ex10_37.htm


    EXHIBIT 10.37

    

      RESTRICTED STOCK
AGREEMENT

       

      This
Restricted Stock Agreement (this “Agreement”) is made
as of
this             31st day of
March, 2006 (the “Effective Date”)
between Simmons Company, a Delaware corporation (the “Company”), and the
undersigned (the “Restricted
Shareholder”).  Certain capitalized terms used herein are
defined in Section
7 hereof.

       

      WHEREAS,
the Company believes it to be in the best interests of the Company and its
shareholders to take action to promote work-force stability, to reward
performance and otherwise align the Restricted Shareholder’s interests with
those of the Company;

       

      WHEREAS,
accordingly, the Company has determined to issue restricted stock to the
Restricted Shareholder in accordance with the provisions of this Agreement;
and

       

      WHEREAS,
the Company desires to be assured that the confidential information and goodwill
of the Company will be preserved for the exclusive benefit of the
Company.

       

      NOW,
THEREFORE, in consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

       

      1. Purchase and Sale of
Restricted Shareholder Stock.

       

      (a) Upon
execution of this Agreement and payment of the Original Purchase Price (as
hereinafter defined), the Company will issue to the Restricted Shareholder that
number of shares of Class B Common Stock, par value $0.01 per share, of the
Company (the “Class B
Common Stock”) set forth below such Restricted Shareholder’s name on the
signature page attached hereto, for a purchase price of $0.01 per share (the
“Original Purchase
Price”).  All of such shares of Class B Common Stock purchased
by the Restricted Shareholder pursuant to this Agreement are referred to herein
as “Restricted
Shareholder Stock.”  To secure the Company’s rights under the
Repurchase Option in Section 3, the
Company will retain possession of the certificates representing the Restricted
Shareholder Stock and will provide the Restricted Shareholder with copies
thereof.

       

      (b) The
parties agree that the fair market value of each share of Restricted Stock as of
the date hereof is $1.95.  The Restricted Shareholder, in his or her
sole discretion, may make an effective election with the Internal Revenue
Service (the “IRS”) under
Section 83(b) of the Code and the regulations promulgated
thereunder.  The Restricted Shareholder understands that under
applicable law such election must be filed with the IRS no later than thirty
(30) days after any acquisition of the Restricted Shareholder Stock to be
effective.  If the Restricted Shareholder files an effective election,
the excess of the fair market value of the Restricted Shareholder Stock (which
the IRS may assert is different from the fair market value determined by the
parties) covered by such election over the amount paid by the Restricted
Shareholder for the stock will be treated as ordinary income received by the
Restricted Shareholder, and the Company or its subsidiary, Simmons Bedding
Company, will withhold from the Restricted Shareholder’s compensation all
amounts required under applicable law.  If the Restricted Shareholder
does not file an effective election, all appreciation on the Restricted
Shareholder Stock from the date of issuance will generally be taxable as
ordinary income when such stock vests pursuant to this Agreement.

       

      (c) In
connection with the acquisition of the Restricted Shareholder Stock, the
Restricted Shareholder represents and warrants to the Company that:

       

      (i) the
Restricted Shareholder Stock to be acquired by the Restricted Shareholder will
be acquired for the Restricted Shareholder’s own account, for investment only
and not with a view to, or intention of, distribution thereof in violation of
the Securities Act, or any applicable state securities laws, and the Restricted
Shareholder Stock will not be disposed of in contravention of the Securities Act
or any applicable state securities laws or this Agreement or the
Securityholders’ Agreement;

       

      (ii) the
Restricted Shareholder, either alone or acting in conjunction with a Purchaser
Representative (as such term is defined in Regulation D of the Securities
Act), generally has such knowledge and experience in business and financial
matters and with respect to investments in securities of privately held
companies so as to enable the Restricted Shareholder to understand and evaluate
the risks and benefits of his or her investment in the Restricted Shareholder
Stock;

       

      (iii) the
Restricted Shareholder has no need for liquidity in his or her investment in the
Restricted Shareholder Stock and is able to bear the economic risk of his or her
investment in the Restricted Shareholder Stock for an indefinite period of time
and understands that the Restricted Shareholder Stock has not been registered or
qualified under the Securities Act or any applicable state securities laws, by
reason of the issuance of the Restricted Shareholder Stock in a transaction
exempt from the registration and qualification requirements of the Securities
Act or such state securities laws and, therefore, cannot be sold unless
subsequently registered or qualified under the Securities Act or such state
securities laws or an exemption from such registration or qualification is
available;

       

      (iv) the
Restricted Shareholder acknowledges that he or she is aware that the Shares may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that Rule are met.  Among the current conditions
for use of Rule 144 by certain holders is the availability to the public of
current information about the Company.  Such information is not now
available, and the Company has no current plans to make such information
available;

       

      (v) the
Restricted Shareholder has had an opportunity to ask questions and receive
answers concerning the terms and conditions of the offering of the Restricted
Shareholder Stock and has had full access to or been provided with such other
information concerning the Company as the Restricted Shareholder has requested;
and

       

      (vi) This
Agreement constitutes the legal, valid and binding obligation of the Restricted
Shareholder, enforceable in accordance with its terms, and the execution,
delivery and performance of this Agreement by the Restricted Shareholder does
not and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which the Restricted Shareholder is a party or any
judgment, order or decree to which the Restricted Shareholder is
subject.

