Sleep Number Corporation - Chapter 11 APA Summary

Sale Order & Asset Purchase Agreement Summary

Parties Involved

• Sellers: Sleep Number Corporation, a Minnesota corporation, and its affiliated debtors — Select Comfort Retail Corporation; Select Comfort Canada Holding Inc.; Select Comfort SC LLC (a Minnesota limited liability company); and Sleep Number Health Corporation (collectively, the Debtors), with a mailing address of 1001 Third Avenue South, Minneapolis, MN 55404. Sleep Number Corporation owns, directly or indirectly, 100% of the interests of each subsidiary; the Seller and the Subsidiaries are collectively the Seller Group.
• The Debtors filed voluntary chapter 11 petitions on June 12, 2026 in the United States Bankruptcy Court for the Southern District of New York and continue to operate as debtors in possession under sections 1107(a) and 1108 of the Bankruptcy Code.
• Purchaser: SNBR Inc., a Delaware corporation and an affiliate of Sleep Country Canada, Inc., which served as the Stalking Horse Bidder and which the Debtors designated as the Successful Bidder.
• Sleep Country Canada, Inc., a corporation formed under the federal laws of Canada, is a party to the Agreement for purposes of Section 10.21 (the Sleep Country Guarantee) only.
• Governing agreement: the Amended and Restated Asset Purchase Agreement dated as of July 18, 2026 (the Agreement), which amends and restates in its entirety the original Asset Purchase Agreement dated June 12, 2026, as amended by Amendment No. 1 dated July 2, 2026. Material amendments made in connection with selection of the Stalking Horse Bid as the Successful Bid are referred to as the APA Amendments.
• Back-Up Bidder: Brooklyn Bedding LLC.
• Immediately prior to the Closing Date, the Purchaser was not an "insider" or "affiliate" of the Debtors as those terms are defined in the Bankruptcy Code, and no common identity of incorporators, directors, or controlling stockholders existed between the Debtors and the Purchaser.

Assets Being Sold

• The "Transferred Assets" (the Assets), as defined in the Agreement, are to be sold to the Purchaser free and clear of all liens, claims, encumbrances, and interests to the fullest extent permitted by law, other than the Permitted Liens and Assumed Liabilities (each as defined in the Agreement).
• The Transferred Assets comprise all rights, title and interests in the assets and interests of the Seller Group used, held for use, or useful in connection with the Business (other than the Excluded Assets), conveyed pursuant to sections 105(a) and 363 of the Bankruptcy Code.
  • The Business consists of developing, selling, delivering, providing, and servicing personalized sleep wellness solutions, including (a) smart beds and mattresses, (b) adjustable bed frames, bases and furniture, (c) pillows, bedding and accessories, and (d) digital solutions and applications for sleep tracking and smart bed control.
  • Transferred Assets include, among other items, transferable Permits used in the Business; Assigned Contracts elected by the Purchaser; the Owned Intellectual Property, together with related royalties, fees, income, and proceeds; personal property (including machinery, equipment, furniture, information technology systems, hardware, and vehicles); all Inventory; all Accounts Receivable; all Transferred Insurance Policies; all Assumed Seller Plans; and all goodwill, customer and referral relationships, and other intangible assets.
  • The Transferred Assets do not include any owned real property.
• Immediately prior to consummating the Sale, the Assets constitute property of the Debtors' estates, good title is vested in the Debtors' estates within the meaning of section 541(a) of the Bankruptcy Code, and the Debtors are the sole and rightful owners of the Assets.
• Upon and following consummation of the Sale, the transfer will vest the Purchaser with good and marketable title to the Assets, and the Purchaser shall be the sole and rightful owner of the Assets.

Excluded Assets

• Any assets, rights and properties of the Seller Group not described as Transferred Assets are retained by the Seller Group, including:
  • All cash and cash equivalents (including the Customer Deposit Balance), bank accounts, and certain escrow monies and deposits, together with investment securities and other short- and medium-term investments;
  • The Excluded Books and Records;
  • Any capital stock, shares, warrants, options, membership interests, or other equity or equity-linked securities of any member of the Seller Group or any other Person;
  • All Seller Plans that are not Assumed Seller Plans, and all related assets, trusts, accounts and insurance policies; and
  • All credit card processing merchant deposits and any other Processor Reserve Deposits.

