Document:

Exhibit 10.32 Summary of Non-Employee Director Compensation

    
      

      

    

    Exhibit
      10.32

     

     

    
      Select
        Comfort Corporation

      Director
        Compensation Summary

      February
        2006

       

      Annual
        Retainer Each
        of
        our non-employee directors receives an annual cash retainer of $25,000. The
        Lead
        Director receives an additional annual cash retainer of $15,000. Each committee
        chair receives additional compensation of $5,000 per year. Each member of
        the
        Audit Committee receives additional compensation of $5,000 per year.

       

      The
        Company maintains a Non-Employee Director Equity Plan that permits non-employee
        directors to elect to receive shares of Select Comfort common stock in lieu
        of
        all or any portion of the cash compensation otherwise payable to the director.
        The non-employee directors may elect to receive payments in stock currently
        or
        to defer receipt of the stock for tax purposes.

       

      Stock
        Options. Each
        non-employee director is eligible to receive, as of the date that the director
        first begins to serve on the Board, an initial grant of options to purchase
        8,500 shares of our common stock. These initial options become exercisable
        one
        year after the date of grant, so long as the director remains a director
        of our
        company. In addition, each of our non-employee directors is eligible for
        an
        annual grant, coincident with the annual meeting of shareholders, of options
        to
        purchase 8,500 shares of our common stock. These annual options become
        exercisable one year after the date of grant, so long as the director remains
        a
        director of our company. All options granted to directors have an exercise
        price
        equal to the fair market value of our common stock on the date of grant and
        remain exercisable for a period of up to 10 years, subject to continuous
        service
        on our Board of Directors.

       

      Reimbursement
        of Expenses. All
        of
        our directors are reimbursed for travel expenses for attending meetings of
        our
        Board or any Board committee.

       

      No
        Director Compensation for Employee Directors. Any
        director who is also an employee of our company does not receive additional
        compensation for service as a director.Exhibit 10.34 Non-Employee Director Equity Plan

    
      

      

    

    Exhibit
      10.34

     

    

      

         

        SELECT
          COMFORT COPRORATION

        NON-EMPLOYEE
          DIRECTOR EQUITY PLAN

         

         

        1. Establishment
          and Purposes of the Plan

         

        1.1 Establishment
          of the Plan.
          Select
          Comfort Corporation (the “Company”) hereby establishes the Select Comfort
          Corporation Non-Employee Director Equity Plan (the “Plan”). The Plan shall be an
          unfunded nonqualified deferred compensation plan within the meaning of
          Section
          409A the Internal Revenue Code of 1986, as amended (including regulations
          and
          rulings issued thereunder) (the “Code”). The Plan does not cover employees and
          is therefore not subject to the Employee Retirement Income Security Act
          of 1974,
          as amended.

         

        1.2 Purposes
          of the Plan.
          The
          purposes of the Plan are to enable the Company to attract and retain qualified
          individuals to serve as Non-Employee Directors of the Company, to provide
          Non-Employee Directors with the opportunity to increase their equity interest
          in
          the Company through the receipt of all or a portion of the Non-Employee
          Director’s fees in the form of stock and to thereby increase the personal
          interest of the Non-Employee Directors in the Company’s continued success, and
          to provide Non-Employee Directors the opportunity to defer the receipt of
          compensation that would otherwise be paid to those directors.

         

        1.3 Effective
          Date.
          The
          Plan shall be effective as of November 17, 2005, provided that no shares
          of
          Common Stock shall be issued under the Plan prior to approval by the
          shareholders of the Company of the issuance of such shares. If any benefits
          are
          required to be paid to any Participant under the Plan prior to the date
          the
          issuance of shares under the Plan has been approved by shareholders of
          the
          Company, such benefits shall be paid in the form of cash in an amount equal
          to
          the Fair Market Value of the shares of Common Stock otherwise payable
          hereunder.

