Document:

REOSTAR ENERGY CORP - Exhibit 9.01

PURCHASE AND SALE AGREEMENT 

  

  

  Between 

  

  REOSTAR ENERGY CORP

  

  (Purchaser) 

  

  And 

  

  UNITED TEXAS PETROLEUM, INC 

  

  (Seller) 

  

  With respect to the 

  

  

  MONTAGUE, COOKE, AND WISE COUNTY PROPERTIES 

  

  

  

  

  

  

  

  

  Dated as of December 4, 2007

PURCHASE AND SALE AGREEMENT 

                     PURCHASE
AND SALE AGREEMENT, dated as of December 4, 2007 (the "Agreement"), by and among
ReoStar Energy Corp., a Nevada corporation ("REOS", or "Purchaser"), and United
Texas Petroleum, Inc., a Texas corporation, ("UTP", or "Seller"). REOS and UTP
are referred to herein each as a "Party" and collectively as the "Parties". 

W I T N E
  S S E T H : 

                     WHEREAS,
Seller is the owner of working interests in certain oil and gas wells and leases
located in Montague, Cooke, and Wise Counties, Texas, as set forth on Schedule
A attached hereto ("UTP Properties"). 

                     WHEREAS,
Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
the UTP Properties on the terms, subject to the conditions, and for the consideration
described herein. 

                     NOW,
THEREFORE, in consideration of the mutual promises made herein and of the mutual
benefits to be derived here from the Parties hereto agree as follows: 

ARTICLE 1            SALE
AND PURCHASE OF THE UTP PROPERTIES 

                     SECTION
1.01. Sale and Purchase of the UTP Properties. 

                     Subject
to the terms and conditions contained herein and in reliance upon the representations
and warranties contained herein, at the Closing provided for in Section 1.02 hereof,
Seller will sell to Purchaser the UTP Properties, and Purchaser will purchase
the UTP Properties, for the Consideration hereinafter defined in Article 2 and
any subsequent purchase as defined in Article 3.. 

                     SECTION
1.02. Effective Date. 

                     The
Effective Date of this Agreement shall be August 1, 2007. 

                     SECTION
1.03. Closing. 

                     Closing
of the purchase and sale of the UTP Properties ("Closing") will take place at
the offices of the Purchaser, or such other place as may be mutually acceptable,
simultaneously with the execution of this Agreement. 

                     SECTION
1.04. Delivery of the UTP Properties and Consideration. 

                     At
Closing, Seller shall deliver to Purchaser, against delivery of the Consideration
as provided in Article 2 hereof and subsequent deliveries of interests defined
in Article 3 hereof, good and marketable title to the UTP Properties free and
clear of any liens, charges, encumbrances, 

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imperfections of title, security interest, options or rights or
claims of others with respect thereto (collectively, "Encumbrances"), by delivering
to Purchaser assignments of interest for the UTP Properties. UTP shall not retain
any interest in the properties conveyed under the terms and conditions of this
Agreement. 

ARTICLE 2            CONSIDERATION

                     As
consideration for the sale of the UTP Properties (the "Consideration"), Purchaser
shall pay to Seller at Closing US$914,446.19 (nine hundred fourteen thousand,
four hundred forty-six dollars) via wire transfer to an account designated by
Seller in accordance with wire transfer instructions to provided by Seller. The
outstanding liabilities associated with these interests, also shown in Schedule
A hereto, will be forgiven by the operator of said interests, Rife Energy Operating,
an affiliate of the Purchaser. 

ARTICLE 3            UNTRANSFERED
INTERESTS AND OUTSTANDING LIABILITIES 

                     SECTION
3.01 Interest in Default Under JOA. 

                     Upon
the completion of the terms and conditions of this Agreement, the Seller will
still retain working interests in certain oil and gas wells and leases located
in Montague, Cooke, and Wise Counties, Texas, as set forth on Schedule B attached
hereto ("UTP Properties - Retained"). With respect to these working interests
and leases, should any of the interests identified in schedule B become in default
the Seller will make reasonable and ongoing efforts to transfer these interests
to the Purchaser under JOA Default Provisions. At no time will any subsequent
transfer or purchase of working interests, as detailed in Schedule B hereto, possess
a net revenue interest less than seventy-five percent (75%). 

                     SECTION
3.02 Interest to be Transferred Outside of Agreement. 

                     It
is also understood that a certain percentage of Working Interest investors under
UTP will transfer from UTP to Rife Energy Operating, Inc. with existing NRI. Furthermore,
any current or future liabilities either in the form of Joint Interest Billings
or AFE cash calls will need to have been satisfied prior to the transfer of said
interests. The current liabilities associated with these interests are also detailed
in Schedule B hereto. All existing ORRI will continue to be the property of UTP.

ARTICLE 4            REPRESENTATIONS
AND WARRANTIES OF SELLER TO PURCHASER 

                     Seller
hereby represents and warrant to Purchaser as of the Initial Closing Date as follows:

                     SECTION
4.01 Organization, Qualification and Corporate Power of UTP. 

                     UTP
is a company duly incorporated, validly existing and in good standing under the
laws of 

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Texas and is duly licensed or qualified to transact business as
a corporation, and is in good standing, in each jurisdiction in which the nature
of its business or the ownership of its properties makes such licensing or qualification
necessary and where the failure be so licensed or qualified would have a material
adverse effect on the business, operations, assets, financial condition, value
or prospects of UTP (a "Material Adverse Effect"). UTP has the corporate power
and authority to own, lease, or sell its properties and to carry on its business
as currently conducted. 

                     SECTION
4.02 Authorization of Agreement; No Conflicts. 

                     The
execution and delivery by Seller of this Agreement and the performance by Seller
of their obligations hereunder have been duly authorized by all requisite action
on the part of Seller and will not violate any provision of law, any order of
any court or other agency of government, the organizational document or by-laws
of Seller, or any provision of any indenture, agreement or other instrument to
which it is a party or by which it or any of its properties is bound or conflict
with, result in a breach of or constitute (with due notice or lapse of time or
both) a default under any such indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of Seller. 

                     SECTION
4.03 Validity. 

                     This
Agreement and each other agreement entered into in connection herewith to which
Seller is a party have been duly executed and delivered by Seller and constitute
the legal, valid and binding obligation of Seller, enforceable in accordance with
their respective terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights generally
now or hereafter in effect and subject to the application of equitable principles
and the availability of equitable remedies. 

                     SECTION
4.04 Consents and Approvals. 

                     No
registration or filing with, or consent or approval of, or other action by, any
Federal, state or other governmental agency or instrumentality or any other person
or entity is or will be necessary on the part of Seller for the valid execution,
delivery and performance by Seller of this Agreement and each other agreement
entered into in connection herewith to which Seller are a party. 

                     SECTION
4.05 Litigation & Indemnification. 

                     There
is no action, suit, investigation or proceeding pending, or to the knowledge of
Seller, threatened against or affecting UTP with regard to the UTP Properties
before any court or by or before any governmental body or arbitration board or
tribunal. The Seller agrees to hold the Purchaser harmless against any and all
actions, litigation, claims or any other type of potential encumbrance that have
occurred or may have occurred from the gross negligence of the seller prior to
the effective date of the Agreement. The Seller further agrees to indemnify the
Purchaser for any action, litigation, claim brought against the Purchaser arising
from Seller's gross negligence occurring prior to the effective date of this Agreement

                     SECTIONS
4.06 No Brokers. 

                     Seller
has not retained any broker or finder in connection with the transactions contemplated

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herein so as to give rise to any valid claim against Seller or
Purchaser for any brokerage or finder's commission, fee or similar compensation.

                     SECTION
4.07 Accuracy of Information. 

                     None
of the representations and warranties of Seller contained herein or in any Schedule
hereto contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein and therein not misleading
in light of the circumstances in which made. 

ARTICLE 5            REPRESENTATIONS
AND WARRANTIES OF PURCHASER 

                     Purchaser
hereby represents and warrants to the Seller as of the date hereof and as of the
Closing Date as follows: 

                     SECTION
5.01 Organizations, Qualification and Corporate Power. 

                     Purchaser
is a corporation duly organized, validly existing and in good standing under the
laws of Nevada, and is duly licensed or qualified to transact business as a limited
liability company and, is in good standing, in each jurisdiction in which the
nature of its business or the ownership of its properties makes such licensing
or qualification necessary and where the failure to be so licensed or qualified
would have a material adverse effect on the business, operations, assets, results
of operation, financial condition, value or prospects of Purchaser. Purchaser
has the power and authority to own or lease its properties and to carry on its
business as currently conducted and to execute, deliver and perform this Agreement.

                     SECTION
5.02 Authorization of Agreement; No Conflicts. 

                     The
execution and delivery by Purchaser of this Agreement and the performance by Purchaser
of its obligations hereunder have been duly authorized by all requisite corporate
action on the part of Purchaser and will not violate any provision of law, any
order of any court or other agency of government, the organizational document
or by-laws of Purchaser, or any provision of any indenture, agreement or other
instrument to which it is a party or by which it or any of its properties is bound
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under any such indenture, agreement or other instrument,
or result in the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties of assets of Purchaser. 