Assumed Liabilities

• Effective as of the Closing, the Purchaser will assume, among others:
  • Liabilities for returns of merchandise previously sold to customers, to the extent in compliance with the applicable return policy;
  • Liabilities for validly issued gift cards or gift certificates outstanding as of the Closing, including certain customer loyalty and rewards program obligations;
  • All Accounts Payable, and, solely to the extent relating to periods following the Closing, accounts payable and other trade payables incurred in the ordinary course of business;
  • All Liabilities relating to severance costs for any Business Employee, whether incurred before, on or after the Closing (the Assumed Severance Liabilities), subject to the limitation described under "Severance Provisions" below;
  • All Cure Costs; and
  • All Liabilities for which the Purchaser is responsible during the Designation Rights Period.

Excluded Liabilities

• The Purchaser assumes only the Assumed Liabilities. Excluded Liabilities include, among others: administrative expenses or priority claims, including 503(b)(9) Claims (other than those included in Cure Costs); Excluded Taxes; Liabilities arising under Environmental Laws (other than those first arising on or after the Closing with respect to the Transferred Assets); and Liabilities associated with any indebtedness, including guarantees of third-party obligations.
• Except with respect to the Permitted Liens and Assumed Liabilities, the Purchaser shall not have, assume, or be deemed to assume any liability or obligation of the Debtors, their estates, or any of their predecessors or affiliates, and shall have no liability for the Excluded Liabilities.

Purchase Consideration

• The Base Purchase Price is $529,500,000. At Closing, the Purchaser shall pay the Seller the Base Purchase Price, plus Prepaid Rent, plus or minus the Closing Working Capital Adjustment, minus the Adjustment Escrow Amount, minus the Closing Marketing Expenditure Deduction (the Purchase Price), and shall assume the Assumed Liabilities.
  • The Target Closing Working Capital is $81,674,696, and the Adjustment Escrow Amount is $10,000,000.
  • The Purchase Price is payable in cash by wire transfer of immediately available funds.
• The APA Amendments increased the total adjusted cash consideration from $415,000,000 under the Stalking Horse APA to $701,800,000 under the Amended and Restated Stalking Horse APA, an increase of $286,800,000, comprised of:
  • An increase in the cash component of the bid from $415,000,000 to $529,500,000 (+$114,500,000); and
  • Value ascribed to Cash APA Adjustments increasing from $0 to $172,300,000 (+$172,300,000).
• Examples of such Cash APA Adjustments include: (i) removal of the Cure Cap (set at $10.0 million under the Stalking Horse APA, with any Cure Costs in excess of that amount being a dollar-for-dollar deduction to the purchase price); (ii) removal of the Processor Reserve Reduction; (iii) the buyer's assumption of severance liabilities; and (iv) the buyer's assumption of accounts payable.
• The total adjusted cash consideration is subject to certain purchase price adjustments and assumptions regarding the ultimate value of the Cash APA Adjustments. The figures above do not capture the value of non-cash adjustments incorporated in the Amended and Restated Stalking Horse APA, nor the value ascribed to the buyer's assumption of certain liabilities under either agreement (e.g., Customer Prepaid Deposits, Customer Returns, and Customer Loyalty and Gift Cards, among others).
• The Agreement provides fair and reasonable terms for the purchase of the Assets, and 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 the Permitted Liens and Assumed Liabilities), including any potential Successor or Other Liabilities.
• As demonstrated by the Gottlieb Declaration, the consideration provided by the Purchaser:
  • is fair and reasonable;
  • constitutes the highest and best offer received for the Assets;
  • will provide a greater recovery for the Debtors' creditors more expeditiously than any other practical available alternative; and
  • constitutes reasonably equivalent value and fair consideration under the Bankruptcy Code and applicable state, federal, and foreign law, 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 than the Purchaser.

