Document:

exv10w1

 

Exhibit
10.1

	 	 	 
	Preferred Pricing Agreement for D&B Risk Management Solutions (11-06c)

	 	

This Preferred Pricing Agreement for D&B Risk Management Solutions (“PPA”) is subject to the PPA Terms and Conditions set forth below in addition to the existing D&B
Master Agreement between
Customer and D&B effective June 17, 2002. Upon acceptance of this PPA by both parties, this PPA shall constitute an “Order” under the existing Master Agreement. If the “New” box is checked, this
Order is not valid until a D&B Master Agreement has been executed between the parties. If the “Existing” box is checked, such D&B Master Agreement means the existing D&B Master Agreement between
the parties. Notwithstanding anything to the contrary contained in the D&B Master Agreement, this Order constitutes Customer’s binding commitment for the term of this Order.

	 	 	 	 	 	 	 
	Effective Date: 03/19/2007

	 	Initial Term: 1 Year
	 	Schedule of Affiliates:
	 	Customer:
	 

	 	 	 	Yes - See Attached
	 	o New     þ Existing
	Governing MA DUNS # : 122683253

	 	Subscriber # : 004012511
	 	 	 	o MDP Conversion

PPA Terms and Conditions

Customer shall have access to all products and services listed on attached Appendix A (“Included Services”) subject to the following:

1. The term of this Order is 1 year from the Effective Date (“Initial Term”). Each 12 month period beginning on the Effective Date is referred to herein as a
“Contract Year”.

2. In consideration of Customer’s payment of the fee for each Contract Year as set forth below (“PPA Fee”), Customer shall be entitled to receive an unlimited amount of
Included Services, subject
to usage limits on selected products and services included within the Included Services (which limits are referred to as “Product Usage Limits”), determined by reference to the applicable pricing
set forth below (subject to Customer’s band discount set forth below);

3. Any use of Included Services in excess of the applicable Product Usage Limits during a particular Contract Year shall be billed to Customer at the below referenced pricing, including
applicable
band discount;

4. The use of Included Services under this Agreement applies to Customer as it exists today, and may be used only to support Customer’s U.S. business, and may be used by Customer’s
U.S. divisions
and wholly owned subsidiaries that are identified on a “Schedule of Affiliates “ attached hereto and executed by the parties and that are not currently eligible to receive Included Services under
an existing agreement with D&B (“Included Entities”) to support their respective U.S. businesses, provided Customer is liable for such Included Entities’ compliance with this Order and Master
Agreement. Any change to Customer via merger or acquisition (including the acquisition of a portfolio), shall require a written addendum between D&B and Customer to reflect such change, which
addendum shall include the applicable revised PPA Fee schedule. Future acquisitions by Customer of, or future acquisitions of Customer by, companies with a D&B credit information contract
(“Acquired/Acquiring Companies”) shall not be included in this Order. Acquired/Acquiring Companies shall continue to receive D&B services pursuant to the terms and conditions of the respective D&B
credit information contract (“Credit Contract”) and shall not be included as an Included Entity under this Order, until the expiration of such Credit Contract and the execution of an addendum to
this Order as referenced above.

5. Any use of Included Services by Customer’s affiliates other than Included Entities shall be the subject of a separate, mutually agreed amendment to this Order; and Customer’s
use of D&B
products and services other than Included Services, if any, shall be the subject of separate Orders executed by the parties, each of which shall be subject to, and incorporate by reference
therein, the terms of the Master Agreement.

	 	 	 	 	 
	PPA Fee

	 	Band Discount: Band 7 
	 	Product Usage Limits (per Contract Year)
	Contract Year 1: 1,034,522
	 	 	 	 
	Contract Year 2:                     

	 	Applicable Pricing: D&B’s published pricing for 2007
	 	þ International Reports 15 % of PPA Fee
	Contract Year 3:                     

	 	 	 	 
	Annual Service Fee: 599
	 	 	 	 

 

 

1. In the event the parties agree to renew this Order under this PPA, the PPA Fee for any Contract Year following Contract Year 1 shall include 50% of the amount, if any, by which
Customer’s usage
in the previous Contract Year exceeded three (3) times the PPA Fee for the previous Contract Year.

2. Customer’s actual usage for a particular Contract Year and the PPA Fee for the subsequent Contract Year shall be determined by D&B by reference to the above referenced pricing,
including
applicable band discount and communicated to Customer within thirty (30) days after the end of the applicable Contract Year.

3. PPA Fees include the Annual Service Fee, and are non-refundable, and unused amounts may not be carried over to subsequent Contract Years.

4. In the event Customer does not renew this Order prior to or on the expiration date, Customer may continue to receive Services, provided that Customer will pay D&B’s then current
published
pricing (subject to Customer’s discount associated with the prior Contract Year PPA Fee set forth herein) for such Included Services for the sixty day period following the expiration date.

