**EMPLOYMENT
        AGREEMENT**
  This **EMPLOYMENT
        AGREEMENT** (the “ Agreement ”)
        is made as of the 10th day of November, 2006, among **** **SIMMONS
        BEDDING COMPANY** **,** a
        Delaware corporation (the “ Company ”) , **SIMMONS
        COMPANY,** a
        Delaware corporation (“ Holdings ”),
        and **GARY
        S. MATTHEWS** , an
        individual resident of the State of Connecticut (the “ Executive ”).
  **W** **** **I** **** **T** **** **N** **** **E** **** **S** **** **S** **** **E** **** **T** **** **H** **:**
  **WHEREAS,** the Company and Holdings desire that the Executive accept employment as
        President of the Company as of the Effective Date; and
  **WHEREAS,** the Company, Holdings and the Executive each desire to enter into this Agreement
        and set forth in writing the terms and conditions of the Executive’s employment
        with the Company;
  **NOW,
        THEREFORE,** in consideration of the premises and the mutual covenants and agreements
        contained herein, and other good and valuable consideration, the receipt
        and
        sufficiency of which are hereby acknowledged, the parties hereby agree as
        follows:
  **SECTION
        1.**  **EMPLOYMENT** **.**
  1.1.  Agreement .
        The Company hereby agrees to employ the Executive as of the Effective Date
        as
        its President, and the Executive hereby agrees to serve the Company in such
        capacity, in each case subject to the terms and conditions set forth
        herein.
  1.2.  Term . The
        period of the Executive’s employment under this Agreement shall commence on the
        first actual working day of employment of the Executive (the
        “ Effective
        Date ”) ,
        and shall continue thereafter for a continuously (on a daily basis) renewing
        eighteen (18) month term, without any further action by either the Company
        or
        the Executive, unless either the Executive or the Company shall provide written
        notice to the other parties hereto not to renew such term, specifying in
        such
        notice the date of such non-renewal, in which case this Agreement shall expire
        on the date that is eighteen (18) months after the date specified in such
        non-renewal notice. Notwithstanding the foregoing, this Agreement may be
        earlier
        terminated by the Company or the Executive in accordance with the terms of
        Section 6 below. The
        date on which termination or expiration of this Agreement is effective pursuant
        to the provisions of this Section 1.2 or of Section 6 shall be referred to
        herein as the “ Termination
        Date ”.
        For all purposes of this Agreement, references to the “ Term ”
        of the Executive’s employment hereunder shall mean the period commencing on the
        Effective Date and ending on the Termination Date.
  **SECTION
        2.**  **POSITION
        AND DUTIES** **.** The Executive shall serve as President of the Company. Executive’s duties and
        responsibilities as the President of the Company shall include the day-to-day
        management and operation of the business, as well as those duties customarily
        associated with an officer with a similar title, and Executive shall be
        accountable to, and shall have such additional powers, duties and
        responsibilities as may from time to time be prescribed by, the Chairman
        of the
        Board of Directors of the Company (the “ Company
        Board ”)
        and Chief Executive Officer, the Company Board or the Board of Directors
        of
        Holdings (the “ Holdings
        Board ”). **** The
        Executive shall perform and discharge, faithfully, diligently, competently
        and
        in good faith, such duties and responsibilities. The Executive (a) shall
        devote
        all of his business time and attention and his best efforts and ability to
        the
        business and affairs of the Company and its Subsidiaries and (b) shall not
        engage in other business activities whether or not compensated during the
        Term
        without the prior written consent of the Holdings Board (provided, however,
        that
        Executive may serve on the Board of Directors of up to two (2) for profit
        enterprises which are not engaged in a Competitive Business (currently, Molson
        Coors Brewing Co. and Van Wagner, Inc.), and may devote a reasonable amount
        of
        time and attention to the management of his personal affairs and investments
        or
        serving as a director or officer of any charitable, religious, civic,
        educational or trade organizations, so long as such activities, individually
        or
        in the aggregate, do not interfere with the performance of the Executive’s
        duties and responsibilities under this Agreement). The services of the Executive
        shall be based at the offices of the Company in the Metropolitan Area; provided , however ,
        that the Executive acknowledges that substantial travel will be required
        because
        the Company conducts operations and maintains facilities throughout the United
        States and elsewhere around the world.
  **SECTION
        3.**  **COMPENSATION** **.** Subject to all of the terms and conditions hereof and to the performance
        by the
        Executive of his duties and obligations to the Company:
  3.1.  Salary .
        As compensation for services performed during the Term, the Company shall
        pay
        the Executive a salary at a rate of $575,000 per annum or such other amount
        as
        may from time to time be established by the Holdings Board (such annual rate
        of
        salary in effect from time to time referred to as the “ Salary ”), payable
        at regular intervals in accordance with the Company’s normal payroll practices
        now or hereafter in effect .
        The Executive shall have an annual review and the Salary may be increased,
        but
        not decreased, from time to time. Any and all increases in the Executive’s
        Salary pursuant to this Section 3.1 shall cause the level of the Executive’s
        Salary hereunder to be increased by the amount of each such increase for
        all
        purposes of this Agreement, and the increased level of Salary as provided
        in
        this Section 3.1 shall become the level of the Executive’s Salary for the
        remainder of the Term unless and until there is a further increase in Salary
        as
        provided herein. Except as otherwise provided in this Agreement, the Salary
        shall be prorated for any period of less than a full fiscal year.
  3.2.  Annual
        Bonus .
        As additional compensation for services hereunder, the Executive shall be
        eligible for a bonus for each Bonus Year. The amount of any such bonus shall
        be
        determined based upon the achievement of specified levels of operating
        performance by the Company for such Bonus Year measured by the business plan
        approved by the Board for such fiscal year (the “ EBITDA  Performance ”).
        The target bonus payable for any Bonus Year with respect to the EBITDA
        Performance shall equal 70% of the Salary. The actual bonus payable for any
        Bonus Year with respect to the EBITDA Performance shall be computed as set
        forth
        on Exhibit
        A attached hereto and incorporated herein by this reference; provided, however,
        that the actual bonus payable, if any, in for the fiscal year of termination
        shall be determined in accordance with the provisions in Section 7. Any bonus
        payable under this Section 3.2 is referred to herein as an “ Annual
        Bonus ”.
        For the purpose of calculating Executive’s Annual Bonus for each fiscal year
        pursuant to this Section 3.2, the target bonus payable with respect to such
        fiscal year shall equal 70% of Executive’s actual salary earned by the Executive
        from the Company for such year (excluding any special bonuses paid pursuant
        to
        Section 3.4 below).
  3.3.  Restricted
        Stock Agreement; Stock Options, Class A Stock .
        (a) If the Executive makes the investment described in Section 3.3(b) below,
        the
        Executive shall be included as a participant in the Simmons Company Equity
        Incentive Plan, as amended from time to time (the “ Plan ”),
        pursuant to which Holdings will issue Executive on the Effective Date (i)
        40,000
        shares of the Class B Common Stock of Holdings (“ Class
        B Shares ”),
        subject to vesting and terms and conditions as provided in the restricted
        stock
        agreement between Holdings and the Executive dated as of the Effective Date
        (the
“Restricted Stock Agreement”) and (ii) options to purchase 30,000 shares of the
        Class B Common Stock of Holdings (“ Stock
        Options ”),
        subject to vesting and terms and conditions as provided in the stock option
        agreement between Holdings and the Executive dated as of the date of issuance
        (the “Stock Option Agreement”). The Class B Shares will be subject to the
        securityholders agreement between Holdings and Executive dated as of the
        same
        date (“ Securityholders
        Agreement ”)
        and the registration rights agreement between Holdings and Executive dated
        as of
        the same date (“ Registration
        Rights Agreement ”).
        Executive will pay $0.01 per Class B Share as well as the taxes due on the
        difference between the then current Fair Market Value (as defined in the
        Restricted Stock Agreement) as of the date of issuance and the $0.01 per
        share
        paid. The Stock Options will have a strike price equal to the Fair Market
        Value
        (as defined in the Stock Option Agreement) as of the Effective Date.
  (b)  The
        Executive will invest $250,000 of his personal funds in Class A Common Stock
        of
        Holdings (“Class A Shares”) as of the Effective Date. The Class A Shares will be
        held pursuant to the terms of the Securityholders Agreement and the Registration
        Rights Agreement. Executive will pay Fair Market Value (as defined in the
        Securityholders Agreement) as of the Effective Date.
  3.4  Signing
        Bonus .
        The Company will pay Executive a one-time bonus in an amount of $600,000
        on the
        Effective Date.
 
