PLAN SPONSOR AGREEMENT
 
AMONG
 
SIMMONS COMPANY
 
BEDDING HOLDCO INCORPORATED
 
(F/K/A THL-SC BEDDING COMPANY)
 
SIMMONS BEDDING COMPANY
 
AOT BEDDING SUPER HOLDINGS, LLC
 
AND
 
AOT BEDDING INTERMEDIATE HOLDINGS, LLC
 
Dated as of September 24, 2009
 

 

 
 

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Exhibits
 
A                                The Plan
B                                Plan Sponsor Order
C                                Confirmation Order
D                                Restructuring Expense Forecast
E                                Subsidiary Debtors

 

 

 

 
 

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AGREEMENT
 
PLAN SPONSOR AGREEMENT, dated as of September 24, 2009 (this “Agreement”), by
and among AOT Bedding Super Holdings, LLC, a Delaware limited liability company
(“Parent”), AOT Bedding Intermediate Holdings, LLC, a Delaware limited liability
company and a wholly owned Subsidiary of Parent (“Purchaser” and together with
Parent, the “Purchaser Entities”), Simmons Company, a Delaware corporation
(“Simmons Company”), Bedding Holdco Incorporated (f/k/a THL-SC Bedding Company),
a Delaware corporation and a wholly owned Subsidiary of Simmons Company (the
“Company”), Simmons Bedding Company, a Delaware corporation and a wholly owned
Subsidiary of the Company (“Opco”), and each of Opco’s direct and indirect
domestic subsidiaries.
 
WHEREAS, the Company and its Subsidiaries are engaged in the business of the
marketing and manufacturing of a range of bedding products including under the
Beautyrest®, Beautyrest Black®, ComforPedic by Simmons™, Natural Care®,
ComforPedic Loft™ and BeautySleep® trademarks (the “Business”);
 
WHEREAS, the Company and Opco, with assistance from professional advisors, have
conducted a sales process to sell the Business and have determined that this
Agreement and the transactions contemplated hereby are in their respective best
interests;
 
WHEREAS, the Debtors (as defined in Section 1.1) propose to solicit the holders
of Opco’s Secured Debt (the “Secured Debtholders”), holders of Opco’s Senior
Subordinated Notes (the “Senior Note Debtholders”) and qualified holders of
Simmons Company’s Senior Discount Notes (the “Holdco Debtholders”) for
acceptance of a plan of reorganization under chapter 11 of title 11 of the
United States Code (the “Bankruptcy Code”) on the terms set forth on Exhibit A
(as it may be amended from time to time consistent with this Agreement, the
“Plan”) pursuant to a Disclosure Statement in form and substance reasonably
satisfactory to Purchaser and the Company (the “Disclosure Statement”) and in
accordance with section 1126(b) of the Bankruptcy Code and Rule 3018 of the
Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”);
 
WHEREAS, subject to the acceptance of the Plan by at least two-thirds in amount
and more than one-half in number of the allowed claims of each of the class of
Secured Debtholders, the class of Senior Note Debtholders and the class of
Holdco Debtholders in accordance with Section 1126(b) and Rule 3018, the Debtors
propose to file voluntary petitions for relief under chapter 11 of the
Bankruptcy Code within 45 days following the date hereof (the “Petition Date”)
in the United States Bankruptcy Court for the District of Delaware (the
“Bankruptcy Court” and such proceedings, collectively, the “Bankruptcy Case”)
and, simultaneously therewith, file motions seeking (i) approval of the
Disclosure Statement and confirmation of the Plan and (ii) Bankruptcy Court
approval of this Agreement and the payment of the Break-Up Fee and other amounts
paid or payable pursuant to this Agreement;
 
WHEREAS, in connection with the foregoing, certain Secured Debtholders, Senior
Note Debtholders and Holdco Debtholders have agreed to accept the Plan and
delivered the Restructuring Support Agreement for the benefit of the Company and
Parent;
 
WHEREAS, each Sponsor has delivered to the Company and Opco concurrently with
this Agreement a duly executed letter, dated as of the date hereof, in favor of
the Company and Opco (the “Equity Guarantees”), with respect to its equity
commitment and the Purchaser Entities’ obligations arising under this Agreement;
 
WHEREAS, the Company has received concurrently with this Agreement a duly
executed debt commitment letter with respect to the terms of the DIP Facility
and the Purchaser Entities and the Company have received concurrently with this
Agreement a duly executed debt commitment letter with respect to the terms of
the Exit Facilities (the “Exit Financing Commitments” and, together with the
Equity Guarantees, the “Commitment Letters”); and
 
WHEREAS, in consideration of Parent incurring significant costs and expenses and
proceeding to execute this Agreement in advance of the filing of the Debtors’
voluntary petitions, in each case for the benefit of the Debtors, and as a
condition thereto, the Company has paid to Parent in cash on the date hereof an
amount equal to $7,000,000 (the “Signing Date Expense Amount”) for reimbursement
of an agreed amount of Parent’s expenses to the date hereof.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and intending to be bound hereby, the parties
hereby agree as follows:
 
I.           CERTAIN DEFINITIONS
 
1.1 Certain Definitions.
 
In addition to the terms defined elsewhere herein and in the Plan (which terms
are used herein as so defined), for purposes of this Agreement, the following
terms shall have the meanings specified in this Section 1.1 when used herein
with initial capital letters:
 
“Accounts Receivable” means all accounts receivable, including, without
limitation, all trade accounts receivable, notes receivable, vendor credits and
all other obligations owed to a Person with respect to sales of goods or
services, whether or not evidenced by a note.
 
“Adverse Commitment Party” has the meaning given to such term in the Exit
Financing Commitments.
 
“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, controls, or is controlled by,
or is under common control with, such Person, and the term “control” (including
the terms “controlled by” and “under common control with”) means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting
securities, by Contract or otherwise.
 
“Affiliated Note Purchaser” means Ares Management LLC on behalf of certain funds
and/or accounts that it manages and/or advises as purchaser of the Exit Notes
under the Exit Financing Commitment.
 
“Break-Up Fee Expense Amount” means the amount of reasonable out-of-pocket
expenses (including attorney’s fees) of the Purchaser Entities relating to this
Agreement, the Bankruptcy Proceeding and the transactions contemplated hereby
and thereby that have been incurred by Parent from the date hereof through the
date of termination; provided, however, that in no event shall the Break-Up Fee
Expense Amount exceed $3,000,000.
 
“Break-Up Fee Note Maturity” means the earlier to occur of (i) the consummation
of a transaction defined in any of clauses (i) through (iii) of the definition
of Competing Transaction (other than an acquisition of Simmons Capital Stock),
(ii) the dismissal of any chapter 11 case of the Company or Opco, or the
conversion of any chapter 11 case of the Company or Opco from one under chapter
11 to one under chapter 7 of the Bankruptcy Code or the Company or Opco filing a
motion or other pleading seeking the dismissal of any chapter 11 case of the
Company or Opco under section 1112 of the Bankruptcy Code or otherwise; (iii)
the effectiveness of a plan of reorganization or arrangement of the Company or
Opco under a chapter 11 proceeding; (iv) the substantial consummation (as
defined in section 1101 of the Bankruptcy Code) of a plan of reorganization of
the Company or Opco that is confirmed pursuant to an order entered by the
Bankruptcy Court in any of the chapter 11 proceedings; (v) the failure of the
issuance and priority status of the Break-Up Fee Note to be approved (in the
Plan Sponsor Order or otherwise) by a Final Order of the Bankruptcy Court in
form and substance reasonably satisfactory to Purchaser within 10 days of the
issuance thereof; and (vi) the third anniversary from the date of issuance.
 
“Business Day” means any day of the year on which national banking institutions
in New York are open to the public for conducting business and are not required
or authorized to close.
 
“Code” means the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder.
 
“Commitment” has the meaning given to such term in the Exit Financing
Commitments.
 
“Communications Plan” means the plan for internally communicating with the
officers and employees of Simmons Company, Company, Opco and their respective
Subsidiaries with respect to the transactions contemplated by this Agreement and
the Plan and pertaining to compensation and benefit matters, which such plan has
been agreed to by Parent and the Company, and may be amended from time to time
with the consent of both parties.
 
“Company Capital Stock” means, as of any date, the issued and outstanding
capital stock of the Company.
 
“Company Intellectual Property” means any right to Intellectual Property used or
held for use in the Business as it is currently conducted by Simmons Company,
Company, Opco or their Subsidiaries.
 
“Company Material Adverse Effect” means (i) an event, circumstance or
development since December 27, 2008 which has had or is reasonably likely to
have or result in, individually or in the aggregate, a material adverse effect
on or a material adverse change in or to the business, assets, properties,
results of operations or financial condition of the Company and its Subsidiaries
(taken as a whole) or (ii) a material adverse effect on or a material adverse
change in or to the ability of the Company and Opco to consummate the
transactions contemplated by this Agreement or the Plan or perform their
respective obligations under this Agreement or the Plan, other than, as applied
to clause (i) only, an effect or change resulting from any one or more of the
following:  (A) the effect of any change in the United States economy or
securities or financial markets in general; (B) the effect of any change that
generally affects the bedding manufacturing industry; (C) the effect of any
change arising in connection with any force majeure (such as hurricanes, floods
or earthquakes), hostilities, acts of war, sabotage or terrorism or military
actions or any escalation or material worsening of any such hostilities, acts or
war, sabotage or terrorism or military actions existing or underway as of the
date hereof; (D) the effect of any actions taken by the Purchaser Entities or
their Affiliates with respect to (1) the transactions contemplated hereby or by
the Plan or (2) the Debtors, including their employees, other than ordinary
course business activities of National Bedding Company, LLC and its subsidiaries
that do not cause, or result in, a breach of any of its obligations to the
Company or Opco; (E) the effect of any changes in applicable Laws or accounting
rules effective after the date hereof; (F) any effect resulting from the public
announcement of this Agreement, compliance with terms of this Agreement or the
consummation of the transactions contemplated by this Agreement; or (G) any loss
of customers or suppliers resulting from the filing of the Bankruptcy Case or
the entering into of this Agreement.  Notwithstanding the foregoing, an effect
or change resulting from the events in (A), (B), (C) and (E) above shall not be
excluded for purposes of determining whether a “Company Material Adverse Effect”
has occurred under clause (i) of the preceding sentence if such adverse effect
or change on the Company and its Subsidiaries (taken as a whole) is
disproportionate to the adverse effect or change thereof on other companies in
the bedding manufacturing industry, but taking into account for purpose of
determining whether a Company Material Adverse Effect has occurred only the
disproportionate impact.
 
“Competing Transaction” means (i) a transaction pursuant to which any Person (or
“group” of Persons as used in Rule 13d-5(b) of the Securities Exchange Act of
1934, as amended), directly or indirectly, acquires or would acquire beneficial
ownership, or rights to acquire beneficial ownership, of 25% or more of any
series of the Simmons Capital Stock or the Company Capital Stock, as applicable,
whether from Simmons Company, the Company or otherwise and whether of a type
contemplated by prior proposals or otherwise, (ii) a merger, reorganization,
share exchange, consolidation or other business combination involving Simmons
Company or the Company in which the holders of the Simmons Capital Stock or
Company Capital Stock, as applicable, immediately prior to such transaction
would cease to own a majority of any of such capital stock (or outstanding
equity securities of the acquiring or resulting entity in such transaction),
(iii) a transaction pursuant to which any Person (or such group of Persons)
acquires or would acquire control of all or any portion of the assets (including
for this purpose the outstanding equity securities of Subsidiaries of Simmons
Company or the Company and securities of the entity surviving any merger or
business combination involving any Subsidiary of Simmons Company or the Company)
of Simmons Company, the Company or any of its Subsidiaries representing more
than 25% of the fair market value of all the assets, or more than 25% of the net
revenues, of Simmons Company and its Subsidiaries or the Company and its
Subsidiaries, as applicable, taken as a whole, immediately prior to such
transaction, (iv) any other consolidation, business combination,
recapitalization, capital restructuring, plan of reorganization or similar
transaction involving Simmons Company or the Company as a result of which the
holders of shares of the Simmons Capital Stock or the Company Capital Stock, as
applicable, immediately prior to such transaction do not, in the aggregate,
continue to hold a majority of the outstanding shares of common stock and the
outstanding voting power of the surviving or resulting entity in such
transaction immediately after the consummation thereof, or (v) any other
transaction (including a transaction of the type referenced in clauses (i)
through (iv) that does not meet the requirements thereof) that is conditioned or
predicated on the transactions contemplated by this Agreement not being
completed in accordance with the terms of this Agreement and the Plan, or is
intended or is reasonably expected to result in such transactions not being so
completed, including without limitation any alternative plan of reorganization
(whether or not involving new equity ownership) under chapter 11 of the
Bankruptcy Code or liquidating plan under chapter 7 of the Bankruptcy Code
(other than a liquidating plan that does not involve the continuation of a
substantial part of the business of the Company as a going concern).
 
“Confidentiality Agreement” means that certain Confidentiality Agreement, dated
February 19, 2009, among Ontario Teachers’ Pension Plan Board, ACOF Operating
Manager, L.P., AOT Bedding Holdings Corp. and Simmons Holdco, Inc.
 
“Confirmation Order” means an order of the Bankruptcy Court, in form and
substance attached hereto as Exhibit C, with such changes as are permitted
pursuant to Section 3.7(b) hereof, including (i) approving the Debtors’
Disclosure Statement, voting materials and procedures, and solicitation and (ii)
confirming the Plan.
 
“Contract” means any legally binding written or oral contract, indenture, note,
bond, lease, mortgage, license, arrangement, agreement or undertaking.
 
“Copyrights” means any copyrights, whether in published or unpublished works and
whether in digital or print media, and any United States or foreign
registrations thereof and applications therefor, including all renewals and
extensions thereof and rights corresponding thereto throughout the world.
 
“Debtor” means each of Simmons Company, the Company, Opco and Opco’s domestic
Subsidiaries, collectively, the “Debtors.”
 
“Defaulting Commitment Party” has the meaning given to such term in the Exit
Financing Commitments.
 
“DIP Facility” means the credit facility available to the Debtors during the
pendency of the Bankruptcy Case.
 
“Disclosure Letter” means the disclosure letter, dated as of the date hereof,
between Simmons Company, the Company, Opco and the Purchaser Entities, organized
by the particular Sections of this Agreement to which the disclosure letter
relates.
 
“Effective Date” means the date on which all conditions precedent to the
effectiveness of the Plan shall have occurred.
 
“Effective Time” means the time on the Closing Date at which the Closing is
effective.
 
“Employees” means all individuals, as of the date hereof, whether or not
actively at work as of the date hereof, who are employed by Simmons Company, the
Company or its Subsidiaries in connection with the Business, together with
individuals who are hired by Simmons Company, the Company or its Subsidiaries
after the date hereof and prior to the Closing.
 
“Environmental Law” means any Law relating to the protection of the environment
or natural resources, and health and safety (as it relates to the handling of,
or  exposure to, any Hazardous Substance) including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601, et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. App. §§ 1801, et
seq.) (as it relates to the protection of the environment), the Resource
Conservation and Recovery Act (42 U.S.C. §§ 6901, et seq.), the Clean Water Act
(33 U.S.C. §§ 1251, et seq.), the Clean Air Act (42 U.S.C. §§ 7401, et seq.),
the Toxic Substances Control Act (15 U.S.C. §§ 2601, et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.), the
Occupational Safety and Health Act (29 U.S.C. §§ 651 et seq.) (as it relates to
the handling of or occupational exposure to any Hazardous Substance) and the
regulations promulgated pursuant thereto, and similar legislation in foreign
jurisdictions.  Notwithstanding the foregoing, Environmental Law does not
encompass laws governing consumer protection or product safety.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“Exit Facilities” means the senior secured term notes (the “Exit Notes”) issued
under the New Notes Indenture (as defined in the Plan) and pursuant to the note
purchase agreement entered into as of the Closing Date.
 
“Exit Financing” means the debt financing provided pursuant to the Exit
Facilities.
 
“Final Order” has the meaning given to such term in the Plan.
 
“GAAP” means generally accepted accounting principles in the United States.
 
“Governmental Body” means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, federal, state,
provincial or local, or any agency, instrumentality or authority thereof, or any
court or arbitrator (public or private).
 
“Hazardous Substance” means any material, substance or waste that is regulated
pursuant to any Environmental Law including, without limitation those listed,
classified or regulated as hazardous, toxic, a pollutant, or a contaminant or
words of similar meaning pursuant to any Environmental Law including those
containing asbestos, mold, lead and petroleum products or by-products.
 
“Holdco Escrow Amount” means an amount equal to $5,000,000.
 
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
 
“Indebtedness” of any Person means, without duplication, (i) the principal of
and premium (if any) in respect of (A) indebtedness of such Person for borrowed
money and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person, all
earnout obligations of such Person, and all obligations of such Person under any
title retention agreement (but excluding trade accounts payable and other
accrued current liabilities arising in the Ordinary Course of Business which are
not more than ninety days overdue or which are being contested in good faith and
for which appropriate reserves have been established in accordance with GAAP);
(iii) all obligations of such Person under leases required to be capitalized in
accordance with GAAP; (iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker’s acceptance or similar credit
transaction; (v) all net amounts payable upon termination of interest rate
protection agreements, foreign currency exchange agreements or other interest
rate or exchange rate hedging arrangements which will be terminated as of the
Closing; (vi) any Liability under any deferred compensation plans, severance
plans, bonus plans, employment agreements, or any other plan, agreement or
arrangement with any Person, which Liability is payable, or becomes due, as a
result of the transactions contemplated herein; (vii) all obligations of the
type referred to in clauses (i) through (vi) of any Persons for the payment of
which such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; (viii)
all obligations of the type referred to in clauses (i) through (vii) of other
Persons secured by any Lien on any property or asset of such Person (whether or
not such obligation is assumed by such Person); and (ix) all other liabilities
or obligations required by GAAP to be reflected as indebtedness on a
consolidated balance sheet of such Person as of the relevant date prepared in
accordance with GAAP.
 
“Intellectual Property” means the following: (i) all Copyrights; (ii) all
Patents; (iii) all trade secrets; (iv) all Trademarks; and (v) all rights to sue
or otherwise claim for past, present or future infringement or unauthorized use
or disclosure or breach of any of the assets, properties or rights described
above.
 
“IRS” means the Internal Revenue Service.
 
“Knowledge of the Company” means the actual knowledge after due inquiry of those
officers of Simmons Company, the Company or its Subsidiaries identified on
Schedule 1.1(a).
 
“Knowledge of Purchaser” means the actual knowledge after due inquiry of those
officers of Parent, Purchaser and each Sponsor identified on Schedule 1.1(b).
 
“Law” means any federal, state, provincial, local or foreign law, statute, code,
ordinance, rule or regulation or common law requirement.
 
“Legal Proceeding” means any judicial, administrative or arbitral actions,
suits, proceedings (public or private) or claims or any proceedings by or before
a Governmental Body.
 
“Liability” means any Indebtedness, debt, liability, commitment or obligation
(whether direct or indirect, known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, or due or to
become due), and including all costs and expenses relating thereto.
 
“Lien” means any lien, encumbrance, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement or encumbrance or any other right of a third
party.
 
“Opco Escrow Amount” means an amount equal to $5,000,000.
 
“Order” means any order, injunction, judgment, decree, ruling, writ, assessment
or arbitration award of a Governmental Body.
 
“Ordinary Course of Business” means the ordinary and usual course of normal
day-to-day operations of the Business through the date hereof consistent with
past practice or as otherwise provided in the Disclosure Statement or Plan.
 
“Other Indebtedness” means the amount of Indebtedness of the Debtors as of the
Closing Date other than (a) the Exit Facilities, (b) the Indebtedness set forth
on Schedule 8.1(f) or (c) Restructuring Expenses.
 
“Parent Company” means each of Bedding Superholdco Incorporated (f/k/a Simmons
Holdco, Inc.), a Delaware corporation, and Simmons Company.
 
“Parent Disclosure Letter” means the disclosure letter, dated as of the date
hereof, between Parent, Simmons Company, Company and Opco, organized by the
particular Sections of this Agreement to which the disclosure letter relates.
 
“Patents” means any United States or foreign utility or design patents or
equivalents, together with, any extensions, reexaminations and reissues of such
patents, patents of addition, patent applications, divisions, continuations,
continuations-in-part and any subsequent filings in any country or jurisdiction
claiming priority therefrom.
 
“Permits” means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body.
 
“Permitted Exceptions” means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to the Purchaser Entities; (ii)
statutory liens for Taxes, assessments or other governmental charges not yet
delinquent or the amount or validity of which is being contested in good faith
by appropriate proceedings provided an adequate reserve is established therefor;
(iii) mechanics’, carriers’, workers’, repairers’ and similar Liens arising or
incurred in the Ordinary Course of Business; (iv) zoning, entitlement and other
land use and environmental regulations by any Governmental Body provided that
such regulations have not been violated; (v) title of a lessor under a capital
or operating lease; (vi) Liens imposed under the Secured Debt Credit Agreement;
(vii) Liens securing debt as disclosed in the audited Financial Statements; and
(viii) other Liens on real or personal property that, individually or in the
aggregate, do not adversely affect the value or use of the property to which
they relate in any material respect.
 
“Person” means any individual, corporation, limited liability company,
partnership, limited partnership, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.
 
“Plan Sponsor Order” means an order of the Bankruptcy Court, substantially in
form and substance attached hereto as Exhibit B, with such changes as are
permitted pursuant to Section 3.7(b) hereof, approving the assumption of this
Agreement by the Debtors and the Break-Up Fee and other amounts paid or payable,
the issuance of the Break-Up Fee Note, and approving and directing the
execution, delivery and performance of this Agreement, the Break-Up Fee Note and
the applicable ancillary agreements.
 
“Plan Representative” is such representative to be determined by the Debtors in
consultation with the creditor parties to the Restructuring Support Agreement.
 
“Purchaser Material Adverse Effect” means a material adverse effect on the
ability of Parent or Purchaser to consummate the transactions contemplated by
this Agreement or the Plan or perform its respective obligations under this
Agreement, the Plan or any of the Purchaser Documents.
 
“Representative” means the directors, officers, employees, investment bankers,
attorneys, accountants and other advisors or representatives of a Person.
 
“Restructuring Expense Target” means $37,125,000.
 
“Restructuring Expenses” means, without duplication, (a) all of the following
out-of-pocket costs, fees and expenses of any kind paid or incurred by Simmons
Company, the Company or its Subsidiaries (1) with respect to the period
commencing June 28, 2009 up to and including the Closing Date to the extent
relating to the restructuring of the capital structure of Simmons Company, the
Company and its Subsidiaries contemplated by this Agreement, the Plan and the
other Restructuring Documents or the Bankruptcy Case and (2) with respect to the
period following the Closing Date, in the ordinary course to the extent relating
to the Bankruptcy Case in an amount not to exceed $1,000,000 in the aggregate,
in each of the cases of (1) and (2): (i) all fees and expenses of financial
advisors, legal counsel, trustees, agents and other professionals (whether
providing services to Simmons Company, the Company and its Subsidiaries or to
any other Person, but excluding the fees of Sullivan & Cromwell LLP and any
other advisor, legal counselor professional providing services to any Purchaser
Entity or its Affiliates, whether or not included in the Signing Date Expenses
Amount or the Break Up Fee Expense Amount), (ii) all fees and costs of the
Bankruptcy Court or the US Trustee or any Governmental Authority in connection
with the Bankruptcy Case or the transactions contemplated by the Plan, (iii) all
interest, fees, expenses and other payments in connection with or payable to or
for the account of creditors or agents under the DIP Facility, the Secured Debt,
the Senior Subordinated Notes, Senior Discount Notes or any other Indebtedness
(other than payments of interest, accruing at rates not to exceed the applicable
current rate, and annual agency fees on the Secured Debt and any Indebtedness
listed on Schedule 8.1(f)), (iv) all costs, fees or expenses of any Person that
was an officer, director or employee of Simmons Company or any of its
Subsidiaries prior to the Closing Date (other than any costs, fees or expenses
(X) of Simmons Company and its Subsidiaries related to ordinary course expense
reimbursement not related to the restructuring of the Debtors and (Y) of any
members of the board of directors of any of Simmons Company or its Subsidiaries,
or any committee thereof, with respect to the payment of ordinary course fees
and the reimbursement of expenses in connection with such board’s or committee’s
meetings in accordance with existing policies but not primarily related to the
restructuring of the Debtors), (v) any distribution or dividend paid by the
Debtors to the Parent Company in connection with the restructuring of such
Parent Company (other than distributions or dividends made pursuant to Sections
7.2(b)(N)(ii) or 7.2(b)(N)(iv) herein), (vi) any cost, fee and expenses that may
be add-backs to Consolidated Adjusted EBITDA pursuant to the Secured Debt Credit
Agreement, and (vii) all other administrative expenses allowable under section
503(b) of the Bankruptcy Code and other costs fees and expenses in contemplation
of or during the Bankruptcy Case except, in the case of this clause (vii), to
the extent arising out of (1) the conduct of the Business in the Ordinary Course
of Business, (2) employee severance arrangements approved by Purchaser, (3) cure
costs for executory contracts and unexpired leases payable in accordance with
the Plan, (b) any amounts of Other Indebtedness (whether or not in connection
with the restructuring), and (c) any Tax to the extent arising out of or
relating to the transactions contemplated by the Plan; provided that,
notwithstanding the foregoing, the term “Restructuring Expenses” shall exclude
all costs, fees and expenses relating to fresh start accounting.
 
