June 6, 2001











                           EMPLOYEES' RETIREMENT PLAN

                                       OF

                             CONE MILLS CORPORATION















                      As Amended and Restated June 30, 2001




<PAGE>

                           TABLE OF CONTENTS





            Employees' Retirement Plan of Cone Mills Corporation
                                Page iv

                                                                          Page

INTRODUCTION.................................................................1

ARTICLE I:   DEFINITIONS

         1.01     Accredited Service.........................................4
         1.02     Accrued Benefit............................................4
         1.03     Actuarial Equivalent.......................................6
         1.04     Actuary....................................................6
         1.05     Affiliate..................................................6
         1.06     Annuity Starting Date......................................6
         1.07     Approved Leave.............................................6
         1.08     Average Monthly Compensation...............................7
         1.09     Average Monthly Covered Compensation.......................8
         1.10     Beneficiary................................................9
         1.11     Board of Directors.........................................9
         1.12     Code.......................................................9
         1.13     Companies or Cone..........................................9
         1.14     Computation Period.........................................9
         1.15     Continuous Service.........................................9
         1.16     Disability Leave...........................................9
         1.17     Effective Date............................................10
         1.18     Eligible Employee.........................................10
         1.19     Employee..................................................10
         1.20     Employer..................................................11
         1.21     Employment Commencement Date..............................11
         1.22     ERISA.....................................................11
         1.23     Hour(s) of Service........................................11
         1.24     Investment Manager........................................12
         1.25     Member....................................................13
         1.26     Normal Retirement Date....................................13
         1.27     Offset Value..............................................13
         1.28     One-Year Break in Service.................................13
         1.29     Participation Date........................................13
         1.30     Part-Time Employee........................................14
         1.31     Pension Committee.........................................15
         1.32     Period of Service.........................................15
         1.33     Period of Severance.......................................15
         1.34     Plan......................................................15
         1.35     Plan Year.................................................15
         1.36     Retirement, Retired.......................................15
         1.37     Rule of Parity Years......................................15
         1.38     Severance from Service Date...............................15
         1.39     Spouse or Surviving Spouse................................16
         1.40     Suspended Member..........................................16
         1.41     Termination of Employment.................................16
         1.42     Total Years of Service....................................16
         1.43     Transfer Contribution.....................................16
         1.44     Trust and Trust Fun.......................................17
         1.45     Trust Agreement...........................................17
         1.46     Trustee...................................................17
         1.47     Year of Service...........................................17

ARTICLE II:   MEMBERSHIP IN PLAN

         2.01     Automatic Membership......................................19
         2.02     Irrevocable Membership....................................19
         2.03     Suspended Membership......................................19
         2.04     Termination of Membership.................................19
         2.05     Qualified Military Service................................19

ARTICLE III:   FUNDING POLICY AND CONTRIBUTIONS

         3.01     Members...................................................20
         3.02     Company Contributions.....................................20
         3.03     Contribution Conditioned on Deductibility.................20
         3.04     Transfer Contributions....................................20
ARTICLE IV:   RETIREMENT

         4.01     Normal Retirement.........................................21
         4.02     Early Retirement..........................................21
         4.03     Notice to Pension Committee...............................21
         4.04     Postponed Retirement......................................21
         4.05     Date of First Payment.....................................21
         4.06     Date of Last Payment......................................21
         4.07     Re-employment of Retired Member...........................21

ARTICLE V:   METHODS OF PAYMENT

         5.01     Method 1.  Life Income with 120 Months Certain............23
         5.02     Method 2.  Life Income with no Death Benefit..............23
         5.03     Method 3.  Qualified Joint and Survivor Annuity...........23
         5.04     Group Annuity Contract....................................23
         5.05     Special Distribution Provisions...........................23
         5.06     Normal Form of Benefit....................................24
         5.07     Eligible Rollover Distributions...........................26
         5.08     Commencement of Benefits..................................27
         5.09     Qualified Domestic Relations Order........................27

ARTICLE VI:   COMPUTATION OF PENSION

         6.01     Retirement Benefits.......................................28
         6.02     Early Retirement..........................................29
         6.03     Disability Retirement.....................................29
         6.04     Maximum Pension...........................................30
         6.05     Determination of Top-Heavy Status.........................33
         6.06     Top-Heavy Definitions.....................................33
         6.07     Top-Heavy Requirements....................................37

ARTICLE VII:   BENEFITS UPON TERMINATION OF EMPLOYMENT

         7.01     Vested Benefits/Termination of Employment with Less
                  than Five Years of Service................................40
         7.02     Termination of Employment with at Least Five
                  Years of Service..........................................40
         7.03     Accrued Benefit of Re-employed Members....................41
         7.04     Involuntary Termination of Employment.....................41

ARTICLE VIII:   BENEFITS PAYABLE BY REASON OF DEATH

         8.01     Death of a Member without a Surviving Spouse..............42
         8.02     Death of a Member with a Surviving Spouse.................43
         8.03     Qualified Pre-Retirement Survivor Annuity.................44
         8.04     Designation of Beneficiaries..............................45
         8.05     Legal Disability of Beneficiary...........................46

ARTICLE IX:   TRUST FUND AND ADMINISTRATION OF THE PLAN

         9.01     Named Fiduciaries & Allocation of Responsibility..........47
         9.02     Duties and Responsibilities...............................47
         9.03     Trust Fund................................................48
         9.04     Enforceable Rights........................................48
         9.05     Impossibility of Diversion................................48
         9.06     Pension Committee.........................................48
         9.07     Officers, Quorums, Expenses...............................48
         9.08     Investment Power..........................................49
         9.09     Duties of Investment Manager..............................49
         9.10     Information to Investment Manager.........................49
         9.11     Notice to Trustee.........................................49
         9.12     Duties of the Pension Committee...........................49
         9.13     Notice of Payments Due....................................49
         9.14     Records and Reports.......................................50
         9.15     Exoneration of Pension Committee..........................50
         9.16     Errors and Omissions......................................50
         9.17     Fees and Expenses.........................................50
         9.18     Voting and Tendering of Shares............................51
         9.19     Claim Procedure...........................................51

ARTICLE X:   AMENDMENT, TERMINATION AND MERGER

        10.01     Amendment.................................................52
        10.02     Termination...............................................52
        10.03     Limitation of Benefits on Plan Termination................53
        10.04     Discontinuance of Contributions...........................54
        10.05     Plan Merger or Asset Transfer.............................54
        10.06     Continuation of the Plan..................................54

ARTICLE XI:   MULTIPLE COMPANIES INCLUDED

        11.01     Plan Sponsor and Other Employers..........................55
        11.02     Method of Participation...................................55
        11.03     Withdrawal by Employer....................................55
        11.04     Tax Year..................................................56

ARTICLE XII:   GENERAL

        12.01     Plan Creates No Separate Rights...........................57
        12.02     Delegation of Authority...................................57
        12.03     Limitation of Liability...................................57
        12.04     Legal Action..............................................58
        12.05     Benefits Supported Only by Trust..........................58
        12.06     Discrimination............................................58
        12.07     Model Amendment I.........................................58
        12.08     Entire Plan...............................................58

SIGNATURE PAGE                                                              60

APPENDIX A (Actuarial Equivalence Assumptions and Methods)

         1 Lump Sums........................................................A1
         2 Commencement Before Normal Retirement Date of Early
           Retirement Benefit...............................................A1
         3 Commencement Before Normal Retirement Date of Terminated
           Vested Benefit...................................................A1
         4 Annuity Conversion Factors.......................................A1
         5 Reduction for Distributions On Or After
           Annuity Starting Dates Per Sections 4.07 & 7.03..................A2

<PAGE>


                             INTRODUCTION

The Employees' Retirement Plan of Cone Mills Corporation (the "Original Plan")
became effective on December 1, 1946. Its principal purposes have been to
promote financial security of retired, salaried employees by providing a monthly
pension income and to encourage the interest of salaried employees in the
successful business operations of Cone Mills. In conjunction with the adoption
of the Cone Mills Corporation 1983 ESOP (the "1983 ESOP"), the Original Plan was
amended to suspend benefits accrued after December 31, 1983, for a period of six
months. The Original Plan was terminated as of June 30, 1984 with respect to
retired and terminated participants, and benefits accrued through December 31,
1983, for all participants were fully vested and funded through the purchase of
a group annuity contract with the Prudential Insurance Company of America.

On July 1, 1984, a second Employees' Retirement Plan of Cone Mills Corporation
was adopted (the "Spin-Off Plan") as a continuation of the Original Plan for
active participants and to provide for the same level of benefits to eligible
salaried employees as the Original Plan. From July 1 through December 31, 1984,
benefit accruals were at a doubled rate so that salaried employees who worked
throughout 1984 would accrue pension benefits under the Spin-Off Plan in the
amount that would have accrued had the six months suspension not occurred.
Benefits provided under the Spin-Off Plan are coordinated with the 1983 ESOP
through use of a floor offset arrangement in accordance with Revenue Ruling
76-259. Pursuant to the floor offset arrangement, if a participant is to receive
the full pension benefit from the Spin-Off Plan attributable to service after
1983, he must elect to transfer to the trustee of the Spin-Off Plan from his
ESOP-A Account in the 1983 ESOP an amount equal to the actuarial equivalent of
that pension benefit. As explained below, prior to March 31, 1993, a
participant's total account balance in the 1983 ESOP was subject to the floor
offset rules. Alternatively, the participant may elect to receive a distribution
of his ESOP-A Account under the terms of the 1983 ESOP and his pension benefit
attributable to service after 1983 under the Spin-Off Plan will be reduced by
the actuarial equivalent of the ESOP account.

The Spin-Off Plan has been amended at various times primarily to comply with
applicable provisions of the Internal Revenue Code and the Employee Retirement
Income Security Act of 1974. Effective January 1, 1985, the Spin-Off Plan was
amended and restated to incorporate the provisions of the Retirement Equity Act.
Amendments effective in 1988, 1989, and 1991 redefined Average Monthly
Compensation, Average Monthly Covered Compensation, and the methods by which
pension benefits are paid.

On January 17, 1989, pursuant to Internal Revenue Service Notice 88-133, Cone
Mills adopted Alternative IID for the purpose of deferring the application of
certain proposed regulations issued under the Tax Reform Act of 1986. The Board
of Directors on November 16, 1989, authorized an extension of the Alternative
IID amendment to the 1990 Plan Year in accordance with Internal Revenue Service
Notice 89-92. Subsequent amendments to the Spin-Off Plan and further regulatory
action by the Internal Revenue Service have made Alternative IID relief
unnecessary after 1990; accordingly, the amendments described above are
effectively revoked by this amended and restated plan document.

Effective March 31, 1993, an amendment to the Spin-Off Plan redefined Offset
Value to apply only to a participant's ESOP-A Account. This amendment reflected


<PAGE>

a corresponding amendment to the 1983 ESOP which restated account balances in
that plan into ESOP-A and ESOP-B Accounts. The amount credited to each Member's
ESOP-A Account as of March 31, 1993, was the difference between his total
Account balance on that date, including the allocation of Company Contributions
for 1992 and dividends and other investment earnings paid or accrued, and his
ESOP-B Account. A Member's ESOP-B Account as of March 31, 1993, represented the
excess, if any, of his total ESOP Account as of December 31, 1991, which
included dividends payable on March 31, 1992, over the calculated single sum
value of his aggregate monthly pension benefit payable at age 65. After March
31, 1993, investment earnings will be credited to ESOP-A and ESOP-B Accounts in
proportion to the assets held in the respective Accounts. Accordingly, each
participant's ESOP-A Account after March 31, 1993, will be subject to transfer
to the trustee of the Spin-Off Plan pursuant to the floor offset arrangement and
his ESOP-B Account will be eligible for distribution to the participant (or his
Beneficiary) under the terms and conditions of the 1983 ESOP.

On August 19, 1993, the Board of Directors approved an amendment to allow
participation in the Spin-Off Plan by United States Expatriates who are employed
by foreign affiliates of Cone Mills Corporation. The Spin-Off Plan was amended
and restated to incorporate all amendments that became effective through
September 1, 1993.

This Spin-Off Plan was amended November 10, 1994, to add a provision on the
eligibility of employees of a Company of which certain assets were acquired.
Effective December 1, 1994, the Spin-Off Plan was amended to incorporate certain
technical changes required by the Code and regulations thereunder and to clarify
certain provisions of the Plan and was restated to incorporate all amendments
that became effective through December 1, 1994.

Subsequent to the restatement as of December 1, 1994, the Spin-Off Plan was
further amended to incorporate additional technical and administrative changes.
Effective June 30, 2001, the Plan has been amended and restated to freeze
benefit accruals as of June 30, 2001 (with no additional benefits accruing after
June 30, 2001 for any Employee, active Member, or Member on an Approved Leave of
absence) by freezing Accredited Service and Average Monthly Compensation as of
June 30, 2001, to grant an additional 18 months of Accredited Service to
Employees who are salaried Employees as of June 30, 2001, to exclude from future
Plan participation those Employees who are first employed after June 30, 2001,
those retired Members who are re-employed after June 30, 2001 and those
Employees who were not salaried as of June 30, 2001, and to incorporate required
regulatory changes. Service for purposes of vesting and eligibility for early
retirement will continue to accrue after June 30, 2001. For those salaried
Employees on June 30,2001 who have yet to reach their initial Participation
Date, eligibility service will continue to accrue after June 30, 2001.

Cone Mills intends to continue this Spin-Off Plan as a defined benefit plan by
incorporating all amendments described above and any other changes required by
applicable law or regulations which are necessary for this Spin-Off Plan to
remain a qualified defined benefit plan under applicable provisions of the
Internal Revenue Code and ERISA. Accordingly, Cone Mills will comply fully with
all applicable laws and regulations and if differences exist between the
Spin-Off Plan provisions and the Code or ERISA, as amended from time to time,
the provisions of the Code or ERISA shall take precedence.

<PAGE>

Any word in this Plan with an initial capital not expected by ordinary
capitalization rules is a defined term. Definitions not found in this Spin-Off
Plan are in the Code or ERISA, both laws as amended to the present time. The
masculine gender where appearing in the Spin-Off Plan includes the feminine
gender unless the context clearly indicates otherwise. Article and Section
headings are included for convenience of reference and do not affect the
Spin-Off Plan terms in any way.

                                                       CONE MILLS CORPORATION

<PAGE>

                                                                     ARTICLE I


                               DEFINITIONS


1.01     Accredited Service for benefit accrual means the years and months of a
         Member's service on and after his Participation Date excluding the
         following:

         (a)      any period of suspended membership;
         (b)      any period of ineligibility under Subsection 1.18(a);
         (c)      any period excluded under Subsections 1.42(b), (c) or (d);
         (d)      any period of absence following an Employee's Severance from
                  Service Date and prior to his next Employment Commencement
                  Date;
         (e)      any period for which such Member receives benefit credits
                  under any other pension plan of any of the Companies;
         (f)      any  period of  service  prior to January 1, 1976 that did not
                  constitute accredited service under the Plan as then in
                  effect; and
         (g)      any period of service on or after July 1, 2001.

         A Member shall not accrue Accredited Service for periods of active
         participation from January 1, 1984, through June 30, 1984. A Member
         shall be deemed to accrue two months of Accredited Service for each one
         month of Accredited Service completed from July 1, 1984, through
         December 31, 1984.

         Accredited Service shall include service with a previous employer to
         the extent determined under Subsection 1.18(b).

         Further provided, the following Members shall be credited with an
         additional 18 months of Accredited Service as of the later of June 30,
         2001 or such Member's initial Participation Date:
         (a)      a salaried Employee on June 30, 2001;
         (b)      a salaried Employee on June 30, 2001 who is on an Approved
                  Leave of absence and whose initial Participation Date occurs
                  prior to the expiration of his leave.

1.02     Accrued Benefit. The total Accrued Benefit computed for a Member as of
         any applicable date and payable beginning the first of the month after
         his Normal Retirement Date shall be the result of (a) multiplied by
         (b), which are as follows:

         (a)      the annual benefit to which such Member would be entitled at
                  his Normal Retirement Date under Method 1 based on his years
                  of Anticipated Accredited Service, his Average Monthly
                  Compensation and on provisions of the Plan as in effect on the
                  date of his Termination of Employment (or other applicable
                  determination date) and treating social security benefits and


<PAGE>

                  all other relevant factors as remaining constant from the date
                  of his Termination of Employment (or other applicable
                  determination date) to his Normal Retirement Date; and

         (b)      the fraction (not to exceed one) where the numerator of such
                  fraction shall be his years of Accredited Service and the
                  denominator shall be his years of Anticipated Accredited
                  Service.

         For purpose of this section, "Anticipated Accredited Service" shall
         mean, with respect to a Member as of any determination date, the years
         (including any fractional years) of service determined as the sum of
         (c) and (d), which are as follows:

         (c)      his actual years of Accredited Service as of the determination
                  date (disregarding any service awards granted as of the later
                  of June 30, 2001 or a Member's initial Participation Date)
                  plus

         (d)      the number of years (including any fractional years) from the
                  determination date to the end of the month which contains his
                  Normal Retirement Date.

         This paragraph applies only to those Members as of December 31, 1993,
         whose retirement benefit under Article VI is affected by the $150,000
         compensation limit set forth in Code Section 401(a)(17) and
         incorporated in Subsection 1.08(a). The frozen Accrued Benefit for each
         such Member as of December 31, 1993, shall be the pension computed as
         of that date under Method 1 for purposes of Article VI or Article VII
         of the Plan, and such frozen Accrued Benefit shall be subject to
         increase under the fresh start formula with extended wear-away as
         described in Regulation 1.401(a)(4)-13(c). Accordingly, the Accrued
         Benefit as of any date after December 31, 1993, for any Member to whom
         this paragraph applies shall not be less than:

         (e)      the frozen Accrued Benefit as of December 31, 1993, plus

         (f)      the Accrued Benefit determined under the formula applicable to
                  benefit accruals in the current Plan Year but excluding the
                  Member's Accredited Service prior to January 1, 1994.

         Further provided, effective June 30, 2001, the Accrued Benefit of each
         Member shall be frozen as of the later of June 30, 2001 or as of such
         Member's initial Participation Date, and shall not increase after the
         later of June 30, 2001 or a Member's initial Participation Date.

         The benefit adjustments listed in Subsections 6.01(b), 6.01(c) and
         6.01(f) shall be applied after the benefit amount is determined in
         accordance with all preceding paragraphs of this section.

         In no event shall an amendment to the Plan decrease the Accrued Benefit
         of any Member.


