Document:

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                                                                    Exhibit 10.5

                               TWI HOLDINGS, INC.

                             2002 STOCK OPTION PLAN

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                                Table of Contents

1.  Purpose                                                                    1

2.  Definitions                                                                1

3.  Term of the Plan                                                           2

4.  Stock Subject to the Plan                                                  2

5.  Administration                                                             3

6.  Eligibility:  Maximum Grant Per Individual                                 3

7.  Time of Granting Options                                                   3

8.  Option Price                                                               3

9.  Option Period                                                              4

10. Limit on Incentive Option Characterization                                 4

11. Exercise of Option                                                         4

12. Restrictions on Issue of Shares                                            5

13. Purchase for Investment; Subsequent Registration                           5

14. Withholding; Notice of Disposition of Stock
    Prior to Expiration of Specified Holding Period                            6

15. Termination of Association with the Company                                7

16. Transferability of Options                                                 7

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                                      -ii-

17. Adjustments for Corporate Transactions                                     7

18. Reservation of Stock                                                       8

19. Limitation of Rights in Stock;
    No Special Employment or Other Rights                                      8

20. Nonexclusivity of the Plan                                                 9

21. Termination and Amendment of the Plan                                      9

22. Notices and Other Communications                                           9

23. Governing Law                                                              9

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                               TWI HOLDINGS, INC.

                             2002 STOCK OPTION PLAN

1.   Purpose

     This Plan is intended to encourage ownership of Stock by employees,
directors and consultants of the Company and its Affiliates and to provide
additional incentives for them to promote the success of the Company's business.
The Plan is intended to be an incentive stock option plan within the meaning of
Section 422 of the Code but not all Options granted hereunder are required to be
Incentive Options.

2.   Definitions

     As used in this Plan the following terms shall have the following meanings:

     2.1.  Act means the Securities Act of 1933, as amended.

     2.2.  Affiliate means a parent or subsidiary corporation of the Company, as
defined in Sections 424(e) and (f), respectively, of the Code.

     2.3.  Board means the Company's Board of Directors.

     2.4.  Code means the Internal Revenue Code of 1986, as amended from time to
time, or any statute successor thereto, and any regulations issued from time to
time thereunder.

     2.5.  Committee means a committee appointed by the Board, responsible for
the administration of the Plan, as provided in Section 5 of the Plan. No member
of the Committee shall be eligible to receive an Incentive Option under the
Plan, and no individual shall be eligible for membership on the Committee within
one year of having received an Incentive Option under the Plan. For any period
during which no Committee is in existence, all authority and responsibility
assigned to the Committee under the Plan shall be exercised, if at all, by the
Board.

     2.6.  Company means TWI Holdings, Inc., a corporation organized under the
laws of the State of Delaware.

     2.7.  Employment Agreement means an agreement, if any, between the Company
and an Optionee, setting forth, inter alia, conditions and restrictions upon the
transfer of shares of Stock.

     2.8.  Fair Market Value means the value of a share of Stock on any date as
determined by the Committee.

     2.9.  Grant Date means the date as of which an Option is granted, as
determined under Section 7.

     2.10. Incentive Option means an Option which by its terms is to be treated
as an "incentive stock option" within the meaning of Section 422 of the Code.

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     2.11. Nonstatutory Option means any Option that is not an Incentive Option.

     2.12. Option means an option to purchase shares of Stock granted under the
Plan.

     2.13. Option Agreement means an agreement between the Company and an
Optionee, setting forth the terms and conditions of an Option.

     2.14. Option Price means the price paid by an Optionee for a share of Stock
upon exercise of an Option.

     2.15. Optionee means a person eligible to receive an Option, as provided in
Section 6, to whom an Option shall have been granted under the Plan.

     2.16. Plan means this 2002 Stock Option Plan of the Company, as amended
from time to time.

     2.17. Stock means Class B Common Stock, par value $.01 per share, of the
Company.

     2.18. Stock Restriction Agreement means an agreement between the Company
and the Optionee in such form as the Committee may prescribe in connection with
the grant of any Option, setting forth certain restrictions upon the transfer of
shares of Stock.

     2.19. Ten Percent Owner means a person who owns, or is deemed within the
meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company (or
any Affiliate). Whether a person is a Ten Percent Owner shall be determined with
respect to each Option based on the facts existing immediately prior to the
Grant Date of such Option.

3.   Term of the Plan

     Options may be granted hereunder at any time in the period commencing on
the adoption of the Plan by the Board and ending immediately prior to the tenth
anniversary of the earlier of the adoption of the Plan by the Board or approval
of the Plan by the Company's shareholders. Options granted prior to shareholder
approval of the Plan are hereby expressly conditioned upon such approval, and
shall be void ab initio in the event the shareholders of the Company shall fail
to approve the Plan within twelve (12) months of the Board's approval of the
Plan.

4.   Stock Subject to the Plan

     At no time shall the number of shares of Stock then outstanding which are
attributable to the exercise of Options granted under the Plan, plus the number
of shares then issuable upon exercise of outstanding Options granted under the
Plan, exceed 18,871.14 shares, subject, however, to the provisions of Section 17
of the Plan. Shares to be issued upon the exercise of Options granted under the
Plan may be either authorized but unissued shares or shares held by the Company
in its treasury. If any Option expires, terminates, or is canceled for any
reason without having been exercised in full, the shares not purchased
thereunder shall again be available for Options thereafter to be granted.