“Restructuring Support Agreement” means the Restructuring Support Agreement,
dated as of the date of this Agreement, by and among Simmons Company, the
Company, Opco, each of Opco’s domestic Subsidiaries, Parent and Purchaser, on
the one hand, and certain creditor and lender parties of the Debtors identified
on the signature pages thereto, on the other hand.
 
“Secured Debt” means the Indebtedness outstanding under the Secured Debt Credit
Agreement, including therein all pre- and post-petition interest and all unpaid
fees and expenses.
 
“Secured Debt Credit Agreement” means the 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), among
(i) Opco, as borrower, (ii) the Company and the domestic Subsidiaries of Opco,
as guarantors, (iii) Deutsche Bank AG, New York Branch, as administrative agent,
and (iv) other lenders, issuing banks, and parties thereto.
 
“Senior Discount Notes” means Simmons Company $259,534,996 (as of August 1,
2009) aggregate principal amount of 10% Senior Discount Notes due 2014.
 
“Senior Subordinated Notes” means Opco’s $200 million aggregate principal amount
of 7.875% Senior Subordinated Notes due January 15, 2014.
 
“Simmons Capital Stock” means, as of any date, the issued and outstanding
capital stock of Simmons Company
 
“Special Committee” means the committee of the board of directors of Simmons
Company, the Company or Opco, as applicable, formed and assigned to evaluate
strategic alternatives for such entity.
 
“Sponsor” means each of Ares Corporate Opportunities Fund, L.P., Ares Corporate
Opportunities Fund III, L.P. and Ontario Teachers’ Pension Plan Board, and such
other investors as any of them may designate with the prior written approval of
the Company not to be unreasonably withheld.
 
“Subsidiary” of a Person (other than a natural person) means any other Person of
which (i) voting power to elect a majority of the board of directors, managers,
trustees or others performing similar functions with respect to such other
Person is, directly or indirectly, held or controlled by the first mentioned
Person or (ii) at least 50% of the equity interests of such other Person is,
directly or indirectly, owned or controlled by such first mentioned Person.
 
“Superior Proposal” means an unsolicited bona fide written proposal relating to
a Competing Transaction involving the acquisition of all or substantially all of
the equity securities or assets of the Company or Opco (whether by purchase,
exchange of claims or otherwise) that the board of directors of the Company has
determined in its good faith judgment is reasonably likely to be consummated in
accordance with its terms, taking into account all legal, financial and
regulatory aspects of the proposal and the Person making the proposal, and if
consummated, would (a) result in a plan of reorganization that, upon
effectiveness, results in a payment in full, free and clear of any avoidance
power or other adverse claim or interest, of the Break-Up Fee and the Break-Up
Fee Expense Amount payable to Parent or Purchaser under the terms of this
Agreement and (b) result in a transaction, after giving effect to the payment of
such amounts to Parent or Purchaser and the financial costs of any expected
delay in consummation of such Competing Transaction, more favorable to the
Company than the transaction contemplated by this Agreement (after taking into
account any revisions to the terms of the transaction pursuant to Section
3.6(a)).
 
“Tax Authority” means any government, or agency or instrumentality thereof,
charged with the administration of any law or regulation relating to Taxes.
 
“Tax” or “Taxes” means (i) all federal, state, provincial, local or foreign
taxes, charges or other assessments, including, without limitation, all net
income, gross receipts, capital, sales, use, ad valorem, value added, unclaimed
property, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, and (ii) all
interest, penalties, fines, additions to tax or additional amounts imposed by
any Tax Authority in connection with any item described in clause (i).
 
“Tax Return” means all returns, declarations, reports, estimates, information
returns and statements required to be filed in respect of any Taxes (including
any attachments thereto or amendments thereof).
 
“Trademarks” means any unregistered trademarks and service marks in the United
States or foreign jurisdictions or multinational trademark authorities; any
trademarks or service marks registered in the United States or foreign
jurisdictions or multinational trademark authorities and any applications
therefor; any trade names, brand names, product identifiers, certification
marks, logos, trade dress, and Internet domain names, and uniform resource
locators associated therewith, and any registration thereof or application
therefor in the United States or foreign jurisdictions, including any extension,
modification or renewal of any such registration or application, and all
goodwill associated with all of the foregoing throughout the world.
 
“WARN Act” means the Worker Adjustment and Retraining Notification Act.
 
1.2 Terms Defined Elsewhere in this Agreement.  For purposes of this Agreement,
the following terms have meanings set forth in the sections indicated:
 
Term
Section
 
Agreement
Recitals
Antitrust Division
7.3(a)(ii)
Antitrust Laws
7.3(b)
AOT
5.7
Bankruptcy Case
Recitals
Bankruptcy Code
Recitals
Bankruptcy Court
Recitals
Bankruptcy Rules
Recitals
Break-Up Fee
3.10(c)
Break-Up Fee Note
3.10(c)
Business
Recitals
Claim
7.18(c)
Closing
3.1
Closing Date
3.1
COBRA
7.15
Commitment Letters
Recitals
Company
Recitals
Company Documents
4.2
Credit Parties
7.5(e)
Current D&O Policy
7.18(e)
Debtor Securities
4.5
Disagreement Notice
2.3(a)(A)
Disclosure Statement
Recitals
D&O Policy Tail Amount
7.18(e)
Employee Benefit Plans
4.12(a)
Equity Guarantees
Recitals
ERISA Affiliate
4.12(e)
Escrow Account
2.2(b)
Escrow Agent
2.2(b)
Escrow Agreement
2.2(b)
Exit Financing Commitments
Recitals
Exit Notes
1.1
Final Restructuring Expense Amount
2.3(a)
Financial Statements
4.4(a)
Financing
5.6
Financing Agreements
7.5(a)
Foreign Plans
4.12(i)
FREA Statement
2.3(a)
FTC
7.3(a)
Holdco Debtholders
Recitals
Indemnitees
7.18(a)
Key Employees
7.2(b)(A)(vii)
Material Contracts
4.11(a)
Material Employee Agreement
4.12(j)
Multiemployer Plan
4.12(a)
Multiple Employer Plan
4.12(a)
Opco
Recitals
Owned Property
4.8(a)
Owned Properties
4.8(a)
Parent
Recitals
Parent Fee
5.5
PBGC
4.12(e)
Petition Date
Recitals
Plan
Recitals
Prime Rate
3.10(d)
Purchase Price
2.2(a)
Purchaser
Recitals
Purchaser Documents
5.2
Purchaser Entities
Recitals
Purchaser Medical Plan
7.10
Qualified Plans
4.12(c)
Real Property Lease
4.8(b)
Real Property Leases
4.8(b)
Restructuring Documents
6.4
Revolving Facility
7.5(b)
Revolving Facility Commitment Letter
7.5(b)
Secured Debtholders
Recitals
Senior Note Debtholders
Recitals
Signing Date Expense Amount
Recitals
Simmons Company
Recitals
Stated Price
2.2(a)
Stock Purchase
2.1(a)
Surplus Amount
2.3(c)
Termination Date
3.4(e)
Title IV Plan
4.12(a)
Transition Period
7.10

 
1.3 Other Definitional and Interpretive Matters.  (a) Unless otherwise expressly
provided, for purposes of this Agreement, the following rules of interpretation
shall apply:
 
Calculation of Time Period.  When calculating the period of time before which,
within which or following which any act is to be done or step taken pursuant to
this Agreement, the date that is the reference date in calculating such period
shall be excluded.  If the last day of such period is not a Business Day, the
period in question shall end on the next succeeding Business Day.
 
Dollars.  Any reference in this Agreement to $ shall mean U.S. dollars.
 
Exhibits/Schedules.  All Exhibits and Schedules annexed hereto or referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein.
 
Gender and Number.  Any reference in this Agreement to gender shall include all
genders, and words imparting the singular number only shall include the plural
and vice versa.
 
Headings.  The division of this Agreement into Articles, Sections and other
subdivisions and the insertion of headings are for convenience of reference only
and shall not affect or be utilized in construing or interpreting this
Agreement.  All references in this Agreement to any “Section” are to the
corresponding Section of this Agreement unless otherwise specified.
 
Herein.  The words such as “herein,” “hereinafter,” “hereof” and “hereunder”
refer to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.
 
Including.  The word “including” or any variation thereof means “including,
without limitation” and shall not be construed to limit any general statement
that it follows to the specific or similar items or matters immediately
following it.
 
The parties hereto have participated jointly in the negotiation and drafting of
this Agreement and, in the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as jointly drafted by
the parties hereto and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
 
II.           THE TRANSACTIONS
 
2.1 Stock Purchase.  On the terms and subject to the conditions set forth in
this Agreement and the Plan, at the Closing, Purchaser shall purchase, acquire
and accept from the Company, and the Company shall issue, sell, transfer and
deliver to Purchaser 1,000,000 newly issued shares of the common stock, of the
Company, which upon consummation of the Plan pursuant to and in accordance with
the Confirmation Order, including the cancellation pursuant to the Plan of all
capital stock and rights to purchase or otherwise acquire capital stock of the
Company prior to the Effective Time, shall constitute all of the issued and
outstanding capital stock of the Company (such transaction, the “Stock
Purchase”), free and clear of all Liens or other interest other than those
created by Parent or Purchaser.
 
2.2 Consideration.
 
(a) On the terms and subject to the conditions herein, on the Closing Date,
Purchaser shall pay to the Company by wire transfer of immediately available
funds an amount equal to $734,532,384 less (i) the Opco Escrow Amount, and (ii)
the Holdco Escrow Amount (the “Stated Price”, as may be adjusted pursuant to
Section 2.3, the “Purchase Price”), to be applied in satisfaction of claims and
interests as provided in the Plan.
 
(b) On the terms and subject to the conditions herein, on the Closing Date,
Purchaser shall pay an amount in cash equal to the Opco Escrow Amount plus the
Holdco Escrow Amount to an escrow agent to be mutually agreed upon by Parent,
the Company and the Plan Representative prior to the Closing Date (the “Escrow
Agent”) by wire transfer of immediately available funds for deposit to an
account designated by the Escrow Agent (the “Escrow Account”).  The Escrow Agent
shall serve and shall hold and disburse the Opco Escrow Amount and Holdco Escrow
Amount in accordance with the escrow agreement to be entered into among
Purchaser, the Company, the Plan Representative and the Escrow Agent at the
Closing on reasonable and customary terms consistent with this Agreement (the
“Escrow Agreement”).
 
(c) As provided in the Plan, from and after the Effective Date, the Debtors
shall pay all other amounts required to be paid by them pursuant to the Plan.
 
2.3  Post-Closing Restructuring Expense Adjustment.
 
(a) Within 60 days following the Closing Date, the Company shall deliver to
Purchaser and the Plan Representative a statement of Restructuring Expenses (the
“FREA Statement”), showing in detail the amount of Restructuring Expenses paid
or incurred by the Debtors (the “Final Restructuring Expense Amount”), together
with any documents substantiating such amounts.
 
(A) In the event that that the Plan Representative disagrees with the
calculation of the Final Restructuring Expense Amount, the Plan Representative
may within 10 Business Days of the receipt of the FREA Statement, deliver a
notice to the Company disagreeing with such calculation and setting forth the
Plan Representative’s calculation of the Final Restructuring Expense Amount (the
“Disagreement Notice”).  Any such Disagreement Notice shall specify those items
or amounts as to which the Plan Representative disagrees, and the Plan
Representative shall be deemed to have agreed with all other items and amounts
contained in the FREA Statement and the calculation of the Final Restructuring
Expense Amount.
 
(B) The Company and the Plan Representative shall, during the 10 calendar days
following such delivery, use their commercially reasonable efforts to reach
agreement on the disputed items or amounts in order to determine, as may be
required, the amount of the Final Restructuring Expense Amount.  If the parties
so resolve all disputes, the computation of the Final Restructuring Expense
Amount, as amended to the extent necessary to reflect the resolution of the
dispute, shall be conclusive and binding on the parties.  If during such period,
the Company and the Plan Representative are unable to reach an agreement, they
shall promptly thereafter petition the Bankruptcy Court to review this Agreement
and the disputed items or amounts for the purpose of calculating the Final
Restructuring Expense Amount.  In making such calculation, the Bankruptcy Court
shall consider only those items or amounts in the FREA Statement and the
Company’s calculation of the Final Restructuring Expense Amount as to which the
Plan Representative has disagreed.  The Bankruptcy Court’s determination of the
Final Restructuring Expense Amount shall be final and binding upon the Company
and the Plan Representative.
 
(C) The Purchaser Entities and the Company shall, and shall cause their
respective representatives to, cooperate and assist in the preparation of any
Disagreement Notice and the calculation of the Final Restructuring Expense
Amount and in the conduct of the review referred to in this Section 2.3,
including the making available to the extent necessary of books, records, work
papers and personnel.
 
(b) Promptly following the determination of the Final Restructuring Expense
Amount in accordance with Section 2.3(a), the parties shall instruct the Escrow
Agent to release the Opco Escrow Amount and the Holdco Escrow Amount,
respectively, in accordance with the terms of the Escrow Agreement to the
Company to pay the remaining Restructuring Expenses, if any, and to distribute
pursuant to the Plan.
 
(c) In the event the Final Restructuring Expense Amount is less than the
Restructuring Expense Target (the amount, if any, by which the Final
Restructuring Expense Amount is less than the Restructuring Expense Target is
referred to as the “Surplus Amount”), then the Purchaser Entities shall (i) pay
to the Company by wire transfer of immediately available funds (within two (2)
Business Days of the final determination of the Final Restructuring Expense
Amount in accordance with Section 2.3(a) above) an amount equal to the Surplus
Amount or (ii) use the Company’s, or its Subsidiaries’, existing cash, if
available, to fund such Surplus Amount, which together with the Opco Escrow
Amount and Holdco Escrow Amount pursuant to Section 2.3(b), shall be distributed
by the Company pursuant to the Plan.
 
III.           CLOSING AND TERMINATION
 
3.1 Closing Date.  Subject to the satisfaction of the conditions set forth in
Article VIII hereof (or the waiver thereof by the party entitled to waive that
condition), the closing of the Stock Purchase (the “Closing”) shall take place
at the offices of Weil Gotshal & Manges LLP, located at 767 Fifth Avenue, New
York, New York (or at such other place as the parties may designate in writing)
at 12:01 a.m. (New York City time) on a date that is not more than five Business
Days following the satisfaction or waiver of all conditions precedent to the
Effective Date and the conditions set forth in Article VIII (other than
conditions that by their nature are to be satisfied at the Closing, but subject
to the satisfaction or waiver of such conditions), unless another time or date,
or both, are agreed to in writing by the parties hereto.  The date on which the
Closing shall be held is referred to in this Agreement as the “Closing Date.”
 
3.2 Deliveries by the Debtors.  At the Closing, the Debtors shall deliver:
 
(a) to the Purchaser Entities, the officer’s certificate(s) required to be
delivered pursuant to Sections 8.1(a) and 8.1(b);
 
(b) to the Purchaser Entities, a certificate executed by the Company that it is
not a foreign person within the meaning of Section 1445(f)(3) of the Code;
 
(c) to the Purchaser Entities, (i) a certificate representing the Company
Capital Stock being purchased and sold hereunder, (ii) evidence of the
resignations or removal of those directors and officers of the Company and its
Subsidiaries, as applicable, identified in writing to the Company by Purchaser
not less than five Business Days prior to Closing and (iii) evidence of any
changes to the constitutive documents of the Company and its subsidiaries that
may be necessary to implement acquisition of the Company Capital Stock as
contemplated by the Plan and which shall have been identified by Purchaser in
writing to the Company not less than five Business Days prior to Closing;
 
(d) to the Purchaser Entities, an Escrow Agreement executed by the Company;
 
(e) the Exit Notes to those purchasers who have entered into the note purchase
agreement in connection with the Exit Facility and all other closing documents
to be delivered in connection with the issuance of the Exit Notes pursuant
thereto;
 
(f) to the Purchaser Entities, a certificate signed by the chief financial
officer of the Company and Opco required to be delivered pursuant to Section
8.1(f); and
 
(g) to the Purchaser Entities, such other documents, instruments and
certificates as the Purchaser Entities may reasonably request, including a
certified copy of the Confirmation Order and notice of the Effective Date.
 
3.3 Deliveries by Purchaser.  At the Closing, Purchaser shall deliver:
 
(a) an amount equal to the Stated Price (net of such portion of the Stated
Price, if any, that (a) is reinvested in Parent in exchange for Common Stock of
Parent pursuant to the Plan or (b) Purchaser and the Company agree can be funded
from cash of the Company and its Subsidiaries at Closing, and which amount is
not necessary for the distribution contemplated by the Plan), to be distributed
as provided in the Plan by wire transfer of immediately available funds to an
account specified by the Company (such account to be specified not less than two
Business Days prior to the Closing Date);
 
(b) an amount equal to the Opco Escrow Amount and Holdco Escrow Amount by wire
transfer of immediately available funds to the Escrow Account;
 
(c) to the Company, on behalf of the Debtors, an Escrow Agreement executed by
Purchaser;
 
(d) rights with respect to the common securities of Parent for distribution
pursuant to the Plan;
 
(e) to the Company, on behalf of the Debtors, the officer’s certificate required
to be delivered pursuant to Sections 8.2(a) and 8.2(b); and
 
(f) to the Company, on behalf of the Debtors, such other documents, instruments
and certificates as the Company may reasonably request.
 
3.4 Automatic Termination.  Subject to Section 9.3, this Agreement will expire
by its own terms and terminate automatically, without notice or further action
by any party, if:
 
(a) the Plan is not accepted by at least two-thirds in amount and more than
one-half in number of those holders of allowed claims of each of the class of
Senior Note Debtholders, and the class of Holdco Debtholders that vote on the
Plan in accordance with section 1126(b) and Rule 3018 of the Bankruptcy Code on
or prior to the 45th day after the date hereof, provided that (i) Purchaser
shall have the option to extend without limit (but subject to the other
termination events described herein) by written notice to the Company, and (ii)
if the Company shall have commenced solicitation on or prior to the 25th day
after the date hereof and shall be diligently pursuing acceptance of each class
of Secured Debtholders, Senior Note Debtholders and Holdco Debtholders in
accordance with section 1126(b) and Rule 3018 of the Bankruptcy Code (A)
Purchaser may not extend pursuant to clause (i) beyond the 75th day after the
date hereof, and (B) the Company shall have the option to extend by written
notice to Purchaser such date for additional periods of time not beyond the 75th
day after the date hereof;
 
(b) the Petition Date does not occur on or prior to the 45th day after the date
hereof, provided that (i) Purchaser shall have the option to extend such date
without limit (but subject to the other termination events described herein) by
written notice to the Company, from time to time, and (ii) the Company shall
have the option to extend by written notice to Purchaser such date for
additional periods of time not to exceed 30 days in the aggregate;
 
(c) the Plan Sponsor Order is not entered (without stay pending appeal) on or
prior to the 25th day after the Petition Date, provided that Purchaser shall
have the option to extend such date without limit (but subject to the other
termination events described herein) by written notice to the Company, from time
to time;
 
(d) the Confirmation Order has not been entered by the Bankruptcy Court within
60 days after the Petition Date; provided that, either Parent or the Company
shall have the option to extend by written notice to the other party, from time
to time, such date for additional periods of time not to exceed 15 days in the
aggregate; provided, further, that if (i) the Company shall not have obtained
the approval of each class of Secured Debtholders, Senior Note Debtholders and
Holdco Debtholders in accordance with section 1126(b) and Rule 3018 of the
Bankruptcy Code or (ii) the condition set forth in Section 8.3(c) has not yet
been satisfied due to the failure to obtain the necessary consents and approvals
under applicable Laws, either Parent or the Company shall have the option to
extend by written notice to the other party, from time to time, such date for
additional periods of time not beyond 120 days after the Petition Date.
 
(e) the Closing shall not have occurred by March 15, 2010 (the “Termination
Date”); 
 
(f) the Bankruptcy Court or any court exercising appellate jurisdiction over the
Bankruptcy Court enters an order denying confirmation of the Plan  or converting
the Bankruptcy Case of the Company or Opco to a case under chapter 7 of title 11
of the Bankruptcy Code and such order (i) has been in effect for 30 days and
(ii) is not subject to stay;
 
(g) the Restructuring Support Agreement is terminated with respect to any
creditor or class of creditors pursuant to Sections 2.1(c), 2.1(g) or 2.3 (other
than, in the case of a termination pursuant to Section 2.1(g) or 2.3, as a
result of an amendment, modification or pleading consented to in writing by a
Purchaser Entity or as a result of a pleading filed by a Purchaser Entity) prior
to termination of this Agreement; provided that Purchaser shall have the option
to delay such termination in this clause (g) without limit (but subject to the
other termination events described herein) by written notice to the Company,
from time to time; or
 
(h) (i) the board of directors of any Debtor approves, endorses or recommends a
Competing Transaction or if any Special Committee recommends a Competing
Transaction and the board of directors of such Debtor does not reject such
recommendation within five (5) Business Days after receipt of such
recommendation in writing, (ii) any Debtor enters into a definitive contract or
agreement relating to a Competing Transaction, (iii) any Debtor or the board of
directors of such Debtor publicly announces its intention to do any of the
foregoing or (iv) the Bankruptcy Court enters a non-appealable order approving
any of the foregoing.
 
3.5 Termination by Mutual Consent.  This Agreement may be terminated prior to
the Closing by mutual written consent of the Company and Parent.
 
3.6 Termination by the Company.  This Agreement may be terminated by the
Company:
 
(a) at any time prior to the time the Bankruptcy Court shall have entered the
Confirmation Order, if (i) the board of directors of the Company and the
Bankruptcy Court authorize the Company, subject to complying with the terms of
this Agreement, to enter into a definitive agreement with respect to a Superior
Proposal, (ii) the board of directors of the Company has determined in good
faith, after consultation with its legal and financial advisors, that the
transactions contemplated by such agreement constitutes a Superior Proposal,
(iii) Simmons Company, the Company and Opco are not then and have not been in
breach in any material respect of any of their obligations under Section 6.2,
and (iv) the Debtors pay the Break-Up Fee plus the Break-Up Fee Expense Amount
or deliver the Break-Up Fee Note in accordance with the terms of Section 3.10(c)
(any purported termination pursuant to this Section 3.6(a) shall be void and of
no force or effect unless the Debtors shall have made such payment or agreed to
make such payment in accordance with Section 3.10(c)); or
 
(b) if any condition set forth in Section 8.2 or Section 8.3(a) shall have
become incapable of fulfillment prior to the Termination Date other than as a
result of a breach by any Debtors of any covenant or agreement contained in this
Agreement, and such condition is not waived by the Company.
 
