Document:

Exhibit 10.68

    Exhibit
      10.68

    

    

    RESOLVED,
      that
      the Board of Directors hereby approves the plans, as presented at this meeting,
      to toll the time periods for meeting stock ownership requirements and earning
      premium shares under the Executive Stock Ownership Program until such time
      as
      the trading blackout imposed on the participants under the Company’s insider
      trading policy is lifted.

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    E-1Exhibit 10.1 Executive Severance Plan

    

     

     

     

     

     

     

     

     

     

     

     

    SELECT
      COMFORT CORPORATION

     

    EXECUTIVE
      SEVERANCE PAY PLAN

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

     

     

     

     

     

    

     

     

     

     

     

     

     

    February
      2007

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    SELECT
      COMFORT CORPORATION

    EXECUTIVE
      SEVERANCE PAY PLAN

     

    TABLE
      OF CONTENTS

     

    
      
        	 ARTICLE
                1 	 Name
                and Purpose 	 1
	 	 	 
	 ARTICLE
                2	 Definitions 	
                 2    

              
	     2.1	 Administrator           	 2
	     2.2	 Affiliate	 2
	     2.3	 Base
                Pay	 2
	     2.4	 Cause	 2
	     2.5	 Change
                in Control	 2
	     2.6	 Code	 3
	     2.7	 Company	 3
	     2.8	 Employee	 3
	     2.9	 Excluded
                Employee	 3
	     2.10	 Participant	 3
	     2.11	 Participating
                Employer	 4
	     2.12	 Plan	 4
	     2.13	 Premium
                Reimbursement Period	 4
	     2.14	 Qualified
                Employee	 4
	     2.15	 Qualified
                Employee Category	 4
	     2.16	 Release	 4
	     2.17	 Severance
                Pay	 4
	 	 	 
	 ARTICLE
                3	 Entitlement
                to Severance Pay 	 5
	     3.1	 Eligible
                Terminations	 5
	     3.2    	 Terminations
                Not Covered	 5
	     3.3	 Release
                Required	 5
	     3.4	 Return
                of Property	 5
	 	 	 
	 ARTICLE
                4	 Amount
                of Severance Pay 	 6
	     4.1	 Base
                Amount	 6
	     4.2	 COBRA
                Reimbursement	 7
	     4.3    	 Reductions	 7
	     4.4    	 Period
                of Payment	 8
	     4.5	 Termination
                of Severance Pay	 8
	     4.6	 Death
                of Participant	 8
	 	 	 
	 ARTICLE
                5	 Administration	 9
	     5.1    	 Administrator	 9
	     5.2	 Administrator's
                Discretion	 9
	 	 	 
	 ARTICLE
                6	 Amendment
                and Termination of Plan 	 10
	     6.1	 Right
                to Amend or Terminate the Plan	 10
	     6.2	 Change
                in Control	 10

      

       

       

       

       

       

       

       

       

      
        
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	 ARTICLE
                7	 Miscellaneous
                Provisions 	 11
	     7.1	 Participation
                by Affiliate	 11
	     7.2	 No
                Benefit Accrues	 11
	     7.3	 Indemnification	 11
	     7.4	 Specialist's
                Assistance	 11
	     7.5	 Benefits
                Claim Procedure	 11
	     7.6	 Disputes	 12
	     7.7	 Company
                Action	 12
	     7.8	 Status
                of Plan	 12
	     7.9	 No
                Assignment of Benefits	 12
	     7.10	 Withholding
                and Offsets	 13
	     7.11	 Other
                Benefits	 13
	     7.12	 No
                Employment Rights Created	 13
	     7.13	 Successors	 13

      

    

     

     

     

     

     

     

     

     

     

     

     

     

    

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
          
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    SELECT
      COMFORT CORPORATION

    EXECUTIVE
      SEVERANCE PAY PLAN

     

    This
      instrument sets forth the Select Comfort Corporation Executive Severance Pay
      Plan, effective as of February 22, 2007. The provisions of this instrument
      will
      apply to any Qualified Employee who terminates employment after February 22,
      2007.

