Exhibit 10.1


    

      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.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (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

       

      
        
          4

        

        
          
          

          
            

          

        

        
          
          

        

         

        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 

       

      
        
          7

        

        
          
          

          
            

          

        

        
          
          

        

         

        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.

       

      
        
          8

        

        
          
          

          
            

          

        

        
          
          

        

         

        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

       

      
        
          15

        

        
          
          

          
            

          

        

        
          
          

        

         

        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

       

      
        
          19

        

        
          
          

          
            

          

        

        
          
          
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;

       

      
        
          20

        

        
          
          

          
            

          

        

        
          
          

        

      

      (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.

       

      
        
          21

        

        
          
          

          
            

          

        

        
          
          

        

      

      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

       

      
        
          22

        

        
          
          

          
            

          

        

        
          
          
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.

       

      
        
          23

        

        
          
          

          
            

          

        

        
          
          

        

      

      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.

       

      
        
          24

        

        
          
          

          
            

          

        

        
          
          

        

      

      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.

       

      
        
          25

        

        
          
          

          
            

          

        

        
          
          

        

      

      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.]%

       

      
        
          27

        

        
          
          

          
            

          

        

        
          
          

        

      

      “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

       

      
        
          28

        

        
          
          

          
            

          

        

        
          
          
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.]. 

       

      
        
          29

        

        
          
          

          
            

          

        

        
          
          

        

      

      “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

       

      
        
          30

        

        
          
          

          
            

          

        

        
          
          
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. 

       


      
        
          32

        

        
          
          

          
            

          

        

        
          
          

        

      


      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.]


      
        
          33

        

        
          
          

          
            

          

        

        
          
          

        

      


      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.]

      


      



      
        
          34

        

        
          
          

          
            

          

        

        
          
          

        

      


      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.]

      


      



      
        
          35

        

        
          
          

          
            

          

        

        
          
          

        

      


      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.

      


      
        
          38

        

        
          
          

          
            

          

        

        
          
          

        

      

      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