DEUTSCHE BANK SECURITIES INC.
DEUTSCHE BANK TRUST COMPANY AMERICAS
60 Wall Street
New York, New York 10005

 
August 20,
2009                                                                                                           CONFIDENTIAL

Simmons Bedding Company
One Concourse Parkway, Suite 800
Atlanta, Georgia 30328

Attn:           William S. Creekmuir
Executive Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary

Commitment Letter

Ladies and Gentlemen:

You have advised Deutsche Bank Trust Company Americas (“DBTCA”), and Deutsche
Bank Securities Inc. (“DBSI” and, together with DBTCA, “DB”, “we” or “us”) that
Bedding Holdco Incorporated (“BHI”), Simmons Bedding Company (“SBC”) and certain
of SBC’s subsidiaries (individually and collectively, the “Entities,” and
together with SBC and BHI, collectively, the “Company”) are considering filing
voluntary petitions under Chapter 11 of the United States Bankruptcy Code (the
“Bankruptcy Code”), in the United States Bankruptcy Court for the District of
Delaware (the “Bankruptcy Court”).  In connection with such consideration, the
Company has requested that we agree to structure, arrange and syndicate a
super-priority secured debtor-in-possession revolving credit facility in an
aggregate principal amount of US$35,000,000 (the “Facility”) and that DBTCA
commit to provide the entire principal amount of the Facility and to serve as
administrative agent for the Facility.  Capitalized terms used but not defined
herein have the meanings assigned to them in the Term Sheet (as defined below).

In connection with the foregoing, DBTCA is pleased to advise you of its
commitment to provide the entire amount of the Facility upon the terms and
subject to the conditions set forth or referred to in this Commitment Letter and
in the Summary of Terms and Conditions attached hereto as Exhibit A (the “Term
Sheet”; this letter, together with the Term Sheet and the attachments thereto,
the “Commitment Letter”).  DBTCA is referred to herein as the “Initial Lender.”
 
It is agreed that (a) DBSI will act as sole bookrunner for the Facility (the
“Bookrunner”), (b) DBSI will act as lead arranger for the Facility and (c) DBTCA
will act as administrative agent for the Facility.  You agree that we may
appoint additional financial institutions agreed to by you to act as named
agents for the Facility.  You agree that no additional bookrunners, agents,
co-agents or arrangers will be appointed, no additional titles will be awarded
and no compensation (other than compensation expressly contemplated by the Term
Sheet or the Fee Letter referred to below) will be paid in connection with the
Facility unless you and we shall so agree.
 