                     SECTION
5.03 Validity. 

                     This
Agreement and each other agreement entered into in connection herewith to which
Purchaser is a party have been duly executed and delivered by Purchaser and constitute
the legal, valid and binding obligation of Purchaser, enforceable in accordance
with their respective terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors'
rights generally now or hereafter in effect and subject to the application of
equitable principles and the availability of equitable remedies. 

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                     SECTION
5.04 Consents and Approvals. 

                     No
registration or filing with, or consent or approval of, or other action by, any
Federal, state or other governmental agency or instrumentality or any other person
or entity is or will be necessary on the part of Purchaser for the valid execution,
delivery and performance by Purchaser of this Agreement and each other agreement
entered into in connection herewith to which Purchaser is a party. 

                     SECTION
5.05 Investment Representations. 

                     Purchaser
is acquiring the UTP Properties being purchased by it hereunder for the purpose
of investment. Purchaser has, with respect to its investment: (i) had an opportunity
to ask all questions of, and receive satisfactory answers from, Seller and the
officers of UTP, (ii) received and reviewed all information, including without
limitation relevant documents, contracts and other instruments, in the each case
deemed necessary or desirable by Purchaser, and (iii) as a result of the foregoing,
has satisfactorily performed its due diligence with respect to the UTP Properties
and such investment; provided the foregoing does not in any way relieve UTP of
its representations and warranties set forth in this Agreement and shall not limit
Purchaser's ability to rely thereon. 

                     SECTION
5.06 Litigation. 

                     There
is no action, suit, investigation or proceeding pending, or to the knowledge of
Purchaser, threatened against or affecting Purchaser before any court or by or
before any governmental body or arbitration board or tribunal which questions
the validity of this Agreement or which questions the validity of or seeks to
rescind or prevent the taking of action taken or to be taken in connection herewith
or the consummation of the transactions contemplated hereby. 

                     SECTIONS
5.07 No Brokers. 

                     Purchaser
has not retained any broker or finder in connection with the transactions contemplated
herein so as to give rise to any valid claim against Seller for any brokerage
or finder's commission, fee or similar compensation. 

ARTICLE 6            COVENANTS
OF SELLER 

                     At
Purchaser's request and without further consideration, Seller will execute and
deliver to Purchaser such other documents and take such other action as Purchaser
may reasonably request in order to consummate more effectively the transactions
contemplated hereby and to vest in Purchaser good and marketable title to the
UTP Properties. 

ARTICLE 7            COVENANTS
OF PURCHASER 

                     At
Seller' request, and without further consideration, Purchaser will execute and
deliver to Seller and take such other action as Seller may reasonably request
in order to consummate more effectively the transactions contemplated hereby.

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ARTICLE 8            FEES
AND EXPENSES 

                     Except
as otherwise provided herein, each of the Parties to this Agreement shall assume,
bear, and pay its own expenses in connection with the preparation, execution,
delivery and performance hereof.. 

ARTICLE 9            SURVIVAL
OF REPRESENTATIONS AND WARRANTIES 

                     The
representations and warranties set forth in Articles 3, 4 and 5 shall survive
the Closing hereunder and shall expire on the third anniversary of the Closing
Date. 

ARTICLE 10          MISCELLANEOUS

                     SECTION
10.01 Assignment; Successors. 

                     This
Agreement may be assigned by REOS to an affiliated company or designee in its
sole discretion and without the consent of UTP. 

                     SECTION
10.02 Amendments, Modification and Waivers. 

                     Neither
this Agreement nor any term hereof may be changed, waived, discharged or terminated
orally, but only by written consent signed by Purchaser and by Seller. 

                     SECTION
10.03 Notices. 

                     Any
notice, payment, demand or communication required or permitted to be given by
an provision of this Agreement will be in writing and will be deemed to have been
given when delivered personally or by facsimile to the party designated to receive
such notice, or on the date following the date sent by overnight courier, or on
the third (3rd) business day after the same is sent by certified mail, postage
and charges prepaid, directed to the following address or to such other or additional
addresses as any party might designate by written notice to the other party: 

	 	To Purchaser: 	ReoStar Energy Corp. 

      3880 Hulen St. 

      Fort Worth, TX 76107 

      Tel: 817-989-7367 

      Fax: 817-989-7368 

      Attn: Joe Bill Bennett 
	 	 	 

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	 	To Seller: 	United Texas Petroleum, Inc 

      13649 Montfort Dr. 

      Suite 200 

      Dallas, TX 75240 

      Tel: 972-732-6510 

      Fax: 972-732-6151 

      Attn: Gary Stapleton 

                     SECTION
10.04 Interpretations and Severance. 

                     Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement, unless the prohibited or invalid provision is a material provision
the omission of which would result in the frustration of the parties' economic
objectives. 

                     SECTION
10.05 Headings and Captions. 

                     The
headings and captions herein are for convenience only and cannot be used to construe
the text of the sectioned paragraphs in which they appear. References herein to
this Agreement include references to the exhibits and the schedules referred to
herein. 

                     SECTION
10.06 No Third-Party Reliance. 

                     No
third party is entitled to rely on any of the representations, warranties and
agreements of Purchaser and the Seller contained in this Agreement. Seller and
Purchaser assume no liability to any third party because of any reliance on the
representations, warranties and agreements of Seller and Purchaser contained in
this Agreement. 

                     SECTION
10.07 Supersedes Prior Agreements. 

                     This
Agreement supersedes any and all prior agreements or understandings, written or
oral, of Seller or Purchaser relating to the acquisition of the UTP Properties
by Purchaser and incorporates the entire understanding of the parties with respect
to the subject matter hereof. 

                     SECTION
10.08 Governing Law. 

                     This
Agreement shall be governed by, construed, interpreted and enforced in accordance
with the laws of the State of Texas without regard to its conflicts of law rules.

                     SECTION
10.09 Counterparts. 

                     Two
or more duplicate originals of the written instruments containing this Agreement
may be signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same agreement, and all signatures need
not appear on any one counterpart. 

                     SECTION
10.10 Continuation of Joint Operating Agreement. 

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                     The
Joint Operating Agreement between Rife Energy Operating and UTP will remain in
effect for all properties referenced in Article 1 and Article 3 of this Purchase
and Sale Agreement. 

                     IN
WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the
date first written above. 

	 	SELLER: 

      

      United Texas Petroleum, Inc. 

      A Texas corporation 

      

      

      By:  /s/ W. Gary Stapleton             

      Name: W. Gary Stapleton

      Title: President
	 	 
	 	 
	 	PURCHASER: 

      

      ReoStar Energy Corp. 

      A Corporation 

      

      

      By:  /s/ Joe Bill Bennett                  
      

      Name: Joe Bill Bennett 

      Title: Chief Operating Officer 
	 	 

 

-8-ex10_1.htm

    EMPLOYMENT
      AGREEMENT

     

    This
      EMPLOYMENT AGREEMENT (the “Agreement”) is made as of
      the 7th day of December, 2007 and is effective as of the 1st day of
      January, 2008 (the “Effective Date”),
      among SIMMONS BEDDING COMPANY,
a Delaware corporation
      (the “Company”), SIMMONS HOLDCO,
      INC., a Delaware corporation, (“Holdco”), and
STEPHEN G. FENDRICH, an individual resident
      of the State of
      Georgia (the “Executive”).

     

    W I T N E S S E T H:

     

    WHEREAS,
      the Company and Holdco desire that the Executive accept employment as President
      and Chief Operating Officer of the Company as of the Effective Date;
      and

     

    WHEREAS,
      the Company, Holdco and the Executive, each desire to enter into this Agreement
      and set forth in writing the terms and conditions of the Executive’s employment
      with the Company;

     

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

     

    SECTION
      1.                                EMPLOYMENT.

     

    1.1.           Agreement.
      The Company hereby agrees to employ the Executive as of the Effective Date
      as
      its President and Chief Operating Officer, and the Executive hereby agrees
      to
      serve the Company in such capacities, in each case subject to the terms and
      conditions set forth herein.

     

    1.2.           Term.
      The period of the Executive’s employment under this Agreement shall commence on
      the Effective Date, and shall continue thereafter for a continuously (on a
      daily
      basis) renewing two (2) year term, without any further action by either the
      Company or the Executive, unless either the Executive or the Company shall
      provide written notice to the other parties hereto not to renew such term,
      specifying in such notice the date of such non-renewal, in which case this
      Agreement shall expire on the date that is two (2) years after the date
      specified in such non-renewal notice. Notwithstanding the foregoing, this
      Agreement may be earlier terminated by the Company or the Executive in
      accordance with the terms of Section 6 below. The date on which termination
      or
      expiration of this Agreement is effective pursuant to the provisions of this
      Section 1.2 or of Section 6 shall be referred to herein as the “Termination
      Date”.  For all purposes of this Agreement, references to the
“Term” of the Executive’s employment hereunder shall mean the period
      commencing on the Effective Date and ending on the Termination
      Date.

