EXHIBIT 10.39

AMENDMENT NO. 1

TO

SEALY PROFIT SHARING PLAN

 

This Amendment No. 1 is executed as of the date set forth below by Sealy
Corporation (the “Company”);

 

WITNESSETH:

 

WHEREAS, the Company previously established the Sealy, Incorporated Employees’
Thrift Plan (the “Thrift Plan”), effective January 1, 1977; and

 

WHEREAS, the Company amended and restated the Thrift Plan as the Sealy Profit
Sharing Plan (the “Plan”), effective January 1, 1988, in order to provide
Participants with the opportunity to make deferred pay contributions pursuant to
Section 401(k) of the Internal Revenue Code (the “Code”) and to make certain
other desirable changes; and

 

WHEREAS, the Company has amended and restated the Plan on various occasions to
comply with changes in the law and to make certain other necessary and desirable
changes; and

 

WHEREAS, the Company most recently amended and restated the Plan generally
effective December 1, 2006; and

 

WHEREAS, pursuant to Section 16.1 of the Plan, the Company has retained the
right to make additional amendments thereto; and

 

WHEREAS, the Company desires to amend the Plan in order to secure a favorable
determination letter from the Internal Revenue Service;

 

NOW, THEREFORE, pursuant to Section 16.1 of the Plan, the Company hereby amends
the Plan, effective as hereinafter provided, as follows:

 

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1.             Effective December 1, 2007, the Plan is hereby amended by the
deletion of Plan Section 2.6 in its entirety and the substitution in lieu
thereof of a new Section 2.6 to read as follows:

 

“2.6         Annual Additions.  The words “Annual Additions” shall mean with
respect to each Participant the sum of the following amounts in any Limitation
Year:

 

(a)                                  the contributions of a Participating
Company (including amounts contributed by the Participating Companies to the
Trustee pursuant to a Participant’s deferral election under Section 4.1 hereof)
or a Related Company credited to his accounts with respect to such Limitation
Year under all defined contribution plans of a Participating Company or any
Related Company, which plans meet the requirements of Code Section 401(a);

 

(b)                                 forfeitures creditable to his accounts under
all such defined contribution plans of a Participating Company or any Related
Company with respect to such Limitation Year; and

 

(c)                                  unless the provisions of this subsection
cease to be required by the Code, amounts allocated, in Limitation Years
beginning after March 31, 1984, to an individual medical account, as defined in
Code Section 415(l)(2), which is part of a pension or annuity plan maintained by
a Participating Company or any Related Company and amounts derived from
contributions paid or accrued after December 31, 1985, in Limitation Years
ending after such date, which are attributable to the separate account of a key
employee, as defined in Code Section 419A(d)(3), under a welfare benefit fund,
as defined in Code Section 419(e), maintained by a Participating Company or any
Related Company.

 

Annual Additions do not include rollover or transfer contributions, catch-up
contributions, loan repayments, restorative payments, or repayments of amounts
described in Code Section 411(a)(7)(B).”

 

2.             Effective December 1, 2007, the Plan is hereby amended by the
deletion of subsection (a) to Plan Section 2.45 in its entirety and the
substitution in lieu thereof of a new subsection (a) to read as follows:

 

“(a)         when used to determine:

 

(1)                                  whether the amounts allocated to Accounts
comply with the limitations on Annual Additions and annual benefits set forth in

 

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Code Section 415, described in Article 21 hereof, and except as further modified
in such Article 21;

 

(2)                                  whether the amounts allocated to Accounts
comply with the “amounts testing” requirements of Code Section 401(a)(4); and

 

(3)                                  the identity of Highly Compensated
Employees for purposes of the Plan,

 

Testing Compensation shall mean any definition of compensation under Code
Section 414(s) that may be used as a safe harbor definition of compensation for
the foregoing purposes, respectively, including the definition which takes into
account all amounts paid to a Participant as payment for services rendered by
him to a Participating Company or any Affiliate (or, for purposes of paragraph
(1) above, any Related Company);”

 

3.             Effective December 1, 2006, the Plan is hereby amended by the
deletion of subsection (f) to Plan Section 17.2 and the substitution in lieu
thereof of a new subsection (f) to read as follows:

 

“(f)          “top-heavy group” shall mean any aggregation group if the sum, as
of the determination date, of:

 

(1)                                the present value of the cumulative accrued
benefits for key employees under all defined benefit plans included in such
group; and

 

(2)                                  the aggregate of the account balances of
key employees under all defined contribution plans included in such group;

