Document:

Exhibit 10.59

             THE RETIREMENT PLAN FOR EMPLOYEES OF GALEY & LORD, INC.

                              AMENDED AND RESTATED

                                 EFFECTIVE AS OF
                                 JANUARY 1, 2000

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                                TABLE OF CONTENTS

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ARTICLE I:  DEFINITIONS...........................................................................................1
         1.1      Accrued Benefit.................................................................................1
         1.2      Actuarial Equivalent............................................................................2
         1.3      Administrative Committee........................................................................2
         1.4      Authorized Leave of Absence.....................................................................2
         1.5      Beneficiary.....................................................................................2
         1.6      Code............................................................................................3
         1.7      Company.........................................................................................3
         1.8      Disability Pension..............................................................................3
         1.9      Disability Retirement Date......................................................................3
         1.10     Early Retirement Age............................................................................3
         1.11     Early Retirement Pension........................................................................3
         1.12     Earnings........................................................................................3
         1.13     Effective Date..................................................................................4
         1.14     Employee........................................................................................4
         1.15     Employer........................................................................................4
         1.16     Final Average Earnings..........................................................................4
         1.17     5% Owner........................................................................................4
         1.18     Hour of Service or Service......................................................................4
         1.19     Investment Committee............................................................................5
         1.20     Investment Manager..............................................................................5
         1.21     Merged Plan.....................................................................................5
         1.22     Normal Retirement Age...........................................................................5
         1.23     Normal Retirement Pension.......................................................................6
         1.24     One-Year Break in Service.......................................................................6
         1.25     Participant.....................................................................................6
         1.26     Pension.........................................................................................6
         1.27     Permanent Disability............................................................................6
         1.28     Plan............................................................................................6
         1.29     Plan Year.......................................................................................6
         1.30     Qualified Joint and Survivor Annuity............................................................6
         1.31     Qualified Pre-Retirement Survivor Annuity.......................................................6
         1.32     Related Company.................................................................................7
         1.33     Section 415 Compensation........................................................................7
         1.34     Spouse..........................................................................................7
         1.35     Trust, Trust Fund, or Fund......................................................................7
         1.36     Trustee.........................................................................................7
         1.37     Year of Credited Service........................................................................7
         1.38     Year of Vesting Service.........................................................................8

ARTICLE II:  PARTICIPATION........................................................................................8
         2.1      Eligibility Requirements........................................................................8
         2.2      Re-employment...................................................................................9
         2.3      Change in Employment Status.....................................................................9
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ARTICLE III:  CONTRIBUTIONS.......................................................................................9
         3.1      Contributions by the Employer...................................................................9
         3.2      Time of Payment of Contributions................................................................9
         3.3      No Right or Duty of Inquiry....................................................................10
         3.4       Non-Reversion.................................................................................10
         3.5       Participant Contributions.....................................................................10

ARTICLE IV:  VESTING AND FORFEITURE..............................................................................10
         4.1      Vesting........................................................................................10
         4.2      Forfeiture of Benefit..........................................................................11

ARTICLE V:  ENTITLEMENT TO AND AMOUNT OF RETIREMENT BENEFITS.....................................................11
         5.1      Normal Retirement..............................................................................11
         5.2      Normal Form of Retirement Benefit..............................................................12
         5.3      Early Retirement...............................................................................12
         5.3      Permanent Disability...........................................................................12
         5.5      Payment of Vested Benefit upon Termination of Employment.......................................13
         5.6      Commencement of Benefits.......................................................................13
         5.7      No Duplication of Benefits.....................................................................14
         5.8      Benefit Limitations: In General................................................................14
         5.9      Benefit Limitations: Multiple Plans............................................................15

ARTICLE VI:  FORMS OF RETIREMENT BENEFITS AND DEATH BENEFIT......................................................15
         6.1      Automatic Forms of Retirement Benefits.........................................................15
         6.2      Optional Forms of Distribution.................................................................15
         6.3      Elections......................................................................................17
         6.4      Cash Out of Small Pension......................................................................17
         6.5      Location of Former Participants................................................................18
         6.6      Benefits to Minors and Incompetents............................................................18
         6.7      Direct Rollovers...............................................................................18
         6.8      Qualified Pre-Retirement Survivor Annuity......................................................18

ARTICLE VII:  ADMINISTRATIVE AND INVESTMENT COMMITTEES...........................................................19
         7.1      Appointment of the Administrative Committee....................................................19
         7.2      Appointment of the Investment Committee........................................................19
         7.3      Powers of the Administrative Committee.........................................................19
         7.4      Responsibilities of the Investment Committee...................................................20
         7.5      Operation......................................................................................20
         7.6      Meetings and Quorum............................................................................21
         7.7      Compensation...................................................................................21
         7.8      Domestic Relations Orders......................................................................21

ATRICLE VIII:  DUTIES AND POWERS OF THE TRUSTEE..................................................................21
         8.1      General........................................................................................21
         8.2      Trust Agreement................................................................................22
         8.3      Limitation of Liability........................................................................22
         8.4      Power of Trustee to Carry Out the Plan.........................................................22
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ATRICLE IX:  SPECIAL PROVISION TO PREVENT DISCRIMINATION.........................................................22
         9.1      General Rule...................................................................................22
         9.2      Exception......................................................................................22

ARTICLE X:  AMENDMENT AND TERMINATION............................................................................23
         10.1     Amendment......................................................................................23
         10.2     Right to Terminate.............................................................................23
         10.3     Merger.........................................................................................23
         10.4     Liquidation of Trust Fund......................................................................23
         10.5     Allocation of Trust Assets Upon Plan Termination...............................................23
         10.6     Manner of Distribution.........................................................................23
         10.7     Residual Amounts...............................................................................24

ARTICLE XI:  TOP HEAVY...........................................................................................24
         11.1     Top Heavy......................................................................................24
         11.2     Minimum Accrued Benefit........................................................................24
         11.3     Vesting of Accrued Benefits....................................................................25
         11.4     Benefit and Contribution Limitations...........................................................25

ARTICLE XII:  ADOPTION OF PLAN BY RELATED COMPANIES..............................................................26
         12.1     Adoption of Plan...............................................................................26
         12.2     Withdrawal.....................................................................................26
         12.3     Sale of Employer's Assets......................................................................26

ARTICLE XIII:  MISCELLANEOUS.....................................................................................26
         13.1     Indemnification................................................................................26
         13.2     Exclusive Benefit Rule.........................................................................27
         13.3     No Right to the Fund...........................................................................27
         13.4     Rights of the Employer.........................................................................27
         13.5     Non-Alienation of Benefits.....................................................................27
         13.6     Construction and Severability..................................................................27
         13.7     Delegation of Authority........................................................................27
         13.8     Request for Tax Ruling.........................................................................27

ARTICLE XIV: SUSPENSION OF BENEFITS..............................................................................28
         14.1     Re-employment before Normal Retirement Age.....................................................28
         14.2     Re-employment after Normal Retirement Age......................................................28
         14.3     Employment beyond Normal Retirement Age........................................................28
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             THE RETIREMENT PLAN FOR EMPLOYEES OF GALEY & LORD, INC.

                                   BACKGROUND

         Effective as of January 1, 1999, The Retirement Plan of Galey & Lord
Industries, Inc. (the "Merged Plan") merged into The Retirement Plan for
Employees of Swift Textiles, Inc. (the "Plan") and all assets and liabilities of
the Merged Plan were transferred to the Plan.

         Also, effective as of January 1, 1999, Galey & Lord, Inc. (the
"Company") became sponsor of the Plan and, as sponsor, amended and restated the
Plan as set forth herein and changed the name of the Plan to The Retirement Plan
for Employees of Galey & Lord, Inc.

         The Plan is intended to be a qualified defined benefit pension plan,
qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended,
and to satisfy the applicable requirements of ERISA, as amended.

         Except as otherwise specifically provided below, the provisions of the
Plan as set forth herein shall apply only to Participants whose employment with
the Employer and Related Companies terminates on or after January 1, 1999. If a
Participant's employment with the Employer and other Related Companies
terminates prior to January 1, 1999, his right to benefits, if any, and the
amount thereof will be determined in accordance with the provisions of the Plan
or, if appropriate, the Merged Plan, as in effect immediately prior to his last
employment termination date.

         NOW, THEREFORE, the Company agrees as follows:

ARTICLE I:  DEFINITIONS

         Where indicated by initial capital letters, the following terms have
the following meanings:

         1.1 ACCRUED BENEFIT: An annual benefit equal to the retirement benefit
a Participant would receive at any time upon termination of employment with the
Employer, determined in accordance with the formula set forth in Section 5.1.

                  The Accrued Benefit of each Participant in the Plan and the
Merged Plan immediately before January 1, 1999 shall be determined as of
December 31, 1998.

                  The determination of the Accrued Benefit of each Participant
who participated in the Merged Plan immediately before January 1, 1999 will
include one-half of one year of service for purposes of benefit accrual for the
period beginning October 1, 1998 and ending December 31, 1998.

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                  Each Participant's Accrued Benefit shall not be less than his
or her Accrued Benefit under the Plan or, if appropriate, the Merged Plan,
determined as of December 31, 1998.

         1.2 ACTUARIAL EQUIVALENT: An amount or benefit equal in value to the
aggregate amounts expected to be received under a different form of payment or
at different times, determined, after applying the following generally
acceptable actuarial principles and assumptions:

                  Mortality Table:  1984 Unisex Mortality Table
                  Interest Rate:    6%

                  Notwithstanding the preceding paragraph, the actuarial factors
set forth in Appendix A will be used with respect to Plan Participants who were
participants in the Merged Plan immediately prior to January 1, 1999 if using
such factors results in a greater benefit.

                  For purposes of converting Participants' Accrued Benefits as
of December 31, 1998 into the lump sum benefit payable under the Plan, as
described in Section 5.1, and for purposes of determining the Actuarial
Equivalent of a deferred payment, as described in the second paragraph of
Section 5.6, the term Actuarial Equivalent means equality in value computed on
the basis of the following actuarial assumptions:

                  Mortality Table:       The table described in Code Section 417
                                         (e)(3)(A)(ii)(I), as prescribed
                                         by the Secretary of Treasury.

                  Interest Rate:         The annual rate of interest on
                                         30-year Treasury securities, as
                                         described in Code Section
                                         417(e)(3)(A)(ii)(II), for the month
                                         immediately preceding the beginning of
                                         the Plan Year in which the distribution
                                         is to be made.

         1.3 ADMINISTRATIVE COMMITTEE: The Administrative Committee of the Galey
& Lord, Inc. Retirement Plans, established pursuant to Article VII to be
responsible for the general administration of the Plan.

         1.4 AUTHORIZED LEAVE OF ABSENCE: Any absence, not to exceed a period of
one year, authorized by the Employer, under its standard personnel practices.

         1.5 BENEFICIARY: The person or persons or entity who is to receive any
benefits payable from the Plan on account of a Participant's death. If the
Participant is not married, the Beneficiary is the person designated by the
Participant to receive such benefits. If the Participant is married, the
Beneficiary is automatically the Participant's Spouse and no written designation
is required. If the Participant is married, and the Participant wishes to
designate a Beneficiary other than his Spouse, the Spouse must consent to the
designation of another person who will become the designated Beneficiary to
receive benefits under the Plan. If at the time of his death, the Participant
has no Spouse or designated Beneficiary, the Beneficiary is the personal
representative of the Participant's estate. A Participant may

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designate a person or entity to be his Beneficiary by filing a properly
completed and executed form provided by the Administrative Committee. If a
married Participant wishes to designate a Beneficiary other than his Spouse, the
Beneficiary designation must be witnessed by a Plan representative or a notary
public and the Spouse must consent to the designation in writing and acknowledge
the effect of such designation. A Participant's Beneficiary is bound by the
terms of the Plan.

         1.6 CODE: The Internal Revenue Code of 1986, as amended, or any
subsequently enacted federal revenue law. A reference to a particular section of
the Code includes a reference to any regulations issued under the section and to
the corresponding section of any subsequently enacted federal revenue law.

         1.7 COMPANY: The Company is Galey & Lord, Inc., and any successor by
merger, purchase, or otherwise.

         1.8 DISABILITY PENSION: A series of monthly amounts that are payable to
a Participant who meets the requirements of Section 5.4.

         1.9 DISABILITY RETIREMENT DATE: The first day of the month following
the date on which the Administrative Committee determines that a Participant has
suffered a Permanent Disability and the Participant has requested that his
Disability Pension begin to be paid.

         1.10 EARLY RETIREMENT AGE: The first day of the month following the
date on which a Participant attains age 55, but has not attained Normal
Retirement Age. A Participant's "Early Retirement Date" is the date on or after
his Early Retirement Age on which the Participant elects to retire and begin
receipt of benefits from the Plan.

         1.11 EARLY RETIREMENT PENSION: A series of monthly amounts that are
payable to a Participant who meets the requirements of Section 5.3.

         1.12 EARNINGS: A Participant's gross annual non-deferred remuneration
received from the Employer and Related Companies (if any) for personal services,
as reported on Form W-2, during the Plan Year, including (to the extent
applicable) bonuses, vacation pay, overtime pay, cash awards and commissions.
Earnings shall exclude contributions or benefits under this Plan or any other
plan of deferred compensation maintained by the Employer, disability pay and
severance pay. Notwithstanding the above, Earnings include amounts which would
have been received by the Employee as remuneration but for the Employee"s
election to defer such amounts under Code Section 401(k) and/or 125. For
convenience of administration, Earnings may be rounded to the nearest $100.

                  For any Plan Year, the amount of a Participant's Earnings that
may be taken into account under the Plan must not exceed the "Code Section
401(a)(17) limit". The "Code Section 401(a)(17) limit" is $150,000, as adjusted
for increases in the cost of living in accordance with Code Section
401(a)(17)(B). If Earnings for any prior determination period are taken into
account in determining an Employee's Accrued Benefit, Earnings for that prior
determination period are subject to the "Code Section 401(a)(17) limit" in
effect for that prior determination period.

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         1.13 EFFECTIVE DATE: The original effective date of the Plan is July
28, 1972. The effective date of this amended and restated document is January 1,
1999.

         1.14 EMPLOYEE: Any person employed by the Employer who (on or after the
Effective Date) is receiving remuneration from the Employer for personal
services as a regular salaried or hourly employee (or would be receiving such
remuneration except for an Authorized Leave of Absence).

                  Notwithstanding the above, the term "Employee" does not
include individuals who are classified by the Employer as independent
contractors, temporary employees, leased employees within the meaning of Code
Section 414(n)(2), hourly employees of Swift Textiles, Inc. and employees of the
Employer whose terms and conditions of employment are covered by a collective
bargaining agreement that does not provide for their participation in the Plan.

         1.15 EMPLOYER: The term Employer means the Company, Galey & Lord
Industries, Inc., Swift Textiles, Inc., G.L. Service Company, North America,
Inc. and any other Related Company that adopts the Plan, with the consent of the
Company.

         1.16 FINAL AVERAGE EARNINGS: A Participant's average Earnings during
the five consecutive full calendar years which provides the greatest average
Earnings. If a Participant has fewer than five consecutive full calendar years
in which the Participant has Earnings, then the average will be computed by
taking into account the consecutive full calendar years in which there are
Earnings. If a Participant in this Plan is transferred from the Employer to a
Related Company, the Participant's Final Average Earnings under this Plan will
be determined by taking into account his Earnings while an employee of the
Related Company. In determining Final Average Earnings, any period during which
the Participant was on an Authorized Leave of Absence falling within such period
is excluded.

         1.17 5% OWNER: Any person who owns (or is considered as owning within
the meaning of Code Section 318) more than 5% of the outstanding stock of the
Company, or stock possessing more than 5% of the total combined voting power of
all stock of the Company.

         1.18 HOUR OF SERVICE OR SERVICE: An Employee is credited with one Hour
of Service for:

                  (a) Each hour for which he is directly or indirectly paid, or
         entitled to payment, by the Company or by a Related Company for the
         performance of duties during a computation period. These hours are
         credited to the Employee for the computation period in which such
         duties are performed.

                  (b) Each hour (up to a maximum of 501 hours during a single
         continuous period) for which the Employee is paid, or entitled to
         payment, by the Company or by a Related Company for a period of time
         during which no duties are performed (irrespective of whether the
         employment relationship has terminated) because of, vacation, holiday,
         illness, incapacity, layoff, jury duty, military duty or leave of

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         absence (including disability). These hours are credited to the
         Employee for the computation period in which the duties would have been
         performed. Hours under this subparagraph are calculated and credited
         pursuant to Section 2530.200b-2 of the Department of Labor Regulations,
         which are incorporated in the Plan by this reference.

                  (c) Each hour for which back pay, irrespective of mitigation
         of damages, has been either awarded or agreed to by the Company or by a
         Related Company. The same Hours of Service will not be credited both
         under subparagraphs (a) or (b), as the case may be, and under this
         subparagraph (c). These hours are credited to the Employee for the
         computation period to which the award or agreement pertains, rather
         than to the computation period in which the award, agreement or payment
         was made.

                  (d) If the Employer leases employees, Hours of Service with
         the Company and Related Company will be credited for any leased
         employee who is to be considered an Employee for purposes of the Plan
         under Code Sections 414(n) and 414(o). In any case for which employment
         records do not accurately reflect hours worked, Hours of Service will
         be credited at the rate of 45 hours per calendar week.

                  To the extent required by Federal law, if an Employee leaves
the employ of the Employer to enter the military service of the United States
and, upon his discharge from such military service, is re-employed by the
Employer at a time when his re-employment rights are protected by Federal law,
the Employee will be considered to have been employed by the Employer during his
period of military service and will be credited with an Hour of Service for all
hours during which he would have performed work for the Employer but for his
military service. Benefits and service credit with respect to qualified military
service will be provided in accordance with Code Section 414(u).

         1.19 INVESTMENT COMMITTEE: The Investment Committee of the Galey &
Lord, Inc. Retirement Plans Master Trust. The duties of the Investment Committee
are set forth in Article VII.

         1.20 INVESTMENT MANAGER: A person appointed by the Investment Committee
other than the Trustee, the Investment Committee or the Administrative Committee
who (a) is registered as an investment advisor under the Investment Advisors Act
of 1940, (b) is a bank, as defined in that Act, or (c) is an insurance company
qualified to perform services relating to the management, acquisition or
disposition of assets of a plan under the laws of more than one state; and who
has acknowledged in writing that it is a fiduciary with respect to the Plan.

         1.21 MERGED PLAN: The Retirement Plan of Galey & Lord Industries, Inc.,
as it existed immediately before January 1, 1999.

         1.22 NORMAL RETIREMENT AGE: The date on which a Participant attains age
65. A Participant's "Retirement Date" is the first day of the month coinciding
with or next following the date on or after his Normal Retirement Age on which
the Participant retires.

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         1.23 NORMAL RETIREMENT PENSION: An annual benefit for the lifetime of
the Participant, payable in a series of monthly amounts, on behalf of a
Participant who meets the requirements of Section 5.1.

         1.24 ONE-YEAR BREAK IN SERVICE: For purposes of determining One-Year
Breaks in Service for Vesting Service and Credited Service, an individual will
be charged with a One-Year Break in Service if such individual does not perform
more than 500 Hours of Service during the Plan Year.

                  For purposes of determining whether an Employee has incurred a
One-Year Break in Service, each hour (up to a maximum of 501 hours in a single
continuous period) for which the Employee is absent because of (a) the pregnancy
of the Employee, (b) the birth of a child of the Employee, (c) the placement of
a child with the Employee in connection with the Employee's adoption of the
child, or (d) the Employee's caring for a child immediately following the birth
or placement of that child. These hours will be credited to the Employee for the
computation period in which the absence begins only if the Employee would
otherwise incur a One-Year Break in Service in that computation period. In all
other cases, these hours will be credited to the next following computation
period.

         1.25 PARTICIPANT: An individual who has satisfied the requirements for
eligibility to participate in the Plan, as set forth in Article II.