 3.5.  Business
        Expenses .
        During the Term, the Executive shall be entitled to receive prompt reimbursement
        by the Company for all reasonable business expenses incurred by him on behalf
        of
        the Company or any of its Subsidiaries or Affiliates in performing services
        hereunder; provided , however ,
        that the Executive shall properly account therefor in accordance with
        requirements for federal income tax deductibility and the Company’s and/or
        Company Board’s policies and procedures. The Company shall pay the Executive’s
        legal expenses incurred in connection with the preparation, negotiation and
        execution of this Agreement and the related Agreements referenced herein,
        up to
        a maximum of $25,000.
  3.6.  Fringe
        Benefits .
        At the election of the Executive and during the Term, the Executive shall
        be
        entitled to participate in or receive benefits under any life insurance,
        health
        and accident plans, retirement plans and other similar fringe benefit
        arrangements made generally available by the Company to its executives and
        key
        management employees, subject to and on a basis consistent with the terms,
        conditions and overall administration of such plans and arrangements. These
        benefits include an annual executive physical, financial planning, an additional
        long term disability insurance policy provided at no cost to Executive, and
        a
        $1.0 million term life insurance policy, convertible to whole life, which
        can be
        assumed by the Executive. Notwithstanding any other arrangements that the
        Company may make available from time to time to its other executives or key
        management employees, the Salary, the bonuses payable under this Agreement
        and
        participation in the Plan **** as
        provided in Section 3.3 of this Agreement shall be in lieu of the Executive’s
        participation in any other bonus, equity incentive or equity-type incentive
        plans established by the Company, except that the Executive shall be entitled
        to
        participate in any supplemental executive retirement plans, “401(k) plans” and
        profit sharing plans.
  3.7.  Vacations .
        During the Term, the Executive shall be entitled to four (4) weeks paid vacation
        in each year and shall also be entitled to all paid holidays given by the
        Company to its employees. The paid vacation days shall be prorated for any
        period of service hereunder less than a full year. The Executive shall not
        be
        entitled to cash compensation for any vacation time not taken during the
        Term
        and shall not be entitled to accrue unused vacation.
  3.8.  Transportation
        Stipend .
        During the Term, the Executive shall be entitled to a stipend of $1,000.00
        each
        month to cover expenses associated with transportation, including leasing
        or
        owning an automobile; provided , however ,
        that the Executive shall properly account therefor on his federal and applicable
        state tax returns and related documentation in accordance with the requirements
        for federal income tax deductibility and the Company’s policies and procedures.
  3.9.  Relocation
        and Interim Housing .
        The Executive shall be entitled to participate in the Company’s Level 1
        Relocation Package, eligibility for which shall continue for eighteen (18)
        months following the Effective Date. In addition, the Company will reimburse
        the
        Executive for interim housing and weekend travel expenses between the
        Metropolitan Area and Executive’s current residence, to a maximum amount of
        $5,000.00 per month, until such time as the Executive has relocated to the
        Metropolitan Area; provided , however ,
        that reimbursement is subject to the Executive submitting documentation
        substantiating such expenditures. The Executive agrees that he shall establish
        his primary residence in the Metropolitan Area within eighteen (18) months
        of
        the Effective Date. Payments pursuant to this Section 3.9 shall be net of
        any
        tax or other amounts required to be withheld by the Company under any applicable
        law or legal requirement.
  **SECTION
        4.**  **OFFICES;
        SUBSIDIARIES AND AFFILIATES; INDEMNIFICATION** **.**
  4.1.  Generally .
        The Executive agrees to serve during the Term, if elected or appointed thereto,
        in one or more positions as an officer or director of the Company or any
        of its
        Subsidiaries or Affiliates, or as an officer, trustee, director or other
        fiduciary of any pension or other employee benefit plan of the Company or
        any of
        its Subsidiaries or Affiliates. Service in such additional positions will
        be
        without additional compensation except for reimbursement of reasonably related
        business expenses on the same terms as provided elsewhere in this
        Agreement.
  4.2.  Indemnification .
        The Company agrees that in connection with the Executive’s service in additional
        positions as provided under Section 4.1, the Executive shall be entitled
        to the
        benefit of any indemnification provisions in the charter and by-laws of the
        Company and any of its Subsidiaries and Affiliates for which the Executive
        serves in such an additional position and any director and officer liability
        insurance coverage carried by the Company and any of its Subsidiaries and
        Affiliates for which the Executive serves as an officer or director; provided,  however, that this Section 4.2 shall not impose on the Company or any of its Subsidiaries
        or Affiliates any obligation to include any such indemnification provisions
        in
        its charter or by-laws or to maintain any such insurance coverage.
  **SECTION
        5.**  **RESTRICTED
        ACTIVITIES** **.**
  (A)  Executive
        acknowledges that (1) the Company has separately bargained and paid additional
        consideration for the restrictive covenants herein; and (2) the Company will
        provide certain benefits to Executive hereunder in reliance on such covenants
        in
        view of the unique and essential nature of the services Executive will perform
        on behalf of the Company and its Subsidiaries and Affiliates and the great,
        immediate and irreparable injury that would befall the Company, its Subsidiaries
        and Affiliates should Executive breach such covenants.
  (B)  Executive
        further acknowledges that his services are of a special, unique and
        extraordinary character and that his position with the Company will place
        him in
        a position of confidence and trust with employees of the Company and its
        Subsidiaries and Affiliates and with the Company’s other constituencies and will
        bring him into close contact with many of the Company’s, its Subsidiaries’ and
        Affiliates’ Customers, Customer Prospects, Vendors, Trade Secrets, and
        Confidential Information.
  (C)  Executive
        further acknowledges that the type and periods of restrictions imposed by
        the
        covenants in this Section 5 are fair, reasonable and necessary to protect
        the Company’s legitimate business interests and its Customer, Customer Prospect,
        and/or Vendor relationships, Trade Secrets, and Confidential Information
        and
        that such restrictions will not prevent Executive from earning a
        livelihood.
  (D)  Having
        acknowledged the foregoing, Executive covenants and agrees with Company as
        follows:
  5.1.  Duty
        of Confidentiality .
        Executive agrees that during his employment with the Company and for a period
        of
        five (5) years following the termination of such employment for any reason,
        Executive shall not directly or indirectly divulge or make use of any Confidential
        Information outside of his employment with the Company (so long as the information remains
        confidential) without the prior written consent of the Company. Executive
        shall
        not directly or indirectly misappropriate, divulge, or make use of Trade
        Secrets
        for an indefinite period of time, so long as the information remains a Trade Secret as defined
        by
        the DUTSA and/or any other applicable law. Executive further agrees that
        if he
        is questioned about information subject to this agreement by anyone not
        authorized to receive such information, Executive will notify the Company’s
        General Counsel within 24 hours. Executive acknowledges that applicable law
        may
        impose longer duties of non-disclosure, especially for Trade Secrets, and
        that
        such longer periods are not shortened by this Agreement.
 
