Document:

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                                                                   EXHIBIT 10.27

                         SIMMONS RETIREMENT SAVINGS PLAN

                      AMENDED AND RESTATED: JANUARY 1, 2002

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                                TABLE OF CONTENTS

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SECTION 1.    INTRODUCTION....................................................................................1

SECTION 2.    DEFINITIONS.....................................................................................3

              (a)       Administrator.........................................................................3
              (b)       Affiliated Company....................................................................3
              (c)       Beneficiary...........................................................................3
              (d)       Board of Directors....................................................................3
              (e)       Break in Service......................................................................3
              (f)       Code..................................................................................3
              (g)       Company...............................................................................3
              (h)       Early Retirement Age..................................................................3
              (i)       Eligible Employee.....................................................................3
              (j)       Employee..............................................................................4
              (k)       Employer..............................................................................4
              (l)       Employer Matching Contribution........................................................4
              (m)       Employer Non-Elective Contributions...................................................4
              (n)       Enrollment Date.......................................................................4
              (o)       ERISA.................................................................................5
              (p)       Highly Compensated Employee...........................................................5
              (q)       Hour of Service.......................................................................5
              (r)       Investment Manager....................................................................7
              (s)       Non-Highly Compensated Employee.......................................................7
              (t)       Non-Vested Amounts....................................................................7
              (u)       Normal Retirement Age.................................................................7
              (v)       Participant...........................................................................7
              (w)       Plan..................................................................................7
              (x)       Plan Year.............................................................................7
              (y)       Qualified Election....................................................................7
              (z)       Qualified Joint and Survivor Annuity..................................................8
              (aa)      Salary................................................................................8
              (bb       Salary Deferral.......................................................................9
              (cc)      Section 415 Compensation..............................................................9
              (dd)      Trust.................................................................................9
              (ee)      Trustee...............................................................................9
              (ff)      Units.................................................................................9
              (gg)      Valuation Date........................................................................9
              (hh)      Year of Service.......................................................................9
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SECTION 3.    PARTICIPATION IN THE PLAN......................................................................10

              (a)       Initial Enrollment...................................................................10
              (b)       Transfer from Another Plan...........................................................10
              (c)       Termination and Reinstatement........................................................10

SECTION 4.    SALARY DEFERRALS...............................................................................11

              (a)       Deferrals from Salary................................................................11
              (b)       Maximum Amount of Contributions......................................................12
              (c)       Transfers from other Plans...........................................................13
              (d)       Return of Contributions..............................................................14

SECTION 5.    NONDISCRIMINATION LIMIT ON SALARY DEFERRALS....................................................15

              (a)       General Rules........................................................................15
              (b)       Actual Deferral Percentage...........................................................15
              (c)       Highly Compensated Eligible Employee.................................................15
              (d)       Refund of Excess Contributions.......................................................16
              (e)       Reduction of Excess Contributions....................................................16
              (f)       Testing Provisions...................................................................17

SECTION 6.    CHANGES IN DEFERRALS AND VOLUNTARY TERMINATION.................................................18

SECTION 7.    EMPLOYER CONTRIBUTIONS.........................................................................19

              (a)       Employer Non-Elective Contributions..................................................19
              (b)       Previous Employer Contributions......................................................19
              (c)       Employer Matching Contributions......................................................19

SECTION 8.    INVESTMENT OPTIONS.............................................................................20

              (a)       Investment Direction.................................................................20
              (b)       Change in Investment Direction.......................................................20
              (c)       ERISA [scruple]404(c)................................................................20

SECTION 9.    MAINTENANCE AND VALUATION OF PARTICIPANTS' ACCOUNTS............................................21

              (a)       Maintenance of Separate Accounts.....................................................21
              (b)       Valuation of Accounts................................................................21
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SECTION 10.   RIGHTS TO BENEFITS.............................................................................22

              (a)       Retirement...........................................................................22
              (b)       Disability Retirement................................................................22
              (c)       Death................................................................................22
              (d)       Other Terminations of Employment.....................................................22
              (e)       Forfeitures..........................................................................23

SECTION 11.   DISTRIBUTION OF BENEFITS.......................................................................24

              (a)       Distribution in Lump Sum on Retirement or on
                                   Termination of Employment Due to Disability...............................24
              (b)       Distribution in Other Than a Lump Sum on Retirement
                                   or on Termination of Employment Due to Disability.........................24
              (c)       Deferral of Distribution on Retirement or on Termination
                                   of Employment Due to Disability...........................................25
              (d)       Payment on Death.....................................................................25
              (e)       Distribution on Other Terminations of Service........................................26
              (f)       Accounts of $5,000 or Less...........................................................26
              (g)       Accounts of More Than $5,000.........................................................26
              (h)       Required Distributions...............................................................27
              (i)       Eligible Rollover Distributions......................................................27

SECTION 12.   WITHDRAWALS....................................................................................29

              (a)       Hardship.............................................................................29
              (b)       Attainment of Age 59-1/2 or 65.......................................................30
              (c)       Other Withdrawals....................................................................30

SECTION 13.   LOANS TO PARTICIPANTS..........................................................................31

              (a)       Requests for Loans...................................................................31
              (b)       Security.............................................................................32
              (c)       Amount of Loans......................................................................32
              (d)       Repayment............................................................................32
              (e)       Administration of Loans..............................................................33

SECTION 14.   ADMINISTRATION BY TRUSTEE......................................................................34

              (a)       Trust Agreement......................................................................34
              (b)       Investment Responsibility............................................................34
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              (c)       Other Powers.........................................................................35
              (d)       Uninvested Funds.....................................................................36
              (e)       Audit................................................................................36

SECTION 15.   LEAVE OF ABSENCE, LAYOFF AND ABSENCE ON DISABILITY.............................................37

SECTION 16.   DESIGNATION OF BENEFICIARIES...................................................................38

SECTION 17.   BENEFITS NOT ASSIGNABLE........................................................................39

              (a)       In General...........................................................................39
              (b)       Qualified Domestic Relations Orders..................................................39
              (c)       Court Orders.........................................................................40

SECTION 18.   EXPENSES.......................................................................................41

SECTION 19.   MODIFICATION OR MERGER OF PLAN.................................................................42

SECTION 20.   TERMINATION OF PLAN............................................................................43

SECTION 21.   NOTICES, REPORTS AND STATEMENTS................................................................44

              (a)       General..............................................................................44
              (b)       Qualified Joint and Survivor Annuities...............................................44

SECTION 22.   ADMINISTRATION AND INTERPRETATION OF PLAN......................................................45

SECTION 23.   TOP-HEAVY PROVISIONS...........................................................................47

              (a)       Top-Heavy Determination..............................................................47
              (b)       Compensation.........................................................................47
              (c)       Vesting..............................................................................48
              (d)       Minimum Benefits.....................................................................48
              (e)       Multiple Top-Heavy Plans.............................................................49

SECTION 24.   MISCELLANEOUS PROVISIONS.......................................................................50

              (a)       No Employment Rights Created.........................................................50
              (b)       Rights to Trust Assets...............................................................50
              (c)       Severability.........................................................................50
              (d)       Facility of Payment..................................................................50
              (e)       Missing Persons......................................................................50
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              (f)       Military Service.....................................................................51
              (g)       Electronic Means of Communication....................................................51
              (h)       Plan Conversions.....................................................................51

SECTION 25.   EXECUTION......................................................................................52

APPENDIX A    ADOPTION OF PLAN BY AFFILIATED EMPLOYERS.......................................................53
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                                      -v-

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                         SIMMONS RETIREMENT SAVINGS PLAN

SECTION 1.      INTRODUCTION.

        The Simmons Retirement Savings Plan (the "Plan") was adopted effective
February 1, 1987.

        The Plan was amended and restated effective May 1, 1991. The primary
purpose of that amendment and restatement of the Plan was to bring the Plan into
compliance with certain changes in applicable law. A further purpose was to
consolidate into a single document the operative provisions of the Plan. In
connection with that amendment and restatement of the Plan, contributions to the
Plan were permitted to resume effective July 1, 1991.

        The Plan was amended and restated generally effective December 28, 1997.
The primary purpose of that amendment and restatement was to comply with
applicable provisions of the Uruguay Round Agreements Act, the Uniformed
Services Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayer Relief Act of 1997, and the Internal
Revenue Service Restructuring and Reform Act of 1998. Such amendment and
restatement shall apply only to a Participant who is credited with an Hour of
Service on or after December 28, 1997, except as may be otherwise stated herein.
The rights and benefits of a Participant who is not credited with an Hour of
Service on or after December 28, 1997, shall be determined in accordance with
the provisions of the Plan as in effect on the Participant's termination of
employment with the Employer.

        The Plan was amended and restated effective as of December 31, 2000. The
purpose of this amendment and restatement was in accordance with Code Section
401(k)(2)(12)(C) to provide for the making of Employer Non-Elective
Contributions and to allow Participants to make additional salary deferral
contributions to the Plan. Such amendment and restatement shall apply only to a
Participant who is credited with an Hour of Service on or after December 31,
2000, except as may be otherwise stated herein. The rights and benefits of a
Participant who is not credited with an Hour of Service on or after December 31,
2000 shall be determined in accordance with the provisions of the Plan as in
effect on the Participant's termination of employment with the Employer.

        The effective date of this amendment and restatement is January 1, 2002.
The purpose of this amendment and restatement is to authorize the resumption of
Employer Matching Contributions and to incorporate various amendments into the
Plan made since its last restatement. This amendment and restatement applies
only to a Participant who is credited with an Hour of Service on or after that
date, except as may be otherwise stated herein. The rights and benefits of a
Participant who is not credited with an Hour of Service on or after January 1,
2002, shall be determined in accordance with the provisions of the Plan as in
effect on the Participant's termination of employment with the Employer.

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        The purpose of the Plan is to provide Eligible Employees with an
opportunity to accumulate retirement income through a program of Eligible
Employee contributions. The Plan is intended to be a profit sharing plan for
purposes of Sections 401, 402, 412 and 417 of the Internal Revenue Code of 1986,
as amended ("Code"), containing a cash or deferred arrangement, qualified under
Sections 401 (a) and 401 (k) of the Code.

                                      -2-
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SECTION 2.      DEFINITIONS.

        For the purposes of the Plan, the following terms shall have the
following meanings:

        (a)     "ADMINISTRATOR" shall mean the Company or other person or entity
appointed to administer the Plan in accordance with Section 22.

        (b)     "AFFILIATED COMPANY" shall mean any corporation or entity that
is a member of a controlled group of corporations of which the Company is a
part, any trade or business (whether or not incorporated) that is under common
control with the Company, any member of an affiliated service group of which the
Company is a member, and any other entity required to be aggregated with the
Company under section 414(o) of the Code, as determined under sections 414(b)
and 414(c) (as modified by section 415(h) of the Code for purposes of Section
4(b) hereof), section 414(m) and section 414(o) of the Code and the regulations
thereunder.

        (c)     "BENEFICIARY" shall mean the person or persons entitled under
Section 16 to receive benefits under the Plan upon the death of the Participant.

        (d)     "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.

        (e)     "BREAK IN SERVICE" shall mean a Plan Year during which a
Participant does not complete more than 500 Hours of Service.

        (f)     "CODE" shall mean the Internal Revenue Code of 1986, as it may
be amended from time to time, or any successor Federal income tax law. Any
reference to a section of the Code shall be deemed to include all regulations
and regulatory guidance promulgated thereunder.

        (g)     "COMPANY" shall mean Simmons Company, a Delaware corporation,
and any successor thereto.

        (h)     "EARLY RETIREMENT AGE" shall mean the date on which the
Participant attains at least age 55 if the Participant has 10 Years of Service.

        (i)     "ELIGIBLE EMPLOYEE" shall mean, for purposes of making Salary
Deferral contributions, any Employee employed by the Employer for at least
twelve (12) weeks and who has attained age 18 and is either (i) not included in
a unit of employment covered by a collective bargaining agreement between
Employee representatives and the Employer where retirement benefits were the
subject of good faith bargaining between such Employee representatives and the
Employer or (ii) covered by such a collective bargaining agreement that
expressly provides for participation in the Plan. A leased employee is not an
Eligible Employee. The term A leased employee means any person (other than an
employee of the Employer) who, pursuant to an agreement between the Employer and
any other person (the A leasing organization), has performed services for the

                                      -3-
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Employer (or for the Employer and any related persons determined in accordance
with section 414(n)(6) of the Code) on a substantially full time basis for a
period of at least one year, and such services are performed under the primary
direction or control of the Employer. Contributions or benefits provided to a
leased employee by the leasing organization which are attributable to services
performed for the Employer shall be treated as provided by the Employer.
Notwithstanding the above, for the purpose of determining whether an Employee is
an Eligible Employee eligible to receive an Employer Non-Elective Contribution,
a Year of Service shall be substituted for the 12-week period described above.
Any individual who is an independent contractor, who performs services with the
Employer under an agreement that identifies the individual as an independent
contractor, or an individual that is not paid through the Employer's regular
payroll, is specifically excluded from the Plan.