     

    SECTION
      2.                                POSITION
      AND DUTIES. The Executive shall serve as President
      and Chief Operating Officer of the Company.  Executive’s duties
      and responsibilities as the President and Chief Operating Officer of the Company
      shall include the day-to-day management and operation of the business, as well
      as those duties customarily associated with an officer with a similar title,
      and
      Executive shall be accountable to, and shall have such additional powers, duties
      and responsibilities as may from time to time be prescribed by, the Chairman
      of
      the Board of Directors of the Company (the “Company Board”) and Chief
      Executive Officer, the Company Board or the Board of Directors of Holdco (the
      “Holdco Board”). The Executive shall perform
      and discharge, faithfully, diligently, competently and in good faith, such
      duties and responsibilities. The Executive (a) shall devote all of his business
      time and attention and his best efforts and ability to the business and affairs
      of the Company and its Subsidiaries and (b) shall not engage in other business
      activities whether or not compensated during the Term without the prior written
      consent of the Holdco Board (provided, however, that Executive may devote a
      reasonable amount of time and attention to the management of his personal
      affairs and investments or serving as a director or officer of any charitable,
      religious, civic, educational or trade organizations, so long as such
      activities, individually or in the aggregate, do not interfere with the
      performance of the Executive’s duties and responsibilities under this
      Agreement).  The services of the Executive shall be based at the
      offices of the Company in the Metropolitan Area; provided,
however, that the Executive acknowledges that substantial travel will
      be
      required because the Company conducts operations and maintains facilities
      throughout the United States and elsewhere around the world.

     

    SECTION
      3.                                COMPENSATION.
      Subject to all of the terms and conditions hereof and to the performance by
      the
      Executive of his duties and obligations to the Company:

     

    3.1.           Salary.  As
      compensation for services performed during the Term, the Company shall pay
      the
      Executive a salary at a rate of $500,000 per annum or such other amount as
      may
      from time to time be established by the Holdco Board (such annual rate of salary
      in effect from time to time referred to as the “Salary”), payable at
      regular intervals in accordance with the Company’s normal payroll practices now
      or hereafter in effect.  The Holdco Board may consider and declare
      from time to time increases in the salary it pays the Executive and thereby
      increase the Salary. Any and all increases in the Executive’s Salary pursuant to
      this Section 3.1 shall cause the level of the Executive’s Salary hereunder to be
      increased by the amount of each such increase for all purposes of this
      Agreement, and the increased level of Salary as provided in this Section 3.1
      shall become the level of the Executive’s Salary for the remainder of the Term
      unless and until there is a further increase in Salary as provided herein.
      Except as otherwise provided in this Agreement, the Salary shall be prorated
      for
      any period of less than a full fiscal year.

     

    3.2.           Annual
      Bonus. As additional compensation for services hereunder, the Executive
      shall be eligible for a bonus for each Bonus Year during the Term. The amount
      of
      any such bonus shall be determined based upon the achievement of specified
      levels of operating performance by the Company for such Bonus Year measured
      by
      the business plan approved by the Board for such fiscal year (the
“EBITDA Performance”). The target bonus payable for any Bonus
      Year with respect to the EBITDA Performance shall equal
      70% of the Salary.  The actual bonus payable for
      any Bonus Year with respect to the EBITDA Performance shall be computed as
      set
      forth on Exhibit A attached hereto and incorporated herein by this
      reference; provided, however, that the actual bonus payable, if any, in for
      the
      fiscal year in which termination occurs shall be determined in accordance with
      the provisions in Section 7. Any bonus payable under this Section 3.2 is
      referred to herein as an “Annual Bonus”. For the purpose of calculating
      Executive’s Annual Bonus for each fiscal year pursuant to this Section 3.2, the
      target bonus payable with respect to such fiscal year shall equal 70% of
      Executive’s actual salary earned at Simmons for such year (excluding any special
      bonuses paid pursuant to Section 3.4 below).

     

    3.3.           Current
      Shares and Additional Stock Options.  The parties acknowledge that
      the Executive currently holds (a) 30,000 Class B Common Stock of Holdco (“Class
      B Shares”) pursuant to the Amended and Restated Restricted Stock Agreement
      between the Executive and Holdco (which superseded Simmons Company) dated April
      18, 2006, as amended from time to time, and (b) 12,500 Class B Shares pursuant
      to the Restricted Stock Agreement between the Executive and Holdco (which
      superseded Simmons Company which superseded THL Bedding Holding Company) dated
      February 21, 2004, which 12,500 Class B Shares vested upon the sale of Sleep
      Country USA, Inc. on or about July 24, 2006 (collectively, the “Previous
      Stock Agreements”).  Pursuant to the Previous Stock Agreements,
      the Executive is a participant in the Second Amended and Restated Simmons
      Holdco, Inc. Equity Incentive Plan, as amended from time to time (the
“Plan”) and has also entered into the Securityholders Agreement between
      Holdco and Executive dated as of February 9, 2007 (“Securityholders
      Agreement”) and the Registration Rights Agreement between Holdco and
      Executive dated as of February 9, 2007 (“Registration Rights
      Agreement”).  Holdco will issue Executive options to purchase an
      additional 30,000 shares of the Class B Shares under the Plan, which options
      will be subject to vesting and terms and conditions as provided in the stock
      option agreement between Holdco and the Executive dated as of the date of
      issuance (the “Stock Option Agreement”).  These options
      to purchase Class B Shares will be issued after formal approval by the Holdco
      Board of the same. 

     

    3.5.           Business
      Expenses. During the Term, the Executive shall be entitled to receive prompt
      reimbursement by the Company for all reasonable business expenses incurred
      by
      him on behalf of the Company or any of its Subsidiaries or
      Affiliates  in performing services hereunder; provided,
however, that the Executive shall properly account therefor in accordance
      with requirements for federal income tax deductibility and the Company’s and/or
      Company Board’s policies and procedures.

     

    3.6.           Fringe
      Benefits.  At the election of the Executive and during the Term,
      the Executive shall be entitled to participate in or receive benefits under
      any
      life insurance, health and accident plans, retirement plans and other similar
      fringe benefit arrangements made generally available by the Company to its
      executives and key management employees, subject to and on a basis consistent
      with the terms, conditions and overall administration of such plans and
      arrangements. The Company acknowledges and agrees that the Executive will
      continue to participate in and receive benefits under (at the current level)
      the
      employee benefit plans which the Executive is currently participating, subject
      to changes in such plans applicable to all other employees similarly
      situated.  These benefits include an annual executive physical,
      financial planning, an additional long term disability insurance policy provided
      at no cost to Executive, and a $1.0 million term life insurance policy,
      convertible to whole life, which can be assumed by the Executive.
      Notwithstanding any other arrangements that the Company may make available
      from
      time to time to its other executives or key management employees, the Salary,
      the bonuses payable under this Agreement and participation in the
      Plan as provided in Section 3.3 of this Agreement shall be
      in lieu of the Executive’s participation in any other bonus, equity incentive or
      equity-type incentive plans established by the Company, except that the
      Executive shall be entitled to participate in any supplemental executive
      retirement plans, “401(k) plans” and profit sharing plans.

     

    3.7.           Vacations.
      During the Term, the Executive shall be entitled to twenty (20) working days
      of
      paid vacation in each year and shall also be entitled to all paid holidays
      given
      by the Company to its employees. The paid vacation days shall be prorated for
      any period of service hereunder less than a full year. The Executive shall
      not
      be entitled to cash compensation for any vacation time not taken during the
      Term
      and shall not be entitled to accrue unused vacation.

     

    3.8.           Transportation
      Stipend. During the Term, the Executive shall be entitled to a stipend of
      $750 each month to cover expenses associated with transportation, including
      leasing or owning an automobile; provided, however, that the
      Executive shall properly account therefor on his federal and applicable state
      tax returns and related documentation in accordance with the requirements for
      federal income tax deductibility and the Company’s policies and
      procedures.

     

    SECTION
      4.                                OFFICES;
      SUBSIDIARIES AND AFFILIATES; INDEMNIFICATION.

     

    4.1.           Generally.
      The Executive agrees to serve during the Term, if elected or appointed thereto,
      in one or more positions as an officer or director of the Company or any of
      its
      Subsidiaries or Affiliates, or as an officer, trustee, director or other
      fiduciary of any pension or other employee benefit plan of the Company or any
      of
      its Subsidiaries or Affiliates. Service in such additional positions will be
      without additional compensation except for reimbursement of reasonably related
      business expenses on the same terms as provided elsewhere in this
      Agreement.

