Sleep Number Corporation - Chapter 11 Bidding Procedures Summary

Amended Sale Order / Asset Purchase Agreement Summary

Parties Involved

• Sellers: the debtors and debtors in possession — Sleep Number Corporation (7886); Select Comfort Retail Corporation (9757); Select Comfort Canada Holding Inc. (4273); Select Comfort SC LLC (5901); and Sleep Number Health Corporation (2499), the parentheticals being the last four digits of each Debtor's employer identification number — with a mailing address of 1001 Third Avenue South, Minneapolis, MN 55404.
• Purchaser: SNBR Inc., an affiliate of Sleep Country Canada, Inc., which served as the Stalking Horse Bidder and was ultimately selected as the Successful Bidder.
• Back-Up Bidder: Brooklyn Bedding LLC.
• The Court found the Purchaser to be a good-faith purchaser within the meaning of section 363(m) and not an "insider" of any Debtor under section 101(31) of the Bankruptcy Code. Immediately prior to the Closing Date, the Purchaser was neither an "insider" nor an "affiliate" of the Debtors, and no common identity of incorporators, directors, or controlling stockholders existed between the parties.
• The Purchaser is not a successor to, mere continuation of, or alter ego of the Debtors or their estates, there is no continuity of enterprise or common identity between them, and the Purchaser is not holding itself out to the public as a successor to or continuation of the Debtors.
• The Agreement and the Related Documents constitute valid and binding contracts between the Debtors and the Purchaser.

Assets Being Sold

• The "Transferred Assets" as defined in the Asset Purchase Agreement, dated as of June 12, 2026, attached to the Motion as Exhibit B, are sold to the Purchaser free and clear of all liens, claims, encumbrances, and interests to the fullest extent permitted by law, other than Permitted Liens and Assumed Liabilities as defined in the Agreement.
• Immediately prior to consummating the Sale, the Assets constitute property of the Debtors' estates, with good title vested in the estates within the meaning of section 541(a) of the Bankruptcy Code. Upon consummation, the Purchaser will be vested with good and marketable title as sole and rightful owner.
• The Order also authorizes the assumption and assignment of the Proposed Assumed Contracts and grants related relief, with the transfer effected pursuant to sections 105(a), 363(b), 363(f), 365(b), and 365(f) of the Bankruptcy Code.
• As of the Closing Date, the Purchaser is authorized to operate under any license, permit, registration, and governmental authorization or approval of the Debtors with respect to the Assets, all of which are directed to be transferred to the Purchaser as of the Closing Date.
• The Purchaser will acquire the Debtors' trademark registrations and applications included in the Transferred Assets that are the subject of the TTAB Proceedings, in each case subject to those proceedings.
• Any sale of personally identifiable information contemplated in the Agreement is consistent with the Debtors' privacy policies and satisfies section 363(b)(1)(A) of the Bankruptcy Code.

Purchase Price and Consideration

• The Court found that the Agreement provides fair and reasonable terms for the purchase of the Assets.
• As demonstrated by the Gottlieb Declaration, the consideration provided by the Purchaser (i) is fair and reasonable, (ii) is the highest and best offer for the Assets, (iii) will provide a greater recovery for the Debtors' creditors more expeditiously than any other practical available alternative, and (iv) constitutes reasonably equivalent value, fair value, and fair consideration under the Bankruptcy Code and under the laws of the United States, any state, territory, possession, the District of Columbia, and any foreign jurisdiction, including the Uniform Fraudulent Conveyance Act, the Uniform Voidable Transactions Act, and the Uniform Fraudulent Transfer Act.
• No other entity or group of entities offered to purchase the Assets for an amount that would provide greater economic value to the Debtors' estates.
• The total consideration reflects the Purchaser's reliance on the Sale Order to convey title to and possession of the Assets free and clear of all Interests other than Permitted Liens and Assumed Liabilities, including any potential Successor or Other Liabilities.
• The Sale Order does not state a dollar purchase price; the consideration is fixed by the Agreement attached to the Motion as Exhibit B and is not quantified in the Order itself.

Marketing and Auction Process

• The Court entered the Bidding Procedures Order on July 2, 2026 [ECF No. 167], approving the Bidding Procedures attached as Exhibit 1 thereto, including the proposed form of notice of the Sale Hearing.
• Following an extensive marketing and sale process and the Auction held on July 13, 2026, the Debtors determined that the Purchaser had submitted the highest or otherwise best bid and selected it as the Successful Bidder, with Brooklyn Bedding LLC designated as the Back-Up Bidder.
• The Debtors adequately marketed the Assets, including through their stalking horse marketing process, and conducted the sale process in compliance with the Bidding Procedures and the Bidding Procedures Order in a noncollusive, fair, and good-faith manner.
  • Potential purchasers were afforded a full and fair opportunity to participate in the bidding process and to make higher or better offers, and the Auction was duly noticed.
  • The bid submitted by the Purchaser and memorialized by the Agreement was deemed a Qualified Bid, and the Purchaser was a Qualified Bidder eligible to participate at the Auction.
  • The Debtors determined that the Purchaser's bid maximizes value for the benefit of the estates, constitutes the highest and best offer, and reflects a valid and sound exercise of business judgment.
• The Court's findings of fact and conclusions of law in the Bidding Procedures Order, including the record of the Bidding Procedures Hearing, are incorporated by reference.

