EXECUTION VERSION

FIRST AMENDMENT TO SECOND FORBEARANCE AGREEMENT; FOURTH AMENDMENT TO THE SECOND
AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT AND SECOND AMENDMENT TO THE
PLEDGE AND SECURITY AGREEMENT

This FIRST AMENDMENT TO SECOND FORBEARANCE AGREEMENT; FOURTH AMENDMENT TO THE
SECOND AMENDED AND RESTATED CREDIT AND GUARANTY AGREEMENT AND SECOND AMENDMENT
TO THE PLEDGE AND SECURITY AGREEMENT (this “Amendment”) is entered into as of
March 25, 2009, by and among Simmons Bedding Company (the “Company”), THL-SC
Bedding Company and certain subsidiaries of the Company party to the Credit
Agreement (as hereafter defined) as Guarantors (together with the Company, the
“Credit Parties”), the financial institutions party hereto as Lenders (as
hereinafter defined) under the Credit Agreement (as hereinafter defined) and
Deutsche Bank AG, New York Branch, individually as a Lender (“DBNY”) and as
administrative agent and collateral agent for the Lenders (in such capacities,
the “Agent”). Capitalized terms used but not otherwise defined herein shall have
the respective meanings ascribed to such terms in the Credit Agreement.

RECITALS
 
WHEREAS, the Company, the other Credit Parties and the Lenders are parties to
that certain Second Amended and Restated Credit and Guaranty Agreement, dated as
of May 25, 2006 (as has been or may be further amended, restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”), pursuant to
which, among other things, the financial institutions from time to time party
thereto as lenders (collectively, the “Lenders”) have agreed, subject to the
terms and conditions set forth in the Credit Agreement, to make certain loans
and other financial accommodations to the Company.
 
WHEREAS, the Company, the other Credit Parties and certain Lenders are parties
to that certain Second Forbearance Agreement; Third Amendment to the Second
Amended and Restated Credit and Guaranty Agreement and First Amendment to the
Pledge and Security Agreement, dated as of December 10, 2008 (the “Second
Forbearance Agreement”), pursuant to which the Second Forbearance Period (as
defined thereunder) shall terminate on March 31, 2009.
 
WHEREAS, as of the date hereof, one or more of the Defaults or Events of Default
listed on Exhibit A to the Second Forbearance Agreement (as modified hereby)
hereto have occurred and are continuing, or may occur during the Second
Forbearance Period (the Defaults and Events of Default described on Exhibit A
hereto being herein collectively called the “Specified Defaults”).
 
WHEREAS, upon the Company’s request, the Lenders have agreed, subject to the
terms and conditions set forth herein, to amend certain provisions of the Second
Forbearance Agreement and the Credit Agreement.
 
WHEREAS, upon the Company’s request, the Lenders have agreed, subject to the
terms and conditions set forth herein, to amend certain provisions of the Pledge
and Security Agreement dated as of December 19, 2003 by and between each of the
Grantors party thereto and the Agent in its capacity as Collateral Agent (as
supplemented and in effect on the date hereof, the “Pledge and Security
Agreement”).
 
NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
 
SECTION 1.                                Confirmation by the Company of
Obligations and Specified Defaults.
 
(a) The Company and each other Credit Party acknowledge and agree that as of
March 19, 2009, the respective aggregate principal balances of the Loans as of
such date and aggregate face amount of Letters of Credit were as follows (such
amounts, in the aggregate, the “Existing Principal and Letters of Credit”):
 
Tranche D Term
Loans:                                                      $465,000,000.00
 
Revolving
Loans:                                                      $64,532,384.22
 
Letters of
Credit:                                                      $10,427,327.00
 
The Company and each Credit Party acknowledge and agree that as of March 19,
2009, the aggregate amount of accrued and unpaid interest, less any overpayment,
on the Tranche D Term Loans and Revolving Loans is $1,813,588.97 (the “Existing
Interest”), and the accrued and unpaid commitment fees payable pursuant to
Section 2.10(a) of the Credit Agreement is $8.81 (the “Existing Commitment
Fees”) and the accrued and unpaid letter of credit fees payable pursuant to
Section 2.10(b) of the Credit Agreement is $39,749.84 (the “Existing LC Fees”
and together with the Existing Principal and Letters of Credit, the Existing
Interest, and the Existing Commitment Fees, the “Outstanding Indebtedness”). The
foregoing amounts do not include other fees, expenses and other amounts which
are chargeable or otherwise reimbursable under the Credit Agreement and the
other Credit Documents.  None of the Company and the other Credit Parties have
any rights of offset, defenses, claims or counterclaims with respect to any of
the Obligations and each of the Credit Parties are jointly and severally
obligated with respect thereto, in accordance with the terms of the Credit
Documents.
 
(b) The Company and each other Credit Party acknowledge and agree that each of
the Specified Defaults constitutes a Default or an Event of Default that has
occurred and is continuing as of the First Amendment Forbearance Effective Date
(as hereinafter defined) or that may occur and continue during the Second
Forbearance Period, as the case may be.
 

 
 
SECTION 2.  Amendments to Second Forbearance Agreement.

