Document:

Restricted Stock Agreement dated December 1, 2006 between Simmons Company and
      Gary S. Matthews

    RESTRICTED
      STOCK AGREEMENT

     

    This
      Restricted Stock Agreement (this “Agreement”)
      is made as of this 1st
      day of December, 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; and

     

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

     

    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 $5.91. 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 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 29, 2007,
      December 27, 2008, December 26, 2009 and December 26, 2010 (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

            
	
               

              2007

               

            	
               

              $181.9

               

            	
               

              $181.9

               

            	
               

              $163.7

               

            	
               

              $163.7

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2008

               

            	
               

              $214.1

               

            	
               

              $396.0

               

            	
               

              $192.7

               

            	
               

              $356.4

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2009

               

            	
               

              $230.0

               

            	
               

              $626.0

               

            	
               

              $207.0

               

            	
               

              $563.4

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2010

               

            	
               

              $255.0

               

            	
               

              $881.0

               

            	
               

              $229.5

               

            	
               

              $792.9

               

            	
               

              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), including
      adjustments for the acquisition of Simmons Canada Inc. and the disposition
      of
      Sleep Country USA, Inc., and such adjustments may take into account the pro
      forma annual Consolidated Adjusted EBITDA of any acquired business, as
      determined by the Board. 

     

    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 (1) the conditions set forth in clauses (a) and (b) above are met,
      and (2) 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 29, 2007 solely if the Company (a) achieves at least 90% of the
      Target EBITDA for the fiscal year ending December 30, 2006, and (b) the actual
      Consolidated Adjusted EBITDA for the fiscal year ending December 30, 2006
      exceeds the actual Consolidated Adjusted EBITDA for the 2005 fiscal year. The
      Target EBITDA for the fiscal year ending December 30, 2006 is $149.7 million.
      If
      the conditions set forth in clauses (a) and (b) above are met and the Company
      achieves 90% of the 2007 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 2007 shall be determined by the end of the 2006 fiscal
      year at such time as the budget for the Company’s 2007 fiscal year has been
      approved by the Board (the “2007 Budget”). The Target EBITDA for each month in
      fiscal year 2007 shall exceed the budgeted EBITDA for each month in such year
      (as set forth in the 2007 Budget) by the same percentage by which the annual
      Target EBITDA for 2007 exceeds the annual budgeted EBITDA for 2007 set forth
      in
      the 2007 Budget. The Company shall inform the Restricted Shareholder of the
      Target EBITDA for each month in the 2007 fiscal year promptly after
      determination. The 2007 Year to Date Target EBITDA represents the cumulative
      Target EBITDA for the period commencing December 31, 2006 and ending on the
      last
      day of the applicable month in the 2007 fiscal year of the Company (the "Year
      to
      Date Target EBITDA"). If (1) the conditions set forth in clauses (a) and (b)
      above are met, and (2) the Company achieves more than 90% of the 2007 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,
      2007 and ending on the last day of the month immediately preceding the Change
      of
      Control exceeds 90% of the 2007 Year to Date Target EBITDA.

     

    (b)  Termination.
      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 DECEMBER
      1, 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 may
      be transferred to any Person who is not an Affiliate of the Restricted
      Shareholder; provided that,
      with respect to Shares that are not Vested Shares, all terms relating to vesting
      and repurchase of the Shares shall continue to apply and shall be deemed to
      be
      with reference to the employment or service of the original Restricted
      Shareholder transferring the Shares. 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.  Intentionally
      Omitted.

     

    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. 

     

    “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.

     

    “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, as amended and/or restated from time
      to
      time.

     

    “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 any of the Indentures 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.

     

    “Indentures”
      shall mean (i) that certain Indenture, dated as of December 19, 2003, governing
      the Senior Subordinated Notes of Simmons Bedding Company, a Subsidiary of the
      Company, due 2013, as amended, modified, restated or refinanced from time to
      time, and (ii) that certain Indenture, dated as of December 15, 2004, governing
      the Company’s 10% Senior Discount Notes, due 2014, as amended, modified,
      restated or refinanced from time to time.

     

    “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 29, 2007.

     

    “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.

     

    “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 Gary Matthews,
      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.

     

    “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.

     

    “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. 

     

    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.

