SELECT COMFORT
EXECUTIVE INVESTMENT PLAN

TABLE OF CONTENTS

<Table>
<Caption>
Page

ARTICLE 1. DESCRIPTION............................................................................................ 1
1.1 Plan Name.................................................................................................. 1
1.2 Plan Purpose............................................................................................... 1
1.3 Plan Type.................................................................................................. 1
1.4 Plan Effective Date........................................................................................ 1

ARTICLE 2. PARTICIPATION.......................................................................................... 2
2.1 Eligibility................................................................................................ 2
2.2 Loss of Eligibility........................................................................................ 2
2.3 Transfer Among Participating Employers..................................................................... 3
2.4 Multiple Employment........................................................................................ 3
2.5 Conditions of Participation................................................................................ 3
2.6 Termination of Participation............................................................................... 3

ARTICLE 3. BENEFITS............................................................................................... 4
3.1 Participant Accounts....................................................................................... 4
3.2 Participant Deferral Credits............................................................................... 4
3.3 Participating Employer Credits............................................................................. 5
3.4 Earnings Credits........................................................................................... 6
3.5 Vesting.................................................................................................... 7

ARTICLE 4. DISTRIBUTION........................................................................................... 9
4.1 Distribution to Participant Before Severance or Disability................................................. 9
4.2 Distribution to Participant After Termination Date......................................................... 9
4.3 Distribution to Beneficiary............................................................................... 10
4.4 Nondeductibility.......................................................................................... 11
4.5 Payment in Event of Incapacity............................................................................ 11
4.6 Suspension................................................................................................ 12

ARTICLE 5. SOURCE OF PAYMENTS; NATURE OF INTEREST................................................................ 13
5.1 Establishment of Trust.................................................................................... 13
5.2 Source of Payments........................................................................................ 13
5.3 Status of Plan............................................................................................ 13
5.4 Non-assignability of Benefits............................................................................. 13

ARTICLE 6. AMENDMENT, TERMINATION................................................................................ 14
6.1 Adoption.................................................................................................. 14
6.2 Amendment................................................................................................. 14
6.3 Termination of Participation.............................................................................. 14
6.4 Termination............................................................................................... 15

ARTICLE 7. DEFINITIONS, CONSTRUCTION AND INTERPRETATION.......................................................... 16
7.1 Account................................................................................................... 16
7.2 Active Participant........................................................................................ 16
7.3 Administrator............................................................................................. 16
7.4 Affiliate................................................................................................. 16
7.5 Base Salary............................................................................................... 16
7.6 Beneficiary............................................................................................... 16
7.7 Board..................................................................................................... 16
7.8 Bonus..................................................................................................... 17
7.9 Code...................................................................................................... 17
7.10 Company................................................................................................ 17
7.11 Cross Reference........................................................................................ 17
7.12 Disabled............................................................................................... 17
</Table>

<Table>
<Caption>
Page

7.13 ERISA.................................................................................................. 17
7.14 Governing Law.......................................................................................... 17
7.15 Headings............................................................................................... 18
7.16 Number and Gender...................................................................................... 18
7.17 Participant............................................................................................ 18
7.18 Participating Employer................................................................................. 18
7.19 Plan................................................................................................... 18
7.20 Plan Rules............................................................................................. 18
7.21 Qualified Employee..................................................................................... 18
7.22 Retirement Account..................................................................................... 18
7.23 Savings Account........................................................................................ 19
7.24 Termination Date....................................................................................... 19
7.25 Trust.................................................................................................. 19
7.26 Trustee................................................................................................ 19
7.27 Unforeseeable Emergency................................................................................ 19
7.28 Years of Service....................................................................................... 19

ARTICLE 8. ADMINISTRATION........................................................................................ 20
8.1 Administrator............................................................................................. 20
8.2 Plan Rules and Regulations................................................................................ 20
8.3 Administrator's Discretion................................................................................ 20
8.4 Specialist's Assistance................................................................................... 20
8.5 Indemnification........................................................................................... 20
8.6 Benefit Claim Procedure................................................................................... 21
8.7 Disputes.................................................................................................. 22

ARTICLE 9. MISCELLANEOUS......................................................................................... 23
9.1 Withholding and Offsets................................................................................... 23
9.2 Other Benefits............................................................................................ 23
9.3 No Warranties Regarding Tax Treatment..................................................................... 23
9.4 No Rights to Continued Employment or Service Created...................................................... 23
9.5 Special Provisions........................................................................................ 23
9.6 Successors................................................................................................ 23
</Table>

ADOPTION CERTIFICATE

Select Comfort Corporation hereby adopts the Select Comfort Executive Investment
Plan in the form attached hereto pursuant to the authority granted by Select
Comfort Corporation's Board of Directors.

SELECT COMFORT CORPORATION

Attest: By
----------------------------
Secretary Its ----------------------

December , 2002
-----

SELECT COMFORT
EXECUTIVE INVESTMENT PLAN

As Adopted Effective as of December 20, 2002

SELECT COMFORT
EXECUTIVE INVESTMENT PLAN

ARTICLE 1.
DESCRIPTION

1.1 PLAN NAME.

The name of the Plan is the "Select Comfort Executive Investment Plan."

1.2 PLAN PURPOSE.

The purposes of the Plan are to:

(a) assist the Participating Employers in attracting and retaining
Qualified Employees,

(b) provide a tax-deferred capital accumulation vehicle for
Qualified Employees, and

1.3 PLAN TYPE.

The Plan is an unfunded plan maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees. It is intended that the Plan is exempt from the
provisions of Parts 2, 3 and 4 of Subtitle B of Title I of ERISA by operation of
sections 201(2), 301(a)(3) and 401(a)(4) thereof, respectively, and from the
provisions of Title IV of ERISA, to the extent otherwise applicable, by
operation of section 4021(b)(6) thereof. The Plan is also intended to be
unfunded for tax purposes. The Plan will be construed and administered in a
manner that is consistent with and gives effect to the foregoing.