 
Effective as of the First Amendment Forbearance Effective Date, the following
provisions of the Second Forbearance Agreement shall be amended as set forth
below.
 
(a) Section 2(a) is hereby amended by:
 
(i) in clause (iv) thereof, deleting “quarter ending September 27, 2008” and
inserting in lieu thereof “any of the quarters ending September 27, 2008, March
28, 2009 and June 27, 2009 and the annual report on Form 10-K for the year
ending December 27, 2008”;
 
(ii) deleting the word “or” immediately preceding clause “(v)” thereof and
amending and restating clause “(v)” thereof in its entirety to read as follows:
 
“(v) 11:59 p.m. (New York City time) on May 31, 2009; provided, however, that,
in respect of clause (v) of this Section 2(a) only, the Lenders and the Agent
shall, on or before May 31, 2009, extend the date provided therein to July 31,
2009, so long as (x) the Second Forbearance Termination Date has not theretofore
occurred and (y) the Company has commenced, on or before May 31, 2009, a
solicitation process seeking consent for, or votes to effect, a Proposed
Transaction, which  Proposed Transaction at the time of extension shall be
acceptable to the Requisite Lenders (as determined by them in their sole
discretion) (the “Selected Transaction”) pursuant to a written notice executed
by the Agent at the direction of the Requisite Lenders and delivered to the
Company on or before May 31, 2009 or”; and
 
(iii) inserting the following new clause “(vi)” immediately after clause (v)
thereof:
 
“(vi) 12:01 a.m. (New York City time) on June 1, 2009, if and only if the
“Forbearance Period” under, and as defined in, the Forbearance Agreement to
Indenture (as hereinafter defined) has not been extended to July 31, 2009, as
contemplated by the proviso to Section 2(a)(i) thereof (the earliest to occur of
clauses (i) through (vi) being the “Second Forbearance Termination Date”).”.
 
(b) Section 2(c) is hereby amended by (x) deleting the word “The” at the
beginning of the last sentence thereof, (y) inserting the phrase “Except as
specifically provided in Section 2(a), the” at the beginning of the last
sentence thereof and (z) by inserting the following phrase at the end of the
last sentence thereof:
 
“(and no prior extension, waiver, forbearance or amendment by a party shall in
any way operate as a continuing waiver or forbearance other than as provided in
this Agreement)”.
 
(c) Section 5 is hereby amended by:
 
(i) amending and restating clause “(h)” thereof in its entirety to read as
follows:
 
“(h)           Management Discussions.  The Company shall cause its senior
management team, and use its commercially reasonable efforts to cause Miller
Buckfire & Co., LLC (“Miller Buckfire”) and other appropriate legal advisors, to
discuss (at the option of the Company, in person or telephonically), on a
bi-weekly basis during regular business hours and for reasonable durational
periods, with the Agent, its legal advisor and Moelis and Company (“Moelis”) and
such other professional advisors retained from time to time by the Agent, and
the Lenders identified to the Company as the steering committee (the “Steering
Committee”), the ongoing financial performance, operations and liquidity of the
Company.”
 
(ii) amending and restating clause “(l)” thereof in its entirety to read as
follows:
 
“(l)           Subordinated Indebtedness
Payments.                                                                                     The
Company shall give the Agent ten (10) Business Days’ prior notice of its intent
to make any payment (including any payment of interest but excluding (x)
payments in respect of reasonable fees and expenses of one counsel and one
financial advisor for the holders of Subordinated Indebtedness and (y) an
Indenture Forbearance Amendment Fee (as hereinafter defined)) with respect to
any Subordinated Indebtedness (the “Payment Notice”).”
 
(iii) (x) re-lettering existing clause “(o)” thereof (“Additional Restrictions”)
as clause “(r)”and (y) inserting the following new clauses “(o)”, “(p)” and
“(q)” immediately after clause “(n)” thereof
 
