<PAGE>

                                                                   EXHIBIT 10.37











                                 SIMMONS COMPANY

                          EMPLOYEE STOCK OWNERSHIP PLAN






            AS AMENDED AND RESTATED EFFECTIVE AS OF DECEMBER 29,2001





<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                           <C>

PREAMBLE.............................................................................................1

ARTICLE I.
INTRODUCTION.........................................................................................2

ARTICLE II.
DEFINITIONS..........................................................................................3

        2.01         Account.........................................................................3
        2.02         Affiliated Company..............................................................3
        2.03         Anniversary Date................................................................3
        2.04         Approved Absence................................................................3
        2.05         Beneficiary.....................................................................3
        2.06         Board of Directors..............................................................3
        2.07         Break in Service................................................................3
        2.08         Capital Accumulation............................................................4
        2.09         Code............................................................................4
        2.10         Committee.......................................................................4
        2.11         Company.........................................................................4
        2.12         Company Stock...................................................................4
        2.13         Company Stock Account...........................................................4
        2.14         Compensation....................................................................4
        2.15         Disability Retirement Date......................................................5
        2.16         Early Retirement Date...........................................................5
        2.17         Effective Date..................................................................5
        2.18         Eligible Employee...............................................................5
        2.19         Employee........................................................................5
        2.20         Employer........................................................................6
        2.21         Employer Contributions..........................................................6
        2.22         Employer Securities.............................................................6
        2.23         Employment Date.................................................................6
        2.24         Entry Date......................................................................6
        2.25         ERISA...........................................................................6
        2.26         Forfeiture......................................................................6
        2.27         Highly Compensated Employee.....................................................6
        2.28         Hours of Service................................................................7
        2.29         Independent Appraiser...........................................................8
        2.30         Leased Employee.................................................................8
        2.31         Loan............................................................................8
        2.32         Normal Retirement Age...........................................................9
</TABLE>



                                       i

<PAGE>


                                TABLE OF CONTENTS
                                    CONTINUED

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                           <C>

        2.33         Other Investments Account.......................................................9
        2.34         Participant.....................................................................9
        2.35         Permanent Disability............................................................9
        2.36         Plan............................................................................9
        2.37         Plan Year.......................................................................9
        2.38         Qualified Participant...........................................................9
        2.39         Qualified Election Period.......................................................9
        2.40         Reemployment Date...............................................................9
        2.41         Retirement......................................................................9
        2.42         Special Effective Date.........................................................10
        2.43         Stipulation....................................................................10
        2.44         Total Distribution.............................................................10
        2.45         Trust..........................................................................10
        2.46         Trust Agreement................................................................10
        2.47         Trust Assets...................................................................10
        2.48         Trustee........................................................................10
        2.49         Trustee........................................................................10
        2.50         Year of Service................................................................10

ARTICLE III.
ELIGIBILITY.........................................................................................12

        3.01         Eligibility for Participation..................................................12
        3.02         Commencement of Participation..................................................12
        3.03         Cessation of Participation.....................................................12
        3.04         Reemployment...................................................................12
        3.05         Leave of Absence...............................................................13
        3.06         Determination of Eligibility...................................................13

ARTICLE IV.
CONTRIBUTIONS.......................................................................................14

        4.01         Employer Contributions.........................................................14
        4.02         No Participant Contributions...................................................15

ARTICLE V.
INVESTMENT OF TRUST ASSETS..........................................................................16

        5.01         Investment of Trust Assets.....................................................16
        5.02         Purchases of Company Stock.....................................................16
</TABLE>



                                       ii

<PAGE>


                                TABLE OF CONTENTS
                                    CONTINUED

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                           <C>

        5.03         Sales of Company Stock.........................................................16
        5.04         Exempt Loan....................................................................17
        5.05         Diversification of Investments.................................................23

ARTICLE VI.
ALLOCATIONS.........................................................................................25

        6.01         Allocations to Participants' Accounts..........................................25
        6.02         Allocable Shares...............................................................26
        6.03         Allocation Limitations.........................................................27
        6.04         Allocation of Net Income (or Loss) of the Trust................................30
        6.05         Accounting for Allocations.....................................................31
        6.06         Other Investments Settlement Account...........................................31
        6.07         Profit Sharing Account.........................................................34

ARTICLE VII.
EXPENSES OF THE PLAN AND TRUST......................................................................38

ARTICLE VIII.
VOTING COMPANY STOCK................................................................................39

        8.01         Trustee's Powers and Duties....................................................39
        8.02         Voting of Shares...............................................................39

ARTICLE IX.
CAPITAL ACCUMULATION................................................................................40

        9.01         Capital Accumulation...........................................................40
        9.02         Retirement, Death or Permanent Disability......................................40
        9.03         Other Termination of Service and Vesting.......................................40
        9.04         Forfeitures....................................................................40
        9.05         Restoration of Forfeitures.....................................................41
        9.06         Certain Reemployed Participants................................................42

ARTICLE X.
DISTRIBUTION........................................................................................43

        10.01        Time of Distribution to Participants...........................................43
        10.02        Benefit Forms for Participants.................................................44
        10.03        Benefits on a Participant's Death..............................................45
</TABLE>



                                      iii


<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                           <C>

        10.04        Consent Requirements...........................................................46
        10.05        Distributions in Company Stock.................................................47
        10.06        Delay in Benefit Determination.................................................48
        10.07        Designated Beneficiaries.......................................................48
        10.08        Required Distributions After Age 70-1/2........................................48
        10.09        Direct Rollovers...............................................................49

ARTICLE XI.
PLAN ADMINISTRATOR..................................................................................51

        11.01        Named Fiduciaries..............................................................51
        11.02        Fiduciary Limitations..........................................................51
        11.03        Company's Responsibilities.....................................................51
        11.04        Trustee's Responsibilities.....................................................51
        11.05        Appointment of Committee.......................................................52
        11.06        Committee Responsibilities.....................................................52
        11.07        Indemnification................................................................54
        11.08        Independent Corporate Fiduciary................................................54

ARTICLE VII.
AMENDMENT AND TERMINATION...........................................................................55

        12.01        Company's Right to Amend.......................................................55
        12.02        Mandatory Amendments...........................................................55
        12.03        Termination....................................................................55
        12.04        Employee Nonforfeitable Rights.................................................56
        12.05        Distribution Upon Termination..................................................56
        12.06        Use of Trust Assets............................................................56

ARTICLE XIII.
TOP-HEAVY PLAN COMPLIANCE PROVISIONS................................................................57

        13.01        Purpose........................................................................57
        13.02        Definitions....................................................................57
        13.03        Determination of Whether Plan is "Top-Heavy"...................................58
        13.04        Aggregation Group of Employer Plans............................................58
        13.05        Special Minimum Vesting and Minimum Contribution
                     Becoming Operative in the Event the Plan Becomes "Top-Heavy"...................59
        13.06        Pre-"Top-Heavy" Plan Terminated Participant....................................59
        13.07        Special "Top-Heavy" Reduction in Combined Benefit and
                     Contribution Limitation........................................................60
</TABLE>



                                       iv

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              Page No.
                                                                                              --------
<S>                                                                                           <C>

        13.08        Termination of "Top-Heavy" Status..............................................60
        13.09        Multiple "Top-Heavy" Plans.....................................................60
        13.10        Effect of the Plan Becoming "Super Top-Heavy"..................................60

ARTICLE XIV.
GENERAL PROVISIONS..................................................................................61

        14.01        Participants' Rights...........................................................61
        14.02        Spendthrift Clause.............................................................61
        14.03        Company's Liability............................................................63
        14.04        Merger or Consolidation........................................................63
        14.05        Governing Law..................................................................63
        14.06        Legal Action...................................................................63
        14.07        Binding on All Parties.........................................................63
        14.08        Headings.......................................................................63
        14.09        Severability of Provisions.....................................................63
        14.10        Certain Dispositions of Employer Securities....................................64
        14.11        Facility of Payment............................................................64
        14.12        Doubt as to Identity of Payee..................................................64
        14.13        Location of Participant or Beneficiary Unknown.................................64
        14.14        No Guarantee of Interests......................................................65
        14.15        Written Communications Required................................................65
        14.16        Nondiscrimination..............................................................65
        14.17        Evidence Furnished Conclusive..................................................65
        14.18        Name and Address Change........................................................65
        14.19        Installment Payments Made Without Interest.....................................65
        14.20        Correction of Participants' Accounts...........................................65
        14.21        Action of Employer and Plan Administrator......................................66
        14.22        Employer Records...............................................................66
        14.23        Military Service...............................................................66
        14.24        Electronic Means of Communication..............................................66
        14.25        Plan Conversions...............................................................66

ARTICLE XV.
EXECUTION...........................................................................................67

APPENDIX A..........................................................................................68
</TABLE>



                                       v

<PAGE>

                                 SIMMONS COMPANY

                          EMPLOYEE STOCK OWNERSHIP PLAN

                                    PREAMBLE

        The Simmons Company Employee Stock Ownership Plan (the "Plan") and the
Trust which forms a part of the Plan are intended to be and to remain qualified
and exempt from taxation under Sections 401 and 501 of the Internal Revenue Code
of 1986, as amended, and shall be interpreted and administered in such manner as
shall be necessary to carry out this intention.

        This Plan was originally adopted by Simmons Company (the "Company")
effective January 31, 1988 and was subsequently amended and restated in its
entirety effective as of January 17, 1989. The Amended and Restated Plan was
subsequently amended, including amendment to provide for the allocation of the
proceeds of the sale of Company Stock pursuant to a stock purchase agreement
dated February 21, 1996, and to provide for the investment thereof. The purpose
of the Fourth Amendment of the Amended and Restated Plan was to provide for the
allocation of the proceeds of the sale of the Company Stock pursuant to a
certain stock sale and exchange agreement to the accounts of ESOP Participants
and to provide for the investment thereof, such agreement being that certain
ESOP Stock Sale and Exchange Agreement by and among State Street Bank & Trust
Company, as Trustee of the Simmons Company Employee Stock Ownership Trust,
Simmons Company, Simmons Holdings, Inc. and REM Acquisition, Inc., dated July
22, 1998 and as subsequently amended. Each such stock purchase agreement and
stock sale and exchange agreement being referenced herein is an "Acquisition
Agreement." The Fourth Amendment was effective as of the Closing Date (as such
term was defined in the Acquisition Agreement dated July 22, 1998 referenced
above), provided, however, that certain provisions of this Amended and Restated
Plan may have different effective dates as specifically set forth in the terms
of those provisions.

        The Plan was further amended and restated effective December 28, 1997 in
order to comply with applicable provisions of the Uniformed Services Employment
and Re-employment Rights Act of 1994, the Small Business Job Protection Act of
1996, the Taxpayer Relief Act of 1997, and the Internal Revenue Service
Restructuring and Reform Act of 1998.

        The effective date of this amendment and restatement of this Plan is
generally December 30, 2001, and the amendment and restatement shall apply only
to a Participant who is credited with an Hour of Service on or after that date,
except as may be otherwise stated herein. The rights and benefits of a
Participant who is not credited with an Hour of Service on or after December 29,
2001 shall be determined in accordance with the provisions of the Plan as in
effect on the Participant's termination of employment with the Employer.

        No Employee shall be eligible to become a Participant in the Plan after
December 29, 2001.



<PAGE>

                                   ARTICLE I.

                                  INTRODUCTION

        1.01    The purpose of this Plan is to enable participating Employees to
share in the growth and prosperity of the Company and to provide participating
Employees with an opportunity to accumulate capital for their future economic
security. The Plan is intended to do this without requiring any contributions
from participating Employees. As provided in Treasury Regulation Section
54.4975-1l(a)(5), this Plan shall consist of two components. The first component
of the Plan (the "Profit Sharing Component") shall consist of a profit sharing
plan as defined in Treasury Regulation Section 1.401-1(b)(1)(ii). The Profit
Sharing Component shall reflect the value of Plan assets attributable to the
sale of Company Stock allocated to Participants' Accounts in connection with
certain acquisition transactions in which third parties have acquired control of
the Company, as provided in Section 6.07. The second component of the Plan (the
"ESOP Component") shall consist of a stock bonus plan as defined in Treasury
Regulation Section 1.401-1(b)(1)(iii) which also is intended to qualify as an
employee stock ownership plan as defined in Section 4975(e)(7) of the Code.
Except as provided in Sections 5.05 and 6.06, Employer Contributions to the ESOP
component of the Plan will be invested primarily in Company Stock, to the extent
that such stock is available.

        1.02    The Plan is also designed to provide a technique of corporate
finance to the Company. Therefore, it may be used to accomplish the following
objectives:

                (a)     To provide participating Employees with beneficial
        ownership of Company Stock, substantially in proportion to their
        relative Compensation;

                (b)     To meet general financing requirements of the Company;
        and

                (c)     To receive loans (or other extensions of credit) to
        finance the acquisition of Company Stock, with such loans (or credits)
        secured primarily by a pledge of the Company Stock acquired with the
        proceeds of the Loan (as provided in Section 5.04) and by a commitment
        by the Company to pay Employer Contributions to the Trust in amounts
        sufficient to enable principal and interest on such loans to be repaid.

        1.03    This Plan shall be administered for the exclusive benefit of
Participants and their Beneficiaries and for the exclusive purpose of providing
benefits to Participants and their Beneficiaries and defraying reasonable
expenses of administering the Plan, consistent with the duties imposed by
Section 404(a)(1) of ERISA.



                                       2
<PAGE>

                                   ARTICLE II.

                                   DEFINITIONS

        In this Plan, whenever the context so indicates, the singular or plural
and the masculine, feminine or neuter gender shall each be deemed to include the
others; the terms "he," "his," and "him" shall refer to an Employee or a
Participant; references to a section of the Code, Treasury Regulation, Labor
Regulation or ERISA shall include any subsequent amendments to such section; and
the capitalized terms shall have the following meanings:

        2.01    ACCOUNT. One of the Accounts maintained to record the allocated
interest of each Participant in the Plan.

        2.02    AFFILIATED COMPANY. Any (a) corporation or entity which is a
member of a controlled group of corporations or other entities with the Company
(as defined in Sections 414(b) and 414(c) of the Code and, for purposes of
Section 6.03, as modified by Section 415(h) of the Code), (b) organization
(whether or not incorporated) which is a member of an affiliated service group
with the Company (as defined in Section 414(m) of the Code), and (c) other
entity required to be aggregated with the Company pursuant to regulations under
Section 414(o) of the Code.

        2.03    ANNIVERSARY DATE. The last day of each Plan Year.

        2.04    APPROVED ABSENCE. A leave of absence from work approved for an
Employee by the Committee in writing.

        2.05    BENEFICIARY. The person (or persons) entitled to receive any
benefits under the Plan in the event of a Participant's death in accordance with
Section 10.07.

        2.06    BOARD OF DIRECTORS. The present or any succeeding Board of
Directors of the Company.

        2.07    BREAK IN SERVICE. A calendar year during which an Employee or
former Employee has been credited with fewer than five hundred one (501) Hours
of Service. Solely for purposes of determining whether a Break in Service for
participation and vesting purposes has occurred, an Employee who is absent from
work for maternity or paternity reasons shall receive credit for the Hours of
Service, up to a total of five hundred one (501) Hours of Service, which would
otherwise have been credited to such Employee but for such absence (as
determined by the Plan Administrator with reference to the Employee's most
recent normal work schedule), or in any case in which such hours cannot be
determined, nine (9) Hours of Service per day of such absence. For purposes of
the preceding sentence, an absence from work for maternity or paternity reasons
means an absence (a) by reason of the pregnancy of the Employee, (b) by reason
of the birth of a child of the Employee; (c) by reason of the placement of a
child with the Employee in connection with the adoption of such child by such
Employee, or (d) for purposes of caring for such child for a period beginning
immediately following such birth or placement. The Hours of Service credited
under this provision shall be, credited (i) in the year in which the absence
begins if the crediting is



                                       3
<PAGE>

necessary to prevent a Break of Service in that period, or (ii) in all other
cases, in the following year. In the case of an Employee who takes a leave of
absence and subsequently returns to work under circumstances that, under the
Family and Medical Leave Act of 1993, entitle such Employee upon his return to
an equivalent position with the Company, the period of such leave shall not be
counted in determining whether the Employee has incurred a Break in Service.

        2.08    CAPITAL ACCUMULATION. A Participant's vested (nonforfeitable)
interest in his Accounts under the Plan.

        2.09    CODE. The Internal Revenue Code of 1986, as amended from time to
time. Any reference to a section of the Code shall be deemed to include all
regulations and regulatory guidance promulgated thereunder.

        2.10    COMMITTEE. The Committee appointed by the Board of Directors of
the Company to administer the Plan and to give instructions to the Trustee. The
Committee shall be the Plan Administrator (the "Plan Administrator"), as
provided in Section 11.06(a).

        2.11    COMPANY. Simmons Company, a Delaware corporation.

        2.12    COMPANY STOCK. Any qualifying employer security within the
meaning of Section 407(d)(5) of ERISA including any share of stock, common or
preferred, issued by the Company or an Affiliated Company.

        2.13    COMPANY STOCK ACCOUNT. An Account of a Participant that is
credited with his allocable share of Company Stock purchased and paid for by the
Trust or contributed to the Trust.

        2.14    COMPENSATION. Except for purposes of Section 2.27, Section 6.03
and Article XIII, wages as defined in Section 3401 (a) of the Code for the
purposes of income tax withholding at the source but determined without regard
to any rules that limit the remuneration included in wages based on the nature
or location of the employment or the services performed (such as the exception
for agricultural labor in Section 3401(a)(2) of the Code). For Plan Years
beginning before December 25, 1993, Compensation shall also include amounts
excluded from the taxable income of Participants pursuant to Section 125 of the
Code.

        For Plan Years beginning on or after January 1, 1989, Compensation taken
into account for any Participant for any Plan Year shall not exceed $200,000,
subject to adjustment by the Secretary of the Treasury in the same manner as
under Section 415(d) of the Code, except that the dollar increase in effect on
January 1 of any calendar year is effective for Plan Years beginning in any
calendar year and the first adjustment to the $200,000 limitation is effective
on January 1, 1990.

        In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan Years
beginning on or after January 1, 1994, the annual Compensation of each Employee
taken into account under the Plan shall not exceed the OBRA '93 annual
compensation limit. The OBRA '93 annual compensation limit is $150,000, as
adjusted by the Commissioner of Internal Revenue for increases in the cost of
living in accordance



                                       4
<PAGE>

with Section 401(a)(17)(B) of the Code. The cost-of-living adjustment in effect
for a calendar year applies to any period, not exceeding 12 months, over which
Compensation is determined (determination period) beginning in such calendar
year. If a determination period consists of fewer than 12 months, the OBRA '93
annual compensation limit will be multiplied by a fraction, the numerator of
which is the number of months in the determination period, and the denominator
of which is 12. For Plan Years beginning on or after January 1, 1994, any
reference in this Plan to the limitation under Section 401(a)(17) of the Code
shall mean the OBRA '93 annual compensation limit set forth herein.

        2.15    DISABILITY RETIREMENT DATE. The first day of the month following
the date on which a Participant's service is determined to have been terminated
due to a Permanent Disability.

        2.16    EARLY RETIREMENT DATE. The first day of the month immediately
following the first date on which a Participant has both attained age fifty-five
(55) and been credited with at least ten (10) Years of Service.

        2.17    EFFECTIVE DATE. The Effective Date shall be December 28, 1997.
The original effective date of the Plan was January 31, 1988.

        2.18    ELIGIBLE EMPLOYEE. Any Employee employed by an Employer paid
through the Employer's regular payroll, other than (a) an Employee whose terms
and conditions of employment are governed by a collective bargaining agreement
(as defined by the Secretary of Labor) between an Employer and one or more
Employee representatives, provided that retirement benefits were the subject of
bargaining between such Employee representatives and the Employer and the
collective bargaining agreement does not provide for members of the relevant
collective bargaining unit to participate in this Plan, or (b) a nonresident
alien not receiving any United States source income (within the meaning of
Section 861(a)(3) of the Code). A Leased Employee shall not be considered an
Eligible Employee for purposes of this Plan, whether or not covered by a safe
harbor plan described in Section 414(n)(5)(B) of the Code. In addition, an
individual shall not be considered to be an Eligible Employee if he or she
provides services to the Employer pursuant to a contractual arrangement with
another entity, but such individual is not considered to constitute a Leased
Employee. In the event the Internal Revenue Service (IRS) retroactively
reclassifies such an individual as an Employee, the reclassified Employee will
become an Eligible Participant on the date the IRS issues a final determination
letter regarding his/her employment status (or the individual's Entry Date, if
later), unless the individual is otherwise excluded form participation. For
periods prior to the date of such final determination, the reclassified Employee
will not have any rights to accrued benefits under the Plan, except as may be
set forth in an amendment adopted by the Employer.