Back-Up Bidder

• Pursuant to the Bidding Procedures Order and as set forth in the Notice of Auction Results, the Debtors, in consultation with the Consultation Parties, designated Brooklyn Bedding LLC as the Back-Up Bidder.
• If the Sale Transaction with the Purchaser is not consummated, the Back-Up Bidder will be deemed the Successful Bidder, and the Debtors are authorized, but not directed, to effectuate the Sale Transaction with the Back-Up Bidder on the terms of the Back-Up Bid as set forth on the record at the Auction.
• In that event, the Debtors will file a notice of termination of the Stalking Horse Bid containing a copy of the Back-Up APA together with a revised Sale Order contemplating consummation with the Back-Up Bidder. The Court will hold a hearing to consider approval of the revised Sale Order within three days of such filing, subject to the Court's availability.
  • The revised Sale Order will provide that any Real Property Lease on the Potential Assumption and Assignment Notice that has not been rejected shall be deemed a Designated Contract subject to the Assumption and Assignment Procedures during the Designation Rights Period.
• The Back-Up Bid terms agreed among the Debtors, the Consultation Parties, and the Back-Up Bidder subsequent to the Auction provide that:
  • The Back-Up Bidder shall serve as such until the earlier of (a) 30 days after entry of the Sale Order or (b) consummation of the Sale Transaction with the Purchaser (the "Back-Up Termination Date").
  • If, prior to the Back-Up Termination Date, the Debtors deliver a written Back-Up Notice stating a good-faith belief that the Sale Transaction with the Purchaser may not be consummated, the parties shall take all steps necessary to be positioned to consummate a transaction on the terms of the Back-Up Bid, subject to (a) a closing inside date of 15 days following the Back-Up Bidder's Hart-Scott-Rodino filings, which must be made within two business days of the Back-Up Notification Date, and (b) a closing outside date of 60 days from execution of the Back-Up APA.

Sale Free and Clear

• The transfer vests the Purchaser with all right, title, and interest of the Debtors in the Assets free and clear, to the fullest extent permitted by law, of all Interests other than Permitted Liens and Assumed Liabilities. "Interests" is defined expansively to encompass Liens and Claims of any kind or nature, whether arising prior to or subsequent to the Petition Date, known or unknown, legal or equitable, matured or unmatured, contingent or noncontingent, liquidated or unliquidated, asserted or unasserted, including rights or claims based on any Successor or Other Liabilities.
• The conditions of section 363(f) have been satisfied in full with respect to each Interest, with one or more of the standards under section 363(f)(1)-(5) met in each case. Holders of Interests that did not timely object, or that withdrew objections, are deemed to have consented pursuant to section 363(f)(2).
• Holders of Interests are adequately protected by having their Interests attach to the net cash proceeds of the Sale ultimately attributable to the Assets in which the holder alleges an Interest, in the same order of priority and with the same validity, force, and effect as against the Assets, subject to any claims and defenses of the Debtors and their estates. As a decretal matter, any and all valid and perfected Interests in the Assets attach solely to the gross proceeds of the Sale on the same terms.
  • Nothing in the Order affects attachment of the DIP Liens, Adequate Protection Liens, and Prepetition Liens to the gross proceeds of the Sale, subject in all respects to the DIP Orders.
• The Court found that the Purchaser would not consummate the transactions absent an express order that neither it nor its affiliates, subsidiaries, officers, directors, partners, principals, shareholders (including any Sponsor), professionals, representatives, successors, or assigns will bear any liability for such Interests, and that a transfer other than free and clear would be of substantially less benefit to the estates.
• On the Closing Date, each of the Debtors' creditors is authorized and directed to execute documents and take actions necessary to release its Liens in the Assets. If any party fails to deliver termination statements, instruments of satisfaction, or releases prior to Closing, the Debtors are authorized to execute and file such documents on that party's behalf, the Purchaser may record a certified copy of the Sale Order as conclusive evidence of release, and the Purchaser may seek to compel execution of such documents.

Successor Liability

• The Sale does not amount to a consolidation, succession, merger, or de facto merger of the Purchaser and the Debtors, and the Purchaser is not a successor to, continuation of, or alter ego of the Debtors or their estates by reason of any theory of law or equity.
• Except for Permitted Liens and Assumed Liabilities or as specifically provided in the Agreement or the Sale Order, the Purchaser does not assume and is not responsible for any liability or obligation of the Debtors, their estates, or their predecessors or affiliates, including any "Successor or Other Liabilities" — defined to include theories of successor, vicarious, antitrust, environmental, revenue, pension, ERISA, tax, labor (including the WARN Act and state law equivalents), employment or benefits, de facto merger, business continuation, substantial continuity, alter ego, derivative, transferee, veil piercing, escheat, continuity of enterprise, mere continuation, product line, and products liability.
• The Purchaser shall have no liability for the Excluded Liabilities, and neither the purchase of the Assets nor the Purchaser's use of Assets previously operated by the Debtors will cause it to be deemed a successor or to incur derivative liability, including on account of warranties, intercompany loans and receivables among the Debtors, taxes relating to cancellation of debt, or the operation of the Assets or the Debtors' ratings experience prior to the Closing Date.
• Except for Permitted Liens and Assumed Liabilities, or as specifically agreed in the Agreement or provided in paragraph 36 of the Sale Order (governing liabilities under Designated Contracts during the Designation Rights Period), the Purchaser has no liability for Interests that become due or owing prior to the Closing Date or that arise after the Closing Date but relate to any act, omission, circumstance, breach, default, or event occurring prior to the Closing Date, including liabilities calculable by reference to the Debtors or their assets, operations, experience, or similar ratings, or relating to conditions continuing as of the Closing.
• All Persons holding Interests — including debt and equity holders, governmental, tax, and regulatory authorities, lenders, trade creditors, litigation claimants, contract counterparties, customers, landlords, licensors, and employees — are forever barred, estopped, and permanently enjoined from asserting such Interests against the Purchaser and its affiliates and representatives, including by commencing or continuing any action, enforcing any judgment, creating or perfecting any Interest, asserting any setoff or subrogation right, or, to the extent prohibited by section 525, revoking or refusing to renew any license or permit relating to the Assets.

