Exhibit 10.27 to Select Comfort Corp. Form 10-K for the Fiscal Year Ended January 3, 2009









Exhibit 10.27


SEPARATION AGREEMENT AND RELEASE


[To be signed after Employee’s last day of
employment]


          This
Separation Agreement and Release (“Agreement”) is entered into between Cathy
Hall (“Employee”), and Select Comfort Corporation, along with its subsidiaries,
successors, assigns, affiliates, parent and predecessor companies, and its
present owners, directors, officers, employees and stockholders (the
“Company”).


RECITALS


          A.          
Employee’s employment with the Company terminated effective October 10, 2008
(the “Separation Date”).


          B.          
The parties wish to enter into this Agreement to fully and finally resolve all
matters between them as set forth herein.


AGREEMENT


          
In consideration of the above recitals and the promises set forth in this
Agreement, the parties agree as follows:


	
 

	
 


	
 

	
          1.       
 Employee’s Claims. “Employee’s Claims” means all rights to be paid or
 given anything by the Company, including overtime pay, Paid Time Off, expense
 reimbursements, back pay, front pay, reinstatement, compensatory damages,
 liquidated damages, punitive damages, attorneys’ fees, costs, or interest,
 based on any claims related to Employee’s employment with the Company or the
 termination of that employment, for:








	
 

	
 

	
 


	
 

	
 

	
          a.          
 alleged wrongful discharge, breach of contract, breach of a covenant of good
 faith and fair dealing, fraud or misrepresentation, defamation, infliction of
 emotional distress, assault, battery, invasion of privacy, interference with
 contractual or business relationships, violation of any the Company policy or
 practice, and any other claims arising under the common law of any state; or


	
 

	
 

	
 


	
 

	
 

	
          b.          
 alleged unlawful discrimination, harassment, or retaliation, or other alleged
 unlawful practices arising under any federal, state, or local statute,
 ordinance, or regulation including, without limitation, claims under Title
 VII of the Civil Rights Act of 1964 (“Title VII”), the Americans with
 Disabilities Act (“ADA”), the Age Discrimination in Employment Act (“ADEA”),
 the Minnesota Human Rights Act (“MHRA”), 42 U.S.C. § 1981 (“Section 1981”),
 Minn. Stat. § 181.81, the South Carolina Human Affairs Law, the Utah
 Antidiscrimination Act, the Employee Retirement Income Security Act
 (“ERISA”), the Family and Medical Leave Act (“FMLA”), the Equal Pay Act, the
 Worker Adjustment and Retraining Notification Act (“WARN”), the Fair Credit
 Reporting Act, the Fair Labor Standards Act, the National Labor Relations
 Act, the Older Workers 





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Benefit
 Protection Act (“OWBPA”), whistleblower protection laws, and workers’
 compensation non-interference or non-retaliation statutes such as Minn. Stat.
 § 176.82.


	
 

	
 

	
 


	
 

	
          2.       
 Severance Benefits. As a result of Employee’s separation from
 employment and in exchange for signing this Agreement and releasing
 Employee’s Claims, Employee will receive the following Severance Benefits
 from the Company:


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
          a.          
 Separation Pay. The Company will pay Employee a total of Three Hundred
 Fifty-six Thousand Six Hundred Forty-six Dollars ($356,646.00) which is
 approximately one times employee’s base salary as of the Separation Date,
 plus one times employee’s 2008 target bonus, plus a pro rata portion of
 employee’s 2008 target bonus less relocation incentive repayment (as agreed
 to per attached relocation addendum). The Separation Pay will be paid to
 Employee in a lump sum on the first regular payroll date after expiration of
 the Rescission Period, which is defined below. Separation payments made under
 this Agreement shall be treated as taxable income, and subject to
 withholdings to the extent required by law.


	
 

	
 

	
 


	
 

	
 

	
          b.          
 Benefits Continuation. Except as otherwise provided below, for twelve
 (12) months following the Separation Date, if Employee elects to continue
 coverage under the Company’s group medical or dental plan for Employee and
 Employee’s dependents under COBRA, and if Employee timely executes all
 documents necessary to make such election, the Company will reimburse
 Employee an amount equal to the difference between the amount Employee pays
 for such continued coverage each week and the amount paid by an active,
 full-time employee in each such week for the same level of coverage elected
 by Employee. The Company’s obligations under this paragraph shall immediately
 cease, however, on (i) the date on which Employee’s eligibility for COBRA
 continuation coverage ends or (ii) the date on which Employee becomes
 eligible to participate in another group
 medical plan, due to 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 the Employee’s coverage under such plan). Further, the Company’s
 obligations under this paragraph are subject to Employee providing, to the
 satisfaction of the Company, proof of COBRA election and proof of payment of
 premiums by Employee.


	
 

	
 

	
 


	
 

	
 

	
          c.          
 Outplacement Assistance. The Company will assist Employee in
 Employee’s career transition by paying for up to twelve (12) months of
 outplacement services from a consultant to be selected by the Company. Such
 payments will be made directly to the consultant by the Company.