Payment Terms: Due upon Receipt of Invoice

Invoice Options: þ Annual Eff. Date      o Annual Eff. Date 30/60       o Other Blank

	 	 	 
	AGREED TO BY:
	 	 
	DUN & BRADSTREET, INC.

	 	CUSTOMER
	Approved:

	 	Company Name: Advanta Bank Corp.
	Authorized Signature: /s/ Thomas M. Wickersham

	 	Authorized Signature: David W. Griffith
	Name (Please Print): Thomas M. Wickersham

	 	Name (Please Print): David W. Griffith
	Title: RVP Strategic Acct

	 	Title: SVP Credit and Marketing Analysis
	Date: 3/22/07

	 	Date: March 22, 2007

CUSTOMER BILL TO ADDRESS:

	 	 	 	 	 
	Company Name: Advanta Bank Corp.
	 	 	 	 
	Address: Welsh & McKean Roads
	 	 	 	 
	City: Spring House

	 	     State: PA
	 	Zip: 19477
	Attention: Dave Griffith
	 	 	 	 
	Telephone #: (215) 444-5153

	 	 	 	Fax #:                     
	D&B D-U-N-S #: 122683253

	 	E-Mail: dgriffith@advanta.com
	 	     Purchase Order#:                     

SUBSCRIBER #: 004-012511

CUSTOMER SHIPPING INFORMATION:

	 	 	 	 	 
	Company Name: same as above
	 	 	 	 
	Address*:                     
	 	 	 	 
	City:                     

	 	State:                     
	 	Zip:                     
	Attention:                     
	 	 	 	 
	RM Name: Ron Needham

	 	RM #: 101818
	 	Center #: 3126
	RM Telephone #: (717) 413-4332

	 	Ext:                     
	 	E-Mail: needhamr@dnb.com
	RM Fax:                     
	 	 	 	 

 

* Attach usage address, if different (Attach Schedule of Affiliates for participating points.)

 

 

Dun & Bradstreet, Inc. (“D&B”) and the customer named on the attached Order (“Customer”) agree
that D&B shall make available to Customer business information services (“Services”), which may
include information (“Information”); computer programs or applications (including those accessed
remotely), documentation and media (collectively, “Software”); and other services, subject to this
Master Agreement (“Agreement”). The Services subject to this Agreement are identified in Orders
entered into from time to time by D&B and Customer. No obligation to furnish or to pay for a
particular Service arises under this Agreement until D&B accepts an order and any attachments
thereto placed by Customer. All accepted orders and their attachments (collectively, the
“Order(s)”) for Services are subject to this Agreement, and the terms of such Orders are
incorporated by reference in this Agreement. Subject to paragraph 10.2, this Agreement continues in
force even though no Order may then be outstanding. The Services will also be made available to
Customer’s U.S. parent and to U.S. companies that are subsidiaries, divisions or affiliates,
wholly-owned or controlled by Customer and that are identified on a “Schedule of Locations of
Service & Customer-Related Companies” schedule attached to such Order and signed by the parties.

1. Licenses

1.1 D&B grants to Customer a non-exclusive, non-transferable license (“License”) to use and display
the Information and Software (in object code format only) constituting each D&B product specified
in an Order, subject to the limitations contained in this Agreement and such Order. D&B retains
all ownership rights (including copyrights and other intellectual property rights) in the Services,
in any form, and Customer obtains only such rights as are explicitly granted in this Agreement and
such Order. The Services will include a custom model developed by D&B through the use of D&B and
Customer information. To the extent such model is customized for Customer, the customized model
shall be owned by Customer; provided that (i) Customer grants D&B a license to use such model in
connection with its provision of Services to Customer hereunder, (ii) Customer’s ownership of the
customized model does not (x) include ownership of any D&B information, techniques, processes,
methods, expertise, or other intellectual property included therein (which collectively remain D&B
intellectual property) or (y) affect D&B’s ability or rights with respect to the use of such D&B
information, techniques, processes, methods, expertise, or other intellectual property for the
purpose of developing custom models for other customers for any purpose, and (iii) Customer shall
not license, sell, distribute or otherwise make available such custom model to any third party,
other than those third parties to which Customer may make Information or Software available
pursuant to the first sentence of paragraph 2.2.

1.2 Each License and Order is for a term, beginning on the date of the Order, of 12 months, unless
another term is specified in the Order. D&B may extend the term for an additional period, in its
discretion, while the parties are engaged in renewal discussions. Any such extension shall be
subject to this Agreement. Each License or Order may be renewed as set forth in the Order and by
mutual written agreement and payment of renewal fees and applicable product and service fees (the
initial term and any renewal period for an Order or License constitute “the Term” for such Order or
License).

1.3 Software “Updates” (i.e., minor enhancements, additions, and substitutions to Software,
including corrections and bug fixes) are provided at no additional fee, if available. “Upgrades”
(i.e., modifications, additions or substitutions that result in a substantial change, improvement
or addition to Software), if available, are provided for an additional fee, if applicable. The
determination of whether a matter involves an Update or an Upgrade is within the sole discretion of
D&B. All Updates and Upgrades obtained by Customer are subject to this Agreement.