Assumed Liabilities

• As of or following the Closing Date, the Purchaser shall assume and pay, discharge, perform, or otherwise satisfy the Assumed Liabilities, subject to the terms of the Agreement. The transfer renders the Purchaser fully liable for any and all Assumed Liabilities, constitutes a legal, valid, and effective delegation of those liabilities to the Purchaser, and divests the Debtors of all liability with respect to them except as otherwise expressly provided in the Sale Order.
• The Purchaser is responsible for, and shall pay, all amounts owed under a Proposed Assumed Contract or Designated Contract that first become due and payable on or after the Closing Date, regardless of when such amounts accrued; provided that if a Designated Contract is later rejected, the Purchaser has no obligations following the effective date of rejection.
• With respect to any Proposed Assumed Contract that is a Real Property Lease, Assumed Liabilities include, after the Assignment Effective Date: (i) year-end adjustment and reconciliation amounts becoming due or accruing after that date (with entitlement to any credits); (ii) all amounts becoming due after that date under the lease, including royalties, rents, utilities, taxes, insurance, fees, common area and other maintenance charges, promotion funds, percentage rent, and other obligations accrued but unbilled, not yet due, or subject to further adjustment; (iii) compliance with all lease terms, including maintenance, repair, and indemnification obligations; (iv) maintenance of insurance coverage and indemnification obligations; and (v) payment of deductibles or self-insured retention amounts where the Purchaser relies on the Debtors' existing insurance coverage for pre-Assignment Effective Date events, except to the extent already satisfied by the applicable Debtor.
• The U.S. Trustee objected at the Sale Hearing to the Assumed Severance Liabilities, solely to the extent they include liabilities arising out of severance costs of Potential Insider Employees — defined as the 14 executive-level and management-level members described on the record at the Sale Hearing and in the Declaration of Amy O'Keefe at Exhibit A, paragraph 5 of ECF No. 403. The objection was consensually resolved following the hearing, and the Agreement was approved in its entirety, including the Assumed Severance Liabilities Provision, provided that no payment on account of Assumed Severance Liabilities may be made to a Potential Insider Employee prior to the confirmation date of a chapter 11 plan of liquidation or reorganization.

Assumption and Assignment

• The assumption and assignment of the Proposed Assumed Contracts, and the sale of the "Designation Rights" — the right to designate Contracts and non-residential real property leases ("Real Property Leases") not previously assumed, assumed and assigned, or rejected — are approved as integral to the Agreement and a sound exercise of business judgment: the assignment is necessary to sell the Assets, allows the Debtors to maximize value, limits Counterparty losses, and maximizes recoveries to other creditors by avoiding rejection claims. All requirements and conditions under sections 363 and 365 of the Bankruptcy Code with respect thereto are found and deemed satisfied.
• Effective upon the Closing Date or the Designation Rights Period Assumption Effective Date, as applicable (the "Assignment Effective Date"), the Debtors are authorized and, unless the Debtors and the Purchaser otherwise agree, directed to assume and assign the Proposed Assumed Contracts to the Purchaser free and clear of all Interests other than Permitted Liens and Assumed Liabilities. Upon the Assignment Effective Date and payment of Cure Costs, the Purchaser is fully and irrevocably vested with the Debtors' right, title, and interest, is deemed substituted for the applicable Debtor as a party to each Proposed Assumed Contract, and the Debtors are relieved of further liability pursuant to section 365(k), except as provided in the Agreement or otherwise expressly provided in the Sale Order.
• Any provision that prohibits, restricts, or conditions assignment (including any change-of-control provision), or that permits a Counterparty to terminate, recapture, impose a penalty, condition renewal, or modify terms upon assignment, or that is triggered by the commencement of the Chapter 11 Cases, the Debtors' insolvency, the assumption and assignment, a change of control, or consummation of the Sale, is deemed an unenforceable anti-assignment or ipso facto provision under sections 365(b), 365(e), and 365(f).
• The Sale Order does not modify or amend any provision of a Proposed Assumed Contract, and each such contract remains fully enforceable by the Purchaser in accordance with its terms and conditions, subject to any amendments or modifications agreed between a Counterparty and the Purchaser.
• Counterparties shall cooperate and expeditiously execute and deliver, upon the Purchaser's reasonable request, any instruments, applications, consents, or other documents required by any public authority or other party to effectuate the transfers. The Debtors and the Purchaser shall each take all actions reasonably required to effect the assumption and assignment, including facilitating negotiations with Counterparties, with the Debtors' post-Closing actions taken at the Purchaser's expense.
• No less than three business days prior to Closing, the Debtors shall file and serve the Closing Assignment Notice, a schedule of Contracts and Real Property Leases identified by the Purchaser in its sole discretion for assumption and assignment at Closing. The notice will consist only of contracts for which no Assumption and Assignment Objection was timely filed or, if filed, was resolved prior to filing.
  • No Contract or Real Property Lease as to which a Counterparty timely filed an Assumption and Assignment Objection may be treated as a Proposed Assumed Contract unless and until the objection is resolved or overruled.
  • Any party with a right to consent to assumption or assignment that failed to timely object is deemed to have consented for purposes of section 365(e)(2)(A)(ii), and the Purchaser is deemed to have demonstrated adequate assurance of future performance under sections 365(b)(1)(C) and 365(f)(2)(B).
• Landlords do not release the Debtors from indemnification claims under Real Property Leases arising from third-party claims for occurrences prior to the Assignment Effective Date, and landlords' rights with respect to the Debtors' available insurance coverage for such claims are preserved; the Purchaser, however, takes the applicable premises free and clear of, and assumes no liability for, any such obligations.
• The requirements of Bankruptcy Rule 6006(f)(6) are waived for cause. Nothing in the Order constitutes an admission by the Debtors or the Purchaser that any contract is executory or must be assumed and assigned to consummate the Sale.