        Notwithstanding any provision to the contrary no Employee shall become
an Eligible Employee after December 29, 2001.

        2.19    EMPLOYEE. Any common law employee of an Employer; provided,
however, that employees of an Affiliated Company shall become Employees with
respect to this Plan only upon, but not before, the date that such Affiliated
Company agrees to be bound by the terms of the Plan



                                       5
<PAGE>

and Trust.

        2.20    EMPLOYER. The Company and any Affiliated Company that has been
designated by the Board of Directors as eligible to adopt the Plan and which has
adopted the Plan. The Affiliated Companies that have adopted the Plan are
identified on Appendix A.

        2.21    EMPLOYER CONTRIBUTIONS. Payments made to the Trust by the
Employer in accordance with Section 4.01. The Affiliated Companies that have
adopted the Plan are set forth in Exhibit A.

        2.22    EMPLOYER SECURITIES. Shares of Company Stock which meet the
requirements of Section 409(l) of the Code which include: (a) common stock
issued by the Company (or a corporation which is a member of the same controlled
group) which is readily tradeable on an established securities market, or (b) if
there is no common stock that meets the requirements of (a) above, common stock
issued by the Company (or by a corporation that is a member of the same
controlled group) having a combination of voting power and dividend rights equal
to or in excess of (i) that class of common stock of the Company (or of any
other such corporation) having the greatest voting power, and (ii) that class of
common stock of the Company (or of any other such corporation) having the
greatest dividend rights. Noncallable preferred stock shall be treated as
Employer Securities, if such stock is convertible at any time into Company Stock
that meets the requirements of (a) or (b) above, and if such conversion is at a
conversion price that (as of the date of the acquisition by the Plan) is
reasonable, as determined by the Trustee.

        2.23    EMPLOYMENT DATE. The first day on which an Employee completes an
Hour of Service with an Employer.

        2.24    ENTRY DATE. January 1st, April 1st, July 1st and October 1st of
each calendar year.

        2.25    ERISA. The Employee Retirement Income Security Act of 1974, as
amended from time to time. Any reference to a section of ERISA shall include all
regulations and regulatory guidance promulgated thereunder.

        2.26    FORFEITURE. Any portion of a Participant's Company Stock and
Other Investments Accounts that does not become part of his Capital Accumulation
upon the occurrence of a Break in Service.

        2.27    HIGHLY COMPENSATED EMPLOYEE.

                (a)     For a particular Plan Year, any Employee (i) who, during
        the current or the preceding Plan Year, was at any time a 5-percent
        owner (as such term is defined in Code Section 416(i)(1)), or (ii) for
        the preceding Plan Year, received compensation from the Company and all
        Affiliated Companies in excess of $80,000 (or such higher amount
        determined by the Secretary of the Treasury for the year under Code
        Section 414(q)(1)(B)) and was in the top paid group of Employees for
        such Plan Year.



                                       6
<PAGE>

                (b)     "Highly Compensated Employee" shall include a former
        Employee whose termination of employment occurred prior to the Plan Year
        and who was a Highly Compensated Employee for the Plan Year in which his
        termination of employment occurred or for any Plan Year ending on or
        after his 55th birthday.

                (c)     For the purposes of this Section, the term
        "compensation" shall mean (i) for the period prior to December 27, 1998,
        the sum of an Employee's compensation under Section 6.03(g) and the
        Employee's before-tax contributions under the Simmons Retirement Savings
        Plan (subject to the dollar limitation described in Section 2.14 of this
        Plan) and elective or salary reduction contributions pursuant to a
        cafeteria plan under Code Section 125, and (ii) for a period commencing
        with the Plan Year beginning on December 27, 1998, an Employee's
        compensation under Section 6.03(g) (subject to the limitation described
        in Section 2.14). For purposes of this Section, the term "top-paid group
        of Employees" shall mean that group of Employees of the Company and all
        Affiliated Companies consisting of the top twenty percent (20%) of such
        Employees when ranked on the basis of compensation paid by the Company
        and all Affiliated Companies during the preceding Plan Year.

        2.28    HOURS OF SERVICE.

                (a)     Each of the hours for which an Employee is paid, in
        accordance with Section 2530.200b-2(a) of the United States Department
        of Labor Rules and Regulations for Minimum Standards for Employee
        Pension Benefit Plans, which provides:

                        (i)     An Hour of Service includes each hour for which
                an Employee is paid, or entitled to payment, for the performance
                of duties for the Employer during the applicable computation
                period;

                        (ii)    An Hour of Service includes each hour for which
                an Employee is paid, or entitled to payment, by the Employer on
                account of a period of time during which no duties are performed
                (irrespective of whether the employment relationship has
                terminated) due to vacation, holiday, illness, incapacity
                (including disability), layoff, jury duty, military duty or
                leave of absence. Notwithstanding the preceding sentence, (A) no
                more than five hundred one (501) Hours of Service are required
                to be credited under this paragraph (ii) to an Employee on
                account of any single continuous period during which the
                Employee performs no duties (whether or not such period occurs
                in a single computation period); (B) an hour for which an
                Employee is directly or indirectly paid, or entitled to payment,
                on account of a period during which no duties are performed is
                not required to be credited to the Employee if such payment is
                made or due under a plan maintained solely for the purpose of
                complying with applicable workmen's compensation, or
                unemployment compensation or disability insurance laws; and (C)
                Hours of Service are not required to be credited for a payment
                that solely reimburses an Employee for medical or medically
                related expenses incurred by the Employee;



                                       7
<PAGE>

                        (iii)   An Hour of Service includes each hour for which
                back pay, irrespective of mitigation of damages, is either
                awarded or agreed to by the Employer. The same Hours of Service
                shall not be credited both under paragraph (i) or paragraph
                (ii), as the case may be, and under this paragraph (iii);

                        (iv)    An Hour of Service includes each hour that was
                not a compensated hour during a period of absence from the
                Employer for service in the armed forces of the United States if
                the Employee returns to work for the Employer at a time when he
                has reemployment rights under federal law.

                (b)     Hours of Service to be credited to an, individual under
        (i), (ii), and (iii) above will be calculated and credited in accordance
        with Section 2530.200b-2(b) and (c) of the Department of Labor
        Regulations which are incorporated herein by reference. However, an
        Eligible Employee will be considered to have completed forty-five (45)
        Hours of Service for each week in which such Employee completes at least
        one (1) Hour of Service.

                (c)     Hours of Service to be credited to an individual during
        an absence described in (iv) above will be determined by the Plan
        Administrator with reference to the individual's most recent normal work
        schedule; provided that if the Plan Administrator cannot so determine
        the number of Hours of Service to be credited, there shall instead be
        credited nine (9) Hours of Service for each day of absence.

                (d)     Employees of a company that becomes an Affiliated
        Company after the Effective Date will not be credited with Hours of
        Service with respect to any period of employment with such company prior
        to such company becoming an Affiliated Company.

        2.29    INDEPENDENT APPRAISER. An appraiser meeting requirements similar
to the requirements set forth in Section 170(a)(1) of the Code.

        2.30    LEASED EMPLOYEE. Any individual (other than a common law
employee) (a) who performs services for the Employer pursuant to an agreement
between the Employer and any other person which is a leasing organization within
the meaning of Treasury Regulation Section 1.414(n)- 1 or any successor
regulation, (b) who has performed such services for the Employer on a
substantially full-time basis for a period of at least one year, but (c)
provided that such services are performed under primary direction or control by
the recipient. For this purpose, an individual will be considered to have
performed services for the Employer on a substantially full-time basis during
any twelve (12) consecutive month period if he has completed a number of Hours
of Service for the Employer at least equal to the lesser of (i) fifteen hundred
(1,500) Hours of Service or (ii) seventy-five percent (75%) of the median number
of Hours of Service completed by Employees (other than Leased Employees) of the
Employer in equivalent positions during such twelve month period.

        2.31    LOAN. Any loan to the Trustee intended to be used to finance the
purchase of Employer Securities made or guaranteed by a disqualified person
(within the meaning of Section 4975(e)(2) of the Code), including, but not
limited to, a direct loan of cash, a purchase money transaction, an assumption
of an obligation of the Trustee, an unsecured guarantee or the use of



                                       8
<PAGE>

assets of a disqualified person (within the meaning of Section 4975(e)(2) of the
Code) as collateral for a loan.

        2.32    NORMAL RETIREMENT AGE. The date on which a Participant attains
age sixty-five (65).

        2.33    OTHER INVESTMENTS ACCOUNT. An Account of a Participant that is
credited with his share of the net income (or loss) of the Trust, Employer
Contributions and Forfeitures invested in investments other than Company Stock,
and which is debited with payments made to pay for Company Stock.

        2.34    PARTICIPANT. Any Eligible Employee who has met the eligibility
requirements set forth in Article III and is participating in this Plan.
Notwithstanding any provision of the Plan to the contrary no Eligible Employee
shall become a Participant after December 29, 2001.

        2.35    PERMANENT DISABILITY. A medically determinable physical or
mental impairment likely to result in death or to be of long-continued and
indefinite duration, such that the Participant cannot continue to engage in any
substantial employment with the Employer; provided, however, that such
impairment must be compensable by the terms of any long term disability
insurance of the Employer.

        2.36    PLAN. The employee stock ownership plan set forth herein
(including any trust forming a part hereof), as amended and supplemented from
time to time, all of which shall be known as the Simmons Company Employee Stock
Ownership Plan.

        2.37    PLAN YEAR. For all years prior to 2002, the annual period that
the Company elects for its tax year. Effective January 1, 2002 and continuing
forward, the Plan Year shall be the period commencing January 1 and ending
December 31. There shall be a short Plan Year commencing December 30, 2001 and
ending on December 31, 2001.

        2.38    QUALIFIED PARTICIPANT. A Participant who has participated in
this Plan for at least ten (10) years and has attained age fifty-five (55).

        2.39    QUALIFIED ELECTION PERIOD. With respect to a Qualified
Participant, the period of six (6) Plan Years commencing with the first Plan
Year in which the Participant first became a Qualified Participant.

        2.40    REEMPLOYMENT DATE. The first day on which an Employee completes
an Hour of Service with an Employer following a Break in Service.

        2.41    RETIREMENT. A Participant's separation from service with the
Employer after his Disability Retirement Date, Early Retirement Date or Normal
Retirement Date.



                                       9
<PAGE>

        2.42    SPECIAL EFFECTIVE DATE. March 29, 1993, but subject to
satisfaction of the conditions stated in paragraph III (17) of the Stipulation
(other than the condition requiring the amendment to the Plan contemplated
thereby).

        2.43    STIPULATION. The Second Amended Stipulation of Compromise and
Settlement, dated as of January 25, 1993, relating to the litigation styled
Florin, et al. v. NationsBank of Georgia, N.A., et al., Civil Action No. 91 C
0948 S, United States District Court for the Western District of Wisconsin.

        2.44    TOTAL DISTRIBUTION. A distribution to a Participant or
Beneficiary, within a single taxable year of such recipient, of the entire
balance credited to the Participant's Accounts under the ESOP Component of the
Plan.

        2.45    TRUST. The Simmons Company Employee Stock Ownership Trust,
created by the Trust Agreement entered into between the Company and the Trustee.

        2.46    TRUST AGREEMENT. The Agreement of Trust between the Company and
the Trustee (or any successor Trustee) establishing the Trust and specifying the
duties of the Trustee.

        2.47    TRUST ASSETS. All cash, Company Stock and other property held in
the Trust for the exclusive benefit of Participants (and their Beneficiaries).

Effective prior to the Special Effective Date:

        2.48    TRUSTEE. The Trustee or Trustees (and any successors thereto)
designated by the Company's Board of Directors who agrees to serve by executing
the Trust Agreement.

Effective on and after the Special Effective Date:

        2.48    TRUSTEE. The Trustee or Trustees (and any successors thereto)
designated by the Company's Board of Directors who agrees to serve by executing
the Trust Agreement. No person or entity other than a financial institution
shall serve as trustee of the Simmons ESOP.

        2.49    VALUATION DATE. The last day of each Plan Year and such interim
dates as the Committee may choose to designate from time to time.

        2.50    YEAR OF SERVICE. For purposes of Section 3.01, a twelve (12)
consecutive month period beginning with an Eligible Employee's Employment Date
if during that period the Eligible Employee completes one thousand (1,000) Hours
of Service, and any Plan Year, ending after the initial anniversary of the
Eligible Employee's Employment Date, if during such Plan Year the Eligible
Employee has completed one thousand (1,000) Hours of Service. For purposes of
Section 9.03, a twelve (12) consecutive month period beginning with a
Participant's Employment Date if during that period the Participant completes
one thousand (1,000) Hours of Service. For the purpose of this paragraph, an
Eligible Employee and a Participant will be considered to have completed
forty-five (45) Hours of Service for each week in which an Eligible Employee or


                                       10
<PAGE>

Participant completes at least one (1) Hour of Service. For purposes of Section
9.03, any Participant whose service with the Employer is involuntarily
terminated by reason of the Employer's closing, on or before December 31, 1989,
of the plant or other Employer owned and operated facility at which such
Participant was employed immediately prior to such closing, shall be deemed to
have completed 1,000 Hours of Service during the Plan Year in which such
involuntary termination of service occurs. For purposes of Section 9.03, Hours
of Service completed by a Leased Employee that would constitute Hours of Service
under Section 2.28 if they were completed by an Employee (including hours of
service as a Leased Employee with an Affiliated Company completed while such
corporation or entity is an Affiliated Company) shall be taken into account
under this Plan if and when the Leased Employee becomes an Eligible Employee
under the Plan.



                                       11
<PAGE>

                                  ARTICLE III.

                                   ELIGIBILITY

        3.01    ELIGIBILITY FOR PARTICIPATION.

                (a)     Notwithstanding any provision to the contrary, no
        Eligible Employee shall become a Participant in the Plan after December
        29, 2001.

                (b)     Each Eligible Employee who was an Eligible Employee on,
        and had attained age twenty-one (21) prior to March 1, 1988, shall
        automatically become a Participant in the Plan as of the later of the
        Effective Date or the Eligible Employee's date of hire.

                (c)     Each other Eligible Employee shall become a Participant
        in the Plan as of the first Entry Date next following the date on which
        such Eligible Employee has both (i) attained age 21 and (ii) has
        completed at least one Year of Service; provided, however, that,
        effective as of January 1, 2000, each other Eligible Employee shall
        become a Participant in the Plan as of the first Entry Date following
        the date on which such Eligible Employee has both (i) attained age 18
        and (ii) has completed at least one Year of Service.

                (d)     Employees who are members of collective bargaining units
        shall not become eligible to participate as set forth in (a) or (b)
        above unless or until a collective bargaining agreement specifically
        provides for their respective inclusion.

        3.02    COMMENCEMENT OF PARTICIPATION. The Plan Administrator shall
notify each Eligible Employee of his eligibility to participate and of the terms
of the Plan as soon as practicable after he becomes eligible. Every Eligible
Employee upon becoming eligible for participation shall become a Participant,
shall provide such data as required by the Plan Administrator, and be deemed to
assent to the terms of this Plan and the Trust Agreement, including all
amendments thereto, in the manner herein authorized.

        3.03    CESSATION OF PARTICIPATION. A Participant shall cease to be a
Participant if he has a Break in Service or ceases to be an Eligible Employee
for any reason. However, in the case of a former Participant who is an Employee
with Accounts under the Plan, such Accounts shall not receive any allocations
pursuant to Section 6.01, but shall be debited or credited as provided in
Section 6.04 until the entire balance in such Accounts have been distributed
pursuant to Section 6.06 and Article X.

        3.04    REEMPLOYMENT. A Participant who has ceased to be an Eligible
Employee and incurred a Break in Service shall be reinstated as a Participant as
of his Reemployment Date. New Accounts will be established to record his
interest in the Plan attributable to his service with the Employer after the
Break in Service. The vesting rules applicable to such Participant's old and new
Accounts are set forth in Sections 6.06 and 9.06.



                                       12
<PAGE>

        3.05    LEAVE OF ABSENCE. If a Participant is granted an Approved
Absence, his participation is not terminated; however, he shall not receive
credit for Hours of Service in excess of five hundred one (501) hours for any
such Approved Absence and, if he does not return to employment upon expiration
of such Approved Absence his Years of Service shall be determined under the
Break in Service rules otherwise set out in this Plan.

        3.06    DETERMINATION OF ELIGIBILITY. Any question as to the eligibility
of any Employee hereunder shall be determined by the Plan Administrator in
accordance with the terms hereof, and such determination shall be final and
conclusive for all purposes.



                                       13
<PAGE>

                                   ARTICLE IV.

                                  CONTRIBUTIONS

        4.01    EMPLOYER CONTRIBUTIONS.

                (a)     For each taxable year of the Company Employer
        Contributions may be paid to the Trustee in such amounts (or under such
        formula) as may be determined by the Company's Board of Directors (and
        communicated to Participants) and delivered in a form acceptable to the
        Trustee to the Trust not later than the due date for filing the
        Company's federal income tax return, including any extensions of such
        due date; provided that such Employer Contributions shall not be paid to
        the Trust in amounts which would permit the limitation described in
        Section 6.03 to be exceeded.

                (b)     Employer Contributions may be paid to the Trust in cash
        or in shares of Company Stock, as determined by the Company's Board of
        Directors; provided that Employer Contributions shall be paid in cash in
        such amounts and at such times, subject to the limitation described in
        Section 6.03, as may be necessary or appropriate to provide the Trustee
        with the funds sufficient to pay in full when due any principal and
        interest payments required by a Loan incurred by the Trustee pursuant to
        Article V to finance the acquisition of Employer Securities, except that
        Employer Contributions may be reduced, in the discretion of the
        Company's Board of Directors, to the extent cash dividends paid to the
        Trust on Company Stock acquired with the proceeds of such Loan are
        available to satisfy principal and interest payments.

                (c)     Employer Contributions may be returned to the Employer
        in the following circumstances:

                        (i)     In the event that any contribution to the Trust
                is made by the Company under a mistake of fact, at the direction
                of the Company, the Trustee shall return such contribution
                within one year after the date of payment of the contribution;

                        (ii)    Each contribution which is made by the Company
                hereunder shall be conditioned upon the initial qualification of
                the Plan pursuant to Section 401 of the Code. In the event that
                the Plan does not so qualify under Section 401, at the direction
                of the Company, the Trustee shall return such contributions to
                the Company within one year after the date of the final
                disposition of the denial of qualification of the Plan; and

                        (iii)   Each contribution that is made by the Company
                hereunder shall be conditioned upon the deductibility of the
                contribution under Section 404 of the Code. In the event that
                the deduction should be disallowed under Section 404 of the
                Code, upon direction of the Company, the Trustee shall return
                such contribution to the Company, within one year after the
                disallowance of the deduction.



                                       14
<PAGE>

        4.02    NO PARTICIPANT CONTRIBUTIONS. No Participant shall be required
or permitted to make contributions to the Plan or Trust.





                                       15
<PAGE>

                                   ARTICLE V.

                           INVESTMENT OF TRUST ASSETS

        5.01    INVESTMENT OF TRUST ASSETS. Trust Assets under the Plan will be
invested primarily in Employer Securities, to the extent that such stock is
available on terms that, in the Committee's judgment, constitute a prudent
investment of the Trust Assets. Employer Contributions, and all other Trust
Assets, including any cash dividends paid on Company Stock, may be used to
acquire shares of Company Stock from shareholders of the Company including
former Participants) or from the Company, except that any Company Stock acquired
with the proceeds of a Loan shall be limited to Employer Securities. Trust
Assets not acquired with the proceeds of a Loan, as well as the Trust Assets
subject to Section 5.05, may also be invested by the Trustee in bank accounts,
certificates of deposit, securities, short-term income funds maintained by the
Trustee, or any other kinds of realty or personalty appropriate for the Trust,
in accordance with the terms of the Trust Agreement; or Trust Assets may be held
in cash. Except as otherwise provided in Section 5.05, all investments shall be
made by the Trustee only upon the direction of the Committee. The Committee may
direct that all Trust Assets be invested and held in Company Stock.
Notwithstanding this Section 5.01, Section 5.02, or any other provision of the
Plan, the initial purchase by the Trustee of all or substantially all of the
outstanding shares of Company Stock, using the proceeds of a Loan, shall be
effected by the Trustee without direction from the Committee and pursuant to the
Trustee's determination (in the exercise of its reasonable judgment) that such
transaction is in the best interests of Participants and is in compliance with
all applicable provisions of the Code and ERISA. This Section 5.01 shall apply
to Participants' Other Investment Settlement Accounts (as defined in Section
6.06(b)), and the assets attributable to such accounts, only to the extent not
inconsistent with Section 6.06(e).