         1.26 PENSION: Benefits payable from the Plan due to a Participant"s
termination of employment from the Employer, either before, on or after the
Participant's Normal Retirement Age, or due to the Participant's attainment of
age 70.

         1.27 PERMANENT DISABILITY: A physical or mental condition which totally
and presumably permanently prevents a Participant from engaging in any
substantially gainful activity and which entitles the Participant to a Social
Security Disability Insurance Benefit, as defined and provided under the Social
Security Act. Notwithstanding the foregoing, the disability must not have arisen
from or be attributable to military service which prevents the Participant from
returning to the employ of the Employer and for which the Participant receives a
military pension. Nor may the disability have arisen from or be attributable to
the Participant's willful participation in any criminal act or intentional
self-inflicted or self-induced injury.

         1.28 PLAN: The Retirement Plan for Employees of Galey & Lord, Inc., as
set forth herein, and as amended from time to time.

         1.29 PLAN YEAR: The calendar year.

         1.30 QUALIFIED JOINT AND SURVIVOR ANNUITY: An immediate annuity payable
to a Participant and his surviving Spouse, as described in Section 6.1.

         1.31 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY: An annuity payable to a
deceased Participant's surviving Spouse for life, as described in Section 6.8.

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         1.32 RELATED COMPANY: Any corporation or business organization that is
under common control with the Company (as determined under Code Section 414(b)
or (c)), that is a member of an affiliated service group with the Company (as
determined under Code Section 414(m)) or that is an entity required to be
aggregated pursuant to Code Section 414(o) or the regulations thereunder. For
the purpose of applying the limitations set forth in Sections 5.8 and 5.9, Code
Sections 414(b), 414(c) and 414(m) are applied as modified by Code Section
415(h).

         1.33 SECTION 415 COMPENSATION: An Employee's total annual compensation
received from the Employer during a Plan Year, as defined in the Treasury
Regulations issued under Code Section 415. Under this definition, "Section 415
Compensation" includes an Employee's wages, salaries, fees for professional
services and other amounts received for personal services actually rendered in
the course of employment with the Employer (including, but not limited to,
commissions paid to salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips and bonuses).
"Section 415 Compensation" does not include items such as:

                  (a) Contributions made by the Employer to a plan of deferred
         compensation to the extent that the contributions are not includable in
         the Employee's gross income for the taxable year in which they are
         contributed.

                  (b) Amounts received from the exercise of a non-qualified
         stock option or from restricted property.

                  (c) Amounts realized from the sale, exchange or other
         disposition of stock acquired under a statutory stock option.

                  (d) Other amounts that receive special tax benefits, such as
         premiums for group term life insurance (but only to the extent that the
         premiums are not includable in the gross income of the Employee).

Notwithstanding the above, Section 415 Compensation includes amounts which would
have been received by the Employee as remuneration but for the Employee's
election to defer such amounts under Code Section 401(k) and/or 125.

         1.34 SPOUSE: The person to whom a Participant is legally married at the
first to occur of (a) the date on which his Pension commences or (b) the date of
his death.

         1.35 TRUST, TRUST FUND, OR FUND: The Galey & Lord, Inc. Retirement
Plans Master Trust, as evidenced by one or more separate, written trust
agreements and the Plan assets held in the Master Trust.

         1.36 TRUSTEE: One or more persons and/or entities appointed by the
Company to serve as trustee of the Master Trust and accepting the Master Trust
and any successor trustee appointed by the Company and accepting the Master
Trust.

         1.37 YEAR OF CREDITED SERVICE: An Employee is credited with a Year of
Credited Service for each Year of Vesting Service while a Participant in the
Plan. In addition, if the

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Participant is not a Participant in the Plan for the entire Plan Year, either
because:

                  (a) the Participant (who has been credited with at least 5
         Years of Vesting Service) terminates employment with the Employer
         during the Plan Year; or

                  (b) the Plan Year is the Participant's first Plan Year of
         participation in the Plan (or return to participation after a One-Year
         Break in Service),

and the Participant is not credited with at least 1,000 Hours of Service during
such partial Plan Year, the Participant shall receive a fractional Year of
Credited Service (which must not exceed one full Year of Credited Service). Such
fractional Year of Credited Service is equal to a fraction, expressed as a
decimal equivalent to two (2) decimal places, having a numerator equal to the
Participant's Hours of Service as an Employee for the Plan Year and a
denominator equal to one thousand (1,000).

                  Notwithstanding the above and solely for purposes of
calculating Years of Credited Service, each Employee who first performs an Hour
of Service on or after January 1, 2000 and who becomes a Participant because he
completes an "eligibility computation period" during which he is credited with
at least 500 Hours of Service will be treated as though he became a Participant
as of his hire date.

         1.38 YEAR OF VESTING SERVICE: Each Employee who is a Participant in the
Merged Plan or the Plan immediately before January 1, 1999 will be credited with
a number of Years of Vesting Service with which each such Participant is
credited under the Plan or Merged Plan as of December 31, 1998. Each Participant
who participated in the Merged Plan immediately before January 1, 1999 will be
credited with a year of service for purposes of vesting for the period beginning
October 1, 1998 and ending December 31, 1998. Beginning January 1, 1999, an
Employee is credited with one Year of Vesting Service for each Plan Year in
which the Employee is credited with at least 1,000 Hours of Service or, if less,
a Plan Year in which the Employee is employed by the Employer or a Related
Company for at least 90 days. Notwithstanding any other provision of the Plan to
the contrary, an Employee who has fewer than 5 Years of Vesting Service and
incurs a consecutive number of One-Year Breaks in Service which equals or
exceeds 5 will receive no credit for Years of Vesting Service credited prior to
the consecutive breaks.

ARTICLE II: PARTICIPATION

         2.1 ELIGIBILITY REQUIREMENTS: Each Employee who is a Participant in the
Plan or the Merged Plan immediately before January 1, 1999 will be a Participant
in the Plan as of January 1, 1999.

                  Each Employee who is not already a Participant will become a
Participant on the day the Employee is first credited with an Hour of Service
for the Employer.

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                  Notwithstanding the immediately preceding sentence, each
Employee who first performs an Hour of Service on or after January 1, 2000 and
who is not already a Participant, will become a Participant on the first day of
the month following the day on which the Employee completes an "eligibility
computation period" during which he is credited with at least 500 Hours of
Service with the Employer. An "eligibility computation period" is a twelve
consecutive month period beginning on the Employee's date of hire and each
anniversary thereof.

         2.2 RE-EMPLOYMENT: If a Participant terminates employment and then is
re-employed by the Employer, the Participant will again qualify as a Participant
as of the date of his re-employment if he is then an Employee.

         2.3 CHANGE IN EMPLOYMENT STATUS: A Participant who ceases to be an
Employee (as defined in Section 1.14) while remaining employed by the Employer
or a Related Company, ceases to accrue Years of Credited Service as of the date
of such change in employment status, but continues to be credited with Years of
Vesting Service and becomes an inactive Participant until such time as he again
becomes an Employee.

                  An employee of the Employer or a Related Company who later
becomes an Employee (as defined in Section 1.14) will become a Participant as of
the date of such change in employment status and will receive Years of Credited
Service only from the date of such change in employment status, but such
Employee will receive Years of Vesting Service from his date of employment in
accordance with the provisions of Section 1.38.

ARTICLE III:  CONTRIBUTIONS

         3.1 CONTRIBUTIONS BY THE EMPLOYER: The Employer shall make
contributions in such amounts and at such times as it determines, upon the
advice of the actuary for the Plan. The Employer's contribution must not exceed
the amount deductible under Code Section 404. Contributions made by the Employer
to the Trust Fund must be used to pay benefits under the Plan or to pay expenses
of the Plan and Trust Fund. Forfeitures arising under this Plan because of
termination of employment before an Employee becomes eligible for a Pension, or
for any other reason, must be applied to reduce the cost of the Plan and not to
increase the benefits otherwise payable to Participants.

                  Each contribution made by the Employer is conditioned (a) upon
the contribution being deductible under Code Section 404 and (b) the Plan being
qualified under Code Section 401(a).

         3.2 TIME OF PAYMENT OF CONTRIBUTIONS: The contributions made by the
Employer for any Plan Year may be made in one or more payments at any time,
provided that the total amount of the contribution for any Plan Year must be
paid to the Trustee not later than the first to occur of the date by which
contributions are required to be made to meet the funding standards of Code
Section 412, or the date on which the Employer's tax return is required to be
filed, including any extensions for filing.

                                       9
<PAGE>

         3.3 NO RIGHT OR DUTY OF INQUIRY: Neither the Trustee, the
Administrative Committee, nor any Participant have any right or duty to inquire
into the amount of the Employer's annual contribution or the method used in
determining the amount of the Employer's contribution, and the Trustee is
accountable only for funds actually received by him.

         3.4 NON-REVERSION: It is impossible, at any time before satisfaction of
all liabilities with respect to Participants and their Beneficiaries, for any
part of the principal or income of the Trust Fund to be used for, or diverted
to, purposes other than for the exclusive benefit of such Participants and their
Beneficiaries, provided, however, that:

                  (a) If a contribution is made by the Employer under a mistake
         of fact, this Section will not prohibit the return of such contribution
         to the Employer within one year after the payment of such contribution;

                  (b) If a contribution is conditioned on initial qualification
         of the Plan under Code Section 401, and the Plan does not so qualify,
         this Section will not prohibit the return of the contribution to the
         Employer within one year after the date of denial of qualification of
         the Plan; or

                  (c) If a contribution is conditioned upon the deductibility of
         the contribution, then, to the extent the deduction is disallowed, this
         Section will not prohibit the return of the contribution (to the extent
         disallowed) to the Employer within one year after the disallowance of
         such deduction.

         3.5 PARTICIPANT CONTRIBUTIONS: Prior to April 1, 1992, Participants
were permitted to make contributions to the Merged Plan. Participants are 100%
vested in these contributions at all times; the Accrued Benefit of each such
Participant, determined as of March 31, 1992, shall not be less than the
Actuarial Equivalent of such contributions accumulated with interest at a rate
equal to 120% of the Federal Mid-Term Rate as of the preceding October 1.

ARTICLE IV:  VESTING AND FORFEITURE

         4.1 VESTING: Except as otherwise provided in the Plan, a Participant
will become vested in his Accrued Benefit according to the following schedule:

              Years of Vesting Service               Vested Percentage
              ------------------------               -----------------

                     Less than five                            0%
                     Five or more                            100%

                  Notwithstanding the foregoing, a Participant's Accrued Benefit
becomes fully vested upon the occurrence of any of the following events, if he
is then an Employee:

                  a)     Attainment of Normal Retirement Age;
                  b)     Attainment of Early Retirement Age;

                                       10
<PAGE>

                  c)     The Participant's Disability Retirement Date;
                  d)     The Participant's death; or
                  e)     The date on which the Participant terminates employment
                         with the Employer due to lack of work or the closing of
                         a plant or operating division, as determined by the
                         Employer.

                  If a Participant's vesting is accelerated by subsection (e) of
this Section 4.1 and the Participant is later rehired by the Employer and again
becomes a Participant in the Plan, any increases in his Accrued Benefit
occurring after re-employment shall be subject to the vesting provisions of this
Section 4.1 without regard to subsection (e) (except in the event of a
subsequent termination of employment due to lack of work or closing of a plant
or operating division, as shall be determined by the Employer).

         4.2 FORFEITURE OF BENEFIT: A Participant who terminates employment with
no vested interest in his Accrued Benefit is deemed to have received payment of
his entire interest in the Plan as of the date of termination of employment and
will forfeit his Accrued Benefit as of such date. If such Participant is
re-employed by the Employer before incurring five consecutive One-Year Breaks in
Service, the Participant's Accrued Benefit which was forfeited upon termination
of employment will be reinstated.

ARTICLE V:  ENTITLEMENT TO AND AMOUNT OF RETIREMENT BENEFITS

         5.1 NORMAL RETIREMENT: A Participant is eligible to receive a Normal
Retirement Pension if the Participant's employment with the Employer terminates
on or after attaining his Normal Retirement Age. The Normal Retirement Pension
payable at a Participant's Retirement Date is equal to the greater of:

                  (a) The Participant's Accrued Benefit, determined as of
         January 1, 1999; or

                  (b) An amount equal to the product of a Participant's Final
         Average Earnings, multiplied by the sum of the Participant's annual
         "credits".

Total annual "credits" allocated to each Participant under the Plan equal the
sum of (c) and (d), as follows:

                  (c) Each Participant who is a Participant in the Plan as of
         January 1, 1999 will receive a number of annual credits equal to the
         amount derived by dividing his or her Accrued Benefit, determined as of
         December 31, 1998 and expressed as a lump sum payment, by his Final
         Average Earnings as of December 31, 1998.

                                       11
<PAGE>

                  (d) In addition to the annual credits received pursuant to
         subsection (c) of this Section 5.1, if any, each Participant will
         receive annual "credits" in the following amount for each Plan Year
         beginning after December 31, 1998 in which he is credited with a Year
         of Credited Service:

                If the Participant's age on the            His annual "credit"
                 Last day of the Plan Year is:            for the Plan Year is:
                 -----------------------------            ---------------------
           Less than 30 years                                      .0135
           At least 30, but less than 35 years                     .0180
           At least 35, but less than 40 years                     .0240
           At least 40, but less than 45 years                     .0320
           At least 45, but less than 50 years                     .0420
           At least 50, but less than 55 years                     .0560
           At least 55, but less than 60 years                     .0750
           At least 60, but less than 65 years                     .1010
           65 years or older                                       .1340

In no event will the annual benefits payable under Section 5.1 (or determined
with reference to Section 5.1) exceed the maximum benefit provided in Sections
5.8 and 5.9.

         5.2 NORMAL FORM OF RETIREMENT BENEFIT: For purposes of funding and
accrual, the normal form of benefit is an annuity for the lifetime of the
Participant, payable upon the Participant's Retirement Date.

         5.3 EARLY RETIREMENT: A Participant is eligible to receive an Early
Retirement Pension if the Participant's employment terminates on or after his
Early Retirement Age and before his Normal Retirement Date. The Early Retirement
Pension will be equal to the Participant's vested Accrued Benefit as of the date
on which the Participant terminates employment.

         5.4 PERMANENT DISABILITY: A Participant will receive a monthly
retirement benefit, commencing, at the Participant's request, on the first day
of any month coinciding with or next following the Participant's Disability
Retirement Date. Payment of such benefit will commence only after the
Administrative Committee has been furnished with written proof satisfactory to
the Administrative Committee that a Participant who has incurred a Permanent
Disability is entitled to a disability income benefit from the Federal Social
Security Act.

                  The amount of the Participant's Disability Pension is equal to
his vested Accrued Benefit, computed as of the date of his Permanent Disability.
If the Participant elects to defer commencement of his benefit under this
Section 5.4, the Participant's Pension will be equal to his vested Accrued
Benefit, computed as of the date on which he elects to begin payment of his
Disability Pension or, if earlier, his Normal Retirement Date (the "Computation
Date") and will be computed as though the Participant continued to be credited
with Years of Credited Service from the date of his Permanent Disability to the
Computation Date, and his Final Average Earnings as of the Computation Date
shall be his Final Average Earnings on the date of his Permanent Disability.

                                       12
<PAGE>

                  A Participant's Permanent Disability will be considered to
have ended, and entitlement to a Disability Pension ceases, as of the first day
of the calendar month in which the earliest of the following events occurs: (a)
the Participant dies, (b) the Participant is reemployed by the Employer, (c) the
Participant engages in any substantially gainful activity, except if found by
the Administrative Committee to be for the primary purpose of rehabilitation or
not incompatible with a finding of Permanent Disability, (d) the Participant
ceases to receive disability income under the Federal Social Security Act, or
(e) the date the Participant fails to furnish the Administrative Committee, upon
a written request from the Administrative Committee (at intervals not more
frequent than six (6) months subsequent to the date of the most recent written
request) and within sixty (60) days from the mailing by the Administrative
Committee of such written request by first class, registered mail, written proof
satisfactory to the Administrative Committee of continuing receipt of disability
income benefits from the Federal Social Security Act. No such request may be
made by the Administrative Committee after the date of attainment by the
Participant of age sixty-four (64) years and six (6) months. If a Participant
recovers from Permanent Disability and returns to employment with the Employer,
subsequent entitlement to a monthly retirement benefit will be determined in
accordance with the provisions of the Plan.

         5.5 PAYMENT OF VESTED BENEFIT UPON TERMINATION OF EMPLOYMENT: If a
Participant terminates employment with the Employer after he has a fully vested
interest in his Accrued Benefit, the Participant will receive his vested Accrued
Benefit. Payment will be made or commence to be made as soon as practicable
after the date of his termination of employment.

         5.6 COMMENCEMENT OF BENEFITS: Subject to the provisions of Article VI
and except as provided below, payment of a Participant's Pension will commence
as of the date specified in the appropriate Section of this Article V.

                  If a Participant retires or terminates employment before his
Normal Retirement Date and the Actuarial Equivalent of the Participant's vested
Accrued Benefit exceeds $5,000 (or has ever exceeded $5,000) at the time the
Pension becomes payable, the Participant must consent to the commencement of the
Pension before it may begin to be paid. If the Participant does not consent to
the distribution, the Pension will commence as soon as practicable after the
Participant's Normal Retirement Date and his Pension at the date of distribution
will be the Actuarial Equivalent of the Pension at his termination of
employment.

                  The Pension of each Participant who is a 5% Owner must begin
to be distributed by the April 1 following the calendar year in which the
Participant attains age 70 (his "required beginning date").

                  The Pension of each Participant who is not a 5% Owner must
begin to be distributed by the April 1 following (a) the calendar year in which
the Participant attains age 70 or, if later, (b) the calendar year in which the
Participant terminates employment with the Employer and Related Companies (his
"required beginning date"). A Participant who is not a 5% Owner and who has not
yet reached his "required beginning date" may

                                       13
<PAGE>

elect, by notifying the Plan Administrator in advance and in writing, to begin
payment of his Pension at any time on or after the April 1 following the
calendar year in which the Participant attains age 70.

                  If a Participant dies after he has begun receiving payment of
his vested Accrued Benefit from the Plan and the Participant's Pension is
payable in a form (as described in Sections 6.1 and 6.2) that entitles his
Beneficiary to payment of all or a portion of his remaining Pension after his
death, then that portion of his Pension that is payable to his Beneficiary must
be paid to his Beneficiary at least as rapidly as under the method of
distribution elected by the Participant.

                  Furthermore, if a Participant dies before his "annuity
starting date" (as defined in Section 6.8), payment of the benefit provided
under Section 6.8 must be completed within the five-year period following the
Participant's death unless payments are to be made to the Beneficiary over the
Beneficiary's life expectancy, in which case such payments must begin within one
year after the Participant's death. If the Participant's Beneficiary is his
spouse and the Beneficiary has elected to receive payment of the Participant's
vested Accrued Benefit over the Beneficiary's life expectancy, the payments are
not required to begin until the date on which the Participant would have
attained age 70 1/2.

                  In addition, unless the Participant elects otherwise, a
Participant's Pension must commence no later than 60 days following the close of
the Plan Year in which occurs the latest of:

                  (a)    The date the Participant attains age 65,

                  (b)    The 10th anniversary of the date on which the
         Participant first commenced participation in the Plan, or

                  (c)    The Participant's date of termination of employment.

         5.7 NO DUPLICATION OF BENEFITS: If a Participant is entitled to receive
benefits from another defined benefit pension plan qualified under Code Section
401(a) to which the Company or a Related Company has contributed, the
Participant's Pension under this Plan will be reduced by the amount of any
vested accrued benefit attributable to the Participant under such other plan and
that is attributable to contributions made by the Company or by a Related
Company to the other plan for any period for which the Participant received
credit for service for benefit accrual purposes under this Plan.

