Document:

Restricted Stock Agreement dated September 29, 2006 between Simmons Company
      and Kimberly Samon

    RESTRICTED
      STOCK AGREEMENT 

     

    This
      Restricted Stock Agreement (this “Agreement”)
      is made as of this 29th
      day of September, 2006 (the “Effective
      Date”)
      between Simmons Company, a Delaware corporation (the “Company”),
      and the undersigned (the “Restricted
      Shareholder”).
      Certain capitalized terms used herein are defined in Section
      7
      hereof. 

     

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

     

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

     

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

     

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

     

    1.  Purchase
      and Sale of Restricted Shareholder Stock.
      

     

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

     

    (b)  The
      parties agree that the fair market value of each share of Restricted Stock
      as of
      the date hereof is $4.74. The Restricted Shareholder, in his or her sole
      discretion, may make an effective election with the Internal Revenue Service
      (the “IRS”)
      under Section 83(b) of the Code and the regulations promulgated thereunder.
      The Restricted Shareholder understands that under applicable law such election
      must be filed with the IRS no later than thirty (30) days after any acquisition
      of the Restricted Shareholder Stock to be effective. If the Restricted
      Shareholder files an effective election, the excess of the fair market value
      of
      the Restricted Shareholder Stock (which the IRS may assert is different from
      the
      fair market value determined by the parties) covered by such election over
      the
      amount paid by the Restricted Shareholder for the stock will be treated as
      ordinary income received by the Restricted Shareholder, and the Company or
      its
      subsidiary, Simmons Bedding Company, will withhold from the Restricted
      Shareholder’s compensation all amounts required under applicable law. If the
      Restricted Shareholder does not file an effective election, all appreciation
      on
      the Restricted Shareholder Stock from the date of issuance will generally be
      taxable as ordinary income when such stock vests pursuant to this Agreement.
      

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    2.  Vesting
      of Restricted Shareholder Stock.

     

    (a)  General.

     

    (i) Vesting.
      The shares of Restricted Shareholder Stock granted hereunder (the “Shares”)
      will be deemed “vested” (the “Vested
      Shares”)
      as follows: Shares shall become Vested Shares in accordance with this
Section
      2,
      based upon the Company’s achievement of the Consolidated Adjusted EBITDA targets
      set forth below (each, the “Target
      EBITDA”)
      for each of the Company’s fiscal years ending December 30, 2006,
      December 29, 2007, December 27, 2008 and December 26, 2009 (the
“Measurement
      Years”).
      

     

     

    EBITDA
      Targets

     

    (dollars
      in millions)

    

    
      	
              Measurement

              Years

            	
              Target
                EBITDA

            	
              Cumulative
                Target
                EBITDA

            	
              90%
                of Target

              EBITDA

            	
              90%
                of Cumulative Target
                EBITDA

            	
              Eligible

              Shares

            
	
               

              2006

               

            	
               

              $149.7

               

            	
               

              $149.7

               

            	
               

              $134.7

               

            	
               

              $134.7

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2007

               

            	
               

              $181.9

               

            	
               

              $331.6

               

            	
               

              $163.7

               

            	
               

              $298.4

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2008

               

            	
               

              $214.1

               

            	
               

              $545.7

               

            	
               

              $192.7

               

            	
               

              $491.1

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            
	
               

              2009

               

            	
               

              $230.0

               

            	
               

              $775.7

               

            	
               

              $207.0

               

            	
               

              $698.1

               

            	
               

              25%
                of Restricted Shareholder Stock

               

            

    

    

     

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

    

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

    

    (ii) Change
      of Control.
      

     

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

     

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

     

    

     

    
      	
              Month

               

            	
              2006
                Monthly

              Target
                EBITDA

              (dollars
                in millions)

            	
              2006
                Year to Date

              Target
                EBITDA

              (dollars
                in millions)

               

            
	
              January

               

            	
              $11.9

               

            	
              $11.9

               

            
	
              February

               

            	
              $10.9

               

            	
              $22.9

               

            
	
              March

               

            	
              $10.5

               

            	
              $33.3

               

            
	
              April

               

            	
              $13.6

               

            	
              $46.9

               

            
	
              May

               

            	
              $11.4

               

            	
              $58.3

               

            
	
              June

               

            	
              $11.4

               

            	
              $69.7

               