                                       -2-

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5.   Administration

     The Plan shall be administered by the Committee. Subject to the provisions
of the Plan, the Committee shall have complete authority, in its discretion, to
make or to select the manner of making the following determinations with respect
to each Option to be granted by the Company in addition to any other
determination allowed the Committee under the Plan: (a) the employee, director
or consultant to receive the Option; (b) whether the Option (if granted to an
employee) will be an Incentive Option or Nonstatutory Option; (c) the Grant Date
of the Option; (d) the number of shares subject to the Option; (e) the Option
Price; (f) the Option period; (g) the Option exercise date or dates; (h) any
provisions for the loan of all or part of the Option Price; and (i) the effect
of termination of employment or other association with the Company and its
Affiliates on the subsequent exercisability of the Option. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective employees and consultants, their present and
potential contributions to the success of the Company and its subsidiaries, and
such other factors as the Committee in its discretion shall deem relevant.
Subject to the provisions of the Plan, the Committee shall also have complete
authority to interpret the Plan, to prescribe, amend and rescind rules and
regulations relating to it, to determine the terms and provisions of the
respective Option Agreements (which need not be identical), and to make all
other determinations necessary or advisable for the administration of the Plan.
The Committee's determinations made in good faith on matters referred to in this
Plan shall be conclusive.

6.   Eligibility: Maximum Grant Per Individual

     An Option shall be granted only to an employee, director or consultant of
one or more of the Company or an Affiliate. A director of one or more of the
Company or any Affiliate who is not also an employee of one or more of the
Company or an Affiliate shall not be eligible to receive an Incentive Option. In
no event shall the number of shares with respect to which Options may be granted
hereunder to any one individual exceed sixty-six and two-thirds percent (66
2/3%) of the number of shares of Stock subject to the Plan as set forth in
Section 4, as the same may be adjusted from time to time in accordance with
Section 17.

7.   Time of Granting Options

     The granting of an Option shall take place at the time specified in the
Option Agreement. Only if expressly so provided in the Option Agreement shall
the Grant Date be the date on which an Option Agreement shall have been duly
executed and delivered by the Company and the Optionee.

8.   Option Price

     The Option Price under each Incentive Option shall be not less than 100% of
the Fair Market Value of Stock on the Grant Date, or not less than 110% of the
Fair Market Value of Stock on the Grant Date if the Optionee is a Ten Percent
Owner. The Option Price under each Nonstatutory Option shall not be so limited
solely by reason of this Section 8.

                                       -3-

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9.   Option Period

     No Incentive Option may be exercised on or after the tenth anniversary of
the Grant Date, or on or after the fifth anniversary of the Grant Date, if the
Optionee is a Ten Percent Owner. The Option period under each Nonstatutory
Option shall not be so limited solely by reason of this Section 9. An Option may
be immediately exercisable or become exercisable in such installments,
cumulative or non-cumulative, as the Committee may determine. In the case of an
Option not otherwise immediately exercisable in full, the Committee may
accelerate the exercisability of such Option in whole or in part at any time,
provided the acceleration of the exercisability of any Incentive Option would
not cause the Option to fail to comply with the provisions of Section 422 of the
Code.

10.  Limit on Incentive Option Characterization

     An Incentive Option shall be considered to be an Incentive Option only to
the extent that the number of shares of Stock for which the Option first becomes
exercisable in a calendar year do not have an aggregate Fair Market Value (as of
the date of the grant of the Option) in excess of the "current limit". The
current limit for any Optionee for any calendar year shall be $100,000 minus the
aggregate Fair Market Value at the Grant Date of the number of shares of Stock
available for purchase for the first time in the same year under each other
Incentive Option previously granted to the Optionee under the Plan, and under
each other incentive stock option previously granted to the Optionee under any
other incentive stock option plan of the Company and its Affiliates, after
December 31, 1986. Any shares of Stock which would cause the foregoing limit to
be violated shall be deemed to have been granted under a separate Nonstatutory
Option, otherwise identical in its terms to those of the Incentive Option.

11.  Exercise of Option

     An Option may be exercised by the Optionee giving written notice, in the
manner provided in Section 22, specifying the number of shares with respect to
which the Option is then being exercised. The notice shall be accompanied by
payment in the form of cash, or certified or bank check payable to the order of
the Company in an amount equal to the Option Price of the shares to be purchased
or, if the Committee had so authorized on the grant of any particular Option
hereunder (and subject to such conditions, if any, as the Committee may deem
necessary to avoid adverse accounting effects to the Company) by delivery of
that number of shares of Stock having a Fair Market Value equal to the Option
Price of the shares to be purchased. Receipt by the Company of such notice and
payment shall constitute the exercise of the Option. Within 30 days thereafter
but subject to the remaining provisions of the Plan, the Company shall deliver
or cause to be delivered to the Optionee or his agent a certificate or
certificates for the number of shares then being purchased. Such shares shall be
fully paid and nonassessable. Nothing herein shall be construed to preclude the
Company from participating in a so-called "cashless exercise", provided the
Optionee or other person exercising the Option and each other party involved in
any such exercise shall comply with such procedures, and enter into such
agreements, of indemnity or otherwise, as the Company shall specify.

                                       -4-

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12.  Restrictions on Issue of Shares

     12.1. Violation of Law. Notwithstanding any other provision of the Plan,
if, at any time, in the reasonable opinion of the Company the issuance of shares
of Stock covered by the exercise of any Option may constitute a violation of
law, then the Company may delay such issuance and the delivery of a certificate
for such shares until (i) approval shall have been obtained from such
governmental agencies, other than the Securities and Exchange Commission, as may
be required under any applicable law, rule, or regulation; and (ii) in the case
where such issuance would constitute a violation of a law administered by or a
regulation of the Securities and Exchange Commission, one of the following
conditions shall have been satisfied:

           (a)  the shares with respect to which such Option has been exercised
are at the time of the issuance of such shares effectively registered under the
Act; or

           (b)  the Company shall have received an opinion, in form and
substance satisfactory to the Company, from the Company's legal counsel to the
effect that the sale, transfer, assignment, pledge, encumbrance or other
disposition of such Shares or such beneficial interest, as the case may be, does
not require registration under the Act or any applicable state securities laws.

The Company shall make all  reasonable  efforts to bring about the occurrence of
said events.