         5.8 BENEFIT LIMITATIONS IN GENERAL: Notwithstanding anything in the
Plan to the contrary, the annual retirement benefit provided under this Plan and
under all other qualified defined benefit plans maintained by the Employer must
not exceed an annual benefit equal to the lesser of (a) $90,000 (as adjusted by
the Secretary of Treasury) or (b) 100% of the Participant's average annual
Section 415 Compensation from the Employer for the three consecutive calendar
years that will produce the highest average.

                                       14
<PAGE>

                  For purposes of this Section 5.8 and Section 5.9, the
"Limitation Year" is the Plan Year and the terms "Company" and "Employer"
include Related Companies. The benefit limitations described in this Section 5.8
are set forth in Code Section 415, which is incorporated herein by reference.

         5.9 BENEFIT LIMITATIONS MULTIPLE PLANS: If an Employee is a Participant
in one or more defined benefit plans and one or more defined contribution plans
maintained by the Employer, then the sum of the "defined benefit plan fraction"
and the "defined contribution plan fraction" (as defined in Code Section 415(e))
for any Limitation Year as applied to the plans must not exceed 1.0. Either the
benefits provided under the defined benefit plans or the contributions made to
the defined contribution plans must be reduced to the extent necessary to comply
with this limitation.

ARTICLE VI:  FORMS OF RETIREMENT BENEFITS AND DEATH BENEFIT

         6.1 AUTOMATIC FORMS OF RETIREMENT BENEFITS: Unless a Participant files
a written election, choosing an optional form of payment under Section 6.2, with
the Administrative Committee before the end of the election period described in
Section 6.3, the form of Pension payable to a Participant whose Spouse is living
at the time the Pension becomes payable is a Qualified Joint and Survivor
Annuity. A Qualified Joint and Survivor Annuity is an immediate annuity payable
for the lifetime of the Participant, with a survivor annuity for the lifetime of
his surviving Spouse that is equal to 50% of the amount of the annuity that is
payable during the joint lifetimes of the Participant and his Spouse. The
annuity must be the Actuarial Equivalent of the Participant's Pension. If the
Participant's Spouse dies after Pension payments begin but before the
Participant dies, the Pension will continue to be paid to the Participant in the
same amount that was payable before the death of his Spouse.

                  Unless the Participant elects an optional form of payment
under Section 6.2, the form of Pension payable to a Participant who is not
married is an immediate annuity payable for his lifetime in an amount equal to
the Actuarial Equivalent of the Participant's Pension.

         6.2 OPTIONAL FORMS OF DISTRIBUTION: A Participant who is eligible to
receive a Pension may elect not to receive his Pension in the automatic form
described in Section 6.1 and may elect, instead, to receive his Pension in one
of the following forms:

                  (a) The Actuarial Equivalent of the Pension may be paid in the
         form of a 50%, 75% or 100% joint and survivor annuity for the lives of
         the Participant and his Beneficiary. Under this form of payment, the
         Participant will receive reduced payments for his lifetime, and after
         his death a survivor annuity will be payable for the lifetime of his
         Beneficiary equal to 50%, 75% or 100% (whichever is applicable) of the
         amount of the annuity payments that were payable to the Participant. If
         the Participant's Beneficiary dies after Pension payments begin but
         before the Participant dies, the Pension will continue to be paid to
         the Participant in the same amount that was payable before the death of
         his Beneficiary. For purposes of this

                                       15
<PAGE>

         paragraph (a), there may be only one Beneficiary and the Participant's
         Beneficiary must be an individual.

                  (b) The Actuarial Equivalent of the Pension may be paid in the
         form of a non-transferable immediate life annuity, with payments in
         equal monthly installments for the lifetime of the Participant and, in
         the event of the Participant's death prior to the receipt of 120
         payments, continuing for the balance of such 120 payments to his
         Beneficiary. Notwithstanding the foregoing, in the event of the
         Participant's death prior to the receipt of 120 payments, the Actuarial
         Equivalent of the balance of such 120 payments may be paid in a single
         sum to the Participant's Beneficiary, if the Beneficiary so elects.

                  (c) If the Participant retires on or after his Early
         Retirement Date, the Actuarial Equivalent of the Pension may be paid in
         the form of a Social Security level income option, payable as an
         annuity for the lifetime of the Participant. The annuity will provide
         for an increased allowance up to the time that the Participant begins
         to receive benefits under the Federal Social Security Act and a
         decreased allowance thereafter to provide to as great an extent as
         possible, a level retirement allowance when such decreased retirement
         allowance is added to his primary benefits under the Federal Social
         Security Act.

                  (d) The Actuarial Equivalent of the Pension may be paid in the
         form of a non-transferable immediate life annuity, with payments in
         equal monthly installments for the lifetime of the Participant.

                  (e) The Actuarial Equivalent of the Pension may be paid in a
         single, lump sum payment.

                  (f) The Actuarial Equivalent of the Pension may be paid in
         monthly installments for a fixed period which does not extend beyond
         the life expectancy of the Participant.

                  Any election made under this Section 6.2 is effective only on
the date on which benefits initially commence. After the date on which payment
of a Participant's Pension has been scheduled to commence, no further elections
will be permitted under any circumstances. Any election may be revoked by the
Participant in writing prior to the annuity starting date; provided that any
election of option (a) automatically will be revoked if the designated
contingent annuitant dies before such date. On revocation of an election for any
reason, benefits will be paid under Section 6.1 unless the Participant makes
another election, with his Spouse's approval (if applicable), in the manner
provided in Section 6.3.

                  Except in the case of a Qualified Joint and Survivor Annuity,
when establishing the term of installment or annuity payments, at the time
payments begin, the payments projected to be paid to the Participant must comply
with the requirements of Code Section 401(a)(9), including the incidental death
benefit requirements of Treasury Regulations Section 1.401(a)(9)-2.

                                       16
<PAGE>

         6.3 ELECTIONS: Section 6.1 provides that the automatic form of Pension
payable upon the retirement or termination of employment of a married
Participant will be a Qualified Joint and Survivor Annuity, unless the
Participant rejects that form of payment, with the consent of his Spouse.
Section 6.1 also provides that the automatic form of Pension payable upon
retirement or termination of employment of an unmarried Participant will be a
single life annuity, unless the Participant rejects that form of payment.
Participants who reject the Qualified Joint and Survivor Annuity or the single
life annuity must elect one of the other forms of payment that are permitted
under Section 6.2. In order to reject the Qualified Joint and Survivor Annuity
or the single life annuity, the Participant and his Spouse, if any, must execute
a written election in the manner and form described below:

                  (a) The Administrative Committee must provide a written
         explanation to each Participant of (i) the terms and conditions of the
         Qualified Joint and Survivor Annuity or single life annuity, whichever
         is applicable, (ii) the Participant's right to make and revoke
         elections under this Section and the method by which he may do so,
         (iii) the effect of such an election or rejection on the Participant's
         retirement benefits, and (iv) the rights of the Participant's Spouse
         regarding the election.

                  (b) A Participant may elect not to receive the Qualified Joint
         and Survivor Annuity or single life annuity during the period beginning
         90 days before the date on which his benefits become payable (the
         "annuity starting date") and ending on the annuity starting date.
         Elections may be made or revoked by the Participant with his Spouse's
         consent at any time during this election period; however, spousal
         consent to an election is irrevocable after it has been given.

                  (c) The Administrative Committee must provide suitable forms
         and must establish reasonable procedures for the making of elections.
         In order to be valid, an election or revocation of an election (i) must
         be signed by the Participant and his Spouse, if any, (ii) must
         designate a specific alternate beneficiary that cannot be changed
         without the Spouse's Consent, and (iii) must be notarized or witnessed
         by a member of the Administrative Committee (or a person authorized by
         the Administrative Committee). If it is established, to the
         satisfaction of the Administrative Committee, that the Spouse cannot be
         located or is otherwise unable to sign, the Spouse's signature is not
         required. Any consent by a Spouse (or any establishment that the
         Spouse's consent cannot be obtained) under the foregoing provisions is
         effective only with respect to that Spouse. The Administrative
         Committee may require a married Participant or his Spouse to supply
         such information as the Administrative Committee deems necessary to
         verify the Participant's marital status and the identification of the
         Participant's Spouse.

         6.4 CASH OUT OF SMALL PENSION: Notwithstanding any other provision of
the Plan, if the Actuarial Equivalent of a Pension payable under this Plan is
$5,000 or less (and has never exceeded $5,000) at the time the Pension begins,
the Administrative Committee will determine that the Participant (or
Beneficiary, if applicable) is not entitled to have his Pension paid in the form
of an annuity or installments and will direct that the Actuarial Equivalent of
the Pension be paid in a single, lump sum payment.

                                       17
<PAGE>

         6.5 LOCATION OF FORMER PARTICIPANTS: If a former Participant who is
entitled to a distribution cannot be located and the Administrative Committee
has made reasonable efforts to locate the former Participant, then the former
Participant's vested interest will be forfeited. The Administrative Committee
will be deemed to have made reasonable efforts to locate the former Participant
(or, in the case of a deceased former Participant, his Beneficiary) after having
made two successive certified or similar mailings to the last address on file
with the Administrative Committee. The former Participant's Accrued Benefit is
forfeited as of the last day of the Plan Year in which occurs the close of the
12 consecutive calendar month period following the last of the two successive
mailings. If the former Participant or Beneficiary makes a written claim for the
vested interest after it has been forfeited, the Employer will cause the vested
interest to be reinstated.

         6.6 BENEFITS TO MINORS AND INCOMPETENTS: If any person entitled to
receive payment under the Plan is a minor, the Administrative Committee may pay
the amount in a single sum directly to the minor, to a guardian of the minor or
to a custodian selected by the Trustee under the appropriate Uniform Gifts to
Minors Act. If a person who is entitled to receive payment under the Plan is
physically or mentally incapable of personally receiving and giving a valid
receipt for any payment due (unless a previous claim has been made by a duly
qualified committee or other legal representative), the payment may be made to
the person's spouse, son, daughter, parent, brother, sister or other person
deemed by the Administrative Committee to have incurred expense for the person
otherwise entitled to payment.

         6.7 DIRECT ROLLOVERS: A Participant, his Beneficiary (if his
Beneficiary is his Spouse) or the alternate payee under a Qualified Domestic
Relations Order may elect, to have any portion of an "eligible rollover
distribution" paid directly to an "eligible retirement plan" in a "direct
rollover". An "eligible rollover distribution" is any cash payment of all or any
portion of the Participant's Account, except that an eligible rollover
distribution does not include a payment that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for the life
(or life expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's Beneficiary, or for a
specified period of ten years or more; any payment to the extent such payment is
required under Code Section 401(a)(9); and the portion of any payment that is
not includable in gross income. An "eligible retirement plan" is an individual
retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan
described in Section 403(a) of the Code, or a qualified trust described in
Section 401(a) of the Code, that will accept the eligible rollover distribution.
However, in the case of a Beneficiary where the Beneficiary is the Participant's
Spouse, an eligible retirement plan is an individual retirement account or
individual retirement annuity. A "direct rollover" is a payment by the Plan to
the eligible retirement plan specified by the Participant, his Beneficiary (if
his Beneficiary is his Spouse or an alternate payee under a Qualified Domestic
Relations Order.

         6.8 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY: If a Participant has a
vested interest in his Accrued Benefit and if the Participant dies before his
"annuity starting date", the Participant's Beneficiary will receive a Qualified
Pre-Retirement Survivor Annuity. A Participant who is an Employee at the time of
his death is 100% vested in his Accrued Benefit. The "annuity starting date" is
the first day of the first period for which an amount

                                       18
<PAGE>

is payable as an annuity. A Qualified Pre-Retirement Survivor Annuity is an
annuity, payable over the lifetime of the Participant's Beneficiary, the value
of which is equal to 100% of the Participant's vested Accrued Benefit,
calculated as if the Participant had terminated employment with the Employer on
the day before death.

                  Notwithstanding the foregoing paragraph, the Beneficiary may
reject the Qualified Pre-Retirement Survivor Annuity and, instead, elect, in
writing, to receive the Participant's vested Accrued Benefit in the form of any
one of the optional forms of payment described in Section 6.2 of the Plan.
Pension payments to the Beneficiary will begin as soon as practicable following
the Participant's death. If the Actuarial Equivalent value of the Qualified
Pre-retirement Survivor Annuity to be distributed to the Beneficiary does not
exceed $5,000, such benefit will be paid to the Beneficiary in a lump-sum
payment. If the Participant has no Beneficiary and dies before the "annuity
starting date", then the Participant's Accrued Benefit will be paid in a
lump-sum payment to his estate.

ARTICLE VII: ADMINISTRATIVE AND INVESTMENT COMMITTEES

         7.1 APPOINTMENT OF THE ADMINISTRATIVE COMMITTEE: The members of the
Administrative Committee consist of one or more persons appointed from time to
time by the Company to serve until their death, resignation or removal by the
Company. A person is not ineligible to be a member of the Administrative
Committee because he is or may be a Participant in the Plan. The Company, from
time to time, may increase or decrease the number of members of the
Administrative Committee. The Administrative Committee and each of its members
are named fiduciaries with respect to the Plan and are indemnified by the
Company against any and all liabilities incurred by reason of any action taken
in good faith pursuant to the provisions of the Plan.

         7.2 APPOINTMENT OF THE INVESTMENT COMMITTEE: The members of the
Investment Committee consist of one or more persons appointed from time to time
by the Company to serve until their death, resignation or removal by the
Company. A person is not ineligible to be a member of the Investment Committee
because he is or may be a Participant in the Plan. The Company, from time to
time, may increase or decrease the number of members of the Investment
Committee. The Investment Committee and each of its members are named
fiduciaries with respect to the Plan and are indemnified by the Company against
any and all liabilities incurred by reason of any action taken in good faith
pursuant to the provisions of the Plan.

         7.3 POWERS OF THE ADMINISTRATIVE COMMITTEE: The Administrative
Committee is responsible for the general administration and interpretation of
the Plan and for carrying out its provisions and has such powers and discretion
as may be necessary to discharge its duties hereunder, including, but not by way
of limitation, the following powers and duties:

                  (a) To construe and interpret the Plan, to decide all
         questions of eligibility and to determine the amount, manner and time
         of payment of any benefits hereunder;

                                       19
<PAGE>

                  (b)   To prescribe procedures to be followed by Employees in
        filing applications for benefits;

                  (c) To make a determination as to the right of any person to a
         benefit and to afford any person dissatisfied with such determination
         the right to a hearing;

                  (d) To request and receive from the Company and from Employees
         such information as is necessary for the proper administration of the
         Plan, including but not limited to, such information as the
         Administrative Committee may reasonably require to determine each
         Participant's eligibility to participate in the Plan and the benefits
         payable to each Participant upon his death, retirement or termination
         of employment;

                  (e)   To prepare and distribute, such manner as it determines
         to be appropriate, information explaining the Plan;

                  (f) To furnish the Company, upon request, with such annual
         reports with respect to the administration of the Plan as are
         reasonable and appropriate; and

                  (g) To direct the Trustee as to the method in which and
         persons to whom Plan assets will be distributed.

                  The Administrative Committee may adopt such rules, regulations
and bylaws and may make such decisions as it deems necessary or desirable for
the proper administration of the Plan, and all rules and decisions of the
Administrative Committee must be uniformly and consistently applied to all
Participants in similar circumstances. Any rule or decision that is not
inconsistent with the provisions of the Plan is conclusive and binding upon all
persons affected by it and there is no appeal from any ruling by the
Administrative Committee that is within its authority, except as otherwise
provided herein. When making a determination or calculation, the Administrative
Committee is entitled to rely upon information furnished by the Company, or
anyone acting on behalf of the Company.

         7.4 RESPONSIBILITIES OF THE INVESTMENT COMMITTEE: The Investment
Committee generally is responsible for the supervision and review of the
financial operation of the Plan, including (a) the establishment, supervision
and review of funding policies and methods consistent with the objectives of the
Plan and the requirements of the Employee Retirement Income Security Act of
1974, as amended from time to time and as construed, interpreted and modified by
regulations or rulings ("ERISA"), (b) the review of actuarial assumptions and of
any accountant's reports relating to the Plan, (c) the review of whether the
Plan satisfies the bonding requirements of ERISA and (d) the appointment of and
the review and evaluation of the investment performance of the Trustee and/or
Investment Manager (and their agents) and the making of any recommendations
relating to the appointment of a new or additional Trustee and/or Investment
Manager (and their agents).

         7.5 OPERATION: The members of the Administrative Committee and the
Investment Committee each will elect a Chairman. They will also elect a
Secretary who may, but need not, be a member of the appropriate committee. The
Administrative

                                       20
<PAGE>

Committee and the Investment Committee have the power to: (a) appoint from its
membership such subcommittees with such powers as the Administrative Committee
or the Investment Committee determine, (b) authorize one or more of its members
or any agent to execute or deliver any instrument or to make any payment in
behalf of the Administrative Committee or the Investment Committee, and (c)
employ counsel and agents and such clerical and other services as the
Administrative Committee or the Investment Committee deem requisite or desirable
in carrying out the provisions of the Plan. The Administrative Committee and the
Investment Committee are fully protected in relying on data, information or
statistics furnished it by persons performing ministerial and limited
discretionary functions as long as the Administrative Committee and the
Investment Committee have had no reason to doubt the competence, integrity or
responsibility of any such person.

         7.6 MEETINGS AND QUORUM: The Administrative Committee and Investment
Committee hold meetings upon such notice, at such place or places, and at such
intervals as they may from time to time determine. A majority of the members of
the Administrative Committee and the Investment Committee at the time in office
constitute a quorum for the transaction of business. All resolutions or other
actions taken by the Administrative Committee and the Investment Committee at
any meeting are by the vote of a majority of those present at any such meeting.
Action may be taken by the Administrative Committee and the Investment Committee
without a meeting by a written consent signed by a majority of the members of
the Administrative Committee or the Investment Committee.

         7.7 COMPENSATION: The members of the Administrative Committee and the
Investment Committee are not entitled to any compensation for their services
with respect to the Plan, but the Administrative Committee and Investment
Committee members are entitled to reimbursement for any and all necessary
expenses that each member may incur. The expenses are paid by the Company or
from the Trust Fund. Any such payments from the Trust Fund are deemed to be for
the exclusive benefit of Participants.

         7.8 DOMESTIC RELATIONS ORDERS: Notwithstanding any other provision of
the Plan, if the "qualified domestic relations order" applicable to an
"alternate payee" (as defined in Code Section 414(p)) so provides, then within
90 days after the Administrative Committee informs the alternate payee of its
determination of the order as satisfying the provisions of Code Section 414(p),
the alternate payee may elect, by writing filed with the Administrative
Committee, to have the Actuarial Equivalent of the Pension otherwise payable to
her under the Plan pursuant to the qualified domestic relations order
distributed to her in a lump sum payment as soon as practicable.

ARTICLE VIII:  DUTIES AND POWERS OF THE TRUSTEE

         8.1 GENERAL: The Trustee receives, holds, manages, converts, sells,
exchanges, invests, disburses and otherwise deals with such contributions as may
from time to time be made to the Trust Fund and the income and profits
therefrom, in the manner and for the uses and purposes of the Plan as provided
in the Plan and in the Master Trust agreement described in Section 8.2. The
Trustee is a named fiduciary with respect to the Plan. No trust, other than the
Master Trust, has been established with respect to this Plan.

                                       21
<PAGE>

         8.2 TRUST AGREEMENT: The Company has entered into a Master Trust
agreement with the Trustee under which the Trustee will receive, invest and
administer the Trust Fund. The Master Trust agreement is incorporated by
reference as a part of the Plan, and the rights of all persons under the Plan
are subject to the terms of the Master Trust agreement. The Master Trust
agreement provides for the investment and reinvestment of the assets of the
Plan, the management of the Master Trust, the responsibilities and immunities of
the Trustee, the removal of the Trustee and appointment of a successor, the
accounting by the Trustee and the disbursement of the Trust Fund.

