<PAGE>   1

                                 LABOR AGREEMENT



                                     BETWEEN

                             SERTA MATTRESS COMPANY

                                       AND

                             TEAMSTERS LOCAL NO. 313

               INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,
                       WAREHOUSEMEN AND HELPERS OF AMERICA









                       NOVEMBER 1, 1994 - NOVEMBER 1, 1998




                                       1
<PAGE>   2
                                   1998 - 2002

This Agreement made and entered into between SERTA WEST, INC. for its facility
located in Puyallup, Washington, (hereinafter referred to as the "Employer") and
LOCAL UNION NO. 313, INTERNATIONAL BROTHERHOOD OF TEAMSTERS, CHAUFFEURS,
WAREHOUSEMEN AND HELPERS OF AMERICA, (hereinafter referred to as the "Union").
This Agreement effective as of November 1, 1998 and to extend to November 1,
2002.


ARTICLE 1         RECOGNITION - UNION SECURITY

1.01     The Employer recognizes the Local Union as the sole collective
         bargaining agent for all employees of the Employer employed in job
         classifications covered by this Agreement.

1.02     All employees who are members of the Union on the effective date of
         this Agreement shall maintain their membership in good standing in the
         Union as a condition of continued employment. All employees covered by
         this Agreement who are not members of the Union on the effective date
         of this Agreement and all new employees hereinafter employed, shall
         become and remain members in good standing in Local Union No. 313, as a
         condition of continued employment on or after the 31st day following
         the beginning of their employment or the effective date of this
         Agreement, whichever is the later.

1.03     The Union shall indemnify the Employer and hold it harmless against any
         and all suits, claims, demands and liabilities that arise out of or by
         reason of any action taken by the Employer for the purpose of complying
         with the provisions of Article 1 when such action is taken as a result
         of a written request or demand by the Union.


ARTICLE 2         DISCIPLINE

2.01     The Employer may discharge or suspend any employee for just cause, but
         no employee shall be discharged or suspended unless a written warning
         notice shall previously have been given to such employee of a complaint
         against him concerning his work or conduct within ten (10) days of the
         date of the violation, and, if such written warning notice is not given
         to the employee and sent to the Union within ten (10) days of such
         violation, the warning notice shall be null and void. No such prior
         warning notice shall be necessary if the cause for discharge or
         suspension is dishonesty, drinking related to his employment, gross
         misconduct, recklessness, or carrying unauthorized passengers.


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<PAGE>   3
         Warning notices shall be void for purposes of further disciplinary
         action after eighteen (18) months from the date issued, provided the
         employee has not been issued other warning notices during the eighteen
         (18) month period.

2.02     The complaint specified in such prior warning notice shall be for the
         same type of misconduct as the cause for discharge or suspension. A
         copy of such warning notice shall be sent to Local Union No. 313 at
         the time it is given to the employee.

2.03     Any employee may request an investigation of his discharge or
         suspension or any warning notice, and the Union shall have the right to
         protest any such discharge, suspension, or warning notice. Any such
         protest shall be presented to the Employer in writing within ten (10)
         calendar days after the discharge, suspension, or warning notice and,
         if not presented within such period, the right of protest shall be
         waived. A copy of such protest shall be given to the Employer and shall
         be referred immediately to Article 10 of this Agreement.

2.04     The Employer shall give to a discharged employee a written notice of
         termination and at the same time send a copy to the local Union.


ARTICLE 3         DISCRIMINATION

3.01     No workman shall be discharged or discriminated against for upholding
         Union principles, and any man working under the instruction of the
         Union or who serves on a committee shall not be discharged or be
         discriminated against for that reason.

3.02     It shall not be a violation of this Agreement or cause for discharge
         for any employee to refuse to cross a lawful primary picket line as
         recognized by Teamsters Local No. 313 in the performance of his duties.

3.03     The Employer and Union agree that there shall be no discrimination
         because of race, sex, color, age, religious creed, national origin,
         ancestry, or handicap.

3.04     Nothing in this Agreement shall prevent the Union and Employer from
         fulfilling their respective responsibilities, if any, under the
         Americans with Disabilities Act and the Family Medical Leave Act.