     

    /s/GSM

    _______ 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

    

    

        /s/
      William S.
      Creekmuir

    By:
      __________________________

    William
      S. Creekmuir

    Executive
      Vice President and 

    Chief
      Financial Officer

    

    

    
      
         

         

         

      

      
         

        
          

        

      

      
         

      

    

    RESTRICTED
      SHAREHOLDER:

    

    Gary
      S. Matthews

                            

                   

    /s/Gary
      S. Matthews

    ______________________________

    Signature

    

     

    Address:
      130 Lower Cross Road

    Greenwich,
      CT 06831

    

    Shares
      of Restricted Shareholder Stock Purchased: 40,000

     

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          

           

        

      

    

    EXHIBIT A
      - ARBITRATION CLAUSE

     

    (1)  In
      consideration of the benefits described in the Restricted Stock Agreement
      executed by GARY
      S. MATTHEWS (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, : .
      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 1st
      day of December, 2006.

    

    
      	
               

               

              /s/
                Gary S. Matthews

              __________________________________

              Gary
                S. Matthews

              Social
                Security #: __________________

            	
              Simmons
                Company

               

                

              By:
                /s/ William S. Creekmuir

               __________________________________

              William
                S. Creekmuir

              Executive
                Vice President and Chief Financial
                OfficerStock Option Agreement dated December 1, 2006 between Simmons Company and Gary
      S. Matthews

    

     

    STOCK
      OPTION AGREEMENT 

     

    This
      Option Agreement (this “Agreement”)
      is made as of this 1st
      day of December, 2006 (the “Effective
      Date”)
      between Simmons Company, a Delaware corporation (the “Company”),
      and the undersigned (the “Optionee”).
      Certain capitalized terms used herein are defined in Section
      8
      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 Optionee’s interests with those of the
      Company; and

     

    WHEREAS,
      accordingly, the Company desires to grant the Optionee a non-qualified stock
      option under the Amended and Restated Simmons Company Equity Incentive Plan
      (the
“Plan”)
      to acquire shares of Class B Common Stock, par value $0.01 per share, of the
      Company (the “Class
      B Common Stock”).

     

    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.  Grant
      of Option.

     

    (a)  Grant.
      The Company hereby grants to the Optionee under the Plan and subject to the
      terms and conditions of the Plan a non-qualified stock option (the “Option”)
      to purchase all or any part of an aggregate number of shares set forth below
      the
      Optionee’s name on the signature page attached hereto (the “Shares”).
      

     

    (b)  Exercise
      Price.
      The per share exercise price (“Exercise
      Price”)
      for the Shares covered by the Option shall be as set forth below the Optionee’s
      name on the signature page attached hereto.

     

    2.  Vesting
      and Exercisability of Option.
      The
      Option shall vest and only become exercisable with respect to the Shares (the
      “Vested
      Shares”)
      as follows: none of the Shares shall be Vested Shares prior to the second
      anniversary of the date hereof; thirty-three and one-third percent (33-1/3%)
      of
      the Shares shall become Vested Shares on the second anniversary of the date
      hereof; thirty-three and one-third percent (33-1/3%) of the shares shall become
      Vested Shares on the third anniversary of the date hereof and all remaining
      Shares shall become Vested Shares on the fourth anniversary of the date hereof
      such that on the fourth anniversary, one hundred percent (100%) of the Shares
      shall be Vested Shares. Vesting and exercisability shall not accelerate upon
      a
      Change of Control and any Shares that have not become Vested Shares as of the
      closing of the Change of Control shall expire and terminate. 

     

    3.  Manner
      of Exercise of Option; Adjustments.

     

    (a)  To
      the extent that the right to exercise the Option has vested in accordance with
      the vesting schedule and such right is in effect, the Option may be exercised
      in
      full or in part as to Vested Shares by giving written notice to the Company
      stating the number of Shares exercised and accompanied by payment in full for
      such Shares. Payment may be made (i) in cash or by certified check payable
      to
      the order of the Company, (ii) in shares of the Class B Common Stock of the
      Company legally and beneficially owned by the Optionee, fully vested and free
      of
      all liens, claims and encumbrances of every kind and valued at Fair Market
      Value
      on the date of delivery, (iii) in the Company’s discretion, by reducing the
      number of Shares to be issued upon exercise by the number of Shares having
      a
      Fair Market Value equal to the aggregate exercise price or (iv) any combination
      of (i), (ii) and (iii); provided,
      however,
      that payment of the exercise price by delivery of shares of Class B Common
      Stock
      of the Company owned by such Optionee may be made only if such payment does
      not
      result in a charge to earnings for financial accounting purposes as determined
      by the Company. Upon such exercise, delivery of a certificate for paid-up,
      non-assessable Shares shall be made at the principal office of the Company,
      not
      more than thirty (30) days from the date of receipt of notice by the
      Company.