Good Faith Deposit

• Pursuant to the Deposit Escrow Agreement, the Purchaser deposited $41,500,000 (the Deposit Amount) in cash with the Deposit Escrow Agent, Kroll Restructuring Administration, LLC.
• If the Closing occurs, the Deposit Amount, together with any accrued investment income, will be delivered to the Seller and applied toward the Purchase Price. If the Agreement is terminated pursuant to Section 9.1(g) (after giving effect to the applicable cure period), the Deposit Amount will be delivered to the Seller within two Business Days of termination.
• 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.

Equity Financing

• Concurrently with execution of the Agreement, the Purchaser delivered to the Seller a signed amended and restated equity commitment letter between the Purchaser and Fairfax Financial Holdings Limited (the Sponsor), under which the Sponsor has committed, subject to the terms set forth therein, to provide (directly or indirectly) equity or debt financing for the purposes stated therein. The Seller is an express third-party beneficiary of the Equity Commitment Letter.
• Assuming satisfaction of the applicable closing conditions and funding of the Equity Financing, the Purchaser will have immediately available funds from the Equity Financing Commitment and excess balance sheet cash in an aggregate amount sufficient to pay all amounts payable under the Agreement and the Related Documents.
• The Purchaser's obligations to perform, including to consummate the Closing, are not conditioned on obtaining the Debt Financing or any alternative debt financing or on the performance of any Debt Financing Source.

Bid Protections and Minimum Overbid

• Break-Up Fee: an amount equal to 3.0% of the Base Purchase Price. Expense Reimbursement Cap: a maximum aggregate amount of $4,000,000.
• Each amount, approved pursuant to the Bid Procedures Order, constitutes an allowed administrative expense claim against the Seller Group on a joint and several basis pursuant to section 503(b) of the Bankruptcy Code. In the event of an Alternate Transaction, the Break-Up Fee is payable from the proceeds of such Alternate Transaction.
• The Seller's obligations to pay the Bid Protections survive termination of the Agreement, and the Bid Protections are deemed earned upon entry of the Bid Procedures Order. Execution of the Original Agreement terminated the Existing Expense Reimbursement Agreement.
• The minimum initial overbid required to qualify as a Qualified Bidder and participate at any Auction was (i) an amount, in cash, no less than the Bid Protections Aggregate Amount, plus (ii) cash or non-cash consideration in the amount of $10,000,000.

Marketing and Auction Process

• 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 to purchase the Assets. Prior to the Bid Deadline, the Debtors received an additional bid from Brooklyn Bedding LLC, which the Debtors, in consultation with the Consultation Parties, determined was a Qualified Bid.
• The Debtors adequately marketed the Assets — including through a 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.
• All potential purchasers were afforded a full and fair opportunity to participate in the bidding process and to make higher or better offers in accordance with the Bidding Procedures, and the Auction was duly noticed.
• The Purchaser's bid, as memorialized by the Agreement, was deemed a Qualified Bid, the Purchaser was a Qualified Bidder eligible to participate at the Auction, and its bid was determined to maximize value for the Debtors' estates and to constitute the highest and best offer for the Assets.

Good Faith of Purchaser

• The Agreement was negotiated, proposed, and entered into by the Debtors and the Purchaser without collusion, in good faith, and from arm's-length bargaining positions, and the purchase price was not controlled by any agreement among bidders.
• The Purchaser is a good-faith purchaser within the meaning of section 363(m) of the Bankruptcy Code and is entitled to the full rights, benefits, privileges, and protections afforded thereunder; these protections are integral to the Sale, and the Purchaser would not consummate the Sale without them.
• The Debtors and the Purchaser have not engaged in any conduct that would cause or permit the Agreement or the Sale to be avoided, or costs or damages to be imposed, under section 363(n) of the Bankruptcy Code, and the Sale may not be avoided under that section.
• A reversal or modification on appeal of the authorization to consummate the Sale shall not affect the validity of the Sale (including the assumption, assignment, and/or transfer of the Proposed Assumed Contracts) unless the authorization and consummation are duly stayed pending appeal.