 

exceeds sixty (60%) of a similar sum determined for all Participants, former
Participants and Beneficiaries permitted to be taken into account pursuant to
Code Section 416(g), with such values being determined for each plan as of the
most recent valuation date occurring within the twelve (12) month period ending
on the determination date and subject to appropriate adjustments under said Code
Section 416(g) and applicable Treasury regulations issued thereunder, including
the requirement that benefits and accounts of an Employee be increased by:

 

(A)                              for Plan Years beginning prior to December 1,
2002, the aggregate distributions with respect to such Employee during the five
(5) year period ending on the determination date; and

 

(B)                                for Plan Years beginning on or after
December 1, 2002, all distributions made during the one (1) year period ending
on

 

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the determination date and not taking into account any accrued benefit or
account balance of an individual who has not performed services for any
Participating Company or Affiliate during the one (1) year period ending on the
determination date, except that in the case of a distribution made for a reason
other than severance from employment, death or disability, this provision shall
be applied by substituting a five (5) year period for a one (1) year period;
and”

 

4.             Effective December 1, 2007, the Plan is hereby amended by the
deletion of Sections 21.1 — 21.4 in their entireties and the substitution in
lieu thereof of new Sections 21.1 — 21.3 to read as follows:

 

“21.1       Maximum Annual Additions.  Notwithstanding anything contained in
this Plan to the contrary, in no event shall a Participant’s Annual Additions
and annual amount of retirement benefits in this Plan and any other qualified
retirement plan sponsored by the Company or any Related Company for a Limitation
Year be greater than the Maximum Permissible Amounts (described below)
determined in accordance with Code Section 415, taking into account
Section 235(g) of the Tax Equity and Fiscal Responsibility Act of 1982, ERISA
Section 2004(d), Section 611 of the Economic Growth and Tax Relief
Reconciliation Act of 2001 and the final regulations issued under Code
Section 415 on April 5, 2007, the requirements of which are, respectively,
incorporated herein by reference.

 

For informational purposes herein, the “Maximum Permissible Amount” is the
lesser of:

 

(a)                                  $40,000, adjusted for changes in the cost
of living as shall be prescribed by the Secretary of Treasury pursuant to Code
Section 415(d); or

 

(b)                                 100% of such Participant’s Testing
Compensation.

 

The 100% of Testing Compensation limitation shall not apply to any contribution
for medical benefits (within the meaning of Code Section 401(h) or 419(f)(2))
that

 

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is not otherwise treated as an Annual Addition under Code Section 415(l)(1) or
419A(d)(2).

 

Prior to determining the Participant’s actual Testing Compensation for a
Limitation Year, the Employer may determine the Maximum Permissible Amount for
each Participant on the basis of a reasonable estimate of his Testing
Compensation for such Limitation Year, uniformly determined for all similarly
situated Participants.  As soon as is administratively feasible after the end of
the Limitation Year, the Maximum Permissible Amount for the Limitation Year
shall be determined on the basis of the Participant’s actual Testing
Compensation for the Limitation Year.  In the event a Participant would
otherwise be credited with excess Annual Additions, benefits or projected
benefits, such excess shall be adjusted in accordance with the provisions set
forth in Section 21.2 below.

 

If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12-consecutive month period, the dollar limit
with respect to the Maximum Permissible Amount to be applied with respect to
such short Limitation Year shall not exceed $40,000 (as adjusted), multiplied by
a fraction, the numerator of which is the number of months in the short
Limitation Year and the denominator of which is 12.

 

21.2         Reduction of Excess Benefits.  Prior to December 1, 2000, in the
event a Participant, who would otherwise be credited with excess Annual
Additions, benefits or projected benefits, is also a participant under any other
defined contribution plan of a Participating Company or any Related Company
and/or any defined benefit pension plan of a Participating Company or any
Related Company, adjustment under Code Section 415 shall be made in the
following order:

 

(a)                                  first, the excess of the Participant’s
projected employer funded annual benefit under any defined benefit pension plan
of a Participating Company

 

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or a Related Company over the Participant’s accrued employer funded annual
benefit under such plan shall be reduced;

 

(b)                                 second, employee deferred pay contributions
made pursuant to a Participant’s Compensation reduction election under
Section 4.1 hereof shall be reduced;

 

(c)                                  third, profit sharing contributions made
pursuant to Section 5.1 hereof shall be reduced;

 

(d)                                 fourth, employer base contributions made
pursuant to Section 5.1 hereof shall be reduced;

 

(e)                                  fifth, annual additions under any other
defined contribution plan of a Participating Company or a Related Company, other
than contributions, if any, made by the Participating Company or Related Company
at the election of the Participant, in lieu of cash compensation pursuant to
Code Section 401(k), shall be reduced;

 

(f)                                    sixth, the accrued benefit of such
Participant under any defined benefit pension plan maintained by a Participating
Company or Related Company shall be reduced; and

 

(g)                                 seventh, contributions, if any, made under
any other defined contribution plan of a Participating Company or a Related
Company by the Participating Company or Related Company at the election of the
Participant in lieu of cash compensation pursuant to Code Section 401(k), shall
be reduced.