1.4 PLAN EFFECTIVE DATE.

The Plan is effective as of December 20, 2002.

ARTICLE 2.
PARTICIPATION

2.1 ELIGIBILITY.

(a) First Day of Plan Year. Prior to the beginning of each Plan
Year, the Administrator will determine which Qualified
Employees, if any, are eligible to defer Base Salary pursuant
to Section 3.2(a) and Bonus pursuant to Section 3.2(b) with
respect to the Plan Year.

(b) During Plan Year. At any time during a Plan Year, the
Administrator may determine that an individual who becomes a
Qualified Employee after the first day of a Plan Year is
eligible to defer Base Salary pursuant to Section 3.2(a) and
Bonus pursuant to Section 3.2(b) with respect to the remainder
of the Plan Year.

(c) Annual Determination. The fact that an individual has been
eligible to make deferral elections with respect to any
particular Plan Year does not give the individual any right to
make deferral elections with respect to any other Plan Year.

2.2 LOSS OF ELIGIBILITY.

(a) Reasons.
-------

(i) Ceasing to be Qualified Employee. An Active
Participant will cease to be eligible to defer Base
Salary and Bonus as of the date on which he or she
ceases to be a Qualified Employee.

(ii) Unforeseeable Emergency. A Participant who, pursuant
to Section 3.2(b)(iii), has revoked a deferral
election of Bonus in connection with an Unforeseeable
Emergency, or pursuant to Section 4.1(a), has
received a distribution due to an Unforeseeable
Emergency, is not eligible to defer Base Salary or
Bonus with respect to the remainder of the Plan Year
during which the revocation occurs or the
distribution is received, as the case may be, and the
immediately following Plan Year.

(iii) 401(k) Hardship Withdrawal. A Qualified Employee who
receives a hardship withdrawal from a 401(k) plan
maintained by a Participating Employer, or by any
other employer required to be aggregated with the
Participating Employer under Code section 414(b),
(c), (m) or (o), is not eligible to defer Base Salary
or Bonus under the Plan to the extent required to
comply with the terms of the 401(k) Plan.

(b) Affect on Deferral Elections. An Active Participant who,
pursuant to Subsection (a), loses his or her eligibility to
defer for a Plan Year is not eligible for further deferral
credits relating to deferral elections made pursuant to
Section 3.2 for the Plan Year other than credits relating to
Base Salary with respect to the period before the loss of
eligibility, and any other Base Salary or Bonus that would
have otherwise been deferred in connection with a deferral
election made pursuant to Section 3.2 for the Plan Year will
be paid to the Participant as if he or she had not made the
deferral election.

2.3 TRANSFER AMONG PARTICIPATING EMPLOYERS.

An Active Participant who transfers employment from one Participating
Employer to another Participating Employer and who continues to be a Qualified
Employee after the transfer will, for the duration of the Plan Year during which
the transfer occurs, continue to participate in the Plan, in accordance with the
election in effect for the portion of the Plan Year before the transfer, as a
Qualified Employee of such other Participating Employer.

2.4 MULTIPLE EMPLOYMENT.

An Active Participant who is simultaneously employed as a Qualified
Employee with more than one Participating Employer will participate in the Plan
as a Qualified Employee of all such Participating Employers on the basis of a
single deferral election pursuant to Section 3.2 applied ratably to his or her
Base Salary or Bonus from each Participating Employer if his or her deferral
election was made in a dollar amount or applied separately to his or her Base
Salary or Bonus from each Participating Employer if his or her deferral election
was made in a percentage.

2.5 CONDITIONS OF PARTICIPATION.

Each Qualified Employee, as a condition of participation in the Plan,
is bound by all the terms and conditions of the Plan and the Plan Rules, and
must furnish to the Administrator such pertinent information and execute such
election forms and other instruments as the Administrator or Plan Rules may
require by such dates as the Administrator or Plan Rules may establish. All
elections, directions, designations and similar actions required in connection
with the Plan must be made in accordance with and are subject to the terms of
the Plan and Plan Rules.

2.6 TERMINATION OF PARTICIPATION.

A Participant will cease to be such as of the date on which he or she
is not then eligible to make deferrals and his or her entire vested Account
balances have been distributed.

ARTICLE 3.
BENEFITS

3.1 PARTICIPANT ACCOUNTS.

(a) Participant Accounts. For each Participant, the Administrator
will establish and maintain one or more separate bookkeeping
accounts as follows:

(i) deferrals elected by the Participant pursuant to
Section 3.2 will be credited to his or her Savings
Account; and

(ii) credits made on the Participant's behalf (if any)
pursuant to Section 3.3 will be credited to his or
her Retirement Account,

3.2 PARTICIPANT DEFERRAL CREDITS.

(a) Base Salary. Base Salary deferrals will be made in accordance
with the following rules:

(i) An Active Participant may elect to defer his or her
Base Salary for a Plan Year from a minimum percentage
or dollar amount to a maximum percentage or dollar
amount, as specified in Plan Rules. Plan Rules may
specify minimum and maximum deferral amounts for a
Plan Year, any period within a Plan Year or both.

(ii) An election made pursuant to this subsection will not
be effective unless it is made on a properly
completed election form received by the Administrator
by a date specified by the Administrator which is
prior to the first day of the Plan Year to which the
election relates or, in the case of an individual who
becomes eligible to participate after the first day
of a Plan Year, within 30 days after he or she
becomes eligible to participate.