       

      (d) As an
inducement to the Company to issue the Restricted Shareholder Stock to the
Restricted Shareholder and as a condition thereto, the Restricted Shareholder
acknowledges and agrees that:

       

      (i) neither
the issuance of the Restricted Shareholder Stock to the Restricted Shareholder
nor any provision contained herein shall entitle the Restricted Shareholder to
remain on the Board of or in the employment of the Company or any of its
Subsidiaries, if any, or affect the rights of the Company, its shareholders or
any of its Subsidiaries to terminate the Restricted Shareholder’s service to or
employment with the Company or any of its Subsidiaries at any time for any
reason; and

       

      (ii) except as
provided in any other agreement between the Company and/or Simmons Bedding
Company or any Subsidiary thereof and the Restricted Shareholder, the Company
shall have no duty or obligation to disclose to the Restricted Shareholder, and
the Restricted Shareholder shall have no right to be advised of, any material
information regarding the Company and its Subsidiaries, if any, at any time
prior to, upon or in connection with the forfeiture of the Restricted
Shareholder Stock upon the termination of the Restricted Shareholder’s service
to or employment with the Company or a Subsidiary thereof.

       

      (e) In
connection with the issuance and sale by the Company to the Restricted
Shareholder of the Restricted Shareholder Stock, the Company represents and
warrants that:

       

      (i) the
Company is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to own, lease and operate the assets used in its
business, to carry on its business as presently conducted, to enter into this
Agreement, to perform its obligations hereunder, and to consummate the
transactions contemplated hereby;

       

      (ii) the
Company has taken all corporate action necessary to authorize its execution and
delivery of this Agreement, its performance of its obligations thereunder, and
its consummation of the transactions contemplated thereby;

       

      (iii) this
Agreement constitutes a valid and binding obligation of the Company, enforceable
in accordance with its terms; and

       

      (iv) the
Restricted Shareholder Stock has been duly authorized and validly issued, fully
paid and nonassessable and will be free of all Encumbrances created by or
through the Company.  For purposes of this clause, “Encumbrance” means
any security interest, mortgage, lien, pledge, charge, easement, reservation,
restriction, or similar right of any third party.

       

      2. Vesting of Restricted
Shareholder Stock.

       

      (a) General.

       

      (i)          Vesting.  The
shares of Restricted Shareholder Stock granted hereunder (the “Shares”) will be
deemed “vested” (the “Vested Shares”) as
follows: Shares that are not Vested Shares as of the date hereof shall become
Vested Shares in accordance with this Section 2, based upon
the Company’s achievement of the Consolidated Adjusted EBITDA targets set forth
below (each, the “Target EBITDA”) for
each of the Company’s fiscal years ending December 30, 2006,
December 29, 2007, December 27, 2008 and December 26, 2009 (the “Measurement
Years”).

       

       

      EBITDA
Targets

       

      (dollars
in millions)

      


      
        	
                Measurement

                Years

              	
                Target
      EBITDA

              	
                Cumulative
      Target EBITDA

              	
                90%
      of Target

                EBITDA

              	
                90%
      of Cumulative Target
      EBITDA

              	
                Eligible

                Shares

              
	
                2006

              	
                $149.7

              	
                $149.7

              	
                $134.7

              	
                $134.7

              	
                25%
      of Restricted Shareholder Stock

              
	
                2007

              	
                $181.9

              	
                $331.6

              	
                $163.7

              	
                $298.4

              	
                25%
      of Restricted Shareholder Stock

              
	
                2008

              	
                $214.1

              	
                $545.7

              	
                $192.7

              	
                $491.1

              	
                25%
      of Restricted Shareholder Stock

              
	
                2009

              	
                $230.0

              	
                $775.7

              	
                $207.0

              	
                $698.1

              	
                25%
      of Restricted Shareholder Stock

              


      

      


       

      The
minimum Target EBITDA numbers set forth above shall be equitably adjusted by the
Board for acquisitions and dispositions made by the Company (whether by purchase
or sale of assets or stock, merger, consolidation or otherwise) and such
adjustments may take into account the pro forma annual Consolidated Adjusted
EBITDA of any acquired business, as determined by the Board.

      


      (A)           Performance Based
Vesting.  At the end of each Measurement Year, on the
Measurement Date, the percentage of Shares set forth above shall be eligible to
vest (the “Eligible
Shares”). On each Measurement Date, 50% of the Eligible Shares shall
become Vested Shares if at least 90% of the Target EBITDA amount was met for the
prior Measurement Year.  If more than 90% of the Target EBITDA amount
was met for the prior Measurement Year, then the Eligible Shares shall become
Vested Shares on a straight line basis such that an additional 5% of Eligible
Shares shall become Vested Shares for each 1% that actual Consolidated Adjusted
EBITDA exceeds 90% of the Target EBITDA amount.

      


      (ii)          Change of
Control.

       

      (A)           Shares
that are not Vested Shares will accelerate as set forth below upon a Change of
Control solely if the Company (a) achieves at least 90% of the Target EBITDA for
the Measurement Year immediately preceding the year in which the Change of
Control occurs, and (b) the actual Consolidated Adjusted EBITDA for the
Measurement Year immediately preceding the year in which the Change of Control
occurs exceeds the actual Consolidated Adjusted EBITDA for the preceding
year.  If (x) the conditions set forth in clauses (a) and (b) above
are met, and (y) the Company achieves 90% of the Cumulative Target EBITDA above
for the Measurement Year completed immediately prior to the Change of Control,
then 50% of the Shares that were Eligible Shares but which did not previously
become Vested Shares (the “Missed Shares”) and
50% of the Shares that are not yet Eligible Shares shall become Vested Shares.
If the Company achieves more than 90% of the Cumulative Target EBITDA above for
the immediately preceding Measurement Year, then a number of Missed Shares and
Shares that are not yet Eligible Shares will become Vested Shares, determined on
a straight line basis such that an additional 5% of the Missed Shares and 5% of
the Shares that are not yet Eligible Shares will become Vested Shares for each
1% that actual Consolidated Adjusted EBITDA for the immediately preceding
Measurement Year exceeds 90% of the Cumulative Target EBITDA set forth
above.