1.4 Telephone and email based software support is available during the Term of an Order for the
currently licensed Software versions, and only if Customer has installed all Updates received.

2. Restrictions on Use

2.1 Information and Software are licensed for Customer’s internal use only and (i) only at the
points of service specified in the Order; (ii) only for the frequency of use or total number of
users set forth in the Order; and (iii) subject to any other restrictions set forth in the Order.

2.2 Customer will not provide Information or Software to others, whether directly in any media or
indirectly through incorporation in a database, marketing list, report or otherwise, or use or
permit the use of Information to generate any statistical or other information that is or will be
provided to third parties (including as the basis for providing recommendations to others); use or
permit the use of Information to prepare any comparison to other information databases that is or
will be provided to third parties; or voluntarily produce Information in legal proceedings; except
that Customer may provide Information or Software to Representatives as defined below, in response
to regulatory requests, or as otherwise required by law. Customer shall: (i) maintain the
Information in strict confidence, including by restricting disclosure of the Information solely to
those of its employees, consultants, agents and advisors (collectively, “Representatives”) with a
need to know and not allowing it to be disclosed, through negligence or otherwise, to third
parties, (ii) advise Representatives who receive the Confidential Information of their obligations
hereunder and assume full responsibility for any breach by them of such obligations, (iii) use the
Confidential Information only in furtherance of the business relationship described in Paragraph 1
above, and (iv) take all steps to ensure that no unauthorized persons have access to Confidential
Information and that all persons having access to Confidential Information refrain from any
unauthorized disclosure.

2.3 Customer will not attempt to access, use, modify, copy, reverse engineer, or otherwise derive
the source code of Software.

2.4 Upon reasonable notice and during regular business hours, Customer will permit D&B to inspect
the locations at, or computer systems on which, Information and Software are used, stored or
transmitted so that D&B can verify Customer’s compliance with this Agreement.

2.5 Customer will be responsible for any direct damages or lost profits incurred by D&B as a result
of Customer’s breach of this paragraph 2.

3. Copying

3.1 Customer will not copy, download, upload or in any other way reproduce Information or Software
except for (i) creating a reasonable number of copies of Information in any format for internal use
only in accordance with this Agreement and not for general internal distribution; and (ii) making
one copy of Information and of Software for internal archival purposes.

4. D-U-N-S Numbers

4.1 D-U-N-S Numbers are proprietary to and controlled by D&B. D&B grants Customer a non-exclusive,
perpetual, limited license to use D-U-N-S Numbers solely for identification purposes and only for
Customer’s internal business use. Where practicable, Customer will refer to the number as a
“D-U-N-S Number” and state that D-U-N-S is a registered trademark of D&B.

5. Third Party Services

5.1 Customer may engage a third party to process or host Information (the “Processor”) provided
that the Processor and D&B enter into a D&B Processor’s Agreement before any Information or
Software is provided to the Processor.

5.2 Third parties that provide Information to D&B for use in providing the Services are intended
third party beneficiaries of paragraphs 8 and 11.

6. Payment

6.1 Customer will pay D&B in accordance with the Order. Prices and product descriptions are those
set forth in the Order, or, if not included in the Order, in the applicable pricing and product
policies made available to Customer in hard copy or on any D&B Internet site, which policies are
incorporated herein. A late payment charge of the lesser of 11/2% per month or the highest lawful
rate may be applied to any outstanding balances until paid.

6.2 Customer will pay any applicable taxes relating to this Agreement, other than taxes based on
D&B income and franchise — related taxes.

6.3 For certain Orders for a committed volume or usage represented by an upfront payment by
Customer, Customer may be entitled to “carry over” portions of unused volume or usage upon renewal.
In addition, if Customer’s usage exceeds the committed amount, such excess usage shall be billed
at a specified “overrun” rate. Such carryover and/or overrun rate, if applicable, will be
determined in accordance with the Order, or, if not included in the Order, in the applicable
pricing and product policies made available to Customer in hard copy or on any D&B Internet site.

 

 

6.4 If Customer’s pricing with respect to a particular Order is based on Customer’s expected volume
or usage as indicated on such Order and Customer does not meet such volume or usage levels,
Customer will pay D&B a “true-up amount” based on the pricing applicable to the volume or usage
actually utilized by Customer.

7. Compliance with Law

7.1 Customer will not use Information as a factor in establishing an individual’s eligibility for
(i) credit or insurance to be used primarily for personal, family, or household purposes, or (ii)
employment. In addition, Customer will not use any Service to engage in any unfair or deceptive
practices and will use the Services only in compliance with applicable state, local, federal or
foreign laws or regulations, including laws and regulations regarding telemarketing, customer
solicitation (including fax and/or e-mail solicitation), data protection and privacy.

