Document:

<PAGE>

                                                                    EXHIBIT 10.3

Dear Stephen G. Fendrich,

As per our discussion, the Simmons Company will assist with your relocation to
CITY LOCATION as detailed in the guidelines below. Upon receipt of this
agreement, the Simmons Company will notify our approved relocation vendors who
will initiate contact with you. To ensure timely attention to your relocation,
please provide your current contact information at the end of this form. If you
have any questions regarding your relocation assistance package, please contact
the Corporate Recruiter in the Human Resources department.

Home finding: Simmons will reimburse the associate for the costs of two (2)
house-hunting trips for you and your spouse. This includes coach round-trip
travel, reasonable lodging, meals, and local transportation for up to a maximum
of eight (8) days and nine (9) nights. If a personal automobile is used, mileage
will be reimbursed at the current mileage allowance rate.

Temporary Living: You will be reimbursed for temporary living expenses for up to
a sixty (60) day maximum. If an extension is required, it will need to be
approved by your manager and the Executive VP of Human Resources. Temporary
living expenses are defined as lodging and meals not to exceed $150 per day. If
there is a necessary extended delay in family relocation, Simmons will reimburse
the cost of a round-trip, economy class airfare, or personal automobile use, for
you to return home at two-week intervals for a maximum of 3 three trips.

Movement of Household Goods: The cost of packing, crating, insuring, and
movement of household goods will be the responsibility of the Simmons Company.
The Corporate Distribution and Traffic Department will handle all arrangements
for the movement of household goods. The Corporate Recruiter will verify
authorization of your move with the traffic department. Any further
communication with regard to the movement of your household goods will be
between you and the traffic department.

Where temporary storage of household goods is necessary, Simmons will pay such
charges up to a maximum of 90 days. Local moving charges to remove household
goods from storage will be paid by Simmons if the charges occur within that
90-day period only.

Simmons will pay to transport one automobile by van and will pay mileage at the
current rate to transport a second automobile unless this is a cross-country
move, in which case Simmons will pay to transport two (2) automobiles by van.

Simmons will not pay for the moving of aircraft, boats, house trailers, animals,
firewood, plants, shrubbery, or combustible items such as building materials,
alcoholic beverages, articles of extraordinary value (jewelry, precious stones,
stamp collections, wills, stocks, etc...), frozen food or the contents of deep
freezers requiring special refrigerated service, or any items requiring special
handling or equipment. The Executive VP of Human Resources must make any
exceptions to this provision.

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Travel to New Location: Simmons will reimburse the costs of transportation,
lodging, and meals for you and your family when traveling to the new location.
You will be reimbursed at the current mileage rate for up to two (2)
automobiles. The most direct route to the new location should be used. If you
drive only one (1) automobile, a second automobile may be shipped as a part of
your household goods move.

In the case of a cross-country move, costs will be reimbursed by Simmons and are
not to exceed the cost of coach/standard airfare and the cost of the shipment of
two (2) automobiles.

Lease Cancellation and Rental Agreements: If you rent at your old place of
residence, Simmons will reimburse you for any forfeiture of deposit, penalty, or
additional rent paid as a result of breaking or terminating a lease in order to
relocate. The maximum reimbursable amount is the equivalent of two (2) months
rent.

Sale of Home in Old Location: Simmons Company will reimburse you for normal
agent's commissions and reasonable legal fees connected with sale of the present
home. Closing costs paid by you as the seller as an inducement to the purchaser
are not reimbursable.

Purchase of New Residence: If you own a home at the old location and purchase at
the new location, you will be reimbursed for the normal expenses associated with
the purchase. Reimbursement will be limited to a period of one (1) year from the
date of the assignment at the new location. Reimbursable expenses, commonly
known as closing costs, can include:

      -     Survey charge

      -     Home inspection report fee

      -     Title search and title insurance fee

      -     Legal, attorney, or escrow agent fees

      -     Transfer fees or transfer taxes

      -     Recording fees

Up to a total of 2% of the mortgage amount for any one of any combination of the
following:

      -     Origination Fees

      -     Application Fees

      -     Processing Fees

      -     Commitment Fees

Loss of Annual Fees: Consideration will be given for reimbursement on a pro-rata
basis for certain prepaid items such as annual memberships or tuition, which
cannot be recovered and which cannot be utilized because of the move.
Documentation and signed approval by the Hiring Manager and the Human Resources
Manager will be required for reimbursement.