       

      (B)           Notwithstanding
the foregoing paragraph, Shares that are not Vested Shares will accelerate upon
a Change of Control which occurs in the Measurement Year ending
December 30, 2006 as follows:  if the Company achieves 90% of the
2006 Year to Date Target EBITDA (as defined below) for the month completed
immediately prior to the Change of Control, then 50% of the Shares that are not
yet Eligible Shares shall become Vested Shares.  The Target EBITDA for
each month in 2006 is set forth below and the 2006 Year to Date Target EBITDA
represents the cumulative Target EBITDA for the period commencing January 1,
2006 and ending on the last day of such month (the "Year to Date Target
EBITDA").  If the Company achieves more than 90% of the 2006 Year to
Date Target EBITDA for the month completed immediately prior to the Change of
Control, then a number of Shares that are not yet Eligible Shares will become
Vested Shares, determined on a straight line basis such that an additional 5% of
the Shares that are not yet Eligible Shares will become Vested Shares for each
1% that actual Consolidated Adjusted EBITDA for the period commencing January 1,
2006 and ending on the last day of the month immediately preceding the Change of
Control exceeds 90% of the 2006 Year to Date Target EBITDA.

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	
                Month

              	
                2006
      Monthly

                Target
      EBITDA

                (dollars
      in millions)

              	
                2006
      Year to Date

                Target
      EBITDA

                (dollars
      in millions)

              
	
                January

              	
                $11.9

              	
                $11.9

              
	
                February

              	
                $10.9

              	
                $22.9

              
	
                March

              	
                $10.5

              	
                $33.3

              
	
                April

              	
                $13.6

              	
                $46.9

              
	
                May

              	
                $11.4

              	
                $58.3

              
	
                June

              	
                $11.4

              	
                $69.7

              
	
                July

              	
                $16.0

              	
                $85.7

              
	
                August

              	
                $14.3

              	
                $100.0

              
	
                September

              	
                $14.1

              	
                $114.1

              
	
                October

              	
                $14.9

              	
                $129.1

              
	
                November

              	
                $10.7

              	
                $139.7

              
	
                December

              	
                $9.9

              	
                $149.7

              


      

      


       

      (b) In the
event the Restricted Shareholder ceases to serve on the Board of, or be employed
by the Company or any of its Subsidiaries on a full-time basis for any reason,
then (i) all Shares of Restricted Shareholder Stock shall cease vesting
effective as of the date upon which the Restricted Shareholder ceases to so
serve or be so employed (the “Termination Date”)
and, (ii) in the event that the Company achieves the Target EBITDA with respect
to the Measurement Year in which such termination occurs, then the Eligible
Shares with respect to such year multiplied by a fraction, the numerator of
which shall equal the number of whole months during such year that the
Restricted Shareholder served on the Board or remained employed with the Company
and the denominator of which is 12, shall become Vested Shares as of the end of
such year.

       

      3. Repurchase of
Shares.

       

      (a) In the
event that the Restricted Shareholder ceases to serve on the Board of, or be
employed by the Company or any of its Subsidiaries on a full-time basis for any
reason, then all Shares of Restricted Shareholder Stock (whether held by the
Restricted Shareholder or by one or more of the Restricted Shareholder’s
transferees) which as of the date of termination:

       

      (i) have not
vested pursuant to Section 2 hereof,
will be subject to repurchase by the Company, at its option (the “Non-Vested Repurchase
Option”), for the lower of the Original Purchase Price of the Restricted
Shareholder Stock and Fair Market Value as of the date of
repurchase;

       

      (ii) have
vested pursuant to Section 2 hereof,
will be subject to repurchase by the Company, at its option (the “Vested Repurchase
Option”), for Fair Market Value as of the date of
repurchase.

       

      (b) In the
event of a Change of Control, then all Shares of Restricted Shareholder Stock
(whether held by the Restricted Shareholder or by one or more of the Restricted
Shareholder’s transferees) which, as of the date of such Change of Control, have
not become Vested Shares pursuant to Section 2, will be
subject to repurchase by the Company, at its option (the “Non-Vested Change of Control
Repurchase Option”) for the lower of the Original Purchase Price of the
Restricted Shareholder Stock and Fair Market Value.

       

      (c) The
Non-Vested Change of Control Repurchase Option, together with the Non-Vested
Repurchase Option and the Vested Repurchase Option, are referred to collectively
as the “Repurchase
Options.” The Repurchase Options shall be exercised by the Company, or
its designee, from time to time, by delivering to the Restricted Shareholder a
written notice of exercise and a check in the amount of the Original Purchase
Price or Fair Market Value, as determined in accordance with Sections 3(a) and (b)
above.  Upon delivery of such notice and payment of the purchase price
as described above, the Company, or its designee, shall become the legal and
beneficial owner of the Shares of Restricted Shareholder Stock being repurchased
and all rights and interest therein or related thereto, and the Company, or its
designee, shall have the right to transfer to its own name the number of Shares
of Restricted Shareholder Stock being repurchased without further action by the
Restricted Shareholder or any of his or her transferees.  If the
Company or its designee elect to exercise the repurchase rights pursuant to this
Section 3 and
the Restricted Shareholder or his or her transferee fails to deliver the Shares
of Restricted Shareholder Stock in accordance with the terms hereof, the
Company, or its designee, may, at its option, in addition to all other remedies
it may have, deposit the purchase price in an escrow account administered by an
independent third party (to be held for the benefit of and payment over to the
Restricted Shareholder or his or her transferee in accordance herewith),
whereupon the Company shall by written notice to the Restricted Shareholder
cancel on its books the certificates(s) representing such Shares of Restricted
Shareholder Stock registered in the name of the Restricted Shareholder and all
of the Restricted Shareholder’s or his or her transferee’s right, title, and
interest in and to such Shares of Restricted Shareholder Stock shall terminate
in all respects.