Cure Costs and Adequate Assurance

• Cure will be deemed timely if paid no later than five business days following the Assignment Effective Date (the "Cure Cost Payment Deadline"). Defaults are cured by the Purchaser solely to the extent set forth in the Agreement and the Sale Order or as agreed with the applicable Counterparty, and payment of Cure Costs shall be in full and final satisfaction of all defaults arising or accruing prior to the Assignment Effective Date, including non-monetary defaults, which are deemed cured upon Closing without further obligation of the Purchaser; this does not affect the Purchaser's obligations under paragraph 26 of the Sale Order, including the Real Property Lease Assumed Liabilities described above.
• The Purchaser's payment of Cure Costs, its agreement to perform post-assignment obligations, and the evidence of adequate assurance provided to Counterparties constitute adequate assurance of future performance within the meaning of sections 365(b)(1) and 365(f)(2), to the extent required and not waived by Counterparties.
• Counterparties that failed to timely file and serve an Assumption and Assignment Objection are forever barred from objecting or asserting monetary or non-monetary defaults, and the applicable Cure Costs are deemed finally determined; provided that a Counterparty retains 14 calendar days to object if the previously stated Proposed Cure Cost has been modified without its consent.
• Upon resolution or overruling of any timely-filed objections, payment of Cure Costs, and the applicable Debtor's resolution of any default arising from a failure to perform non-monetary obligations to the extent required under the Bankruptcy Code, no default or other obligation arising prior to the Assignment Effective Date exists under any Proposed Assumed Contract, and each Counterparty is forever barred, estopped, and permanently enjoined from (i) declaring a default based on pre-Assignment Effective Date acts or occurrences, (ii) asserting any assignment fee, default, breach, claim of pecuniary loss, or condition to assignment, or (iii) taking action against the Purchaser on account of any Debtor's financial condition, bankruptcy, or non-performance. Counterparties are likewise barred from asserting indemnity or warranty claims for pre-Assignment Effective Date occurrences and from imposing rent accelerations, assignment fees, increases, or other fees.
• A landlord's timely filed Assumption and Assignment Objection challenging assumption, including adequate assurance-related issues and evidence, is expressly reserved until adjudicated at a Contract Hearing or consensually resolved. The Debtors may not argue issue preclusion as to adequate assurance-related evidence or findings relevant to preserved lease assumption objections.
• From entry of the Sale Order, the Debtors may not settle an objection to the assignment of a Proposed Assumed Contract or Designated Contract, including as to Cure Costs, without the Purchaser's express prior written consent (email being sufficient). If such an objection remains unresolved before expiration of the Designation Rights Period, the Debtors may elect not to assume and assign and may designate the Contract or Real Property Lease for rejection.

Designation Rights

• If an Assumption/Rejection Objection is unresolved prior to the Closing Date, the affected contracts shall, at the Purchaser's election, be deemed Designated Contracts; the Purchaser will proceed to close with respect to all other Assets and determine during the Designation Rights Period whether to assume and assign or reject such contracts once the objection is resolved.
• The Purchaser may, in its sole discretion, designate any Designated Contract for assumption and assignment or rejection by delivering a Purchaser Designation Notice, which must be provided at least seven business days prior to expiration of the Designation Rights Period and, for assumptions, must include the associated Proposed Cure Cost.
  • Within three business days of receipt, the Debtors shall file and serve a Designation Rights Period Assumption and Assignment Notice or Designation Rights Period Rejection Notice, as applicable. For Real Property Leases, the notices must include the store number, store address, landlord entity name, tenant debtor entity, and proposed assignee, accompanied by a proposed form of order.
  • Current adequate assurance information for the Purchaser shall be provided to affected Counterparties upon request, concurrently with the Designation Rights Period Assumption and Assignment Notice.
  • Where the Proposed Cure Cost is consistent with the Potential Assumption and Assignment Notice or the Counterparty has consented to any deviation, assumption and assignment is deemed effective upon filing of the notice. Where the Proposed Cure Cost has changed without consent, or the Counterparty had not previously received notice, the Counterparty has 14 days to object, failing which assumption and assignment becomes effective upon expiration of that period. For Real Property Leases, the Debtors must submit an assumption and assignment order under certification of counsel.
  • Rejections are immediately effective without further order; for Real Property Leases, the Debtors shall submit a rejection order providing an effective date of the later of the filing and service of the rejection notice or surrender of the premises by return of keys and alarm codes or notice permitting re-entry.
• Counterparties to Designated Contracts may object solely as to (a) a Proposed Cure Cost modified without their consent, (b) for Real Property Leases, the identity of the Purchaser on adequate assurance grounds, and only if adequate assurance has materially changed, or (c) rejection of Contracts or Real Property Leases added to a Designation Rights Rejection Notice, in each case within 14 days after filing of the applicable notice.
• Any Contract or Real Property Lease not designated for assumption and assignment or rejection before expiration of the Designation Rights Period is deemed rejected upon such expiration without further order of the Court.
• The Purchaser may negotiate assumption and assignment directly with a Counterparty listed on a Potential Assumption and Assignment Notice and deliver written notice of any resulting consensual agreement to the Debtors, with assumption and assignment effective on the date set forth in that notice without further order (subject to entry of an order under certification of counsel for Real Property Leases).
• Use and occupancy by the Purchaser of non-residential real property governed by a Designated Contract during the Designation Rights Period is in the nature of a sublease terminating on the earlier of (i) expiration of the Designation Rights Period, (ii) entry of a final, non-appealable order approving assumption and assignment of the lease, or (iii) rejection of the lease.
  • During the Sublease Term, the Purchaser is responsible for performance of all terms, obligations, and covenants of the lease and submits to the Court's jurisdiction for enforcement, including recovery of possession, and must maintain and provide evidence of insurance naming the landlords and their agents as additional insureds.
  • Nothing modifies or relieves the Debtors of their obligation to timely perform lease obligations under section 365(d)(3). The Debtors shall use commercially reasonable efforts to provide unrestricted access to the applicable properties to allow the Purchaser to operate the business.
• The Purchaser is responsible for all liabilities under Designated Contracts incurred and coming due during the Designation Rights Period through the effective date of assumption and assignment, rejection, or deemed rejection, payable on a current basis. For Real Property Leases, the Purchaser funds such amounts to the Debtors, which hold them in trust solely for the benefit of the applicable Counterparty, free from commingling or other use, for prompt remittance when due.
• Previously Omitted Contracts — executory contracts or unexpired leases inadvertently omitted from the Potential Assumption and Assignment Notice — identified by the Purchaser during the Designation Rights Period may be designated for assumption and assignment by written notice, with the Debtors filing and serving a Previously Omitted Contract Notice within three business days identifying the contract, the Proposed Cure Cost, and the objection deadline. The Counterparty has 14 days from service to object; absent a timely objection, the contract is deemed a Proposed Assumed Contract and the assignment effective upon expiration of that period, subject for Real Property Leases to entry of an order under certification of counsel. If a timely objection is filed, the Sale Order's procedures apply mutatis mutandis, and the Purchaser's failure to designate any contract or lease as a Previously Omitted Contract does not prejudice its rights under the Designation Rights provisions.
• Where a Designated Contract is subject to a timely-filed Assumption/Rejection Objection, the parties will cooperate in good faith to resolve it; if unresolved before expiration of the Designation Rights Period, the Debtors shall schedule a hearing on no less than five business days' notice, to occur no later than the Confirmation Hearing. Upon entry of an order determining Cure Costs and authorizing assignment, the Purchaser may elect either assumption and assignment or rejection.
• Any Designated Contract assumed and assigned to the Purchaser during the Designation Rights Period pursuant to the Designation Rights Procedures constitutes a Proposed Assumed Contract for all purposes under the Sale Order. Upon expiration of the Designation Rights Period, the Debtors shall file a notice including a final register of all Proposed Assumed Contracts assumed and assigned to the Purchaser, together with associated Cure Costs. The Sale Order does not itself specify the length of the Designation Rights Period, which is fixed by the Agreement and the Bidding Procedures Order.