8. Disclaimers

8.1 Though D&B uses extensive procedures to keep its database current and to maintain accurate
data, Customer acknowledges that the Information will contain a degree of error and that Customer
is responsible for determining that the Information is sufficiently accurate for Customer’s
purposes. If the Information is not sufficiently accurate for Customer’s purposes, then Customer
must so notify D&B, in writing, within 15 days after receipt of such Information. D&B will, at its
option, either correct the inaccuracy at D&B’s expense or refund any amounts paid relating to the
unusable Information.

8.2 ALL SERVICES ARE PROVIDED ON AN “AS IS,” “AS AVAILABLE” BASIS. OTHER THAN AS EXPLICITLY STATED
IN THIS AGREEMENT, D&B DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF
ACCURACY, COMPLETENESS, CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. D&B DOES
NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR-FREE AND DISCLAIMS ANY WARRANTY OR
REPRESENTATION REGARDING AVAILABILITY OF A SERVICE, SERVICE LEVELS OR PERFORMANCE. D&B WILL NOT BE
LIABLE FOR ANY LOSS OR INJURY ARISING OUT OF, IN WHOLE OR IN PART, D&B’S CONDUCT IN PROCURING,
COMPILING, COLLECTING, INTERPRETING, REPORTING OR DELIVERING SERVICES.

9. Copyrights and Other Proprietary Rights

9.1 Customer acknowledges that Information and Software are proprietary works of D&B and comprise:
(i) works of original authorship, including compiled Information containing D&B’s selection,
arrangement and coordination and expression of such Information or pre-existing material it has
created, gathered or assembled; (ii) trade secret and other confidential information, including
information that derives value or potential value from not being readily known or available; and
(iii) information that has been created, developed and maintained by D&B at great expense, such
that misappropriation or unauthorized use by others for commercial gain would unfairly and/or
irreparably harm D&B or reduce D&B’s incentive to create, develop and maintain such information.
Customer will not knowingly commit or permit any act or omission that would contest or impair D&B’s
proprietary and intellectual property rights in Information and Software or that would cause the
Information or Software to infringe the proprietary or intellectual property rights of a third
party. Customer will reproduce D&B’s copyright and proprietary rights legend on all copies of
Information and Software which are so marked when received. Customer will be responsible for any
direct damages or lost profits incurred by D&B as a result of Customer’s breach of this paragraph
9.1.

9.2 Customer and D&B will not (i) use any trademark, service mark or trade name of each other or
any of their affiliated companies, except that D&B and its affiliates may include Customer’s trade
names in the data base of business information included within the Services it offers to Customer
and others or otherwise as permitted by law, or (ii) publish any press releases regarding this
Agreement or any Order.

9.3 D&B will treat all information that Customer designates in writing to be proprietary in the
same manner as D&B treats its own proprietary information. D&B agrees not to use such identified
proprietary information except for the purposes of performing its obligations to Customer and for
internal analytical purposes (i.e., analyzing such data to improve D&B’s products and services).
Such proprietary information shall not include information that (i) is or becomes a part of the
public domain through no act or omission of D&B; (ii) was in D&B’s lawful possession prior to
Customer’s disclosure to D&B; (iii) is lawfully disclosed to D&B by a third-party with the right to
disclose such information and without restriction on such disclosure; or (iv) is independently
developed by D&B without use of or reference to the proprietary information.

9.4 D&B represents and warrants to Customer that, to D&B’s knowledge, the Software and Information,
when used in accordance with this Agreement, do not violate any existing U.S. copyrights, patents,
trademarks, or other intellectual property rights of any third party. The foregoing warranty does
not apply to the extent Customer modifies the Software or Information in any way or combines the
Software or Information with material from third parties.

10. Termination

10.1 In the event of material breach (including, without limitation, an assignment in violation of
paragraph 13.2 hereof) by Customer or D&B, the non-breaching party may immediately terminate this
Agreement or particular Orders without prior notice. In addition, D&B may terminate this Agreement
or particular Orders upon 30 days’ prior written notice; provided that if D&B terminates this
Agreement or particular Orders other than for cause, D&B will refund to Customer the unused balance
of any amounts paid under the relevant Orders. If Customer terminates this Agreement or particular
Orders due to a material breach by D&B pursuant to this section, D&B will refund to Customer the
unused balance of any amounts paid under the relevant Orders so long as such material breach is
proved in any judicial proceeding.

10.2 If Customer has no Orders in effect during a period of six consecutive months, then D&B may
terminate this Agreement at the end of such six-month period by sending written notice to Customer.

10.3 The provisions set forth in paragraphs 2, 3, 4, 6, 7, 8, 9, 10.3, 10.4, 10.5, 11 and 12 will
survive the termination of this Agreement.

10.4 If, without D&B’s written permission, Customer continues after termination to obtain Services
covered by a terminated Order or Agreement, Customer will be liable to D&B for the undiscounted
fees for such Services in effect on the date of such termination.