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<PAGE>   4
ARTICLE 4         HOLIDAYS

4.01     The following days shall be considered as holidays, and regular
         employees who have worked eighty (80) hours in thirty (30) days prior
         to these holidays shall be paid for holidays listed regardless of the
         day on which they fall, provided the employee works his full scheduled
         shift before the holiday and his full scheduled shift after the holiday
         or is excused by mutual consent: New Year's Day, Washington's Birthday,
         Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, Day After
         Thanksgiving, Day Before Christmas, and Christmas Day.

4.02     All employees who work on a holiday shall, in addition to the regular
         day's pay provided for above, receive time and one-half (1 1/2) pay for
         actual hours worked, with a minimum guarantee of four (4) hours. Such
         time worked shall be included in the workweek when computing the hours
         on which overtime is to be paid. If a holiday falls during an
         employee's vacation period, an additional day will be granted or paid
         for.


ARTICLE 5         HOURS OF WORK - OVERTIME PREMIUMS

5.01     Five consecutive days of eight (8) hours each, Monday through Friday,
         shall constitute the workweek. All work performed before 5:00 a.m. and
         after 6:00 p.m., unless worked as part of a regular shift, shall be
         paid at the overtime rate. When an employee is required to remain out
         of town on Saturday and/or Sunday but is not actively engaged in
         driving, such time shall be considered standby time and the employee
         shall be compensated at the straight time hourly rate for up to a
         maximum of eight (8) hours per day. Standby time to be computed and
         paid beginning at 8:00 a.m. and running continuously up to eight (8)
         hours.

5.02     Time and one-half (1 1/2) shall be paid for all work performed in
         excess of eight (8) hours per day. In computing overtime, hours worked
         shall be rounded off to the nearest quarter hour.

5.03     All Saturday work shall be paid for at the rate of time and one-half (1
         1/2). All Sunday work shall be paid for at double time (2x). Extra
         employees shall not be employed on Saturday to deprive regular
         employees of Saturday overtime.

5.04     Regular employees, when ordered to report to work, shall be guaranteed
         four (4) hours' work or pay.




                                       4
<PAGE>   5
5.05     Any employee who has been employed for a period of ninety (90) days and
         has averaged three (3) days per week (or equivalent hours), and
         continues to average eighty (80) hours per month shall be considered a
         regular employee and shall receive the benefits of a regular employee.

5.06     Holiday, vacation and overtime pay shall include shift premium. The
         employee's rate of pay in effect at the time of holiday or vacation
         shall be paid.

5.07     A second shift premium of seventeen and one-half cents (17 1/2 (cents))
         per hour shall be paid for all regularly scheduled second shift work,
         and a third shift premium of twenty-seven and one-half cents (27 1/2
         (cents)) per hour shall be paid for all regularly scheduled third shift
         work.

5.08     An employee who requires medical treatment due to an injury related to
         employment shall be paid for the remainder of the shift on the day of
         the injury to a maximum of eight (8) hours at the straight time hourly
         rate of pay if directed by a physician to not return to work. Medical
         certification by the physician is required in order to receive
         compensation under this provision.


ARTICLE 6         CLASSIFICATIONS - RATES OF PAY

6.01     The wage scales are attached hereto in the Wage Supplement.

6.02     When a driver makes a trip which necessitates his being away from home
         overnight, the Employer shall compensate him for reasonable meal and
         lodging expenses, subject to paid receipts.


ARTICLE 7         HEALTH AND WELFARE

7.01     The Employer agrees to contribute on behalf of eligible employees to
         the Washington Teamsters Welfare Trust Fund for benefit plans as
         listed.

<TABLE>
<S>                                     <C>     <C>
         -   Vision                     -       $ 11.35
         -   Dental Plan E              -       $ 43.10
         -   *Medical Plan WT400        -       $251.55
</TABLE>

         *    Effective February 1, 1999 on January hours the Employer agrees to
              contribute an additional $12.50 per month for enhance Time Loss
              benefits and 12 months extended coverage when disabled.



                                       5
<PAGE>   6
7.02     During the term of the Labor Agreement (November 1, 1998 - October 31,
         2002), the Employer agrees to pay up to an additional sixty nine
         dollars and twenty cents ($69.20) per month on behalf of each eligible
         employee if such increase is required by the Trustees in order to fund
         plan benefits identified in paragraph 7.01 of this article.