 5.2.  Return
        of Confidential Information And Company Property .
        Executive agrees to return all Confidential Information and/or Trade Secrets
        within three (3) calendar days following the termination of his employment
        for
        any reason. To the extent Executive maintains Confidential Information and/or
        Trade Secrets in electronic form on any computers or other electronic devices
        owned by him, Executive agrees to irretrievably delete all such information
        and
        to confirm the fact of deletion in writing within three (3) calendar days
        following termination of employment with the Company for any reason. Executive
        also agrees to return all property in his possession at the time of the
        termination of his employment with the Company, including but not limited
        to all
        documents, records, tapes, and other media of every kind and description
        relating to the Business of the Company and its Customers, Customer Prospects,
        and/or Vendors, and any copies, in whole or in part, whether or not prepared
        by
        the Excecutive, all of which shall remain the sole and exclusive property
        of the
        Company.
 
 5.3.  Proprietary
        Rights .
        Proprietary Rights shall be promptly and fully disclosed by Executive to
        the
        Company’s General Counsel and shall be the exclusive property of the Company as
        against Executive and Executive’s successors, heirs, devisees, legatees and
        assigns. Executive hereby assigns to the Company his entire right, title,
        and
        interest therein and shall promptly deliver to the Company all papers, drawings,
        models, data, and other material relating to any of the foregoing Proprietary
        Rights conceived, made, developed, created or reduced to practice by Executive
        as aforesaid. All copyrightable Proprietary Rights shall be considered “works
        made for hire.” Executive shall, upon the Company’s request and at its expense,
        execute any documents necessary or advisable in the opinion of the Company’s
        counsel to assign, and confirm the Company’s title in the foregoing Proprietary
        Rights and to direct issuance of patents or copyrights to the Company with
        respect to such Proprietary Rights as are the Company’s exclusive property as
        against Executive and Executive’s successors, heirs, devisees, legatees and
        assigns under this Section
        5.3 .
        or to vest in the Company title to such Proprietary Rights as against Executive
        and Executive’s successors, heirs, devisees, legatees and assigns, the expense
        of securing any such patent or copyright, however, to be borne by the
        Company.
 
 5.4.  Non-Competition .
        Executive covenants and agrees that, during the term of his employment with
        the
        Company and for eighteen (18) months after the termination thereof, regardless
        of the reason for the employment termination, Executive will not, directly
        or
        indirectly, anywhere in the Continental United States or Canada, on behalf
        of
        any Competitive Business serve in a senior executive or similar capacity,
        whether as owner, partner, investor, consultant, agent, employee or co-venturer,
        or undertake any planning for any Competitive Business.
 
 5.5.  Non-Solicitation
        of Customers, Customer Prospects, and Vendors .
        Executive also covenants and agrees that during the term of his employment
        with
        the Company and for eighteen (18) months after the termination thereof,
        regardless of the reason for the employment termination, Executive will not,
        directly or indirectly, solicit or attempt to solicit any business from any
        of
        the Company’s Customers, Customer Prospects, and/or Vendors with whom he had
        business related contact during the last two (2) years of his employment
        with
        the Company.
 
 5.6.  Non-Solicitation
        of Employees .
        Executive also covenants and agrees that during the term of his employment
        with
        the Company and for eighteen (18) months after the termination thereof,
        regardless of the reason for the employment termination, Executive will not,
        directly or indirectly, on his own behalf or on behalf of or in conjunction
        with
        any person or legal entity, recruit, solicit, or induce, or attempt to recruit,
        solicit, or induce, any non-clerical employee of the Company with whom Executive
        had personal contact or supervised while performing his Job Duties, to terminate
        their employment relationship with the Company.
 
 5.7.  No
        Disparagement .
        (a) Executive will not make any negative, disparaging or defamatory statement,
        comment, or remark, directly or indirectly, either in writing or any other
        medium, regarding the Company, Thomas H. Lee Partners, or any of their
        respective officers, directors, employees, affiliates, subsidiaries, successors
        and assigns, compelled truthful testimony under oath being expressly excepted
        from this Section 5.7 and permitted.
 
 (b)
        Following the termination of the Executive’s employment for any reason, none of
        the Company, Holdings or the executive leadership team and General Counsel
        of
        the Company or Holdings will make any negative, disparaging or defamatory
        statement, comment, or remark, directly or indirectly, either in writing
        or any
        other medium, about the Executive externally, compelled truthful testimony
        under
        oath being expressly excepted from this Section 5.7 and permitted.
 
 5.8.  False
        Claims Representations, Cooperation and Promises .
        Executive also agrees to disclose to the Company any information he learns
        concerning any conduct involving the Company that he has any reason to believe
        may be unlawful. Executive promises to cooperate fully with the Company during
        and after his employment with the Company in any investigation the Company
        undertakes into matters occurring during his employment with Company. Executive
        agrees that, as and when requested by the Company whether during or after
        his
        employment with the Company, he will fully cooperate with Company in effecting
        a
        smooth transition of his responsibilities to others. If requested by the
        Company, Executive will promptly and fully respond to all inquiries from
        the
        Company and its representatives relating to any claims or lawsuits which
        relate
        to matters which occurred during his employment with the Company. If Executive
        is contacted as a potential witness to any claim or in any litigation at
        any
        time, he will notify Company of any such contact or request as promptly as
        practicable (but in no event more than five (5) business days) after learning
        of
        it and will permit the Company to take all steps it deems to be appropriate,
        if
        any, to prevent his involvement, or to be present during any such discussions.
        This Section does not prohibit Executive’s participation as a witness to the
        extent otherwise legally required but does require that Executive provide
        Company with notice and the opportunity to object and/or
        participate.
 