“(o) Professional Advisors’ Meetings.  On a weekly basis (commencing from the
First Amendment Forbearance Effective Date), the Company shall use commercially
reasonable efforts to cause representatives of Miller Buckfire and Weil, Gotshal
& Manges LLP (collectively, the “Company Advisors”) to (i) discuss (at the
option of the Company Advisors, in person or telephonically), to the extent not
prohibited by the terms of any applicable confidentiality obligation by which
the Company is bound, with representatives of Moelis and White & Case LLP
(collectively the “Steering Committee Advisors” and together with the Company
Advisors, collectively, the “Professional Advisors”), during regular business
hours and for reasonable durational periods, the process with respect to, and
the status of, any asset sale, merger, consolidation or other business
combination, equity infusion, financing proposals (of any type), change of
control transaction or restructuring or plan proposal, in each case,
contemplated in connection with the Company’s restructuring process (each, a
“Proposed Transaction”), including, without limitation, by providing detailed
updates and information with respect to the material terms and conditions of any
such Proposed Transaction and (ii) from and after the First Amendment
Forbearance Effective Date, promptly deliver to the Steering Committee Advisors
for their review a copy of each bid and any operative document related thereto
(each, a “Proposed Transaction Document”) received by the Company Advisors on or
after March 6, 2009 with respect to any Proposed Transaction (the actions
described in clauses (i) and (ii) above, collectively, comprising a “Process
Update”); provided that, (a) if disclosing a Proposed Transaction Document is
prohibited under the terms of any applicable confidentiality obligation by which
the Company is bound, the Company Advisors shall, to the extent not prohibited
by such confidentiality obligation, deliver a written summary of the material
terms and conditions of such Proposed Transaction Document (a “Proposed
Transaction Document Summary”) in lieu of a copy thereof; (b) with respect to
any confidentiality obligation of the Company to the bidder or bidders selected
by the Company to further evaluate a Proposed Transaction (any such bidder, a
“Selected Bidder”), the Company agrees that it and the other Credit Parties
shall use commercially reasonable efforts to obtain the consent of such Selected
Bidder to permit the Company Advisors to provide an un-redacted copy of any
Proposed Transaction Document to the Steering Committee Advisors, and if such
consent is not obtained after using commercially reasonable efforts, the Company
Advisors shall, to the extent not prohibited under the terms of any applicable
confidentiality obligation by which the Company is bound, deliver a Proposed
Transaction Document Summary in lieu thereof; and (c) with respect to any
confidentiality obligation by which the Company is bound that arises on or after
the First Amendment Forbearance Effective Date, the Company agrees that it, the
other Credit Parties and the Company Advisors shall use commercially reasonable
efforts to ensure that such confidentiality obligations do not prohibit (A) the
Company, any of the other Credit Parties or the Company Advisors from providing
any Proposed Transaction Document, Proposed Transaction Document Summary or any
other Process Update, or any information relating thereto, to the Steering
Committee Advisors or (B) the Professional Advisors’ further disclosure of such
Proposed Transaction Documents, Proposed Transaction Document Summaries or other
Process Updates to members of the Steering Committee in accordance with the
following sentence. Notwithstanding anything to the contrary herein, prior to
any disclosure of any information contained in any Proposed Transaction
Document, Proposed Transaction Document Summary or Process Update to any Person,
including, without limitation members of the Steering Committee or any Lender,
the Professional Advisors will collectively determine the nature and extent of
any such disclosure (which determination shall be documented in writing,
including by email correspondence among the Professional Advisors); provided
that, if there is a disagreement among the Company Advisors, on the one hand,
and the Steering Committee Advisors, on the other hand, the information that is
the subject of such disagreement shall not be disclosed by the Steering
Committee Advisors to members of the Steering Committee, any Lender, or any
other Person unless and until such disagreement is resolved as acknowledged by
e-mail correspondence among the Professional Advisors.
 
(p) Bidders’ Meetings.  On or before April 17, 2009, the Company shall cause
each Selected Bidder to hold one meeting, during regular business hours and for
a reasonable durational period, with members of the Steering Committee who have
not submitted a bid to acquire or provide equity in or pursuant to a Proposed
Transaction, to discuss, in reasonable detail, the nature, structure and
material terms of the Proposed Transaction sponsored by such Selected Bidder.
 
(q) Selected Transaction.  The Selected Transaction shall not be amended,
supplemented or otherwise modified in any respect which is materially adverse to
the interests of the Lenders, as Lenders, without the prior written consent of
the Requisite Lenders.”
 
(d) Exhibit A to the Second Forbearance Agreement is hereby amended by:
 
(i) amending and restating paragraph 1 set forth thereon in its entirety to read
as follows:
 
“The failure of the Company to comply with Section 6.6 of the Credit Agreement
for the Fiscal Quarters ended on September 27, 2008 and December 27, 2008 and
ending on March 28, 2009 and, solely to the extent the Second Forbearance Period
has been extended pursuant to the proviso to Section 2(a)(v) of this Agreement,
June 27, 2009.”
 
(ii) amending and restating paragraph 2 set forth thereon in its entirety to
read as follows:
 
“Any Default or Event of Default pursuant to Section 8.1(b) of the Credit
Agreement occurring solely as a result of a “Default” or “Event of Default”
under, and as defined in, the Senior Subordinated Note Indenture, which occurs
(i) on or after January 15, 2009, as a result of the Company’s failure to make
its regular scheduled interest payments with respect to the Senior Subordinated
Notes on or after January 15, 2009 and (ii) on or after June 15, 2009, as a
result of the Company’s failure to make its regular scheduled interest payments
with respect to the Senior Subordinated Notes on or after June 15, 2009.”
 
(iii) amending and restating paragraph 3 set forth thereon in its entirety to
read as follows:
 
“Any Default or Event of Default pursuant to Section 8.1(b) of the Credit
Agreement as a result of any default under (i) Section 4.03 of the Senior
Subordinated Note Indenture as a result of the failure of the Company to furnish
certain periodic reports or (ii) Section 4.04 of the Senior Subordinated Note
Indenture as a result of the failure of the Company to furnish certain
statements or certificates.”
 
(iv) amending and restating paragraph 4 set forth thereon in its entirety to
read as follows:
 
“Any Default or Event of Default pursuant to Section 8.1(e) of the Credit
Agreement as a result of a default under Section 5.1(f) of the Credit Agreement
arising in connection with the failure of any Credit Party to timely furnish any
written statement of an independent certified public accountant required under
Section 5.1(f) therein.”
 