        In the event the Internal Revenue Service (IRS) retroactively
reclassifies such an individual as an Employee, the reclassified Employee will
become an Eligible Participant on the date the IRS issues a final determination
regarding his/her employment status (or the individual's Entry Date, if later),
unless the individual is otherwise excluded from participation. For periods
prior to the date of such final determination, the reclassified Employee will
not have any rights to accrued benefits under the Plan, except as may be set
forth in an amendment adopted by the Employer.

        (j)     "EMPLOYEE" shall mean any individual employed by the Company or
an Affiliated Company, including any leased employee, as defined in the
preceding paragraph.

        (k)     "EMPLOYER" shall mean the Company and any Affiliated Company
that has been designated by the Board of Directors as eligible to adopt the Plan
and which has adopted this Plan. The Affiliated Companies that have adopted the
Plan are identified in Appendix A.

        (l)     "EMPLOYER MATCHING CONTRIBUTIONS" shall mean the amounts
contributed to the Plan, if any, with respect to a Participant's Salary Deferral
Contributions. It is intended that such amounts not be includable in a
Participant's compensation subject to federal income tax for the Plan Year for
which the contribution is made.

        (m)     "EMPLOYER NON-ELECTIVE CONTRIBUTIONS" shall mean the amounts
contributed to the Plan on an Employee's behalf by the Employer. It is intended
that such amounts not be includable in a Participant's compensation subject to
federal income tax for the Plan Year for which the contribution is made.

        (n)     "ENROLLMENT DATE" shall mean, for purposes of making Salary
Deferral Contributions, the first day of the month following the completion of
12 weeks of service and, for purposes of receiving an Employer Non-Elective
Contribution, shall mean the first day of the month following the completion of
a Year of Service.

                                      -4-
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        (o)     "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as it may be amended from time to time. Any reference to a section of
ERISA shall include all regulations and regulatory guidance thereunder.

        (p)     "HIGHLY COMPENSATED EMPLOYEE" shall mean, for Plan Years
beginning on and after December 28, 1997:

                (i)     Any Employee (1) who, during the current or the
preceding Plan Year, was at any time a 5-percent owner (as such term is defined
in section 416(i)(1) of the Code), or (2) for the preceding Plan Year, received
compensation from the Company and all Affiliated Companies in excess of the
amount in effect for such Plan Year under section 414(q)(1)(B) of the Code and
was in the top paid group of Employees for such Plan Year.

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

                (iii)   For the purposes of this Section, the term
"compensation" shall mean (1) for the period prior to December 27, 1998, the sum
of an Employee's section 415 Compensation and the Employee's Salary Deferrals
under this Plan (subject to the dollar limitation described in section 401
(a)(17) of the Code) and elective or salary reduction contributions pursuant to
a cafeteria plan under section 125 of the Code, and (2) for the period
commencing with the Plan Year beginning on December 27, 1998, an Employee's
compensation under section 415 of the Code (subject to the limitation described
in section 40l(a)(17) of the Code). For purposes of this Section, the term
"top-paid group of Employees" shall mean that group of Employees of the Company
and all Affiliated Companies consisting of the top twenty percent (20%) of such
Employees when ranked on the basis of compensation paid by the Company and all
Affiliated Companies during the preceding Plan Year.

        (q)     "HOUR OF SERVICE" shall mean an hour for which an Employee is
credited, in accordance with section 2530.200b-2(a) of the United States
Department of Labor Regulations for Minimum Standards for Employee Pension
Benefit Plans, which provides:

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

                (ii)    An Hour of Service is each hour for which an Employee is
paid, or entitled to payment, by the Employer on account of a period of time
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave of absence.
Notwithstanding the preceding sentence, (a) no more than 501 Hours of Service
are required to be credited under this paragraph (ii) to an Employee on account
of any single continuous period during

                                      -5-
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which the Employee performs no duties (whether or not such period occurs in a
single computation period); (b) an hour for which an Employee is directly or
indirectly paid, or entitled to payment, on account of a period during which no
duties are performed is not required to be credited to the Employee if such
payment is made or due under a plan maintained solely for the purpose of
complying with applicable worker's compensation, unemployment compensation, or
disability insurance laws; and (c) Hours of Service are not required to be
credited for a payment which solely reimburses an Employee for medical or
medically related expenses incurred by the Employee;

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

                (iv)    An Hour of Service is each hour which was not a
compensated hour during a period of absence from the Employer for service in the
armed forces of the United States if the Employee returns to work for the
Employer at a time when the Employee has re-employment rights under federal law;
and

                (v)     Solely for purposes of determining whether or not a
Break in Service has occurred, an Hour of Service is each non-compensated hour
during a period of absence from the Employer (a) by reason of the Employee's
pregnancy, (b) by reason of the birth of the Employee's child, (c) by reason of
the placement of a child with the Employee in connection with the adoption of
the child by the Employee, (d) for purposes of caring for such child for a
period beginning immediately following such birth or placement, or (e) on
account of an approved leave of absence taken pursuant to the Family and Medical
Leave Act of 1993. For purposes of this paragraph (e) the following special
rules will apply:

                        (A)     any Hour of Service credited with respect to an
absence shall be credited (1) only in the Plan Year in which the absence begins,
if the Employee would be prevented from incurring a Break in Service in such
year solely because of Hours of Service credited hereunder for such absence, or
(2) in any other case, in the immediately following Plan Year;

                        (B)     no Hours of Service shall be credited hereunder
unless the Employee furnishes the Administrator with such information as the
Administrator may reasonably require establishing (1) that the absence from work
is an absence described hereunder and (2) the number of days the absence lasted;

                        (C)     in no event shall more than 501 Hours of Service
be credited to an Employee hereunder for any absence by reason of any one
pregnancy or the placement of any one child.

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

                                      -6-
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at least one Hour of Service. Hours of Service to be credited to an Employee
during an absence described in paragraphs (iv) and (v) above will be determined
by the Administrator with reference to the individual's most recent normal work
schedule; provided that if the Administrator cannot so determine the number of
Hours of Service to be credited, there shall instead be credited 10 Hours of
Service for each day of absence.

        (r)     "INVESTMENT MANAGER" shall mean an investment manager as defined
in section 3(38) of ERISA.

        (s)     "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean an Eligible
Employee who is not a Highly Compensated Employee.

        (t)     "NON-VESTED AMOUNTS" shall mean, with respect to an Employee
whose employment terminates for reasons other than retirement, disability, or
death (in accordance with Section 10), all amounts which, as of the date of
determination, are attributable to contributions made by the Employer (including
without limitation Employer Matching Contributions) and which are forfeitable in
accordance with the vesting schedule set forth in Section 10(d).

        (u)     "NORMAL RETIREMENT AGE" shall mean the date on which the
Participant attains age 65.

        (v)     "PARTICIPANT" shall mean an Eligible Employee participating in
the Plan as provided under Section 3, and whose participation has not terminated
as provided in the Plan. If a Participant becomes represented by a collective
bargaining agent after electing to participate in the Plan, the right to
continue to participate shall not be affected, except as provided under any
collective bargaining agreement.

        (w)     "PLAN" shall mean this Simmons Retirement Savings Plan, as
amended and restated effective January 1, 2002, together with any and all
amendments and supplements hereto.

        (x)     "PLAN YEAR" shall mean for all years prior to 2002 the annual
period ending on the last Saturday in December of each such annual period, or
such other annual period that the Company may elect for its tax year. Effective
January 1, 2002, and continuing forward, the Plan Year shall be the period
commencing January 1 and ending December 31. There shall be a short Plan Year
commencing December 30, 2001, and ending December 31, 2001.

        (y)     "QUALIFIED ELECTION" shall mean a waiver of a Qualified Joint
and Survivor Annuity or a qualified pre-retirement survivor annuity. Any waiver
of a Qualified Joint and Survivor Annuity or a qualified pre-retirement survivor
annuity shall not be effective unless: (i) the Participant's spouse consents in
writing to the election; (ii) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent (or the spouse expressly permits
designation by the Participant without any further spousal consent); (iii) the
spouse's consent acknowledges the effect of the election; and (iv) the spouse's

                                      -7-
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consent is witnessed by a Plan representative or notary public. Additionally, a
Participant's waiver of the Qualified Joint and Survivor Annuity shall not be
effective unless the election designates a form of benefit payment which may not
be changed without spousal consent (or the spouse expressly permits designations
by the Participant without any further spousal consent). If it is established to
the satisfaction of a Plan representative that there is no spouse or that the
spouse cannot be located, a waiver will be deemed a Qualified Election. Any
waiver of the Qualified Joint and Survivor Annuity must take place during the
90-day period ending on the Participant's annuity starting date (as defined in
section 417(f) of the Code).

        Any consent by a spouse (or establishment that the consent of a spouse
may not be obtained) shall be effective only with respect to such spouse. A
consent that permits designations by the Participant without any requirement of
further consent by such spouse must acknowledge that the spouse has the right to
limit consent to a specific Beneficiary, and a specific form of benefit where
applicable, and that the spouse voluntarily elects to relinquish either or both
of such rights. A revocation of a prior waiver may be made by a Participant
without the consent of the spouse at any time before the commencement of
benefits. The number of revocations shall not be limited. No consent obtained
under this definition shall be valid unless the Participant has received notice
as provided in Section 21 (b).

        (z)     "QUALIFIED JOINT AND SURVIVOR ANNUITY" shall mean an immediate
annuity for the life of the Participant with a survivor annuity for the life of
the spouse which is not less than 50% and not more than 100% of the amount of
the annuity which is payable during the joint lives of the Participant and the
spouse and, in any case, is the amount of the annuity benefit which can be
purchased with the amount of the Participant's account which is nonforfeitable.

        (aa)    "SALARY" shall mean an Employee's total cash compensation,
including Salary Deferrals, but excluding any daily allowances or expenses
reimbursed in connection with the performance of duties, as determined from the
payroll records of the Employer.

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

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

                                      -8-
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beginning in such calendar year. If a determination period consists of fewer
than 12 months, the OBRA >93 annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination
period, and the denominator of which is 12. For Plan Years beginning on or after
January 1, 1994, any reference in this Plan to the limitation under Section
401(a)(17) of the Code shall mean the OBRA >93 annual compensation limit set
forth herein.

        (bb)    "SALARY DEFERRAL" shall mean the amounts contributed to the Plan
on an Eligible Employee's behalf by the Employer at the election of the Eligible
Employee. It is intended that such amounts not be includable in a Participant's
compensation subject to Federal income tax for the Plan Year for which the
contribution is made.

        (cc)    "SECTION 415 COMPENSATION" shall mean compensation as defined in
section 415(c)(3) of the Code, which includes amounts contributed by the
Employer pursuant to a salary reduction agreement and which are not includable
in the gross income of the Participant under Code Sections 125, 132(f),
402(e)(3), 402(h)(1)(B), 403(b) or 457 and in applicable Internal Revenue
Service regulations thereunder.

        (dd)    "TRUST" shall mean the trust or trusts created by the trust
agreement referred to in Section 14 between the Company and the Trustee.

        (ee)    "TRUSTEE" shall mean the trustee or trustees (and any successor
trustee or trustees) under the trust agreement referred to in Section 14.

        (ff)    "UNITS" shall mean the Units referred to in Section 9.

        (gg)    "VALUATION DATE" shall mean the last day of each Plan Year and
each day on which the New York Stock Exchange is open for trading.

        (hh)    "YEAR OF SERVICE" shall mean a computation period in which an
Eligible Employee completes 1,000 Hours of Service. The computation period shall
be (i) the 12-consecutive-month period beginning with an Eligible Employee's
employment commencement date, and (ii) each Plan Year ending after the initial
one year anniversary of the Eligible Employee's commencement date.

                                      -9-
<PAGE>

SECTION 3.      PARTICIPATION IN THE PLAN.

        (a)     Initial Enrollment.

                (i)     For purposes of making Salary Deferrals and receiving
Employer Matching Contributions, an Eligible Employee may elect to participate
in the Plan, beginning on any Enrollment Date after the completion of twelve
(12) weeks of employment. Such Eligible Employee may authorize a Salary Deferral
in accordance with Section 4 and shall direct the investment of Salary Deferrals
and Employer Matching Contributions in accordance with Section 8. Such
authorization and direction shall be given by the Eligible Employee at a time
and in a manner specified by the Administrator.

                (ii)    For purposes of receiving an Employer Non-Elective
        Contribution, an Eligible Employee shall participate in the Plan
        beginning on the first Enrollment Date coinciding with or following the
        completion of a Year of Service. Such Participant shall direct the
        investment of the Employer Non-Elective Contribution in accordance with
        Section 8. Such authorization and direction shall be given by the
        Eligible Employee at a time and in a manner specified by the
        Administrator.

        (b)     Transfer from Another Plan.

        Notwithstanding the provision of paragraph (a) above, an Eligible
Employee whose account in another qualified plan sponsored or maintained by the
Employer (or any current or previous parent or affiliate of the Employer) has
been transferred to the Plan in accordance with Section 4(c) shall participate
in the Plan beginning on the date of such transfer, whether or not such date is
an Enrollment Date. An Eligible Employee whose account in another qualified plan
not sponsored or maintained by the Employer (or any current or previous parent
or affiliate of the Employer) has been transferred to the Plan in accordance
with Section 4(c) shall participate in the Plan in accordance with paragraph (a)
above.

        (c)     Termination and Reinstatement.