<PAGE>

1.03     Actuarial Equivalent means a form of benefit different in time, period,
         or manner of payment from a specific benefit provided under the Plan
         but having equivalent value when computed under the applicable
         assumptions contained in Appendix A or as otherwise provided in this
         Section 1.03.

         (a)      The Offset Value shall be the amount of the annuity, payable
                  under the method of payment described in Article V as elected
                  by the Member or as otherwise provided in the Plan, that is
                  determined by converting the Member's ESOP-A Account under the
                  Cone Mills Corporation 1983 ESOP to that form of annuity using
                  the assumptions set forth in paragraph 1 of Appendix A.

         (b)      The Actuarial Equivalent of any Transfer Contribution shall be
                  the amount of the annuity, payable under the method of payment
                  described in Article V as elected by the Member or as
                  otherwise provided in the Plan, that is determined by
                  converting the Transfer Contribution to that form of annuity
                  using the assumptions set forth in paragraph 1 of Appendix A.

         (c)      The present value of an Accrued Benefit shall be determined by
                  using the assumptions set forth in paragraph 1 of Appendix A.

         (d)      If this Section 1.03 is amended, then, to the extent required
                  by Code Section 411(d)(6), the Actuarial Equivalent of a
                  Member's Accrued Benefit on or after the date of change shall
                  be determined as the greater of (1) the Actuarial Equivalent
                  of the Accrued Benefit as of the date of change computed on
                  the old basis, or (2) the Actuarial Equivalent of the total
                  Accrued Benefit computed on the new basis.

1.04     Actuary means the Actuary from time to time employed to make actuarial
         studies of the assets and liabilities of the Plan.

1.05     Affiliate means a member of the same control group of corporations, as
         defined in Code Section 1563(a), as Cone Mills Corporation.

1.06     Annuity Starting Date means the first day of the first period for which
         an amount is paid as an annuity regardless of when payment is actually
         made.

1.07     Approved Leave means an individual's non-working period granted by an
         Employer for reasons related to:

         (a)      accident, sickness or disability;
         (b)      job connected educational training;
         (c)      government service, including jury duty, whether elective or
                  by appointment; or
         (d)      terminal leave, with or without pay.
<PAGE>

         Approved Leave shall be granted pursuant to policies that are uniformly
         applied to all individuals, with no discrimination in favor of Highly
         Compensated Employees as defined in Code Section 414(q). Approved Leave
         also means an individual's non-working period during which he is absent
         from work due to compulsory service in the Armed Forces of the United
         States, and such period thereafter as his job rights are protected by
         law.

1.08     Average Monthly Compensation means the Member's monthly compensation
         from the Companies averaged over the five consecutive years which
         produces the highest average out of the last ten calendar years during
         which he was compensated on a salaried basis, subject to the following:

         (a)      Compensation includes base salary, overtime earnings, vacation
                  pay, holiday pay, service awards, severance pay, commissions,
                  incentive  pay,  bonuses,  supervisors' supplements and other
                  similar compensation, but does not include pension or profit
                  sharing benefits or other benefits and contributions paid by
                  any Employer (other than contributions caused by a Member's
                  salary reduction elections that are not includable in gross
                  income by reason of Code Sections 125 or 402(a)(8)), stock
                  option payments, moving or regular expense allowances, moving
                  expense reimbursements, retainers, fees under contract,
                  mortgage interest differential payments, imputed income
                  resulting from personal use of company cars or group term life
                  insurance coverage, or any other similar compensation not
                  related to actual earnings as an Employee. The compensation
                  of an Employee described in the last sentence of Section 1.19
                  of the Plan shall be determined in accordance with the special
                  rules set forth in Code Section  406(b)(2). Notwithstanding
                  the foregoing, the annual compensation of each Member taken
                  into account under the Plan for any Plan Year shall not exceed
                  $200,000 ($150,000, effective for Plan Years beginning January
                  1, 1994) as adjusted for increases in cost-of-living in
                  accordance with Code Section 401(a)(17).

         (b)      Compensation hereunder shall not be annualized because of
                  temporary absences from work nor shall the divisor used in
                  determining Average Monthly Compensation be changed because of
                  such absences.

         (c)      Compensation paid to an Employee during any period in which he
                  is not an active Member of the Plan shall not be taken into
                  account except as otherwise provided herein.

         (d)      If a Member is on full-time Military Leave or on a Disability
                  Leave, he shall be deemed to have received compensation during
                  such leave equal to his regular fixed Salary immediately
                  preceding such leave whether or not his Salary is continued,
                  reduced or discontinued.

         (e)      If a Member does not have five consecutive years in which he
                  received salaried compensation during the last ten calendar
                  years, his Average Monthly compensation shall be computed by
                  using the five latest calendar years during which he received
                  or was deemed to have received compensation from the Companies
                  on a salaried basis, or the total of such years if less than
                  five.
<PAGE>

         (f)      Average  Monthly Compensation shall be frozen as of June
                  30, 2001. In determining Average Monthly Compensation for a
                  Member as of June 30, 2001, calendar years of compensation
                  shall be used except that if it would produce a higher
                  average, or if the number of months he was compensated on a
                  salaried basis during the calendar years used in determining
                  his average is less than sixty, compensation for his final
                  fraction of a year (including the period January 1, 2001
                  through June 30,  2001, if applicable) shall be added to the
                  total compensation which would otherwise have been used to
                  determine his average, and to the extent that the compensation
                  used in determining his Average Monthly Compensation would
                  then represent a period exceeding sixty months, compensation
                  for the first calendar year or part thereof used in
                  determining his Average Monthly Compensation shall be reduced
                  by an amount determined by multiplying such compensation by
                  the number of months included in the final fraction of a year,
                  in excess of 60 months, and dividing the result by the number
                  of months for which he was compensated on a salaried basis
                  during such first calendar year.

         (g)      Compensation paid to an Employee after June 30, 2001 shall not
                  be used in determining his Average Monthly Compensation. For a
                  salaried Employee on June 30, 2001 who first becomes a Member
                  after June 30, 2001, his Average Monthly Compensation shall be
                  deemed to be equal to the monthly rate of his regular fixed
                  Salary on June 30, 2001.

1.09     Average Monthly Covered Compensation means, prior to July 1, 2001, for
         each Member, 1/12th of the average (without indexing) of the taxable
         wage bases in effect, under Section 230 of the Social Security Act, for
         each calendar year during the 35-year period ending with the last day
         of the calendar year in which the Member attains (or will attain)
         Social Security Retirement Age (as defined in Code Section 415(b)(8).
         Notwithstanding the preceding sentence, with respect to the
         determination of Accrued Benefits after December 31, 1987, for a member
         who had attained age 60 on or before December 31, 1987, Average Monthly
         Covered Compensation shall be one-twelfth of the average (without
         indexing) of the taxable wage bases in effect under Section 230 of the
         Social Security Act for persons who reach Social Security Retirement
         Age in calendar year 1977. The Average Monthly Covered Compensation for
         each Member who had not attained age 60 on or before December 31, 1987
         is automatically adjusted for each Plan Year. In determining a Member's
         Average Monthly Covered Compensation for a Plan Year, the taxable wage
         base for the current Plan Year and any subsequent Plan Year shall be
         assumed to be the same as the taxable wage base in effect as of the
         beginning of the Plan Year for which the determination is being made. A
         Member's Average Monthly Covered Compensation for a Plan Year after the
         35-year period described above is the Member's Average Monthly Covered
         Compensation for the Plan Year during which the Member attained Social
         Security Retirement Age. A Member's Average Monthly Covered
         Compensation for a Plan Year before the 35-year period described above
         is the taxable wage base in effect as of the beginning of the Plan
         Year.

         After June 30, 2001, a Member's Average Monthly Covered Compensation
         shall be equal to his Average Monthly Covered Compensation as
         determined on June 30, 2001, or as would have been determined on June
         30, 2001 had he been a Member on June 30, 2001.
<PAGE>

1.10     Beneficiary means the person designated or determined pursuant to Plan
         Sections 8.01 and 8.04 to receive any benefits payable under the Plan
         after the death of such Member or former Member. Despite the preceding,
         to the extent provided in a Qualified Domestic Relations Order as
         defined in Section 5.09 and Code Section 414(p)(1), Beneficiary means
         the Spouse, former Spouse, child, or other dependent of a Member who is
         recognized by such order as having a right to receive all or a portion
         of any benefits payable under the Plan to such Member.

1.11     Board of Directors means the Board of Directors of Cone Mills
         Corporation.

1.12     Code means the Internal Revenue Code of 1986, as amended from time to
         time.

1.13     Companies or Cone means Cone Mills Corporation, a North Carolina
         corporation, the Plan sponsor and its Affiliates. Any action required
         or permitted to be taken by Cone under or pursuant to the Plan shall be
         taken by the Board of Directors, the Executive Committee of the Board
         of Directors or a committee appointed by the Board of Directors
         pursuant to Plan Section 9.06 to which the authority to take such
         action has been granted; provided, however, that only the Board of
         Directors may amend or terminate the Plan.

1.14     Computation Period means a consecutive twelve-month period beginning
         with an Employee's Employment Commencement Date and succeeding
         anniversaries of such date and in addition, for Part-Time Employees, a
         Plan Year.

1.15     Continuous Service means an Employee's period of employment with an
         Employer or an Affiliate beginning with his Employment Commencement
         Date and continuing until his Severance from Service Date. If an
         Employee is re-employed or returns to work after a Severance from
         Service and his Continuous Service completed before his Severance from
         Service is not required to be recognized under this Plan, his period of
         employment with an Employer or an Affiliate is Continuous Service
         beginning on the date on which he again is credited with an Hour of
         Service for the performance of duties and continuing until his later
         Severance from Service Date. Continuous Service includes all employment
         even though as a non-Member. For purposes of eligibility to participate
         in the Plan and vesting, the Continuous Service of an employee who
         voluntarily terminates employment, retires or is discharged includes
         his Period of Severance (up to a maximum of 12 months) if he again
         performs an Hour of Service with an Employer or an Affiliate before the
         first anniversary of the date of his termination, retirement or
         discharge, and the Continuous Service of an Employee who is absent for
         any reason other than Termination of Employment, and who has a
         Severance from Service before the first anniversary of such absence,
         includes the period of time between the Severance from Service Date and
         the first anniversary of the absence if he again performs an Hour of
         Service with an Employer or an Affiliate before the first anniversary
         of the absence.

1.16     Disability Leave means an Approved Leave because of a medically
         determinable physical or mental impairment which can be expected to be
         either of indefinite duration or result in death and which renders the
         Member unable to engage in substantial gainful activity which could be
         assigned to him by the employer.

<PAGE>

1.17     Effective Date of the Original Plan means December 1, 1946; the
         effective date of this amended and restated plan is June 30, 2001,
         except with respect to those provisions that were required to be
         effective earlier pursuant to the Tax Reform Act of 1986.

1.18     Eligible Employee means an Employee who is compensated on a salaried
         basis, who has attained age twenty-one and who has completed at least
         one Year of Service, subject to the following:

         (a)      Employees of any plant, office or division of the Company at
                  the time having another pension plan in effect for its
                  salaried paid Employees, or Employees in any group of
                  Employees for whom the Company is at the time obligated to
                  contribute to another defined benefit plan qualified under the
                  Code shall not be eligible.

         (b)      The Board of Directors shall determine whether or not
                  Employees of any plant, division, subsidiary or other
                  employing unit acquired by or becoming affiliated with any of
                  the Companies shall be eligible to participate in the Plan and
                  to what extent service with such employing unit shall be
                  deemed employment for determining Years of Service and
                  Accredited Service under the Plan.

         (c)      Service for eligibility shall be determined in accordance with
                  Section 1.42.

         (d)      Except as provided in Section 1.42, Periods of Service of less
                  than one year determined under Section 1.14 shall be
                  aggregated and if an Employee other than a Part-time Employee
                  is re-employed within twelve months after his Termination of
                  Employment or within twelve months after the beginning of an
                  Approved Leave during which he terminated employment, his
                  Period of Severance shall be counted as service for
                  determining eligibility.

         (e)      Employees who are Leased Employees cannot be Eligible
                  Employees.

         (f)      Solely for the purpose of determining eligibility to
                  participate in this Plan, any former employee of Golding
                  Industries, Inc. who became an Employee pursuant to the
                  Asset Purchase Agreement referred to in this Letter of Intent
                  dated October 14, 1994, between Golding Industries, Inc. and
                  Cone Mills Corporation shall receive credit for all  service
                  with which he was credited for eligibility purposes under the
                  Golding Industries, Inc. Salaried Retirement Plan immediately
                  prior to his becoming an Employee. In no event shall any
                  service with Golding Industries, Inc. constitute Accredited
                  Service or be included in determining an Employee's Years of
                  Service for purposes of vesting.

         (g)      An Employee first employed after June 30, 2001, a Retired
                  Member who is re-employed after June 30, 2001 and an Employee
                  who was not a salaried Employee on June 30, 2001 cannot become
                  an Eligible Employee.

1.19     Employee is an individual who renders personal services for an Employer
         or an Affiliate and who is classified as an employee by the Employer or
         Affiliate. A Part-Time Employee is an individual who, according to a


<PAGE>

         policy uniformly applied in similar situations, is scheduled to work
         less than the standard number of hours for full-time job
         classifications. Employee shall include Leased Employees within the
         meaning of Code Sections 414(n)(2) and 414(o)(2) unless such Leased
         Employees are covered by a Plan described in Code Section 414(n)(5) and
         such Leased Employees do not constitute more than 20% of the
         recipient's nonhighly compensated work force. For purposes of the Plan,
         a citizen or resident of the United States who is an employee of a
         foreign entity in which the Corporation directly or through other
         entities has not less than a ten percent (10%) interest in the voting
         stock thereof (or, in the case of an entity other than a corporation,
         in the profits thereof) shall be treated as an Employee of the
         Corporation if the Corporation has entered into an agreement under Code
         Section 3121(1) with respect to such foreign entity and if no
         contributions under a funded plan of deferred compensation are provided
         by any person other than the Corporation with respect to the
         remuneration paid to such individual by the foreign entity.

1.20     Employer means an entity described in Plan Section 11.01.

1.21     Employment Commencement Date means the first day for which an Employee
         is credited with an Hour of Service. The Employment Commencement Date
         for any Employee who has Rule of Parity Years is the first day after
         those Rule of Parity Years for which that Employee is credited with an
         Hour of Service for the performance of duties.

1.22     ERISA means Employee Retirement Income Security Act of 1974, as amended
         from time to time.

1.23     Hour(s) of Service

         (a)      An Hour of Service is each hour for which an Employee is paid
                  or is entitled to payment for the performance of duties for an
                  Employer or an Affiliate during the applicable Computation
                  Period.

         (b)      An Hour of Service is each hour for which an Employee is paid
                  or is entitled to payment by an Employer or an Affiliate in a
                  period during which no duties are performed (regardless of
                  whether the relationship has terminated) because of vacation,
                  holiday, illness, incapacity, layoff or Approved Leave, but:

                  (1)      no more than 501 Hours of Service are credited under
                           this paragraph (b) to an individual for any single
                           continuous period during which he performs no duties
                           (whether or not the period occurs in a single
                           Computation Period);

                  (2)      an hour for which an individual is directly or
                           indirectly paid, or is entitled to payment, because
                           of a period during which no duties are performed, is
                           not credited to him if that payment is made or is due
                           under a plan maintained solely for the purpose of
                           complying with applicable worker's compensation,
                           unemployment compensation or disability insurance
                           laws; and
<PAGE>

                  (3)      Hours of Service are not credited for a payment that
                           solely reimburses an individual for his medical or
                           medically related expenses incurred.

                  For purposes of this paragraph (b), a payment is deemed to be
                  made by or be due from an Employer or an Affiliate regardless
                  of whether it is made by or due from that entity directly or
                  indirectly through a trust fund or insurer to which that
                  entity contributes or pays premiums, and regardless of whether
                  contributions made or due to the trust fund or insurer or
                  other funding vehicle are for the benefit of particular
                  individuals or are on behalf of a group of individuals.

         (c)      An Hour of Service is each hour for which back pay,
                  irrespective of mitigation of damages, is either awarded or
                  agreed to by an Employer or an Affiliate. The same Hours
                  of Service must not be credited both under paragraph (a) or
                  (b) and also under this paragraph (c). Thus, for example,
                  if an individual  receives a back-pay award following
                  a determination that he was paid at an unlawful rate for Hours
                  of Service previously credited, he is not entitled to
                  additional credit for the same Hours of Service.
                  Crediting of Hours of Service for back pay awarded or agreed
                  to with respect to periods described  in  paragraph (b) is
                  subject to the limitations set forth in that paragraph. For
                  example, no more than 501 Hours of Service are required to be
                  credited for payments of back pay, to the extent that the back
                  pay is agreed to or awarded for a period of time during which
                  an individual did not or would not have performed duties.

         (d)      For determining Hours of Service for reasons other than the
                  performance of duties, the special rule in 29 C.F.R. section
                  2530.200b-2(b) is incorporated by reference. That rule
                  provides that Hours of Service are credited on the basis of
                  the number of hours in the individual's regular work schedule
                  or, in the case of a payment not calculated by units of time,
                  by dividing the payment in question by the individual's most
                  recent hourly rate of pay.

         (e)      When crediting Hours of Service to Computation periods, the
                  special rule in 29 C.F.R. section 2530.200b-2(c) is
                  incorporated by reference. That rule provides that Hours of
                  Service are credited to individuals in the Computation Periods
                  covered by the individual's regular work schedule during the
                  period of nonperformance of duties.

         (f)      The determination of Hours of Service must be made from
                  records of hours worked and hours for which payment is made or
                  due.

         (g)      For purposes of determining Hours of Service credited
                  according to the maternity and paternity absence provisions of
                  Code Section 410(a)(5)(E) and Code Section 411(a)(6)(E), those
                  provisions are first effective for Plan Years beginning after
                  1984.

1.24     Investment Manager means an individual, firm or other entity appointed
         by the Board of Directors and assigned duties as described in Plan
         Section 9.09.
<PAGE>

1.25     Member means any Eligible Employee who becomes a Member as provided in
         Article II of the Plan and includes former Employees or their
         Beneficiaries who are entitled to benefits under the Plan, provided,
         however, that a former Employee or a Beneficiary whose benefit has
         become an irrevocable obligation of an insurance company is no longer
         considered a Member.