(v) Inserting the following new paragraph 5 immediately following paragraph 4
thereon:
 
“Any Default or Event of Default pursuant to Sections 5.1(h) or 8.1(d) of the
Credit Agreement as a result of the events or conditions described in paragraphs
1-4 above.”
 

 
 
SECTION 3.
Amendments to Credit Agreement.

 
Effective as of the First Amendment Forbearance Effective Date, the following
provisions of the Credit Agreement shall be amended as set forth below (which
amendments are in addition to those contained in the Forbearance Agreement and
the Second Forbearance Agreement, which shall remain in full force and effect
except as expressly modified herein).  For the avoidance of doubt, the Credit
Agreement shall remain amended as set forth in this section after the First
Amendment Forbearance Termination Date, and these amendments shall not operate
as a waiver of any Default or Event of Default.

(a) Amendments to Section 1.1.
 
(i) the last sentence of the definition of “Applicable Margin” in Section 1.1 is
hereby amended by (A) deleting the word “and” immediately preceding clause (y)
thereof and inserting a comma in lieu thereof, (B) inserting immediately after
the phrase “after the Second Forbearance Effective Date” appearing therein, the
phrase “and to and including (but not on) the First Amendment Forbearance
Effective Date” and (C) inserting the following new text immediately at the end
of the existing text thereof:
 
“and (z) during all periods on and after the First Amendment Forbearance
Effective Date, the “Applicable Margin” shall mean (i) for all Loans which are
Base Rate Loans, 6.25% per annum and (ii) for all Loans which are Eurodollar
Rate Loans, 7.25% per annum.”;
 
(ii) the definition of “Credit Document” is hereby amended by deleting “and
Second Forbearance Agreement” and inserting in lieu thereof “, Second
Forbearance Agreement and First Amendment Forbearance Agreement”;
 
(iii) the definition of “Restructuring Amendment” is hereby amended by inserting
“or the First Amendment Forbearance Agreement” immediately after the words
“Second Forbearance Agreement” in the last sentence thereof;
 
(iv) the definition of “Second Forbearance Agreement” is hereby amended by
inserting “(as has been or may be further amended, restated, amended and
restated, supplemented or otherwise modified from time to time)” at the end
thereof; and
 
(v) the following new definitions are hereby added in the appropriate
alphabetical order:
 
“First Amendment Forbearance Effective Date” has the meaning assigned to that
term in the First Amendment Forbearance Agreement.
 
“First Amendment Forbearance Agreement” means the First Amendment to the Second
Forbearance Agreement and Fourth Amendment to the Second Amended and Restated
Credit and Guaranty Agreement dated as of March 25, 2009 by and among the
Company, the other Credit Parties, the Lender parties thereto and the Agent.
 
(b) Section 5.1(c)(i) is hereby amended by inserting the following at the end
thereof and immediately before the words “and (ii)”:
 
“; provided that, solely with respect to the Fiscal Year ended December 27,
2008, such date for delivery may be automatically extended by an additional
fifteen (15) days at the request of the Company”.
 
(c) Section 8.1(n) is hereby amended by deleting “and (n)” immediately after
“(i)” and inserting in lieu thereof “, (n), (o) and (p)”.
 

 
 
SECTION 4.
Amendments to Pledge and Security Agreement.

 
(a) Effective as of the First Amendment Forbearance Effective Date, Schedule 4.5
to the Pledge and Security Agreement is hereby amended by inserting two new rows
in the form attached hereto as Exhibit A at the end of the table set forth in
Part I therein (which amendment is in addition to those contained in the
Forbearance Agreement and the Second Forbearance Agreement, which shall remain
in full force and effect except as expressly modified herein).
 

 
SECTION 5.
Representations, Warranties And Covenants Of Company and Other Credit Parties.

 
To induce the Lenders and the Agent to execute and deliver this Amendment, each
of the Company and the other Credit Parties represents, warrants and covenants
that:
 
(a) Organization and Powers. Each Credit Party is a corporation, limited
liability company or limited partnership, as applicable, duly organized or
formed, as applicable, validly existing and, to the extent such concept applies,
in good standing under the laws of its jurisdiction of incorporation or
formation, as applicable.  Each Credit Party has all requisite corporate or
other organizational power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to enter
into this Amendment and to carry out the transactions contemplated thereby;
 
(b) Authorization of Amendment; No Conflict. The execution, delivery and
performance of this Amendment have been duly authorized by all necessary
corporate, limited liability company or limited partnership, as applicable,
action on the part of each Credit Party that is a party thereto. The execution,
delivery and performance by Credit Parties of this Amendment and the
consummation of the transactions contemplated hereby do not and will not (a)
violate any provision of any law or any governmental rule or regulation
applicable to Holdings or any of its Subsidiaries, the Certificate or Articles
of Incorporation or Bylaws (or equivalent constituent documents) of Holdings or
any of its Subsidiaries or any order, judgment or decree of any court or other
agency of government binding on Holdings or any of its Subsidiaries, except to
the extent such violation could not be reasonably be expected to have a Material
Adverse Effect, (b) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
Holdings or any of its Subsidiaries, (c) result in or require the creation or
imposition of any Lien upon any of the properties or assets of Holdings or any
of its Subsidiaries (other than any Liens created under any of the Credit
Documents in favor of Collateral Agent on behalf of the Secured Parties), or (d)
require any approval of stockholders or any approval or consent of any Person
under any Contractual Obligation of Holdings or any of its Subsidiaries, except
for such approvals or consents which will be obtained on or before the First
Amendment Forbearance Effective Date and disclosed in writing to the Lenders and
except for any such consents or approvals the failure of which to obtain would
not reasonably be expected to have a Material Adverse Effect;
 