         8.3 LIMITATION OF LIABILITY: The Trustee will hold in trust and
administer the Trust Fund subject to all the terms and conditions of this Plan
and of the Master Trust agreement described in Section 8.2. The Trustee is not
responsible for the administration of the Plan unless employed by the Company to
serve in such capacity. The Trustee's responsibility is limited to holding,
investing and reinvesting the assets of the Trust Fund from time to time in its
possession or under its control as Trustee and to disbursing funds it may be
directed by the Administrative Committee. The Trustee is not responsible for the
correctness of any payment or disbursement or action if made in accordance with
the instructions of the Administrative Committee.

         8.4 POWER OF TRUSTEE TO CARRY OUT THE PLAN: If, at any time, the
Company or the Administrative Committee is incapable, for any reason, of giving
directions, instructions or authorizations to the Trustee, as herein provided,
the Trustee may act, without such directions, instructions or authorizations, as
it, in its discretion, deems appropriate and advisable under the circumstances
for carrying out the provisions of the Plan.

ARTICLE IX: SPECIAL PROVISION TO PREVENT DISCRIMINATION

         9.1 GENERAL RULE: In the event of Plan termination, the benefit of any
Participant who is a highly compensated employee (as defined in Code Section
414(q)) is limited to a benefit that is non-discriminatory under Code Section
401(a)(4). Benefits distributed to any of the 25 most highly compensated
employees are restricted such that the annual payments are no greater than an
amount equal to the payment that would be made on behalf of the Participant
under a single life annuity that is the Actuarial Equivalent of the sum of the
Participant's Accrued Benefit.

         9.2 EXCEPTION: Section 9.1 will not apply if, after payment of the
benefit to a Participant described in the preceding paragraph, the value of Plan
assets equals or exceeds 110% of the value of current liabilities, as defined in
Code Section 412(l)(7) or the value of the benefits for a Participant described
above is less than 1% of the value of the current liabilities.

                                       22
<PAGE>

ARTICLE X: AMENDMENT AND TERMINATION

         10.1 AMENDMENT: This Plan may be amended from time to time by the
Company. No amendment will be made to the Plan that (a) would have the effect of
diverting any of the Trust Fund from Participants or their Beneficiaries as
provided in the Plan, (b) would prevent the allowance as a deduction for federal
income tax purposes, and particularly under Code Section 404, of any
contribution made by the Employer to the Master Trust, (c) would take the Plan
and Master Trust out of the scope of Code Sections 401, 402 and 501(a), (d)
would increase the duties of the Trustee without its consent, or (e) would
eliminate an optional form of benefit in violation of Code Section 411(d)(6).

         10.2 RIGHT TO TERMINATE: The Company may, by resolution of its Board of
Directors, at any time terminate the Plan. In the event that the Company ceases
to exist, the Plan will be terminated, unless a successor organization adopts
the Plan and thereby continues their participation.

         10.3 MERGER: In the event of merger or consolidation with, or transfer
of assets or liabilities to, any other plan, each Participant will be entitled
to a benefit under such other plan immediately after the merger, consolidation,
or transfer that is equal to or greater than his vested Accrued Benefit
determined under this Plan immediately before the merger, consolidation or
transfer.

         10.4 LIQUIDATION OF TRUST FUND: Upon termination or partial termination
of the Plan, each affected Participant's Accrued Benefit will become fully
vested and nonforfeitable; provided, however, that a Participant does not have
any recourse towards satisfaction of his nonforfeitable benefits from other than
the Plan assets or the Pension Benefit Guaranty Corporation.

                  The assets of the Trust Fund will be liquidated by first
making provision for the expenses of liquidation and second, by making payment
or provision for the payment of benefits. In the event of a termination or
partial termination of the Plan, the notice and other requirements of ERISA, as
amended by the Single Employer Pension Plan Amendments Act of 1986 will apply.

         10.5 ALLOCATION OF TRUST ASSETS UPON PLAN TERMINATION: The assets of
the Trust Fund available for the payment of benefits as determined in Section
10.4 will be allocated in accordance with ERISA Section 4044, to the extent the
assets are available to provide benefits to Participants and their
Beneficiaries.

         10.6 MANNER OF DISTRIBUTION: Any distribution after termination of the
Plan may be made, in whole or in part, to the extent that no discrimination in
value results, in cash, in securities, or in other assets in kind, or in
non-transferable annuities, as the Administrative Committee in its discretion
determines. In making such distribution, any and all determinations, divisions,
appraisals, apportionments and allotments so made will be final and conclusive
and not subject to question by any person. To the extent that any distribution
is made in property other than cash, such property will be valued at fair market
value as of the date of distribution.

                                       23
<PAGE>

         10.7 RESIDUAL AMOUNTS: Upon termination of the Plan and notwithstanding
any other provision of the Plan, the Employer will receive such amount, if any,
as may be attributable to its contributions and as may remain after the
satisfaction of all liabilities of the Plan to its Employees.

ARTICLE XI:  TOP HEAVY

         11.1 TOP HEAVY: If the Plan is Top Heavy for any Plan Year, then the
provisions of this Section will apply, notwithstanding any provision in the Plan
to the contrary. The Administrative Committee will determine whether the Plan is
Top Heavy. The determination of Top Heavy status will be made as follows:

                  (a) The Plan and any other plan maintained by the Employer
         will be Top Heavy if the sum of the present value of the accrued
         benefits and the account balances of Key Employees exceeds 60% of the
         sum of the present value of the accrued benefits and the account
         balances of all employees, former employees and beneficiaries in the
         plans. The determination whether this Plan is Top Heavy for a Plan Year
         will be made as of the last day of the immediately preceding Plan Year,
         based on values as of that date, and will be made in accordance with
         Code Section 416(g). If the Company and Related Company maintain more
         than one plan qualified under Code Section 401(a), then (i) each such
         plan in which a Key Employee is a participant, and (ii) each such plan
         that must be taken into account in order for a plan described in the
         preceding clause to meet the requirements of Code Section 401(a)(4) or
         410 must be aggregated with this Plan to determine whether the plans,
         as a group, are Top Heavy. The Company and Related Company may
         aggregate in their discretion, any other qualified plans with this Plan
         to the extent that such aggregation is permitted by Code Section
         416(g).

                  (b) A Key Employee is an Employee or former Employee who, at
         any time during the Plan Year or during any of the four preceding Plan
         Years, is or was (i) an officer of the Employer whose annual Section
         415 Compensation exceeds $45,000 (or 50% of the amount in effect under
         Code Section 415(b)(1)(A) for the Plan Year), (ii) one of the ten
         employees who own (or are considered as owning, within the meaning of
         Code Section 318) at least 0.5% and the largest interests in the
         Company or a Related Company and whose annual Section 415 Compensation
         from the Company and Related Company exceeds $30,000 (or the amount in
         effect under Code Section 415(c)(1)(A) for the Plan Year), (iii) a 5%
         Owner, or (iv) a 1% owner of the Company or a Related Company whose
         annual Section 415 compensation exceeds $150,000. "Key Employee" also
         includes the beneficiary of a deceased Key Employee, as described
         above. The determination of Key Employee status will be made in
         accordance with Code Section 416(i), and the number of persons who are
         considered Key Employees will be limited as provided under that
         Section.

         11.2 MINIMUM ACCRUED BENEFIT: If the Plan is Top Heavy for any Plan
Year, a minimum Accrued Benefit will be provided for each Participant who is not
a Key Employee and whose employment is not covered by a collective bargaining
agreement under which

                                       24
<PAGE>

retirement benefits are the subject of good faith bargaining. The minimum
Accrued Benefit for each Participant will be at least equal to an annual benefit
for the Participant's lifetime, commencing at his Normal Retirement Date, equal
to the lesser of (a) 2% of the Participant's average Section 415 Compensation
for the five consecutive Plan Years in which the Participant has the highest
aggregate Section 415 Compensation, multiplied by the Participant's years of
Credited Service described below, or (b) 20% of the Participant's average
Section 415 Compensation for the five consecutive Plan Years in which the
Participant has the highest aggregate Section 415 Compensation. For purposes of
this Section, years of Credited Service means Plan Years during which the
Participant performs at least 1,000 Hours of Service; provided that years of
Credited Service does not include years of Credited Service in which ends a Plan
Year for which this Plan is not Top Heavy. For purposes of determining Section
415 Compensation, compensation earned in Plan Years after the close of the last
Plan Year in which the Plan is Top Heavy will be disregarded.

         11.3 VESTING OF ACCRUED BENEFITS: If the Plan is Top Heavy for any Plan
Year, with respect to Participants whose employment is not covered by a
collective bargaining agreement under which retirement benefits are the subject
of good faith bargaining, the following vesting schedule will be substituted for
the vesting schedule described in Section 4.1:

          Years of Vesting Service                        Vested Percentage
          ------------------------                        -----------------

              Less than 3 years                                   0%
              3 years or more                                   100%

                  If the Plan becomes Top Heavy and then ceases to be Top Heavy,
the vesting schedule of this Section 11.3 will continue to apply to all
Participants who have then completed at least three years of Vesting Service
(whether or not consecutive), and the vesting of Section 4.1 will apply to all
other Participants; provided, however, that no Participant's vested interest in
his Accrued Benefit may be reduced as a result of the change in vesting.

         11.4 Benefit and Contribution Limitations: For any Plan Year in which
the Plan is Top Heavy, the 1.25 amount described in Code Section 415(e) will be
changed to 1.0 unless:

                  (a) The sum of the present value of accrued benefits and
         account balances of Key Employees under all plans aggregated pursuant
         to Section 11.1 does not exceed 90% of the sum of the total present
         value of accrued benefits and account balances of all employees, former
         employees and beneficiaries in the plans; and

                  (b) The minimum benefit described in Section 11.2 is increased
         to the amount required by Code Section 416(h).

                                       25
<PAGE>

ARTICLE XII: ADOPTION OF PLAN BY RELATED COMPANIES

         12.1 ADOPTION OF PLAN: A Related Company may become an Employer with
the approval of the Company by adopting the Plan for its Employees. A Related
Company that becomes a party to the Plan shall promptly deliver to the Trustee a
certified copy of the resolutions or other documents evidencing its adoption of
the Plan. Notwithstanding anything in the Plan to the contrary, a Related
Company adopting the Plan may determine whether and to what extent periods of
employment with the Related Company before the Related Company adopted the Plan
shall be included as Service under the Plan.

         12.2 WITHDRAWAL: A Related Company may withdraw from the Plan at any
time by giving advance notice in writing of its intention to withdraw to the
Company and to the Administrative Committee. Upon the receipt of notice of any
such withdrawal, the Committee shall certify to the Trustee the equitable share
of the withdrawing Related Company in the Trust Fund, and the Trustee shall
thereupon set aside from the Trust Fund such securities and other property as it
shall, in its sole discretion, deem to be equal in value to the Related
Company's equitable share. If the Plan is to be terminated with respect to the
Related Company, the amount set aside shall be administered according to Article
X. If the Plan is not to be terminated with respect to the Related Company, the
Trustee shall turn over the Related Company's equitable share to a trustee
designated by the Related Company, and the securities and other property shall
thereafter be held and invested as a separate trust of the Related Company and
shall be used and applied according to the terms of a new trust agreement
between the Related Company and the trustee so designated. Neither the
segregation of the Trust Fund assets upon the withdrawal of a Related Company,
nor the execution of a new trust agreement shall operate to permit any part of
the corpus or income of the Trust Fund to be used for or diverted to purposes
other than for the exclusive benefit of Participants, former Participants and
Beneficiaries.

         12.3 SALE OF EMPLOYER'S ASSETS: If all or any portion of the Employer's
assets are sold to another corporation that adopts a defined benefit plan as a
continuation of this Plan, then the Committee shall certify to the Trustee the
equitable share in the Trust Fund of the Participants who become participants in
the other plan immediately following the transfer. The Trustee shall transfer
that share of the Trust Fund to the trustee of the other plan, to be held in
accordance with the terms of the other plan.

ARTICLE XIII: MISCELLANEOUS

         13.1 INDEMNIFICATION: The Company indemnifies each Administrative
Committee and Investment Committee member and each other Employee who is
involved in the administration of the Plan against all costs, expenses and
liabilities, including attorney's fees, incurred in connection with any action,
suit or proceeding instituted against any of them alleging any act of omission
or commission performed while acting in good faith in discharging their duties
with respect to the Plan. Promptly after receipt by an indemnified party of
notice of the commencement of any action, the indemnified party must notify the
Company of the action. The Company is entitled to participate at his own expense
in the defense or to assume the defense of any action brought against any
indemnified party. If

                                       26
<PAGE>

the Company elects to assume the defense of any such suit, the defense will be
conducted by counsel chosen by the Company, and the indemnified party will bear
the fees and expenses of any additional counsel retained by him.

         13.2 EXCLUSIVE BENEFIT RULE: This Plan is administered for the
exclusive benefit of the Employees of the Employer and for the payment to
Participants out of the income and principal of the Trust Fund of the benefits
provided under the Plan. No part of the income or principal of the Trust Fund
will be used for or diverted to purposes other than the exclusive benefit of the
Participants or their Beneficiaries, as provided in the Plan.

         13.3 NO RIGHT TO THE FUND: No person will have any interest in, or
right to, any part of the assets of the Trust Fund or any rights under the Plan,
except as to the extent expressly provided in the Plan.

         13.4 RIGHTS OF THE EMPLOYER: The establishment of this Plan is not to
be construed as conferring any legal or other rights upon any Employee or any
other person for continuation of employment, nor will it interfere with the
right of the Employer to discharge any Employee or to deal with him without
regard to the effect thereof under the Plan.

         13.5 NON-ALIENATION OF BENEFITS: No amount payable to or held under the
Plan for the account of any Participant, former Participant, retired
Participant, or Beneficiary of a Participant or former Participant will be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt so to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge the same will be void. No
amount payable to or held under the Plan for the account of any Participant,
former Participant, retired Participant, or Beneficiary may be in any manner
liable for his debts, contracts, liabilities, engagements or torts, or be
subject to any legal process, levy or attachment. The provisions of this Section
do not preclude distributions made by the Trustee in accordance with a Qualified
Domestic Relations Order or certain judgments and settlements, as provided in
Code Section 401(a)(13).

         13.6 CONSTRUCTION AND SEVERABILITY: Except as otherwise provided by
federal law, the provisions of this Plan is intended to be construed and
enforced according to North Carolina laws, and all of the provisions of the Plan
will be administered in accordance with the laws of the State of North Carolina.
For simplicity of expression, pronouns and other terms are sometimes expressed
in a particular number and gender; however, where appropriate to the context,
such terms are deemed to include each of the other numbers and the other gender.
Each provision of this Plan is severable from all other provisions so that if
any provision or any part of a provision is declared void, then the remaining
provisions of the Plan that are not declared void will continue to be effective.

         13.7 DELEGATION OF AUTHORITY: Whenever the Employer, under the terms of
this Plan, is permitted or required to do or perform any act, the act may be
done or performed by any officer of the Employer, and such officer will be
presumed to be duly authorized by the Board of Directors of the Employer.

         13.8 REQUEST FOR TAX RULING: This Plan is based upon the condition
precedent that it meet the requirements of the Code with respect to
tax-qualified employees' retirement

                                       27
<PAGE>

plans so as to permit the Employer to deduct for federal income tax purposes the
amounts of its contributions and so that its contributions will not be taxable
to the Participants as income in the year in which the contributions are made.
The Company will apply for a determination by the Internal Revenue Service that
this Plan is so qualified. If the Internal Revenue Service rules that this Plan
is not so qualified, then the then current value of all contributions made by
the Employer before the initial determination as to qualification will be
returned to the Employer, and this Plan will be of no further force or effect.

ARTICLE XIV:  SUSPENSION OF BENEFITS

         14.1 RE-EMPLOYMENT BEFORE NORMAL RETIREMENT AGE: If a Participant is
re-employed as an Employee after the commencement of his Pension, but prior to
the attainment of Normal Retirement Age, payment of his Pension will be
discontinued. The Participant's rights to future benefits under the Plan will be
subject to redetermination upon any subsequent termination of employment or
retirement under the Plan in accordance with the Plan provisions then in effect.
Any benefits thereafter payable will be reduced, on an Actuarial Equivalent
basis, to reflect the value of the retirement benefits received by the
Participant in the period during which he was in receipt of a retirement
benefit. However, the retirement benefit thereafter payable will not be less
than the retirement benefit payable immediately before his latest re-employment
plus the Actuarial Equivalent of any retirement benefit suspended while the
Participant is not employed in such service as is described in Department of
Labor Regulations Section 2530.203-3(c)(1).

         14.2 RE-EMPLOYMENT AFTER NORMAL RETIREMENT AGE: If a Participant is
re-employed as an Employee after the commencement of his retirement benefit
under any of the provisions of the Plan and after the attainment of his Normal
Retirement Age, he will continue to receive the monthly retirement benefit
payment determined and paid in every respect as if he were not so employed by
the Employer. Any such Participant will be entitled to an additional monthly
retirement benefit upon his subsequent termination of employment based on his
period of re-employment after his Normal Retirement Date.

         14.3 EMPLOYMENT BEYOND NORMAL RETIREMENT AGE: If a Participant
continues employment with the Employer beyond his Normal Retirement Date,
payment of the Participant's monthly retirement benefit will be suspended and
will be subject to the following requirements:

                  (a) Each Participant whose monthly retirement benefit is
         suspended under this Section 14.3 must be notified of the suspension of
         his benefit payments. The notification must be made by personal
         delivery or first class mail during the first calendar month or payroll
         period (if applicable) in which the Participant's monthly retirement
         benefit is suspended. The notification must contain the following
         information (either expressly or by reference to the Plan's Summary
         Plan Description):

                         (i)   A description of the specific reasons why benefit
                  payments are being suspended;

                                       28
<PAGE>

                        (ii)   A general description and a copy of the Plan
                  provisions relating to the suspension of benefit payments;

                       (iii) A statement that applicable Department of Labor
                  regulations can be found in Section 2530.203-3 of the Code of
                  Federal Regulations; and

                        (iv)   A description of the Plan's procedure for
                  affording a review of the suspension of benefits.

                         (v) As of Normal Retirement Age, a Participant's
                  monthly retirement benefit may be suspended under this Section
                  14.3 for each month, or, if applicable, during each four (4)
                  or five (5) week payroll period ending in a calendar month
                  during which the Participant completes forty (40) or more
                  Hours of Service (other than Hours of Service credited only on
                  account of back pay that was awarded or agreed to by the
                  Employer). During each calendar month or payroll period (if
                  applicable ) in which a Participant meets the preceding
                  requirements, he will be deemed to be in the "service" of the
                  Employer for purposes of this Section 14.3. A Participant who
                  has reached his Normal Retirement Age and who does not perform
                  forty (40) or more Hours of Service during any such calendar
                  month or payroll period (if applicable) will be deemed to have
                  terminated employment with the Employer and, as a result, will
                  be entitled to a monthly retirement benefit payment for such
                  period that he was deemed terminated. Payment of the benefit
                  for such period will be made in accordance with Section
                  14.3(b).

                  (b) Upon the actual retirement of a Participant who did not
         complete forty (40) or more Hours of Service in any month or four (4)
         or five (5) week payroll period (if applicable) pursuant to Section
         14.3(a)(v) above, such Participant's monthly retirement benefit will be
         increased by the Actuarial Equivalent of the payments which would
         otherwise have been payable by reason of the Participant being deemed
         to have terminated his employment.

                  (c) Further, upon the actual retirement of a Participant who
         is deemed terminated under Section 14.3(a)(v), such Participant will be
         entitled to receive a monthly benefit equal to the greater of the
         benefit provided in this Section 14.3 or his Accrued Benefit. Payment
         of such Participant's monthly retirement benefit will commence not
         later than the first day of the third (3rd) month after the calendar
         month in which the Participant actually retires.

                  (d) A Participant may request, and the Administrative
         Committee will render, a determination whether specific contemplated
         employment will result in the suspension of his monthly benefit
         payments.

THIS DOCUMENT, REPRESENTING THE RETIREMENT PLAN FOR EMPLOYEES OF GALEY & LORD,
INC., IS EXECUTED THIS 24th DAY OF APRIL, 2000.
                                       29
<PAGE>

                                          GALEY & LORD,  INC.