        5.02    PURCHASES OF COMPANY STOCK. All purchases of Company Stock by
the Trust shall be made at a price, or at prices, which, in the judgment of the
Committee, does not exceed the fair market value of such Company Stock. In
transactions between the Trust and a "disqualified person" (as defined in
Section 4975(e) of the Code), value shall be determined as of the transaction
date. In all other transactions, value shall be determined as of the most recent
Valuation Date. At such times as the Company Stock is not readily tradable on an
established securities market, the determination of fair market value of Company
Stock for all purposes under the Plan shall be made by the Committee based upon
the value determined by an Independent Appraiser having expertise in rendering
valuations with respect to employee stock ownership plan transactions.

        5.03    SALES OF COMPANY STOCK. The Committee may direct the Trustee to
sell or resell shares of Company Stock to any person, including the Company,
provided that any such sales to any disqualified person, as defined by Section
4975(e)(2) of the Code, including the Company, shall be made at not less than
the fair market value of Company Stock as determined in accordance with Section
5.02 and further provided that no commission is charged. Any such sale shall be
made in conformity with Section 408(e) of ERISA. All sales of Company Stock by
the Trustee shall be charged pro rata to the Company Stock Accounts of the
Participants.



                                       16
<PAGE>

        5.04    EXEMPT LOAN.

                (a)     The initial purchase of all or substantially all of the
        outstanding shares of Employer Securities using the proceeds of a Loan,
        shall be effected by the Trustee without direction from the Committee
        and pursuant to the Trustee's determination (in the exercise of its
        reasonable judgment) that such transaction is in the best interest of
        Participants and is in compliance with all applicable provisions of
        ERISA. Any such Loan shall meet all requirements necessary to constitute
        an "exempt loan" within the meaning of Treasury Regulation Section
        54.4975-7(b)(1) (iii) and shall be used primarily for the benefit of the
        Participants (and their Beneficiaries). The proceeds of any such Loan
        shall be used, within a reasonable time after the Loan is obtained, only
        to purchase Employer Securities, repay the Loan, or repay any prior
        Loan. Any such Loan shall provide for no more than a reasonable rate of
        interest, as determined under Treasury Regulation Section
        54.4975-7(b)(7), and must be without recourse against the Plan. The
        number of years to maturity under the Loan must be definitely
        ascertainable at all times. In the event of a default on any such Loan,
        the value of Plan assets transferred in satisfaction of the Loan must
        not exceed the amount of the default. If the Loan is obtained from a
        disqualified person, such Loan must provide that Plan assets may be
        transferred upon default only upon and to the extent of the failure of
        the Plan to make payment on the Loan when due.

                All Employer Securities purchased with the proceeds of a Loan
        shall be held in a suspense account (a "Suspense Account"). The only
        assets of the Plan that may be given as collateral for a Loan are shares
        of Employer Securities acquired with the proceeds of the Loan and shares
        of Employer Securities that were used as collateral on a prior Loan
        repaid with the proceeds of the current Loan. No person entitled to
        payment under a Loan shall have recourse against Trust Assets other than
        such collateral, Employer Contributions in cash that are available under
        the Plan to meet obligations under a Loan, and earnings attributable
        (including dividends paid on Company Stock) to such collateral and the
        investment of such Employer Contributions. All Employer Contributions
        paid during the Plan Year in which a Loan is made (whether before or
        after the date the proceeds of the Loan are received), all Employer
        Contributions paid thereafter until the Loan has been repaid in full,
        and all earnings from investment of such Employer Contributions without
        regard to whether any such Employer Contributions and earnings have been
        allocated to Participants' Other Investments Accounts, shall be
        available to meet obligations under a Loan, unless otherwise provided by
        the Employer at the time any such Employer Contribution is made,
        provided that no amount allocated to Participants' Other Investments
        Settlement Accounts (as described in Section 6.06) and no amount
        allocated to Participants' Profit Sharing Accounts (as described in
        Section 6.07) shall be available to meet obligations under a Loan. In
        accordance with applicable law and regulations, the Trustee and the
        Company may agree in writing to a reduction or elimination of the
        outstanding principal, interest and/or other amounts owed under or with
        respect to any Loan from the Company to the Trust. Any such action shall
        not constitute or result in an Employer Contribution or Annual Addition.



                                       17
<PAGE>

                Except as hereinafter provided in subsection (b), Employer
        Securities held in a Suspense Account under this Section 5.04, including
        any Employer Securities pledged as collateral for a Loan, must be
        released from the Suspense Account and from any such pledge, as provided
        in this subsection (a). For each Plan Year during the duration of the
        Loan, the number of shares of Employer Securities released from the
        Suspense Account, and from any pledge as collateral for a Loan, shall be
        determined by multiplying the number of shares of Employer Securities
        held in the Suspense Account immediately prior to the release for the
        current Plan Year by a fraction, the numerator of which shall be the
        amount of principal and interest paid on the Loan for the Plan Year and
        the denominator of which is the sum of the numerator plus the principal
        and interest to be paid on the Loan for all future years, or by any
        other method permitted by the Code or regulations promulgated
        thereunder. The number of future years under a Loan shall be determined
        without taking into account any possible extension or renewal periods.
        In the event the interest rate under a Loan is variable, the interest to
        be paid in future years must be computed by using the interest rate
        applicable as of the end of the Plan Year. If the Employer Securities
        held in the Suspense Account include more than one class of Employer
        Securities, the number of shares of each class to be released for a Plan
        Year must be determined by applying the same fraction to each class. In
        addition to the foregoing, Employer Securities may be released from
        pledge (but not from a Suspense Account) upon the mutual written
        agreement of the Trustee and the pledgee.

                The Committee may, in its discretion, but with the consent of
        the Trustee, elect, in lieu of the provision in the preceding paragraph
        providing for the release of Employer Securities from the Suspense
        Account on the basis of principal and interest paid during the Plan
        Year, to release the shares of Employer Securities from the Suspense
        Account solely with reference to the principal payments made during the
        Plan Year. If the Committee elects to apply this principal-only method
        of determining the number of Employer Securities to be released, such
        method shall be applied throughout the period of the Loan and shall be
        applied in accordance with the requirements imposed by Treasury
        Regulation Section 54.4975-7(b)(8), including the following three rules:

                        (i)     The Loan must provide for annual payments of
                principal and interest at a cumulative rate that is not less
                rapid at any time than level annual payments of such amounts for
                ten (10) years;

                        (ii)    The interest included in any payment shall be
                disregarded only to the extent it would be determined to be
                interest under standard loan amortization tables; and

                        (iii)   The alternative, principal-only method of
                release shall not be applicable after the time at which, by
                reason of a renewal, extension or refinancing of the Loan, the
                sum of the already expired duration of the Loan, any extension
                or renewal period, and the duration of the new Loan, exceeds ten
                (10) years.

                (b)     As of September 16, 1992, the Trust held 9,711,408
        shares of Employer



                                       18
<PAGE>

        Securities in a Suspense Account (the "Subject Shares"). The Subject
        Shares, as well as certain other Employer Securities, were acquired by
        the Trust with funds borrowed from the Company pursuant to six loan
        agreements, being Amended and Restated ESOP Loan Agreement #1 through
        and including Amended and Restated ESOP Loan Agreement #6, all dated as
        of January 17, 1989, as amended and restated as of March 15, 1991,
        between the Company and the Trustee (collectively, the "ESOP Loan
        Agreements"). Immediately prior to September 16, 1992, the Subject
        Shares were pledged by the Trust to the Company as collateral for the
        Loans evidenced by the ESOP Loan Agreements. Effective September 16,
        1992, ESOP Loan Agreement #2 through and including Amended and Restated
        ESOP Loan Agreement #6, and the Loans evidenced thereby, were canceled
        and terminated and the Subject Shares previously pledged as collateral
        for such Loans became pledged as collateral for the Loan evidenced by
        Amended and Restated ESOP Loan Agreement #1 and remained allocated to a
        Suspense Account. Amended and Restated ESOP Loan Agreement #1, the Loan
        evidenced thereby ("ESOP Loan # 1") and the pledge prior to September
        16, 1992 of certain Subject Shares as collateral for ESOP Loan #1 were
        not affected by the foregoing cancellations, terminations and pledge.
        The purpose of this subsection (b) is to set forth the terms and
        conditions of the release of the Subject Shares from the Suspense
        Account and from encumbrance.

                As of the Anniversary Date of each Plan Year commencing with the
        Plan Year ending December 26, 1992 and ending with the Plan Year as of
        which all principal and interest due on ESOP Loan #1 are paid in full,
        the number of Subject Shares released from the Suspense Account shall be
        determined by multiplying the number of such Subject Shares held in the
        Suspense Account immediately prior to the release for such Plan Year by
        a fraction, the numerator of which shall be the amount of principal and
        interest paid on ESOP Loan #1 for the Plan Year and the denominator of
        which is the sum of the numerator plus the amount of principal and
        interest to be paid on ESOP Loan #1 for all future years. Such number of
        future years shall be determined without taking into account any
        possible extension or renewal periods. In the event that the interest
        rate under ESOP Loan #1 is variable, the interest to be paid in future
        years shall be computed by using the interest rate applicable as of the
        end of the Plan Year.

                (c)     Repayment of principal and payment of interest on a Loan
        during a Plan Year shall be made by the Trustee (as directed by the
        Committee) only from (i) Employer Contributions, and earnings from such
        Employer Contributions, made to the Trust to meet the Plan's obligation
        under a Loan; (ii) any earnings attributable to Employer Securities
        (including, but not limited to, cash dividends declared and paid with
        respect to Employer Securities but excluding any dividends
        simultaneously paid with respect to other classes of the Company's
        Stock) whether allocated or unallocated to Participants' Accounts; and
        (iii) from the proceeds of a sale of unallocated shares of Employer
        Securities held in a suspense account, solely to the extent provided in
        an agreement for the pledge of such shares in the case of a current and
        continuing Event of Default, as defined therein. To the extent that
        there is no continuing Event of Default under such agreement, the
        proceeds of such sale shall not be used to repay principal or interest
        on a Loan. Such Employer Contributions and earnings must be accounted
        for separately by the Plan until a Loan is repaid.



                                       19
<PAGE>

                Employer Securities released from the Suspense Account by reason
        of the payment of principal or interest on a Loan from amounts
        previously allocated to Participants' Other Investments Accounts (but
        not Other Investments Settlement Accounts or Participants' Profit
        Sharing Accounts) shall, subject to the restriction in Section 6.01(b)
        concerning Eligible Employees who have made an election under Section
        1042 of the Code with respect to the sale of the Employer Securities to
        the Trust, be credited pro rata to such Participants' Company Stock
        Accounts at the time corresponding reductions are made in the balances
        credited to the Participants' Other Investments Accounts.

                (d)     The Company shall contribute to the Trust sufficient
        amounts to enable the Trust to pay principal and interest on any such
        Loans as they are due; provided, however, that no such Employer
        Contribution shall exceed the limitations in Section 6.03. In the event
        that such Employer Contributions by reason of the limitations in Section
        6.03 are insufficient to enable the Trust to pay principal and interest
        on such Loan as it is due, then upon the Trustee's request, the Company
        shall:

                        (i)     Make an additional Loan to the Trust, as
                described in Treasury Regulation Section 54.4975-7(b)(4)(iii),
                in sufficient amounts to meet such principal and interest
                payments. Such new Loan shall also meet all requirements of an
                "exempt loan" within the meaning of Treasury Regulation Section
                54.49757(b)(1)(iii). Employer Securities released from the
                pledge of the prior Loan shall be pledged as collateral to
                secure the new Loan. Such Employer Securities shall be released
                from this new pledge and allocated to the Accounts of the
                Participants in accordance with applicable provisions of the
                Plan; or

                        (ii)    Purchase any Employer Securities pledged as
                collateral in an amount necessary to provide the Trustee with
                sufficient funds to meet the principal and interest repayments.
                Any such sale by the Plan shall meet the requirements of Section
                408(e) of ERISA; or

                        (iii)   Any combination of the foregoing. However, the
                Company shall not, pursuant to the provisions of this
                subsection, do, cause to be done, fail to do, or cause to fail
                to be done any act or thing the result of such act or failure to
                act would disqualify the Plan as a leveraged employee Stock
                ownership plan under the Code.

                (e)     Right of First Refusal. Shares of Employer Securities
        acquired by the Trust with the proceeds of a Loan and distributed by the
        Trustee may be distributed to Participants subject to a "right of first
        refusal." If the shares are subject to such a "right of first refusal",
        such "right" shall provide that prior to any subsequent transfer, the
        shares shall first be offered in writing to the Trust and then, if
        refused by the Trust, to the Company at a price equal to the greater of
        (i) the then fair market value of such shares of Employer Securities as
        determined in good faith by the Committee, from time to time, or (ii)
        the purchase price offered by a buyer, other than the Company or
        Trustee, making a good faith (as determined by the Committee) offer to
        purchase such shares of Employer



                                       20
<PAGE>

        Securities. The Trust or the Company, as the case may be, may accept the
        offer as to part or all of the Employer Securities at any time during a
        period not exceeding fourteen (14) days after receipt of such offer by
        the Trust, on terms and conditions no less favorable to the shareholder
        than those offered by the independent third party buyer. If the offer is
        not accepted by the Trust, the Company, or both, by the end of the
        fourteen (14) day period, then the proposed transfer may be completed
        without regard to the right of first refusal. Any installment purchase
        by the Trust or the Company shall be made pursuant to a note secured by
        the shares purchased and shall bear a reasonable rate of interest as
        determined by the Committee, but the terms and conditions shall be no
        less favorable to the shareholder than the terms and conditions of the
        third party buyer's prior offer. Shares of Employer Securities that are
        publicly traded within the meaning of Treasury Regulation Section
        54.4975-7(b)(1)(iv) at the time such right may otherwise be exercised
        shall not be subject to this right of first refusal.

                (f)     Put Option. If shares of Employer Securities acquired
        with the proceeds of a Loan by the Trust are, at the time distributed
        are not publicly traded within the meaning of Treasury Regulation
        Section 54.4975-7(b)(1)(iv) or, if publicly traded, are subject to a
        "trading limitation," such shares shall be subject to a "put" option at
        the time of distribution, whether such distribution constitutes a Total
        Distribution or one of a series of periodic installments. (For purposes
        of this paragraph, a "trading limitation" on a security is a restriction
        under any federal or state securities law, any regulation thereunder, or
        an agreement affecting the security which would make the security not as
        freely tradable as a security not subject to such restriction.) The
        "put" option shall be exercisable by the Participant or the
        Participant's Beneficiary, by the donees of either, or by a person
        (including an estate or its distributee) to whom the Employer Securities
        pass by reason of the Participant's or Beneficiary's death. The "put"
        option shall provide that, for a period of at least sixty (60)
        consecutive days immediately following the date the shares are
        distributed to the holder of the "put" option and for another sixty (60)
        consecutive day period during the Plan Year next following the Plan Year
        in which the shares were distributed, the holder of the option shall
        have the right to cause the Company, by notifying it in writing of the
        holder's election to exercise the option, to purchase such shares at
        their fair market value, as determined by the Committee, but subject to
        the last sentence of this Section 5.04(f). The Company may, in its
        discretion, cause an Affiliated Company designated by the Company for
        such purpose to assume the Company's obligations to purchase Employer
        Securities pursuant to any such "put" option. The Trustee may, in its
        discretion and with the consent of the Company, cause the Trust to
        assume the rights and obligations of the Company at the time of "put"
        option is exercised, insofar as the repurchase of Employer Securities is
        concerned. The period during which the "put" is exercisable shall not
        include any period during which the holder is unable to exercise such
        "put" option because the Company or an Affiliated Company designated by
        the Company to assume its obligations is prohibited from honoring it by
        federal or state law. The terms of payment for the purchase of such
        shares of Employer Securities shall be as set forth in the "put" option.
        Such "put" option shall provide that if a Participant or Beneficiary
        exercises the "put option", the Company, the Affiliated Company or the
        Trust, if the Trust so elects, shall repurchase the Employer Securities
        as follows:



                                       21
<PAGE>

                        (i)     If the shares of Employer Securities distributed
                are part of a Total Distribution, payment of the fair market
                value of these Employer Securities (as of the most recent
                Valuation Date) shall be made in substantially equal
                installments (made not less frequently than annually) over a
                period not longer than five (5) years. The first such
                installment shall be paid no later than thirty (30) days after
                the date of exercise of the "put" option. The unpaid
                installments shall bear a reasonable rate of interest, and shall
                be adequately secured by the Company, Affiliated Company or
                Trust.

                        (ii)    If the shares of Employer Securities distributed
                are part of an installment distribution of a Participant's
                Capital Accumulation, the fair market value of the Employer
                Securities (as of the most recent Valuation Date) shall be paid
                to the Participant (or Beneficiary) within thirty (30) days of
                the exercise of the "put" option.

                The "put" option provided for by this Section 5.04(f) (including
        the provisions of the last sentence of this Section 5.04(f)) shall
        continue to apply to shares of Employer Securities purchased by the
        Trustee with the proceeds of a Loan, as described herein,
        notwithstanding repayment of all Loans or any amendment to or
        termination of this Plan that causes the Plan to cease to be a leveraged
        employee stock ownership plan within the meaning of Section 4975(e)(7)
        of the Code. For purposes of the "put" option provided herein, fair
        market value shall, in the case of a share of the Company's Series A
        Preferred Stock which was allocated to the Participant's Company Stock
        Account by reason of release from the Suspense Account described in this
        Section 5.04 and which is subject to such "put" option, not be less than
        the "Redemption Price" at the time such "put" is exercised, as such term
        is defined in the Amended and Restated Certificate of Incorporation of
        the Company; provided, however, that effective as of October 29, 1998,
        for purposes of the "put" option provided herein, fair market value
        shall, in the case of a share of Common Stock of Simmons Holdings, Inc.
        which was allocated to the Participant's Company Stock Account by reason
        of release from the Suspense Account described in this Section 5.04 and
        which is subject to such "put" option, not be less than the fair market
        value at the time such "put" is exercised, determined on an enterprise
        value basis without the application of any minority discounts.

        5.05    DIVERSIFICATION OF INVESTMENTS.

                (a)     Election to Diversify. Each Qualified Participant, upon
        written notice to the Plan Administrator received no later than the 90th
        day after the first day of a Plan Year within the Qualified Election
        Period of such Qualified Participant, may elect to direct the Committee
        to diversify in the manner set forth in subsection 5.05(b) that portion
        of his Accounts under the Plan determined by:

                        (i)     determining the aggregate value of his Company
                Stock Account as of the Anniversary Date immediately preceding
                each election;



                                       22
<PAGE>

                        (ii)    adding to the amount determined under (i) above
                the amount, if any, previously elected to be diversified;

                        (iii)   multiplying the amount in (ii) above by
                twenty-five percent (25%) or, in the case of the last year in
                the Qualified Participant's Qualified Election Period, fifty
                percent (50%);

                        (iv)    subtracting from the amount in (iii) above the
                amount previously elected to be diversified.

                (b)     Manner of Diversification. In the event that a Qualified
        Participant provides notice of an election to diversify a portion of his
        Company Stock Account pursuant to subsection 5.05(a) above, the Plan
        Administrator, prior to the one hundred eightieth (180th) day after the
        first day of the Plan Year in which such election may be filed, shall,
        in the discretion of the Plan Administrator either:

                        (i)     distribute the amount so elected to the
                Participant; or

                        (ii)    permit the Participant to direct the investment
                of the amount so elected in one or any combination of at least
                three (3) funds within the Plan as may be established pursuant
                to determination of the Committee, made in its sole discretion
                but not inconsistent with regulations issued by the Secretary of
                the Treasury; provided, however, no such investment fund may
                include investments in Company Stock.

                (c)     Accounting for Amounts Diversified Pursuant to Section
        5.05(b)(ii). For each Qualified Participant who has elected to diversify
        amounts and has been permitted to elect an alternative investment
        election, the Plan Administrator shall establish a Diversified Account
        to hold and account for the Qualified Participant's interest in the
        investment option(s) so elected. Such Diversified Account shall be
        separate from the Qualified Participant's other Accounts under the Plan
        and shall be separately credited (or debited) with a pro rata share of
        the income (or loan) of such investments elected. The Diversified
        Account shall be valued at the same times as the Qualified Participant's
        other Accounts under the Plan; provided, however, that effective as of
        June 2, 1997, the Diversified Account shall be valued on each Valuation
        Date (as defined in Section 2.49) under the Plan. All other rules of the
        Plan, including, but not limited to those concerning distributions
        (except distributions in the form of Company Stock, as provided in
        Section 10.05), shall apply to the Diversified Account.



