof that would appear on a
balance sheet of such person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.

"Consolidated Capital Expenditures" means, as of the last day of any fiscal
quarter for any period, the capital expenditures of Retailer and its Affiliates
for such period, as the same are (or would in accordance with GAAP be) set forth
in the consolidated statement of changes in financial position of Retailer and
its Affiliates for such period.

"Consolidated EBITDAR" means, for any period, for Retailer and its Affiliates on
a consolidated basis, an amount equal to the sum of (a) Consolidated Net Income,
plus (without duplication) (b) Consolidated Interest Charges, (c) the amount of
taxes, based on or measured by income, used or included in the determination of
such Consolidated Net Income, (d) the amount of depreciation and amortization
expense deducted in determining such Consolidated Net Income, (e) Consolidated
Rental Payments used or included in the determination of Consolidated Net
Income, and (f) the amount of non-cash equity compensation expense, if any, of
Retailer and its Affiliates.

"Consolidated Fixed Charge Coverage Ratio" means as of any date of
determination, the ratio of:

(a) Consolidated EBITDAR for the period of the four fiscal quarters then most
recently ended, less (i) Consolidated Capital Expenditures for such period, less
(ii) the amount of all taxes based on or measured by income, used or included in
the determination of Consolidated Net Income, paid or required to be paid in
cash by Retailer and its Affiliates on a consolidated basis during such period,
to

(b) the sum of (i) Consolidated Interest Charges paid or required to be paid
during such period, plus (ii) all scheduled payments of principal made or
required to be made with respect to all Indebtedness (which, for purposes of
this Schedule 6.7 shall have the meaning given below) (including the principal
portion of capital leases) of Retailer and its Affiliates on a consolidated
basis during such period, plus (iii) all scheduled Consolidated Rental Payments
of Retailer and its Affiliates during such period, plus (iv) all Restricted
Payments comprising dividends during such period.

"Consolidated Interest Charges" means, for any period, for Retailer and its
Affiliates on a consolidated basis, the sum of (a) all interest, premium
payments, fees, charges and related expenses of Retailer and its Affiliates in
connection with borrowed money (including capitalized interest) or in connection
with the deferred purchase price of assets, in each case to the extent treated
as interest in accordance with GAAP, and (b) the portion
 
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 of rent expense of Retailer and its Affiliates with respect to such period
under capital leases that is treated as interest in accordance with GAAP.

"Consolidated Net Income" means, for any period, for Retailer and its Affiliates
on a consolidated basis, the net income of Retailer and its Affiliates after
extraordinary items (excluding gains or losses from Dispositions of assets) for
that period.

"Consolidated Net Worth" means, as of any date of determination, for Retailer
and its Affiliates on a consolidated basis, Shareholders' Equity of Retailer and
its Affiliates on that date.

"Consolidated Rental Payments" means, for any period, for Retailer and its
Affiliates all payments under operating leases.

"Disposition" or "Dispose" means the sale, transfer, license or other
disposition (including any sale and leaseback transaction) of any property by
any person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

"Guaranty Obligation" means, as to any person, any (a) obligation, contingent or
otherwise, of such person guarantying or having the economic effect of
guarantying any Indebtedness or other obligation payable or performable by
another person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such person, direct or indirect, (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation, or (iv) entered into for the purpose of assuring in any other manner
the obligee in respect of such Indebtedness or other obligation of the payment
or performance thereof or to protect such obligee against loss in respect
thereof (in whole or in part), or (b) any lien, hypothecation or similar
encumbrance on any assets of such person securing any Indebtedness or other
obligation of any other person, whether or not such Indebtedness or other
obligation is assumed by such person. The amount of any Guaranty Obligation
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Guaranty Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guarantying person in good faith.

"Indebtedness" means, as to any person at a particular time, all of the
following (without duplication), whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such person for borrowed money and all obligations of
such person evidenced by bonds, debentures, notes, loan agreements or other
similar instruments;

(b) all direct or contingent obligations of such person arising under letters of
credit (including standby and commercial), bankers' acceptances, bank
guaranties, surety bonds and similar instruments;

(c) net obligations under any Swap Contract in an amount equal to the Swap
Termination Value thereof;

(d) all obligations of such person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a lien,
hypothecation or similar encumbrance on property owned or being purchased by
such person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have been
assumed by such person or is limited in recourse;

(f) capital leases and Synthetic Lease Obligations; and

(g) all Guaranty Obligations of such person in respect of any of the foregoing.

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For all purposes hereof, the Indebtedness of any person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such person (subject only to customary exceptions
acceptable to Bank). The amount of any capital lease or Synthetic Lease
Obligation as of any date shall be deemed to be the amount of Attributable
Indebtedness in respect thereof as of such date.

"Restricted Payment" means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock of Retailer or
any Affiliate thereof, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit on account of the
purchase, redemption, retirement, acquisition, cancellation or termination of
any such capital stock or of any option, warrant or other right to acquire any
such capital stock.

"Shareholders' Equity" means, as of any date of determination for Retailer and
its Affiliates on a consolidated basis, shareholders' equity as of that date
determined in accordance with GAAP.

"Swap Contract" means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any “International
Foreign Exchange Master Agreement”, or any other master agreement (any such
master agreement, together with any related schedules, a "Master Agreement"),
including any such obligations or liabilities under any Master Agreement.

"Swap Termination Value" means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a) the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts which may include the Working Capital Lender).

"Synthetic Lease Obligation" means the monetary obligation of a person under (a)
a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property creating obligations that do not
appear on the balance sheet of such person but which, upon the insolvency or
bankruptcy of such person, would be characterized as the indebtedness of such
person (without regard to accounting treatment).
 
39