         

        2. Definitions

         

        2.1 Beneficiary.
          “Beneficiary” means the individual, trust or other entity designated by the
          Participant to receive any benefits to be distributed under the Plan after
          the
          Participant’s death. A Participant may designate more than one Beneficiary with
          specification of the percentage of any benefits to be paid to each designated
          Beneficiary. A Participant may designate or change a Beneficiary by filing
          a
          signed designation with the Company in a form approved by the Company.
          If a
          designation has not been properly completed and filed with the Company
          or is
          ineffective for any other reason, the Beneficiary shall be the Participant’s
          surviving spouse.

         

        2.2 Board.
“Board”
          means the Board of Directors of the Company.

         

        2.3 Change
          in Control.
          A
“Change in Control” of the Company shall mean any of the following, provided,
          however, that such event constitutes a “change in control event” under Section
          409A of the Code: (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 (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 5.01 of the Current Report on Form
          8-K, as in effect on the effective date of the Plan, pursuant to Section
          13 or
          15(d) of the Exchange Act, whether or not the Company is then subject to
          such
          reporting requirement; provided that, without limitation, such a Change
          in
          Control shall be deemed to have occurred at such time as (x) 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 (y) individuals who constitute the Board of Directors
          on the effective date of the 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 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
          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 (y), considered
          as though
          such person were a member of the Board of Directors on the effective date
          of the
          Plan.

         

        2.4 Committee.
          “Committee” means the Management Development and Compensation Committee of the
          Board or such other committee as the Board shall designate to administer
          the
          Plan.

         

        2.5 Common
          Stock.
“Common
          Stock” means the common stock, par value $0.01 per share, of the
          Company.

         

        2.6 Director’s
          Fees.
          “Director’s Fees” means any compensation payable by the Company in the form of
          cash to a Non-Employee Director for service as a Non-Employee Director
          on the
          Board or any committee of the Board as may be approved from time to time
          by the
          Board, excluding expense allowances, reimbursements and insurance premiums
          paid
          to or on behalf of such Non-Employee Directors.

         

        2.7 Fair
          Market Value.
“Fair
          Market Value” means, with respect to the Common Stock, as of any date (or, if no
          shares were traded or quoted on such date, as of the next preceding date
          on
          which there was such a trade or quote): (a) the mean between the reported
          high
          and low sale prices of the Common Stock if the Common Stock is listed,
          admitted
          to unlisted trading privileges or reported on any foreign or national securities
          exchange or on the Nasdaq National Market or an equivalent foreign market
          on
          which sale prices are reported; (b) if the Common Stock is not so listed,
          admitted to unlisted trading privileges or reported, the closing bid price
          as
          reported by the Nasdaq SmallCap Market, OTC Bulletin Board or the National
          Quotation Bureau, Inc. or other comparable service; or (c) if the Common
          Stock
          is not so listed or reported, such price as the Committee determines in
          good
          faith in the exercise of its reasonable discretion, and in accordance with
          the
          requirements of Section 409A of the Code, to be the fair market value of
          such
          Common Stock. If determined by the Committee, such determination will be
          final,
          conclusive and binding for all purposes and on all persons, including,
          without
          limitation, the Company, the shareholders of the Company, the Participants
          and
          their respective successors-in-interest. No member of the Committee will
          be
          liable for any determination regarding the fair market value of the Common
          Stock
          that is made in good faith.

         

        
          
            
            

          

          
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        2.8 Non-Employee
          Director.
          “Non-Employee Director” means any individual who serves as a member of the Board
          and who is not an employee of the Company or any of its subsidiaries; provided,
          that the Committee may exclude any Non-Employee Director from participating
          in
          the Plan at any time or from time to time pursuant to an individual agreement
          or
          arrangement with such Non-Employee Director.

         

        2.9 Participant.
          “Participant” means any Non-Employee Director who elects to participate in the
          Plan.

         

        2.10 Plan.
“Plan”
          means this Select Comfort Corporation Non-Employee Director Equity
          Plan.

         

        2.11 Plan
          Year.
“Plan
          Year” means the 12-month period beginning each January 1, commencing January
          1,
          2006.

