<PAGE>

                                                                    Exhibit 10.7

                              AMENDED AND RESTATED
                     EMPLOYMENT AND NONCOMPETITION AGREEMENT
                                 (David C. Fogg)

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
executed as of this 4/th/day of October, 2002, and effective as of the Closing
Date (as defined in the Merger Agreement referred to below, the "Closing Date"),
by and between Tempur World, Inc., a Delaware corporation (the "Company"), and
David C. Fogg, an individual ("Employee").

                                    RECITALS

     Pursuant to the Agreement and Plan of Merger, dated as of October 4, 2002
(the "Merger Agreement"), among the Company, TWI Holdings, Inc., a Delaware
corporation ("Parent"), TWI Acquisition Corp., a Delaware corporation
("Purchaser") and certain shareholders of the Company, on the Closing Date, the
Purchaser will be merged into the Company, with the Company as the surviving
corporation.

     The Company desires to directly employ Employee from and after the Closing
Date by amending and restating in its entirety the existing Employment Agreement
dated as of December 31, 1999 between Tempur-Pedic, Inc., a Kentucky corporation
and wholly-owned subsidiary of the Company ("TPI"), and Employee (the "Former
Agreement"), and Employee desires to be directly employed by the Company in such
manner, on the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by the Company and
Employee,

     IT IS HEREBY AGREED AS FOLLOWS:

                                    ARTICLE I

                                   EMPLOYMENT

     1.1  Term of Employment. Effective as of the Closing Date, the Company
employs Employee, and Employee accepts employment by the Company, for the period
commencing on the Closing Date and ending on the first anniversary of the
Closing Date, subject to earlier termination as hereinafter set forth in Article
III (the "Employment Term"). Following the expiration of the Employment Term,
the Employment Term shall be automatically renewed for successive one-year
periods (collectively, the "Renewal Terms"; individually, a "Renewal Term")
unless, at least 90 days prior to the expiration of the Employment Term or the
then current Renewal Term, either party provides the other with a written notice
of intention not to renew, in

<PAGE>


which case the Employee's employment with the Company, and the Company's
obligations hereunder, shall terminate as of the end of the Employment Term or
said Renewal Term, as applicable, provided however that Employee shall agree to
continue his employment hereunder at the option of the Company for a period of 6
months following written notice by either party of intention to terminate or not
to renew (other than any such written notice given within 90 days following a
Change in Control). Except as otherwise expressly provided herein, the terms of
this Agreement during any Renewal Term shall be the same as the terms in effect
immediately prior to such renewal, subject to any such changes or modifications
as mutually may be agreed between the parties as evidenced in a written
instrument signed by both the Company and Employee. As used herein, "Change in
Control" shall mean a change in the ownership of the Company, such that more
than 50% of the equity securities of the Company are acquired by any person or
group (as such terms are defined for purposes of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended) that does not own common stock of
the Company on the Closing Date; provided, however, no Change in Control shall
be deemed to occur (a) as a result of the consummation of the transactions
contemplated by the Merger Agreement or (b) if such Change in Control is
effected pursuant to any internal reorganization of the Company (including, by
way of example, establishment of a new holding company for the Company) that
does not result in a change of more than 50% of the ultimate equity ownership of
the Company.

     1.2  Position and Duties. Employee shall be employed in the position of
Executive Vice President or such other executive position as may be assigned
from time to time by the Company's Chief Executive Officer. In such capacity,
Employee shall be subject to the authority of, and shall report to, the
Company's Chief Executive Officer. Employee's duties and responsibilities shall
include all those customarily attendant to such position and such other duties
and responsibilities as may be assigned by the Chief Executive Officer. Employee
shall devote Employee's entire business time, loyalty, attention and energies
exclusively to the business interests of the Company while employed by the
Company, and shall perform his duties and responsibilities diligently and to the
best of his ability.

                                   ARTICLE II

                         COMPENSATION AND OTHER BENEFITS

     2.1  Base Salary. The Company shall pay Employee an initial annual salary
of $260,000.00 ("Base Salary"), payable in accordance with the normal payroll
practices of the Company. The Employee's Base Salary will be reviewed and be
subject to adjustment by the Board of Directors on or about January 1 of each
year beginning with January 1, 2004.