        If an individual who has ceased to be a Participant because such
Participant ceases to be an Eligible Employee, the individual will again become
a Participant in the Plan on the first Enrollment Date following the first date
on which such individual again completes an Hour of Service as an Eligible
Employee.

                                      -10-
<PAGE>

SECTION 4.      SALARY DEFERRALS.

        (a)     Deferrals from Salary.

                (i)     An Eligible Employee may authorize a Salary Deferral of
between 1% and 17% of Salary. Notwithstanding the above, the Administrator may
reduce the amount of Eligible Employees' Salary Deferrals in any Plan Year
and/or require that all Salary Deferrals cease for any part of any Plan Year for
the purpose of complying with (A) paragraph (b) below, (B) Section 5, and (C)
reasonable, nondiscriminatory limitations established by the Administrator to
comply with contractual obligations of the Company regarding the allocation of
the limitations of paragraph (b) below between this Plan and the Simmons Company
Employee Stock Ownership Plan. The amount of any such reduction shall be the
amount determined by the Administrator in accordance with such limitations to be
necessary for such compliance and shall be, in the case of a reduction described
in clauses (A) and (B) of the preceding sentence, an amount determined
individually for any Participant and, in the case of a reduction described in
clause (C) of the preceding sentence, an aggregate amount determined for all
Eligible Employees making Salary Deferrals in such Plan Year, which amount shall
be allocated pro rata among such Eligible Employees to reduce such Salary
Deferrals in 1% increments of such Eligible Employees Salary.

                (ii)    For Plan Years beginning prior to December 30, 2000, all
Salary Deferrals shall be subject to the limitation described in Section 5.

                (iii)   A Participant's Salary Deferrals are intended, for
federal income tax purposes, to be a direct contribution by the Employer and are
intended to be not includable in the Participant's compensation subject to
Federal income tax for the year the deferrals are made. A Participant shall be
entitled to contribute to the Plan only through Salary Deferrals except as
described in paragraph (c) below. No after-tax contributions by Participants
shall be required or permitted under the Plan.

                (iv)    Salary Deferrals will begin with the first payroll
period ending after the Enrollment Date on which the Eligible Employee begins
participation in the Plan. Salary Deferrals made by or for a Participant shall
be transmitted by his Employer to the Trustee as soon as practicable, but in any
event not later than 15 days after the end of the month in which such amounts
are withheld or would otherwise have been paid to the Participant. Salary
Deferrals shall be credited to a Participant's account from the date of receipt
by the Trustee.

                (v)     Notwithstanding any provision of the Plan to the
contrary, beginning with the first full pay period after January 1, 2002, an
Eligible Employee who is employed at Simmons Caribbean Bedding, Inc. and who has
completed at least twelve (12) weeks of service as of January 1, 2002 may
authorize a Salary Deferral in any amount from 1% to up to 10% (not more than
10%) of the Participant's salary up to a maximum of eight thousand dollars
($8,000) annually in accordance with Section 1165(e)(7) of the Puerto Rico
Internal Revenue Code of 1994, as amended.

                (vi)    All Salary Deferrals shall be immediately vested and
shall not be subject to

                                      -11-
<PAGE>

forfeiture.

        (b)     Maximum Amount of Contributions.

        With respect to any Participant in any Plan Year, the annual addition to
a Participant's account may not exceed the lesser of $30,000 or 25% of a
Participant's Section 415 Compensation for such Plan Year. The annual addition
shall be the sum, credited to a Participant's accounts under this Plan and all
other plans maintained by the Company or an Affiliated Company, of:

                (i)     Employer contributions;

                (ii)    forfeitures;

                (iii)   Participant contributions, provided that Participant
contributions for plan years beginning prior to January 1, 1987 that were
disregarded under the provisions in effect prior to that date shall continue to
be disregarded;

                (iv)    amounts allocated to an individual medical account (as
defined in section 415(l) of the Code) which is part of a defined benefit plan
maintained by the Company or an Affiliated Company; and

                (v)     amounts (derived from contributions paid after December
31, 1985, in taxable years ending after such date) attributable to
post-retirement medical benefits allocated to the separate account of a key
Employee (as defined in section 419A(d)(3) of the Code) maintained by the
Company or an Affiliated Company.

        Notwithstanding the foregoing, the 25% limitation in this paragraph (b)
and section 415(c)(1)(B) of the Code shall not apply to any contribution for
medical benefits (within the meaning of section 419A(f)(2) or 401(h)) that is
otherwise treated as an annual addition.

        Notwithstanding this paragraph (b) and any provision of any other plan
with which this Plan must be aggregated for purposes of the limitations set
forth herein, to the extent annual additions must be reduced, the annual
addition to this Plan shall be reduced first in the manner described in
paragraph (d) below, before the reduction of any Participant's annual addition
to each other plan in which the Participant participates, but only to the extent
necessary to comply with the contractual obligations of the Company regarding
the allocation of the limitations on annual additions between this Plan and the
Simmons Company Employee Stock Ownership Plan, and thereafter, to the extent
annual additions must be reduced further, the annual addition to each other plan
in which a Participant participates shall be reduced before any further
reduction of such Participant's annual addition under this Plan.

                                      -12-
<PAGE>

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

                        (A)     Notwithstanding any other provision of this
paragraph (b), and as required by the Code, the sum of the Participant's defined
benefit plan fraction and defined contribution plan fraction may not exceed 1.0
in any Plan Year (which shall also be the limitation year); provided, however,
that the limitation described in this paragraph (A) shall cease to apply for
limitation years beginning on and after December 31, 2000. The limitation year
is the Plan Year.

                        (B)     The defined benefit plan fraction is a fraction,
the numerator of which is the sum of the Participant's projected annual benefits
under all defined benefit plans (whether or not terminated) maintained by the
Company and any Affiliated Company, and the denominator of which is the lesser
of (1) 1.25 times the dollar limitation of section 415(b)(1)(A) of the Code in
effect for the Plan Year, or (2) 1.4 times the Participant's average Section 415
Compensation for the three consecutive years that produce the highest average.
"Projected annual benefit" means the annual benefit to which the Participant
would be entitled under the terms of the defined benefit plan if the Participant
continued employment until normal retirement age (or actual age, if later) and
the Participant's Section 415 Compensation for the Plan Year and all other
relevant factors used to determine such benefit remained constant until Normal
Retirement Age (or actual age, if later).

                        (C)     The defined contribution plan fraction is a
fraction, the numerator of which is the sum of the annual additions to the
Participant's accounts under all defined contribution plans maintained by the
Company or an Affiliated Company (whether or not terminated) for the current and
all prior Plan Years, and the denominator of which is the sum of the lesser of
the following amounts determined for such year and for each prior year of
service with the Company or an Affiliated Company (or a predecessor to the
extent permitted under the Code): (1) 1.25 times the dollar limitation effect
under section 415(c)(1)(A) of the Code for such year, or (2) 1.4 times the
amount which may be taken into account under section 415(c)(1)(B) of the Code.

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

        Notwithstanding anything to the contrary in this Section, in no event
shall a Participant's Salary Deferrals exceed $11,000 for any calendar year (as
adjusted under section 402(g) of the Code) when aggregated with other deferrals
by the Participant pursuant to any other cash or deferred arrangement maintained
by the Company by an Affiliated Company under section 401(k) of the Code.

        (c)     Transfers from other Plans.

        The Administrator shall receive on behalf of a Participant (or on behalf
of an individual who would be an "Eligible Employee" but for the fact that such
individual has not yet satisfied the minimum age and service requirements
contained in the definition of "Eligible Employee" in

                                      -13-
<PAGE>

Section 2 of this plan) a transfer to the Plan of all or a portion of the amount
of any of the following distributions:

                (i)     any distribution from a terminated pension or profit
sharing plan that was qualified under section 401(a) of the Code, including any
plan sponsored by the Company or any current or previous Affiliated Company; and

                (ii)    an eligible rollover distribution (within the meaning of
section 402 of the Code) from a pension or profit sharing plan that is qualified
under section 401(a) of the Code. However, in no event will such a transfer be
permitted if, in the sole opinion of the Administrator, such transfer would
adversely affect the qualification of the Plan under section 401(a) of the Code,
or would subject the Plan to the requirements of section 401(a)(11) or section
417 of the Code to which the Plan would not be subject but for the acceptance of
the transfer.

        For purposes of determining the maximum amount that may be contributed
on behalf of any Participant within any limits described in the Plan, no amount
transferred to the Plan pursuant to this paragraph (c) shall be included in such
determination.

        (d)     Return Of Contributions.

                (i)     For Plan Years prior to December 30, 2000, Salary
Deferrals in excess of the limitation described in Section 5 shall be returned
to the Participants who made such deferrals in accordance with Section 5.

                (ii)    Notwithstanding any provision to the contrary, if it is
determined that in any calendar year the sum of a Participant's Salary Deferrals
and deferrals to another plan described by section 401(k) of the Code and
maintained by the Company or an Affiliated Company exceeds $11,000 (as adjusted
under section 402(g) of the Code), the Administrator shall refund the excess
amount to the Participant. Where the Participant makes pretax deferrals to
another plan described in section 401(k) of the Code and not maintained by the
Company or an Affiliated Company that exceed this $11,000 limit (as adjusted
under 402(g) of the Code) when combined with Salary Deferrals, the excess amount
shall be refunded to the Participant if individual notifies the Administrator in
writing of the excess amount before March 1 of the next calendar year. The Plan
shall return any such excess amount to the Participant (together with any
earnings attributable to such excess contribution up to the end of the preceding
calendar year) no later than April 15 of the succeeding calendar year. Any
earnings attributable to such excess contribution shall be determined by
multiplying the total earnings of the Participant's account for the year by a
fraction, the numerator of which is the amount of excess Salary Deferrals for
the Plan Year and the denominator of which is the sum of the account balance of
the Participant as of the beginning of the Plan Year attributable to Salary
Deferrals, plus Salary Deferrals for the year.

                                      -14-
<PAGE>

SECTION 5.      NONDISCRIMINATION LIMIT ON SALARY DEFERRALS (FOR PLAN YEARS
                ENDING DECEMBER 30, 2000).

        (a)     General Rules.

        Notwithstanding any provision of the Plan to the contrary, for any Plan
Year, the Average Actual Deferral Percentage (as defined in paragraph (b) of
this Section) for the group of Highly Compensated Eligible Employees for such
Plan Year shall not exceed the greater of (a) 125% of the Average Actual
Deferral Percentage for all other Eligible Employees for the preceding Plan Year
or (b) the lesser of (i) 200% of the Average Actual Deferral Percentage for all
other Eligible Employees for the preceding Plan Year, or (ii) the Average Actual
Deferral Percentage for the preceding Plan Year for all other Eligible Employees
plus 2 percentage points. If two or more plans which include cash or deferred
arrangements are considered as one plan for purposes of sections 401(a)(4) or
410(b) of the Code, such arrangements included in such plans shall be treated as
one arrangement for the purposes of this Section; and if any Highly Compensated
Eligible Employee is a participant under two or more cash or deferred
arrangements maintained by the group consisting of the Company and all
Affiliated Companies, all such arrangements shall be treated as one cash or
deferred arrangement for purposes of determining the Actual Deferral Percentage
with respect to such Highly Compensated Eligible Employee.

        (b)     Actual Deferral Percentage.

        For the purposes of this Section, the Average Actual Deferral Percentage
for a specified group of Eligible Employees for a Plan Year shall be the average
of the ratios ("Actual Deferral Percentages") (calculated separately for each
Eligible Employee in such group) of (a) the amount of Salary Deferrals actually
paid to the Trust for each such Eligible Employee for such Plan Year (including
any "excess deferrals" described in Section 4(d)(ii)) to (b) the Eligible
Employee's compensation for such Plan Year. For the purpose of this Section, the
term "compensation" shall mean (i) for the period prior to December 27, 1998,
the sum of an Eligible Employee's section 415 Compensation and his Salary
Deferrals (subject to the dollar limitation described in section 401(a)(17) of
the Code) and (ii) for the period commencing on and after December 27, 1998, an
Eligible Employee's compensation under section 415(c)(3) of the Code (subject to
the limitations described in section 401(a)(17) of the Code).

        (c)     Highly Compensated Eligible Employee.

        For the purposes of this Section, the term "Highly Compensated Eligible
Employee" for a particular Plan Year shall mean any Highly Compensated Employee
who is an Eligible Employee.

                                      -15-
<PAGE>

        (d)     Refund of Excess Contributions.

        In the event that excess contributions (as such term is hereinafter
defined) are made to the Trust for any Plan Year, then, prior to March 15 of the
following Plan Year, such excess contributions (and any income allocable
thereto) shall be distributed to the Highly Compensated Eligible Employees on
the basis of the respective portions of the excess contributions attributable to
each such Eligible Employee. The excess contributions, and the portion of the
excess contributions to be distributed, shall be calculated in the following
manner:

                (i)     The excess contributions with respect to a Highly
Compensated Eligible Employee for a Plan Year are determined by reducing the
Salary Deferrals of the Highly Compensated Eligible Employee with the highest
Actual Deferral Percentage by the amount required to cause the individual's
Actual Deferral Percentage to equal the Actual Deferral Percentage of the Highly
Compensated Eligible Employee with the next highest such percentage. If a lesser
reduction would enable the arrangement to satisfy the test described in Section
5(a), only this lesser reduction will be made. This process must be repeated
until the test described in Section 5(a) would be satisfied.