Use of Sale Proceeds

• Any Sale Transaction Fee due to Guggenheim Securities upon consummation shall be funded into the Carve-Out or segregated and escrowed for Guggenheim's exclusive benefit (the "Guggenheim Reserve") as an express carve-out from the collateral of the Debtors' pre- and post-petition secured lenders, prior to any other use or distribution of proceeds. Any shortfall shall be funded into the Guggenheim Reserve at Closing from available cash of the Debtors, likewise as an express carve-out; in no event is the Purchaser or its affiliates obligated to make any payment to Guggenheim Securities. The Sale Transaction Fee shall be funded only once. Nothing in the Order prohibits the use of any unencumbered assets of the Debtors or their proceeds to pay Guggenheim Securities' fees and expenses, or the assertion or allowance of an administrative priority claim under section 503(b)(2) on account of those fees and expenses.
• Once the Guggenheim Reserve is funded, the Debtors shall promptly use sale proceeds to satisfy outstanding DIP Obligations in accordance with Section 2.11 of the DIP Loan Agreement.
• On the Closing Date and after the DIP Obligations are paid in full in cash, the Debtors shall deposit $15,800,000 (the "503(b)(9) Reserve Amount") into a segregated, non-commingled account established solely to pay allowed 503(b)(9) claims for goods received within 20 days before the Petition Date.
  • The reserve is held for the benefit of holders of allowed 503(b)(9) Claims, is not subject to creditor liens other than the DIP Liens (if applicable), Adequate Protection Liens, and Prepetition Liens, and shall be promptly remitted to the applicable holder of an allowed 503(b)(9) Claim — to which remittance the DIP Secured Parties and Prepetition Secured Parties consent — upon the earlier of the effective date of the assumption and assignment of a Proposed Assumed Contract or a confirmed chapter 11 plan. The Debtors' liability on account of 503(b)(9) Claims is not capped at the reserve amount, all of the Debtors' rights and defenses with respect to any 503(b)(9) Claim are expressly preserved, and any residual funds constitute estate property and proceeds of DIP and Prepetition Collateral subject to the applicable liens.
• On or promptly following the Closing Date and after payment in full in cash of the DIP Obligations, the Debtors shall provide $6.3 million of cash collateral to U.S. Bank to collateralize the letter of credit issued for the benefit of Sentry Insurance a Mutual Company in respect of the Debtors' workers' compensation insurance program.
• The Adjustment Escrow Amount under Section 2.10 of the Agreement is funded solely by the Purchaser, is not property of the Debtors' estates under section 541, is not a proceed of any DIP Collateral, and is not subject to any lien, claim, or interest of the DIP Agent, the DIP Lenders, or any other creditor. Releases to the Purchaser may be made without further order of the Court, and no party may interfere with or delay such release; any portion released to the Debtors (or a successor entity under an Acceptable Plan) constitutes estate property and proceeds of DIP and Prepetition Collateral subject to the applicable liens. Nothing in that provision, including the no-interference language, limits, impairs, waives, or modifies any right or remedy of the DIP Agent, the DIP Lenders, or the Prepetition Secured Parties under the DIP Orders or DIP Loan Documents, including their liens on, and right to receive, proceeds and Debtor-side releases of any portion or all of the Adjustment Escrow Amount.
• Nothing in the Sale Order, including any deemed consent under section 363(f)(2), waives, impairs, or modifies the rights of the DIP Secured Parties or Prepetition Secured Parties to receive sale proceeds or to enforce rights and remedies under the DIP Orders or DIP Loan Documents, though the Assets are conveyed free and clear of any DIP Lien, Prepetition Lien, or interest.

Tax Matters

• To the extent the Texas Taxing Authorities — the approximately sixty counties, cities, independent school districts, appraisal districts, municipal utility districts, and emergency service districts enumerated in footnote 6 of the Sale Order — hold valid, perfected, enforceable, senior, and non-avoidable liens as of the Petition Date for 2025 and prior-year personal property ad valorem taxes, including accrued penalties and interest (the "Delinquent Taxes"), such liens attach to the sale proceeds in their relative Petition Date priority, and the Debtors shall either (i) pay all Delinquent Taxes owed incident to the Assets on the Closing Date or (ii) set aside $34,447.55 in a segregated Texas Tax Reserve, with the liens continuing to attach until paid in full.
  • The Texas Tax Reserve is in the nature of adequate protection and constitutes neither an allowance of the Delinquent Taxes nor a cap on amounts the Texas Taxing Authorities may be entitled to receive. Nothing limits the Texas Taxing Authorities from receiving payment from a source other than sale proceeds, and no liability for Delinquent Taxes is imposed on the Purchaser.
• Personal property taxes for tax year 2026 pertaining to the Assets become the responsibility of the Purchaser, with valid and enforceable liens retained against the Assets until paid in full, including any penalties and interest. The Debtors' pro-rata share is apportioned on terms agreed pursuant to the Agreement, and any proration dispute has no effect on the Purchaser's responsibility to pay the 2026 Taxes.
• The Sale shall not be exempt from taxes under section 1146(a) of the Bankruptcy Code, and no bulk sales law or similar law of any state or jurisdiction applies to the transactions.