     

    4.2.           Indemnification.
      The Company agrees that in connection with the Executive’s service in additional
      positions as provided under Section 4.1, the Executive shall be entitled to
      the
      benefit of any indemnification provisions in the charter and by-laws of the
      Company and any of its Subsidiaries and Affiliates for which the Executive
      serves in such an additional position and any director and officer liability
      insurance coverage carried by the Company and any of its Subsidiaries and
      Affiliates for which the Executive serves as an officer or director;
provided, however, that this Section 4.2 shall not impose on
      the Company or any of its Subsidiaries or Affiliates any obligation to include
      any such indemnification provisions in its charter or by-laws or to maintain
      any
      such insurance coverage.

     

    SECTION
      5.                                RESTRICTED
      ACTIVITIES.

     

    (A)           Executive
      acknowledges that (1) the Company has separately bargained and paid additional
      consideration for the restrictive covenants herein; and (2) the Company will
      provide certain benefits to Executive hereunder in reliance on such covenants
      in
      view of the unique and essential nature of the services Executive will perform
      on behalf of the Company and its Subsidiaries and Affiliates and the great,
      immediate and irreparable injury that would befall the Company, its Subsidiaries
      and Affiliates should Executive breach such covenants.

     

    (B)           Executive
      further acknowledges that his services are of a special, unique and
      extraordinary character and that his position with the Company will place him
      in
      a position of confidence and trust with employees of the Company and its
      Subsidiaries and Affiliates and with the Company’s other constituencies and will
      bring him into close contact with many of the Company’s, its Subsidiaries’ and
      Affiliates’ Customers, Customer Prospects, Vendors, Trade Secrets, and
      Confidential Information.

     

    (C)            Executive
      further acknowledges that the type and periods of restrictions imposed by the
      covenants in this Section 5 are fair, reasonable and necessary to protect
      the Company’s legitimate business interests and its Customer, Customer Prospect,
      and/or Vendor relationships, Trade Secrets, and Confidential Information and
      that such restrictions will not prevent Executive from earning a
      livelihood.

     

    (D)            Having
      acknowledged the foregoing, Executive covenants and agrees with Company as
      follows:

     

    5.1.          Duty
      of Confidentiality. Executive agrees that during his employment with the
      Company and for a period of five (5) years following the termination of such
      employment for any reason, Executive shall not directly or indirectly divulge
      or
      make use of any Confidential Information outside of his employment with
      the Company (so long as the information remains confidential) without the prior
      written consent of the Company.  Executive shall not directly or
      indirectly misappropriate, divulge, or make use of Trade Secrets for an indefinite
      period of time, so long as the
      information remains a Trade Secret as defined by the DUTSA and/or any other
      applicable law.  Executive further agrees that if he is questioned
      about information subject to this agreement by anyone not authorized to receive
      such information, Executive will notify the Company’s General Counsel within 24
      hours.  Executive acknowledges that applicable law may impose longer
      duties of non-disclosure, especially for Trade Secrets, and that such longer
      periods are not shortened by this Agreement.

    

    5.2.           Return
      of Confidential Information And Company Property.  Executive
      agrees to return all Confidential Information and/or Trade Secrets within three
      (3) calendar days following the termination of his employment for any
      reason.  To the extent Executive maintains Confidential Information
      and/or Trade Secrets in electronic form on any computers or other electronic
      devices owned by him, Executive agrees to irretrievably delete all such
      information and to confirm the fact of deletion in writing within three (3)
      calendar days following termination of employment with the Company for any
      reason.  Executive also agrees to return all property in his
      possession at the time of the termination of his employment with the Company,
      including but not limited to all documents, records, tapes, and other media
      of
      every kind and description relating to the Business of the Company and its
      Customers, Customer Prospects, and/or Vendors, and any copies, in whole or
      in
      part, whether or not prepared by you, all of which shall remain the sole and
      exclusive property of the Company.

    

    5.3.           Proprietary
      Rights.  Proprietary Rights shall be promptly and fully disclosed
      by Executive to the Company’s General Counsel and shall be the exclusive
      property of the Company as against Executive and Executive’s successors, heirs,
      devisees, legatees and assigns.  Executive hereby assigns to the
      Company his entire right, title, and interest therein and shall promptly deliver
      to the Company all papers, drawings, models, data, and other material relating
      to any of the foregoing Proprietary Rights conceived, made, developed, created
      or reduced to practice by Executive as aforesaid.  All copyrightable
      Proprietary Rights shall be considered “works made for
      hire.”  Executive shall, upon the Company’s request and at its
      expense, execute any documents necessary or advisable in the opinion of the
      Company’s counsel to assign, and confirm the Company’s title in the foregoing
      Proprietary Rights and to direct issuance of patents or copyrights to the
      Company with respect to such Proprietary Rights as are the Company’s exclusive
      property as against Executive and Executive’s successors, heirs, devisees,
      legatees and assigns under this Section 5.3. or to vest in the Company
      title to such Proprietary Rights as against Executive and Executive’s
      successors, heirs, devisees, legatees and assigns, the expense of securing
      any
      such patent or copyright, however, to be borne by the Company.

    

    5.4.           Non-Competition.  Executive
      covenants and agrees that, during the term of his employment with the Company
      and for two (2) years after the termination thereof, regardless of the reason
      for the employment termination, Executive will not, directly or indirectly,
      anywhere in the Continental United States, on behalf of any Competitive Business
      serve in a senior executive or similar capacity, whether as owner, partner,
      investor, consultant, agent, employee or co-venturer, or undertake any planning
      for any Competitive Business.

    

    5.5.           Non-Solicitation
      of Customers, Customer Prospects, and Vendors.  Executive also
      covenants and agrees that during the term of his employment with the Company
      and
      for two (2) years after the termination thereof, regardless of the reason for
      the employment termination, Executive will not, directly or indirectly, solicit
      or attempt to solicit any business from any of the Company’s Customers, Customer
      Prospects, and/or Vendors with whom he had business related contact during
      the
      last two (2) years of his employment with the Company.

    

    5.6.           Non-Solicitation
      of Employees.  Executive also covenants and agrees that during the
      term of his employment with the Company and for two (2) years after the
      termination thereof, regardless of the reason for the employment termination,
      Executive will not, directly or indirectly, on his own behalf or on behalf
      of or
      in conjunction with any person or legal entity, recruit, solicit, or induce,
      or
      attempt to recruit, solicit, or induce, any non-clerical employee of the Company
      with whom Executive had personal contact or supervised while performing his
      Job
      Duties, to terminate their employment relationship with the
      Company.

    

    5.7.           No
      Disparagement.  Executive will not make any negative, disparaging
      or defamatory statement, comment, or remark, directly or indirectly, either
      in
      writing or any other medium, regarding the Company, Thomas H. Lee Partners,
      or
      any of their respective officers, directors, employees, affiliates,
      subsidiaries, successors and assigns, compelled truthful testimony under oath
      being expressly accepted.

    

    5.8.           False
      Claims Representations, Cooperation and Promises.  Executive also
      agrees to disclose to the Company any information he learns concerning any
      conduct involving the Company that he has any reason to believe may be
      unlawful.  Executive promises to cooperate fully with the Company
      during and after his employment with the Company in any investigation the
      Company undertakes into matters occurring during his employment with
      Company.  Executive agrees that, as and when requested by the Company
      whether during or after his employment with the Company, he will fully cooperate
      with Company in effecting a smooth transition of his responsibilities to
      others.  If requested by the Company, Executive will promptly and
      fully respond to all inquiries from the Company and its representatives relating
      to any claims or lawsuits which relate to matters which occurred during his
      employment with the Company.  If Executive is contacted as a potential
      witness to any claim or in any litigation at any time, he will notify Company
      of
      any such contact or request within one (1) day after learning of it and will
      permit the Company to take all steps it deems to be appropriate, if any, to
      prevent his involvement, or to be present during any such
      discussions.  This Section does not prohibit Executive’s participation
      as a witness to the extent otherwise legally required but does require that
      Executive provide Company with notice and the opportunity to object and/or
      participate.

    

    5.9.           Outside
      Activities. The Executive agrees that, during his employment with the
      Company, he will not undertake any outside activity (except as explicitly
      allowed pursuant to Section 2), whether or not competitive with the business
      of
      the Company or any of its Subsidiaries or Affiliates, that could reasonably
      give
      rise to a conflict of interest with his duties and obligations to the Company
      or
      any of its Subsidiaries or Affiliates.

     

    5.10.                      Ownership
      of Securities. Notwithstanding the provisions set forth herein, the
      Executive shall have the right to (a) invest in or acquire any class of
      securities issued by any Person not engaged in a Competitive Business, or (b)
      acquire as a passive investor (with no involvement in the operations or
      management of the business) up to 1% of any class of securities which is (i)
      issued by any Person engaged in a Competitive Business, and (ii) publicly traded
      on a national securities exchange or over-the-counter market.

