Document:

<PAGE>   1
                                                                   SAN FRANCISCO
                                                      STANDARD LICENSE AGREEMENT
                                                                     SERTA, INC.

         THIS AGREEMENT, dated this 4th day of November, 1989 by and between
SERTA, INC., a Delaware corporation (hereinafter referred to as "Serta"), and
SIMON MATTRESS MFG. CO.,

                             (check as appropriate)

         /X/  corporation                         / /  partnership
         / /  sole proprietorship                 / /  limited partnership

a California corporation, (hereinafter referred to as "Licensee").

                                   WITNESSETH:

         WHEREAS, Serta is a service corporation serving related companies which
are in the business of manufacturing and selling mattresses, other bedding
products and other products of any kind or nature; and

         WHEREAS, Serta has heretofore adopted, or otherwise acquired, and now
owns, uses, advertises and authorizes the use and advertising of certain trade
names, trade-marks and labels identifying the aforementioned products and by
reason thereof has created valuable good will in connection with the manufacture
and sale thereof under said trade names, trade-marks and labels; and

         WHEREAS, Serta licenses persons, firms and corporations to manufacture
the aforementioned products under standard specifications covering the method or
process of the manufacture thereof, the quality of workmanship employed in such
manufacture and the quantity and quality of the materials entering in such
manufacture, and to attach or otherwise affix thereto and to the containers in
which the same are packaged, the trade names, trade-marks and labels of Serta
(such products so manufactured and identified are hereinafter referred to as
"Serta products"); and

         WHEREAS, Licensee desires to obtain from Serta a license to manufacture
and sell Serta products as a related company of Serta; and

         WHEREAS, Licensee has agreed to comply with the provisions of this
agreement and with Serta's by-laws, specifications, rules, resolutions and
regulations covering the manufacture and sale of Serta products and the use of
said trade names, trade-marks and labels now and hereafter in force and effect;

         NOW, THEREFORE, in consideration of the premises and of other good and
valuable considerations, and in further consideration of the covenants
hereinafter contained to be kept and performed by the parties hereto, it is
agreed as follows:

<PAGE>   2
         1. (a) Serta hereby gives to Licensee, under the terms and conditions
hereinafter set forth, the right to manufacture and sell Serta products in
accordance with and subject to Serta's by-laws, rules, regulations, resolutions
and specifications from time to time adopted or established by Serta. If at any
time or times hereafter Serta shall adopt or otherwise acquire any additional
trade name, trade-mark or label identifying any of the aforementioned products,
such trade name, trademark or label shall be deemed and treated to be included
within the scope of this agreement.

            (b) This agreement shall become effective on November 4, 1989
and shall remain in force and effect until terminated by the mutual written
agreement of Serta and Licensee or under any of the provisions hereinafter set
forth.

         2. Licensee shall have the right to manufacture Serta products pursuant
to this agreement only in the following territory: The territory outlined in red
on the attached map.

(hereinafter referred to as the "manufacturing territory"). Serta shall not,
during the term of this agreement, suffer or permit any other person, firm or
corporation to manufacture Serta products in said manufacturing territory;
provided, however, that Serta may authorize other persons, firms or corporations
to manufacture Serta products other than mattresses and box springs for the sole
purpose of supply and shipment thereof to Serta licensees with exclusive
manufacturing territories in the United States (hereinafter sometimes referred
to as "U.S. primary licensees").

         3. Licensee's manufacturing territory shall be deemed and treated to be
its Area of Primary Responsibility for the promotion and sale of Serta products.
Licensee shall at all times exert its best efforts to obtain maximum sales of
Serta products in said manufacturing territory. If Licensee shall not meet such
minimum quota of sales of Serta products in its manufacturing territory as may
from time to time be provided in Serta's by-laws under a plan uniformly
applicable to all U.S. primary licensees, such a failure may be deemed and
treated by Serta to be an event of default by Licensee hereunder.