                                           BY: /S/ MICHAEL R. HARMON
                                              ----------------------------------
                                           TITLE:  EXECUTIVE VICE-PRESIDENT
                                                 -------------------------------

                                       30Exhibit 10.60

                THE GALEY & LORD RETIREMENT SAVINGS PLAN (401(k))

                              AMENDED AND RESTATED

                                 EFFECTIVE AS OF
                                 JANUARY 1, 2000

<PAGE>
<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

<S>                                                                                                              <C>
Background........................................................................................................1
SECTION I:   DEFINITIONS..........................................................................................1
   1.1    Account or Accounts.....................................................................................1
   1.2    Administrative Committee................................................................................1
   1.3    Authorized Leave of Absence.............................................................................2
   1.4    Beneficiary.............................................................................................2
   1.5    Code....................................................................................................2
   1.6    Company.................................................................................................2
   1.7    Compensation............................................................................................2
   1.8    Effective Date..........................................................................................3
   1.9    Employee................................................................................................3
   1.10      Employer.............................................................................................3
   1.11      5% Owner.............................................................................................3
   1.12      Highly Compensated Employee..........................................................................3
   1.13      Hour of Service or Service...........................................................................4
   1.14      Investment Committee.................................................................................4
   1.15      Investment Manager...................................................................................4
   1.16      Key Employee.........................................................................................5
   1.17      Matching Employer Contributions......................................................................5
   1.18      Normal Retirement Date...............................................................................5
   1.19      Participant..........................................................................................5
   1.20      Permanent Disability.................................................................................5
   1.21      Plan.................................................................................................5
   1.22      Plan Year............................................................................................5
   1.23      Related Company......................................................................................5
   1.24      Salary Deferral Contributions........................................................................6
   1.25      Section 415 Compensation.............................................................................6
   1.26      Top Heavy............................................................................................6
   1.27      Trust, Trust Fund or Fund............................................................................7
   1.28      Trustee..............................................................................................7
   1.29      Valuation Date.......................................................................................7
   1.30      Year of Service......................................................................................7
SECTION II:  PARTICIPATION........................................................................................7
   2.1    Participation...........................................................................................7
   2.2    Reemployment............................................................................................8
   2.3    Cessation of Participation with Continued Employment....................................................8
SECTION III:  CONTRIBUTIONS.......................................................................................8
   3.1    Elections as to Salary Deferral Contributions; Changes; Suspensions.....................................8
   3.2    Salary Deferral Contributions...........................................................................9
   3.3    Employer Contributions..................................................................................9
   3.4    Rollovers and Trustee to Trustee Transfers.............................................................10
   3.5    Limitation on Contributions............................................................................10
   3.6    No Right or Duty of Inquiry............................................................................10
   3.7    Time and Manner of Payment of Contributions............................................................10
   3.8    Non-Reversion..........................................................................................11
</TABLE>
                                       i
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                                             <C>
SECTION IV:  ACCOUNTS AND ALLOCATIONS............................................................................11
   4.1    Participants' Accounts.................................................................................11
   4.2    Allocation of Salary Deferral Contributions............................................................12
   4.3    Allocation of Company Contributions....................................................................12
   4.4    Top Heavy Allocation...................................................................................12
   4.5    Allocation of Earnings.................................................................................12
   4.6    Annual Additions.......................................................................................13
   4.7    Correction of Excess Annual Additions..................................................................13
   4.8    Anti-Discrimination Test for Salary Deferral Contributions and Matching Employer Contributions.........13
   4.9    Correction of Excess Amounts...........................................................................14
   4.10      Correction of Error.................................................................................15
   4.11      Trust as Single Fund................................................................................15
SECTION V:  DIRECTED INVESTMENTS.................................................................................15
   5.1    Directed Investments...................................................................................15
   5.2    Investment Funds.......................................................................................15
   5.3    Accounts Not Directed..................................................................................15
   5.4    Life Insurance.........................................................................................15
SECTION VI:  VESTING AND TERMINATION OF EMPLOYMENT...............................................................16
   6.1    Vesting................................................................................................16
   6.2    Forfeitures............................................................................................17
   6.3    Top Heavy Vesting......................................................................................17
SECTION VII:  BENEFITS...........................................................................................17
   7.1    Termination of Employment..............................................................................17
   7.2    Distribution of Small Accounts.........................................................................18
   7.3    Direct Rollovers.......................................................................................18
   7.4    Legal Restrictions on Timing of Distribution...........................................................19
   7.5    Location of Former Participants........................................................................19
   7.6    Benefits to Minors.....................................................................................19
   7.7    Benefits to Incompetents...............................................................................19
   7.8    Withdrawals............................................................................................20
   7.9    Financial Hardship Withdrawals.........................................................................20
   7.10      Restrictions on Withdrawals.........................................................................21
   7.11      Time of Withdrawal..................................................................................21
   7.12      Death Benefits......................................................................................21
SECTION VIII:  PARTICIPANT LOANS.................................................................................21
   8.1    Introduction...........................................................................................21
   8.2    Approval of Loan.......................................................................................22
   8.3    Amount of Loan.........................................................................................22
   8.4    Non-Discrimination.....................................................................................22
   8.5    Security and Interest Rates............................................................................22
   8.6    Repayment and Distributions............................................................................22
   8.7    Separate Investment....................................................................................23
   8.8    Expenses...............................................................................................23
   8.9    Amortization...........................................................................................23
SECTION IX:  ADMINISTRATION BY THE COMMITTEE.....................................................................23
   9.1    Appointment of the Administrative Committee............................................................23
   9.2    Appointment of the Investment Committee................................................................23
</TABLE>

                                       ii
<PAGE>
<TABLE>
<CAPTION>

<S>                                                                                                             <C>
   9.3    Powers of the Administrative Committee.................................................................24
   9.4    Responsibilities of the Investment Committee...........................................................24
   9.5    Operation..............................................................................................25
   9.6    Meetings and Quorum....................................................................................25
   9.7    Compensation...........................................................................................25
   9.8    Domestic Relations Orders..............................................................................25
SECTION X:  DUTIES AND POWERS OF THE TRUSTEE.....................................................................26
   10.1      General.............................................................................................26
   10.2      Trust Agreement.....................................................................................26
   10.3      Limitation of Liability.............................................................................26
   10.4      Power of Trustee to Carry Out the Plan..............................................................26
SECTION XI:  AMENDMENT AND TERMINATION...........................................................................26
   11.1      Amendment...........................................................................................26
   11.2      Termination.........................................................................................27
   11.3      Merger..............................................................................................27
SECTION XII:  ADOPTION OF PLAN BY RELATED COMPANIES..............................................................27
   12.1      Adoption of the Plan................................................................................27
   12.2      Withdrawal..........................................................................................27
   12.3      Sale of Employer's Assets...........................................................................28
SECTION XIII:  MISCELLANEOUS.....................................................................................28
   13.1      Indemnification.....................................................................................28
   13.2      Exclusive Benefit Rule..............................................................................28
   13.3      No Right to the Fund................................................................................28
   13.4      Rights of the Employer..............................................................................28
   13.5      Non-Alienation of Benefits..........................................................................28
   13.6      Construction and Severability.......................................................................29
   13.7      Delegation of Authority.............................................................................29
   13.8      Rights of Returning Veterans........................................................................29
   13.9      Request for Tax Ruling..............................................................................29
</TABLE>

                                      iii

<PAGE>

                THE GALEY & LORD RETIREMENT SAVINGS PLAN (401(k))

                                   BACKGROUND

         Galey & Lord, Inc., formerly known as Galey & Lord Industries, Inc.
(the "Company") maintains The Savings and Profit Sharing Plan of Galey & Lord
Industries, Inc., originally effective as of February 1, 1988 and as
subsequently amended (the "Merged Plan").

         Swift Textiles, Inc. maintains The Retirement Savings Plan for the
Employees of Swift Textiles, Inc. (the "Plan"), most recently amended and
restated, effective as of January 1, 1989 and as subsequently amended.

         Effective as of October 1, 1999, the Merged Plan merged into the Plan
and the name of the Plan was changed to The Galey & Lord Retirement Savings Plan
(401(k)) and Galey & Lord, Inc. became sponsor of the Plan. All assets and
liabilities of the Merged Plan were transferred to the Plan as soon as
practicable following October 1, 1999. The Plan is herein amended and restated,
effective as of January 1, 2000.

         The Plan is intended to be a qualified profit sharing plan, qualified
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") and to include a qualified cash or deferred arrangement under Section
401(k) of the Code.

         Except as otherwise specifically provided below, the provisions of the
Plan as set forth herein shall apply only to Participants whose employment with
the Employer and Related Companies terminates on or after October 1, 1999. If a
Participant's employment with the Employer and other Related Companies
terminates prior to October 1, 1999, his right to benefits, if any, and the
amount thereof will be determined in accordance with the provisions of the Plan
or, if appropriate, the Merged Plan, as in effect immediately prior to his last
employment termination date, as updated for applicable changes in the legal
requirements for tax-.qualified plans herein.

         NOW, THEREFORE, the Company agrees as follows:

SECTION I:  DEFINITIONS

         Where indicated by initial capital letters, the following terms shall
have the following meanings:

         1.1 ACCOUNT OR ACCOUNTS: A Participant's interest in the Trust Fund,
which shall consist of the Participant's Salary Deferral Contributions Account,
Employer Contributions Account, and Rollover Account, as described in Section
4.1.

         1.2 ADMINISTRATIVE COMMITTEE: The Administrative Committee of the Galey
& Lord, Inc. Savings Plans, established pursuant to Article IX to be responsible
for the general administration of the Plan.

                                       1
<PAGE>

         1.3 AUTHORIZED LEAVE OF ABSENCE: Any absence, not to exceed a period of
one year, authorized by the Employer, under its standard personnel practices.

         1.4 BENEFICIARY: The person or entity who is to receive any benefits
payable from the Plan on account of a Participant's death. If the Participant is
not married, the Beneficiary is the person designated by the Participant to
receive such benefits.

                  If the Participant is married, the Beneficiary is
automatically the Participant's surviving spouse and no written designation is
required. If the Participant is married and the Participant wishes to designate
a Beneficiary other than his spouse, the spouse must consent to the designation
of another person who will become the designated Beneficiary to receive benefits
under the Plan. The spouse's written consent to the Beneficiary designation must
be witnessed by a Plan representative or a notary public and must (a)
acknowledge the Beneficiary or Beneficiaries, including any class of
Beneficiaries or contingent Beneficiaries, or expressly permit the designation
of any Beneficiary by the Participant and (b) acknowledge the effect of such
designation as waiving the spouse's right to be the Beneficiary or to limit the
Beneficiaries to which the consent applies.

                  A Participant may designate a person or entity to be his
Beneficiary by filing a properly completed and executed form provided by the
Administrative Committee. If at the time of his death, the Participant has no
surviving spouse or designated Beneficiary, the Beneficiary is the Participant's
estate. A Participant's Beneficiary is bound by the terms of the Plan.

         1.5 CODE: The Internal Revenue Code of 1986, as amended, or any
subsequently enacted federal revenue law. A reference to a particular Section of
the Code includes a reference to any regulations issued under the Section and to
the corresponding section of any subsequently enacted federal revenue law.

         1.6 COMPANY: Galey & Lord, Inc. and any successor by merger,
consolidation or otherwise.

         1.7 COMPENSATION: The base compensation paid to an Employee by the
Employer for personal services, including bonuses and commissions, as reported
on Form W-2. "Compensation" will be determined before taking into account any
reduction in earnings resulting from an election to have Salary Deferral
Contributions made on his behalf pursuant to the Plan or salary reduction
contributions made to any plan established under Code Section 125 and maintained
by the Employer. "Compensation" does not include other deferred compensation in
connection with this Plan or any other plan of deferred compensation maintained
by the Employer, and it does not include special allowances (such as amounts
paid to an Employee during an Authorized Leave of Absence, disability or
severance pay, moving expenses, car expenses, tuition reimbursement, meal
allowances, the cost of excess group life insurance income includible in taxable
income, and similar items). In the case of an Employee who is employed by two or
more Employers, the Employee's aggregate Compensation from all Employers shall
be deemed to be his Compensation.

                                       2
<PAGE>

                  Notwithstanding any other provision of the Plan, the annual
Compensation of each Employee taken into account under the Plan shall not exceed
$150,000, as adjusted by the Commissioner of Internal Revenue for increases in
the cost of living in accordance 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 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 convenience of administration, Compensation may be rounded
to the nearest $100.

         1.8 EFFECTIVE DATE: The original effective date of the Plan is January
1, 1984. The effective date of this amended and restated Plan is October 1,
1999, except where otherwise indicated.

         1.9 EMPLOYEE: Any person employed by an Employer who (on or after the
Effective Date) is receiving remuneration from the Employer for personal
services as a regular salaried or hourly employee (or would be receiving such
remuneration except for an Authorized Leave of Absence).

                  Notwithstanding the above, the term "Employee" does not
include individuals who are classified by the Employer as independent
contractors, temporary employees, leased employees within the meaning of Code
Section 414(n)(2) and employees of the Employer whose terms and conditions of
employment are covered by a collective bargaining agreement that does not
provide for their participation in the Plan.

         1.10 EMPLOYER: The term Employer means the Company, Galey & Lord
Industries, Inc., Swift Textiles, Inc., G.L. Service Company, North America,
Inc. and any other Related Company that adopts the Plan, with the consent of the
Company.

         1.11 5% OWNER: If the Employer or a Related Company is a corporation,
any person who owns (or is considered as owning within the meaning of Code
Section 318) more than 5% of the outstanding stock of the Employer or a Related
Company or stock possessing more than 5% of the total combined voting power of
all stock of the Employer or a Related Company. If the Employer or a Related
Company is not a corporation, a 5% Owner is any person who owns more than 5% of
the capital or profits interest in the Employer or a Related Company.

         1.12 HIGHLY COMPENSATED EMPLOYEE: Except as otherwise provided below, a
Highly Compensated Employee generally includes Highly Compensated active
Employees and Highly Compensated former Employees. A Highly Compensated active
Employee means any Employee who (a) was a five percent owner (as defined in
Section 416(i)(1) of the Code) of the Employer at any time during the current or
the preceding year, or (b) for the preceding year, had 415 Compensation from the
Employer in excess of $80,000 (as adjusted by the Secretary pursuant to Section
415(d) of the Code).

                                       3
<PAGE>

                  A former Employee shall be treated as a Highly Compensated
Employee if (a) such Employee was a Highly Compensated Employee when such
Employee separated from service, or (b) such Employee was a Highly Compensated
Employee at any time after attaining age 55.

                  The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, will be made in accordance with Code Section 414(q) and the
regulations thereunder.

         1.13 HOUR OF SERVICE OR SERVICE: An Employee is credited with one Hour
of Service for:

                  (a) Each hour for which he is directly or indirectly paid, or
         entitled to payment, by the Company or by a Related Company for the
         performance of duties during a computation period. These hours are
         credited to the Employee for the computation period in which such
         duties are performed.

                  (b) Each hour (up to a maximum of 501 hours during a single
         continuous period) for which the Employee is paid, or entitled to
         payment, by the Company or by a Related Company for a period of time
         during which no duties are performed (irrespective of whether the
         employment relationship has terminated) because of, vacation, holiday,
         illness, incapacity, layoff, jury duty, military duty or leave of
         absence (including disability). These hours are credited to the
         Employee for the computation period in which the duties would have been
         performed. Hours under this subparagraph are calculated and credited
         pursuant to Section 2530.200b-2 of the Department of Labor Regulations,
         which are incorporated in the Plan by this reference.

                  (c) Each hour for which back pay, irrespective of mitigation
         of damages, has been either awarded or agreed to by the Company or by a
         Related Company. The same Hours of Service will not be credited both
         under subparagraphs (a) or (b), as the case may be, and under this
         subparagraph (c). These hours are credited to the Employee for the
         computation period to which the award or agreement pertains, rather
         than to the computation period in which the award, agreement or payment
         was made.

                  (d) If the Employer leases employees, Hours of Service with
         the Company and Related Company will be credited for any leased
         employee who is to be considered an Employee for purposes of the Plan
         under Code Sections 414(n) and 414(o). In any case for which employment
         records do not accurately reflect hours worked, Hours of Service will
         be credited at the rate of 45 hours per calendar week.

         1.14 INVESTMENT COMMITTEE: The Investment Committee described in
Article IX.

         1.15 INVESTMENT MANAGER: A person appointed by the Investment Committee
other than the Trustee, the Investment Committee or the Administrative Committee
who

                                       4
<PAGE>

(a) is registered as an investment advisor under the Investment Advisors Act
of 1940, (b) is a bank, as defined in that Act, or (c) is an insurance company
qualified to perform services relating to the management, acquisition or
disposition of assets of a plan under the laws of more than one state; and who
has acknowledged in writing that it is a fiduciary with respect to the Plan.

         1.16 KEY EMPLOYEE: An employee or former employee who, at any time
during the Plan Year or during any of the four preceding Plan Years, is or was
(a) an officer of the Employer or a Related Company whose annual Section 415
Compensation from the Employer and Related Companies exceeds $50,000 (or 50% of
the amount described in Code Section 415(b)(1)(A), as adjusted, if greater), (b)
one of the ten Employees who own (or are considered as owning, within the
meaning of Code Section 318) at least 0.5% and the largest interests in the
Employer or a Related Company and whose annual Section 415 Compensation from the
Employer and Related Companies exceeds $30,000 (as that amount may be adjusted
under Code Section 415(c)(1)(A)), (c) a 5% Owner, or (d) a 1% owner of the
Employer or a Related Company whose annual Section 415 Compensation from the
Employer and Related Companies exceeds $150,000. The term "Key Employee" also
includes the beneficiary of a deceased Key Employee, as described above. The
determination of Key Employee status must be made in accordance with Code
Section 416, and the number of persons who are considered Key Employees will be
limited as provided under that Section. A "non-Key Employee" is any Employee or
former Key Employee who is not a Key Employee.

         1.17 MATCHING EMPLOYER CONTRIBUTIONS: Contributions made by the
Employer on behalf of a Participant on account of the Participant's election to
make Salary Deferral Contributions, as provided in Section 3.3.

         1.18 NORMAL RETIREMENT DATE: A Participant's 65th birthday.

         1.19 PARTICIPANT: An Employee who has met the eligibility requirements
of the Plan as set forth in Section II and has elected to become a Participant.
The term "Participant" includes a former Employee who maintains an Account in
the Plan.

         1.20 PERMANENT DISABILITY: A physical or mental condition which totally
and presumably permanently prevents a Participant from engaging in any
substantially gainful activity and which entitles the Participant to a Social
Security Disability Insurance Benefit, as defined and provided under the Social
Security Act.

         1.21 PLAN: "The Galey & Lord Retirement Savings Plan (401(k))", as set
forth herein, and as amended from time to time.

         1.22 PLAN YEAR: The twelve consecutive month period beginning each
January 1 and ending each December 31.

         1.23 RELATED COMPANY: Any corporation or business organization that is
under common control with the Employer (as determined under Code Section 414(b)
or (c)) or that is a member of an affiliated service group with the Company (as
determined under Code Section 414(m)) or that is required to be aggregated under
Code Section 414(o). For

                                       5
<PAGE>

the purpose of applying the limitations set forth in Section 4.6, Code Sections
414(b), 414(c) and 414(m) will be applied as modified by Code Section 415(h).

         1.24 SALARY DEFERRAL CONTRIBUTIONS: Contributions made at the election
of a Participant by the Employer pursuant to Section 3.2.