     

    SECTION
      6.                                TERMINATION.  Subject
      to the respective continuing obligations of the parties hereto, including those
      set forth in Section 5, the Executive’s employment by the Company hereunder may
      be terminated prior to the expiration of the Term as follows:

     

    6.1.           Death.
      The Executive’s employment hereunder shall terminate upon his
      death.

     

    6.2.           Incapacity.
      If the Executive shall have been unable to perform his duties hereunder by
      reason of any physical or mental illness, injury or other incapacity (a) for
      any
      period of sixty (60) consecutive days or (b) for a total of one hundred twenty
      (120) days in any period of twelve (12) consecutive calendar months, in the
      reasonable judgment of the Holdco Board, after consultation with such experts,
      if any, as the Holdco Board may deem necessary or advisable, the Company may
      terminate the Executive’s employment hereunder by written notice to the
      Executive.

     

    6.3.           Cause.
      The Company may terminate the Executive’s employment hereunder for Cause at any
      time upon written notice to the Executive. For purposes of this Agreement,
      the
      Company shall have “Cause” to terminate the Executive’s employment
      hereunder upon:  (a) the Executive’s breach of any of his obligations
      set forth in this Agreement, which breach is not cured within fifteen (15)
      days
      after receipt by the Executive of written notice from the Holdco Board of such
      breach; (b) the Executive’s breach of his fiduciary duties 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; or (c) the
      Executive’s commission of a felony involving fraud, personal dishonesty or moral
      turpitude (whether or not in connection with his employment).

     

    6.4.           Other
      than for Cause. The Company may terminate the Executive’s employment
      hereunder other than for Cause at any time upon written notice to the
      Executive.

     

    6.5.           Good
      Reason. The Executive may terminate the Executive’s employment hereunder for
      Good Reason at any time upon sixty (60) days’ prior written notice to the
      Company.  In the event of termination of the Executive pursuant to
      this Section 6.5, the Holdco Board or the Company Board may elect to waive
      the
      period of notice or any portion thereof. For the purposes of this Agreement,
      the
      Executive shall have “Good Reason” to terminate the Executive’s
      employment hereunder upon: (a) material diminution in the nature or scope of
      Executive’s responsibilities, duties or authority, in each case except in the
      event of termination of the Executive’s employment pursuant to Section 6.1, 6.2,
      6.3 or 6.6; provided, however, that the Company’s failure to
      continue Executive’s appointment or election as a director or officer of any of
      its Affiliates and any diminution of the business of the Company or any of
      its
      Affiliates, including without limitation the sale or transfer of any or all
      of
      the assets of the Company or any of its Affiliates, shall not constitute “Good
      Reason”, or (b) material failure of the Company to provide Executive the Salary
      and benefits in accordance with the terms of Section 3 hereof.

     

    6.6.           Other
      than for Good Reason. The Executive may terminate his employment hereunder
      at any time upon sixty (60) days prior written notice to the Company. In the
      event of termination of the Executive pursuant to this Section 6.6, the Holdco
      Board may elect to waive the period of notice, or any portion
      thereof.

     

    SECTION
      7.                                COMPENSATION
      UPON TERMINATION.

     

    7.1.           Death.
      In the event of the Executive’s death during the Term, (a) the Company shall pay
      or transfer, as the case may be, to the Executive’s designated beneficiary or,
      if no beneficiary has been designated by the Executive, to his estate, (1)
      his
      Salary that is earned and unpaid at the date of death and (2) on the earlier
      of
      (i) the date of the release of the audited financial statements of the Company
      for the Bonus Year during which death occurs or (ii) the date which is one
      hundred twenty (120) days after the end of such Bonus Year, an amount equal
      to
      the product of (x) the Annual Bonus that the Executive would otherwise have
      earned for such Bonus Year if death had not occurred,
multiplied by (y) a fraction, the numerator of which is the
      number of days from the beginning of such Bonus Year until the date of death
      and
      the denominator of which is 365; and (b) Holdco shall have the right to
      repurchase the Executive’s vested and unvested shares of the Class B Common
      Stock of Holdco pursuant to the terms of the Previous Stock Agreements and
      the
      Stock Option Agreement.

     

    7.2.           Incapacity.
      If the Executive’s employment shall be terminated by reason of his incapacity
      pursuant to Section 6.2, then (a) the Company shall (1) continue to pay the
      Executive his Salary, and the Executive shall continue to participate in the
      employee benefit, retirement, compensation plans and other perquisites as
      provided in Section 3, through the Termination Date, and (2) pay the Executive
      on the earlier of (i) the date of the release of the audited financial
      statements of the Company for the Bonus Year during which termination pursuant
      to Section 6.2 occurs or (ii) the date which is one hundred twenty (120) days
      after the end of such Bonus Year, an amount equal to the product of (x) the
      Annual Bonus that the Executive would otherwise have earned for such Bonus
      Year
      if termination pursuant to Section 6.2 had not occurred,
multiplied by (y) a fraction, the numerator of which is the
      number of days from the beginning of such Bonus Year until the date of
      termination pursuant to Section 6.2 and the denominator of which is 365; and
      (b)
      Holdco shall have the right to repurchase the Executive’s vested and unvested
      shares of the Class B Common Stock of Holdco pursuant to the terms of the
      Previous Stock Agreements and the Stock Option Agreement.

     

    7.3           Cause
      or Without Good Reason. If the Company shall terminate the Executive’s
      employment hereunder for Cause pursuant to Section 6.3, or the Executive
      shall terminate the Executive’s employment hereunder without Good Reason
      pursuant to Section 6.6, the Company shall have no further obligations to the
      Executive under this Agreement other than the payment of his Salary through
      the
      Termination Date.

     

    7.4.           Other
      than for Cause; Good Reason.

     

    (a)           If
      the Company shall terminate the Executive’s employment hereunder without Cause
      pursuant to Section 6.4 or the Executive shall terminate his employment
      hereunder for Good Reason pursuant to Section 6.5, then:

     

    (1)
      the Company shall pay to the
      Executive:

     

    (A)
      as soon as reasonably practicable
      after the Termination Date, his Salary through the Termination
      Date;

     

    (B)
      as soon as reasonably practicable
      following the last day of the month in which the Termination Date occurs, his
      Annual Bonus as described in Section 3.2, subject to
      the  following:  For purposes of computing the percentage of
      Targeted EBITDA which has been achieved pursuant to Exhibit A (the
“Applicable Percentage”), the Company shall compare (i) the actual EBITDA
      achieved from the beginning of the fiscal year in which the Termination Date
      occurs through the last day of the month in which the Termination Date occurs
      to
      (ii) the budgeted EBITDA from the beginning of the fiscal year in which the
      Termination Date occurs through the last day of the month in which the
      Termination Date occurs.  The amount of the Annual Bonus payable to the
      Executive under this Section 7.4(a)(1)(B) shall be equal to (x) the applicable
      percentage of Salary set forth opposite the Applicable Percentage on Exhibit
      A, multiplied by (y) the Executive's Salary paid or payable from the
      beginning of the fiscal year in which the Termination Date occurs through the
      Termination Date; and,

    

    (C)
      for a period of two (2) years after
      the Termination Date, severance at a rate equal to 100% of his Salary in effect
      at the time notice of termination is given;

     

    
      	
               

            	
              (2)  Holdco
                shall have the right to repurchase the Executive’s vested and unvested
                shares of the Common Stock of Holdco pursuant to the terms of the
                Previous
                Stock Agreements and the Stock Option Agreement, Securityholders
                Agreement
                and Registration Rights Agreement;
                and

            

    

     

    
      	
               

            	
              (3)  until
                the earlier to occur of (A) the passage of two (2) years after the
                Termination Date or (B) the date on which the Executive commences
                other
                employment in connection with which the Executive is eligible to
                receive
                medical and dental benefits (including self-employment or engaging
                in an
                enterprise as a sole proprietor or partner) (the “Benefits Termination
                Date”), if the Executive was participating in any Company medical,
                vision and dental plans pursuant to Section 3.6 and subject to any
                employee contribution applicable to Executive as of the Termination
                Date, the Company shall contribute to the premium cost of Executive’s
                coverage and that of Executive’s qualified dependents under its medical,
                vision, and dental plans at the same rate that it contributes to
                the
                premium cost for its active executives and their qualified
                dependents.

            

    

     

    (b)           The
      obligations of the Company to the Executive under this Section 7.4 (other than
      Section 7.4(a)(1)(A)) are conditioned upon the Executive’s signing a release of
      claims in the form of Exhibit B (the “Release”) within
      twenty-eight (28) days of the date on which notice of termination is given
      and
      upon such Release remaining in full force and effect thereafter. All severance
      payments under this Section 7.4 will be in the form of salary continuation,
      payable in accordance with the normal payroll practices of the Company and
      will
      begin at the Company’s next regular payroll period following the effective date
      of the Release, but shall be retroactive to the Termination Date.

     

    7.5.           Early
      Termination of Severance Benefits. If the Executive’s employment hereunder
      is terminated by the Company without Cause pursuant to Section 6.4 or the
      Executive shall terminate his employment hereunder for Good Reason pursuant
      to
      Section 6.5, and Executive subsequently engages in the activities prohibited
      by
      Section 5, then the Company may thereafter immediately terminate and shall
      not
      be required to continue on behalf of the Executive or his dependents and
      beneficiaries any compensation provided for in Section
      7.4 other than those benefits that the Company may be
      required to maintain for the Executive under applicable law.