Allowance for Miscellaneous Items: To assist you with miscellaneous expenses
incurred during your move, Simmons will pay a $1,500 special allowance. This
allowance is paid approximately one week before your move to the new location.
The amount is put on an

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<PAGE>

expense report, signed off by the Hiring Manager, and then sent to the Corporate
Recruiter for approval and processing.

Tax Assistance (Gross-Up): A tax gross-up will be added to the portion of
relocation expense reimbursements that are taxable, but not deductible. There
will be no gross-up on those expenses, which are deductible by the associate.

Tax Regulations Applicable to Moving Expenses: IRS regulations require that all
moving expenses reimbursed or paid on behalf of the Simmons Company must be
included in your taxable income. Please contact the Simmons Tax Department in
the event that you have questions regarding taxable relocation expenses per IRS
guidelines.

Expense Report Procedures: All requests for reimbursement should be made via
expense report, which should be approved by the new manager and forwarded to the
Corporate Recruiter for final review and approval. All expenses claimed should
be supported by appropriate documentation. Please note that no expenses will be
paid until the Corporate Recruiter receives an executed copy of the Voluntary
Separation Form from the relocating associate.

Simmons Company will provide you with the Relocation Assistance Package as
indicated above to pay for your moving related expenses, reimbursable through
submitting expense reports and receipts. This is a complete agreement regarding
your relocation assistance package and supersedes all prior agreements, and can
only be amended in writing signed by you and the Executive VP of Human
Resources.

Read and Agreed:

/s/ Stephen Fendrich
--------------------------------------------------
Name and Date

Street Address:
________________________________________

City, State, and Zip:
________________________________________

Home Phone:
________________________________________

Personal Email Address:

CORPORATE HUMAN RESOURCES

                                       3<PAGE>
                                                                    EXHIBIT 10.1

                    GENERAL RELEASE AND SEPARATION AGREEMENT

         Simmons Bedding Company (previously named Simmons Company), a
corporation incorporated under the laws of the State of Delaware ("Company"),
and Simmons Company (previously named THL Bedding Holding Company), a
corporation incorporated under the laws of the State of Delaware ("Holdings")
(collectively Company and Holdings are referred to herein as "Simmons"), and
Robert W. Hellyer ("Executive") hereby enter into this General Release and
Separation Agreement ("Separation Agreement"), contracting and agreeing as
follows:

1. SEPARATION DATE AND EMPLOYMENT AGREEMENT. The parties agree that Executive's
last day of employment with Company is June 30, 2005 (the "Separation Date").
Executive acknowledges and agrees that except as specifically set forth below,
the Employment Agreement dated as of December 19, 2003 among Holdings, Company
and Executive (the "Employment Agreement") is terminated. Executive further
agrees that effective as of the Separation Date, he will be removed from all
officer and director positions with Simmons and any of its subsidiaries and
affiliates and agrees to sign any letters or other documents on or after such
date acknowledging the same.

2. CONSIDERATION PERIOD. Executive acknowledges that Executive was given this
Separation Agreement to consider on June 30, 2005 which was revised and given to
him again on August 3, 2005 after negotiations with his attorney, and that
Executive has twenty-one (21) days to consider whether to sign the same.
Executive is hereby advised to consult a lawyer before signing this Separation
Agreement.

3. EFFECTIVE DATE. Executive may accept this Separation Agreement only by
signing, initialing and dating this Separation Agreement in the spaces provided
and delivering the Separation Agreement to Simmons Bedding Company, Attention:
Rhonda Rousch, Corporate Human Resources, One Concourse Parkway, Suite 800,
Atlanta, Georgia 30328, no later than Company's normal close of business on the
later of (a) the twenty-second (22nd) day following Executive's receipt of this
Separation Agreement or (b) if the twenty-second (22nd) day following receipt is
a Saturday, Sunday or legal holiday in the State of Georgia, the next day that
is not a Saturday, Sunday or legal holiday. Time is of the essence as it
pertains to this Section 3. The "Effective Date" of this Separation Agreement
shall be seven (7) days after the date on which Executive signs and delivers the
Separation Agreement pursuant to this Section, so long as Executive has not
revoked the Separation Agreement pursuant to Section 4 below.