1.26     Normal Retirement Date means the date on which a Member attains age
         sixty-five.

1.27     Offset Value means the Actuarial Equivalent of the value of a Member's
         ESOP-A Account under the Cone Mills Corporation 1983 ESOP. The value of
         the ESOP-A Account is deemed to be its value on the Valuation Date
         coinciding with or immediately preceding the date on which the Offset
         Value is calculated and is also deemed to include the value of all
         prior distributions from that Account, or any predecessor account. For
         determinations of Offset Value prior to March 31, 1993, the applicable
         amount was the Member's total Account balance in the Cone Mills
         Corporation 1983 ESOP. Notwithstanding the foregoing, the Offset Amount
         of a disabled Member who participates in the Group Insurance Long Term
         Disability Plan for Salaried Employees of Cone Mills Corporation shall
         be determined as of the last day of the period for which compensation
         by reason of disability is directly paid by an Employer (which is
         immediately before the date on which the long term disability insurance
         carrier becomes obligated for payment of disability benefits) and shall
         be that portion of his ESOP Account balance that would have to be
         transferred to this Plan so that, by reason of the floor-offset
         arrangement incorporated herein, there would be no reduction in the
         benefit payable to the Member under this Plan for the period January 1,
         1984, through such determination date.

1.28     One-Year Break in Service is defined for Full-Time Employees in
         paragraph (a) and is defined for Part-Time Employees in paragraph (b).

         (a)      A Full-Time Employee has a one-year Break in Service for each
                  twelve-consecutive-month Period of Severance.

         (b)      A Part-Time Employee has a one-year Break in Service during
                  each Plan Year in which he receives credit for fewer than 501
                  Hours of Service after crediting Hours of Service according to
                  Code Sections 410(a)(3)(E) and 411(a)(6)(E) regarding
                  maternity and paternity absences.

         Any period of unpaid leave under The Family and Medical Leave Act of
         1993 shall not be treated as or counted towards a Break in Service for
         purposes of vesting and eligibility to participate in the Plan.

         Solely for the purposes of avoiding a One-year Break in Service under
         the Plan, an Employee who is in qualified military and/or uniformed
         service will be credited with such Hours of Service as may be required
         by the Uniformed Services Employment and Re-employment Rights Act of
         1994.

1.29     Participation Date means the date an Eligible Employee enters the Plan.
         An Eligible Employee (who becomes eligible for the first time or who is
         transferred from an hourly or piece-rate basis of compensation to a


<PAGE>

         salaried basis) shall participate from the first of the month
         coinciding with or next succeeding the date he fulfills the eligibility
         requirements of Section 1.18.

(a)      In the case of the re-employment of an Eligible Employee
         that occurs prior to July 1, 2001:

         (i.)     Retired Members and former Employees who have a
                  non-forfeitable right to any Accrued Benefit derived
                  from Company contributions to the Plan shall, if
                  re-employed on a salaried basis of compensation by
                  any of the Companies, participate as of the date of
                  their re-employment.

         (ii.)    Each other Member who is re-employed on a salaried
                  basis of compensation by any of the Companies without
                  incurring one or more One-year Breaks in Service, or
                  after one or more One-Year Breaks in Service if his
                  previous service is not excluded under Section
                  1.42(d), shall participate as of the date of his
                  re-employment.

         (iii.)   Any other former Employee who is re-employed by any
                  of the Companies shall participate on the first of
                  the month coinciding with or next succeeding the date
                  he fulfills the eligibility requirements of Section
                  1.18.

(b)      In the case of the re-employment of an Eligible Employee
         that occurs after June 30, 2001:

         (i.)     a Retired Member shall not re-enter the Plan and shall not
                  have his pension suspended.

         (ii.)    a former Employee who has a non-forfeitable right to
                  any Accrued Benefit from the Plan shall re-enter upon
                  re-employment for the sole purpose of accruing
                  additional service as Total Years of Service to
                  qualify for the Plan's early Retirement benefits.

         (iii.)   a former Employee who does not have a non-forfeitable
                  right to any Accrued Benefit from the Plan but who
                  retains service under Section 1.01 shall re-enter
                  upon re-employment for the purposes of accruing
                  additional service as Total Years of Service to
                  qualify for a non-forfeitable right to an Accrued
                  Benefit and for the Plan's early Retirement benefits.

         (iv.)    a former Employee not described above shall not be eligible
                  to re-participate in the Plan.

1.30     Part-Time Employee means an Employee who in accordance with established
         policy uniformly applied in similar situations is scheduled to work
         less than the standard number of hours for his job classification.

<PAGE>

1.31     Pension Committee means the committee charged with the general
         administration of the Plan.

1.32     Period of Service means the period of time beginning on an Employee's
         Employment Commencement Date and ending on his Severance from Service
         Date.

1.33     Period of Severance means the period of time beginning on an Employee's
         Severance from Service Date and ending on the date on which he is next
         credited with an Hour of Service for the performance of duties.

1.34     Plan means the Employees' Retirement Plan of Cone Mills Corporation as
         described in this document which was renumbered 013 after the spin-off
         and amendment and restatement, effective July 1, 1984. Original Plan
         refers to the Plan with respect to which this Plan was designated as
         the Spin-Off Plan.

1.35     Plan Year means a twelve (12) month  period beginning on January 1 and
         ending on December 31 and shall be the "limitation year" for purposes
         of Code Section 415.

1.36     Retirement, Retired and all variants means Termination of Employment by
         the Company at age 55 or later in circumstances which entitle the
         Member to Retirement benefits from the Plan under Articles IV and VI.

1.37     Rule of Parity Years means Years of Service which are disregarded for
         eligibility, vesting or other service credit under the Plan. Rule of
         Parity Years only apply to an Employee: (1) who has no vested interest
         in any part of his Accrued Benefit under the Plan, (2) who has at least
         five consecutive One-Year Breaks in Service, and (3) whose consecutive
         One-Year Breaks in Service exceed prior Years of Service.

1.38     Severance from Service Date means the earliest of:

         (a)      The date an Employee quits, Retires, is discharged or dies; or

         (b)      The first anniversary of the date from which an Employee
                  remains absent from work (with or without pay) for any other
                  reason such as layoff, disability, or Approved Leave; except
                  that, (i) for an Employee who is absent from work by reason of
                  a maternity or paternity absence described in Code Section
                  410(a)(5)(i)(E) or Code Section 411(a)(6)(i)(E) and who
                  continues to be absent from work beyond the first anniversary
                  of the first day of such maternity or paternity absence, his
                  Severance from Service Date is the second anniversary of the
                  first day of such absence and the period between the first and
                  second anniversaries is neither a period of Continuous Service
                  nor a Period of Severance; (ii) for an Employee who is absent
                  from work by reason of compulsory military service, his
                  Severance from Service Date is the 91st day following his
                  discharge from active duty; and (iii) for an Employee who is
                  disabled and who is receiving benefits under the Group
                  Insurance Long-Term Disability Plan for Salaried Employees of
                  Cone Mills Corporation, his Severance from Service Date is the
                  date as of which he ceases receiving benefits under the
                  Long-Term Disability Plan or Retires, whichever is earlier.

<PAGE>

1.39     Spouse or Surviving Spouse means the person to whom a Member is legally
         married on the earlier of his Annuity Starting Date or the date of his
         death. To the extent provided in any Qualified Domestic Relations
         Order, as defined in Plan Section 5.09 and Code Section 414(d), a
         former spouse will be treated as the Member's Spouse or Surviving
         Spouse.

1.40     Suspended Member means a Member who is not at the time eligible to
         actively participate in the Plan because of his transfer to an hourly
         or piece-rate basis of compensation or to a part-time basis of less
         than 1,000 Hours of Service in a Computation Period or because of his
         transfer to a plant, office, division, or other job of any of the
         Companies at the time having another retirement plan in effect for its
         Employees paid on a salaried basis of Compensation or to an Affiliate
         not participating in the Plan.

1.41     Termination of Employment means cessation of regular employment by the
         Companies upon resignation by the Employee, Retirement, discharge, or
         if later, an Employee's Severance from Service Date.

1.42     Total Years of Service for eligibility and vesting means all of an
         Employee's Years of Service, whether or not consecutive, determined
         under Sections 1.14 and 1.47, excluding the following:

         (a)      Employment prior to any Termination of Employment which
                  occurred before January l, 1976;

         (b)      Service while not a Member of the Plan if before age eighteen
                  or before the Computation Period in which the Employee attains
                  age eighteen, whichever is applicable;

         (c)      Any One-Year Break in Service occurring after December 31,
                  1975, except as provided in paragraph (e);

         (d)      Rule of Parity Years as defined in Plan Section 1.37.

         (e)      In the case of a Member who is not a Part-Time  Employee, the
                  twelve-consecutive (12) month period beginning on the first
                  anniversary of the first date of such maternity or
                  paternity leave of absence that began on or after January  1,
                  1985, shall not constitute a One-Year Break in Service for
                  eligibility or vesting  purposes. Maternity or  paternity
                  leave of absence means an absence by reason of the pregnancy
                  of the Member, by reason of the birth of a child of the
                  Member, by reason of the placement of a child with the Member
                  in connection with the adoption of such child by such Member
                  or for purposes of caring for such child for a period
                  beginning immediately following such birth or placement.

1.43     Transfer Contribution means a Member's elective transfer of assets to
         the Plan from the Cone Mills Corporation 1983 ESOP as provided in Plan
         Section 3.04, or from any other plan or account designated by Cone as
         part of a floor-offset arrangement that offsets this Plan's benefits.

<PAGE>

1.44     Trust and Trust Fund refers to a Trust Fund or Trust Funds established
         for this Plan and the Trust Agreement(s) executed under this Plan.

1.45     Trust Agreement means any agreement including amendments executed by a
         Trustee or Co-Trustee with Cone to be used in connection with this
         Plan.

1.46     Trustee means one or more individuals or entities or their successors
         so designated in the Trust Agreement. A Co-Trustee is one of several
         trustees so designated under a Trust Agreement. Unless the context
         clearly indicates otherwise, the term Trustee also means Co-Trustees.

1.47     Year of Service is defined in (a) for a Part-Time Employee and in (b)
         for a Full-Time Employee.

         (a)      For a Part-Time Employee, a Plan Year following a Part-Time
                  Employee's Employment Commencement Date during which he is
                  credited with a least 1,000 Hours of Service. A Part-Time
                  Employee will be credited with one Year of Service for his
                  first full Plan Year if he is credited with at least 1,000
                  Hours of Service during his initial Computation Period,
                  regardless of whether he is credited with at least 1,000 Hours
                  of Service during such first full Plan Year, provided however,
                  a Year of Service shall not be given for both the initial
                  Computation Period and the first full Plan Year of
                  employment.

         (b)      For a Full-Time Employee, twelve (12) months of Continuous
                  Service (whether or not consecutive). Months of Continuous
                  Service are aggregated to yield Years of Service.

         If a Part-Time Employee becomes a Full-Time Employee during his initial
         Computation Period and is credited with at least 1,000 Hours of Service
         in such Computation Period, as of the date his change of status
         occurred, he is granted a Year of Service and his Continuous Service
         shall begin on the first day of the Computation Period after which the
         change to Full-Time status occurred. If he is not credited with at
         least 1,000 Hours of Service as of the date the change in status
         occurred, then he is credited with service as if he had been a
         Full-Time Employee during the entire Computation Period. After
         completing his initial Computation Period, a Part-Time Employee who
         becomes a Full-Time Employee and who had been credited with at least
         1,000 Hours of Service for the Plan Year during which the change
         occurs, retains his Years of Service for pre-change Plan Years, is
         credited with a Year of Service for the Plan Year in which the change
         occurs, and is credited with Continuous Service beginning on the first
         day of the Plan Year following the date on which the change occurs. If
         a Part-Time Employee becomes a Full-Time Employee, after completing one
         Computation Period, and had not been credited with at least 1,000 Hours
         of Service for the Plan Year during which the change occurs, his
         Continuous Service is credited from the beginning of the Plan Year in
         which the change occurs. If a Full-Time Employee becomes a Part-Time
         Employee, he shall receive credit for the number of full years of
         Continuous Service completed as of the date the change occurred and
         will be deemed to become a Part-Time Employee on the first day of the
         Plan Year in which the date of change occurs. For the Plan Year in
         which the change occurs, he shall receive credit, on the basis of 190
         Hours of Service per month or fraction thereof, for the period from the
         end of his last full year of Continuous Service to the date of his
         change in status. A Full-Time Employee who quits, retires, is
         discharged or is otherwise absent from work and who returns as a
<PAGE>

         Part-Time Employee within twelve (12) months is treated as if he had
         changed from a Full-Time Employee to a Part-Time Employee on the date
         of his re-employment. A Full-Time Employee who quits, retires, is
         discharged or is otherwise absent from work and who returns after the
         first anniversary of the date on which he quit, retired, was discharged
         or otherwise absent from work as a Part-Time Employee shall have an
         initial Computation Period begin on the date of return. A Part-Time
         Employee who quits, retires, is discharged or is otherwise absent from
         work and who returns as a Full-Time Employee before the end of the Plan
         Year in which such event occurred is treated as if he had been a
         Part-Time Employee for the entire Plan Year and is credited with 190
         Hours of Service for each month in which he is a Full-Time Employee;
         his Continuous Service as a Full-Time Employee begins on the first day
         of the next Plan Year.


<PAGE>

                                                                     ARTICLE II

                             MEMBERSHIP IN THE PLAN


2.01     Automatic Membership. Each Eligible Employee shall automatically become
         a Member on his Participation Date and such Member shall promptly file
         with the Pension Committee such statistical information concerning
         himself and his Beneficiary as the Pension Committee may request.

2.02     Irrevocable  Membership. A Member may not terminate his membership in
         the Plan while he continues to be an active or Suspended Member.

2.03     Suspended Membership. If a Member becomes ineligible to continue active
         participation in the Plan in circumstances described in Section 1.40,
         his membership shall not terminate but be suspended. A Member shall not
         receive Accredited Service from the Plan for employment during such
         period. If a Suspended Member again becomes eligible to participate on
         an active basis, his membership shall be automatically resumed.

2.04     Termination of Membership. If a Member has a Termination of Employment,
         his membership shall be terminated unless he is entitled to a benefit
         under the Plan, which has not become an irrevocable obligation of an
         insurance company. The Surviving Spouse or other Beneficiary of a
         deceased Member who is entitled to a benefit under the Plan by reason
         of the Member's death, or any individual who is entitled to a benefit
         under the Plan pursuant to a Qualified Domestic Relations Order shall
         be considered a Member unless and until such benefit has become an
         irrevocable obligation of an insurance company.

2.05     Qualified Military Service. Effective for re-employments initiated
         after December 12, 1994, notwithstanding any provisions of the Plan to
         the contrary, contributions, benefits and service credit with respect
         to qualified military service will be provided in accordance with
         Section 414(u) of the Code.

<PAGE>
                                                                    ARTICLE III



                        FUNDING POLICY AND CONTRIBUTIONS


3.01     Members. Members make no contributions to the Plan.

3.02     Company Contributions. Cone intends to make annual contributions which
         equal or exceed the minimum funding standards of the Code or ERISA and
         which together with the net increment from operations of the Trust Fund
         will provide the benefits payable under the Plan. The amount of
         contributions allocable to each Affiliate which participates in the
         Plan shall be determined by the Pension Committee based upon advice
         from the Actuary.

3.03     Contribution Conditioned on Deductibility. Each contribution by Cone is
         conditioned upon the deduction of such contribution for income tax
         purposes under the Code and to the extent that a deduction is
         disallowed, such contribution shall, upon request, be returned to Cone
         within one year after the disallowance of a deduction.

3.04     Transfer Contributions. Upon the direction of the administrator of the
         Cone Mills Corporation 1983 ESOP, pursuant to an election in writing by
         a Member of this Plan and the 1983 ESOP, all or any portion of the
         vested interest of such Member in the assets held in his ESOP-A Account
         under the Cone Mills Corporation 1983 ESOP may be transferred to the
         Trust Fund of this Plan. Prior to March 31, 1993, the Member's entire
         vested interest in the assets held in his Account under the Cone Mills
         Corporation 1983 ESOP was subject to the elective transfer provided in
         this Section 3.04. Transferred interests are at all times fully vested.
         Despite the preceding sentence, to the extent necessary to preserve the
         exempt status of this Plan and the Trust Fund, the Pension Committee
         may prevent any transfer of funds or interests under this Section, and
         the amount transferred by any Member may not exceed the amount required
         so that, by reason of the floor-offset arrangement incorporated herein,
         there is no reduction in the benefit payable to the Member under this
         Plan for the period after December 31, 1983. The Trustee must value all
         non-cash property transferred at its fair market value on the effective
         date of transfer.

<PAGE>
                                                                     ARTICLE IV



                                   RETIREMENT


4.01     Normal Retirement. Except as otherwise provided in this ARTICLE IV, a
         Member shall Retire on the day he attains age sixty-five (65), or at
         his election, as of any date prior to the first of the next month.

4.02     Early Retirement. If a Member's Total Years of Service amount to ten
         (10) years or more, he may elect to Retire at any time after reaching
         age fifty-five (55).

4.03     Notice to Pension Committee. Unless waived by the Pension Committee, a
         Member shall give at least thirty-one (31) days notice of his intention
         to Retire.

4.04     Postponed Retirement.

        (a)       Effective through June 30, 2001: If a Member continues his
                  employment by the Companies after age sixty-five (65), payment
                  of his normal retirement benefit shall be suspended and he
                  shall be given notice of the suspension in accordance with
                  ERISA Section 203(a)(3)(B) and regulations thereunder, but
                  such Member shall receive credit for service because of
                  employment after age sixty-five (65) and the percentages and
                  other factors used in determining his benefits under the
                  available options shall include his service, compensation,
                  age and other appropriate factors applicable to his employment
                  after age sixty-five (65). The payment of such Member's
                  retirement benefit shall be subject to the provisions of
                  Sections 4.06 and 5.05.

        (b)       Effective July 1, 2001: Any actively employed Member who has
                  or will continue his employment with the Companies after his
                  Normal Retirement Date shall commence to receive his
                  Retirement benefits as soon as administratively possible
                  beginning on the later of July 1, 2001 and the first of the
                  month following his Normal Retirement Date. As an actively
                  employed salaried Employee on June 30, 2001, the Member would
                  be entitled to the additional 18 months of Accredited Service
                  granted as of June 30, 2001.

4.05     Date of First Payment. A Member who Retires in accordance with this
         ARTICLE IV shall have a non-forfeitable right to a pension from the
         Plan computed in accordance with the provisions of ARTICLE VI and
         payable beginning the first of the month next following his actual
         Retirement.

4.06     Date of Last Payment. Except as otherwise provided herein, a Retired
         Member's pension under this Plan shall continue to be payable on and
         including the first day of the month in which death occurs irrespective
         of the method under which his benefits are being paid.