     

    7.6.           Continuation
      of Health Care Benefits. If Executive was enrolled in the Company’s medical,
      vision, and/or dental plans as of the Termination Date, then upon the expiration
      of the Company’s obligations pursuant to this Section 7 with respect to such
      medical, vision and/or dental benefits, the Executive may elect to continue
      Executive’s participation and that of Executive’s qualified dependents in those
      plans for the remainder of the COBRA period, if any, by paying the full premium
      cost plus an administrative fee, without regard to any provision of this
      Agreement.

     

    7.7.           Post-Termination
      Obligations Generally. Except as expressly set forth in this Section 7, and
      in the Previous Stock Agreements, the Stock Option Agreement, the
      Securityholders Agreement and Registration Rights Agreement, the Company and
      Holdco shall have no further obligations to the Executive following expiration
      of the Term, and performance by the Company and/or Holdco of any obligation
      specifically provided in this Section 7 shall constitute full settlement of
      any
      claim that the Executive may have on account of such termination against the
      Company and/or Holdco or their respective Subsidiaries and Affiliates and all
      of
      their respective past and present officers, directors, stockholders, controlling
      Persons, employees, agents, representatives, successors and assigns and all
      other others connected with any of them, both individually and in their official
      capacities.

     

    7.8.           Payments
      after Death. Should the Executive die after the termination of his
      employment with the Company while any amounts are payable to him hereunder,
      this
      Agreement shall inure to the benefit of and be enforceable by Executive’s
      executors, administrators, heirs, distributees, devisees and legatees, and
      all
      amounts payable hereunder shall be paid in accordance with the terms of this
      Agreement to Executive’s devisee, legatee or other designee or, if there is no
      such designee, to his estate.

     

    SECTION
      8.                                CONFLICTING
      AGREEMENTS.  The Executive hereby
      represents and warrants that the execution of this Agreement and the performance
      of the Executive’s obligations hereunder will not breach or be in conflict with
      any other agreement to which the Executive is a party or by which the Executive
      is bound and that the Executive is not now subject to any covenants against
      competition, non-solicitation or similar covenants that would affect the
      performance of the Executive’s obligations hereunder or would restrict the
      Company in its operations, including hiring any additional
      executives.  The Executive has provided the Company with true and
      correct copies of all agreements that remain binding between the Executive
      and
      the Executive’s former employer or employers and any similar agreements
      governing the Executive’s rights and obligations relating to any former
      employer. The Executive will not disclose to or use on behalf of Holdco or
      the
      Company any confidential or proprietary information or trade secrets of a third
      party without such party’s consent.

     

    SECTION
      9.                                WITHHOLDING. Except
      as otherwise expressly provided, all payments made by the Company under this
      Agreement shall be net of any tax or other amounts required to be withheld
      by
      the Company under any applicable law or legal requirement.

     

    SECTION
      10.                                NOTICES.
      All notices, requests and demands to or upon the parties hereto to be effective
      shall be in writing, by facsimile, by overnight courier or by registered or
      certified mail, postage prepaid and return receipt requested, and shall be
      deemed to have been duly given or made upon: (a) delivery by hand, (b) one
      business day after being sent by nationally recognized overnight courier; or
      (c)
      in the case of transmission by facsimile, when confirmation of receipt is
      obtained. Such communications shall be addressed and directed to the parties
      as
      follows (or to such other address as either party shall designate by giving
      like
      notice of such change to the other party):

     

    If
      to the
      Executive:

     

    Stephen
      G. Fendrich

    

     

    If
      to the
      Company:

     

    Simmons
      Holdco, Inc.

    One
      Concourse Parkway, Suite 800

    Atlanta,
      Georgia, 30328

    Attention:
      Chief Executive Officer, General Counsel

       and
      Executive Vice President – Human Resources

    Facsimile:
      (770) 206-2669

    

    with
      copies to:

     

    Thomas
      H. Lee Partners,
      L.P.

    75
      State
      Street

    Boston,
      MA 02109

    Attention:                                Scott
      A. Schoen

    Todd
      M. Abbrecht

    George
      Taylor

    Facsimile:
      (617) 227-3514

    

    and

    

    Weil,
      Gotshal & Manges, LLP

     

    100
      Federal Street, 34th Floor

     

    Boston,
      Massachusetts  02110

     

    Attention:
      James Westra, Esq.

     

    Facsimile:
      (617) 772-8333

     

    SECTION
      11.                                DEFINITIONS;
      CERTAIN RULES OF CONSTRUCTION. Certain capitalized
      terms are used in this Agreement with the specific meanings defined below in
      this Section 11. Except as otherwise explicitly specified to the contrary or
      unless the context clearly requires otherwise, (a) the capitalized term
“Section” refers to sections of this Agreement, (b) the capitalized term
“Exhibit” refers to exhibits to this Agreement, (c) references to a
      particular Section include all subsections thereof, (d) the word
“including” shall be construed as “including, without limitation”, and
      (e) references to “$” mean United States dollars.

     

    11.1.              “Affiliate”
      shall mean (a) any Person directly or indirectly controlling, controlled by
      or
      under direct or indirect common control with the Company (or other specified
      Person), (b) any other Person which, together with its Affiliates (as defined
      in
      clause (a) above), shall, directly or indirectly, own beneficially or control
      the voting of at least 10% of the ownership interest in the Company (or other
      specified Person) and (c) any other Person of which the Company (or other
      specified Person) and its Affiliates (as defined in clauses (a) and (b) above)
      shall, directly or indirectly, own beneficially or control the voting of at
      least 10% of any class of outstanding capital stock or other evidence of
      beneficial interest or of any interest as a general partner or joint
      venturer.

     

    11.2.              “Agreement”
      is defined in the Preamble to this Agreement.

     

    11.3.              “Annual
      Bonus” is defined in Section 3.2.

     

    11.4.              “Benefits
      Termination Date” is defined in Section 7.4(a)(3).

     

    11.5.              “Bonus
      Year” means the fiscal year of the Company, provided, however,
      that in the event the fiscal year of the Company is changed, any calculations
      made under Section 3.2 and Exhibit A hereto shall be proportionately
      adjusted as the Board, in its sole and absolute discretion, shall deem
      appropriate.

     

    11.6.              “Business
      of the Company” means the highly competitive business of developing,
      manufacturing, marketing, distributing, and/or selling sleep products, including
      mattresses, foundations, changing pads and covers, and bedding components for
      the same.

    

    11.7.              “Cause”
      is defined in Section 6.3.

     

    11.8.              “Common
      Stock” means the common stock, $.01 par value, of Holdco.

     

    11.9              “Class
      B Shares” is defined inSection 3.3

     

    11.10.                      “Company”
      is defined in the preamble to this Agreement.

     

    11.11.                      “Company
      Board” is defined in Section 2.

     

    11.12.                      “Competitive
      Business” means any firm, partnership, joint venture, corporation and/or any
      other entity and/or person, including but not limited to Sealy Corporation,
      Serta International, Spring Air Company, Select Comfort Corporation,
      Tempur-Pedic International, Inc., King Koil Licensing Company, Inc., and/or
      any
      licensee of such entity, that develops, manufactures, markets, distributes,
      and/or sells any of the sleep products described in Section
      11.6.

     

    11.13.                      “Confidential
      Information” means information about the Company and its Customers, Customer
      Prospects, and/or Vendors that is not generally known outside of the Company,
      which you will learn of in connection with your employment with the
      Company.  Confidential Information may include, without limitation:
      (1) the terms of this Agreement, except as necessary to inform a subsequent
      employer of the restrictive covenants contained herein and/or your attorney,
      spouse, or professional tax advisor and, even as to such a person, only if
      the
      person agrees to honor this confidentiality requirement; (2) the Company’s
      business policies, finances, and business plans; (3) the Company’s financial
      projections, including but not limited to, annual sales forecasts and targets
      and any computation(s) of the market share of Customers and/or Customer
      Prospects; (4) sales information relating to the Company’s product roll-outs;
      (5) customized software, marketing tools, and/or supplies that you may be
      provided access to by the Company and/or may create; (6) the identity of the
      Company’s Customers, Customer Prospects, and/or Vendors (including names,
      addresses, and telephone numbers of Customers, Customer Prospects, and/or
      Vendors); (7) any list(s) of the Company’s Customers, Customer Prospects, and/or
      Vendors; (8) the account terms and pricing upon which the Company obtains
      products and services from its Vendors; (9) the account terms and pricing of
      sales contracts between the Company and its Customers; (10) the proposed account
      terms and pricing of sales contracts between the Company and its Customer
      Prospects; (11) the names and addresses of the Company’s employees and other
      business contacts of the Company; and (12) the techniques, methods, and
      strategies by which the Company develops, manufactures, markets, distributes,
      and/or sells any of the sleep products described in Section
      11.6.