7.03     Newly hired employees shall become eligible for contributions on their
         behalf on the first of the month following a three (3) consecutive
         months waiting period provided they were compensated a minimum of
         eighty (80) hours in the immediate prior month. Thereafter,
         contributions shall be made on behalf of each employee performing work
         covered by this Agreement who was compensated for eighty (80) hours or
         more in the prior month.

7.04     The Employer and Union agree to be bound by the terms and provisions of
         the Trust Agreements and accept, as their representatives, the Trustees
         serving on the Board of Trustees and their duly appointed successors.

ARTICLE 8         PENSION

8.01     For the term of the Agreement, the Employer shall pay into the Western
         Conference of Teamsters' Pension Trust Fund on account of each employee
         performing work covered by this Agreement a basic contribution and an
         additional contribution in order to provide the Program for Enhanced
         Early Retirement (PEER 84).

8.02     Effective December 1, 1998 on November hours, the contribution to the
         Pension Trust shall be increased to one dollar and ninety nine cents
         ($1.99) per compensable hour as the basic contribution plus an
         additional thirteen cents ($.13) for PEER. The total contribution rate
         of two dollars and twelve cents ($2.12) per compensable hour shall not
         exceed three hundred sixty six dollars and seventy six cents ($366.76)
         per month.

8.03     Effective December 1, 1999 on November hours, the contribution to the
         Pension Trust shall be increased to two dollars and eighteen cents
         ($2.18) per compensable hour as the basic contribution plus an
         additional fourteen cents ($.14) for PEER. The total contribution rate
         of two dollars and thirty two cents ($2.32) per compensable hour shall
         not exceed four hundred one dollars and thirty six cents ($401.36) per
         month.

8.04     Effective December 1, 2000 on November hours, the contribution to the
         Pension Trust shall be increased to two dollars and thirty seven cents
         ($2.37) per compensable hour as the basic contribution plus an
         additional fifteen cents ($.15) for PEER. The total contribution rate
         of two dollars and fifty two cents


                                       6
<PAGE>   7
         ($2.52) per compensable hour shall not exceed four hundred thirty five
         dollars and ninety six cents ($435.96) per month.

8.05     Effective December 1, 2001 on November hours, the contribution to the
         Pension Trust shall be increased to two dollars and fifty five cents
         ($2.55) per compensable hour as the basic contribution plus an
         additional seventeen cents ($.17) for PEER. The total contribution rate
         of two dollars and seventy two cents ($2.72) per compensable hour shall
         not exceed four hundred seventy dollars and fifty six cents ($470.56)
         per month.

8.06     It is understood that the PEER contributions will not be taken into
         consideration for benefit accrual purposes under the Pension Plan.
         Also, the PEER rate must always be a 6.5% of the basic pension rate and
         may not be decreased nor discontinued unless directed by the Pension
         Trustees.

8.07     The total amount due for each calendar month shall be remitted in a
         lump sum not later than ten (10) days after the last business day of
         such month. The Employer agrees to abide by such rules as may be
         established by the Trustees of said Trust Fund to facilitate the
         determination of the hours for which contributions are due, the prompt
         and orderly collection of such amounts, and the accurate reporting and
         recording of such amounts paid on account of each member of the
         bargaining unit. Failure to make all payments herein provided for
         within the time specified shall be a breach of this Agreement. Economic
         action may be taken by the Union after ninety (90) days' delinquency.

8.08     The parties agree that because the Trustees of the Fund will rely on
         the execution of this Agreement to restore or not to reduce benefits to
         retiring employees as indicated above, this Agreement may not be
         modified, terminated, or rescinded by the parties, directly or
         indirectly, without the express written consent of the Trustees.

8.09     In the event the Employer fails to make the monetary contributions
         required by this Article of this Agreement, the Employer shall be
         notified by the Union and shall have five (5) days within which to
         attempt to secure payment of the amount due. If payment is not made by
         the Employer before the end of such five (5) day period, the Union
         shall be free to take any economic action against the Employer it deems
         necessary, and such action shall not be considered a violation of this
         Agreement.