     

    (b)  The
      Company shall at all times during the Term of the Option reserve and keep
      available such number of Shares of Class B Common Stock as will be sufficient
      to
      satisfy the requirements of this Option.

     

    (c)  Except
      as expressly set forth herein, adjustments on changes in recapitalization,
      reorganization and the like shall be made in accordance with Section 13 of
      the
      Plan, as in effect on the date of this Agreement.

     

    4.  Termination;
      Repurchase of Shares.

     

    (a)  Expiration.
      The Option shall expire on the earliest of (i) the expiration of the Term,
      (ii)
      the date that is twelve (12) months following the date on which the Optionee’s
      Service terminates as a result of the Optionee’s death or Disability, (iii) the
      date that is three (3) months following the Optionee’s termination of Service
      without Cause or resignation for Good Reason or Justifiable Cause or (iii)
      on
      the date of termination of Service if Service is terminated with Cause or due
      to
      voluntary resignation by the Optionee without Good Reason or Justifiable Cause
      (as applicable, the “Expiration
      Date”).
      However, the Optionee (or in the case of the Optionee’s death or Disability, the
      Optionee’s representative) may exercise all or a part of the Optionee’s Option
      at any time before the Expiration Date of such Option only to the extent that
      the Option has become exercisable for Vested Shares pursuant to this Agreement
      on or before the date the Optionee’s Service terminates. The balance of the
      Option (which is not exercisable for and vested on the date Optionee’s Service
      terminates) shall lapse when the Optionee’s Service terminates.

     

    (b)  In
      the event that the Optionee’s Service terminates for any reason, then all Shares
      purchased by the Optionee upon exercise of this Option (including any capital
      stock issued with respect to such Shares by way of stock split, stock dividend
      or other recapitalization and whether held by the Optionee or by one or more
      of
      the Optionee’s transferees) will be subject to repurchase by the Company, at its
      option (the “Repurchase
      Option”),
      for Fair Market Value as of the date of repurchase. 

     

    (c)  The
      Repurchase Option shall be exercised by the Company, or its designee, from
      time
      to time, by delivering to the Optionee a written notice of exercise and a check
      in the amount of Fair Market Value. 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 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
      being repurchased without further action by the Optionee or any of his or her
      transferees. If the Company or its designee elect to exercise the repurchase
      rights pursuant to this Section
      4
      and the Optionee or his or her transferee fails to deliver the Shares 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 Optionee or his or her
      transferee in accordance herewith), whereupon the Company shall by written
      notice to the Optionee cancel on its books the certificates(s) representing
      such
      Shares registered in the name of the Optionee and all of the Optionee’s or his
      or her transferee’s right, title, and interest in and to such Shares shall
      terminate in all respects.

     

    (d)  Notwithstanding
      the foregoing, if at any time the Company elects to purchase any Shares pursuant
      to this Section 4,
      the Company shall pay the purchase price for the Shares it purchases
      (i) first, by offsetting indebtedness, if any, owing from such Optionee 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 Shares 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 any Shares are repurchased pursuant to this Section
      4,
      the Optionee 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.

     

    5.  Restrictions
      on Transfer and Voting.

     

    (a)  The
      right of the Optionee to exercise the Option shall not be assignable or
      transferable by the Optionee other than (i) by will or the laws of descent
      and distribution, and the Option may be exercised during the lifetime of the
      Optionee only by him or her, and (ii) to a trust, partnership, limited liability
      company or other similar vehicle established and maintained solely for the
      benefit of the Optionee’s spouse and descendants (natural or adopted) provided
      the Optionee controls such vehicle; provided that all terms regarding
      termination of the Option and repurchase of the Shares issued upon exercise
      shall continue to apply and shall be deemed to be with reference to the Service
      of the original Optionee transferring the Option. The Option shall be null
      and
      void and without effect upon the bankruptcy of the Optionee or upon any
      attempted assignment or transfer, except as hereinabove provided, including
      without limitation any purported assignment, whether voluntary or by operation
      of law, pledge, hypothecation or other disposition contrary to the provisions
      hereof, or levy of execution, attachment, trustee process or similar process,
      whether legal or equitable, upon the Option.