(c) Governmental Consents. The execution, delivery and performance by the Credit
Parties of this Amendment and the consummation of the transactions contemplated
hereby do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body (a) such as have been obtained and are
in full force and effect and (b) any such consents or approvals the failure of
which to obtain would not reasonably be expected to have a Material Adverse
Effect;
 
(d) Grantors. Each Domestic Subsidiary of THL-SC Bedding Company is a Grantor
and is a party to the Pledge and Security Agreement.
 
(e) Deposit Accounts. As of the First Amendment Forbearance Effective Date, no
Credit Party has any deposit account containing unrestricted Cash other than the
deposit accounts listed in Schedule 4.5 to the Pledge and Security Agreement (as
amended pursuant to Section 4 hereof).
 
(f) Binding Obligation. This Amendment has been duly executed and delivered by
each Credit Party and is the legally valid and binding obligation of such Credit
Party, enforceable against such Credit Party in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors’ rights generally or by
equitable principles relating to enforceability.
 
(g) Incorporation of Representations and Warranties and Covenants from Credit
Documents. Except with respect to the Specified Defaults and the Permitted
Exceptions, the representations and warranties contained in the Credit Agreement
and each of the other Credit Documents are and will be true, correct and
complete in all material respects on and as of the First Amendment Forbearance
Effective Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case they were true, correct and complete in all material
respects on and as of such earlier date, and each of the agreements and
covenants in the Credit Agreement and the other Credit Documents is hereby
reaffirmed with the same force and effect as if each were separately stated
herein and made as of the date hereof.
 
(h) Absence of Default. As of the date hereof, except for the Specified
Defaults, (x) no Default or Event of Default has occurred or is continuing under
this Amendment, the Second Forbearance Agreement, the Forbearance Agreement, the
Credit Agreement or any other Credit Document and (y) except as set forth on
Exhibit A to the Second Forbearance Agreement (as amended by this Amendment), no
“Default” or “Event of Default” (as those terms are defined under the Senior
Subordinated Note Indenture or the documents evidencing the Holdco Notes) has
occurred or is continuing in respect of the Senior Subordinated Notes or the
Holdco Notes.
 
(i) Collateral. The Lenders’ and the Agent’s security interests in the
Collateral continue to be valid, binding, and enforceable first-priority
security interests which secure the Obligations (subject only to the Permitted
Liens).
 
(j) Acknowledgement. Each of the Agent, the Lenders and the Company acknowledges
that this Amendment is not a “Restructuring Amendment” as defined in the
Forbearance Agreement.
 

 
SECTION 6.                                Ratification of Liability.
 
(a) Each of the Company and other Credit Parties hereby ratifies and reaffirms
all of its payment and performance obligations and obligations to indemnify,
contingent or otherwise, under this Amendment and each other Credit Document to
which such party is a party, and each such party hereby ratifies and reaffirms
its grant of Liens on its properties pursuant to such Credit Documents to which
it is a party as security for the Obligations under or with respect to the
Credit Agreement, and confirms and agrees that such Liens hereafter secure all
of the Obligations.  Each Guarantor acknowledges the effectiveness and
continuing validity of its guarantee in the Credit Agreement and its liability
for the Obligations pursuant to the terms of such guarantee and that such
obligation is without defense, setoff and counterclaim.
 
(b) The Company and each other Credit Party (i) acknowledge receipt of a copy of
this Amendment and all other agreements, documents and instruments executed
and/or delivered in connection herewith, (ii) consents to the terms and
conditions of same without prejudice to any Credit Party’s liability pursuant to
any of the Credit Documents, and (iii) agrees and acknowledges that each of the
Credit Documents remains in full force and effect, that such Credit Party’s
obligations thereunder are without defense, setoff and counterclaim and that
each of the Credit Documents is hereby ratified and confirmed.
 

 
SECTION 7.                                Reference To And Effect Upon the
Credit Agreement, the Pledge and Security Agreement and the Second Forbearance
Agreement.
 
(a) Except as expressly modified hereby, all terms, conditions, covenants,
representations and warranties contained in the Credit Agreement, the Second
Forbearance Agreement and other Credit Documents, and all rights of Lenders and
the Agent and all of the Obligations, shall remain in full force and effect.
Each of the Company and the other Credit Parties hereby confirms that no such
party has any right of setoff, recoupment or other offset with respect to any of
the Obligations.
 