         4. Nothing herein contained shall be deemed or treated to limit or
restrict Licensee in any substantial way from selling Serta products to any
person, firm or corporation or from selling and delivering Serta products
anywhere in the United States of America; provided, however, that if, pursuant
to any modification of the Final Judgment entered in the cause of action
entitled "UNITED STATES OF AMERICA vs SERTA ASSOCIATES, INC., No. 60 C 8043 IN
THE UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF ILLINOIS, EASTERN
DIVISION" or to any legislation by the Congress of the United States, it shall
become lawful and proper at any time hereafter for Serta to give and grant to
its U.S. primary licensees exclusive sales territories, then in any such event,
upon the written approval of not less than two-thirds (2/3) of its U.S. primary
licensees, Serta may, by written notice to such licensees, constitute their
respective exclusive manufacturing territories as exclusive selling territories.
In such event, the Licensee shall abide by and comply with the by-laws of Serta
from time to time adopted by its stockholders to implement, protect and control
the exclusivity of such selling territories.

         5. In order to control the nature and quality of Serta products, and to
provide for the proper and effective establishment of policy for and
administration of the business of Serta, a

                                       -2-

<PAGE>   3
complete set of by-laws, rules, regulations, resolutions and specifications
pertaining to the manufacture and sale of Serta products is presently in full
force and effect and is on file at the principal office of Serta, Inc. Licensee
shall comply with the by-laws, rules, regulations, resolutions and
specifications now and hereafter adopted or established by Serta or its
stockholders.

         6. Licensee shall at all times own and hold such number of shares in
Serta as may be required by Serta's by-laws under a plan uniformly applicable to
all U.S. primary licensees. Licensee shall pay any and all fees and assessments
levied against stockholders under any plan approved by Serta's stockholders in
accordance with the by-laws from time to time in force and effect.

         7. Serta shall defend any and all litigation to which Licensee may be
made a party arising out of its proper use of the trade names, trade-marks and
labels from time to time adopted by Serta or arising out of the alleged
infringement by Licensee of any patent specified by Serta in connection with the
method of manufacturing Serta products or the proper use of any articles or
materials specified by Serta in the manufacture of such products, provided
Licensee gives Serta timely written notice of any such litigation so as to
enable Serta to appear in such litigation and prepare for the defense thereof.
Serta hereby agrees to save the Licensee harmless from any and all loss, costs
or damages sustained by it arising out of any such litigation, provided that
Licensee gives Serta the notice herein provided and is not in default in the
performance of any of the terms, covenants and conditions hereof.

         8. Licensee shall not permit or suffer any of its officers, employees
or agents to injure the good will and business of Serta and Serta trade names
and trade-marks by discrediting the Serta products, the selling policies, the
financial responsibility or the business reputation of any other Serta Licensee.

         9. Licensee shall not violate the provisions of said Final Judgment
described in paragraph 4 above, or any modification thereof.

         10. (a) Neither this license nor any of the rights or privileges
granted to the Licensee hereunder shall be assignable by Licensee or by
operation of law or otherwise to any other person, firm or corporation. Licensee
shall not sub-license or sub-contract any of said rights or privileges,
including, but not in limitation, the right to manufacture Serta products, to
any other person, firm or corporation whomsoever. Notwithstanding any other
provision of this agreement, any such assignment or sub-license shall forthwith
terminate, without notice, the license hereby granted to Licensee and the rights
and interests of Licensee as a stockholder of Serta and any such sub-contract
shall constitute a default referred to in paragraph 11 below.

             (b) For the purpose of this paragraph 10(b), and paragraphs
10(c) and 10(d) below, the following definitions shall apply:

                           "Affiliate" of an individual, corporation or
                  partnership shall mean any person which directly or indirectly
                  controls, is controlled by, or is under common control with
                  such individual, corporation or partnership and any person who
                  is an employee of such individual, corporation or partnership,
                  a partner in such partnership or an

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<PAGE>   4
                  officer or director of such corporation. For the purposes of
                  this definition, "person" means any individual, corporation,
                  partnership or joint venture, trust, unincorporated
                  association or any other entity, body, organization or group.

                           "Control partner" shall mean (individually and
                  collectively and singly or in the aggregate with affiliates)
                  the partner or partners of a partnership having the power,
                  directly or indirectly, to direct or cause the direction of
                  the management and policies of the partnership and having the
                  authority to bind the partnership.

                           "Control stockholder" shall mean (individually and
                  collectively and singly or in the aggregate with affiliates)
                  the owner or owners of the majority shares in a corporation or
                  those shareholders exercising effective voting control of a
                  corporation pursuant to any written agreement.

