<PAGE>   1
                                                                        HONOLULU
                                                      STANDARD LICENSE AGREEMENT
                                                                     SERTA, INC.

         THIS AGREEMENT, dated this 17th day of April, 2000 by and between
SERTA, INC., a Delaware corporation (hereinafter referred to as "Serta"), and
SIMON MATTRESS MANUFACTURING COMPANY,

                             (check as appropriate)

<TABLE>
<S>                                               <C>
         /X/  corporation                         / /  partnership
         / /  sole proprietorship                 / /  limited partnership
</TABLE>

a California corporation, (hereinafter referred to as "Licensee").

                                   WITNESSETH:

         WHEREAS, Serta is a service corporation serving related companies which
are in the business of manufacturing and selling mattresses, other bedding
products and other products of any kind or nature; and

         WHEREAS, Serta has heretofore adopted, or otherwise acquired, and now
owns, uses, advertises and authorizes the use and advertising of certain trade
names, trade-marks and labels identifying the aforementioned products and by
reason thereof has created valuable good will in connection with the manufacture
and sale thereof under said trade names, trade-marks and labels; and

         WHEREAS, Serta licenses persons, firms and corporations to manufacture
the aforementioned products under standard specifications covering the method or
process of the manufacture thereof, the quality of workmanship employed in such
manufacture and the quantity and quality of the materials entering in such
manufacture, and to attach or otherwise affix thereto and to the containers in
which the same are packaged, the trade names, trade-marks and labels of Serta
(such products so manufactured and identified are hereinafter referred to as
"Serta products"); and

         WHEREAS, Licensee desires to obtain from Serta a license to manufacture
and sell Serta products as a related company of Serta; and

         WHEREAS, Licensee has agreed to comply with the provisions of this
agreement and with Serta's by-laws, specifications, rules, resolutions and
regulations covering the manufacture and sale of Serta products and the use of
said trade names, trade-marks and labels now and hereafter in force and effect;

         NOW, THEREFORE, in consideration of the premises and of other good and
valuable considerations, and in further consideration of the covenants
hereinafter contained to be kept and performed by the parties hereto, it is
agreed as follows:
<PAGE>   2
         1.       (a) Serta hereby gives to Licensee, under the terms and
conditions hereinafter set forth, the right to manufacture and sell Serta
products in accordance with and subject to Serta's by-laws, rules, regulations,
resolutions and specifications from time to time adopted or established by
Serta. If at any time or times hereafter Serta shall adopt or otherwise acquire
any additional trade name, trade-mark or label identifying any of the
aforementioned products, such trade name, trademark or label shall be deemed and
treated to be included within the scope of this agreement.

                  (b) This agreement shall become effective on November 4, 1989
and shall remain in force and effect until terminated by the mutual written
agreement of Serta and Licensee or under any of the provisions hereinafter set
forth.

         2.       Licensee shall have the right to manufacture Serta products
pursuant to this agreement only in the following territory: Honolulu.

(hereinafter referred to as the "manufacturing territory"). Serta shall not,
during the term of this agreement, suffer or permit any other person, firm or
corporation to manufacture Serta products in said manufacturing territory;
provided, however, that Serta may authorize other persons, firms or corporations
to manufacture Serta products other than mattresses and box springs for the sole
purpose of supply and shipment thereof to Serta licensees with exclusive
manufacturing territories in the United States (hereinafter sometimes referred
to as "U.S. primary licensees").

         3.       Licensee's manufacturing territory shall be deemed and treated
to be its Area of Primary Responsibility for the promotion and sale of Serta
products. Licensee shall at all times exert its best efforts to obtain maximum
sales of Serta products in said manufacturing territory. If Licensee shall not
meet such minimum quota of sales of Serta products in its manufacturing
territory as may from time to time be provided in Serta's by-laws under a plan
uniformly applicable to all U.S. primary licensees, such a failure may be deemed
and treated by Serta to be an event of default by Licensee hereunder.