(iii) An Active Participant may revoke a deferral election
made pursuant to this subsection at any time. The
revocation will be effective as of the first payroll
period that follows by at least 30 days (or such
shorter period as Plan Rules may allow) the
Administrator's receipt of a properly completed form.
Upon making a revocation, the Active Participant will
be unable to make further deferrals of Base Salary
until the next Plan Year.

(v) Any election pursuant to this subsection applies only
to Base Salary relating to services performed after
the effective date of the election.

(b) Bonus. Bonus deferrals will be made in accordance with the
following rules:

(i) An Active Participant may elect to defer all or any
portion of his or her Bonus for the Plan Year from a
minimum percentage or dollar amount to a maximum
percentage or dollar amount, as specified in Plan
Rules.

(ii) An election made by an Active Participant pursuant to
this subsection will not be effective unless it is
made on a properly completed election form received
by the Administrator by a date specified in Plan
Rules but not later than 30 days after the date on
which the Company or Participating Employer
officially announces the terms of the bonus plan and
its application to the Active Participant for such
Plan Year or, in the case of an individual who
becomes a Qualified Employee after the date the bonus
plan is announced, within 30 days after he or she
becomes a Qualified Employee.

(iii) An Active Participant may revoke a deferral election
made pursuant to this subsection after the election
becomes effective if, and only if, the Participant
submits a written request to the Administrator and
the Administrator determines that the Participant has

experienced an Unforeseeable Emergency. The
revocation will be effective as soon as
administratively practicable after the
Administrator's determination that the Participant
has experienced an Unforeseeable Emergency.

(iv) Notwithstanding the foregoing provisions of this
Subsection (b), an Active Participant may elect to
defer all or any portion of his or her Bonus that is
to be determined and paid to such Active Participant
in 2003, by submitting a properly completed election
form to the Administrator by December 20, 2002.

(c) Administrative Reduction. The Administrator may reduce the
amount of any deferral that would otherwise be made pursuant
to this section to the extent determined by the Administrator
to be necessary to effect any required payroll withholding,
contributions or deferrals pursuant to any other plan
maintained by any Affiliate or any other deductions. In
addition, Plan Rules may specify individual or aggregate
annual or lifetime deferral limitations.

(d) Allocation to Savings Account. An Active Participant's
deferrals pursuant to this section will

be allocated to his or her Savings Account.

(e) Timing of Credits. Deferrals of an Active Participant's Base
Salary and Bonus pursuant to this section will be credited to
his or her Savings Account as of the date on which the
Participant would have otherwise received the Base Salary or
Bonus but for his or her deferral election pursuant to this
section.

3.3 PARTICIPATING EMPLOYER CREDITS

A Participating Employer may from time to time credit the Retirement Account of
any Participant with an amount determined by the Participating Employer. If a
Participating Employer chooses to make such a credit, the Company will provide
the Participant with a written notice that specifies the amount of the credit,
the timing of the credit and, any conditions that the Participant must satisfy
to be entitled to the credit. Credits pursuant to this subsection will be made,
if at all, on a Participant-by-Participant basis. If a Participating Employer
chooses to credit the Retirement Account of a Participant pursuant to this
subsection, the Participating Employer is not, as a result, required to make any
credit to the Retirement Account of any other Participant, whether or not he or
she is otherwise similarly situated.

3.4 EARNINGS CREDITS.

(a) Designation of Investment Funds. The Administrator will
designate two or more investment funds which will serve as the
basis for determining adjustments pursuant to this section.
The Administrator may, from time to time, designate additional
investment funds or eliminate any previously designated
investment funds. The designation or elimination of a fund
pursuant to this subsection is not a Plan amendment. The
Administrator will not be responsible in any manner to any
Participant or other person for any damages, losses,
liabilities, costs or expenses of any kind arising in
connection with any designation or elimination of an
investment fund.

(b) Participant Direction. A Participant must direct the manner in
which amounts credited to his or her Accounts pursuant to
Section 3.2 or 3.3 will be deemed to be invested among the
investment funds designated pursuant to Subsection (a).
Amounts will be deemed to be invested in accordance with the
Participant's direction on or as soon as administratively
practicable after the amounts are credited to the
Participant's Account. To the extent a Participant fails to
direct the manner in which amounts credited to his or her
Accounts will be deemed to be invested, such amounts will
deemed to be invested in the manner specified in Plan Rules.

(c) Change in Direction for Future Credits. A Participant may
direct a change in the manner in which future credits to his
or her Accounts pursuant to Section 3.2 or 3.3 will be deemed
to be invested among the investment funds designated pursuant
to Subsection (a). The direction will be effective

for deferrals credited to the Participant's Account pursuant
to Section 3.2 or 3.3 at least 30 days (or such shorter period
as Plan Rules may allow) after the date on which the
Administrator receives the direction from the Participant.

(d) Change in Direction for Existing Account Balance. A
Participant may direct a change in the manner in which his or
her existing Account balances are deemed to be invested among
the investment funds designated pursuant to Subsection (a).
The direction will be effective as soon as administratively
practicable after the date on which the Administrator receives
the direction from the Participant.

(e) Account Adjustment. As of the close of business on each day on
which the New York Stock Exchange is open for regular
business, the Administrator will cause Participants' Accounts
to be separately adjusted, in a manner determined by the
Administrator to be uniform and equitable, to reflect the
income, expense, gains, losses, fees and the like (other than
taxes) that would have resulted since the last adjustment had
the Participant's investment directions pursuant to this
section actually been implemented. For purposes of this
subsection, an amount will be deemed to have been invested in
accordance with a Participant's direction by the fifth
business day after (i) the date on which the amount is
credited to the Participant's Account in the case of a
direction pursuant to Subsection (b) or Subsection (c) or (ii)
the effective date of a direction pursuant to Subsection (d).
To the extent determined by the Administrator to be necessary
in conjunction with any distribution pursuant to the Plan, the
Administrator will cause the Account from which the
distribution is to be made to be adjusted to reflect a good
faith estimate by the Administrator of any fees and other
expenditures payable after the date of the distribution in
connection with deemed investment activity in the Account
through and including the date of the distribution. Any such
estimate is binding on the Participating Employer and the
person to whom the distribution is made.