                           "General partner" shall mean the holder of a general
                  partnership interest in a partnership.

                           "General partnership interest" shall mean the
                  interest of a general partner in a partnership.

                           "Limited partner" shall mean the holder of a limited
                  partnership interest in a limited partnership.

                           "Limited partnership interest" shall mean the
                  interest of a limited partner in a limited partnership.

                           "Limited partnership interest coupled with an
                  interest" shall mean a limited partnership interest held by a
                  limited partner of Licensee, if Licensee is a limited
                  partnership, which limited partner either directly or through
                  an affiliate shall (i) hold or shall have any direct or
                  indirect right to acquire an interest as, or any material
                  participation in the right of control in, the control partner
                  of Licensee, whether or not such right shall be exercisable
                  only in the event of a contingency, as, for example,
                  foreclosure of a security interest granted in connection with
                  any loan, advance or financial contribution or guaranty made
                  by or on behalf of such limited partner or (ii) shall have any
                  power to initiate the removal of or to remove a control
                  partner of Licensee or to otherwise designate any successor
                  control partner of Licensee.

                           "Majority shares" shall mean such number of the
                  voting shares in a corporation as shall amount to more than
                  one-half thereof.

                           "Voting shares" shall mean the issued and outstanding
                  voting shares in a corporation and the voting rights or
                  beneficial interest in its voting shares.

         Each of the following events shall be deemed and treated to be an
assignment of this license prohibited by the provisions of paragraph 10(a) next
preceding:

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                  (i) The filing by Licensee, or by the control stockholder of
                  Licensee, or by the control partner of Licensee of a voluntary
                  petition or similar pleading under any section or sections of
                  any Bankruptcy Act or in any Court to declare Licensee, or
                  such control stockholder or control partner, insolvent;

                  (ii) An assignment for the benefit of creditors by Licensee or
                  by such control stockholder or control partner;

                  (iii) The filing against Licensee or such control stockholder
                  or control partner of an involuntary petition or similar
                  pleading under any section or sections of any Bankruptcy Act
                  or any involuntary petition or similar pleading in any court
                  to declare Licensee or such control stockholder or control
                  partner insolvent, or the appointment of a receiver for
                  Licensee or its assets or for such control stockholder or its
                  assets or such control partner or its assets provided,
                  however, that if such petition or pleading shall be dismissed
                  or withdrawn, or such appointment shall be vacated within
                  thirty (30) days after the filing or occurrence thereof, the
                  provisions of this paragraph 10(b)(iii) shall not apply.

                  (iv) The happening of any event described in subparagraphs (i)
                  through (iii) above in respect to one or more persons
                  comprising the control stockholder or control partner which
                  results in a material change in the control stockholder or
                  control partner shall be deemed to have occurred in respect of
                  such control stockholder or control partner for purposes of
                  this License Agreement.

                  (c) Subject to the provisions of paragraphs 10(d) and 10(e)
below, each of the following events shall likewise be deemed and treated to be
an assignment of this license prohibited by the provisions of paragraph 10(a)
above:

                  (i) The transfer whether voluntary or involuntary, by sale, by
                  operation of law, or other-wise, of the majority shares in
                  Licensee or of the general partnership interest of the control
                  partner of Licensee or the limited partnership interest
                  coupled with an interest of any limited partner of Licensee.

                  (ii) The transfer of control from, or any material
                  participation in the right of control in (i.e., the power,
                  directly or indirectly, to direct or cause the direction of
                  the management and policies of the control partner or limited
                  partner and bind the control partner or limited partner) the
                  control partner or any limited partner with a limited
                  partnership interest coupled with an interest.

                  (iii) The exchange of the majority shares in Licensee for less
                  than the majority shares in another corporation pursuant to a
                  merger with, consolidation into or other form of
                  reorganization involving another corporation.

                  (iv) The transfer of the majority shares in Licensee by the
                  control stockholder to another person or persons by successive
                  transfer of such number of voting shares in

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<PAGE>   6
                  Licensee as will total the majority shares in Licensee, or as
                  the result of the issuance or successive issuances of
                  additional voting shares in Licensee, or as the result of the
                  sale or successive sales of treasury shares by Licensee for
                  cash or other consideration or in satisfaction of any debt or
                  debts of Licensee, or as consideration for the acquisition of
                  shares or other interests in another corporation, firm or
                  proprietorship, or as the result of the merger of another
                  corporation into the Licensee, or as the result of any
                  combination of the foregoing events. Two or more transfers or
                  issuances of voting shares in Licensee shall be deemed and
                  treated to be successive transfers or successive issuances
                  regardless of the period in which the same shall be effected.