         4.       Nothing herein contained shall be deemed or treated to limit
or restrict Licensee in any substantial way from selling Serta products to any
person, firm or corporation or from selling and delivering Serta products
anywhere in the United States of America; provided, however, that if, pursuant
to any modification of the Final Judgment entered in the cause of action
entitled "UNITED STATES OF AMERICA vs SERTA ASSOCIATES, INC., No. 60 C 8043 IN
THE UNITED STATES DISTRICT COURT, NORTHERN DISTRICT OF ILLINOIS, EASTERN
DIVISION" or to any legislation by the Congress of the United States, it shall
become lawful and proper at any time hereafter for Serta to give and grant to
its U.S. primary licensees exclusive sales territories, then in any such event,
upon the written approval of not less than two-thirds (2/3) of its U.S. primary
licensees, Serta may, by written notice to such licensees, constitute their
respective exclusive manufacturing territories as exclusive selling territories.
In such event, the Licensee shall abide by and comply with the by-laws of Serta
from time to time adopted by its stockholders to implement, protect and control
the exclusivity of such selling territories.

         5.       In order to control the nature and quality of Serta products,
and to provide for the proper and effective establishment of policy for and
administration of the business of Serta, a complete set of by-laws, rules,
regulations, resolutions and specifications pertaining to the


                                      -2-
<PAGE>   3
manufacture and sale of Serta products is presently in full force and effect and
is on file at the principal office of Serta, Inc. Licensee shall comply with the
by-laws, rules, regulations, resolutions and specifications now and hereafter
adopted or established by Serta or its stockholders.

         6.       Licensee shall at all times own and hold such number of shares
in Serta as may be required by Serta's by-laws under a plan uniformly applicable
to all U.S. primary licensees. Licensee shall pay any and all fees and
assessments levied against stockholders under any plan approved by Serta's
stockholders in accordance with the by-laws from time to time in force and
effect.

         7.       Serta shall defend any and all litigation to which Licensee
may be made a party arising out of its proper use of the trade names,
trade-marks and labels from time to time adopted by Serta or arising out of the
alleged infringement by Licensee of any patent specified by Serta in connection
with the method of manufacturing Serta products or the proper use of any
articles or materials specified by Serta in the manufacture of such products,
provided Licensee gives Serta timely written notice of any such litigation so as
to enable Serta to appear in such litigation and prepare for the defense
thereof. Serta hereby agrees to save the Licensee harmless from any and all
loss, costs or damages sustained by it arising out of any such litigation,
provided that Licensee gives Serta the notice herein provided and is not in
default in the performance of any of the terms, covenants and conditions hereof.

         8.       Licensee shall not permit or suffer any of its officers,
employees or agents to injure the good will and business of Serta and Serta
trade names and trade-marks by discrediting the Serta products, the selling
policies, the financial responsibility or the business reputation of any other
Serta Licensee.

         9.       Licensee shall not violate the provisions of said Final
Judgment described in paragraph 4 above, or any modification thereof.

         10.      (a) Neither this license nor any of the rights or privileges
granted to the Licensee hereunder shall be assignable by Licensee or by
operation of law or otherwise to any other person, firm or corporation. Licensee
shall not sub-license or sub-contract any of said rights or privileges,
including, but not in limitation, the right to manufacture Serta products, to
any other person, firm or corporation whomsoever. Notwithstanding any other
provision of this agreement, any such assignment or sub-license shall forthwith
terminate, without notice, the license hereby granted to Licensee and the rights
and interests of Licensee as a stockholder of Serta and any such sub-contract
shall constitute a default referred to in paragraph 11 below.

                  (b) For the purpose of this paragraph 10(b), and paragraphs
10(c) and 10(d) below, the following definitions shall apply:

                           "Affiliate" of an individual, corporation or
                  partnership shall mean any person which directly or indirectly
                  controls, is controlled by, or is under common control with
                  such individual, corporation or partnership and any person who
                  is an employee of such individual, corporation or partnership,
                  a partner in such partnership or an officer or director of
                  such corporation. For the purposes of this definition,
                  "person"


                                      -3-
<PAGE>   4
                  means any individual, corporation, partnership or joint
                  venture, trust, unincorporated association or any other
                  entity, body, organization or group.

                           "Control partner" shall mean (individually and
                  collectively and singly or in the aggregate with affiliates)
                  the partner or partners of a partnership having the power,
                  directly or indirectly, to direct or cause the direction of
                  the management and policies of the partnership and having the
                  authority to bind the partnership.