     

    11.14.                     “Customers”
      means any firm, partnership, corporation and/or any other entity and/or person
      that purchased or purchases from the Company any of the sleep products described
      in Section 11.6.

    

    11.15.                     “Customer
      Prospects” means any firm, partnership, corporation and/or any other entity
      and/or person reasonably expected by the Company to purchase from the Company
      any of the sleep products described in Section 11.6.

    

    11.16.                      “$”
      is defined in the introductory paragraph to this Section 11.

     

    11.17.                      “EBITDA
      Performance” is defined in Section 3.2.

     

    11.18.                      “Effective
      Date” is defined in the preamble.

     

    11.19.                      “Executive”
      is defined in the preamble.

     

    11.20.                      “Exhibit”
      is defined in the introductory paragraph to this Section 11.

     

    11.21.                      “Good
      Reason” is defined in Section 6.5.

     

    11.22.   “including”
      is defined in the introductory paragraph to this Section 11.

     

    11.23.                      “Holdco”
      means Simmons Holdco, Inc., a Delaware corporation.

     

    11.24.                      “Holdco
      Board” is defined in Section 2.

     

    11.25.                      “Metropolitan
      Area” means the Atlanta, Georgia metropolitan area.

     

    11.26.                      “Person”
      means any individual, partnership, corporation, association, trust, joint
      venture, limited liability company, unincorporated organization or entity,
      and
      any government, governmental department or agency or political subdivision
      thereof.

     

    11.27.                      “Plan”
      is defined in Section 3.3.

     

    11.32.                      “Previous
      Stock Agreements” is defined in Section 3.3.

     

    11.28.                      “Products”
      means all products planned, researched, developed, tested, manufactured, sold,
      licensed, leased or otherwise distributed or put into use by the Company or
      any
      of its Subsidiaries or Affiliates, together with all services provided or
      planned by the Company or any of its Subsidiaries or Affiliates, during the
      Executive’s employment.

     

    11.29.                     “Proprietary
      Rights” means any and all inventions, discoveries, developments, methods,
      processes, compositions, works, supplier and customer lists (including
      information relating to the generation and updating thereof), concepts, and
      ideas (whether or not patentable or copyrightable) conceived, made, developed,
      created, or reduced to practice by Executive (whether at the request or
      suggestion of the Company or otherwise, whether alone or in conjunction with
      others, and whether during regular hours of work or otherwise) prior to or
      during Executive’s, which may be directly or indirectly useful in, or related
      to, the Business of the Company or any business or products contemplated by
      the
      Company while Executive was or is an employee, officer, or director of the
      Company.

    

    11.30.                      “Release”
      is defined in Section 7.4(b).

     

    11.31.                      “Registration
      Rights Agreement” is defined in Section 3.3.

     

    11.32.                      “Salary”
      is defined in Section 3.1.

     

    11.33.                      “Section”
      is defined in the introductory paragraph to this Section 11.

     

    11.34.                      Securityholders
      Agreement” is defined in Section 3.3.

     

    11.35.                      “Stock
      Option Agreement” is defined in Section 3.3.

     

    11.36.                      “Subsidiary”
      means any Person of which the Company (or other specified Person) shall,
      directly or indirectly, own beneficially or control the voting of at least
      a
      majority of the outstanding capital stock (or other shares of beneficial
      interest) entitled to vote generally or at least a majority of the partnership,
      joint venture or similar interests, or in which the Company (or other specified
      Person) or a Subsidiary thereof shall be a general partner or joint venturer
      without limited liability.

     

    11.37.                      “Term”
      is defined in Section 1.2.

     

    11.38.                      “Termination
      Date” is defined in Section 1.2.

     

    11.39.               “Trade
      Secret” means Confidential Information which meets the additional
      requirements of the Delaware Uniform Trade Secrets Act (“DUTSA”), 6 Del. Code
      Ann. §§ 2001-2011, and/or under any other applicable law.

    

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

     

    SECTION
      12.                                MISCELLANEOUS.
No provision of this Agreement
      may be modified, waived or discharged
      unless such waiver, modification or discharge is approved by the Board and
      agreed to in writing by the Executive and such officer as may be specifically
      authorized by the Board in connection with such approval. No waiver by either
      party hereto at any time of compliance with or of any breach by the other party
      hereto of any condition or provision of this Agreement to be performed by such
      other party shall be deemed a waiver of similar or dissimilar provisions or
      conditions at the same or at any prior or subsequent time. No agreements or
      representations, oral or otherwise, express or implied, with respect to the
      subject matter hereof have been made by either party which are not set forth
      expressly in this Agreement.

     

    SECTION
      13.  GOVERNING LAW AND
      REMEDIES.  In addition to any other remedies at law or in
      equity it may have, each party shall be entitled to seek equitable relief,
      including injunctive relief and specific performance, in connection with a
      breach of the provisions of this Agreement.  The Company and Executive
      acknowledge and agree that they are bound by their arbitration obligations
      under
Exhibit C attached hereto, which the Company and Executive also hereby
      agree to execute contemporaneously and is an integral part of this
      Agreement.  The Company and Executive agree and acknowledge that all
      provisions of this Agreement shall be governed by and construed in
      accordance with the laws of the State of Delaware exclusively and without
      reference to principles of conflict of laws; provided, however, the Federal
      Arbitration Act (“FAA”) will supersede state laws to the extent
      inconsistent.  The Arbitrator(s) shall have no authority to apply the
      law of any other jurisdiction.

    

    
      	
              /s/ 
                SGF

            	
              Your
                initials to acknowledge agreement to Governing Law and Remedies provision
                in Section 13.

            

    

    

     

    SECTION
      14.                                SEVERABILITY.
      If any portion or provision of this Agreement shall to any extent be declared
      illegal or unenforceable by a court of competent jurisdiction, then the
      remainder of this Agreement, or the application of such portion or provision
      in
      circumstances other than those as to which it is so declared illegal or
      unenforceable, shall not be affected thereby, and each portion and provision
      of
      this Agreement shall be valid and enforceable to the fullest extent permitted
      by
      law.

     

    SECTION
      15.                                COUNTERPARTS.
      This Agreement may be executed in any one or more counterparts, each of which
      shall be deemed to be an original but all of which together shall constitute
      one
      and the same instrument.  Executed counterparts may be delivered by
      facsimile transmission.

     

    SECTION
      16.                                ENTIRE
      AGREEMENT. This Agreement, and the Plan,
      constitute the entire agreement between the parties hereto, and supersede any
      and all prior communications, agreements and understandings, written or oral,
      with respect to the terms and conditions of the Executive’s employment with the
      Company, including the letter agreement between the Executive, Simmons Company
      and Simmons Bedding Company dated August 3, 2005 and the clarification of the
      letter agreement dated March 14, 2006.  The parties acknowledge,
      however, that this Agreement does not supersede the Previous Stock Agreements,
      the Securityholders Agreement or the Registrations Rights
      Agreement.

     

    SECTION
      17.                                ASSIGNMENT.
      This Agreement shall inure to the benefit of and be binding upon (a) the
      Executive, his personal or legal representatives, executors, administrators,
      successors, heirs, distributees, devisees and legatees and (b) the Company,
      Holdco and their respective successors (including by means of reorganization,
      merger, consolidation or liquidation) and permitted assigns. The Company or
      Holdco may assign this Agreement to any of its Subsidiaries or to any successor
      of the Company or Holdco by reorganization, merger, consolidation or liquidation
      and any transferee of all or substantially all of the business or assets of
      the
      Company or Holdco or of any division or line of business of the Company or
      Holdco with which the Executive is at any time associated. The Company requires
      the personal services of the Executive hereunder and the Executive may not
      assign this Agreement.

     

     [Signatures
      next page]

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have executed and delivered this
      Agreement, or caused this Agreement to be executed and delivered by its duly
      authorized officer, as the case may be, all as of the date first above
      written.

    

    

    SIMMONS
      BEDDING COMPANY

    

    

    By:         /s/ 
      Charles R.
      Eitel                                                                  

    

    Name:         
      Charles R. Eitel                                                                        

    

    Its:               Chairman
      and
      CEO                                                            

    

    

    SIMMONS
      HOLDCO, INC.

    

                                 By:         /s/ 
      Charles R.
      Eitel                                                                  

     

                
                      Name:         
      Charles R. Eitel                                                                        

     

                        Its:               
      Chairman and
      CEO                                                            

                                                                       

    

                                /s/ 
Stephen
      G.
      Fendrich

    STEPHEN
      G. FENDRICH

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    COMPUTATION
      OF EBITDA PERFORMANCE

     

    
      	
              %
                of Budgeted EBITDA Target1

            	
              %
                of Annual Bonus

            	
              %
                of Salary

            
	
              90%
                or below2

            	
              0

            	
              0

            
	
              91

            	
              10

            	
              7%

            
	
              92

            	
              20

            	
              14%

            
	
              93

            	
              30

            	
              21%

            
	
              94

            	
              40

            	
              28%

            
	
              95

            	
              50

            	
              35%

            
	
              96

            	
              60

            	
              42%

            
	
              97

            	
              70

            	
              49%

            
	
              98

            	
              80

            	
              56%

            
	
              99

            	
              90

            	
              63%

            
	
              1002

            	
              100

            	
              70%

            

    

    

    

      

    

      
      1
        The budgeted EBITDA target
        will be reset each year.  The Board will approve the budgeted EBITDA
        target for any fiscal year on or prior to the later of (a) the date which
        is 45
        days after the
        end
        of such fiscal year or (b) the date which is 15 days after the date of release
        of the audited financial statements of the Company for the immediately preceding
        fiscal year.