Business Justification

• The Debtors demonstrated compelling circumstances and a sound business purpose for entering into the Agreement, and determined in their business judgment that consummating the Sale on the terms embodied in the Agreement is in the best interests of the Debtors, their estates and creditors, and all other parties in interest.
• The Sale is necessary for the Debtors to maximize the value of their estates and make cash distributions to creditors as swiftly as possible; the Purchaser would not have entered into the Agreement or consummated the Sale without all of the relief provided in the Sale Order.
• The Sale does not constitute a sub rosa chapter 11 plan, does not impermissibly restructure the rights of any Debtor's creditors, and does not impermissibly dictate the terms of a chapter 11 plan.

Sale Free and Clear of Interests

• Free and Clear means free and clear of all Liens and Liabilities, other than the Permitted Liens and the Assumed Liabilities, in accordance with section 363(f) of the Bankruptcy Code.
• The conditions of section 363(f) have been satisfied in full with respect to each Interest in the Assets, permitting the Debtors to sell the Assets free and clear of all Interests (other than the Permitted Liens and Assumed Liabilities), with one or more of the standards under section 363(f)(1)–(5) satisfied in each case.
• Holders of Interests that did not timely object, or that withdrew their objections, are deemed to have consented to the Sale pursuant to section 363(f)(2).
• Pursuant to sections 105(a), 363(b), 363(f), 365(b), and 365(f), the transfer of the Assets (including the Proposed Assumed Contracts) will be a legal, valid, binding, enforceable, and effective sale that renders the Purchaser liable for the Assumed Liabilities and divests the Debtors of liability for such Assumed Liabilities except as otherwise expressly provided.
• All valid and perfected Interests shall attach solely to the gross proceeds of the Sale with the same validity, force, effect, and order of priority they had against the Assets, subject to the Debtors' rights, claims, and defenses; holders of Interests are thereby adequately protected.
• The parties waive compliance with bulk sales, bulk transfer and similar Laws, and no bulk sales law of any state or jurisdiction shall apply to the transactions contemplated under the Agreement.

Successor Liability

• 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 Sale does not amount to a consolidation, succession, merger, or de facto merger. The parties intend that, upon Closing, the Purchaser and its Affiliates shall have no responsibility or Liability for the Seller Group's obligations on any theory of successor liability.
• Neither the purchase of the Assets nor the Purchaser's use of Assets previously operated by the Debtors will cause the Purchaser to be deemed a successor to or continuation of the Debtors or to incur liability under any revenue, pension, ERISA, tax, antitrust, environmental, labor (including any WARN Act), employment or benefits, de facto merger, business continuation, substantial continuity, successor, vicarious, alter ego, derivative, transferee, veil-piercing, escheat, continuity-of-enterprise, mere-continuation, product-line, or products-liability theory, other than the Permitted Liens and Assumed Liabilities.

Assumption and Assignment of Proposed Assumed Contracts

• The assumption and assignment of the Proposed Assumed Contracts is integral to the Agreement, represents a reasonable exercise of the Debtors' sound business judgment, and is approved under sections 105(a), 363, and 365 of the Bankruptcy Code, subject to and conditioned upon Closing and payment of the Cure Costs.
• No later than 14 days following the Petition Date (the Potential Assumption Notice Deadline), the Seller was required to file the Potential Assumption and Assignment Notice, including a complete list of Contracts to which any member of the Seller Group is a party and, to the Seller's Knowledge, a good-faith calculation of the Cure Costs (comprising all prepetition arrears plus a good-faith estimate of Post-Petition Cure Costs). Prior to the Closing Date, the Seller shall file the Proposed Assumption and Assignment Notice scheduling the Contracts designated by the Purchaser, in its sole discretion, as Assigned Contracts.
• Each Proposed Assumed Contract shall be assigned to and remain in full force for the benefit of the Purchaser notwithstanding any anti-assignment provision, and the Debtors are authorized and directed to assume and assign such contracts free and clear of all Interests (other than the Permitted Liens and Assumed Liabilities), effective upon the Closing Date or the Designation Rights Period Assumption Effective Date (each, an Assignment Effective Date).
• Upon the Assignment Effective Date and payment of the Cure Costs, the Purchaser shall be fully and irrevocably vested with all right, title, and interest of the Debtors in the Proposed Assumed Contracts, and, pursuant to section 365(k), the Debtors shall be relieved from further liability thereunder except as otherwise provided.
• Any Counterparty that did not timely file and serve an Assumption and Assignment Objection is barred from objecting or asserting monetary or non-monetary defaults with respect to any such Proposed Assumed Contract.
• Nothing in the Sale Order or the Motion constitutes an admission that any contract is executory or must be assumed and assigned to consummate the Sale.