                           "Control stockholder" shall mean (individually and
                  collectively and singly or in the aggregate with affiliates)
                  the owner or owners of the majority shares in a corporation or
                  those shareholders exercising effective voting control of a
                  corporation pursuant to any written agreement.

                           "General partner" shall mean the holder of a general
                  partnership interest in a partnership.

                           "General partnership interest" shall mean the
                  interest of a general partner in a partnership.

                           "Limited partner" shall mean the holder of a limited
                  partnership interest in a limited partnership.

                           "Limited partnership interest" shall mean the
                  interest of a limited partner in a limited partnership.

                           "Limited partnership interest coupled with an
                  interest" shall mean a limited partnership interest held by a
                  limited partner of Licensee, if Licensee is a limited
                  partnership, which limited partner either directly or through
                  an affiliate shall (i) hold or shall have any direct or
                  indirect right to acquire an interest as, or any material
                  participation in the right of control in, the control partner
                  of Licensee, whether or not such right shall be exercisable
                  only in the event of a contingency, as, for example,
                  foreclosure of a security interest granted in connection with
                  any loan, advance or financial contribution or guaranty made
                  by or on behalf of such limited partner or (ii) shall have any
                  power to initiate the removal of or to remove a control
                  partner of Licensee or to otherwise designate any successor
                  control partner of Licensee.

                           "Majority shares" shall mean such number of the
                  voting shares in a corporation as shall amount to more than
                  one-half thereof.

                           "Voting shares" shall mean the issued and outstanding
                  voting shares in a corporation and the voting rights or
                  beneficial interest in its voting shares.

         Each of the following events shall be deemed and treated to be an
assignment of this license prohibited by the provisions of paragraph 10(a) next
preceding:



                                      -4-
<PAGE>   5
                  (i) The filing by Licensee, or by the control stockholder of
                  Licensee, or by the control partner of Licensee of a voluntary
                  petition or similar pleading under any section or sections of
                  any Bankruptcy Act or in any Court to declare Licensee, or
                  such control stockholder or control partner, insolvent;

                  (ii) An assignment for the benefit of creditors by Licensee or
                  by such control stockholder or control partner;

                  (iii) The filing against Licensee or such control stockholder
                  or control partner of an involuntary petition or similar
                  pleading under any section or sections of any Bankruptcy Act
                  or any involuntary petition or similar pleading in any court
                  to declare Licensee or such control stockholder or control
                  partner insolvent, or the appointment of a receiver for
                  Licensee or its assets or for such control stockholder or its
                  assets or such control partner or its assets provided,
                  however, that if such petition or pleading shall be dismissed
                  or withdrawn, or such appointment shall be vacated within
                  thirty (30) days after the filing or occurrence thereof, the
                  provisions of this paragraph 10(b)(iii) shall not apply.

                  (iv) The happening of any event described in subparagraphs (i)
                  through (iii) above in respect to one or more persons
                  comprising the control stockholder or control partner which
                  results in a material change in the control stockholder or
                  control partner shall be deemed to have occurred in respect of
                  such control stockholder or control partner for purposes of
                  this License Agreement.

                  (c) Subject to the provisions of paragraphs 10(d) and 10(e)
below, each of the following events shall likewise be deemed and treated to be
an assignment of this license prohibited by the provisions of paragraph 10(a)
above:

                  (i) The transfer whether voluntary or involuntary, by sale, by
                  operation of law, or other-wise, of the majority shares in
                  Licensee or of the general partnership interest of the control
                  partner of Licensee or the limited partnership interest
                  coupled with an interest of any limited partner of Licensee.

                  (ii) The transfer of control from, or any material
                  participation in the right of control in (i.e., the power,
                  directly or indirectly, to direct or cause the direction of
                  the management and policies of the control partner or limited
                  partner and bind the control partner or limited partner) the
                  control partner or any limited partner with a limited
                  partnership interest coupled with an interest.

                  (iii) The exchange of the majority shares in Licensee for less
                  than the majority shares in another corporation pursuant to a
                  merger with, consolidation into or other form of
                  reorganization involving another corporation.