         

        2.12 Separation
          from Service.
          “Separation from Service” means the Participant’s separation from service as a
          director and independent contractor with the Company (and all entities
          with whom
          the Company would be considered a single employer under Sections 414(b)
          and
          414(c) of the Code), voluntarily or involuntarily, for any reason, provided
          such
          Separation from Service constitutes a “separation from service” within the
          meaning of Section 409A of the Code.

         

        2.13 Unforeseeable
          Emergency.
          An
“Unforeseeable Emergency” is a severe financial hardship of a Participant
          resulting from an illness or accident of the Participant, his or her spouse,
          his
          or her dependent (as defined in Code section 152(a)); the loss of the
          Participant’s property due to casualty; or other similar extraordinary and
          unforeseeable circumstances arising as a result of events beyond the control
          of
          the Participant.

         

        3. Administration

         

        3.1 Power
          and Authority.
          The
          Committee shall administer the Plan and shall have full power and authority
          to
          interpret the provisions of the Plan and to supervise the administration
          of the
          Plan. All determinations, interpretations and selections made by the Committee
          regarding the Plan shall be final and conclusive.

         

        3.2 Delegation
          of Powers; Employment of Advisers.
          The
          Committee may delegate to any person or entity such duties and powers,
          both
          administrative and discretionary, as it deems appropriate, except for such
          duties that may not be delegated by law or regulation. In administering
          the
          Plan, the Committee may employ attorneys, consultants, accountants or other
          persons, and the Company and the Committee shall be entitled to rely upon
          the
          advice or opinions of any such persons. All ordinary and reasonable expenses
          of
          the Committee shall be paid by the Company.

         

        4. Election
          to Receive Director’s Fees in the Form of Common Stock

         

        4.1 Election.
          A
          Non-Employee Director may elect to receive all or any portion of any Director’s
          Fees in the form of Common Stock by giving notice of such election to the
          Company in a form approved by the Committee. Such an election shall be
          effective
          with respect to Director’s Fees payable commencing with the next Plan Year
          following the date of the election.

         

        
          
            
            

          

          
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        4.2 Revocation
          of Election.
          An
          election to receive payment of Director’s Fees in the form of Common Stock may
          be revoked only by a subsequent election to receive payment of Director’s Fees
          in cash or to defer such Director’s Fees pursuant to Section 5 below. Such an
          election shall be effective with respect to Director’s Fees payable commencing
          with the next Plan Year following the date of the election.

         

        43. Determination
          of Number of Shares.
          The
          number of shares of Common Stock to be paid to a Participant shall be determined
          by dividing the amount of Director’s Fees payable by the Fair Market Value of
          the Common Stock on the date such Director’s Fees would have been paid in cash
          but for the Participant’s election to receive payment of such Director’s Fees in
          the form of Common Stock. The amount of any fractional share shall be paid
          in
          cash.

         

        4.4 Issuance
          and Delivery of Shares.
          If a
          Participant has elected to receive his or her Director’s Fees in the form of
          Common Stock, a certificate for the number of shares of Common Stock to
          which
          the Participant is entitled shall be issued as soon as reasonably practicable
          following the date the Participant otherwise would have received the Director’s
          Fees or, alternatively, the shares may be issued in non-certificated form
          and
          delivered via electronic means to a brokerage account designated by the
          Participant.

         

        5. Election
          to Defer Receipt of Director’s Fees and to Receive Director’s Fees in the Form
          of Common Stock

         

        5.1 Election.
          A
          Non-Employee Director may elect to defer receipt of all or any portion
          of any
          Director’s Fees and to receive such deferred Director’s Fees in the form of
          Common Stock by giving notice of such election to the Company in a form
          approved
          by the Committee (a “Deferral
          Election”).
          A
          Deferral Election shall be effective with respect to Director’s Fees payable
          commencing with the next Plan Year following the date of the Deferral Election.
          A new Non-Employee Director who first becomes eligible to participate in
          the
          Plan may make an initial irrevocable Deferral Election during the first
          30 days
          of eligibility to participate and such election shall apply only to Director’s
          Fees earned for performance of services following the date of the election.
          If a
          new Participant does not make an election during this 30-day period, the
          Participant may not make a Deferral Election to be effective earlier than
          the
          beginning of the next Plan Year. An election becomes irrevocable after
          the last
          day on which such election can be made and remains so for the Plan
          Year.