4.07     Re-employment of Retired Member. If a Retired Member returns to
         regular, full-time employment by any of the Companies prior to June 30,
         2001, the Pension Committee may, but is not required to suspend payment
         of the pension, if any, which such Member otherwise would have received


<PAGE>

         during any such period of employment and his benefits upon subsequent
         Termination of Employment whether for death or Retirement shall be
         recomputed subject to the following:

         (a)      The pension previously payable to such Member shall upon
                  resumption be recomputed taking into account the increase in
                  such Member's age during any period his benefits are
                  suspended. If Method 3 is in effect for any previous period of
                  membership the increase in the Spouse's age shall be taken
                  into account on the same basis as the increase in such
                  Member's age;

         (b)      Such  Member shall be eligible to rejoin the Plan as of the
                  date he performs an Hour of Service under the Plan and the
                  amount payable for any subsequent period of membership
                  shall be determined by aggregating  all of his  Accredited
                  Service and by adjusting the benefit derived therefrom by the
                  Actuarial Equivalent of any benefits previously paid and by
                  the Actuarial Equivalent of the recomputed pension payable
                  pursuant to paragraph (a) above. A Member may have a separate
                  Beneficiary for any period of membership in the circumstances
                  provided herein but Section 6.01 shall apply to the
                  total of his benefits from all periods of membership.

         In no event, however, shall the payment of a Member's monthly pension
         be withheld or suspended prior to his receiving notification in
         accordance with Labor Reg. Section 2530.203-3(b)(4).

         If the Pension Committee does not elect to suspend the re-employed
         Member's pension, or if the Member received a lump-sum payment from the
         Plan with respect to his prior Termination of Employment upon his
         subsequent Termination of Employment, an additional Retirement benefit
         will be paid to such Member calculated in accordance with Articles V
         and VI and based on all of his Accredited Service, but reduced, but not
         below zero, by the Actuarial Equivalent of the benefits previously
         paid.

         A Retired Member who is re-employed on or after June 30, 2001 shall not
         have his pension suspended, and such Member shall not again become an
         active Member of the Plan.

<PAGE>

                                                                     ARTICLE V



                               METHODS OF PAYMENT



5.01     Method 1. Life Income with 120 Months Certain. A Retired Member's
         pension under Method 1 shall consist of a monthly income for his
         lifetime, with the provision that if such Member dies before having
         received 120 installments of his monthly pension under the Plan, his
         Beneficiary shall be entitled to monthly payments equal to the amount
         which would have been payable to such Member beginning as of the first
         of the month next following the date of his death and continuing until
         a total of 120 monthly installments have been made to the Member and
         his Beneficiary together.

5.02     Method 2. Life Income with No Death Benefits. A Retired Member's
         pension under Method 2 shall consist of a monthly income for his
         lifetime only, with no payments to be made to any Beneficiary of such
         Retired Member after his death. The amount payable under Method 2 to a
         Retired Member shall be the Actuarial Equivalent of the amount that
         would have been paid under Method 1.

5.03     Method 3. Qualified Joint and Survivor Annuity. A Retired Member's
         pension under Method 3 shall consist of an adjusted monthly income for
         his lifetime, with the provision that if the Member is survived by his
         Spouse, an amount equal to 50% of his pension shall be continued to
         such Spouse beginning as of the first of the next month following the
         date of such Member's death and continuing until and including the
         first of the month in which the Spouse dies. The adjusted amount
         payable to the Member shall be determined based on the attained age of
         the Member and his Spouse so that the aggregate of the payments
         expected to be made to the Member and his Spouse shall be the Actuarial
         Equivalent of the amount which would have been payable under Method 1.

5.04     Group Annuity Contract. For Members with Accredited Service before
         January 1, 1984, benefits payable under this Plan are paid in part
         under the group annuity contract with Prudential Insurance Company of
         America that was purchased in connection with the termination of the
         Original Plan and the adoption of this Plan.

5.05     Special Distribution Provisions.

         (a)      Notwithstanding any provision in the Plan to the contrary, the
                  distribution of a Participant's benefits shall be made in
                  accordance with the following requirements and shall otherwise
                  comply with Code Section 401(a)(9) and the Regulations
                  thereunder (including Regulation 1.401(a)(9)-2), the
                  provisions of which are incorporated herein by reference:

                  (1)      Except as otherwise permitted by Code Section
                           401(q)(9), a Participant's benefits shall be
                           distributed to him not later than April 1st of the


<PAGE>

                           calendar year in which the Participant attains age
                           70-1/2 whether or not he has a Severance from
                           Service. Alternatively, distributions to a
                           Participant must begin no later than April 1st of the
                           calendar year in which the Participant attains age
                           70-1/2 and must be made in accordance with Treasury
                           Regulations over the life of the Participant or over
                           the lives of the Participant and a designated
                           Beneficiary (or over a period certain not extending
                           beyond the life expectancy of the Participant or life
                           expectancies of the Participant and a designated
                           Beneficiary).

                  (2)      Distributions to a Participant and his Beneficiaries
                           shall only be made in accordance with the incidental
                           death benefit requirements of Code Section
                           401(a)(9)(G) and the Regulations thereunder.

         (b)      Notwithstanding any provision in the Plan to the contrary,
                  any distributions upon the death of a Participant shall be
                  made in accordance with the following requirements and
                  shall otherwise comply with Code Section 401(a)(9) and the
                  Regulations thereunder. If it is determined pursuant to
                  Regulations that the distribution of a Participant's
                  interest has begun and the Participant dies before his entire
                  interest has been distributed to him, the remaining portion
                  of such interest shall be distributed at least as rapidly as
                  under the method of distribution selected pursuant to Article
                  V as of his date of death. If a Participant dies before he has
                  begun to receive any distributions of his interest under the
                  Plan or before distributions are deemed to have begun pursuant
                  to Treasury Regulations, then any death benefit payable to a
                  designated Beneficiary must be distributed over a period not
                  extending beyond the life expectancy of such designated
                  Beneficiary provided such distribution begins not later
                  than December 31st of the calendar year immediately following
                  the calendar year in which the Participant died. If the death
                  benefit is payable in the form of a Qualified Pre-Retirement
                  Survivor Annuity, then distributions thereunder must commence
                  on or before the later of: (1) December 31st of the calendar
                  year immediately following the calendar year in which the
                  Participant  dies; or (2) December 31st of the calendar year
                  in which the Participant would have attained age 70-1/2.

         (c)      For purposes of this Section 5.05, the life expectancy of a
                  Participant and a Participant's Surviving Spouse or designated
                  Beneficiary shall be computed using the return multiples in
                  Tables V and VI of Regulations 1.72-9.

5.06     Normal Form of Benefit.

         (a)      Unless a Member has made an effective election pursuant to
                  paragraph (b) to waive the normal form of benefit described in
                  this paragraph (a), the vested portion of his Accrued Benefit
                  under this Plan shall be distributed in the form of a
                  Qualified Joint and Survivor Annuity under Method 3 if the
                  Member has a Spouse on his Annuity Starting Date or in the
                  form of a Single Life Annuity under Method 2 if he does not
                  have a Spouse on his Annuity Starting Date.

         (b)      A Member may elect to waive the normal form of  benefit
                  described in paragraph (a) during the 90-day period ending
                  on his Annuity Starting Date; provided, however, that no
<PAGE>

                  election to waive the Qualified Joint and Survivor  Annuity
                  form of benefit shall be effective unless accompanied by a
                  spousal consent as described in paragraph (e) below.
                  During the aforesaid election period, a Member may revoke any
                  election to waive the normal form of benefit described in
                  paragraph (a) and, subject to any required spousal consent,
                  may elect, revoke and elect again during the election period.
                  If a Member effectively waives the normal form of benefit
                  described in paragraph (a), he may elect to have the vested
                  portion of his Accrued Benefit, subject to any required
                  spousal consent, distributed in accordance with Plan Sections
                  5.01 and 5.02.

         (c)      The Pension Committee must provide each Member with a general
                  written explanation of (i) the terms and conditions of his
                  normal form of benefit under paragraph (a); (ii) the Member's
                  right to make, and the effect of, an election not to receive
                  benefits in the normal form; (iii) any required spousal
                  consent; and (iv) the right to make and the effect of, a
                  revocation under paragraph (b). The explanation must be
                  provided to the Member not earlier than 90 days and, except as
                  otherwise permitted by the Code or Regulations, not later than
                  30 days before his Annuity Starting Date.

         (d)      Notwithstanding the foregoing:

                  (1)      With respect to a Member whose Severance from Service
                           Date is before January 1, 1998, if the present value
                           of the vested portion of his Accrued Benefit,
                           determined in accordance with Plan Sections 1.03 and
                           7.02(a) does not exceed $3,500, that present value
                           will be distributed to the Member in a single lump
                           sum payment and no spousal consent shall be required.
                           If the amount distributable under this paragraph
                           (d)(1) exceeds $3,500 a single sum payment shall not
                           be made.

                  (2)      With respect to a Member whose Severance from Service
                           Date is on or after January 1, 1998, if the present
                           value of the vested portion of his Accrued Benefit,
                           determined in accordance with Plan Sections 1.03 and
                           7.02(a) does not exceed $5,000, that present value
                           will be distributed to the Member in a single lump
                           sum payment and no spousal consent shall be required.
                           If the amount distributable under this paragraph
                           (d)(2) exceeds $5,000 a single sum payment shall not
                           be made.

         (e)      A Member's election not to take the Qualified Joint and
                  Survivor Annuity provided in Section 5.03 is not effective
                  as of his Annuity Starting Date unless his Spouse has
                  consented in writing to such election. The Spouse's consent
                  must acknowledge the effect of the Member's election and must
                  be witnessed by a Plan Representative or Notary Public.
                  Despite the preceding sentence, spousal consent is not
                  required if the Member establishes to the satisfaction of the
                  Plan Representative that such written consent cannot be
                  obtained because there is no Spouse, because the Spouse cannot
                  be located, or because of such circumstances as applicable
                  Treasury regulations prescribe. Any consent under this Section
                  is valid only with respect to the Spouse who signed the


<PAGE>

                  consent. Any evidence that a Spouse's consent cannot be
                  obtained is valid only with respect to that designated Spouse.

5.07     Eligible Rollover Distributions.

         (a)      Notwithstanding any provision of the Plan to the contrary that
                  would otherwise limit a distributee's election under this
                  Section, a distributee may elect, at the time and in the
                  manner prescribed by the Pension Committee, to have any
                  portion of an eligible rollover distribution paid directly to
                  an eligible retirement plan specified by the distributee in a
                  direct rollover.

         (b)      Definitions.

                  (1)      Eligible rollover distribution: An eligible rollover
                           distribution is any distribution of all or any
                           portion of the balance to the credit of the
                           distributee, except that an eligible rollover
                           distribution does not include: any distribution that
                           is one of a series of substantially equal periodic
                           payments (not less frequently than annually) made for
                           the life (or life expectancy) of the distributee or
                           the joint lives (or joint life expectancies) of the
                           distributee and the distributee's designated
                           beneficiary, or for a specified period of ten (10)
                           years or more; any distribution to the extent such
                           distribution is required under Section 401(a)(9) of
                           the Code; the portion of any distribution that is a
                           hardship distribution described in Section
                           401(k)(2)(B)(i)(IV) of the Code; and the portion of
                           any distribution that is not includable in gross
                           income (determined without regard to the exclusion
                           for net unrealized appreciation with respect to
                           employer securities).

                  (2)      Eligible retirement plan: An eligible retirement plan
                           is an individual retirement account described in
                           Section 408(a) of the Code, an individual retirement
                           annuity described in Section 408(b) of the Code, an
                           annuity plan described in Section 403(a) of the Code,
                           or a qualified trust described in Section 401(a) of
                           the Code, that accepts the distributee's eligible
                           rollover distribution. However, in the case of an
                           eligible rollover distribution to the Surviving
                           Spouse, an eligible retirement plan is an individual
                           retirement account or individual retirement annuity.

                  (3)      Distributee: A distributee includes an Employee or
                           former Employee. In addition, the Employee's or
                           former Employee's Surviving Spouse and the Employee's
                           or former Employee's Spouse or former Spouse who is
                           the alternate payee under a Qualified Domestic
                           Relations Order, as defined in section 414(p) of the
                           Code, are distributees with regard to the interest of
                           the Spouse or former Spouse.

                  (4)      Direct rollover: A direct rollover is a payment by
                           the Plan to the eligible retirement plan specified
                           by the distributee.
<PAGE>

5.08     Commencement of Benefits.

         (a)      Notwithstanding any other provision of Articles IV, V or VII,
                  a Member's benefit payment must begin no later than 60 days
                  after the close of the Plan Year in which occurs the latest
                  of:

                  (1)      his 65th birthday;

                  (2)      the 10th anniversary of the date he became a Member
                           of the Plan; or

                  (3)      his Termination of Employment.

         (b)      If for any reason the benefit amount cannot be accurately
                  determined before payment is required, or if it is not
                  possible to pay when required because the Pension Committee
                  has been unable to locate the Member, after making reasonable
                  efforts to do so, a payment retroactive to the required date
                  may be made no later than 60 days after the earliest date on
                  which the amount of that payment can be determined, or the
                  date on which the Member is located (whichever is applicable).

5.09     Qualified Domestic Relations Order. Except as provided in this Section
         5.09 Plan benefits may not be assigned, alienated or in any other way
         made subject to debts or other obligations of Members or Beneficiaries.
         Notwithstanding the above, the Pension Committee must comply with the
         terms of a Qualified Domestic Relations Order which is a judgment,
         decree or order (including approval of a property settlement agreement)
         made pursuant to a state domestic relations law (including community
         property law), that relates to the provision of child support, alimony
         payments or marital property rights of a Spouse, former Spouse, child
         or other dependent ("Alternate Payee") of a Member. A Qualified
         Domestic Relations Order creates or recognizes the existence of an
         Alternate Payee's right to or assigns to an Alternate Payee the right
         to receive all or a portion of the benefits payable to the Member under
         this Plan and specifies the following: (1) name and last known mailing
         address of the Member and each Alternate Payee; (2) the amount of
         percentage of the Member's Plan benefits to be paid to any Alternate
         Payee, or the manner in which such amount or percentage is to be
         determined; and (3) the number of payment or the period to which the
         Order applies and the name of the plan(s) to which the Order relates.
         Plan benefits will be paid pursuant to a Qualified Domestic Relations
         Order to such Alternative Payee(s) at such times and in such amounts as
         are stated therein, even if the affected Member has not separated from
         service and has not reached the "earliest retirement age", as defined
         in Code Section 414(p); provided, however, that a Qualified Domestic
         Relations Order may not require the Plan to provide any type or form of
         benefit or any option not otherwise provided and may not require the
         Plan to provide increased benefits. The Pension Committee shall
         establish reasonable procedures to determine the qualified status of
         domestic relations orders and to administer distributions under orders
         that are determined to be Qualified Domestic Relations Orders.

<PAGE>

                                                                     ARTICLE VI



                             COMPUTATION OF PENSION


6.01     Retirement Benefits. Subject to Section 1.02 and the adjustments
         required by the remainder of this ARTICLE VI and otherwise under this
         Plan, the pension payable under Method 1 to a Member who Retires on or
         after his Normal Retirement Date shall be computed under paragraphs (a)
         through (e), as applicable, reduced as described in paragraph (f), with
         credit for any fraction of a year being determined by interpolation:

         (a)      By multiplying his Average Monthly Compensation by the
                  accumulated percentage determined from Column 1 of the table
                  below according to his total Accredited Service plus an amount
                  computed by multiplying that part of his Average Monthly
                  Compensation, if any, which exceeds his Average Monthly
                  Covered Compensation by the accumulated percentage determined
                  by Column 2 of the table below according to his total
                  Accredited Service:


                  -------------------------------------------------------------
                  ACCREDITED SERVICE                      COLUMN 1     COLUMN 2
                  -------------------------------------------------------------
                  For each year up to 10 (inclusive)        1.40%        0.70%

                  For each year from 11 through 20          1.10%        0.70%

                  For each year from 21 through 30          0.70%        0.40%

                  For each year thereafter                  0.40%        0.20%

                  provided, however, that if the amount computed for a Retiring
                  member pursuant to this paragraph (a) produces a total Accrued
                  Benefit (as defined in Section 1.02) that is less than his
                  total Accrued Benefit as of December 31, 1988, then there
                  shall be substituted for the amount computed pursuant to this
                  paragraph (a) the amount necessary to produce the Retiring
                  Member's total Accrued Benefit as of December 31, 1988.

         (b)      If any part of a Member's Accredited Service was based on his
                  employment by Cone Mills, Inc. prior to May 1, 1962, his
                  pension basis as computed above shall be reduced by that part
                  of his monthly benefits at Normal Retirement payable from the
                  Metropolitan Retirement Plan and attributable to membership in
                  such plan on and after the date his Accredited Service began
                  under this Plan;

         (c)      If a Member was a participant in the John Wolf Textiles, Inc.
                  Pension Trust as of December 31, 1962, the basis for
                  determining his pension shall be increased by an amount equal
                  to (or the Actuarial Equivalent of) the deferred annuity
                  determined for him by the Massachusetts Mutual Insurance
                  Company on a monthly life income with ten years certain basis
                  at his Normal Retirement Date under all contracts in force for
                  such Member under the John Wolf Textiles, Inc. Pension Trust
                  as of December 31, 1962;

         (d)      If a Member who is not entitled to Retirement benefits under
                  Article IV or to vested benefits under Section 7.02 has a
                  Termination of Employment but is re-employed  before


<PAGE>

                  he  incurs  Rule of  Parity  Years,  at his  subsequent
                  Termination of Employment or Retirement, the percentages used
                  in determining the pension payable shall be equal to
                  the percentages which would be applicable under Section
                  6.01(a) if his total Accredited Service during all periods of
                  employment were combined. If a Member who is not entitled to
                  Retirement benefits under Article IV or to vested benefits
                  under Section 7.02 has a Termination of Employment and is
                  re-employed after having five (5) consecutive One-Year-
                  Breaks-in-Service, at his subsequent Retirement or Termination
                  of Employment, the percentages used in determining the pension
                  payable shall be the percentages which are applicable to
                  Accredited Service during the period(s) of employment
                  subsequent to the five (5) consecutive One-Year Breaks-in-
                  Service.