 5.9.  Outside
        Activities .
        The Executive agrees that, during his employment with the Company, he will
        not
        undertake any outside activity (except as explicitly allowed pursuant to
        Section
        2), whether or not competitive with the business of the Company or any of
        its
        Subsidiaries or Affiliates, that could reasonably give rise to a conflict
        of
        interest with his duties and obligations to the Company or any of its
        Subsidiaries or Affiliates.
  5.10.  Ownership
        of Securities .
        Notwithstanding the provisions set forth herein, the Executive shall have
        the
        right to (a) invest in or acquire any class of securities issued by any Person
        not engaged in a Competitive Business, or (b) acquire as a passive investor
        (with no involvement in the operations or management of the business) up
        to 1%
        of any class of securities which is (i) issued by any Person engaged in a
        Competitive Business, and (ii) publicly traded on a national securities exchange
        or over-the-counter market.
  **SECTION
        6.**  **TERMINATION** **.** Subject to the respective continuing obligations of the parties hereto,
        including those set forth in Section 5, the Executive’s employment by the
        Company hereunder may be terminated prior to the expiration of the Term as
        follows:
  6.1.  Death .
        The Executive’s employment hereunder shall terminate upon his
        death.
  6.2.  Incapacity .
        If the Executive shall have been unable to perform his duties hereunder by
        reason of any physical or mental illness, injury or other incapacity (a)
        for any
        period of sixty (60) consecutive days or (b) for a total of one hundred twenty
        (120) days in any period of twelve (12) consecutive calendar months, in the
        reasonable judgment of the Holdings Board, after consultation with such experts,
        if any, as the Holdings Board may deem necessary or advisable, the Company
        may
        terminate the Executive’s employment hereunder by written notice to the
        Executive.
  6.3.  Cause .
        The Company may terminate the Executive’s employment hereunder for Cause at any
        time upon written notice to the Executive. For purposes of this Agreement,
        the
        Company shall have “ Cause ”
        to terminate the Executive’s employment hereunder upon: (a) the Executive’s
        breach of any of his material obligations set forth in this Agreement, which
        breach, if capable of being cured, is not cured within fifteen (15) days
        after
        receipt by the Executive of written notice from the Holdings Board of such
        breach; (b) the Executive’s breach of his fiduciary duties involving a matter of
        material consequence as an officer or director of the Company or any of its
        Subsidiaries or Affiliates, or as an officer, trustee, director or other
        fiduciary of any pension or employee benefit plan of the Company or any of
        its
        Subsidiaries or Affiliates, which breach, if capable of being cured, is not
        cured within fifteen (15) days after receipt by the Executive of written
        notice
        from the Holdings Board of such breach; or (c) the Executive’s commission of a
        felony involving fraud, personal dishonesty or moral turpitude (whether or
        not
        in connection with his employment).
  6.4.  Other
        than for Cause .
        The Company may terminate the Executive’s employment hereunder other than for
        Cause at any time upon written notice to the Executive.
  6.5.  Good
        Reason .
        The Executive may terminate the Executive’s employment hereunder for Good Reason
        at any time upon sixty (60) days’ prior written notice to the Company. In the
        event of termination of the Executive pursuant to this Section 6.5, the Holdings
        Board or the Company Board may elect to waive the period of notice or any
        portion thereof. For the purposes of this Agreement, the Executive shall
        have
“ Good
        Reason ”
        to terminate the Executive’s employment hereunder upon: (a) material diminution
        in the nature or scope of Executive’s responsibilities, duties or authority, in
        each case except in the event of termination of the Executive’s employment
        pursuant to Section 6.1, 6.2, 6.3 or 6.6; provided,  however, that the Company’s failure to continue Executive’s appointment or election as a
        director or officer of any of its Affiliates and any diminution of the business
        of the Company or any of its Affiliates, including without limitation the
        sale
        or transfer of any or all of the assets of the Company or any of its Affiliates,
        shall not constitute “Good Reason”, (b) material failure of the Company to
        provide Executive the Salary and benefits in accordance with the terms of
        Section 3 hereof, or (c) failure of the Company to indemnify the Executive
        (or
        advance expenses in connection with indemnification) in connection with the
        Executive’s services hereunder as required by the Company under law or pursuant
        to its charter, by-laws or other contractual arrangements with the Executive
        then in effect, which failure shall not have been cured within fifteen (15)
        days
        after receipt by the Company of written notice from the Executive of such
        breach.
  6.6.  Other
        than for Good Reason or Justifiable Cause .
        The Executive may terminate his employment hereunder at any time upon sixty
        (60)
        days prior written notice to the Company. In the event of termination of
        the
        Executive pursuant to this Section 6.6, the Holdings Board may elect to waive
        the period of notice, or any portion thereof.
  6.7  Justifiable
        Cause .
        The Executive may terminate his employment for “ Justifiable
        Cause ”
        upon sixty (60) days prior written notice to the Company at any time within
        ninety (90) days after the failure of the Company to appoint the Executive
        as
        Chief Executive Officer of the Company promptly after the termination, for
        any
        reason, of Charles Eitel as Chief Executive Officer of the Company.
  **SECTION
        7.**  **COMPENSATION
        UPON TERMINATION** **.**
  7.1.  Death .
        In the event of the Executive’s death during the Term, the Company shall pay or
        transfer, as the case may be, to the Executive’s designated beneficiary or, if
        no beneficiary has been designated by the Executive, to his estate, (1) his
        Salary that is earned and unpaid at the date of death and (2) on the earlier
        of
        (i) the date of the release of the audited financial statements of the Company
        for the Bonus Year during which death occurs or (ii) the date which is one
        hundred twenty (120) days after the end of such Bonus Year, an amount equal
        to
        the product of (x) the Annual Bonus that the Executive would otherwise have
        earned for such Bonus Year if death had not occurred, multiplied  by (y) a fraction, the numerator of which is the number of days from the beginning
        of such Bonus Year until the date of death and the denominator of which is
        365.
  7.2.  Incapacity .
        If the Executive’s employment shall be terminated by reason of his incapacity
        pursuant to Section 6.2, then the Company shall (1) continue to pay the
        Executive his Salary, and the Executive shall continue to participate in
        the
        employee benefit, retirement, compensation plans and other perquisites as
        provided in Section 3, through the Termination Date, and (2) pay the Executive
        on the earlier of (i) the date of the release of the audited financial
        statements of the Company for the Bonus Year during which termination pursuant
        to Section 6.2 occurs or (ii) the date which is one hundred twenty (120)
        days
        after the end of such Bonus Year, an amount equal to the product of (x) the
        Annual Bonus that the Executive would otherwise have earned for such Bonus
        Year
        if termination pursuant to Section 6.2 had not occurred, multiplied  by (y) a fraction, the numerator of which is the number of days from the beginning
        of such Bonus Year until the date of termination pursuant to Section 6.2
        and the
        denominator of which is 365.
  7.3  Cause
        or Without Good Reason .
        If the Company shall terminate the Executive’s employment hereunder for Cause
        pursuant to Section 6.3, or the Executive shall terminate the Executive’s
        employment hereunder without Good Reason pursuant to Section 6.6, the Company
        shall have no further obligations to the Executive under this Agreement other
        than the payment of his Salary through the Termination Date.
  7.4.  Other
        than for Cause; Good Reason .
  (a)  If
        the Company shall terminate the Executive’s employment hereunder without Cause
        pursuant to Section 6.4 or the Executive shall terminate his employment
        hereunder for Good Reason pursuant to Section 6.5, then:
  (1)
        the Company shall pay to the Executive:
  (A)
        as soon as reasonably practicable after the Termination Date, his Salary
        through
        the Termination Date;
  (B)
        as soon as reasonably practicable following the last day of the month in
        which
        the Termination Date occurs, his Annual Bonus as described in Section 3.2,
        subject to the following sentence. For purposes of computing the percentage
        of
        Targeted EBITDA which has been achieved pursuant to Exhibit
        A (the “ Applicable
        Percentage ”),
        the Company shall compare (i) the actual EBITDA achieved from the beginning
        of
        the fiscal year in which the Termination Date occurs through the last day
        of the
        month in which the Termination Date occurs to (ii) the budgeted EBITDA from
        the
        beginning of the fiscal year in which the Termination Date occurs through
        the
        last day of the month in which the Termination Date occurs. The amount of
        the
        Annual Bonus payable to the Executive under this Section 7.4(a)(1)(B) shall
        be
        equal to (x) the applicable percentage of Salary set forth opposite the
        Applicable Percentage on Exhibit
        A ,
        multiplied by (y) the Executive's Salary paid or payable from the beginning
        of
        the fiscal year in which the Termination Date occurs through the Termination
        Date; and
 