     12.2. Execution of Stock Restriction Agreement; Interpretation. Whenever
shares are to be issued pursuant to an Option, the Company shall be under no
obligation to issue such shares until such time, if ever, as the person who
exercises such Option, in whole or in part, shall have executed and delivered to
the Company the Stock Restriction Agreement specified by the Committee in
connection with the grant of such Option, if any. In the event of any conflict
between the provisions of this Plan and provisions of a Stock Restriction
Agreement or Employment Agreement, the provisions of the Stock Restriction
Agreement or Employment Agreement shall control, but insofar as possible the
provisions of the Plan and any such Stock Restriction Agreement or Employment
Agreement shall be construed so as to give full force and effect to all such
provisions.

     12.3. Placement of Legends. Each certificate representing shares issued
upon the exercise of an Option will bear restrictive legends which may refer to
applicable restrictions under the Stock Restriction Agreement and Employment
Agreement, if any.

13.  Purchase for Investment; Subsequent Registration

     13.1. Investment Representation. Unless the shares to be issued upon
exercise of an Option granted under the Plan have been effectively registered
under the Act, the Company shall be under no obligation to issue any shares
covered by any Option unless the person who exercises such Option, in whole or
in part, shall give a written representation to the Company which is
satisfactory in form and substance to its counsel and upon which the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the Option on his or her own account for the purpose of investment
and not with a view to, or for sale in connection with, the distribution of any
such shares.

                                       -5-

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     13.2. Registration. If the Company shall deem it necessary or desirable to
register under the Act or other applicable statutes any shares with respect to
which an Option shall have been granted, or to qualify any such shares for
exemption from the Act or other applicable statutes, then the Company shall take
such action at its own expense. The Company may require from each Option holder,
or each holder of shares of Stock acquired pursuant to the Plan, such
information in writing for use in any registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from such holder against all losses, claims, damage and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made. In addition, the Company may require of any such person that he or she
agree that, without the prior written consent of the Company or such managing
underwriter, he or she will not sell, make any short sale of, loan, grant any
option for the purchase of, pledge or otherwise encumber, or otherwise dispose
of, any shares of Stock during the 180 day period commencing on the effective
date of the registration statement relating to such underwritten public offering
of securities.

     13.3. Placement of Legends; Stop Orders; etc. Each share of Stock issued
pursuant to an Option granted under this Plan may bear a reference to the
investment representation made in accordance with Section 13.1 in addition to
any other applicable restriction under the Plan and the terms of the Option and
to the fact that no registration statement has been filed with the Securities
and Exchange Commission in respect to said Stock. All certificates for shares of
Stock or other securities delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of any stock exchange upon
which the Stock is then listed, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

14.  Withholding; Notice of Disposition of Stock
     Prior to Expiration of Specified Holding Period

     14.1. Tax Withholding. Whenever shares are to be issued in satisfaction of
an Option granted hereunder, the Company shall have the right to require the
Optionee to remit to the Company an amount sufficient to satisfy federal, state,
local or other withholding tax requirements if and to the extent required by law
(whether so required to secure for the Company an otherwise available tax
deduction or otherwise) prior to the delivery of any certificate or certificates
for such shares.

     14.2. Notification of Disposition. Each person exercising any Incentive
Option granted under the Plan shall be deemed to have covenanted with the
Company to report to the Company any disposition of such shares prior to the
expiration of the holding periods specified by Section 422(a)(1) of the Code
and, if and to the extent that the realization of income in such a disposition
imposes upon the Company federal, state, local or other withholding tax
requirements, or any such withholding is required to secure for the Company an
otherwise available tax deduction, to remit to the Company an amount in cash
sufficient to satisfy those requirements.

                                       -6-

<PAGE>

15.  Termination of Association with the Company

     Unless the Committee shall specify otherwise in the grant of a particular
Option under the Option Agreement, if the Optionee's employment or other
association with the Company is terminated, whether voluntarily or otherwise,
the Option shall immediately cease to be exercisable in any respect. Military or
sick leave shall not be deemed a termination of employment or other association,
provided that it does not exceed the longer of 90 days or the period during
which the absent Optionee's reemployment rights, if any, are guaranteed by
statute or by contract.

16.  Transferability of Options

     Options shall not be transferable, other than by will or the laws of
descent and distribution, and may be exercised during the life of the Optionee
only by the Optionee.

17.  Adjustments for Corporate Transactions

     17.1. Stock Dividend, Etc. In the event of any stock dividend payable in
Stock or any split-up or contraction in the number of shares of Stock after the
date of the Option Agreement and prior to the exercise in full of the Option,
the number of shares subject to such Option Agreement and the price to be paid
for each share subject to the Option shall be proportionately adjusted.

     17.2. Stock Reclassification. In the event of any reclassification or
change of outstanding shares of Stock, shares of stock or other securities
equivalent in kind and value to those shares an Optionee would have received if
he or she had held the full number of shares of Stock subject to the Option
immediately prior to such reclassification or change and had continued to hold
those shares (together with all other shares, stock and securities thereafter
issued in respect thereof) to the time of the exercise of the Option shall
thereupon be subject to the Option.

     17.3. Consolidation or Merger. Subject to the remainder of this Section
17.3, in the event of any consolidation or merger of the Company with or into
another company or in case of any sale or conveyance to another company or
entity of the property of the Company as a whole or substantially as a whole,
shares of stock or other securities equivalent in kind and value to those shares
and other securities an Optionee would have received if he or she had held the
full number of shares of Stock remaining subject to the Option immediately prior
to such consolidation, merger, sale or conveyance and had continued to hold
those shares (together with all other shares, stock and securities thereafter
issued in respect thereof) to the time of the exercise of the Option shall
thereupon be subject to the Option. However, unless any Option Agreement shall
provide different or additional terms, in any such transaction the Committee, in
its discretion, may provide instead that any outstanding Option shall terminate,
to the extent not exercised by the Optionee prior to termination, either (a) at
the close of a period of not less than ten (10) days specified by the Committee
and commencing on the Committee's delivery of written notice to the Optionee of
its decision to terminate such Option without payment of consideration as
provided in the following clause or (b) as of the date of the transaction, in
consideration of the Company's payment to the Optionee of an amount of cash
equal to the difference between the aggregate Fair Market Value of the shares of
Stock for which the Option is then exercisable and the aggregate exercise price
for such shares under the Option.