Cure Costs and Adequate Assurance

• All Cure Costs are Assumed Liabilities of the Purchaser. The Cure Cap of $10.0 million contained in the Stalking Horse APA — under which Cure Costs in excess of that amount reduced the purchase price dollar-for-dollar — was removed by the APA Amendments. Cure Costs expressly exclude any 503(b)(9) Claims.
• The Debtors or the Purchaser, as applicable, have cured or will timely cure any default under any Proposed Assumed Contract arising prior to the relevant Assignment Effective Date; a cure is deemed timely if paid no later than five (5) business days following the Assignment Effective Date (the Cure Cost Payment Deadline).
• The Purchaser's payment of the Cure Costs, together with evidence of its ability and intent to perform future obligations, constitutes adequate assurance of future performance within the meaning of sections 365(b)(1) and 365(f)(2), and payment of the Cure Costs fully satisfies the Debtors' obligations under section 365(b).
• Payment of the Cure Costs shall be in full and final satisfaction of all defaults arising prior to the Assignment Effective Date, including non-monetary defaults, which shall be deemed cured upon Closing.
• Where a Counterparty failed to timely object, the applicable Cure Costs are deemed finally determined; however, a Counterparty retains fourteen (14) calendar days to object if the previously stated Proposed Cure Cost was modified without its consent.

Designation Rights

• If an Assumption/Rejection Objection is unresolved prior to the Closing Date, the affected contracts may, at the Purchaser's election, be deemed Designated Contracts, and the Purchaser may proceed to Closing with respect to all other Assets and later determine whether to assume and assign or reject each Designated Contract during the Designation Rights Period.
• During the Designation Rights Period, the Purchaser may, in its sole discretion, designate any Designated Contract for assumption and assignment or for rejection by delivering a Purchaser Designation Notice at least seven (7) Business Days prior to the expiration of the Designation Rights Period.
• Any Contract or Real Property Lease not designated before the expiration of the Designation Rights Period shall be deemed rejected, effective upon such expiration, without further order of the Court.
• The Purchaser shall be responsible for all liabilities under Designated Contracts that come due during the Designation Rights Period through the effective date of assumption and assignment, rejection, or deemed rejection, and the Debtors shall use commercially reasonable efforts to provide unrestricted access to properties governed by any Designated Contract that is a Real Property Lease.
• Any Designated Contract assumed and assigned during the Designation Rights Period constitutes a Proposed Assumed Contract for all purposes; upon expiration of the period, the Debtors shall file a notice including a final register of all Proposed Assumed Contracts assigned to the Purchaser, together with associated Cure Costs.

Back-Up Bidder

• 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 will be authorized, but not directed, to effectuate the Sale Transaction with the Back-Up Bidder on the terms of the Back-Up Bid.
• If applicable, the Debtors will file a notice terminating the Stalking Horse Bid, attaching the Back-Up Bidder's asset purchase agreement (the Back-Up APA) and a revised Sale Order, and the Court will hold a hearing to consider approval of the revised Sale Order within 3 days of such filing (subject to availability).
• The revised Sale Order shall 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 is subject to the following agreed terms:
  • The Back-Up Bidder shall serve as the Back-Up Bid until the earlier of (a) the date that is thirty (30) days after entry of the Sale Order or (b) consummation of the Sale Transaction with the Purchaser.
  • 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 Back-Up Bidder and the Debtors shall take all steps necessary to consummate a transaction on the terms of the Back-Up Bid, subject to (a) a closing inside date of fifteen (15) days following the Back-Up Bidder's Hart-Scott-Rodino filings (which the Back-Up Bidder shall make within two (2) Business Days of the Back-Up Notification Date) and (b) a closing outside date of sixty (60) days from execution of the Back-Up APA.
• Under the Agreement, the reciprocal obligation applies to the Purchaser: had the Purchaser not been the Successful Bidder but been the next highest or otherwise best bidder, it would have been required to serve as the Back-Up Bid and keep its bid open and irrevocable until the Back-Up Termination Date — the first to occur of (a) 30 days after entry of the Sale Order, (b) consummation of the Transactions with the winning bidder at the Auction, and (c) the Purchaser's receipt of written notice from the Seller releasing its obligations.