                  (iv) The transfer of the majority shares in Licensee by the
                  control stockholder to another person or persons by successive
                  transfer of such number of voting shares in Licensee as will
                  total the majority shares in Licensee, or as the result of the
                  issuance


                                      -5-
<PAGE>   6
                  or successive issuances of additional voting shares in
                  Licensee, or as the result of the sale or successive sales of
                  treasury shares by Licensee for cash or other consideration or
                  in satisfaction of any debt or debts of Licensee, or as
                  consideration for the acquisition of shares or other interests
                  in another corporation, firm or proprietorship, or as the
                  result of the merger of another corporation into the Licensee,
                  or as the result of any combination of the foregoing events.
                  Two or more transfers or issuances of voting shares in
                  Licensee shall be deemed and treated to be successive
                  transfers or successive issuances regardless of the period in
                  which the same shall be effected.

                  (v) If the majority shares in Licensee are owned directly or
                  indirectly, by another corporation and any event hereinabove
                  set forth in paragraph 10(c) shall occur in respect of such
                  corporation, the occurrence of such event shall be deemed and
                  treated to be an assignment of this license prohibited by the
                  provisions of paragraph 10(a) above, with the same force and
                  effect as if such event had occurred with respect to Licensee.

                  (d) Transfers to the following described classes of persons
shall not be deemed or treated to be transfers for purposes of paragraph 10(c)
above provided, however, that the shares or interests of such transferees shall
continue to be included among the shares or interests in Licensee for the
purpose of this paragraph 10:

                  (i) The spouse, father, mother, brothers, sisters, children or
                  grandchildren of the transferrer, including, but not in
                  limitation, such persons as are so related through adoption.

                  (ii) A donee by bona fide gift or a legatee or heir through
                  inheritance, intrust or otherwise, of a transferrer.

                  (iii) An individual or individuals who shall acquire their
                  voting shares or general partnership interest or limited
                  partnership interest in Licensee pursuant to a contract or
                  contracts in force and effect on the date of execution of this
                  license; provided that concurrently with the execution of this
                  license, Licensee furnishes to Serta true and correct copies
                  of such contract or contracts along with a written statement
                  setting forth the date of the execution of any such contract
                  or contracts, the persons signatory thereto and their
                  addresses and the number of voting shares or the number and
                  percentage interest of the general or limited partnership
                  interests in Licensee subject thereto; provided, further such
                  contract or contracts, if given effect, would not violate any
                  of the terms and provisions of this license, Serta's by-laws,
                  or any rules and regulations of Serta.

                  (iv) A transferee of the control stockholder of Licensee or a
                  transferee of the control stockholder of any corporation
                  ("parent corporation"), which corporation at the time of such
                  transfer directly or through or together with one or more
                  subsidiaries owns the majority shares in Licensee, or controls
                  the control partner of Licensee or controls a limited partner
                  of Licensee with a limited partnership interest coupled with
                  an interest provided (a) that one or more classes of the
                  voting shares of Licensee or


                                      -6-
<PAGE>   7
                  such parent corporation or any of such subsidiaries is
                  registered under Section 12(b) or Section 12(g) of the
                  Securities Exchange Act of 1934 or any successor statute then
                  in effect, (b) that after giving effect to such transfer, at
                  least one of the classes of voting shares of Licensee or such
                  parent corporation or any of such subsidiaries so registered
                  remains, and is required to remain, so registered, and (c)
                  concurrently with the execution of this license that Serta
                  shall have been provided with written notice of such transfer
                  and satisfactory evidence of such required continued
                  registration.

                  (v) The admission of a substitute limited partner or a new
                  limited partner to a partnership other than with respect to a
                  limited partnership interest coupled with an interest.

         (e)

                  (i) Upon the written request of Licensee to Serta and the
                  submission to Serta by Licensee of such facts and information
                  as Serta shall request, Serta may, by the affirmative vote of
                  a majority of its Board of Directors, consent to any
                  assignment referred to in paragraph 10(c) above. Such consent
                  shall not be unreasonably withheld.

                  (ii) If, following a request by Licensee that Serta consent to
                  such an assignment, a majority of Serta's Board of Directors
                  shall not consent thereto, or shall not take action thereon
                  within thirty (30) days after Serta receives from Licensee
                  such facts and information as it shall have requested
                  concerning such assignment, Licensee may, by written notice to
                  Serta, request that such consent be considered and acted upon
                  by the stockholders of Serta at the next annual stockholders'
                  meeting or, if so requested by Licensee, at a special meeting
                  of the stockholders called by Serta for such purpose within
                  ten (10) days after it receives such request. At such meeting
                  the stockholders may consent to such assignment by
                  affirmatively voting therefor in accordance with Serta's
                  by-laws. Such vote shall be final and binding on Serta and
                  Licensee.