 (C)
        for a period of eighteen (18) months after the Termination Date, severance
        at a
        rate equal to 100% of his Salary in effect at the time notice of termination
        is
        given;
  (2)
        until the earlier to occur of (A) the passage of eighteen (18) months after
        the
        Termination Date or (B) the date on which the Executive commences other
        employment in connection with which the Executive is eligible to receive
        medical
        and dental benefits (including self-employment or engaging in an enterprise
        as a
        sole proprietor or partner) (the “ Benefits
        Termination Date ”),
        if the Executive was participating in any Company medical, vision and dental
        plans pursuant to Section 3.6 and subject to any employee contribution
        applicable to Executive as of the Termination Date, the Company shall contribute
        to the premium cost of Executive’s coverage and that of Executive’s qualified
        dependents under its medical, vision, and dental plans at the same rate that
        it
        contributes to the premium cost for its active executives and their qualified
        dependents.
  (b)  The
        obligations of the Company to the Executive under this Section 7.4 (other
        than
        Section 7.4(a)(1)(A)) are conditioned upon the Executive’s signing a release of
        claims in the form of Exhibit
        B (the “ Release ”)
        within twenty-eight (28) days of the date on which notice of termination
        is
        given and upon such Release remaining in full force and effect thereafter.
        All
        severance payments under this Section 7.4 will be in the form of salary
        continuation, payable in accordance with the normal payroll practices of
        the
        Company and will begin at the Company’s next regular payroll period following
        the effective date of the Release, but shall be retroactive to the Termination
        Date.
  7.5  Justifiable
        Cause .
        If the Executive shall terminate the Executive’s employment hereunder for
        Justifiable Cause pursuant to Section 6.7, then (a) as soon as reasonably
        practicable after the Termination Date, the Company shall pay his Salary
        through
        the Termination Date, (b) the Company shall pay to the Executive for a period
        of
        twelve (12) months after the Termination Date, severance at a rate equal
        to 100%
        of his Salary in effect at the time notice of termination is given, and (c)
        the
        Executive shall be entitled to participate in the Company’s Level 1 Relocation
        Package with respect to the Executive’s relocation from the Metropolitan Area to
        another location in the United States. The obligations of the Company to
        the
        Executive under this Section 7.5 (other than Section 7.5(a)) are conditioned
        upon the Executive’s signing the Release within twenty-eight (28) days of the
        date on which notice of termination is given and upon such Release remaining
        in
        full force and effect thereafter. All severance payments under this Section
        7.5
        will be in the form of salary continuation, payable in accordance with the
        normal payroll practices of the Company and will begin at the Company’s next
        regular payroll period following the effective date of the Release, but shall
        be
        retroactive to the Termination Date.
  7.6.  Early
        Termination of Severance Benefits .
        If the Executive’s employment hereunder is terminated by the Company without
        Cause pursuant to Section 6.4 or the Executive shall terminate his employment
        hereunder for Good Reason pursuant to Section 6.5 or the Executive shall
        terminate his employment hereunder for Justifiable Cause, and Executive
        subsequently engages in the activities prohibited by Section 5, then the
        Company
        may thereafter immediately terminate and shall not be required to continue
        on
        behalf of the Executive or his dependents and beneficiaries any compensation
        provided for in Section 7.4 or Section 7.5, as the case may be, **** other
        than those benefits that the Company may be required to maintain for the
        Executive under applicable law.
  7.7.  Continuation
        of Health Care Benefits .
        If Executive was enrolled in the Company’s medical, vision, and/or dental plans
        as of the Termination Date, then upon the expiration of the Company’s
        obligations pursuant to this Section 7 with respect to such medical, vision
        and/or dental benefits, the Executive may elect to continue Executive’s
        participation and that of Executive’s qualified dependents in those plans for
        the remainder of the COBRA period, if any, by paying the full premium cost
        plus
        an administrative fee, without regard to any provision of this
        Agreement.
  7.8.  Post-Termination
        Obligations Generally .
        Except as expressly set forth in this Section 7, and in the Restricted Stock
        Agreement, Stock Option Agreement, the Securityholders Agreement and
        Registration Rights Agreement, the Company and Holdings shall have no further
        obligations to the Executive following expiration of the Term, and performance
        by the Company and/or Holdings of any obligation specifically provided in
        this
        Section 7 shall constitute full settlement of any claim that the Executive
        may
        have on account of such termination against the Company and/or Holdings or
        their
        respective Subsidiaries and Affiliates and all of their respective past and
        present officers, directors, stockholders, controlling Persons, employees,
        agents, representatives, successors and assigns and all other others connected
        with any of them, both individually and in their official
        capacities.
  7.9.  Payments
        after Death .
        Should the Executive die after the termination of his employment with the
        Company while any amounts are payable to him hereunder, this Agreement shall
        inure to the benefit of and be enforceable by Executive’s executors,
        administrators, heirs, distributees, devisees and legatees, and all amounts
        payable hereunder shall be paid in accordance with the terms of this Agreement
        to Executive’s devisee, legatee or other designee or, if there is no such
        designee, to his estate.
  7.10  Stock
        Repurchases .
        Upon termination of the Executive for any reason, Holdings shall have the
        right
        to repurchase the Executive’s vested and unvested Class B Shares and Class A
        Shares pursuant to the terms of the Restricted Stock Agreement, Stock Option
        Agreement, Securityholders Agreement and Registration Rights Agreement
        (collectively, the “ Related
        Agreements ”).
        For purposes of each of the Related Agreements, the Executive shall be
        considered a “Senior Manager” as used and defined in such Related Agreement. For
        purposes of Section 3.5 of the Securityholders Agreement, a termination by
        the Executive for Justifiable Cause shall have the same consequences as a
        termination for “good reason” thereunder.
  **SECTION
        8.**  **CONFLICTING
        AGREEMENTS** **.** The Executive hereby represents and warrants that the execution of this
        Agreement and the performance of the Executive’s obligations hereunder will not
        breach or be in conflict with any other agreement to which the Executive
        is a
        party or by which the Executive is bound and that the Executive is not now
        subject to any covenants against competition, non-solicitation or similar
        covenants that would affect the performance of the Executive’s obligations
        hereunder or would restrict the Company in its operations, including hiring
        any
        additional executives. The Executive will not disclose to or use on behalf
        of
        Holdings or the Company any confidential or proprietary information or trade
        secrets of a third party without such party’s consent.
  **SECTION
        9.**  **WITHHOLDING** **.** Except as otherwise expressly provided, all payments made by the Company
        under
        this Agreement shall be net of any tax or other amounts required to be withheld
        by the Company under any applicable law or legal requirement.
  **SECTION
        10.**  **NOTICES** **.** All notices, requests and demands to or upon the parties hereto to be effective
        shall be in writing, by facsimile, by overnight courier or by registered
        or
        certified mail, postage prepaid and return receipt requested, and shall be
        deemed to have been duly given or made upon: (a) delivery by hand, (b) two
        business days after being sent by nationally recognized overnight courier;
        or
        (c) in the case of transmission by facsimile, one business day after when
        confirmation of receipt is obtained. Such communications shall be addressed
        and
        directed to the parties as follows (or to such other address as either party
        shall designate by giving like notice of such change to the other
        party):
  If
        to the Executive:
  Gary
        S. Matthews
 130
        Lower Cross Road
 Greenwich,
        CT 06831
 
 with
        a copy to:
 
 Schiff
        Hardin LLP
 6600
        Sears Tower
 Chicago,
        IL 60606
 Attention:
        John F. Adams
 Facsimile:
        (312) 258-5600
 