(f) Obligations and Responsibilities of Administrator. The sole
obligation of the Administrator with respect to the
designation or elimination of any investment fund designated
pursuant to Subsection (a) is to act in accordance with the
express terms of Subsection (a). By way of example and without
limiting the previous sentence, the Administrator is not
required, and no course of conduct will cause it to be
required, to investigate or monitor any designated fund to any
extent or for any purpose or to take or refrain from taking
any action with respect to a fund because of any aspect of the
performance of the fund. The designation of a limited number
of investment funds is solely for administrative convenience
and in no way reflects any endorsement of any such funds by
the Administrator.

(g) Deemed Investment. Trust assets are not required to be
invested in accordance with a Participant's directions and the
balance of all Accounts pursuant to the Plan will be
determined pursuant to this section and other applicable
sections of the Plan without regard to the actual amount of
Trust assets.

(h) Participant Responsibilities. Each Participant is solely
responsible for any and all consequences of his or her
investment directions made pursuant to this section. Neither
any Participating Employer, any of its directors, officers or
employers, the Company's Board nor the Administrator has any
responsibility to any Participant or other person for any
damages, losses, liabilities, costs or expenses of any kind
arising in connection with any investment direction made by a
Participant pursuant to this section.

3.5 VESTING.

(a) Each Participant always has a fully vested nonforfeitable
interest in his or her Savings Account.

(b) A Participant will acquire a fully vested nonforfeitable
interest in his or her Retirement Account if he or she dies or
becomes disabled on or prior to his or her Termination Date.

(c) A Participant whose Retirement Account is not otherwise fully
vested will acquire a vested nonforfeitable interest in the
portion of his or her Retirement Account to the extent
provided in the following schedule based on the Participant's
Years of Service:

<Table>
<Caption>
Vested
Full Years of Service Interest

Less than One Year 0%
At least One Year 25%
At least Two Years 50%
At least Three Years 75%
Four or More Years 100%
</Table>

ARTICLE 4.
DISTRIBUTION

4.1 DISTRIBUTION TO PARTICIPANT BEFORE SEVERANCE OR DISABILITY.

(a) Withdrawals Due to Unforeseeable Emergency. Prior to a
Participant's Termination Date, a distribution will be made to
a Participant from his or her vested Accounts if the
Participant submits a written distribution request to the
Administrator and the Administrator determines that the
Participant has experienced an Unforeseeable Emergency. The
amount of the distribution may not exceed the lesser of (i)
the amount necessary to satisfy the emergency, as determined
by the Administrator or (ii) the vested balance of the
Accounts. The distribution will be made in the form of a lump
sum cash payment as soon as administratively practicable after
the Administrator's determination that the Participant has
experienced an Unforeseeable Emergency. Any distribution
pursuant to this subsection will be made first from the
Participant's Savings Account and then, if necessary, from his
or her Retirement Account.

(b) Reduction of Account Balance. The balances of a Participant's
Accounts will be reduced (but not below zero) by the amount of
the distribution as of the date of the distribution.

4.2 DISTRIBUTION TO PARTICIPANT AFTER TERMINATION DATE.

(a) Time. Distribution to a Participant will be made or commence
as soon as administratively practicable after the last day of
the Plan Year that includes the Participant's Termination
Date.

(b) Form. Distribution to the Participant will be made in the form
of a lump sum cash payment unless (i) the Participant made a
written election, on a form provided by the Administrator, to
receive his or her distribution in the form of ten annual
installment cash payments, (ii) his or her properly completed
election form is filed with the Administrator before the first
day of the Plan Year immediately preceding the Plan Year that
includes his or her Termination Date, and (iii) the aggregate
vested balance of the Participant's Accounts as of the date of
such election is not less than $10,000. Not more than once
during any 12-month period, a Participant may change an
election made pursuant to this subsection, but the change will
not be valid and will not have any effect unless it is made on
a properly completed form received by the Administrator before
the first day of the Plan Year immediately preceding the Plan
Year that includes the Participant's Termination Date. Until
an election becomes effective, it will have no effect on any
prior election whether or not such prior election became
effective before or after the Administrator received the later
election. When an election becomes effective, it will
automatically supersede any prior election then in effect.

c) Amount.

(i) Lump Sum. The amount of a lump sum payment from a
Participant's Accounts will be equal to the vested
balances of the Accounts.

(ii) Installments. The amount of an installment payment
from a Participant's Accounts will be determined by
dividing the vested balances of the Accounts by the
total number of remaining payments (including the
current payment). The undistributed portion of an
Account distributed in the form of installment
payments will continue to be credited with earnings
in accordance with Section 3.4.

(d) Reduction of Account Balances. The balance of the Accounts
will be reduced (but not below zero) by the amount of the
distribution as of the date of the distribution.

4.3 DISTRIBUTION TO BENEFICIARY.

(a) Time. Distribution to a Beneficiary will be made as soon as
administratively practicable after the date on which the
Administrator receives notice of the Participant's death and
determines that the Beneficiary is entitled to receive the
distribution.

(b) Form. Distribution to the Beneficiary will be made in the form
of a lump sum cash payment whether or not payments had
commenced to the Participant in the form of installments prior
to his or her death.