Competing Transactions and Fiduciary Out

• The Agreement is subject to approval by the Bankruptcy Court and to the Seller's consideration of higher or better competing bids for all or any part of the Transferred Assets in accordance with the Bid Procedures Order (each, a Competing Bid).
• Following the Post-Auction Notice Deadline and until the Closing, the Seller shall not solicit or encourage inquiries, proposals or offers for a sale or other disposition of the Transferred Assets; however, the Seller and its Representatives may respond to unsolicited inquiries or offers and take such other actions as may be required by the Seller's fiduciary duties under applicable Law, the Bankruptcy Code or the Bid Procedures Order.
• The Seller Group retains the right to pursue any transaction or restructuring strategy, including any Alternate Transaction, that in the good faith business judgment of its board of directors (or equivalent governing body) permits compliance with fiduciary duties to maximize the value of the businesses and estates.

Conditions Precedent to Closing

• HSR Act: Any applicable waiting periods under the HSR Act shall have expired or been terminated.
• No Injunctions or Restraints: No Order or Law shall be in effect that restrains, enjoins or otherwise prohibits, or makes illegal, the consummation of the Transactions.
• No Antitrust Litigation: There shall not be pending by the Federal Trade Commission or the U.S. Department of Justice Antitrust Division any judicial or administrative proceedings under the Antitrust Laws that seek to prevent, restrain, enjoin or otherwise prohibit the consummation of the Transactions.
• Sale Order: The Bankruptcy Court shall have entered the Sale Order, and such Sale Order shall be a Final Order (unless such requirement is waived by the Seller and Purchaser in their respective sole discretions).
• No Material Adverse Effect: Since the Petition Date, there shall not have occurred any Material Adverse Effect.
• Stub Rent: The Seller shall have funded a segregated account (the Stub Rent Reserve) in the amount of $5,193,168 on account of unpaid lease obligations for the period from June 12, 2026 through June 30, 2026, and the reserve shall not have a balance less than that amount on the Closing Date.
• The Debtors and the Purchaser have no obligation to proceed with Closing until all conditions precedent are met, satisfied, or waived under the Agreement.

Use of Sale Proceeds

• Any Sale Transaction Fee due to Guggenheim Securities upon consummation of the Sale shall be funded into the Carve-Out (as defined in the DIP Orders) or segregated and escrowed for its 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.
• Once the Guggenheim Reserve is funded, the Debtors shall promptly use the sale proceeds to satisfy the 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 account established solely to pay allowed claims under section 503(b)(9) for the value of goods received within twenty (20) days before the Petition Date. 503(b)(9) Claims (other than those included in Cure Costs) remain Excluded Liabilities under the Agreement.
• On or promptly following the Closing Date and after the DIP Obligations are paid in full in cash, the Debtors shall provide $6.3 million in 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.

Tax Provisions

• To the extent the Texas Taxing Authorities hold valid, perfected, enforceable, senior, and nonavoidable liens as of the Petition Date for 2025 and prior-year personal property ad valorem taxes (the Delinquent Taxes), such liens shall attach to the sale proceeds in their 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 account (the Texas Tax Reserve), with the liens continuing to attach until paid in full.
• Personal property taxes for tax year 2026 (the 2026 Taxes) pertaining to the Assets shall become the responsibility of the Purchaser, and valid, enforceable liens securing the 2026 Taxes shall be retained against the Assets until paid in full.
• Excluded Taxes remain Excluded Liabilities retained by the Seller Group under the Agreement.
• The Sale shall not be exempt from taxes under section 1146(a) of the Bankruptcy Code, and no bulk sales law of any state or jurisdiction shall apply to the transactions contemplated under the Agreement.