                (ii)    The total of the reductions in the amounts of Salary
Deferrals, determined in accordance with (i) above, shall be determined.

                (iii)   After the total in (ii) above has been determined, the
Salary Deferrals of the Highly Compensated Eligible Employee with the highest
dollar amount of Salary Deferrals shall be reduced by the amount required to
cause that Highly Compensated Eligible Employee's Salary Deferrals to equal the
dollar amount of the Salary Deferrals of the Highest Compensated Eligible
Employee with the next highest dollar amount of Salary Deferrals. This amount is
then distributed to the Highly Compensated Eligible Employee with the highest
dollar amount of Salary Deferrals. However, if a lesser reduction, which added
to the total dollar amount already distributed under this step would equal the
total excess contributions determined under (ii) above, the lesser reduction
amount is distributed to the appropriate Participant.

                (iv)    If the total amount distributed under (iii) above is
less than the total excess contributions determined under (ii) above, then the
procedure described in (iii) is repeated until the full amount of the excess
contributions, determined under (ii) above, has been distributed to
Participants.

        (e)     Reduction of Excess Contributions.

        Notwithstanding the foregoing, any excess contributions to be
distributed hereunder shall be reduced by any excess deferrals previously
distributed under Section 4(d)(ii) with respect to the same Plan Year.

        (f)     Testing Provisions.

                                      -16-
<PAGE>

        In applying the limitations set forth in Sections 5(a) and 4(d)(ii), the
Administrator may, at its option, utilize such testing procedures as may be
permitted under sections 401(a)(4), 401(k), 401(m) or 410(b) of the Code,
including, without limitation, (a) aggregation of the Plan with one or more
other qualified plans of the Company and the Affiliated Companies, (b) inclusion
of qualified matching contributions, qualified nonelective contributions or
elective deferrals described in, and meeting the requirements of, Treasury
Regulations under sections 401(k) and 401(m) of the Code to any other qualified
plan of the Company and the Affiliated Companies in applying the limitations set
forth in Sections 5(a) and 4(d)(ii), (c) effective December 26, 1999, exclusion
of all Eligible Employees (other than Highly Compensated Eligible Employees) who
have not met the minimum age and service requirements of section 410(a)(1)(A) of
the Code in applying the limitations set forth in Section 5(a), or (d) any
permissible combination thereof.

                                      -17-
<PAGE>

SECTION 6.      CHANGES IN DEFERRALS AND VOLUNTARY TERMINATION.

        A Participant, by giving notice to the Administrator at a time and in a
manner specified by the Administrator, may change the percentage of Salary
authorized as Salary Deferrals to another percentage specified in Section 4(a).
Any reduction or increase in this percentage shall be made in accordance with
procedures established by the Administrator. Also, a Participant may voluntarily
suspend his Salary Deferrals by giving notice to the Administrator at a time and
in a manner specified by the Administrator. In the event of a change in the
Salary of a Participant, the percentage of Salary Deferrals currently in effect
shall be applied as soon as practicable with respect to such changed Salary,
without action by the Participant.

                                      -18-
<PAGE>

SECTION 7.      EMPLOYER CONTRIBUTIONS.

        (a)     Employer Non-Elective Contributions.

                (i)     For Plan Years beginning on and after December 31, 2000,
and for those Eligible Employees who have satisfied the requirements of Section
3(a)(ii) of the Plan (including, but not limited to, individuals employed by
Simmons Caribbean Bedding, Inc.), the Employer shall make an Employer
Non-Elective Contribution equal to 3% of a Participant's Salary. All Employer
Non-Elective Contributions shall be immediately vested when paid to the Trust
and shall not be subject to forfeiture. This Employer Non-Elective Contribution
is a Safe Harbor Non-Elective Contribution with the meaning of Code Section
401(k)(12)(C).

        (b)     Previous Employer Contributions.

        Beginning January 1, 1989, and ending December 30, 2000, no Employer
contributions were made to the Plan, other than Salary Deferrals. All Employer
contributions (other than Salary Deferrals) made to the Plan prior to January 1,
1989 shall continue to be held in the Plan and shall be invested and distributed
in accordance with the terms of the Plan.

        (c)     Employer Matching Contributions.

                (i)     Effective February 1, 2002, for those Participants who
have completed a Year of Service, and are actively employed on the last day of
the Plan Year, except if their termination of employment was on account of
death, disability or termination of employment following attainment of Normal
Retirement Age, the Employer will make an Employer Matching Contribution equal
to fifty percent (50%) of the first six percent (6%) of a Participant's Salary
Deferrals. The maximum Employer Matching Contribution will equal three percent
(3%) of Compensation. The Employer Matching Contribution shall be subject to the
vesting schedule set forth in Section 10(d).

                (ii)    The non-discrimination rules set forth in Code Section
401(m) shall be satisfied by the Safe Harbor Non-Elective Contribution described
in 7(a) above.

                                      -19-
<PAGE>

SECTION 8.      INVESTMENT OPTIONS.

        (a)     Investment Direction.

        Each Eligible Employee shall direct the manner in which (i) Salary
Deferrals (ii) amounts transferred to the Plan in accordance with the provisions
of Section 4, (iii) Employer Non-Elective Contributions, (iv) Employer Matching
Contributions, and (v) Employer contributions to the Plan made before January 1,
1989, shall be invested. These amounts shall be invested in one of the
investment options offered under the Plan, as determined from time to time by
the Administrator or the Trustee. A Participant may elect to have these amounts
allocated among each investment option only in multiples of 5%.

        Earnings or gains received (or losses incurred) with respect to any
investment fund shall be allocated to and reinvested in that investment fund.

        (b)     Change in Investment Direction.

        Any investment direction given by a Participant shall continue in effect
until changed by the Participant. A Participant may change investment direction
at such times as the Administrator shall designate and in accordance with the
procedure established by the Administrator from time to time.

        The term "Participant" as used here shall include a former Participant
or a Beneficiary who has elected to defer the distribution of the Participant's
account pursuant to Section 11 and a former Participant who has elected to
receive an installment distribution pursuant to Section 11.

        (c)     ERISA 404(c).

        The provisions of this Section 8 shall be applied in a manner consistent
with United States Department of Labor Regulations 2550.404c-1 (or any future
regulations of the United States Department of Labor of similar import) so that
this Plan shall be an ERISA 404(c) plan.

                                      -20-
<PAGE>

SECTION 9.      MAINTENANCE AND VALUATION OF PARTICIPANTS ACCOUNTS.

        (a)     Maintenance of Separate Accounts.

        There shall be established for each Participant a separate account,
which shall reflect all Salary Deferrals by the Participant, Employer
Non-Elective Contributions, Employer Matching Contributions, rollover
contributions, and all other related amounts contributed by the Employer and the
investment gains and losses from such amounts. Each Participant shall be
furnished a statement of account at times determined by the Administrator, but
no less frequently than annually.

        (b)     Valuation of Accounts.

        At such times as may be necessary to reflect Participants proportionate
interests in collective investment vehicles offered under the Plan, and at such
other times as the Administrator shall determine, the interest of a Participant
in each type of investment shall be valued and credited to the account. Any
account or portion thereof of a Participant which is invested in a certain fund
shall only share in the gains or losses of such fund, and shall not share in the
gains or losses of any other Trust fund investment.

                                      -21-
<PAGE>

SECTION 10.     RIGHTS TO BENEFITS.

        (a)     Retirement.

        Upon retirement at Normal Retirement Age or Early Retirement Age, each
Participant will have a fully vested and nonforfeitable interest in amounts
allocated to his account in the Trust. Upon retirement, a Participant's account,
valued as of the Valuation Date coinciding with or immediately succeeding the
date the Participant terminates service, will be distributed to him (or if
distributed in installments, will begin to be distributed to him) in accordance
with Section 11.

        (b)     Disability Retirement.

        A Participant may retire before his Normal Retirement Age or Early
Retirement Age if, because of a medically determinable physical or mental
impairment likely to result in death or to be long-continued and indefinite in
duration, the Participant cannot engage in any substantial employment with the
Employer and as a result his employment with the Employer is terminated. In the
event of such termination of employment on account of disability, the
Participant will have a fully vested and nonforfeitable interest in amounts
allocated to his account in the Trust. A Participant's account, valued as of the
Valuation Date coinciding with or immediately succeeding the date the
Participant terminates service, will be distributed to him (or if distributed in
installments, will begin to be distributed to him) in accordance with Section
11.

        Whether the Participant is disabled will be determined by the
Administrator, in its sole discretion, on the basis of medical evidence
satisfactory to the Administrator.

        (c)     Death.

        If a Participant or former Participant dies, upon his death his
designated Beneficiary will have a fully vested and nonforfeitable interest in,
and will be entitled to receive, the amount of the Participant's account in the
Trust, valued as of the Valuation Date coinciding with or immediately preceding
the date of distribution. Distribution to the Beneficiary will be made (or if
distributed in installments, will commence) in accordance with Section 11.

        If a Participant dies, Salary Deferrals from the Participant's Salary
not deposited into the Plan prior to the Participant's death will be paid over
to the person or persons entitled thereto.

        (d)     Other Terminations of Employment.

        If a Participant terminates employment with the Employer for reasons
other than retirement, disability, or death, then the Participant will be
entitled to a benefit equal to (i) the balance of his account, less
(ii) the Non-Vested Amounts determined as of the Valuation Date immediately
succeeding the date

                                      -22-
<PAGE>

the Participant terminates service. The vesting schedule for determining the
Non-Vested Amount of Employer Matching Contributions, if any, shall be as
follows:

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

Years of Service prior to February 1, 2002, shall be recognized in determining a
Participant's non-forfeitable right to Employer Matching Contributions.
Notwithstanding any provision of the Plan to the contrary, Employer Non-Elective
Contributions shall be immediately vested and shall not be subject to
forfeiture.

        Distribution of a benefit under this paragraph (d) will be made in
accordance with Section 11. However, notwithstanding anything in this Section 10
to the contrary, any person who was an Employee of the Employer as of October
30, 1986, shall be deemed to have five Years of Service as of January 1, 1987.
In addition, for purposes of this paragraph (d), only each Year of Service
completed by a Participant after attaining age 18 shall be counted.

        (e)     Forfeitures.

        If a Participant terminates service before the Participant has a 100%
nonforfeitable interest in his Employer Matching Contributions, then any
Non-Vested Amounts shall be forfeited and placed in a separate account on the
date the Participant incurs a Break in Service. This separate account shall be
invested by the Administrator or Trustee and shall share in the net income (or
loss) of the Trust, but shall not be entitled to an allocation of any
contributions or forfeitures.

        If, prior to incurring five consecutive Breaks in Service, the
Participant becomes re-employed by the Employer, the amount of this separate
account shall be deemed not forfeited and shall be returned to the Participant's
Employer Matching Contribution account. Upon re-employment, the Participant's
vested interest attributable to Employer Matching Contributions shall equal P(AB
+ (R x D)) - (R x D), where P is the nonforfeitable percentage at the relevant
time determined under paragraph (d) above; AB is the account balance of the
separate account at the relevant time; D is the amount of the distribution
attributable to Employer Matching Contributions; and R is the ratio of the
account balance of the separate account at the relevant time to the account
balance of such account immediately after the distribution.

        Upon the Participant incurring five consecutive Breaks in Service, the
Participant shall permanently forfeit the amount of this separate account, and
this amount shall be used to pay expenses of administering the Plan pursuant to
Section 18.

                                      -23-
<PAGE>

SECTION 11.     DISTRIBUTION OF BENEFITS.

        (a)     Distribution in Lump Sum on Retirement or on Termination of
Employment Due to Disability.

        In the case of a Participant who has retired after attaining Normal
Retirement Age or Early Retirement Age, or who has terminated employment because
of disability, unless the Participant elects an optional form of benefit
described in paragraph (b) below, a Participant's nonforfeitable account balance
will be paid in the form of a single lump-sum payment.

        (b)     Distribution in Other Than a Lump Sum on Retirement or on
Termination of Employment Due to Disability.

        In the case of Participant who has retired after attaining Normal
Retirement Age or Early Retirement Age, or who has terminated employment because
of disability, such Participant may elect, in accordance with paragraph (a)
above, to receive a distribution of the Participant's nonforfeitable account
balance in the form of a Qualified Joint and Survivor Annuity or a single life
annuity, or in approximately equal cash installments payable at least annually
over a period not to exceed the least of:

                (i)     10 years,

                (ii)    the life expectancy of the Participant, or

                (iii)   if the Participant has a spouse who is the designated
Beneficiary, the life expectancy of both.

        Any Participant who has elected to receive a distribution in the form of
a Qualified Joint and Survivor Annuity or a single life annuity may revoke this
election and select another form of payment only by making a Qualified Election
as described in Section 2.

                                      -24-
<PAGE>

        (c)     Deferral of Distribution on Retirement or on Termination of
Employment Due to Disability.