4. REVOCATION. Executive may revoke this Separation Agreement at any time within
seven (7) days after signing and delivering it to Simmons by notifying Simmons
Bedding Company, Attention Rhonda Rousch, Corporate Human Resources, One
Concourse Parkway, Suite 800, Atlanta, Georgia 30328, in writing of Executive's
decision to revoke.

5. SEPARATION BENEFITS. Provided that Executive satisfies the conditions of this
Separation Agreement and does not revoke this Separation Agreement, Company will
do the following:

         (a) Pay to Executive his unpaid salary through the Separation Date.
Such amount will be paid at the next regular pay period after the Separation
Date.

         (b) Pay to Executive the portion of the Annual Bonus due, if any, in
accordance with the calculation set forth in Section 9.4(2) of his Employment
Agreement. Such amount will be paid within 15 days of the last day of the month
in which the Effective Date occurs.

         (c) Pay to Executive the gross amount of $940,000, which equals two (2)
years of Executive's current salary of $470,000 per year. This amount, less
legal deductions, will be paid in accordance with Executive's current pay
schedule for a period from July 1, 2005 to June 30, 2007 (the "Severance Pay
Period") provided that the first payment shall not be made until after the
expiration of the revocation period, and which first payment will include any
missed payments between the first payment due date and the expiration of the
revocation period.

         (d) (i) Executive and Executive's Dependents (as defined below) may
continue to participate in the Company's medical, dental and vision plans at the
same level of participation that was in effect immediately prior to the
Separation Date until the earlier of (i) June 30, 2007 or (ii) the date on which
the Executive commences other employment in connection with which the Executive
receives medical and dental benefits substantially comparable to those made
available by the Company (including self employment or engaging in an enterprise
as a sole proprietor or partner). Executive shall continue to pay for such
coverage at the same rate or rates that apply from time to time to active
employees for comparable coverage. Notwithstanding the foregoing, if the benefit
plan for which Executive is currently enrolled is no longer offered by Simmons,
then Executive through June 30, 2007 will be eligible to participate in the plan
offered to current Simmons' associates that is most similar to, but does not
offer greater benefits than, Executive's plan as of the

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<PAGE>

Separation Date. Executive must pay Executive's portion by deductions from
Executive's severance payments. The 18 month period during which benefits under
the Consolidated Omnibus Budget Reconciliation Act (aka COBRA) are available to
Executive and his Dependants shall begin on the Separation Date and run
concurrently with the benefits available under this Section 5(d)(i).

                  (ii) After June 30, 2007 but only until Executive commences
other employment in connection with which the Executive receives medical and
dental benefits substantially comparable to those made available by the Company
(including self employment or engaging in an enterprise as a sole proprietor or
partner), Executive may elect to continue the same coverage for Executive and
Executive's enrolled and qualified spouse as of the Separation Date for the rest
of their natural lives by paying the current full group premium cost plus an
administrative fee. To elect this coverage, Executive shall notify Simmons in
writing on or before June 30, 2007 in a letter addressed to Simmons Bedding
Company, Attn: Corporate Benefits Department, One Concourse Parkway, Suite 800,
Atlanta, Georgia 30328 (or such other address of which Simmons notifies
Executive in writing) and thereafter Executive shall make the monthly payments
in accordance with the payment instructions below.

                  (iii) Beginning in 2006, the new medical and dental rates will
be communicated to the Executive before December 31 of the prior year. Executive
is required to complete all necessary forms required during the open enrollment
period each year. Notwithstanding the foregoing, if the benefit plan for which
Executive is currently enrolled is no longer offered by Simmons during the
periods listed above, then Executive will be eligible to participate in the plan
offered to current Simmons' associates that is most similar to, but does not
offer greater benefits than, Executive's plan as of the Separation Date, during
the periods outlined above. Further, if Executive discontinues his coverage
under the Company's medical or dental plans at any time, he will no longer be
entitled to any of the benefits described in this Section 5(d) after such date.

                  (iv) After the Severance Pay Period expires, all payments
shall be made by sending a check made payable to Simmons Bedding Company by the
1st of each month to Simmons Bedding Company, Attn: Corporate Benefits
Department, One Concourse Parkway, Suite 800, Atlanta, Georgia 30328 (or such
other address of which Simmons notifies Executive in writing). If Simmons has
not received Executive's check in the full amount by the 5th of each month, then
all benefits for Executive and Executive's qualified Dependents will be
immediately cancelled. If Executive commences other employment in connection
with which the Executive receives medical and dental benefits substantially
comparable to those made available by the Company (including self employment or
engaging in an enterprise as a sole proprietor or partner), he shall immediately
notify Simmons in a letter addressed to Simmons Bedding Company, Attn: Legal
Department, One Concourse Parkway, Suite 800, Atlanta, Georgia 30328 (or such
other address of which Simmons notifies Executive in writing).