Specific Contract and Creditor Provisions

• Synchrony: Upon identification of the Synchrony Agreements as Proposed Assumed Contracts or Designated Contracts, the Purchaser shall be responsible for all amounts owed under the Retailer Program Agreement dated January 1, 2014, between Synchrony Bank and one or more of the Debtors (together with related agreements, including the Home Network Program Card Acceptance Agreement effective July 1, 2017; Irrevocable Standby Letter of Credit No. SLC10023713 dated October 10, 2025; the interpretation letter dated October 29, 2025; 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) that first become due on or after the Closing Date, even if relating to pre-Closing acts. Synchrony retains all related rights, claims, and defenses; if the Synchrony Agreements are rejected, the Purchaser shall have no obligations following the effective date of rejection.
• Stord (Trade Creditor): Pursuant to paragraph 8 of the Trade Creditor Agreement dated July 15, 2026, the Debtors acknowledged that Stord Inc. maintains a valid, first-priority warehouse lien against the Debtors' goods in its possession, custody, or control, securing 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.
• Flex: Flextronics Industria, Ltd. and Sleep Number Corporation are parties to a Manufacturing Supply Agreement dated February 10, 2021 (the Flex Agreements). Absent a Flex Cure Dispute, the Flex Agreements will be assumed by the Debtors and assigned to the Purchaser on the Closing Date. The Debtors and Flex agree that the portion of the Flex Cure Claim attributable to the period prior to the Petition Date equals $5,709,670.71 (the Flex Pre-Petition Cure Claim); the Debtors will propose the post-petition portion (through the Closing Date) three business days before Closing. The Flex Cure Claim will be paid within five business days of the Closing Date (or, if disputed, within five business days after entry of a court order authorizing the assumption and assignment), and upon assumption and assignment the Purchaser will assume all liabilities that first become due under the Flex Agreements from and after the Flex Assignment Date, including inventory-related liabilities.
• Tempur (TTAB Proceedings): Nothing in the Sale Order impairs the rights, claims, defenses, or remedies of the Debtors, Tempur World, LLC and its affiliates, or the Purchaser in the pending TTAB Proceedings — Cancellation No. 92091494, Opposition No. 91287992, and Cancellation No. 92083580. The Purchaser shall acquire the trademark registrations and applications included in the Transferred Assets that are the subject of the TTAB Proceedings, in each case subject to those proceedings.

Consumer Privacy

• The sale of any personally identifiable information contemplated in the Agreement is consistent with the Debtors' privacy policies and satisfies the requirements of section 363(b)(1)(A) of the Bankruptcy Code.

Severance Provisions

• Under the Agreement, the Purchaser assumes all Liabilities relating to severance costs for any Business Employee, whether incurred before, on or after the Closing (the Assumed Severance Liabilities). The buyer's assumption of severance liabilities was one of the Cash APA Adjustments contributing to the increase in total adjusted cash consideration.
• As discussed on the record at the Sale Hearing, no Assumed Severance Liabilities shall be allowed or paid by the Purchaser to Potential Insider Employees (the 14 executive- and management-level employees identified on the record and in the O'Keefe Declaration) without further order of the Court.
• A hearing on whether such Assumed Severance Liabilities may be assumed and paid by the Purchaser (the Severance Assumption Issue) will be held, if necessary, on August 3, 2026 at 10:00 a.m. (prevailing Eastern Time).
• Unless the Debtors and the U.S. Trustee consensually resolve the issue in advance, each may file (i) a brief on or before July 28, 2026 at 5:00 p.m. (prevailing Eastern Time) and (ii) a reply on or before July 31, 2026 at 5:00 p.m. (prevailing Eastern Time).

Post-Closing Arrangements

• The parties shall negotiate in good faith and use commercially reasonable efforts to finalize a Transition Services Agreement to be entered into at Closing, under which the Seller shall provide to the Purchaser benefit plans, payroll and certain other critical transition services for a period following the Closing, the fees and costs of which shall be borne 100% by the Purchaser.
• Following the Closing, the Seller and Purchaser shall reasonably cooperate to promptly liquidate, dissolve and wind up the Seller Group, provided that the Purchaser shall not be required to expend any money in connection therewith.
• From and after the Closing, for a period of three years, the Purchaser shall, at the sole cost and expense of the Seller Group, afford the Seller Group reasonable access to the books and records of the Purchaser, its Affiliates and the Business for purposes including preparing Tax Returns, enforcing rights under the Agreement, complying with Governmental Authority requirements, and administering the Bankruptcy Cases.