     

    (b)  As
      a condition precedent to the Optionee’s exercise of any portion of the Option,
      the Optionee will sign a joinder agreement to the Securityholders’ Agreement as
      an “Employee” or “Senior Manager,” as the case may be, in which the Optionee
      agrees that such Shares will be subject to the restrictions in the
      Securityholders’ Agreement.

     

    6.  Representation
      Letter and Investment Legend.

     

    (a)  In
      the event that for any reason the Shares to be issued upon exercise of the
      Option shall not be effectively registered under the Securities Act of 1933,
      upon any date on which the Option is exercised in whole or in part, the person
      exercising the Option shall give a written representation to the Company in
      the
      form attached hereto as Exhibit
      A
      and the Company shall place an “investment legend” so-called, as described in
Exhibit
      A,
      upon any certificate for the Shares issued by reason of such
      exercise.

     

    (b)  The
      Company shall be under no obligation to qualify Shares or cause a registration
      statement or post-effective amendment to any registration statement to be
      prepared for the purpose of covering the issue of Shares.

     

    7.  Intentionally
      Omitted.

     

    8.  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. 

     

    “Cause”
      shall mean (i) “Cause” as defined in any employment agreement between the
      Optionee and the Company (or if applicable, the Subsidiary employing the
      Optionee), or (ii) if the Optionee is not a party to an employment
      agreement or “Cause” is not defined therein, any one or more of the
      following:

     

    (a) The
      Optionee’ breach of any of his material obligations set forth in this Agreement
      or the Optionee’s employment agreement (if any), which breach, if capable of
      being cured, is not cured within fifteen (15) days after receipt by the Optionee
      of written notice from the Board of such breach; 

     

    (b) The
      Optionee’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 Optionee of written notice from the Board of
      such
      breach; or

     

    (c) the
      Optionee’s commission of a felony involving fraud, personal dishonesty or moral
      turpitude (whether or not in connection with his employment).

     

    “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 the Preamble hereto.

     

    “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, as amended and/or restated from time
      to
      time.

     

    “Disability”
      shall mean with respect to the Optionee, (i) disability or incapacity as defined
      in any employment agreement between the Optionee and the Company (or, if
      applicable, the Subsidiary employing the Optionee) or (ii) if the Optionee
      is
      not party to an employment agreement or “disability” or “incapacity” is not
      defined therein, the Optionee’s inability to perform his duties by reason of
      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 Board, after consultation with such experts, if
      any,
      the Board may deem necessary or advisable.

     

    “Fair
      Market Value”
      shall be determined by the Board in good faith. Upon such determination, the
      Company shall promptly provide the Optionee 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 any of the Indentures 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.

     

    “Good
      Reason”
      shall mean with respect to the Optionee, (i) “Good Reason” as defined in any
      employment agreement between the Optionee and the Company (or, if applicable,
      the Subsidiary employing the Optionee), or (ii) if the Optionee is not a party
      to an employment agreement or “Good Reason” is not defined therein, then “Good
      Reason” shall mean: 

     

    (a) a
      material diminution in the nature or scope of Optionee’s responsibilities,
      duties or authority, in each case except in the event of termination of the
      Optionee’s employment due to Cause, Disability, death or voluntary termination
      without Good Reason; provided,
      however,
      that the Company’s failure to continue Optionee’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) the
      material failure of the Company to provide the Optionee’s base salary and
      benefits which are offered as of the date hereof in accordance with these terms,
      or

     

    (c) the
      failure of the Company to indemnify the Optionee (or advance expenses in
      connection with indemnification) in connection with the Optionee’s services
      rendered to the Company or on its behalf as required by the Company under law
      or
      pursuant to its charter, by-laws or other contractual arrangements with the
      Optionee then in effect, which failure shall not have been cured within fifteen
      (15) days after receipt by the Company of written notice from the Optionee
      of
      such breach.

     

    “Indentures”
      shall mean (i) that certain Indenture, dated as of December 19, 2003, governing
      the Senior Subordinated Notes of Simmons Bedding Company, a Subsidiary of the
      Company, due 2013, as amended, modified, restated or refinanced from time to
      time, and (ii) that certain Indenture, dated as of December 15, 2004, governing
      the Company’s 10% Senior Discount Notes, due 2014, as amended, modified,
      restated or refinanced from time to time.

     

    “Justifiable
      Cause”
      shall have the meaning set forth in the Employment Agreement of even date
      between the Optionee and the Company.