                                       23
<PAGE>

                                   ARTICLE VI.

                                   ALLOCATIONS

        6.01    ALLOCATIONS TO PARTICIPANTS' ACCOUNTS.

                (a)     Separate Company Stock Accounts and other Investments
        Accounts, together with Diversified Accounts for Qualified Participants
        making elections pursuant to Section 5.05 (which Accounts, collectively,
        shall comprise the ESOP Portion of the Plan), and Profit Sharing
        Accounts (which Profit Sharing Accounts shall comprise the Profit
        Sharing Portion of the Plan) shall be established to reflect each
        Participant's interest under the Plan. Records shall be kept by the Plan
        Administrator from which can be determined the portion of each Other
        Investments Account which at any time is available to meet Loan
        obligations and the portion which is not so available, as determined
        pursuant to Section 5.04.

                (b)     As of each Anniversary Date, the Company Stock Account
        maintained for each Participant shall be credited with (i) its allocated
        share (as determined in Section 6.02(a)) of Company Stock (including
        fractional shares) purchased and paid for by the Trust or contributed in
        kind to the Trust, and with Forfeitures of Company Stock, and (ii) any
        stock dividends on shares in the Company Stock Account. Company Stock
        acquired by the Trust with the proceeds of a Loan obtained pursuant to
        Section 5.04 shall be allocated (as determined in Section 6.02(a)) to
        the Company Stock Accounts of Participants as the Company Stock is
        released from the Suspense Account in accordance with Section 5.04.
        Notwithstanding the preceding two sentences, if an Eligible Employee has
        elected favorable income tax treatment under Section 1042 of the Code
        with respect to a sale of Employer Securities to the Trust, no portion
        of the Employer Securities acquired by the Trust in such transaction, or
        other assets of the Trust attributable to such Employer Securities, may
        be allocated during the nonallocation period (as hereinafter defined),
        directly or indirectly, to the Accounts of:

                        (i)     such Eligible Employee;

                        (ii)    any other Participant who is related to such
                Eligible Employee (within the meaning of Section 267(b) of the
                Code), provided that such Employer Securities or other assets of
                the Trust attributable to such Employer Securities may be
                allocated during the nonallocation period to the benefit of
                lineal descendants of Eligible Employees electing favorable
                income tax treatment under Section 1042 of the Code in an
                aggregate amount not to exceed 5% of such Employer Securities or
                other assets; or

                        (iii)   any other Participant who owns (after the
                application of Section 318(a) of the Code without regard to the
                employee trust exception in Section 318(a)(2)(B)(i) of the Code)
                more than 25% of (A) any class of outstanding stock of



                                       24
<PAGE>

                the Company or of any Affiliated Company or (B) the total value
                of any class of outstanding stock of the Company or of any
                Affiliated Company.

                The term "nonallocation period" shall mean the period beginning
        on the date of the sale of such Employer Securities to the Trust and
        ending on the later of (i) the date which is ten (10) years after the
        date of the sale to the Trust, or (ii) the date of the allocation
        attributable to the last payment of principal and/or interest on a Loan
        incurred in connection with such sale. In the event that an Eligible
        Employee who satisfies the requirements for electing favorable income
        tax treatment under Section 1042 of the Code with respect to the sale of
        Employer Securities to the Trust does not receive an allocation of
        Employer Securities in any Plan Year by action of the preceding two
        sentences, and such Eligible Employee does not elect favorable income
        tax treatment under Section 1042 of the Code during the time for making
        such election, the Plan Administrator shall, consistent with Section
        6.02(e), allocate to such Eligible Employee (as provided in the next
        sentence), in addition to the Employer Securities otherwise allocated to
        such Eligible Employee for any subsequent Plan Year, the number of
        shares of Employer Securities that would have been allocated to such
        Eligible Employee but for the action of the preceding two sentences. The
        allocation required by the preceding sentence shall be made on the first
        Anniversary Date following the deadline for making an election under
        Section 1042 and, if necessary, on each subsequent Anniversary Date to
        the extent necessary, so that the limits of Section 6.03(a) are not
        exceeded in any Plan Year.

                (c)     As of each Valuation Date, each Other Investments
        Account maintained for each Participant under the Plan will be credited
        (or debited) with its share of the net income (or loss) of the Trust
        attributable to investments other than Company Stock, with any cash
        dividends on Company Stock allocated to his Company Stock Accounts, and
        with Employer Contributions in cash and Forfeitures in forms other than
        Company Stock. Each such Other Investments Account will be debited with
        its share of any cash payments applied to the acquisition of Company
        Stock for the benefit of Company Stock Accounts or to any repayment of
        principal and interest on any Loan or other debt chargeable to
        Participants' Company Stock Accounts; provided that only the portion of
        each Other Investments Account which is available to meet obligations
        under Loans, as determined pursuant to the provisions of Section
        5.04(a), shall be used to pay principal or interest on a Loan.

        6.02    ALLOCABLE SHARES.

                (a)     For purposes of Section 6.01, an Eligible Employees'
        allocable share of Employer Contributions, Forfeitures, and, to the
        extent not allocated pursuant to Section 5.04(c) or 6.02(d), shares
        released from a suspense account pursuant to Section 5.04(a), for a Plan
        Year, shall be determined by multiplying the aggregate of the amounts to
        be allocated to the Company Stock Accounts or Other Investments Accounts
        times a fraction, the numerator of which is the Eligible Employee's
        total Compensation for such Plan Year and the denominator of which is
        the aggregate Compensation of all Eligible Employees entitled to an
        allocation for such Plan Year.



                                       25
<PAGE>

                (b)     Except for reasons of death, Permanent Disability,
        Approved Absence, involuntary termination of service by reason of the
        Employer's closing, on or before December 31, 1989, of the plant or
        other Employer owned and operated facility at which the Participant was
        employed immediately prior to such closing, Retirement, or a leave of
        absence following which the Participant returns to work if, upon such
        return, the Participant is entitled to an equivalent position with the
        Company pursuant to the Family and Medical Leave Act of 1993, a
        Participant must have not incurred a termination of service with the
        Employer prior to the Anniversary Date for the Plan Year in order to
        share in the allocation of Employer Contributions and Forfeitures for
        such Plan Year.

                (c)     Employer Contributions with respect to a taxable year of
        the Employer which are not designated to be applied to repay a Loan
        shall be allocated to Participants' Accounts as of the Anniversary Date
        of the Plan Year ending with or within such taxable year. Employer
        Securities which are released from encumbrance in accordance with
        Section 5.04 in connection with the application of Employer
        Contributions to repay a Loan shall be allocated to Participants'
        Accounts as of the Anniversary Date of the Plan Year with or within
        which ends the taxable year of the Employer to which such Employer
        Contributions relate.

                (d)     In the event that cash dividends paid on Employer
        Securities allocated to Participants' Accounts are used to repay a Loan,
        before determining Participants' allocable share of Employer Securities
        released from a suspense account for the Plan Year pursuant to Section
        5.04(a), there shall first be allocated to the Company Stock Accounts of
        Participants to whose accounts such cash dividends would have been
        allocated but for such Loan repayment a number of shares of Employer
        Securities having a fair market value not less than the amount of the
        cash dividend so applied. Only that number of shares of Employer
        Securities released from a suspense account which is in excess of the
        number allocated pursuant to the preceding sentence shall be available
        for allocation pursuant to Section 6.02(a).

                (e)     The Committee may, if and when it deems necessary, adopt
        reasonable procedures for making corrections to allocations to
        Participants' Accounts which have been made as a result of any mistake
        or administrative error.

        6.03    ALLOCATION LIMITATIONS.

                (a)     For each Plan Year, the Annual Addition (as defined
        below) to the Accounts of a Participant, under this Plan and all other
        defined contribution plans maintained by the Company or any Affiliated
        Company, may not exceed the lesser of:

                        (i)     $30,000; or

                        (ii)    twenty-five percent (25%) of such Participant's
                Compensation.



                                       26
<PAGE>

        Allocations shall be made for each Plan Year to any other defined
        contribution plan maintained by the Company or any Affiliated Company
        after the application of this Section 6.03 to this Plan for such Plan
        Year.

                (b)     For purposes of this Section, the term "Annual Addition"
        shall mean the sum, for any Plan Year, for all defined contribution
        plans maintained by the Employer or any Affiliated Company, of (i)
        Employer contributions, (ii) forfeitures and (iii) Participant
        contributions, if any, allocated to a Participant's Accounts under this
        Plan or any other defined contribution plan maintained by the Company or
        any Affiliated Company. Notwithstanding this provision of this Plan and
        any provision of any other plan with which this Plan must be aggregated
        for purposes of the limitations set forth herein, to the extent Annual
        Additions must be reduced, the Annual Addition to each other plan in
        which a Participant participates, other than the Simmons Retirement
        Savings Plan, shall be reduced prior to the reduction of such
        Participant's Annual Addition under this Plan. If the reduction of
        Annual Additions to such other plans are not sufficient to avoid a
        violation of the limitation set forth in subsection (a), Annual
        Additions to this Plan shall be reduced before any reduction of Annual
        Additions to the Simmons Retirement Savings Plan is effected.

                (c)     Notwithstanding the foregoing subsection (a), if no more
        than one-third of the Employer Contributions for a Plan Year are
        allocated to the group of Employees consisting of Highly Compensated
        Employees, Annual Additions shall be determined without regard to the
        Employer Contributions applied to the repayment of interest on any Loan
        or to any Forfeitures of Employer Securities acquired with the proceeds
        of a Loan; and, subject to the provisions of Section 415(c)(6) of the
        Code, for Plan Years beginning before July 12, 1989, the dollar
        limitation on Annual Additions to a Participant's Accounts shall be: the
        sum of (i) the amount determined in paragraph (a)(i) above; and (ii) the
        lesser of the amount determined under (a)(i) or the amount of the
        Participant's allocable share of the Employer Securities contributed to
        the Plan for the Plan Year, or purchased with cash contributed to the
        Plan for the Plan Year (including cash applied to payments on a Loan).

                (d)     If for any Plan Year, as a result of the allocation of
        Forfeitures, a reasonable error in estimating a Participant's annual
        Compensation, or such other facts and circumstances which the Internal
        Revenue Service will permit, a Participant's Annual Additions exceeds
        the maximum annual addition for such Plan Year which would be
        permissible under the first sentence of Section 6.03(a) (the "Maximum
        Annual Addition"), such excess of the Participant's Annual Additions
        over his Maximum Annual Addition (called the "Annual Excess") shall not
        be allocated to such Participant's Account but shall be treated in the
        following manner:

                        (i)     The Annual Excess shall be allocated and
                reallocated to the other Participants entitled to an allocation
                for such Plan Year, subject to the limitations on annual
                additions to the Accounts of such other Participants for such
                Plan Year.



                                       27
<PAGE>

                        (ii)    If after the application of the above paragraph
                (i) an Annual Excess remains, the Annual Excess will be held
                unallocated in a Suspense Account. The Suspense Account will be
                allocated and reallocated among Participants in the next Plan
                Year, and each succeeding Plan Year, if necessary, in the manner
                provided in Section 6.01.

                        (iii)   No Employer contributions shall be made to the
                Plan as long as amounts remain credited to the Suspense Account.

                        (iv)    If a Suspense Account is in existence at any
                time during a Plan Year, none of the Trust Fund's investment
                gains and losses for such year shall be allocated to the
                Suspense Account.

                        (v)     If upon termination of the Plan there remains
                any amount properly allocated to the Suspense Account, such
                amount shall revert to the Employer.

                (e)     For purposes of the application of Section 415 of the
        Code to all defined benefit and defined contribution plans presently
        maintained, or to be established and maintained in the future, by the
        Company or an Affiliated Company, the "limitation year" shall be the
        Plan Year.

                (f)     In the event that any Participant is or was covered
        under both a defined benefit plan and a defined contribution plan
        maintained by the Company or an Affiliated Company:

                        (i)     Notwithstanding any other provision of this
                Section 6.03, and as required by the Code, the sum of the
                Participant's defined benefit plan fraction and defined
                contribution plan fraction may not exceed 1.0 in any Plan Year
                (which shall also be the limitation year); provided, however,
                that this limitation shall not apply with respect to limitation
                years beginning on and after December 31, 2000.

                        (ii)    The defined benefit plan fraction is a fraction
                the numerator of which is the sum of the Participant's projected
                annual benefits under all defined benefit plans (whether or not
                terminated) maintained by the Company and Affiliated Companies,
                and the denominator of which is the lesser of (A) 1.25 times the
                dollar limitation of Section 415(b)(1)(A) of the Code in effect
                for the Plan Year or (B) 1.4 times the Participant's average
                compensation for the three (3) consecutive years that produces
                the highest average. "Projected annual benefit" means the annual
                benefit to which the Participant would be entitled under the
                terms of the Plan, if the Participant continued employment until
                normal retirement age (or actual age, if later) and the
                Participant's compensation for the Plan Year and all other
                relevant factors used to determine such benefit remained
                constant until normal retirement age (or actual age, if later).



                                       28
<PAGE>

                        (iii)   The defined contribution plan fraction is a
                fraction, the numerator of which is the sum of the annual
                additions to the Participant's Accounts under all defined
                contribution plans maintained by the Company or an Affiliated
                Company (whether or not terminated) for the current and all
                prior Plan Years, and the denominator of which is the sum of the
                lesser of the following amounts determined for such year and for
                each prior year of service with the Company or an Affiliated
                Company (or a predecessor to the extent permitted under the
                Code): (A) 1.25 times the dollar limitation effect under Section
                415(c)(1)(A) of the Code for such year, or (B) 1.4 times the
                amount which may be taken into account under Section
                415(c)(1)(B) of the Code.

                        (iv)    If, in any Plan Year, the sum of the defined
                benefit plan fraction and the defined contribution plan fraction
                will exceed 1.0, the rate of benefit accrual under the defined
                benefit plan(s) will be reduced so that the sum of the fractions
                equals 1.0.

                (g)     For purposes of this Section 6.03, Compensation of a
        Participant shall mean the total compensation determined under Section
        415 of the Code, which includes amounts contributed by the Employer
        pursuant to a salary reduction agreement and which are not includible in
        the gross income of the Participant under Code Section 125, 132(f),
        402(e)(3), 402(h)(1)(B), 403(b) or 457.

        6.04    ALLOCATION OF NET INCOME (OR LOSS) OF THE TRUST.

                (a)     PRIOR TO JUNE 2, 1997. The net income (or loss)
        attributable to Trust Assets for each Plan Year shall be determined as
        of each Valuation Date. Each Participant's allocable share of the
        Trust's net income (or loss) attributable to Trust Assets other than
        Diversified Accounts and Other Investment Settlement Accounts (as
        defined in Section 6.06(b)) shall be allocated, as of the Anniversary
        Date, to his Other Investments Account in the ratio in which the credit
        balance of each such Account on the preceding Anniversary Date (reduced
        by the amount of any distribution of Capital Accumulation from such
        Account) bears to the aggregate sum of the Other Investment Account
        balances for all Participants as of that date. The net income (or loss)
        attributable to Diversified Accounts shall be allocated, as of the
        Anniversary Date, to each Participant's Diversified Account, if any, by
        investment fund, in the ratio in which the Participant's credit balance
        in each such investment fund on the preceding Anniversary Date bears to
        the sum of the balances for all Participants in such investment fund as
        of that date. The net income (or loss) includes the increase (or
        decrease) in the fair market value of Trust Assets (other than Company
        Stock), interest income, dividends and other income (or loss)
        attributable to Trust Assets (other than allocated Company Stock), since
        the preceding Anniversary Date. For purposes of computing net income (or
        loss), interest paid on any Loan or installment sales contract for the
        acquisition of Company Stock by the Trustee shall be disregarded. This
        Section 6.04 shall not apply to Participants' Other Investments
        Settlement Account (as defined in Section 6.06).



                                       29
<PAGE>

                (b)     ON AND AFTER JUNE 2, 1997. Notwithstanding the
        foregoing, on an after June 2, 1997, the following provisions shall
        apply: The net income (or loss) attributable to the Trust Assets shall
        be determined as of each Valuation Date. As of each Valuation Date, the
        Other Investments Account shall be credited or debited with its
        proportionate share of net income, expense, appreciation or depreciation
        allocable to the investment funds selected by the Participant. As of
        each Valuation Date, the Diversified Account shall be credited or
        debited with its proportionate share of net income, expense,
        appreciation or depreciation allocable to the investment funds elected
        by the Participant. The net income (or loss) includes the increase (or
        decrease) in the fair market value of Trust Assets (other than Company
        Stock), since the preceding Valuation Date. For purposes of computing
        net income (or loss), interest paid on any Loan or installment sales
        contract for the acquisition of Company Stock by the Trustee shall be
        disregarded. This Section 6.04 shall not apply to Participants' Other
        Investments Settlement Accounts (as defined in Section 6.06), or Profit
        Sharing Accounts (as defined in Section 6.07).

        6.05    ACCOUNTING FOR ALLOCATIONS. The Committee shall adopt accounting
procedures for the purpose of making the allocations, valuations, and
adjustments to Participants' Accounts provided for in this Article and Section
5.05(c). Except as provided in Treasury Regulation Section 54.4975-11, Company
Stock acquired by the Plan shall be accounted for as provided under Treasury
Regulation Section 1.402(a)-1(b)(2)(ii), allocations of Company Stock shall be
made separately for each class of stock, and the Committee shall maintain
adequate records of the cost basis of all shares of Company Stock allocated to
each Participant's Company Stock Accounts. From time to time, the Committee may
modify the accounting procedures for the purpose of achieving equitable and
nondiscriminatory allocations among the Accounts of Participants in accordance
with the general concepts of the Plan and the provisions of this Section. Annual
valuations of Trust Assets shall be made at fair market value.

Effective as of the Special Effective Date:

        6.06    OTHER INVESTMENTS SETTLEMENT ACCOUNT.

                (a)     Background. Pursuant to certain litigation styled
        Florin, et al. v. NationsBank of Georgia, N.A., et al., Civil Action No.
        91 C 0948 S, United States District Court for the Western District of
        Wisconsin (the "Litigation"), and more particularly the Second Amended
        Stipulation of Compromise and Settlement among the parties to the
        Litigation dated January 25, 1993 (the "Settlement"), the defendants in
        the Litigation and all other persons who sold Employer Securities to the
        Plan in January 1989, are to contribute to the Escrow Settlement Account
        described in the Settlement ("Escrow Settlement Account"), in
        conjunction with the entry by such Court of a Final Order and Judgment
        approving the Settlement, an amount of cash described in the Settlement,
        part of which contribution will subsequently be paid from the Escrow
        Settlement Account to the Trust ("First Cash Payment"), and all persons
        who sold Employer Securities to the Plan in January 1989, are to make
        another cash contribution to the Escrow Settlement Account, within one
        year and one day after the effective date of the Settlement, part of
        which contribution will be paid to the Trust ("Second Cash Payment"),
        all under the terms and



                                       30
<PAGE>

        conditions stated in the Settlement, including, but not limited to,
        paragraphs III(i), (2) and (3) thereof (including, with respect to
        defined terms used therein, but not defined therein, the corresponding
        definitions in Section I of the Settlement). Pursuant to the Settlement,
        the First Cash Payment and the Second Cash Payment (collectively, the
        "ESOP Settlement Funds") will be allocated, as described in this Section
        6.06, among those Participants in the Plan who are identified in the
        Settlement as "Current ESOP Participants," more particularly defined as
        each person (other than a person who sold Employer Securities to the
        Plan) who on the effective date of the Settlement had not received full
        payment of his Capital Accumulation in the Plan. The purpose of this
        Section 6.06 is to provide special rules regarding the allocation of the
        ESOP Settlement Funds to the Current ESOP Participants, as well as
        certain vesting, investment direction, and distribution rules applicable
        to the ESOP Settlement Funds after allocation to Current ESOP
        Participants.