       

      (d) Notwithstanding
the foregoing, if at any time the Company elects to purchase any Class B
Common Stock pursuant to this Section 3, the
Company shall pay the purchase price for the Class B Common Stock it
purchases (i) first, by offsetting indebtedness, if any, owing from such
Restricted Shareholder to the Company and (ii) then, by the Company’s delivery
of cash for the remainder of the purchase price, if any, against delivery of the
certificates or other instruments representing the Class B Common Stock so
purchased, duly endorsed; provided that, if any such
cash payment at the time such payment is required to be made would result
(A) in a violation of any law, statute, rule, regulation, policy, order,
writ, injunction, decree or judgment promulgated or entered by any federal,
state, local or foreign court or governmental authority applicable to the
Company or any of its Subsidiaries or any of its or their property or
(B) after giving effect thereto, a Financing Default, or (C) if the Board
determines in good faith that immediately prior to such purchase there shall
exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the “Cash Deferral
Conditions”), the portion of the cash payment so affected may be made by
the Company’s delivery of a promissory note or senior preferred shares of the
Company with a liquidation preference equal to the balance of the purchase
price. The promissory note or senior preferred shares shall accrue interest or
yield, as the case may be, annually at the “prime rate” published in The Wall
Street Journal on the date of issuance, which interest or yield, as the case may
be, shall be payable at maturity or upon payment of distributions by the
Company. The value of each such senior preferred share shall as of its issuance
be deemed to equal (A) the portion of the cash payment paid by the issuance
of such preferred shares divided by (B) the number of senior preferred
shares so issued.  Any senior preferred shares or the promissory note
shall be redeemed or payable when and to the extent the Cash Deferral Condition
which prompted their issuance no longer exists.

       

      (e) In the
event that Restricted Shareholder Stock is repurchased pursuant to this Section 3, the
Restricted Shareholder and his or her successors, assigns or Representatives
shall take (at the Company’s expense) all steps necessary and desirable to
obtain all required third-party, governmental and regulatory consents and
approvals and take all other actions necessary and desirable to facilitate
consummation of such repurchase in a timely manner.

       

      4. Legend.

       

      The certificates representing the
Restricted Shareholder Stock will bear the following legend:

       

      “THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF MARCH 31,
2006 BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO.  A COPY OF
SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE.

       

      THE SALE,
TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES IN RESPECT OF
THE ELECTION OF DIRECTORS ARE SUBJECT TO A SECURITYHOLDERS’ AGREEMENT DATED
DECEMBER 19, 2003 AMONG THL BEDDING HOLDING COMPANY AND CERTAIN HOLDERS OF ITS
OUTSTANDING CAPITAL STOCK.  COPIES OF SUCH AGREEMENT MAY BE OBTAINED
AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THL BEDDING HOLDING COMPANY.

       

      THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES OR BLUE SKY LAWS.  THESE SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT OR LAWS.”

       

      5. Restrictions on Transfer,
Conversion and Voting.

       

      (a) The
Company and the Restricted Shareholder acknowledge and agree that the Shares of
Restricted Shareholder Stock are subject to and restricted by the
Securityholders’ Agreement and with respect to such Shares of Restricted
Shareholder Stock, the Restricted Shareholder shall be an “Employee” or “Senior
Manager,” as the case may be, and as each such term is used in the
Securityholders’ Agreement.  Notwithstanding anything to the contrary
contained in the Securityholders’ Agreement, no Shares of Restricted Shareholder
Stock that have not become Vested Shares pursuant to Section 2 hereof may
be transferred to any Person and no Shares of Restricted Shareholder Stock that
are Vested Shares may be transferred to any Person who is not an Affiliate of
the Restricted Shareholder.  The Vested Shares may be transferred by
will or the laws of descent and distribution.

       

      (b) Prior to
any Transfer, the transferee shall agree, by execution of a Joinder Agreement,
to be bound by this Agreement as holder of Restricted Shareholder Stock and by
the Securityholders’ Agreement as an “Employee” or “Senior Manager”, as the case
may be.  Any Transfer or attempted Transfer of any Restricted
Shareholder Stock in violation of the preceding sentence shall be void, and the
Company shall not record such Transfer on its books or treat any purported
transferee of such Restricted Shareholder Stock as the owner of such stock for
any purpose.

       

      (c) The Restricted Shareholder agrees that so long as the
Restricted Shareholder owns Shares of Restricted Shareholder Stock which have
not become Vested Shares pursuant to Section 2 hereof, the Restricted Shareholder shall be obligated
to vote all of his, her or its Shares of Restricted Shareholder Stock which have
not become Vested Shares pursuant to Section 2 hereof in the same manner and proportions as the votes
cast by the holders of a majority of the Company’s voting capital stock not
subject to such repurchase rights.  If the Restricted Shareholder
fails or refuses to vote his, her or its Shares of Restricted Shareholder Stock
which have not become Vested Shares pursuant to Section 2 hereof as required by, or votes his, her or its Shares
of Restricted Shareholder Stock which have not become Vested Shares pursuant to
Section
2 hereof in contravention of this Section 5(c), then the Restricted Shareholder hereby grants to each
of the President and Treasurer of the Company, acting solely in his or her
capacity as such, an irrevocable proxy, coupled with an interest, to vote such
Shares in accordance with Section 5(c).

       

      6. Restricted
Activities.

       

      (a) The
Restricted Shareholder acknowledges that (1) the Company has separately
bargained and paid additional consideration for the restrictive covenants
herein; (2) the Company will provide certain benefits to the Restricted
Shareholder hereunder in reliance on such covenants in view of the unique and
essential nature of the services the Restricted Shareholder will perform on
behalf of the Company and the irreparable injury that would befall the Company
should the Restricted Shareholder breach such covenants; and (3) as used in this
Section 6 and
for all terms defined in Section 7 that are
utilized in Section
6, the definition of the “Company” includes the Company and/or its
Subsidiaries, Affiliates, and the successors and assigns of each and any such
related entities.