         

        5.2 Revocation
          of Election; Change in Distribution Date for Subsequent Plan
          Years.

         

        (a) Except
          as
          provided in Section 5.9, a Deferral Election may be revoked only by a subsequent
          election to receive payment of Director’s Fees in cash or to receive such
          Director’s Fees in the form of Common Stock pursuant to Section 4 above. Such an
          election shall be effective with respect to Director’s Fees payable for services
          commencing with the next Plan Year following the date of the
          election.

         

        (b) For
          each
          succeeding Plan Year in which a Deferral Election is in effect, a Participant
          may change the distribution date for purposes of Section 5.4 for amounts
          deferred in the succeeding Plan Year(s) by timely delivering a new Deferral
          Election to the Company, specifying the distribution date for the amounts
          to be
          deferred in the succeeding Plan Year(s).

         

        
          
            
            

          

          
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        5.3 Establishment
          of Deferred Stock Unit Account.
          As of
          any date that Director’s Fees would have been paid in cash to a Participant but
          for the Deferral Election, any amounts deferred pursuant to this Section
          5 shall
          be credited to a bookkeeping reserve account (“Account”)
          maintained by the Company in stock units (“Stock
          Units”).
          The
          number of Stock Units credited to a Participant’s Account shall be determined by
          dividing the amount of Director’s Fees to be deferred by the Fair Market Value
          of the Common Stock on the date such Director’s Fees would have been paid in
          cash to a Participant but for the Deferral Election, and shall include
          fractions
          of a Stock Unit. All Stock Units credited to a Participant’s Account pursuant to
          the Plan shall at all times be fully vested and non-forfeitable.

         

        5.4 Payment
          of Deferred Stock Unit Account.
          

         

        (a) Except
          as
          otherwise provided in Sections 7.1 and 7.2 below, Stock Units Credited
          to a
          Participant’s Account shall be payable in either a single distribution or in a
          series of annual installments over a period of two (2) to ten (10) years,
          as
          specified by the Participant in the applicable Deferral Election. The amount
          of
          the annual installment shall be determined by dividing the number of Stock
          Units
          in the Participant’s Account by the number of remaining installments to be made
          (including the payment being determined).

         

        (b) Except
          as
          otherwise provided in Sections 7.1 and 7.2 below, distribution of Stock
          Units
          shall be made or shall commence at such time or times as may be specified
          by the
          Participant in the applicable Deferral Election; provided that the designated
          payment date or dates with respect to any Deferral Election must be no
          earlier
          than the first day of the calendar year after the calendar year in which
          the
          Director’s Fees would have been paid but for the Deferral Election. A
          Participant may elect to receive distribution either upon a fixed, predetermined
          date (but not an event), or upon the Participant’s Separation from
          Service.

         

        (c) Stock
          Units shall be payable in a number of shares of Common Stock equal to the
          number
          of Stock Units in the Account. The amount of any fractional shares shall
          be paid
          in cash.

         

        5.5 Issuance
          and Delivery of Shares.
          The
          Company shall issue and deliver to the Participant a certificate for the
          number
          of shares of Common Stock due such Participant as payment for Stock Units
          as
          soon as practicable following the date on which Stock Units are payable
          or,
          alternatively, the shares may be issued in non-certificated form and delivered
          via electronic means to a brokerage account designated by the
          Participant.

         

        5.6 Unfunded
          Nature of Accounts.
          The
          Plan shall be unfunded with respect to the Company’s obligation to pay any
          amount of Stock Units in any Account, and a Participant’s rights to receive any
          payment of cash or shares of Common Stock for Stock Units in any Account
          shall
          be no greater than the rights of an unsecured general creditor of the
          Company.