                                       -7-

<PAGE>

     17.4. Dissolution or Liquidation. Upon dissolution or liquidation of the
Company, the Option shall terminate, but the Optionee (if at the time in the
employ of or otherwise associated with the Company or any of its Affiliates)
shall have the right, immediately prior to such dissolution or liquidation, to
exercise the Option to the extent exercisable on the date of such dissolution or
liquidation.

     17.5. Related Matters. Any adjustment required by this Section 17 shall be
determined and made by the Committee. No fraction of a share shall be
purchasable or deliverable upon exercise, but in the event any adjustment
hereunder of the number of shares covered by the Option shall cause such number
to include a fraction of a share, such number of shares shall be adjusted to the
nearest smaller whole number of shares. In the event of changes in the
outstanding Stock by reason of any stock dividend, split-up, contraction,
reclassification, or change of outstanding shares of Stock of the nature
contemplated by this Section 17, the number of shares of Stock available for the
purposes of the Plan as stated in Section 4 shall be correspondingly adjusted.

18.  Reservation of Stock

     The Company shall at all times during the term of the Plan and any
outstanding Options granted hereunder reserve or otherwise keep available such
number of shares of Stock as will be sufficient to satisfy the requirements of
the Plan (if then in effect) and such Options and shall pay all fees and
expenses necessarily incurred by the Company in connection therewith.

19.  Limitation of Rights in Stock;
     No Special Employment or Other Rights

     The Optionee shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the shares of Stock covered by an Option, except
to the extent that the Option shall have been exercised with respect thereto
and, in addition, a certificate shall have been issued therefor and delivered to
the Optionee or his agent. Any Stock issued pursuant to the Option shall be
subject to all restrictions upon the transfer thereof which may be now or
hereafter imposed by the Certificate of Incorporation, the By-laws of the
Company, the Stock Restriction Agreement and the Employment Agreement. Nothing
contained in the Plan or in any Option shall confer upon any Optionee any right
with respect to the continuation of his or her employment or other association
with the Company (or any Affiliate), or interfere in any way with the right of
the Company (or any Affiliate), subject to the terms of any separate employment
or consulting agreement or provision of law or corporate articles or by-laws to
the contrary, at any time to terminate such employment or consulting agreement
or to increase or decrease the compensation of the Optionee from the rate in
existence at the time of the grant of an Option.

20.  Nonexclusivity of the Plan

     Neither the adoption of the Plan by the Board nor the submission of the
Plan to the shareholders of the Company shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including without limitation, the granting of stock
options other than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

                                       -8-

<PAGE>

21.  Termination and Amendment of the Plan

     The Board may at any time terminate the Plan or make such modifications of
the Plan as it shall deem advisable. No termination or amendment of the Plan
may, without the consent of the Optionee to whom any Option shall theretofore
have been granted, adversely affect the rights of such Optionee under such
Option.

22.  Notices and Other Communications

     Any notice, demand, request or other communication hereunder to any party
shall be deemed to be sufficient if contained in a written instrument delivered
in person or duly sent by first class registered, certified or overnight mail,
postage prepaid, or telecopied with a confirmation copy by regular, certified or
overnight mail, addressed or telecopied, as the case may be, (i) if to the
Optionee, at his or her residence address last filed with the Company and (ii)
if to the Company, 1713 Jaggie Fox Way, Lexington, KY 40511, Attention:
President, or to such other address or telecopier number, as the case may be, as
the addressee may have designated by notice to the addressor. All such notices,
requests, demands and other communications shall be deemed to have been
received: (i) in the case of personal delivery, on the date of such delivery;
(ii) in the case of mailing, when received by the addressee; and (iii) in the
case of facsimile transmission, when confirmed by facsimile machine report.

23.  Governing Law

     The Plan and all Options and actions taken thereunder shall be governed,
interpreted and enforced in accordance with the laws of the State of Delaware,
without regard to the conflict of laws principles thereof.

                     * ---------------- * ---------------- *

The following does not form part of this Plan but is included solely for
informational purposes:

           Date of Board Approval:     November 1, 2002
     Date of Shareholder Approval:     November 1, 2002

                                       -9-<PAGE>

                                                                    Exhibit 10.6

                              AMENDED AND RESTATED
                     EMPLOYMENT AND NONCOMPETITION AGREEMENT
                            (Robert B. Trussell, Jr.)

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
executed as of this 4/th/ day of October, 2002, and effective as of the Closing
Date (as defined below in the Merger Agreement referred to below, the "Closing
Date"), by and between Tempur World, Inc., a Delaware corporation (the
"Company"), and Robert B. Trussell, Jr., an individual ("Employee").

                                    RECITALS

     Pursuant to the Agreement and Plan of Merger, dated as of October 4, 2002
(the "Merger Agreement"), among the Company, TWI Holdings, Inc., a Delaware
corporation ("Parent"), TWI Acquisition Corp., a Delaware corporation
("Purchaser") and certain shareholders of the Company, on the Closing Date, the
Purchaser will be merged into the Company, with the Company as the surviving
corporation.