(b) Except as expressly set forth herein, the effectiveness of this Amendment
shall not directly or indirectly (i) create any obligation to make any further
Loans or issue any Letters of Credit after the First Amendment Forbearance
Effective Date, (ii) create any obligation to make any further Loans or issue
any Letters of Credit or to continue to defer any enforcement action after the
occurrence of any Forbearance Default (as defined in the Second Forbearance
Agreement), (iii) constitute a consent or waiver of any past, present or future
violations, including Defaults and Events of Default, of any provisions of the
Credit Agreement or any other Credit Documents, (iv) amend, modify, prejudice or
operate as a waiver of any provision of the Credit Agreement or any other Credit
Documents or any right, remedy, power or privilege of the Lenders and/or the
Agent, (v) constitute a consent to any merger or other transaction or to any
sale, restructuring or refinancing transaction, or (vi) constitute a course of
dealing or other basis for altering any Obligations or any other contract or
instrument.  Except as expressly set forth herein, each Lender and the Agent
reserve all of their respective rights, remedies, powers and privileges under
the Credit Agreement, the Second Forbearance Agreement, the other Credit
Documents and applicable law and/or equity. All of the provisions of the Credit
Agreement, the Second Forbearance Agreement and the other Credit Documents are
hereby reiterated, and if ever waived, are hereby reinstated.  Notwithstanding
any other provision in this Amendment, it is understood and agreed that during
the Second Forbearance Period, notwithstanding the Company’s inability to make
the statements required by Section 3.2 of the Credit Agreement (or in any
Funding Notice or Request for Issuance required thereby), solely to the extent
excused pursuant to the last sentence of Section 2(d) of the Second Forbearance
Agreement, but subject to all other terms and conditions contained in the Credit
Agreement and Section 2(d) of the Second Forbearance Agreement, any Issuing Bank
may issue, renew, extend or replace Letters of Credit and the Company shall be
permitted to request Revolving Loans (and Lenders agree to make such Revolving
Loans), provided that the Revolving Credit Exposure is not increased or
decreased after giving effect to such issuance, renewal, extension or
replacement of any such Letter of Credit or the making of any such Revolving
Loans.
 
(c) From and after the First Amendment Forbearance Effective Date (i) the term
“Agreement” in the Second Forbearance Agreement, and all references to the
Second Forbearance Agreement in any Credit Document shall mean the Second
Forbearance Agreement as amended by this Amendment; (ii) the term “Agreement” in
the Credit Agreement, and all references to the Credit Agreement in any Credit
Document shall mean the Credit Agreement as amended by the Second Forbearance
Agreement and this Amendment; (iii) the term “Agreement” in the Pledge and
Security Agreement, and all references to the Pledge and Security Agreement in
the Second Forbearance Agreement and any other Credit Document, shall mean the
Pledge and Security Agreement as amended by the Second Forbearance Agreement and
this Amendment and (iv) the term “Credit Document” in the Credit Agreement, the
Pledge and Security Agreement, the Second Forbearance Agreement and the other
Credit Documents shall include, without limitation, the Second Forbearance
Agreement and this Amendment and any agreements, instruments and other documents
executed and/or delivered in connection therewith.
 
(d) This Amendment shall not be deemed or construed to be a satisfaction,
reinstatement, novation or release of the Credit Agreement or any other Credit
Document.
 

 
SECTION 8.                                Company’s Release and Duty to
Indemnify for Assigned Claims.
 
(a) By its execution hereof and in consideration of the mutual covenants
contained herein and other accommodations granted to the Credit Parties
hereunder, each Credit Party, on behalf of itself and each of its Subsidiaries,
and its or their successors, assigns and agents, hereby expressly forever
waives, releases and discharges any and all claims (including, without
limitation, cross-claims, counterclaims, and rights of setoff and recoupment),
causes of action (whether direct or derivative in nature), demands, suits,
costs, expenses and damages (collectively, the “Claims”) any of them may have or
allege to have as of the date of this Amendment (and all defenses that may arise
out of any of the foregoing) of any nature, description, or kind whatsoever,
based in whole or in part on facts, whether actual, contingent or otherwise, now
known, unknown, or subsequently discovered, whether arising in law, at equity or
otherwise, against the Agent or any Lender, their respective affiliates, agents,
principals, managers, managing members, members, stockholders, “controlling
persons” (within the meaning of the United States federal securities laws),
directors, officers, employees, attorneys, consultants, advisors, agents,
trusts, trustors, beneficiaries, heirs, executors and administrators of each of
the foregoing (collectively, the “Released Parties”), in each case, involving or
otherwise relating to this Amendment or any of the other agreements entered into
in connection herewith, the Credit Agreement, the Second Forbearance Agreement,
the Credit Documents or any or all of the actions and transactions contemplated
hereby or thereby, including, without limitation, any actual or alleged
performance or nonperformance by any of the Released Parties hereunder or
thereunder.  Each Credit Party hereby acknowledges that the agreements in this
paragraph (a) are intended to be in full satisfaction of all or any alleged
injuries or damages arising in connection with the Claims.  In entering into
this Amendment, each Credit Party expressly disclaims any reliance on any
representations, acts, or omissions by any of the Released Parties and hereby
agrees and acknowledges that the validity and effectiveness of the releases set
forth above does not depend in any way on any such representation, acts and/or
omissions or the accuracy, completeness, or validity thereof.  The provisions of
this paragraph shall survive the termination or expiration of the Second
Forbearance Period and the termination of the Credit Documents and the payment
in full of all obligations of the Credit Parties under or in respect of the
Credit Agreement and other Credit Documents and all other amounts owing
thereunder.
 