     2.2  Performance Bonus. Employee will be eligible to earn an annual
performance-based bonus based on a formula approved by the Company's Board of
Directors and incorporated herein by this reference for each full or pro-rata
portion of the fiscal year during which Employee is employed by the Company (a
"Bonus Year"), the terms and conditions of which as well as Employee's
entitlement thereto shall be determined annually in the sole discretion of the
Company's Board of Directors (the "Performance Bonus"). The amount of the
Performance

                                       2

<PAGE>

Bonus will vary based on the achievement of performance criteria in the formula
established by the Company's Board of Directors, but the formula will be set to
target a Performance Bonus equal to 30% of Base Salary as of January 1/st/ of
the Bonus Year if the performance criteria in the formula are met.

     2.3  Benefit Plans. Employee will be eligible to participate in the
Company's retirement plans that are qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended, and in the Company's welfare benefit
plans that are generally applicable to all executive employees of the Company
(the "Plans"), in accordance with the terms and conditions thereof.

     2.4  Expenses. The Company shall reimburse Employee for all authorized and
approved expenses incurred in the course of the performance of Employee's duties
and responsibilities pursuant to this Agreement and consistent with the
Company's policies with respect to travel, entertainment and miscellaneous
expenses, and the requirements with respect to the reporting of such expenses.

     2.5  Automobile Allowance. The Company shall either pay to Employee an
automobile allowance of $600.00 per month or provide Employee with an automobile
for business and personal use.

     2.6  Vacation. Employee shall be entitled to vacation in any calendar year
in accordance with the Company's general vacation policies for similarly
situated executive employees.

     2.7  Grant of Stock Options. On or promptly following the Closing Date,
Parent shall grant Employee options to purchase shares of the Class B-1 Voting
Common Stock of Parent representing 0.850% of the fully-diluted common stock of
Parent as of the Closing Date for a purchase price per share equal to the fair
market value per share of Class B-1 Voting Common Stock of Parent (as determined
by the Board of Directors of Parent), pursuant to a Stock Option Agreement
between Parent and Employee. Such options shall vest on an annual basis in equal
installments over a four-year period from the Closing Date. Such options, and
any shares issued upon exercise of such options, shall be subject to certain
termination and repurchase rights of the Parent upon termination of employment
of Employee, and shall be subject to restrictions on transfer as set forth in
the Stock Option Agreement, the Stock Repurchase Agreement attached thereto as
an exhibit and the Stockholder Agreement among Parent and its stockholders.

                                   ARTICLE III

                                   TERMINATION

     3.1  Right to Terminate; Automatic Termination.

          (a)  Termination by Company Without Cause. Subject to Section 3.2, the
Company may terminate Employee's employment and all of the Company's obligations
under this Agreement at any time and for any reason.

                                       3

<PAGE>

          (b)  Termination by Employee for Good Reason. Subject to Section 3.2,
Employee may terminate his employment obligation hereunder (but not his
obligation under Article IV hereof) for "Good Reason" (as hereinafter defined)
if Employee gives written notice thereof to the Company (which notice shall
specify the grounds upon which such notice is given) and the Company fails,
within 30 days of receipt of such notice, to cure or rectify the grounds for
such Good Reason termination set forth in such notice. "Good Reason" shall mean
any of the following: (i) relocation of Employee's principal workplace over 60
miles from the Company's existing workplaces without the consent of Employee
(which consent shall not be unreasonably withheld, delayed or conditioned), or
(ii) the Company's material breach of the Agreement which is not cured within 30
days after receipt by the Company from Employee of written notice of such
breach.