     The Company desires to continue to employ Employee from and after the
Closing Date by amending and restating in its entirety the existing Employment
Agreement dated as of December 31, 1999 between the Company and Employee (the
"Former Agreement"), and Employee desires to continue to be employed by the
Company in such manner, on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the Company and
Employee,

     IT IS HEREBY AGREED AS FOLLOWS:

                                    ARTICLE I

                                   EMPLOYMENT

     1.1   Term of Employment. Effective as of the Closing Date, the Company
employs Employee, and Employee accepts employment by the Company, for the period
commencing on the Closing Date and ending on the second anniversary of the
Closing Date, subject to earlier termination as hereinafter set forth in Article
III (the "Employment Term"). Following the expiration of the Employment Term,
the Employment Term shall be automatically renewed for successive one-year
periods (collectively, the "Renewal Terms"; individually, a "Renewal Term")
unless, at least 90 days prior to the expiration of the Employment Term or the
then current Renewal Term, either party provides the other with a written notice
of intention not to renew, in

<PAGE>

which case the Employee's employment with the Company, and the Company's
obligations hereunder, shall terminate as of the end of the Employment Term or
said Renewal Term, as applicable, provided however that Employee shall agree to
continue his employment hereunder at the option of the Company for a period of 6
months following written notice by either party of intention to terminate or not
to renew (other than any such written notice given within 90 days following a
Change in Control). Except as otherwise expressly provided herein, the terms of
this Agreement during any Renewal Term shall be the same as the terms in effect
immediately prior to such renewal, subject to any such changes or modifications
as mutually may be agreed between the parties as evidenced in a written
instrument signed by both the Company and Employee. As used herein, "Change in
Control" shall mean a change in the ownership of the Company, such that more
than 50% of the equity securities of the Company are acquired by any person or
group (as such terms are defined for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) that does not own common stock of
the Company on the Closing Date; provided, however, no Change in Control shall
be deemed to occur (a) as a result of the consummation of the transactions
contemplated by the Merger Agreement or (b) if such Change in Control is
effected pursuant to any internal reorganization of the Company (including, by
way of example, establishment of a new holding company for the Company) that
does not result in a change of more than 50% of the ultimate equity ownership of
the Company.

     1.2   Position and Duties. Employee shall be employed in the position of
Chief Executive Officer, and shall be subject to the authority of, and shall
report to, the Company's Board of Directors. Employee's duties and
responsibilities shall include all those customarily attendant to such position
and such other duties and responsibilities as may be assigned by the Board of
Directors. Employee shall devote Employee's entire business time, loyalty,
attention and energies exclusively to the business interests of the Company
while employed by the Company, and shall perform his duties and responsibilities
diligently and to the best of his ability.

                                   ARTICLE II

                         COMPENSATION AND OTHER BENEFITS

     2.1   Base Salary. The Company shall pay Employee an initial annual salary
of $310,000.00 ("Base Salary"), payable in accordance with the normal payroll
practices of the Company. The Employee's Base Salary will be reviewed and be
subject to adjustment by the Board of Directors on or about January 1 of each
year beginning with January 1, 2004.

     2.2   Performance Bonus. Employee will be eligible to earn an annual
performance-based bonus based on a formula approved by the Company's Board of
Directors and incorporated herein by this reference for each full or pro-rata
portion of the fiscal year during which Employee is employed by the Company (a
"Bonus Year"), the terms and conditions of which as well as Employee's
entitlement thereto shall be determined annually in the sole discretion of the
Company's Board of Directors (the "Performance Bonus"). The amount of the
Performance Bonus will vary based on the achievement of performance criteria in
the formula established by the Company's Board of Directors, but the formula
will be set to target a Performance Bonus

                                        2

<PAGE>

equal to 30% of Base Salary as of January 1/st/ of the Bonus Year if the
performance criteria in the formula are met.

     2.3   Benefit Plans. Employee will be eligible to participate in the
Company's retirement plans that are qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended, and in the Company's welfare benefit
plans that are generally applicable to all executive employees of the Company
(the "Plans"), in accordance with the terms and conditions thereof.

     2.4   Expenses. The Company shall reimburse Employee for all authorized and
approved expenses incurred in the course of the performance of Employee's duties
and responsibilities pursuant to this Agreement and consistent with the
Company's policies with respect to travel, entertainment and miscellaneous
expenses, and the requirements with respect to the reporting of such expenses.

     2.5   Automobile Allowance. The Company shall either pay to Employee an
automobile allowance of $600.00 per month or provide Employee with an automobile
for business and personal use.

     2.6   Vacation. Employee shall be entitled to vacation in any calendar year
in accordance with the Company's general vacation policies for similarly
situated executive employees.

     2.7   Grant of Stock Options. On or promptly following the Closing Date,
Parent shall grant Employee options to purchase shares of the Class B-1 Voting
Common Stock of Parent representing 1.750% of the fully-diluted common stock of
Parent as of the Closing Date for a purchase price per share equal to the fair
market value per share of Class B-1 Voting Common Stock of Parent (as determined
by the Board of Directors of Parent), pursuant to a Stock Option Agreement
between Parent and Employee. Such options shall vest on an annual basis in equal
installments over a four-year period from the Closing Date. Such options, and
any shares issued upon exercise of such options, shall be subject to certain
termination and repurchase rights of the Parent upon termination of employment
of Employee, and shall be subject to restrictions on transfer as set forth in
the Stock Option Agreement, the Stock Repurchase Agreement attached thereto as
an exhibit and the Stockholder Agreement among Parent and its stockholders.

                                   ARTICLE III

                                   TERMINATION

     3.1   Right to Terminate; Automatic Termination.

                (a)  Termination by Company Without Cause. Subject to Section
3.2, the Company may terminate Employee's employment and all of the Company's
obligations under this Agreement at any time and for any reason.