     

    ARTICLE
      1

    Name
      and Purpose

     

    The
      name
      of this Plan is the “Select Comfort Corporation Executive Severance Pay Plan.”
Its purpose is to provide severance benefits to certain Qualified Employees
      whose employment is involuntarily terminated without Cause. Severance Pay is
      in
      addition to regular earned pay and benefits for accrued paid time off, if any,
      payable to Qualified Employees upon separation.

     

    As
      stated
      in Section 4.4, it is not
      intended
      that this Plan be treated as a nonqualified deferred compensation plan subject
      to Code section 409A. 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
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    ARTICLE
      2

    Definitions

     

    The
      terms
      listed in this section shall have the meanings given below.

     

    2.1  Administrator.
      The
      Administrator is the person designated under the Plan to perform administrative
      duties on behalf of the Company or, as the context may require, the individual
      to whom specific administrative duties have been delegated.

     

    2.2  Affiliate.
      An
      Affiliate is the Company or another member of a controlled group of
      corporations, within the meaning of Code section 1563(a) without regard to
      Code
      section 1563(a)(4), that includes the Company, any trade or business that is
      under common control with the Company, within the meaning of Code section
      414(c), any member of an “affiliated service group,” within the meaning of Code
      section 414(m), of which the Company is a member, or any other organization
      that, together with the Company, is treated as a single employer pursuant to
      Code section 414(o) and Treasury Regulations.

     

    2.3  Base
      Pay.

     

    (A)  Base
      Pay
      means the Employee’s base salary in effect immediately prior to his or her
      termination of employment and will exclude any commissions, incentive pay,
      bonus
      or other addition to pay.

     

    (B)  Base
      Pay
      includes any amounts by which pay is voluntarily reduced under a Code section
      125 cafeteria plan, section 401(k) cash or deferred arrangement or the Select
      Comfort Executive Investment Plan.

     

    2.4  Cause. 
      Cause means any reason for which an Employee may be subject to discipline under
      the Company’s or Affiliate’s policies, practices and procedures including, but
      not limited to, the following: 

     

    (A)  dishonesty,
      fraud, misrepresentation, embezzlement or deliberate injury or attempted injury,
      in each case related to the Company or any Affiliate, 

     

    (B)  commission
      of a felony crime, or commission of any criminal or unlawful activity of any
      nature or degree in the course of or in relation to Employee's employment,
      

     

    (C)  failure
      to satisfactorily perform the duties of the Employee's employment, if the
      failure to perform would merit termination under the Company's or Affiliate's
      usual policy or practice, 

     

    (D)  any
      material breach of any employment, service, confidentiality or non-compete
      agreement entered into with the Company or any Affiliate, or 

     

    (E)  violation
      of the Company's Code of Business Conduct. 

     

    2.5  Change
      in Control.  A
      "Change
      in Control" of the Company shall mean: 

     

    (A)  the
      sale,
      lease, exchange or other transfer of all or substantially all of the assets
      of
      the Company (in one transaction or in a series of related transactions) to
      a
      corporation that is not controlled by the Company, 

     

    (B)  the
      approval by the shareholders of the Company of any plan or proposal for the
      liquidation or dissolution of the Company, or 

     

     

     

     

     

     

    
      
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    (C)  a
      change
      in control of a nature that would be required to be reported (assuming such
      event has not been “previously reported”) in response to Item 1(a) of the
      Current Report on Form 8-K, as in effect on the effective date of the Select
      Comfort Corporation 2004 Stock Incentive Plan, pursuant to Section 13 or 15(d)
      of the Exchange Act, whether or not the Company is then subject to such
      reporting requirement; 

     

    (D)  provided
      that, without limitation, such a Change in Control shall be deemed to have
      occurred at such time as - 

     

    (1)  any
      Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the
      Exchange Act) directly or indirectly, of 50% or more of the combined voting
      power of the Company’s outstanding securities ordinarily having the right to
      vote at elections of directors or

     