The Bookrunner reserves the right, prior to or after the execution of the
Facility Documentation (as defined below), to syndicate the Facility (including,
in its discretion, all or part of the commitments of the Initial
Lender hereunder) to a group of financial institutions identified by us in
consultation with you (including, without limitation, certain of the financial
institutions party to that certain Second Amended and Restated Credit and
Guaranty Agreement, dated as of May 25, 2006, by and among BHI, SBC, certain
subsidiaries of SBC party thereto, the financial institutions party thereto as
lenders (collectively, the “Pre-Petition Lenders”) and Deutsche Bank AG, New
York Branch, as administrative agent and collateral agent) (such institutions,
together with the Initial Lender but excluding the Disqualified Institutions (as
defined below), collectively, the “Lenders”) other than (i) those financial
institutions or other institutional lenders reasonably acceptable to the
Bookrunner and identified to it in writing by you prior to the date hereof and
(ii) those persons (or affiliates of such persons) that are competitors of the
Company and its subsidiaries and identified by you, in writing, prior to the
date hereof, to the Bookrunner (collectively, the “Disqualified
Institutions”).  The Bookrunner intends to commence its syndication efforts
promptly upon the execution of this Commitment Letter, and you agree to use
commercially reasonable efforts to assist the Bookrunner in completing a
syndication that is satisfactory to the Bookrunner and you until the entry of
the final order approving the Facility (the “Final Order”).  Such assistance
shall include (a) your using commercially reasonable efforts to ensure that the
Bookrunner’s syndication efforts benefit materially from the existing banking
relationships of SBC and its domestic subsidiaries, (b) the hosting, with the
Bookrunner, of one or more meetings or conference calls with the Lenders, (c)
direct contact (mutually agreed by you and the Bookrunner, either in person or
telephonically) between your senior management and advisors, on the one hand,
and the senior management and advisors of the Lenders, on the other hand, (d)
entry into confidentiality agreements with prospective Lenders that are in form
and substance reasonably acceptable to you and (e) reasonable assistance in the
preparation of an information package (including a confidential information
memorandum) and other marketing materials to be used in connection with the
syndication.  At the request of the Bookrunner, you agree to assist in the
preparation of a version of the information package and presentation consisting
exclusively of information and documentation that is either publicly available
or not material with respect to the Company and any of their respective
securities for purposes of United States Federal and state securities laws (any
such information and documentation being “Public Lender Information”) and with
any information and documentation that is not Public Lender Information being
referred to herein as “Private Lender Information”).  You agree that (A) each
document to be disseminated by the Bookrunner or any other agent to any Lender
in connection with the Facility shall be deemed to contain Private Lender
Information unless you specify otherwise and (B) any such document that contains
solely Public Lender Information will be identified by you as containing solely
Public Lender Information.  Notwithstanding anything to the contrary in the
foregoing, you acknowledge and agree that each of the following documents
contain solely Public Lender Information (unless you notify us promptly that
such document contains Private Lender Information):  (a) any drafts or final
definitive documentation with respect to the Facility; (b) any administrative
materials prepared by us for Lenders (such as a Lender meeting invitation); and
(c) any notification of changes in the terms of the Facility; provided that in
the cases of clauses (b) and (c) above, any accompanying explanation or
discussion has been approved in writing by the Company (to the extent such
explanation would otherwise contain Private Lender Information). Notwithstanding
any other provision of this Commitment Letter or the Fee Letter to the contrary,
(I) until the closing of the Facility, unless the Company otherwise agrees in
writing, the Initial Lender shall not be relieved of or novated from its
obligations hereunder and (II) neither the commencement nor the completion of
the syndication of the Facility shall constitute a condition precedent to the
commitments of the Initial Lender hereunder.
 
The Bookrunner will manage, in consultation with you, all aspects of the
syndication, including but not limited to decisions as to the selection of
institutions to be approached (other than Disqualified Institutions) and when
they will be approached, when their commitments will be accepted, which
institutions will participate, the allocations of the commitments among the
Lenders and the amount and distribution of fees among the Lenders, provided,
however, that in connection with any syndication efforts made prior to the entry
of the Final Order, the Bookrunner shall use commercially reasonable efforts to
syndicate the commitments of the Initial Lender to the Pre-Petition Lenders
(other than any Disqualified Institutions). To assist the Bookrunner in its
syndication efforts, you agree to reasonably promptly prepare and provide to the
Bookrunner and the Initial Lender all information with respect to SBC and its
subsidiaries, including all projections (the “Projections”) and all financial
information, as they may reasonably request in connection with and deem
reasonably necessary for the Facility.  You hereby represent and covenant that
(a) all information other than the Projections and information of an industry
specific or general economic nature that has been or will be made available to
the Bookrunner or the Initial Lender in writing by you or any of your
representatives in connection with the Facility (collectively, the
“Information”) is or will be, when furnished and taken as a whole, complete and
correct in all material respects and does not or will not, when furnished,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, taken as a whole,
not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to the Bookrunner or the Initial Lender by you or any of your
representatives in connection with the Facility have been or will be prepared in
good faith based upon assumptions that you believe to be reasonable at the time
made (it being understood that such Projections are not to be viewed as facts
and that actual results during the period or periods covered by any such
Projections may differ materially from the projected results and that no
assurance can be given that the projected results will be realized).  In
arranging and syndicating the Facility, we will be entitled to use and rely
primarily on the Information and the Projections without responsibility for
independent verification thereof.
 
