<PAGE>

                                                                    EXHIBIT 10.1

August 3, 2005

Mr. Steve Fendrich
[Address]

Dear Steve:

Congratulations! On behalf of the Simmons Bedding Company it is a pleasure to
confirm our offer of employment to you. The position is Executive Vice President
of Sales, reporting to the Chairman & CEO, Charlie Eitel. You will have
responsibility for Simmons Bedding Company sales as well as SCUSA. Your
anticipated start date is August 9, 2005. The semi-monthly salary for the
position is $12,500 which equates to $300,000.

You are eligible for participation in Simmons Bedding Company's Management Bonus
Plan, with a target EBITDA and Sales Performance Based Bonus of 60% of your base
salary with no cap. Your 2005 bonus will follow SCUSA or Simmons Bedding
Company's targeted EBITDA and Sales Performance, whichever is greater.

Simmons will offer you 30,000 Class B shares to be purchased at fair market
value established at the August 9, 2005 Board of Directors meeting with a
vesting schedule to begin in 2005. You will retain your current Class B shares
of 12,500 which will follow SCUSA's vesting program.

Simmons will provide you with four weeks of vacation per year, a car allowance
of $750 per month and relocation assistance per our Level I policy which is
attached. You will be offered temporary living through June, 2006. We will
review the executive benefits package with you during your first few days of
employment. These executive benefits will include an executive physical, tax and
financial planning and we will apply for $1.0 million of term life insurance,
convertible to whole and can be assumed by the associate upon exiting the
Company. Eligibility for group insurance benefits commences on the first day of
the month following employment. Based on a start date of August 9, 2005, your
benefits eligibility will be September 1, 2005.

You will be eligible to start participating in our 401(k) plan at the first of
the month after completing 12 weeks of service. Plan entry dates are the first
of each month. If you begin work on August 9, 2005, you will be eligible to
enroll in the 401(k) plan on November 1, 2005.

In addition to the benefits listed above, Simmons is offering you a two year
severance agreement for a termination without cause. Please review the attached
document, sign and return with the offer letter.

Per the Immigration Reform and Control Act of 1986, we are required to verify
that you are a citizen of the United States or that you have the legal right to
work in the United States. When you report to work, you will be asked to produce
ORIGINAL documentation attesting to your status as noted on the attached list of
acceptable documentation. These originals will be viewed and returned to you.

You agree that the offer letter you signed with SC Holdings, Inc. and Sleep
Country USA, Inc., dated July 2, 2003, shall terminate when you sign this offer
letter including, without limitation, any rights to bonuses (except as stated
above), salary, severance and other benefits under the same.

In accepting this offer, you also give us assurance that you have not relied on
any agreements or representations, express or implied, with respect to your
employment that are not set forth expressly in this letter agreement. By your
execution of this letter agreement, you expressly acknowledge and agree that
this letter (a) constitutes the entire understanding between you and the Company
with respect to your employment with the Company and (b) supersedes all prior
and contemporaneous understandings and agreements, whether written or oral, with
respect to your employment with the Company.

We hope that you will find the tools and opportunities to help customize your
career and create your success. However, please note that employment with
Simmons Bedding Company is not for a specified term and can be terminated by you
or Simmons Bedding Company at any time for any reason, with or without cause or
advance notice. This offer of employment is contingent on the successful
completion of a background check and drug screen.

We look forward to you joining our team and believe you will make an excellent
contribution.

Sincerely,

/s/ Rhonda Rousch

                                       1
<PAGE>

Rhonda Rousch
Executive Vice President, Human Resources

ACKNOWLEDGEMENT:

I accept the offer of Executive Vice President of Sales and the conditions
explained in this letter.

Stephen G. Fendrich                               August 9, 2005
-----------------------------                          Date
Print Name

/s/ Stephen G. Fendrich
-----------------------------
Signature

                                       2