     

    “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.

     

    “Plan”
      has the meaning set forth in the Preamble hereto.

     

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

     

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

     

    “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 Gary Matthews
      and/or any other Persons designated by the Board as Senior Managers
      (collectively, the “Senior
      Managers”).

     

    “Service”
      shall mean service as a full-time employee or director of or consultant to
      the
      Company or any of its Subsidiaries.

     

    “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.

     

    “Term”
      means the period starting on the date of this Agreement and expiring 10 years
      from the date of this Agreement.

     

    “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.

     

    9.  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 embodies 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 Optionee, 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 Optionee under this Agreement shall not be
      assignable except as permitted under Section
      5
      hereunder.

     

    (e)  Governing
      Law and Remedies.
      The parties acknowledge and agree that they are bound by their arbitration
      obligations under Exhibit B
      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.

     

    /s/
      GSM

    _______ Optionee’s
      initials to acknowledge agreement to Governing Law and Remedies provision in
      Section 9(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 Optionee 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 Optionee, to the address set forth underneath the Optionee’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 and in the
      Exhibits hereto 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 Optionee 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 Optionee acknowledges that he or she has received
      a
      copy of the Plan. The Optionee 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.

     

    (p)  Rights
      as a Shareholder.
      The Optionee shall have no rights as a shareholder with respect to any Shares
      that may be purchased by exercise of this Option unless and until a certificate
      or certificates representing such Shares are duly issued and delivered to the
      Optionee. Any such issuance is expressly conditioned upon the Optionee’s prior
      execution of a joinder agreement to the Securityholders’ Agreement and the
      Registration Rights Agreement. Except as otherwise expressly provided in the
      Plan, no adjustment shall be made for dividends or other rights for which the
      record date is prior to the date such stock certificate is issued.

     

    (q)  Withholding
      Taxes.
      Whenever Shares are to be issued upon exercise of this Option, the Company
      shall
      have the right to require the Optionee (or his or her successor, assign or
      Representatives) to remit to the Company an amount sufficient to satisfy all
      federal, state and local withholding tax requirements prior to issuance of
      the
      Shares and the delivery of any certificate or certificates for such
      Shares.

     

    [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

    

        /s/
      William S.
      Creekmuir

    

    By:
      __________________________

    William
      S. Creekmuir

    Executive
      Vice President and

    Chief
      Financial Officer

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    OPTIONEE:

    

    Gary
      S. Matthews

                            /s/
      Gary S.
      Matthews

    ______________________________

    Signature

    

     

    Address:
      130 Lower Cross Road

    Greenwich,
      CT 06831

    

    Social
      Security Number: _____________

     

    Number
      of Shares: 30,000

     

    Per
      Share Exercise Price: $5.91

     

    Grant
      Date: December 1, 2006

     

    

    

    

    

    
      
        
          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          

           

        

      

    

    EXHIBIT
      A

    TO
      STOCK OPTION AGREEMENT

    

    

    Simmons
      Company

    One
      Concourse Parkway, Suite 800

    Atlanta,
      GA 30328

    

     

    Ladies
      and Gentlemen:

     

    In
      connection with the acquisition by me of _____ shares of Class B Common Stock,
      par value $0.01 per share (the “Shares”)
      of Simmons Company, a Delaware corporation (the “Company”),
      pursuant to the exercise of an Option dated as of ________, 2006, I hereby
      represent to the Company as follows:

     

    (a) I
      hereby confirm that: (i) the Shares to be received by me will be acquired for
      investment only, for my own account, not as a nominee or agent and not with
      a
      view to the sale or distribution of any part thereof; and (ii) I have no current
      intention of selling, granting participation in or otherwise distributing the
      Shares. I further represent that I do not have any contract, undertaking,
      agreement or arrangement with any person to sell, transfer or grant
      participation to such person, or to any third person, with respect to any of
      the
      Shares.

     

    (b) I
      understand that the Shares have not been registered under the Securities Act
      of
      1933, as amended (the “1933
      Act”)
      on the basis that the acquisition of the Shares by me and the issuance of
      securities by the Company to me is exempt from registration under the 1933
      Act
      and that the Company’s reliance on such exemption is predicated on my
      representations set forth herein.