         (e)      If a Member who has become entitled to Retirement benefits
                  under Article IV or to vested benefits under Section 7.02 has
                  a Termination of Employment and is re-employed, the
                  percentages used in determining benefits at a subsequent
                  Termination of Employment or Retirement shall be equal  to
                  the percentages which would be applicable under Section
                  6.01(a) if his total Accredited Service during all periods
                  of membership to the Termination of Employment or Retirement
                  date were combined; provided, however, that the pension
                  benefit so determined shall be reduced by the Actuarial
                  Equivalent value of any lump sum distribution or monthly
                  payments received with respect to prior period(s) of
                  employment in accordance with Section 4.07.

         (f)      A Member's total pension basis under this Plan is equal to
                  the allowances provided in the preceding paragraphs, or the
                  Actuarial Equivalent of such allowances under Method
                  2 of Method 3, reduced by the Offset Value, but not reduced
                  below the benefit accrued as of December 31, 1983, and
                  increased by the amount that is the Actuarial Equivalent
                  of the value of the Member's Transfer Contribution. In no
                  event may this reduction be applied against a Member's
                  benefit determined under Sections 6.01(a) through (e) based
                  on Average Monthly Compensation and Accredited Service up to
                  December 31, 1983, or against any ancillary benefits
                  attributable to such accrued benefit.

6.02     Early Retirement. The pension payable under Method 1 to a Member who
         Retires earlier than his Normal Retirement Date in accordance with
         Section 4.02 shall be the amount computed in Section 6.01 based on his
         Accredited Service on his early Retirement date. Such pension shall be
         payable beginning the first of the month following his Normal
         Retirement Date. At such Member's election, his pension may begin the
         first of any month following his early Retirement but, if so, shall be
         reduced for early commencement as described in paragraph 2 of Appendix
         A. The pension payable under this Section 6.02 shall also be adjusted
         based on the attained age of the Member (and Spouse) as of the date
         payments actually begin and the method of payment determined in
         accordance with Article V.

6.03     Disability Retirement. A Member who becomes disabled within the meaning
         of Section 1.16 and who also is a participant in the Group Insurance
         Long Term Disability Plan for Salaried Employees (the "LTD Plan") shall
         be deemed to be on Disability Leave and shall receive Accredited
         Service for the duration of benefit payments under said LTD Plan except
         that he shall not receive Accredited Service for any period after June
         30, 2001. For purposes of pension and Average Monthly Compensation


<PAGE>

         computations, the disabled Members who participate in the LTD Plan
         shall be eligible for Retirement on the earlier of their Normal
         Retirement Date or the first of the month following the final monthly
         payment under the LTD Plan; provided, however, if a Member ceases to be
         disabled, regardless of whether he resumes employment, his eligibility
         for Retirement will be determined pursuant to Article IV and his
         eligibility for vested benefits will be determined by Article VII. A
         Member, who becomes disabled within the meaning of Section 1.16, but
         who does not participate in the LTD Plan, will be eligible for
         Retirement benefits or vested benefits determined in accordance with
         Articles IV and VII, respectively at the later of end of his Disability
         Leave or his Severance from Service Date.

6.04     Maximum  Pension. The maximum pension payable to a Member must not
         exceed the limitations of Code Section 415 as set forth in this Plan
         Section 6.04.

         (a)      Any other provision herein to the contrary notwithstanding,
                  the Annual Pension as defined in Subsection 6.04(b) below
                  which is payable on the behalf of a Member hereunder shall not
                  exceed the lesser of:

                  (1)      the Dollar Limitation for the Member (or such other
                           dollar amount determined in accordance with
                           Subsection 6.04(d) below) multiplied by a fraction
                           whose value cannot exceed one, the numerator of which
                           is the Member's years of participation in the Plan
                           (computed to fractional parts of a year), and the
                           denominator of which is 10, or

                  (2)      100 percent of the Member's average Compensation for
                           his highest three consecutive calendar years during
                           which the Member both was an Employee and had the
                           greatest Compensation from the Employers, multiplied
                           by a fraction whose value cannot exceed one, the
                           numerator of which is the Member's Years of Service
                           (computed to fractional parts of a year), and the
                           denominator of which is 10.

         (b)      Definitions Used in this Section

                  (1)      "Annual Pension" means the sum of all annual benefits
                           payable in the form of a single life annuity or
                           qualified joint and survivor annuity from all defined
                           benefit plans (whether or not terminated) maintained
                           by the Employer. Benefits payable in any other form
                           shall be adjusted to the larger of:

                           (A)      the Actuarial Equivalent of a single life
                                    annuity beginning at the same age, computed
                                    using the interest rate and mortality basis
                                    (or other tabular factor) used for actuarial
                                    equivalence for the particular form of
                                    payment under the Plan, or

                           (B)      the Actuarial Equivalent of a single life
                                    annuity beginning at the same age, computed
                                    using a 5.00% interest rate (or for any form
                                    of payment subject to IRC Section 417(e)(3),
                                    the applicable interest rate as defined in
                                    IRC Section 417(e)(3)) and the mortality
                                    basis prescribed in Section 415(b)(2)(E)(v)
                                    of the IRC.
<PAGE>

                           The Annual Pension shall not be adjusted for any
                           pre-retirement death or disability benefits provided,
                           or for any ancillary benefit that is not related to
                           pension benefits, or for the survivor annuity
                           provided under the portion of any annuity that
                           constitutes a qualified joint and survivor annuity
                           (as defined in Section 417(b) of the IRC).

                  (2)      "Dollar Limitation" means the adjusted value of
                           $90,000 (or such other amount as may be in effect on
                           the last day of the calendar year pursuant to Section
                           415(d) of the IRC) based on the age of the Member
                           when the benefit begins as follows:

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

                                   Age:                      Limitation Adjustment Under the Defined Benefit Plan:
                          ----------------------- ----------------------------------------------------------------------------
                          Over SSNRA              The smaller of:    (a)    the Actuarial Equivalent of the limitation for
                                                                            SSNRA, computed using the interest rate and
                                                                            mortality basis (or other tabular factor) used
                                                                            for actuarial equivalence for Late Retirement
                                                                            Income under the Plan, or
                                                                            (b)       the Actuarial Equivalent of the
                                                                            limitation for SSNRA, computed using a 5.00%
                                                                            interest rate and the mortality basis prescribed
                                                                            in Section 415(b)(2)(E)(v) of the IRC.
                          ----------------------- ----------------------------------------------------------------------------
                          SSNRA                   No adjustment.
                          ----------------------- ----------------------------------------------------------------------------
                          62 to SSNRA:            Actuarial Equivalent of limitation for SSNRA, based on reduction factors
                                                  equal to 5/9 of 1% for each of the first 36 months by which the age is
                                                  less than the SSNRA, and 5/12 of 1% for each additional month by which the
                                                  age is less than the SSNRA.
                          ----------------------- ----------------------------------------------------------------------------
                          Less than 62            The smaller of:    (a)    the Actuarial Equivalent of the limitation for
                                                                            age 62, computed using the interest rate and
                                                                            mortality basis (or other tabular factor)
                                                                            used for actuarial equivalence for Early Retirement
                                                                            Income under the Plan, or

                                                                     (b)    the Actuarial Equivalent of the
                                                                            limitation for age 62, computed
                                                                            using 5.00% interest rate and the
                                                                            mortality basis prescribed in Section
                                                                            415(b)(2)(E)(v)
                                                                            of the IRC.
</TABLE>

<PAGE>

                  (3)      "SSNRA" means the Social Security Normal Retirement
                           Age, determined as follows:

                           Year of Birth                       SSNRA
                           -------------                       -----
                           1937 or earlier                      65
                           1938 - 1954                          66
                           1955 or later                        67

         (c)      This Section 6.04 will not be applicable if Annual Pension
                  benefits do not exceed $10,000 multiplied by the fraction in
                  paragraph 6.04(a)(2) above, provided the Member has never
                  participated in a defined contribution plan maintained by the
                  Employer.

         (d)      Cost-of-living adjustments in the Dollar Limitation for
                  benefits shall be limited to scheduled annual increases
                  determined by the Secretary of the Treasury  that become
                  effective no sooner than January 1 of each year. The
                  limitation in paragraph 6.04(a)(1) for a Member whose
                  benefit has commenced shall be adjusted annually by
                  multiplying such limitation by the ratio of (1) the adjusted
                  Dollar Limitation for the limitation year in which the
                  limitation is being adjusted, to (2) the adjusted Dollar
                  Limitation for the limitation year in which the Member's
                  benefit began. The limitation in paragraph 6.04(a)(2) for
                  Members who have separated from service shall be adjusted
                  annually by multiplying such limitation by the ratio of (3)
                  the adjusted Dollar Limitation for the limitation year in
                  which the compensation limitation is being adjusted, to (4)
                  the adjusted Dollar Limitation for the limitation year in
                  which the Member separated from service.

         (e)      For purposes of Plan Sections 6.04 and 6.07  Compensation and
                  "415 compensation" shall constitute Compensation as defined in
                  Section 1.08 less deferrals and contributions pursuant to
                  Members' salary reduction elections that are not includable
                  in gross income by reason of Code Sections 125 and 402(e)(3).
                  Provided, however, that for Plan Years beginning on and after
                  January 1, 1998 Compensation for purposes of this Section
                  6.04 shall include the aggregate elective deferrals (if any)
                  made on the Member's behalf during the Plan Year under any
                  plan maintained by his Employer pursuant to Code Section
                  401(k) and the aggregate elective contributions (if any)
                  made on the Members behalf during the Plan Year under any
                  plan maintained by his Employer pursuant to Code Section 125.

         (f)      For purpose of this Section 6.04, all qualified defined
                  benefit plans (whether terminated or not) ever maintained by
                  the Employer shall be treated as one defined benefit plan, and
                  all qualified defined contribution plans (whether terminated
                  or not) ever maintained by the Employer shall be treated as
                  one defined contribution plan.

         (g)      For purposes of this Section 6.04, if the Employer is a member
                  of a controlled group of Corporations, trades or businesses
                  under common control (as defined by Code Section 1563(a) or
                  Code Section 415(b) and (c) as modified by Code Section
                  415(h)) or if a Member of an Affiliate Service group (as


<PAGE>

                  defined by Code Section 414(m)) all Employees of such
                  Employers shall be considered to be employed by a single
                  Employer.

         (h)      For purposes of this Section 6.04, if this Plan is a Code
                  Section 413(c) Plan, all Employers of a Member who maintained
                  this Plan will be considered to be a single Employer.

         (i)      Notwithstanding anything contained in this Section 6.04 to the
                  contrary, the limitations, adjustments and other requirements
                  described in this Section shall at all times comply with the
                  provisions of Code Section 415 and the Regulations thereunder,
                  the terms of which are specifically incorporated herein by
                  reference.

6.05     Determination of Top Heavy Status. The following provisions shall
         become effective in any Plan Year commencing after the 1983 Plan Year
         in which the Plan is determined to be a Top Heavy Plan.

         (a)      This Plan shall be a Top Heavy Plan for any Plan Year in
                  which, as of the Determination Date, (1) the Present Value of
                  Accrued Benefits of Key Employees under this Plan and all
                  plans of an Aggregation Group, and (2) the sum of the
                  Aggregate Accounts of Key Employees under all plans of an
                  Aggregation Group, exceed sixty percent (60%) of the Present
                  Value of Accrued Benefits and the Aggregate Accounts of all
                  Key and Non-Key Employees under this Plan and all plans of an
                  Aggregation Group.

         (b)      This Plan shall be a Super Top Heavy Plan for any Plan Year in
                  which, as of the Determination Date, (1) the Present Value of
                  Accrued Benefits of Key Employees under this Plan and all
                  Plans of an Aggregation Group and (2) the sum of the Aggregate
                  Aggregation Group, exceed ninety percent (90%) of the Present
                  Value of Accrued Benefits and the Aggregate Accounts of all
                  Key and Non-Key Employees under this Plan and all plans of an
                  Aggregation Group.

         (c)      If any Member is a Non-Key Employee for any Plan Year, but
                  such Member was a Key Employee for any prior Plan Year,  such
                  Member's Present Value of Accrued  Benefits and/or Aggregate
                  Account balance shall not be taken into  account for purposes
                  of determining whether this Plan is a Top Heavy or Super Top
                  Heavy Plan (or whether any Aggregation Group which includes
                  this Plan is a Top Heavy Group). In addition, if a Member
                  or former Member Accounts of Key Employees under all Plans of
                  an has not performed any services for any Employer maintaining
                  the Plan at any time during the five year period ending on the
                  Determination Date, any Accrued Benefit or Aggregate
                  Account for such Member or former Member shall not be taken
                  into account for the purposes of determining whether this
                  Plan is a Top Heavy or Super Top Heavy Plan.

6.06     Top Heavy Definitions.

         The following definitions apply in determining whether the Plan is a
         Top Heavy Plan or a Super Top Heavy Plan:

<PAGE>

         (a)      Aggregate Account: A Member's Aggregate Account as of the
                  Determination Date is the sum of the amounts and adjustments
                  described below:

                  (1)      his Member's Account balance as of the most recent
                           valuation  occurring within a twelve (12) month
                           period ending on the Determination Date;

                  (2)      an adjustment for any contributions due as of the
                           Determination Date. Such adjustment shall be the
                           amount of any contributions actually made after the
                           applicable Plan valuation date but due on or before
                           the Determination Date, except for the first Plan
                           Year when such adjustment shall also reflect the
                           amount of any contributions made after the
                           Determination Date that are allocated as of a date in
                           that first Plan Year;

                  (3)      any Plan distributions made within the Plan Year that
                           includes the Determination Date or within the four
                           (4) preceding Plan Years. However, in the case of
                           distributions made after the valuation date and prior
                           to the Determination Date, such distributions are not
                           included as distributions for top heavy purposes to
                           the extent that such distributions are already
                           included in the Member's Aggregate Account balance as
                           of the valuation date. Notwithstanding anything
                           herein to the contrary, all distributions, including
                           distributions made prior to January 1, 1984, and
                           distributions under a terminated plan which if it had
                           not been terminated would have been required to be
                           included in an Aggregation Group, will be counted.
                           Further, distributions from the Plan (including the
                           cash value of life insurance policies) of a Member's
                           account balance because of death shall be treated as
                           a distribution for the purposes of this paragraph.

                  (4)      any Employee contributions, whether voluntary or
                           mandatory. However, amounts attributable to tax
                           deductible qualified voluntary employee contributions
                           shall not be considered to be a part of the Member's
                           Aggregate Account balance.

                  (5)      with respect to unrelated rollovers and plan-to-plan
                           transfers (ones which are both initiated by the
                           Employee and made from a plan maintained by one
                           employer to a plan maintained by another employer),
                           if this Plan provides the rollovers or plan-to-plan
                           transfers, it shall always consider such rollovers or
                           plan-to-plan transfers as a distribution for the
                           purposes of this Section.

                  (6)      with respect to related rollovers and plan-to-plan
                           transfers (ones either not initiated by the Employee
                           or made to a plan maintained by the same employer),
                           if this Plan provides for a rollover or plan-to-plan
                           transfer, it shall not be counted as a distribution
                           for purposes of this Section. If this Plan is the
                           Plan accepting such rollover or plan-to-plan
                           transfer, it shall consider such rollover or
                           plan-to-plan transfer as part of the Member's
                           Aggregate Account balance, irrespective of the date
                           on which such rollover or plan-to-plan transfer is
                           accepted.

<PAGE>

                  (7)      For the purposes of determining whether two employers
                           are to be treated as the same employer in (5) and (6)
                           above, all employers aggregated under Code Section
                           414(b), (c), (m) and (o) are treated as the same
                           employer.

         (b)      Aggregation Group means either a Required Aggregation Group
                  or a Permissive Aggregation Group as hereinafter determined.

                  (1)      Required Aggregation Group: In determining a Required
                           Aggregation Group hereunder, each plan of the
                           Employer in which a Key Employee is a member in the
                           Plan Year containing the Determination Date or any of
                           the four preceding Plan Years, and each other plan of
                           the Employer which enables any plan in which a Key
                           Employee participates to meet the requirements of
                           Code Sections 401(a)(4) or 410, will be required to
                           be aggregated. Such group shall be known as a
                           Required Aggregation Group. In the case of a Required
                           Aggregation Group, each plan in the group will be
                           considered a Top Heavy Plan if the Required
                           Aggregation Group is a Top Heavy Group. No plan in
                           the Required Aggregation Group will be considered a
                           Top Heavy Plan if the Required Aggregation Group is
                           not a Top Heavy Group.

                  (2)      Permissive Aggregation Group: The Employer may also
                           include any other plan not required to be included in
                           the Required Aggregation Group, provided the
                           resulting group, taken as a whole, would continue to
                           satisfy the provisions of Code Sections 401(a)(4) and
                           410. Such group shall be known as a Permissive
                           Aggregation Group. In the case of a Permissive
                           Aggregation Group, only a plan that is part of the
                           Required Aggregation Group will be considered a Top
                           Heavy Plan if the Permissive Aggregation Group is a
                           Top Heavy Group. No plan in the Permissive
                           Aggregation Group will be considered a Top Heavy Plan
                           if the Permissive Aggregation Group is not a Top
                           Heavy Group.

                  (3)      Only those plans of the Employer in which the
                           Determination Dates fall within the same calendar
                           year shall be aggregated in order to determine
                           whether such plans are Top Heavy Plans.

                  (4)      An Aggregation Group shall include any terminated
                           plan of the Employer if it was maintained within the
                           last five (5) years ending on the Determination Date.

         (c)      Determination Date means (a) the last day of the preceding
                  Plan Year, or (b) in the case of the first Plan Year, the last
                  day of such Plan Year.

         (d)      Key Employee means an Employee as defined in Code Section
                  416(i) and the Regulations thereunder. Generally, any Employee
                  or former Employee (as well as each of his Beneficiaries) is
                  considered a Key Employee if he, at any time during the Plan
                  Year that contains the "Determination Date" or any of the
                  preceding four (4) Plan Years, has been included in one of the
                  following categories:

<PAGE>

                  (1)      an officer of the Employer (as that term is defined
                           within the meaning of the Regulations under Code
                           Section 416) having annual "415 Compensation" greater
                           than 50 percent (50%) of the amount in effect under
                           Code Section 415(b)(1)(A) for any such Plan Year.

                  (2)      one of the ten employees having annual "415
                           Compensation" from the Employer for a Plan Year
                           greater than the dollar limitation in effect under
                           Code Section 415(c)(1)(A) for the calendar year in
                           which such Plan Year ends and owning (or considered
                           as owning within the meaning of Code Section 318)
                           both more than one-half percent (0.5%) interest and
                           the largest interests in the Employer.