        In the case of retirement or termination of employment because of
disability, the Participant, in lieu of receiving a distribution under paragraph
(a) or (b) above at the time of such retirement or termination, may elect that
the Participant's account remain in the Plan; provided, however, that a
Participant's account shall be distributed, or begin to be distributed, no later
than April 1 of the calendar year following the taxable year in which the
Participant attains age 70-1/2, to the extent required in paragraph (h) of the
Section. Such an election shall be on a form provided for this purpose signed by
the Participant and delivered to the office designated by the Administrator
within 90 days before such retirement or termination. Thereafter, the
Participant, by giving notice to the Administrator at a time and in a manner
specified by the Administrator, shall be considered to have retired at the end
of such month for the purpose of the distribution of the Participant's account
under paragraphs (a) and (b) of this Section 11.

        (d)     Payment on Death.

        If a Participant dies after distribution of his nonforfeitable account
balance has commenced, the remaining nonforfeitable account balance shall be
distributed to the Participant's spouse or other Beneficiary, at least as
rapidly as under the method of distribution applicable to the Participant at the
time of death.

        If a Participant dies before distribution of his nonforfeitable account
balance has begun, distribution will commence no later than one year after the
Participant's death or, if the Participant's designated Beneficiary is the
Participant's surviving spouse, the date the Participant would have attained age
70-1/2 and will be made, as the Beneficiary shall elect, either in a single
lump-sum payment or in approximately equal cash installments payable at least
annually:

                (i)     over a period ending not later than the fifth
anniversary of the Participant's death, or

                (ii)    if the Participant has a designated Beneficiary who is
alive at the time benefits payments commence, over a period not to exceed the
life expectancy of the designated Beneficiary.

        In the event of a married Participant's death before the annuity
starting date (as defined in Section 417(f) of the Code), if the Participant has
elected to receive payment in the form of a Qualified Joint and Survivor Annuity
or a single life annuity, his nonforfeitable account balance shall be used to
purchase an annuity for the life of his surviving spouse (which shall meet the
requirements of a qualified preretirement survivor annuity described in section
417(c) of the Code and which shall provide that benefit payments will begin
within a reasonable time after the Participant's death), unless the surviving
spouse elects a lump sum or installment form of benefit described in paragraphs
(a) and (b) above.

                                      -25-
<PAGE>

        With regard to a qualified preretirement survivor annuity as required by
the preceding paragraph, the Plan Administrator shall provide each Participant
within the Applicable Period for such Participant a written explanation of the
qualified preretirement survivor annuity.

        "Applicable Period" shall mean, with respect to a Participant, whichever
of the following periods ends last: (a) the period beginning with the first day
of the Plan Year in which the Participant attains age 32 and ending with the
close of the Plan Year preceding the Plan Year in which the Participant attains
age 35; and (b) a reasonable period ending after the individual becomes a
Participant. Notwithstanding the foregoing, notice must be provided within a
reasonable period ending after separation from service in the case of a
Participant who separates from service before attaining age 35. For purposes of
applying this definition, a "reasonable period" ending after an event described
above is the end of the 2-year period beginning one year prior to the date the
applicable event occurs, and ending one year after that date. In the case of a
Participant who separates from service before the Plan Year in which age 35 is
attained, the Applicable Period shall be the 2-year period beginning one year
prior to separation and ending one year after separation. If such a Participant
thereafter returns to employment with the Employer or an Affiliated Company, the
Applicable Period for such Participant shall be redetermined.

        (e)     Distribution on Other Terminations of Service.

        In the case of a Participant who terminates service for reasons other
than death, disability, or retirement after attaining Normal Retirement Age or
Early Retirement Age, such Participant shall receive a distribution in a single
lump-sum payment, as soon as practicable after the date of termination;
provided, however, if the Participant elects at a time and in a manner specified
by the Administrator, the Administrator shall instruct the Trustee to purchase
on behalf of the Participant a life annuity or Qualified Joint and Survivor
Annuity, except that the annuity starting date will be no earlier than the
Participant's attainment of age 59-1/2 and will be no later than the
Participant's attainment of age 65.

        (f)     Accounts of $5,000 or Less.

        Notwithstanding any provision to the contrary, if the nonforfeitable
amount in a Participant's account is $3,500 or less ($5,000 or less on the date
of the Participant's termination of employment, effective as of January 1,
2000), the benefit shall be distributed in a single lump-sum payment.

        (g)     Accounts of More Than $5,000.

        If the nonforfeitable amount in a Participant's account is more than
$3,500 (more than $5,000 on the date of the Participant's termination of
employment effective as of January 1, 2000), no amount shall be distributed to a
Participant who has not attained Normal Retirement Age without his consent.
Unless the Participant has made an election in accordance with paragraph (c),
the Participant's entire account shall continue to be invested in accordance
with the terms of the Plan until the Participant reaches Normal Retirement Age
and shall then be distributed pursuant to this Section.

                                      -26-
<PAGE>

        (h)     Required Distributions.

        Notwithstanding any other provisions of the Plan relating to the
distribution of a Participant's account, unless a Participant elects otherwise,
the distribution of benefits under the Plan will begin not later than the 60th
day after the latest of the close of the Plan Year in which (i) the Participant
attains age 65, (ii) occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan, or (iii) the Participant
terminates service with the Employer. Notwithstanding any other provision of the
Plan, to the extent required under section 401(a)(9) of the Code, the entire
account balance of a Participant who is a 5% owner (as defined in section 416 of
the Code) or who attains age 70-1/2 prior to January 1, 2001 (i) shall be
distributed to him in a lump sum in cash not later than April 1 of the calendar
year following the calendar year in which individual attains age 70-1/2 and,
with respect to such Participants who are Employees, on December 31 of such year
and each succeeding year or (ii) shall commence to be distributed to him in one
of the forms permitted under Section 11 (b) not later than the time specified in
clause (i) of this paragraph. In addition, the account balance of any other
Participant must be distributed or commence to be distributed not later than the
April 1 of the calendar year following the later of (i) the calendar year in
which individual attains age 70-1/2 or (ii) the calendar year in which
individual incurs a termination of employment.

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

        (i)     Eligible Rollover Distributions.

        This section applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee's election under this paragraph, a distributee may elect, at
the time and in the manner prescribed by the Administrator, to have a portion of
an eligible rollover distribution paid directly to an eligible retirement plan
specified by the distributee in a direct rollover. The Administrator shall
establish rules regarding the eligibility of a distributee to elect a direct
rollover in accordance with the requirements of section 401(a)(31) of the Code.

        The terms used in this paragraph shall be defined as follows:

                                      -27-
<PAGE>

                (i)     "Eligible rollover distribution" means a distribution of
all or any portion of the balance to the credit of the distributee, except that
an eligible rollover distribution does not include: (A) any distribution that is
one of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the distributee or the
joint lives (or joint life expectancies) of the distributee and the
distributee's designated Beneficiary, or for a period of ten years or more; (B)
any distribution to the extent such distribution is required under section
401(a)(9) of the Code; (C) any hardship distribution described in Section
401(k)(2)(B)(i)(iv) received after December 31, 1998, (D) the portion of any
distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities); (E) any hardship distribution under Section 12(a) of this Plan; or
(F) any other distribution exempted under regulations or other guidance issued
by the Internal Revenue Service.

                (ii)    "Eligible retirement plan" means an individual
retirement account described in section 408(a) of the Code, an individual
retirement annuity described in section 408(b) of the Code, or a qualified trust
described in section 401(a) of the Code that accepts the distributee's eligible
rollover distribution. However, in the case of an eligible rollover distribution
to a surviving spouse, an eligible retirement plan is an individual retirement
account or an individual retirement annuity.

                (iii)   "Distributee" includes an Employee or former Employee.
In addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is an alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are distributees with regard to the interest of the spouse or
former spouse.

                (iv)    "Direct rollover" means a payment by the Plan to the
eligible retirement plan specified by the distributees.

                                      -28-
<PAGE>

SECTION 12.     WITHDRAWALS.

        (a)     Hardship.

        Any Participant who suffers a financial hardship may request a
withdrawal from his account in the Trust of any sum not in excess of the amount
of his Salary Deferrals contributed to such account, plus earnings on such
Salary Deferrals credited as of December 31, 1988, by written notice to the
Administrator setting forth the amount requested and the facts establishing the
existence of the financial hardship. For purposes of this Section 12, a
"financial hardship" is defined as an immediate and heavy financial need of the
Participant where such Participant lacks other available resources to meet this
need.

        The following are the only financial needs considered immediate and
heavy:

                (i)     Expenses for medical care (within the meaning of section
213(d) of the Code) incurred by the Participant or the Participant's spouse,
children, or dependents (as defined in section 152 of the Code) or necessary for
these persons to obtain such medical care;

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

                (iii)   Payment of tuition and related educational fees for the
next 12 months of post- secondary education for the Participant or the
Participant's spouse, children, or dependents (as defined in section 152 of the
Code); or

                (iv)    The need to prevent the eviction of the Participant
from, or a foreclosure on the mortgage of, the Participant's principal
residence.

        A hardship withdrawal, if approved, shall be limited to the amount
necessary to satisfy the financial hardship, and shall be paid to the
Participant in a single lump-sum payment. A Participant must obtain all
distributions (other than hardship distributions) and all nontaxable loans
currently available under the Plan and all other plans maintained by the
Employer in order for the distribution to be deemed necessary to satisfy the
financial hardship. A Participant receiving a hardship withdrawal shall not be
permitted to make Salary Deferrals for 12 months after receipt of the hardship
withdrawal, and shall not be permitted to make Salary Deferrals in the calendar
year after the calendar year of the hardship withdrawal in excess of $11,000 (as
adjusted under section 402(g) of the Code) less the amount of Salary Deferrals
for the calendar year of the hardship withdrawal.

        Determination of whether hardship exists, and the amount that may be
withdrawn in the event of hardship, shall be made by the Administrator, in its
sole discretion, on the basis of all relevant facts and circumstances.

                                      -29-
<PAGE>

        (b)     Attainment of Age 59-1/2 or 65.

        A Participant who has attained age 59-1/2 may request a withdrawal of
all or a portion of his account, attributable to Salary Deferrals. Upon
attainment of age 65, a Participant may also request a withdrawal of all or a
portion of his nonforfeitable account balance attributable to Salary Deferrals,
Employer Matching Contributions, Employer Non-Elective Contributions and
Employer contributions made prior to January 1, 1989, and rollover contributions
in accordance with Section 4 of the Plan.

        Upon receipt of such request the Administrator will direct the Trustee
to distribute the amount of the withdrawal to the Participant in a single lump
sum.

        (c)     Other Withdrawals.

        A Participant may request a withdrawal of his nonforfeitable account
balance, if any of the following occur:

                (i)     termination of this Plan without the establishment of a
successor defined contribution Plan;

                (ii)    sale by the Company of substantially all of the assets
it uses in a trade or business (but only with respect to a Participant who is
employed with the entity acquiring such assets); or

                (iii)   sale by the Company of its interest in a subsidiary (but
only with respect to a Participant who is employed by such subsidiary).

        Upon receipt of such request, the Administrator will direct the Trustee
to distribute to the Participant in a single lump-sum payment the amount of the
withdrawal.

                                      -30-
<PAGE>

SECTION 13.     LOANS TO PARTICIPANTS.

        (a)     Requests for Loans.

        A Participant who is a "party-in-interest," as defined in section 3(14)
of ERISA, may request, on an application (the "Loan Application") prescribed by
the Administrator, that the Administrator direct the Trustee to make a loan from
the Trust to the Participant, subject to the terms and conditions of this
Section. A Participant is generally a "party-in-interest" if the Participant is
(i) a current employee of the Employer, (ii) a former employee of the Employer
who is a director, officer, or 10% stockholder of the Employer, or (iii) a
former employee of the Employer who is an officer, director, or 10% stockholder
of an entity owned 50% or more by the Employer. A Participant who is otherwise
eligible to request a loan may do so only once every 12 months and may have only
one loan from the Plan outstanding at any time.

        Loans shall be available to all Participants on a reasonably equivalent
basis and shall not be made available to Highly Compensated Employees in an
amount greater than the amount made available to Non-Highly Compensated
Employees. However, the Administrator may make distinctions based on
creditworthiness, state law restrictions affecting payroll deductions, and any
other factor that may adversely affect the Trust's ability to assure repayment
through payroll deductions. The Administrator may reduce or refuse a requested
loan where it determines that timely repayment of the loan is not assured.

        A Participant may apply for a loan by completing and returning to the
Administrator the Loan Application. The Administrator shall review the Loan
Application and shall approve or deny a loan in its sole discretion. If
approved, the loan shall be documented by a promissory note, a payroll
withholding authorization, and certain other forms that the Participant will be
required to sign and which are described in the Loan Application. The Loan
Application also contains the following information:

                (i)     the person authorized to administer loans made under
this Section;

                (ii)    the procedure for applying for loans;

                (iii)   the basis on which loans will be approved or denied;

                (iv)    limitations on the types and amount of loans available;

                (v)     how the interest rate will be determined;

                (vi)    the collateral required for a loan; and

                (vii)   events constituting a default and the action that will
be taken by the Plan in the event of a default.

                                      -31-
<PAGE>

        The Administrator is authorized to amend the Loan Application and the
other forms used to document and secure loans in such manner and at such times
as the Administrator, in its discretion, deems necessary or appropriate. The
Loan Application is incorporated in this Plan by this reference and is deemed to
be a part of this Plan.