(d) Reduction of Account Balance. The balances of the Accounts
will be reduced (but not below zero) by the amount of the
distribution as of the date of the distribution.

(e) Beneficiary Designation.

(i) Each Participant may designate, on a form furnished
by the Administrator, one or more primary
Beneficiaries or alternative Beneficiaries to receive
all or a specified part of his or her Accounts after
his or her death, and the Participant may change or
revoke any such designation from time to time. No
such designation, change or revocation is effective
unless executed by the Participant and received by
the Administrator during the Participant's lifetime.

(ii) If a Participant--

(1) fails to designate a Beneficiary, or

(2) revokes a Beneficiary designation without
naming another Beneficiary, or

(3) designates one or more Beneficiaries, none
of whom survives the Participant or exists
at the time in question,

for all or any portion of his or her Account, such
Account or portion will be paid to the Participant's
surviving spouse or, if the Participant is not
survived by a spouse, to the representative of the
Participant's estate.

(iii) The automatic Beneficiaries specified above and,
unless the designation otherwise specifies, the
Beneficiaries designated by the Participant, become
fixed as of the Participant's death so that, if a
Beneficiary survives the Participant but dies before
the

receipt of the payment due such Beneficiary, the
payment will be made to the representative of such
Beneficiary's estate. Any designation of a
Beneficiary by name that is accompanied by a
description of relationship or only by statement of
relationship to the Participant is effective only to
designate the person or persons standing in such
relationship to the Participant at the Participant's
death.

4.4 NONDEDUCTIBILITY.

If the Company determines in good faith that there is a reasonable
likelihood that any compensation paid to a Participant by an Affiliate for a
taxable year of the Affiliate would not be deductible by the Affiliate solely by
reason of the limitation under Code section 162(m), to the extent deemed
necessary by the Company to ensure that the entire amount of any distribution to
the Participant pursuant to the Plan is deductible, notwithstanding any other
provision of the Plan or any election by the Participant to the contrary, all or
any portion of the distribution may be deferred. Any amounts deferred pursuant
to this section will continue to be credited with earnings in accordance with
Section 3.4. The deferred amounts and earnings thereon will be distributed to
the Participant, or to his or her Beneficiary in the case of the Participant's
death, at the earliest possible date, as determined by the Company in good
faith, on which the deductibility of compensation paid or payable to the
Participant for the taxable year of the Affiliate during which the distribution
is made will not be limited by Code section 162(m).

4.5 PAYMENT IN EVENT OF INCAPACITY.

If any individual entitled to receive any payment under the Plan is, in
the judgment of the Administrator, physically, mentally or legally incapable of
receiving or acknowledging receipt of the payment, and no legal representative
has been appointed for the individual, the Administrator may (but is not
required to) cause the payment to be made to any one or more of the following as
may be chosen by the Administrator: the Beneficiary (in the case of the
incapacity of a Participant); the institution maintaining the individual; a
custodian for the individual under the Uniform Transfers to Minors Act of any
state; or the individual's spouse, children, parents, or other relatives by
blood or marriage. The Administrator is not required to see to the proper
application of any such payment and the payment completely discharges all claims
under the Plan against the Participating Employer, the Plan and Trust to the
extent of the payment.

4.6 SUSPENSION.

If a Participant who is receiving installment payments again becomes an
employee of an Affiliate, the installment payments will stop. The remaining
vested balance of the Participant's Accounts will be distributed upon the
Participant's subsequent Termination Date in accordance with Article 4 without
regard to any election made pursuant to Section 4.2(b)(i) prior to the
Participant's last preceding Termination Date.

ARTICLE 5.
SOURCE OF PAYMENTS; NATURE OF INTEREST

5.1 ESTABLISHMENT OF TRUST.

Each Participating Employer will establish a Trust, or become covered
by a Trust established by another Participating Employer, with an independent
corporate trustee. The Trust must (a) be a grantor trust with respect to which
the Participating Employer is treated as the grantor for purposes of Code
section 677, (b) not cause the Plan to be funded for purposes of Title I of
ERISA and (c) provide that the Trust assets will, upon the insolvency of a
Participating Employer, be used to satisfy claims of the Participating
Employer's general creditors. The Participating Employers may from time to time
transfer to the Trust cash, marketable securities or other property acceptable
to the Trustee in accordance with the terms of the Trust. The Participating
Employers will pay all taxes of any kind whatsoever payable in respect of Trust
assets or any transaction with respect to Trust assets, other than taxes payable
by a Participant or Beneficiary, or any other person claiming by, under or
through a Participant or Beneficiary, in connection with a distribution from the
Plan.

5.2 SOURCE OF PAYMENTS.

(a) Each Participating Employer will pay, from its general assets,
the portion of any benefit pursuant to Article 4 or Section
6.3 or 6.4 attributable to a Participant's Accounts with
respect to that Participating Employer, and all costs, charges
and expenses relating thereto.

(b) The Trustee will make distributions to Participants and
Beneficiaries from the Trust in satisfaction of a
Participating Employer's obligations under the Plan in
accordance with the terms of the Trust. The Participating
Employer is responsible for paying any benefits attributable
to a Participant's Account with respect to that Participating
Employer that are not paid by the Trust.

5.3 STATUS OF PLAN.

Nothing contained in the Plan or Trust is to be construed as providing
for assets to be held for the benefit of any Participant or any other person or
persons to whom benefits are to be paid pursuant to the terms of this Plan, the
Participant's or other person's only interest under the Plan being the right to
receive the benefits set forth herein. The Trust is established only for the
convenience of the Participating Employers and the Participants, and no
Participant has any interest in the assets of the Trust prior to distribution of
such assets pursuant to the Plan. To the extent the Participant or any other
person acquires a right to receive benefits under this Plan or the Trust, such
right is no greater than the right of any unsecured general creditor of the
Participating Employer.