         

        5.7 Designation
          of Beneficiary.
          A
          Non-Employee Director may designate a Beneficiary or Beneficiaries to receive
          any distributions under the Plan upon his or her death.

         

        5.8 Dividends.
          In the
          event a cash dividend is declared with respect to the Common Stock, the
          Account
          of each Participant shall be credited with a number of Stock Units determined
          

         

        
          
            
            

          

          
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        by
          first
          calculating the product of (a) the cash dividend payable with respect to
          each
          share of Common Stock and (b) the total number of Stock Units credited
          to the
          Account as of the record date for such dividend; and second, by dividing
          such
          product by the Fair Market Value of the Common Stock on the payment date
          for
          such dividend.

         

        5.9 Unforeseeable
          Emergency.
          A
          Participant may receive a distribution from his or her Account if the Committee
          determines that such distribution is on account of an Unforeseeable Emergency.
          The amount that may be distributed with respect to a Participant’s Unforeseeable
          Emergency may not exceed the amounts necessary to satisfy the emergency
          plus
          amounts necessary to pay taxes reasonably anticipated as a result of the
          distribution, after taking into account the extent to which such Unforeseeable
          Emergency is or may be relieved through reimbursement or compensation by
          insurance or otherwise or by liquidation of the Participant’s assets (to the
          extent the liquidation of such assets would not itself cause severe financial
          hardship), and the cancellation of the Participant’s deferral election for the
          balance of the Plan Year, provided the determination of such limitation
          is
          consistent with the requirements of Section 409A(2)(B)(ii) of the Code.
          To
          receive such a distribution, the Participant must request a distribution
          by
          filing an application with the Committee and furnishing such supporting
          documentation as the Committee may require. In the application, the Participant
          shall specify the basis for the distribution and the dollar amount to be
          distributed. If such request is approved by the Committee, distribution
          shall be
          made in a lump sum payment as soon as administratively practicable following
          the
          approval of the completed application by the Committee.

         

        6. Compliance
          with Rule 16b-3

         

        Notwithstanding
          the above, no election otherwise permitted under Section 4 or 5 above shall
          be
          effective if such election would cause the payment of Director’s Fees in the
          form of Common Stock to be a non-exempt purchase under Rule 16b-3 promulgated
          under the Securities Exchange Act of 1934 or would terminate the Non-Employee
          Director’s status as a non-employee director under Rule 16b-3, unless approved
          by the Board or the Committee.

         

        7. Distribution
          upon Change in Control or upon Death of a Participant

         

        7.1 Distribution
          upon Change in Control.
          Notwithstanding anything in the Plan to the contrary (including Section
          5.4
          above), in the event of a Change in Control, all Stock Units credited to
          an
          Account for a Participant shall, as of the date of the occurrence of a
          Change in
          Control, be immediately payable to such Participant in the form of shares
          of
          Common Stock equal in number to the Stock Units held as of the date of
          the
          Change in Control. In the event that the Change in Control shall have resulted
          in the payment of cash, securities or other consideration for outstanding
          shares
          of Common Stock, then the Participants shall be entitled to receive the
          amount
          of such cash, securities or other consideration as would have been payable
          in
          connection with such Change in Control in respect of the shares of Common
          Stock
          otherwise payable to the Participants hereunder. The amount of any fractional
          shares shall be paid in cash.

         

        7.2
Distribution
          upon Death. Notwithstanding
          anything in the Plan to the contrary (including Section 5.4 above), in
          the event
          of the death of a Participant, all Stock Units credited to an Account for
          the
          deceased Participant shall, as of the date of the Participant's death,
          be
          immediately payable to the Participant's Beneficiary or Beneficiaries in
          the
          form of shares of Common Stock equal in number to the Stock Units held
          in the
          deceased Participant's 

         

        
          
            
            

          

          
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        Account
          as of the date of the Participant's death. If
          there is no Beneficiary, as that term is defined under this Plan, the remaining
          benefits shall be distributed to the Participant's estate. The amount of
          any
          fractional shares shall be paid in cash.