          (c)  Termination by Company For Cause. Subject to Section 3.2, the
Company may terminate Employee's employment and all of the Company's obligations
under this Agreement at any time "For Cause" (as defined below) by giving notice
to Employee stating the basis for such termination, effective immediately upon
giving such notice or at such other time thereafter as the Company may
designate. "For Cause" shall mean any of the following: (i) Employee's willful
and continued failure to substantially perform the reasonably assigned duties
with the Company which are consistent with Employee's position and job
description referred to in this Agreement, other than any such failure resulting
from incapacity due to physical or mental illness, after a written notice is
delivered to Employee by the Board of Directors of the Company which
specifically identifies the manner in which Employee has not substantially
performed the assigned duties, (ii) Employee's willful engagement in illegal
conduct which is materially and demonstrably injurious to the Company, (iii)
Employee's conviction by a court of competent jurisdiction of, or his pleading
guilty or nolo contendere to, any felony, or (iv) Employee's commission of an
act of fraud, embezzlement, or misappropriation against the Company, including,
but not limited to, the offer, payment, solicitation or acceptance of any
unlawful bribe or kickback with respect to the Company's business. For purposes
of this paragraph, no act, or failure to act, on Employee's part shall be
considered "willful" unless done, or omitted to be done, in knowing bad faith
and without reasonable belief that the action or omission was in, or not opposed
to, the best interests of the Company. Any act, or failure to act, expressly
authorized by a resolution duly adopted by the Board of Directors or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, in good faith and in the best interests of the Company.
Notwithstanding the foregoing, Employee shall not be deemed to have been
terminated For Cause unless and until there shall have been delivered to
Employee a copy of a resolution, duly adopted by the affirmative vote of not
less than a majority of the entire membership of the Board of Directors at a
meeting of the Board called and held for such purpose (after reasonable notice
to Employee and an opportunity for Employee, together with Employee's counsel,
to be heard before the Board), finding that in the good faith opinion of the
Board of Directors Employee committed the conduct set forth above in (i), (ii),
(iii) or (iv) of this Section and specifying the particulars thereof in detail.

          (d)  Termination Upon Death or Disability. Subject to Section 3.2,
Employee's employment and the Company's obligations under this Agreement shall
terminate: (i)

                                       4

<PAGE>

automatically, effective immediately and without any notice being necessary,
upon Employee's death; and (ii) in the event of the disability of Employee, by
the Company giving notice of termination to Employee. For purposes of this
Agreement, "disability" means the inability of Employee, due to a physical or
mental impairment, for 90 days (whether or not consecutive) during any period of
360 days, to perform, with reasonable accommodation, the essential functions of
the work contemplated by this Agreement. In the event of any dispute as to
whether Employee is disabled, the matter shall be determined by the Company's
Board of Directors in consultation with a physician selected by the Company's
health or disability insurer or another physician mutually satisfactory to the
Company and the Employee. The Employee shall cooperate with the efforts to make
such determination or be subject to immediate discharge. Any such determination
shall be conclusive and binding on the parties. Any determination of disability
under this Section 3.1 is not intended to alter any benefits any party may be
entitled to receive under any long-term disability insurance policy carried by
either the Company or Employee with respect to Employee, which benefits shall be
governed solely by the terms of any such insurance policy. Nothing in this
subsection shall be construed as limiting or altering any of Employee's rights
under State workers compensation laws or State or federal Family and Medical
Leave laws.

     3.2  Rights Upon Termination.

          (a)  Section 3.1(a) and 3.1(b) Termination. If Employee's employment
terminates pursuant to Section 3.1(a) or 3.1(b) hereof, Employee shall have no
further rights against the Company hereunder, except for the right to receive,
following execution of a release and waiver in form satisfactory to the Company,
(i) any unpaid Base Salary, the value of any accrued but unused vacation, a
pro-rata portion (based on the number of days of the Bonus Year prior to the
effective date of termination) of any Performance Bonus that would be payable
with respect to the Bonus Year in which the termination occurs and any stock
options to which the Employee is entitled under the Stock Option Agreement, (ii)
payment of Base Salary for the duration of the Term or the Renewal Term (as
applicable) (the "Severance Period"), payable in accordance with the normal
payroll practices of the Company, (iii) reimbursement of expenses to which
Employee is entitled under Section 2.4 hereof, and (iv) continuation of the
welfare plans of the Company as detailed in Paragraph 2.3 hereof for the
duration of the Severance Period. Notwithstanding the above, in the event of a
Section 3.1(a) or (b) Termination during the Initial Term hereof, Employee shall
be entitled to the payments described in this Section for a Severance Period of
a minimum of 12 months.