5.4 NON-ASSIGNABILITY OF BENEFITS.

The benefits payable under the Plan and the right to receive future
benefits under the Plan may not be anticipated, alienated, sold, transferred,
assigned, pledged, encumbered, or subjected to any charge or legal process.

ARTICLE 6.
AMENDMENT, TERMINATION

6.1 ADOPTION.

With the prior approval of the Administrator, an Affiliate may adopt
the Plan and become a Participating Employer by furnishing to the Administrator
a certified copy of a resolution of its Board adopting the Plan.

6.2 AMENDMENT.

(a) Right. The Company reserves the right to amend the Plan at any
time to any extent that it may deem advisable.

(b) Method. To be effective, an amendment must be stated in a
written instrument approved in advance or ratified by the
Company's Board and executed in the name of the Company by two
of its officers.

(c) Binding Effect. An amendment adopted in accordance with
Subsection (b) is binding on all interested parties as of the
effective date stated in the amendment; provided, however,
that no amendment may retroactively deprive any Participant,
or the Beneficiary of a deceased Participant, of any benefit
to which he or she is entitled under the terms of the Plan in
effect immediately prior to the effective date of the
amendment or the date on which the amendment is adopted,
whichever is later.

(d) Certain Amendments to Earnings Credit Method. Any amendment
that materially changes the method of determining the
adjustments to Participants' Accounts pursuant to Section 3.4
is effective with respect to the portion of the Accounts
attributable to credits made before the date on which the
amendment is adopted only if the Company's Board determines in
good faith that on that date, it is reasonably likely that, in
the long run, the new method will not result in materially
lower credit rate than the old method.

(e) Applicability to Participants Who Have Terminated Employment.
The provisions of the Plan in effect on a Participant's
Termination Date will, except as otherwise expressly provided
by a subsequent amendment, continue to apply to such
Participant.

6.3 TERMINATION OF PARTICIPATION.

Notwithstanding any other provision of the Plan to the contrary, if
determined by the Administrator to be necessary to ensure that the Plan is
exempt from ERISA to the extent contemplated by Section 1.3, or upon the
Administrator's determination that a Participant's interest in the Plan has been
or is likely to be includable in the Participant's gross income for federal
income tax purposes prior to the actual payment of benefits pursuant to the
Plan, the Administrator may take any or all of the following steps:

(a) terminate the Participant's future participation in the Plan;

(b) cause the Participant's entire vested interest in the Plan to
be distributed to the Participant in the form of an immediate
lump sum cash payment; and/or

(c) transfer the benefits that would otherwise be payable pursuant
to the Plan for all or any of the Participants to a new plan
that is similar in all material respects (other than those
which require the action in question to be taken.)

6.4 TERMINATION.

The Company reserves the right to terminate the Plan in its entirety at
any time. Each Participating Employer reserves the right to cease its
participation in the Plan at any time. The Plan will terminate in its entirety
or with respect to a particular Participating Employer as of the date specified
by the Company or such Participating Employer in a written instrument adopted in
the same manner as an amendment. Upon the termination of the Plan in its
entirety or with respect to any Participating Employer, the Company or
Participating Employer, as the case may be, will either cause (a) any benefits
to which Participants have become entitled prior to the effective date of the
termination to continue to be paid in accordance with the provisions of Article
4 or (b) the vested Account balances of any or all Participants, or the
Beneficiaries of any or all deceased Participants, to be distributed in the form
of an immediate lump sum payment.

ARTICLE 7.
DEFINITIONS, CONSTRUCTION AND INTERPRETATION

The definitions and rules of construction and interpretation set forth
in this article apply in construing the Plan unless the context otherwise
indicates.

7.1 ACCOUNT.

"Account" means the bookkeeping account maintained with respect to a
Participant pursuant to Section 3.1 and may mean the Savings Account, the
Retirement Account or both, as the context requires.

7.2 ACTIVE PARTICIPANT.

"Active Participant" with respect to a Plan Year means a Qualified
Employee who is eligible to make deferrals pursuant to the Plan for the Plan
Year, for the portion of the Plan Year during which he or she remains eligible.

7.3 ADMINISTRATOR.

"Administrator" means the Company or the person to whom administrative
duties are delegated pursuant to the provisions of Section 8.1, as the context
requires.

7.4 AFFILIATE.

"Affiliate" means the Company and any other company or trade or
business, whether or not incorporated, that together with the Company is treated
as a single employer pursuant to Code section 414(b) or 414(c).

7.5 BASE SALARY.

"Base Salary" for a Plan Year means the base salary payable in cash to
an Active Participant by a Participating Employer for the Participant's services
during the Plan Year as a Qualified Employee, net of any contributions or
deductions specified in Plan Rules

7.6 BENEFICIARY.

"Beneficiary" with respect to a Participant is the person designated or
otherwise determined under the provisions of Section 4.3(e) as the distributee
of benefits payable after the Participant's death. A person designated or
otherwise determined to be a Beneficiary under the terms of the Plan has no
interest in or right under the Plan until the Participant in question has died.
A Beneficiary will cease to be such on the day on which all benefits to which
he, she or it is entitled under the Plan have been distributed.

7.7 BOARD.

"Board" means the board of directors of the Affiliate in question. When
the Plan provides for an action to be taken by the Board, the action may be
taken by any committee or individual authorized to take such action pursuant to
a proper delegation by the board of directors in question.

7.8 BONUS.

"Bonus" for a Plan Year means the annual bonus earned by an Active
Participant during the Plan Year for his or her services during the Plan Year as
a Qualified Employee and paid in cash to the Participant by a Participating
Employer during the Plan Year first following the Plan Year, net of any
contributions or deductions specified in Plan Rules.