ARTICLE 9         VACATIONS

9.01     Regular employees who have been with the Employer for one (1) year or
         more shall receive one week's vacation with pay; those with three (3)
         or more years of service shall receive two (2) weeks' vacation with
         pay; and those with ten (10) years or more service shall receive three
         (3) weeks' vacation with pay. (Upon


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<PAGE>   8
         employee's anniversary date following November 1, 1998 increase
         vacation benefit to two (2) weeks vacation after two (2) years.)

9.02     Vacations shall be scheduled in accordance with seniority with the
         understanding that in the case of employees entitled to three (3)
         weeks' vacation, not less than two (2) weeks shall be scheduled
         consecutively in accordance with seniority, and the remaining earned
         vacation time by mutual agreement between Employer and employee.

9.03     The vacation period shall be April 1 to October 1 unless otherwise
         mutually agreed to between Employer and employee.

9.04     All regular employees shall receive pro-rated vacations after the first
         (1st) year of service at the rate of one-twelfth (1/12th) of the
         determined vacation pay for each month of service.

ARTICLE 10        GRIEVANCE AND ARBITRATION

10.01      Purpose
           It is the intent and purpose of this article, which shall be
           available to both the Union and the Employer to provide for the
           presentation and equitable adjustment of grievances. A grievance is
           defined as a dispute involving the interpretation or application of
           the provisions of this Agreement that arises during the term of the
           Agreement. It is the intent of the parties that the following
           procedures shall be the exclusive remedy for resolving disputes as
           herein defined.

10.02      The Union shall not be required to process an employee's grievance
           if, in the Union's opinion, the grievance lacks merit. The Union
           shall be the exclusive representative of the employee with respect to
           the processing, disposition and/or settlement of any grievance
           including hearings and final decisions of arbitrators.

10.03      Grievance Procedure

           Step 1:
           Any grievance arising under this Agreement must be presented first by
           the grievant to the Operations Manager within ten (10) calendar days
           after the occurrence of the event causing the grievance. The
           Operations Manager shall give an answer to the grievant within seven
           (7) calendar days after his discussion with the grievant. If the
           Operations Manager's decision is not appealed in writing by the
           grievant within seven (7) calendar days of the grievant's receipt of
           the Operations Manager's answer, the grievance will be considered
           settled on the basis of the Operations Manager's decision and shall
           not be eligible for further appeal.


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<PAGE>   9
           Step 2:
           Grievances filed in this second step shall be in writing on forms
           furnished by the Union and shall be dated and signed by the grievant
           and shop steward. Such grievance forms shall be presented to the
           Operations Manager or his designee. Such grievances shall be
           discussed in an attempt of settlement at a mutually convenient time
           within seven (7) calendar days after presentation to the Operations
           Manager or his designee. The Operations Manager or his designee will
           provide the Employer's written settlement position to the Union
           within seven (7) calendar days of the conclusion of the Step 2
           meeting. If the decision by the Operations Manager or his designee is
           not appealed to the next step by the Union in writing within ten (10)
           calendar days of receipt of the Employer's Step 2 answer, the
           grievance shall be considered settled on the basis of the Operations
           Manager or his designee's decision and shall not be eligible for
           further appeal.

           Step 3:
           The Operations Manager or his designee shall, within ten (10)
           calendar days after receipt of the appeal from Step 2, confer with
           the Secretary-Treasurer of the Union or his designee in an attempt to
           settle the same. After such discussion, the Operations Manager or his
           designee shall render his decision in writing to the
           Secretary-Treasurer of the Union within ten (10) calendar days. If
           such a decision is unsatisfactory to the Union, the Union may, by
           written notice served on the Employer within twenty (20) calendar
           days from receipt by such decision, appeal the grievance to
           arbitration as hereinafter provided. If the decision in this step is
           not appealed to arbitration as stated above, the grievance shall be
           considered settled on the basis of the Operations Manager's decision
           and shall not be eligible for further appeal.

           Step 4:
           A grievance appealed from Step 3 shall be submitted to an arbitrator
           whose decision shall be final. The parties shall appeal to the
           Federal Mediation and Conciliation Service for a panel of seven (7)
           names. If the parties cannot agree upon one of the individuals named
           in the panel submitted, the Employer and the Union shall strike names
           alternately until one (1) name remains and he/she shall be the
           arbitrator. The arbitrator shall not have the power to alter or amend
           the terms of this Agreement, and the cost of said arbitration
           proceeding shall be borne equally by the Employer and the Union.