    (2)  individuals
      who constitute the Board of Directors on the effective date of the Select
      Comfort Corporation 2004 Stock Incentive Plan cease for any reason to constitute
      at least a majority thereof, provided that any person becoming a director
      subsequent to the effective date of the Select Comfort Corporation 2004 Stock
      Incentive Plan whose election, or nomination for election by the Company’s
      shareholders, was approved by a vote of at least a majority of the directors
      comprising the Board of Directors on the effective date of the Select Comfort
      Corporation 2004 Stock Incentive Plan (either by a specific vote or by approval
      of the proxy statement of the Company in which such person is named as a nominee
      for director, without objection to such nomination) shall be, for purposes
      of
      this clause (2), considered as though such person were a member of the Board
      of
      Directors on the effective date of the Select Comfort Corporation 2004 Stock
      Incentive Plan.

     

    2.6  Code. 
      Code
      means the Internal Revenue Code of 1986, as amended. Any reference to a specific
      provision of the Code includes any amendment of or successor to that
      provision.

     

    2.7  Company. 
      The Company is Select Comfort Corporation or its successor.

     

    2.8  Employee. 
An
      Employee is any individual who performs services for a Participating Employer
      as
      a common-law
      employee of the Participating Employer. No reclassification of an individual
      as
      a common-law employee of a Participating Employer will be given retroactive
      effect for any purpose under this Plan.

     

    2.9  Excluded
      Employee.  An
      “Excluded Employee” is an Employee who:

     

    (A)  resides
      in the United States but is not a United States citizen, unless he or she is
      classified as a permanent resident of the United States; 

     

    (B)  is
      classified by the Participating Employer as a part-time Employee;

     

    (C)  is
      classified by the Participating Employer as a temporary Employee;
      or

     

    (D)  is
      covered by a collective bargaining agreement that does not specifically provide
      for participation in this Plan.

     

    2.10  Participant. 
A
      Participant is a former Qualified Employee who is entitled to Severance Pay
      benefits under this Plan.

     

     

     

     

     

     

     

     

     

     

     

     

    
      
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    2.11  Participating
      Employer. 
A
      Participating Employer is the Company and any other U.S. Affiliate that has
      adopted
      the Plan, or all of them collectively, as the context requires, and their
      respective successors. An Affiliate will cease to be a Participating Employer
      upon a termination of the Plan as to its Employees or upon its ceasing to be
      an
      Affiliate. The Participating Employer with respect to any individual
is
      the
      Affiliate that is responsible for paying the individual’s wages or
      salary.

     

    2.12  Plan. 
      The
      Plan
      is the Select Comfort Corporation Executive Severance Pay Plan set forth in
      this
      instrument as it may be amended from time to time.

     

    2.13  Premium
      Reimbursement Period. 
      The Premium Reimbursement Period is the period of time during which the
      Participant is entitled to receive cash reimbursement payments for COBRA
      continuation coverage, as described in Section 4.2.

     

    2.14  Qualified
      Employee. 
A
      “Qualified
      Employee” is an Employee who -

     

    (A)  is
      paid
      under a U.S. domestic payroll of the Participating Employer;

     

    (B)  is
      classified by the Participating Employer in Qualified
      Employee Category
      grade
      15, grade 14 or grade 13; and

     

    (C)  is
      not an
      Excluded Employee.

     

    2.15  Qualified
      Employee Category. 
A
      “Qualified Employee Category” is the employment grade or classification of a
      Qualified Employee as determined by the Participating Employer in its sole
      discretion.

     

    2.16  Release. 
A
      Release is a written instrument, prescribed by the Administrator and signed
      by
      the Qualified Employee, under which the Qualified Employee releases all
      Affiliates, and the directors, officers and employees of each of them, all
      employee benefit plans and all employee benefit plan fiduciaries from any and
      all claims the Qualified Employee may have against any of them. The Release
      will
      waive all claims the Qualified Employee may have under the Age Discrimination
      in
      Employment Act, the Older Workers Benefit Protection Act, the Americans with
      Disabilities Act, the Employee Retirement Income Security Act of 1974 (other
      than benefits payable following termination of employment), and such other
      statutes and rules of law as the Company may deem advisable.