                  (v) If the majority shares in Licensee are owned directly or
                  indirectly, by another corporation and any event hereinabove
                  set forth in paragraph 10(c) shall occur in respect of such
                  corporation, the occurrence of such event shall be deemed and
                  treated to be an assignment of this license prohibited by the
                  provisions of paragraph 10(a) above, with the same force and
                  effect as if such event had occurred with respect to Licensee.

                  (d) Transfers to the following described classes of persons
shall not be deemed or treated to be transfers for purposes of paragraph 10(c)
above provided, however, that the shares or interests of such transferees shall
continue to be included among the shares or interests in Licensee for the
purpose of this paragraph 10:

                  (i) The spouse, father, mother, brothers, sisters, children or
                  grandchildren of the transferrer, including, but not in
                  limitation, such persons as are so related through adoption.

                  (ii) A donee by bona fide gift or a legatee or heir through
                  inheritance, intrust or otherwise, of a transferrer.

                  (iii) An individual or individuals who shall acquire their
                  voting shares or general partnership interest or limited
                  partnership interest in Licensee pursuant to a contract or
                  contracts in force and effect on the date of execution of this
                  license; provided that concurrently with the execution of this
                  license, Licensee furnishes to Serta true and correct copies
                  of such contract or contracts along with a written statement
                  setting forth the date of the execution of any such contract
                  or contracts, the persons signatory thereto and their
                  addresses and the number of voting shares or the number and
                  percentage interest of the general or limited partnership
                  interests in Licensee subject thereto; provided, further such
                  contract or contracts, if given effect, would not violate any
                  of the terms and provisions of this license, Serta's by-laws,
                  or any rules and regulations of Serta.

                  (iv) A transferee of the control stockholder of Licensee or a
                  transferee of the control stockholder of any corporation
                  ("parent corporation"), which corporation at the time of such
                  transfer directly or through or together with one or more
                  subsidiaries owns the majority shares in Licensee, or controls
                  the control partner of Licensee or

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<PAGE>   7
                  controls a limited partner of Licensee with a limited
                  partnership interest coupled with an interest provided (a)
                  that one or more classes of the voting shares of Licensee or
                  such parent corporation or any of such subsidiaries is
                  registered under Section 12(b) or Section 12(g) of the
                  Securities Exchange Act of 1934 or any successor statute then
                  in effect, (b) that after giving effect to such transfer, at
                  least one of the classes of voting shares of Licensee or such
                  parent corporation or any of such subsidiaries so registered
                  remains, and is required to remain, so registered, and (c)
                  concurrently with the execution of this license that Serta
                  shall have been provided with written notice of such transfer
                  and satisfactory evidence of such required continued
                  registration.

                  (v) The admission of a substitute limited partner or a new
                  limited partner to a partnership other than with respect to a
                  limited partnership interest coupled with an interest.

         (e)

                  (i) Upon the written request of Licensee to Serta and the
                  submission to Serta by Licensee of such facts and information
                  as Serta shall request, Serta may, by the affirmative vote of
                  a majority of its Board of Directors, consent to any
                  assignment referred to in paragraph 10(c) above. Such consent
                  shall not be unreasonably withheld.

                  (ii) If, following a request by Licensee that Serta consent to
                  such an assignment, a majority of Serta's Board of Directors
                  shall not consent thereto, or shall not take action thereon
                  within thirty (30) days after Serta receives from Licensee
                  such facts and information as it shall have requested
                  concerning such assignment, Licensee may, by written notice to
                  Serta, request that such consent be considered and acted upon
                  by the stockholders of Serta at the next annual stockholders'
                  meeting or, if so requested by Licensee, at a special meeting
                  of the stockholders called by Serta for such purpose within
                  ten (10) days after it receives such request. At such meeting
                  the stockholders may consent to such assignment by
                  affirmatively voting therefor in accordance with Serta's
                  by-laws. Such vote shall be final and binding on Serta and
                  Licensee.