 If
        to the Company:
  Simmons Bedding
        Company
 One
        Concourse Parkway, Suite 800
 Atlanta,
        Georgia, 30328
 Attention:
        Chief Executive Officer, General Counsel
 and
        Senior Vice President - Human Resources
 Facsimile:
        (770) 206-2669
 
 with
        copies to:
  Thomas
        H. Lee Partners, L.P.
 100
        Federal Street, 35 th Floor
 Boston,
        MA 02109
 Attention:  Scott
        A. Schoen
 Todd
        M. Abbrecht
 George
        Taylor
 Facsimile:
        (617) 227-3514
 
 and
 
 Weil,
        Gotshal & Manges, LLP
  100
        Federal Street, 34th Floor
  Boston,
        Massachusetts 02110
  Attention:
        Marilyn French
  Facsimile: (617)
        772-8333
  **SECTION
        11.**  **DEFINITIONS;
        CERTAIN RULES OF CONSTRUCTION** **.** Certain capitalized terms are used in this Agreement with the specific meanings
        defined below in this Section 11. Except as otherwise explicitly specified
        to
        the contrary or unless the context clearly requires otherwise, (a) the
        capitalized term “ Section ”
        refers to sections of this Agreement, (b) the capitalized term “ Exhibit ”
        refers to exhibits to this Agreement, (c) references to a particular Section
        include all subsections thereof, (d) the word “ including ”
        shall be construed as “including, without limitation”, and (e) references to
“ $ ”
        mean United States dollars.
  11.1.  “ Affiliate ”
        shall mean (a) any Person directly or indirectly controlling, controlled
        by or
        under direct or indirect common control with the Company (or other specified
        Person), (b) any other Person which, together with its Affiliates (as defined
        in
        clause (a) above), shall, directly or indirectly, own beneficially or control
        the voting of at least 10% of the ownership interest in the Company (or other
        specified Person) and (c) any other Person of which the Company (or other
        specified Person) and its Affiliates (as defined in clauses (a) and (b) above)
        shall, directly or indirectly, own beneficially or control the voting of
        at
        least 10% of any class of outstanding capital stock or other evidence of
        beneficial interest or of any interest as a general partner or joint
        venturer.
  11.2.  “ Agreement ”
        is defined in the Preamble to this Agreement.
  11.3.  “ Annual
        Bonus ”
        is defined in Section 3.2.
  11.4.  “ Benefits
        Termination Date ”
        is defined in Section 7.4(a)(3).
  11.5.  “ Bonus
        Year ”
        means fiscal year of the Company, provided , however ,
        that in the event the fiscal year of the Company is changed, any calculations
        made under Section 3.2 and Exhibit
        A hereto shall be proportionately adjusted as the Board, in its sole and absolute
        discretion, shall deem appropriate.
  11.6.  “ Business
        of the Company ”
        means the highly competitive business of developing, manufacturing, marketing,
        distributing, and/or selling sleep products, including mattresses, foundations,
        changing pads and covers, and bedding components for the same.
 
 11.7.  “ Cause ”
        is defined in Section 6.3.
  11.8.  “ Common
        Stock ”
        means the common stock, $.01 par value, of Holdings.
  11.9.  “ Class
        A Shares ”
        is defined in Section 3.3
  11.10  “ Class
        B Shares ”
        is defined in Section 3.3
  11.11.  “ Company ”
        is defined in the preamble to this Agreement.
  11.12.  “ Company
        Board ”
        is defined in Section 2.
  11.13.  “ Competitive
        Business ”
        means any firm, partnership, joint venture, corporation and/or any other
        entity
        and/or person, including but not limited to Sealy Corporation, Serta
        International, Spring Air Company, Select Comfort Corporation, Tempur-Pedic
        International, Inc., King Koil Licensing Company, Inc., and/or any licensee
        of
        such entity, that develops, manufactures, markets, distributes, and/or sells
        any
        of the sleep products described in Section
        11.6.
  11.14.  “ Confidential
        Information ”
        means information about the Company and its Customers, Customer Prospects,
        and/or Vendors that is not generally known outside of the Company, which
        you
        will learn of in connection with your employment with the Company. Confidential
        Information may include, without limitation: (1) the terms of this Agreement,
        except as necessary to inform a subsequent employer of the restrictive covenants
        contained herein and/or your attorney, spouse, or professional tax advisor
        and,
        even as to such a person, only if the person agrees to honor this
        confidentiality requirement; (2) the Company’s business policies, finances, and
        business plans; (3) the Company’s financial projections, including but not
        limited to, annual sales forecasts and targets and any computation(s) of
        the
        market share of Customers and/or Customer Prospects; (4) sales information
        relating to the Company’s product roll-outs; (5) customized software, marketing
        tools, and/or supplies that you may be provided access to by the Company
        and/or
        may create; (6) the identity of the Company’s Customers, Customer Prospects,
        and/or Vendors (including names, addresses, and telephone numbers of Customers,
        Customer Prospects, and/or Vendors); (7) any list(s) of the Company’s Customers,
        Customer Prospects, and/or Vendors; (8) the account terms and pricing upon
        which
        the Company obtains products and services from its Vendors; (9) the account
        terms and pricing of sales contracts between the Company and its Customers;
        (10)
        the proposed account terms and pricing of sales contracts between the Company
        and its Customer Prospects; (11) the names and addresses of the Company’s
        employees and other business contacts of the Company; and (12) the techniques,
        methods, and strategies by which the Company develops, manufactures, markets,
        distributes, and/or sells any of the sleep products described in Section
        11.6 .
  11.15.  “ Customers ”
        means any firm, partnership, corporation and/or any other entity and/or person
        that purchased or purchases from the Company any of the sleep products described
        in Section
        11.6 .
 
 11.16.  “ Customer
        Prospects ”
        means any firm, partnership, corporation and/or any other entity and/or person
        reasonably expected by the Company to purchase from the Company any of the
        sleep
        products described in Section
        11.6 .
 