         11.      If Licensee shall default in the prompt and full compliance
with or performance of any of the provisions hereof, Serta may terminate the
license hereby granted to Licensee and the rights and interests of Licensee as a
stockholder in Serta upon not less than thirty (30) days prior written notice to
Licensee specifying such default or defaults and the effective date of such
termination. Licensee shall have the right to cure any such default or defaults
prior to the date of termination of this license as specified in such notice.
Nothing contained in this paragraph 11 shall limit or affect the consequences of
a prohibited assignment or sub-licensing by Licensee under paragraph 10(a),
10(b) or 10(c) above.

         12.      Failure of Serta to notify Licensee of any default hereunder
or to take action with respect thereof shall not constitute a waiver of such
default or the provisions hereof defaulted. Waiver by Serta of any remedy,
including but not in limitation, the right to terminate this license, arising
out of any default by Licensee, shall not constitute a waiver of Serta's right
to terminate this


                                      -7-
<PAGE>   8
license, as provided in paragraph 11 above or to resort to any other remedies on
account of any subsequent or different default.

         13.      The good will created in connection with the manufacture and
sale by Licensee of Serta products shall at all times be the property of Serta.
In the event this license shall be terminated pursuant to the provisions hereof,
all rights of Licensee to use said trade-marks or to enjoy the benefits of said
good will shall terminate and revert to Serta. From and after the date of such
termination, Licensee shall not manufacture or sell any Serta products and shall
not use or affix any of the trade names, trade-marks or labels theretofore used
by it in connection therewith under the terms of this license upon any articles
thereafter manufactured or sold by Licensee, and shall not hold itself out to
the public as a licensee of Serta, or as having any rights in the Serta name or
good will. Serta shall have the right to enforce by injunction the full and
faithful performance by Licensee of this covenant, and Licensee hereby consents
to the granting of a temporary injunction and a permanent injunction, without
bond, against Licensee.

         14.      Any territory in the United States which, during the term of
this agreement, shall not be licensed as an exclusive manufacturing territory to
any person, firm or corporation shall, until so licensed, be referred to as
"open territory." If such territory shall remain open territory for more than
six months, and if an exclusive license to manufacture Serta products therein
shall thereafter be granted by Serta, then, in such event, Licensee agrees that
in order to encourage the Licensee under such new license to expend the sums
necessary to establish a factory and full facilities for the manufacture and
sale of Serta products and to create good will for itself and Serta in its
manufacturing territory, Serta may require all, but not less than all, other
U.S. primary Licensees, including, but not in limitation, the Licensee
hereunder, not to sell and deliver Serta products for a period not exceeding
five (5) years to dealers and other persons, firms and corporations in such
manufacturing territory.

         15.      Except where it is hereinabove specifically stated that any
action by Serta shall be upon the authority or direction of its stockholders,
all rights, powers, authorities and discretions reserved by or granted to Serta
hereunder shall be vested in and exercised by Serta's Board of Directors in
accordance with its by-laws.

         16.      All notices to be given hereunder shall be sent by United
States certified mail, postage prepaid, and shall be addressed to Serta at the
principal office of Serta, Inc., and to the Licensee at [       ]. All notices
mailed as hereinabove provided shall be deemed and treated to have been received
five (5) days after the date of mailing. Serta and Licensee shall have the
right, by notice given as herein provided, to change the mailing address to
which notices to it shall be sent by the other party hereto.

         17.      This agreement supersedes all previous license or franchise
agreements between the parties hereto. The terms and provisions of this
agreement are severable, and if any part hereof shall be held invalid or
unenforceable for any reason, the remaining provisions hereof shall not be
invalidated but shall remain in full force and effect. This agreement shall be
construed under and in accordance with the laws of the State of Illinois.



                                      -8-
<PAGE>   9
         18.      If there shall be any conflict between any of the terms and
provisions of this agreement and the by-laws of Serta from time to time in force
and effect, then in any such event the terms and provisions of this agreement
shall be controlling.