                                       9
<PAGE>   10
10.04      If an employee or the Union fails to process a grievance within the
           time limits set forth above and the procedure is not waived by mutual
           agreement, that grievance shall be deemed waived and such failure
           shall bar any future action thereon. If the Employer fails to respond
           within the time limits described, unless the procedure is waived by
           mutual agreement, the grievance shall be considered automatically
           advanced to the next step in the Grievance Procedure.

10.05      Any dispute as to procedure shall be heard and decided by the
           arbitrator prior to any hearing on the merits of a grievance. Any
           dismissal of a grievance by the arbitrator, whether on the merits or
           on procedural grounds, shall bar any further arbitration.


ARTICLE 11        STRIKES

11.01    It is further agreed that there shall be no strikes of any kind by
         Local No. 313 or its members during the Agreement.


ARTICLE 12        CLOTHING

12.01    In the event the Employer elects to provide uniforms, failure to wear
         the uniform shall not be cause for disciplinary action.


ARTICLE 13        DEATH IN FAMILY

13.01    If a regular employee covered by this contract suffers a death in the
         immediate family, such employee shall receive three (3) days off with
         pay, or pay in lieu thereof, on the basis of his regular straight-time
         pay for eight (8) hours, providing the employee attends the funeral.
         Immediate family shall be defined as a wife, husband, son, daughter,
         step children residing in the home, mother, father, brother, sister,
         grandchildren and grandparents residing within the United States.


ARTICLE 14        JURY DUTY

14.01    When a regular employee covered by this Agreement is called upon for
         jury service in any municipal, county, state, or federal court, he
         shall advise the Employer upon receipt of such call, and if taken from
         his work for such service, shall be reimbursed up to a maximum of
         eighty (80) hours in a calendar year; for


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<PAGE>   11
         any loss of wages while actually performing such service; provided he
         exhibits to the Employer his properly endorsed check and permits the
         Employer to copy the check or voucher he received for such service. The
         amount the employee shall be reimbursed shall be determined by
         subtracting the amount he received for such service from the amount he
         would have earned at his regular straight hourly rate during the
         regular working hours he missed while performing such service.


ARTICLE 15        SENIORITY

15.01    After three (3) months' service, and provided the employee is qualified
         to perform the work involved, length of service shall prevail in layoff
         and recall of regular employees. In the event of layoff, the last
         regular employee laid off shall be the first rehired. Seniority shall
         be broken only by justifiable discharge, voluntary quit, or being off
         the active payroll for any reason in excess of six (6) consecutive
         months. By mutual agreement between the Union and the Employer,
         additional time away from work without loss of seniority may be granted
         upon request by the employee.


ARTICLE 16        MOONLIGHTING

16.01    The Employer shall not employ under this Agreement any person who is
         regularly employed full-time elsewhere. It shall also be cause for
         discharge for any employee covered under this Agreement to accept and
         continue other part-time or full-time employment.


ARTICLE 17        EXTRA AGREEMENTS

17.01    The Employer agrees not to enter into any agreement or contract with
         his employees which in any way conflicts with the terms and provisions
         of this Agreement. Such agreements shall be null and void.


ARTICLE 18        PAYROLL INSPECTION

18.01    The Union shall have the right, when it deems there is a violation of
         this Agreement, to check the Local No. 313 bargaining unit payroll
         records in regard to wages, pension, health and welfare or any other
         cost of fringe items, including overtime pay. If the Employer refuses,
         the Union is free to take any economic action against such Employer it
         deems necessary, and such action shall not be considered a violation of
         this Agreement.



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<PAGE>   12
ARTICLE 19        EQUIPMENT - SAFETY

19.01    All equipment shall be equipped in accordance with Safety Standards as
         established by the State of Washington or Interstate Commerce
         Commission regulations where they apply.

19.02    Adequate heaters and adequate defrosters and large mirrors will be
         installed in the cabs and on the cabs of all trucks and tractors put in
         regular service after April 1, 1966. The Employer agrees to make a
         reasonable and practicable effort to provide such equipment in all
         other units now in service and keep them in good working order.