As consideration for the commitments of the Initial Lender hereunder and the
agreement of the Bookrunner hereunder to perform the services described herein,
SBC agrees to pay or cause to be paid to DBTCA (for its account and for the
account of the Bookrunner, in each case as further described in the Term Sheet
or the Fee Letter) the nonrefundable fees set forth in the Term Sheet and in the
Arrangement Fee Letter, dated the date hereof and delivered herewith (the “Fee
Letter”) as and when provided in the Term Sheet or the Fee Letter, as the case
may be, and subject to the terms and conditions set forth herein and the
approval of the Bankruptcy Court.
 
The commitments of the Initial Lender hereunder and the agreement of the
Bookrunner to perform the services described herein are subject to (a) our not
having discovered or otherwise become aware after the date hereof that any
information disclosed in the Company’s annual report on Form 10-K filed with the
U.S. Securities and Exchange Commission with respect to the fiscal year ended
December 31, 2008 was materially and adversely inaccurate with respect to the
business, operations, assets, properties or financial condition of the Company
and its subsidiaries, taken as a whole, as of the date of such filing, (b) there
not having occurred any event, development, change or condition that has had or
could be reasonably expected to have a material adverse effect on the business,
operations, assets, property, or financial condition of the Company, taken as a
whole, since December 31, 2008 (other than those which may occur as a result of
the events and circumstances giving rise to, leading up to and following the
commencement of proceedings under Chapter 11 of the Bankruptcy Code), (c) the
negotiation, execution and delivery of definitive financing documentation with
respect to the Facility reflecting the terms set forth herein and in the Term
Sheet and otherwise reasonably satisfactory to DB and you and DB’s and your
respective counsel (such documentation, “Facility Documentation”) and (d) our
satisfaction with the entry of an interim order  (the “Interim Order”), which
order shall, among other things, approve (i) the Facility and the borrowing of
up to an amount to be agreed under the Facility, (ii) the Bankruptcy Code
Sections 364(c)(1), (2) and (3) and 364(d) liens and superpriority claims for
the Facility and (iii) the payment by the Company of all of the fees that are
provided for in the Fee Letter.  The terms and conditions of the commitments of
the Initial Lender hereunder and of the Facility are not limited to those set
forth herein and in the Term Sheet. Those matters that are not covered by the
provisions hereof and of the Term Sheet are subject to the approval and
agreement of DB and the Company.
 