10.5 Upon termination of a Term with respect to particular Information or Software, or upon receipt
of Software or Information that is intended to supersede previously obtained Software or
Information, unless D&B instructs Customer otherwise, Customer will immediately delete or destroy
all originals and copies (other than archival copies permitted by paragraph 3) of the Information
or Software, and upon request, provide D&B with certification thereof.

10.6 Termination of this Agreement will result in a termination of all outstanding Orders.

11. Limitation of Liability

11.1 NEITHER D&B NOR CUSTOMER WILL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR
CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES,
ARISING OUT OF THIS AGREEMENT OR THE DELIVERY, USE, SUPPORT OR OPERATION OF THE SERVICES, EXCEPT
AS OTHERWISE PROVIDED HEREIN.

11.2 D&B’s LIABILITY FOR A PARTICULAR CLAIM WILL NOT EXCEED THE AMOUNT PAID BY CUSTOMER TO D&B FOR
THE PARTICULAR INFORMATION OR SOFTWARE UPON WHICH THE CLAIM IS BASED OR $20,000, WHICHEVER IS
GREATER. ANY CLAIMS AGAINST D&B WILL BE BROUGHT, IN ACCORDANCE WITH THIS AGREEMENT, WITHIN 12
MONTHS OF DISCOVERY OF THE FIRST OCCURRENCE GIVING RISE TO SUCH CLAIMS, BUT IN NO CASE MORE THAN
TWENTY-FOUR (24) MONTHS FROM THE FIRST OCCURRENCE, OR SUCH CLAIMS WILL BE FOREVER BARRED.

12. Choice of Law; Disputes

12.1 This Agreement is governed by and construed in accordance with the laws of the State of New
Jersey, without regard to choice of law provisions. Any disputes arising out of this Agreement
that cannot be resolved by the parties will be brought in state or federal court located in Newark,
New Jersey.

12.2 Each party shall bear its own costs and expenses, including reasonable attorneys’ fees
incurred in any action to enforce the obligations of the other party under this Agreement, however,
Customer will reimburse D&B

 

 

for all costs and expenses (including all reasonable attorneys’ fees and costs as well as all
damages incurred) in D&B’s enforcement of the Customer-Related Companies compliance with this
Agreement.

13. Miscellaneous

13.1 This Agreement, all Orders, addenda and schedules, and D&B’s published policies and procedures
referred to herein and in effect from time to time, including those published on D&B’s web site,
constitute the entire agreement between D&B and Customer regarding the Services. Unless an Order
states otherwise, where there is a conflict between the terms of any addenda or schedules and this
Agreement, the terms of the Agreement shall control with respect to the Services. Where there is a
conflict between the terms of any Order and this Agreement, the terms of the Order shall control
with respect to the Services set forth in such Order and solely to the extent of the conflict. Any
amendments of or waivers relating to this Agreement or any Order must be in writing signed by both
parties.

13.2 This Agreement binds and inures to the benefit of the parties and their successors and
assigns, except that neither party will assign this Agreement without the prior written consent of
the other party; however, either party may assign the Agreement (i) to an affiliate controlled by,
controlling or under common control with that party; provided such affiliate is not a direct
competitor of D&B, or (ii) in connection with a merger or consolidation (so long as the assignment
is to the newly merged or consolidated entity) or the sale of substantially all of its assets (so
long as the assignment is to the newly merged or consolidated entity). Notwithstanding the
foregoing, with respect to an assignment pursuant to (ii) above, the non-assigning party may
terminate this agreement upon thirty (30) days written notice if such party objects to the
assignment.

14 Indemnification

     D&B shall defend or settle at its expense any claim, suit or proceeding arising from or
alleging: (a) infringement of any existing U.S. copyrights, patents, trademarks, or other
intellectual property rights of any third party (“Intellectual Property Right”) by Service or part
thereof furnished under this Agreement; (b) property damage or personal injury, including death,
directly caused by or personal injury, including death, directly caused by or sustained in
connection with the performance of the Services or any activities of D&B in connection therewith;
and (c) a breach of the warranties and representations made by D&B in this Agreement. D&B shall
indemnify and hold Customer harmless from and pay any and all losses, costs and damages, including
royalties and license fees, reasonable counsel fees attributable to such claim, suit or proceeding.
Customer shall give D&B prompt notice of, and the parties shall cooperate in, the defense of any
such claim, suit or proceeding, including appeals, negotiations and any settlement or compromise
thereof, provided that the Customer shall approve the terms of any settlement or compromise.

If any Service or part thereof furnished under this Agreement, including without limitation
Software, system design, equipment or Documentation, becomes or in the Customer’s or D&B’s
reasonable opinion is likely to become, the subject of any claim, suit, or proceeding arising from
or alleging infringement of, or in the event of any adjudication that such Service or part thereof
infringes on, any Intellectual Property Right, D&B, at its own expense shall take the following
actions in the listed order of preference: (i) secure for the Customer the right to continue using
the Service or part thereof; or (ii) if efforts are unavailing, replace or modify the Service or
part thereof to make it non-infringing; provided, however, that such modification or replacement
shall not degrade the operation or performance of the ServiceExhibit 10.1 to Select Comfort Corporation Form 10-Q for period ended March 31, 2007

Exhibit 10.1

SEPARATION AGREEMENT

 

THIS AGREEMENT, dated as of April 12, 2007, is entered into by and between Select Comfort Corporation, a Minnesota corporation (“Company”), and Keith C. Spurgeon, an individual resident of the State of Minnesota (“Employee”).