3.7 Termination by Parent.  This Agreement may be terminated at any time prior
to the Closing by Parent:
 
(a) if any condition set forth in Section 8.1 or Section 8.3(a) shall have
become incapable of fulfillment prior to the Termination Date other than as a
result of a breach by Parent or Purchaser of any covenant or agreement contained
in this Agreement, and such condition is not waived by Parent; or
 
(b) if any amendments that would require Purchaser Approval (under and as
defined in the Plan) are made to the Plan, Plan Sponsor Order or Confirmation
Order without Purchaser Approval (as defined in the Plan).
 
3.8 Waiver; Automatic Stay.  The failure of a party to exercise its right to
terminate this Agreement under, or the extension of any time period in, any
provision of this Article III at any time will not constitute a waiver of any
such right.  For the avoidance of doubt, the automatic stay arising pursuant to
section 362 of the Bankruptcy Code in the Bankruptcy Case shall be deemed waived
or modified for purposes of providing notice under or terminating this
Agreement.
 
3.9 Procedure Upon Termination.  In the event of termination pursuant to this
Article III, written notice thereof shall forthwith be given to the other party
or parties (other than in the case of termination pursuant to Section 3.4), and
this Agreement shall terminate without further action by the parties hereto.  If
this Agreement is terminated as provided herein, each party shall, and shall
cause each of its Affiliates and each of its and their respective agents,
consultants, advisors and Representatives that has heretofore executed a
confidentiality agreement, or a consent with respect to compliance with any
confidentiality agreement, in connection with the transactions contemplated
herein, to return or destroy, in accordance with the terms of the
Confidentiality Agreement or other applicable confidentiality agreement, all
written Confidential Information (as defined in the Confidentiality Agreement)
and any other written material containing or reflecting any of the Confidential
Information (as defined in the Confidentiality Agreement), including any copies,
extracts or other reproductions in whole or in part, mechanical or electronic,
of such written material, or any computer records, voicemails, documents,
memoranda, notes or other writings whatsoever prepared by such party or its
Representatives based on the Confidential Information (as defined in the
Confidentiality Agreement).
 
3.10 Effect of Termination; Break-Up Fee.
 
(a) In the event of termination of this Agreement pursuant to this Article III,
this Agreement shall become void and of no effect with no liability to any
Person on the part of any party hereto (or of any of its Representatives or
Affiliates); provided, however, and notwithstanding anything in the foregoing to
the contrary, that Section 3.9, Section 3.10 and the provisions set forth in
Article IX shall survive the termination of this Agreement.
 
(b) In the event that:
 
(A) this Agreement shall terminate pursuant to Section 3.4(a), Section 3.4(b) or
Section 3.4(c); or
 
(B) this Agreement shall terminate pursuant to Section 3.7(b) because of an
amendment to the Plan Sponsor Order made prior to or upon entry of the Plan
Sponsor Order by the Bankruptcy Court;
 
then the Debtors, jointly and severally, shall pay to Parent in cash on demand
but in no event later than three Business Days thereafter, a cash amount equal
to the Break-Up Fee Expense Amount.
 
(c) In the event that:
 
(A) this Agreement shall terminate pursuant to Section 3.4(g), Section 3.4(h) or
Section 3.6(a); or
 
(B) this Agreement is terminated by Parent pursuant to (i) Section 3.7(b)
because of an amendment to the Plan, Plan Sponsor Order or Confirmation Order
made following entry of the Plan Sponsor Order by the Bankruptcy Court, or (ii)
Section 3.7(a) solely as it relates to Section 8.1 as a result of a breach by
the Company or Opco of its obligations under this Agreement;
 
then the Debtors, jointly and severally, shall pay to Parent in cash on demand,
but in no event later than three Business Days thereafter, a cash amount equal
to $21 million (the “Break-Up Fee”) plus the Break-Up Fee Expense Amount;
provided, however, that in the event such termination occurs following the entry
of the Plan Sponsor Order, the Debtors, jointly and severally, may elect with
the approval of the Bankruptcy Court as provided in the Plan Sponsor Order to
fund the Break-Up Fee and the Break-Up Fee Expense Amount by delivering to
Parent, in lieu of cash, an unconditional and negotiable note payable (the
“Break-Up Fee Note”) in principal amount equal to the Break-Up Fee of the
Debtors, jointly and severally, in a form reasonably acceptable to Parent and
attached to the Plan Sponsor Order, and payable in full plus accrued and unpaid
interest thereon at the Prime Rate on the Break-Up Fee Note Maturity.  All
amounts due under the Break-Up Fee Note shall constitute administrative expenses
of the Debtors in the Bankruptcy Case, with administrative priority and senior
secured status under sections 364(c) and 364(d) of the Bankruptcy Code as so
ordered by the Court. Such administrative claim shall have priority over all
other costs and expenses of the kinds specified in, or ordered pursuant to,
sections 105, 326, 330, 331, 503(b), 506(c), 507(a), 507(b), 726 or any other
provision of the Bankruptcy Code and shall at all times be senior to the rights
of the Debtors, the Debtors’ estates, and any successor trustee or estate
representative in the Bankruptcy Case or any subsequent proceeding or case under
the Bankruptcy Code.
 
(d) Simmons Company, the Company and Opco acknowledge that the agreements
contained in this Section 3.10 are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, the
Purchaser Entities would not enter into this Agreement; accordingly, if the
Company fails to pay the amount due pursuant to, and in accordance with the
terms of Section 3.10(b) or Section 3.10(c), and either party commences a suit
or files a motion to determine the obligation of the Company to pay the amount
set forth in Section 3.10(b) or Section 3.10(c) or any portion thereof, the
prevailing party shall be entitled to recover from the non-prevailing party all
of its reasonable substantiated costs and expenses (including reasonable
attorneys’ fees) solely in connection with such suit or motion, together with
interest on such amount or portion thereof at the “prime rate” as published in
The Wall Street Journal, Eastern Edition in effect on the date such payment was
required to be made through the date of payment (calculated daily on the basis
of a year of 365 days and the actual number of days elapsed, without
compounding) (the “Prime Rate”).
 
IV.           REPRESENTATIONS AND WARRANTIES OF THE DEBTORS
 
Each Debtor hereby represents and warrants to the Purchaser Entities that except
as set forth in the Disclosure Letter, which exceptions shall be deemed to be
part of the representations and warranties made hereunder, the following
representations are true and correct.  The Disclosure Letter shall be arranged
in sections corresponding to the numbered and lettered sections and subsections
contained in this Article IV, and the disclosures in any section or subsection
of the Disclosure Letter shall qualify other sections and subsections of this
Article IV only to the extent it is reasonably clear from a reading of such
disclosure that such disclosure is applicable to such other sections and
subsections:
 
4.1 Organization and Good Standing.  Schedule 4.1 sets forth the name and
jurisdiction of organization of each of Simmons Company, the Company, Opco and
their respective Subsidiaries.  Each of Simmons Company, the Company, Opco and
their respective Subsidiaries have made available to Purchaser copies of their
respective certificate of incorporation, bylaws or other organizational
documents, as the case may be, as currently in effect on the date hereof.  Each
of Simmons Company, the Company, Opco and their respective Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization and, subject to the limitations imposed on
such Debtors as a result of filing the Bankruptcy Case, has the requisite
corporate or company power and authority to own, lease, operate or otherwise
hold its properties and assets and to carry on its business as now
conducted.  Each of Simmons Company, the Company, Opco and their respective
Subsidiaries is duly qualified or authorized to do business as a foreign entity
and is in good standing under the laws of each jurisdiction in which it owns or
leases real property and each other jurisdiction in which the conduct of its
business or the ownership of its properties or assets requires such
qualification or authorization, except where the failure to be so qualified,
authorized or in good standing would not have a Company Material Adverse Effect.
 
4.2 Authorization of Agreement.  Each Debtor has all requisite power, authority
and legal capacity to execute and deliver, or authorize Opco to execute and
deliver on its behalf, this Agreement and each other agreement, document,
instrument or certificate contemplated by this Agreement or to be executed by
such Debtor in connection with the consummation of the transactions contemplated
by this Agreement (the “Company Documents”) and, subject to entry of the
Confirmation Order and the Plan Sponsor Order, to perform its respective
obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby.  The execution and delivery of this Agreement
and the Company Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of each Debtor.  This Agreement has been, and the Company Documents
will be at or prior to the Closing, duly and validly executed and delivered by,
or on behalf of, each Debtor and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto, the entry of the Confirmation
Order and, with respect to the Company’s obligations under Section 3.10, the
entry of the Plan Sponsor Order) this Agreement constitutes, and each of the
Company Documents when so executed and delivered will constitute, legal, valid
and binding obligations of each Debtor, enforceable against it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
 
4.3 Conflicts; Consents.
 
(a) The execution, delivery and performance by, or on behalf of, the Debtors of
this Agreement and the Company Documents, the consummation of the transactions
contemplated hereby and thereby, or compliance by the Debtors with any of the
provisions hereof or thereof will not (A) conflict with, or result in any
violation of, or constitute a breach or default (with or without notice or lapse
of time, or both) under, or give rise to any penalty or right of termination,
cancellation or acceleration under, any provision of (i) the certificate of
incorporation and by-laws or comparable organizational documents of Simmons
Company, the Company, Opco or any of their Subsidiaries; (ii) subject to entry
of the Confirmation Order and applicable provisions of the Bankruptcy Code, any
Contract or Permit to which Simmons Company, the Company, Opco or any of their
Subsidiaries is a party or by which any of the properties or assets of Simmons
Company, the Company, Opco or any of their Subsidiaries is bound, except where
the right of termination or cancellation of the Contract arises from the
bankruptcy of the Debtors or its Subsidiaries; (iii) subject to compliance with
the applicable requirements of the HSR Act and other Antitrust Laws and entry of
the Confirmation Order and applicable provisions of the Bankruptcy Code, any
Order of any Governmental Body or Law applicable to the Company, Opco or any of
their Subsidiaries or any of their respective properties or assets as of the
date hereof, other than, in the case of clauses (ii) and (iii), such conflicts,
violations, defaults, terminations or cancellations that would not have a
Company Material Adverse Effect or (B) result in the creation or imposition of
any Lien other than Permitted Exceptions on any of the assets or properties of
Simmons Company, the Company, Opco or any of their Subsidiaries.
 
(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Simmons Company, the Company, Opco or any of their
Subsidiaries in connection with the execution, delivery and performance of this
Agreement or the Company Documents, the compliance by the Debtors with any of
the provisions hereof or thereof, the consummation of the transactions
contemplated hereby or thereby or the taking by the Debtors of any other action
contemplated hereby or thereby, except for (i) compliance with the applicable
requirements of the HSR Act and other Antitrust Laws, (ii) the entry of the
Confirmation Order, (iii) the entry of the Plan Sponsor Order, and (iv) such
other consents, waivers, approvals, Orders, Permits, authorizations,
declarations, filings and notifications, the failure of which to obtain or make
would not have a Company Material Adverse Effect.
 
4.4 Financial Statements; Undisclosed Liabilities.
 
(a) The Company has delivered to the Purchaser Entities copies of (i) the
audited consolidated balance sheets of Simmons Company as at December 30, 2006,
December 29, 2007 and December 27, 2008 the related audited consolidated
statements of operations and of cash flows for the fiscal years then ended,
together with all related notes and schedules thereto, accompanied by the
reports thereon of Simmons Company’s accountants and (ii) the unaudited
condensed consolidated balance sheet of Simmons Company as at June 27, 2009 and
the related consolidated statement of operations and cash flows for the six
month period then ended (such audited and unaudited statements, including the
related notes and schedules thereto, are referred to herein as the “Financial
Statements”).  Each of the Financial Statements (X) was prepared in all material
respects in accordance with the books of account and other financial records of
Simmons Company, (Y) except as disclosed in the notes and schedules thereto, has
been prepared in accordance with GAAP consistently applied without modification
of the accounting principles used in the preparation thereof throughout the
periods presented and (Z) presents fairly in all material respects the
consolidated financial condition, results of operations and cash flows of
Simmons Company, as applicable, as at the dates and for the periods indicated
therein; provided that the unaudited Financial Statements are subject to normal
year-end audit adjustments which are not, in the aggregate, material in amount
or effect as of the date hereof.
 
(b) There are no Liabilities of Simmons Company, the Company, Opco or any of
their Subsidiaries of any kind required by GAAP to be disclosed on a balance
sheet, other than (i) Liabilities that are fully and adequately reflected or
reserved against in the Financial Statements, (ii) Liabilities incurred in the
Ordinary Course of Business subsequent to December 27, 2008, (iii) Liabilities
resulting from obligations pursuant to Material Contracts entered into in the
Ordinary Course of Business provided that Simmons Company, the Company, Opco or
its Subsidiaries, as applicable, are not in default thereunder, (iv) Liabilities
disclosed on Schedule 4.4(b), and (v) other undisclosed Liabilities that would
not have a Company Material Adverse Effect.
 
4.5 Capitalization.  Schedule 4.5 sets forth the number of authorized and
outstanding shares of capital stock or comparable equity interest of each of
Simmons Company, the Company, Opco and their Subsidiaries, the names of the
record holders thereof and the amount of capital stock or comparable equity
interest held by such holder.  All outstanding shares of capital stock or other
equity interest of each of Simmons Company, the Company, Opco and their
Subsidiaries have been duly authorized and validly issued and are fully paid and
non assessable, were issued in compliance with all applicable federal and state
securities laws and any preemptive rights or rights of first refusal of any
Person, and are not listed on any stock exchange or regulated market. The
capital stock or other equity interest of each of the Company’s Subsidiaries is
owned by the Company or by a direct or indirect wholly-owned Subsidiary of the
Company, free and clear of any Lien, except for Permitted Exceptions.  There are
no, and Simmons Company, the Company, Opco and their Subsidiaries are not bound
by or subject to any, outstanding (i) securities convertible into or
exchangeable for shares of capital stock or voting securities of any of Simmons
Company, the Company, Opco and their Subsidiaries, or (ii) options, warrants,
put, call, exchange or other rights (including pre-emptive rights or rights of
first offer) agreements, commitments, arrangements or understandings of any kind
pursuant to which Simmons Company, the Company, Opco and their Subsidiaries,
contingently or otherwise, are or may become obligated to offer, issue, sell
purchase, return or redeem, or cause to be offered, issued, sold, purchased,
returned or redeemed, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Simmons Company, the Company, Opco and their Subsidiaries (the items in the
preceding clauses (i) and (ii) together with shares of capital stock or voting
securities of Simmons Company, the Company, Opco and their Subsidiaries, being
referred to collectively as the “Debtor Securities”).  There are no voting
trusts, proxies or any other agreements or understandings with respect to the
voting of any Debtor Securities or that affects or relates to the voting or
giving of written consents with respect to any Debtor Securities.  There is no
agreement or restriction (such as a right of first refusal, right of first offer
or proxy) with respect to the sale of any Debtor Securities (whether outstanding
or issuable upon conversion or exercise of outstanding securities).  There are
no agreements, commitments, arrangements, understandings or other obligations to
declare, make or pay any dividends or distributions, whether current or
accumulated, or due or payable, on any Debtor Securities.
 
4.6 Title.  Other than the real property subject to Real Property Leases,
Intellectual Property, and personal property subject to personal property
leases, each of Simmons Company, the Company, Opco and their respective
Subsidiaries owns or has a valid right to use all of the material assets used or
held for use by it in the conduct of the Business, free and clear of all Liens,
other than Permitted Exceptions.
 
4.7 Taxes.
 
(a) For all taxable years ending on or after December 31, 2001, Simmons Company,
the Company, Opco and their respective Subsidiaries have timely filed all
federal and all material state, local or foreign Tax Returns required to be
filed with the appropriate Tax Authorities in all jurisdictions in which such
Tax Returns are required to be filed (taking into account any extension of time
to file granted or to be obtained on behalf of Debtors or their Subsidiaries)
and all such Tax Returns are correct and complete in all material respects. All
Taxes shown to be payable on such Tax Returns have been paid.
 
(b) No agreements, waivers or other arrangements exist providing for an
extension of time with respect to payment by, or assessment against, any of
Simmons Company, the Company, Opco or their respective Subsidiaries in respect
of any Taxes.  None of Simmons Company, the Company, Opco or any of their
respective Subsidiaries is a party to or bound by any Tax sharing or allocation
agreement or has any current or potential contractual obligation to indemnify
any Person other than Simmons Company, the Company or any of its Subsidiaries
with respect to Taxes.
 
(c) (i) None of the Tax Returns referred to in Section 4.7(a) is currently being
examined by the Internal Revenue Service or the appropriate state, local or
foreign taxing authority; and (ii) to the Knowledge of the Company, there is no
jurisdiction where any of Simmons Company, the Company, Opco or any of their
respective Subsidiaries might be required to file Tax Returns where such Tax
Returns have not been filed.
 
(d) None of Simmons Company, the Company, Opco and their respective Subsidiaries
will be required, as a result of (i) a change in accounting method for a Tax
period beginning on or before the Closing, to include any adjustment under
Section 481(c) of the Code (or any similar provision of state, local or foreign
law) in taxable income for any Tax period beginning on or after the Closing
Date, or (ii) any “closing agreement” as described in Section 7121 of the Code
(or any similar provision of state, local or foreign Tax law), to include any
item of income in or exclude any item of deduction from any Tax period beginning
on or after the Closing.
 
(e) From and after the taxable year ending December 31, 2001, none of Simmons
Company, the Company, Opco and their respective Subsidiaries has ever been a
member of an affiliated, combined, consolidated or unitary Tax group for
purposes of filing any Tax Return (other than the group that they are currently
members of).
 
(f) From and after the taxable year ending December 31, 2001, no closing
agreements, private letter rulings, technical advice memoranda or similar
agreement or rulings have been entered into or issued by any taxing authority
with respect to any of Simmons Company, the Company, Opco and their respective
Subsidiaries.
 
(g) For all periods for which Treasury Regulations Section 1.6011-4 has been
effective, none of Simmons Company, the Company, Opco and their respective
Subsidiaries has engaged in any transaction that is the same as, or
substantially similar to, a transaction which is a “reportable transaction” for
purposes of Treasury Regulations Section 1.6011-4(b) (including any transaction
which the Internal Revenue Service has determined to be a “listed transaction”
for purposes of Treasury Regulation Section 1.6011-4(b)(2)) or any comparable
provisions of state or local Law.  From and after the taxable year ending
December 31, 2001, none of Simmons Company, the Company, Opco and their
respective Subsidiaries has (i) engaged in a transaction of which it made
disclosure to any taxing authority to avoid penalties under Section 6662(d) of
the Code or any comparable provision of state, foreign or local law or (ii)
participated in any “tax amnesty” or similar program offered by any taxing
authority to avoid the assessment of penalties or other additions to Tax.
 
(h) None of Simmons Company, the Company, Opco and their respective Subsidiaries
has been a “distributing corporation” or a “controlled corporation” in a
distribution of stock intended to qualify for Tax-free treatment under Section
355(a) of the Code: (i) at any time during the two-year period prior to the date
hereof, (ii) at any time during the period commencing on the date hereof and
ending on the Closing Date or (iii) which could otherwise constitute part of a
“plan” or “series of related transactions” (within the meaning of Section 355(e)
of the Code) in conjunction with and including the transactions contemplated by
this Agreement.
 
(i) Simmons Company, the Company, Opco and their respective Subsidiaries are and
have always been properly characterized as a corporation for U.S. federal income
tax purposes.
 
(j) From and after the taxable year ending December 31, 2001, each of Simmons
Company, the Company, Opco and their respective Subsidiaries has duly and timely
withheld all material amounts of Taxes required by Law to be withheld by it
(including Taxes required to be withheld by it in respect of any amount paid or
credited or deemed to be paid or credited by it to or for the account of any
person, including any Employees, officers or directors and any non-resident
person) and has duly and timely remitted to the appropriate Tax Authority such
Taxes required by Law to be remitted by it.
 
(k) Simmons Company’s Financial Statements reflect an appropriate reserve, in
accordance with GAAP for all material Taxes payable by Simmons Company, the
Company and their Subsidiaries that are not yet due and payable whether or not
assessed and whether or not shown as being due on any Return and that relate to
periods ending on or prior to the date of such financial statements, and Simmons
Company, the Company and their Subsidiaries have made adequate provisions in
accordance with GAAP in their books and records for any Taxes accruing in
respect of any period which has ended subsequent to the period covered by such
financial statements.
 
(l) From and after the taxable year ending December 31, 2001, none of Simmons
Company, the Company, Opco and their respective Subsidiaries has acquired
property from a non-arm’s length person for consideration, the value of which is
less than the fair market value of the property acquired in circumstances which
could subject it to a liability for Taxes.
 
4.8 Real Property.
 
(a) Schedule 4.8(a) sets forth a complete list of the street address of each
parcel of owned real property owned in fee by Simmons Company, the Company, Opco
or their Subsidiaries (individually, an “Owned Property” and collectively, the
“Owned Properties) and the current record owner of each such Owned
Property.  With respect to each such Owned Property (a) the identified record
owner has good and marketable fee simple title to the parcel, free and clear of
all Liens, other than Permitted Exceptions; (b) there are no leases, subleases
or licenses, written or oral, granting to any party or parties, other than to
Simmons Company, the Company, Opco or their Subsidiaries, any material right of
use or occupancy of such parcel or any portion thereto (except for matters of
public record or matters which are disclosed in a survey); and (c) no Person,
other than Simmons Company, the Company, Opco or their Subsidiaries, has any
agreement to purchase, right of first refusal, option to purchase or any other
right to acquire from Simmons Company, the Company, Opco or their Subsidiaries
all or any part of the Owned Properties.  Correct and complete copies of each
vesting deed, title policy, land registrar and/or title commitment, easement,
survey and other instrument affecting title to the Owned Properties that are
currently in Simmons Company’s, the Company’s, Opco’s or any of their respective
Subsidiaries’ possession been made available to the Purchaser Entities.  None of
Simmons Company, the Company, Opco and their Subsidiaries has any options to
acquire any fee interest or leasehold interest in any real property other than
with respect to the Owned Properties or the Real Property Leases.  To the
Knowledge of the Company, there are no existing public improvements which may
reasonably be expected to result in any material special assessment and no
pending or, to the Knowledge of the Company, threatened assessments that could
materially adversely affect the ownership, operation, use or enjoyment of the
Owned Properties.  To the Knowledge of the Company, each of the Owned Properties
has been granted such entitlements, whether by applicable zoning, variance or
otherwise, to be used as it is currently used, and there is no pending or, to
the Knowledge of the Company, threatened change in any such entitlement.  There
are no pending or, to the Knowledge of the Company, threatened claims relating
to condemnation, eminent domain or similar proceedings affecting the Owned
Properties in any material respect.
 
(b) Schedule 4.8(b) sets forth a complete list of all real property leased or
subleased by Simmons Company, the Company, Opco or their Subsidiaries
(individually, a “Real Property Lease” and collectively, the “Real Property
Leases”).  All Real Property Leases are held by Simmons Company, the Company,
Opco or their Subsidiaries under valid leasehold interests.  The Company has
made available to the Purchaser Entities a correct and complete copy (with all
amendments thereto) of the leases and subleases for the Real Property
Leases.  To the Knowledge of the Company, each lease and sublease (as amended)
for the Real Property Leases is in full force and effect in all material
respects, and none of Simmons Company, the Company, Opco or their respective
Subsidiaries has received written notice of a current default under any such
lease or sublease.  None of the parties to any such lease or sublease has
provided as of the date hereof written notification to Simmons Company, the
Company, Opco or any of their respective Subsidiaries of an intention not to
renew any such lease or sublease.  To the Knowledge of the Company, each of the
properties subject to Real Property Leases has been granted such entitlements,
as necessary, whether by applicable zoning, variance or otherwise, to be used as
it is currently used, and there is no pending or, to the Knowledge of the
Company, threatened change in any such entitlement, if any.
 