        

        

         

        7.3 Tax
          Withholding.
          Notwithstanding anything in the Plan to the contrary, the Company may withhold
          from any distribution the amount of any federal, state or local tax that
          the
          Company reasonably determines is required by law to be withheld. Any benefits
          withheld and determined not to be required to be withheld shall be distributed
          as soon as there is a final determination of the applicable withholding.
          No
          interest shall be payable to any Participant or any Beneficiary for any
          period
          that any amount is withheld pursuant to this Section 7.3.

         

        8. General
          Provisions

         

        8.1 Adjustments
          to Shares of Common Stock Upon Certain Events.
          In the
          event of any reorganization, merger, consolidation, recapitalization,
          liquidation, reclassification, stock dividend, stock split, combination
          of
          shares, rights offering, divestiture or extraordinary dividend (including
          a spin
          off) or any other change in the corporate structure or shares of the Company,
          the Committee (or, if the Company is not the surviving corporation in any
          such
          transaction, the board of directors of the surviving corporation) will
          make
          appropriate adjustment (which determination will be conclusive) as to the
          number
          and kind of securities or other property (including cash) payable with
          respect
          to Accounts under the Plan in order to prevent dilution or enlargement
          of the
          rights of Participants.

         

        8.2 Amendment;
          Termination.
          The
          Company reserves the right to amend the Plan prospectively or retroactively,
          in
          whole or in part, or to terminate the Plan, provided that no amendment
          or
          termination may reduce or revoke any Participant’s rights under the Plan accrued
          and existing as of the later of the date of adoption of the amendment or
          termination or the effective date of the amendment or termination. Upon
          termination of the Plan, the Accounts of affected Participants shall be
          administered and distributed in accordance with the provisions of the Plan.
          The
          Company may, to the extent it complies with the requirements of Section
          409A of
          the Code, accelerate distribution of the Participant’s Accounts following
          termination of the Plan.

         

        8.3 Rights
          Not Assignable.
          Except
          for designation of a Beneficiary, Participants’ Accounts or other rights under
          the Plan shall not be subject to assignment, conveyance, transfer, anticipation,
          pledge, alienation, sale, encumbrance or charge, whether voluntary or
          involuntary, by the Participant or any Beneficiary of the Participant.
          An
          interest in an Account or the amount represented thereby shall not provide
          collateral or security for a debt of a Participant or Beneficiary or be
          subject
          to garnishment, execution, assignment, levy or to another form of judicial
          or
          administrative process or to the claim of a creditor of a Participant or
          Beneficiary, through legal process or otherwise. Any attempt to anticipate,
          alienate, sell, transfer, assign, pledge, encumber, charge or to otherwise
          dispose of benefits, before actual receipt of the benefits, or a right
          to
          receive benefits, shall be void and shall not be recognized.

         

        8.4 Unsecured
          Creditor Status.
          A
          Participant shall be an unsecured general creditor of the Company as to
          the
          distribution of any benefits under the Plan. The right of any Participant
          or
          Beneficiary to receive any distribution under the Plan shall be no greater
          than
          the right of any other general, unsecured creditor of the Company.

         

        
          
            
            

          

          
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        8.5 No
          Trust or Fiduciary Relationship.
          Nothing
          contained in the Plan shall be deemed to create a trust or fiduciary
          relationship of any kind for the benefit of any Participant or
          Beneficiary.

         

        8.6 Rights
          as a Stockholder.
          A
          Participant will have no rights as a shareholder unless and until shares
          of
          Common Stock are issued hereunder and the Participant becomes the holder
          of
          record of such shares.

         

        8.7 Construction.
          The
          singular includes the plural, and the plural includes the singular, unless
          the
          context clearly indicates the contrary. Capitalized terms (except those
          at the
          beginning of a sentence or part of a heading) have the meaning specified
          in the
          Plan. If a capitalized term is not defined in the Plan, the term shall
          have the
          general, accepted meaning of the term.