                                        3

<PAGE>

                (b)  Termination by Employee for Good Reason. Subject to Section
3.2, Employee may terminate his employment obligation hereunder (but not his
obligation under Article IV hereof) for "Good Reason" (as hereinafter defined)
if Employee gives written notice thereof to the Company (which notice shall
specify the grounds upon which such notice is given) and the Company fails,
within 30 days of receipt of such notice, to cure or rectify the grounds for
such Good Reason termination set forth in such notice. "Good Reason" shall mean
any of the following: (i) a material reduction in the Employee's duties and
responsibilities hereunder; (ii) relocation of Employee's principal workplace
over 60 miles from the Company's existing workplaces without the consent of
Employee (which consent shall not be unreasonably withheld, delayed or
conditioned), or (iii) the Company's material breach of the Agreement which is
not cured within 30 days after receipt by the Company from Employee of written
notice of such breach.

                (c)  Termination by Company For Cause. Subject to Section 3.2,
the Company may terminate Employee's employment and all of the Company's
obligations under this Agreement at any time "For Cause" (as defined below) by
giving notice to Employee stating the basis for such termination, effective
immediately upon giving such notice or at such other time thereafter as the
Company may designate. "For Cause" shall mean any of the following: (i)
Employee's willful and continued failure to substantially perform the reasonably
assigned duties with the Company which are consistent with Employee's position
and job description referred to in this Agreement, other than any such failure
resulting from incapacity due to physical or mental illness, after a written
notice is delivered to Employee by the Board of Directors of the Company which
specifically identifies the manner in which Employee has not substantially
performed the assigned duties, (ii) Employee's willful engagement in illegal
conduct which is materially and demonstrably injurious to the Company, (iii)
Employee's conviction by a court of competent jurisdiction of, or his pleading
guilty or nolo contendere to, any felony, or (iv) Employee's commission of an
act of fraud, embezzlement, or misappropriation against the Company, including,
but not limited to, the offer, payment, solicitation or acceptance of any
unlawful bribe or kickback with respect to the Company's business. For purposes
of this paragraph, no act, or failure to act, on Employee's part shall be
considered "willful" unless done, or omitted to be done, in knowing bad faith
and without reasonable belief that the action or omission was in, or not opposed
to, the best interests of the Company. Any act, or failure to act, expressly
authorized by a resolution duly adopted by the Board of Directors or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, in good faith and in the best interests of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated For Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors at a
meeting of the Board called and held for such purpose (after reasonable notice
to Employee and an opportunity for Employee, together with Employee's counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board of Directors Employee committed the conduct set forth above in (i), (ii),
(iii) or (iv) of this Section and specifying the particulars thereof in detail.

                (d)  Termination Upon Death or Disability. Subject to Section
3.2, Employee's employment and the Company's obligations under this Agreement
shall terminate: (i)

                                        4

<PAGE>

automatically, effective immediately and without any notice being necessary,
upon Employee's death; and (ii) in the event of the disability of Employee, by
the Company giving notice of termination to Employee. For purposes of this
Agreement, "disability" means the inability of Employee, due to a physical or
mental impairment, for 90 days (whether or not consecutive) during any period of
360 days, to perform, with reasonable accommodation, the essential functions of
the work contemplated by this Agreement. In the event of any dispute as to
whether Employee is disabled, the matter shall be determined by the Company's
Board of Directors in consultation with a physician selected by the Company's
health or disability insurer or another physician mutually satisfactory to the
Company and the Employee. The Employee shall cooperate with the efforts to make
such determination or be subject to immediate discharge. Any such determination
shall be conclusive and binding on the parties. Any determination of disability
under this Section 3.1 is not intended to alter any benefits any party may be
entitled to receive under any long-term disability insurance policy carried by
either the Company or Employee with respect to Employee, which benefits shall be
governed solely by the terms of any such insurance policy. Nothing in this
subsection shall be construed as limiting or altering any of Employee's rights
under State workers compensation laws or State or federal Family and Medical
Leave laws.

     3.2   Rights Upon Termination.

                (a)  Section 3.1(a) and 3.1(b) Termination. If Employee's
employment terminates pursuant to Section 3.1(a) or 3.1(b) hereof, Employee
shall have no further rights against the Company hereunder, except for the right
to receive, following execution of a release and waiver in form satisfactory to
the Company, (i) any unpaid Base Salary, the value of any accrued but unused
vacation, a pro-rata portion (based on the number of days of the Bonus Year
prior to the effective date of termination) of any Performance Bonus that would
be payable with respect to the Bonus Year in which the termination occurs and
any stock options to which the Employee is entitled under the Stock Option
Agreement, (ii) payment of Base Salary for the duration of the Term or the
Renewal Term (as applicable) (the "Severance Period"), payable in accordance
with the normal payroll practices of the Company, (iii) reimbursement of
expenses to which Employee is entitled under Section 2.4 hereof, and (iv)
continuation of the welfare plans of the Company as detailed in Paragraph 2.3
hereof for the duration of the Severance Period. Notwithstanding the above, in
the event of a Section 3.1(a) or (b) Termination during the Initial Term hereof,
Employee shall be entitled to the payments described in this Section for a
Severance Period of a minimum of 6 months.

                (b)  Section 3.1(c) and 3.1(d) Termination. If Employee's
employment is terminated pursuant to Sections 3.1(c) or 3.1(d) hereof, or if
Employee quits employment (other than for Good Reason) notwithstanding the terms
of this Agreement, Employee or Employee's estate shall have no further rights
against the Company hereunder, except for the right to receive, following
execution of a release and waiver in form satisfactory to the Company, (i) any
unpaid Base Salary and in the case of 3.1(d) hereof, the value of any accrued
but unused vacation, a pro-rata portion (based on the number of days of the
Bonus Year prior to the effective date of termination) of any Performance Bonus
that would be payable with respect to the Bonus Year in which the termination
occurs, and any stock options to which the Employee is entitled under the

                                        5

<PAGE>

Stock Option Agreement, and (ii) reimbursement of expenses to which Employee is
entitled under Section 2.4 hereof.