Objection Procedures and Sale Hearing

• Objections relating solely to the conduct of the Auction (a Post-Auction Objection) were required to be filed with the Court no later than Monday, July 20, 2026 at 10:00 a.m. (prevailing Eastern Time), in writing, stating the legal and factual bases with specificity and complying with the Bankruptcy Code, Bankruptcy Rules, and Local Rules.
• Objections were required to be served on, among others, proposed counsel to the Debtors (Davis Polk & Wardwell LLP), counsel to the DIP Agent (Faegre Drinker Biddle & Reath LLP), counsel to the Successful Bidder (Goodwin Procter LLP), counsel to the Committee, and the U.S. Trustee.
• The Sale Hearing was conducted in a hybrid format permitting either in-person attendance at One Bowling Green, New York, NY 10004-1408, Courtroom 610, or virtual participation via Zoom for Government.
• Copies of the Bidding Procedures Order and the Bidding Procedures, the Revised Proposed Sale Order, the Amended and Restated Stalking Horse APA, and any other document filed publicly in the Chapter 11 Cases are available free of charge at the Debtors' case website, https://restructuring.ra.kroll.com/Sleepnumber.

Key Dates and Milestones

• Petition Date / Original Agreement Date: June 12, 2026
• Bidding Procedures Order entered; Amendment No. 1 to APA: July 2, 2026
• Auction: July 13, 2026
• Amended and Restated Stalking Horse APA: July 18, 2026
• Post-Auction Objection Deadline: July 20, 2026 at 10:00 a.m. ET
• Closing may not occur prior to July 31, 2026 without the prior written consent of the Purchaser
• Outside Date: 150 days following the Original Agreement Date (June 12, 2026)
• Bankruptcy Court Milestones (measured from the Petition Date): Bid Procedures Motion and substantially final form of the Agreement filed on the Petition Date; entry of the DIP Interim Order no later than 3 business days; entry of the Bid Procedures Order no later than 21 days; entry of the DIP Order on a final basis no later than 30 days; Auction (if necessary) held no later than 45 days; Sale Hearing held no later than 50 days; entry of the Sale Order no later than 1 Business Day after the Sale Hearing; Closing Date no later than 60 days. With the Purchaser's consent, all Bankruptcy Court Milestones other than the Milestone set forth in Sections 5.9(g) and (h) are deemed waived and satisfied under the Sale Order.

Other Provisions

• The Agreement and the Related Documents, including any amendments, supplements, and modifications, are approved in their entirety.
• The Agreement may be modified, amended, or supplemented in a signed writing without further Court order so long as the change does not materially adversely affect the Debtors' estates or conflict with the Sale Order; any change adverse to the DIP Lenders and Prepetition Lenders (as reasonably determined by the Administrative Agent) requires the Administrative Agent's prior consent, and materially adverse changes require the consent of the Required DIP Lenders.
• For cause shown, and pursuant to Bankruptcy Rules 6004(h), 6006(d), 7062, and 9014, the Sale Order is effective and enforceable immediately upon entry, the stays under Bankruptcy Rules 6004(h) and 6006(d) are expressly waived, and the Debtors and the Purchaser are authorized to close the Sale immediately upon entry.
• The Court retains exclusive jurisdiction to interpret, implement, and enforce the Sale Order, the Agreement, and the Related Documents, and to adjudicate any disputes relating to the Sale, including compelling delivery of the Assets, enforcing the injunctions and limitations of liability, and entering further orders under sections 105, 363, and 365 of the Bankruptcy Code.
• As of the Closing Date, the Purchaser is authorized to operate under the Debtors' licenses, permits, registrations, and governmental authorizations relating to the Assets, which are directed to be transferred to the Purchaser; and, to the extent provided by section 525 of the Bankruptcy Code, no governmental unit may deny, revoke, suspend, or refuse to renew any permit, license, or similar grant on account of the Chapter 11 Cases or the consummation of the Sale.