         11. If Licensee shall default in the prompt and full compliance with or
performance of any of the provisions hereof, Serta may terminate the license
hereby granted to Licensee and the rights and interests of Licensee as a
stockholder in Serta upon not less than thirty (30) days prior written notice to
Licensee specifying such default or defaults and the effective date of such
termination. Licensee shall have the right to cure any such default or defaults
prior to the date of termination of this license as specified in such notice.
Nothing contained in this paragraph 11 shall limit or affect the consequences of
a prohibited assignment or sub-licensing by Licensee under paragraph 10(a),
10(b) or 10(c) above.

         12. Failure of Serta to notify Licensee of any default hereunder or to
take action with respect thereof shall not constitute a waiver of such default
or the provisions hereof defaulted.

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<PAGE>   8
Waiver by Serta of any remedy, including but not in limitation, the right to
terminate this license, arising out of any default by Licensee, shall not
constitute a waiver of Serta's right to terminate this license, as provided in
paragraph 11 above or to resort to any other remedies on account of any
subsequent or different default.

         13. The good will created in connection with the manufacture and sale
by Licensee of Serta products shall at all times be the property of Serta. In
the event this license shall be terminated pursuant to the provisions hereof,
all rights of Licensee to use said trade-marks or to enjoy the benefits of said
good will shall terminate and revert to Serta. From and after the date of such
termination, Licensee shall not manufacture or sell any Serta products and shall
not use or affix any of the trade names, trade-marks or labels theretofore used
by it in connection therewith under the terms of this license upon any articles
thereafter manufactured or sold by Licensee, and shall not hold itself out to
the public as a licensee of Serta, or as having any rights in the Serta name or
good will. Serta shall have the right to enforce by injunction the full and
faithful performance by Licensee of this covenant, and Licensee hereby consents
to the granting of a temporary injunction and a permanent injunction, without
bond, against Licensee.

         14. Any territory in the United States which, during the term of this
agreement, shall not be licensed as an exclusive manufacturing territory to any
person, firm or corporation shall, until so licensed, be referred to as "open
territory." If such territory shall remain open territory for more than six
months, and if an exclusive license to manufacture Serta products therein shall
thereafter be granted by Serta, then, in such event, Licensee agrees that in
order to encourage the Licensee under such new license to expend the sums
necessary to establish a factory and full facilities for the manufacture and
sale of Serta products and to create good will for itself and Serta in its
manufacturing territory, Serta may require all, but not less than all, other
U.S. primary Licensees, including, but not in limitation, the Licensee
hereunder, not to sell and deliver Serta products for a period not exceeding
five (5) years to dealers and other persons, firms and corporations in such
manufacturing territory.

         15. Except where it is hereinabove specifically stated that any action
by Serta shall be upon the authority or direction of its stockholders, all
rights, powers, authorities and discretions reserved by or granted to Serta
hereunder shall be vested in and exercised by Serta's Board of Directors in
accordance with its by-laws.

         16. All notices to be given hereunder shall be sent by United States
certified mail, postage prepaid, and shall be addressed to Serta at the
principal office of Serta, Inc., and to the Licensee at 3777 Vaca Valley
Parkway, Vacaville, California 95688. All notices mailed as hereinabove provided
shall be deemed and treated to have been received five (5) days after the date
of mailing. Serta and Licensee shall have the right, by notice given as herein
provided, to change the mailing address to which notices to it shall be sent by
the other party hereto.

         17. This agreement supersedes all previous license or franchise
agreements between the parties hereto. The terms and provisions of this
agreement are severable, and if any part hereof shall be held invalid or
unenforceable for any reason, the remaining provisions hereof shall not be

                                       -8-

<PAGE>   9
invalidated but shall remain in full force and effect. This agreement shall be
construed under and in accordance with the laws of the State of Illinois.

         18. If there shall be any conflict between any of the terms and
provisions of this agreement and the by-laws of Serta from time to time in force
and effect, then in any such event the terms and provisions of this agreement
shall be controlling.

         19. This Agreement may be amended at anytime or times, but only upon
the occurrence of all of the following:

                  (a) Adoption by two-thirds (2/3rds) of the whole Board of
Serta;

                  (b) Approval by the holders of two-thirds (2/3rds) of the
issued and outstanding Class A stock; and

                  (c) Ratification by two-thirds (2/3rds) of all separate Class
A Stockholders of Serta, voting on a per capita basis without reference to their
respective shareholdings, provided, however, that for purposes of such
ratification only, any group of Stockholders affiliated with each other shall be
deemed and treated as only one Stockholder.