                                   ARTICLE IV

                CONFIDENTIALITY; NONCOMPETITION; NONSOLICITATION

     4.1   Covenants Regarding Confidential Information, Trade Secrets and Other
Matters. Employee covenants and agrees as follows:

           (a)  Definitions. For purposes of this Agreement, the following terms
are defined as follows:

                    (1)  "Trade Secret" means all information possessed by or
developed for the Company or any of its subsidiaries, including, without
limitation, a compilation, program, device, method, system, technique or
process, to which all of the following apply: (i) the information derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use and (ii) the information is
the subject of efforts to maintain its secrecy that are reasonable under the
circumstances.

                    (2)  "Confidential Information" means information, to the
extent it is not a Trade Secret, which is possessed by or developed for the
Company or any of its subsidiaries and which relates to the Company's or any of
its subsidiaries' existing or potential business or technology, which
information is generally not known to the public and which information the
Company or any of its subsidiaries seeks to protect from disclosure to its
existing or potential competitors or others, including, without limitation, for
example: business plans, strategies, existing or proposed bids, costs, technical
developments, existing or proposed research projects, financial or business
projections, investments, marketing plans, negotiation strategies, training
information and materials, information generated for client engagements and
information stored or developed for use in or with computers. Confidential
Information also includes information received by the Company or any of its
subsidiaries from others which the Company or any of its subsidiaries has an
obligation to treat as confidential.

                (b)  Nondisclosure of Confidential Information. Except as
required in the conduct of the Company's or any of its subsidiaries' business or
as expressly authorized in writing on behalf of the Company or any of its
subsidiaries, Employee shall not use or disclose, directly or indirectly, any
Confidential Information during the period of his employment with the Company.
In addition, following the termination for any reason of Employee's employment
with the Company, Employee shall not use or disclose, directly or indirectly,
any Confidential Information. This prohibition does not apply to Confidential
Information after it has become generally known in the industry in which the
Company conducts its business. This prohibition also does not prohibit
Employee's use of general skills and know-how acquired during and prior

                                        6

<PAGE>

to employment by the Company, as long as such use does not involve the use or
disclosure of Confidential Information or Trade Secrets.

                (c)  Trade Secrets. During Employee's employment by the Company,
Employee shall do what is reasonably necessary to prevent unauthorized
misappropriation or disclosure and threatened misappropriation or disclosure of
the Company's or any of its subsidiaries' Trade Secrets and, after termination
of employment, Employee shall not use or disclose the Company's or any of its
subsidiaries' Trade Secrets as long as they remain, without misappropriation,
Trade Secrets.

     4.2   Noncompetition.

                (a)  During Employment. During Employee's employment hereunder,
Employee shall not engage, directly or indirectly, as an employee, officer,
director, partner, manager, consultant, agent, owner (other than a minority
shareholder or other equity interest of not more than 1% of a company whose
equity interests are publicly traded on a nationally recognized stock exchange
or over-the-counter) or in any other capacity, in any competition with the
Company or any of its subsidiaries.

                (b)  Subsequent to Employment. For a two year period following
the termination of Employee's employment for any reason or without reason,
Employee shall not in any capacity (whether in the capacity as an employee,
officer, director, partner, manager, consultant, agent or owner (other than a
minority shareholder or other equity interest of not more than 1% of a company
whose equity interests are publicly traded on a nationally recognized stock
exchange or over-the-counter), directly or indirectly advise, manage, render or
perform services to or for any person or entity which is engaged in a business
competitive to that of the Company or any of its subsidiaries within any
geographical location wherein the Company or any of its subsidiaries produces,
sells or markets its goods and services at the time of such termination or
within a one-year period prior to such termination.

     4.3   Nonsolicitation. For a two year period following the termination of
Employee's employment for any reason or without reason, Employee shall not
solicit or induce any person who was an employee of the Company or any of its
subsidiaries on the date of Employee's termination or within three months prior
to leave his or her employment with the Company or any of its subsidiaries.

     4.4   Return of Documents. Immediately upon termination of employment,
Employee will return to the Company, and so certify in writing to the Company,
all the Company's or any of its subsidiaries' papers, documents and things,
including information stored for use in or with computers and software
applicable to the Company's and its subsidiaries' business (and all copies
thereof), which are in Employee's possession or under Employee's control,
regardless whether such papers, documents or things contain Confidential
Information or Trade Secrets.

     4.5   No Conflicts. To the extent that they exist, Employee will not
disclose to the Company any of Employee's previous employer's confidential
information or trade secrets.

                                        7

<PAGE>

Further, Employee represents and warrants that Employee has not previously
assumed any obligations inconsistent with those of this Agreement and that
employment by the Company does not conflict with any prior obligations to third
parties.

     4.6   Agreement on Fairness. Employee acknowledges that: (i) this Agreement
has been specifically bargained between the parties and reviewed by Employee,
(ii) Employee has had an opportunity to obtain legal counsel to review this
Agreement, and (iii) the covenants made by and duties imposed upon Employee
hereby are fair, reasonable and minimally necessary to protect the legitimate
business interests of the Company, and such covenants and duties will not place
an undue burden upon Employee's livelihood in the event of termination of
Employee's employment by the Company and the strict enforcement of the covenants
contained herein.

     4.7   Equitable Relief and Remedies. Employee acknowledges that any breach
of this Agreement will cause substantial and irreparable harm to the Company for
which money damages would be an inadequate remedy. Accordingly, notwithstanding
the provisions of Article V below, the Company shall in any such event be
entitled to obtain injunctive and other forms of equitable relief to prevent
such breach and the prevailing party shall be entitled to recover from the
other, the prevailing party's costs (including, without limitation, reasonable
attorneys' fees) incurred in connection with enforcing this Agreement, in
addition to any other rights or remedies available at law, in equity, by statute
or pursuant to Article V below.

