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    <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
D.C. 20549</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">FORM
8-K</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
REPORT</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
TO SECTION 13 OR 15(d) OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date of
Report (Date of earliest event reported):&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">May 30, 2008</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SELECT
COMFORT CORPORATION</font></div>
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name of registrant as specified in its charter)</font></div>
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other jurisdiction of incorporation or organization)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Commission
      File No.)</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(IRS
      Employer Identification No.)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">9800 59th Avenue North,
Minneapolis, Minnesota 55442</font></font></div>
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of principal executive
offices)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(Zip
Code)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">(763)
551-7000</font></font></div>
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telephone number, including area code)</font></div>
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applicable</font></font></div>
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name or former address, if changed since last report)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[&#160;&#160;]&#160;&#160;Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">[&#160;&#160;]&#160;&#160;Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)</font></div>
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communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></div>
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communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
1.01.&#160;&#160;ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
No. 3 to Credit Agreement</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>On May 30, 2008, Select Comfort
Corporation entered into Amendment No. 3 to the Credit Agreement (&#8220;Amendment No.
3&#8221;), amending our existing Credit Agreement dated as of June 9, 2006, as
previously amended by the First Amendment thereto effective as of June 28, 2007,
and the Second Amendment thereto effective as of February 1, 2008 (the &#8220;Credit
Agreement&#8221;) and also entered into various ancillary agreements related to
Amendment No. 3.&#160;&#160;The parties to Amendment No. 3 are Select Comfort
Corporation, Select Comfort Retail Corporation, JPMorgan Chase Bank, National
Association, as Administrative Agent and as Collateral Agent, Bank of America,
N.A., as Syndication Agent and JPMorgan Chase Bank, National Association, Bank
of America, N.A., Citicorp USA, Inc., Wells Fargo Bank, National Association and
Branch Banking and Trust Co., as Lenders.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Amendment No. 3 modifies the financial
covenants to allow greater flexibility, provides additional financial covenants,
modifies the credit limit and maturity date of our credit facility, increases
the cost of borrowing under the credit facility, provides collateral for the
credit facility in the form of a security interest in substantially all our
assets and that of our subsidiaries, and imposes additional restrictions and
covenants with respect to our operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Financial
Covenant Flexibility and Additional Financial Covenants</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Amendment No. 3 revised the financial
covenants under our credit facility.&#160;&#160;The minimum interest coverage
ratio is now based on a schedule that starts at &#8220;1.25 to 1.00&#8221; for the twelve
months ending fiscal June 2008, reduces to &#8220;1.00 to 1.00&#8221; for the twelve months
ending fiscal September 2008 and then increases monthly starting in fiscal
January 2009 until it reaches &#8220;1.25 to 1.00&#8221; for the twelve months ending fiscal
March 2009, and then increases to &#8220;1.50 to 1.00&#8221; for the twelve months ending
fiscal March 2010 and each fiscal quarter ending thereafter.&#160;&#160;Starting
with the month ending January 31, 2009 through the month ending December 31,
2009, the interest coverage ratio is required to be measured as of the end of
each calendar month then ended, rather than as of the end of each fiscal
quarter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Amendment No. 3 provides that the
maximum leverage ratio will be based on a schedule that starts at &#8220;3.50 to 1.00&#8221;
beginning in fiscal March 2009 and reduces until it reaches &#8220;3.00 to 1.00&#8221; for
the four fiscal quarter period ending December 2009 and each period ending
thereafter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>A new financial covenant requires us to
maintain EBITDA above certain amounts for certain periods based on a schedule
starting at negative $13.5 million for the period from April 1, 2008 through
June 30, 2008, and increasing on a monthly basis until reaching positive $5
million for the period from April 1, 2008 through December 31,
2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Amendment No. 3 also limits capital
expenditures so that we and our subsidiaries in the aggregate cannot make
capital expenditures during any one fiscal year on a non-cumulative basis that
exceed $30 million, $25 million or $35 million for the fiscal years ending
December 31 of 2008, 2009 and 2010, respectively.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Credit
Limit and Maturity Date Revisions</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Under Amendment No. 3, with some
exceptions, all of the proceeds from asset dispositions and half of the proceeds