         19.      This Agreement may be amended at anytime or times, but only
upon the occurrence of all of the following:

                  (a) Adoption by two-thirds (2/3rds) of the whole Board of
Serta;

                  (b) Approval by the holders of two-thirds (2/3rds) of the
issued and outstanding Class A stock; and

                  (c) Ratification by two-thirds (2/3rds) of all separate Class
A Stockholders of Serta, voting on a per capita basis without reference to their
respective shareholdings, provided, however, that for purposes of such
ratification only, any group of Stockholders affiliated with each other shall be
deemed and treated as only one Stockholder.

         IN WITNESS WHEREOF, Serta and Licensee have caused these presents to be
signed in their respective corporate names by their duly authorized officers,
all on the day and year first above written.


<TABLE>
<S>                                        <C>
ATTEST:                                    SERTA, INC.

/s/ Maury Knowlten                         By: /s/ Edward Lilly
----------------------------------            ---------------------------------
                        Secretary.                          President
            SEAL
ATTEST:                                    SIMON MATTRESS MANUFACTURING COMPANY

/s/ Donald S. Simon                        By: /s/ Donald S. Simon
----------------------------------            ---------------------------------
                        Secretary.                          President
            SEAL
</TABLE>


                                      -9-
<PAGE>   10
                                                                        HONOLULU
                                                         MEMORANDUM OF AGREEMENT
                                                                     SERTA, INC.

         THIS MEMORANDUM OF AGREEMENT dated this 17th day of April, 2000, by and
between SERTA INC., a Delaware corporation, party of the first part, hereinafter
sometimes referred to as "Serta," and Simon Mattress Manufacturing Company,
party of the second part, hereinafter sometimes referred to as "Member,"

                                   WITNESSETH:

         WHEREAS, the parties hereto have heretofore entered into a Standard
License Agreement under the terms of which the Member has been given the right
to manufacture and sell certain articles in accordance with Serta's by-laws,
rules, regulations, resolutions and specifications; and

         WHEREAS, under the terms of said Standard License Agreement the Member
is also given the right to use certain trade-marks, trade names and labels in
connection with the manufacture and sale of said articles; and

         WHEREAS, Serta engages in national advertising of its specification
products; and

         WHEREAS, the Member is desirous of gaining the consent of Serta to the
use of the word "Serta" in the corporate name or in the firm name and style
under which the Member is engaged in the manufacture and sale of such articles
in accordance with the terms of said Standard License Agreement; and

         WHEREAS, it is to the mutual advantage of the parties hereto to permit
the Member to use the word "Serta" in such corporate or firm name under the
restrictions and upon the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and in further
consideration of the execution and delivery of said Standard License Agreement
and of the terms, covenants and conditions hereof to be kept and performed by
the parties hereto, it is covenanted and agreed as follows:

                  (a) The Member shall not appropriate for use or use any
         corporate name or firm name and style embodying the word "Serta" in its
         business done under said Standard License Agreement unless and until
         the Member has obtained the written consent of Serta to such
         appropriation or use by the Member of such corporate name or firm name
         and style.

                  (b) Such corporate name or firm name and style shall be
         sufficiently distinctive so as to prevent the public from confusing
         such corporate name or firm name and style with the corporate name of
         Serta or with the corporate name or firm name and style of any other
         stockholder and licensee of Serta.

                  (c) The Member shall, in using such corporate name or firm
         name and style upon its stationery, billheads and in its advertising,
         state in substance upon such stationery and
<PAGE>   11
         billheads and in such advertising that the Member is a member or
         licensee of Serta, Inc., a Delaware corporation, or is engaged in the
         manufacture and sale of articles in accordance with specifications
         formulated by Serta.

                  (d) The Member hereby consents to the appropriation and use by
         any other stockholder and licensee of Serta of a corporate name or firm
         name and style embodying the word "Serta" which is approved by Serta
         pursuant to an agreement between Serta and such other stockholder and
         licensee containing the same provisions as contained in this agreement.
         The Member shall, from time to time, upon request, execute and deliver
         such documents as may be necessary or proper in Serta's opinion to
         permit and consent to such appropriation and use by other stockholders
         and licensees of Serta.