	
 

	
 

	
 


	
 

	
          Employee
 agrees that the benefits described above constitute sufficient compensation
 for all of Employee’s promises contained in this Agreement, including





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Employee’s
 Release of Claims set forth below. Employee understands that Employee will
 not receive any of the Severance Benefits described above if Employee
 exercises the right of rescission described below. 


	
 

	
 

	
 


	
 

	
          3.       
 Release of Employee’s Claims. Employee agrees that the Severance
 Benefits Employee will receive are in addition to anything of value that
 Employee would be entitled to receive from the Company if Employee did not
 sign this Agreement. In exchange for the Severance Benefits, and by signing
 this Agreement, Employee agrees to waive all of Employee’s Claims. Employee
 will not bring any lawsuits against the Company, or make any demands against
 the Company for compensation or damages, based on Employee’s Claims. The
 Severance Benefits Employee is receiving in exchange for signing this
 Agreement are fair payment for the release of Employee’s Claims. However,
 Employee’s release does not include, and Employee is not waiving, any Claims
 that the law does not allow to be waived, or any claims that may arise after
 the date on which Employee signs this Agreement.


	
 

	
 

	
 


	
 

	
          Employee’s
 release does not limit Employee’s right to file a charge under Title VII,
 ADEA, ADA, Section 1981 or any other civil rights statute, regulation, or
 ordinance, or Employee’s right to participate in an investigation or
 proceeding conducted by the EEOC or other Federal, state or local
 anti-discrimination agency. However, Employee agrees that if Employee signs
 this Agreement and such a charge or a lawsuit is brought in Employee’s name
 before any such government agency, Employee will not be able to recover money
 or other damages for any of Employee’s Claims.


	
 

	
 

	
 


	
 

	
          4.       
 Paid Time Off. Regardless of whether Employee signs this Agreement,
 the Company will pay Employee for all Paid Time Off (“PTO”) that Employee has
 earned but not used as of the Separation Date. 


	
 

	
 

	
 


	
 

	
          5.       
 No Other Benefits. Employee understands that except for those items of
 compensation and benefits specifically described in this Agreement, after the
 Separation Date, Employee shall receive no other benefits and shall no longer
 participate in any of the Company’s benefit plans, except as required under
 state and federal benefit continuation laws. All of Employee’s rights under
 such plans shall be governed by the terms of such plans.


	
 

	
 

	
 


	
 

	
          6.       
 Restrictions.


	
 

	
 

	
 


	
 

	
 

	
          a.          
 Confidentiality. Employee agrees that this Agreement and all of its
 terms shall remain completely confidential, and that Employee will not share
 them with anyone, either before or after Employee signs this Agreement,
 except that Employee may reveal the terms of this Agreement to Employee’s
 accountants or other financial advisors, legal counsel, and spouse or
 domestic partner, if these individuals agree to be bound by the terms of this
 provision, to appropriate governmental agencies, and as required by law.





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          b.          
 Nondisparagement. Employee agrees that Employee will not, directly or
 indirectly, at any time, make any defaming or disparaging remark, either oral
 or in writing, regarding the Company, its products or services, or any of its
 employees, officers, directors, affiliates or agents, either individually or
 in any representative capacity. Employee further agrees not to foment,
 encourage, incite or assist any claims, complaints or protests of any kind by
 any third party against the Company or any of its employees, officers,
 directors, affiliates or agents. In the event that Employee receives a
 subpoena from a party other than the Company, Employee shall promptly notify
 the Company and provide it with a copy of the subpoena so that the Company
 has an opportunity to seek to quash or otherwise respond to the subpoena. 


	
 

	
 

	
 


	
 

	
 

	
          c.          
 Damages for Violation of Confidentiality and Nondisparagement Provisions.
 Employee acknowledges and agrees that the Confidentiality and Nondisparagement
 provisions of this Agreement are significant inducements for the Company to
 enter into this Agreement, and that any violation of either of these
 provisions by Employee would irreparably harm the Company in ways that cannot
 be measured. In the event of any such violation, the Company shall be
 entitled to bring a legal action for appropriate equitable relief as well as
 damages, including recovery of its reasonable attorneys’ fees and costs from
 Employee.


	
 

	
 

	
 


	
 

	
 

	
          d.          
 Cooperation in Transition. Employee agrees to continue to devote
 Employee’s best efforts to the performance of Employee’s duties and to assist
 the Company in transitioning Employee’s work to other employees. If the
 Company believes, it its discretion, that Employee is not complying with this
 paragraph, the Company has the right to revoke the offer set forth
 in this Agreement and Employee will not be entitled to the Severance
 Benefits.