                                    ARTICLE V

               AGREEMENT TO SUBMIT ALL EXISTING OR FUTURE DISPUTES
                             TO BINDING ARBITRATION

     The Company and Employee agree that any controversy or claim arising out of
or related to this Agreement or Employee's employment with or termination by the
Company that is not resolved by the parties shall be settled by arbitration
administered by the American Arbitration Association under its National Rules
for the Resolution of Employment Disputes. Said arbitration shall be conducted
in Lexington, Kentucky. The parties further agree that the arbitrator may
resolve issues of contract interpretation as well as law and award damages, if
any, to the extent provided by the Agreement or applicable law. The parties
agree that the costs of the arbitrator's services shall be borne by the Company.
The parties further agree that the arbitrator's decision will be final and
binding and enforceable in any court of competent jurisdiction. In addition to
the A.A.A.'s Arbitration Rules and unless otherwise agreed to by the parties,
the following rules shall apply:

                (a)  Each party shall be entitled to discovery exclusively by
the following means: (i) requests for admission, (ii) requests for production of
documents, (iii) up to 15 written interrogatories (with any subpart to be
counted as a separate interrogatory), and (iv) depositions of no more than six
individuals.

                                        8

<PAGE>

                (b)  Unless the arbitrator finds that delay is reasonably
justified or as otherwise agreed to by the parties, all discovery shall be
completed, and the arbitration hearing shall commence within five months after
the appointment of the arbitrator.

                (c)  Unless the arbitrator finds that delay is reasonably
justified, the hearing will be completed, and an award rendered within 30 days
of commencement of the hearing.

The arbitrator's authority shall include the ability to render equitable types
of relief and, in such event, any aforesaid court may enter an order enjoining
and/or compelling such actions or relief ordered or as found by the arbitrator.
The arbitrator also shall make a determination regarding which party's legal
position in any such controversy or claim is the more substantially correct (the
"Prevailing Party") and the arbitrator shall require the other party to pay the
legal and other professional fees and costs incurred by the Prevailing Party in
connection with such arbitration proceeding and any necessary court action.

Notwithstanding the foregoing provisions of this Article V, the parties
expressly agree that a court of competent jurisdiction may enter a temporary
restraining order or an order enjoining a breach of Article IV of this Agreement
without submission of the underlying dispute to an arbitrator. Such remedy shall
be cumulative and nonexclusive, and shall be in addition to any other remedy to
which the parties may be entitled.

                                   ARTICLE VI

                               GENERAL PROVISIONS

     6.1   Notices. Any and all notices provided for in this Agreement shall be
given in writing and shall be deemed given to a party at the earlier of (i) when
actually delivered to such party, or (ii) when mailed to such party by
registered or certified mail (return receipt requested) or sent to such party by
courier, confirmed by receipt, and addressed to such party at the address
designated below for such party as follows (or to such other address for such
party as such party may have substituted by notice pursuant to this Section
5.1):

                (a) If to the Company:        Tempur World, Inc.
                                              1713 Jaggie Fox Way
                                              Lexington, KY 40511
                                              Attention: President

                (b) If to Employee:           Robert B. Trussell, Jr.
                                              248 Holiday Road
                                              Lexington, KY  40502

     6.2   Entire Agreement. This Agreement contains the entire understanding
and the full and complete agreement of the parties and, effective as of the
Closing Date, supersedes and replaces any prior understandings and agreements
among the parties with respect to the subject

                                        9

<PAGE>

matter hereof (including, without limitation, the Former Agreement). The
Employee hereby acknowledges and agrees that (a) no amounts are owed to him
under the Former Agreement, other than any accrued salary payments for the
current payroll period, and (b) effective upon the Closing Date, the Former
Agreement shall terminate and be of no further force or effect, and accordingly
the Employee shall have no rights to terminate his employment under the Former
Agreement for "Good Reason" (as defined in the Former Agreement) with respect to
any "Change in Control" (as defined in the Former Agreement) relating to the
transactions contemplated by the Merger Agreement.

     6.3   Amendment. This Agreement may be altered, amended or modified only in
a writing, signed by both of the parties hereto. Headings included in this
Agreement are for convenience only and are not intended to limit or expand the
rights of the parties hereto. References to Sections herein shall mean sections
of the text of this Agreement, unless otherwise indicated.

     6.4   Assignability. This Agreement and the rights and duties set forth
herein may not be assigned by either of the parties without the express written
consent of the other party. This Agreement shall be binding on and inure to the
benefit of each party and such party's respective heirs, legal representatives,
successors and assigns.

     6.5   Severability. If any court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then such
invalidity or unenforceability shall have no effect on the other provisions
hereof, which shall remain valid, binding and enforceable and in full force and
effect, and such invalid or unenforceable provision shall be construed in a
manner so as to give the maximum valid and enforceable effect to the intent of
the parties expressed therein.

     6.6   Waiver of Breach. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

     6.7   Governing Law; Construction. This Agreement shall be governed by the
internal laws of the State of Kentucky, without regard to any rules of
construction concerning the party responsible for the drafting hereof.

     6.8.  Effective Date. The terms and conditions of this Agreement shall be
effective as of the Closing Date. Prior to the Closing Date, the terms and
conditions of Employee's employment with the Company shall be as set forth in
the Former Agreement. In the event that the Merger Agreement is terminated, this
Agreement shall be null and void and of no further force and effect, and the
Former Agreement shall remain in full force and effect until amended or
terminated in accordance with its terms.

                                       10

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written above.

                                       COMPANY:

                                       TEMPUR WORLD, INC.

                                       By: /s/ Robert B. Trussell, Jr.
                                          --------------------------------------
                                       Title: CEO

                                       EMPLOYEE:

                                       /s/ Robert B. Trussell, Jr.
                                       -----------------------------------------
                                       Robert B. Trussell, Jr.

                                       WITNESSED BY:

                                       /s/ William H. Poche
                                       -----------------------------------------

Date: 10/4/02
     ---------------------

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