(b) Each Credit Party represents and warrants that it has not assigned to any
Person any Claim other than to the Collateral Agent pursuant to the Pledge and
Security Agreement.  In the event that the foregoing representation and warranty
is, or is purported to be, untrue, each Credit Party agrees to indemnify and
hold harmless the Released Parties against, and to pay, any and all actions,
demands, obligations, causes of action, decrees, awards, claims, liabilities,
losses and costs (including, but not limited to, reasonable expenses of
investigation and fees and expenses of counsel) that any of the Released Parties
may sustain or incur as a result of the breach or purported breach of the
foregoing representation and warranty, in each case, in the manner and to the
extent set forth in Section 10.3 of the Credit Agreement.  The provisions of
this paragraph shall survive the termination or expiration of the Second
Forbearance Period and the termination of the Credit Documents and the payment
in full of all obligations of the Credit Parties under or in respect of the
Credit Agreement and other Credit Documents and all other amounts owing
thereunder.
 

 
SECTION 9.                                Construction.
 
This Amendment and all other agreements and documents executed and/or delivered
in connection herewith have been prepared through the joint efforts of all of
the parties hereto. Neither the provisions of this Amendment or any such other
agreements and documents nor any alleged ambiguity therein shall be interpreted
or resolved against any party on the ground that such party or its counsel
drafted this Amendment or such other agreements and documents, or based on any
other rule of strict construction.  Each of the parties hereto represents and
declares that such party has carefully read this Amendment and all other
agreements and documents executed in connection therewith, and that such party
knows the contents thereof and signs the same freely and voluntarily.  The
parties hereto acknowledge that they have been represented by legal counsel of
their own choosing in negotiations for and preparation of this Amendment and all
other agreements and documents executed in connection herewith and that each of
them has read the same and had their contents fully explained by such counsel
and is fully aware of their contents and legal effect.
 

 
SECTION 10.                                Counterparts.
 
This Amendment may be executed in any number of counterparts, each of which when
so executed shall be deemed an original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on
any one counterpart. Any party hereto may execute and deliver a counterpart of
this Amendment by delivering by facsimile or other electronic transmission a
signature page of this Amendment signed by such party, and any such facsimile or
other electronic signature shall be treated in all respects as having the same
effect as an original signature.
 

 
SECTION 11.                                Severability.
 
The invalidity, illegality, or unenforceability of any provision in or
obligation under this Amendment in any jurisdiction shall not affect or impair
the validity, legality, or enforceability of the remaining provisions or
obligations under this Amendment or of such provision or obligation in any other
jurisdiction.
 

 
SECTION 12. Further Assurances.
 
The Company and each other Credit Party agrees to, and to cause any other Credit
Party to, take all further actions and execute all further documents as Agent
may from time to time reasonably request to carry out the transactions
contemplated by this Amendment and all other agreements executed and delivered
in connection herewith; provided that any failure to do so shall be an Event of
Default if such failure has not been remedied or waived within  five (5)
Business Days after the Company’s receipt of notice from the Agent.
 

 
SECTION 13.                                Section Headings.
 
Section headings in this Amendment are included herein for convenience of
reference only and shall not constitute part of this Amendment for any other
purpose.
 

 
SECTION 14.                                Governing Law.
 
THIS AMENDMENT, THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND ANY
CLAIMS OR ACTIONS ARISING HEREUNDER OR IN CONNECTION HEREWITH (WHETHER SOUNDING
IN CONTRACT OR IN TORT) SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
 

 
SECTION 15.                                Acknowledgements.
 
Each Credit Party hereby acknowledges that:
 
(a) it has carefully read and fully understood all of the terms and conditions
of this Amendment;
 
(b) it has consulted with, or had a full and fair opportunity to consult with,
and has been advised by fully competent counsel in the negotiation, execution
and delivery of this Amendment;
 
(c) it has had a full and fair opportunity to participate in the drafting of
this Amendment and that no provision of this Amendment shall be construed
against or interpreted to the disadvantage of any party hereto by any court or
other governmental or judicial authority by reason of any party hereto having or
being deemed to have structured, dictated or drafted such provision;
 
(d) it is freely, voluntarily, knowingly and intelligently entering into this
Amendment;
 
(e) none of the Lenders or the Agent has a fiduciary relationship to any Credit
Party, and the relationship between the Agent and the Lenders, on the one hand,
and the Credit Parties, on the other, is solely that of creditor and debtor; and
 
(f) no joint venture exists among the Credit Parties, the Agent and the Lenders.
 

 
SECTION 16.                                Effectiveness.
 
This Amendment shall become effective at the time (the “First Amendment
Forbearance Effective Date”) that all of the following conditions precedent have
been satisfied as determined by the Agent in its sole discretion:
 
(a) Agreement. The Agent shall have received duly executed signature pages for
this Amendment signed by the Company, each other Credit Party and the Requisite
Lenders.
 