                (b)     Allocation of ESOP Settlement Funds. As described in the
        Settlement, the Settlement Funds shall be allocated among the Current
        ESOP Participants in proportion to their relative Account balances as of
        December 31, 1992. Each Current ESOP Participant's share of the ESOP
        Settlement Funds shall be determined by multiplying the aggregate amount
        to be allocated by a fraction, the numerator of which is the balance of
        each such Current ESOP Participant's Accounts in the Plan as of December
        31, 1992 and the denominator of which is the aggregate balances of all
        Current ESOP Participants' Accounts as of December 31, 1992. Each
        Current ESOP Participant shall receive an allocation of the First Cash
        Payment and the Second Cash Payment in accordance with this subsection
        (b) notwithstanding the termination of his employment prior to the date
        of such allocation. The allocation of the ESOP Settlement Funds shall be
        made by special allocations of the First Cash Payment and the Second
        Cash Payment performed as soon as administratively practicable after
        each such payment is received by the Trust, as determined by the
        Committee. The cash which is allocated to the Current ESOP Participants
        shall be held in a newly created subaccount under the Other Investments
        Account, and which shall be referred to in this Section 6.06 as the
        "Other Investments Settlement Account". All funds and assets held in the
        Other Investments Settlement Account shall be subject to the rules of
        this Plan which apply to the Other Investments Account except as
        expressly provided otherwise in this Section 6.06. The cash allocated to
        the Other Investments Settlement Accounts pursuant to this subsection
        (b) shall not constitute or be deemed to be an Employer Contribution or
        result in an Annual Addition.

                (c)     Prohibition on Use of Funds. Notwithstanding Section
        6.01(c) or anything else to the contrary in this Plan, no funds or
        assets which constitute a part of the Other Investments Settlement
        Account may be used to repurchase Company Stock or to repay principal or
        interest on any Loan.

                (d)     Special Vesting Rule. Notwithstanding Section 9.03 or
        anything else to the contrary in this Plan, each Current ESOP
        Participant shall always be fully vested in all funds and assets
        allocated to his Other Investments Settlement Account.



                                       31
<PAGE>

                (e)     Investment Direction by Participants.

                        (1)     Notwithstanding anything to the contrary in this
                Plan, each Current ESOP Participant shall direct how the cash
                allocated to his Other Investments Settlement Account shall be
                invested, pursuant to the rules set forth in this Section
                6.06(e). The investment funds which are made available to
                Current ESOP Participants and the manner of selecting those
                funds as described in this Section 6.06(e) are intended to meet
                the requirements of Section 404(c) of ERISA and regulations
                thereunder, and this Section shall be so interpreted.

                        (2)     The Committee shall select three or more mutual
                funds, individually managed investment funds, or collective or
                commingled investment funds (which may include collective or
                commingled investment funds made available by the Trustee) to
                serve as investment vehicles for the cash allocated to the Other
                Investments Settlement Account. The Committee shall provide
                information regarding such investment funds to Current ESOP
                Participants, and may change, add, or delete investment funds
                from time to time, provided that the reconstituted investment
                funds are intended by the Committee in good faith to meet the
                requirements of Section 404(c) of ERISA.

                        (3)     Each Current ESOP Participant shall direct on a
                form provided by the Committee to have the cash held in or
                received by his Other Investments Settlement Account allocated
                among the investment funds made available by the Committee. Such
                investment election shall be made in increments of five percent
                (5%) of the balance of his Other Investments Settlement Account.
                A Current ESOP Participant's initial investment election shall
                allocate all of the cash held in his Other Investments
                Settlement Account among the investment funds and all subsequent
                allocations of cash to the Other Investments Settlement Account
                for so long as the elections remain in effect. If a Current ESOP
                Participant fails to make an investment election, the cash held
                in his Other Investments Settlement Account shall be invested
                among the investment funds as determined by the Committee.

                        (4)(i)  Investment elections will remain in effect until
                changed by a new election. New elections may be made by a
                Current ESOP Participant as frequently as the Committee will
                permit, which shall be at least once each calendar quarter. The
                new election will be effective as of the next January 1, April
                1, July 1 or October 1 of each Plan Year or such earlier date as
                the Committee may approve, provided that new elections must be
                received at least 30 days prior to the desired effective date
                (unless the Committee provides for a shorter notice period on a
                uniform basis. New elections shall reallocate the Current ESOP
                Participant's Other Investments Settlement Account among the
                investment funds.

                        (ii)    Notwithstanding the foregoing, effective as of
                June 2, 1997, investment elections will remain in effect until
                changed by a new election. New elections may be made by a
                Current ESOP Participant on each Valuation Date. The



                                       32
<PAGE>

                new election will be effective as soon as administratively
                practicable after the date of receipt of the election; provided
                that the Committee may provide that any election must be
                received no later than a specified period of time prior to the
                effective date of the election. New elections shall in each case
                reallocate the Current ESOP Participant's Other Investments
                Settlement Account among the investment funds.

                        (5)(i)  Each of the investment funds shall be valued as
                of the last day of each calendar quarter. As of the last day of
                each calendar quarter, the Other Investments Settlement Account
                shall be credited or debited with its proportionate share of net
                income, expense, appreciation or depreciation allocable to the
                investment funds selected by the Current ESOP Participant for
                the quarter. The reasonable incremental costs of offering and
                administering the investment funds shall be charged pro rata
                against the Other Investments Settlement Accounts of all Current
                ESOP Participants.

                        (ii)    Notwithstanding the foregoing, effective as of
                June 2, 1997, each of the investment funds shall be valued as of
                each Valuation Date. As of each Valuation Date, the Other
                Investments Settlement Account shall be credited or debited with
                its proportionate share of net income, expense, appreciation or
                depreciation allocable to the investment funds selected by the
                Current ESOP Participant. The reasonable incremental costs of
                offering and administering the investment funds shall be charged
                pro rata against the Other Investments Settlement Accounts of
                all Current ESOP Participants.

                (f)     Special Distribution Rules. Notwithstanding anything to
        the contrary in this Plan, a Current ESOP Participant whose employment
        ends for any reason may elect that all funds held in his Other
        Investments Settlement Account be distributed to such Current ESOP
        Participant as soon as practicable following the date on which his
        employment ends. In the event that a Current ESOP Participant's
        employment ends before allocation of the First Cash Payment, or after
        allocation of the First Cash Payment but before allocation of the Second
        Cash Payment, such Current ESOP Participant may elect, upon termination
        of this employment, to have his allocable portion of such unallocated
        ESOP Settlement Funds, determined pursuant to subsection (b) hereof,
        distributed to him as soon as practicable after allocation (or after
        each allocation, if more than one) in a lump sum payment (or payments,
        if applicable).

        6.07    PROFIT SHARING ACCOUNT.

                (a)     Background. Pursuant to the terms of those certain
        Acquisition Agreements described in the Preamble of this amended and
        restated Plan, the Employer Securities allocated to the Accounts of
        Participants as of the Closing Date of each Acquisition Agreement (as
        such term is defined in such Acquisition Agreement) were sold and the
        Plan received a single lump sum cash payment in consideration for such
        sale ("Cash Consideration"). As described in this Section 6.07, such
        Cash Consideration shall be



                                       33
<PAGE>

        allocated among the Profit Sharing Accounts of those Participants in the
        Plan whose Accounts under this Plan as of such Closing Date held
        Employer Securities which were sold and thereby became entitled to
        receive an allocable share of the Cash Consideration. Such Participants
        are referred to herein as "Selling Participants." The purpose of this
        Section 6.07 is to provide special rules regarding the allocation of the
        Cash Consideration, as well as certain vesting, investment direction,
        and distribution rules applicable to the Cash Consideration after
        allocation to Selling Participants.

                (b)     Allocation of Cash Consideration. The Cash Consideration
        shall be allocated among the Selling Participants in proportion to their
        relative Company Stock Account balances as of the Closing Date;
        provided, however, that effective as of October 29, 1998, the Cash
        Consideration shall be allocated among the Selling Participants in
        proportion to their relative shares of Employer Securities allocated to
        their Company Stock Accounts as of the Closing Date of each Acquisition
        Agreement. Each Selling Participant's share of the Cash Consideration
        shall be determined by multiplying the aggregate amount to be allocated
        by a fraction, the numerator of which is the balance of each such
        Selling Participant's Company Stock Account in the Plan as of the
        Closing Date and the denominator of which is the aggregate balances of
        all Selling Participant's Company Stock Accounts as of the Closing Date;
        provided, however, that effective as of October 29, 1998, each Selling
        Participant's Share of the Cash Consideration shall be determined by
        multiplying the aggregate amount to be allocated by a fraction, the
        numerator of which is the number of shares of Employer Securities
        allocated to each such Selling Participant's Company Stock Account in
        the Plan as of each Closing Date and the denominator of which is the
        aggregate number of shares of Employer Securities allocated to all
        Selling Participants' Company Stock Accounts as of such Closing Date.
        Each Selling Participant shall receive an allocation of the Cash
        Consideration in accordance with this subsection (b) notwithstanding the
        termination of his employment prior to the date of such allocation. The
        Cash Consideration which is allocated to the Selling Participants shall
        be held in a newly created account under the Profit Sharing Component of
        the Plan, and which shall be referred to in this Plan as the "Profit
        Sharing Account". All funds and assets held in the Profit Sharing
        Account shall be subject to the rules of this Plan which apply to the
        Other Investments Account held under the ESOP Portion of the Plan except
        as expressly provided otherwise in this Section 6.07. The Cash
        Consideration allocated to the Profit Sharing Accounts pursuant to this
        subsection (b) shall not constitute or be deemed to be an Employer
        Contribution or result in an Annual Addition.

                (c)     Prohibition on Use of Funds. Notwithstanding Section
        6.01(c) or anything else to the contrary in this Plan, no funds or
        assets which constitute a part of the Profit Sharing Account may be used
        to repurchase Company Stock or to repay principal or interest on any
        Loan.

                (d)     Special Vesting Rule. A Participant's interest in his
        Profit Sharing Account shall be determined under the rules generally
        applicable under this Plan to the determination of a Participant's
        vested status (excluding the provisions of Section 6.06).



                                       34
<PAGE>

                (e)     Investment Direction by Participants.

                        (1)     Notwithstanding anything to the contrary in this
                Plan, each Selling Participant shall direct how the cash
                allocated to his Profit Sharing Account shall be invested,
                pursuant to the rules set forth in this Section 6.07(e). The
                investment funds which are made available to Selling
                Participants and the manner of selecting those funds as
                described in this Section 6.07(e) are intended to meet the
                requirements of Section 404(c) of ERISA and regulations
                thereunder, and this Section shall be so interpreted.

                        (2)     The Committee shall select three or more mutual
                funds, individually managed investment funds, or collective or
                commingled investment funds (which may include collective or
                commingled investment funds made available by the Trustee) to
                serve as investment vehicles for the cash allocated to the
                Profit Sharing Account. The Committee shall provide information
                regarding such investment funds to Selling Participants, and may
                change, add, or delete investment funds from time to time,
                provided that the reconstituted investment funds are intended by
                the Committee in good faith to meet the requirements of Section
                404(c) of ERISA.

                        (3)     Each Selling Participant shall direct on a form
                provided by the Committee to have the cash held in or received
                by his Profit Sharing Account allocated among the investment
                funds made available by the Committee. Such investment election
                shall be made in increments of five percent (5%) of the balance
                of his Profit Sharing Account. A Selling Participant's initial
                investment election shall allocate all of the cash held in his
                Profit Sharing Account among the investment funds and all
                subsequent allocations of cash to the Profit Sharing Account for
                so long as the elections remain in effect. If a Selling
                Participant fails to make an investment election, the cash held
                in his Profit Sharing Account shall be invested among the
                investment funds as determined by the Committee.

                        (4)(i)  Investment elections will remain in effect until
                changed by a new election. New elections may be made by a
                Selling Participant as frequently as the Committee will permit,
                which shall be at least once each calendar quarter. The new
                election will be effective as of the next January 1, April 1,
                July 1 or October 1 of each Plan Year or such earlier date as
                the Committee may approve, provided that new elections must be
                received at least 30 days prior to the desired effective date
                (unless the Committee provides for a shorter notice period on a
                uniform basis). New elections shall reallocate the Selling
                Participant's Profit Sharing Account among the investment funds.

                        (ii)    Notwithstanding the foregoing, effective as of
                June 2, 1997, investment elections will remain in effect until
                changed by a new election. New elections may be made by a
                Selling Participant on each Valuation Date. The new election
                will be effective as soon as administratively practicable after
                the date of receipt of the election; provided that the Committee
                may provide that any election



                                       35
<PAGE>

                must be received a specified period of time prior to the
                effective date of the election. New elections shall in each case
                reallocate the Selling Participant's Profit Sharing Account
                among the investment funds.

                        (5)(i)  Each of the investment funds shall be valued as
                of the last day of each calendar quarter. As of the last day of
                each calendar quarter, the Profit Sharing Account shall be
                credited or debited with its proportionate share of net income,
                expense, appreciation or depreciation allocable to the
                investment funds selected by the Selling Participant for the
                quarter. The reasonable-incremental costs of offering and
                administering the investment funds shall be charged pro rata
                against the Profit Sharing Accounts of all Selling Participants.

                        (ii)    Notwithstanding the foregoing, effective as of
                June 2, 1997, each of the investment funds shall be valued as of
                each Valuation Date. As of each Valuation Date, the Profit
                Sharing Account shall be credited or debited with its
                proportionate share of net income, expense, appreciation or
                depreciation allocable to the investment funds selected by the
                Selling Participant. The reasonable-incremental costs of
                offering and administering the investment funds shall be charged
                pro rata against the Profit Sharing Accounts of all Selling
                Participants.

                (f)     Special Distribution Rules. Notwithstanding anything to
        the contrary in this Plan, a Selling Participant whose employment ends
        for any reason may elect that all funds held in his Profit Sharing
        Account be distributed to such Selling Participant as soon as
        practicable following the date on which his employment ends. In the
        event that a Selling Participant's employment ends before allocation of
        any Cash Consideration, such Selling Participant may elect, upon
        termination of this employment, to have his allocable portion of such
        unallocated Cash Consideration, determined pursuant to subsection (b)
        hereof, distributed to him as soon as practicable after allocation (or
        after each allocation, if more than one) in a lump sum payment (or
        payments, if applicable).



                                       36
<PAGE>

                                  ARTICLE VII.

                         EXPENSES OF THE PLAN AND TRUST

        7.01    (a)     Except as provided in Section 6.06, all expenses of
establishing and administering the Plan shall be paid by the Company, and if not
paid by the Company, shall be charged against the assets of the Trust.

                (b)     Any Employer other than the Company shall reimburse the
Company for that portion of costs and expenses paid by the Company for any Plan
Year as the amount of Employer Contributions from each such Employer for such
Plan Year bears to the aggregate Employer Contributions from all Employers for
that Plan Year.



                                       37
<PAGE>

                                  ARTICLE VIII.

                              VOTING COMPANY STOCK

        8.01    TRUSTEE'S POWERS AND DUTIES. All Company Stock held in the Trust
shall be voted by the Trustee only in such manner as provided pursuant to this
Article VIII.

        8.02    VOTING OF SHARES.

                (a)     If any class of Company Stock is required to be
        registered under Section 12 of the Securities Exchange Act of 1934, as
        amended, or if any Employer Securities were acquired with the proceeds
        of an outstanding Loan which is a securities acquisition loan (as
        defined in Section 133 of the Code) and which is subject to the
        requirements of Section 133(b)(7) of the Code) then each Participant in
        the Plan shall be entitled to instruct the Committee as to the manner in
        which any shares of such Company Stock or Employer Securities allocated
        to his Company Stock Account shall be voted, but only to the extent
        required under Sections 133 and 409(e) of the Code.

                (b)     If no class of Company Stock is required to be
        registered under Section 12 of the Securities Exchange Act of 1934, as
        amended, or if no Employer Securities were acquired with the proceeds of
        an outstanding Loan which is a securities acquisition loan (as defined
        in Section 133 of the Code) and which is subject to the requirements of
        Section 133(b)(7) of the Code, each Participant shall be entitled to
        instruct the Committee as to the manner in which such share of Company
        Stock or Employer Securities then allocated to his Company Stock Account
        shall be voted with respect to any corporate merger, consolidation,
        recapitalization, reclassification, liquidation, dissolution, sale of
        substantially all the assets of the Company or a similar transaction
        prescribed by Treasury Regulation under Section 409(e) of the Code, but
        only to the extent required by Sections 133, 401 (a)(22) and 409(e)(3)
        of the Code.

                (c)     On any occasion on which the stockholders of the Company
        vote, any allocated Company Stock with respect to which voting
        instructions are not received from Participants shall not be voted and
        all Company Stock that is not then allocated to any Participant's
        Company Stock Account shall be voted by the Trustee in the manner
        determined by the Committee, provided that such determination is
        consistent with ERISA.

                (d)     The Trustee shall vote all shares of Company Stock not
        then allocated to the accounts of Participants in the manner directed by
        the Committee, to the extent that such direction is, in the judgment of
        the Trustee, consistent with ERISA.



                                       38
<PAGE>

                                   ARTICLE IX.

                              CAPITAL ACCUMULATION

        9.01    CAPITAL ACCUMULATION. Upon termination of a Participant's
employment with the Employer, or upon incurring a Break in Service, a
Participant (or, in the case of the Participant's death, his Beneficiary) shall
have a vested (nonforfeitable) interest in all, a part, or none of the final
balances in his Accounts in accordance with Sections 6.06(d), 9.02 and 9.03. A
Participant's (or his Beneficiary's) Capital Accumulation shall be determined as
set forth below as soon after his employment ends as practicable.

        9.02    RETIREMENT, DEATH OR PERMANENT DISABILITY. Upon attainment of
age sixty-five (65) or a Participant's death, Permanent Disability or
Retirement, a Participant shall have a nonforfeitable right to one hundred
percent (100%) of the balances credited to his Accounts. In such a case, the
Participant's Capital Accumulation shall be determined as of the Anniversary
Date coinciding with or next following such Participant's death, Disability
Retirement Date or Retirement Date, as the case may be, and he shall be entitled
to receive an allocation of Employer Contributions and Forfeitures as described
in Section 6.02 for the Plan Year in which his employment ends.

        9.03    OTHER TERMINATION OF SERVICE AND VESTING. If a Participant's
employment with the Employer ends for any reason other than Retirement, death,
or Permanent Disability, his Capital Accumulation (for his Accounts exclusive of
his Other Investments Settlement Account) shall be determined as of the
Anniversary Date coinciding with or next following his termination date. Such
Capital Accumulation shall be determined in accordance with the following
vesting schedule:

<TABLE>
<CAPTION>
                        Years of                             Percentage
                        Service                              of Vesting
                        -------                              ----------
                        <S>                                  <C>
                        Less than 1                                 0
                        1                                          20
                        2                                          40
                        3                                          60
                        4                                          80
                        5 or more                                 100
</TABLE>

        For purposes of this Section 9.03, a Participant's Years of Service
shall include all Years of Service with the Company or any Affiliated Company.

        9.04    FORFEITURES.

                (a)     Any portion of the final balances in a Participant's
        Accounts that is not vested and does not become part of his Capital
        Accumulation shall become a Forfeiture in accordance with the provisions
        of this Section 9.04. The amount of any such Forfeiture shall first be
        deducted from the Participant's other Investments Accounts (exclusive of
        the Participant's other Investments Settlement Account). If Forfeiture
        of the Participant's



                                       39
<PAGE>

        Other Investments Accounts (exclusive of the Participant's Other
        Investments Settlement Account) is not sufficient to reduce the fair
        market value of his Capital Accumulation to the percentage of the total
        value of his Accounts determined under Section 9.03, the remainder of
        the Forfeiture shall be deducted from the Participant's Profit Sharing
        Account. If Forfeiture of the Participant's Profit Sharing Accounts is
        not sufficient to reduce the fair market value of his Capital
        Accumulation to the percentage of the total value of his Accounts
        determined under Section 9.03, the remainder of the Forfeiture shall be
        deducted from the Participant's Company Stock Accounts. If a
        Participant's Company Stock Accounts include more than one class of
        Company Stock, the Forfeiture shall consist of the same proportion of
        each class of stock. All Forfeitures shall be reallocated to the
        Accounts of the remaining Participants pursuant to Section 6.02 as of
        the Anniversary Date of the Plan Year in which the Participant incurs a
        Break in Service or, if the Participant receives a Total Distribution,
        as of the Anniversary Date of the Plan Year in which the Total
        Distribution is completed.

                (b)     If distribution of a Participant's Capital Accumulation
        (other than a Total Distribution) occurs prior to the occurrence of a
        Break in Service, and if such Participant is not one hundred percent
        (100%) vested in his Account balances, the non-vested portion of such
        Accounts that is not distributed will continue to be held in his
        Accounts under the Plan, and shall become a Forfeiture only on the
        Anniversary Date of the Plan Year in which a Break in Service occurs.
        Such Accounts shall continue to receive allocations of the net income
        (or loss) of the Trust, but shall not be entitled to an allocated share
        of Employer Contributions, Forfeitures or Company Stock released from a
        Suspense Account. At any given time, the vested interest ("X") in such
        Accounts shall be determined in accordance with the following formula:

                                X = P(AB + D) - D

                For purposes of applying this formula, P is the vested
        percentage at the time of the subsequent termination; AB is the total of
        the Account balances (other than the Participant's Other Investments
        Settlement Account) at the time; and D is the amount of the Capital
        Accumulation (other than the Participant's Other Investments Settlement
        Account) previously distributed.