from the sale of equity or debt securities by us or our subsidiaries must be
applied to prepayment of any outstanding revolving loans.&#160;&#160;Those
mandatory prepayments also serve to reduce the amount available for borrowing or
obtaining letters of credit under the credit facility in $1 million
increments.&#160;&#160;The maximum aggregate lender commitments under the credit
facility remains at $100 million, but certain liquidity restrictions limit our
borrowings plus outstanding letters of credit to $95,000,000 for the period of
May 30, 2008<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>through August 31, 2008
and decreasing periodically to $80,000,000 beginning June 30,
2009.&#160;&#160;The credit facility maturity date as amended is June 9,
2010.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cost
of Borrowing and Interest Rate Changes</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The interest rate associated with
borrowing under the credit facility includes a Eurocurrency spread of 3.00%, a
facility fee rate of 0.50% and an ABR spread of 2.00%.&#160;&#160;These rates
would decline beginning December 31, 2008 if we achieve certain specified
leverage ratios.&#160;&#160;Additionally, Amendment No. 3 provides that during
the existence of an event of default an additional 2% will be added to the
applicable interest rate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
New Restrictions and Covenants</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Amendment No. 3 also includes
limitations on additional debt and permitted liens, restrictions on our ability
to make other investments and additional terms with respect to
default.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The aforementioned description of
Amendment No. 3 is qualified in its entirety by reference to the complete terms
of Amendment No. 3, a copy of which is included as Exhibit 10.1 to this Current
Report on Form 8-K and incorporated herein by reference.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Private
Label Consumer Credit Card Program Agreement</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We have agreed to provide GE Money Bank
a letter of credit as collateral security pursuant to the terms of the existing
Amended and Restated Private Label Consumer Credit Card Program Agreement dated
as of December 14, 2005, as previously amended by the First Amendment thereto
effective as of April 23, 2007, and the Second Amendment thereto effective as of
February 1, 2008 (the &#8220;GE Agreement&#8221;).&#160;&#160;The letter of credit can be
eliminated if we maintain compliance with the financial covenants of the
existing GE Agreement (or when we regain compliance in the event that we fall
out of compliance).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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9.01.&#160;&#160;FINANCIAL STATEMENTS AND EXHIBITS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 49.5pt"></font>10.1&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Amendment
No. 3 to Credit Agreement, dated as of May 30, 2008.</font></div>
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to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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      COMFORT CORPORATION</font></div>
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      2, 2008</font></div>
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      Vice President</font></div>
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INDEX</font></div>
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No.</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Description</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
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form8k053008.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported):
May 30, 2008
SELECT
COMFORT CORPORATION
(Exact
name of registrant as specified in its charter)
Minnesota
(State or
other jurisdiction of incorporation or organization)
0-25121
41-1597886
(Commission
      File No.)
(IRS
      Employer Identification No.)
9800 59th Avenue North,
Minneapolis, Minnesota 55442
(Address
of principal executive
offices)                 (Zip
Code)
(763)
551-7000
(Registrant's
telephone number, including area code)
Not
applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[  ]  Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[  ]  Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[  ]  Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[  ]  Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
ITEM
1.01.  ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Amendment
No. 3 to Credit Agreement
On May 30, 2008, Select Comfort
Corporation entered into Amendment No. 3 to the Credit Agreement ("Amendment No.
3"), amending our existing Credit Agreement dated as of June 9, 2006, as
previously amended by the First Amendment thereto effective as of June 28, 2007,
and the Second Amendment thereto effective as of February 1, 2008 (the "Credit
Agreement") and also entered into various ancillary agreements related to
Amendment No. 3.  The parties to Amendment No. 3 are Select Comfort
Corporation, Select Comfort Retail Corporation, JPMorgan Chase Bank, National
Association, as Administrative Agent and as Collateral Agent, Bank of America,
N.A., as Syndication Agent and JPMorgan Chase Bank, National Association, Bank
of America, N.A., Citicorp USA, Inc., Wells Fargo Bank, National Association and
Branch Banking and Trust Co., as Lenders.
Amendment No. 3 modifies the financial
covenants to allow greater flexibility, provides additional financial covenants,
modifies the credit limit and maturity date of our credit facility, increases
the cost of borrowing under the credit facility, provides collateral for the
credit facility in the form of a security interest in substantially all our
assets and that of our subsidiaries, and imposes additional restrictions and
covenants with respect to our operations.