(b) Due Authorization. The Agent shall have received resolutions from each
Credit Party evidencing the corporate or similar authority of such Credit Party
to execute, deliver and perform its obligations under this Amendment and, as
applicable, all other agreements and documents executed in connection therewith.
 
(c) Opinions. The Agent shall have received opinions of counsel to the Credit
Parties (other than the entities organized under the laws of the State of
Nevada) as to the transactions contemplated hereby in form and substance
reasonably acceptable to Agent.
 
(d) Forbearance Agreement to Indenture. The Agent shall have received a duly
executed copy of an agreement amending, among other things, the definition of
“Forbearance Period” under the Forbearance Agreement to Indenture dated as
February 4, 2009 (as in effect as of the date hereof, the “Forbearance Agreement
to Indenture”), by and among the Company, the Guarantors party thereto and the
Holders party thereto, such that the reference to “March 31, 2009” in Section
2(a) therein is replaced with a reference to “May 31, 2009” (which date shall be
extended to July 31, 2009, so long as the Company has commenced, by May 31,
2009, a solicitation process to effect the Selected Transaction (as defined in
the Forbearance Agreement to Indenture (as amended as of the date hereof)) (the
“First Amendment to Forbearance Agreement to Indenture”) and otherwise in form
and substance reasonably satisfactory to the Agent and with any fees or any
other economics payable in connection therewith not in excess of the relevant
amounts or percentages set forth in the draft First Amendment to Forbearance
Agreement to Indenture provided to the Agent on March 19, 2009, and such First
Amendment to Forbearance Agreement to Indenture shall have become effective in
accordance with its terms.
 

 
SECTION 17.                                Assignments; No Third Party
Beneficiaries.
 
This Amendment shall be binding upon and inure to the benefit of the Company,
the other Credit Parties, the Lenders, the Agent and their respective successors
and assigns; provided, that neither the Company nor any other Credit Party shall
be entitled to delegate any of its duties hereunder and shall not assign any of
its rights or remedies set forth in this Amendment without the prior written
consent of the Agent in its sole discretion. No Person other than the parties
hereto and their permitted successors and assigns, shall have any rights
hereunder or be entitled to rely on this Amendment and all third-party
beneficiary rights are hereby expressly disclaimed.
 
SECTION 18.                                Final Agreement.
 
This Amendment, the Credit Agreement, the Second Forbearance Agreement, the
other Credit Documents, and the other written agreements, instruments, and
documents entered into in connection herewith and therewith (collectively, the
“Company/Lender Documents”) set forth in full the terms of agreement between the
parties hereto and thereto and are intended as the full, complete, and exclusive
contracts governing the relationship between such parties, superseding all other
discussions, promises, representations, warranties, agreements, undertakings and
understandings between the parties with respect thereto.  No term of the
Company/Lender Documents may be amended, restated, waived or otherwise modified
except in a writing signed by the party against whom enforcement of the
modification, amendment, or waiver is sought, unless otherwise provided in the
applicable Company/Lender Document.  Any waiver of any condition in, or breach
of, any of the foregoing in a particular instance shall not operate as a waiver
of other or subsequent conditions or breaches of the same or a different
kind.  The Lenders’ and/or the Agent’s exercise or failure to exercise any
rights or remedies under any of the foregoing in a particular instance shall not
operate as a waiver of its right to exercise the same or different rights,
remedies, powers and privileges in any other instances.  There are no oral
agreements among the parties hereto.
 
[Signature pages to follow]
 

 
 

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IN WITNESS WHEREOF, this First Amendment to Second Forbearance Agreement and
Fourth Amendment to Second Amended and Restated Credit and Guaranty Agreement
has been executed by the parties hereto as of the date first written above.
 

SIMMONS BEDDING COMPANY

By: /s/ William S. Creekmuir
Name: William S. Creekmuir
Title: Executive Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary

 
 

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THL-SC BEDDING COMPANY

By: /s/ Stephen G. Fendrich
Name: Stephen G. Fendrich
Title: President and Cheif Operating Officer

 
 

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THE SIMMONS MANUFACTURING CO., LLC
By WORLD OF SLEEP OUTLETS, LLC
SIMMONS CONTRACT SALES, LLC
WINDSOR BEDDING CO., LLC
SIMMONS EXPORT CO.

By: /s/ Stephen G. Fendrich
Name: Stephen G. Fendrich
Title: President and Chief Operating  Officer,

 
 

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DREAMWELL, LTD.
SIMMONS CAPITAL MANAGEMENT, LLC

By: /s/ Kristen K. McGuffey
Name: Kristen K. McGuffey
Title: Vice President and Secretary

 
 

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DEUTSCHE BANK AG, NEW YORK BRANCH,
As Agent

By: /s/ Vincent D'Amore
Name:  Vincent D'Amore
Title:  Director

By: /s/ Keith C. Braun
Name:  Keith C. Braun
Title:  Managing Director
 

DEUTSCHE BANK A.G., CAYMAN ISLANDS BRANCH,
Individually as a Lender

By: /s/ Vincent D'Amore
Name:  Vincent D'Amore
Tifle:  Director

By: /s/ Keith C. Braun
Name:  Keith C. Braun
Title:  Managing Director
 
 

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