 11.17.  “ $ ”
        is defined in the introductory paragraph to this Section 11.
  11.18.  “ EBITDA
        Performance ”
        is defined in Section 3.2.
  11.19.  “ Effective
        Date ”
        is defined in the preamble.
  11.20.  “ Executive ”
        is defined in the preamble.
  11.21.  “ Exhibit ”
        is defined in the introductory paragraph to this Section 11.
  11.22.  “ Good
        Reason ”
        is defined in Section 6.5.
  11.23.  “ including ”
        is defined in the introductory paragraph to this Section 11.
  11.24.  “ Holdings ”
        means Simmons Company, a Delaware corporation.
  11.25.  “ Holdings
        Board ”
        is defined in Section 2.
  11.26  “ Justifiable
        Cause ”
        is defined in Section 6.7.
  11.27.  “ Metropolitan
        Area” means the Atlanta, Georgia metropolitan area.
  11.28.  “ Person ”
        means any individual, partnership, corporation, association, trust, joint
        venture, limited liability company, unincorporated organization or entity,
        and
        any government, governmental department or agency or political subdivision
        thereof.
  11.29.  “ Plan ”
        is defined in Section 3.3.
  11.30.  “ Products ”
        means all products planned, researched, developed, tested, manufactured,
        sold,
        licensed, leased or otherwise distributed or put into use by the Company
        or any
        of its Subsidiaries or Affiliates, together with all services provided or
        planned by the Company or any of its Subsidiaries or Affiliates, during the
        Executive’s employment.
  11.31.  “ Proprietary
        Rights ”
        means any and all inventions, discoveries, developments, methods, processes,
        compositions, works, supplier and customer lists (including information relating
        to the generation and updating thereof), concepts, and ideas (whether or
        not
        patentable or copyrightable) conceived, made, developed, created, or reduced
        to
        practice by Executive (whether at the request or suggestion of the Company
        or
        otherwise, whether alone or in conjunction with others, and whether during
        regular hours of work or otherwise) prior to or during Executive’s, which may be
        directly or indirectly useful in, or related to, the Business of the Company
        or
        any business or products contemplated by the Company while Executive was
        or is
        an employee, officer, or director of the Company.
  11.32  “ Related
        Agreements ”
        is defined in Section 7.10.
  11.33.  “ Release ”
        is defined in Section 7.4(b).
  11.34.  “ Registration
        Rights Agreement ”
        is defined in Section 3.3.
  11.35.  “ Restricted
        Stock Agreement ”
        is defined in Section 3.3.
  11.36.  “ Salary ”
        is defined in Section 3.1.
  11.37.  “ Section ”
        is defined in the introductory paragraph to this Section 11.
  11.38.  “ Securityholders
        Agreement ”
        is defined in Section 3.3.
  11.39.  “ Stock
        Options ”
        are defined in Section 3.3.
  11.40.  “ Stock
        Option Agreement ”
        is defined in Section 3.3.
  11.41.  “ Subsidiary ”
        means any Person of which the Company (or other specified Person) shall,
        directly or indirectly, own beneficially or control the voting of at least
        a
        majority of the outstanding capital stock (or other shares of beneficial
        interest) entitled to vote generally or at least a majority of the partnership,
        joint venture or similar interests, or in which the Company (or other specified
        Person) or a Subsidiary thereof shall be a general partner or joint venturer
        without limited liability.
  11.42.  “ Term ”
        is defined in Section 1.2.
  11.43.  “ Termination
        Date ”
        is defined in Section 1.2.
  11.44.  “ Trade
        Secret ”
        means Confidential Information which meets the additional requirements of
        the
        Delaware Uniform Trade Secrets Act (“DUTSA”), 6 Del.
        Code Ann. §§ 2001-2011,
        and/or under any other applicable law.
  11.45.  “ Vendors ”
        means any individual and/or entity that provided goods and services to the
        Company.
  **SECTION
        12.**  **MISCELLANEOUS** **.** No
        provision of this Agreement may be modified, waived or discharged unless
        such
        waiver, modification or discharge is approved by the Board and agreed to
        in
        writing by the Executive and such officer as may be specifically authorized
        by
        the Board in connection with such approval. No waiver by either party hereto
        at
        any time of compliance with or of any breach by the other party hereto of
        any
        condition or provision of this Agreement to be performed by such other party
        shall be deemed a waiver of similar or dissimilar provisions or conditions
        at
        the same or at any prior or subsequent time. No agreements or representations,
        oral or otherwise, express or implied, with respect to the subject matter
        hereof
        have been made by either party which are not set forth expressly in this
        Agreement.
  **SECTION
        13.** **GOVERNING
        LAW AND REMEDIES** .
        In addition to any other remedies at law or in equity it may have, each party
        shall be entitled to seek equitable relief, including injunctive relief and
        specific performance, in connection with a breach of the provisions of this
        Agreement. The Company and Executive acknowledge and agree that they are
        bound
        by their arbitration obligations under Exhibit
        C attached hereto, which the Company and Executive also hereby agree to execute
        contemporaneously and is an integral part of this Agreement. The Company
        and
        Executive agree and acknowledge that all provisions of this Agreement shall
        be
        governed by and construed  in
        accordance with the laws of the State of Delaware exclusively and without
        reference to principles of conflict of laws; provided, however, the Federal
        Arbitration Act (“FAA”) will supersede state laws to the extent inconsistent.
        The Arbitrator(s) shall have no authority to apply the law of any other
        jurisdiction.
 
 **/s/GSM**  **Your
        initials to acknowledge agreement to Governing Law and Remedies provision
        in** **Section
        13** **.**
 
  **SECTION
        14.**  **SEVERABILITY** **.** If any portion or provision of this Agreement shall to any extent be declared
        illegal or unenforceable by a court of competent jurisdiction, then the
        remainder of this Agreement, or the application of such portion or provision
        in
        circumstances other than those as to which it is so declared illegal or
        unenforceable, shall not be affected thereby, and each portion and provision
        of
        this Agreement shall be valid and enforceable to the fullest extent permitted
        by
        law.
  **SECTION
        15.**  **COUNTERPARTS** **.** This Agreement may be executed in any one or more counterparts, each of which
        shall be deemed to be an original but all of which together shall constitute
        one
        and the same instrument. Executed counterparts may be delivered by facsimile
        transmission.
  **SECTION
        16.**  **ENTIRE
        AGREEMENT** **.** This Agreement, the Plan, the Restricted Stock Agreement, Securityholders
        Agreement and Registration Rights Agreement constitute the entire agreement
        between the parties hereto, and supersede any and all prior communications,
        agreements and understandings, written or oral, with respect to the terms
        and
        conditions of the Executive’s employment with the Company.
  **SECTION
        17.**  **ASSIGNMENT** **.** This Agreement shall inure to the benefit of and be binding upon (a) the
        Executive, his personal or legal representatives, executors, administrators,
        successors, heirs, distributees, devisees and legatees and (b) the Company,
        Holdings and their respective successors (including by means of reorganization,
        merger, consolidation or liquidation) and permitted assigns. The Company
        or
        Holdings may assign this Agreement to any of its Subsidiaries or to any
        successor of the Company or Holdings by reorganization, merger, consolidation
        or
        liquidation and any transferee of all or substantially all of the business
        or
        assets of the Company or Holdings or of any division or line of business
        of the
        Company or Holdings with which the Executive is at any time associated. The
        Company requires the personal services of the Executive hereunder and the
        Executive may not assign this Agreement.
  
  \
  **[Signatures
        next page]**
  BO1:\147807\04\361R04!.DOC\74339.0001
  **IN
        WITNESS WHEREOF** ,
        the parties hereto have executed and delivered this Agreement, or caused
        this
        Agreement to be executed and delivered by its duly authorized officer, as
        the
        case may be, all as of the date first above written.
 
 
 **SIMMONS
        BEDDING COMPANY**
  /s/Charles
        R.
        Eitel
 Name:Charles
        R.
        Eitel
 Its: Chairman
        and
        CEO
 
 
 **SIMMONS
        COMPANY**
 
 By: /s/Charles
        R. Eitel
 Name:Charles
        R.
        Eitel
 Its: Chairman
        and
        CEO
 
  /s/Gary
        S. Matthews
 **GARY
        S. MATTHEWS**
 
  BO1:\147807\04\361R04!.DOC\74339.0001
  **Exhibit
        A**
  **COMPUTATION
        OF EBITDA PERFORMANCE**
  **%
                  of Budgeted EBITDA Target**
              **%
                  of Annual Bonus**
              **%
                  of Salary**<902
              0
              090
              9.09
              6.36391
              18.18
              12.72692
              27.27
              19.08993
              36.36
              25.45294
              45.45
              31.81595
              54.55
              38.18596
              63.64
              44.54897
              72.73
              50.91198
              81.82
              57.27499
              90.91
              63.637100
              100
              701The budgeted EBITDA target will be reset each year. The Board will
                approve
                the budgeted EBITDA target for any fiscal year on or prior to the
                later of
                (a) the date which is 45 days after the end of such fiscal year or
                (b) the
                date which is 15 days after the date of release of the audited financial
                statements of the Company for the immediately preceding fiscal
                year.2Upon attaining 100% of budgeted EBITDA target, the amount of the
                Annual
                Bonus will be increased thereafter by 4% of Salary for each 1% increase
                in
                EBITDA in excess of 100% of the Target. The Annual Bonus is not
                capped.
 