         IN WITNESS WHEREOF, Serta and Licensee have caused these presents to be
signed in their respective corporate names by their duly authorized officers,
all on the day and year first above written.

ATTEST:                                    SERTA, INC.

                                           By:   /s/ Roy Unger
----------------------------                  -------------------------------
                  Secretary.                             President
              SEAL
ATTEST:                                    SIMON MATTRESS MFG. CO.

                                           By:      /s/ Donald Simon
----------------------------                  -------------------------------
                   Secretary.                            President

               SEAL

                                       -9-

<PAGE>   10
                             SIMON MATTRESS MFG, CO.
                            SAN FRANCISCO, CALIFORNIA

                             Manufacturing Territory
                           Breakdown by State & County

<TABLE>
<CAPTION>
CALIFORNIA                 OREGON                    NEVADA
----------                 ------                    ------
<S>                        <C>                       <C>
Alameda                    Curry                     Churchill
Alpine                     Jackson                   Douglas
Amador                     Josephine                 Esmeralda
Butte                      Klamath                   Humboldt
Calaveras                  Lake                      Lyon
Colusa                                               Mineral
Contra Costa                                         Ormsby
Del Norte                                            Pershing
Eldorado                                             Storey
Fresno                                               Washoe
Glenn
Humboldt
Inyo
Kings
lake
Lassen
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Placer
Plumas
Sacramento
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tohama
Trinity
Tulare
Tuolumne
Yolo
Yuba
</TABLE>

                                      -10-

<PAGE>   11
                                                                   SAN FRANCISCO
                                                         MEMORANDUM OF AGREEMENT
                                                                     SERTA, INC.

      THIS MEMORANDUM OF AGREEMENT dated this 4th day of November, 1989, by and
between SERTA INC., a Delaware corporation, party of the first part, hereinafter
sometimes referred to as "Serta," and Simon Mattress Manufacturing Company,
party of the second part, hereinafter sometimes referred to as "Member,"

                                   WITNESSETH:

      WHEREAS, the parties hereto have heretofore entered into a Standard
License Agreement under the terms of which the Member has been given the right
to manufacture and sell certain articles in accordance with Serta's by-laws,
rules, regulations, resolutions and specifications; and

      WHEREAS, under the terms of said Standard License Agreement the Member is
also given the right to use certain trade-marks, trade names and labels in
connection with the manufacture and sale of said articles; and

      WHEREAS, Serta engages in national advertising of its specification
products; and

      WHEREAS, the Member is desirous of gaining the consent of Serta to the use
of the word "Serta" in the corporate name or in the firm name and style under
which the Member is engaged in the manufacture and sale of such articles in
accordance with the terms of said Standard License Agreement; and

      WHEREAS, it is to the mutual advantage of the parties hereto to permit the
Member to use the word "Serta" in such corporate or firm name under the
restrictions and upon the terms and conditions hereinafter set forth;

      NOW, THEREFORE, in consideration of the premises and in further
consideration of the execution and delivery of said Standard License Agreement
and of the terms, covenants and conditions hereof to be kept and performed by
the parties hereto, it is covenanted and agreed as follows:

            (a) The Member shall not appropriate for use or use any corporate
      name or firm name and style embodying the word "Serta" in its business
      done under said Standard License Agreement unless and until the Member has
      obtained the written consent of Serta to such appropriation or use by the
      Member of such corporate name or firm name and style.

            (b) Such corporate name or firm name and style shall be sufficiently
      distinctive so as to prevent the public from confusing such corporate name
      or firm name and style with the corporate name of Serta or with the
      corporate name or firm name and style of any other stockholder and
      licensee of Serta.

            (c) The Member shall, in using such corporate name or firm name and
      style upon its stationery, billheads and in its advertising, state in
      substance upon such stationery and
<PAGE>   12
      billheads and in such advertising that the Member is a member or licensee
      of Serta, Inc., a Delaware corporation, or is engaged in the manufacture
      and sale of articles in accordance with specifications formulated by
      Serta.