         1.25 SECTION 415 COMPENSATION: An Employee's total annual compensation
from the Employer and Related Companies, as defined in the Treasury Regulations
issued under Code Section 415. Under this definition, "Section 415 Compensation"
includes an Employee's wages, salaries, earned income, fees for professional
services and other amounts received (without regard to whether the amount is
paid in cash) for personal services actually rendered in the course of
employment with the Employer and Related Companies which are includible in gross
income (including, but not limited to, commissions paid to salesmen,
compensation for services on the basis of a percentage of profits, commissions
on insurance premiums, tips, bonuses, fringe benefits, reimbursements and
expense allowances). "Section 415 Compensation" does not include items such as:

                  (a) Matching Employer Contributions or any other contributions
         made by the Employer to this Plan or any other plan of deferred
         compensation to the extent that the contributions are not includible in
         the Employee's gross income for the taxable year in which they are
         contributed.

                  (b) Amounts received from the exercise of a non-qualified
         stock option or from restricted property.

                  (c) Amounts realized from the sale, exchange or other
         disposition of stock acquired under a statutory stock option.

                  (d) Other amounts that receive special tax benefits, such as
         premiums for group term life insurance (but only to the extent that the
         premiums are not includible in the gross income of the Employee).

                  Notwithstanding the above, Section 415 Compensation will be
determined before taking into account any reduction in compensation resulting
from an election to have Salary Deferral Contributions made on his behalf
pursuant to the Plan or salary reduction contributions made to any plan
established under Code Section 125 and maintained by the Employer.

         1.26 TOP HEAVY: One or more plans that are qualified under Code Section
401(a) and under which the sum of the present value of accrued benefits of Key
Employees under defined benefit plans and the account balances of Key Employees
under defined contribution plans exceeds 60% of the sum of the present value of
accrued benefits and account balances of all employees, former employees (except
for former employees who perform no services for the Employer for the five-year
period ending on the determination date) and beneficiaries in the plans. The
determination date is the date on which it is determined whether this Plan is
Top Heavy. Such determination will be made as of the last day of the immediately
preceding Plan Year and will be made in accordance with Code Section 416(g). If
the Employer and Related Companies maintain more than one plan

                                       6
<PAGE>

qualified under Code Section 401, then (a) each such plan in which a Key
Employee is a participant and (b) each such plan that must be taken into account
in order for a plan described in the preceding clause to meet the requirements
of Code Section 401(a)(4) or 410 must be aggregated with this Plan to determine
whether the plans, as a group, are Top Heavy. The Employer and Related Companies
may, in their discretion, aggregate any other qualified plan with this Plan to
the extent that such aggregation is permitted by Code Section 416(g). The
Administrative Committee will determine whether the Plan is Top Heavy. For
purposes of the preceding sentence, a Plan includes a terminated plan which was
maintained by the Employer within the last five years ending on the
determination date and would otherwise be required to be aggregated with this
Plan.

         1.27 TRUST, TRUST FUND OR FUND: One or more separate, written trust
agreements between the Company and the Trustee or Trustees, and the Plan assets
held in the Trust.

         1.28 TRUSTEE: One or more persons and/or entities appointed by the
Company to serve as trustee of the Trust, as evidenced by one or more trust
agreements under the Plan and accepting the Trust and any successor trustee(s)
appointed by the Company and accepting the Trust.

         1.29 VALUATION DATE:  Each business day of the year.

         1.30 YEAR OF SERVICE: An Employee is credited with one Year of Service
for each Plan Year in which the Employee is credited with at least 1,000 Hours
of Service for the Employer or, if less, a Plan Year in which the Employee is
employed by the Employer or a Related Company for at least 90 days.
Notwithstanding any other provision of the Plan to the contrary, an Employee who
has no vested interest in his Employer Contributions Account and incurs a
consecutive number of "One-Year Breaks in Service" which equals or exceeds 5
will receive no credit for Years of Service credited prior to the consecutive
breaks.

                  An individual will be charged with a "One-Year Break in
Service" if such individual does not perform more than 500 Hours of Service
during the Plan Year. For purposes of determining whether an Employee has
incurred a One-Year Break in Service, each hour (up to a maximum of 501 hours in
a single continuous period) for which the Employee is absent because of (a) the
pregnancy of the Employee, (b) the birth of a child of the Employee, (c) the
placement of a child with the Employee in connection with the Employee's
adoption of the child, or (d) the Employee's caring for a child immediately
following the birth or placement of that child. These hours will be credited to
the Employee for the computation period in which the absence begins only if the
Employee would otherwise incur a One-Year Break in Service in that computation
period. In all other cases, these hours will be credited to the next following
computation period.

SECTION II:  PARTICIPATION

         2.1 PARTICIPATION: Each Employee who is a Participant in the Plan or
the Merged Plan immediately before October 1,

                                       7
<PAGE>

1999 will be a Participant in the Plan as of October 1, 1999. Each Employee who
is not already a Participant will become a Participant on the day the Employee
is first credited with an Hour of Service for the Employer.

                  Notwithstanding the immediately preceding sentence, each
Employee who first performs an Hour of Service on or after January 1, 2000 and
who is not already a Participant, will become a Participant on the first day of
the month following the day on which the Employee completes an "eligibility
computation period" during which he is credited with at least 500 Hours of
Service with the Employer. An "eligibility computation period" is a twelve
consecutive month period beginning on the Employee's date of hire and each
anniversary thereof.

         2.2 REEMPLOYMENT: If a Participant terminates employment and then is
reemployed by the Employer, the Employee will requalify as a Participant as of
the date of his reemployment.

         2.3 CESSATION OF PARTICIPATION WITH CONTINUED EMPLOYMENT: If a
Participant ceases to be an Employee, but continues in the employ of an Employer
or Related Company, contributions will cease to be made to the Plan on his
behalf, his Account will continue to be held in the Plan and receive allocations
of Trust Fund earnings pursuant to Section 4.5 until distribution and his
Account will be distributed upon his termination of employment, retirement or
death, as provided in Section VII. If the Participant again becomes an Employee,
he will again participate in the Plan immediately.

SECTION III:  CONTRIBUTIONS

         3.1 ELECTIONS AS TO SALARY DEFERRAL CONTRIBUTIONS; CHANGES;
SUSPENSIONS: A Participant may elect to have Salary Deferral Contributions made
on his behalf by filing an appropriate written election with the Administrative
Committee before the payroll period as of which the election is to become
effective. A Participant may change the amount of his Salary Deferral
Contributions for subsequent payroll periods by filing a new election with the
Administrative Committee before the payroll period as of which the change is to
become effective. All elections made by a Participant will continue in force
until they are changed or until the Participant ceases to be a Participant.

                  A Participant may request that his Salary Deferral
Contributions be suspended for the balance of the then current Plan Year by
filing a written request with the Administrative Committee before the beginning
of the payroll period as of which the suspension is to be effective. If such a
suspension is made, the Participant may elect to resume contributions by filing
an election with the Administrative Committee in a timely manner (as described
in subsection (a)). A Participant may not make up suspended contributions, and
Matching Employer Contributions will not be made for a Participant with respect
to any suspended contributions.

                  The Administrative Committee may establish rules, deadlines
and other procedures with respect to a Participant's election to make, revise or
suspend Salary Deferral Contributions.

                                       8
<PAGE>

         3.2 SALARY DEFERRAL CONTRIBUTIONS: A Participant electing to have
Salary Deferral Contributions made on his behalf, as provided in Section 3.1,
must direct his Employer in writing to reduce his Compensation, when the
election becomes effective, by a designated percentage and to contribute that
designated percentage to the Plan for the benefit of the Participant. The
designated percentage may be from 1% to 22% of the Compensation that is
otherwise payable to the Participant during the Plan Year, provided that:

                  (a) At any time during the Plan Year, the Administrative
         Committee may limit the percentage of Compensation that may be
         contributed for the benefit of Highly Compensated Employees, and

                  (b) For each calendar year, the maximum amount of Salary
         Deferral Contributions that may be made on behalf of a Participant
         under this Plan and salary deferral contributions under all other
         plans, contracts, or arrangements described in Code Section 402(g)(3)
         may not exceed the "402(g) limit" during the Participant's taxable
         year. The 402(g) limit is $10,000, as adjusted from time to time in the
         same manner as provided under Code Section 415(d).

                  The Administrative Committee may require that Salary Deferral
Contributions be made in whole percentages of Compensation.

                  If the amount of Salary Deferral Contributions made to this
Plan exceed the annual 402(g) limit, the Administrative Committee will determine
the amount of excess Salary Deferral Contributions attributable to this Plan and
will distribute any excess Salary Deferral Contributions and income attributable
to those contributions will be distributed to the Participant by the April 15
following the close of the calendar year in which the Salary Deferral
Contributions were made.

                  If the amount of Salary Deferral Contributions made to this
Plan does not exceed the annual 402(g) limit, but the Participant participates
in another plan that is subject to the 402(g) limit and the amount of Salary
Deferral Contributions that are made on behalf of the Participant under this
Plan and salary deferral contributions that are made under all other plans,
contracts, or arrangements described in Code Section 402(g)(3) exceed the 402(g)
limit during the Participant's taxable year, the Participant may allocate any
contributions in excess of the 402(g) limit among the plans in which he
participates. In such case, the Administrative Committee will distribute Salary
Deferral Contributions and income attributable to those contributions at the
written direction of the Participant, as soon as practicable following receipt
of the Participant's written direction. Matching Employer Contributions
attributable to the excess amounts distributed from the Plan in accordance with
this Section 3.2, if any, as adjusted for earnings and/or losses, shall be
forfeited.

         3.3 EMPLOYER CONTRIBUTIONS: Each payroll period, the Employer will make
a Matching Employer Contribution on behalf of each Participant who has elected
to contribute to the Plan through Salary Deferral Contributions in an amount
equal to 50% of the Participant's Salary Deferral Contributions for such payroll
period. Notwithstanding the preceding sentence, Salary Deferral Contributions
which exceed 6% of the Participant's Compensation for the payroll period will
not be matched.

                                       9
<PAGE>

                  At the end of each Plan Year, the Employer shall review the
Matching Employer Contribution made during the year on behalf of each
Participant who is an Employee on the last day of the Plan Year. If the total
Matching Employer Contribution made on behalf of each such Participant for each
payroll period during the Plan Year is less than 50% of the Participant's annual
Salary Deferral Contributions which do not exceed 6% of Compensation for the
Plan Year, the Employer shall make a supplemental matching contribution on
behalf of that Participant so that his total annual Matching Employer
Contribution equals 50% of the Participant's annual Salary Deferral
Contributions which do not exceed 6% of Compensation for the Plan Year.
Notwithstanding the foregoing, if the supplemental matching contribution
described in this paragraph is less than $1.00, no supplemental contribution
will be made.

         3.4 ROLLOVERS AND TRUSTEE TO TRUSTEE TRANSFERS: The Trustee may
receive, with the consent of the Administrative Committee, the transfer of
assets previously held under another qualified plan for the benefit of a person
who is a Participant in this Plan or who is eligible to be a Participant except
for fulfilling the service requirements for participation. The assets may be
received directly from the trustee of a qualified plan, or they may be received
as a rollover contribution from a qualified plan or from an individual
retirement account. Any plan from which assets are received must be a plan
qualified under Code Section 401 at the time of the transfer, and any rollover
individual retirement account must be an individual retirement account within
the meaning of Code Section 408 whose assets consist solely of funds transferred
from another qualified retirement plan and earnings thereon at the time of the
rollover.

                  Assets from a money purchase pension plan, any other pension
plan subject to the funding requirements of Code Section 412 and any profit
sharing or stock bonus plan which is subject to the joint and survivor annuity
requirements of Code Section 401(a)(11) may not be directly transferred from the
trustee of such plan to the Trustee of this Plan unless the transfer is a direct
transfer of an eligible rollover distribution, as described in Code Section
401(a)(31) and the appropriate participant and spousal consents have been
obtained in accordance with Code Section 401(a)(11) prior to the transfer.

         3.5 LIMITATION ON CONTRIBUTIONS: The Employer's aggregate Matching
Employer Contributions and Salary Deferral Contributions for any Plan Year shall
not exceed 15% of the total Compensation of all Participants during the Plan
Year, or such greater or lesser percentage as may be allowed as a deduction from
the gross income of the Employer as provided in Code Section 404(a)(3).

         3.6 NO RIGHT OR DUTY OF INQUIRY: Neither the Trustee, the
Administrative Committee, nor any Participant have any right or duty to inquire
into the amount of the Employer's annual contribution or the method used in
determining the amount of the Employer's contribution. The Trustee is
accountable only for funds actually received by him.

         3.7 TIME AND MANNER OF PAYMENT OF CONTRIBUTIONS: Salary Deferral
Contributions will be paid to the Trustee on a regular basis determined by the
Administrative Committee, provided that all Salary Deferral Contributions for a
Plan Year must be paid to the Trustee

                                       10
<PAGE>

as soon as practicable after such assets can be separated from the general
assets of the Employer or, if earlier, no later than the 15th business day of
the month following the month in which such funds would have been paid to the
Participant had there been no election to have the funds contributed to the
Plan.

                  Matching Employer Contributions for any Plan Year may be made
in one or more payments at any time; provided that the total amount of such
contributions for any Plan Year must be paid to the Trustee not later than the
date on which the Employer's income tax return is required to be filed,
including any extensions for filing obtained.

         3.8 NON-REVERSION: It will be impossible, at any time before
satisfaction of all liabilities with respect to Participants and their
Beneficiaries, for any part of the principal or income of the Trust Fund to be
used for, or diverted to, purposes other than for the exclusive benefit of such
Participants and their Beneficiaries. However, the Employer's contributions
under the Plan for any particular Plan Year are conditioned upon (a) the Plan
initially being a qualified plan under Code Section 401(a) for the Plan Year,
and (b) the contribution being deductible under Code Section 404. If, after the
Employer's contribution has been made, it is determined that a condition
described in (a) or (b) was not satisfied with respect to such contribution, or
that all or a portion of such contribution was made under a mistake of fact,
then the Trustee will refund to the Employer within one year of the date the
contribution is remitted to the Trustee, if such contribution is made by reason
of a mistake of fact, or within one year of the denial of qualification or
disallowance of the deduction, the amount of the contribution that was affected
by the mistake of fact, or by a condition described in (a) or (b) not being
satisfied, subject to the following rules:

                  (a) The Trustee is under no obligation to make such refund
         unless a written direction of the refund signed by an authorized
         representative of the Employer, is submitted to the Trustee.

                  (b) Earnings attributable to the refundable amount are not to
         be refunded, but the refundable amount must be reduced by a
         proportionate share of any losses of the Trust from the date of
         crediting by the Trustee to the date of segregation.

                  (c) The Trustee is under no obligation to verify that the
         refund is allowable or timely and is entitled to rely on the Employer's
         written direction.

SECTION IV:  ACCOUNTS AND ALLOCATIONS

         4.1 PARTICIPANTS' ACCOUNTS: The following Accounts shall be maintained
for each Participant:

                  (a) A Salary Deferral Contributions Account, to which will be
         credited Salary Deferral Contributions made pursuant to Section 3.2,
         and earnings thereon. Also, if, prior to October 1, 1999, a portion of
         a Participant's Accounts is attributable to qualified matching
         contributions (as defined in Code Section 401(k)(3)(D)(ii)(I)) or
         qualified non-elective contributions (as defined in Code Section

                                       11
<PAGE>

         401(m)(C)), such contributions, as adjusted for earnings and losses,
         will be credited to the Salary Deferral Contributions Account.

                  (b) An Employer Contributions Account, to which will be
         credited Matching Employer Contributions made pursuant to Section 3.3,
         any other employer contributions made to the Plan or Merged Plan prior
         to the Effective Date and earnings thereon.

                  (c) A Rollover Account, to which will be credited funds
         transferred from another qualified retirement plan or individual
         retirement account, as provided in Section 3.4 and earnings thereon.

                  If a Participant contributed voluntary employee contributions
to the Merged Plan prior to April 1, 1992 and those contributions remain in the
Trust, such contributions and earnings thereon will be accounted for separately.

         4.2 ALLOCATION OF SALARY DEFERRAL CONTRIBUTIONS: As of each payroll
period and at such interim dates as the Administrative Committee designates, the
Administrative Committee will allocate to each Participant's Account the Salary
Deferral Contributions made for the benefit of the Participant since the last
allocation date.

         4.3 ALLOCATION OF COMPANY CONTRIBUTIONS: As of each payroll period and
at such interim dates as the Administrative Committee designates, the
Administrative Committee will allocate to each Participant's Account the
Matching Employer Contributions made pursuant to Section 3.3 for the benefit of
the Participant since the last allocation date.

         4.4 TOP HEAVY ALLOCATION: For each Plan Year in which the Plan is Top
Heavy, each Participant who is an Employee as of the last day of the Plan Year
and who is not a Key Employee (regardless of the Hours of Service credited to
the Employee during the Plan Year) will receive an allocation of a contribution
to be made by the Employer up to an amount equal to the lesser of (a) 3% of each
such Participant's Section 415 Compensation or (b) the percentage of each such
Participant's Section 415 Compensation that is equal to the highest percentage
of Section 415 Compensation at which Matching Employer Contributions and Salary
Deferral Contributions are allocated to a Key Employee's Account for the Plan
Year. The allocation will be made in the proportion that each such Participant's
Compensation for the Plan Year bears to all such Participants' Compensation for
the Plan Year. After this allocation is made, the remaining contribution made by
the Employer (if any) will be allocated as described in Section 4.3.
Notwithstanding the foregoing, if the minimum allocation of this subsection is
provided under any other defined contribution plan maintained by the Employer or
a Related Company, it will not be provided under this Plan.

         4.5 ALLOCATION OF EARNINGS: As of each Valuation Date and at such
interim dates as the Administrative Committee designates, the Trustee (or such
third party as the Administrative Committee designates) will determine the
current fair market value and any increase or decrease in value of the Trust
Fund. A Participant's Account will continue to share in allocations of earnings
pursuant to this Section 4.5 until the Participant's Accounts are distributed.

                                       12
<PAGE>

         4.6 ANNUAL ADDITIONS: Notwithstanding any other provision of this Plan
to the contrary, the total amount of the Annual Addition (defined below) that
may be allocated to the Accounts of any Participant for any Limitation Year
(defined below) must not exceed the lesser of (a) $30,000 or (b) 25% of the
Participant's Section 415 Compensation. For purposes of this Section, the
"Limitation Year" is the Plan Year and the term "Annual Addition" means the
total of the Matching Employer Contributions and Salary Deferral Contributions
credited to the Participant's Accounts for the Plan Year. If the Company and
Related Companies maintain more than one defined contribution plan qualified
under Code Section 401, then this Section will be applied in such a way that the
total Annual Additions under all such plans will not exceed the amount specified
in this Section.

         4.7 CORRECTION OF EXCESS ANNUAL ADDITIONS: If the Annual Additions to a
Participant's Account in any Limitation Year exceed the limitation of Section
4.6, then the amounts that would have been credited to his Account but for this
Section in excess of the limitation will be held unallocated in a suspense
account. The amount held in a suspense account will be allocated as though such
amount were a Matching Employer Contribution as of the end of the next following
Plan Year among the Accounts of Participants entitled to an allocation of
Matching Employer Contributions as of that date. The allocation as of the end of
the next following Plan Year will be made before any contributions that would
constitute Annual Additions are made to the Plan for that Plan Year. A suspense
account is not subject to adjustment for investment gains or losses. Upon
termination of the Plan, the assets of any suspense account then in existence
will be allocated as though such amount were a Matching Employer Contribution
among the Accounts of Participants entitled to an allocation of Matching
Employer Contributions as of the date on which the Plan terminates.

         4.8 ANTI-DISCRIMINATION TEST FOR SALARY DEFERRAL CONTRIBUTIONS AND
MATCHING EMPLOYER CONTRIBUTIONS: Notwithstanding any other provision of the
Plan, the Plan will satisfy the anti-discrimination requirements set forth
below:

         The Average Actual Deferral Percentage Test
         -------------------------------------------
         The average actual deferral percentage (as defined in Code Section
         401(k)(3) and the applicable sections of the Treasury regulations) of
         the Highly Compensated Employees eligible to participate in the Plan
         will not exceed the greater of:

                      a)   The average actual deferral percentage of all other
                  eligible employees multiplied by 1.25; or

                      b) The lesser of the average actual deferral percentage of
                  all other eligible employees multiplied by 2, or the average
                  actual deferral percentage of all other eligible employees
                  plus 2 percentage points.