                  (v) As used herein, a "Dependent" is a dependent of Executive
enrolled and qualified in Simmons' medical, dental and/or vision plans
immediately prior to the Separation Date and will only continue to be a
"Dependent" hereunder for as long as he or she continues to be qualified as
outlined in the applicable health plan documents. Simmons reserves the right
from time to time to require proof from Executive that Executive's Dependents
are still considered qualified under the applicable health plan documents.

                  (vi) Nothing contained herein shall give Executive any rights
to any other Simmons' sponsored benefits, including without limitation, long
term disability, short term disability, and retirement contributions, except as
permitted under those plans for retired associates.

         (e) Pay all verified and approved expense reports submitted by
Executive to Company within two (2) weeks of the Separation Date in accordance
with Company's current policies, practices and procedures.

         (f) Provide a neutral employment reference. Executive must direct all
reference requests to the Executive Vice President of Human Resources of Simmons
Bedding Company.

         (g) Executive agrees that if Executive subsequently engages in
activities prohibited by Section 10 below, 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
this Section 5 other than those benefits that the Company may be required to
maintain for the Executive under applicable law.

6. REPURCHASE OF SHARES.

   (a) Class A Shares.

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<PAGE>

     (i) Pursuant to Section 3.5(b)(i) of the Securityholders Agreement dated as
     of December 19, 2003 (the "SH Agreement") between Executive and Holdings,
     Holdings hereby calls the 34,534.52 Class A shares that Executive currently
     owns at the Fair Market Value (as defined in the SH Agreement) as of the
     end of the second fiscal quarter of 2005 as determined by the Board at its
     next regularly scheduled board meeting. The Call Notice (as that term is
     defined in the SH Agreement) shall be deemed to have been given as of the
     Effective Date of this Separation Agreement. The Call Closing (as that term
     is defined in the SH Agreement) will take place at One Concourse Parkway,
     Suite 800, Atlanta, Georgia 30328 on the later of (i) the date that is ten
     (10) business days after the final determination of the Fair Market Value
     by the Board members and (ii) the date that is thirty (30) days after the
     Effective Date of this Separation Agreement.

     (ii)Upon the Board of Directors' determination of the current Fair Market
     Value of the Class A shares, Holdings agrees to provide Executive an
     affidavit signed by the Executive Vice President and Chief Financial
     Officer of Holdings which (i) identifies the ranges of the stock value for
     the Class A stock as determined by the outside third party who does such
     valuations on behalf of Holdings and (ii) states that the Board
     determination of the current Fair Market Value was consistent with past
     practices in making such determinations. Executive agrees that such
     information is considered Confidential Information under the terms of
     Section 5.1 of the Employment Agreement and represents and warrants that he
     will not disclose to any third party or use for his own benefit or gain the
     information provided in the affidavit with the only exception being that
     this information may be disclosed to his attorneys at Rogers & Hardin LLP
     who represented him in the negotiation of this Separation Agreement.

         (b) Class B Shares. Pursuant to Section 2(b) and 3(a) of the Senior
Manager Restricted Stock Agreement (the "RSA") dated as of December 19, 2003 by
and among Executive and Holdings, the vesting of Executive's Restricted Class B
stock has terminated; and Holdings now exercises the following rights:

                  (i) Executive had 23,658 Class B shares vest on March 22,
2005. Holdings intends to exercise its right to repurchase these vested shares
no earlier than September 22, 2005.

                  (ii) Based on the six (6) full months that Executive was
employed in 2005, Executive has an additional 15,772 shares that may potentially
vest if Holdings meets the performance requirements for 2005 as set forth in
Section 2(a)(i)(A) of the RSA. For the portion, if any, of these shares that
vest pursuant to such performance requirements, Holdings intends to exercise its
right to repurchase these vested shares no less than one-hundred eighty (180)
days from the Measurement Date (as defined in the RSA) in 2006 for those shares.
For the portion, if any, of these shares that do not vest pursuant to the
performance requirements for 2005, then Holdings will repurchase these unvested
shares at Executive's original purchase price of one penny per share within
thirty (30) days of the Measurement Date in 2006 for those shares.