     

    2.17  Severance
      Pay. 
      Severance Pay is an amount payable under the terms of this Plan.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
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    ARTICLE
      3  

    Entitlement
      to Severance Pay

     

    3.1  Eligible
      Terminations.  Severance
      Pay will be paid, subject to the succeeding provisions of this Plan, only to
      a
      Qualified Employee whose employment is involuntarily terminated by a
      Participating Employer.

     

    3.2  Terminations
      Not Covered.  No
      Severance Pay will be paid to any person upon commencement of a leave of
      absence, including military service leave, or to any person whose employment
      is
      terminated by:

     

    (A)  his
      or
      her resignation, retirement or death;

     

    (B)  discharge
      for Cause;

     

    (C)  failure
      to be reinstated following a leave of absence; or

     

    (D)  refusal
      to accept a new job position with an Affiliate, a transfer to a new work
      location or a reduction in wages or salary; provided that a refusal to accept
      a
      job change that would entail (1) a reduction of 10% or more in the Qualified
      Employee’s combined base compensation plus target bonus, other than in
      conjunction with a general compensation reduction program or (2) an increase
      in
      the commuting distance from the Qualified Employee’s current principal residence
      to his or her job location of more than 50 miles or (3) a required relocation
      of
      the Qualified Employee’s principal residence will be deemed to be an involuntary
      termination not excluded from Severance Pay.

     

    3.3  Release
      Required.  No
      Severance Pay will be paid to an individual who fails to execute a Release
      in
      the form provided by the Company and deliver it to the Administrator within
      the
      period prescribed by the Administrator or who revokes his or her
      Release.

     

    3.4  Return
      of Property.  No
      Severance Pay will be paid to a Participant prior to the date on which the
      Participant returns to his or her employer all property of the Company and
      any
      Affiliate he or she has in his or her possession or control including, but
      not
      limited to, employee identification cards, credit cards, phone cards, vehicles,
      equipment, documents and electronic storage media.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
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    ARTICLE
      4  

    Amount
      of Severance Pay

     

    4.1  Base
      Amount.  Subject
      to the succeeding provisions of this section, a Participant in each Qualified
      Employee Category will
      receive a cash base amount of Severance Pay determined from the following
      table.

     

    
      	
              Qualified
                Employee Category

            	
              Base
                Amount - Severance Pay 

            
	
              Grade
                15

            	
              An
                amount equal to: 

               

              (a)
                two times - 

               

              (i)  annual
                Base Pay (in effect as of the date of termination of employment)
                and

               

              (ii)  target
                annual bonus (in effect as of the date of termination of
                employment)

               

              plus
                

               

              (b)
                pro-rata target bonus for year of termination of employment
                

            
	
              Grade
                14

            	
              An
                amount equal to: 

               

              (a)
                one times - 

               

              (i)
                annual Base Pay (in effect as of the date of termination of employment)
                and

               

              (ii) target
                annual bonus (in effect as of the date of termination of
                employment)

               

              plus
                

               

              (b)
                pro-rata target bonus for year of termination of
                employment

            
	
              Grade
                13

            	
              An
                amount equal to: 

               

              (a)
                fifty percent of - 

               

              (i)  annual
                Base Pay (in effect as of the date of termination of employment)
                and

               

              (ii)  target
                annual bonus (in effect as of the date of termination of
                employment)

               

              plus
                

               

              (b)
                pro-rata target bonus for year of termination of
                employment

            

    

     

    

    
      
        
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    4.2  COBRA
      Reimbursement.
      Subject
      to the succeeding provisions of this section, if the Participant timely elects
      continued coverage under the Participating Employer’s group medical plan 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 the Administrator, for the Premium Reimbursement Period
      the Participating Employer will reimburse the Participant each month during
      the
      Premium Reimbursement Period an amount equal to the difference between the
      amount the Participant pays for such COBRA continuation coverage each such
      month
      and the amount paid by a full-time active employee of the Participating Employer
      each such month for the same level of coverage elected by the Participant.
      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)  the
      last
      date of the Premium Reimbursement Period that applies to the Participant based
      on his or her Qualified Employee Category in the table below;

     

    (B)  the
      date
      on which the Participant’s eligibility for COBRA continuation coverage under the
      Company’s group medical or group dental plan ends; or 

     

    (C)  the
      date
      on which the Participant 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 the Participant 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 Participant’s coverage under
      such plan). 