                  (e) The Member shall not manufacture and sell any article
         under any corporate name or firm name and style which includes the word
         "Serta" unless said article is manufactured and sold in full compliance
         with Serta's by-laws, rules, regulations, resolutions and
         specifications.

                  (f) The Member shall not manufacture and sell any article
         under any trade name, trademark, or label unless such trade name,
         trade-mark, or label is adopted and specified by Serta for use
         generally by all of its licensees and stockholders.

                  (g) In the event the Member ceases to be a stockholder of
         Serta, or in the event the said Standard License Agreement is
         terminated by reason of some default of the Member in the terms,
         covenants and conditions of said Standard License Agreement, or in the
         event of any default by the Member of any of the terms, covenants and
         conditions of this agreement and such default continues for a period of
         thirty (30) days after a written demand by Serta upon the Member to
         remedy such default, then in either such event this agreement shall
         terminate and the Member shall immediately, upon such termination of
         said Standard License Agreement, or upon ceasing to be a stockholder of
         Serta, or upon the expiration of said thirty (30) day period for
         remedying any default under the terms of this agreement, as the case
         may be, cease and abandon the use of such corporate name or firm name
         and style.

                  (h) In the event of a termination of this agreement in the
         manner specified in paragraph (g) hereof, the Member shall, within
         thirty (30) days of the date of termination of this agreement, cause
         such corporate name to be changed by deleting the word "Serta"
         therefrom. In the event such firm name and style can be registered
         under the provisions of any state law for the exclusive use by the
         registrant, then, in the event of the termination of this agreement as
         provided in paragraph (g), the Member shall, within thirty (30) days of
         such termination, take such legal steps as may be necessary to change
         the registration of such firm name and style by deleting the word
         "Serta" therefrom.

                  (i) In the event of the termination of this agreement by
         reason of a default of the Member as herein specified and the Member
         fails or refuses to cease and desist from the use of such corporate
         name or firm name and style embodying the word "Serta" therein, or
         fails and refuses to change such corporate. name or such firm name and
         style by deleting the word "Serta" therefrom, then in either such event
         Serta shall have the right, without notice to the




                                       -2-
<PAGE>   12
         Member, to obtain an injunction enjoining the Member from the use of
         any corporate name or firm name and style which embodies the word
         "Serta" therein.

                  (j) In the event Serta desires to become qualified as a
         foreign corporation in the state or states in which the Member is doing
         business under such corporate name or such firm name and style, the
         Member shall, upon request of Serta, execute a written consent to the
         qualification of Serta in such state or states.

                  (k) In the event the Member does not cease from using such
         corporate name or firm name and style as provided in paragraphs (g) and
         (h) hereof, it is understood and agreed that Serta will suffer material
         damages, the exact amount of which would be difficult, if not
         impossible, of ascertainment. Therefore, the Member shall pay to Serta,
         upon demand, the sum of Twenty-Five Dollars ($25.00) per day as
         liquidated damages for each and every day in which the Member fails to
         cease and desist from the use of such corporate name or firm name and
         style as required by the terms of this agreement. In addition to the
         foregoing penalty, the Member shall pay to Serta its reasonable costs,
         expenses and attorneys' fees incurred in and about the collection of
         such penalty or in and about the obtaining of an injunction against the
         Member, or in and about any litigation to which Serta is made a party
         by reason of the fault of the Member.

                  (l) In the event the Member is declared a bankrupt, or in the
         event any corporation organized by the Member under a corporate name
         embodying the word "Serta" is declared bankrupt, then in either such
         event this agreement shall be terminated as of the date upon which the
         Member or such corporation is declared a bankrupt. The occurrence of
         such event shall constitute a default.

         IN WITNESS WHEREOF, Serta has caused these presents to be signed in its
corporate name by its duly authorized officers, and the Member has caused these
presents to be signed in its corporate name or in its firm name and style by its
duly authorized officers or partners, as the case may be, all on the day and
year first above written.

ATTEST:                                       SERTA, INC.

/s/ Maury Knowlten                            By:  /s/ Edward Lilly
---------------------                              -------------------------
            Secretary.                                           President
        SEAL

ATTEST:                                       SIMON MATTRESS MANUFACTURING
                                              COMPANY

/s/ Donald S. Simon
---------------------
           Secretary.                         By:  /s/ Donald S. Simon
                                                   ------------------------
       SEAL                                                      President


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