 

RECITALS

 

	
            A.
 	
            Company and Employee have agreed to certain terms and conditions relating to the termination of Employee’s employment with Company as set forth herein.
 

	
            B.
 	
            Except as otherwise expressly set forth below, all of the terms and conditions relating to the termination of Employee’s employment with Company are set forth herein and this Agreement supersedes and replaces in its entirety any previous agreement, letter or understanding between Company and Employee relating to the termination of Employee’s employment with Company.
 

In consideration of the foregoing and the mutual agreements set forth below, the parties hereto agree as follows:

 

	
            1.
 	
            Termination of Service. Company and Employee agree that Employee’s employment with Company will terminate effective as of June 30, 2007, as of which date Employee agrees to resign all of his positions as an officer of Company.
 

	
            2.
 	
            Compensation. Subject to reasonable compliance by Employee with the terms and conditions of this Agreement and the agreement referred to in Section 8 below, and subject to the execution and delivery by Employee (on or after Employee’s last day of employment with Company) of the release in the form of Exhibit A attached hereto (the “Release”) and the effectiveness of the Release following the passage of any applicable period of time during which the Release may be revoked or rescinded by Employee, Company agrees to pay, and Employee agrees to accept, in lieu of all other severance or other compensation set forth in any other agreement, letter or understanding between Company and Employee, or any other plan or arrangement of Company, the
following amounts:
 

	
             
  	
            A.
 	
            Employee’s current annual base salary;
 

	
             
 	
            B.
 	
            The amount of Employee’s targeted annual bonus equal to 55% of Employee’s current annual base salary; and
 

	
             
 	
            C.
 	
            Assuming Employee’s engagement in continued employment through June 2007, a pro rata bonus with respect to 2007 calculated at the target level.
 

The foregoing amount will be paid in a single, lump sum payment (less all applicable withholdings) promptly following (i) the execution and delivery of the Release and (ii) the passage of any applicable period of time during which the Release may be revoked or rescinded by Employee.

 

1

	
            3.
 	
            Welfare Benefits. Subject to the succeeding provisions of this Section 3, if Employee timely elects continued coverage under Company’s group medical plan and/or group dental plan pursuant to section 4980B of the Code (“COBRA”), in accordance with ordinary plan practices and provides appropriate documentation of such payment as requested by Company’s plan administrator, during the Premium Reimbursement Period (as defined below) Company will reimburse Employee each month an amount equal to the difference between the amount Employee pays for such COBRA continuation coverage each such month and the amount paid by a full-time active employee of Company each such month for the same level of coverage elected by Employee. For purposes of the preceding sentence, the Premium Reimbursement
Period is the period that begins on the date of termination of employment and ends on the earlier of:
 

	
             
  	
            A.
 	
            One (1) year after termination of Employee’s employment;
 

	
             
  	
            B.
 	
            The date on which Employee’s eligibility for COBRA continuation coverage under Company’s group medical or group dental plan ends; or
 

	
             
  	
            C
 	
            The date on which Employee becomes eligible to participate in another group medical plan or group dental plan, as the case may be, because of reemployment or otherwise, whether or not Employee elects to participate in such plan and whether or not such plan provides comparable benefits or includes limitations or exclusions (unless such other group medical plan contains a pre-existing condition exclusion that affects Employee’s coverage under such plan).
 

Other than the Premium Reimbursement Period payments described in this Section 3, Employee’s coverage under any employee benefit plan of Company is subject to the terms of such employee benefit plan and applicable law.

	
            4.
 	
            Outplacement Services. Company will assist Employee by paying for up to Fifteen Thousand Dollars ($15,000) for outplacement services from a consultant approved by Company. Such payments will be made directly to the consultant by Company.
 

	
            5.
 	
            Paid Time Off. Regardless of whether Employee signs this Agreement or executes and delivers the Release, Company will pay Employee for all Paid Time Off (“PTO”) that Employee has earned but not used as of the Separation Date, in accordance with the current Company policy with respect to PTO payout.
 

	
            6.
 	
            No Other Compensation; Withholding. Employee agrees and understands that he is not entitled to any compensation other than as expressly provided in this Agreement and will not accrue or become entitled to any benefits other than as expressly provided herein. Employee also understands that payments made pursuant to this Agreement may be subject to withholding of applicable income and other employment-related taxes (as well as FICA and Medicare) and consents to Company’s right to withhold from such payments as required by applicable tax laws.
 

 

2

	
            7.
 	