     

    Other
      than the Premium Reimbursement Period payments described in this Section 4.2,
      the Participant’s coverage under any Employer employee benefit plan is subject
      to the terms of such employee benefit plan and applicable law. 

     

    
      	
              Qualified
                Employee Category

            	
              Premium
                Reimbursement Period 

            
	
              Grade
                15

               

            	
              Two
                Years after the date of termination of employment 

            
	
              Grade
                14

               

            	
              One
                Year after the date of termination of employment

            
	
              Grade
                13

               

            	
              Six
                months after the date of termination of
                employment

            

    

    

     

    4.3  Reductions.
      Notwithstanding
      the foregoing provisions, the total amount of Severance Pay (base amount and
      COBRA reimbursements) to which a Participant would otherwise be entitled under
      this Plan will be reduced by each of the following:

     

    (A)  the
      full
      amount of any payments the Company or any Affiliate is required to make to
      the
      Participant under any provision of law on account of the termination of his
      or
      her employment including, but not limited to, any payments owed to the
      Participant under any individual severance, separation or employment agreement
      or pursuant to the Worker Adjustment and Retraining Notification Act, 21 U.S.C.
      §2101 et
      seq.
      (or a
      similar law of any state);

     

    (B)  the
      full
      amount of any indebtedness of the Participant to the Company or any Affiliate
      including, but not limited to, unearned advances, credit card balances and
      paid
      time off in excess of time accrued; and 

     

     

     

     

     

     

     

     

    
      
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    (C)  with
      respect to any Participant who terminated employment with the Company or an
      Affiliate and is rehired by the Company or an Affiliate, the full amount of
      Severance Pay paid to the Participant under this Plan or any individual
      severance, separation or employment agreement or pursuant to the Worker
      Adjustment and Retraining Notification Act, 21 U.S.C. §2101 et
      seq.
      (or a
      similar law of any state) within the two year period following such previous
      termination of employment. 

     

    4.4  Period
      of Payment. 

     

    (A)  The
      base
      amount of Severance Pay benefits pursuant to Section 4.1 will be paid in a
      single lump sum within a reasonable time following the Participant’s termination
      of employment and in no event later than March 1st of the calendar year
      following the calendar year during which such termination of employment occurs.
      These benefits are intended to comply with the short-term deferral exception
      to
      Code section 409A (as described in Proposed Treasury Regulations section
      1.409A-1(b)(4)) because such benefits will be paid not later than March 15th
      of
      the calendar year following the calendar year in which the employee’s right to
      the benefits is no longer subject to a substantial risk of forfeiture within
      the
      meaning of Code section 409A.

     

    (B)  The
      COBRA
      reimbursement benefits pursuant to Section 4.2 will be paid in cash within
      a
      reasonable time following the Participant’s monthly payment of the COBRA
      premium. These benefits are intended to comply with the exception to Code
      section 409A for reimbursement of medical expenses under a separation pay plan
      (as described in Proposed Treasury Regulations section 1.409A-1(b)(9)(iv))
      because such COBRA reimbursement benefits will be paid no later than December
      31st of the second calendar year following the calendar year during which the
      Participant’s termination of employment occurred.

     

    4.5  Termination
      of Severance Pay.
      A
      Participant’s right to receive Severance Pay will terminate before the last
      scheduled payment upon the occurrence of any of the following
      events.

     

    (A)  The
      Participant becomes employed by the Company or any Affiliate.

     

    (B)  The
      Participant’s Release is declared invalid or the Participant revokes (or
      attempts to revoke) the Release or commences or is part of a legal or
      administrative action against the Company, any of its Affiliates, or the
      directors, officers or employees of any of them that is based on any claim
      waived under the Release. Upon the occurrence of any such event, the Participant
      shall, upon demand of the Administrator, repay to the Employer the full amount
      of Severance Pay he or she received, to the extent such amount would not have
      been payable under this Plan if the Participant had not executed the
      Release.