Financial
Covenant Flexibility and Additional Financial Covenants
Amendment No. 3 revised the financial
covenants under our credit facility.  The minimum interest coverage
ratio is now based on a schedule that starts at "1.25 to 1.00" for the twelve
months ending fiscal June 2008, reduces to "1.00 to 1.00" for the twelve months
ending fiscal September 2008 and then increases monthly starting in fiscal
January 2009 until it reaches "1.25 to 1.00" for the twelve months ending fiscal
March 2009, and then increases to "1.50 to 1.00" for the twelve months ending
fiscal March 2010 and each fiscal quarter ending thereafter.  Starting
with the month ending January 31, 2009 through the month ending December 31,
2009, the interest coverage ratio is required to be measured as of the end of
each calendar month then ended, rather than as of the end of each fiscal
quarter.
Amendment No. 3 provides that the
maximum leverage ratio will be based on a schedule that starts at "3.50 to 1.00"
beginning in fiscal March 2009 and reduces until it reaches "3.00 to 1.00" for
the four fiscal quarter period ending December 2009 and each period ending
thereafter.
A new financial covenant requires us to
maintain EBITDA above certain amounts for certain periods based on a schedule
starting at negative $13.5 million for the period from April 1, 2008 through
June 30, 2008, and increasing on a monthly basis until reaching positive $5
million for the period from April 1, 2008 through December 31,
2008.
Amendment No. 3 also limits capital
expenditures so that we and our subsidiaries in the aggregate cannot make
capital expenditures during any one fiscal year on a non-cumulative basis that
exceed $30 million, $25 million or $35 million for the fiscal years ending
December 31 of 2008, 2009 and 2010, respectively.
2
Credit
Limit and Maturity Date Revisions
Under Amendment No. 3, with some
exceptions, all of the proceeds from asset dispositions and half of the proceeds
from the sale of equity or debt securities by us or our subsidiaries must be
applied to prepayment of any outstanding revolving loans.  Those
mandatory prepayments also serve to reduce the amount available for borrowing or
obtaining letters of credit under the credit facility in $1 million
increments.  The maximum aggregate lender commitments under the credit
facility remains at $100 million, but certain liquidity restrictions limit our
borrowings plus outstanding letters of credit to $95,000,000 for the period of
May 30, 2008
through August 31, 2008
and decreasing periodically to $80,000,000 beginning June 30,
2009.  The credit facility maturity date as amended is June 9,
2010.
Cost
of Borrowing and Interest Rate Changes
The interest rate associated with
borrowing under the credit facility includes a Eurocurrency spread of 3.00%, a
facility fee rate of 0.50% and an ABR spread of 2.00%.  These rates
would decline beginning December 31, 2008 if we achieve certain specified
leverage ratios.  Additionally, Amendment No. 3 provides that during
the existence of an event of default an additional 2% will be added to the
applicable interest rate.
Other
New Restrictions and Covenants
Amendment No. 3 also includes
limitations on additional debt and permitted liens, restrictions on our ability
to make other investments and additional terms with respect to
default.
The aforementioned description of
Amendment No. 3 is qualified in its entirety by reference to the complete terms
of Amendment No. 3, a copy of which is included as Exhibit 10.1 to this Current
Report on Form 8-K and incorporated herein by reference.
Private
Label Consumer Credit Card Program Agreement
We have agreed to provide GE Money Bank
a letter of credit as collateral security pursuant to the terms of the existing
Amended and Restated Private Label Consumer Credit Card Program Agreement dated
as of December 14, 2005, as previously amended by the First Amendment thereto
effective as of April 23, 2007, and the Second Amendment thereto effective as of
February 1, 2008 (the "GE Agreement").  The letter of credit can be
eliminated if we maintain compliance with the financial covenants of the
existing GE Agreement (or when we regain compliance in the event that we fall
out of compliance).
ITEM
9.01.  FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
10.1                             Amendment
No. 3 to Credit Agreement, dated as of May 30, 2008.
3
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
SELECT
      COMFORT CORPORATION
(Registrant)
Dated:  June
      2, 2008
By:
/s/ Mark A. Kimball
Title:        Senior
      Vice President
4
EXHIBIT
INDEX
Exhibit
No.
Description
10.1
Amendment No.
3 to Credit Agreement, dated as of May 30, 2008.
5