SBC agrees (a) to indemnify and hold harmless each of the Bookrunner and the
Initial Lender and their respective officers, directors, employees, affiliates,
advisors, agents and controlling persons (each, an “Indemnified Party”) from and
against any and all losses, claims, damages and liabilities to which any such
person may become subject, in each case, arising out of or in connection with
this Commitment Letter, the Fee Letter, the Facility, the use of any proceeds
thereof or any claim, litigation, investigation or proceeding relating to any of
the foregoing (any of the foregoing, a “Proceeding”), regardless of whether any
of such Indemnified Parties is a party thereto or whether a Proceeding is
initiated by or on behalf of a third party or you or any of your affiliates, and
to reimburse each of such Indemnified Parties within a reasonable period of time
following receipt of a reasonably detailed invoice therefor, for any reasonable
and documented out-of-pocket expenses incurred in connection with investigating
or defending any of the foregoing (but limited, in the case of counsel, to the
reasonable and documented out-of-pocket fees and expenses of one law firm to all
indemnified parties, taken as a whole, and, if reasonably necessary, one local
counsel in each material relevant local jurisdiction); provided that the
foregoing indemnity will not, as to any Indemnified Party, apply to losses,
claims, damages, liabilities or related expenses to the extent that they are
determined by the final judgment of a court of competent jurisdiction to have
resulted from the bad faith, willful misconduct or gross negligence of such
Indemnified Party or in connection with any dispute solely among the Indemnified
Parties and (b) within a reasonable period of time following receipt of a
reasonably detailed invoice therefor, to reimburse each of the Bookrunner and
the Initial Lender for all reasonable and documented out-of-pocket expenses
(including syndication expenses, without duplication, expenses required to be
reimbursed pursuant to the Engagement Letter dated June 4, 2009, between you and
us (the “Engagement Letter”), and the reasonable and documented out-of-pocket
fees, charges and disbursements of one law firm and, if reasonably necessary,
one local counsel in each material relevant jurisdiction, in each case, to the
Bookrunner and the Initial Lender, taken as a whole) incurred in connection with
the arrangement and syndication of the Facility and any related documentation
(including this Commitment Letter, the Fee Letter and the Facility
Documentation).  No Indemnified Party shall be liable for any damages arising
from the unauthorized use by others of information or other materials obtained
through electronic, telecommunications or other information transmission systems
except to the extent such unauthorized use resulted from an Indemnified Party’s
bad faith, willful misconduct or gross negligence, and neither the Company nor
any Indemnified Party shall be liable for any special, indirect, punitive or
consequential damages in connection with its activities related to this
Commitment Letter or the Facility except, in the case of the Company, to the
extent such damages would otherwise be subject to indemnity hereunder.
 
It is understood and agreed that this Commitment Letter shall not constitute or
give rise to any obligation on the part of the Bookrunner, the Initial Lender or
any of their respective affiliates to provide any financing, except as expressly
provided herein.
 
You acknowledge and agree that (a) no fiduciary, advisory or agency relationship
between you, on the one hand, and the Bookrunner or the Initial Lender, on the
other hand, is intended to be or has been created in respect of any of the
transactions contemplated by this Commitment Letter, irrespective of whether the
Bookrunner or the Initial Lender has advised or is advising you on other
matters, (b) the Bookrunner and the Initial Lender, on the one hand, and you, on
the other hand, have an arms-length business relationship that does not directly
or indirectly give rise to, nor do you rely on, any fiduciary duty on the part
of the Bookrunner or the Initial Lender, (c) you are capable of evaluating and
understanding, and you understand and accept, the terms, risks and conditions of
the transactions contemplated by this Commitment Letter, (d) you have been
advised that each of the Bookrunner and the Initial Lender is engaged in a broad
range of transactions that may involve interests that differ from your interests
and that neither the Bookrunner nor the Initial Lender has any obligation to
disclose such interests and transactions to you by virtue of any fiduciary,
advisory or agency relationship and (e) you waive, to the fullest extent
permitted by law, any claims you may have against the Bookrunner and the Initial
Lender for breach of fiduciary duty or alleged breach of fiduciary duty and
agree that neither the Bookrunner nor the Initial Lender shall have any
liability (whether direct or indirect) to you in respect of such a fiduciary
duty claim or to any person asserting a fiduciary duty claim on behalf of or in
right of you, including your stockholders, employees or
creditors.  Additionally, you acknowledge and agree that, neither the Bookrunner
nor the Initial Lender is advising you as to any legal, tax, investment,
accounting or regulatory matters in any jurisdiction.  You shall consult with
your own advisors concerning such matters and shall be responsible for making
your own independent investigation and appraisal of the transactions
contemplated hereby, and neither the Bookrunner nor the Initial Lender shall
have any responsibility or liability to you with respect to your investigation
and appraisal of such transactions.
 