            Stock Options and Restricted Stock Awards. Stock options and restricted stock awards previously granted to Employee by Company that are currently outstanding will continue to vest and remain exercisable only in accordance with the existing terms of such options. Nothing contained in this Agreement shall be construed to alter or modify in any way any of the terms or conditions of any such stock options or restricted stock awards.
 

	
            8.
 	
            Employee Inventions, Confidentiality and Non-Compete Agreement. Employee and Company agree that the Employee Inventions, Confidentiality and Non-Compete Agreement dated as of February 22, 2002, shall remain in full force and effect and binding on Employee in accordance with its terms, except that the term referenced in Section 3 of such agreement shall be extended from one (1) year to two (2) years.
 

	
            9.
 	
            Non-Disparagement. Employee agrees that he will not at any time disparage, demean or criticize, or do or say anything to cause injury to, the business, reputation, management, employees or products of Company. Company agrees that it will not at any time disparage, demean or criticize, or do or say anything to cause injury to the reputation or career development of Employee. In addition to any other damages or remedies that may be available to a non-breaching party for any breach of this Section 9, any breaching party shall further be obligated to the non-breaching party for any reasonable attorneys’ fees and costs incurred by the non-breaching party to enforce the provisions of this Section 9.
 

	
            10.
 	
            Confidentiality. Company and Employee each agree that they will hold the facts and circumstances of this Agreement in strict confidence and will not reveal the existence or the terms of this Agreement to anyone except as may be required by law. Employee acknowledges that Company may be required to file a copy of this Agreement with the Securities and Exchange Commission in which event this Agreement would be publicly available. Notwithstanding the foregoing, each of the parties hereto will be entitled to advise their respective professional advisors of the terms hereof, and Employee will be entitled to discuss the terms hereof with immediate family members.
 

	
            11.
 	
            Knowing and Willful Agreement. Employee hereby acknowledges he fully understands and accepts the terms of this Agreement, that his signature is freely, voluntarily and knowingly given, and that he has been provided a full opportunity to review and reflect on the terms of this Agreement.
 

	
            12.
 	
            Opportunity to Consider and Seek Advice. Employee has been advised by Company to consult with an attorney prior to signing this Agreement, and that he has twenty-one (21) days from the date on which he received this Agreement to consider whether or not he wishes to sign it. To accept this Agreement, Employee must sign it and deliver it to Mark Kimball at Select Comfort Corporation, 6105 Trenton Lane North, Minneapolis, Minnesota, 55442.
 

 

3

	
            13.
 	
            Opportunity to Rescind or Revoke Release. Employee understands that Employee has the right to rescind or revoke the Release by giving written notice of such rescission or revocation to Company within fifteen (15) calendar days following Employee’s execution and delivery of the Release. Any such notice of rescission or revocation must be in writing and hand-delivered to Company or, if sent by mail, postmarked within the applicable time period, sent by certified mail, return receipt requested, and addressed as follows:  Select Comfort Corporation, 6105 Trenton Lane North, Minneapolis, MN 55442,  Attn.:  General Counsel.
 

	
            14.
 	
            Entire Agreement. This Agreement constitutes the entire agreement between the parties and supersedes all previous negotiations, representations and agreements heretofore made by the parities with respect to the subject matter hereof. No amendment waiver or discharge hereof shall be valid unless in writing and executed by both parties hereto.
 

	
            15.
 	
            Governing Law. The laws of the State of Minnesota will govern the validity, construction and performance of this Agreement, without regard to the conflict of law provisions of any jurisdictions. Any legal proceeding related to this Agreement, will be brought in a Minnesota court of competent jurisdiction, and both Company and Employee hereby consent to the exclusive jurisdiction of any such court for this purpose.
 

	
            16.
 	
            Severability. Whenever possible, each provision of this Agreement will be interpreted so that it is valid under applicable law. If any provision of the Agreement is to any extent rendered invalid under applicable law, that provision will still be effective to the extent it remains valid. The remainder of this Agreement also will continue to be valid, and the entire Agreement will continue to be valid in other jurisdictions.
 

	
            17.
 	
            No Assignment. Employee may not assign this Agreement to any third party for whatever purpose without the express written consent of Company. Company may not assign this Agreement to any third party, except by operation of law through merger, consolidation, liquidation or recapitalization, or by sale of all or substantially all of the assets of Company, without the express written consent of Employee.
 

	
            18.
 	
            Remedies. The parties hereto agree that the rights granted by this Agreement are both unique and special, and the parties contemplate that enforcement of this Agreement may be had by recourse to the equitable remedies available in courts of competent jurisdiction in addition to any other remedies which may be or may become available at law.
 

	
            19.
 	
            Binding Effect. This Agreement and the obligations of the respective parties hereunder shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. In furtherance of, and not in limitation of, the foregoing, Company agrees that the provisions of this Agreement shall be binding upon any successor to the business and assets of Company and the provisions of this Agreement for the benefit of Employee shall inure to the benefit of Employee’s estate in the event of Employee’s death, including all benefits and payments due hereunder.
 