        9.05    RESTORATION OF FORFEITURES. If a Participant receives a
distribution which is less than the total value of his Account balances, has a
portion of his Account forfeited, and later resumes employment covered under the
Plan, the Participant's Accounts shall be restored to their balances as of a
time immediately prior to the forfeiture, unadjusted by any subsequent gains or
losses, provided the rehired Participant repays to the Plan the full amount of
the distribution. Such restored forfeitures shall be restored first from current
year forfeitures (other than forfeitures of Company Stock) and then to the
extent needed, by an additional Employer Contribution. Such repayment by the
Participant shall be made before the earlier of five (5) years after the
Participant's Reemployment Date and the date on which the Participant would have
incurred five (5) consecutive Breaks in Service, if he had not been rehired.
Such repayment shall be held in an account established for the Participant by
the Plan Administrator, which account shall be segregated from



                                       40
<PAGE>

the Participant's other Accounts under the Plan for investment purposes and
shall be separately credited (or debited) with the income (or loss) resulting
from investments purchased with such repayment; provided, however, that no such
investment may include investments in Company Stock.

        9.06    CERTAIN REEMPLOYED PARTICIPANTS. If a Participant incurs five
(5) or more consecutive Breaks in Service, all Years of Service after such
Breaks in Service shall be disregarded when determining such Participant's
Capital Accumulation for the period of service before such Breaks in Service
(subject to the right to restoration of Forfeitures set forth in Section 9.05).
If a Participant incurs five (5) or more consecutive Breaks in Service, all
Years of Service before such Breaks in Service shall be disregarded when
determining such Participant's Capital Accumulation for the period of service
after such Breaks in Service, unless either (a) such Participant had vested
Capital Accumulation at the time the Participant's Break in Service commenced,
or (b) upon returning to service the number of consecutive Breaks in Service
incurred by the Participant is less than the greater of (i) five (5) and (ii)
the number of Years of Service prior to such Breaks in Service.



                                       41
<PAGE>

                                   ARTICLE X.

                                  DISTRIBUTIONS

        10.01   TIME OF DISTRIBUTION TO PARTICIPANTS. Unless a Participant
elects otherwise as set forth in Section 6.06 or this Article X, distribution of
benefits shall begin no later than the sixtieth (60th) day after the close of
the Plan Year in which the latest of the following events occurs: (i) the
Participant attains age sixty-five (65); (ii) the occurrence of the tenth
anniversary of the year in which the Participant commenced participation in the
Plan; or (iii) the Participant terminates his service with the Employer.
Otherwise, any Participant whose employment ends shall receive the vested
balance in his Accounts (exclusive of his Other Investments Settlement Account)
as follows:

                (a)     Retirement, Death or Permanent Disability. A Participant
        whose employment ends on or after becoming eligible for Retirement,
        Early Retirement, or by reason of his Permanent Disability or death
        shall receive or commence to receive his Capital Accumulation within the
        Plan Year following the Plan Year in which his employment ends, unless
        the Participant, or the Participant's Beneficiary in the event of the
        Participant's death, elects to defer payment until a later date;
        provided, however, that if the value of the Participant's Capital
        Accumulation is $3,500 or less (and has not at the time of any prior
        distribution exceeded $3,500), the Committee shall automatically make
        distribution of the Participant's Capital Accumulation within the Plan
        Year following the Plan Year in which the Participant's employment ends
        and no deferral election shall be available; provided, further, that
        with respect to distributions that are made on and after January 1,
        2000, if the value of the Participant's Capital Accumulation is $5,000
        or less at the time of termination of employment, the Committee shall
        automatically make distribution of the Participant's Capital
        Accumulation within the Plan Year following the Plan Year in which the
        Participant's employment ends and no deferral election shall be
        available. Any shares of Company Stock included as part of such
        Participant's Capital Accumulation shall be valued; as of the Valuation
        Date immediately preceding the date of distribution. Notwithstanding the
        foregoing, effective July 1, 1994, such Participant (or beneficiary) may
        elect in writing to receive up to fifty percent (50%) of his Capital
        Accumulation as soon as practicable following the date of termination,
        in which case the value of any shares of Company Stock subject to such
        early distribution shall be determined as of the Valuation Date
        immediately preceding such date of termination, and the balance of such
        Participant's Capital Accumulation shall be distributable as provided
        above. In the event of an immediate partial distribution in accordance
        with the immediately preceding sentence, no subsequent adjustment shall
        be made with respect to the value of the portion of the Participant's
        Capital Accumulation so distributed.

                (b)     Other Separation from Service. A Participant whose
        employment ends for reasons or at times other than described above shall
        receive his Capital Accumulation:

                        (i)     unless the Participant elects otherwise, within
                or beginning within one year after the end of the Plan Year
                which is the fifth Plan Year after the Plan Year in which the
                Participant's employment ends unless the Participant is


                                       42
<PAGE>

                reemployed by the Company prior to the time for such
                distribution; provided, however, if the Participant's Capital
                Accumulation includes shares of Company Stock acquired with the
                proceeds of a Loan, no distribution shall be required to be made
                to the Participant until sixty (60) days after the end of the
                Plan Year in which such Loan is repaid in full.

                        (ii)    Notwithstanding the foregoing, if the value of
                the vested portion of a Participant's Company Stock and Other
                Investments Account is $3,500 or less (and has not at the time
                of any prior distribution exceeded $3,500), the Committee shall
                make distribution of the Participant's Capital Accumulation
                within one year after the end of the Plan Year in which his
                employment ends; provided, however, that with respect to
                distributions that are made on and after January 1, 2000, if the
                value of the vested portion of a Participant's Company Stock and
                Other Investments Account is $5,000 or less at the time of
                termination of employment, the Committee shall make,
                distribution of the Capital Accumulation within one year after
                the end of the Plan Year in which his employment ends.

                        (iii)   for purposes of Section 10.01(b), any shares of
                Company Stock included as part of a Participant's Capital
                Accumulation shall be valued as of the Valuation Date
                immediately preceding the date of distribution.

                (c)     In any event, distribution of benefits shall commence to
        the extent and in the manner required by Section 10.08.

        10.02   BENEFIT FORMS FOR PARTICIPANTS.

                (a)     A Participant's Capital Accumulation, if in the amount
        of $50,000 or less (exclusive of the Participant's Other Investments
        Settlement Account and the Participant's Profit Sharing Account), shall
        be paid to him in the form of a single lump sum, payable as provided in
        Section 10.01, unless the Participant elects to receive payment in a
        series of annual installments as provided in subsection (b) of this
        Section 10.02; provided, however, that if the Participant's Capital
        Accumulation is in the amount of $3,500 or less (and has not at the time
        of any prior distribution exceeded $3,500), the Capital Accumulation
        shall be paid to him in the form of a single lump sum, payable as
        provided in Section 10.01; provided, further, that with respect to
        distributions that are made on and after January 1, 2000, if the
        Participant's Capital Accumulation is in the amount of $5,000 or less at
        the time of termination of employment, the Capital Accumulation shall be
        paid to him in the form of a single lump sum, payable as provided in
        Section 10.01.

                (b)     A Participant's Capital Accumulation, if in excess of
        $50,000 (exclusive of the Participant's Other Investments Settlement
        Account and the Participant's Profit Sharing Account) shall be paid to
        him in a series of annual installments, payable over a period of five
        (5) years (or such shorter period determined in accordance with Section
        10.02(d) or Section 10.03) commencing as provided in Section 10.01;
        provided, however, that in the event of death, a Participant's
        Beneficiary may elect to receive payment in a single lump



                                       43
<PAGE>

        sum. Each installment shall be in an amount equal in value to (i) the
        number of shares of Company Stock credited to the Participant's Company
        Stock Account and the balance credited to the Participant's Other
        Investments Account and the balance credited to the Participant's
        Diversified Account, if any, as of the most recent Valuation Date, each
        divided by (ii) the number of installments which remain to be paid from
        the Participant's Capital Accumulation (including the current
        installment being computed).

                (c)     To the extent permitted by applicable law,
        notwithstanding the foregoing, the Company may, in its discretion,
        determine at any time, by formal action of the Committee or amendment of
        the Plan, that all Participants' Capital Accumulations (other than Other
        Investments Settlement Accounts) shall henceforth be distributed, on a
        uniform, nondiscriminatory basis, in the form of a single lump-sum
        payment, or, alternatively, that each Participant eligible to receive a
        distribution may elect whether to receive his Capital Accumulation
        (exclusive of his other Investments Settlement Account) as a lump sum
        payment or as a series of five (5) annual installments.

                (d)     Where a Participant's benefits are to be paid in
        installments, the period for the installments must be such that, except
        when the Participant's designated Beneficiary is his spouse, all
        benefits shall be paid over a period not exceeding the life expectancy
        of the Participant or the joint life and last survivor expectancy of the
        Participant and his designated Beneficiary (where the Participant's life
        expectancy and, if the Participant's designated Beneficiary is his
        spouse, his designated Beneficiary's life expectancy is redetermined as
        of the first day of each Plan Year), and that in each year after the
        Participant reaches age 70-1/2, the Participant shall receive at least
        the amount required under Code Section 401(a)(9).

        10.03   BENEFITS ON A PARTICIPANT'S DEATH. If a Participant's employment
is ended by death, or if a Participant has any vested interest under the Plan
when his employment ends and he then dies before his benefits are fully paid,
his vested interest in his accounts shall be paid to his Beneficiary. The
benefits will generally be payable as provided in Sections 6.06, 6.07, 10.01 and
10.02. Installment distributions to a Beneficiary pursuant to Section 10.02(b)
shall be over a period not in excess of the Beneficiary's life expectancy, as
hereinafter provided, each installment being equal to (i) the number of shares
of Company Stock credited to the Participant's Company Stock Account and the
balance credited to the Participant's Other Investments Account (exclusive of
his Other Investments Settlement Account) and the balance credited to the
Participant's Diversified Account, if any, as of the most recent Valuation Date,
each divided by (ii) the number of installments which remain to be paid
(including the current installment being computed). Any election shall be made
by the Beneficiary not later than sixty (60) days after benefits become payable
as provided in Section 10.01(a). In all events, all of the Participant's
interest in this Plan shall be completely distributed within five (5) years
after the date of his death, except (i) if benefits are payable to or for the
benefit of a designated Beneficiary and the benefit payments begin within one
(1) year after the Participant's death (or such later period as may be permitted
by regulations), the designated Beneficiary's benefits may be paid over a period
not exceeding the designated Beneficiary's, life expectancy at the date of the
Participant's death and (ii) if the Participant's designated Beneficiary is his
spouse, benefit payments need not begin until the date the Participant



                                       44
<PAGE>

would have reached age 70-1/2 and, if the spouse dies before such payments
begin, the Participant's interest in this Plan shall then be distributed
pursuant to this Section 10.03 applied as if the spouse were the Participant.
Further, for purposes of this Section any benefits paid to a child of a
Participant shall be treated as if they have been paid to the Participant's
spouse if the benefits will become payable to the spouse when the child reaches
majority (or upon such other designated event permitted by regulations).

        10.04   CONSENT REQUIREMENTS.

                (a)     In General. Notwithstanding any provision of this Plan
        to the contrary, unless one of the exceptions in subsection (c) below is
        satisfied, no distribution may be made or commence to a Participant
        unless the Participant has been provided the notification required under
        subsection (b) below at the time and in the manner indicated in such
        subsection, and has consented in writing to the distribution after
        receiving such notification, with such consent being given no less than
        30 days and no more than 90 days prior to his benefit commencement date,
        except as provided in subsection (b) below. To the extent permitted by
        applicable law, such consent may be given by telephone or other
        electronic means of communication if the Plan's administrative
        procedures provide for the giving of consent by such means.

                (b)     Notification. The Committee shall notify the Participant
        of the right, if any, to defer any distribution. Such notification shall
        include a general description of the material features, and an
        explanation of the relative values of the optional forms of benefit
        available, if any, under the Plan and shall inform the Participant of
        his right to defer receipt of the distribution, and shall be provided
        (by mail, posting or personal delivery) no less than 30 days and no more
        than 90 days prior to his benefit commencement date; provided, however,
        that a Participant may waive the right to receive the notice no less
        than 30 days prior to the benefit commencement date; provided, further,
        that a Participant shall have the opportunity to consider the decision
        of whether or not to elect a distribution for at least 30 days after the
        notice is provided; provided, further, that the Committee shall provide
        information to the Participant clearly indicating that the Participant
        has the right to the 30-day period for making the decision.

                (c)     Exceptions. This Section shall not be applicable to the
        following distributions:

                        (i)     Cash-Outs. If the value of a Participant's
                entire Capital Accumulation does not and has not at the time of
                a prior distribution ever exceeded $3,500 (or, effective with
                respect to distributions that are made on or after January 1,
                2000, does not exceed $5,000 on the date of termination of
                employment), this Section shall not be applicable to a
                distribution of such entire Capital Accumulation as a single
                lump sum.



                                       45
<PAGE>

                        (ii)    Immediately Distributable. If a distribution is
                made on or after the Participant's attainment of his Normal
                Retirement Age, this Section shall not be applicable to such
                distribution.

                        (iii)   Beneficiaries. If a distribution is made to an
                alternate payee pursuant to a qualified domestic relations order
                or to any other Beneficiary, this Section shall not be
                applicable to such distribution.

                        (iv)    Code Sections 401(a)(9) and 415. If a
                distribution is required to satisfy the provisions of Section
                10.08 (Code Section 401 (a)(9) required distribution rules) or
                Section 6.03 (Code Section 415 limitation on allocations), this
                Section shall not be applicable to such distribution.

                        (v)     Plan Termination. If a distribution is made to
                the Participant upon termination of this Plan and no member of
                the controlled group of which the Employer is a part maintains
                any other defined contribution plan (other than an employee
                stock ownership plan as defined in Section 4975(e)(7) of the
                Code), this Section shall not be applicable to such distribution
                if this Plan does not offer an annuity option (purchased from a
                commercial provider).

                (d)     Application to Plan Provisions. To the extent that a
        distribution is required by the terms and provisions of this Plan, but
        this Section is applicable to the distribution and the distribution
        therefore cannot be made, such distribution shall, except as otherwise
        provided, be made as soon as administratively practicable following the
        date that this Section is no longer applicable to the distribution.

        10.05   DISTRIBUTIONS IN COMPANY STOCK. A Participant's benefits shall
be paid in cash. In connection with a distribution, the Committee shall cause
the shares of Company Stock credited to the Participant's Company Stock Account
and units in each investment fund under his Diversified Account which are to be
distributed to be converted into cash at the Company Stock's current fair market
value, with the resulting cash being paid to the Participant or his Beneficiary,
along with the portion of the Participant's Other Investments Account which is
being distributed. Notwithstanding the foregoing, a Participant or his
Beneficiary, as the case may be, shall have the right to request that the
Participant's benefits attributable to his Company Stock Account or his Other
Investments Account be paid in the form of Company Stock, (but not his
Diversified Account, if any, or his Profit Sharing Account, if any), provided
such a request is made within such time period as is established by the
Committee for such decision. In that event, the Committee shall cause the
portion of the Participant's Other Investments Account which is to be
distributed to be converted into Company Stock at its current fair market value,
with the resulting Company Stock being distributed to the Participant or his
Beneficiary, along with the shares of Company Stock credited to the
Participant's Company Stock Account which are being distributed, provided, that
the value of any fractional share of Company Stock shall be paid in cash. No
distribution shall be made in Series A Preferred Stock with respect to an asset
other than Series A Preferred stock held in a Participant's account. In the case
of a share of the Company's Series A Preferred Stock which was allocated to the
Participant's Company Stock Account by reason of release from the



                                       46
<PAGE>

Suspense Account described in Section 5.04, at any time prior to the conversion
of such Series A Preferred Stock, fair market value for purposes of distribution
pursuant to this Article X shall not be less than the "Redemption Price," as
such term is defined in the Amended and Restated Certificate of Incorporation of
the Company, on the applicable Valuation Date provided in this Article X.
Effective as of October 29, 1998, in the case of any share of Common Stock of
Simmons Holdings, Inc. which was allocated to the Participant's Company Stock
Account by reason of the release from the Suspense Account described in Section
5.04, fair market value for purposes of distribution pursuant to this Article X
shall not be less than the fair market value determined on an enterprise value
basis without the application of any minority discounts, on the applicable
Valuation Date provided for in this Article X.

        10.06   DELAY IN BENEFIT DETERMINATION. If the Committee is unable to
determine the benefits payable to a Participant or Beneficiary on or before the
latest date prescribed for payment pursuant to Section 6.06, 10.01 or 10.03, or
in the event that an appraisal of shares in respect to which a distribution is
to be made is not performed in a timely manner, the benefits shall in any event
be paid within sixty (60) days after they can first be determined, with whatever
makeup payments may be appropriate in view of the delay.

        10.07   DESIGNATED BENEFICIARIES. Distribution of a Participant's
Capital Accumulation shall be made to the Participant, if living, and, if not to
the Beneficiary. In the event of a Participant's death, his Beneficiary shall be
his surviving spouse, if living, or if none, his estate unless the Participant,
prior to his death designated a Beneficiary other than his surviving spouse or
estate. A Participant may designate a Beneficiary and/or contingent
Beneficiaries and may change such designation from time to time.

        Notwithstanding any provision of this Plan to the contrary, any
Beneficiary designation or change by a Participant which would result in the
designation of a Beneficiary other than the Participant's spouse shall not be
effective unless the Participant's spouse consents to such designation or
change. The spouse's consent must be witnessed by a Plan representative or a
notary public. If the Participant establishes to the satisfaction of the Plan
Administrator that such written consent cannot be obtained because there is no
spouse or the spouse cannot be located, the written consent of the Participant
shall be deemed sufficient. A consent shall be valid only with respect to the
spouse who signs the consent, or in the event of a deemed consent, the
designated spouse. A revocation of a prior nonspouse designation or change may
be made by the Participant without the consent of the spouse at any time before
the commencement of benefits. The number of revocations shall not be limited.

        10.08   REQUIRED DISTRIBUTIONS AFTER AGE 70-1/2.

                (a)     Notwithstanding any other provision of the Plan, to the
        extent required under Section 401(a)(9) of the Code, the entire Capital
        Accumulation of a Participant who is a 5% owner (as defined in Section
        416 of the Code) or who attains age 70-1/2 prior to January 1, 2001 (i)
        shall be distributed to him in a lump sum in cash not later than April 1
        of the calendar year in which he attains age 70-1/2 and, with respect to
        such Participants who are Employees, on December 31 of such year and
        each succeeding year or (ii) shall commence



                                       47
<PAGE>

        to be distributed to him in one of the forms permitted under Section
        10.02 not later than the time specified in clause (i) of this paragraph.
        In addition, the Capital Accumulation of any other Participant must be
        distributed or commence to be distributed not later than the April 1 of
        the calendar year following the later of (i) the calendar year in which
        he attains age 70-1/2 or (ii) the calendar year in which he incurs a
        termination of employment.

                (b)     Notwithstanding the foregoing, distributions under this
        Section shall be made in accordance with the required minimum
        distribution requirements under the proposed regulations under Code
        Section 401(a)(9) released in July 1987 for distributions made for
        taxable years commencing before January 1, 2002, and the proposed
        regulations under Code Section 401(a)(9) released in January 2001 for
        distributions made for taxable years commencing on or after January 1,
        2001, provided that such provisions shall override the other
        distribution provisions of the Plan only to the extent that such other
        Plan provisions provide for distribution that is less rapid than
        required under such provisions of the Code and Regulations. Nothing
        contained in this Section shall be construed as providing any optional
        form of payment that is not available under the other distribution
        provisions of the Plan.

        10.09   DIRECT ROLLOVERS.

                (a)     This Section applies to distributions made on or after
        January 1, 1993. 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 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)     For purposes of this Section 10.09, the following
        capitalized terms shall have the respective meanings set forth below:

                        (i)     "Direct Rollover" means a payment by the Plan to
                the Eligible Retirement Plan specified by the Distributee.

                        (ii)    "Distributee" means 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.

                        (iii)   "Eligible Retirement Plan" means 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



                                       48
<PAGE>

                individual retirement plan or individual retirement annuity.