You acknowledge that the Bookrunner, the Initial Lender and their respective
affiliates may be providing debt financing, equity capital or other services
(including but not limited to financial advisory services) to other companies in
respect of which you may have conflicting interests regarding the transactions
described herein and otherwise. Neither the Bookrunner, the Initial Lender nor
any of their respective affiliates will use confidential information obtained
from you by virtue of the transactions contemplated by this Commitment Letter or
their other relationships with you in connection with the performance by the
Bookrunner, the Initial Lender or any of their respective affiliates of services
for other companies, and neither the Bookrunner, the Initial Lender or any of
their respective affiliates will furnish any such information to other
companies. You also acknowledge that neither the Bookrunner, the Initial
Lender nor any of their respective affiliates has any obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to the Company or its subsidiaries or representatives, confidential
information obtained by the Bookrunner, the Initial Lender or any of their
respective affiliates from any other company or person.
 
This Commitment Letter shall not be assignable by you without the prior written
consent of the Bookrunner and the Initial Lender (and any purported assignment
without such consent shall be null and void). This Commitment Letter is intended
to be solely for the benefit of the parties hereto (and Indemnified Parties), is
not intended to confer any benefits on, or create any rights in favor of, any
person other than the parties hereto (and Indemnified Parties) and may not be
amended or waived except by an instrument in writing signed by SBC, the
Bookrunner and the Initial Lender. Any and all obligations of, and services to
be provided by, the Bookrunner or the Initial Lender hereunder may be performed,
and any and all rights of such person hereunder may be exercised, by or through
their respective affiliates without affecting or releasing the obligations of
such person hereunder. This Commitment Letter may be executed in any number of
counterparts, each of which shall be an original and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Commitment Letter by facsimile, portable document format (“.pdf”) or
other electronic transmission shall be effective as delivery of a manually
executed counterpart hereof. This Commitment Letter, the Fee Letter and the
Engagement Letter are the only agreements entered into among us with respect to
the Facility and set forth the entire understanding of the parties with respect
thereto. THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF, TO THE EXTENT THAT THE SAME ARE NOT
MANDATORILY APPLICABLE BY STATUTE AND WOULD REQUIRE OR PERMIT THE APPLICATION OF
THE LAW OF ANOTHER JURISDICTION).
 
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY
RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE PERFORMANCE OF
SERVICES HEREUNDER.
 
Each of the parties hereto hereby irrevocably and unconditionally (a) submits,
for itself and its property, to the exclusive (subject to the proviso below)
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York County, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Commitment Letter
or the Fee Letter or the transactions contemplated hereby, or for recognition or
enforcement of any judgment, and agrees that all claims in respect of any such
action or proceeding may be heard and determined only in such courts located in
New York County, provided however, that DB shall be entitled to assert
jurisdiction over you and your property in any court in which jurisdiction may
be laid over you or your property in order to enforce any judgment obtained in
any action or proceeding in any such court located in New York County or any
appellate court from any thereof and the parties also submit to the jurisdiction
of the Bankruptcy Court, (b) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Commitment Letter or the Fee Letter or the transactions contemplated hereby
in any New York State or Federal court, (c) waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court and (d) agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law.  Service of any process, summons, notice or document by registered mail or
overnight courier addressed to you at the address above shall be effective
service of process against you for any suit, action or proceeding brought in any
such court.
 
This Commitment Letter is delivered to you on the understanding that this
Commitment Letter and the Fee Letter, and their respective terms and substance
(and any other work product provided by the Bookrunner, the Initial Lender or
any of their respective affiliates, employees, officers, attorneys or other
professional advisors in connection herewith or therewith, in each case that is
(i) not based upon any information provided by or on behalf of the Company or
which is otherwise publicly available and (ii) designated as privileged or
confidential), shall be for your confidential use only and shall not be
disclosed by you (or on your behalf) to any other person other than to
prospective purchasers of the Company and your and their affiliates, controlling
persons, directors, employees, officers, accountants, attorneys, agents,
financial advisors and other advisors involved in the consideration of this
matter; provided that nothing herein shall prevent you from disclosing such
information (a) pursuant to the order of any court or administrative or
regulatory agency or in any legal, judicial, administrative or regulatory
proceeding or (b) otherwise as required by applicable law or regulation
(including in any public record in which it is required by law to be filed) or
by subpoena or similar legal process (in which case you shall inform the
Bookrunner and the Initial Lender promptly to the extent permitted by law).  The
restrictions contained in the preceding sentence shall cease to apply (except in
respect of the Fee Letter and its terms and substance) after this Commitment
Letter has been accepted by you.
 