4.9 Insurance.  The Company has made available to the Purchaser Entities all
policies of fire, liability, workers’ compensation, property, casualty and other
forms of insurance currently in force for the benefit of or relating to the
assets, properties, business, operations, employees, officers or directors of
Simmons Company, the Company, Opco and their respective Subsidiaries.  All such
policies are valid and in full force and effect, all premiums with respect
thereto covering all periods up to the date of this Agreement have been timely
paid and Simmons Company, the Company, Opco and their respective Subsidiaries
are otherwise in compliance with their obligations under such policies in all
material respects, and, except for notices of cancellation received by Simmons
Company, the Company, Opco or their respective Subsidiaries in the Ordinary
Course of Business prior to the renewal date of such policies, no written notice
of cancellation, termination or non-renewal has been received by Simmons
Company, the Company, Opco or their respective Subsidiaries with respect to any
such policy, nor has Simmons Company, the Company, Opco and or their respective
Subsidiaries been denied insurance coverage.  No policy limits under such
policies have been exhausted or materially reduced.  No insurance policy with
respect to Simmons Company, the Company, Opco or their respective Subsidiaries
is maintained through a qualified self-insurance, other than the deductible
portion of any insurance policy.  All material claims, if any, made against
Simmons Company, the Company, Opco or their respective Subsidiaries that are
covered by insurance have been disclosed to and have not been rejected or
reserved as to any rights by the appropriate insurer.
 
4.10 Intellectual Property.
 
(a) Schedule 4.10(a) sets forth a true and complete list of all (i) Intellectual
Property that is registered by Simmons Company, the Company, Opco or any of
their respective Subsidiaries or for which an application for registration by
Simmons Company, the Company, Opco or any of their respective Subsidiaries is
pending, and (ii) material Trademarks that are not subject to a registration or
pending application for registration that Simmons Company, the Company, Opco or
any of their respective Subsidiaries owns or for which it claims ownership.
 
(b) Parent Company does not own or license any Company Intellectual Property.
 The Company, Opco and/or their respective Subsidiaries exclusively own or have
licenses to use, free and clear of all Liens except Permitted Exceptions, all
Company Intellectual Property conveyed to Purchaser in connection with this
Agreement.  To the Knowledge of the Company, (i) all Company Intellectual
Property owned or exclusively licensed by the Company, Opco or any of their
respective Subsidiaries is valid and enforceable and (ii) subject to Section
7.2(b)(I) of this Agreement, all Company Intellectual Property that is
registered by the Company, Opco or any of their respective Subsidiaries is
subsisting.  No claims are pending or, to the Knowledge of the Company,
threatened, against Simmons Company, the Company, Opco and their respective
Subsidiaries based on any claim or allegation that the operation of the Business
infringes, misappropriates, dilutes, or otherwise violates any Intellectual
Property right of any third party, nor, to the Knowledge of the Company, is
there a basis for such a claim.
 
(c) To the Knowledge of the Company, no Person is infringing, misappropriating,
diluting or otherwise violating any Company Intellectual Property that is
exclusively licensed or owned by the Company, Opco or their respective
Subsidiaries’ in any material respect.
 
(d) The material Company Intellectual Property is not the subject of any
challenge received by Simmons Company, the Company, Opco and their respective
Subsidiaries in writing.
 
(e) Each of Simmons Company, the Company, Opco and their respective Subsidiaries
has taken reasonable measures to protect the confidentiality of all trade
secrets and other confidential business information that are owned, used or held
by any of them, respectively, and to the Knowledge of the Company, such trade
secrets and other material confidential business information have not been used,
disclosed to or discovered by any Person except pursuant to non-disclosure
agreements which, to the Knowledge of the Company, have not been breached.  To
the Knowledge of the Company, none of Simmons Company, the Company, Opco or
their respective Subsidiaries has breached a non-disclosure agreement with
respect to, any trade secrets or other confidential business information that
are owned, used or held by any other Person.
 
(f) Each of Simmons Company, the Company, Opco and their respective Subsidiaries
has complied in all material respects with (i) all applicable Laws regarding
data protection and the privacy and security of personal information, and (ii)
their respective posted privacy policies.
 
(g) Notwithstanding anything in this Agreement to the contrary, this
Section 4.10 contains the sole and exclusive representations and warranties in
this Agreement relating to Intellectual Property infringement matters.
 
4.11 Material Contracts.
 
(a) Schedule 4.11 sets forth all Contracts (except purchase orders executed in
the Ordinary Course of Business and except for leases and/or subleases for real
property) to which any of Simmons Company, the Company, Opco and their
respective Subsidiaries is a party, or is otherwise bound, or to which any of
their respective assets are bound, of the type described below (collectively,
the “Material Contracts”):
 
(A) (a) any option or purchase Contract which involves commitments to purchase
by Simmons Company, the Company, Opco or their respective Subsidiaries in excess
of $2,000,000 annually, and (b) any agreement for the lease of personal property
to or from any Person providing for payments in excess of $1,000,000 annually,
in each case that cannot be terminated on not more than 60 days’ notice without
payment by Simmons Company, the Company, Opco or their respective Subsidiaries
of any penalty;
 
(B) any agreement concerning a partnership or joint venture;
 
(C) any agreement entered into during the five (5) years prior to the date
hereof relating to the acquisition or disposition of any business or assets
outside the Ordinary Course of Business (whether by merger, sale/purchase of
stock, sale/purchase of assets or otherwise), in each case for consideration in
excess of $5,000,000;
 
(D) Contracts (other than inter-company Contracts between any of the Company,
Opco or their respective wholly-owned Subsidiaries) relating to incurrence of
Indebtedness or the making of any loan or advance, in each case involving
amounts in excess of $500,000;
 
(E) any agreement that restricts the ability of Simmons Company, the Company,
Opco or their respective Subsidiaries to (i) compete in any line of the Business
anywhere in the world, (ii) except further as part of any temporary hire
agreement entered into in the Ordinary Course of Business, solicit or retain any
customer of the Business to do business, or (iii) except further as part of any
temporary hire agreement, consulting agreement or IT services agreement entered
into in the Ordinary Course of Business, solicit or hire any person in the
Business to become an employee;
 
(F) except for agreements entered into in the Ordinary Course of Business, all
agreements involving Simmons Company, the Company, Opco or their respective
Subsidiaries and a Governmental Body;
 
(G) any agreement with any labor union or association representing any employees
of Simmons Company, the Company, Opco or their respective Subsidiaries or any
collective bargaining agreements;
 
(H) any license, royalty or other agreement (other than engagement letters with
consultants or intra-company licenses, royalties or agreements between any of
the Company, Opco or their respective wholly-owned Subsidiaries) granting rights
to Simmons Company, the Company, Opco or any of their respective Subsidiaries to
the Intellectual Property of any other Person which involves Intellectual
Property that is material to the conduct of the Business;
 
(I) any stockholders agreement, registration rights agreement, voting agreement
or other similar agreement to which Simmons Company, the Company, Opco or any of
their respective Subsidiaries is subject;
 
(J) any agreement creating an indemnification obligation of Simmons Company, the
Company, Opco or any of their respective Subsidiaries in an amount in excess of
$500,000, other than agreements entered into in the Ordinary Course of Business
and other than engagement or advisor agreements entered into in connection with
the restructuring of the Debtors;
 
(K) any agreement whereby any of Simmons Company, the Company, Opco or their
respective Subsidiaries provides a warranty with respect to its services
rendered or its products sold or leased outside the Ordinary Course of Business;
 
(L) any license, royalty or other agreement (other than intra-company licenses,
royalties or agreements between any of the Company, Opco or their respective
wholly-owned Subsidiaries) granting rights to any Person under any Company
Intellectual Property owned or claimed by Simmons Company, the Company, Opco or
any of their respective Subsidiaries which involves (i) the exclusive licensing
of such Company Intellectual Property; or (ii) payment to the Company, Opco or
any of their respective Subsidiaries during fiscal year 2008 in excess of
$250,000 for the terms of such agreement;
 
(M) any dealer incentive or hospitality agreement which, over the term of the
contract involves payment (other than volume related payments) by Simmons
Company, the Company, Opco or their respective Subsidiaries, as the case may be,
in excess of $500,000; and
 
(N) any other Contract (other than engagement or advisor agreements entered into
in connection with the restructuring of the Debtors or inter-company Contracts
between any of Opco or its wholly-owned Subsidiaries) the performance of which
involves payment or rebates by Simmons Company, the Company, Opco or their
respective Subsidiaries of consideration in excess of $1,000,000 during fiscal
year 2008 and which cannot be terminated on not more than 60 days’ notice
without payment by Simmons Company, the Company, Opco or their respective
Subsidiaries without penalty.
 
The Company has made available to the Purchaser Entities a correct and complete
copy of each written Material Contract and a summary of the terms of each oral
Material Contract.  Each Material Contract is valid, binding and enforceable in
all material respects by Simmons Company, the Company, Opco or their respective
Subsidiaries, as applicable, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing where applicable
(regardless of whether enforcement is sought in a proceeding at law or in
equity).  To the Knowledge of the Company, none of Simmons Company, the Company,
Opco and their respective Subsidiaries, as applicable, is in breach or default
in any material respect under any Material Contract, and, other than with
respect to the Bankruptcy Case and the transactions contemplated by the Plan, no
event has occurred which with notice or lapse of time or both would constitute a
breach or default in any material respect thereunder by Simmons Company, the
Company, Opco or their respective Subsidiaries, as applicable, or permit
termination, cancellation, material modification, or acceleration by the other
party thereto, other than in each case as a result of the insolvency or
financial condition of any Debtor or the commencement of the Bankruptcy
Case.  To the Knowledge of the Company, no event has occurred or circumstance
exists that contravenes, conflicts with, or results in a violation or breach by
any counterparty or third party of, or gives Simmons Company, the Company, Opco
or their respective Subsidiaries the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to terminate,
cancel, or materially modify, any Material Contract.  None of Simmons Company,
the Company, Opco and their respective Subsidiaries has received in the twelve
months prior to the date hereof any written notice in accordance with the terms
of any Material Contract of termination or default from any other party to such
Material Contract.
 
4.12 Employee Benefits.
 
(a) Schedule 4.12(a) lists: (i) all “employee benefit plans”, as defined in
Section 3(3) of ERISA, and (ii) all other material plans, programs, agreements
and arrangements providing for pension, welfare benefit, bonus, incentive
compensation, equity or equity-based compensation, deferred compensation, stock
purchase, severance pay, sick leave, leaves of absence, vacation pay, salary
continuation, disability, life insurance, educational assistance programs,
employee employment agreements or other employment related plans, programs,
agreements or arrangements with current or former Employees maintained by
Simmons Company, the Company, Opco and their respective Subsidiaries or to which
Simmons Company, the Company, Opco and their respective Subsidiaries have any
obligation or liability (contingent or otherwise) for current or former
employees of the Company, Opco and their respective Subsidiaries (the “Employee
Benefit Plans”); Schedule 4.12(a) separately identifies each Employee Benefit
Plan which is a single employer plan (“Title IV Plan”), a multiemployer plan
subject to Title IV of ERISA (“Multiemployer Plan”) or is a multiple employer
plan subject to Sections 4063 or 4064 of ERISA (“Multiple Employer Plan”).
 
(b) True, correct and complete copies of the following documents, with respect
to each of the Employee Benefit Plans (other than Multiemployer Plans) (as
applicable), have been made available to the Purchaser Entities along with (A)
any plans and related trust documents, and all amendments thereto, (B) the most
recent Form 5500 and schedules thereto, (C) the most recent financial statements
and most recent actuarial valuations, (D) the most recent IRS determination
letter, and (E) the most recent summary plan descriptions (including letters or
other documents updating such descriptions).
 
(c) Each of the Employee Benefit Plans intended to qualify under Section 401 of
the Code (“Qualified Plans”) has been determined by the IRS to be so qualified,
and nothing has occurred with respect to the operation of any such plan which
could reasonably be expected to result in the revocation of such favorable
determination.  None of Simmons Company, the Company, Opco and their respective
Subsidiaries has engaged in a transaction with respect to any Employee Benefit
Plan that, assuming the taxable period of such transaction expired as of the
date hereof, could subject Simmons Company, the Company, Opco and their
respective Subsidiaries to a Tax or penalty imposed by either Section 4975 of
the Code or Section 502(i) of ERISA.  None of Simmons Company, the Company, Opco
and their respective Subsidiaries has incurred or reasonably expects to incur a
Tax or penalty imposed by Section 4980 of the Code or Section 502 of ERISA or
any liability under Section 4071 of ERISA
 
(d) All contributions and premiums required by law or by the terms of any
Employee Benefit Plan have been timely made (taking into account any waivers
granted with respect thereto) and all obligations in respect of each Employee
Benefit Plan have been properly accrued and reflected in the Financial
Statements.  Neither any Title IV Plan nor any single-employer plan of an ERISA
Affiliate has an “accumulated funding deficiency” (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA
Affiliate has an outstanding funding waiver.  Neither any Title IV Plan nor any
single-employer plan of an ERISA Affiliate has been required to file information
pursuant to Section 4010 of ERISA for the current or most recently completed
plan year.  It is not reasonably anticipated that required minimum contributions
to any Title IV Plan under Section 412 of the Code will be materially increased
by application of Section 412(l) of the Code.  None of Simmons Company, the
Company, Opco and their respective Subsidiaries has provided, or is required to
provide, security to any Title IV Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
 
(e) Each of the Employee Benefit Plans has been maintained, in substantial
compliance with its terms and all provisions of applicable Law. No liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by Simmons Company, the Company, Opco and their respective Subsidiaries
with respect to any ongoing, frozen or terminated “single-employer plan”, within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any of them, or the single-employer plan of any entity which is considered one
employer with the Company under Section 4001 of ERISA or Section 414 of the Code
(an “ERISA Affiliate”).  Simmons Company, the Company, Opco and their respective
Subsidiaries have not incurred and do not expect to incur any withdrawal
liability with respect to a Multiemployer Plan under Subtitle E of Title IV of
ERISA (regardless of whether based on contributions of an ERISA
Affiliate).  With the exception of the filing of a petition for bankruptcy in
connection with the transactions contemplated herein, no notice of a “reportable
event”, within the meaning of Section 4043 of ERISA for which the reporting
requirement has not been waived or extended, other than pursuant to Pension
Benefit Guaranty Corporation (“PBGC”) Reg. Section 4043.33 or 4043.66, has been
required to be filed for any Employee Benefit Plan or by any ERISA Affiliate
within the 12 month period ending on the date hereof or will be required to be
filed in connection with the transaction contemplated by this Agreement.  Other
than pursuant to the filing of a petition for bankruptcy in connection with the
transactions contemplated herein, no notices have been required to be sent to
participants and beneficiaries or the PBGC under Section 302 or 4011 of ERISA or
Section 412 of the Code.
 
(f) Under each Title IV Plan, as of the last day of the most recent plan year
ended prior to the date hereof, the actuarially determined present value of all
“benefit liabilities”, within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such Pension
Plan's most recent actuarial valuation), did not exceed the then current value
of the assets of such Title IV Plan, and there has been no material change in
the financial condition, whether or not as a result of a change in the funding
method, of such Title IV Plan since the last day of the most recent plan year.
The withdrawal liability of Simmons Company, the Company, Opco and their
respective Subsidiaries under each Benefit Plan which is a Multiemployer Plan to
which Simmons Company, the Company, Opco and their respective Subsidiaries or an
ERISA Affiliate has contributed during the preceding 12 months, determined as if
a “complete withdrawal”, within the meaning of Section 4203 of ERISA, had
occurred as of the date hereof, would not be material to Simmons Company, the
Company, Opco or their respective Subsidiaries.
 
(g) As of the date hereof, there is no material pending or, to the Knowledge of
the Company threatened, litigation relating to the Employee Benefit Plans.  None
of Simmons Company, the Company, Opco and their respective Subsidiaries has any
obligations for retiree health and life benefits under any Employee Benefit Plan
or collective bargaining agreement.  Simmons Company, the Company, Opco and
their respective Subsidiaries may amend or terminate any such retiree health and
life benefit plan at any time without incurring any liability thereunder other
than in respect of claims incurred prior to such amendment or termination. There
has been no amendment to, announcement by Simmons Company, the Company, Opco and
their respective Subsidiaries relating to, or change in employee participation
or coverage under, any Employee Benefit Plan which would increase materially the
expense of maintaining such plan above the level of the expense incurred
therefor for the most recent fiscal year.
 
(h) Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (v) entitle any employees or
consultants of Simmons Company, the Company or any of its subsidiaries to any
transaction bonus, success fee or other similar payment, (w) entitle any
employees of Simmons Company, the Company or any of its subsidiaries to
severance pay or any increase in severance pay upon any termination of
employment after the date hereof, (x) accelerate the time of payment or vesting
or result in any payment or funding (through a grantor trust or otherwise) of
compensation or benefits under, increase the amount payable or result in any
other obligation pursuant to, any of the Employee Benefit Plans, (y) limit or
restrict the right of Simmons Company, the Company or, after the consummation of
the transactions contemplated hereby, Purchaser to merge, amend or terminate any
of the Employee Benefit Plans or (z) result in payments under any of the Benefit
Plans which would not be deductible under Section 280G of the Code.
 
(i) With respect to each Employee Benefit Plan that is maintained outside of the
United States substantially for employees who are situated outside of the United
States (the “Foreign Plans”):
 
(A) All Foreign Plans are, and have been, established, registered, administered,
funded and invested in all material respects in accordance with the terms of
such Foreign Plans including the terms of the material documents that support
such Foreign Plans, any applicable collective agreement and all applicable Laws.
 
(B) To the Knowledge of the Company, no event has occurred respecting any
Foreign Plan which would result in the revocation of the registration of such
Foreign Plan or entitle any person (without consent of the Company) to wind up
or terminate any Foreign Plan, in whole or in part, or which could otherwise
reasonably be expected to adversely affect the tax status of any such Foreign
Plan.
 
(C) None of the Foreign Plans provide for benefit increases or the acceleration
of, or an increase in, funding obligations that are contingent upon, or will be
triggered by the completion of the transactions contemplated herein.
 
(D) There are no unfunded liabilities in respect of any Foreign Plan including
going concern unfunded liabilities, solvency deficiencies or wind-up
deficiencies where applicable.
 
(E) None of the Foreign Plans provide benefits beyond retirement or other
termination of service to employees or former employees or to the beneficiaries
or dependants of such employees other than pension benefits.
 
(F) None of Simmons Company, the Company, Opco, nor their respective
Subsidiaries sponsor, administer or contribute to or have sponsored,
administered or contributed to a multi-employer pension plan.
 
(G) There is no proceeding, action, suit or claim (other than routine claims for
payments of benefits) pending or threatened involving any Foreign Plan or its
assets.
 
(j) Schedule 4.12(j) sets forth all agreements, to which any of Simmons Company,
the Company, Opco and their respective Subsidiaries is a party, or is otherwise
bound, or to which any of their respective assets are bound, with any (i)
employees (full-time or part-time) or (ii) individual consultants or advisors
(except for any such consultants or advisors that were engaged by Simmons
Company, the Company, Opco or their Subsidiaries solely in connection with the
transactions contemplated hereby and the Plan), that require payments in excess
of $200,000 annually and that cannot be terminated on less than 60 days’ notice
without payment by Simmons Company, the Company, Opco or their respective
Subsidiaries of any penalty, or any agreement providing severance benefits to
any such individual requiring payment in excess of $200,000 (the “Material
Employee Agreements”).  With respect to the Material Employee Agreements, the
Company has made available to the Purchaser Entities a correct and complete copy
of each written Material Employee Agreement and a summary of the terms of each
oral Material Employee Agreement.  Each Material Employee Agreement is valid,
binding and enforceable in all material respects by Simmons Company, the
Company, Opco or their respective Subsidiaries, as applicable, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights
generally and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
where applicable (regardless of whether enforcement is sought in a proceeding at
law or in equity).  To the Knowledge of the Company, none of Simmons Company,
the Company, Opco and their respective Subsidiaries, as applicable, is in breach
or default in any material respect under any Material Employee Agreement, and no
event has occurred which with notice or lapse of time or both would constitute a
breach or default in any material respect thereunder by Simmons Company, the
Company, Opco or their respective Subsidiaries, as applicable, or permit
termination, cancellation, material modification, or acceleration by the other
party thereto, other than in each case as a result of the insolvency or
financial condition of any Debtor or the commencement of the Bankruptcy
Case.  To the Knowledge of the Company, no event has occurred or circumstance
exists that contravenes, conflicts with, or results in a violation or breach by
any counterparty or third party of, or gives Simmons Company, the Company, Opco
or their respective Subsidiaries the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to terminate,
cancel, or materially modify, any Material Employee Agreement.  None of Simmons
Company, the Company, Opco and their respective Subsidiaries has received in the
twelve months prior to the date hereof any written notice in accordance with the
terms of any Material Employee Agreement of termination or default from any
other party to such Material Employee Agreement.
 
4.13 Labor and Employment.  (a) Schedule 4.13(a)(i) sets forth a complete and
accurate list of the directors and officers of Simmons Company, the Company,
Opco and their respective Subsidiaries and Schedule 4.13(a)(ii) sets forth a
complete and accurate list of the positions held and employee ID numbers of all
employees of Simmons Company, the Company, Opco and their respective
Subsidiaries as of the date hereof; (b) none of Simmons Company, the Company,
Opco and their respective Subsidiaries is a party to or bound by any labor or
collective bargaining agreement; (c) no employees of Simmons Company, the
Company, Opco or their respective Subsidiaries are represented by any labor
organization, and no labor organization or group of employees of Simmons
Company, the Company, Opco or their respective Subsidiaries has made a pending
demand for recognition, and there are no representation proceedings or petitions
seeking a representation proceeding presently pending or, to the Knowledge of
the Company, threatened to be brought or filed, with the National Labor
Relations Board or other labor relations tribunal; (d) no labor strike, work
stoppage or slowdown has occurred during the past three years, or, to the
Knowledge of the Company, is threatened; (e) there are no unfair labor practice
charges, grievances or complaints pending or, to the Knowledge of the Company,
threatened by or on behalf of any employee or group of employees of Simmons
Company, the Company, Opco or their respective Subsidiaries; (f) there are no
complaints, charges or claims against Simmons Company, the Company, Opco or
their respective Subsidiaries pending or, to the Knowledge of the Company,
threatened that could be brought or filed, with any Governmental Body or based
on, arising out of, in connection with or otherwise relating to the employment
or termination of employment or failure to employ by Simmons Company, the
Company, Opco or their respective Subsidiaries, of any individual; (g) there is
no material occupational safety and health claim, discrimination complaint,
arbitration request, minimum wage claim, overtime claim or other
employment-related claim pending or, to the Knowledge of the Company,
threatened, in any forum, which, may reasonably, individually or in the
aggregate, create a material Liability, or cause Simmons Company, the Company,
Opco or their respective Subsidiaries to incur material expenses or forego
material operating savings; and (h) in the six-month period preceding the date
hereof, (i) none of Simmons Company, the Company, Opco and their respective
Subsidiaries has effectuated a “plant closing” (as defined in the WARN Act)
affecting any site of employment or one or more facilities or operating units
within any site of employment or facility, (ii) there has not occurred a “mass
layoff” (as defined in the WARN Act) affecting any site of employment or
facility of either Debtor or any of its Subsidiaries, and (iii) neither of the
Debtors nor any of their respective Subsidiaries has engaged in layoffs or
employment terminations sufficient in number to trigger application of the WARN
Act or any similar state or local law or regulation.
 
4.14 Litigation.  There are no Legal Proceedings pending or, to the Knowledge of
the Company, threatened against Simmons Company, the Company, Opco or their
respective Subsidiaries before any Governmental Body, nor is there any Order
outstanding against Simmons Company, the Company, Opco or their respective
Subsidiaries, in each case, that has or would have a Company Material Adverse
Effect or prevent, materially delay or materially impair the consummation of the
transactions contemplated by this Agreement.
 
4.15 Compliance with Laws; Permits.
 
(a) Simmons Company, the Company, Opco and their respective Subsidiaries are in
compliance with all Laws (other than Environmental Laws, which are addressed in
Section 4.16) applicable to their respective operations or assets or the
Business, except where the failure to be in compliance would not have a Company
Material Adverse Effect.  None of Simmons Company, the Company, Opco and their
respective Subsidiaries has received any written notice of or been charged with
the violation of any such Laws or, to the Knowledge of the Company, are subject
of any investigation or review pending or, threatened by any Governmental Body
relating to an alleged violation of Law, except where such violation would not
have a Company Material Adverse Effect.
 