7.9 CODE.

"Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a specific provision of the Code includes a reference to that
provision as it may be amended from time to time and to any successor provision.

7.10 COMPANY.

"Company" means Select Comfort Corporation, a Minnesota corporation.

7.11 CROSS REFERENCE.

References within a section of the Plan to a particular subsection
refer to that subsection within the same section and references within a section
or subsection to a particular clause refer to that clause within the same
section or subsection, as the case may be.

7.12 DISABLED.

A Participant will be considered to be "Disabled" only if (i) in the
case of a Participant who is participating in the Company's long-term disability
plan, he or she is receiving disability benefits under such plan, or (ii) in the
case of any other Participant, he or she is certified as being disabled by the
Social Security Administration and is receiving disability benefits under the
disability provisions of the Social Security Act.

7.13 ERISA.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended. Any reference to a specific provision of ERISA includes a reference to
that provision as it may be amended from time to time and to any successor
provision.

7.14 GOVERNING LAW.

To the extent that state law is not preempted by the provisions of
ERISA, or any other laws of the United States, all questions pertaining to the
construction, validity, effect and enforcement of the Plan will be determined in
accordance with the internal, substantive laws of the State of Minnesota without
regard to the conflict of law rules of the State of Minnesota or any other
jurisdiction.

7.15 HEADINGS.

The headings of articles and sections are included solely for
convenience of reference; if there exists any conflict between such headings and
the text of the Plan, the text will control.

7.16 NUMBER AND GENDER.

Wherever appropriate, the singular may be read as the plural, the
plural may be read as the singular and one gender may be read as the other
gender.

7.17 PARTICIPANT.

"Participant" means a current or former Active Participant to whose
Account amounts have been credited pursuant to Article 3 and who has not ceased
to be a Participant pursuant to Section 2.6.

7.18 PARTICIPATING EMPLOYER.

"Participating Employer" means the Company and any other Affiliate that
has adopted the Plan, or all of them collectively, as the context requires. An
Affiliate will cease to be a Participating Employer upon a termination of the
Plan as to its employees and the satisfaction in full of all of its obligations
under the Plan or upon its ceasing to be an Affiliate.

7.19 PLAN.

"Plan" means the Select Comfort Executive Investment Plan, as from time
to time amended or restated.

7.20 PLAN RULES.

"Plan Rules" are rules, policies, practices or procedures adopted by
the Administrator pursuant to Section 8.2.

7.21 QUALIFIED EMPLOYEE.

"Qualified Employee" means an individual who performs services for a
Participating Employer as an employee of the Participating Employer (as
classified by the Participating Employer at the time the services are performed
without regard to any subsequent reclassification) and who is determined by the
Administrator to be a management or highly compensated employee of the
Participating Employer.

7.22 RETIREMENT ACCOUNT.

"Retirement Account" with respect to a Participant means the Account
maintained on his or her behalf pursuant to Section 3.1(a)(ii).

7.23 SAVINGS ACCOUNT.

"Savings Account" with respect to a Participant means the Account
maintained on his or her behalf pursuant to Section 3.1(a)(i).

7.24 TERMINATION DATE.

"Termination Date" means the date on which a Participant has completely
severed his or her employment relationship with all Affiliates.

7.25 TRUST.

"Trust" means any trust or trusts established by a Participating
Employer pursuant to Section 5.1.

7.26 TRUSTEE.

"Trustee" means the independent corporate trustee or trustees that at
the relevant time has or have been appointed to act as Trustee of the Trust.

7.27 UNFORESEEABLE EMERGENCY.

"Unforeseeable Emergency" means an unanticipated emergency that is
caused by an event beyond the Participant's control resulting in a severe
financial hardship that cannot be satisfied through other means. The existence
of an unforeseeable emergency will be determined by the Administrator in its
sole discretion.

7.28 YEARS OF SERVICE.

"Years of Service" for purposes of determining a Participant's vested
interest in his or her Retirement Account pursuant to Section 3.5, means the sum
of a Qualified Employee's periods of service as an employee with the Affiliates
(measured in the case of any Affiliate from not earlier than the date on which
it became an Affiliate), commencing as of the Qualified Employee's employment
commencement date and ending with the Employee's Termination Date.

ARTICLE 8.
ADMINISTRATION

8.1 ADMINISTRATOR.

The general administration of the Plan and the duty to carry out its
provisions is vested in the Company. The Company may delegate such duty or any
portion thereof to a named person or persons and may from time to time revoke
such authority and delegate it to another person or persons.

8.2 PLAN RULES AND REGULATIONS.

The Administrator has the discretionary power and authority to make
such Plan Rules as the Administrator determines to be consistent with the terms,
and necessary or advisable in connection with the administration, of the Plan
and to modify or rescind any such Plan Rules.

8.3 ADMINISTRATOR'S DISCRETION.

The Administrator has the discretionary power and authority to make all
determinations necessary for administration of the Plan, except those
determinations that the Plan requires others to make, and to construe,
interpret, apply and enforce the provisions of the Plan and Plan Rules whenever
necessary to carry out its intent and purpose and to facilitate its
administration, including, without limitation, the discretionary power and
authority to remedy ambiguities, inconsistencies, omissions and erroneous
benefit calculations. In the exercise of its discretionary power and authority,
the Administrator will treat all similarly situated persons uniformly.