         The amount of excess contributions determined under this Section 4.8
         shall be reduced by Salary Deferral Contributions exceeding the annual
         dollar limit described in Section 3.2(b), which were previously
         distributed for the same Plan Year.

                                       13
<PAGE>

         The Average Actual Contribution Percentage Test
         -----------------------------------------------
         The average actual contribution percentage (as defined in Code Section
         401(m)(2) and applicable sections of the Treasury regulations) of the
         Highly Compensated Employees eligible to participate in the Plan will
         not exceed the greater of:

                      a)   The average actual contribution  percentage of all
                  other eligible employees multiplied by 1.25; or

                      b) The lesser of the average actual contribution
                  percentage of all other eligible employees multiplied by 2, or
                  the average actual deferral percentage of all other eligible
                  employees plus 2 percentage points.

         To the extent permitted in the regulations, Matching Employer
         Contributions may be used in the Actual Deferral Percentage Test
         described above.

         Multiple Use Test
         -----------------
         The sum of the average actual deferral percentage and the average
         actual contribution percentage on behalf of Highly Compensated
         Employees may not exceed the "aggregate limit" permitted under the
         multiple use test, as set forth in Code Section 401(m)(9) and Section
         1.401(m)-2(b) of the treasury regulations.

         4.9 CORRECTION OF EXCESS AMOUNTS: If Salary Deferral Contributions of
Highly Compensated Employees are required to be reduced as a result of the
Average Actual Percentage Test, the excess contributions and income attributable
to those contributions shall be distributed to the Highly Compensated Employees
after the close of the Plan Year (but no later than the close of the following
Plan Year) for which the contributions were made. In determining the amount of
these distributions, the Plan Administrator shall use the method described in
Code Section 401(k)(8)(C). Matching Employer Contributions attributable to
Salary Deferral Contributions which are distributed in accordance with this
Section will be forfeited to the extent required by Treasury Regulations issued
under Code Section 401(m).

                  If Matching Employer Contributions of Highly Compensated
Employees are required to be reduced as a result of the Average Actual
Contribution Test, the excess contributions and income attributable to those
contributions shall be distributed to the Highly Compensated Employees after the
close of the Plan Year (but no later than the close of the following Plan Year)
for which the contributions were made. In determining the amount of these
distributions, the Plan Administrator shall use the method described in Code
Section 401(m)(6)(C).

                                       14
<PAGE>

                  If Salary Deferral Contributions and/or Matching Employer
Contributions exceed the "aggregate limit" provided under the Multiple Use Test,
as set forth in Code Section 401(m)(9) and Section 1.401(m)-2(b) of the Treasury
Regulations and additional correction is required to be made after the
corrections described above have been completed, further corrections will be
made by distributing Salary Deferral Contributions and income attributable to
those contributions using the method described in Code Section 401(k)(8)(C).

         4.10 CORRECTION OF ERROR: If an error is made in the adjustment of a
Participant's Accounts, the error will be corrected by the Administrative
Committee, and any gain or loss resulting from the correction will be credited
to the income or charged as an expense of the Trust Fund for the Plan Year in
which the correction is made. In no event will the Accounts of other
Participants be adjusted on account of the error.

         4.11 TRUST AS SINGLE FUND: The creation of separate Accounts for
accounting and bookkeeping purposes shall not restrict the Trustee in operating
each individual Trust as a single Fund. Allocations to the Accounts of
Participants in accordance with this Section IV do not vest any right or title
to any part of the assets of the Fund in such Participants, except as provided
in Section VII.

SECTION V:  DIRECTED INVESTMENTS

         5.1 DIRECTED INVESTMENTS: To the extent and in the manner permitted by
the Administrative Committee, each Participant must direct the investment of any
or all of his Accounts among the investment funds authorized by the Investment
Committee.

         5.2 INVESTMENT FUNDS: The Investment Committee will select investment
funds in which Participants' Accounts may be invested. A Participant may direct
that his Accounts be invested in one or more of the investment funds authorized
for investment by the Investment Committee. The Investment Committee may add to
or reduce the number and type of investment funds that will be available for
investment in any Plan Year and may establish rules relating to the investment
of Accounts in the funds.

         5.3 DEFAULT INVESTMENT FUND: If a Participant fails to designate the
investment funds in which all or a portion of his Accounts are to be invested,
the portion of such Participant's Account which is not subject to investment
direction will be invested in the stable value fund made available by the
Investment Committee.

         5.4 LIFE INSURANCE: To the extent and in the manner permitted by the
Administrative Committee, a Participant who is or was employed by Swift
Textiles, Inc. may direct the Trustee (on a form provided by the Administrative
Committee) to invest a portion of his Account in any form or type of life
insurance policy on the Participant's life. The policies shall be selected by
the Administrative Committee and shall constitute separate investments of the
Accounts of the respective Participants, and all premiums shall be paid from the
respective Accounts. The aggregate amount paid for the purchase of life
insurance on a Participant's life must be less than twenty-five (25) per cent of
the total

                                       15
<PAGE>

Employer contributions and forfeitures that have been allocated to the
Participant's Account.

                  Upon issuance, each policy purchased under this Section shall
be owned by the Trustee. A Participant who has directed the Trustee to invest a
portion of his Account in life insurance and who is entitled to a distribution
from the Plan will receive the portion of his Account which is invested in life
insurance in one of the following forms, as elected by the Participant:

                  (a) The Participant may elect to have the insurance contract
         or contracts delivered to him as soon as reasonably practicable after
         the Participant terminates employment; or

                  (b) The Participant may elect to liquidate the contract, and
         the amount thereof shall be credited to the Participant's Account to be
         paid in a single sum distribution to or for the benefit of the
         Participant and, in the event of his death thereafter, to or for the
         benefit of his Beneficiary.

                  Each Participant who is on the payroll of Swift Textiles,
Inc., Columbus, Georgia, also may direct the Trustee to invest a portion of his
Accounts in life insurance on the life of a dependent of the Participant, and
the proceeds of such policy shall be payable to the Participant. Such life
insurance shall be incidental to the retirement purpose of the Plan.

SECTION VI:  VESTING AND TERMINATION OF EMPLOYMENT

         6.1 VESTING: Each Participant who first performs an Hour of Service
with Swift Textiles, Inc. before January 1, 1999 shall be fully vested in his
Accounts at all times. Each other Participant shall become fully vested in his
Employer Contributions Account upon the first to occur of the following:

               (a)  His Normal Retirement Date;

               (b)  The date on which he first becomes eligible to elect early
                    retirement (age 55);

               (c)  The date on which he first qualifies for retirement on
                    account of Permanent Disability;

               (d)  The date of his death;

               (e)  The date on which the Participant terminates employment with
                    the Employer due to lack of work or the closing of a plant
                    or operating division, as determined by the Employer;

               (f)  The date on which the Employee has been credited with at
                    least 5 Years of Service.

                  If a Participant's vesting is accelerated by subsection (e) of
this Section 6.1 and the Participant is later rehired by the Employer and again
becomes a Participant in the Plan, any increases in his Employer Contributions
Account occurring after re-employment shall be subject to the vesting provisions
of this Section 6.1 without regard to subsection

                                       16
<PAGE>

(e) (except in the event of a subsequent termination of employment due to lack
of work or closing of a plant or operating division, as shall be determined by
the Employer).

         6.2 FORFEITURES: A Participant who terminates employment with no vested
interest in his Employer Contributions Account is deemed to have received
payment of his entire interest in the Plan as of the date of termination of
employment and will forfeit his Employer Contributions Account as of such date.
If such Participant is re-employed by the Employer before incurring five
consecutive One-Year Breaks in Service, the Participant's Employer Contributions
Account which was forfeited upon termination of employment will be reinstated.
Forfeitures reduce Matching Employer Contributions.

         6.3 TOP HEAVY VESTING: For any year in which the Plan is Top Heavy, the
Employer Contributions Account of a Participant other than a Participant who
first performed an Hour of Service with Swift Textiles, Inc. before January 1,
1999, shall vest in accordance with the following schedule:

                  Years of Service                       Vested Percentage
                  ----------------                       -----------------

                  Less than 2                                      0%
                  2 but less than 3                               20%
                  3 but less than 4                               40%
                  4 but less than 5                               60%
                  At least 5                                     100%

                  If the Plan is Top Heavy for a Plan Year, the vesting schedule
described in this Section 6.3 shall continue to apply to each Participant who
was a Participant in the Plan during the Top Heavy year. The vesting schedule
described in this Section 6.3 shall not apply to Participants who first become
Participants after the Top Heavy year unless the Plan again becomes Top Heavy.

SECTION VII:  BENEFITS

         7.1 TERMINATION OF EMPLOYMENT: Subject to Section 7.2, if a Participant
terminates employment for any reason other than death, all or a portion, as
elected by the Participant, of the Participant's vested Account (valued as of
the date on which the distribution is made) will be distributed if the
Participant consents to the distribution. The distribution will be made as soon
as practicable following the Participant's election to take the distribution in
the manner described below. If the Participant does not consent to a
distribution of his vested Accounts upon retirement, the Participant's vested
Accounts will be held in the Plan and distributed at such time as the
Participant elects or, if earlier, at such time as is required in Section 7.4 or
upon the Participant's death.

                  Each Participant who is entitled to a distribution of his
vested Account will receive the distribution in a single, lump sum payment
unless he chooses one of the following alternative annuity forms of payment:

                                       17

<PAGE>
                  a)     Life Annuity:  An annuity payable in equal monthly
         installments on the last day of each month during the Participant's
         lifetime only;

                  b)     Term Certain and Life Annuity:  An annuity payable in
         monthly installments on the last day of each month for a terms certain
         and, if the Participant survives the term certain, on the last day of
         each month during the Participant's lifetime;

                  c) Joint and 50% Survivor Annuity: An annuity payable in equal
         monthly installments on the last day of each month during the
         Participant's lifetime and, if the Participant's Beneficiary survives
         the Participant, continuing monthly payments for the lifetime of the
         Beneficiary equal to 50% of each monthly payment made to the
         Participant.

                  If a Participant chooses an annuity form of payment, the
annuity will be purchased from an insurance company with the Participant's
Account, valued as of the date of his election. Such annuity must comply with
Code Section 401(a)(9).

                  If the Participant chooses to have his vested Account paid in
one of the alternative annuity forms of distribution and the Participant does
not choose the Joint and 50% Survivor Annuity with his spouse as the survivor
with respect to the annuity, the Participant's spouse must consent to the
Participant's election. The spouse's consent must be in writing, witnessed by a
Plan representative or a notary public and acknowledge the form of payment
selected by the Participant and his choice of survivor, if applicable. The
spouse's consent must be made at least 7 days and no more than 90 days before
payments under the annuity are to begin.

         7.2      DISTRIBUTION OF SMALL ACCOUNTS:  This Section 7.2 applies
notwithstanding any other provision of the Plan.

                  If a Participant has terminated employment and his vested
Account is less than $200, the Participant's entire vested Account will be
distributed as soon as practicable following the Participant's termination of
employment. Federal income tax will not be withheld from the distribution, and
the Participant will not be entitled to elect to have any portion of the
distribution paid directly to an eligible retirement plan in a direct rollover,
as described below.

                  If a Participant has terminated employment (on account of
retirement, Disability, death or otherwise) and the Participant's vested Account
is at least $200, but is $5,000 or less, the Participant's entire vested Account
will be distributed in a lump sum payment as soon as practicable following the
Participant's termination of employment.

         7.3 DIRECT ROLLOVERS: A Participant or, in the case of a distribution
made on account of the Participant's death or pursuant to a qualified domestic
relations order, the Participant's spouse who receives a lump sum distribution
of $200 or more may elect to have any portion of an "eligible rollover
distribution" paid directly to an "eligible retirement plan" specified by the
Participant in a direct rollover. For purposes of this Plan, an "eligible
rollover distribution" is any cash distribution of all or any portion of the
balance to the

                                       18
<PAGE>

credit of the distributee, except that an eligible rollover distribution does
not include any of the alternative annuity forms of payment described above or
any distribution to the extent such distribution is required under Code Section
401(a)(9). An eligible retirement plan is an individual retirement account
described in Code Section 408(a), an individual retirement annuity described in
Code Section 408(b), an annuity plan described in Code Section 403(a) or a
qualified retirement plan described in Code Section 401(a), that accepts the
eligible rollover distribution. However, if the distribution is made on account
of the Participant's death or pursuant to a qualified domestic relations order
and the recipient is the Participant's spouse, an eligible retirement plan is
only an individual retirement account or individual retirement annuity.

         7.4 LEGAL RESTRICTIONS ON TIMING OF DISTRIBUTION: Unless he elects
otherwise, a Participant's vested Account must commence to be paid to him no
later than 60 days following the close of the Plan Year in which occurs the
latest of: (a) the date the Participant attains age 65, (b) the 10th anniversary
of the date on which the Participant first commenced participation in the Plan
or (c) the date on which the Participant separates from service.

                  Notwithstanding the preceding sentence, each Participant's
Account must be distributed by the April 1 following the calendar year in which
the Participant attains age 70. All distributions from the Plan will be made in
accordance with Code Section 401(a)(9) and accompanying Treasury Regulations.
Notwithstanding the immediately preceding two sentences, the Account of a
Participant, other than a 5% Owner, who attains age 70 1/2 is not required to be
distributed until the April 1 following the calendar year in which the
Participant attains age 70 1/2 or, if later, the calendar year in which the
Participant terminates employment with the Company and Related Companies.

         7.5 LOCATION OF FORMER PARTICIPANTS: If a former Participant who is
entitled to a distribution cannot be located and the Administrative Committee
has made reasonable efforts to locate the former Participant, then the former
Participant's Account will be forfeited. The Administrative Committee will be
deemed to have made reasonable efforts to locate the Participant if the
Administrative Committee is unable to locate the former Participant (or, in the
case of a deceased former Participant, his Beneficiary) after having made two
successive mailings to the last address on file with the Administrative
Committee. The former Participant's Account will be forfeited as of the last day
of the Plan Year in which occurs the last of the two successive mailings. The
forfeiture shall be allocated to each Participant's Account in the same manner
described in the first sentence of Section 4.3 and will be treated as an Annual
Addition pursuant to Section 4.6. If the former Participant or Beneficiary makes
a written claim for the Account after it has been forfeited, the Company shall
cause the Account to be reinstated.

         7.6 BENEFITS TO MINORS: If any person entitled to receive payment under
the Plan is a minor, the Administrative Committee will pay the Account directly
to the minor, to a guardian of the minor or to a custodian selected by the
Trustee under the appropriate Uniform Transfers to Minors Act.

         7.7 BENEFITS TO INCOMPETENTS: If a person who is entitled to receive
payment under the Plan is physically or mentally incapable of personally
receiving and giving a valid

                                       19
<PAGE>

receipt for any payment due (unless a previous claim has been made by a duly
qualified committee or other legal representative), the payment may be made to
the person's spouse, son, daughter, parent, brother, sister or other person
deemed by the Administrative Committee to have incurred expense for the person
otherwise entitled to payment.

         7.8 WITHDRAWALS: A Participant may request a withdrawal from his
Accounts (including earnings thereon) if the Participant has attained age 59
1/2. If a Participant contributed voluntary employee contributions to the Merged
Plan prior to the Plan prior to April 1, 1992, and those contributions remain in
the Trust, the Participant may withdraw all or any portion of such
contributions, as adjusted for earnings and losses at any time.

         7.9 FINANCIAL HARDSHIP WITHDRAWALS: A Participant may request a
withdrawal from his Salary Deferral Contributions Account and Matching Employer
Contributions Account, before he has attained age 59 1/2 if the Participant has
incurred a severe financial hardship, as described below. A Participant will be
considered to have incurred financial hardship if he has immediate and heavy
financial needs that cannot be fulfilled through other reasonably available
financial resources of the Participant. Immediate and heavy financial needs
include:

                  (a) Medical expenses described in Code Section 213(d) incurred
         (or to be incurred) by the Participant, the Participant's spouse, or
         any dependents of the Participant (as defined in Code Section 152);

                  (b) The purchase (excluding mortgage payments) of a principal
         residence for the Participant;

                  (c) Payment of tuition during the next twelve months for
         post-secondary education for the Participant or his spouse, children or
         dependents;

                  (d) The need to prevent the eviction of the Participant from
         his personal residence or foreclosure on the mortgage of the
         Participant's personal residence; or

                  (e) Payment of funeral expenses for a member of the
         Participant's family.

                  The determination of hardship will be made by the
Administrative Committee in a uniform and nondiscriminatory manner in accordance
with such standards as may be promulgated from time to time by the Internal
Revenue Service. A distribution to satisfy an immediate and heavy financial need
of the Participant is subject to all of the following requirements:

                  (a) The distribution must not be in excess of the amount of
         the immediate and heavy financial need of the Participant,

                  (b) The Participant must obtain all distributions, other than
         hardship withdrawals, and all non-taxable loans currently available
         under all plans maintained by the Company,

                                       20
<PAGE>

                  (c) The Participant's Salary Deferral Contributions will be
         suspended for 12 full months after receipt of the withdrawal, and

                  (d) If the Administrative Committee deems it appropriate, the
         Participant may not make Salary Deferral Contributions for the calendar
         year that immediately follows the year of the withdrawal in excess of
         the applicable limit under Section 3.2 for the year, minus the amount
         of the Participant's Salary Deferral Contributions for the year in
         which the withdrawal is made.

         7.10 RESTRICTIONS ON WITHDRAWALS: A Participant who wishes to make a
withdrawal pursuant to Section 7.9 or 7.10 must apply in writing to the
Administrative Committee, on forms provided by the Administrative Committee and
must furnish such information in support of his application as may be requested
by the Administrative Committee. The Administrative Committee will determine the
amount, if any, of withdrawal that is permitted to be made and, in the case of a
hardship withdrawal, may direct distribution of as much of the Participant's
Account as it deems necessary to alleviate or to help alleviate the hardship.

                  Notwithstanding Section 7.9, each withdrawal made pursuant to
Section 7.9 must be for an amount of at least $1,000 and may not exceed 50% of
the Participant's Salary Deferral Contributions Account (except for earnings,
qualified matching contributions or qualified non-elective contributions
credited to such Account) and Matching Employer Contributions Account.

         7.11 TIME OF WITHDRAWAL: The payment of the withdrawal will be made as
soon as possible after the date on which the withdrawal is approved by the
Administrative Committee.

         7.12 DEATH BENEFITS: If a Participant dies before his Account has been
distributed, the Participant's Account, valued on the date of his death, will be
paid to the Participant's Beneficiary in a single, lump sum distribution as soon
as practicable after the Participant's death. Notwithstanding the preceding
sentence, if the Participant's Beneficiary is his spouse, the spouse may elect
to receive the Participant's Account in the form of an annuity, payable in equal
monthly installments on the last day of each month during the spouse's lifetime
only. If the Participant dies after his entire Account has been distributed in a
single, lump sum payment, the Beneficiary will receive no death benefit under
the Plan. If the Participant dies after payment of his Account has begun in the
form of an annuity, the Participant's designated Beneficiary is entitled only to
the benefit provided to survivors of the Participant under the annuity contract.

SECTION VIII:  PARTICIPANT LOANS

         8.1 INTRODUCTION: A Participant (who is an active Employee) may apply
in writing, on a form approved by the Administrative Committee, for a loan to be
made to the Participant from his Account. Notwithstanding any other provision of
the Plan, Participants who are not active Employees may not make an application
for a loan under this Section VIII.

                                       21
<PAGE>

         8.2 APPROVAL OF LOAN: A loan may not be made to a Participant unless
the Administrative Committee approves the loan, acting according to uniform and
nondiscriminatory standards. The Administrative Committee will take into
consideration the terms of any Qualified Domestic Relations Order (as described
in Section 9.8) in determining whether to approve the loan. A loan will not be
made to a Participant unless the Participant is credit worthy.