        (b)     Security.

        The Administrator shall require that each loan be evidenced by a note
executed in favor of the Trust and that the loan shall be secured by the entire
nonforfeitable amount in the Participant's account.

        Any note evidencing a loan to a Participant made under this Section
shall be deemed to be an asset of the Trust which is allocable to the borrowing
Participant's account. The fair market value of the note shall be equal to the
unpaid balance of the note plus any accrued interest.

        (c)     Amount of Loans.

        The minimum amount of any loan is $1,000.  The maximum amount of any
loan, together with the aggregate amount of principal and accrued interest owed
by the Participant with respect to any prior loan from the Trust, may not exceed
the lesser of:

                (i)     $50,000 reduced by the excess (if any) of:

                        (A)     the highest outstanding balance of loans from
the Plan to the Participant during the one-year period ending on the day before
the date on which such loan was made; or

                        (B)     the outstanding balance of loans from the Plan
to the Participant on the date on which such loan was made; or

                (ii)    one-half the present value of the nonforfeitable accrued
balance of the Participant under the Plan determined as of the Valuation Date
immediately preceding the date the loan is requested.

        (d)     Repayment.

        The loan shall be repayable by payroll deductions no less frequently
than monthly. Moreover, the payments of principal and interest shall be
amortized on a level basis over the life of the loan. No loan may exceed a
period of five years.

        Notwithstanding any other provision of the Plan, loan repayments will be
suspended under the Plan as permitted under section 414(u)(4) of the Code (for
Participants on a leave of absence for "qualified military service" (as defined
in Section 24(f) of the Plan)).

                                      -32-
<PAGE>

        Notwithstanding any other provision of the Plan, a loan made pursuant to
this Section shall be a first lien against the Participant's account. Any amount
of principal or interest due and unpaid on the loan at the time of any default
on the loan shall be satisfied by deduction from the Participant's account, and
shall be deemed to have been distributed to the Participant, as follows:

                (i)     in the case of a Participant who is an Employee and who
is not, at the time of the default, eligible to receive a distribution of his
account, at such time as INDIVIDUAL first becomes eligible to receive a
distribution of his account; or

                (ii)    in the case of any other Participant, immediately upon
such default.

        (e)     Administration of Loans.

        The Administrator shall promulgate rules and procedures relating to such
loans. Without limiting the foregoing, the Administrator may require that the
spouse of a Participant requesting a loan consent in writing to the loan and to
the reduction that may result in the death benefit otherwise payable under this
Plan if there is a default on the loan. Such consent shall be obtained within
the 90-day period ending on the day the loan is made and shall satisfy the
spousal consent requirements of a Qualified Election. In addition to the
limitations contained in the Loan Application, the Administrator may further
limit the amount of a loan in order to maintain a reserve chargeable against a
Participant's account for income taxes which may have to be withheld by the
Trustee if the loan becomes a deemed distribution to the Participant. Any taxes
required to be withheld by the Trustee shall be charged to and shall reduce the
Participant's account to the extent possible and, if not payable from the
Participant's account, shall be an administrative expense of the Plan and shall
be reimbursed by the Participant.

                                      -33-
<PAGE>

SECTION 14.     ADMINISTRATION BY TRUSTEE.

        (a)     Trust Agreement.

        The Company has entered into a trust agreement appointing a Trustee
under the Plan. The trust agreement provides, among other things, that all funds
received by the Trustee thereunder will be held by the Trustee or its designee,
and that no part of the corpus or income of the Trust held by the Trustee or its
designee shall be used for, or diverted to, purposes other than for the
exclusive benefit of Participants or their Beneficiaries. The Company shall have
authority to remove such Trustee or any successor Trustee, and any Trustee or
any successor Trustee may resign. Upon removal or resignation of a Trustee, the
Company shall appoint a successor Trustee.

        The Company shall have authority to direct that there shall be more than
one Trustee under the trust agreement and to determine the portion of the assets
under the trust agreement to be held by each such Trustee. If such a direction
is given, the Company shall designate the additional Trustee or Trustees, and
each Trustee shall hold, administer, and keep records with respect to the
portion of such assets held by it.

        The Company shall also have the authority to direct that all or a
portion of the assets invested in any of the investment options available under
the Plan be segregated into one or more separate accounts, each of which shall
be invested by an Investment Manager (or such other person or entity) designated
by the Company, and to determine the flow of funds into, from, and between the
investment funds in a manner consistent with the investment instructions of
Participants.

        The Company shall have authority to issue general investment guidelines
governing investments by the Trustee and Investment Managers.

        (b)     Investment Responsibility.

        Unless otherwise determined by the Trustee, the Trust assets shall be
invested in the investment funds available under the Plan. Each Participant or
Beneficiary shall direct the Trustee as to the investment of assets allocated to
his account in one or more of such investment funds pursuant to the provisions
of Section 8, and the Trustee shall be subject to the direction of the
Participant or Beneficiary. The Administrator shall be responsible for directing
Participants and Beneficiaries as to the manner in which information and
disclosure with respect to the investment funds may be obtained. The Trustee and
the Administrator shall develop reasonable administrative procedures governing
investment directions by Participants and Beneficiaries, including without
limitation, rules regarding the frequency of changes in investment elections and
the percentage of each account which may be invested in a particular investment
fund; provided, however, that changes in investment elections shall be permitted
no less frequently than once each calendar quarter. In such case, the
Participant or Beneficiary shall not be deemed to be a fiduciary by reason of
such exercise of control over the assets in his account, and no person who is
otherwise a fiduciary with respect to the Plan shall be liable for any loss or
by reason of any breach, which results from such Participant's or

                                      -34-
<PAGE>

Beneficiary's exercise of control. All investment-related expenses, including
administrative fees charged by brokerage houses, may be charged against the
account of the Participant or Beneficiary with respect to which the Participant
or Beneficiary directs the investment of assets.

        Subject to the foregoing restrictions, the Trustee shall be authorized
and empowered to invest and reinvest all or any part of the Trust assets in any
property, including, but not limited to, capital or common, preferred or
preference stock (whether voting or nonvoting and whether or not currently
paying a dividend), shares of regulated investment companies, convertible
securities, and corporate and governmental obligations. Subject to the
applicable provisions of Title I of ERISA, the Trustee shall not be bound as to
the character of any investments by any statute, rule of court, or custom
governing the investment of Trust assets in making and retaining such
investments and reinvestments. Notwithstanding anything herein to the contrary,
the Trustee shall not maintain any indicia of ownership of any asset held in the
Trust outside the jurisdiction of the District Courts of the United States
unless such holding is approved through a ruling or regulation promulgated under
ERISA by the Secretary of Labor, nor shall the Trustee engage in any transaction
that would be prohibited under ERISA or the Code.

        (c)     Other Powers.

        In addition to the authority and powers enumerated in the preceding
paragraph (b), the Trustee is authorized and empowered with respect to the
Trust:

                (i)     subject to the preceding paragraph (b), and subject to
any proper investment instructions from Participants pursuant to the terms of
the Plan, to sell, exchange, convey, transfer, or otherwise dispose of, either
at public or private sale, any property, real, personal, or mixed, at any time
held by it, for such consideration and on such terms and conditions as to credit
or otherwise as the Trustee may, in its sole discretion, deem to be in the best
interest of the Trust;

                (ii)    to vote, in person or by proxy, any stocks, bonds, or
other securities held by it; to exercise any options appurtenant to any stocks,
bonds, or other securities, or to exercise any rights to subscribe for
additional stocks, bonds, or other securities, and to make any and all necessary
payments therefor; to-join in, or to dissent from, and to oppose, the
reorganization, consolidation, liquidation, sale, or merger of corporations or
properties in which it may be interested as Trustee, upon such terms and
conditions as it may deem advisable;

                (iii)   to make, execute, acknowledge, and deliver any and all
documents of transfer and conveyance and any and all other instruments that may
be necessary or appropriate to execute the powers granted herein;

                (iv)    to register any investment held in the Trust in the name
of the Trust or in the name of a nominee, and to hold any investment in bearer
form, but the books and records of the Trustee shall at all times show that all
such investments are part of the Trust;

                (v)     to employ suitable agents and counsel (who may also be
agents and/or counsel for the Employer) and to pay their reasonable expenses and
compensation; and

                                      -35-
<PAGE>

                (vi)    subject to Title I of ERISA, to borrow or raise monies
for the purpose of the Trust from any source and, for any sum so borrowed, to
issue a promissory note as Trustee, but nothing contained herein shall obligate
the Trustee to render itself liable in its individual capacity for the amount of
any such borrowing, and no person loaning money to the Trustee shall be bound to
see to the application of money loaned or to inquire into the validity or
propriety of such borrowing.

        Notwithstanding any provision in this paragraph (c) to the contrary, the
Trustee shall not engage in any transaction that would be prohibited under ERISA
or the Code.

        (d)     Uninvested Funds.

        The Trustee may keep uninvested an amount of cash sufficient in its
opinion to enable it to carry out the purposes of the Plan; provided, however,
that the Trustee shall be responsible for assuring, to the extent practicable
and subject to paragraphs, (b) and (c) above, the daily investment of all cash
balances at any time held by the Trustee, so as to maintain daily uninvested
cash balances at a minimum. No income shall accrue to an account of any
Participant on such uninvested funds.

        (e)     Audit.

        The Company shall select a firm of independent certified public
accountants to examine and report on the financial statements of the Plan at
such times and intervals as are required by law or determined by it to be
reasonable and appropriate.

                                      -36-
<PAGE>

SECTION 15.     LEAVE OF ABSENCE, LAYOFF AND ABSENCE ON DISABILITY.

        If a Participant is granted a leave of absence by the Employer, no
Salary Deferrals shall be permitted during the period of the leave, and
deferrals shall be deemed to be suspended during such period.

        If a Participant is laid off, no Salary Deferrals shall be permitted
during the period of layoff, and deferrals shall be deemed to be suspended
during such period. If at the end of 12 months the Participant has not returned
as an Employee in active service, then notwithstanding any other provision of
the Plan, the individual's participation in the Plan shall terminate at such
time, and employment shall be deemed to have terminated at such time for the
purpose of distribution under the Plan.

        If a Participant is absent on account of disability and is receiving
disability benefits under a plan of the Employer, there shall be no Salary
Deferrals during the period of the leave, and Salary Deferrals shall be deemed
to be suspended during such period.

                                      -37-
<PAGE>

SECTION 16.     DESIGNATION OF BENEFICIARIES.

        A Participant may designate a Beneficiary, or Beneficiaries, to receive
all or part of the amount in the Participant's account in case of death. A
designation of Beneficiary may be replaced by a new designation or may be
revoked by the Participant at any time. A designation or revocation shall be on
a form to be provided for such purpose and shall be signed by the Participant
and delivered to the Administrator prior to death.

        In case of the death of the Participant, the amount in the Participant's
account with respect to which a designation of Beneficiary has been made (to the
extent it is valid and enforceable under applicable law) shall be distributed in
accordance with the Plan to the designated Beneficiary or Beneficiaries.

        The amount in the Participant's account distributable upon death and not
covered by such a designation shall be distributed to the Participant's estate.
If there shall be any question as to the legal right of any Beneficiary to
receive a distribution under the Plan, the amount in question may be paid to the
estate of the Participant, in which event the Trustee and the Employer shall
have no further liability to anyone with respect to such amount. The amount in
the Participant's account shall be distributed as a single payment as soon as
practicable after death.

        If the Participant's Beneficiary should die after the Participant but
before all or any payments or installments have been paid, a lump-sum payment of
the remaining amount will be made to such Beneficiary's estate.

        Notwithstanding the foregoing provisions of this Section 16 and subject
to the requirements for making a Qualified Election, if a Participant dies
leaving a surviving spouse, the Participant's surviving spouse shall be deemed
to be the Participant's designated Beneficiary for purposes of the Plan unless
the Participant has designated another person or entity as the Participant's
Beneficiary, the surviving spouse has consented in writing to such designation,
and the surviving spouse's consent acknowledges the effect of such designation
and has been witnessed by a notary public or a representative of the Plan.

                                      -38-
<PAGE>

SECTION 17.     BENEFITS NOT ASSIGNABLE.

        (a)     In General. Benefits or interests available hereunder will not
be subject to assignment or alienation, either voluntarily or involuntarily. For
purposes of this Section, a loan made to a Participant or Beneficiary shall not
be treated as an assignment or alienation if such loan is secured by the
Participant's nonforfeitable account balance and is exempt from the tax imposed
by section 4975 (relating to the tax on prohibited transactions) by reason of
section 4975(d)(1).

        (b)     Qualified Domestic Relations Orders.

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

                (ii)    QDRO Procedures.

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

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

                (iii)   QDRO Payouts.

                        (A)     Payment Upon Receipt of QDRO. Notwithstanding
any provision of this Plan to the contrary, any amounts of a Participant's
vested Account balances which, due to the

                                      -39-
<PAGE>

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

                        (B)     Subsequent Additional Amounts. The preceding
subparagraph (A) shall apply to any amounts of a Participant's vested account
balances which, due to the receipt of a domestic relations order determined to
be a qualified domestic relations order under subsection (b) above, become the
vested account balances of an alternate payee under such order after a payment
under subparagraph (A) above due to additional vesting, allocation of
contributions or earnings, or any other reason.