            
	
              July

               

            	
              $16.0

               

            	
              $85.7

               

            
	
              August

               

            	
              $14.3

               

            	
              $100.0

               

            
	
              September

               

            	
              $14.1

               

            	
              $114.1

               

            
	
              October

               

            	
              $14.9

               

            	
              $129.1

               

            
	
              November

               

            	
              $10.7

               

            	
              $139.7

               

            
	
              December

               

            	
              $9.9

               

            	
              $149.7

               

            

    

    

     

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

     

    3.  Repurchase
      of Shares.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    4.  Legend.

     

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

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE AND CERTAIN
      OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF SEPTEMBER
      29, 2006 BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO. A COPY OF SUCH
      AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE
      OF BUSINESS WITHOUT CHARGE.

     

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

     

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

     

    5.  Restrictions
      on Transfer, Conversion and Voting.

     

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

     

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

     

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

     

    6.  Restricted
      Activities.

     

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

     

    (b)  The
      Restricted Shareholder agrees that the Restricted Shareholder’s work for the
      Company has brought and will bring Restricted Shareholder into close contact
      with many of the Company’s Customers, Customer Prospects, Vendors, Trade
      Secrets, and Confidential Information. The Restricted Shareholder further agrees
      that the covenants in this Section
      6
      are reasonable and necessary to protect the Company’s legitimate business
      interests and its Customer, Customer Prospect, and/or Vendor relationships,
      Trade Secrets, and Confidential Information. 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    (j)  Non-Solicitation
      of Employees.
      The Restricted Shareholder also covenants and agrees that during the term of
      Restricted Shareholder’s employment with the Company and for twelve (12) months
      after the termination thereof, regardless of the reason for the employment
      termination, the Restricted Shareholder will not, directly or indirectly, on
      the
      Restricted Shareholder’s own behalf or on behalf of or in conjunction with any
      person or legal entity, recruit, solicit, or induce, or attempt to recruit,
      solicit, or induce, any non-clerical employee of the Company with whom the
      Restricted Shareholder had personal contact or supervised while performing
      the
      Restricted Shareholder’s Job Duties, to terminate their employment relationship
      with the Company.

     

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

     

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

     

    7.  Definitions.

     

    The
      following terms shall have the meanings ascribed below:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Customers”
      means any firm, partnership, corporation and/or any other entity and/or Person
      that purchased or purchases from the Company any of the sleep products described
      in the definition for the “Business of the Company.”

     

    “Customer
      Prospects”
      means any firm, partnership, corporation and/or any other entity and/or Person
      reasonably expected by the Company to purchase from the Company any of the
      sleep
      products described in the definition for the “Business of the
      Company.”

     

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

     

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

     

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

    

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

     

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

     

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

     

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

     

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

     

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

     

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

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

     

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

     

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

     

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

     

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

     

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

     

    “Territory”
      means the United States and Puerto Rico. 

     

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

     

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

     

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

     

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

     

    8.  General
      Provisions.

     

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

     

    (b)  Entire
      Agreement.
      This Agreement and the Securityholders’ Agreement embody the complete agreement
      and understanding among the parties hereto with respect to the subject matter
      hereof and supersedes and preempts any prior understandings, agreements or
      representations by or among the parties, written or oral, which may have related
      to the subject matter hereof in any way,
      provided, however, that notwithstanding the foregoing, if the Restricted
      Shareholder is currently a party to any non-competition or non-solicitation
      covenants with the Company or its Subsidiaries and such covenants are to be
      governed by and construed in accordance with the laws of the State of Delaware,
      without reference to principles of conflict of laws, such covenants (together
      with any definitions contained in such covenants and any exhibits or schedules
      referenced therein) (collectively, the "Prior Covenants") shall not be
      superseded or restated but instead shall be incorporated herein by reference.
      The Prior Covenants shall be read together with the covenants contained in
      Section 6 hereof in such manner as to make such Prior Covenants and the
      covenants contained herein enforceable to the fullest extent permissible under
      the laws of the State in which enforcement is sought.