ARTICLE 20        BULLETIN BOARDS


20.01    The Employer agrees to provide suitable space for the Union to use a
         Bulletin Board. Postings by the Union on such boards are to be confined
         to official business of the Union. When furnished by the Union, a copy
         of the Health and Welfare and Pension transmittals shall be posted by
         the Employer on the Union Bulletin Board.


ARTICLE 21        OVERLOADING

21.01    In the event a driver loses his driver's license solely for the reason
         of overloading, the Employer shall be responsible for all fines and all
         wages lost because of the overload.


ARTICLE 22        SEPARABILITY & SAVINGS

22.01    If any article or section of this Agreement or any Riders thereto
         should be held invalid by operation by law, or by any tribunal of
         competent jurisdiction, or if compliance with or enforcement of any
         article or section should be restrained by such tribunal pending a
         final determination as to its validity, the remainder of this Agreement
         and of any Rider thereto, or the application of such article or section
         to persons or circumstances other than those as to which it has been
         held invalid or as to which compliance with or enforcement of has been
         restrained, shall not be affected thereby.



                                       12
<PAGE>   13
22.02    In the event that any article or section is held invalid or enforcement
         of or compliance with which has been restrained, as above set forth,
         the parties affected thereby shall enter into immediate collective
         bargaining negotiations upon the request of either party for the
         purpose of arriving at a mutually satisfactorily replacement for such
         article or section during the period of invalidity or restraint. If the
         parties do not agree on a mutually satisfactorily replacement within
         sixty (60) days after the beginning of the period of invalidity or
         restraint, either party shall be permitted all legal or economic
         recourse in support of its demands notwithstanding any provision in
         this Agreement to the contrary.


ARTICLE 23        DURATION

23.01    This Agreement shall be in effect until November 1, 2002 and will
         automatically renew itself from year to year thereafter unless either
         party shall serve written notice at least sixty (60) days prior to the
         expiration date of any year of a desire to amend or terminate the
         Agreement.


Signed at Puyallup, Washington this __________ day of _______________, 1999.


<TABLE>
<S>                                              <C>
Serta Mattress Company                           Teamsters Local No. 313



/S/ Tom Sparks                                   /S/ Patrick E. Swanson
____________________________                     _______________________________
Tom Sparks                                       Patrick E. Swanson
Operations Manager                               Secretary-Treasurer
</TABLE>








                                       13
<PAGE>   14
                                 WAGE SUPPLEMENT



<TABLE>
<CAPTION>
TRUCK DRIVERS                11/01/98   11/01/99   11/01/00   11/01/01
-------------                --------   --------   --------   --------

<S>                          <C>        <C>        <C>        <C>
1st 500 Hours Worked (70%)    $10.42     $10.59     $10.77     $10.98

2nd 500 Hours Worked (80%)     11.90      12.10      12.30      12.54

3rd 500 Hours Worked (90%)     13.39      13.62      13.84      14.11

Thereafter:                   $14.88     $15.13     $15.38     $15.68
</TABLE>




                                       14
<PAGE>   15
                             LETTER OF UNDERSTANDING
                                 BY AND BETWEEN
                             TEAMSTER LOCAL NO. 313
                                       AND
                             SERTA MATTRESS COMPANY


It is the intent of the Union and Employer that the company maintain its present
practices by attempting to utilize its employees prior to contracting work out,
giving first consideration to factors such as availability of regular employees
and equipment, cost and delivery schedules.

In the event the Employer desires to reduce or cease operating its own delivery
fleet, it shall provide the Union with thirty (30) days' prior notification in
order to provide the Union with an opportunity to meet and confer. The Employer
shall give consideration to alternatives presented by the Union prior to
reaching a final decision.

Signed and dated this ________ day of _____________ , 1999.


<TABLE>
<S>                                              <C>
Serta Mattress Company                           Teamsters Local No. 313



/S/ Tom Sparks                                   /S/ Patrick E. Swanson
____________________________                     _______________________________
Tom Sparks                                       Patrick E. Swanson
Operations Manager                               Secretary - Treasurer
</TABLE>




                                       15