(b) The Company, Opco and their respective Subsidiaries currently have all
Permits which are required for the lawful conduct and operation of the Business
as presently conducted, except where the absence of which would not have a
Company Material Adverse Effect.  None of Simmons Company, the Company, Opco and
their respective Subsidiaries is in default or violation (and no event has
occurred which, with notice or the lapse of time or both, would constitute a
default or violation) of any term, condition or provision of any Permit to which
it is a party, except where such default or violation would not have a Company
Material Adverse Effect.
 
4.16 Environmental Matters.  The representations and warranties contained in
this Section 4.16 are the sole and exclusive representations and warranties of
the Company pertaining to any Environmental Law. Except as set forth on Schedule
4.16:
 
(a) the Business is and has been in compliance with all applicable Environmental
Laws, which compliance includes obtaining, maintaining and complying with all
material Permits required under all applicable Environmental Laws necessary to
operate the Business, except where the failure to comply could not reasonably be
expected to result in the imposition of any material liability pursuant to any
Environmental Law;
 
(b) No property (including soils, groundwater, surface water, buildings or other
structures) currently or, to the Knowledge of the Company, formerly owned or
operated by Simmons Company, the Company or any Subsidiary has been contaminated
with any Hazardous Substance in a manner that could reasonably be expected to
result in the imposition of any material liability pursuant to any Environmental
Law;
 
(c) to the Knowledge of the Company, none of Simmons Company, the Company nor
any Subsidiary could be reasonably expected to incur any material Liability for
any Hazardous Substance release, disposal or contamination on any third party
property;
 
(d) no Debtor or its Subsidiaries is the subject of any outstanding Order or
Contract with any Governmental Body or any Contract or indemnity with any third
party that imposes any liabilities or obligations relating to any Environmental
Law, except for such liabilities or obligations that could not reasonably be
expected to result in the imposition of any material liability pursuant to any
Environmental Law;
 
(e) there are no pending or, to the Knowledge of the Company, threatened claims
alleging any violation of or liability under or pursuant to Environmental Law
relating to the Business;
 
(f) there are no pending or, to the Knowledge of the Company, threatened
investigations of the Business which could reasonably be expected to result in
the imposition of any material liability pursuant to any Environmental Law; and
 
(g) to the Knowledge of the Company, there are no other currently existing
circumstances or conditions involving Simmons Company, the Company or any of its
Subsidiaries that could reasonably be expected to result in any claims,
liability, investigations or costs which could reasonably be expected to result
in the imposition of any material liability relating to any Environmental Law or
any material restrictions on the ownership, use or transfer of any property.
 
4.17 Financial Advisors.  Other than Miller Buckfire & Co. LLC, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for the
Debtors or their Affiliates in connection with the transactions contemplated by
this Agreement.  None of Simmons Company, the Company, Opco and their
Subsidiaries is obligated to pay any such fee or commission or like payment to
any Person, other than Miller Buckfire & Co. LLC, in connection with the
transactions contemplated by this Agreement.
 
4.18 Affiliate Transactions.  Except (i) for salary, annual bonus and associated
benefits provided in the Ordinary Course of Business, (ii) for confidentiality
agreements, non-disclosure and proprietary information agreements,
non-competition agreements or non-solicitation agreements between the Company,
Opco or any of their Subsidiaries and their respective employees entered into in
the Ordinary Course of Business, or (iii) intra-company agreements, contracts,
commitments, Indebtedness or transactions between any of the Company, Opco or
their respective wholly-owned Subsidiaries, or (iv) as disclosed in the most
recent audited Financial Statements, no officer, director, manager, partner,
employee or other Affiliate of Simmons Company, the Company, Opco or their
respective Subsidiaries or Affiliates or any Affiliate or family member of any
officer, director, manager, employee or partner of Simmons Company, the Company,
Opco or their respective Subsidiaries or Affiliates is a party to any material
agreement, contract, commitment or transaction with any of Simmons Company, the
Company, Opco and their respective Subsidiaries or Affiliates or has any
material interest in any property used by any of Simmons Company, the Company,
Opco and their respective Subsidiaries or Affiliates, and there is no
Indebtedness owing to Simmons Company, the Company, Opco or their respective
Subsidiaries or Affiliates by any officer, director, manager, partner or other
Affiliate of Simmons Company, the Company, Opco or their respective Subsidiaries
or Affiliates or any Affiliate or family member of any officer, director,
manager, employee or partner of Simmons Company, the Company, Opco or their
respective Subsidiaries or Affiliates (other than a wholly-owned Subsidiary of
the Company).  Other than in connection with salary, annual bonus and associated
benefits provided in the Ordinary Course of Business or disclosed in the most
recent audited Financial Statements, or intra-company liabilities between the
Company, Opco or their respective wholly-owned Subsidiaries, there are no
current or accrued liabilities or obligations of Simmons Company, the Company,
Opco or their respective Subsidiaries to any officer, director, manager, partner
or other Affiliate of Simmons Company, the Company, Opco or their respective
Subsidiaries or Affiliates or any Affiliate or family member of any officer,
director, manager, employee or partner of Simmons Company, the Company, Opco or
their respective Subsidiaries or Affiliates.  The Company has made available to
the Purchaser Entities a correct and complete copy of each written agreement and
a summary of the terms of each oral agreement listed on Schedule 4.18.
 
4.19 Absence of Certain Changes and Events.  Except as otherwise contemplated by
this Agreement or the Plan, since December 27, 2008:
 
(a) there has not occurred a Company Material Adverse Effect;
 
(b) Simmons Company, the Company, Opco and their respective Subsidiaries have
conducted their business in the Ordinary Course of Business;
 
(c) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has sold, leased or otherwise disposed of any properties, licenses or assets,
except (i) for inventory in the Ordinary Course of Business, (ii) for other
properties, licenses or assets having a net book value not in excess of $250,000
individually or $1,000,000 in the aggregate or (iii) as reflected in the
Financial Statements;
 
(d) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has mortgaged, pledged or otherwise subjected any of their assets to any Lien,
other than (i) Permitted Exceptions or (ii) any other Liens with respect to
obligations not in excess of $500,000 individually or $2,000,000 in the
aggregate;
 
(e) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has granted any severance payments or increased the salary, employee benefits or
other compensation of any employee, officer or director or agreed or committed
to pay any bonus or other additional salary, employee benefits or compensation
to any employee, officer or director, except (i) for relocation reimbursements
made in the Ordinary Course of Business and (ii) for increases or payments to
employees less than (1) $25,000 per individual employee and $500,000 in the
aggregate with respect to any such severance payments and (2) $25,000 per
individual employee who is an officer (Senior Vice President or higher) or
$50,000 per other individual employee with respect to any other such payments;
 
(f) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has declared, set aside or paid any dividend or other distribution (whether in
cash, stock or property) on any of the capital stock or comparable equity
interest, as the case may be, or redeemed or repurchased any of its capital
stock or comparable equity interest, as the case may be, other than in either
case such capital stock or comparable equity interest held by the Company or one
of its wholly-owned Subsidiaries;
 
(g) [reserved];
 
(h) there has not been property damage or casualty loss incurred by any of
Simmons Company, the Company, Opco and their respective Subsidiaries in excess
of $500,000 individually or $2,000,000 in the aggregate, except any such loss
reflected in the Financial Statements;
 
(i) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has incurred any capital expenditure in excess of $750,000 individually or
$2,000,000 in the aggregate, except any such capital expenditure reflected in
the Financial Statements or contemplated by Section 7.2(b)(G);
 
(j) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has permitted any material Company Intellectual Property that is registered or
for which an application for registration is pending to expire, lapse, become
abandoned or cancelled, or has failed to make any payments with respect thereto
when due; provided, however, that neither the expiration of a patent on its
scheduled expiration date nor the abandonment of an application for registration
of a trademark in connection with a third party opposition proceeding, which the
applicant, in its reasonable business judgment, has determined it would be
unlikely to prevail, shall be deemed a breach of the foregoing;
 
(k) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has revalued any of its assets, including writing down the value of inventory or
writing off notes or accounts receivable, other than in the Ordinary Course of
Business;
 
(l) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has settled or compromised any pending or threatened Legal Proceeding, the
settlement or compromise of which provides for covenants that materially
restrict such Debtor’s or its Subsidiaries’ ability to conduct their business or
which involves an amount in excess of $1,000,000 individually or $2,000,000 in
the aggregate;
 
(m) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has made or changed any Tax election, filed any amended Tax Return, entered into
any closing agreement, waived or extended any statute of limitation with respect
to Taxes, settled or compromised any Tax liability, claim or assessment,
surrendered any right to claim a refund of Taxes or taken any other similar
action relating to the filing of any Tax Return or the payment of any Tax;
 
(n) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has decreased its reserves or changed the method of determining reserves other
than as disclosed in the Financial Statements;
 
(o) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has made any change in its cash management practices, accounting methods,
principles or practices other than as disclosed in the Financial Statements; and
 
(p) none of Simmons Company, the Company, Opco and their respective Subsidiaries
has agreed to take any of the foregoing actions described in clauses (c) through
(o).
 
4.20 Customers.  Schedule 4.20 sets forth a list of the ten largest customers of
Simmons Company, the Company, Opco or their respective Subsidiaries as measured
by volume of sales for the year ended December 27, 2008.  To the Knowledge of
the Company, none of Simmons Company, the Company, Opco and their respective
Subsidiaries has received any written notice that any such customer intends to
terminate or, except in the Ordinary Course of Business, reduce or change the
pricing, terms or amount of business with Simmons Company, the Company, Opco or
their respective Subsidiaries, and no such customer has provided notice of
termination or, except in the Ordinary Course of Business, reduced or changed
the pricing terms of its business with Simmons Company, the Company, Opco or
their respective Subsidiaries since December 28, 2008.
 
4.21 Suppliers.  Schedule 4.21 sets forth a list of the ten largest suppliers of
Simmons Company, the Company, Opco or their respective Subsidiaries as measured
by volume of purchases for the year ended December 27, 2008.  To the Knowledge
of the Company, none of Simmons Company, the Company, Opco and their respective
Subsidiaries has received any written notice that any such supplier intends to
terminate, materially increase or materially change the pricing, terms or amount
of business with Simmons Company, the Company, Opco or their respective
Subsidiaries, and no such supplier has provided written notice of termination or
materially increased or changed the pricing terms of its business with Simmons
Company, the Company, Opco or their respective Subsidiaries since December 28,
2008.
 
4.22 Inventories.  Except as otherwise reflected or disclosed in the last
audited Financial Statements, the inventories of Simmons Company, the Company,
Opco and their respective Subsidiaries , taken as a whole, consist of a quality
and quantity usable and saleable in the Ordinary Course of Business, except (i)
for items of obsolete materials and materials of below-standard quality, all of
which as of the date of the last audited Financial Statements have been written
off or written down on the last audited Financial Statements to fair market
value or for which, in the Company’s judgment, adequate reserves have been
provided, or (ii) where the failure to be so usable and saleable would not have
a Company Material Adverse Effect.  The inventories of each of Simmons Company,
the Company, Opco and their respective Subsidiaries, net of reserves applicable
to such inventories, are reflected in all material respects on such entity’s
books and records in accordance with GAAP.
 
4.23 Accounts Receivable.  Except as otherwise reflected or disclosed in the
last audited Financial Statements, the Accounts Receivable of Simmons Company,
the Company, Opco and their respective Subsidiaries (a) are valid receivables
incurred in the Ordinary Course of Business, except where the failure to be
valid and incurred in the Ordinary Course of Business would not have a Company
Material Adverse Effect, and (b) are reflected in all material respects on the
Financial Statements in accordance with GAAP.
 
4.24 Product Liability.  The products that have been manufactured, shipped, sold
or delivered by Simmons Company, the Company, Opco or their respective
Subsidiaries (i) conform and comply in all material respects with the terms and
requirements of any applicable warranty or other contract and with all Laws and
(ii) to the Knowledge of the Company, are free in all material respects of any
design defects, construction defects, manufacturing defects, materials defects,
warning defects or other defects or deficiencies at the time of sale.  Schedule
4.24 sets forth a list of recalls since January 1, 2006 with respect to any
product manufactured, shipped, sold or delivered by Simmons Company, the
Company, Opco or their respective Subsidiaries.  To the Knowledge of the
Company, no event has occurred, and no condition or circumstance exists, that
might reasonably be expected to (with or without notice or lapse of time) give
rise to or serve as a basis for any additional recall, claim of breach or other
similar action relating to any product, except for such recall, claim of breach
or other similar action that would not have a Company Material Adverse
Effect.  Since January 1, 2008, no Governmental Body regulating the marketing,
testing or advertising of any of the products manufactured, sold, distributed or
used in connection with Simmons Company, the Company, Opco or their respective
Subsidiaries’ business has delivered a written request to Simmons Company, the
Company, Opco or their respective Subsidiaries that any such product be removed
from the market, that substantial new product testing be undertaken as a
condition to the continued manufacturing, selling, distribution or use of any
such product, or that such products be modified.  To the Knowledge of the
Company, none of Simmons Company, the Company, Opco and their respective
Subsidiaries has any material Liability not covered by insurance arising out of
any injury to individuals or property as a result of the ownership, possession,
or use of any product manufactured, sold, leased, or delivered by such entity.
 
4.25 Bank Accounts.  Schedule 4.25 sets forth the names and addresses of all
banks, trust companies, savings and loan associations and other financial
institutions at which each of Simmons Company, the Company, Opco and their
respective Subsidiaries maintains an account, deposit, safe deposit box, lock
box or other arrangement for the collection of Accounts Receivable or line of
credit or other loan facility relationship or accounts of any nature and the
names of all Persons authorized to draw thereon, make withdrawals therefrom or
have access thereto.
 
4.26 Assets.  No Parent Company or any other Affiliate of the Company that is
not a Subsidiary of the Company, owns any assets used in the conduct of the
Business as presently constituted.  All machinery, equipment and other tangible
assets of Simmons Company, the Company, Opco and their respective Subsidiaries,
taken as a whole, are in good operating condition and repair, other than usual
wear and tear, are free of material defects and are suitable for their current
use and operation, except where the failure to be in good operating condition
and repair, free of material defects, or suitable for current use and operation
would not have a Company Material Adverse Effect.
 
4.27 Impediments to Closing.  Subject to the satisfaction or waiver of the
conditions precedent to the obligations of the Purchaser Entities to consummate
the transactions contemplated by the Agreement, neither Simmons Company, the
Company nor Opco has any reason to believe that any condition set forth in the
Commitment Letters or Revolving Facility Commitment Letter, if applicable
pursuant to Section 7.5(b), will not be satisfied or waived prior to the Closing
Date
 
4.28 No Other Representations or Warranties; Schedules.  Except for the
representations and warranties contained in this Article IV, neither Simmons
Company, the Company, Opco nor any other Person makes any other express or
implied representation or warranty with respect to Simmons Company, the Company,
Opco or their respective Subsidiaries, the Business or the transactions
contemplated by this Agreement, and each of Simmons Company, the Company and
Opco disclaims any other representations or warranties, whether made by Simmons
Company, the Company, any Affiliate of the Company, or any of the Company’s or
their Affiliates’ respective officers, directors, employees, agents or
representatives.  Except for the representations and warranties contained in
Article IV, each of Simmons Company, the Company and Opco (i) expressly
disclaims and negates any representation or warranty, expressed or implied, at
common law, by statute, or otherwise, relating to the condition of its assets
(including any implied or expressed warranty of merchantability or fitness for a
particular purpose, or of conformity to models or samples of materials) and (ii)
expressly disclaims all liability and responsibility for any representation,
warranty, projection, forecast, statement or information made, communicated, or
furnished (orally or in writing) to the Purchaser Entities or their Affiliates
or representatives (including any opinion, information, projection or advice
that may have been or may be provided to the Purchaser Entities by any director,
officer, employee, agent, consultant, or representative of the Company or any of
its Affiliates).  Simmons Company and the Company make no representations or
warranties to the Purchaser Entities regarding the probable success or
profitability of the Business.  The disclosure of any matter or item in any
schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed or is material or that such matter would
result in a Company Material Adverse Effect.
 
V.           REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
Parent hereby represents and warrants to the Company that except as set forth in
the Parent Disclosure Letter, which exceptions shall be deemed to be part of the
representations and warranties made hereunder, the following representations are
true and correct.  Parent Disclosure Letter shall be arranged in sections
corresponding to the numbered and lettered sections and subsections contained in
this Article V, and the disclosures in any section or subsection of the Parent
Disclosure Letter shall qualify other sections and subsections of this Article V
only to the extent it is reasonably clear from a reading of such disclosure that
such disclosure is applicable to such other sections and subsections.
 
5.1 Organization and Good Standing.  Each of Parent and Purchaser is an entity
duly organized, validly existing and in good standing under the laws of its
state of formation and has the requisite limited liability company power and
authority to own, lease, operate or otherwise hold its properties and assets and
to carry on its business as now conducted.
 
5.2 Authorization of Agreement.  Each of Parent, Purchaser and the Sponsors, as
applicable, has all requisite power, authority and legal capacity to execute and
deliver this Agreement, the Equity Guarantees, and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by Parent, Purchaser or Sponsor in connection with the consummation of
the transactions contemplated by this Agreement (the “Purchaser Documents”) and,
subject to entry of the Confirmation Order and the Plan Sponsor Order, to
perform its obligations hereunder and thereunder and consummate the transactions
contemplated hereby and thereby.  The execution and delivery of this Agreement
and the Purchaser Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
company action on the part of Parent, Purchaser and each Sponsor, as
applicable.  This Agreement has been, and each Purchaser Document will be at or
prior to the Closing, duly and validly executed and delivered by Parent,
Purchaser and each Sponsor, as applicable, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto, and the entry of
the Confirmation Order) this Agreement constitutes, and each Purchaser Document
when so executed and delivered will constitute, legal, valid and binding
obligations of Parent, Purchaser and each Sponsor, as applicable, enforceable
against them in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
 
5.3 Conflicts; Consents of Third Parties.
 
(a) The execution, delivery and performance by Parent, Purchaser and each
Sponsor, as applicable, of this Agreement and the Purchaser Documents, the
consummation of the transactions contemplated hereby or thereby, or the
compliance by the Purchaser Entities and the Sponsors, as applicable, with any
of the provisions hereof or thereof will not conflict with, or result in any
violation of, or constitute a breach or default (with or without notice or lapse
of time, or both) under, or give rise to any penalty or right of termination,
cancellation or acceleration under, any provision of (i) the certificate of
formation, operating agreement or other comparable organizational documents of
Parent, Purchaser or the Sponsors, as applicable, (ii) any Contract or Permit to
which Parent, Purchaser or any Sponsor is a party or by which any of their
properties or assets are bound, (iii) subject to compliance with the applicable
requirements of the HSR Act and other Antitrust Laws and entry of the
Confirmation Order and applicable provisions of the Bankruptcy Code, any Order
of any Governmental Body or Law applicable to Parent, Purchaser or any Sponsor
or any of their properties or assets as of the date hereof, other than in the
case of clauses (ii) and (iii), such conflicts, violations, defaults,
terminations or cancellations that would not reasonably be likely to have or
result in, individually or in the aggregate, a Purchaser Material Adverse
Effect.
 
(b) No consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification to, any Person or Governmental Body
is required on the part of Parent, Purchaser or any Sponsor in connection with
the execution, delivery and performance of this Agreement or the Purchaser
Documents, the compliance by Parent, Purchaser or any Sponsor with any of the
provisions hereof or thereof, the consummation of the transactions contemplated
hereby or thereby or the taking by Parent, Purchaser or any Sponsor of any other
action contemplated hereby or thereby, or for Parent, Purchaser or any Sponsor
to conduct the Business, except for (i) compliance with the applicable
requirements of the HSR Act and other Antitrust Laws, (ii) the entry of the
Confirmation Order, (iii) the entry of the Plan Sponsor Order, and (iv) such
other consents, waivers, approvals, Orders, Permits, authorizations,
declarations, filings and notifications, the failure of which to obtain or make
would not reasonably be likely to have or result in, individually or in the
aggregate, a Purchaser Material Adverse Effect.
 
5.4 Litigation.  There are no Legal Proceedings pending or, to the Knowledge of
Purchaser, threatened against Parent or Purchaser, before any Governmental Body,
nor is there any Order outstanding against Parent or Purchaser, except in each
case, for those that are not or those that would not reasonably be likely to
have or result in, individually or in the aggregate, a Purchaser Material
Adverse Effect or prevent, materially delay or materially impair the
consummation of the transactions contemplated by this Agreement.
 
5.5 Financial Advisors.  Other than Goldman, Sachs & Co., no Person has acted,
directly or indirectly, as a broker, finder or financial advisor for Parent or
its Affiliates in connection with the transactions contemplated by this
Agreement.  Neither Parent nor any of its Affiliates are obligated to pay any
fee or commission or like payment to any Person, other than Goldman, Sachs &
Co., in connection with the transactions contemplated by this Agreement (“Parent
Fee”).  For the avoidance of doubt, in no event shall the Company or any of its
Subsidiaries be obligated to pay a Parent Fee prior to the Closing.
 
5.6 Financial Capability.  Upon receipt of the proceeds from the Commitment
Letters (the “Financing”), (i) Purchaser has, and at the Closing will have,
sufficient funds available to pay the Purchase Price and any expenses incurred
by the Purchaser Entities in connection with the transactions contemplated by
this Agreement, (ii) Parent and Purchaser have, and at the Closing will have,
the resources and capabilities (financial or otherwise) to perform their
obligations hereunder, and (iii) Purchaser and Parent have not incurred any
obligation, commitment, restriction or Liability of any kind other than for
organizational expenses and performance of their obligations under this
Agreement, which would materially and adversely impair or affect such resources
and capabilities.  The Commitment Letters or Revolving Facility Commitment
Letter, if applicable pursuant to Section 7.5(b), are in full force and effect,
have not been amended, withdrawn or rescinded in any respect and are legal,
valid and binding obligations of the respective parties thereto.  No commitment
or other fees are payable by the Company under the Commitment Letters or
Revolving Facility Commitment Letter, if applicable pursuant to Section 7.5(b),
until the Closing Date occurs.  Except as set forth in the Commitments Letters,
Revolving Facility Commitment Letter, if applicable pursuant to Section 7.5(b),
there are no conditions to the consummation of the Financing or the financing
contemplated by the Revolving Facility Commitment Letter, as applicable, and,
subject to the satisfaction or waiver of the conditions precedent to the
obligations of Simmons Company, the Company, and Opco, as applicable, to
consummate the transactions contemplated by the Agreement, the Purchaser
Entities have no reason to believe that any condition set forth in the
Commitment Letters or the Revolving Facility Commitment Letter will not be
satisfied or waived prior to the Closing Date.
 
5.7 Stockholder Consent.  Requisite stockholders of AOT Bedding Holdings Corp.,
a Delaware corporation (“AOT”), have agreed to contribute their equity interests
in AOT to Parent in accordance with the Plan.
 
5.8 Claims.  No Purchaser Entity has any claim that may arise under the Secured
Debt Credit Agreement or the Senior Subordinated Notes.
 
5.9 Tax Filing Status.  Each of the Purchaser Entities is taxable as a
corporation for federal income tax purposes.
 
5.10 Condition of the Business.  Notwithstanding anything contained in this
Agreement to the contrary, the Purchaser Entities acknowledge and agree that
none of Simmons Company, the Company, Opco and their respective Subsidiaries is
making any representations or warranties whatsoever, express or implied, beyond
those expressly given by Simmons Company and the Company in Article IV hereof,
and the Purchaser Entities acknowledge and agree that, except for the
representations and warranties contained therein, the Business is being
transferred on a “where is” and, as to condition, “as is” basis.  Any claims the
Purchaser Entities may have for breach of representation or warranty shall be
based solely on the representations and warranties of the Company set forth in
Article IV hereof.  The Purchaser Entities further represent that neither the
Company nor any of its Affiliates nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding Simmons Company, the Company, Opco or
any of their respective Subsidiaries, the Business or the transactions
contemplated by this Agreement not expressly set forth in this Agreement, and
none of Simmons Company, the Company, any of its Affiliates or any other Person
will have or be subject to any liability to the Purchaser Entities or any other
Person resulting from the distribution to the Purchaser Entities or their
Representatives or the Purchaser Entities’ use of, any such information,
including any confidential memoranda distributed on behalf of the Company
relating to the Business or other publications or data room information provided
to the Purchaser Entities or their Representatives, or any other document or
information in any form provided to the Purchaser Entities or their
Representatives in connection with the sale of the Business and the transactions
contemplated hereby.  Subject to representations and warranties and other
provisions contained in this Agreement, the Purchaser Entities acknowledge that
they have conducted to their satisfaction, their own independent investigation
of the Business and, in making the determination to proceed with the
transactions contemplated by this Agreement, the Purchaser Entities have relied
on the results of their own independent investigation and on the representations
and warranties and other provisions contained in this Agreement.
 