 
  
  **EXHIBIT
        B - RELEASE OF CLAIMS**
  FOR
        AND IN CONSIDERATION OF the special payments and benefits to be provided
        in
        connection with the termination of my employment in accordance with the terms
        of
        the Employment Agreement dated as of __________ 2006 (as amended and in effect from time to time, the " Employment
        Agreement ")
        among SIMMONS COMPANY, a Delaware corporation (“Holdings”), and SIMMONS BEDDING
        COMPANY, a Delaware corporation, along with its subsidiaries, parents, joint
        ventures, affiliated entities, and includes its successors and assigns or
        any
        such related entities (the “Company”), and me, I, on my own behalf and on behalf
        of my personal or legal representatives, executors, administrators, successors,
        heirs, distributees, devisees and legatees and all others connected with
        me,
        hereby release and forever discharge the Company and their respective Affiliates
        (as defined in the Employment Agreement) and all of their respective past
        and
        present officers, directors, stockholders, controlling persons, employees,
        agents, representatives, successors and assigns and all others connected
        with
        any of them (all collectively, the " Released "),
        both individually and in their official capacities, from any and all rights,
        liabilities, claims, demands and causes of action of any type (collectively,
        " Claims ")
        which I have had in the past, now have, or might now have, through the date
        of
        my signing of this Release of Claims, in any way resulting from, arising
        out of
        or connected with my employment or its termination or pursuant to any federal,
        state, foreign or local employment law, regulation or other requirement
        (including, without limitation, Title VII of the Civil Rights Act of 1964,
        the
        Age Discrimination in Employment Act, the Americans with Disabilities Act,
        and
        the fair employment practices laws of the state or states in which I have
        been
        employed by the Company, each as amended from time to time); provided , however ,
        that the foregoing release shall not apply to (a) any right explicitly set
        forth
        in the Employment Agreement to special payments and benefits to be provided
        in
        connection with the termination of my employment, (b) any right to
        indemnification set forth in Section 4.2 of the Employment Agreement or (c)
        any
        rights as a participant in any retirement, profit sharing or other employment
        benefit plan in accordance with the terms of such plans.
 
 In
        signing this Release of Claims, I acknowledge that I have had at least 21
        days
        from the date of notice of termination of my employment to consider the terms
        of
        this Release of Claims and that such time has been sufficient; that I have
        been
        advised in writing by the Company to seek the advice of an attorney prior
        to
        signing this Release of Claims; and that I am signing this Release of Claims
        voluntarily and with a full understanding of its terms.
 
 I
        understand that I may revoke this Release of Claims at any time within seven
        days of the date of my signing by written notice to the Company and that
        this
        Release of Claims will take effect only upon the expiration of such seven-day
        revocation period and only if I have not timely revoked it.
 
 Intending
        to be legally bound, I have signed this Release of Claims under seal as of
        the
        _____ day of ________________, _________.
 
 __________________________________________
 GARY
        S. MATTHEWS
 
 
 
  **EXHIBIT
        C - ARBITRATION CLAUSE**
 
 (1)  In
        consideration of the benefits described in the Employment Agreement executed
        by
        GARY S. MATTHEWS (the “Employee” or ”you”) and SIMMONS COMPANY, a Delaware corporation
        (“Holdings”), and SIMMONS
        BEDDING COMPANY ,
        a Delaware corporation, along with its subsidiaries, parents, joint ventures,
        affiliated entities, and includes its successors and assigns or any such
        related
        entities (the “Company”) on the same date hereto and into which this Exhibit C
        is incorporated (“Agreement”), the parties hereby agree that any controversy or
        claim arising under federal, state and local statutory or common or contract
        law
        between the Company and/or Holdings and you involving the construction or
        application of any of the terms, provisions, or conditions of the Agreement,
        including, but not limited to, breach of contract, tort, and/or fraud, must
        be
        submitted to arbitration on the written request of the parties served on
        the
        other. Arbitration shall be the exclusive forum for any such controversy.
        For
        example, if the Company and you disagree as to whether the Company had Cause,
        as
        defined by the Agreement, to terminate your employment or if the Company
        and you
        have a dispute concerning the interpretation or enforceability of one or
        more
        restrictive covenants, the parties will resolve the dispute exclusively through
        arbitration. The Arbitrator’s decision shall be final and binding on the
        parties.
  (2)  If
        any claim or cause of action at law or in equity is filed by a party in any
        state or federal court which results in arbitration being compelled and/or
        the
        claim or cause of action being dismissed, stayed, and/or removed to arbitration
        pursuant to this Agreement, the party who instituted the claim or cause of
        action in state or federal court, either wholly or in substantial part, shall,
        at the discretion of the Arbitrator(s), reimburse the respondent for its
        reasonable attorneys’ fees, costs, and necessary disbursements to the extent
        permitted by law, in addition to any other relief to which it may be entitled,
        related to the state or federal court claim or action.
  (3)  Excluding
        the initial filing fee, which shall be borne by the claimant, the cost of
        arbitration shall be borne by the Company, unless the Arbitrator determines
        that
        any claim(s) brought by you was/were wholly frivolous or fraudulent. If an
        arbitration or any action at law or in equity is necessary to enforce or
        interpret the terms of this Agreement, the prevailing party, either wholly
        or in
        substantial part, shall, at the discretion of the Arbitrator, be entitled
        to its
        reasonable attorneys’ fees, costs, and necessary disbursements to the extent
        permitted by law, in addition to any other relief to which it may be
        entitled.
  (4)  The
        parties hereby agree that all claims must be submitted to arbitration
        administered by the American Arbitration Association’s Southeast Case Management
        Center in Atlanta, Georgia and the arbitration will be conducted in Atlanta,
        Georgia.
   (5)  The
        arbitration shall comply with and be governed by the American Arbitration
        Association’s Commercial Arbitration Rules (“Rules”) effective as of the
        execution date below, to the extent such Rules are not contrary to the express
        provisions of this Agreement. The parties also agree that the American
        Arbitration Association Optional Rules for Emergency Measures of Protection
        (“Emergency Rules”) shall apply to proceedings under this Agreement. The above
        Rules and Emergency Rules can be found at the following page of the American
        Arbitration Association’s website, www.adr.org : ** http://www.adr.org/sp.asp?id=22440 .
        You acknowledge that you should read these Rules and Emergency Rules and
        that it
        is your responsibility to be familiar with them prior to signing the Agreement.
        If you are unable to access the Rules and/or Emergency Rules at the above
        website, you can request a copy of them from a Company official prior to
        signing
        the Agreement.
  (6)  The
        parties agree and acknowledge that all provisions of this Agreement shall
        be
        governed by and construed  in
        accordance with the laws of the State of Delaware exclusively and without
        reference to principles of conflict of laws; provided, however, the Federal
        Arbitration Act (“FAA”) will supersede state laws to the extent inconsistent.
        Any claim(s) involving the construction or application of this Agreement
        must be
        submitted to arbitration within the statute of limitations period for such
        claim(s) under Delaware state law. The Arbitrator(s) shall have no authority
        to
        apply the law of any other jurisdiction.
  (7)  The
        dispute shall be heard and determined by one Arbitrator, unless the parties
        mutually consent in writing signed by you and an authorized representative
        of
        Company and/or Holdings to a panel of three (3) Arbitrators. Unless the parties
        mutually consent otherwise, the parties agree and request that the Arbitrator(s)
        issue a reasoned award in accordance with Commercial Arbitration Rule
        R-42(b).
  I
        UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY
        TRIAL.
 
 
 Executed
        this 10th day of November, 2006.
 (day)
        (month)
 
  
 GARY
        S. MATTHEWS      SIMMONS
        BEDDING COMPANY
 SIMMONS
        COMPANY
 
 /s/Gary
        S. Matthews   By:
        /s/Charles R. Eitel
 Name:
        /s/Charles R. Eitel
 Social
        Security #: __________  Title:
        Chariman and CEO_______________________________