Specific Counterparty Provisions

• Tempur World, LLC: Nothing in the Sale Order impairs, releases, precludes, enjoins, or extinguishes the rights, claims, defenses, or remedies of the Debtors, Tempur and its affiliates, or the Purchaser in the pending TTAB Proceedings — (i) Cancellation No. 92091494, (ii) Opposition No. 91287992, and (iii) Cancellation No. 92083580 — solely with respect to the registrability, cancellation, maintenance, enforceability, ownership, or priority of the trademarks at issue.
  • The Sale Order makes no determination as to registrability, enforceability, ownership, priority, or cancellability of any such trademark. The carve-out limits the Purchaser's protections under the Sale Order only to the extent necessary to permit continued prosecution and defense of the TTAB Proceedings, and does not permit assertion of any claim against the Purchaser, its affiliates, or the Transferred Assets other than such determinations, preserve any pre-Closing claim or liability (including trademark infringement, unfair competition, dilution, damages, or other monetary relief), or cause the Purchaser to be deemed a successor with respect to pre-Closing liabilities relating to the TTAB Proceedings; the Purchaser acquires the Transferred Assets free and clear of any such liabilities to the extent related to acts occurring prior to the Closing Date.
  • To the extent the underlying trademarks have been transferred to the Purchaser, the automatic stay is no longer in effect with respect to the TTAB Proceedings effective upon consummation of the Closing.
• Synchrony Bank: Upon identification of the Synchrony Agreements — the Retailer Program Agreement dated January 1, 2014 between Synchrony Bank and one or more Debtors, as amended, together with all related agreements, instruments, side letters, waivers, supplements, and letters of credit, including the Home Network Program Card Acceptance Agreement effective July 1, 2017; Irrevocable Standby Letter of Credit No. SLC10023713 dated October 10, 2025; the October 29, 2025 letter interpreting that letter of credit; the Letter of Credit/Substitute Collateral letter dated February 2, 2026; and the Extension of Waiver for Affirm Pilot/Waiver of Exclusivity for Lease to Own Products dated March 19, 2026 — as Proposed Assumed Contracts or Designated Contracts, the Purchaser is responsible for all amounts and obligations that first become due on or after the Closing Date, even if relating to earlier acts or circumstances. Synchrony retains all rights, claims, and defenses, including as to letters of credit and reserves; the Purchaser's obligations cease upon the effective date of any rejection.
• Stord Inc.: Pursuant to paragraph 8 of the Trade Creditor Agreement dated July 15, 2026, the Debtors acknowledged that Stord maintains a valid, first-priority warehouse lien against the Debtors' goods in its possession, custody, or control, which continues to secure amounts due after the Petition Date. The Debtors shall pay the Prepetition Trade Claim in full pursuant to the Critical Vendor Order prior to Closing.
• Flextronics Industrial, Ltd.: Absent a Flex Cure Dispute, the Flex Agreements — the Manufacturing Supply Agreement for the supply of component parts to be incorporated into finished goods, dated February 10, 2021, between Flex and Sleep Number Corporation, as modified or amended with all addendums and exhibits — shall be assumed by the Debtors and assigned to the Purchaser on the Closing Date, with the cure of the Flex Cure Claim effected as required under section 365 of the Bankruptcy Code.
  • The Debtors and Flex agree the pre-petition portion of the Flex Cure Claim equals $5,709,670.71. The Debtors will propose the post-petition portion, covering the Petition Date through Closing, three business days prior to the Closing Date; any disagreement will be resolved under paragraph 30 of the Sale Order.
  • The Debtors and the Purchaser shall cause payment of the Flex Cure Claim (i) absent a Flex Cure Dispute, within five business days of the Closing Date, and (ii) if disputed, within five business days after entry of an order authorizing assumption and assignment of the Flex Agreements or as agreed by the Debtors, the Purchaser, and Flex under a stipulation filed with the Court; the earlier of clauses (i) and (ii) to occur is the "Flex Assignment Date". Payment is deemed to cure all existing defaults and satisfy all current amounts due and payable to Flex as of the Flex Assignment Date, without impairing any rights of the parties under the Flex Agreements or applicable law, including defensive rights of setoff or recoupment.
  • Upon assumption and assignment, the Purchaser shall pay, discharge, and perform all liabilities first becoming due and payable under the Flex Agreements from and after the Flex Assignment Date, including inventory-related liabilities set forth in paragraphs 18 and 20(ii) of Flex's omnibus objection [ECF No. 269], irrespective of when accrued and subject to the Purchaser's defenses.

Good Faith and Section 363(m) Protections

• The Agreement was negotiated, proposed, and entered into without collusion, in good faith, and from arm's-length bargaining positions; the Purchaser did not act collusively with any Person; and the purchase price was not controlled by any agreement among bidders, all of whom acted in good faith, at arm's length, and in a noncollusive manner.
• Supporting findings include that the Purchaser recognized the Debtors were free to deal with any other interested party; complied with the Bidding Procedures Order; agreed to subject its bid to the competitive bidding procedures; disclosed all payments and related agreements or arrangements; and shares no common identity of directors or controlling stockholders with the Debtors.
• The Purchaser is entitled to the full rights, benefits, privileges, and protections of section 363(m), which the Court found integral to the Sale and without which the Purchaser would not consummate. Reversal or modification on appeal will not affect the validity of the Sale, including the assumption and assignment of the Proposed Assumed Contracts, absent a duly entered stay pending appeal.
• Neither party engaged in conduct that would permit avoidance of the Agreement or the Sale, or the imposition of costs or damages, under section 363(n); the Purchaser entered into no agreement with, and did not collude with, any potential or actual bidder, and neither the Debtors nor any successor in interest may bring an action against the Purchaser under section 363(n).
• The Agreement and Related Documents were not entered into to hinder, delay, or defraud creditors, and neither party is entering into the Sale fraudulently for purposes of statutory or common-law fraudulent conveyance and fraudulent transfer claims.