         8.3 AMOUNT OF LOAN: A loan may only be made from a Participant's
interest in his Account in the Trust Fund. The amount of loans outstanding to a
Participant at any time, aggregated with the outstanding balance of all other
loans to the Participant from all other qualified plans maintained by the
Company and Related Companies, must not exceed the lesser of:

                  (a)    $50,000; or

                  (b)    One-half of the Participant's Account.

                  Overdue interest will be deemed to be an outstanding loan. The
$50,000 limit referred to in subparagraph (a) is reduced by the highest
outstanding balance of loans from the Plan during the one-year period ending on
the day before the date the loan is made over the outstanding balance of loans
from the Plan on the date the loan is made. Each loan must be for an amount of
at least $1,000, and each Participant may have only two loans outstanding at any
time.

         8.4 NON-DISCRIMINATION: Loans are available to all Participants on a
reasonably equivalent basis, provided that the Administrative Committee may make
reasonable distinctions among prospective borrowers on the basis of
credit-worthiness. Loans are not made available to Highly Compensated Employees
in a greater percentage of their Account balances than the percentage that is
available to other Participants.

         8.5 SECURITY AND INTEREST RATES: A loan to a Participant must be
secured by a pledge of the Participant's Account in the Fund. No other
collateral will be accepted. A pledge of a Participant's interest in the Fund to
secure a loan made from the Fund is not subject to the anti-alienation
requirements of Section 13.5.

                  Interest on a loan will be charged at the prevailing rate in
the community for a loan of the type being made. The Administrative Committee
may vary the interest rates charged, depending on the credit worthiness of the
Participant and on any other reasonable basis provided in regulations or other
guidance issued by the Department of Labor.

         8.6 REPAYMENT AND DISTRIBUTIONS: Repayment must be made within five
years from the date of the loan. A longer repayment period is available for a
Participant who wishes to borrow from the Plan in order to purchase his or her
primary residence. If a loan is a taxable distribution to a borrowing
Participant, then the taxable amount of the loan will be treated as a
distribution from the Fund to the Participant.

                                       22
<PAGE>

                  If an outstanding loan is not repaid as and when due, the
Participant's Account will be liquidated to the extent necessary in order to
repay the principal and interest owing on the loan; provided, however, no such
liquidation will be made before the earlier of the Participant's termination of
employment or attainment of age 59 1/2.

                  If a Participant terminates employment with the Employer while
a loan from the Plan is outstanding, the Participant may immediately repay the
entire outstanding balance of the loan or may repay the loan over the remainder
of the repayment period. If a Participant's Account is distributed to him, the
Participant must repay the entire balance of his outstanding loan or, if he
refuses payment, the loan will be distributed to him.

         8.7 SEPARATE INVESTMENT: A loan made to a Participant is considered as
a separate investment of the portion of the Participant's Account that is equal
to the outstanding balance of the loan. The balance in the borrowing
Participant's Account is reduced by the outstanding balance of the loan for
purposes of allocating net income and increases and decreases in the value of
Fund assets pursuant to Section 4.5. Interest paid on the loan will be credited
to the borrowing Participant's Account and will not be considered earnings of
the Fund for allocation purposes.

         8.8 EXPENSES: All expenses incurred by the Administrative Committee and
the Trustee in making, administering, and collecting a loan may be charged
against the Account of the borrowing Participant.

         8.9 AMORTIZATION: A loan must be amortized in level payments made not
less frequently than quarterly over the term of the loan.

SECTION IX:  ADMINISTRATION BY THE COMMITTEE

         9.1 APPOINTMENT OF THE ADMINISTRATIVE COMMITTEE: The members of the
Administrative Committee consist of one or more persons appointed from time to
time by the Company to serve until their death, resignation or removal by the
Company. A person is not ineligible to be a member of the Administrative
Committee solely because he is or may be a Participant in the Plan. The Company
from time to time may increase or decrease the number of members of the
Administrative Committee. The Administrative Committee and each of its members
are named fiduciaries with respect to the Plan, and are indemnified by the
Employer against any and all liabilities incurred by reason of any action taken
in good faith pursuant to the provisions of the Plan.

         9.2 APPOINTMENT OF THE INVESTMENT COMMITTEE: The members of the
Investment Committee consist of one or more persons appointed from time to time
by the Board of Directors of the Company to serve until their death, resignation
or removal by the Company. A person is not ineligible to be a member of the
Investment Committee because he is or may be a Participant in the Plan. The
Company, from time to time, may increase or decrease the number of members of
the Investment Committee. The Investment Committee and each of its members are
named fiduciaries with respect to the Plan and are indemnified by the Company
against any and all liabilities incurred by reason of any action taken in good
faith pursuant to the provisions of the Plan.

                                       23
<PAGE>

         9.3 POWERS OF THE ADMINISTRATIVE COMMITTEE: The Administrative
Committee is responsible for the general administration and interpretation of
the Plan and for carrying out its provisions and has such powers as are
necessary to discharge its duties hereunder, including, but not by way of
limitation, the following powers and duties:

                  (a) In its absolute discretion to construe and interpret the
         Plan (including supplying any omissions consistent with the intent of
         the Plan), to decide all questions of eligibility and to determine the
         amount, manner and time of payment of any benefits hereunder;

                  (b) To prescribe procedures to be followed by Employees in
        filing applications for benefits;

                  (c) To make a determination as to the right of any person to a
         benefit and to afford any person dissatisfied with such determination
         the right to a hearing;

                  (d) To request and receive from the Employer and from
         Employees such information as may be necessary for the proper
         administration of the Plan, including but not limited to, such
         information as the Administrative Committee may reasonably require to
         determine each Participant's eligibility to participate in the Plan and
         the benefits payable to each Participant upon his death, retirement or
         termination of employment;

                  (e) To prepare and distribute, in such manner as it determines
         to be appropriate, information explaining the Plan;

                  (f) To furnish the Employer, upon request, with such annual
         reports with respect to the administration of the Plan as are
         reasonable and appropriate; and

                  (g) To direct the Trustee as to the method in which and
         persons to whom Plan assets will be distributed.

                  The Administrative Committee may adopt such rules, regulations
and bylaws and may make such decisions as it deems necessary or desirable for
the proper administration of the Plan, and all rules and decisions of the
Administrative Committee will be uniformly and consistently applied to all
Participants in similar circumstances. Any rule or decision that is not
inconsistent with the provisions of the Plan will be conclusive and binding upon
all persons affected by it, and there will be no appeal from any ruling by the
Administrative Committee that is within its authority, except as otherwise
provided herein. When making a determination or calculation, the Administrative
Committee is entitled to rely upon information furnished by an Employer or
anyone acting on behalf of an Employer.

         9.4 RESPONSIBILITIES OF THE INVESTMENT COMMITTEE: The Investment
Committee generally is responsible for the supervision and review of the
financial operation of the Plan, including (a) the establishment, supervision
and review of funding policies and methods consistent with the objectives of the
Plan and the requirements of the Employee Retirement Income Security Act of
1974, as amended from time to time and as construed,

                                       24
<PAGE>

interpreted and modified by regulations or rulings ("ERISA"), (b) the review of
actuarial assumptions and of any accountant's reports relating to the Plan, (c)
the review of whether the Plan satisfies the bonding requirements of ERISA and
(d) the appointment of the review and evaluation of the investment performance
of the Investment Managers (and their agents) and the making of any
recommendations relating to the appointment of a new or additional Trustee.

         9.5 OPERATION: The members of the Administrative Committee and the
Investment Committee each will elect a Chairman. They will also elect a
Secretary who may, but need not, be a member of the appropriate Committee. The
Administrative Committee and the Investment Committee have the power to: (a)
appoint from its membership such subcommittees with such powers as the
Administrative Committee or the Investment Committee determine, (b) authorize
one or more of its members or any agent to execute or deliver any instrument or
to make any payment on behalf of the Administrative Committee or the Investment
Committee, and (c) employ counsel and agents and such clerical and other
services as the Administrative Committee or the Investment Committee deem
requisite or desirable in carrying out the provisions of the Plan. The
Administrative Committee and the Investment Committee are fully protected in
relying on data, information or statistics furnished it by persons performing
ministerial and limited discretionary functions as long as the Administrative
Committee and the Investment Committee have had no reason to doubt the
competence, integrity or responsibility of any such person.

         9.6 MEETINGS AND QUORUM: The Administrative Committee and the
Investment Committee will hold meetings upon such notice, at such places, and at
such intervals as it may from time to time determine. A majority of the members
of the Administrative Committee and the Investment Committee at the time in
office will constitute a quorum for the transaction of business. All resolutions
or other actions taken by the Administrative Committee and the Investment
Committee at any meeting will be by the vote of a majority of those present at
any such meeting. Action may be taken by the Administrative Committee and the
Investment Committee without a meeting by a written consent signed by a majority
of the members of the Administrative Committee or the Investment Committee.

         9.7 COMPENSATION: The members of the Administrative Committee and the
Investment Committee are not entitled to any compensation for their services
with respect to the Plan, but the Administrative Committee and the Investment
Committee members are entitled to reimbursement for any and all necessary
expenses that each member may incur. The expenses are to be paid by the Company
or from the Trust Fund. Any such payments from the Trust Fund will be deemed to
be for the exclusive benefit of Participants.

         9.8 DOMESTIC RELATIONS ORDERS: Notwithstanding any other provision of
the Plan, if the "qualified domestic relations order" applicable to an
"alternate payee" (as defined in Code Section 414(p)) so provides, then within
90 days after the Administrative Committee informs the alternate payee of its
determination of the order as satisfying the provisions of Code Section 414(p),
the alternate payee may elect, by writing filed with the Administrative
Committee, to have the portion of the Participant's Account otherwise

                                       25
<PAGE>

payable to her under the Plan pursuant to the qualified domestic relations order
distributed to her in a lump sum payment as soon as practicable.

SECTION X:  DUTIES AND POWERS OF THE TRUSTEE

         10.1 GENERAL: The Trustee will receive, hold, manage, convert, sell,
exchange, invest, disburse and otherwise deal with such contributions as may
from time to time be made to the Trust Fund and the income and profits
therefrom, in the manner and for the uses and purposes of the Plan as provided
in the Plan and in the trust agreement described in Section 10.2. If an
Investment Manager is appointed, the Investment Manager will manage all or a
portion of the assets of the Trust in accordance with instructions given by the
Administrative Committee.

         10.2 TRUST AGREEMENT: The Company has entered into the Trust, evidenced
by one or more trust agreements, with the Trustee under which the Trustee will
receive, invest and administer the Trust Fund. The Trust is incorporated by
reference as a part of the Plan, and the rights of all persons under the Plan
are subject to the terms of the Trust. The Trust provides for the investment and
reinvestment of the Trust Fund, the management of the Trust Fund, the
responsibilities and immunities of the Trustee, the removal of the Trustee and
appointment of a successor, the accounting by the Trustee and the disbursement
of the Trust Fund.

         10.3 LIMITATION OF LIABILITY: The Trustee will hold in trust and
administer the Trust Fund subject to all the terms and conditions of this Plan
and of the Trust described in Section 10.2. The Trustee will not be responsible
for the administration of the Plan unless employed by the Company to serve in
such capacity. The Trustee's responsibility is limited to holding, investing and
reinvesting the assets of the Trust Fund from time to time in its possession or
under its control as Trustee and to disbursing funds as may be directed by the
Administrative Committee. The Trustee will not be responsible for the
correctness of any payment or disbursement or action if made in accordance with
the instructions of the Administrative Committee. If an Investment Manager is
appointed, the Trustee's liability and responsibility with regard to holding,
investing and reinvesting the assets will be limited as provided in the trust
agreement.

         10.4 POWER OF TRUSTEE TO CARRY OUT THE PLAN: If, at any time, the
Company or the Administrative Committee is incapable, for any reason, of giving
directions, instructions or authorizations to the Trustee, as herein provided,
the Trustee may act, without such directions, instructions or authorizations, as
it, in its discretion, deems appropriate and advisable under the circumstances
for carrying out the provisions of the Plan.

SECTION XI:  AMENDMENT AND TERMINATION

         11.1 AMENDMENT: This Plan is irrevocable and binding as to all
contributions made by the Employer to the Trust, but this Plan may be amended
from time to time by the Company. No amendment will be made to the Plan that (a)
would have the effect of diverting any of the Trust from Participants or their
Beneficiaries as provided in the Plan,

                                       26
<PAGE>

(b) would prevent the allowance as a deduction for federal income tax purposes,
and particularly under Code Section 404, of any contribution made by the
Employer to the Trust, (c) would take the Plan and Trust out of the scope of
Code Sections 401, 402 and 501(a), (d) would increase the duties of the Trustee
without its consent, (e) would decrease a Participant's vested interest in his
Account in the Trust Fund, or (f) would eliminate an optional form of benefit or
reduce an accrued benefit in violation of Code Section 411(d)(6).

         11.2 TERMINATION: This Plan may be terminated at any time by the
Company. If the Plan is terminated, or if a partial termination occurs (through
a complete discontinuance of contributions or otherwise), each affected
Participant will have a 100% vested interest in his Account, and his Account
will be paid to him (or to his Beneficiary, in the event of his death) in a lump
sum as soon as is practicable after the termination. A Related Company that has
adopted the Plan may terminate its participation in the Plan at any time. In the
event of such termination, the Related Company may adopt a successor plan
providing substantially similar benefits and the interests of each Participant
who is an Employee of the Related Company will be transferred to the trustee or
other funding agent for such successor plan. If the Related Company does not
establish a successor plan within six months of its notice of termination of
participation in the Plan (or gives sooner notice that no successor plan will be
established) then the Plan will be deemed to be terminated with respect to the
Related Company.

         11.3 MERGER: In the event of merger or consolidation with, or transfer
of assets or liabilities to, any other plan, each Participant will be entitled
to a benefit under such other plan immediately after the merger, consolidation,
or transfer that is equal to or greater than his Account balance determined
under this Plan immediately before the merger, consolidation or transfer.

SECTION XII:  ADOPTION OF PLAN BY RELATED COMPANIES

         12.1 ADOPTION OF THE PLAN: A Related Company may become an Employer,
with the approval of the Company, by adopting the Plan for its Employees. A
Related Company that becomes a party to the Plan will promptly deliver to the
Trustee a certified copy of the resolutions or other documents evidencing its
adoption of the Plan. Notwithstanding anything in the Plan to the contrary, a
Related Company adopting the Plan may determine whether and to what extent
periods of employment with the Related Company before the Related Company
adopted the Plan will be included as service under the Plan.

         12.2 WITHDRAWAL: A Related Company may withdraw from the Plan at any
time by giving advance notice in writing of its intention to withdraw to the
Company and to the Administrative Committee. Upon the receipt of notice of a
withdrawal, the Administrative Committee will certify to the Trustee the
equitable share of the Related Company in the Trust Fund, and the Trustee will
thereupon set aside from the Trust Fund such securities and other property as
it, in its sole discretion, deems to be equal in value to the Related Company's
equitable share. If the Plan is to be terminated with respect to the Related
Company, the amount set aside will be administered according to Section 11.2. If
the Plan is not to be terminated with respect to the Related Company, the
Trustee will turn over the

                                       27
<PAGE>

Related Company's equitable share to a trustee designated by the Related
Company, and the securities and other property will thereafter be held and
invested as a separate trust of the Related Company.

         12.3 SALE OF EMPLOYER'S ASSETS: If all or any portion of the Employer's
assets are sold to another corporation that adopts a defined contribution plan
as a continuation of this Plan, then the Administrative Committee must certify
to the Trustee the equitable share in the Trust Fund of the Participants who
become participants in the other plan immediately following the transfer. The
Trustee will transfer that share of the Trust Fund to the trustee of the other
plan, to be held in accordance with the terms of the other plan.

SECTION XIII:  MISCELLANEOUS

         13.1 INDEMNIFICATION: The Employer will indemnify each Administrative
Committee member and each other Employee who is involved in the administration
of the Plan against all costs, expenses and liabilities, including attorney's
fees, incurred in connection with any action, suit or proceeding instituted
against any of them alleging any act of omission or commission performed while
discharging their duties with respect to the Plans, other than liability
incurred as a result of that person's gross negligence or willful misconduct.
Promptly after receipt by an indemnified party of notice of the commencement of
any action, the indemnified party must notify the Employer of the action. The
Employer is entitled to participate at its own expense in the defense or to
assume the defense of any action brought against any indemnified party. If the
Employer elects to assume the defense of any such suit, the defense will be
conducted by counsel chosen by the Employer, and the indemnified party will bear
the fees and expenses of any additional counsel retained by him.

         13.2 EXCLUSIVE BENEFIT RULE: This Plan will be administered for the
exclusive benefit of the Employees of an Employer and for the payment to
Participants out of the income and principal of the Trust Fund of the benefits
provided under the Plan. No part of the income or principal of the Trust Fund
will be used for or diverted to purposes other than the exclusive benefit of the
Participants or their Beneficiaries, as provided in the Plan.

         13.3 NO RIGHT TO THE FUND: No person will have any interest in, or
right to, any part of the assets of the Trust Fund or any rights under the Plan,
except as to the extent expressly provided in the Plan.

         13.4 RIGHTS OF THE EMPLOYER: The establishment of this Plan will not be
construed as conferring any legal or other rights upon any Employee or any other
person for continuation of employment, nor will it interfere with the right of
the Employer to discharge any Employee or to deal with him without regard to the
effect thereof under the Plan.

         13.5 NON-ALIENATION OF BENEFITS: No amount payable to or held under the
Plan for the account of any Participant, former Participant, retired
Participant, or Beneficiary of a Participant or former Participant will be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, except as provided in Code Section 401(a)(13),
and any attempt so to anticipate, alienate, sell, transfer, assign,

                                       28
<PAGE>

pledge, encumber or charge the same in a manner inconsistent with Code Section
401(a)13) will be void. No amount payable to or held under the Plan for the
account of any Participant, former Participant, retired Participant, or
Beneficiary may be in any manner liable for his debts, contracts, liabilities,
engagements or torts, or be subject to any legal process, levy or attachment.
The provisions of this Section do not preclude distributions made by the Trustee
in accordance with a Qualified Domestic Relations Order, as described in Section
9.8 or amounts paid pursuant to certain settlements and judgments as described
in Code Section 401(a)(13)(C).

         13.6 CONSTRUCTION AND SEVERABILITY: Except as otherwise provided by
federal law, the provisions of this Plan will be construed and enforced
according to New York laws, and all of the provisions of the Plan will be
administered in accordance with the laws of the State of New York. For
simplicity of expression, pronouns and other terms are sometimes expressed in a
particular number and gender; however, where appropriate to the context, such
terms will be deemed to include each of the other numbers and the other gender.
Each provision of this Plan is severable from all other provisions so that if
any provision or any part of a provision is declared void, then the remaining
provisions of the Plan that are not declared void will continue to be effective.

         13.7 DELEGATION OF AUTHORITY: Whenever the Employer, under the terms of
this Plan, is permitted or required to do or perform any act, the act may be
done or performed by any officer of the Employer, and such officer will be
presumed to be duly authorized by the Board of Directors of the Company.

         13.8 RIGHTS OF RETURNING VETERANS: Notwithstanding any provision of
this Plan to the contrary, effective as of October 13, 1996, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with Code Section 414(u).

         13.9 REQUEST FOR TAX RULING: This Plan is based upon the condition
precedent that it meet the requirements of the Code with respect to qualified
employees' trusts so as to permit the Company and/or Sponsor to deduct for
federal income tax purposes the amounts of its contributions and so that its
contributions will not be taxable to the Participants as income in the year in
which the contributions are made. The Sponsor will apply for a determination by
the Internal Revenue Service that this Plan is so qualified.

                               ******************

                                       29
<PAGE>

         This document representing The Galey & Lord Retirement Savings Plan
401(k)) is executed this 24th day of April, 2000.

                                                 GALEY & LORD, INC.

                                                 By:  /s/ Michael R. Harmon
                                                      Executive Vice-President

                                       30

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