Document:

<PAGE>

              THIRD AMENDMENT TO REVOLVING CREDIT PROGRAM AGREEMENT

         This Third Amendment to Revolving Credit Program Agreement is made as
of the 19th day of June, 2002 (the "Amendment"), by and between Conseco Bank,
Inc. ("Conseco Bank") and Select Comfort Corporation ("Select Comfort").

         Whereas the Conseco Bank (as assignee of Green Tree Financial
Corporation) and Select Comfort entered into a Revolving Credit Program
Agreement dated May 17, 1999, as amended on February 20, 2001 and April 13 2001,
also referred to as Program Agreement, (the "Agreement") governing the terms and
conditions under which Conseco Bank would provide a Program (as defined in the
Agreement, provided furthermore, that all capitalized terms used herein shall
have the meaning attributable to them in the Agreement, unless otherwise defined
herein) to Select Comfort's customers;

         Whereas, the Agreement provides for a Reserve Account of One Million
Dollars ($1,000,000.00) in cash held by Conseco Bank as collateral for
Chargeback Liability;

         Whereas, the parties hereto desire to amend the agreement so that the
cash can be exchanged for a Standby Letter of Credit (the "Letter of Credit");

         Now, therefore, in consideration of the above premises and the mutual
considerations contained herein the parties hereto agree to amend the Agreement
as follows:

         1.       Upon receipt of the Letter of Credit in the amount of ONE
                  MILLION DOLLARS ($1,000,000.00), in form acceptable to Conseco
                  Bank (substantially in the form of Exhibit A attached hereto),
                  Conseco Bank will release to Select Comfort funds in the
                  Reserve Account in the amount of ONE MILLION DOLLARS
                  ($1,000,000.00), plus any accrued but unpaid interest thereon
                  as provided in the Agreement and thereafter the provisions of
                  Section 4.05(d) will terminate and the provisions of Section
                  4.05 (e) will apply only as provided in Section 4.05(f).

         2.       Sections 4.05 of the Agreement is amended by adding new
                  Section 4.05(f), which shall read as follows: "Section
                  4.05(f). To permit the release to Select Comfort of the funds
                  held in the Reserve Account and to still insure the
                  performance and payment of Select Comfort's Chargeback
                  Liability to Conseco Bank under Section 4.05(b) and Section 5,
                  Select Comfort shall cause to be issued to Conseco Bank on or
                  before execution of this Amendment a Letter of Credit, in form
                  and from a bank acceptable to Conseco Bank (substantially in
                  the form of Exhibit A attached hereto) in the amount of ONE
                  MILLION DOLLARS ($1,000,000.00) naming Conseco Bank as
                  beneficiary of the Letter of Credit. If both that Select
                  Comfort defaults in paying any Chargeback Liability to Conseco
                  Bank and Conseco Bank is unable to set off such Chargeback

<PAGE>

                  Liability against amounts owing Select Comfort, Conseco Bank
                  may make draws (multiple draws if necessary) on the Letter of
                  Credit for such unpaid Chargeback Liability of Select Comfort.
                  In the event that the Letter of Credit is not renewed or
                  replaced for the then current undrawn amount prior to the
                  expiry date of the Letter of Credit, Conseco Bank may draw
                  upon the whole amount of the Letter of Credit and deposit the
                  proceeds thereof in the Reserve Account where the funds will
                  be subject to the provisions of 4.05(e). The proceeds of the
                  Letter of Credit shall at all times be construed as a
                  continuation of the collateral in which Select Comfort granted
                  a security interest in pursuant to Section 4.05(e). Upon the
                  earlier of (i) ninety (90) days after termination of this
                  Agreement or (ii) when Select Comfort purchases the Accounts
                  pursuant to Section 8.03, then in each case, Conseco Bank
                  shall either surrender the Letter of Credit to Select Comfort
                  or the issuing Bank or otherwise authorize the termination of
                  the Letter of Credit as Select Comfort may direct."

         3.       Select Comfort expressly agrees that 1) Conseco Bank's release
                  to Select Comfort of the funds in the Reserve Account as
                  provided herein and the replacement thereof with the issuance
                  of the Letter of Credit is done at the request of Select
                  Comfort to allow it free access to such funds, and 2) the
                  replacement of the funds in the Reserve Account with the
                  issuance of the Letter of Credit and the proceeds thereof is a
                  continuation of equivalent value of Conseco Bank's collateral
                  in which Select Comfort granted a security interest pursuant
                  to Section 4.05(e) and shall not be construed as the giving of
                  any greater value or preference to Conseco Bank as a creditor
                  than it had before this Amendment.

         4.       Except as expressly amended herein, all terms and conditions
                  of the Agreement shall remain in full force and effect.
                  Nothing herein shall constitute a waiver of any of Conseco
                  Bank's rights and remedies under the Agreement or be construed
                  as a course of conduct to grant any waiver of any of Conseco
                  Bank's rights and remedies under the Agreement in the future.

         5.       This Amendment may be executed in any number of counterparts
                  and delivered by facsimile, all of which shall constitute but
                  one and the same original.

In witness hereof, the parties hereto have executed this Amendment as of the
first date written above.

CONSECO BANK, INC.                          SELECT COMFORT CORPORATION

By:  /s/                                    By: Mitch Johnson
     ---------------------                      -------------
Its: SVP and CFO                            Its: VP Tax, Treasury and Insurance
                                                 ------------------------------<PAGE>

                                 SELECT COMFORT
                            EXECUTIVE INVESTMENT PLAN

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                                                                 Page

<S>                                                                                                              <C>
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>

<PAGE>
<Table>
<Caption>
                                                                                                                 Page

<S>                                                                                                              <C>
   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>

                                       ii

<PAGE>

                              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
                                                          -----

<PAGE>

                                 SELECT COMFORT
                            EXECUTIVE INVESTMENT PLAN

                                  As Adopted Effective as of December 20, 2002

<PAGE>

                                 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

         (c)      encourage additional retirement savings by Qualified Employees

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.

                                       1
<PAGE>

                                   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
<PAGE>

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.

                                       3
<PAGE>

                                   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

                                       4
<PAGE>

                           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

                                       5
<PAGE>

                  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.

                                       6
<PAGE>

         (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

<S>                                                      <C>
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>

                                       7
<PAGE>

                                   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.

                                       8
<PAGE>

         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.

         (c)      Amount. The amount of a lump sum payment will be equal to the
                  balance of the deceased Participant's Accounts.

         (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

                                       9
<PAGE>

                           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.

                                       10
<PAGE>

                                   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.

                                       11
<PAGE>

                                   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.)

                                       12
<PAGE>

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.

                                       13
<PAGE>

                                   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.

                                       14
<PAGE>

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.

                                       15
<PAGE>

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).

                                       16
<PAGE>

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.

                                       17
<PAGE>

                                   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;

                                       18
<PAGE>

                  (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.

         (c)      The same procedure applies to the Beneficiary of a deceased
                  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.

                                       19
<PAGE>

                                   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.

                                       20

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