Business Justification

• The Debtors demonstrated compelling circumstances and good, sufficient, and sound business purposes for entering into the Agreement and performing thereunder, and determined in their business judgment that consummating the Sale is in the best interests of the Debtors, their estates and creditors, and all other parties in interest.
• The Court found that prompt consummation outside the ordinary course under section 363(b), before and outside of a plan of reorganization, is necessary to maximize estate value and expedite cash distributions to creditors, and that any other transaction, including one pursuant to a chapter 11 plan, would not have yielded as favorable an economic result. Accordingly, there is cause to lift the stay contemplated by Bankruptcy Rules 6004 and 6006.
• The Sale does not constitute a sub rosa chapter 11 plan and neither impermissibly restructures creditor rights nor impermissibly dictates the terms of a chapter 11 plan.
• The Purchaser would not have entered into the Agreement or consummated the Sale without all of the relief provided in the Sale Order.

Notice and Objections

• The Motion — the same motion that sought the Bidding Procedures relief [ECF No. 17] — is deemed to have served as the motion requesting the relief granted in the Sale Order pursuant to Section I of the Sale Guidelines, so the Debtors were not required to file a separate motion, and notice of the Motion is deemed good and sufficient and appropriate under the circumstances.
• Due, proper, timely, adequate, and sufficient notice of the Motion, the Sale Hearing, the Sale, the assumption and assignment of the Proposed Assumed Contracts, the Cure Costs, the Designation Rights, and all related deadlines was provided to all interested parties, including the Sale Notice Parties, as evidenced by the affidavits of service at ECF Nos. 36, 159, and 390. Publication in the Wall Street Journal, evidenced by the Certificate of Publication at ECF No. 231, was sufficient as to Persons whose identities are not reasonably ascertainable. The Debtors' disclosures concerning the Motion, the Agreement, the Bidding Procedures, the Auction, and the Sale Hearing were good, complete, and adequate, and a reasonable opportunity to object and be heard was afforded to all interested parties.
• All objections, reservations of rights, and responses not withdrawn, waived, settled, resolved, or adjourned are denied and overruled on the merits with prejudice; provided that timely Assumption and Assignment Objections are preserved until consensually resolved or adjudicated by the Court.
  • The following ECF Nos., and any other Assumption and Assignment Objection filed prior to the Cure Objection Deadline, are deemed timely: ECF Nos. 181, 203, 222-23, 225, 228-29, 235, 238, 242-48, 250-51, 254-55, 258, 262-66, 269, 270-71, 279, 287, 289-91, 293-96, 298-99, 304, 306-10, 312, 313-14, 316, 318, 320, and 322-23.
• Parties that did not timely object, whose objections were consensually resolved, or that withdrew their objections are deemed to have consented to the relief granted for all purposes, including under section 363(f)(2).

Approval of the Agreement and Closing

• The Motion is granted, and the Agreement and Related Documents, including any amendments, supplements, and modifications, and all terms and conditions thereof, are approved in their entirety as set forth in the Sale Order and on the record of the Sale Hearing, which is incorporated into the Order as if fully set forth therein. The Debtors are authorized under sections 105(a), 363, and 365 to take all actions necessary to consummate the Sale, including any actions that would otherwise require approval of Counterparties, shareholders, members, or the board of directors.
• The Sale Order is binding, without posting any bond, upon the Debtors, their estates, all creditors and equity holders, all holders of Claims, Liens, or other Interests, all Counterparties, all agencies, the Purchaser, and all successors and assigns, including any trustee, examiner, or receiver subsequently appointed in the Chapter 11 Cases or any successor case following conversion to chapter 7.
• Neither the Debtors nor the Purchaser is obligated to proceed with Closing until all conditions precedent are met, satisfied, or waived under the Agreement. Unless the Purchaser otherwise consents, all Persons that are in or come into possession of any portion of the Assets at any time prior to the Closing Date are directed to surrender possession to the Purchaser on the Closing Date or as thereafter requested, and all Persons are forever prohibited and enjoined from taking any action that would adversely affect or interfere with the transfer.
• With the Purchaser's consent, all Bankruptcy Court Milestones other than those set forth in Sections 5.9(g) and (h) of the Agreement are deemed waived and satisfied.
• The Agreement may be modified, amended, or supplemented in a signed writing without further notice to or order of the Court, so long as the change does not have a material adverse effect on the Debtors' estates or conflict with the Sale Order; any modification adverse to the DIP Lenders and Prepetition Lenders, as reasonably determined by the Administrative Agent, requires the Administrative Agent's prior consent and, for materially adverse changes, the consent of the Required DIP Lenders.

Corporate Authority

• Each applicable Debtor has full requisite corporate or organizational power and authority to execute, deliver, and perform the Agreement and the Related Documents and to consummate the Sale, and has taken all requisite corporate action and formalities to authorize and approve them; upon execution, each agreement will constitute a valid and binding obligation enforceable against the applicable Debtor.
• No government, regulatory, or other consents or approvals beyond those expressly provided for in the Agreement are required for the Debtors' execution, delivery, and performance or for consummation of the Sale.