         

        8.8 Disputes.
          The
          Committee shall be the final arbiter of any dispute related to any matter
          under
          the Plan. If the Participant involved in a dispute is a member of the Committee,
          such Participant shall not participate in the Committee’s deliberations or
          decision related to the dispute. The determination by the Committee with
          respect
          to any such dispute shall be final and binding on all parties.

         

        8.9 Unfunded
          Plan.
          This
          Plan is intended to be an unfunded nonqualified deferred compensation plan
          within the meaning of Section 409A of the Code and shall be interpreted
          accordingly. Benefits provided in the Plan constitute only an unsecured
          contractual promise to distribute Common Stock (and cash in lieu of fractional
          shares) in accordance with the terms of the Plan by the Company.

         

        8.10 Self-Employment
          Taxes.
          To the
          extent that amounts distributed or deferred under the Plan are deemed to
          be net
          earnings from self-employment, each Participant shall be responsible for
          any
          taxes payable under federal, state or local law. 

         

        8.11 Right
          of Company to Replace Directors.
          Neither
          the action of the Company in establishing the Plan, nor any provision of
          the
          Plan, shall be construed as giving any Non-Employee Director the right
          to be
          retained as a director, or any right to any payment whatsoever except to
          the
          extent of the benefits provided for by the Plan. The Company expressly
          reserves
          the right at any time to replace or fail to renominate any Non-Employee
          Director
          without any liability for any claim against the Company for any payment
          or
          distribution whatsoever except to the extent provided for in the
          Plan.

         

        8.12 Governing
          Law; Severability.
          The
          Plan shall be construed, regulated and administered under the laws of the
          State
          of Minnesota. If any provisions of the Plan shall be held invalid or
          unenforceable for any reason, such invalidity or unenforceability shall
          not
          affect the remaining provisions of the Plan, and the Plan shall be deemed
          to be
          modified to the least extent possible to make it valid and enforceable
          in its
          entirety.

         

        8.13 Trust
          Fund.
          The
          Company shall be responsible for the distribution of all benefits provided
          under
          the Plan. At its discretion, the Company may establish one or more trust,
          with
          such trustees as the Board or the Committee may approve, for the purpose
          of
          providing for the distribution of such benefits. Such trust or trusts may
          be
          irrevocable, but the assets thereof shall 

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        be
          subject to the claims of the Company’s creditors. To the extent any benefits
          provided under the Plan are actually distributed from any such trust, the
          Company shall have no further obligation with respect thereto, but to the
          extent
          not so distributed, such benefits shall remain the obligation of, and shall
          be
          distributed by, the Company.

         

        8.14 Securities
          Law and Other Restrictions.
          Notwithstanding any other provision of the Plan or any agreements entered
          into
          pursuant to the Plan, the Company may, to the extent permitted under Section
          409A of the Code, delay the distribution of any shares of Common Stock
          under
          this Plan if the Company reasonably anticipates that the making of the
          payment
          will violate federal securities laws or other applicable law, provided
          payment
          will be made at the earliest date at which the Company reasonably anticipates
          that the distribution will not cause such violation. A Participant may
          not sell,
          assign, transfer or otherwise dispose of shares of Common Stock issued
          pursuant
          to the Plan, unless (a) there is in effect with respect to such shares
          a
          registration statement under the Securities Act and any applicable securities
          laws of a state or foreign jurisdiction or an exemption from such registration
          under the Securities Act and applicable state or foreign securities laws,
          and
          (b) there has been obtained any other consent, approval or permit from
          any other
          U.S. or foreign regulatory body which the Committee, in its sole discretion,
          deems necessary or advisable. The Company may condition the issuance, sale
          or
          transfer of shares of Common Stock upon the receipt of any representations
          or
          agreements from the parties involved, and the placement of any legends
          on
          certificates representing shares of Common Stock, as may be deemed necessary
          or
          advisable by the Company in order to comply with such securities law or
          other
          restrictions.

         

        
          
            
            

          

          
            9

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