          (b)  Section 3.1(c) and 3.1(d) Termination. If Employee's employment
is terminated pursuant to Sections 3.1(c) or 3.1(d) hereof, or if Employee quits
employment (other than for Good Reason) notwithstanding the terms of this
Agreement, Employee or Employee's estate shall have no further rights against
the Company hereunder, except for the right to receive, following execution of a
release and waiver in form satisfactory to the Company, (i) any unpaid Base
Salary and in the case of 3.1(d) hereof, the value of any accrued but unused
vacation, a pro-rata portion (based on the number of days of the Bonus Year
prior to the effective date of termination) of any Performance Bonus that would
be payable with respect to the Bonus Year in which the termination occurs, and
any stock options to which the Employee is entitled under the

                                       5

<PAGE>

Stock Option Agreement, and (ii) reimbursement of expenses to which Employee is
entitled under Section 2.4 hereof.

                                   ARTICLE IV

                CONFIDENTIALITY; NONCOMPETITION; NONSOLICITATION

     4.1  Covenants Regarding Confidential Information, Trade Secrets and Other
Matters. Employee covenants and agrees as follows:

          (a)  Definitions. For purposes of this Agreement, the following terms
are defined as follows:

               (1)  "Trade Secret" means all information possessed by or
developed for the Company or any of its subsidiaries, including, without
limitation, a compilation, program, device, method, system, technique or
process, to which all of the following apply: (i) the information derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who
can obtain economic value from its disclosure or use and (ii) the information is
the subject of efforts to maintain its secrecy that are reasonable under the
circumstances.

               (2)  "Confidential Information" means information, to the extent
it is not a Trade Secret, which is possessed by or developed for the Company or
any of its subsidiaries and which relates to the Company's or any of its
subsidiaries' existing or potential business or technology, which information is
generally not known to the public and which information the Company or any of
its subsidiaries seeks to protect from disclosure to its existing or potential
competitors or others, including, without limitation, for example: business
plans, strategies, existing or proposed bids, costs, technical developments,
existing or proposed research projects, financial or business projections,
investments, marketing plans, negotiation strategies, training information and
materials, information generated for client engagements and information stored
or developed for use in or with computers. Confidential Information also
includes information received by the Company or any of its subsidiaries from
others which the Company or any of its subsidiaries has an obligation to treat
as confidential.

          (b)  Nondisclosure of Confidential Information. Except as required in
the conduct of the Company's or any of its subsidiaries' business or as
expressly authorized in writing on behalf of the Company or any of its
subsidiaries, Employee shall not use or disclose, directly or indirectly, any
Confidential Information during the period of his employment with the Company.
In addition, following the termination for any reason of Employee's employment
with the Company, Employee shall not use or disclose, directly or indirectly,
any Confidential Information. This prohibition does not apply to Confidential
Information after it has become generally known in the industry in which the
Company conducts its business. This prohibition also does not prohibit
Employee's use of general skills and know-how acquired during and prior

                                       6

<PAGE>

to employment by the Company, as long as such use does not involve the use or
disclosure of Confidential Information or Trade Secrets.

          (c)  Trade Secrets. During Employee's employment by the Company,
Employee shall do what is reasonably necessary to prevent unauthorized
misappropriation or disclosure and threatened misappropriation or disclosure of
the Company's or any of its subsidiaries' Trade Secrets and, after termination
of employment, Employee shall not use or disclose the Company's or any of its
subsidiaries' Trade Secrets as long as they remain, without misappropriation,
Trade Secrets.

     4.2  Noncompetition.

          (a)  During Employment. During Employee's employment hereunder,
Employee shall not engage, directly or indirectly, as an employee, officer,
director, partner, manager, consultant, agent, owner (other than a minority
shareholder or other equity interest of not more than 1% of a company whose
equity interests are publicly traded on a nationally recognized stock exchange
or over-the-counter) or in any other capacity, in any competition with the
Company or any of its subsidiaries.

          (b)  Subsequent to Employment. For a two year period following the
termination of Employee's employment for any reason or without reason, Employee
shall not in any capacity (whether in the capacity as an employee, officer,
director, partner, manager, consultant, agent or owner (other than a minority
shareholder or other equity interest of not more than 1% of a company whose
equity interests are publicly traded on a nationally recognized stock exchange
or over-the-counter), directly or indirectly advise, manage, render or perform
services to or for any person or entity which is engaged in a business
competitive to that of the Company or any of its subsidiaries within any
geographical location wherein the Company or any of its subsidiaries produces,
sells or markets its goods and services at the time of such termination or
within a one-year period prior to such termination.

