EXECUTIVE SEVERANCE PAY PLAN

SELECT COMFORT CORPORATION

This instrument sets forth the Select Comfort Corporation Executive Severance Pay Plan, amended and restated as of August 21, 2008.  The provisions of this instrument will apply to any Qualified Employee who terminates employment after August 21, 2008.

The name of this Plan is the “Select Comfort Corporation Executive Severance Pay Plan.”  Its purpose is to provide severance benefits to certain Qualified Employees whose employment is involuntarily terminated without Cause.  Severance Pay is in addition to regular earned pay and benefits for accrued paid time off, if any, payable to Qualified Employees upon separation.

As stated in Section 4.4, it is not intended that this Plan be treated as a nonqualified deferred compensation plan subject to Code section 409A.

The terms listed in this section shall have the meanings given below.

2.1   Administrator.   The Administrator is the person designated under the Plan to perform administrative duties on behalf of the Company or, as the context may require, the individual to whom specific administrative duties have been delegated.

2.2   Affiliate.   An Affiliate is the Company or another member of a controlled group of corporations, within the meaning of Code section 414(b) or any trade or business that is under common control with the Company, within the meaning of Code section 414(c).

2.3   Base Pay.

(A)   Base Pay means the Employee’s base salary in effect immediately prior to his or her Termination of Employment and will exclude any commissions, incentive pay, bonus or other addition to pay.

(B)   Base Pay includes any amounts by which pay is voluntarily reduced under a Code section 125 cafeteria plan, section 401(k) cash or deferred arrangement or the Select Comfort Executive Investment Plan .

2.4   Cause.    Cause means any reason for which an Employee may be subject to discipline under the Company’s or Affiliate’s policies, practices and procedures including, but not limited to, the following:

(A)   dishonesty, fraud, misrepresentation, embezzlement or deliberate injury or attempted injury, in each case related to the Company or any Affiliate,

(B)   commission of a felony crime, or commission of any criminal or unlawful activity of any nature or degree in the course of or in relation to Employee's employment,

(C)   failure to satisfactorily perform the duties of the Employee's employment, if the failure to perform would merit termination under the Company's or Affiliate's usual policy or practice,

(D)   any material breach of any employment, service, confidentiality or non-compete agreement entered into with the Company or any Affiliate, or

(E)   violation of the Company's Code of Business Conduct.

2.5   Change in Control.   A "Change in Control" of the Company shall mean:

(A)   the sale, lease, exchange or other transfer of all or substantially all of the assets of the Company (in one transaction or in a series of related transactions) to a corporation that is not controlled by the Company,

(B)   the approval by the shareholders of the Company of any plan or proposal for the liquidation or dissolution of the Company, or

(C)   a change in control of a nature that would be required to be reported (assuming such event has not been “previously reported”) in response to Item 1(a) of the Current Report on Form 8-K, as in effect on the effective date of the Select Comfort Corporation 2004 Stock Incentive Plan, pursuant to Section 13 or 15(d) of the Exchange Act, whether or not the Company is then subject to such reporting requirement;

(D)   provided that, without limitation, such a Change in Control shall be deemed to have occurred at such time as -

(1)   any Person becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of 50% or more of the combined voting power of the Company’s outstanding securities ordinarily having the right to vote at elections of directors or

(2)   individuals who constitute the Board of Directors on the effective date of the Select Comfort Corporation 2004 Stock Incentive Plan cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the effective date of the Select Comfort Corporation 2004 Stock Incentive Plan whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors comprising the Board of Directors on the effective date of the Select Comfort Corporation 2004 Stock Incentive Plan (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination) shall be, for purposes of this clause (2), considered as though such person were a member of the Board of Directors on the effective date of the Select Comfort Corporation 2004 Stock Incentive Plan.

2.6   Code.   Code means the Internal Revenue Code of 1986, as amended.  Any reference to a specific provision of the Code includes any amendment of or successor to that provision.

2.7   Company.   The Company is Select Comfort Corporation or its successor.

2.8   Employee.   An Employee is any individual who performs services for a Participating Employer as a common-law employee of the Participating Employer.  No reclassification of an individual as a common-law employee of a Participating Employer will be given retroactive effect for any purpose under this Plan.

2.9   Excluded Employee.   An “Excluded Employee” is an Employee who:

(A)   resides in the United States but is not a United States citizen, unless he or she is classified as a permanent resident of the United States;

(B)   is classified by the Participating Employer as a part-time Employee;

(C)   is classified by the Participating Employer as a temporary Employee; or

(D)   is covered by a collective bargaining agreement that does not specifically provide for participation in this Plan.