VI.           BANKRUPTCY COURT MATTERS
 
6.1 Bankruptcy Court Filings.
 
(a) On the Petition Date, the Debtors shall file with the Bankruptcy Court a
motion seeking entry of the Plan Sponsor Order and the Debtors shall thereafter
pursue diligently the entry of the Plan Sponsor Order.  The Purchaser Entities
agree that they will promptly take such actions as are reasonably requested by
the Company to assist in obtaining entry of the Plan Sponsor Order.  In the
event the entry of the Plan Sponsor Order shall be appealed, the Company and the
Purchaser Entities shall use their commercially reasonable efforts to defend
such appeal, including opposing any stay requested in connection therewith.
 
(b) The Debtors shall give Parent and its Representatives reasonable advance
notice of, and opportunity to review and comment on, the “first day” motions and
any other motions, pleadings notices and other documents to be filed during the
Bankruptcy Proceeding (and any other Restructuring Documents) and shall consult
with Parent in good faith with respect to such comments.  None of the Debtors
shall be required to accept any such comments from Parent; provided, however,
that, except for actions taken consistent with this Agreement with respect to a
Superior Proposal, no motion or other pleading that would have the effect of
amending, modifying or supplementing the Plan, the Plan Sponsor Order or the
Confirmation Order, or that would have the effect of preventing the conditions
to the obligations of the parties under this Agreement to be timely satisfied or
delaying the Closing Date, shall be made without Purchaser Approval (as defined
in the Plan).
 
6.2 Competing Transactions.
 
(a) No Solicitation or Negotiation.  Each of the Debtors agrees that, except as
expressly permitted by this Section 6.2, neither of the Debtors, nor any of the
officers and directors of each such Debtor entity, shall, and that it shall
cause each such entity’s Representatives not to, directly or indirectly:
 
(A) initiate, solicit or encourage any inquiries or the making of any proposal
or offer that constitutes, or could reasonably be expected to lead to, any
Competing Transaction; or
 
(B) engage in, continue or otherwise participate in any discussions or
negotiations regarding, or provide any non-public information or data to any
Person relating to, any Competing Transaction; or
 
(C) otherwise facilitate any effort or attempt to make a Competing Transaction.
 
Notwithstanding anything in the foregoing to the contrary, prior to the time,
but not after, the Bankruptcy Court shall have entered the Confirmation Order,
the Company may, and may cause its Representatives to, (A) provide information
in response to a request therefor by a Person who has made an unsolicited bona
fide written proposal for a Competing Transaction, if any Debtor receives from
the Person so requesting such information an executed confidentiality agreement
on customary terms; it being understood that such confidentiality agreement need
not prohibit the making, or amendment, of a Competing Transaction; (B) engage or
participate in any discussions or negotiations with any Person who has made such
an unsolicited bona fide written proposal for a Competing Transaction; or (C)
after having complied with Section 6.2(c), approve, recommend, or otherwise
declare advisable or propose to approve, recommend or declare advisable
(publicly or otherwise), or enter into, such a Competing Transaction, if and
only to the extent that, (x) prior to taking any action described in clause (A),
(B) or (C) above, the board of directors or the Special Committee of the Company
determines in good faith after consultation with outside legal counsel that
failure to take such action, in light of the Competing Transaction and the terms
of this Agreement, would be inconsistent with the directors’ fiduciary duties
under applicable Law, and (y) in each such case referred to in clause (B) or (C)
above, the board of directors or the Special Committee of the Company has
determined in good faith based on the information then available and after
consultation with its financial advisor that such Competing Transaction either
constitutes a Superior Proposal or is reasonably likely to result in a Superior
Proposal; provided, that, notwithstanding anything herein to the contrary, the
board of directors or the Special Committee of the Company and their legal
counsel and financial advisor shall be permitted to engage or participate in
discussions (but for the avoidance of doubt not to share confidential
information except after making the determination required by clause (x) above
and in accordance with this Section 6.2) with any such Person who has made a
bona fide written proposal for a Competing Transaction for the purpose of making
a determination described in subsections (x) and/or (y) herein.
 
(b) Existing Discussions.  Subject to Section 6.1(a), each of the Debtors agrees
that it will, and will cause its Subsidiaries and their respective
Representatives to, immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any Competing Transaction.  Each of the Debtors agrees that it
will take commercially reasonable steps to promptly inform the individuals or
entities referred to in the first sentence hereof of the obligations undertaken
in this Section 6.2.  Each of the Debtors also agrees that it will take
commercially reasonable steps to promptly request each Person that has
heretofore executed a confidentiality agreement in connection with its
consideration of acquiring Simmons Company or the Company or any of its
Subsidiaries to return or destroy, in accordance with the terms of the
applicable confidentiality agreement, all confidential information heretofore
furnished to such Person by or on behalf of Simmons Company, the Company or any
of its Subsidiaries.
 
(c) Notice.  Each of the Debtors agrees that it will promptly (and, in any
event, within 48 hours) notify Parent if any inquiries, proposals or offers with
respect to a Competing Transaction are received by, any such information is
requested from, or any such discussions or negotiation are sought to be
initiated or continued with, any of Debtors or their Subsidiaries, or any of
their Representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any proposals or offers
(including, if applicable, copies of any written requests, proposals or offers,
including proposed agreements) and thereafter shall keep Parent informed, on a
current basis, of the status and terms of any such proposals or offers
(including any amendments thereto) and the status of any such discussions or
negotiations, including any change in any of the Debtors’ intentions as
previously notified.  Each of the Debtors shall notify Parent in writing if it
intends to enter into a definitive agreement with respect to a Superior
Proposal, attaching the most current version of such agreement (including any
amendments, supplements or modifications) to such notice, and shall, during the
five Business Day period following Parent’s receipt of such notice, offer to
negotiate with (and, if accepted, shall negotiate in good faith with), and shall
cause its respective financial and legal advisors to offer to negotiate with
(and, if accepted, to cause to negotiate in good faith with), Parent during the
five Business Day period in making adjustments to the terms and conditions of
this Agreement such that the Superior Proposal ceases to constitute a Superior
Proposal.
 
(d) For the avoidance of doubt, nothing herein shall prevent the Debtors from
complying with their obligations under the last paragraph of Section 1.1 of the
Restructuring Support Agreement.
 
6.3 Administrative Priority.  Subject to entry of the Plan Sponsor Order, the
Break-Up Fee, the Break-Up Fee Note and all other amounts due by Simmons Company
and the Company hereunder shall constitute an administrative expense of Debtors
under section 503(b) and section 507(a)(2) of the Bankruptcy Code.
 
6.4           Support of the Reorganization.  Each of the Purchaser Entities
shall (i) support, and not object to (or support any other person’s efforts to
oppose or object to), confirmation of the Plan or object to, or otherwise
commence any proceeding to oppose or alter, the Plan, the Disclosure Statement,
motions filed by the Debtors in connection therewith, or “first day” motions, or
any other documents or agreements to be executed or implemented in connection
with the Plan, or otherwise contemplated by the reorganization, each of which
documents and agreements shall be consistent in all material respects with this
Agreement (collectively, the “Restructuring Documents”), (ii) not vote for,
consent to, support or participate in the formulation of any plan of
reorganization other than the Plan, (iii) not directly or indirectly seek,
solicit, support, participate in or encourage any plan other than the Plan, or
any sale, proposal or offer of dissolution, winding up, liquidation,
reorganization, merger, reorganization or restructuring of the Debtors or any of
their subsidiaries that reasonably could be expected to prevent, delay or impede
the successful implementation of the reorganization as contemplated by the Plan
and the Restructuring Documents, and (iv) not take any other action not required
by law that is inconsistent with, or that would materially delay or impede
approval, confirmation or consummation of, the Plan, including supporting a sale
of assets under section 363 of the Bankruptcy Code.  For the avoidance of doubt,
notwithstanding anything herein to the contrary, each of the Purchaser Entities
shall have the right to object to or oppose any proposed amendments,
modifications or supplements to any Restructuring Documents that are
inconsistent with the terms and conditions of this Agreement or the Plan and to
enforce their rights hereunder or under the Restructuring Documents.
 
VII.           COVENANTS
 
7.1 Access to Information.  Each of the Debtors agrees that, prior to the
Closing Date, (i) Parent shall be entitled, through its officers, employees,
consultants and representatives (including its legal advisors and accountants),
to make such investigation of the properties, businesses and operations of the
Debtors and their respective Subsidiaries and the Business and such examination
of the books and records of the Debtors and their respective Subsidiaries and
the Business as it reasonably requests and to make extracts and copies of such
books and records and (ii) the Debtors will provide Parent reasonable access and
cooperation to plan for post-closing transition subject to reasonable
limitations so as to minimize disruption to operations, employees, suppliers and
customers, provided, however, that any provision of competitively sensitive
material should be subject to Section 7.3(a).  Any such investigation and
examination shall be conducted upon reasonable advance notice.  The obligations
of the Debtors and their respective Subsidiaries pursuant to this Section 7.1
shall be subject to restrictions under applicable Law.  The Debtors shall cause
their and their respective Subsidiaries’ respective officers, employees,
consultants, agents, accountants, attorneys and other Representatives to
cooperate with Parent and Parent’s Representatives in connection with such
investigation and examination, and Parent and its Representatives shall
cooperate with the Debtors and its Representatives and shall use their
commercially reasonable efforts to minimize any disruption to the Business.
 
7.2 Conduct of the Business Pending the Closing.  (a) Except (i) as required by
applicable Law, (ii) as otherwise expressly contemplated by this Agreement,
(iii) as provided in the Disclosure Statement or Plan, or (iv) with the prior
written consent of the Persons listed on Schedule 7.2(a)(iv) (which consent
shall not be unreasonably delayed, withheld or conditioned), during the period
from the date of this Agreement to the Closing, the Debtors shall and shall
cause each of their respective Subsidiaries to:
 
(A) continue to conduct the Business only in the Ordinary Course of Business;
and
 
(B) use their commercially reasonable efforts to preserve the present business
operations, organization and goodwill of the Business.
 
(b) Except (i) as set forth on Schedule 7.2(b), (ii) as required by applicable
Law, (iii) as otherwise expressly contemplated by this Agreement, (iv) as
provided in the Disclosure Statement or Plan, or (v) with the prior written
consent of Persons listed on Schedule 7.2(a)(iv) (which consent shall not be
unreasonably delayed, withheld or conditioned), during the period from the date
of this Agreement to the Closing, each of the Debtors shall not and shall cause
each of their respective Subsidiaries not to:
 
(A) (i) with respect to employees who are officers holding a position of Senior
Vice President or higher and, as applicable, directors, (X) increase any such
Person’s base salary, annual level of severance payments or employee benefits,
(Y) grant to such Person any bonus, benefit or other direct or indirect
compensation, except, in each case, as required by the terms of any existing
Employee Benefit Plan or any Contract listed on Schedule 7.2(b)(A)(i), or in
connection with the payment of relocation reimbursements, or (Z) enter into any
employment, deferred compensation, severance, bonus, retention, equity award or
similar Contract (or amend any such Contract), except as permitted under Section
7.2(a)(B) or as required by applicable Law from time to time in effect or as
required by the terms of any of the Employee Benefit Plans or Contracts listed
on Schedule 7.2(b)(A)(i),
 
(ii) with respect to employees who are not officers or are officers holding a
position lower than Senior Vice President, (X) increase any such Person’s base
salary by more than $50,000 per individual employee or 3% in the aggregate, (Y)
other than base salaries, increase the level of severance payments or employee
benefits or grant any bonus, benefit or other direct or indirect compensation to
any such Person, except in an amount that does not exceed $50,000 per individual
employee on an annual basis or $500,000 in the aggregate for all such employees,
or as required by the terms of any existing Employee Benefit Plan or Contract
listed on Schedule 7.2(b)(A)(ii), or in connection with the payment of
relocation reimbursements, or (Z) enter into any employment, deferred
compensation, severance, bonus, retention, equity award or similar Contract (or
amend any such Contract), except, in each case, where the amount of compensation
provided under such Contact is less than $150,000, or as required by applicable
Law from time to time in effect, or as required by the terms of any of the
Employee Benefit Plans or Contracts listed on Schedule 7.2(b)(A)(ii),
 
(iii) amend any Employee Benefit Plan to materially increase the coverage or
benefits available thereunder or create any new Employee Benefit Plan,
 
(iv) take any action to accelerate the vesting or payment, or fund or in any
other way secure the payment, of compensation or benefits under any Employee
Benefit Plan, to the extent not already provided in any such Employee Benefit
Plan,
 
(v) change any actuarial or other assumptions used to calculate funding
obligations with respect to any Employee Benefit Plan or to change the manner in
which contributions to such plans are made or the basis on which such
contributions are determined, except as may be required by GAAP,
 
(vi) forgive any loans to directors, officers or employees of the Company or any
of its Subsidiaries in an aggregate amount not to exceed $75,000;
 
(vii) terminate without cause the employment of key employees of the Debtors or
any of their Subsidiaries listed on Schedule 7.2(b)(A)(vii) (the “Key
Employees”); and
 
(viii) permit circumstances to exist that would allow any of the Key Employees
with an asterisk next to their name on Schedule 7.2(b)(A)(vii) to terminate
their employment with the Company or any of its Subsidiaries for good reason
under such Key Employee’s existing employment agreements with the Company or any
of its Subsidiaries;
 
provided that, notwithstanding the foregoing, nothing herein shall restrict or
limit the Company’s ability to establish, modify or make payments under any
sales incentive or other commission arrangements made in the Ordinary Course of
Business;
 
(B) make, change or rescind any material election relating to Taxes, settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, enter into
any closing agreement, waive or extend any statute of limitation with respect to
any material amount of Taxes, surrender any right to claim a refund of Taxes or
take any other similar action relating to the filing of any Tax Return or
payment of any material amount of Tax or, except as may be required by
applicable Law or GAAP, make any material change to any of its methods,
principles or practices of tax accounting, cash tax management practices, or
methods of reporting income or deductions for Tax from those employed in the
preparation of its most recent audited Financial Statements or Tax Returns, as
applicable;
 
(C) create, incur or subject any of its assets to any Lien, except for Permitted
Exceptions;
 
(D) other than in the Ordinary Course of Business, acquire any assets or stock
of any other Person (other than a wholly-owned Subsidiary of the Company) or
sell, assign, license, transfer, convey, lease or otherwise dispose of any of
its properties, licenses or assets (except for such licenses and assets that
relate to Intellectual Property, which shall be subject to Section 7.2(b)(I)
below) in an aggregate amount not to exceed $500,000, except pursuant to an
existing Contract specifically listed on the Schedule 7.2(b)(D) or inventory in
the Ordinary Course of Business;
 
(E) permanently close any plants or facilities, or conduct a “plant closing” or
“mass layoff” as such terms are defined under the WARN Act;
 
(F) other than with respect to the discharge or satisfaction of Liens or
Liabilities as they become due in the Ordinary Course of Business or Liens or
Liabilities arising under any inter-company Contract between the Company, Opco
or their respective wholly-owned subsidiaries, discharge or satisfy any Lien or
Liability in excess of $500,000, or cancel or compromise any material debt or
claim or waive or release any material right of Debtors, or;
 
(G) enter into any commitment, individually or in the aggregate, for capital
expenditures (other than capital expenditures that do not exceed the Company’s
2009 annual budget or 2010 plan, true, correct and complete copies of which have
been previously provided to the Purchaser Entities) in excess of $100,000 in the
aggregate (for the sake of clarity, any capital expenditure that is budgeted in
the Company’s 2009 annual budget, but that is not actually accrued within the
2009 fiscal year, shall be allowed to carry over into the 2010 fiscal year as if
such capital expenditure was described in the 2010 plan);
 
(H) other than in the Ordinary Course of Business, except as otherwise permitted
herein, (i) enter into, amend, supplement, waive, modify, terminate, or cancel
any Material Contract in any material respect, or (ii) designate any executory
contract or unexpired lease, in each case that is a Material Contract, for
rejection;
 
(I) waive, sell, assign, lease, license, transfer or otherwise dispose of, any
Intellectual Property rights material to the Business, enter into any Contract
or other commitment to restrict or limit any Intellectual Property other than in
the Ordinary Course of Business, or permit any material  Intellectual Property
that is subject to a registration or an application for registration to lapse,
be abandoned or canceled, expire or terminate, or fail to make any payments with
respect thereto when due; provided, however, that neither the expiration of a
patent on its scheduled expiration date nor the abandonment of an application
for registration of a trademark in connection with a third party opposition
proceeding, which the applicant, in its reasonable business judgment, has
determined it would be unlikely to prevail, shall be deemed a breach of the
foregoing;
 
(J) engage in any transaction with any employee, officer, director or Affiliate
of any Debtor or any such individual other than the payment of compensation and
benefits and the advancement and reimbursement of business expenses of
employees, officers and directors in the Ordinary Course of Business, including
payments to the independent members of the board of directors of any Debtor
serving in the capacity as board members and/or board committee members;
 
(K) issue or sell any capital stock or comparable equity interest, as
applicable, or any securities convertible into or exchangeable for any equity
interests, or effect any recapitalization, reclassification or similar change in
its capital stock or comparable equity interest, as applicable;
 
(L) amend its certificate of incorporation or other comparable organizational
document, as applicable;
 
(M) merge, consolidate or engage in any other similar transaction, other than
with a wholly-owned Subsidiary of the Company;
 
(N) declare, set aside or pay any dividend or other distribution (whether in
cash, stock or other property) on any of the capital stock or comparable equity
interest, as the case may be, or redeem or repurchase any of its capital stock
or comparable equity interest, as the case may be, other than (i) in either case
such capital stock or comparable equity interest held by the Company or one of
its wholly-owned Subsidiaries, (ii) cash distributions to any Parent Company in
amounts not to exceed $300,000 in the aggregate, consistent with prior practice
to the extent necessary to provide the Parent Company with sufficient cash to
pay their on-going operating expenses, (iii) cash distributions to any Parent
Company in amounts not to exceed $150,000 per Parent Company in connection with
the restructuring, liquidation or winding up of such Parent Company, (iv) cash
distributions to any Parent Company in the Ordinary Course of Business pursuant
to tax sharing agreements, or (v) cash distributed to any Parent Company to pay
any deductible required under D&O Policy in an amount not to exceed $100,000 per
claim or occurrence;
 
(O) cancel any material insurance policy (unless simultaneously replaced by a
comparable policy) or materially reduce the coverage provided by any existing
material insurance policy;
 
(P) settle or compromise any pending or threatened Legal Proceeding, the
settlement or compromise of which provide for covenants that restrict the
ability to conduct operations in the Ordinary Course of Business or which
involves an amount not covered by insurance in excess of $1,000,000 individually
or $2,000,000 in the aggregate;
 
(Q) except as required under GAAP, revalue any of its assets, including writing
down the value of inventory or writing off notes or Accounts Receivable, other
than in the Ordinary Course of Business and other than in connection with any
inter-company Contract between the Company, Opco or their respective
wholly-owned subsidiaries;
 
(R) amend the DIP Facility in a manner that prevents the consummation of the
transactions contemplated hereunder or that would have the effect of permitting
less than $10,000,000 to be undrawn and available under the DIP Facility at any
time for more than five (5) consecutive Business Days; or
 
(S) agree to do anything prohibited by this Section 7.2(b).
 
(c) Prior to making any written or oral communication that may be inconsistent
with or not contemplated by the Communications Plan to the directors, officers
or employees of the Debtors and their respective Subsidiaries pertaining to
compensation or benefit matters that are affected by the transactions
contemplated by this Agreement, the Debtors shall provide the Purchaser Entities
with a copy of the intended communication, the Purchaser Entities shall have a
reasonable period of time to review and comment on the communication, and the
Purchaser Entities and the Company shall use commercially reasonable efforts to
cooperate in good faith in providing any such communication.
 
(d) The Debtors shall use their reasonable best efforts, and the Purchaser
Entities shall cooperate with the Debtors, to obtain at the earliest practicable
date all consents and approvals required to consummate the transactions
contemplated by this Agreement; provided, however, that the Debtors shall not be
required to offer or pay any consideration in order to obtain any such consents
or approvals.
 
7.3 Regulatory Approvals.
 
(a) Parent and the Company have made their respective filings under the HSR Act
and shall (i) make or cause to be made all additional filings required of each
of them or any of their respective Affiliates under the HSR Act or all filings
under other Antitrust Laws with respect to the transactions contemplated hereby
as promptly as practicable, (ii) subject to the other provisions of this Section
7.3, comply, at the earliest practicable date, with any request under the HSR
Act or other Antitrust Laws for additional information, documents or other
materials received by each of them or any of their respective subsidiaries from
Federal Trade Commission (the “FTC”), the Antitrust Division of the United
States Department of Justice (the “Antitrust Division”) or any other
Governmental Body in respect of such filings or such transactions, and
(iii) cooperate with each other in connection with any such filing (including,
to the extent permitted by applicable Law, providing copies of all such
documents to the non-filing parties prior to filing and considering all
reasonable additions, deletions or changes suggested in connection therewith)
and in connection with resolving any investigation or other inquiry of any of
the FTC, the Antitrust Division or other Governmental Body under any Antitrust
Laws with respect to any such filing or any such transaction.  Each such party
shall use reasonable best efforts to furnish to each other all information
required for any application or other filing to be made pursuant to any
applicable Law in connection with the transactions contemplated by this
Agreement.  Each such party shall promptly inform the other parties hereto of
any oral communication with, and provide copies of written communications with,
any Governmental Body regarding any such filings or any such transaction.  No
party hereto shall independently participate in any formal meeting with any
Governmental Body in respect of any such filings, investigation, or other
inquiry without giving the other parties hereto prior notice of the meeting and,
to the extent permitted by such Governmental Body, the opportunity to attend
and/or participate.  Subject to applicable Law, the parties hereto will consult
and cooperate with one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto relating to proceedings under the
HSR Act or other Antitrust Laws.  The Company and Parent may, as each deems
advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 7.3 as “outside counsel
only.”  Such materials and the information contained therein shall be given only
to the outside legal counsel of the recipient and will not be disclosed by such
outside counsel to employees, officers or directors of the recipient, unless
express written permission is obtained in advance from the source of the
materials (the Company or Parent, as the case may be).
 
(b) Subject to the other provisions of this Section 7.3 and the provisions of
Section 7.4, each of Parent and the Company shall use its reasonable best
efforts to resolve such objections, if any, as may be asserted by any
Governmental Body with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other United
States federal or state or foreign statutes, rules, regulations, orders,
decrees, administrative or judicial doctrines or other laws that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, the “Antitrust Laws”).  In
connection therewith, if any Legal Proceeding is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as being
in violation of any Antitrust Law, each of Parent and the Company shall
cooperate and use its reasonable best efforts to contest and resist any such
Legal Proceeding, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement, including by
pursuing all available avenues of administrative and judicial appeal, litigation
and all available legislative action, unless, by mutual agreement, Parent and
the Company agree that litigation is not in each of their respective best
interests.  Subject to the other provisions of this Section 7.3, each of Parent
and the Company shall use its reasonable  best efforts to take such action as
may be required to cause the expiration of the notice periods under the HSR Act
or other Antitrust Laws with respect to such transactions, as promptly as
possible after the execution of this Agreement.  In connection with and without
limiting the foregoing, and subject to the Company’s and Parent’s right to
terminate the Agreement and the other terms of this Section 7.3, each of Parent
and the Company agrees to use its reasonable best efforts, to take promptly any
and all steps necessary to avoid or eliminate each and every impediment under
any Antitrust Laws that may be asserted by any Federal, state and local and
non-United States antitrust or competition authority, so as to enable the
parties to close the transactions contemplated by this Agreement as
expeditiously as possible.
 