                  (iii) For all Class B shares that have vested or that do vest
pursuant to Section 6(b)(i) and (ii) above, Executive and Simmons agree that,
notwithstanding any terms previously agreed to by the parties, such vested
shares will be repurchased by Holdings at the then current Fair Market Value (as
defined in the RSA) at the time of such repurchase as determined by the Board of
Directors of Simmons.

                  (iv) Holdings hereby exercises its right to repurchase 86,746
of the Executive's unvested Class B shares at Executive's original purchase
price of one penny per share, or $867.46, which amount will be paid within
thirty (30) days of the Effective Date of this Separation Agreement. (Under the
terms of the RSA, Executive ceases vesting in the stock after Executive's
employment terminates and therefore none of the 63,088 Class B shares that might
have vested in 2006 and 2007 will vest, and 15,772 of the 31,544 Class B shares
that would have been available for vesting based on the performance requirements
for 2005 will not vest because Executive was not working for the entire last six
(6) month(s) of 2005. Further, an additional 7,886 Class B shares that were
subject to vesting based on the performance objectives for 2004 did not vest.)
These shares shall be deemed repurchased upon payment by Simmons to Executive.

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<PAGE>

         (c) Executive further agrees that the obligations of Holdings to make
payments pursuant to this Section 6(a) and 6(b) are subject to there being no
Cash Deferral Condition existing (as such term is defined in Section 3(d) of the
RSA and Section 3.5(a)(iv) of the SH Agreement).

7. RELEASE.

                  (a) Subject to Executive's right to revoke this Separation
     Agreement as stated above, by signing this Separation Agreement, Executive
     gives up and releases Simmons, each subsidiary and affiliate of Company or
     Holdings, or both; and their respective employee welfare benefit plans,
     employee retirement benefit plans, successors and assigns (including, in
     their representative capacities, all present and former shareholders,
     directors, officers, partners, fiduciaries, agents, representatives and
     employees of those companies and other entities) (collectively the
     "Released Parties") from and promises never to sue or lodge any charge or
     complaint whether as a named plaintiff, class member, or otherwise against
     the Released Parties with respect to any and all rights and claims that
     Executive may have against the Released Parties, including without
     limitation any and all rights and claims to or for attorneys' fees, whether
     or not Executive presently is aware of such rights or claims or suspects
     them to exist. These rights and claims include, but are not limited to, any
     and all rights and claims which Executive may have under, or arising out
     of, Title VII of the Civil Rights Act of 1964, as amended; the Americans
     with Disabilities Act, as amended; the Age Discrimination in Employment Act
     of 1967, as amended; and any other federal, state or local statute,
     ordinance, executive order, or common law. Executive specifically releases
     any and all claims of/for discrimination on the basis of age, gender, race,
     national origin, religion and/or retaliation. These rights and claims also
     include, but are not limited to, any and all rights and claims that
     Executive may have under any agreement or contract (other than this
     Separation Agreement). This release includes any and all claims that might
     exist at the time Executive executes this Separation Agreement, whether
     known or unknown to Executive. These rights and claims do not include any
     rights or claims which arise after the date on which Executive signs and
     delivers this Separation Agreement to Company or any vested rights
     Executive has (if any) under any retirement benefit plan sponsored by
     Company, and do not include any rights or claims existing under this
     Separation Agreement.

                  (b) Executive further gives up and releases Houlihan, Lokey,
     Howard & Zukin Financial Advisors, Inc., its successors and assigns
     (including all present and former shareholders, directors, officers,
     partners, fiduciaries, agents, representatives and employees of those
     companies and other entities) (collectively the "HLHZ Released Parties")
     from and promises never to sue or lodge any charge or complaint whether as
     a named plaintiff, class member, or otherwise against the HLHZ Released
     Parties with respect to any and all rights and claims that Executive may
     have against the HLHZ Released Parties relating to his employment with
     Company or his investments in Holdings, including without limitation any
     and all rights and claims to or for attorneys' fees, whether or not
     Executive presently is aware of such rights or claims or suspects them to
     exist.