Post-Closing Arrangements

• All governmental agencies, filing agents, filing officers, title agents, recording agencies, secretaries of state, and other officials are directed to accept any documents and instruments necessary to consummate the Sale, and neither the Debtors nor the Purchaser is required to execute or file releases, termination statements, assignments, consents, or other instruments to implement the Order. The Sale Order is deemed to be in recordable form, and the Purchaser may file a certified copy in any filing or recording office, which shall be sufficient to release, discharge, and terminate any of the Interests as of the Closing Date.
• To the extent provided by section 525, no governmental unit may deny, revoke, suspend, or refuse to renew any permit, license, or similar grant relating to the operation of the Assets on account of the filing or pendency of the Chapter 11 Cases or consummation of the transactions. Where a license or permit is determined not to be assumable and assignable under section 365 or otherwise transferable, the Purchaser may apply for and promptly obtain it, with the Debtors authorized to cooperate.
• The automatic stay under section 362 is lifted to the extent necessary, without further order of the Court, to allow the Purchaser to deliver any notice provided for in the Agreement and to take any actions permitted under the Agreement and Related Documents.
• The Debtors and the Purchaser shall, upon request, execute and deliver such further documents and take such further actions as may reasonably be deemed necessary to consummate the Sale, including to vest, perfect, confirm, or record the Purchaser's right, title, and interest in the Assets and the Proposed Assumed Contracts.
• For cause shown, and pursuant to Bankruptcy Rules 6004(h), 6006(d), 7062, and 9014, the Sale Order is not stayed after entry but is effective and enforceable immediately upon entry, with the stays provided in Bankruptcy Rules 6004(h) and 6006(d) expressly waived and inapplicable; the Debtors and the Purchaser are accordingly authorized and empowered to close the Sale immediately upon entry.

Miscellaneous Provisions

• Failure to include or specifically reference any particular provision of the Agreement or a Related Document does not diminish or impair its effectiveness, and all provisions of the Sale Order, the Agreement, and the Related Documents are non-severable and mutually dependent.
• In the event of any inconsistency between the Sale Order and the Motion, the Agreement, any Related Document, the Bidding Procedures Order, or any other prior order or pleading, the Sale Order controls; provided that nothing modifies, limits, or affects the rights, remedies, protections, or entitlements of the Prepetition Secured Parties under the Prepetition Loans or of the Prepetition Secured Parties and DIP Secured Parties under the DIP Orders or DIP Loan Documents.
• Where any plan of reorganization or liquidation, confirmation order, or other order entered in the Chapter 11 Cases (or any subsequent chapter 7 case) conflicts with or derogates from the Agreement, any Related Document, or the Sale Order, those documents control; provided that a separate written agreement between the Purchaser and a Proposed Assumed Contract counterparty governs their respective rights and obligations.

Jurisdiction and Final Order

• The Amended Sale Order was entered in In re Sleep Number Corporation, et al., Case No. 26-11399 (KYP) (Jointly Administered), pending in the United States Bankruptcy Court for the Southern District of New York before the Hon. Kyu Y. Paek, and was signed and entered on July 30, 2026 [ECF No. 470]. The Court has jurisdiction under 28 U.S.C. §§ 157 and 1334 and the Amended Standing Order of Reference M-431, dated January 31, 2012 (Preska, C.J.), and may enter a final order with respect to the Motion, the Sale, and all related relief; the matter is a core proceeding under 28 U.S.C. § 157(b); and venue is proper under 28 U.S.C. §§ 1408 and 1409. The statutory predicates are sections 105(a), 363, and 365 of the Bankruptcy Code, Bankruptcy Rules 2002(a)(2), 6004, 6006, 9007, and 9014, and Local Rules 6004-1 and 6006-1.
• The Sale Order constitutes a final and appealable order within the meaning of 28 U.S.C. § 158(a), and the Court expressly found no just reason for delay in its implementation and directed entry of judgment.
• The Court retains exclusive jurisdiction to interpret, implement, and enforce the Sale Order, the Agreement, and the Related Documents; to compel delivery of the Assets; to enforce the injunctions and limitations of liability; to decide disputes concerning the status, nature, and extent of the Assets and the Proposed Assumed Contracts; and to enter orders under sections 105, 363, and 365, including after the confirmation date of any plan of liquidation or reorganization.

Key Dates

• Synchrony Retailer Program Agreement Date: January 1, 2014 (related documents effective/dated July 1, 2017; October 10, 2025; October 29, 2025; February 2, 2026; and March 19, 2026)
• Flex Manufacturing Supply Agreement Date: February 10, 2021
• Guggenheim Securities Engagement Letter Date: February 23, 2026 [ECF No. 132]
• Asset Purchase Agreement Date: June 12, 2026
• Bidding Procedures Order Entry: July 2, 2026 [ECF No. 167]
• Auction: July 13, 2026
• Trade Creditor Agreement (Stord Inc.) Date: July 15, 2026
• Sale Order Entry: July 30, 2026
• Closing Assignment Notice Deadline: no less than 3 business days prior to the Closing Date
• Flex Post-Petition Cure Claim Proposal: 3 business days prior to the Closing Date
• Cure Cost Payment Deadline: no later than 5 business days following the Assignment Effective Date
• Back-Up Termination Date: the earlier of 30 days after entry of the Sale Order or consummation of the Sale Transaction with the Purchaser
• Back-Up Bid Closing Inside Date: 15 days following the Back-Up Bidder's Hart-Scott-Rodino filings, which must be made within 2 business days of the Back-Up Notification Date
• Back-Up Bid Closing Outside Date: 60 days from execution of the Back-Up APA
• Purchaser Designation Notice Deadline: at least 7 business days prior to expiration of the Designation Rights Period
• Designation Rights Period Notices: within 3 business days of the Debtors' receipt of a Purchaser Designation Notice
• Designation Rights Period and Previously Omitted Contract Objection Deadlines: 14 days from filing or service of the applicable notice
• Revised Sale Order Hearing (Back-Up scenario): within 3 days of filing the notice of termination of the Stalking Horse Bid, subject to the Court's availability
• Unresolved Designated Contract Objection Hearing: on no less than 5 business days' notice, and no later than the Confirmation Hearing
• 503(b)(9) Lookback: goods received by the Debtors within 20 days before the Petition Date