7.4 Further Assurances.  Subject to the other provisions of this Agreement, each
of Parent and the Debtors shall use their reasonable best efforts to (i) take
all actions necessary or appropriate to consummate the transactions contemplated
by this Agreement at the earliest practicable date and (ii) cause the
fulfillment at the earliest practicable date of all of the conditions to their
respective obligations to consummate the transactions contemplated by this
Agreement; provided, however, that nothing in this Agreement, including, without
limitation, Section 7.3 and this Section 7.4, shall require, or be construed to
require, Parent to proffer to, or agree to, sell, divest, lease, license,
transfer, dispose of or otherwise encumber or hold separate and agree to sell,
divest, lease, license, transfer, dispose of or otherwise encumber before or
after the Effective Time, any assets, licenses, operations, rights, product
lines, businesses or interest therein of Parent, the Company or any of their
respective Affiliates (or to consent to any sale, divestiture, lease, license,
transfer, disposition or other encumberment by the Company of any of its or its
Affiliates’ assets, licenses, operations, rights, product lines, businesses or
interest therein or to any agreement by the Company or any of its Affiliates to
take any of the foregoing actions) or to agree to any material changes
(including, without limitation, through a licensing arrangement) or restriction
on, or other impairment of Parent’s ability to own or operate, any of any such
assets, licenses, operations, rights, product lines, businesses or interests
therein or Parent’s ability to vote, transfer, receive dividends or otherwise
exercise full ownership rights with respect to the stock of Purchaser or the
Company.
 
7.5 Financing Arrangements.
 
(a) The Purchaser Entities shall and shall cause their Affiliates and
Representatives to use their commercially reasonable efforts to take or cause to
be taken all actions and to do, or cause to be done, all that is necessary,
proper or advisable to (i) arrange and obtain the Exit Financing on terms and
conditions, taken as a whole, no less favorable to the Company than those
described in the Exit Financing Commitments; (ii) enter into definitive
agreements with respect thereto on substantially the same terms and conditions
contained in the Exit Financing Commitments, which agreements shall be in effect
as promptly as practicable after the date hereof, but in no event later than the
Closing; (iii) satisfy on a timely basis all conditions applicable to the
Purchaser Entities in such definitive agreements that are within their control;
(iv) consummate the Exit Financing no later than the Closing; (v) if necessary
for Closing, procure commitments from one or more alternative financing sources,
including persons not party to the Exit Financing Commitments, to assume the
obligations, including the Commitments, of any Defaulting Commitment Party or
any Adverse Commitment Party under the Exit Financing Commitments, provided that
such commitments can be obtained on terms and conditions that are no less
favorable, taken as a whole, to the Purchaser Entities than the terms and
conditions of the Commitments being replaced; and (vi) if necessary for Closing,
enforce their rights under the Exit Financing Commitments, including by means of
requiring any Defaulting Commitment Party or Adverse Commitment Party, as
applicable, to assign its Commitment to another Commitment Party (with the
consent of such Commitment Party who is the assignee of such Commitment) or any
other reputable entity that agrees, in writing, to assume all of such Commitment
(it being understood that Purchaser shall not be required to pay any fee or
other consideration in connection with such assignment unless Purchaser shall so
agree in its sole discretion) and/or by securing specific performance.  Unless
Purchaser and the Company otherwise agree in writing, Purchaser shall not
terminate the Exit Financing Commitments unless (i) Purchaser has given at least
ten (10) days advance written notice to the Company of such termination and (ii)
Purchaser shall have satisfied its obligations under this Section 7.5.  In the
event that any portion of the Exit Financing becomes unavailable in the manner
or from the sources contemplated in the Exit Financing Commitments, (A) the
Purchaser Entities shall promptly notify the Company in writing, and (B) the
Purchaser Entities shall use their commercially reasonable efforts to arrange to
obtain alternative financing from alternative sources, on terms and conditions,
taken as a whole, that are no less favorable to the Purchaser Entities than
those contained in the Exit Financing Commitments that will enable the Purchaser
Entities to consummate the transactions contemplated by this Agreement, as
promptly as practicable following the occurrence of such event (but in no event
later than the Termination Date), including entering into definitive agreements
with respect thereto (such definitive agreements entered into pursuant to this
‎Section 7.5‎ being referred to as the “Financing Agreements”).  The Purchaser
Entities shall, and shall cause their respective Affiliates and Representatives
to use their commercially reasonable efforts to, comply with the terms, and
satisfy on a timely basis the conditions applicable to such parties in the Exit
Financing Commitments, any alternative financing commitments, the Financing
Agreements and any related fee and engagement letters.  The Purchaser Entities
shall refrain (and shall cause their Affiliates and Representatives to refrain)
from taking or omitting to take, directly or indirectly, any action that would
reasonably be expected to result in a failure of any condition contained in the
Exit Financing Commitments or Financing Agreements that is within their
control.  The Purchaser Entities shall (x) furnish complete, correct and
executed copies of the Financing Agreements promptly upon their execution, (y)
give the Company prompt notice of any material breach by any party of any of the
Exit Financing Commitments, any alternative financing commitment or the
Financing Agreements of which the Purchaser Entities become aware or any
termination thereof, and (z) otherwise keep the Company reasonably informed of
the status of the Purchaser Entities’ efforts to arrange the Exit Financing (or
any replacement thereof).  The Purchaser Entities will not consent to the
amendment, supplementation, modification or waiver of, and will not waive their
rights under the Exit Financing Commitments or Financing Agreements without the
Debtors’ consent or an order of a court of competent jurisdiction, if the effect
of such amendment, supplementation, modification or waiver would reasonably be
expected to have the effect of preventing the consummation of the Financing on
or before the Closing or delaying the Effective Date.
 
(b) At least 10 days prior to the Petition Date, the Sponsor (or the Purchaser
Entities) shall have executed, accepted and delivered to the Company a binding
and enforceable commitment letter (such commitment letter, including any term
sheets or annexes attached thereto, a “Revolving Facility Commitment Letter”)
from a financial institution reasonably satisfactory to the Company pursuant to
which such financial institution shall commit to provide a revolving credit
facility of not less than $50,000,000 to the Company and its Subsidiaries on the
Closing Date (the “Revolving Facility”), which Revolving Facility Commitment
Letter shall be in form and substance reasonably satisfactory in all respects to
the Company.  The Company has reviewed the Revolving Facility Commitment Letter
and agrees that such letter is reasonably satisfactory for the purposes hereof.
 
(c) Each of the Purchaser Entities agrees to reasonably communicate with and
inform the Debtors regarding the Purchaser Entities’ communications and
marketing efforts.  Each of the Purchaser Entities shall provide the Debtors
with reasonable updates on the status of its discussions with the Credit Parties
at such times as the Debtors shall reasonably request.  In no event shall the
Company, Opco or their respective Subsidiaries, or any of their respective
Affiliates, be required to pay any commitment or similar fee or incur any
liability in connection with the Exit Facilities or the Revolving Facility prior
to the Closing.
 
(d) Notwithstanding anything to the contrary herein, the Debtors may (i) provide
information mutually agreed upon in advance with the Purchaser Entities in
response to unsolicited inquiries from the Credit Parties in support of the
transactions contemplated by this Agreement and the Plan, (ii) provide
information required by Contracts with or for the benefit of the Senior Note
Debtholders, the Secured Debtholders, the Holdco Debtholders and the agents and
lenders under the DIP Facility in existence on the date hereof or (iii) provide
information required by Law; provided that if the Debtors determine that they
are required to provide such information pursuant to clause (iii), the Debtors
agree to provide the Purchaser Entities, to the extent legally permissible, with
prior notice, and to consult with the Purchaser Entities with respect to such
disclosure.  Subject to the provisions of this Section 7.5(d) and (e), the
Debtors shall not otherwise discuss the Exit Facilities with the Credit Parties
or any person known by the Debtors to be potential lenders or investors in the
Exit Facilities without the prior consent of Parent, which consent shall not be
unreasonably delayed, withheld or conditioned.
 
(e) Prior to the Closing, promptly upon reasonable request by the Purchaser
Entities or their Representatives, the Debtors shall, and shall use commercially
reasonable efforts to cause their respective Subsidiaries and Representatives
to, provide reasonable cooperation with and assist the Purchaser Entities in
connection with the arrangement of the Exit Facilities and the Revolving
Facility.  Without limiting the generality of the foregoing, the Debtors shall,
and shall use commercially reasonable efforts to cause their respective
Subsidiaries and Representatives to, as promptly as practicable upon reasonable
request by the Purchaser Entities or their Representatives, (i) furnish any
financial statements, schedules or other financial data relating to the Debtors
and their respective Subsidiaries to the initial purchasers of, and/or lenders
or potential lenders under the Exit Facilities or Revolving Facility (each, a
“Credit Party” and collectively, the “Credit Parties”) that execute a
confidentiality agreement in form and substance reasonably satisfactory to the
Company, as may be reasonably requested by the Purchaser Entities, or are
informed by the Purchaser Entities or the Company of the confidential nature of
such information; (ii) use commercially reasonable efforts to obtain the
cooperation and assistance of their counsel in providing legal opinions and
other services as may be reasonably required by the Exit Facilities and the
Revolving Facility; (iii) arrange for their senior officers to provide
reasonable and customary representations to auditors, attend meetings with
prospective lenders, investors and rating agencies, other meetings and due
diligence sessions, in each case, either in person or telephonically, at times
and places (as applicable) to be mutually agreed and for reasonable durational
periods; (iv) use commercially reasonable efforts to cause their independent
accountants to provide reasonable assistance and cooperation to the Purchaser
Entities, including participating in drafting sessions and accounting due
diligence sessions, providing consent to the Purchaser Entities to use their
audit reports relating to the Debtors and their respective Subsidiaries and
providing customary “comfort letters” and agreed procedures letters; (v) provide
reasonable assistance and cooperation with the creation and maintenance of a
valid and perfected security interest which shall become effective upon the
Closing in the properties and the other assets of the Debtors and their
Subsidiaries for the benefit of any lenders participating in the Exit Facilities
or the Revolving Facilities and to enable such lenders to exercise and enforce
their rights and remedies with respect to the properties and other assets of the
Debtors and their Subsidiaries on and after the Closing solely to the extent
required pursuant to the terms of the applicable definitive financing documents;
(vi) provide reasonable assistance in the negotiation of, and execute and
deliver, definitive financing documents, including pledge and security
documents, and certificates, legal opinions, documents and information necessary
to satisfy the requirements of Rule 144A(d)(4) promulgated under the Securities
Act of 1933, as amended, management representation letters or other documents,
in each case, to the extent reasonably requested by the Purchaser Entities or
reasonably required to facilitate the pledging of collateral upon the Closing;
(vii) provide reasonable access to the books and records, their officers,
directors, employees, agents and other Representatives to Credit Parties that
execute a confidentiality agreement in form and substance reasonably
satisfactory to the Company, or are informed by the Purchaser Entities or the
Company of the confidential nature of such information; (viii) use commercially
reasonable efforts to assist with the preparation of materials for rating agency
presentations, offering documents, private placement memoranda, bank information
memoranda, prospectuses and similar documents necessary, proper or advisable in
connection with the Exit Facilities and the Revolving Facility; (ix) reasonably
cooperate with the marketing and syndication efforts of the Purchaser Entities
and their financing sources for the Exit Facilities and the Revolving Facility,
including but not limited to, using commercially reasonable efforts to take or
refrain from taking, as the case may be, such actions with respect to the
syndication of the Revolving Facility pursuant to the Revolving Facility
Commitment Letter; and (x) take all corporate actions reasonably requested by
the Purchaser Entities or the Credit Parties, prior to the Closing or the
termination of this Agreement, to permit or facilitate consummation of the Exit
Facilities and the Revolving Facility, including any actions necessary to permit
the issuance of the Exit Notes as contemplated by the Exit Financing
Commitments.  Notwithstanding the foregoing, nothing in this Section 7.5(e)
shall require compliance by the Debtors, their respective Subsidiaries or any of
the Representatives with the foregoing if such compliance would reasonably be
expected to cause any breach by the Debtors of this Agreement, cause any closing
condition set forth in Article VIII to fail to be satisfied, or create or
otherwise result in a binding commitment by the Debtors or their respective
Subsidiaries, or any of their respective Affiliates which becomes effective
prior to Closing.
 
7.6 Publicity.  The initial press release announcing this Agreement shall be in
the form expressly agreed to by the Company and Parent.  None of the parties
hereto shall publish any press release or similar statement concerning this
Agreement or the transactions contemplated hereby without obtaining the prior
written approval of the other party hereto, which approval will not be
unreasonably withheld, delayed or conditioned, unless, in the sole judgment of
Parent or the Company, as the case may be, disclosure is otherwise required by
applicable Law, or by the Bankruptcy Court with respect to filings to be made
with the Bankruptcy Court, in connection with this Agreement, provided that the
party intending to make such release shall use its commercially reasonable
efforts consistent with such applicable Law or Bankruptcy Court requirement to
consult with the other party with respect to the text thereof.
 
7.7 Supplementation and Amendment of Schedules.  The Debtors may, at their
option, include in the Disclosure Letter items that are not material, and such
inclusion, or any references to dollar amounts, shall not be deemed to be an
acknowledgement or representation that such items are material, to establish any
standard of materiality or to define further the meaning of such terms for
purposes of this Agreement.  From time to time prior to the Closing, the Debtors
shall have the right to supplement or amend the Disclosure Letter with respect
to any matter hereafter arising or discovered after the delivery of the
Disclosure Letter pursuant to this Agreement, provided, however, that any such
supplement or amendment shall be disregarded for purposes of determining the
satisfaction of Parent’s conditions to Closing pursuant to Section 8.1.
 
7.8 Financial Statements.  The Debtors shall deliver to the Purchaser Entities
(a) within twenty-five days after the end of each month hereafter the unaudited
consolidated balance sheet of Simmons Company and the related unaudited
consolidated statements of operations and changes in cash flows as of and for
each month prior to the Closing Date and (b) concurrently with delivery to the
lenders under the Secured Debt Credit Agreement and the DIP Facility, all
reports and forecasts of the Company or its Subsidiaries delivered to the
Company’s or such Subsidiaries’ lenders under the Secured Debt Credit Agreement
and the DIP Facility.  Such financial statements shall (i), except for the
adoption of new accounting standards required by GAAP, be prepared on a basis
consistent with the most recent audited Financial Statements, and (ii) be
subject to normal year-end or quarter-end adjustments.  In addition, as promptly
as practicable upon Parent’s reasonable request from time to time, the Debtors
shall deliver to the Purchaser Entities a flash sales report for the Company and
its Subsidiaries for the period or periods requested by Parent.
 
7.9 Notification of Certain Matters.  Prior to the Closing, each of Parent and
the Debtors shall give prompt written notice to the other party of (a) the
existence or occurrence, to the Knowledge of such party, of any Purchaser
Material Adverse Effect or Company Material Adverse Effect, as applicable, any
inaccuracy in any material respect of any representation or warranty of Parent,
on the one hand, or Simmons Company, the Company or Opco, on the other hand,
contained in this Agreement or in any other Purchaser Document or Company
Document, as applicable, at any time from the date of this Agreement to the
Closing that would rise to failure of a condition precedent in Article VIII, as
applicable, and that cannot be cured as of the Closing; (b) the failure of the
Purchaser Entities, or the Debtors, as applicable, to comply with or satisfy in
any material respect any covenant to be complied with by it hereunder; and (c)
unless prohibited by Law, any written notice or other written communication from
any Governmental Body in connection with the transactions contemplated by this
Agreement.
 
7.10 Medical Plan.  For a period of one year following the Closing Date (the
“Transition Period”), Parent shall cause the Company and its Subsidiaries to
continue in effect the medical plans of the Company in effect as of the Closing
Date.  Following the Transition Period, Parent shall provide a medical plan so
as to ensure uninterrupted coverage of all Employees (the “Purchaser Medical
Plan”).  The Purchaser Medical Plan shall grant credit for amounts paid
(including any deductibles and out of pocket expenses) by participants under the
Employee Benefit Plans during the applicable plan year during the Transition
Period, and shall waive any pre-existing conditions and waiting periods to the
extent such pre-existing conditions were covered (and such waiting periods were
satisfied) under the applicable Employee Benefit Plan.
 
7.11 Past Service Credit.  Parent agrees that, with respect to all of the
Company’s, its Subsidiaries’ or their respective employee benefit programs and
arrangements, as applicable, covering or otherwise benefiting any of the
Employees on or after the Closing Date, including during the Transition Period,
service with Debtors and its Subsidiaries shall be counted for purposes of
determining any period of eligibility to participate or to vest in benefits,
including vacation rights, provided under such programs and arrangements.
 
7.12 Severance Pay.  Parent shall, and shall cause the Company and its
Subsidiaries to, maintain during the Transition Period severance pay plans or
other severance arrangements pursuant to severance agreements providing
substantially the same severance pay benefits to each Employee as provided under
the severance pay plans or severance agreements described in Schedule 7.12.
 
7.13 Continuation of Cash Compensation and Employee Benefits.  Parent shall, and
shall cause Simmons Company, the Company and its Subsidiaries to, during the
Transition Period, maintain the Employee Benefit Plans listed on Schedule 7.13
and provide each Employee with compensation (including base salary, wages, and
non-equity incentive compensation opportunities) at no less than the level as in
effect as of the Closing and employee benefits that are substantially comparable
in the aggregate as are in effect as of the Closing Date, provided, however,
that nothing herein will prohibit or otherwise affect the right of any Purchaser
Entity or any Debtor to terminate or amend any Employee Benefit Plans after the
Closing in accordance with the terms thereof and applicable Laws if and to the
extent that Parent determines in good faith that such decrease is consistent
with changes in its benefit plans generally and such action does not
discriminate against any Employees.  Notwithstanding the foregoing, nothing
contained herein shall (a) be treated as an amendment of any particular Employee
Benefit Plan, (b) give any third party any right to enforce the provisions of
Sections 7.10 to 7.15 or (c) obligate Parent, the Company or any of their
Affiliates to (i) maintain any particular Employee Benefit Plan except as may be
required by this Agreement or (ii) retain the employment of any particular
employee.
 
7.14 Vacation.  Parent shall, and, during the Transition Period, shall cause the
Company and its Subsidiaries to, provide any Employees with paid time off days
equal to all accrued but unused paid time off days earned prior to the Closing.
 
7.15 COBRA.  Parent shall be responsible for satisfying any obligations to
provide continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”) with respect to any “qualified
event” which occurs either prior to or after the Closing, subject to Section
7.16 of this Agreement.
 
7.16 Excluded Employee Benefits Liabilities.  Notwithstanding anything in this
Agreement which may be to the contrary, the parties hereto agree and acknowledge
that no Liability of Bedding Superholdco Incorporated or any of the Debtors with
respect to or resulting from the following shall transfer to any Purchaser
Entity or remain with Simmons Company, the Company and its Subsidiaries, and
neither the Purchaser Entities nor any of Simmons Company, the Company and its
subsidiaries shall have any Liability or responsibility with respect to any
equity incentive plans, including but not limited to the Third Amended and
Restated Simmons Holdco, Inc. Equity Incentive Plan, and any stock option,
restricted stock or other equity agreements.
 
7.17 Characterization of Transactions.  Parent and the Debtors shall
characterize the transactions contemplated by this Agreement for income tax
purposes as contemplated by the Plan.
 
7.18 Indemnification; Exculpation and Insurance.
 
(a) From and after the Closing Date, the Purchaser Entities shall indemnify,
defend and hold harmless, to the fullest extent permitted under applicable Law,
the individuals who on or prior to the Closing Date were directors, officers or
employees of any Debtor and their direct or indirect Subsidiaries (collectively,
the “Indemnitees”) with respect to all acts or omissions by them in their
capacities as such or taken at the request of or with the knowledge of the
Company, any other Debtor or any of their direct or indirect Subsidiaries at any
time prior to the Closing Date.  The Purchaser Entities agree that all rights of
the Indemnitees to indemnification and exculpation from liabilities for acts or
omissions occurring on or prior to the Closing Date as provided in the
respective certificate of incorporation or by-laws or other comparable
organizational documents of each Debtor or their direct or indirect Subsidiaries
as now in effect, shall survive the Closing Date and shall continue in full
force and effect in accordance with their terms.  In addition, the Purchaser
Entities shall pay the expenses of any Indemnitee under this Section 7.18 which
are incurred in connection with any Claim (as defined below) to the fullest
extent permitted under applicable Law, provided that the person to whom expenses
are advanced provides an undertaking to repay such advances if it is ultimately
determined that such person is not entitled to indemnification; and provided,
further, that any determination required to be made with respect to whether an
Indemnitee’s conduct complies with the standards set forth under applicable Law
and the applicable organizational documents of the Debtors or their direct or
indirect Subsidiaries, shall be made by independent legal counsel selected by
the Purchaser Entities and mutually acceptable to such Indemnitee.
 
(b) The Purchaser Entities, from and after the Closing Date, shall cause (i) the
certificate of incorporation and by-laws or comparable organizational documents
of each Debtor and its direct or indirect Subsidiaries to contain provisions no
less favorable to the Indemnitees with respect to limitation of certain
liabilities of directors, officers, employees and agents and indemnification
than are set forth as of the date of this Agreement in the certificate of
incorporation and by-laws or other comparable organizational documents of such
Debtor and its direct or indirect Subsidiaries, except as required by Law, and
(ii) the certificate of incorporation and by-laws or comparable organizational
documents of each Debtor and its direct or indirect Subsidiaries to contain the
current provisions regarding indemnification of directors, officers, employees
and agents which provisions in each case shall not be amended, repealed or
otherwise modified in a manner that would adversely affect the rights thereunder
of the Indemnitees, except as required by Law.
 
(c) Any Indemnitee wishing to claim indemnification under this Section 7.18 for
any actual or threatened investigation, litigation, claim, administrative
hearing or proceeding (each, a “Claim”) relating to any acts or omissions
covered under this Section 7.18, upon learning of any such Claim, shall promptly
notify the Purchaser Entities thereof, but the failure to so notify shall not
relieve the Purchaser Entities of any liability it may have to such Indemnitee,
except to the extent such failure materially prejudices the indemnifying
party.  In the event of any such Claim, (i) the Purchaser Entities shall have
the right to assume the defense thereof and the Purchaser Entities shall not be
liable to such Indemnitee for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnitee in connection with the defense
thereof, except that if the Purchaser Entities elect not to assume such defense
or counsel for the Indemnitees advises that there are issues which raise
conflicts of interest between the Purchaser Entities and the Indemnitees, the
Indemnitees may retain counsel satisfactory to them, and the Purchaser Entities
shall pay all reasonable fees and expenses of such counsel for the Indemnitees;
provided, however, that the Purchaser Entities shall be obligated pursuant to
this Section 7.18(c) to pay for only one firm of counsel for all Indemnitees in
any jurisdiction unless the use of one counsel of such Indemnitees would present
such counsel with a conflict of interest, provided that the fewest number of
counsels necessary to avoid conflicts of interest shall be used; (ii) the
Indemnitees will cooperate in the defense of any such matter; and (iii) the
Purchaser Entities shall not be liable for any settlement effected without their
prior written consent; and provided, further, that the Purchaser Entities shall
not have any obligation hereunder to any Indemnitee if and when a court of
competent jurisdiction shall ultimately determine, and such determination shall
have become final, that the indemnification of such Indemnitee in the manner
contemplated hereby is prohibited by applicable Law.
 
(d) Each of the Purchaser Entities and the Indemnitees shall cooperate, and
cause their respective Affiliates to cooperate, in the defense of any Claim and
shall provide access to properties and individuals as reasonably requested and
furnish or cause to be furnished records, information and testimony, and attend
such conferences, discovery proceedings, hearings, trials or appeals, as may be
reasonably requested in connection therewith.
 