       

      (b) The
Restricted Shareholder agrees that the Restricted Shareholder’s work for the
Company has brought and will bring Restricted Shareholder into close contact
with many of the Company’s Customers, Customer Prospects, Vendors, Trade
Secrets, and Confidential Information.  The Restricted Shareholder
further agrees that the covenants in this Section 6 are
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.

       

      (c) The
Restricted Shareholder agrees to faithfully perform the duties assigned to the
Restricted Shareholder and will not engage in any other employment or business
activity while employed by the Company that might interfere with the Restricted
Shareholder’s full-time performance of the Restricted Shareholder’s duties for
the Company or cause a conflict of interest.  The Restricted
Shareholder agrees to abide by all of the Company’s policies and procedures,
which may be amended from time-to-time.

       

      (d) The
Restricted Shareholder agrees that, due to Restricted Shareholder’s position,
the Restricted Shareholder’s engaging in any activity that may breach this
Agreement will cause the Company great, immediate, and irreparable
harm.

       

      (e) Duty of
Confidentiality. The Restricted Shareholder agrees that during the
Restricted Shareholder’s employment with the Company and for a period of five
(5) years following the termination of such employment for any reason, the
Restricted Shareholder shall not directly or indirectly divulge or make use of
any Confidential Information outside of the Restricted Shareholder’s employment
with the Company (so long as the information remains confidential) without the
prior written consent of the Company.  The Restricted Shareholder
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.  The Restricted Shareholder further agrees that if the Restricted
Shareholder is questioned about information subject to this Agreement by anyone
not authorized to receive such information, the Restricted Shareholder will
notify the Company’s General Counsel within 24 hours.  The Restricted
Shareholder 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.

       

      (f) Return of Confidential
Information And Company Property.  The Restricted Shareholder
agrees to return to the Company all Confidential Information and/or Trade
Secrets within three (3) calendar days following the termination of the
Restricted Shareholder’s employment for any reason.  To the extent the
Restricted Shareholder maintains Confidential Information and/or Trade Secrets
in electronic form on any computers or other electronic devices owned by the
Restricted Shareholder, the Restricted Shareholder 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.  The Restricted Shareholder also agrees to
return all property in the Restricted Shareholder’s possession at the time of
the termination of the 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 Restricted Shareholder, all of which shall remain the sole and exclusive
property of the Company.

       

      (g) Proprietary
Rights.  Proprietary Rights shall be promptly and fully
disclosed by the Restricted Shareholder to the Company’s General Counsel and
shall be the exclusive property of the Company as against the Restricted
Shareholder and the Restricted Shareholder’s successors, heirs, devisees,
legatees and assigns.  The Restricted Shareholder hereby assigns to
the Company Restricted Shareholder’s 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 the Restricted
Shareholder as aforesaid.  All copyrightable Proprietary Rights shall
be considered “works made for hire.”  The Restricted Shareholder
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 the
Restricted Shareholder and/or the Restricted Shareholder’s successors, heirs,
devisees, legatees and assigns under this Section 6.(g) or to
vest in the Company title to such Proprietary Rights as against the Restricted
Shareholder and/or the Restricted Shareholder’s successors, heirs, devisees,
legatees and assigns, the expense of securing any such patent or copyright,
however, to be borne by the Company.

       

      (h) Non-Competition.  The
Restricted Shareholder covenants and agrees that, during the term of Restricted
Shareholder’s employment with the Company and for twelve (12) months after the
termination thereof, regardless of the reason for the employment termination,
the Restricted Shareholder will not, directly or indirectly, anywhere in the
Territory, on behalf of any Competitive Business perform the same or
substantially the same Job Duties.

       

      (i) Non-Solicitation of
Customers, Customer Prospects, and Vendors.  The Restricted
Shareholder also covenants and agrees that during the term of Restricted
Shareholder’s employment with the Company and for twelve (12) months after the
termination thereof, regardless of the reason for the employment termination,
the Restricted Shareholder will not, directly or indirectly, solicit or attempt
to solicit any business from any of the Company’s Customers, Customer Prospects,
or Vendors with whom the Restricted Shareholder had Material Contact during the
last two (2) years of the Restricted Shareholder’s employment with the
Company.

       

      (j) Non-Solicitation of
Employees.  The Restricted Shareholder also covenants and
agrees that during the term of Restricted Shareholder’s employment with the
Company and for twelve (12) months after the termination thereof, regardless of
the reason for the employment termination, the Restricted Shareholder will not,
directly or indirectly, on the Restricted Shareholder’s 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 the Restricted Shareholder had personal contact or
supervised while performing the Restricted Shareholder’s Job Duties, to
terminate their employment relationship with the Company.

       

      (k) Ownership of
Securities.  Notwithstanding the provisions set forth herein,
the Restricted Shareholder shall have the right to (a) invest in or acquire any
class of securities issued by any firm, partnership, corporation, and/or any
other entity and/or person not engaged in any 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 securities which is (i) issued
by any Competitive Business, and (ii) publicly traded on a national securities
exchange or over-the-counter market.

       

      (l) No
Disparagement.  Each of the parties hereto covenants and agrees
that, during the term of the Restricted Shareholder’s employment with the
Company and for twelve (12) months after the termination thereof, regardless of
the reason for the employment termination, such party will not, directly or
indirectly, either in writing or by any other medium, make any disparaging,
derogatory or negative statement, comment or remark about the other parties
hereto, or any of them, or Thomas H. Lee Partners, or any other their respective
officers, directors, employees, Affiliates, Subsidiaries, successors and
assigns, as the case may be; provided, however, that this Section 6.(l) shall
not be construed to require any Person to provide other than truthful testimony
when compelled to testify pursuant to an enforceable subpoena or court
order.