     

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

     

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

     

    (e)  Governing
      Law and Remedies.
      The parties acknowledge and agree that they are bound by their arbitration
      obligations under Exhibit A
      attached hereto, which the parties also hereby agree to execute
      contemporaneously and is an integral part of this Agreement. The parties agree
      and acknowledge that all provisions of this Agreement shall be governed by
      and
      construed in
      accordance with the laws of the State of Delaware exclusively and without
      reference to principles of conflict of laws. The Federal Arbitration Act
      (“FAA”)
      will supersede state laws to the extent inconsistent. The Arbitrator(s) shall
      have no authority to apply the law of any other jurisdiction.

     

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

     

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

     

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

     

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

     

    If
      to the Company, to:

     

    Simmons
      Company

    One
      Concourse Parkway, Suite 800

    Atlanta,
      GA 30328

    Attention:
      Chief Financial Officer and General Counsel

    

     

    With
      a copy to:

     

    Thomas
      H. Lee Partners, L.P.

    100
      Federal Street, 35th Floor

    Boston,
      MA 02110

    Attention:     Scott
      A.
      Schoen

      Todd
      M.
      Abbrecht

      George
      Taylor

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    

     

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

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

     

    SIMMONS
      COMPANY

    

    

    

    By:
      __/s/  Charles R. Eitel__

    Charles
      R. Eitel

    Chairman
      of the Board and 

    Chief
      Executive Officer

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      
        

         

        

         

         

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    RESTRICTED
      SHAREHOLDER:

    

    Kimberly
      A. Samon

     

    _/s/ 
      Kimberly A. Samon_______

    Signature

    

     

    Address:
      _____________________

    _____________________

    _____________________

    

     

     

    Shares
      of Restricted Shareholder Stock Purchased: 1,000

     

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

        
          

           

        

      

    

    EXHIBIT A
      - ARBITRATION CLAUSE

     

    (1)  In
      consideration of the benefits described in the Restricted Stock Agreement
      executed by KIMBERLY
      A. SAMON (the
      “Restricted Shareholder” or “you”) and SIMMONS
      COMPANY,
      a Delaware corporation (the “Company”), on the same date hereto and into which
      this Exhibit A
      is incorporated, (“Agreement”), the Company and you hereby agree that any
      controversy or claim arising under federal, state and local statutory or common
      or contract law between the Company and you involving the construction or
      application of any of the terms, provisions, or conditions of the Agreement,
      including, but not limited to, breach of contract, tort, and/or fraud, must
      be
      submitted to arbitration on the written request of either party served on the
      other. Arbitration shall be the exclusive forum for any such controversy. For
      example, if the Company and you have a dispute concerning the interpretation
      or
      enforceability of one or more restrictive covenants, the parties will resolve
      the dispute exclusively through arbitration. The Arbitrator’s decision shall be
      final and binding on both parties.

     

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

     

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

     

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

     

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

     

    (6)  The
      parties agree and acknowledge that all provisions of this Agreement shall be
      governed by and construed in
      accordance with the laws of the State of Delaware exclusively and without
      reference to principles of conflict of laws. The Federal Arbitration Act (“FAA”)
      will supersede state laws to the extent inconsistent. Any claim(s) involving
      the
      construction or application of this Agreement must be submitted to arbitration
      within the statute of limitations period for such claim(s) under Delaware state
      law and shall be dismissed if the statute of limitations period is not met.
      The
      Arbitrator(s) shall have no authority to apply the law of any other
      jurisdiction.

     

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

     

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

    

    

    Executed
      effective as of this 29th
      day of September, 2006.

     

    

    
      	
               

               

               

              __/s/ 
                Kimberly A. Samon_________

              Kimberly
                A. Samon

              Social
                Security #: __________________

            	
              Simmons
                Company

               

               

              By:
                _/s/  Charles R. Eitel________

              Charles
                R. Eitel

              Chairman
                of the Board and 

              Chief
                Executive OfficerEX-10.1

Exhibit 10.1

September 29, 2006

Patriot Associates, LLC

111 E. 56th Street

New York, NY 10022

Dear Sirs,

This letter is to confirm our discussion of this afternoon that Xenonics Holdings, Inc. will not be
extending the Consulting Agreement dated September 9, 2005. In accordance with Amendment No. 3 to
the Consulting Agreement, the Company will not issue 187,500 shares of the Company’s common stock
and will cancel the warrant dated October 19, 2005 for 1,312,500 shares of common stock effective
September 30, 2006.

Sincerely,

/s/ Richard J. Naughton

Richard J. Naughton

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