     

    (c) I
      represent that I have, either alone or together with the assistance of a
“purchaser representative” (as the term is defined in Regulation D promulgated
      under the 1933 Act), such knowledge and experience in financial and business
      matters as to be capable of evaluating the merits and risks of my investment
      in
      the Company. I further represent that I am familiar with the business and
      financial condition, properties, operations and prospects of the Company. I
      further represent that I have had, prior to my acquisition of the Shares, the
      opportunity to ask questions of, and receive answers from, the Company
      concerning the terms and conditions of the issuance and to obtain information
      (to the extent the Company possessed such information or could acquire it
      without unreasonable effort or expense) necessary to verify the accuracy of
      any
      information furnished to me or to which I have had access. I am satisfied that
      there is no material information concerning the condition, properties,
      operations and prospects of the Company of which I am unaware. I have made,
      either alone or together with my advisors, such independent investigation of
      the
      Company as I deem to be, or my advisors deem to be, necessary or advisable
      in
      connection with this investment.

     

    (d) I
      understand that the Shares may not be sold, transferred or otherwise disposed
      of
      without registration under the 1933 Act and applicable state securities laws,
      or
      an exemption therefrom, and that in the absence of an effective registration
      statement covering the Shares or an available exemption from registration under
      the 1933 Act or applicable state securities laws, the Shares must be held
      indefinitely. In particular, I acknowledge that I am aware that the Shares
      may
      not be sold pursuant to Rule 144 promulgated under the 1933 Act unless all
      of
      the conditions of that Rule are met. I represent that, in the absence of an
      effective registration statement covering the Shares, I will not sell, transfer
      or otherwise dispose of the Shares.

     

    (e) I
      represent that I (i) am capable of bearing the economic risk of holding the
      unregistered Shares for an indefinite period of time and have adequate means
      for
      providing for my current needs and contingencies, (ii) can afford to suffer
      a
      complete loss of my investment in the Shares, and (iii) understand and have
      taken cognizance of all risk factors related to the acquisition of the
      Shares.

     

    (f) I
      understand that the acquisition of the Shares involves a high degree of risk
      and
      there will be no established market for the Company’s capital stock and it is
      not likely that any public market for such stock will develop in the near
      future.

     

    (g) I
      represent that neither I nor anyone acting on my behalf has paid any commission
      or other remuneration to any person in connection with the acquisition of the
      Shares.

     

    (h) Independent
      of the additional restrictions on the transfer of the Shares contained herein,
      I
      agree that I will not make a transfer, disposition or pledge of any of the
      Shares other than pursuant to an effective registration statement under the
      1933
      Act and applicable state securities laws, unless and until: (i) I shall have
      notified the Company of the proposed disposition and shall have furnished the
      Company with a statement of the circumstances surrounding the disposition and
      (ii) if requested by the Company and at my expense or at the expense of my
      transferee, I shall have furnished to the Company an opinion of counsel,
      reasonably satisfactory (as to counsel and as to substance) to the Company
      and
      its counsel, to the effect that such transfer may be made without registration
      of the Shares under the 1933 Act, and applicable state securities
      laws.

     

    (i) I
      acknowledge that all certificates evidencing the Shares shall 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 DECEMBER
      1, 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.” 

     

    (j) The
      certificates evidencing the Shares shall also bear any legend required by any
      applicable state securities law.

     

    (k) In
      addition, the Company shall make a notation regarding the restrictions on
      transfer of the Shares in its stock books, and the Shares shall be transferred
      on the books of the Company only if transferred or sold pursuant to an effective
      registration statement under the 1933 Act and applicable state securities laws
      covering such Shares or pursuant to and in compliance with the provisions of
      the
      Securityholders’ Agreement, as amended. 

     

    Very
      truly yours,

    

    
      
        
          

          

          

           

        

         

      

      
         

        
          

        

      

      
         

        
          

           

        

      

    

    EXHIBIT B
      - ARBITRATION CLAUSE

     

    (1)  In
      consideration of the benefits described in the Restricted Stock Agreement
      executed by GARY
      S. MATTHEWS (the
      “Optionee” 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 Optionee 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 Optionee’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, : .
      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 1st
      day of December, 2006.

     

    

    
      	
               

               

              /s/
                Gary S. Matthews

              __________________________________

              Gary
                S. Matthews

              Social
                Security #: __________________

            	
              Simmons
                Company

               

                  /s/William
                S.
                Creekmuir

              By:
                __________________________________

              William
                S. Creekmuir

              Executive
                Vice President and Chief Financial
                Officer

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