 

4

The parties have duly executed this Agreement as of the date set forth above.

 

	
             
 	
             
 	
            SELECT COMFORT CORPORATION
 
	
              
 	
             
 	
            By: 
 	
            
 /s/  Mark A. Kimball
 
	
             
 	
             
 	
            
 Its:
 	
            
 SVP & General Counsel
 

 

 

 

	
             
 	
             
 	
            KEITH C. SPURGEON
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
            /s/  Keith C. Spurgeon
 

 

 

5

EXHIBIT A TO SEPARATION AGREEMENT

(To be executed and delivered only on or after Employee’s last date of employment)

 

RELEASE

The undersigned, Keith C. Spurgeon (“Employee”) understands that, pursuant to the terms of the Separation Agreement between Employee and Select Comfort Corporation (“Company”) dated as of ____________, 2007, Employee is receiving substantial compensation that Employee would not otherwise be entitled to receive in the absence of the Separation Agreement and the execution, delivery and effectiveness of this Release, and Employee agrees that such compensation is sufficient consideration for all aspects of the Separation Agreement and this Release. In return for this compensation, Employee, on behalf of himself and his heirs, executors, administrators, agents, attorneys, successors, assigns, and representatives, hereby releases Company and all of its officers, agents, directors, employees, and representatives, both individually and in any representative capacity, all of
Company’s parent, subsidiary and affiliated companies, businesses and entities, and all other persons and entities, from each and every legal claim or demand of any kind that Employee ever had or might now have, arising out of any action, conduct or decision relating to Employee’s employment with Company or Employee’s separation from employment with Company, whether or not any such claim is known to Employee at the present time.

 

Employee fully understands that the claims Employee is releasing include, but are not limited to, all claims under Title VII of the Civil Rights Act of 1964, the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, the Fair Labor Standards Act, the National Labor Relations Act, the Older Workers Benefit Protection Act, the Equal Pay Act, the Worker Adjustment and Retraining Notification Act, any applicable state non-discrimination laws, and any other local, state, or federal laws, rules, regulations or executive orders relating to discrimination in the workplace. Employee also understands that Employee is releasing any claims Employee may have for payment of compensation of any kind, fraud or misrepresentation, breach of contract (including, but not limited to, any employment agreement),
promissory estoppel, wrongful or constructive discharge, defamation, invasion of privacy, breach of the covenant of good faith and fair dealing, reprisal or retaliation, unjust enrichment, negligent hiring, supervision or retention, intentional or negligent infliction of emotional distress, assault or battery, violation of whistleblower protection laws, violation of public policy, and any other claims arising under the common law of any state.

 

This Agreement does not release any rights or claims under the Minnesota Human Rights Act, the Age Discrimination in Employment Act or any of Company’s benefits plans that arise after Employee signs this Agreement or that arise from acts occurring after Employee signs this Agreement.

Further, nothing in this Agreement shall waive or release Employee’s right, where applicable, to file or participate in an investigative proceeding of any federal, state or local government agency. If, however, any claim released in this Release is prosecuted in Employee’s name before any government agency, Employee will waive any benefits Employee may obtain through such prosecution and agree not to accept an award of money or other damages from the claim.

 

1

Rights to Rescind or Revoke

Employee understands that Employee has the right to rescind or revoke this Release by giving written notice of such rescission or revocation to Company within fifteen (15) calendar days following Employee’s execution and delivery of this Release. Any such notice of rescission or revocation must be in writing and hand-delivered to Company or, if sent by mail, postmarked within the applicable time period, sent by certified mail, return receipt requested, and addressed as follows:  Select Comfort Corporation, 6105 Trenton Lane North, Minneapolis, MN 55442,  Attn.:  General Counsel.

Employee agrees that if Employee exercises any right of rescission or revocation, Company may at its option nullify the Separation Agreement in its entirety. In the event Company opts to nullify the entire Separation Agreement, neither Employee nor Company will have any rights or obligations whatsoever under the Separation Agreement or this Release.

Employee has read this Release carefully and understands all its terms. Employee has reviewed this Release with his own attorney or has knowingly and voluntarily chosen not to do so. In agreeing to sign this Release, Employee has not relied on any statements or explanations made by Company or its counsel.

Employee understands and agrees that this Release, the Separation Agreement pursuant to which it is given, and the Employee Inventions, Confidentiality and Non-Compete Agreement dated as of February 22, 2002 referred to in the Separation Agreement, contain all the agreements between Employee and Company. We have no other written or oral agreements.

 

	
            Dated:
 	
              
 	
            , 2007
 	
             
 	
              
 
	
             
 	
             
 	
             
 	
             
 	
            Keith C. Spurgeon
 
	
             
 	
             
 	
             
 	
             
 	
             
 
	
            Subscribed and sworn to before me 

this ______ day of ________, 2007.
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 
	
            Notary Public
 	
             
 	
             
 

 

 

 

2

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