                  (3)      a "five percent owner" of the Employer. "Five percent
                           owner" means any person who owns (or is considered as
                           owning within the meaning of Code Section 318) more
                           than five percent (5%) of the outstanding stock of
                           the Employer or stock possessing more than five
                           percent (5%) of the total combined voting power of
                           all stock of the Employer or, in the case of an
                           unincorporated business, any person who owns more
                           than five percent (5%) of the capital or profits
                           interest in the Employer. In determining percentage
                           ownership hereunder, employers that would otherwise
                           be aggregated under Code Sections 414(b), (c), (m)
                           and (o) shall be treated as separate employers.

                  (4)      a "one percent owner" of the Employer having an
                           annual "415 Compensation" from the Employer of more
                           than $150,000. "One percent owner" means any person
                           who owns (or is considered as owning within the
                           meaning of Code Section 318) more than one percent
                           (1%) of the outstanding stock of the Employer or
                           stock possessing more than one percent (1%) of the
                           total combined voting power of all stock of the
                           Employer or, in the case of an unincorporated
                           business, any person who owns more than one percent
                           (1%) of the capital or profits interest in the
                           Employer. In determining percentage ownership
                           hereunder, employers that would otherwise be
                           aggregated under Code Sections 414(b), (c), (m) and
                           (o) shall be treated as separate employers. However,
                           in determining whether an individual has "415
                           Compensation" of more than $150,000, "415
                           Compensation" from each employer required to be
                           aggregated under Code Sections 414(b), (c), (m) and
                           (o) shall be taken into account. For purposes of this
                           Section, "415 Compensation" means compensation as
                           defined in Plan Section 1.08, except that the
                           determination of "415 Compensation" shall be made
                           without regard to Code Sections 125, 402(a)(8),
                           402(h)(1)(B) and, in the case of Employer
                           contributions made pursuant to a salary reduction
                           agreement, without regard to Code Section 403(b).

         (e)      Non-Key Employee means any Employee or former Employee (and
                  his Beneficiaries) who is not a Key Employee.

         (f)      Present Value of Accrued Benefit: In the case of a defined
                  benefit plan, the Present Value of Accrued Benefit for a
                  Member other than a Key Employee, shall be as determined using


<PAGE>

                  the single accrual method used for all plans of the Employer
                  and Affiliated Employers, or if no such single method exists,
                  using a method which results in benefits accruing not more
                  rapidly than the slowest accrual rate permitted under Code
                  Section 411(b)(1)(C).

         (g)      Top Heavy Group means an Aggregation Group in which as of the
                  Determination Date, the sum of: (1) the Present Value of
                  Accrued Benefits of Key Employees under all defined benefit
                  plans included in the group, and (2) the Aggregate Accounts of
                  Key Employees under all defined contribution plans included in
                  the group, exceeds sixty percent (60%) of a similar sum
                  determined for all Members.

6.07     Top Heavy Requirements.

         (a)      Minimum Benefits for Top-Heavy Plans. If the Plan is or
                  becomes a Top-Heavy Plan, then, notwithstanding the provisions
                  of Section 6.01, the minimum accrued benefit expressed as a
                  single life annuity beginning at Normal Retirement Age for
                  each Non-Key Employee who is a Participant shall be the lesser
                  of:

                  (1)      two percent of his Top-Heavy Average Compensation
                           times Top-Heavy Years of Service, or

                  (2)      20% of his Top-Heavy Average Compensation.

                  If the form of benefit is other than a single life annuity,
                  the minimum benefit must be an amount that is the Actuarial
                  Equivalent of the above minimum benefit. If the benefit
                  commences at a date other than at Normal Retirement Age, the
                  Participant will receive an amount that is at least the
                  Actuarial Equivalent of the single life annuity benefit
                  commencing at Normal Retirement Age. Each Non-Key Employee who
                  is a Participant shall receive this minimum benefit regardless
                  of the Non-Key Employee's level of Compensation and regardless
                  of whether the Non-Key Employee is employed on a specified
                  date.

                  In the case of a Top-Heavy Group consisting of both defined
                  benefit and defined contribution plans, the required minimum
                  accrued benefit or Employer contribution for each Top-Heavy
                  Year of Service for Employees participating in each type of
                  Plan shall be satisfied by the minimum accrued benefit under
                  this Plan. The required minimum accrued benefit or Employer
                  contribution for each Top-Heavy Year of Service for Employees
                  who do not participate in this Plan, but who do participate in
                  another plan of the Top-Heavy Group shall be satisfied by
                  providing the minimum accrued benefit or contribution under
                  that plan. If the Employer maintains another qualified plan
                  which provides a minimum benefit or contribution, then in no
                  event shall the minimum benefit or contribution provided under
                  this Plan, when combined with the benefit or contribution
                  provided by the other plan, exceed the amount required by
                  Section 415(c) of the Code.

<PAGE>

                  For purposes of this Section 6.07, Compensation shall mean
                  compensation as defined in Section 414 (q)(7) the average
                  Compensation paid during the consecutive Top-Heavy Years of
                  Service, not to exceed five years, which produces the highest
                  average Compensation. In determining the Top-Heavy Average
                  Compensation, years during which the Employee did not earn a
                  Year of Service shall be disregarded. Top-Heavy Years of
                  Service shall mean all Years of Service, excluding any Year of
                  Service after which the Plan was not a Top-Heavy Plan for the
                  Plan Year ending during such Year of Service and further
                  excluding any Year of Service completed in a Plan Year
                  beginning before January 1, 1984.

         (b)      Minimum Vesting Requirements. If the Plan is or becomes a
                  Top-Heavy Plan, as defined in Section 6.05, then,
                  notwithstanding the provisions of Section 7.01, a Participant
                  shall be vested in the applicable percentage of his Accrued
                  Benefit under the Plan as follows:

                          Number of Years of ServicePercentage
                          ------------------------------------
                                   Less than 3                        0%
                                   3 or more                        100%


                  Years of Service for the purposes of vesting in a Top-Heavy
                  Plan shall include all Years of Service, including years prior
                  to January 1, 1984, and years during which the Plan is not
                  considered to be a Top-Heavy Plan. Vesting pursuant to this
                  Section 6.07(b) shall apply to each Participant's entire
                  Accrued Benefit. However, when the Plan becomes a Top-Heavy
                  Plan, the Accrued Benefit of any Employee who does not
                  complete at least one Hour of Service after the Plan becomes
                  Top-Heavy is not required to be subject to the minimum vesting
                  schedule for Top-Heavy Plans.

                  When the Plan ceases to be a Top-Heavy Plan, the vesting
                  schedule shall revert to the schedule set forth in Section
                  7.01 with respect to future benefit accruals. However, each
                  Participant with at least three Years of Service shall have
                  his non-forfeitable percentage computed under the Plan
                  according to the Top-Heavy vesting schedule.

                  For purposes of the above paragraph, a Participant shall be
                  considered to have completed three Years of Service if he has
                  completed 1,000 Hours of Service in each of three Plan Years,
                  whether or not consecutive, ending with or prior to the last
                  day of the election period described below.

         (c)      Impact on Maximum Benefits: For any Plan Year in which the
                  Plan is a Top-Heavy Plan, Plan Section 6.04 shall be applied
                  by substituting the number "l.00" for the number "1.25"
                  wherever it appears therein except such substitution shall not
                  have the effect of reducing any benefit accrued under a
                  defined benefit plan prior to the first day of the Plan Year
                  in which this provision becomes applicable.

         (d)      Notwithstanding anything contained herein to the contrary, the
                  requirements prescribed in this Section 6.07 shall at all
                  times comply with the provisions of Code Section 416 and the


<PAGE>

                  Regulations thereunder, the terms of which are specifically
                  incorporated herein by reference.

<PAGE>

                                                                    ARTICLE VII



                          BENEFITS UPON TERMINATION OF
                       EMPLOYMENT OTHER THAN AT RETIREMENT


7.01     Vested Benefits/Termination of Employment with Less than Five Years of
         Service. Each Member's Accrued Benefit under the Plan is
         non-forfeitable (100% vested) at the earlier of: (1) attaining age 65
         (Normal Retirement Age) while a Member, or (2) completion of five Total
         Years of Service after age 18. If a Member's employment is terminated
         for any reason and at the time his Total Years of Service hereunder is
         less than five (5) years and he does not qualify for Retirement under
         the provisions of ARTICLE IV, no benefits shall be payable under this
         Plan on his behalf.

7.02     Termination of Employment with at Least Five Years of Service. If a
         Member's employment is terminated for any reason and at the time his
         Total Years of Service hereunder is five (5) years or more but he does
         not qualify for Retirement under the provisions of ARTICLE IV or
         Section 7.04, he shall, if he survives to the date of payment
         determined herein, be entitled to all of his Accrued Benefit, as
         defined in Section 1.02, and adjusted for his age at the date payment
         is to be made or begin, and payable as follows:

         (a)      (1) With respect to a Member whose Severance from
                      Service Date is before January 1, 1998, if the
                      present value of the Member's non-forfeitable Accrued
                      Benefit determined in accordance with Plan Section
                      1.02 does not exceed $3,500, that present value shall
                      be payable in a single sum as soon as practicable;

                  (2) With respect to a Member whose Severance from Service
                      Date is on or after January 1, 1998, if the present
                      value of the Member's non-forfeitable Accrued Benefit
                      determined in accordance with Plan Section 1.02 does
                      not exceed $5,000, that present value shall be
                      payable in a single sum as soon as practicable;

         (b)      (1) With respect to a Member whose Severance from
                      Service Date is before January 1, 1998, if the
                      present value of the Member's non-forfeitable Accrued
                      Benefit determined in accordance with Plan Section
                      1.02 exceeds $3,500, payment shall be made in
                      accordance with paragraph (c);

                  (2) With respect to a Member whose Severance from Service
                      Date is on or after January 1, 1998, if the present
                      value of the Member's non-forfeitable Accrued Benefit
                      determined in accordance with Plan Section 1.02
                      exceeds $5,000, payment shall be made in accordance
                      with paragraph (c);

         (c)      That portion of such Member's benefits not payable under
                  Section 7.02(a) shall be payable beginning the first of the
                  month after he attains age 65, or at his  election,
                  at any time within the ten-year period immediately preceding
                  as though he were a Retired  Member, and for the purpose of
                  this paragraph the pension basis shall be the Actuarial


<PAGE>

                  Equivalent of the Accrued Benefit as defined in Plan Section
                  1.02 determined by application of the provisions of paragraphs
                  3 and 4 contained in Appendix A based on the attained age of
                  the Member (and Spouse) as of the date payments actually begin
                  and the method of payment determined in accordance with
                  Article V.

         (d)      A distribution pursuant to paragraph (c) cannot be made unless
                  the Member's Spouse consents to the distribution in the manner
                  provided in Section 5.06.

7.03     Accrued Benefit of Re-employed Member. Benefits for a terminated or
         Suspended Member who resumes employment covered by the Plan shall be
         determined as follows:

         (a)      If such Member has received no benefits from the Plan, his
                  total Accrued Benefit as defined in Section 1.02 shall be
                  restored to the extent that his previous service is taken into
                  account under Section 1.01 and shall be subject to the vesting
                  and forfeiture provisions of the Plan according to his Total
                  Years of Service hereunder determined at his eventual
                  Termination of Employment.

         (b)      If such Member has received a distribution of his
                  non-forfeitable benefit either in a lump sum or in monthly
                  payments, the benefits determined with respect to his eventual
                  Termination of Employment shall be reduced by the Actuarial
                  Equivalent of the amount(s) previously received as provided in
                  Section 4.07.

7.04     Involuntary Termination of Employment. If a Member's employment is
         involuntarily terminated for reasons other than death and he has at
         least fifteen (15) Total Years of Service and five (5) years of
         membership in the Plan but at the time has not attained age 55, and if
         he survives to age 55, he shall then be entitled to a monthly pension
         based on his Accredited Service to the date of his involuntary
         Termination of Employment computed in accordance with Article VI as
         though he had Retired under Article IV. For purposes of this pension
         calculation, Average Monthly Compensation, provisions of the plan as in
         effect on the date of Termination of Employment, and all other relevant
         factors shall be treated as remaining constant from the date of
         Termination of Employment to the Retirement date. Benefits under this
         Section 7.04, payable in accordance with Article V, shall begin as of
         the first of the month coinciding with or following the Member's
         attaining age 55 or at his election the first of any subsequent month.

<PAGE>

                                                                   ARTICLE VIII



                      BENEFITS PAYABLE BY REASON OF DEATH


8.01     Death of a Member without a Surviving Spouse.

         (a)      Death of Active or Suspended Member Before Early Retirement
                  Age:

                  (1)      If an active or Suspended Member with fewer than ten
                           Years of Service dies before reaching age 55 and does
                           not have a Surviving Spouse, no benefit shall be
                           payable under the Plan on his behalf.

                  (2)      If an active or Suspended Member with ten or more
                           Years of Service dies before reaching age 55 and does
                           not have a Surviving Spouse, then his Beneficiary
                           shall be entitled to 120 monthly installments equal
                           to 50% of the monthly pension to which such Member
                           would have been entitled had he Separated from
                           Service as of the date of his death, survived to age
                           55, and then elected to receive payment of his
                           Accrued Benefit under Method 1 beginning as of the
                           first day of the next month. Payment of the
                           installments provided for in this subparagraph (a)(2)
                           shall begin as of the first day of the month
                           following the month in which the deceased Member
                           would have attained age 55.

         (b)      Death of Active or Suspended Member After Early Retirement Age
                  But Before Annuity Starting Date:

                  If an active or Suspended Member who has met the age and
                  service requirements for Early Retirement under Section 4.02
                  dies before his Annuity Starting Date and he does not have a
                  Surviving Spouse, his Beneficiary shall be entitled to 120
                  monthly installments equal to 50% of the monthly pension to
                  which such Member would have been entitled had he Retired as
                  of the date of his death and elected to receive his pension
                  under Method 1 beginning as of the first day of the next
                  month.

         (c)      Death after Termination of Employment:

                  (1)      Except as provided in subparagraph (c)(2) below, if a
                           Member's employment terminates before he has met the
                           age and service requirements for Early Retirement
                           under Section 4.02 and the Member dies before his
                           Annuity Starting Date without a Surviving Spouse, no
                           benefits shall be payable under the Plan on his
                           behalf.

                  (2)      If a Member's employment is involuntarily terminated
                           and he is entitled to benefits under Section 7.04,
                           and if such Member survives more than thirty (30)
                           days after his Termination of Employment but dies
                           before his Annuity Starting Date, and does not have a
                           Surviving Spouse, his Beneficiary shall be entitled


<PAGE>

                           to 120 monthly installments of the monthly pension
                           which would have been payable to such Member under
                           Section 5.01 beginning the first of the month
                           following the date he would have attained age
                           fifty-five or the first of the month following the
                           date of his death, whichever is later.

         (d)      If the present value of any benefit payable under Section
                  8.01(a)(2), Section 8.01(b) or Section 8.01(c)(2) does not
                  exceed $5,000, the Pension Committee shall direct the
                  immediate distribution of such amount to the Beneficiary.

         (e)      If a Member dies after his Annuity Starting Date, subject to
                  the rights of an Alternate Payee under a Qualified Domestic
                  Relations Order, any pension benefit payable under the Plan
                  will be paid in accordance with the method of payment elected
                  under Article V.

8.02     Death of a Member with a Surviving Spouse.

         (a)      If a Member dies before his Annuity Starting Date and before
                  completing five Total Years of Service, no benefit shall be
                  payable under this Plan on his behalf.

         (b)      If a Member dies before his Annuity Starting Date after
                  completing five Total Years of Service, but before the
                  earliest date on which he could have elected to receive a
                  pension benefit under the Plan, either as an early Retirement
                  benefit under Section 4.02 or a deferred pension under Section
                  7.02(c) or 7.04, subject to the rights of any Alternate Payee
                  under a Qualified Domestic Relations Order, his Spouse shall
                  be entitled to a Qualified Pre-Retirement Survivor Annuity in
                  accordance with Section 8.03(b).

         (c)      If a Member dies before his Annuity Starting Date and on or
                  after the earliest date on which he could have elected to
                  begin receiving a pension under the Plan, either as an
                  early Retirement benefit under Section 4.02 or a deferred
                  pension under Section 7.02(c) or 7.04, subject to the rights
                  of any Alternate Payee under a Qualified Domestic Relations
                  Order, his Spouse shall be entitled to a Qualified
                  Pre-Retirement Survivor Annuity provided in Section 8.03(a).
                  Notwithstanding  the preceding  sentence, if a Member who
                  could begin receiving an early Retirement benefit under
                  Section 4.02 so elects on forms provided by the Pension
                  Committee, subject to any required spousal consent, his
                  Beneficiary shall be entitled to 120 installments equal to
                  fifty percent of the monthly pension such Member would have
                  been entitled to had he retired as of the date of his death
                  and elected to receive his pension under Method 1 beginning
                  asof the first day of the next month.

                  The Pension Committee must provide each Member eligible to
                  make an election under this Section 8.02(c) with a general
                  written explanation of (I) the terms and conditions of the
                  Qualified Pre-Retirement Survivor Annuity payable under Plan
                  Section 8.03; (ii) the Member's right to make, and the effect
                  of, an election not to receive survivor benefits in that form;
                  (iii) any required spousal consent; and (iv) the right to
                  make, and the effect of, a revocation of an election under
                  this Section 8.02(c). The explanation must be provided to the
                  Member within a reasonable period after he becomes eligible to
                  make an election under this Section 8.02(c). A Member's


<PAGE>

                  election not to take the Qualified Pre-Retirement Survivor
                  Annuity provided in Section 8.03 is not effective unless his
                  Spouse has consented in writing to such election. The Spouse's
                  consent must acknowledge the effect of the Member's election
                  and must be witnessed by a Plan Representative or Notary
                  Public. Despite the preceding sentence, spousal consent is not
                  required if the Member establishes to the satisfaction of the
                  Plan Representative that such written consent cannot be
                  obtained because there is no Spouse, because the Spouse cannot
                  be located, or because of such circumstances as applicable
                  Treasury regulations prescribe. Any consent under this Section
                  is valid only with respect to the Spouse who signed the
                  consent. Any evidence that a Spouse's consent cannot be
                  obtained is valid only with respect to that designated Spouse.

         (d)      If a Member dies after his Annuity Starting Date, subject to
                  the rights of an Alternate Payee under a Qualified Domestic
                  Relations Order, any pension benefit payable under the Plan
                  will be paid in accordance with the method of payment elected
                  under Article V.