     

    (C)  The
      office of the Company’s general counsel informs the Administrator that the
      Participant is in violation of a non-compete or confidentiality agreement with
      the Company or any Affiliate.

     

    4.6  Death
      of Participant. If
      a
      Participant dies prior to receiving all of the Severance Pay to which he or
      she
      is entitled, any remaining payments will be made to the Participant’s estate. If
      the Participant dies during the COBRA reimbursement period pursuant to Section
      4.2, COBRA premium reimbursement payments still owed (if any) will continue
      to
      be paid to the Participant’s estate.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
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    ARTICLE
      5 

    Administration

     

    5.1  Administrator.
      The
      Company will be the Administrator and Named Fiduciary of the Plan. The Senior
      Vice President, Human Resources of the Company will perform administrative
      duties on behalf of the Company and will have overall responsibility for
      administration of the Plan. The Senior Vice President, Human Resources may
      delegate to any person such administrative duties as he or she deems advisable
      and may revoke any such delegation at any time. Any delegation to a person
      who
      is not an Employee of an Affiliate will be in writing, and any delegation to
      an
      Employee of an Affiliate will terminate upon the termination of his or her
      employment. If the name of position of Senior Vice President, Human Resources
      of
      the Company changes or the duties of such position are transferred to another
      position, such other position will be substituted for the Senior Vice President,
      Human Resources of the Company in this provision.

     

    5.2  Administrator’s
      Discretion. The
      Administrator will have the discretionary power and authority to establish,
      modify or terminate Plan policies, rules or procedures, to interpret, construe,
      apply and enforce the terms of the Plan or any such Plan rules, polices or
      procedures whenever he or she deems necessary in its administration. Such
      discretion will include, without limitation, the discretionary power and
      authority to (A) determine whether an individual is a Qualified Employee, the
      amount of a Qualified Employee’s benefit and whether a Qualified Employee has
      satisfied applicable conditions or is subject to limitations and (B) remedy
      ambiguities, inconsistencies, omissions and erroneous benefit calculations.
      In
      exercising such discretionary power and authority, the Administrator will treat
      all individuals determined by the Administrator to be similarly situated in
      a
      uniform manner. All acts and decisions of the Administrator made in good faith
      are binding on all interested persons.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    

    
      
        
          9

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    

     

    ARTICLE
      6  

    Amendment
      and Termination of Plan

     

    6.1  Right
      to Amend or Terminate the Plan. Subject
      to Section 6.2, the
      Company reserves the right to amend or terminate this Plan at any time by a
      written instrument signed by the Senior Vice President, Human
      Resources and
      General Counsel of
      the
      Company; provided that any amendment that applies to the Chief Executive Officer
      or any Senior Vice President of the Company must be approved in advance or
      ratified by the Compensation Committee of the Company’s board of directors.
Subject
      to Section 6.2, the
      amendment or termination of the Plan shall be effective as of the date specified
      in such instrument and may apply to any Qualified Employee or Participant,
      except that no amendment will be effective to reduce the total amount of
      Severance Pay payable to a Participant whose employment with all Affiliates
      terminated before the date the amendment is adopted. Any Employee whose
      employment terminates on or after the effective date of the termination of
      the
      Plan will be ineligible for Severance Pay.

     

    6.2  Change
      in Control.
      Notwithstanding Section 6.1:

     

    (A)  the
      Company or any successor to the Company may not terminate the Plan during the
      24-month period that begins on the date of a Change in Control and

     

    (B)  any
      Severance Pay payable to any individual who is a Participant in this Plan as
      of
      the day immediately prior to the date of the Change in Control and whose
      employment with all Affiliates terminates during the 24-month period beginning
      on the date of a Change in Control, will be no less than the Severance Pay
      such
      Participant would have been entitled to receive if he or she had become entitled
      to Severance Pay upon terminating employment with all Affiliates on the day
      immediately prior to the date of the Change in Control.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        10

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
      7  

    Miscellaneous
      Provisions

     

    7.1  Participation
      by Affiliate.
      An
      Affiliate may, when authorized by its board of directors, adopt this Plan for
      the benefit of its Employees, subject to the approval of the Administrator.
      Upon
      adoption of this Plan, the Participating Employer is subject to the terms of
      this Plan, as amended by the Company. Subject to Section 6.2, any Participating
      Employer may terminate this Plan with respect to its Employees at any time
      when
      authorized by its board of directors.