     4.3  Nonsolicitation. For a two year period following the termination of
Employee's employment for any reason or without reason, Employee shall not
solicit or induce any person who was an employee of the Company or any of its
subsidiaries on the date of Employee's termination or within three months prior
to leave his or her employment with the Company or any of its subsidiaries.

     4.4  Return of Documents. Immediately upon termination of employment,
Employee will return to the Company, and so certify in writing to the Company,
all the Company's or any of its subsidiaries' papers, documents and things,
including information stored for use in or with computers and software
applicable to the Company's and its subsidiaries' business (and all copies
thereof), which are in Employee's possession or under Employee's control,
regardless whether such papers, documents or things contain Confidential
Information or Trade Secrets.

     4.5  No Conflicts. To the extent that they exist, Employee will not
disclose to the Company any of Employee's previous employer's confidential
information or trade secrets.

                                       7

<PAGE>

Further, Employee represents and warrants that Employee has not previously
assumed any obligations inconsistent with those of this Agreement and that
employment by the Company does not conflict with any prior obligations to third
parties.

     4.6  Agreement on Fairness. Employee acknowledges that: (i) this Agreement
has been specifically bargained between the parties and reviewed by Employee,
(ii) Employee has had an opportunity to obtain legal counsel to review this
Agreement, and (iii) the covenants made by and duties imposed upon Employee
hereby are fair, reasonable and minimally necessary to protect the legitimate
business interests of the Company, and such covenants and duties will not place
an undue burden upon Employee's livelihood in the event of termination of
Employee's employment by the Company and the strict enforcement of the covenants
contained herein.

     4.7  Equitable Relief and Remedies. Employee acknowledges that any breach
of this Agreement will cause substantial and irreparable harm to the Company for
which money damages would be an inadequate remedy. Accordingly, notwithstanding
the provisions of Article V below, the Company shall in any such event be
entitled to obtain injunctive and other forms of equitable relief to prevent
such breach and the prevailing party shall be entitled to recover from the
other, the prevailing party's costs (including, without limitation, reasonable
attorneys' fees) incurred in connection with enforcing this Agreement, in
addition to any other rights or remedies available at law, in equity, by statute
or pursuant to Article V below.

                                    ARTICLE V

               AGREEMENT TO SUBMIT ALL EXISTING OR FUTURE DISPUTES
                             TO BINDING ARBITRATION

     The Company and Employee agree that any controversy or claim arising out of
or related to this Agreement or Employee's employment with or termination by the
Company that is not resolved by the parties shall be settled by arbitration
administered by the American Arbitration Association under its National Rules
for the Resolution of Employment Disputes. Said arbitration shall be conducted
in Lexington, Kentucky. The parties further agree that the arbitrator may
resolve issues of contract interpretation as well as law and award damages, if
any, to the extent provided by the Agreement or applicable law. The parties
agree that the costs of the arbitrator's services shall be borne by the Company.
The parties further agree that the arbitrator's decision will be final and
binding and enforceable in any court of competent jurisdiction. In addition to
the A.A.A.'s Arbitration Rules and unless otherwise agreed to by the parties,
the following rules shall apply:

          (a)  Each party shall be entitled to discovery exclusively by the
following means: (i) requests for admission, (ii) requests for production of
documents, (iii) up to 15 written interrogatories (with any subpart to be
counted as a separate interrogatory), and (iv) depositions of no more than six
individuals.

                                       8

<PAGE>

          (b)  Unless the arbitrator finds that delay is reasonably justified or
as otherwise agreed to by the parties, all discovery shall be completed, and the
arbitration hearing shall commence within five months after the appointment of
the arbitrator.

          (c)  Unless the arbitrator finds that delay is reasonably justified,
the hearing will be completed, and an award rendered within 30 days of
commencement of the hearing.

The arbitrator's authority shall include the ability to render equitable types
of relief and, in such event, any aforesaid court may enter an order enjoining
and/or compelling such actions or relief ordered or as found by the arbitrator.
The arbitrator also shall make a determination regarding which party's legal
position in any such controversy or claim is the more substantially correct (the
"Prevailing Party") and the arbitrator shall require the other party to pay the
legal and other professional fees and costs incurred by the Prevailing Party in
connection with such arbitration proceeding and any necessary court action.