8.03     Qualified Pre-Retirement Survivor Annuity.

         In the event a Member with a vested right to his Accrued Benefit under
         the Plan dies before his Annuity Starting Date and has not made the
         election provided for in Subsection 8.02(c), benefits shall be payable
         to the Member's Spouse as follows:

         (a)      If the Member at the date of death was then eligible to
                  receive a benefit under the Plan under Article IV or Plan
                  Section 7.02(c) or 7.04, his Surviving Spouse shall be
                  entitled to receive a death benefit commencing as of the first
                  day of the month coinciding with or next following the date of
                  the Member's death, in an amount equal to one-half of the
                  amount of the retirement benefit which would have been payable
                  to the Member if he had retired on the day preceding his death
                  and received a benefit in the form of a Joint and Survivor
                  Annuity as defined in Plan Section 5.03.

         (b)      If the Member at the date of death was at that time not
                  eligible to receive a benefit under the Plan, then the
                  Member's Surviving Spouse shall be entitled to a death benefit
                  in an amount equal to the amount that would have been payable
                  to the Spouse under Section 7.02(c) or 7.04 assuming:

                  (1)      the Member had Separated from Service on the earlier
                           of his Termination of Employment or date of his
                           death;

                  (2)      the Member had survived to the earliest date he
                           would be entitled to receive a benefit under the
                           Plan pursuant to Section 7.02(c) or 7.04;

                  (3)      on that date the Member began receiving his Accrued
                           Benefit in the form of a Qualified Joint and Survivor
                           Annuity as described in Plan Section 5.03; and

                  (4)      the Member died on the day after the date described
                           in subsection (2).

<PAGE>

                  Unless the Spouse elects a later starting date, the
                  pre-retirement spousal death benefit under this Section
                  8.03(b) shall commence as of the first day of the first month
                  in which the Member could have begun receiving a benefit under
                  the Plan pursuant to Article IV, Section 7.02(c) or Section
                  7.04 had he not died, and shall be paid to and including the
                  month in which such Spouse dies.

                  Notwithstanding the foregoing, if the present value of the
                  pre-retirement spousal death benefit with respect to a Member
                  who dies before becoming eligible to receive a benefit under
                  the Plan does not exceed $5,000, his Spouse shall be entitled
                  to receive such present value as soon as practicable.

8.04     Designation of Beneficiaries.

         (a)  A Member may designate a Beneficiary  or  Beneficiaries  in
              accordance with this Section 8.04 to receive  benefits  payable
              under the method described in Section 5.01 after the Member's
              death after  Retirement, and  benefits  payable  by reason of the
              Member's  death  before  his Annuity  Starting  Date  pursuant
              to  Section  8.01.  In the  case of benefits   payable  as
              described  in  Section  5.01  no   Beneficiary designation  in
              accordance  with this Section 8.04 shall be effective unless
              accompanied  by a spousal  consent  described in paragraph (c)
              below, and received by the Pension  Committee before the first
              monthly payment. A Member may revoke any Beneficiary designation,
              and subject to any required spousal consent may designate another
              Beneficiary or Beneficiaries.

          (b) On forms provided by the Pension Committee, each Member may
              designate or change a Beneficiary or Beneficiaries to
              receive Retirement benefits calculated under Plan Section
              5.01 by reason of the Member's death and benefits payable by
              reason of the Member's death before his Annuity Starting Date
              pursuant to Section 8.01. A Beneficiary designation is effective
              when received by the Pension Committee. Any designation
              of a Beneficiary by a Member without a Spouse shall become
              void and of no further force and effect if the Member marries
              prior to his Annuity Starting Date. If a Beneficiary or
              Beneficiaries are designated in accordance with this Section 8.04,
              then after the Pension Committee receives proof of the Member's
              death, it shall request his Beneficiary or Beneficiaries to
              submit claim, election and tax withholding forms. Subject to the
              rights of any Alternate Payee under a Qualified Domestic Relations
              Order, the Pension Committee upon receiving these forms, shall
              direct the Trustee to pay the deceased Member's retirement
              benefits to his Beneficiary or Beneficiaries for the remainder
              of the 120 month period as provided in Section 5.01 or
              for the 120 month period required pursuant to Section 8.01. If
              there is no effective Beneficiary designation in effect at the
              time of the Retired Member's death, then subject to any required
              Spousal consent and to the rights of any Alternate Payee, the
              Member's estate shall be entitled to receive any remaining pension
              payments due.

         (c)  Notwithstanding the Member's right to designate a Beneficiary
              as provided in Section 8.04(a), the Member's Beneficiary shall
              be the Member's Spouse unless the Member's Spouse consents in


<PAGE>

              writing to the Member's election of payment under Method 1 and
              of a different Beneficiary. This Spouse's consent must
              acknowledge the effect of the Member's election and must be
              witnessed by a Plan Representative or Notary Public. With this
              spousal consent, the provisions of this Section 8.04 shall
              apply.

8.05     Legal Disability of Beneficiary. If any Member, former Member or
         Beneficiary entitled to any payment under the Plan shall be under a
         legal disability whether due to incompetency, being a minor, or
         otherwise, the Pension Committee, upon the receipt of satisfactory
         evidence of such legal disability may cause any payment otherwise
         payable to be paid, (i) to the guardian of the person or property of
         such Member or Beneficiary, or (ii) to any other person, firm or
         institution for the benefit of such Member or Beneficiary, or, if the
         Beneficiary is a minor, to a custodian for such Beneficiary under a
         Uniform Gifts or Transfers to Minors Act, and the receipt of any of the
         foregoing shall constitute a full acceptance of the Pension Committee
         to the extent of the distribution so made.


<PAGE>

                                                                     ARTICLE IX



                    TRUST FUND AND ADMINISTRATION OF THE PLAN


9.01     Named Fiduciaries and Allocation of Responsibility.

         (a)      Plan Fiduciaries are Cone, each Trustee or co-Trustee, the
                  Pension Committee and any other Committee appointed pursuant
                  to Plan Section 9.06. Each Fiduciary shall have only those
                  powers, duties, responsibilities and obligations that are
                  specifically assigned under the Plan or Trust Agreement. A
                  Fiduciary may serve in more than one capacity with respect to
                  the Plan. Cone shall appoint the Pension Committee and any
                  Trustee or successor Trustees or co-Trustees and any other
                  Fiduciaries.

         (b)      The Trustee has custody and sole responsibility for
                  administration of the Trust Fund, but the Trustee's authority
                  to manage, acquire or dispose of assets of the Plan is subject
                  to the direction of Cone in accordance with Section 9.08. If
                  an Investment Manager is appointed, the Trustee or each
                  Co-Trustee under that Trust Agreement is released from any
                  obligation or liability for the investment of the assets for
                  which the appointment is made.

         (c)      The Pension Committee has only the responsibilities described
                  in this Plan and those delegated by Cone. The Pension
                  Committee has no responsibility for the control or management
                  of the Trust Fund.

         (d)      All responsibilities not specifically  delegated to a
                  Fiduciary remain with Cone,  including  designating other
                  Fiduciaries not named in this Plan or the Trust  Agreement.
                  A Fiduciary  serves at the  pleasure of Cone and may employ
                  one or more  persons to render  advice with regard
                  to  any  responsibility  such  Fiduciary  has  under  the
                  Plan.  Each Fiduciary  may rely  upon any  direction,
                  information  or  action  of another  Fiduciary as being
                  proper under the Plan or Trust  Agreement and shall not be
                  required to inquire  into the  propriety  of any such
                  direction,  information or action.  It is intended that
                  each Fiduciary be  responsible  for the proper  exercise  of
                  its own  power,  duties, responsibilities  and obligations and
                  shall not be responsible for any act or omission of another
                  Fiduciary except to the extent that it has knowledge of a
                  breach of Fiduciary responsibility by another Fiduciary
                  and fails to make reasonable effort to remedy the breach.

9.02     Duties and Responsibilities. Each Fiduciary shall discharge his duties
         with respect to the Plan solely in the interest of Members and
         Beneficiaries for the exclusive purpose of providing benefits to
         Members and Beneficiaries and for defraying reasonable expenses in
         administering the Plan, with the care, skill, prudence and diligence
         under the circumstances then prevailing that a prudent man acting in a
         like capacity and familiar with such matters would use in the conduct
         of an enterprise of a like character and with like aims, and in
         accordance with the documents and instruments governing the Plan
         insofar as such documents and instruments are consistent with the
         provisions of applicable law or regulation.

<PAGE>

9.03     Trust Fund. All of the assets of the Plan shall be held in a Trust Fund
         or Funds under a Trust Agreement or Agreements which shall be a part of
         the Plan except for the group annuity contract described in Section
         5.04. Such Trust Agreement or Agreements may provide for a master trust
         containing assets of more than one plan if the portion or percentage
         attributable to each plan is clearly established and discernible. Each
         Trustee or Co-Trustee shall be appointed by the Board of Directors, and
         the Board of Directors shall have the sole authority to appoint and
         remove any Trustee, Co-Trustee or successor Trustee or Co-Trustee. All
         contributions shall be paid into a Trust Fund. To the extent not
         provided by the group annuity contract with Prudential Insurance
         Company of America benefits provided by the Plan shall be payable from
         the Trust Fund, except that pensions under the Plan may be provided
         through the purchase of annuities from a legal reserve life insurance
         company which comply with the payment options described in ARTICLE V of
         the Plan. The Trustee or Co-Trustee shall execute such documents and
         take any other action necessary to carry out the instructions of the
         Investment Manager and Pension Committee.

9.04     Enforceable  Rights.  Cone does not guarantee  payment of any benefits
         provided  for under the Plan.  No person shall have any interest in or
         right to any part of the corpus or income of the Trust Fund  except as
         provided in the Plan.

9.05     Impossibility of Diversion. The assets of the Plan and the Trust Fund
         shall not inure to the benefit of the Employer and shall be held for
         the exclusive purposes of providing benefits to Members and
         Beneficiaries and defraying reasonable expenses of administering the
         Plan.

9.06     Pension Committee and Other Committees. The Board of Directors shall
         appoint a Pension Committee and may appoint other Committees from time
         to time, each Committee to consist of at least three (3) persons who
         may, but need not be, officers, directors or Employees of Cone. The
         members of each Committee shall hold office at the pleasure of the
         Board of Directors and shall serve without compensation. Each Committee
         member shall file his written acceptance with the Board of Directors
         and acknowledge that he is a Fiduciary under the Plan. Any Committee
         member may resign at any time by delivering his written resignation to
         the Board of Directors. Any vacancy which reduces Committee membership
         to less than three shall be filled by the Board of Directors as soon as
         practicable.

9.07     Officers, Quorums, Expenses. The Pension Committee or any other
         committee appointed or designated by Cone pursuant to Section 9.01(a)
         may authorize one or more of its members to execute or deliver any
         instrument or act on its behalf. Each Committee shall hold meetings
         upon such notice and at such place and times as it may determine. A
         majority of the members of each Committee in office at the time shall
         constitute a quorum for the transaction of business. All resolutions or
         other actions taken by a Committee shall be by the vote of a majority
         of those present at a meeting or without a meeting by an instrument in
         writing signed by a majority of the members. If a Committee member
         registers his dissent in writing with respect to any act or omission by
         the majority, delivered to the remaining Committee members within a
         reasonable time, such member shall not be responsible for such act or
         omission. The expenses of each Committee in performing its duties and
         the compensation of its agents shall be paid by Cone.

<PAGE>

9.08     Investment Powers. Except to the extent delegated to an Investment
         Manager, Cone shall have all the powers, duties, responsibilities and
         obligations contained in Section 9.09 with respect to investments under
         the Plan. The Company shall have authority to appoint in writing and
         obtain the services of one or more Investment Managers (as defined in
         ERISA Section 3(38)) whose duties and responsibilities shall be to
         manage the investment and reinvestment of such portion of the Trust
         Fund as shall be determined from time to time by the Committee. Cone
         may appoint the Trustee to serve as Investment Manager with respect to
         all or a portion of the Trust Fund.

9.09     Duties of Investment Manager. Each duly appointed Investment Manager
         shall, with respect to the portion of any Trust Fund for which it is
         responsible, have the sole authority, without prior consultation with
         the Trustee or Cone to manage, acquire and dispose of assets of the
         Trust Fund but shall not, except to the extent permitted in the Trust
         Agreement, have physical custody or indicia of ownership of any such
         assets. The appointment of an Investment Manager shall become effective
         as of the date he delivers to Cone a written statement acknowledging
         that it is Fiduciary as defined in ERISA Section 3(21)(a) and that it
         has the responsibility for acquisition and disposition of that portion
         of Trust Fund assets assigned to it. The Investment Manager shall
         exercise its power through written directions to the Trustee. The
         Investment Manager shall periodically deliver to Cone a report
         describing all Trust Fund asset transactions for each agreed upon
         reporting period. Any compensation or fee due to the Investment Manager
         for services rendered shall be paid out of the Trust Fund, unless paid
         by Cone in its discretion.

9.10     Information to Investment Manager. Cone or the Pension Committee shall
         advise each Investment Manager of the amount of that portion of any
         Trust Fund which he is to manage, the amount of Cone contributions to
         be added to the Fund and the expected future benefits to be payable
         from the Fund in order that the Investment Manager may establish a
         funding policy consistent with current and long-term needs of the Plan
         and compatible with guidelines determined by Cone.

9.11     Notice to Trustee. Cone shall notify the Trustee of each Trust Fund for
         which an Investment Manager has been appointed of the name of such
         Investment Manager and the portion of the Trust Fund for which such
         Manager is responsible. Until notified in writing by Cone that there
         has been a change in the appointment of an Investment Manager, the
         Trustee shall be fully protected in relying upon the instructions
         received from such Investment Manager with respect to the portion of
         the fund for which such Manager has investment responsibilities.

9.12     Duties of the Pension Committee. The Pension Committee shall be
         responsible for and have discretionary authority with respect to
         interpretation of the provisions of the Plan, the determination of
         benefits and the right of any person to benefits, and such other
         functions including without limitation the promulgation of rules and
         regulations as may be necessary for proper administration of the Plan
         and not hereunder delegated to the Trustee, Investment Manager or other
         Fiduciary appointed by the Board of Directors. The Pension Committee's
         rules, interpretations, computations and actions will be conclusive and
         binding on all persons.

9.13     Notice of Payments Due. The Pension Committee shall notify the Trustees
         in writing of the amounts payable under the Plan and the date of
         such payments.

<PAGE>

9.14     Records and Reports. The Pension Committee shall maintain accounts
         showing the fiscal transactions of the Plan and shall keep in
         convenient form such data as may be necessary for the valuation of the
         assets and liabilities, contingent or otherwise, of the Plan. The
         Committee shall exercise such authority as it deems appropriate in
         order to comply with the reporting requirements of any applicable law
         or regulation affecting the Plan and shall prepare annually a report
         showing in reasonable detail such assets and liabilities of the Plan
         and any other information which the Board of Directors may require and
         which the Committee can reasonably furnish or obtain from the Trustees.
         Such report shall be submitted to the Board of Directors.

9.15     Exoneration of Pension Committee. The members of the Pension Committee,
         Employers and their officers, directors and Employees shall be entitled
         to rely upon the reports furnished by any Trustee or by any accountant
         approved by the Committee or the Board of Directors, and upon all
         opinions given by any legal counsel selected or approved by the
         Committee or the Board of Directors. Except as contrary to law, the
         members of the Committee, Employers and their officers, directors and
         Employees shall be fully protected and exonerated from liability with
         respect to any action taken or suffered by them in good faith in
         reliance upon such reports, opinions or other advice received from any
         such Trustee, accountant or legal counsel.

         The fact that any member of the Committee is a director, officer or
         shareholder of the Employer, or a Member of the Plan, shall not
         disqualify him from performing any duties which the Plan or the Trust
         Agreement authorizes or requires him to do as a member of the Committee
         or render him accountable for any benefits received by him under the
         Plan. All directors, officers and Employees who are deemed to be
         Fiduciaries of this Plan are entitled to indemnification to the full
         extent provided for by law and by the Articles of Incorporation and
         Bylaws of Cone in effect on January 1, 1987, or as, thereafter amended.

9.16     Errors and Omissions. Individuals and entities charged with the
         administration of the Plan must see that it is administered in
         accordance with its terms as long as it is not in conflict with the
         Code of ERISA. If an innocent error or omission is discovered in the
         Plan's operation or administration, and if the Pension Committee
         determines that it would cost more to correct the error than is
         warranted, and if the Pension Committee determines that the error did
         not result in discrimination prohibited by the Code, ERISA or by Plan
         Section 12.06 or cause a qualification of excise-tax problem, then, to
         the extent that an adjustment will not in the Pension Committee's
         judgment result in discrimination prohibited by the Code, ERISA or Plan
         Section 12.06, the Pension Committee may authorize any equitable
         adjustment it deems necessary or desirable to correct the error or
         omission, including but not limited to the authorization of additional
         Cone contributions designed, in a manner consistent with the goodwill
         intended to be engendered by the Plan, to put Members in the same
         relative position they would have enjoyed if there had been no error or
         omission.

9.17     Fees and Expenses. Any fees or expenses incurred in connection with the
         operation of the Plan shall be paid out of the Trust Fund, unless paid
         by Cone in its discretion.

<PAGE>

9.18     Voting and Tendering of Shares. Securities held in the Trust Fund shall
         be voted by the Trustee or other Investment Manager in its sole
         discretion and in accordance with its fiduciary duties and
         responsibilities described in Section 9.02. The Trustee or Investment
         Manager shall advise Cone or the Pension Committee annually of its
         policies with respect to voting of proxies and in such detail as is
         requested, the nature of its voting practice.

9.19     Claim Procedure. As a condition precedent to the payment of benefits,
         the Pension Committee may require any Member or Beneficiary entitled to
         benefits to complete an application for payment and a form for
         selection of the method of payment under which benefits are to be paid
         and to provide information with respect to withholding of income taxes.
         Any denial by the Pension Committee of a claim for benefits under the
         Plan shall be stated in writing by the Pension Committee and shall be
         delivered or mailed to the Member or his Beneficiary. Such notices
         shall state the specific reason for denial and provide a reasonable
         opportunity for a joint review of the decision by the Member or his
         Beneficiary and the Pension Committee.

<PAGE>

                                                                     ARTICLE X



                        AMENDMENT, TERMINATION AND MERGER


10.01    Amendment.

         (a)      The Board of Directors retains the right at any time: (1) to
                  amend this Plan and any Trust Agreement to qualify or retain
                  qualification of this Plan and the Trust under the applicable
                  provisions of the Code or under any other laws; (2) to amend
                  this Plan and any Trust Agreement in any other manner; and (3)
                  to amend this Plan and liquidate any Trust Fund by
                  transferring all assets to a new trust qualified under the
                  Code.