       

      7. Definitions.

       

      The
following terms shall have the meanings ascribed below:

       

      “Affiliate” of any
particular Person means any other Person controlling, controlled by or under
common control with such particular Person or, with respect to any individual,
such individual’s spouse and descendants (whether natural or adopted) and any
trust, partnership, limited liability company or similar vehicle established and
maintained solely for the benefit of (or the sole members or partners of which
are) such individual, such individual’s spouse and/or such individual’s
descendants.

       

      “Board” means the
Board of Directors of the Company.

       

      “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.

       

      “Cause” shall mean any
one or more of the following:

       

      
        	
                 
      

              	
                (a)

              	
                The
      Restricted Shareholder shall have been convicted of, or shall have pleaded
      guilty or nolo contendere to,
      any felony or a crime involving fraud, personal dishonesty or moral
      turpitude (whether or not in connection with his
    employment);

              


      

       

      
        	
                 
      

              	
                (b)

              	
                The
      Restricted Shareholder shall have repeatedly or consistently failed or
      refused to perform his or her duties or fulfill his or her
      responsibilities to the Company, after verbal notice and ten (10) days
      opportunity to cure;

              


      

       

      
        	
                 
      

              	
                (c)

              	
                The
      Restricted Shareholder shall have breached any provision of Section 6
      hereof; or

              


      

       

      
        	
                 
      

              	
                (d)

              	
                The
      Restricted Shareholder shall have committed any fraud, embezzlement,
      misappropriation of funds, breach of fiduciary duty or other act of
      dishonesty against the Company.

              


      

       

      “Change of Control”
shall mean the consummation of a transaction, whether in a single transaction or
in a series of related transactions that are consummated contemporaneously (or
consummated pursuant to contemporaneous agreements), with any other party or
parties, other than an Affiliate of THL, on an arm's-length basis, pursuant to
which (a) a party or group (as defined under Rule 13d under the Securities
Exchange Act of 1934, as amended) who is not a stockholder of the Company on the
Effective Date, acquires, directly or indirectly (whether by merger, stock
purchase, recapitalization, reorganization, redemption, issuance of capital
stock or otherwise), more than 50% of the voting stock of the Company, (b) such
party or parties, directly or indirectly, acquire assets constituting all or
substantially all of the assets of the Company and its Subsidiaries on a
consolidated basis, or (c) prior to an initial public offering of the Company
common stock pursuant to an offering registered under the Securities Act, Thomas
H. Lee Equity Fund V, L.P., a Delaware limited partnership, and its affiliates
cease to have the ability to elect, directly or indirectly, a majority of the
Board.

       

      “Class A Common Stock”
means the Company’s Class A Common Stock, $0.01 par value per
share.

       

      “Class B Common Stock”
has the meaning set forth in Section 1(a)
hereof.

       

      “Code” shall mean the
Internal Revenue Code of 1986, as amended.

       

      “Competitive
Business(es)” include 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 the definition
for the “Business of the Company.”

       

      “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 Restricted Shareholder learned in connection with the Restricted
Shareholder’s 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 the Restricted Shareholder’s attorney, spouse, or professional tax
advisor only on the condition that any subsequent disclosure by any such person
shall be considered a disclosure by the Restricted Shareholder and a violation
of this Agreement; (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 the Restricted Shareholder was provided
access to by the Company and/or created; (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 the definition
for the “Business of the Company.”

       

      “Consolidated Adjusted
EBITDA” has the meaning set forth in the Credit Agreement.

       

      “Credit Agreement”
shall mean the Amended and Restated Credit and Guaranty Agreement, dated as of
August 27, 2004, among Simmons Bedding Company, as Company, THL-SC Bedding
Company and certain subsidiaries of the Company, as Guarantors, the financial
institutions listed therein, as Lenders, UBS Securities LLC, as Joint Lead
Arranger and as Co-Syndication Agent, Deutsche Bank AG, New York Branch, as
Administrative Agent and Collateral Agent, General Electric Capital Corporation,
as Co-Documentation Agent, CIT Lending Services Corporation, as Co-Documentation
Agent, and Goldman Sachs Credit Partners L.P., as Sole Bookrunner, a Joint Lead
Arranger and as Co-Syndication Agent.

       

      “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
the definition for the “Business of the Company.”

       

      “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 the definition for the “Business of the
Company.”

       

      “DUTSA” means Delaware
Uniform Trade Secrets Act, 6 Del. Code Ann. §§ 2001-2011.

       

      “Fair Market Value”
shall be determined by the Board in good faith. Upon such determination, the
Company shall promptly provide the Restricted Shareholder with notice of the
Fair Market Value so determined (the “Board
Notice”).  In the event of a determination of Fair Market Value
with respect to Class B Common Stock owned by a Senior Manager, such Senior
Manager shall have the right to contest such determination in good faith, by
delivery of written notice to the Company within ten (10) days of delivery of
the Board Notice. If the Senior Manager does not notify the Company of any
disagreement therewith, then the Fair Market Value shall be as set forth in the
Board Notice.  If the Senior Manager does notify the Company of his or
her disagreement with the Fair Market Value set forth in the Board Notice within
such 10-day time period, then the Company must retain an independent third party
appraiser to make such Fair Market Value determination (the “Final
Determination”), and such Final Determination shall govern; provided, however, that if the
Final Determination of Fair Market Value equals less than 110% of the Fair
Market Value set forth in the Board Notice, then the Senior Manager shall pay
for all costs and expenses of the third party appraiser.

       

      “Financing Default”
means any event of default or breach under (i) the Credit Agreement,
(ii) that certain senior unsecured floating rate loan facility by and among
THL-SC Bedding Company, certain of its subsidiaries, certain lenders, party
thereto and Deutsche Bank, A.G., Cayman Islands Branch, as administrative agent,
as amended, modified, restated or refinanced from time to time, (iii) the
covenant contained in the Indenture which permits repurchases by the Company of
employee stock not exceeding a specified amount in the aggregate, or (iv) any
other similar notes or instruments that the Company or its Subsidiaries may
issue from time to time.