 

In lieu of the foregoing, the Plan Administrator and the Participant may agree
to an alternative order for reduction of the Participant’s annual benefits and
Annual Additions.

 

Notwithstanding the foregoing, in the event a Participant’s excess annual
benefits or projected benefits would only result in a violation under Code
Section 415(b), his benefits under a defined benefit pension plan of a
Participating Company or a Related Company shall be reduced in the order set
forth in subsections (a) and (f) above.  Furthermore, in the event a
Participant’s excess Annual Additions would only result in a violation under
Code Section 415(c), his Annual Additions shall be reduced under the Company’s
defined contribution plans,

 

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including the Plan, and any defined benefit pension plan of a Participating
Company or a Related Company in the order set forth in subsections (b), (c),
(d), (e) and (g) above.

 

On and after December 1, 2000, in the event a Participant, who would otherwise
be credited with excess Annual Additions, is also a participant under any other
defined contribution plan of a Participating Company or any Related Company,
adjustment under Code Section 415 shall be made in the following order:

 

(1)                                  first, employee deferred pay contributions
made pursuant to a Participant’s Compensation reduction election under
Section 4.1 hereof shall be reduced;

 

(2)                                  second, profit sharing contributions made
pursuant to Section 5.1 hereof shall be reduced;

 

(3)                                  third, employer base contributions made
pursuant to Section 5.1 hereof shall be reduced;

 

(4)                                  fourth, annual additions under any other
defined contribution plan of a Participating Company or a Related Company, other
than contributions, if any, made by the Participating Company or Related Company
at the election of the Participant, in lieu of cash compensation pursuant to
Code Section 401(k), shall be reduced; and

 

(5)                                  fifth, contributions, if any, made under
any other defined contribution plan of a Participating Company or a Related
Company by the Participating Company or Related Company at the election of the
Participant in lieu of cash compensation pursuant to Code Section 401(k), shall
be reduced.

 

In lieu of the foregoing, the Plan Administrator and the Participant may agree
to an alternative order for reduction of the Participant’s annual benefits and
Annual Additions.

 

Notwithstanding the foregoing, effective December 1, 2007, if a Participant has
excess Annual Additions for a Limitation Year, the Plan may only correct such
excess in accordance with the provisions set forth in the Employee Plans
Compliance Resolution System (“EPCRS), as set forth in Revenue Procedure 2006-27
or any other superseding guidance, including but not

 

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limited to Revenue Procedure 2008-50 and the preamble to the final Treasury
regulations issued under Code Section 415.

 

21.3             Definitions.  For purposes of calculating the maximum allowable
amounts under Section 21.1 hereof, a Participant’s “Annual Additions” and
“Limitation Year” shall have the same meaning as that set forth in Article 2
hereof and his “Testing Compensation” shall have the same meaning as set forth
in Article 2 hereof, provided that such amounts are paid and includible in gross
income during the Limitation Year being tested.  Notwithstanding the foregoing,
the Testing Compensation of a Participant who experiences a severance from
employment shall include the following amounts, to the extent said amounts are
paid by the later of 2½ months following his severance or the end of the
Limitation Year in which his severance occurred:  (i) regular pay received after
severance of employment that would have been paid to the Participant had no
severance occurred; (ii) payments for unused sick, vacation or other leave that
could have been used had no severance occurred; (iii) payments from unfunded
nonqualified deferred compensation plans to the extent they would have been paid
at the same time had no severance occurred and would have been includible in the
Participant’s gross income at that time; (iv) salary continuation payments for
Participants during Military Service to the extent such payments do not exceed
the amounts the Participant would have received had he performed services for
the Participating Company or a Related Company; or (v) salary continuation
payments during periods of a Participant’s Disability.  No other payments made
following a Participant’s severance from employee may be considered Testing
Compensation, even if paid within the time period described above.”

 

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IN WITNESS WHEREOF, Sealy Corporation, by its appropriate officer duly
authorized, has caused this Amendment No. 1 to be executed as of the 8th day of
May , 2009.

 

 

 

SEALY CORPORATION

 

 

 

 

(“Company”)

 

 

 

 

 

 

 

By:

/s/ Carmen J. Dabiero

 

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