         (b)      Except as permitted by Section 10.02,  no amendment to the
                  Plan or any Trust  Agreement and no transfer of liabilities
                  or assets of any Trust Fund  shall  permit  any  part of the
                  Trust  Fund  to be used  for or diverted  to the  purposes
                  other  than for the  exclusive  benefit of Members and
                  Beneficiaries  and for defraying  reasonable  expenses of
                  administering  the Plan.  An amendment  may not cause any
                  reduction in benefits  accrued by any Member or cause or
                  permit any  portion of the Trust  Fund to revert to or become
                  the  property  of an  Employer.  An amendment that affects the
                  rights,  duties or  responsibilities of any Fiduciary may not
                  be made without that  Fiduciary's  written  consent.
                  Except as  permitted  by Treasury  regulations,  no Plan
                  amendment or transaction  having the effect of a Plan
                  amendment  (such as a merger, plan transfer or similar
                  transaction) shall be effective to the extent it eliminates
                  or reduces any "Section 411(d)(6)  protected benefit" or
                  adds or modifies  conditions  relating to "Section 411(d)(6)
                  protected benefits" the result of which is a further
                  restriction on such benefit unless such protected benefits
                  are preserved with respect to benefits accrued as of the
                  later of the adoption date or effective  date of the
                  amendment. "Section 411(d)(6) protected benefits" are benefits
                  described in Code Section 411(d)(6)(A),  early retirement
                  benefits and retirement-type subsidies, and optional forms
                  of benefit. An amendment is effective on the date indicated
                  in any written  instrument  that is identified as an amendment
                  to the Plan, that is approved or authorized by the Board of
                  Directors and signed by an officer of the Corporation.

         (c)      As allowed by law, a transfer of liabilities or Trust Fund
                  assets, or any amendment to the Plan or a Trust Agreement, may
                  authorize or permit part of the Trust Fund to be used for or
                  diverted to payment of taxes owed, or to payment of reasonable
                  administrative expenses. To the extent allowed by Code Section
                  401(a), Trust Fund assets may be used for or diverted to
                  purposes that benefit Employees other than Members or their
                  Beneficiaries or estates.

10.02    Termination.

         (a)      The Board of Directors has the right at any time to terminate
                  this Plan and any Trust Agreement. Notice of a termination
                  must be given to the Members, the Pension Committee, the


<PAGE>

                  affected Trustees or Co-Trustees and all necessary
                  authorities. If any authority's approval is necessary,
                  termination is effective according to that approval;
                  otherwise, the date of the notice or a later date contained in
                  the notice is the termination date for purposes of this Plan.

         (b)      If the Plan is terminated the rights of Members and
                  Beneficiaries to benefits accrued to the date of termination,
                  or partial termination, to the extent then funded shall be
                  non-forfeitable (100% vested). If the Plan is partially
                  terminated (determined in a manner consistent with legal
                  authorities), the rights to benefits accrued to the date of
                  partial termination of affected Members and Beneficiaries are
                  fully non-forfeitable and may then be treated by the Pension
                  Committee as if the Plan had terminated.

         (c)      In the event the Plan shall be terminated as provided in this
                  Section 10.02, the then present value of Retirement benefits
                  vested in each Member shall be determined as of the
                  termination date, and the assets then held under this Plan
                  shall, subject to any necessary approval by the Pension
                  Benefit Guaranty Corporation, be allocated, to the
                  extent that they shall be sufficient, after providing for
                  expenses of administration, in the order of precedence
                  provided for under Section 4044 of ERISA. The Retirement
                  benefits for which funds have been allocated in accordance
                  with Section 4044 of ERISA shall be provided through the
                  continuance of the existing funding arrangements or
                  through a new instrument entered into for that purpose and,
                  as directed by the Pension Committee, shall be paid either
                  in a lump sum or through the purchase of a nontransferable
                  annuity contract(s). After all liabilities of the Plan have
                  been satisfied with respect to all Members so affected by
                  the Plan's termination, the Employer shall be entitled to
                  any balance of Plan assets which shall remain.

         (d)      Effective on and after January 1, 1996, upon termination of
                  the Plan, benefits of missing Members shall be treated in
                  accordance with Section 4050 of ERISA.

10.03    Limitation of Benefits on Plan Termination.

         (a)      In the event of Plan termination, the benefit of any Highly
                  Compensated Employee or any Highly Compensated Former Employee
                  (each as defined in Code Section 414(q)) shall be limited to a
                  benefit that is nondiscriminatory under Code Section
                  401(a)(4). Notwithstanding the foregoing, with respect to Plan
                  Years beginning prior to January 1, 1994, compliance with
                  Treasury regulations then in effect shall be deemed to be
                  compliance with this paragraph.

         (b)      Upon Plan termination, the monthly payments to a Highly
                  Compensated Employee or a Highly Compensated Former Employee
                  who is one of the twenty five (25) highest paid Highly
                  Compensated Employees and Highly Compensated Former Employees
                  shall be limited to an amount equal to the monthly payments
                  that would be made on behalf of such individual under a
                  straight life annuity that is the Actuarial Equivalent of the
                  sum of such individual's Accrued Benefit and any other
                  benefits under the Plan. However the limitation of Section
                  10.03(b) shall not apply if:



<PAGE>

                  (1)      after payment to an individual described above of all
                           benefits payable to such individual under the Plan,
                           including, but not limited to, any periodic income,
                           any withdrawal values payable to a living Employee
                           and any death benefits not provided for by insurance
                           on the Employee's life, the value of Plan assets
                           equals or exceeds 110% of the value of current
                           liabilities, as defined in Code Section 412(l)(7), or

                  (2)      the value of the benefits described in subparagraph
                           (1) above for such individual described above is less
                           than one (1) percent of the value of current
                           liabilities before distribution, or

                  (3)      the present value of benefits described in
                           subparagraph (1) above for such individual described
                           above does not exceed $5,000 and has never exceeded
                           $5,000 at the time of any prior distribution.

10.04    Discontinuance of Contributions.

         (a)      Each Employer has the right at any time to reduce or
                  discontinue its contributions to this Plan subject to any
                  funding requirements under Code Section 412.

         (b)      A discontinuance of Employer contributions is not a
                  termination of the Plan unless Cone gives the notice described
                  in Plan Section 10.02(a).

10.05    Plan Merger or Asset Transfer.

         (a)      The merger or consolidation of the Plan with, or the transfer
                  of assets or liabilities of this Plan to another employee
                  benefit plan, or the transfer of assets or liabilities of
                  another plan to this Plan is allowed provided each Member's
                  benefit entitlement immediately after the merger,
                  consolidation, or transfer, is (when computed as if the
                  surviving or receiving plan had immediately terminated) equal
                  to or greater than the benefit to which the Member would have
                  been entitled if this Plan had terminated immediately before
                  the merger, consolidation, or transfer.

         (b)      Subject to paragraph (a), on written direction from Cone, the
                  Pension Committee and any Trustee or Co-Trustee so directed
                  must take all necessary steps to transfer assets held in any
                  Trust Fund, in whole or in part, to another qualified plan.

10.06    Continuation of the Plan. If an Employer is merged or consolidated with
         any other business or is succeeded by a corporation or any other legal
         entity that acquires substantially all of the Employer's assets, the
         surviving or purchasing corporation or legal entity, subject to
         approval of the Board of Directors, may elect to continue this Plan as
         to that Employer's Members but shall not be required to do so.

<PAGE>

                                                                     ARTICLE XI



                           MULTIPLE COMPANIES INCLUDED


11.01    Plan Sponsor and Other Employers.

         (a)      This Plan's sponsor is Cone Mills Corporation, or its
                  successor.

         (b)      This Plan is designed to allow the sponsor's Affiliates to
                  participate. Employers are Cone Mills Corporation and
                  Affiliates that are permitted to adopt this Plan in accordance
                  with Section 11.02.

11.02    Method of Participation. With approval of the Board of Directors, any
         other business that is an Affiliate of Cone may take appropriate action
         through its board and become a party to the Plan as an Employer. To
         become an Employer, a business must adopt this Plan as a Qualified Plan
         for its Employees. A business that becomes an Employer must promptly
         deliver to the Trustee or Co-Trustees designated by Cone a copy of the
         resolutions or other documents evidencing its adoption of the Plan and
         also a written instrument showing Cone's Board's approval of the
         adopting entity's status as a party to the Plan and an Employer.

11.03    Withdrawal by Employer.

         (a)      An Employer may withdraw from the Plan at any time by giving
                  the Pension Committee and the Board of Directors six months
                  advance notice in writing of its intention to withdraw unless
                  a shorter notice is agreed to by the Board of Directors.

         (b)      Upon receipt of an Employer's notice of withdrawal, the
                  Pension Committee must certify to the appropriate Trustees
                  or Co-Trustees the withdrawing Employer's equitable share
                  in the Trust Fund as determined by the Actuary. The Pension
                  Committee may rely conclusively on the determination made
                  by counsel and advisors then employed on behalf
                  of the Plan. The Trustees or Co-Trustees must then set aside
                  from the Trust Fund such securities and other property as
                  each deems, in its sole discretion, to be equal in value to
                  that amount directed by the Pension Committee. If the Plan is
                  to be terminated with respect to the Employer, then the
                  amount set aside must be dealt with according to the
                  provisions of Plan Article X. If the Plan is not to be
                  terminated with respect to the Employer, the Trustee or
                  Co-Trustees must either transfer the assets set aside to
                  another trust governed by an agreement between a Trustee or
                  Co-Trustees and the withdrawing Employer or to a successor
                  trustee, according to the Pension Committee's directions.

         (c)      The segregation of the Trust Fund assets upon an Employer's
                  withdrawal, or the execution of a new agreement and
                  declaration of trust pursuant to any of the provisions of this
                  Section, must not operate to permit any part of the Trust
                  Fund's principal or income to be used for or diverted to
                  purposes other than for the benefit of Members and
                  Beneficiaries or for the payment of reasonable expenses of
                  administering the Plan.

<PAGE>

11.04    Tax Year. Although the Employers may have different tax years, the
         Plan Year which is the calendar year, is the tax year for this Plan
         and any Trust Fund.

<PAGE>

                                                                    ARTICLE XII



                                     GENERAL


12.01    Plan Creates No Separate Rights. The establishment and existence of
         the Plan, Trust Agreements and Trust Fund does not give a person
         any legal or equitable right against:

         (a)      any Employer;

         (b)      any officer, director, Employee or other agent of an Employer;

         (c)      any Trustee or any Co-Trustee;

         (d)      any Investment Manager; or

         (e)      the Pension Committee or any member of the Pension Committee.

         The Plan and Trust Agreements create no employment rights and do not
         modify the terms of an Employee's or a Member's employment. The Plan
         and Trust Agreements are not contracts between an Employer and any
         Employee, and the Plan is not an inducement for anyone's Employment.

12.02    Delegation of Authority.

         Cone's acts may be accomplished by any person with authorization from
         the Board of Directors. Any other Employer's acts may be accomplished
         by any person with authorization from that Employer's board.

12.03    Limitation of Liability.

         (a)      A Fiduciary is not subject to suit or liability in connection
                  wit this Plan or the Trust Agreement or their operation,
                  except according to this Section 12.03.

         (b)      Each member of the Pension Committee, each Trustee and
                  Co-Trustee and any person employed by an Employer is liable
                  only for that person's own acts or omissions.

         (c)      Each member of the Pension Committee, each Trustee and
                  Co-Trustee, or any person employed by an Employer is not
                  liable for the acts or omissions of another without knowing
                  participation in the acts or omissions, except by action to
                  conceal an action or omission of another while knowing the act
                  or omission is a breach, or by a failure to properly perform
                  duties that enables the breach to occur, or with knowledge of
                  the breach, failure to make reasonable efforts to remedy the
                  breach.

<PAGE>

         (d)      One Trustee or Co-Trustee must use reasonable care to prevent
                  another from committing a breach, but all Trustees and
                  Co-Trustees need not jointly manage or control the
                  assets, because specific duties have been allocated among
                  them in this Plan or the Trust Agreements. A Trustee or
                  Co-Trustee is not liable for actions or omissions when
                  following the specific directions of the Pension Committee or
                  a duly authorized and appointed Investment Manager unless
                  such directions are improper on their face. If an Investment
                  Manager has been properly appointed, subject to paragraph (c),
                  a Trustee or Co-Trustee is not liable for the acts of the
                  Investment Manager and does not have any investment
                  responsibility for assets under the management of the
                  Investment Manager.

         (e)      A Fiduciary is not liable for the actions of another to whom
                  responsibility has been allocated or delegated according to
                  this Plan and the Trust Agreements, unless as the allocating
                  or delegating Fiduciary it was imprudent in making the
                  allocation or delegation or in continuing the allocation or
                  delegation.

         (f)      Each Employee releases all members of the Pension Committee,
                  each Trustee and Co-Trustee, each Employer, all officers and
                  agents of each Employer, and all agents of Fiduciaries from
                  any and all liability or obligation, to the extent release is
                  consistent with the provisions of this Section.

12.04    Legal Action. Except as explicitly permitted by statute, in any action
         or proceeding involving the Plan, a Trust Agreement, a Trust Fund, any
         property held as part of a Trust Fund, or the administration of the
         Plan or Trust Fund, the Pension Committee, the appropriate Trustee or
         Co-Trustees and Cone are the only necessary parties. No Employees or
         former Employees or their Beneficiaries or any person having or
         claiming to have an interest in any Trust Fund, or under the Plan is
         entitled to notice of process. Any final judgment that is not appealed
         or appealable that may be entered in an action or proceeding is binding
         and conclusive on the parties to this Plan and all persons having or
         claiming to have any interest in any Trust Fund or under the Plan.

12.05    Benefits Supported only by Trust. Except as otherwise provided by
         statute, a person having any claim under the Plan must look solely to
         the assets of the Trust Fund for satisfaction, or to the extent his
         benefit has become an irrevocable obligation of an insurance company,
         solely to that insurance company.

12.06    Discrimination. The Pension Committee must administer the Plan in a
         uniform and consistent manner for all Members and may not permit
         discrimination in favor of highly compensated Employees.

12.07    Model Amendment I. The following sections of Model Amendment I (IRS
         Notice 87-2) are hereby incorporated in the Employee's Retirement Plan
         of Cone Mills Corporation for the Plan Years beginning January 1, 1987,
         and January 1, 1988: I, II, III, IV, V, VI, VIII, and IX.

12.08    Entire Plan. This document incorporates in its entirety the Employee's
         Retirement Plan of Cone Mills Corporation and supersedes and replaces
         all prior Plan documents. The Plan may not be amended, modified or
         supplemented except by a written instrument that is identified as


<PAGE>

         amendment to the Plan that is approved or authorized by the Board of
         Directors of Cone Mills Corporation and signed by an officer of the
         Corporation.

<PAGE>

                                                                SIGNATURE PAGE




                                 SIGNATURE PAGE

As evidence of the adoption of the Plan, as amended and restated, for itself and
by all Affiliated Companies, Cone Mills Corporation has caused this document to
be signed by its duly authorized officer on this day of June, 2001.


                             CONE MILLS CORPORATION

                             By: /s/Neil W. Koonce
                                Neil W. Koonce
                                Title: Vice President, General Counsel
                                       and Secretary
<PAGE>


                                   APPENDIX A


Actuarial Equivalence Assumptions and Methods

         1.       Lump Sums - for purposes of determining single lump sums
                  pursuant to Sections 7.02 and 8.03 of the Plan:

                  (a)      Mortality: The "applicable mortality table", which
                           shall mean the table prescribed under Code Section
                           417(e)(3) as in effect on the first day of the Plan
                           Year of distribution.

                  (b)      Interest: The "applicable interest rate", which shall
                           mean the annual rate of interest on 30-year Treasury
                           securities for the month of November of the calendar
                           year preceding distribution.

         2.       Commencement before Normal Retirement Date of Early Retirement
                  Benefit

                  The Early Retirement benefit payable at Normal Retirement Date
                  under Method 1 is reduced by 0.25% for each month by which the
                  Annuity Starting Date precedes Normal Retirement Date.

         3.       Commencement before Normal Retirement Date of Terminated
                  Vested Benefit

                  The early commencement benefit payable under Method 1 prior to
                  Normal Retirement Date pursuant to Section 7.02(c) or 8.03
                  shall equal the Accrued Benefit payable at age 65 actuarially
                  reduced from Normal Retirement Date to Annuity Starting Date,
                  based on the following assumptions:

                  (a)      Mortality: The UP-1984 Mortality Table

                  (b)      Interest: 7.75% per annum

         4.       Annuity Conversion Factors

                  For purposes of converting a benefit payable under Method 1 to
                  a benefit payable under Method 2 or Method 3;

                  (a)      Mortality: The UP-1984 Mortality Table

                  (b)      Interest: 9.50% per annum

<PAGE>

         5.       Reduction for Distributions on or after Annuity Starting
                  Dates per Sections 4.07 and  7.03

                  If, as of a particular Annuity Starting Date, prior
                  distributions with respect to periods of Accredited Service
                  recognized under this Plan as of such Annuity Starting Date
                  have been made, then the new benefits payable under the Plan
                  as of such Annuity Starting Date shall be reduced in
                  accordance with the following methods and assumptions:

                  (a)      If the prior distribution was a lump sum, then the
                           Accrued Benefit under the Plan shall be reduced by
                           the Accrued Benefit which gave rise to the prior lump
                           sum.

                  (b)      If the prior distribution is being distributed in a
                           form other than a lump sum, then the Accrued Benefit
                           under the Plan shall be reduced by the Actuarial
                           Equivalent of the prior distribution (determined as
                           follows) with such prior distribution continuing in
                           force without interruption:

                           i.       If necessary, convert the amount of the
                                    prior distribution into the amount that
                                    would have been payable under Method 1 at
                                    that time.

                           ii.      Convert (i) to an actuarially equivalent
                                    amount starting at the new Annuity Starting
                                    Date under Method 1, based on (v) and
                                    (vi) below.

                           iii.     Subtract the amount determined in (ii) from
                                    the benefit otherwise payable under Method 1
                                    at the new Annuity Starting Date without
                                    regard to such prior distributions (result
                                    cannot be less than $0).

                           iv.      Convert the amount determined in (iii) to
                                    the form of benefit (if other than Method
                                    1) elected by the Member as of the new
                                    Annuity Starting Date.

                           v.       Mortality:  The UP-1984 Mortality Table.

                           vi.      Interest:   5.00% per annum