      


      “Fully Diluted Shares”
means, as of any date of determination, the number of shares of Class A Common
Stock and Class B Common Stock outstanding, plus (without duplication) shares of
Class A Common Stock and Class B Common Stock issuable, whether at such time or
upon the passage of time or the occurrence of future events, upon the exercise,
conversion or exchange of all then-outstanding rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Class A Common Stock or Class B Common Stock or securities
exercisable for or convertible or exchangeable into Class A Common Stock or
Class B Common Stock, as the case may be, whether at the time of issuance or
upon the passage of time or the occurrence of some future event.

       

      “Indenture” shall mean
that certain Indenture, dated as of December 19, 2003, governing the Company’s
Senior Subordinated Notes due 2013, as amended, modified, restated or refinanced
from time to time.

       

      “Job Duties” for the
Restricted Shareholder are those job duties the Restricted Shareholder performed
for the twelve (12) months prior to the Effective Date of this Agreement, as
well as those duties as may from time-to-time reasonably be prescribed by the
Company during the period of the Restricted Shareholder’s employment with the
Company.

       

      “Material Contact”
means personal contact or the supervision of the efforts of those who have
direct personal contact with a Customers, Customer Prospects, or Vendors in an
effort to initiate or further a business relationship between the Company and
such Customers, Customer Prospects, or Vendors.

       

      “Measurement Date”
shall mean the date upon which the Company shall have received its audited
financial statements for the prior Measurement Year, beginning with the
Measurement Year ending December 30, 2006.

       

      “Person” shall be
construed broadly and shall include, without limitation, an individual, a
partnership, an investment fund, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.

       

      “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 the Restricted Shareholder (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 the
Restricted Shareholder’s employment, 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 the Restricted Shareholder was or is an
employee, officer, or director of the Company.

      “Representative”
means, with respect to the deceased Restricted Shareholder, the duly appointed,
qualified and acting personal representative (or personal representatives
collectively) of the estate of the deceased Restricted Shareholder (or portion
of such estate that includes Restricted Shareholder Stock), whether such
personal representative holds the position of executor, administrator or other
similar position qualified to act on behalf of such estate.

       

      “Restricted Shareholder
Stock” has the meaning set forth in Section 1(a)
hereof.  The Restricted Shareholder Stock will continue to be
Restricted Shareholder Stock in the hands of any holder other than the
Restricted Shareholder (except for the Company and except for transferees in a
Public Sale) and, except as otherwise provided herein, each such other holder of
the Restricted Shareholder Stock will succeed to all rights and obligations
attributable to the Restricted Shareholder as a holder of the Restricted
Shareholder Stock hereunder.  The Restricted Shareholder Stock will
also include shares of the Company’s capital stock issued with respect to the
Restricted Shareholder Stock by way of a stock split, stock dividend or other
recapitalization.

       

      “Securities Act” means
the Securities Act of 1933, as amended, or any successor federal law then in
force.

       

      “Securityholders’
Agreement” means the Securityholders’ Agreement dated  December
19, 2003 between the Company and certain stockholders of the Company, as
amended, modified or supplemented from time to time.

       

      “Senior Manager” shall
mean each of Charles Roy Eitel, William S. Creekmuir, and Rhonda C. Rousch,
and/or any other Persons designated by the Board as Senior Managers
(collectively, the “Senior
Managers”).

       

      “Subsidiary” means any
Person of which (i) a majority of the outstanding share capital, voting
securities or other equity interests are owned, directly or indirectly, by the
Company or (ii) the Company is entitled, directly or indirectly, to appoint a
majority of the board of directors or managers or comparable supervisory body of
such Person.

       

      “Territory” means the
United States and Puerto Rico.

       

      “THL” means Thomas H.
Lee Equity Fund V, L.P., a Delaware limited partnership, Thomas H. Lee Parallel
Fund V, L.P., Thomas H. Lee Cayman Fund V, L.P., 1997 Thomas H. Lee Nominee
Trust, Thomas H. Lee Investors Limited Partnership, Putnam Investments Holdings,
LLC, Putnam Investments Employees’ Securities Company I LLC, and Putnam
Investments Employees’ Securities Company II, LLC.

       

      “Trade Secrets” means
Confidential Information which meets the additional requirements of the DUTSA
and/or under any other applicable law.

       

      “Transfer” means the
sale, transfer, assignment, pledge or other disposal (whether with or without
consideration and whether voluntarily or involuntarily or by operation of law)
of any Restricted Shareholder Stock.

       

      “Vendors” means any
individual and/or entity that provided goods and services to the
Company.

       

      8. General
Provisions.

       

      (a) Severability.  It
is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought.  Accordingly, if any particular provision of this Agreement
shall be adjudicated by a court of competent jurisdiction to be invalid,
prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.  Notwithstanding the foregoing, if such provision
could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

       

      (b) Entire
Agreement.  This Agreement and the Securityholders’ Agreement
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any
way.

       

      (c) Counterparts.  This
Agreement may be executed in separate counterparts, each of which is deemed to
be an original and all of which taken together constitute one and the same
agreement.

       

      (d) Successors and
Assigns.  Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit of and be enforceable by the Restricted
Shareholder, the Company, and their respective successors, assigns, heirs,
representative and estate, as the case may be (including subsequent holders of
Restricted Shareholder Stock); provided that the rights and obligations of the
Restricted Shareholder under this Agreement shall not be assignable except in
connection with a permitted transfer of Restricted Shareholder Stock
hereunder.

       

      (e) Governing Law and
Remedies.  The parties acknowledge and agree that they are
bound by their arbitration obligations under Exhibit A
attached hereto, which the parties also hereby agree to execute
contemporaneously and is an integral part of this Agreement.  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.  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.