     

    7.2  No
      Benefit Accrues. No
      Employee of any Affiliate will accrue any right to benefits under this Plan
      before satisfying all of the requirements for Plan benefits in effect at the
      termination of his or her employment. No Participant will accrue any right
      to
      continued benefits under this Plan unless he or she satisfies the conditions
      for
      eligibility as of the date each benefit installment becomes
      payable.

     

    7.3  Indemnification.
      Each
      Affiliate will indemnify and hold harmless, to the extent permitted by law,
      each
      of its directors, officers and employees against any and all liabilities,
      losses, costs and expenses (including legal fees) of every kind and nature
      that
      may be imposed on, incurred by or asserted against such person at any time
      by
      reason of such individual’s services at the request of the Affiliate in
      connection with the Plan, but only if such individual did not act dishonestly
      or
      in bad faith or in willful violation of the law, regulation or Company by-law
      under which such liability, loss, cost or expense arises. An Affiliate has
      the
      right, but not the obligation, to select counsel and control the defense and
      settlement of any action for which an individual may be entitled to
      indemnification under this provision.

     

    7.4  Specialist’s
      Assistance.
      The
      Administrator may retain such actuarial, accounting, legal, clerical and other
      services as may reasonably be required in the administration of the Plan, and
      may pay reasonable compensation for such services. All costs of administering
      the Plan will be paid by the Company.

     

    7.5  Benefits
      Claim Procedure. The
      claim
      and appeal review procedures set forth below will apply to this
      Plan.

     

    (A)  The
      Participant (“Claimant”), or the Participating Employer on the Participant’s
      behalf, must make a claim for benefits under the Plan with the Administrator.
      A
      claim for benefits must be made no later than 60 days following the termination
      of employment.

     

    (1)  Within
      30
      days after receipt of a claim for benefits, the Administrator will render a
      written decision on the claim to the Claimant.

     

    (2)  If
      the
      claim is denied, in whole or in part, the Administrator will send notification
      of the denial to the Claimant. Such notification will comply with the
      requirements set forth in Department of Labor regulation
      2560.503-1(g).

     

    (B)  Appeals
      of denied claims will be subject to the following procedures.

     

    (1)  To
      appeal
      the denial, the Claimant or his or her representative must file a written
      request for review with the Administrator not later than 60 days after the
      Claimant receives the Administrator’s written decision on the
      claim.

     

    (2)  The
      Claimant or his or her representative may submit written comments, documents,
      records, and other information relating to the claim for benefits to the
      Administrator for consideration by the Administrator without regard to whether
      such information was submitted or considered in the initial review
      determination. 

     

     

     

     

     

     

     

     

     

     

     

    
      
        11

      

      
        
        

        
          

        

      

      
        
        

      

    

    (3)  The
      Claimant will be provided, upon request and free of charge, reasonable access
      to, and copies of, all documents, records, and other information relevant to
      the
      Claimant’s claim for benefits. 

     

    (4)  The
      Administrator will make a decision on review within 60 days of the receipt
      of
      the request for review and will provide the decision on review in writing to
      the
      Claimant.

     

    (5)  If
      the
      denial is upheld in whole or part, the Administrator will notify the Claimant.
      The notification will include the reasons for the denial, the reference to
      the
      Plan provisions on which the denial is based and the Plan’s response to any
      additional information provided by the Claimant following the initial review
      determination.

     

    (C)  The
      30-
      and 60-day periods during which the Administrator must respond to the Claimant,
      may be extended by up to an additional 30- or 60- days, respectively, if
      circumstances beyond the Administrator’s control so require and if notice of
      such extension is given to the Claimant. If the time for rendering a written
      decision on a claim is extended due to the Claimant’s failure to provide
      information necessary to decide the claim, the time period for making the
      determination will be tolled from the date on which the notification of the
      extension is sent to the Claimant until the date on which the Claimant responds
      to the request for additional information.