    

      
      2
        Upon attaining 100% of
        budgeted EBITDA target, the amount of the Annual Bonus will be increased
        thereafter by 4% of Salary for each 1% increase in EBITDA in excess of 100%
        of
        theTarget.  The
        Annual Bonus is not capped.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B – RELEASE OF CLAIMS

     

    FOR
      AND
      IN CONSIDERATION OF the special payments and benefits to be provided in
      connection with the termination of my employment in accordance with the terms
      of
      the Employment Agreement effective as of January 1, 2008 (as amended and in
      effect from time to time, the "Employment Agreement") between SIMMONS
      HOLDCO, INC., a Delaware Corporation, (“Holdco”), and SIMMONS BEDDING COMPANY, a
      Delaware corporation, along with its subsidiaries, parents, joint ventures,
      affiliated entities, and includes its successors and assigns or any such related
      entities (the “Company”), and me, I, on my own behalf and on behalf of my
      personal or legal representatives, executors, administrators, successors, heirs,
      distributees, devisees and legatees and all others connected with me, hereby
      release and forever discharge the Company and their respective Affiliates (as
      defined in the Employment Agreement) and all of their respective past and
      present officers, directors, stockholders, controlling persons, employees,
      agents, representatives, successors and assigns and all others connected with
      any of  them (all collectively, the "Released"), both
      individually and in their official capacities, from any and all rights,
      liabilities, claims, demands and causes of action of any type (collectively,
      "Claims") which I have had in the past, now have, or might now have,
      through the date of my signing of this Release of Claims, in any way resulting
      from, arising out of or connected with my employment or its termination or
      pursuant to any federal, state, foreign or local employment law, regulation
      or
      other requirement (including, without limitation, Title VII of the Civil Rights
      Act of 1964, the Age Discrimination in Employment Act, the Americans with
      Disabilities Act, and the fair employment practices laws of the state or states
      in which I have been employed by the Company, each as amended from time to
      time); provided, however, that the foregoing release shall not
      apply to (a) any right explicitly set forth in the Employment Agreement to
      special payments and benefits to be provided in connection with the termination
      of my employment, (b) any right to indemnification set forth in Section 4.2
      of
      the Employment Agreement or (c) any rights as a participant in any retirement,
      profit sharing or other employment benefit plan in accordance with the terms
      of
      such plans.

    

    In
      signing this Release of Claims, I acknowledge that I have had at least 21 days
      from the date of notice of termination of my employment to consider the terms
      of
      this Release of Claims and that such time has been sufficient; that I have
      been
      advised in writing by the Company to seek the advice of an attorney prior to
      signing this Release of Claims; and that I am signing this Release of Claims
      voluntarily and with a full understanding of its terms.

    

    I
      understand that I may revoke this Release of Claims at any time within seven
      days of the date of my signing by written notice to the Company and that this
      Release of Claims will take effect only upon the expiration of such seven-day
      revocation period and only if I have not timely revoked it.

    

    Intending
      to be legally bound, I have signed this Release of Claims under seal as of
      the 7th day of December, 2007.

    

    /s/ 
      Stephen G. Fendrich

    STEPHEN
      G. FENDRICH

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      C - ARBITRATION CLAUSE

    

    (1)           In
      consideration of the benefits described in the Employment Agreement executed
      by
      STEPHEN G. FENDRICH (the “Employee” or ”you”) and SIMMONS HOLDCO, INC., a
      Delaware Corporation, (“Holdco”), and SIMMONS BEDDING COMPANY, a Delaware
      corporation, along with its subsidiaries, parents, joint ventures, affiliated
      entities, and includes its successors and assigns or any such related entities
      (the “Company”) on the same date hereto and into which this Exhibit C is
      incorporated (“Agreement”), the parties hereby agree that any controversy or
      claim arising under federal, state and local statutory or common or contract
      law
      between the Company and/or Holdco and you involving the construction or
      application of any of the terms, provisions, or conditions of the Agreement,
      including, but not limited to, breach of contract, tort, and/or fraud, must
      be
      submitted to arbitration on the written request of the parties served on the
      other.  Arbitration shall be the exclusive forum for any such
      controversy.  For example, if the Company and you disagree as to
      whether the Company had Cause, as defined by the Agreement, to terminate your
      employment or if the Company and you have a dispute concerning the
      interpretation or enforceability of one or more restrictive covenants, the
      parties will resolve the dispute exclusively through arbitration.  The
      Arbitrator’s decision shall be final and binding on the parties.

     

    (2)           If
      any claim or cause of action at law or in equity is filed by a party in any
      state or federal court which results in arbitration being compelled and/or
      the
      claim or cause of action being dismissed, stayed, and/or removed to arbitration
      pursuant to this Agreement, the party who instituted the claim or cause of
      action in state or federal court, either wholly or in substantial part, shall,
      at the discretion of the Arbitrator(s), reimburse the respondent for its
      reasonable attorneys’ fees, costs, and necessary disbursements to the extent
      permitted by law, in addition to any other relief to which it may be entitled,
      related to the state or federal court claim or action.

     

    (3)           Excluding
      the initial filing fee, which shall be borne by the claimant, the cost of
      arbitration shall be borne by the Company, unless the Arbitrator determines
      that
      any claim(s) brought by you was/were wholly frivolous or
      fraudulent.  If an arbitration or any action at law or in equity is
      necessary to enforce or interpret the terms of this Agreement, the prevailing
      party, either wholly or in substantial part, shall, at the discretion of the
      Arbitrator, be entitled to its reasonable attorneys’ fees, costs, and necessary
      disbursements to the extent permitted by law, in addition to any other relief
      to
      which it may be entitled.

     

    (4)           The
      parties hereby agree that all claims must be submitted to arbitration
      administered by the American Arbitration Association’s Southeast Case Management
      Center in Atlanta, Georgia and the arbitration will be conducted in Atlanta,
      Georgia.

     

     

     (5)           The
      arbitration shall comply with and be governed by the American Arbitration
      Association’s Commercial Arbitration Rules (“Rules”) effective as of the
      execution date below, to the extent such Rules are not contrary to the express
      provisions of this Agreement.  The parties also agree that the
      American Arbitration Association Optional Rules for Emergency Measures of
      Protection (“Emergency Rules”) shall apply to proceedings under this
      Agreement.  The above Rules and Emergency Rules can be found at the
      following page of the American Arbitration Association’s website,
www.adr.org: http://www.adr.org/sp.asp?id=22440.  You
      acknowledge that you should read these Rules and Emergency Rules and that it
      is
      your responsibility to be familiar with them prior to signing the
      Agreement.  If you are unable to access the Rules and/or Emergency
      Rules at the above website, you can request a copy of them from a Company
      official prior to signing the Agreement.

     

    (6)           The
      parties agree and acknowledge that all provisions of this Agreement shall be
      governed by and construed in accordance with the laws of the State of
      Delaware exclusively and without reference to principles of conflict of
      laws; provided, however, the Federal Arbitration Act (“FAA”) will supersede
      state laws to the extent inconsistent.  Any claim(s) involving the
      construction or application of this Agreement must be submitted to arbitration
      within the statute of limitations period for such claim(s) under Delaware state
      law.  The Arbitrator(s) shall have no authority to apply the law of
      any other jurisdiction.

     

    (7)           The
      dispute shall be heard and determined by one Arbitrator, unless the parties
      mutually consent in writing signed by you and an authorized representative
      of
      Company and/or Holdco to a panel of three (3) Arbitrators.  Unless the
      parties mutually consent otherwise, the parties agree and request that the
      Arbitrator(s) issue a reasoned award in accordance with Commercial Arbitration
      Rule R-42(b).

     

    I
      UNDERSTAND THAT BY SIGNING THIS
      AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.

    

    

    Executed
      this  7th day of December, 2007.

                        (day)              (month)

    

     

    

    STEPHEN
      G.
      FENDRICH                                                                                                 SIMMONS
      BEDDING COMPANY

    SIMMONS
      HOLDCO, INC.

    

    /s/ 
      Stephen G.
      Fendrich                                                                                                By:  /s/ 
Charles R. Eitel

     

    Name:
/s/ 
Charles
      R.
      Eitel

    

    Social
      Security
      #:  __________________                                                                                     Title: 
Chairman and CEO

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