8.4 SPECIALIST'S ASSISTANCE.

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

8.5 INDEMNIFICATION.

The Participating Employers jointly and severally agree to indemnify
and hold harmless, to the extent permitted by law, each director, officer, and
employee of any Affiliates against any and all liabilities, losses, costs and
expenses (including legal fees) of every kind and nature that may be imposed on,
incurred by, or asserted against such person at any time by reason of such
person's services in connection with the Plan, but only if such person did not
act dishonestly or in bad faith or in willful violation of the law or
regulations under which such liability, loss, cost or expense arises. The
Participating Employers have the right, but not the obligation, to select
counsel and control the defense and settlement of any action for which a person
may be entitled to indemnification under this provision.

8.6 BENEFIT CLAIM PROCEDURE.

(a) The Administrator will notify a Participant in writing, within
90 days of the Participant's written application for benefits,
of the Participant's eligibility or noneligibility for
benefits under the Plan. If the Administrator determines that
a Participant is not eligible for benefits or full benefits,
the notice will:

(1) state the specific reasons for the denial of any
benefits;

(2) provide a specific reference to the provision of the
Plan on which the denial is based;

(3) provide a description of any additional information
or material necessary for the claimant to perfect the
claim, and a description of why it is needed;

(4) state that the claimant will be provided, on request
and free of charge, reasonable access to, and copies
of, all documents, records, and other information
relevant to the claim;

(5) state the claimant's right to bring a civil action
under ERISA Section 502(a) following a continued
denial of a claim after appeal review; and

(6) provide an explanation of the Plan's claims review
procedure and other appropriate information as to the
steps to be taken if the Participant wishes to have
the claim reviewed. If the Administrator determines
that there are special circumstances requiring
additional time to make a decision, the Administrator
will notify the Participant of the special
circumstances and the date by which a decision is
expected to be made, and may extend the time for up
to an additional 90-day period.

(b) If a Participant is determined by the Administrator not to be
eligible for benefits or if the Participant believes that he
or she or she is entitled to greater or different benefits,
the Participant will be provided the opportunity to have his
or her claim reviewed by the Administrator by filing a
petition for review with the Administrator within 60 days
after the Participant receives the notice issued by the
Administrator. The petition must state the specific reasons
the Participant believes he or she or she is entitled to
benefits or greater or different benefits. Within 60 days
after the Administrator receives the petition, the
Administrator will give the Participant (and his or her
counsel, if any) an opportunity to present his or her position
to the Administrator in writing, and the Participant (or his
or her counsel) may review the pertinent documents, and the
Administrator will notify the Participant of its decision in
writing within such 60-day period, stating specifically the
basis of the decision written in a manner calculated to be
understood by the Participant and the specific provisions of
the Plan on which the decision is based. If because of special
circumstances requiring additional time to make a decision,
the 60-day period is not sufficient, the decision may be
deferred for up to another 60-day period at the election of
the Administrator, but notice of this deferral must be given
to the Participant.

(d) A claimant must exhaust the procedure described in this
section before pursuing the claim in any other proceeding.

8.7 DISPUTES.

(a) In the case of a dispute between a Participant or his or her
Beneficiary and a Participating Employer, the Administrator or
other person relating to or arising from the Plan, the United
States District Court for the District of Minnesota is a
proper venue for any action initiated by or against the
Participating Employer, Administrator or other person and such
court will have personal jurisdiction over any Participant or
Beneficiary named in the action.

(b) Regardless of where an action relating to or arising from the
participation in the Plan by any Participant is pending, the
law as stated and applied by the United States Court of
Appeals for the Eighth Circuit or the United States District
Court for the District of Minnesota will apply to and control
all actions relating to the Plan brought against the Plan, a
Participating Employer, the Administrator or any other person
or against any such Participant or his or her Beneficiary.

ARTICLE 9.
MISCELLANEOUS

9.1 WITHHOLDING AND OFFSETS.

The Participating Employers and the Trustee retain the right to
withhold from any compensation, deferral and/or benefit payment pursuant to the
Plan, any and all income, employment, excise and other tax as the Participating
Employers or Trustee deems necessary and the Participating Employers may offset
against amounts then payable to a Participant or Beneficiary under the Plan any
amounts then owing to the Participating Employers by such Participant or
Beneficiary.

9.2 OTHER BENEFITS.

Neither amounts deferred nor amounts paid pursuant to the Plan
constitute salary or compensation for the purpose of computing benefits under
any other benefit plan, practice, policy or procedure of a Participating
Employer unless otherwise expressly provided thereunder.

9.3 NO WARRANTIES REGARDING TAX TREATMENT.

The Participating Employers make no warranties regarding the tax
treatment to any person of any deferrals or payments made pursuant to the Plan
and each Participant will hold the Administrator and the Participating Employers
and their officers, directors, employees, agents and advisors harmless from any
liability resulting from any tax position taken in good faith in connection with
the Plan.

9.4 NO RIGHTS TO CONTINUED EMPLOYMENT OR SERVICE CREATED.

Neither the establishment of nor participation in the Plan gives any
individual the right to continued employment or service on the Company's board
of directors or limits the right of the Participating Employer to discharge,
transfer, demote, modify terms and conditions of employment or service on the
Company's board of directors or otherwise deal with any individual without
regard to the effect which such action might have on him or her with respect to
the Plan.

9.5 SPECIAL PROVISIONS.

Special provisions of the Plan applicable only to certain Participants
may be set forth on an exhibit to the Plan adopted in the same manner as an
amendment to the Plan. In the event of a conflict between the terms of the
exhibit and the terms of the Plan, the exhibit controls. Except as otherwise
expressly provided in the exhibit, the generally applicable terms of the Plan
control all matters not covered by the exhibit.

9.6 SUCCESSORS.

Except as otherwise expressly provided in the Plan, all obligations of
the Participating Employers under the Plan are binding on any successor to the
Participating Employer whether the existence of such successor is the result of
a direct or indirect purchase, merger, consolidation or otherwise of all or
substantially all of the business and/or assets of the Participating Employer.