            (d) The Member hereby consents to the appropriation and use by any
      other stockholder and licensee of Serta of a corporate name or firm name
      and style embodying the word "Serta" which is approved by Serta pursuant
      to an agreement between Serta and such other stockholder and licensee
      containing the same provisions as contained in this agreement. The Member
      shall, from time to time, upon request, execute and deliver such documents
      as may be necessary or proper in Serta's opinion to permit and consent to
      such appropriation and use by other stockholders and licensees of Serta.

            (e) The Member shall not manufacture and sell any article under any
      corporate name or firm name and style which includes the word "Serta"
      unless said article is manufactured and sold in full compliance with
      Serta's by-laws, rules, regulations, resolutions and specifications.

            (f) The Member shall not manufacture and sell any article under any
      trade name, trademark, or label unless such trade name, trade-mark, or
      label is adopted and specified by Serta for use generally by all of its
      licensees and stockholders.

            (g) In the event the Member ceases to be a stockholder of Serta, or
      in the event the said Standard License Agreement is terminated by reason
      of some default of the Member in the terms, covenants and conditions of
      said Standard License Agreement, or in the event of any default by the
      Member of any of the terms, covenants and conditions of this agreement and
      such default continues for a period of thirty (30) days after a written
      demand by Serta upon the Member to remedy such default, then in either
      such event this agreement shall terminate and the Member shall
      immediately, upon such termination of said Standard License Agreement, or
      upon ceasing to be a stockholder of Serta, or upon the expiration of said
      thirty (30) day period for remedying any default under the terms of this
      agreement, as the case may be, cease and abandon the use of such corporate
      name or firm name and style.

            (h) In the event of a termination of this agreement in the manner
      specified in paragraph (g) hereof, the Member shall, within thirty (30)
      days of the date of termination of this agreement, cause such corporate
      name to be changed by deleting the word "Serta" therefrom. In the event
      such firm name and style can be registered under the provisions of any
      state law for the exclusive use by the registrant, then, in the event of
      the termination of this agreement as provided in paragraph (g), the Member
      shall, within thirty (30) days of such termination, take such legal steps
      as may be necessary to change the registration of such firm name and style
      by deleting the word "Serta" therefrom.

            (i) In the event of the termination of this agreement by reason of a
      default of the Member as herein specified and the Member fails or refuses
      to cease and desist from the use of such corporate name or firm name and
      style embodying the word "Serta" therein, or fails and refuses to change
      such corporate. name or such firm name and style by deleting the word
      "Serta" therefrom, then in either such event Serta shall have the right,
      without notice to the

                                       -2-
<PAGE>   13
      Member, to obtain an injunction enjoining the Member from the use of any
      corporate name or firm name and style which embodies the word "Serta"
      therein.

            (j) In the event Serta desires to become qualified as a foreign
      corporation in the state or states in which the Member is doing business
      under such corporate name or such firm name and style, the Member shall,
      upon request of Serta, execute a written consent to the qualification of
      Serta in such state or states.

            (k) In the event the Member does not cease from using such corporate
      name or firm name and style as provided in paragraphs (g) and (h) hereof,
      it is understood and agreed that Serta will suffer material damages, the
      exact amount of which would be difficult, if not impossible, of
      ascertainment. Therefore, the Member shall pay to Serta, upon demand, the
      sum of Twenty-Five Dollars ($25.00) per day as liquidated damages for each
      and every day in which the Member fails to cease and desist from the use
      of such corporate name or firm name and style as required by the terms of
      this agreement. In addition to the foregoing penalty, the Member shall pay
      to Serta its reasonable costs, expenses and attorneys' fees incurred in
      and about the collection of such penalty or in and about the obtaining of
      an injunction against the Member, or in and about any litigation to which
      Serta is made a party by reason of the fault of the Member.

            (l) In the event the Member is declared a bankrupt, or in the event
      any corporation organized by the Member under a corporate name embodying
      the word "Serta" is declared bankrupt, then in either such event this
      agreement shall be terminated as of the date upon which the Member or such
      corporation is declared a bankrupt. The occurrence of such event shall
      constitute a default.

      IN WITNESS WHEREOF, Serta has caused these presents to be signed in its
corporate name by its duly authorized officers, and the Member has caused these
presents to be signed in its corporate name or in its firm name and style by its
duly authorized officers or partners, as the case may be, all on the day and
year first above written.