The Bookrunner and the Initial Lender will use all confidential information
provided to it by or on behalf of the Company hereunder solely for the purpose
of providing the services which are the subject of this Commitment Letter and
will not disclose any such information other than to its affiliates, controlling
persons, directors, employees, officers, accountants, attorneys, agents,
financial advisors and other advisors involved in the consideration of this
matter; provided that nothing herein shall prevent the Bookrunner or the Initial
Lender from disclosing such information (a) pursuant to the order of any court
or administrative or regulatory agency or in any legal, judicial, administrative
or regulatory proceeding, (b) otherwise as required by applicable law or
regulation (including in any public record in which it is required by law to be
filed) or by subpoena or similar legal process (in which case the Bookrunner or
the Initial Lender, as applicable, shall inform SBC promptly to the extent
permitted by law) or (c) to prospective Lenders, participants or assignees under
the Facility in each case who sign a confidentiality agreement as required
hereunder.
 
The compensation, reimbursement, indemnification, confidentiality, jurisdiction
and waiver of jury trial provisions contained herein shall remain in full force
and effect regardless of whether definitive financing documentation for the
Facility shall be executed and delivered and notwithstanding the termination of
this Commitment Letter, provided that this Commitment Letter shall in all other
respects be superseded by the definitive financing documentation for the
Facility upon the effectiveness thereof.
 
Each of the Bookrunner and the Initial Lender hereby notifies you that pursuant
to the requirements of the U.S.A. PATRIOT ACT (Title III of Pub. L. 107 56
(signed into law October 26, 2001)) (the “Patriot Act”), it, on behalf of itself
and each of the Lenders, may be required to obtain, verify and record
information that identifies the Company, which information may include the name
and address of the Company, and other information that will allow the
Bookrunner, the Initial Lender and each of the Lenders to identify the Company
in accordance with the Patriot Act. This notice is given in accordance with the
requirements of the Patriot Act and is effective for the Bookrunner and the
Initial Lender on behalf of themselves and each of the Lenders.
 
 
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms of this Commitment Letter and the Fee Letter by
returning to us executed counterparts of this Commitment Letter and the Fee
Letter not later than 5:00 p.m., New York City time, on August 20, 2009. The
commitment of the Initial Lender hereunder and the agreement of the
Bookrunner hereunder to perform the services contemplated herein will expire at
such time in the event we have not received such executed counterparts in
accordance with the immediately preceding sentence. In the event that the entry
of the initial order approving the Facility does not occur on or before October
31, 2009, then this Commitment Letter and the commitments hereunder shall
automatically terminate unless the Bookrunner and the Initial Lender shall, in
their sole discretion, agree in writing to an extension.
 
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We are pleased to have been given the opportunity to assist you in connection
with this important financing.
 
 
Very truly yours,

DEUTSCHE BANK TRUST COMPANY  AMERICAS

By
 /s/ Keith C. Braun

Name:  Keith C. Braun
Title:  Managing Director

By
 /s/ Vincent D'Amore

Name:  Vincent D'Amore
Title:  Director

 
DEUTSCHE BANK SECURITIES INC.

 
By
 /s/ Keith C. Braun

Name:  Keith C. Braun
Title:  Managing Director

 
By
 /s/ Vincent D'Amore

Name:  Vincent D'Amore
Title:  Director

 
 

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Accepted and agreed to as of the date first
written above by:

SIMMONS BEDDING COMPANY
For itself and each of its affiliates
constituting the 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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EXHIBIT A

Term Sheet