2.10             Involuntary Termination of Employment.   An “Involuntary Termination of Employment” shall include any Termination of Employment by a Participating Employer other than for “Cause” and shall also include any resignation by a Qualified Employee for “Good Reason,” including any refusal to accept:

(A)   a material diminution in the Qualified Employee’s base compensation, which for purposes of this Plan shall mean a reduction of 10% or more in the Qualified Employee’s salary plus target bonus;

(B)   discontinuation of eligibility to participate in a material long-term cash or equity award or equity-based grant program (or in a comparable substitute program) in which other Qualified Employees at a comparable level are generally eligible to participate;

(C)   following a Change in Control, any material diminution of authority, duties or responsibilities, including any change in the authority, duties or responsibilities of the Qualified Employee that is inconsistent in any material and adverse respect with the Qualified Employee’s then-current position(s), authority, duties and responsibilities with the Participating Employer; provided, however, that “Good Reason” shall not be deemed to exist pursuant to this clause (C) solely on account of the Company no longer being a publicly traded entity or solely on account of a change in the reporting relationship of the Qualified Employee;

(D)   a material change in the geographic location at which the Company requires the Qualified Employee to be based as compared to the location where the Qualified Employee was based immediately prior to the change, which for purposes of this Plan shall mean (i) a relocation that results in an increase in the commuting distance from the Qualified Employee’s principal residence to his or her new job location of more than 50 miles, or (ii) a relocation that requires the Qualified Employee to relocate his or her principal residence.

Notwithstanding the foregoing, however, “Good Reason” shall not be deemed to exist as a result of any of the actions stated in clauses (A) or (B) above to the extent that such actions are in connection with an across-the-board change or termination that equally affects at least ninety-five percent (95%) of all Qualified Employees.  An act or omission will not constitute a “Good Reason” unless the Qualified Employee gives written notice to the Company of the existence of such act or omission within ninety (90) days of its initial existence, the Company fails to cure the act or omission within thirty (30) days after the notification, and actual Termination of Employment occurs within two (2) years of the initial existence of the act or omission.

2.11             Participant.   A Participant is a former Qualified Employee who is entitled to Severance Pay benefits under this Plan.

2.12             Participating Employer.   A Participating Employer is the Company and any other U.S. Affiliate that has adopted the Plan, or all of them collectively, as the context requires, and their respective successors.  An Affiliate will cease to be a Participating Employer upon a termination of the Plan as to its Employees or upon its ceasing to be an Affiliate.  The Participating Employer with respect to any individual is the Affiliate that is responsible for paying the individual’s wages or salary.

2.13             Plan.   The Plan is the Select Comfort Corporation Executive Severance Pay Plan set forth in this instrument as it may be amended from time to time.

2.14             Premium Reimbursement Period.   The Premium Reimbursement Period is the period of time during which the Participant is entitled to receive cash reimbursement payments for COBRA continuation coverage, as described in Section 4.2.

2.15             Qualified Employee.   A “Qualified Employee” is an Employee who -

(A)   is paid under a U.S. domestic payroll of the Participating Employer;

(B)   is classified by the Participating Employer in Qualified Employee Category grade 15,  grade 14 or grade 13; and

(C)   is not an Excluded Employee.

2.16             Qualified Employee Category.   A “Qualified Employee Category” is the employment grade or classification of a Qualified Employee as determined by the Participating Employer in its sole discretion.

2.17             Release.   A Release is a written instrument, prescribed by the Administrator and signed by the Qualified Employee, under which the Qualified Employee releases all Affiliates, and the directors, officers and employees of each of them, all employee benefit plans and all employee benefit plan fiduciaries from any and all claims the Qualified Employee may have against any of them.  The Release will waive all claims the Qualified Employee may have under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, the Americans with Disabilities Act, the Employee Retirement Income Security Act of 1974 (other than benefits payable following Termination of Employment), and such other statutes and rules of law as the Company may deem advisable.

2.18             Severance Pay.   Severance Pay is an amount payable under the terms of this Plan.

2.19             Termination of Employment.   Termination of Employment means a termination of the Qualified Employee’s employment relationship (both as an employee and independent contractor) with the Company and all Affiliates or such other change in the Qualified Employee’s employment relationship with the Company and all Affiliates that would be considered a “separation from service” under Section 409A of the Code.  The Executive’s employment relationship will be treated as remaining intact while the Qualified Employee is on a military leave, a sick leave or other bona fide leave of absence (pursuant to which there is a reasonable expectation that the Qualified Employee will return to perform services for the Company or an Affiliate) but only if the period of such leave does not exceed six (6) months, or if longer, so long as the Qualified Employee retains a right to reemployment by the Company or an Affiliate under applicable statute or by contract, provided, however, where the Qualified Employee’s leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months and such impairment causes the Qualified Employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a twenty-nine (29) month period of absence may be substituted for such six (6) month period of absence.  In all cases, the Qualified Employee’s Termination of Employment must constitute a “separation from service” under Section 409A of the Code and any “separation from service” under Section 409A of the Code shall be treated as a Termination of Employment.

3.1   Eligible Terminations.   Severance Pay will be paid, subject to the succeeding provisions of this Plan, only to a Qualified Employee subject to an Involuntary Termination of Employment by a Participating Employer.

3.2   Terminations Not Covered.   No Severance Pay will be paid to any person upon commencement of a leave of absence, including military service leave, or to any person whose employment is terminated by:

(A)   his or her resignation, retirement or death;

(B)   discharge for Cause;

(C)   failure to be reinstated following a leave of absence; or

(D)   refusal to accept a new job position with a Participating Employer, a transfer to a new work locat