     

    (D)  Any
      individual who fails to follow the claim and appeal procedure will be barred
      from asserting his or her claim in any judicial or administrative
      proceeding.

     

    7.6  Disputes.
      The
      United States District Court for the District of Minnesota is the exclusive
      proper venue for any action involving a dispute between any individual and
      any
      Affiliate, the Administrator or any other person relating to or arising from
      the
      Plan, and such court will have personal jurisdiction over any Qualified Employee
      named in the action. The law as stated and applied by the United States Court
      of
      Appeals for the Eighth Circuit or the United States District Court for the
      District of Minnesota will apply to and control all actions relating to the
      Plan
      brought against the Plan. No action relating to or arising from the Plan may
      be
      commenced against the Plan, the Plan Administrator or the Company more than
      six
      months following termination of the involved individual’s employment with an
      Affiliate or, if later, 90 days after the issuance of the Administrator’s final
      decision on the request for review of a denied claim under the Plan’s benefit
      claim procedure.

     

    7.7  Company
      Action.
      The
      Company’s decisions and actions pursuant to the Plan (other than those decisions
      which the Plan requires to be made by the Administrator when the Company is
      acting in that capacity) will be made or taken in the Company’s own interest,
      and the Company is not required to consider the interest of any Qualified
      Employee or other individual, it being intended that any such decision or action
      will be made or taken by the Company in its settlor capacity rather than in
      a
      fiduciary capacity.

     

    7.8  Status
      of Plan.
      Nothing
      contained in the Plan is to be construed as providing for assets to be held
      for
      the benefit of any Qualified Employee or any other person to whom benefits
      are
      to be paid pursuant to the terms of this Plan, the Qualified Employee’s or other
      person’s only interest under the Plan being the right to receive the benefits
      specified in this instrument. To the extent the Qualified Employee or any other
      person acquires a right to receive benefits under this Plan, such right is
      no
      greater than the right of any unsecured general creditor of the
      Company.

     

    7.9  No
      Assignment of Benefits.
      The
      benefits payable under the Plan and the right to receive future benefits under
      the Plan may not be anticipated, alienated, sold, transferred, assigned,
      pledged, encumbered or subjected to any charge or legal process.

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        12

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.10  Withholding
      and Offsets.
      The
      Company retains the right to withhold from any benefit payment pursuant to
      the
      Plan any and all income, employment, excise and other taxes as the Company
      deems
      necessary, and the Company may offset against amounts otherwise then
      distributable to any person under the Plan any amounts such person then owes
      the
      Company.

     

    7.11  Other
      Benefits.
      No
      amounts paid pursuant to the Plan constitute salary or compensation for the
      purpose of computing benefits under any other benefit plan, practice, policy
      or
      procedure of the Company that does not expressly provide otherwise.

     

    7.12  No
      Employment Rights Created.
      Neither
      the maintenance of nor participation in the Plan gives any employee a right
      to
      continued employment or limits the right of the Company to discharge, transfer,
      demote or modify the terms and conditions of employment or otherwise deal with
      any employee without regard to the effect such action might have on him or
      her
      with respect to the Plan.

     

    7.13  Successors.
      Except
      as otherwise expressly provided in the Plan, all obligations of the Company
      under the Plan are binding on any successor to the Company, whether the
      existence of such successor is the result of a direct or indirect purchase,
      merger, consolidation or other transfer of all or substantially all of the
      business or assets of the Company.

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this instrument to be executed by its authorized officers
      on
      the date written below.

     

    

     

    
      	 	
              SELECT
                COMFORT CORPORATION

               

            
	
               

               

               

               

              Dated:
                February 22, 2007

            	
               

               

               

               

              By:  /s/
                Mark A. Kimball  

              Senior
                Vice President & General Counsel

            
	
               

               

               

               

              Dated:
                February 22, 2007

            	
               

               

               

               

              By:  /s/
                Scott Peterson  

              Senior
                Vice President, Human Resources

               

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      

      
        
          13

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