       

      _______                      Restricted
Shareholder’s initials to acknowledge agreement to Governing Law and Remedies
provision in Section 8(e).

       

      (f) Remedies.  Each
of the parties to this Agreement and any such Person granted rights hereunder
whether or not such Person is a signatory hereto shall be entitled to enforce
its rights under this Agreement specifically to recover damages and costs
(including reasonable attorney’s fees) for any breach of any provision of this
Agreement and to exercise all other rights existing in its favor.  The
parties hereto agree and acknowledge that money damages may not be an adequate
remedy for any breach of the provisions of this Agreement and that any party and
any such Person granted rights hereunder whether or not such Person is a
signatory hereto may in its sole discretion submit the matter to arbitration for
specific performance and/or other injunctive relief (without posting any bond or
deposit) in order to enforce or prevent any violations of the provisions of this
Agreement.

       

      (g) Amendment and
Waiver.  The provisions of this Agreement may be amended and
waived only with the prior written consent of the Company and the Restricted
Shareholder and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall be construed as a waiver of such provisions
or affect the validity, binding effect or enforceability of this Agreement or
any provision hereof.

       

      (h) Notices.  Any
notice provided for in this Agreement must be in writing and must be either
personally delivered, transmitted via facsimile, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated or at such other address or to the attention of such other person as
the recipient party has specified by prior written notice to the sending
party.  Notices will be deemed to have been given hereunder and
received when delivered personally, when received if transmitted via facsimile,
five (5) days after deposit in the U.S. mail and one (1) day after deposit with
a reputable overnight courier service.

       

      If to the
Company, to:

       

      Simmons Company

      One Concourse Parkway, Suite
800

      Atlanta,
GA  30328

      Attention:  Chief Financial
Officer and General Counsel

      


       

      With a
copy to:

       

      Thomas H.
Lee Partners, L.P.

      100
Federal Street, 35th Floor

      Boston,
MA  02110

      Attention:  Scott
A. Schoen

      Todd M. Abbrecht

      George Taylor

      


      If to the
Restricted Shareholder, to the address set forth underneath the Restricted
Shareholder’s name on the signature pages hereto.

       

      (i) Business
Days.  If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company’s chief executive office is located, the time period for
giving notice or taking action shall be automatically extended to the business
day immediately following such Saturday, Sunday or holiday.

       

      (j) Survival of Representations,
Warranties and Agreements.  All representations, warranties and
agreements contained herein shall survive the consummation of the transactions
contemplated hereby and the termination of this Agreement
indefinitely.

       

      (k) Descriptive
Headings.  The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this
Agreement.

       

      (l) Construction.  Where
specific language is used to clarify by example a general statement contained
herein, such specific language shall not be deemed to modify, limit or restrict
in any manner the construction of the general statement to which it
relates.  The language used in this Agreement shall be deemed to be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction shall be applied against any party.

       

      (m) WAIVER OF JURY
TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT.

       

      (n) Nouns and
Pronouns.  Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice
versa.

       

      (o) Acknowledgement and
Waiver.  The Restricted Shareholder hereby represents and
warrants that he or she has access to adequate information regarding the terms
of this Agreement, the scope and effect of the provisions set forth herein and
all other matters encompassed by this Agreement, to make an informed and
knowledgeable decision with regard to enter into this Agreement.  The
Restricted Shareholder further represents and warrants that he or she has not
relied on the Company in deciding to enter into this Agreement and has instead
made his or her own independent analysis and decision to enter into this
Agreement.

       

      


       

      [Remainder
of Page Intentionally Left Blank]

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement as of the date first written above.

       

      SIMMONS
COMPANY

      


      


      


      By:  __________________________

      William S. Creekmuir

      Executive Vice President
and

      Chief Financial Officer

      


      


      


      


      


       

      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      RESTRICTED
SHAREHOLDER:

      


      Dominick
Azevedo

       

      ______________________________

      Signature

      


       

      Address:
_____________________

         _____________________

         _____________________

      


      


       

      Shares of Restricted Shareholder Stock
Purchased: 2580

       

      


      


      



      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBIT A - ARBITRATION
CLAUSE

       

      (1) In
consideration of the benefits described in the Restricted Stock Agreement
executed by DOMINICK AZEVEDO (the “Restricted Shareholder” or “you”) and SIMMONS
COMPANY, a Delaware corporation (the “Company”), on the same date hereto and
into which this Exhibit A is
incorporated, (“Agreement”), the Company and you hereby agree that any
controversy or claim arising under federal, state and local statutory or common
or contract law between the Company 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 either party served on the
other.  Arbitration shall be the exclusive forum for any such
controversy.  For example, 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
both parties.

       

      (2) If any
claim or cause of action at law or in equity is filed by either 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) If the
Restricted Shareholder submits any controversy or claim to arbitration, the
arbitration will be conducted in Atlanta, Georgia and all claims shall be
submitted to and administered by the American Arbitration Association’s
Southeast Case Management Center in Atlanta, Georgia.  If the Company
submits any controversy or claim to arbitration, the arbitration shall be
conducted at the American Arbitration Association’s Local or Regional Office
that is geographically closest to the Restricted Shareholder’s place of
residence and all claims shall be submitted to and administered by the American
Arbitration Association’s corresponding Case Management Center.

       

      (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 brought by either
party.  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.  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 and
shall be dismissed if the statute of limitations period is not
met.  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 both parties
mutually consent in writing signed by you and an authorized representative of
Company to a panel of three (3) Arbitrators.  Unless both 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
effective as of this 31st day of
March, 2006.

      


      


      
        	
                 

                 

                 

                __________________________________

                Dominick
      Azevedo

                Social
      Security #:  __________________

                 

              	
                Simmons
      Company

                 

                 

                By:
      __________________________________

                      William
      S. Creekmuir

                      Executive
      Vice President and

                      Chief
      Financial Officer