                        (iv)    "Eligible Rollover Distribution" means 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 life (or life expectancy) of
                the Distributee or the joint lives (or joint life expectancies)
                of the Distributee and the Distributee's designated Beneficiary,
                o r for a specified period of ten years or more; any
                distribution to the extent such distribution is required under
                Section 401(a)(9) 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).



                                       49
<PAGE>

                                   ARTICLE XI.

                               PLAN ADMINISTRATION

        11.01   NAMED FIDUCIARIES. The Committee and the Company shall each be a
"named fiduciary" within the meaning of Section 402 of ERISA, but each such
party's role as a named fiduciary shall be limited solely to the exercise of its
own authority and discretion, as defined under the terms of this Plan, to
control and manage the operation and administration of the Plan (other than
authority and discretion assigned under this Plan, or delegated pursuant
thereto, to the Trustee). A named fiduciary may designate other persons who are
not named fiduciaries to carry out its fiduciary responsibilities hereunder, and
any such person shall become a fiduciary under the Plan with respect to such
delegated responsibilities in the event of such a designation; the named
fiduciary shall not be liable for an act or omission of the designee in carrying
out responsibilities delegated to him except to the extent provided in Section
405 of ERISA.

        11.02   FIDUCIARY LIMITATIONS. Named fiduciaries under the Plan, as well
as the Trustee and any other person who may be a fiduciary by virtue of Section
3(21) of ERISA, shall exercise and discharge their respective powers and duties
in the following manner:

                (a)     By acting solely in the interest of the Participants and
        their Beneficiaries;

                (b)     By acting for the exclusive purpose of providing
        benefits to Participants and their Beneficiaries and defraying
        reasonable expenses of administering the Trust Assets and Plan;

                (c)     By acting 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

                (d)     By otherwise acting in accordance with this Plan and
        Trust Agreement to the extent consistent with Title I of ERISA.

        11.03   COMPANY'S RESPONSIBILITIES. The Company, acting through the
Board of Directors, shall have the authority to amend or terminate the Plan
pursuant to the provisions of Article XII, to determine the amount of Employer
Contributions to the Plan pursuant to Article IV, and to appoint the Trustee and
the Committee. Whenever the Company is permitted or required to do or perform
any act under the terms of this Plan, it shall be done and performed by any
officer duly authorized by the Board of Directors. To enable the Committee to
perform its duties, the Company shall supply completely and timely all
information which the Committee may from time to time require.

        11.04   TRUSTEE'S RESPONSIBILITIES. The Trustee shall have, to the
extent set forth in the Trust Agreement, authority and discretion to receive,
hold and distribute Trust Assets, fiduciary responsibilities in connection with
the exercise of such authority and discretion, and a duty to issue



                                       50
<PAGE>

reports and otherwise to account to the Company and the Committee.
Notwithstanding anything set forth in this Plan or Trust Agreement to the
contrary, the Trustee shall be subject to the directions of the Company, any
other Employer or the Committee only to the extent such directions are (i)
delivered in writing to the Trustee, (ii) executed by a party previously
authorized and (iii) are proper, made in accordance with the terms of the Plan
and the Trust Agreement and are not contrary to ERISA. All Employer
Contributions shall be paid over to the Trustee and, together with accretions
thereto, shall be invested by the Trustee in accordance with the directions
permitted in this Plan and Trust Agreement.

        11.05   APPOINTMENT OF COMMITTEE. This Plan shall be administered by a
Committee appointed by the Board of Directors of the Company to serve at its
pleasure and without compensation. A member of the Committee may be removed by
the Board of Directors at any time with or without cause upon ten (10) days'
written notice from the Board of Directors, and any member of the Committee may
resign by delivering his written resignation to the Board of Directors.

        11.06   COMMITTEE RESPONSIBILITIES. The Committee shall have the
following responsibilities:

                (a)     Powers and Duties.

                        (i)     The Committee shall be the Plan Administrator
                under Section 414(g) of the Code and under Section 3(16)(A) of
                ERISA. The Committee shall have sole and absolute discretion (A)
                to interpret the provisions of the Plan (including, without
                limitation, by supplying omissions from, correcting deficiencies
                in, or resolving inconsistencies or ambiguities in, the language
                of the Plan), (B) to make factual findings with respect to any
                issue arising under the Plan, (C) to determine the rights and
                status under the Plan of Participants and other persons, (D) to
                decide disputes arising under the Plan and to make
                determinations and findings (including factual findings) with
                respect to the benefits payable thereunder and the persons
                entitled thereto as may be required for the purposes of the
                Plan.

                        (ii)    In furtherance thereof, but without limiting the
                foregoing, the Committee is hereby granted the following
                specific authorities, which it shall discharge in its sole and
                absolute discretion in accordance with the terms of the Plan (as
                interpreted, to the extent necessary, by the Committee): (A) to
                resolve all questions (including factual questions) arising
                under the Plan as to any individual's entitlement to become a
                Participant, (B) to determine what constitutes a Year of Service
                and Compensation, (C) to determine the allocation to
                Participants of Employer Contributions, Forfeitures and income
                (or loss), (D) to determine the valuation of Trust Assets, (E)
                to determine the amount of benefits, if any, payable with
                respect to any person under the Plan (including, to the extent
                necessary, making any factual findings with respect thereto),
                and (F) to conduct the claims and review procedure specified in
                Section 11.06(f).



                                       51
<PAGE>

                        (iii)   All decisions of the Administrative Committee as
                to the facts of any case and the application thereof to any
                case, as to the interpretation of any provision of the Plan or
                its application to any case, and as to any other interpretative
                matter or other determination or question related to the Plan
                shall be final and binding on all parties affected thereby,
                subject to the provisions of Section 11.06(f).

                (b)     Records and Reports. The Committee shall be responsible
        for keeping a record of all its proceedings and actions and shall
        maintain, or cause to be maintained by its delegates, all such books of
        account, records, and other data as shall be necessary to administer the
        Plan and to meet the disclosure and reporting requirements of ERISA.

                (c)     Compensation. No member of the Committee who is an
        Employee of an Employer shall receive any compensation from the Company,
        any other Employer, the Plan or the Trust for his services as a member
        of the Committee.

                (d)     Committee Procedures. The Committee may act at a meeting
        or in writing without a meeting. The Committee shall elect one of its
        members as Chairman, who shall also be the agent for service of legal
        process on behalf of the Plan, and appoint a Secretary, who may or may
        not be a Committee member. The Committee may adopt such regulations as
        it deems desirable for the conduct of its affairs. All decisions of the
        Committee shall be made by majority vote of the number then constituting
        the Committee, including actions taken without a meeting.

                (e)     Distribution of Benefits.

                        (i)     Direction to the Trustee. The Committee shall
                issue directions to the Trustee concerning all benefits which
                are to be paid from the Trust pursuant to the provisions of the
                Plan, and shall warrant that all such directions are in
                accordance with this Plan.

                        (ii)    Application by Participants. The Committee may
                require a Participant to complete and file with it an
                application for the payment of benefits under the Plan and any
                other forms deemed necessary and desirable by the Committee for
                the proper administration of the Plan and furnish all pertinent
                information requested by the Committee. The Committee may rely
                upon all such information so furnished it, including the
                Participant's current mailing address.

                        (iii)   Participant's Incapacity. Whenever in the
                written and certified opinion of one or more qualified
                physicians or psychiatrists selected by or satisfactory to the
                Committee, a person entitled to receive a payment hereunder of a
                benefit or installment thereof is under a legal disability or is
                incapacitated in any way so as to be unable to manage his
                financial affairs, the Committee may direct the Trustee to make
                payments to such person or to his legal representative. Any
                payment of a benefit or installment thereof in accordance with
                the provisions of this paragraph shall be a complete discharge
                of any liability for the making of such



                                       52
<PAGE>

                payment under the provisions of the Plan.

                (f)     Claims Procedure. Any claim by a Participant or
        Beneficiary shall be filed in writing with the Company's benefits
        department or Human Resources Department as agent for the Committee. Any
        decision by the Committee denying a claim by a Participant or a
        Beneficiary for benefits under the Plan shall be communicated in writing
        to the Participant or Beneficiary, setting forth the specific reasons
        for such denial. Any such Participant or Beneficiary whose claim has
        been denied, or his or her duly authorized representative, may (i)
        appeal to the Committee in writing within sixty (60) days after receipt
        of the notice of denial for a full review of the decision by the
        Committee; (ii) review pertinent documents; and (iii) submit issues and
        comments in writing. The decision by the Committee following such review
        shall be made no later than sixty (60) days after the date of receipt by
        the Committee of the request for review, and shall be conclusive as to
        all persons affected thereby. Such decision shall be in writing and
        shall include both specific reasons for the decision, written in a
        manner calculated to be understood by the claimant, and specific
        references to the pertinent Plan provisions on which the decision is
        based.

                (g)     Bonding. The Committee shall arrange for such bonding as
        is required by law, but no bonding in excess of the amount required by
        law shall be considered required by this Plan.

        11.07   INDEMNIFICATION. To the extent permitted by the laws of the
State of Georgia and ERISA, the Company shall indemnify the members of the
Committee, any present or former member of the Board of Directors, or any other
officer or employee of the Company or an Affiliated Company, against any and all
claims, losses, damages, expenses (including legal fees), fines, penalties, and
liabilities arising out of acts, omissions, and conduct as a fiduciary (as
defined in Section 3(21) of EFASA) with respect to the Plan, except to the
extent that such person shall be determined to be liable by a court of competent
jurisdiction for his own gross negligence or willful misconduct. The foregoing
rights of indemnification shall be in addition to such other rights as the above
persons may enjoy, whether as a matter of law or by reason of insurance coverage
of any kind or otherwise.

        11.08   INDEPENDENT CORPORATE FIDUCIARY. Notwithstanding any other
provision of this Plan providing for the Trustee to act in accordance with
directions given by the Committee or by the Company, in connection with those
transactions contemplated by those certain Acquisition Agreements described in
the Preamble, the Trustee hereunder shall serve in the capacity of an
independent corporate fiduciary. In such capacity the Trustee shall, in each
case without direction by the Company or by the Committee: evaluate the
transactions proposed or contemplated by such Acquisition Agreement, for the
purpose of making such determinations as are necessary or appropriate under such
circumstances; enter into such agreements, including such Acquisition
Agreements, on such terms and conditions as are deemed by the Trustee to be
prudent and in the interests of Participants and Beneficiaries; consent to
related Plan amendments as required by Section 12.01(b) hereof, and take such
further actions in connection therewith as the Trustee deems appropriate in the
exercise of its fiduciary responsibility.



                                       53
<PAGE>

                                  ARTICLE XII.

                            AMENDMENT AND TERMINATION


        12.01   COMPANY'S RIGHT TO AMEND.

                (a)     Subject to the provisions hereinafter set forth, the
        Company reserves the right, at any time or from time to time by action
        of the Board of Directors (or any of its committees, or to the extent
        authority with respect to the Plan is delegated, by written instrument
        signed by the Administrator) to amend in whole or in part any or all of
        the provisions of this Plan; provided, however, that no such amendment
        shall be made that:

                        (i)     Would deprive any Participant of any benefit to
                which he has a nonforfeitable right under Section 6.06 or
                Article IX of this Plan; or

                        (ii)    Shall make it possible for any part of the Trust
                Assets or its income to be used for or diverted to, purposes
                other than for the exclusive benefit of the Participants. Any
                such amendment shall become effective upon delivery of a written
                instrument, executed by order of the Board of Directors, to the
                Trustee and the endorsement of the Trustee of its receipt.

                (b)     Notwithstanding any other provision of this Plan or this
        Section 12.01 to the contrary, no amendment to Section 5.04(f), this
        Section 12.01(b) or the last sentence of Section 10.05 shall be
        effective without the written consent of an independent corporate
        Trustee.

                (c)     Amendments made to the Plan shall be binding on any
        Affiliate that has adopted the Plan.

        12.02   MANDATORY AMENDMENTS. Notwithstanding the provisions of this
Article XII, or of any other provisions of this Plan, any amendment may be made,
retroactively if necessary, which the Company deems necessary or appropriate to
conform the Plan to, or to satisfy the conditions of, any law, government
regulation or ruling, and to permit the Plan to meet the requirements for
qualification under Sections 4975(e)(7) and 401 of the Code, and to permit the
Trust to meet the requirements for tax-exempt status under Section 501 of the
Code. In the event that a favorable determination letter from the Internal
Revenue Service is not obtained with respect to the adoption of the amended
Plan, then the amended Plan shall be declared null and void and the Plan in
effect prior to the amendment shall continue in full force and effect.

        12.03   TERMINATION. The Company shall have the right to terminate the
Plan and the Trust created concurrently herewith at any time by action of the
Board of Directors, by delivering to the Committee written notice of such
termination and by further informing the Trustee by written notice of such
termination. Each Employer reserves the right to terminate the participation of
its Employees under the Plan. Upon any such termination, such action shall be
taken as to render it



                                       54
<PAGE>

impossible for any part of the corpus of the Trust or income of the Plan to be
at any time used for, or diverted to, purposes other than for the exclusive
benefit of Participants and their Beneficiaries.

        12.04   EMPLOYEE NONFORFEITABLE RIGHTS. Upon termination (or partial
termination) of the Plan within the meaning of Section 411(d)(3) of the Code or
a complete discontinuance of Employer Contributions thereunder, each Participant
(or in the case of a partial termination, each Participant affected) shall have
a nonforfeitable right to one hundred percent (100%) of the balance in each of
his Accounts as of the date of termination, partial termination or complete
discontinuance.

        12.05   DISTRIBUTION UPON TERMINATION. In the event of termination of
the Plan pursuant to Section 12.03, the assets then held in the Trust under the
Plan shall be distributed to the Participants in accordance with Section 6.06
and Article X, either, in the sole discretion of the Committee, based upon a
Participant's actual termination of service or as if such Participant's
termination of service occurred as of the date the Plan terminated; provided,
however, no such distribution shall be required to be made by the Trustee prior
to the time the Company receives a favorable written determination from the
Internal Revenue Service with respect to the qualified status of the Plan, as
terminated, under Section 401(a) of the Code and the tax-exempt status of the
Trust under Section 501(a) of the Code, or the Company agrees, in an agreement
acceptable to the Trustee, to indemnify the Trustee for any liability it may
incur by reason of such distribution constituting a violation of ERISA or the
qualification requirements of the Code.

        12.06   USE OF TRUST ASSETS. No amendment or termination of the Plan
pursuant to this Article XII shall be made that shall make it possible for any
part of the Trust Assets or its income to be used for, or diverted to, purposes
other than for the exclusive benefit of the participants.



                                       55
<PAGE>

                                  ARTICLE XIII.

                      TOP-HEAVY PLAN COMPLIANCE PROVISIONS

        13.01   PURPOSE. The purpose of this Article XIII of the Plan is to
comply with the special rules applicable to "top-heavy" plans contained in
Section 416 of the Code, as added by Section 240 of the Tax Equity and Fiscal
Responsibility Act of 1982, and the appropriate Regulations of the Internal
Revenue Service thereunder, including Proposed Regulation Section 1.416-1 and
successor Regulations. The rules set forth in this Article XIII shall be
operative if the Plan is, or becomes, "top-heavy" within the meaning of Section
416 of the Code and the Regulations thereunder. In the event that by statutory
repeal or amendment, or regulatory change or ruling by the Internal Revenue
Service, any of the limitations or restrictions of this Article XIII are no
longer necessary in order for the Plan to meet the requirements of Section 416
of the Code or other applicable provisions of the Code then in effect, such
limitations or restrictions shall immediately become null and void and shall no
longer apply without necessity of further amendment to the Plan.

        13.02   DEFINITIONS. For purposes of this Article XIII only, the
following terms shall have the meanings set forth below:

                (a)     "Compensation" means the compensation of an employee, as
        defined in Section 415(c)(3) of the Code, but including amounts
        contributed by the Company and any Employer which are excludable from
        the employee's gross income under Sections 125, 132(f), 402(a)(8),
        402(h) or 403(b) of the code.

                (b)     "Determination Date" means, as to any Plan Year, the
        last day of any preceding Plan year or, in the case of the first Plan
        Year, the last day of such Plan Year.

                (c)     "Key Employee" means any employee, or former employee,
        or beneficiary of either, who at any time during the Plan Year or the
        four preceding Plan Years, is:

                        (i)     an officer of the Company having an annual
                Compensation greater than the amount determined by multiplying
                fifty percent (50%) of the dollar limitation under Section
                415(b)(1)(A) of the Code;

                        (ii)    one of the ten (10) employees owning the largest
                interests in the Company having an annual Compensation at least
                equal to the dollar limitation under section 415(c)(1)(A) of the
                Code;

                        (iii)   a five percent (5%) owner of the Company; or

                        (iv)    a one percent (1%) owner of the Company having
                aggregate annual Compensation of at least $150,000 from the
                Company and all entities required to be aggregated with the
                Company under Sections 414(b), (c) and (m) of the Code.

                For purposes of paragraphs (ii), (iii) and (iv), owners of the
        Company shall include



                                       56
<PAGE>

        those considered as owners within the meaning of Section 318 of the
        Code. In identifying the top ten (10) employee owners under Section
        13.02(c)(ii), if several employees have equal ownership interests, those
        employees with higher Compensation shall be treated as having a greater
        ownership interest.

                The determination of who is a Key Employee shall be made in
        accordance with Section 416(i) of the Code, the provisions of which are
        incorporated herein by reference.

                (d)     "Non-Key Employee" means any Employee other than a Key
        Employee, and shall include any former Key Employees. For the purposes
        of this Article XIII, the term "Participant" shall be also mean Non-Key
        Employee.

                (e)     "Valuation Date" means the most recent Valuation Date
        occurring within the twelve (12) month period ending on the
        Determination Date.

        13.03   DETERMINATION OF WHETHER PLAN IS "TOP-HEAVY". The Plan will be
deemed to be "top-heavy" in any Plan Year if, as of the Determination Date, the
sum of the present value of accrued benefits of Key Employees exceeds sixty
percent (60%) of the sum of the present value of accrued benefits of all
Participants, excluding former Key Employees. As used in this Section 13.03, the
present value of accrued benefits includes the amount attributable to Employer
Contributions allocated to the individual accounts of Participants and former
Participants. The determination of whether the Plan is "top-heavy" and the
extent to which distributions, rollovers, and transfers are taken into account
in such calculation shall be made in accordance with Section 416 of the Code,
which is incorporated by reference herein. A former Participant's Account
balance is to be disregarded in determining whether the Plan is "top-heavy,"
unless the Participant performed services for an Employer within the five (5)
year period ending on the Determination Date.

        13.04   AGGREGATION GROUP OF EMPLOYER PLANS. All corporations and
businesses that are aggregated under Sections 414(b), (c) and (m) of the Code
with the Company must be considered with the Company for the purpose of
determining whether the Plan is "top-heavy." All plans of the Company in which a
Key Employee has participated during the five (5) Plan Years ending on the
Determination Date, whether terminated or not, and each other stock bonus,
pension or profit sharing plan, if any, of the Company which enables any plan in
which a Key Employee participates to meet the requirements of Section 401(a)(4)
or Section 410 of the Code, will be aggregated as a required aggregation group
within the meaning of Section 416(g) of the Code. Each plan in the required
aggregation group will be "top-heavy" if the group is "top-heavy," and no plan
in the group will be "top-heavy" if the group is not "top-heavy."

        In addition, the Company may elect to include as part of the permissive
aggregation group under Section 416(g) of the Code any plans that are not part
of a required aggregation group but that satisfy the requirements of Sections
401(a)(4) and 410 of the Code when considered together with the plans
constituting the required aggregation group. If the permissive aggregation group
is "top-heavy," only those plans which are part of the required aggregation
group will be subject to the additional requirements applicable to "top-heavy"
plans as herein provided.