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

        (c)     Court Orders

        Notwithstanding any provision of the Plan to the contrary, the Plan
shall honor a judgment, order, decree or settlement providing for the offset of
all or a part of a Participants benefit under the Plan, to the extent permitted
under Code Section 401(a)(13)(C); provided that the requirements of Code Section
401(a)(13)(C)(iii) relating to the protection of the Participant's spouse (if
any) are satisfied.

                                      -40-
<PAGE>

SECTION 18.     EXPENSES.

        Except to the extent paid by an Employer in its sole discretion and
subject to the rules contained in ERISA, expenses of administering the Plan
shall be paid out of Trust assets and charged against Participants' accounts in
proportion to the balance of the accounts. All expenses of administering the
Trust, including but not limited to Trustee fees, investment management fees,
legal fees, expenses of any insurance company relating to any investment of the
Plan, and brokerage fees, transfer taxes, and other expenses incident to the
purchase or sale of securities by the Trustee shall be a charge to and borne by
the Trust. Such fees and expenses shall be allocated to each Participant's
account on the basis of the Participant's account balance as of the end of any
applicable accounting period. Taxes, if any, on any assets held or income
received by the Trustee shall be charged appropriately against the accounts of
Participants as the Administrator shall determine.

                                      -41-
<PAGE>

SECTION 19.     MODIFICATION OR MERGER OF PLAN.

        The Company may modify the Plan, provided that no part of the corpus or
income attributable to any funds received by the Trustee for the purposes of the
Plan shall be used for, or diverted to, purposes other than for the exclusive
benefit of Participants or their Beneficiaries. The Plan may be modified by
written resolution of the Board of Directors or any of its committees or, to the
extent authority with respect to modification of the Plan is delegated, by
written instrument signed by the Administrator. In this regard, the Company has
delegated authority to the Administrator to modify the Loan Application and the
other forms used to document and secure loans to Participants made in accordance
with Section 13. Any such modification shall be effective at such date as the
Company or the Administrator may determine, except that no such modification,
other than one of a minor nature, may apply to any period prior to the
announcement of the modification by the Company or the Administrator unless, in
the opinion of the Company or the Administrator, such modification is necessary
or advisable in order to comply with the provisions of the Code (including any
regulations or rulings thereunder) relating to the qualification of similar
plans or relating to the exemption of a trust established pursuant thereto or is
necessary or advisable in order to comply with any other applicable legal
requirements or would not adversely affect the rights of Participants in respect
of the Plan. Notice of any modification of the Plan shall be given promptly to
the Trustee. Amendments made to the Plan by the Company shall be binding on any
Affiliated Company that has adopted the Plan.

        If the Plan's vesting schedule set forth in Section 10(d) is amended, or
if the Plan is amended in any way that directly or indirectly affects the
computation of the percentage of the Participant's account balance that is
nonforfeitable, or if the Plan is deemed amended by an automatic change to or
from a top-heavy vesting schedule in accordance with Section 23, each
Participant with at least three Years of Service may elect, within a reasonable
period after the later of the adoption or effective date of the amendment, to
have his nonforfeitable percentage computed under the Plan without regard to
such amendment or change.

        There shall be no merger or consolidation of the Plan with, or transfer
of assets or liabilities of the Plan to, any other Plan unless each Participant
in the Plan would (if the Plan terminated immediately thereafter) receive a
benefit immediately after the merger, consolidation, or transfer which is equal
to or greater than the benefit the Participant would have been entitled to
receive immediately before the merger, consolidation, or transfer (if the Plan
had then terminated).

                                      -42-
<PAGE>

SECTION 20.     TERMINATION OF PLAN.

        The Company expects the Plan to be permanent, but the Company must
necessarily and does hereby reserve the right to terminate the Plan at any time,
for any reason whatsoever, by action of the Board of Directors. Each Employer
reserves the right to terminate the participation of its Employees under the
Plan and shall provide written notice to the Company that it has terminated the
Plan with respect to the Employees. Upon a complete or partial termination of
the Plan or complete discontinuance of contributions to the Plan (within the
meaning of section 1.411(d)-2 of the Internal Revenue Service regulations), no
further contributions shall be made under the Plan on behalf of affected
Participants, the account of each affected Participant shall fully vest, and
unless otherwise directed by the Company, the accounts of any affected
Participants shall be distributed at the time and in the manner specified in
Sections 11 and 12.

                                      -43-
<PAGE>

SECTION 21.     NOTICES, REPORTS AND STATEMENTS.

        (a)     General.

        Notices, reports and statements to be given, made or delivered to an
Employee shall be deemed duly given, made or delivered, when hand delivered, or
when delivered by first class mail addressed to the Employee at his last known
business or home address.

        (b)     Qualified Joint and Survivor Annuities.

        (i)     In the case of a Participant who has elected to receive a
Qualified Joint and Survivor Annuity or a single life annuity, between 30 and 90
days before the annuity starting date (as defined in section 417(f) of the Code)
(effective as of January. 1, 2000, between 7 and 90 days before the annuity
starting date), the Administrator shall provide each Participant a written
explanation of: (A) the terms and conditions of a Qualified Joint and Survivor
Annuity; (B) the Participant's right to make, and the effect and financial
consequences of, an election to waive the Qualified Joint and Survivor Annuity
form of benefit; (C) the relative values of the various optional forms of
benefit under the Plan; (D) the rights of a Participant's spouse regarding a
waiver of the Qualified Joint and Survivor Annuity; and (E) the right to make,
and the effect and financial consequences of, a revocation of a previous
election to waive the Qualified Joint and Survivor Annuity. A Participant's
waiver of the Qualified Joint and Survivor Annuity shall not be effective unless
made pursuant to a Qualified Election.

        The Administrator shall also provide each such Participant, within a
reasonable period after the Participant elects to receive a Qualified Joint and
Survivor Annuity or a single life annuity, a written explanation of the
qualified pre-retirement survivor annuity payable to the Participant's spouse if
the Participant dies prior to the annuity starting date in such terms and in
such manner as would be comparable to the explanation provided for meeting the
requirement of the notice described in the preceding paragraph for the Qualified
Joint and Survivor Annuity. A Participant's waiver of the qualified
pre-retirement survivor annuity shall not be effective unless made pursuant to a
Qualified Election.

                                      -44-
<PAGE>

SECTION 22.     ADMINISTRATION AND INTERPRETATION OF PLAN.

        The Company shall be the "administrator" and the "plan sponsor" of the
Plan, as those terms are defined in ERISA.

        The Company shall be or shall appoint another person (which may be a
person or entity related to the Company) to be the Administrator, which shall
have such powers as may be necessary to enable it to administer the Plan, except
for powers vested in the Company, the Trustee, and Investment Managers. The
Company and the Administrator may each employ persons to render advice with
regard to any of its responsibilities under the Plan.

        The Administrator shall have sole and absolute discretion (a) to
interpret the provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities in, the language of the Plan), (b) to make
factual findings with respect to any issue arising under the Plan, (c) to
determine the rights and status under the Plan of Participants and other
persons, (d) to decide disputes arising under the Plan and to make
determinations and findings (including factual findings) with respect to the
benefits payable thereunder and the persons entitled thereto as may be required
for the purposes of the Plan.

        In furtherance thereof, but without limiting the foregoing, the
Administrator is hereby granted the following specific authorities, which it
shall discharge in its sole and absolute discretion in accordance with the terms
of the Plan (as interpreted, to the extent necessary, by the Administrator): (a)
to resolve all questions (including factual questions) arising under the Plan as
to any individual's entitlement to become a Participant, (b) to determine the
amount of benefits, if any, payable with respect to any person under the Plan
(including, to the extent necessary, making any factual findings with respect
thereto), and (c) to conduct the claims and review procedure specified below in
this Section 22.

        All decisions of the Administrator as to the facts of any case and the
application thereof to any case as to the interpretation of any provision of the
Plan or its application to any case, and as to any other interpretative matter
or other determination or question related to the Plan shall be final and
binding on all parties affected thereby, subject to the provisions of the claims
and review procedure specified below in this Section 22.

        Claims will be processed in accordance with ERISA and regulations
thereunder, and shall include but not be limited to the following procedures:

                (i)     Claims by an Employee, or anyone claiming through an
Employee, shall be presented to the Company, which shall either arrange for
payment of the claim or refer it to the Administrator for decision. Adequate
notice shall be provided in writing to any person whose claim has been denied by
the Administrator, setting forth the specific reasons for such denial.

                                      -45-
<PAGE>

                (ii)    Any person whose claim for benefits has been denied may,
within 60 days after receipt of notice of denial, submit a written request for
review of the decision denying the claim. In such case, the Administrator shall
make a full and fair review of such decision within 60 days after receipt of a
request for review and notify the claimant in writing of the review decision,
specifying the reasons for such decision.

        The Company and the Administrator are each a named fiduciary as that
term is used in ERISA with respect to the particular duties and responsibilities
herein provided to be allocated to each of them, respectively. Any person, group
of persons, or any entity may serve in more than one fiduciary capacity with
respect to the Plan (including service both as a Trustee and as an
Administrator). The Company and the Administrator are each a named fiduciary as
that term is used in ERISA with respect to the particular duties and
responsibilities for the operation and administration of the Plan consistent
with the Plan's terms. The Company and other named fiduciaries may delegate any
of their responsibilities under the Plan by designating in writing other persons
to carry out any of such responsibilities (other than Trustee responsibilities
the delegation of which may be limited by law) under the Plan, and may employ
persons to advise them with regard to any such responsibilities. Any other
fiduciary of the Plan may delegate any responsibility with the written consent
of the Company.

        The Plan shall be governed by the laws of the State of Georgia (except
to the extent that such laws are preempted by ERISA or other federal law) and
applicable Federal law (including without limitation ERISA and the Code).

                                      -46-
<PAGE>

SECTION 23.     TOP-HEAVY PROVISIONS.

        In the event that the Plan is deemed a "Top-Heavy Plan" with respect to
any Plan Year (determined in accordance with paragraph (a) below), the following
provisions shall apply with respect to such Plan Year, notwithstanding any other
Plan provisions to the contrary:

        (a)     Top-Heavy Determination.

        This Plan shall be deemed a "Top-Heavy Plan" only with respect to any
Plan Year in which, as of the "Determination Date," the aggregate of the
accounts of "Key Employee" under the Plan exceeds 60% of the aggregate of the
accounts of all Participants under the Plan. For purposes of this Section 23,
"Determination Date" shall mean, with respect to any Plan Year, the last day of
the preceding Plan Year or, in the case of the first Plan Year, the last day of
such Plan Year. In determining whether or not this Plan is a "Top-Heavy Plan"
with respect to any Plan Year, the term "Key Employee" shall have the meaning
assigned to such term under section 416(i) of the Code, and the account balance
of any Participant who is not a "Key Employee" but who was a "Key Employee" in a
prior Plan Year, or who has not been credited with at least one Hour of Service
with the Employer at any time during the five-year period ending on the
Determination Date, shall not be taken into account. For purposes of determining
the amount of the account of any Participant, such amount shall be increased by
the aggregate distributions (if any) made with respect to such Participant under
this Plan during the five-year period ending on the "Determination Date."

        Each plan of an Employer required to be included in an "Aggregation
Group" shall be treated as a "Top-Heavy Plan": if such group is a "Top-Heavy
Plan". For purposes of this paragraph (a) "Aggregation Group" shall mean: (i)
each plan of the Employer in which a "Key Employee" is a Participant, and (ii)
each other plan of an Employer which enables the plan or plans described in the
preceding clause (i) to meet the requirements of section 40l(a)(4) or 4l0 of the
Code. Any plan of an Employer that is not required to be included in an
"Aggregation Group" may be treated as part of such group if such group would
continue to meet the requirements of sections 401(a)(4) and 410 of the Code.

        For purposes of this paragraph (a), "Top-Heavy Plan" means any
"Aggregation Group" if the sum (as of the "Determination Date") of the present
value of the cumulative accrued benefits for "Key Employees" under all defined
benefit plans included in such group and the aggregate of the accounts of "Key
Employees" under all defined contribution plans included in such group exceeds
60% of a similar sum determined for all Employees.

        (b)     Compensation

        For purposes of this Section 23, "compensation" shall mean Section 415
Compensation, but shall not exceed the amount determined by the Secretary of the
Treasury under section 401(a)(17) of the Code.

                                      -47-
<PAGE>

        (c)     Vesting.

        Notwithstanding Section 10(d), the following vesting schedule shall, to
the extent it results in more rapid vesting than provided for under Section
10(d), apply to any Participant hereunder, as provided in section 416 of the
Code:

<TABLE>
<CAPTION>
                        Years of Service          Nonforfeitable Percentage
<S>                                               <C>
                            Less than 0                        0
                            3 or more                         100
</TABLE>

If the Plan ceases to be a "Top-Heavy Plan," then any Employee who has at least
three Years of Service as of the last day of the last Plan Year in which the
Plan was "Top-Heavy Plan" may elect that the provisions contained in the
preceding sentence shall continue to apply with respect to such Employee. For
any other Employee, such provisions shall apply only to the Units in the
Employee's account representing Non-Vested Amounts as of the last day of the
last Plan Year in which the Plan was "Top-Heavy Plan."