(e) For the six-year period commencing immediately upon the Closing Date, the
Purchaser Entities shall maintain in effect the directors’ and officers’
liability insurance of Bedding Superholdco Incorporated (f/k/a Simmons Holdco,
Inc.) and its direct and indirect Subsidiaries in effect on the date hereof
covering acts or omissions occurring prior to the Closing Date with respect to
those persons who are covered on the date hereof (the “Current D&O Policy”) or
the Purchaser Entities may, at their election, substitute for the Current D&O
Policy director and officers liability policies of a reputable insurance company
the terms of which, including coverage and amount, are no less favorable to such
directors and officers than the Current D&O Policy; provided, however, that in
no event shall the Purchaser Entities expend for such policies an annual premium
in excess of 300% of the annual premium most recently paid by the Company for
such coverage (such amount, the “D&O Policy Tail Amount”); provided, further,
that if the annual premiums of such insurance coverage exceed such amount, the
Purchaser Entities shall obtain a policy with the greatest coverage available
for a cost not exceeding such amount.
 
(f) The provisions of this Section 7.18:  (i) are intended to be for the benefit
of, and shall be enforceable by, each Indemnitee, his or her heirs and his or
her representatives; and (ii) are in addition to, and not in substitution for,
any other rights to indemnification or contribution that any such person may
have by Contract or otherwise.
 
(g) In the event that the Purchaser Entities or any of their successors or
assigns (i) consolidates with or merges into any other person and is not the
continuing or surviving corporation or entity of such consolidation or merger;
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall be
made so that the successors and assigns of such Purchaser Entity shall assume
all of the obligations thereof set forth in this Section 7.18.
 
(h) The obligations of the Purchaser Entities under this Section 7.18 shall not
be terminated or modified in such a manner as to adversely affect any Indemnitee
to whom this Section 7.18 applies without the consent of the affected Indemnitee
(it being expressly agreed that the Indemnitees to whom this Section 7.18
applies shall be third party beneficiaries of this Section 7.18).
 
7.19 Restructuring Expense Forecast.  Attached as Exhibit D is the initial
budget for Restructuring Expenses to be incurred from June 28, 2009 through
December 26, 2009 (as revised pursuant hereto, the “Restructuring Expense
Forecast”).  The Debtors shall provide to the Purchaser Entities a revised
Restructuring Expense Forecast on or prior to the first calendar day of each
month after the date hereof and prior to the Closing Date, including projected
Restructuring Expenses by the categories identified in Exhibit D for a rolling
three fiscal month period and such other available detail as the Purchaser
Entities shall reasonably request.  The Debtors shall not incur Restructuring
Expenses other than those it reasonably believes are reasonably necessary or
appropriate to consummate the transactions contemplated by this
Agreement.  Notwithstanding any contrary provision of this Agreement, none of
the Debtors nor any of their Subsidiaries shall, without the prior written
consent of Parent, (a) increase the aggregate amount of fees paid to any
financial advisor to the Debtors or any creditor or class of creditors set forth
on Schedule 7.19 from the amounts set forth therein or (b) make any payment to
any Affiliate (other than the Debtors and their Subsidiaries) not expressly
listed on the initial Restructuring Expense Forecast on Exhibit D or
contemplated by this Agreement.
 
7.20 Certain Tax Matters.
 
(a)  The Debtors shall deliver to Parent all income Tax returns to be filed by
the Debtors or any of their Subsidiaries prior to the Closing Date no later than
ten (10) days prior to the date for filing such returns.  In the event of any
disagreement with respect to the manner in which any item is reflected upon any
such return, the Debtors and Parent shall cooperate in good faith to reach an
agreement with respect to such item; provided that if the Debtors and Parent are
unable to reach an agreement, the determination of the Debtors shall control.
 
(b) In the event that a party hereto proposes changes to the structure of the
transactions contemplated hereby or other actions to be taken by the parties
that would have the effect of rendering such transactions more tax-efficient for
the Company and its Subsidiaries prior to, at or after Closing, each other party
shall consider such proposal in good faith, provided that no party hereto shall
be required by this Section 7.20 to make any change or take any action not
required hereunder or under applicable law which would adversely affect the
rights or interests of such party, the Company or any of its Subsidiaries.
 
VIII.           CONDITIONS TO CLOSING
 
8.1 Conditions Precedent to Obligations of Parent.  The obligation of Parent to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by Parent in whole or in part to
the extent permitted by applicable Law):
 
(a) the representations and warranties of Simmons Company, the Company and Opco
set forth in this Agreement (without giving effect to any materiality or Company
Material Adverse Effect qualifications set forth therein) shall be true and
correct at and as of the Closing Date, (except to the extent such
representations and warranties expressly relate to an earlier date in which case
such representations and warranties shall be true and correct on and as of such
earlier date) except for any failures of the representations or warranties to be
so true and correct that, taken together, do not result in or constitute a
Company Material Adverse Effect, and Parent shall have received a certificate
signed by a senior executive officer of the Company, dated the Closing Date, to
the foregoing effect;
 
(b) the Debtors shall have performed and complied in all material respects with
all obligations and agreements required by this Agreement to be performed or
complied with by the Debtors prior to the Closing Date and Parent shall have
received a certificate signed by a senior executive officer of the Company,
dated the Closing Date, to the forgoing effect;
 
(c) the Company, on behalf of the Debtors, shall have delivered, or caused to be
delivered, to Parent all of the items set forth in Section 3.2;
 
(d) the Debtors shall have obtained the consent or approval of each Person whose
consent or approval shall be required under each Contract listed on Schedule
8.1(d), except where any failure to obtain such consent or approval do not have
a Company Material Adverse Effect;
 
(e) all agreements listed on Schedule 8.1(e) between Simmons Company, the
Company or its Subsidiaries, on the one hand, and its Affiliates (other than
wholly owned Subsidiaries of the Company), on the other hand, shall be
terminated and fully discharged;
 
(f) the Company and its Subsidiaries shall have no Indebtedness outstanding as
of the Closing Date after giving effect to the transactions contemplated hereby
other than (i) the Exit Facilities, (ii) the Indebtedness as set forth on
Schedule 8.1(f) and (iii) Other Indebtedness not to exceed $1 million in the
aggregate, and Parent shall have received a certificate signed by the chief
financial officer of the Company and Opco, dated the Closing Date, to the
forgoing effect and identifying each item of Other Indebtedness;
 
(g) the Plan shall be effective, the Bankruptcy Court shall have entered a
Confirmation Order and such order shall not have been stayed, no executory
contracts or unexpired leases shall have been rejected except as permitted
hereby, the Purchaser Entities shall have received that portion of the proceeds
of the financing arrangements contemplated by the Plan and the Exit Financing
Commitments or other Financing Agreement (other than a failure to receive
proceeds as a result of a breach by an Affiliated Note Purchaser to fund its
commitment in accordance with the terms and conditions of the Exit Financing
Commitments) on terms and conditions, taken as a whole, no less favorable in the
aggregate to the Purchaser Entities than those contained in the Exit Financing
Commitments (taking into account any “flex” provisions contained therein, any
breakage or liquidated damage payments, and all related fees, expenses and
amounts payable to the Credit Parties), and there shall have been no amendment
to the Plan, the Plan Sponsor Order or the Confirmation Order except as
permitted hereby;
 
(h) (i) the total amount of Restructuring Expenses that the Purchaser and the
Company mutually, reasonably and in good faith believe (or, in the absence of
any such mutual agreement, that the Bankruptcy Court determines) may be incurred
by the Company (including Restructuring Expenses incurred prior to, on and after
the Closing Date), does not exceed $57,125,000; and (ii) Deloitte & Touche LLP
(“Deloitte”) and Ernst & Young LLP, in following good faith consultation with
each other, shall have reasonably concluded based on the methodology of the
Deloitte presentation titled “Bedding Superholdco, Inc. – Proposed Restructuring
Transaction,” dated September 15, 2009, as updated for subsequent changes in
financial information supplied by the Debtors or applicable law, that none of
the Company or any of its subsidiaries shall have any liability under Treasury
Regulation 1502-6 or any other similar rule of state, local or foreign law
arising as a result of the transactions contemplated by this Agreement in excess
of $2,500,000; and
 
(i) no Company Material Adverse Effect shall have occurred and be continuing.
 
8.2 Conditions Precedent to Obligations of the Debtors.  The obligation of the
Debtors to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions (any or all of which may be waived by the Company, on
behalf of the Debtors, in whole or in part to the extent permitted by applicable
Law):
 
(a) the representations and warranties of Parent set forth in this Agreement
(without giving effect to any materiality or “Purchaser Material Adverse Effect”
qualifications set forth therein) shall be true and correct at and as of the
Closing Date, (except to the extent such representations and warranties
expressly relate to an earlier date in which case such representations and
warranties shall be true and correct on and as of such earlier date) except for
any failures of the representations or warranties to be so true and correct
that, taken together, do not result in or constitute a Purchaser Material
Adverse Effect, and the Company shall have received a certificate signed by a
senior executive officer of Parent, dated the Closing Date, to the foregoing
effect;
 
(b) Parent and Purchaser shall have performed and complied in all material
respects with all obligations and agreements required by this Agreement to be
performed or complied with by Parent or Purchaser on or prior to the Closing
Date, and the Company shall have received a certificate signed by a senior
executive officer of Parent and Purchaser, dated the Closing Date, to the
foregoing effect; and
 
(c) Parent shall have delivered, or Parent shall have caused to be delivered, to
the Company all of the items set forth in Section 3.3.
 
8.3 Conditions Precedent to Obligations of Parent and the Debtors.  The
respective obligations of Parent and the Debtors to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, on or prior to
the Closing Date, of each of the following conditions (any or all of which may
be waived by Parent and the Company, on behalf of the Debtors, in whole or in
part to the extent permitted by applicable Law):
 
(a) there shall not be in effect any Order by a Governmental Body of competent
jurisdiction or other legal restraint or prohibition preventing, restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement or causing the transactions contemplated by this
Agreement to be rescinded following consummation;
 
(b) the Bankruptcy Court shall have entered the Confirmation Order and such
Order shall not have been stayed; and
 
(c) the waiting period applicable to the transactions contemplated by this
Agreement under the HSR Act and the other Antitrust Laws listed on
Schedule 8.3(c) shall have expired or been terminated.
 
8.4 Frustration of Closing Conditions.  Neither the Debtors nor Parent may rely
on the failure of any condition set forth in Section 8.1, Section 8.2 or Section
8.3, as the case may be, if such failure was caused by such party’s, or an
Affiliate of such party’s, failure to comply with any provision of this
Agreement.
 
IX.           MISCELLANEOUS
 
9.1 No Survival of Representations and Warranties.  The parties hereto agree
that the representations and warranties contained in this Agreement shall not
survive the Closing hereunder, and none of the parties shall have any liability
to each other after the Closing for any breach thereof; provided, however, that
for the avoidance of doubt this Section 9.1 shall not affect any party’s rights
under the Plan; provided, further, that the obligations of the parties set forth
in Section 3.9, Section 3.10 and the provisions of Article IX hereof shall
survive any such termination and shall be enforceable hereunder.
 
9.2 Expenses.  Except as otherwise provided in this Agreement, each of the
Debtors and the Purchaser Entities shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby; provided that, in addition
to any remedies that may be available to the Company pursuant to Section 9.3, if
this Agreement is terminated (X) pursuant to Section 3.4(e) and on the
Termination Date (a) all conditions to Closing have been satisfied other than
the condition in Section 8.3(c) relating to the termination of the waiting
period under the HSR Act and conditions that by their nature are to be, and
capable of being, satisfied at the Closing, (b) no Debtor is in breach of its
obligations under this Agreement such that the condition set forth in Section
8.1(b) would not have been satisfied or capable of being satisfied, and (c) the
Company shall have certified its substantial compliance with the second request
for additional information from the Federal Trade Commission in connection with
the transactions contemplated by this Agreement on or prior to October 31, 2009,
or (Y) pursuant to Section 3.6(b) as a result of a breach of any representation
or warranty of the Purchaser Entities set forth in Article V or the failure to
perform any covenant or agreement on the part of a Purchaser Entity set forth in
this Agreement such that the conditions set forth in Section 8.2(a) and/or (b)
would not have been satisfied or capable of being satisfied, then the Purchaser
Entities shall pay to the Company in cash on demand but in no event later than
five Business Days thereafter, an amount equal to the sum of (i) the Signing
Date Expense Amount paid to the Purchaser Entities upon signing of this
Agreement and (ii) solely in the case of clause (X) above, $5,000,000.
 
9.3 Remedies.  The parties agree that irreparable harm would occur in the event
that any provision of this Agreement is not performed in accordance with its
specific terms or is otherwise breached and that the parties would not have an
adequate remedy at law.  It is accordingly agreed as follows:
 
(a) Each of the parties hereto shall be entitled to an injunction or injunctions
to prevent breaches and threatened breaches of this Agreement and to enforce
specifically the provisions of this Agreement.
 
(b) If Closing shall not have occurred because of a breach by any Debtor party
to this Agreement of its obligations under this Agreement such that the
condition set forth in Section 8.1(b) was not satisfied, all conditions
precedent to Company’s obligations to close have been satisfied (or would have
been satisfied but for a breach by a Debtor party to this Agreement of its
obligations under this Agreement or other than conditions that by their nature
are to be, and are capable of being, satisfied at the Closing), and no Purchaser
Entity is in breach of its obligations under this Agreement such that the
condition set forth in Section 8.2(b) would not have been satisfied or capable
of being satisfied, then (i) Parent may elect to extend the Termination Date,
notwithstanding the termination provisions of Section 3.4(e) of this Agreement,
so long as Parent is actively seeking a court order to specifically enforce the
provisions of this Agreement or any other Company Document and to cause Closing
to occur and (ii) if specific performance is promptly sought by Parent but, for
any reason, specific performance is not available to Parent (or if awarded would
not result in Closing), the Company shall pay to Parent upon termination of this
Agreement as liquidated damages and the sole and exclusive monetary remedy for
such breach an amount in cash equal to $21,000,000.
 
(c) If Closing shall not have occurred because of a breach by any Purchaser
Entity of its obligations under this Agreement such that the condition set forth
in Section 8.2(b) was not satisfied, all conditions precedent to Parent’s
obligations to close have been satisfied (or would have been satisfied but for a
Purchaser Entity’s breach of its obligations under this Agreement or other than
conditions that by their nature are to be, and are capable of being, satisfied
at the Closing), and no Debtor party to this Agreement is in breach of its
obligations under this Agreement such that the condition set forth in Section
8.1(b) would not have been satisfied or capable of being satisfied, then (i) the
Company may elect to extend the Termination Date, notwithstanding the
termination provisions of Section 3.4(e) of this Agreement, so long as the
Company is actively seeking a court order to specifically enforce the provisions
of this Agreement or any other Purchaser Document and to cause Closing to occur
and (ii) if specific performance is promptly sought by the Company but, for any
reason, such specific performance remedy is not available to the Company (or if
awarded would not result in Closing), Parent shall pay to Company upon
termination of this Agreement as liquidated damages and the sole and exclusive
monetary remedy for such breach an amount in cash equal to $21,000,000.
 
(d) The rights set forth in this Section 9.3, and the right of Parent pursuant
to Section 3.10, shall be in addition to any other rights which a party hereto
may have at law or in equity pursuant to this Agreement, provided that no party
shall have the right to damages or any other monetary remedy against any party
for breach of the provisions hereof except to the extent of the payments
contemplated in Section 9.2, this Section 9.3 and Section 3.10 and in no event
shall Purchaser be entitled to remedies under both Section 3.10 and this Section
9.3.
 
(e) The Company, on the one hand, and the Purchaser Entities, on the other hand,
hereby agree not to raise any objections to the availability of the equitable
remedy of specific performance to prevent or restrain breaches of this Agreement
by the Company, on the one hand, or the Purchaser Entities, on the other hand,
and to specifically enforce the terms and provisions of this Agreement to
prevent breaches or threatened breaches of, or to enforce compliance with, the
covenants and obligations of the parties under this Agreement.
 
9.4 Submission to Jurisdiction; Consent to Service of Process.
 
(a) Without limiting any party’s right to appeal any order of the Bankruptcy
Court, (i) the Bankruptcy Court shall retain exclusive jurisdiction to enforce
the terms of this Agreement and to decide any claims or disputes which may arise
or result from, or be connected with, this Agreement, any breach or default
hereunder, or the transactions contemplated hereby, and (ii) any and all
proceedings related to the foregoing shall be filed and maintained only in the
Bankruptcy Court, and the parties hereby consent to and submit to the
jurisdiction and venue of the Bankruptcy Court and shall receive notices at such
locations as indicated in Section 9.8 hereof; provided, however, that if the
Bankruptcy Case has closed, the parties agree to unconditionally and irrevocably
submit to the exclusive jurisdiction of the United States District Court for the
District of Delaware and any appellate court from any decision thereof, for the
resolution of any such claim or dispute.  The parties hereby irrevocably waive,
to the fullest extent permitted by applicable law, any objection which they may
now or hereafter have to the laying of venue of any such dispute brought in such
court or any defense of inconvenient forum for the maintenance of such
dispute.  Each of the parties hereto agrees that a judgment in any such dispute
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
 
(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by delivery of a copy
thereof in accordance with the provisions of Section 9.8.
 
9.5 Waiver of Right to Trial by Jury.  Each party to this Agreement waives any
right to trial by jury in any action, matter or proceeding regarding this
Agreement or any provision hereof.
 
9.6 Entire Agreement; Amendments and Waivers.  This Agreement (including the
schedules and exhibits hereto), the Confidentiality Agreement and the Equity
Guarantees represent the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof.  This Agreement can be
amended, supplemented or changed, and any provision hereof can be waived, only
by written instrument making specific reference to this Agreement signed by each
of Simmons Company, the Company, Opco, Parent and Purchaser.  No action taken
pursuant to this Agreement, including any investigation by or on behalf of any
party, shall be deemed to constitute a waiver by the party taking such action of
compliance with any representation, warranty, covenant or agreement contained
herein.  The waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a further or continuing waiver of
such breach or as a waiver of any other or subsequent breach.  No failure on the
part of any party to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or remedy by such party preclude any other
or further exercise thereof or the exercise of any other right, power or
remedy.  All remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law.
 
9.7 Governing Law.  This Agreement, and all claims or causes of action (whether
in contract or tort) that may be based upon, arise out of or relate to this
Agreement or the negotiation, execution or performance of this Agreement
(including any claim or cause of action based upon, arising out of or related to
any representation or warranty made in or in connection with this Agreement or
as an inducement to enter into this Agreement), shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and performed in such State without giving effect to the choice
of law principles of such state that would require or permit the application of
the laws of another jurisdiction.
 
9.8 Notices.  All notices and other communications under this Agreement shall be
in writing and shall be deemed given (a) when delivered personally by hand, (b)
when sent by facsimile (with written confirmation of transmission) or (c) one
Business Day following the day sent by overnight courier (with written
confirmation of receipt), in each case at the following addresses and facsimile
numbers (or to such other address or facsimile number as a party may have
specified by notice given to the other party pursuant to this provision):
 
If to Simmons, the Company or Opco, to:
 
One Concourse Parkway, Suite 800
Atlanta, GA                      30328
Facsimile No.: (770) 206-2669
Attention:  William S. Creekmuir
     Kristen K. McGuffey

With a copy (which shall not constitute notice) to:
 
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY  10153
Facsimile No.: (212) 310-8007
Attention: Michael F. Walsh
                    Joseph J. Basile

 
If to a Purchaser Entity, to:
 
AOT Bedding Super Holdings, LLC c/o Ares Management LLC
 
2000 Avenue of the Stars, 12th Floor
 
Los Angeles, CA  90067
 
Facsimile No.: (310) 432-8641
 
Attention: Nav Rahemtulla
 
AOT Bedding Super Holdings, LLC c/o Ontario Teachers’ Pension Plan Board
 
5650 Yonge St., 8th Floor
 
Toronto, Ontario, Canada  M2M 4H5
 
Facsimile No.: (416) 730-5082
 
Attention: Romeo Leemrijse
 
With a copy (which shall not constitute notice) to:
 
Sullivan & Cromwell LLP
1888 Century Park East, Suite 2100
Los Angeles, CA 90067
Facsimile No.: (310) 712-8800
Attention:  Alison S. Ressler
                   Andrew G. Dietderich
 
9.9 Severability.  If any provision of this Agreement is invalid, illegal, or
incapable of being enforced by any law or public policy, all other provisions of
this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party.  Upon such determination
that any provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
 
9.10 Binding Effect; Assignment.  This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns.  Except as otherwise provided in Section 7.18, nothing in this
Agreement shall create or be deemed to create any third party beneficiary rights
in any Person or entity not a party to this Agreement.  No assignment or
delegation of this Agreement or of any rights or obligations hereunder may be
made by either the Company, Opco, Parent or Purchaser (by operation of law or
otherwise) without the prior written consent of the other parties hereto and any
attempted assignment or delegation without the required consents shall be void,
provided that each of the Purchaser Entities may assign or delegate some or all
of its rights or obligations hereunder to one or more Subsidiaries formed by it
prior to the Closing.  No assignment or delegation of any obligations hereunder
shall relieve the parties hereto of any such obligations.  Upon any such
permitted assignment or delegation, the references in this Agreement to the
Company, Opco, Parent or Purchaser shall also apply to any such assignee or
delegatee unless the context otherwise requires.
 
9.11 Non-Recourse.  Except for the obligations of the parties to the Equity
Guarantees as set forth therein, no past, present or future director, officer,
employee, incorporator, member, partner, stockholder, Affiliate, agent, attorney
or representative of the Company, Opco, Parent or Purchaser will have any
liability for any obligations or liabilities of any party to this Agreement,
including any Schedule or Exhibit hereto, such obligations being solely of the
parties hereto.
 
9.12 Counterparts.  This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
 
[SIGNATURE PAGE FOLLOWS]
 

 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
written above.
 
SIMMONS COMPANY
 

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

 

 

SIGNATURE PAGE TO PLAN SPONSOR AGREEMENT
 

 

 

 

 
 
 

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BEDDING HOLDCO INCORPORATED (F/K/A THL-SC BEDDING COMPANY)
 

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

 

 

SIGNATURE PAGE TO PLAN SPONSOR AGREEMENT
 

 

 

 

 
 
 

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SIMMONS BEDDING COMPANY, ON BEHALF OF ITSELF AND ITS DIRECT AND INDIRECT
SUBSIDIARIES LISTED ON EXHIBIT __
 

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

 

SIGNATURE PAGE TO PLAN SPONSOR AGREEMENT
 

 

 

 

 
 
 

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AOT BEDDING SUPER
 
      HOLDINGS, LLC
 
By: Ares Corporate Opportunities Fund III, L.P.,
 
its member
 
By: ACOF Operating Manager III LLC,
 
its manager
 

 
 
By: /s/ Nav Rahemtulla
 
      Name: Nav Rahemtulla
 
      Title: Authorized Signatory
 
 and
 
By: Ontario Teachers' Pension Plan Board,its member
 

 
By: /s/ Romeo Leemrijse
 
      Name: Romeo Leemrijse
 
Title: Director
 

SIGNATURE PAGE TO PLAN SPONSOR AGREEMENT
 

 

 

 

 
 
 

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AOT BEDDING INTERMEDIATE
 
HOLDINGS, LLC
 
By: AOT Bedding Super Holdings, LLC,
 
its sole member
 
By: Ares Corporate Opportunities Fund III, L.P.,
 
its member
 
By: ACOF Operating Manager III LLC,
 
its manager
 

 
 
By: /s/ Nav Rahemtulla
 
Name: Nav Rahemtulla
 
Title: Authorized Signatory
 
 and
 
By:  Ontario Teachers' Pension Plan Board,
 
       its member
 

 
By: /s/ Romeo Leemrijse
 
Name: Romeo Leemrijse
 
Title: Director
 

 

 
 

SIGNATURE PAGE TO PLAN SPONSOR AGREEMENT
 

 

 

 

 
 
 

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EXHIBIT A
 

 
The Plan
 

 

 

 
 

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EXHIBIT B
 

 
Plan Sponsor Order
 

 

 
 

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EXHIBIT C
 
Confirmation Order
 

 

 
 

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EXHIBIT D
 

 
Restructuring Expense Forecast
 

 
 

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EXHIBIT E
 

 
Subsidiary Debtors
 

 
1.  
The Simmons Manufacturing Co., LLC

2.  
Windsor Bedding Co., LLC

3.  
World of Sleep Outlets, LLC

4.  
Simmons Contract Sales, LLC

5.  
Dreamwell, Ltd.

6.  
Simmons Capital Management, LLC

7.  
Simmons Export Co.