                                       57
<PAGE>

        13.05   SPECIAL MINIMUM VESTING AND MINIMUM CONTRIBUTION BECOMING
OPERATIVE IN THE EVENT THE PLAN BECOMES "TOP-HEAVY". In the event that the Plan
shall be determined to be "top-heavy" as to any Plan Year, the following special
vesting and minimum contribution requirements shall become operative for such
Plan Year:

                (a)     Notwithstanding Section 9.03, the following vesting
        schedule shall, to the extent it results in more rapid vesting than
        provided for in Section 9.03, apply to any Participant hereunder, as
        provided in Section 416 of the Code:

<TABLE>
<CAPTION>
                             Years of                      Percentage
                             Service                       of Vesting
                             -------                       ----------
                             <S>                           <C>
                             Less than 3 years                   0%
                             3 years or more                   100%
</TABLE>

                (b)     Minimum Contributions. The Employer Contributions and
        forfeitures allocated to the Accounts under the Plan of a non-Key
        Employee for each Plan Year in which the Plan is "top-heavy" shall equal
        the lesser of (i) three percent (3%) of Compensation for such Plan Year
        and (ii) the largest percentage of Compensation, subject to the
        Compensation Limitation, allocated to the Accounts of a Key Employee
        under the Plan for that Plan Year. Any Participant's elective
        contribution under Section 401(k) of the Code will be treated as
        Employer Contributions for the purposes of the minimum contribution
        requirements. In the event that any other plan of the Company or an
        Affiliated Employer does not use for purposes of determining the defined
        benefit plan fraction and defined Contribution plan fraction under
        Section 415(e) of the Code a factor of 1.0 of the applicable
        limitations, the minimum contribution in respect to each such Non-Key
        Employee shall be four percent (4%) in lieu of the three percent (3%)
        set forth above. Further, in the event that the Company maintains a
        defined benefit plan and this plan, both of which are top-heavy in any
        year, such minimum Contribution shall be five percent (5%) and shall
        offset the minimum benefit under the defined benefit plan.

                All Participants who have not terminated employment as of the
        last day of the Plan Year must receive the minimum contribution.
        Employees who (i) failed to complete one thousand (1,000) Hours of
        Service during the Plan Year, (ii) declined to make mandatory
        contributions to the Plan or (iii) would have been excluded from the
        Plan because their Compensation is less than a stated amount, must
        nevertheless be considered Participants for purposes of the minimum
        contribution in this Section 13.05 if such employees are required to
        satisfy the coverage requirements of Section 410(b) of the Code in
        accordance with Section 401(a)(5) of the Code. The minimum contribution
        is determined without regard to any Social Security contribution.

        13.06   PRE-"TOP-HEAVY" PLAN TERMINATED PARTICIPANT. This Article XIII
shall not apply to any Participant who does not complete an Hour of Service
after the Plan becomes "top-heavy."



                                       58
<PAGE>

        13.07   SPECIAL "TOP-HEAVY" REDUCTION IN COMBINED BENEFIT AND
CONTRIBUTION LIMITATION. In the event that the Plan shall be determined to be
"top-heavy" in any Plan Year, the multiple applicable to the dollar limitation
in the denominator of the defined benefit fraction described in Section
6.03(c)(ii) of the Plan and the multiple applicable to the dollar limitation in
the denominator of the defined contribution fraction described in Section
6.03(c)(iii) of the Plan shall be 1.0 rather than 1.25; provided, however, that
this Section 13.07 of the Plan shall not apply in the event that the Plan is not
a "super top-heavy" plan as defined in Section 13.10(a) of the Plan and each
Participant who is a non-Key Employee shall receive the minimum contribution set
forth in subsection (b) of Section 13.05 of the Plan, except that the multiple
in paragraph (i) of subsection (b) of Section 13.05 shall be four percent (4%)
rather than three percent (3%).

        13.08   TERMINATION OF "TOP-HEAVY" STATUS. In the event that the Plan
shall be "top-heavy" within the meaning of Section 416 of the Code for any Plan
Year, and in a subsequent Plan Year the Plan shall cease to be "top-heavy," the
special "top-heavy" vesting, minimum contribution and Compensation Limitation
Rules shall cease to apply with respect to any Plan Year for which the Plan is
not "top-heavy"; provided, however, that in no event shall a reduction in a
Participant's nonforfeltable percentage occur by reason of a change in the
Plan's status.

        13.09   MULTIPLE "TOP-HEAVY" PLANS. In the event that a Participant in
the Plan is also participating in a defined benefit plan maintained by the
Company or an Affiliated Employer during a Plan Year in which both the Plan and
such defined benefit plan are "top-heavy," the Participant shall receive, in
lieu of and in place of the Minimum Contribution described in Section 13.05(b),
a Minimum Contribution of five percent (5%) of his Compensation for such Plan
Year. In the event that the Participant is covered only under this Plan, he
shall receive an allocation under this Plan equal to four percent (4%) of his
Compensation for such Plan Year in lieu of and in place of the Minimum
Contribution otherwise provided under Section 13.05(b). In the event that a
Participant in the Plan is also participating in the Simmons Retirement Savings
Plan during a Plan Year in which both the Plan and the Retirement Savings Plan
are "top-heavy" the Participant shall receive the Minimum Contribution provided
under Section 13.05(b) of this Plan in lieu of and in place of any minimum
contribution otherwise provided under the Retirement Savings Plan.

        13.10   EFFECT OF THE PLAN BECOMING "SUPER TOP-HEAVY".

                (a)     The Plan shall be deemed to be "super top-heavy" if, as
        of the most recent Valuation Date, the sum of the present value of
        accrued benefits for Key Employees is more than ninety percent (90%) of
        the sum of the present value of accrued benefits for all Employees,
        excluding former Key Employees.

                (b)     In the event that the Plan shall be determined to be
        "super top-heavy" in any Plan Year, the multiple applicable to the
        dollar limitation in the denominator of the defined benefit fraction
        described in Section 6.03(c)(2) of the Plan and the multiple applicable
        to the dollar limitation in the denominator of the defined contribution
        fraction described in Section 6.03(c)(3) of the Plan shall be 1.0 rather
        than 1.25.



                                       59
<PAGE>

                                  ARTICLE XIV.

                               GENERAL PROVISIONS

        14.01   PARTICIPANTS' RIGHTS. Neither the establishment of this Plan,
nor any modification thereof, nor the creation of any fund or account, nor the
payment of any benefits, shall be construed as giving to any Participant or
other person any legal or equitable right against the Company or any Employer,
or any officer or Employee thereof, or the Trustee, or the Committee, except as
herein provided. The adoption and maintenance of this Plan shall not be deemed
to constitute a contract of employment or otherwise between an Employer and any
Employee, or to be a consideration for, or an inducement or condition of, any
employment. Nothing contained herein shall be deemed to give an Employee the
right to be retained in the service of an Employer or to interfere with the
right of an Employer to discharge, with or without cause, any Employee at any
time.

        14.02   SPENDTHRIFT CLAUSE.

                (a)     No benefit that shall be payable out of the Trust Assets
        to any Participant and/or his Beneficiary shall be subject in any manner
        to voluntary or involuntary anticipation, alienation, sale, transfer,
        assignment, garnishment, pledge, encumbrance, or charge, and any attempt
        to anticipate any such benefit shall be void; and no such benefit shall
        in any manner be liable for or subject to the debts, contracts,
        liabilities, engagements, or torts of any such Participant and/or his
        Beneficiary nor shall it be subject to attachment or legal process for
        or against such person, and the same will not be recognized by the
        Trustee except to such an extent as may be required by law.
        Notwithstanding any provision of the Plan to the contrary, the Plan
        shall honor a judgment, order, decree or settlement providing for the
        offset of all or a part of a Participant's benefit under the Plan, to
        the extent permitted under Section 401(a)(13)(C) of the Code; provided
        that the requirements of Section 401(a)(13)(C)(iii) of the Code relating
        to the protection of the Participant's spouse (if any) are satisfied.

                (b)     Qualified Domestic Relations Orders.

                        (i)     General Rule. The provisions of subsection (a)
                above shall not apply to a "qualified domestic relations order,"
                as defined in Code 414(p) and ERISA Section 206(d)(3), or any
                other domestic relations order permitted to be treated as a
                "qualified domestic relations order" by the Committee under the
                provisions of the Retirement Equity Act of 1984. The Committee
                shall establish a written procedure to determine the qualified
                status of domestic relations orders and to administer
                distributions under such qualified orders. To the extent
                provided under a "qualified domestic relations order," a former
                spouse of a Participant shall be treated as the spouse or
                surviving spouse for all purposes under the Plan.



                                       60
<PAGE>

                        (ii)    QDRO Procedures.

                                (A)     Procedure Upon Receipt. Upon receiving a
                        domestic relations order, the Committee shall notify all
                        affected Participants and any alternate payees (spouse,
                        former spouse, child or other dependent of the
                        Participant, named in the order) that the order has been
                        received. The Committee shall also notify the affected
                        Participants and alternate payees of its procedure for
                        determining whether the domestic relations order is
                        qualified.

                                (B)     Procedure During Determination. During
                        the period the Committee is determining the qualified
                        status of the order, the Committee shall separately
                        account for the amount (if any) that would be payable to
                        an alternate payee under this order (if it were a
                        qualified domestic relations order) during this period.
                        If the Committee determines the order is a qualified
                        domestic relations order during the 18-month period
                        commencing on the date the first payment would be
                        required under the qualified domestic relations order,
                        then the alternate payee shall receive payment from the
                        separate account. If the Committee cannot make a
                        determination of the order's qualified status during
                        this 18-month period (or determines the order is not a
                        qualified domestic relations order), then the Trustee
                        shall return the amounts in the separate account to the
                        account of the affected Participant as if no court order
                        had been received.

                        (iii)   QDRO Payouts.

                                (A)     Payment Upon Receipt of QDRO.
                        Notwithstanding any provision of this Plan to the
                        contrary, any amounts of a Participant's vested Account
                        balances which, due to the receipt of a domestic
                        relations order determined to be a qualified domestic
                        relations order under paragraph (ii) above, become the
                        vested Account balances of an alternate payee under such
                        order shall be distributed in the form of a single
                        lump-sum payment in cash to the alternate payee as of
                        the earliest date (following the close of the Plan Year
                        in which the order is determined to be a qualified
                        domestic relations order) on which such amounts can be
                        accurately determined and paid, subject to any
                        provisions of the qualified domestic relations order to
                        the contrary as to a different time of payment. No
                        written consent of the alternate payee shall be required
                        for this distribution pursuant to Treas. Reg. Section
                        1.411(a)-11(c)(6).

                                (B)     Subsequent Additional Amounts. The
                        preceding subparagraph (A) shall apply to any amounts of
                        a Participant's vested Account balances which, due to
                        the receipt of a domestic relations order determined to
                        be a qualified domestic relations order under subsection
                        (b) above, become the vested Account balances of an
                        alternate payee under



                                       61
<PAGE>

                        such order after a payment under subparagraph (A) above
                        due to additional vesting, allocation of contributions
                        or earnings, or any other reason.

                        (iv)    Status of Alternate Payee. An alternate payee
                under a qualified domestic relations order shall be entitled to
                all rights of a Beneficiary hereunder except as otherwise
                specified herein.

        14.03   COMPANY'S LIABILITY. All Capital Accumulations shall be paid
only from the Trust Assets, and neither the Company nor any Employer nor the
Committee nor the Trustee shall have any duty or liability to furnish the Trust
with any funds, securities or other assets, except as expressly provided in the
Plan.

        14.04   MERGER OR CONSOLIDATION. In the event of a merger or
consolidation of the Plan with, or transfer in whole or in part of the Trust
Assets or liabilities to, another trust fund held under any other plan of
deferred compensation maintained or to be established for the benefit of all or
some of the Participants, Trust Assets or liabilities shall be transferred to
the other trust fund only if each Participant or Beneficiary would be entitled
to a benefit immediately after the merger, consolidation or transfer (assuming
the other plan and trust had then terminated) which is equal to or greater than
the benefit to which he would have been entitled to receive immediately before
the merger, consolidation or transfer (if the Plan had then terminated).

        14.05   GOVERNING LAW. This Plan shall be construed according to the
laws of the State of Georgia applicable to agreements made and to be performed
in that State and all provisions hereof shall be administered according to, and
its validity shall be determined under the laws of such State, except to the
extent that such laws have been specifically preempted by ERISA or other federal
legislation.

        14.06   LEGAL ACTION. In any action or proceeding involving the Trust,
or any property constituting part or all thereof, or the administration thereof,
Employees or former Employees of the Company or an Affiliated Company or the
Beneficiaries or any other person having or claiming to have an interest in the
Trust Assets or under the Plan shall not be necessary parties nor entitled to
any notice of process.

        14.07   BINDING ON ALL PARTIES. Any final judgment which is not appealed
or appealable that may be entered in any legal action or proceeding shall be
binding and conclusive on the parties hereto, the Committee, and all persons
having or claiming to have an interest in the Trust Assets or under this Plan.

        14.08   HEADINGS. The headings of this Plan are inserted for convenience
of reference only, and are not to be considered in the construction or the
interpretation of this Plan.

        14.09   SEVERABILITY OF PROVISIONS. If any provision of this Plan is
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision, and this Plan shall be construed and enforced as
if such provision had not been included.



                                       62
<PAGE>

        14.10   CERTAIN DISPOSITIONS OF EMPLOYER SECURITIES. With respect to
transactions occurring on or before October 28, 1998, in the event of a sale,
exchange or other disposition by the Trustee of less than all Employer
Securities then held by the Trustee in connection with a Redemption Event, as
such term is used in the Amended and Restated Articles of Incorporation of the
Company, or by reason of another event described therein or in the 1996
Stockholders' Agreement, as such instruments may from time to time be amended,
such sale, exchange or other disposition shall first be of Employer Securities
which have been allocated to the Accounts of Participants, and thereafter, shall
be of Employer Securities which have not been so allocated and are held in a
Suspense Account described in Section 5.04.

        14.11   FACILITY OF PAYMENT. If the Committee receives evidence
satisfactory to it that any person entitled to make any election or to receive
any payment of a benefit or installment thereof hereunder is (at the time said
election or payment is to be made) a minor or is physically, mentally, or
legally incompetent to make such an election or to receive such a benefit and to
give a valid receipt therefor, or is incapable of properly using, expending,
investing, or otherwise disposing of such benefit, then the Committee may, in
its sole and complete discretion, direct the Trustee to pay the benefit to the
legal or natural guardian or other relative of such minor or the court-appointed
guardian or committee of any incompetent Participant or Beneficiary or any
individual or institution maintaining or having the custody of said person or to
any adult with whom such person temporarily or permanently resides, and the
receipt of said individual or institution shall be a valid and complete
discharge to the Trustee, the Plan Administrator and this Plan for the payment
of any such benefit or installment thereof, without any responsibility on the
part of the Trustee, the Plan Administrator or the Company to see to the
application of the amounts so distributed. Deposit to the credit of a
Participant or Beneficiary in any bank or trust company shall be deemed payment
into his hands.

        14.12   DOUBT AS TO IDENTITY OF PAYEE. If at any time any doubt exists
as to the identity of any person entitled to payment of any benefit hereunder or
as to the amount or time of any such payment, the Committee shall certify that
fact to the Trustee and shall direct the Trustee to hold any such sum in trust
until further order or until final order of a court of competent jurisdiction,
or to pay any such sum into a court of competent jurisdiction in accordance with
any lawful procedure in said case made and provided.

        14.13   LOCATION OF PARTICIPANT OR BENEFICIARY UNKNOWN. In the event
that all, or any portion, of the distribution payable to a Participant or
Beneficiary hereunder shall, at the expiration of a reasonable time after it has
become payable, remain unpaid solely by reason of the inability of the Plan
Administrator, after sending a registered letter, return receipt requested, to
the last known address, and after further diligent effort, to ascertain the
whereabouts of such Participant or Beneficiary, the amount so distributable
shall be forfeited and shall be used to reduce the contributions to the Plan. In
the event a Participant or Beneficiary is located subsequent to his benefit
being forfeited, such benefit shall be restored.



                                       63
<PAGE>

        14.14   NO GUARANTEE OF INTEREST. The Employer, the Committee, and the
Trustee do not guarantee the Trust Fund from any loss or depreciation, nor do
they guarantee any payment to any person. The liability of the Trustee, the
Employee, and the Committee to make payments hereunder is limited to the
available assets of the Trust Fund.

        14.15   WRITTEN COMMUNICATIONS REQUIRED. Any notice, request,
instruction, or other communication to be given or made hereunder shall be in
writing and either personally delivered to the addressee or deposited in the
United States mail fully post-paid and properly addressed to said addressee at
the last address for notice shown on the Committee's records.

        14.16   NONDISCRIMINATION. Wherever it is herein provided, directly or
by implication, that any person or persons concerned with the administration of
the Plan shall exercise discretion in the making of any decision, said
discretion shall be exercised so as not to discriminate among persons similarly
situated.

        14.17   EVIDENCE FURNISHED CONCLUSIVE. The Employer, the Committee and
any person or persons involved in the administration of the Plan shall be
entitled to rely upon any certification, statement, or representation made, or
evidence furnished, by an Employee, Participant, or Beneficiary with respect to
his age or other facts required to be determined under any of the provisions of
the Plan, and shall not be liable on account of the payment of any monies or the
doing of any act or failure to act in reliance thereon. Any such certification,
statement, representation, or evidence, upon being duly made or furnished, shall
be conclusively binding upon said Employee, Participant, or Beneficiary but not
upon the Employer, the Committee, or any other person or persons involved in the
administration of the Plan. Nothing herein contained shall be construed to
prevent any of said parties from contesting any such certification, statement,
representation, or evidence or to relieve the Employee, Participant, or
Beneficiary from the duty of submitting satisfactory proof of his age or any
other fact.

        14.18   NAME AND ADDRESS CHANGE. Each Plan Participant and each
Beneficiary of a deceased Participant shall at all times be responsible for
notifying the Committee of any change in his name or address. If any check in
payment of a benefit hereunder, which was mailed by regular United States mail
to the last address of the payee as shown on the Committee's records is returned
unclaimed, further payments shall be discontinued until the Committee directs
otherwise.

        14.19   INSTALLMENT PAYMENTS MADE WITHOUT INTEREST. If any benefit under
the Plan is paid in installments, except as expressly provided herein to the
contrary, said installments shall be payable without any interest accruing
thereon, but shall continue to share proportionally in the investment gains or
losses of the Trust Fund.

        14.20   CORRECTION OF PARTICIPANTS' ACCOUNTS. If an error or omission is
discovered in the Account of a Participant, or in the amount distributed to a
Participant, the Plan Administrator will make such equitable adjustments in the
records of the Plan and, if applicable, in the payments made to a Participant,
as may be necessary or appropriate to correct such error or omission as of the
Plan Year in which such error or omission is discovered. Further, the Employer
may, in its discretion, make a special contribution to the Plan for the purpose
of correcting any such error or omission.



                                       64
<PAGE>

        14.21   ACTION OF EMPLOYER AND PLAN ADMINISTRATOR. Except as may be
specifically provided, any action required or permitted to be taken by the
Company, an Employer, or the Committee may be taken on behalf of such person by
any entity or individual who has been delegated the proper authority.

        14.22   EMPLOYER RECORDS. Records of the Employer as to an Employee's or
Participant's period of employment, termination of employment and the reason
therefor, leaves of absence, reemployment, compensation, and elections or
designations under this Plan will be conclusive on all persons, unless
determined to be incorrect.

        14.23   MILITARY SERVICE. Notwithstanding any provision of this Plan to
the contrary, contributions, benefits and service credit with respect to
qualified military service will be provided in accordancewith Section 414(u) of
the Code. "Qualified military service" means any service in the uniformed
services (as defined in chapter 43 of title 38 of the United States Code) by any
individual if such individual is entitled to reemployment rights under such
chapter with respect to such service.

        14.24   ELECTRONIC MEANS OF COMMUNICATION. Whenever, under this Plan, a
Participant or Beneficiary is required to make an election, provide a notice,
give a consent, request a distribution, or otherwise communicate with the
Company, the Committee, the Trustee or a delegate of any of them, to the extent
permitted by law, the election, notice, consent, distribution request or other
communication may be transmitted by means of telephonic or other electronic
communication, if the administrative procedures under the Plan provide for such
means of communication.

        14.25   PLAN CONVERSIONS. Notwithstanding any provision of the Plan to
the contrary, during any conversion period, in accordance with procedures
established by the Committee, the Committee may temporarily suspend, in whole or
in part, certain provisions of the Plan, which may include, but are not limited,
a Participant's right to change his investment election and a Participant's
right (if any) to withdraw from his Account or obtain a distribution from his
Account.



                                       65
<PAGE>

                                   ARTICLE XV.

                                    EXECUTION


To record the adoption of this amendment and restatement of the Plan effective
December 29, 2001, the Company has caused its appropriate officer to execute
this document on this 25th day of February, 2002.


                                           SIMMONS COMPANY


                                           By: /s/
                                                  William S. Creekmuir
                                           Title: Executive Vice President & CFO



                                       66
<PAGE>

                                   APPENDIX A

The following Affiliates have adopted the Plan.


        Name                                            Date of Adoption

        Simmons Caribbean Bedding, Inc.                 January 31, 1988

        Simmons Contract Sales, LLC                     December 29, 2001

        World of Sleep Outlets, LLC                     December 29, 2001

        The Simmons Manufacturing Company, LLC          December 29, 2001



                                       67