ATTEST:                              SERTA, INC.

                                     By:   /s/ Roy Unger
-------------------------------         --------------------------------------
                     Secretary.                 President

                SEAL

ATTEST:                              SIMON MATTRESS MANUFACTURING
                                     COMPANY

--------------------------------
                      Secretary.     By:   /s/ Donald S. Simon
                                        --------------------------------------
                SEAL                                  President

                                       -3-<PAGE>   1

                                 LABOR AGREEMENT

                                     BETWEEN

                             SERTA MATTRESS COMPANY

                                       AND

                             TEAMSTERS LOCAL NO. 313

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

                       NOVEMBER 1, 1994 - NOVEMBER 1, 1998

                                       1
<PAGE>   2
                                   1998 - 2002

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

ARTICLE 1         RECOGNITION - UNION SECURITY

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

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

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

ARTICLE 2         DISCIPLINE

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

                                       2
<PAGE>   3
         Warning notices shall be void for purposes of further disciplinary
         action after eighteen (18) months from the date issued, provided the
         employee has not been issued other warning notices during the eighteen
         (18) month period.

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

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

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

ARTICLE 3         DISCRIMINATION

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

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

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

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

                                       3
<PAGE>   4
ARTICLE 4         HOLIDAYS

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

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

ARTICLE 5         HOURS OF WORK - OVERTIME PREMIUMS

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

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

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

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

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

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

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

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

ARTICLE 6         CLASSIFICATIONS - RATES OF PAY

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

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

ARTICLE 7         HEALTH AND WELFARE

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

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

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

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

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

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

ARTICLE 8         PENSION

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

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

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

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

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

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

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

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

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

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

ARTICLE 9         VACATIONS

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

                                       7
<PAGE>   8
         employee's anniversary date following November 1, 1998 increase
         vacation benefit to two (2) weeks vacation after two (2) years.)

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

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

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

ARTICLE 10        GRIEVANCE AND ARBITRATION

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

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

10.03      Grievance Procedure

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

                                       8
<PAGE>   9
           Step 2:
           Grievances filed in this second step shall be in writing on forms
           furnished by the Union and shall be dated and signed by the grievant
           and shop steward. Such grievance forms shall be presented to the
           Operations Manager or his designee. Such grievances shall be
           discussed in an attempt of settlement at a mutually convenient time
           within seven (7) calendar days after presentation to the Operations
           Manager or his designee. The Operations Manager or his designee will
           provide the Employer's written settlement position to the Union
           within seven (7) calendar days of the conclusion of the Step 2
           meeting. If the decision by the Operations Manager or his designee is
           not appealed to the next step by the Union in writing within ten (10)
           calendar days of receipt of the Employer's Step 2 answer, the
           grievance shall be considered settled on the basis of the Operations
           Manager or his designee's decision and shall not be eligible for
           further appeal.

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

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

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

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

ARTICLE 11        STRIKES

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

ARTICLE 12        CLOTHING

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

ARTICLE 13        DEATH IN FAMILY

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

ARTICLE 14        JURY DUTY

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

                                      10
<PAGE>   11
         any loss of wages while actually performing such service; provided he
         exhibits to the Employer his properly endorsed check and permits the
         Employer to copy the check or voucher he received for such service. The
         amount the employee shall be reimbursed shall be determined by
         subtracting the amount he received for such service from the amount he
         would have earned at his regular straight hourly rate during the
         regular working hours he missed while performing such service.

ARTICLE 15        SENIORITY

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

ARTICLE 16        MOONLIGHTING

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

ARTICLE 17        EXTRA AGREEMENTS

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

ARTICLE 18        PAYROLL INSPECTION

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

                                       11
<PAGE>   12
ARTICLE 19        EQUIPMENT - SAFETY

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

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

ARTICLE 20        BULLETIN BOARDS

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

ARTICLE 21        OVERLOADING

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

ARTICLE 22        SEPARABILITY & SAVINGS

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

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

ARTICLE 23        DURATION

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

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

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

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

                                       13
<PAGE>   14
                                 WAGE SUPPLEMENT

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

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

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

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

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

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

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

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

Signed and dated this ________ day of _____________ , 1999.

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

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

                                       15

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