	
 

	
 

	
 


	
 

	
          7.       
 Opportunity to Consider and Seek Advice. Employee has been advised by
 the Company to consult with an attorney prior to signing this Agreement.
 Employee further understands that Employee has twenty-one (21) days from the
 date on which Employee receives this Agreement, not counting the day on which
 Employee receives it, to consider whether or not to sign it (“Consideration
 Period”). Employee may sign this Agreement earlier if Employee wishes;
 provided, however, that Employee may not sign this Agreement prior to the
 Separation Date. Employee agrees that if Employee signs this Agreement before
 the end of the Consideration Period, it will be Employee’s voluntary decision
 to do so because Employee decided Employee did not need additional time to
 decide whether to sign this Agreement.


	
 

	
 

	
 


	
 

	
          8.       
 Opportunity to Rescind. Employee understands that he may rescind or
 cancel this Agreement within fifteen (15) days after the date on which he
 signs it, not counting the day upon which he signs it (“Rescission Period”).
 This Agreement will not become effective or enforceable unless and until the
 15-day Rescission Period has expired without Employee revoking the Agreement.





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          9.       
 Procedure for Accepting or Revoking the Agreement. To accept the terms
 of this Agreement, Employee must deliver it, after signing and dating it, to
 the Company by hand or by mail within the Consideration Period. To rescind
 the release of Employee’s Claims, Employee must deliver a written, signed
 statement that Employee revokes or cancels Employee’s acceptance to the
 Company by hand or by mail within the 15-day Rescission Period. All
 deliveries must be made to the Company at the following address:





Lisa Eull

Director, Benefits

Select Comfort Corporation

9800 59th Avenue North

Minneapolis, MN 55442


	
 

	
 

	
 


	
 

	
          If
 Employee chooses to deliver Employee’s acceptance of this Agreement or
 rescission of the release of Employee’s Claims by mail, it must be:








	
 

	
 

	
 

	
 


	
 

	
 

	
a. 

	
postmarked
 within the period stated above;


	
 

	
 

	
 

	
 


	
 

	
 

	
b. 

	
properly
 addressed to the Company at the address stated above; and


	
 

	
 

	
 

	
 


	
 

	
 

	
c. 

	
sent by
 certified mail.








	
 

	
 

	
 


	
 

	
          10.       
 Return of Property. Employee certifies that Employee has returned the
 originals and all copies of all Company files, documents, software, hardware,
 keys, credit cards, office equipment, and all other property of the Company
 in Employee’s possession or under Employee’s control. If Employee finds any
 Company property after Employee signs this Agreement, Employee agrees to
 return the property to the Company promptly.


	
 

	
 

	
 


	
 

	
          11.       
 Non-Admission. The Company denies that it has violated any legal
 obligation or engaged in any wrongdoing, and nothing in this Agreement is
 intended to be, nor will be deemed to be, an admission of liability by the
 Company or a waiver of any defense.


	
 

	
 

	
 


	
 

	
          12.       
 Entire Agreement. Except for the Employee Inventions, Confidentiality
 and Non-compete Agreement signed on November 1, 2007 (copy enclosed), this
 Agreement contains the entire agreement between the parties and replaces any
 and all oral and written agreements and communications between the parties
 regarding the subject matter addressed in this Agreement. Employee
 acknowledges that Employee has not relied upon any representation or
 statement made by the Company or by any of the Company’s agents, attorneys or
 representatives with regard to the subject matter, scope or effect of this
 Agreement or otherwise, other than those specifically stated in this
 Agreement.


	
 

	
 

	
 


	
 

	
          13.       
 Invalidity. In case any one or more of the provisions of this
 Agreement is held to be invalid, illegal or unenforceable in any respect, the
 validity, legality and 





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enforceability
 of the remaining provisions of this Agreement will not in any way be affected
 or impaired.


	
 

	
 

	
 


	
 

	
          14.       
 Voluntary and Knowing Action. Employee acknowledges that Employee has
 had the opportunity to consult with counsel of Employee’s choosing, has read
 and understood the terms of this Agreement, and is voluntarily entering into
 this Agreement to resolve all of Employee’s Claims.


	
 

	
 

	
 


	
 

	
          15.       
 Governing Law. Employee understands that Minnesota law governs this
 Agreement. Employee agrees that any dispute relating to this Agreement will
 be subject to the jurisdiction of the state and federal courts located within
 the State of Minnesota, Hennepin County, and that venue there is proper.


	
 

	
 

	
 


	
 

	
          16.       
 Binding and Enforceable Agreement. The Parties acknowledge that they
 have entered into this Agreement intending it to be legally binding and
 enforceable.








	
 

	
 

	
 

	
 


	
Dated:
 October 22, 2008

	
 

	
          /s/
 Cathy Hall

	
 


	
 

	
 

	
                    Cathy
 Hall

	
 


	
 

	
 

	
 

	
 


	
Dated:
 October 24, 2008

	
 

	
SELECT COMFORT CORPORATION

	
 








	
 

	
 

	
 

	
 


	
 

	
 

	
/s/ Scott
 Peterson

	
 


	
 

	
By:

	
Scott
 Peterson

	
 


	
 

	
Its:

	
Senior Vice
 President, Human Resources

	
 





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