Notwithstanding the foregoing provisions of this Article V, the parties
expressly agree that a court of competent jurisdiction may enter a temporary
restraining order or an order enjoining a breach of Article IV of this Agreement
without submission of the underlying dispute to an arbitrator. Such remedy shall
be cumulative and nonexclusive, and shall be in addition to any other remedy to
which the parties may be entitled.

                                   ARTICLE VI

                               GENERAL PROVISIONS

     6.1  Notices. Any and all notices provided for in this Agreement shall be
given in writing and shall be deemed given to a party at the earlier of (i) when
actually delivered to such party, or (ii) when mailed to such party by
registered or certified mail (return receipt requested) or sent to such party by
courier, confirmed by receipt, and addressed to such party at the address
designated below for such party as follows (or to such other address for such
party as such party may have substituted by notice pursuant to this Section
5.1):

          (a) If to the Company:        Tempur World, Inc.
                                        1713 Jaggie Fox Way
                                        Lexington, KY 40511
                                        Attention: President

          (b) If to Employee:           David Fogg
                                        3085 Paris Pike
                                        Lexington, KY  40511

     6.2  Entire Agreement. This Agreement contains the entire understanding and
the full and complete agreement of the parties and, effective as of the Closing
Date, supersedes and replaces any prior understandings and agreements among the
parties and/ or TPI with respect to

                                       9

<PAGE>

the subject matter hereof (including, without limitation, the Former Agreement).
The Employee hereby acknowledges and agrees that (a) no amounts are owed to him
under the Former Agreement, other than any accrued salary payments for the
current payroll period, and (b) effective upon the Closing Date, the Former
Agreement shall terminate and be of no further force or effect, and accordingly
the Employee shall have no rights to terminate his employment under the Former
Agreement for "Good Reason" (as defined in the Former Agreement) with respect to
any "Change in Control" (as defined in the Former Agreement) relating to the
transactions contemplated by the Merger Agreement.

     6.3  Amendment. This Agreement may be altered, amended or modified only in
a writing, signed by both of the parties hereto. Headings included in this
Agreement are for convenience only and are not intended to limit or expand the
rights of the parties hereto. References to Sections herein shall mean sections
of the text of this Agreement, unless otherwise indicated.

     6.4  Assignability. This Agreement and the rights and duties set forth
herein may not be assigned by either of the parties without the express written
consent of the other party. This Agreement shall be binding on and inure to the
benefit of each party and such party's respective heirs, legal representatives,
successors and assigns.

     6.5  Severability. If any court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then such
invalidity or unenforceability shall have no effect on the other provisions
hereof, which shall remain valid, binding and enforceable and in full force and
effect, and such invalid or unenforceable provision shall be construed in a
manner so as to give the maximum valid and enforceable effect to the intent of
the parties expressed therein.

     6.6  Waiver of Breach. The waiver by either party of the breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach by either party.

     6.7  Governing Law; Construction. This Agreement shall be governed by the
internal laws of the State of Kentucky, without regard to any rules of
construction concerning the party responsible for the drafting hereof.

     6.8. Effective Date. The terms and conditions of this Agreement shall be
effective as of the Closing Date. Prior to the Closing Date, the terms and
conditions of Employee's employment with TPI shall be as set forth in the Former
Agreement. In the event that the Merger Agreement is terminated, this Agreement
shall be null and void and of no further force and effect, and the Former
Agreement shall remain in full force and effect until amended or terminated in
accordance with its terms.

                  [Remainder of Page Intentionally Left Blank]

                                       10

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year written above.

                                        COMPANY:

                                        TEMPUR WORLD, INC.


                                        By: /s/ Robert B. Trussell, Jr.
                                           -------------------------------------
                                        Title: CEO


                                        EMPLOYEE:


                                        /s/ David C. Fogg
                                        ----------------------------------------
                                        David C. Fogg


                                        WITNESSED BY:


                                        /s/ Robert B. Trussell, Jr.
                                        ----------------------------------------


Date: 10/4/02
      ------------------

Acknowledgement and Agreement

Tempur-Pedic, Inc. hereby acknowledges and agrees to the terms of this Agreement
as they relate to the termination of the Former Agreement, and agrees that the
Former Agreement shall terminate as of the Closing Date.

TEMPUR-PEDIC, INC.


By: /s/ Jeffrey T. Lillich
   -------------------------------------
   Name:   Jeffrey T. Lillich
   Title:  Vice President of Finance
   Date:   10/4/02