        (d)     Minimum Benefits.

        Employer contributions (if any) allocated to the account of each
"non-key employee" for each Plan Year in which the Plan is "Top-Heavy Plan"
shall equal the lesser of 3% of the compensation of each "non-key employee" for
such Plan Year or the largest percentage of compensation provided through
Employer contributions on behalf of any "Key Employee" for such Plan Year.
However, in the event that a plan sponsored by the Employer which is qualified
under section 401(a) of the Code does not always use, for purposes of
determining the fractions under section 415(e), a factor of 1.0 of the
applicable dollar limitations, then the number 4% shall replace the number 3% in
the previous sentence, provided that the plan or group of plans would not be
"Top-Heavy Plan" if "90%" were substituted for "60%" in making this
determination. For this purpose, a "non-key employee" shall mean any employee of
an Employer who is not a "Key Employee," and who is an Eligible Employee or who
would be an Eligible Employee after completing one Year of Service.

        The preceding paragraph shall not apply to any "non-key employee" who is
also covered by a defined benefit Plan sponsored by an Employer during a Plan
Year in which this Plan is "Top Heavy" if such Employee is entitled for such
Plan Year to a minimum benefit accrual under the defined benefit Plan, in
accordance with section 416(c)(1) of the Code.

        All Participants who have not terminated employment as of the last day
of the Plan Year must receive the minimum contribution. Employees who (i) failed
to complete one thousand (1,000) Hours of Service during the Plan Year, (ii)
declined to make mandatory contributions to the Plan or (iii) would have been
excluded from the Plan because their Compensation is less than a stated amount,
must nevertheless be considered Participants for purposes of the minimum
contribution in this Section 23(d) if such employees are required to be taken
into account in order for the Plan to satisfy the coverage requirements of
Section 410(b) of the Code in accordance with Section

                                      -48-
<PAGE>

401(a)(5) of the Code. The minimum contribution is determined without regard to
any Social Security contribution.

        (e)     Multiple Top-Heavy Plans.

        In the event that a Participant in the Plan is also participating in a
defined benefit plan maintained by the Employer or an Affiliated Company during
a Plan Year in which both the Plan and such defined benefit plan are
"top-heavy," the Participant shall receive the minimum accrued benefit under the
defined benefit plan rather than the minimum contribution provided for in this
Plan In the event that a Participant in the Plan is also participating in
another defined contribution plan maintained by the Employer of an Affiliated
Company during a Plan Year in which both the Plan and such other defined
contribution plan are "top-heavy," the Participant shall receive the minimum
contribution under the other defined contribution plan rather than the minimum
contribution provided for in this Plan.

                                      -49-
<PAGE>

SECTION 24.     MISCELLANEOUS PROVISIONS.

        (a)     No Employment Rights Created.

        Neither the establishment nor the continuation of the Plan, nor anything
contained within the Plan, shall be deemed to give any person the right to
continued employment by the Company or an Affiliated Company, or to affect the
right of the Company or any Affiliated Company to terminate the employment of
any individual.

        (b)     Rights to Trust Assets.

        No Participant or Beneficiary shall have any right to, or interest in,
any assets of the Trust upon termination of employment or otherwise, except as
specifically provided under the Plan, and then only to the extent of the
benefits payable under the Plan to the Participant or Beneficiary out of the
assets of the Trust. All payments of benefits under this Plan shall be made
solely out of assets of the Trust, and neither the Company, the Affiliated
Companies, nor any fiduciary shall be liable therefor in any manner.

        (c)     Severability.

        In the event that any provision of this Plan is held invalid or illegal
for any reason, this invalidity or illegality shall not affect the remaining
parts of the Plan, and the Plan shall be enforced and construed as if the
provision had never been inserted herein.

        (d)     Facility of Payment.

        If the Administrator shall find that any person to whom a benefit is
payable from the Trust is unable to care for the person's own affairs because of
illness or accident, any payments due (unless a prior claim for the benefits has
been made by a duly appointed guardian, committee, or other legal
representative) may be paid to the recipient's spouse, child, parent, brother or
sister, or to any person deemed by the Administrator to have incurred expense
for the person otherwise entitled to payment. Any such payment shall be a
complete discharge of any liability under the Plan for these benefits.

        (e)     Missing Persons.

        If the Administrator is unable to locate a proper payee within one year
after a benefit becomes payable, the Administrator may treat the benefit as a
forfeiture. However, if a claim for benefits is subsequently presented by a
person entitled to a payment, the forfeited amount shall be re-credited upon
verification of the claim, except for those amounts that have been paid pursuant
to an escheat or other applicable law.

        (f)     Military Service.

                                      -50-
<PAGE>

        Notwithstanding any provisions of this Plan to the contrary,
contributions, benefits and service credit with respect to qualified military
service will be provided in accordance with Section 414(u) of the Code.
"Qualified military service" means any service in the uniformed services (as
defined in chapter 43 of Title 38 of the United States Code) by any individual
if such individual is entitled to re-employment rights under such chapter with
respect to such service.

        (g)     Electronic Means of Communication.

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

        (h)     Plan Conversions.

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

                                      -51-
<PAGE>

SECTION 25.     EXECUTION.

        To record the adoption of this Plan, the Company has caused this Plan to
be executed on its behalf this 25th day of February, 2002, effective as of
January 1, 2002.

                                    SIMMONS COMPANY

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

                                      -52-
<PAGE>

                                   APPENDIX A

                The following Affiliates have adopted the Plan:

<TABLE>
<CAPTION>
                Name                                                  Date of Adoption
                ----                                                  ----------------
<S>                                                                   <C>
                Simmons Caribbean Bedding, Inc. *                     December 31, 2000*

                Simmons Contract Sales, LLC                           December 29, 2001

                World of Sleep Outlets, LLC                           December 29, 2001

                The Simmons Manufacturing Company, LLC                December 29, 2001
</TABLE>

* Simmons Caribbean Bedding, Inc. became an Affiliated Company on December 31,
2000 with respect to the Non-Elective Employer Contribution, and on January 1,
2002 with respect to Salary Deferrals and Employer Matching Contributions.

                                      -53-<PAGE>

                                                                 EXHIBIT 10.27.1

                                 FIRST AMENDMENT

                                     TO THE

                         SIMMONS RETIREMENT SAVINGS PLAN

SECTION I. LIMITATIONS ON CONTRIBUTIONS

1. Effective date. This Section shall be effective for limitation years
beginning after December 31, 2001.

2. Maximum annual addition. The annual addition that may be contributed or
allocated to a Participant's Account under the Plan for any limitation year
shall not exceed the lesser of:

(a) $40,000, as adjusted for increases in the cost-of-living under Section
415(d) of the Code, or

(b) 100 percent of the Participant's Salary, within the meaning of Section
415(c)(3) of the Code, for the limitation year. The Salary limit referred to in
(b) shall not apply to any contribution for medical benefits after separation
from service (within the meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an annual addition.

SECTION II. INCREASE IN SALARY LIMIT

The annual Salary of each Participant taken into account in determining
allocations for any Plan Year beginning after December 31, 2001, shall not
exceed $200,000, as adjusted for cost-of-living increases in accordance with
Section 401(a)(17)(B) of the Code. Annual Salary means Salary during the Plan
Year or such other consecutive 12-month period over which Salary is otherwise
determined under the Plan (the determination period). The cost-of-living
adjustment in effect for a calendar year applies to annual Salary for the
determination period that begins with or within such calendar year.

SECTION III. MODIFICATION OF TOP-HEAVY RULES

1. Effective date. This Section shall apply for purposes of determining whether
the Plan is a top-heavy Plan under Section 416(g) of the Code for Plan Years
beginning after December 31, 2001, and whether the Plan satisfies the minimum
benefits requirements of Section 416(c) of the Code for such years. This Section
amends Section 23 of the Plan.

<PAGE>

2. Determination of top-heavy status.

2.1 Key Employee. Key Employee means any Employee or former Employee (including
any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Employer having annual Salary greater
than $130,000 (as adjusted under Section 416(i)(1) of the Code for Plan Years
beginning after December 31, 2002), a 5-percent owner of the Employer, or a
1-percent owner of the Employer having annual Salary of more than $150,000. For
this purpose, annual Salary means Salary within the meaning of Section 415(c)(3)
of the Code. The determination of who is a Key Employee will be made in
accordance with Section 416(i)(1) of the Code and the applicable regulations and
other guidance of general applicability issued thereunder.

2.2 Determination of present values and amounts. This Section 2.2 shall apply
for purposes of determining the present values of accrued benefits and the
amounts of Account balances of Employees as of the determination date.

2.2.1 Distributions during year ending on the determination date. The present
values of accrued benefits and the amounts of Account balances of an Employee as
of the determination date shall be increased by the distributions made with
respect to the Employee under the Plan and any Plan aggregated with the Plan
under Section 416(g)(2) of the Code during the 1-year period ending on the
determination date. The preceding sentence shall also apply to distributions
under a terminated Plan which, had it not been terminated, would have been
aggregated with the Plan under Section 416(g)(2)(A)(i) of the Code. In the case
of a distribution made for a reason other than separation from service, death,
or disability, this provision shall be applied by substituting "5-year period"
for "1-year period."

2.2.2 Employees not performing services during year ending on the determination
date. The accrued benefits and accounts of any individual who has not performed
services for the Employer during the 1-year period ending on the determination
date shall not be taken into account.

3. Minimum benefits.

3.1 Employer Matching Contributions. Employer Matching Contributions shall be
taken into account for purposes of satisfying the minimum contribution
requirements of Section 416(c)(2) of the Code and the Plan. The preceding
sentence shall apply with respect to Employer Matching Contributions under the
Plan or, if the Plan provides that the minimum contribution requirement shall be
met in another Plan, such other Plan. Employer Matching Contributions that are
used to satisfy the minimum contribution requirements shall be treated as
Employer Matching Contributions for purposes of the actual contribution
percentage test and other requirements of Section 401(m) of the Code.

<PAGE>

SECTION IV. DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS

1. Effective date. This Section shall apply to distributions made after December
31, 2001.

2. Modification of definition of eligible retirement plan. For purposes of the
direct rollover provisions in Section 11(i) of the Plan, an eligible retirement
Plan shall also mean an annuity contract described in Section 403(b) of the Code
and an eligible plan under Section 457(b) of the Code which is maintained by a
state, political subdivision of a state, or any agency or instrumentality of a
state or political subdivision of a state and which agrees to separately account
for amounts transferred into such plan from this Plan. The definition of
eligible retirement plan shall also apply in the case of a distribution to a
surviving spouse, or to a spouse or former spouse who is the alternate payee
under a qualified domestic relation order, as defined in Section 414(p) of the
Code.

3. Modification of definition of eligible rollover distribution to exclude
hardship distributions. For purposes of the direct rollover provisions in
Section 11(i) of the Plan, any amount that is distributed on account of hardship
shall not be an eligible rollover distribution and the distributee may not elect
to have any portion of such a distribution paid directly to an eligible
retirement Plan.

SECTION V. ROLLOVERS DISREGARDED IN INVOLUNTARY CASH-OUTS

Rollovers disregarded in determining value of Account balance for involuntary
distributions. For purposes of Section 11(f) of the Plan, the value of a
Participant's nonforfeitable Account balance shall be determined without regard
to that portion of the Account balance that is attributable to rollover
contributions (and earnings allocable thereto) within the meaning of Sections
402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code. If
the value of the Participant's nonforfeitable Account balance as so determined
is $5,000 or less, the Plan shall immediately distribute the Participant's
entire nonforfeitable Account balance.

SECTION VI. MODIFICATION OF TOP-HEAVY RULES

The top-heavy requirements of Section 416 of the Code and Section 23 of the Plan
shall not apply in any year beginning after December 31, 2001, in which the Plan
consists solely of a cash or deferred arrangement which meets the requirements
of Section 401(k)(12) of the Code and Employer Matching Contributions with
respect to which the requirements of Section 401(m)(11) of the Code are met.

<PAGE>

SECTION VII. SUSPENSION PERIOD FOLLOWING HARDSHIP DISTRIBUTION

A Participant who receives a distribution of Salary Deferrals after December 31,
2001, on Account of hardship shall be prohibited from making Salary Deferrals
under this and all other Plans of the Employer for 6 months after receipt of the
distribution. A Participant who receives a distribution of Salary Deferrals in
calendar year 2001 on account of hardship shall be prohibited from making Salary
Deferrals under this and all other Plans of the Employer for the period
specified in Section 12(a).

SECTION VIII. DISTRIBUTION UPON SEVERANCE FROM EMPLOYMENT

A Participant's Salary Deferrals, qualified Employer Non-elective Contributions,
qualified Employer Matching Contributions, rollover contributions and earnings
attributable to these contributions shall be distributed on account of the
Participant's severance from employment. However, such a distribution shall be
subject to the other provisions of the Plan regarding distributions, other than
provisions that require a separation from service before such amounts may be
distributed. Distribution upon severance from employment shall commence for
distributions after December 31, 2001.

                                            SIMMONS COMPANY

Date: February 25, 2002

                                            By: /s/

                                                      William S. Creekmuir

                                            Its: Executive Vice President & CFO

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