                  (c) The Company and Holdings give up and release Executive
     from and promise never to sue or lodge any charge or complaint whether as a
     named plaintiff, class member, or otherwise against the Executive with
     respect to any and all rights and claims that the Company or Holdings may
     have against the Executive, including without limitation any and all rights
     and claims to or for attorneys' fees, whether or not the Company or
     Holdings presently is aware of such rights or claims or suspects them to
     exist. These rights and claims also include, but are not limited to, any
     and all rights and claims that the Company or Holdings may have under any
     agreement or contract (other than this Separation Agreement, the SH
     Agreement, RSA, and the Employment Agreement, but in each case only with
     respect to any ongoing obligations thereunder). This release includes any
     and all claims that might exist at the time the Company and Holdings
     execute this Separation Agreement, whether known or unknown to the Company
     or Holdings. These rights and claims do not include any rights or claims
     which arise after the date on which the Company and Holdings sign and
     deliver this Separation Agreement, and do not include any rights or claims
     existing under this Separation Agreement, the SH Agreement, RSA, and the
     Employment Agreement, but in each case only with respect to any ongoing
     obligations thereunder.

8. FALSE CLAIMS REPRESENTATIONS, COOPERATION AND PROMISES: Executive has
disclosed to Company any information Executive has concerning any conduct
involving Simmons or any affiliate that Executive has any reason to believe may
be unlawful. Executive promises to cooperate fully with Simmons in any
investigation Simmons or any affiliate undertakes into matters occurring during
Executive's employment with Simmons or any affiliate. Executive agrees that, as
and when requested by Simmons, Executive will fully cooperate with Simmons or
any affiliate in effecting a smooth transition of Executive's responsibilities
to others. If requested by Simmons, Executive will promptly and fully respond to
all inquiries from Simmons or any affiliate and its representatives relating to
any claims or lawsuits which relate to matters occurring during Executive's
employment with Simmons. If Executive is contacted as a potential witness to any
claim or in any litigation, Executive will notify Simmons of any such contact or
request within two (2) days after learning of it and will permit Simmons to take
all steps it deems to be appropriate, if any, to prevent Executive's
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 Simmons with notice and the
opportunity to object and/or participate. Before Executive discloses any
Simmons' information or engages in any other activity that could

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<PAGE>

possibly violate the promises Executive has made herein, Executive promises that
Executive will discuss Executive's proposed actions with the Executive Vice
President of Human Resources at (770) 392-2596, who will advise Executive in
writing whether the proposed actions would violate these promises.

9. NO ADMISSION. This Separation Agreement does not constitute an admission by
the Released Parties of any liability to Executive, and Executive understands
and agrees that the Released Parties deny any liability to Executive.

10. OBLIGATIONS AND RESTRICTED ACTIVITIES. In consideration of the benefits as
set forth herein, and other good and valuable consideration, the adequacy of
which Executive acknowledges, Executive, intending to be legally bound, agrees
to continue to be bound by the obligations and restrictions as set forth in
Sections 5, 6(A) through (D), 6.1, 6.2, 6.4, 6.6 and 7 of the Employment
Agreement and terms shall remain binding and enforceable during the periods set
forth therein. Defined terms as used in those Sections 5, 6(A) through (D), 6.1,
6.2, 6.4, 6.6 and 7 of the Employment Agreement shall have the specific meanings
as defined in Section 13 of the Employment Agreement.

11. GENERAL

         (a) The Company agrees to pay Rogers & Hardin LLP up to $3,500 for its
services to Executive in negotiating this Separation Agreement. Such payment
will be made upon receipt of an itemized invoice identifying the attorneys who
provided such services, the services performed and the amount of time and the
date such services were performed; which invoice shall be provided to the
General Counsel for Simmons. The payment will be made within 45 days of the
receipt of such invoice but in no case earlier than the Effective Date of this
Separation Agreement.

         (b) This Separation Agreement contains the entire agreement of Simmons
with Executive and replaces all prior and contemporaneous agreements,
communications and understandings, whether written or oral, with respect to
Executive's employment with Company and its termination and all related matters,
including the Employment Agreement, excluding only Executive's rights and
obligations, if any, that survive the Employment Agreement as specifically set
forth above. The parties further agree that no amendment or modification of this
Separation Agreement shall be valid or binding upon any of them unless made in
writing and signed by all parties hereto. The Separation Agreement does not
affect ongoing rights and obligations of the parties under the SH Agreement, RSA
and any related agreements concerning Class A or Class B stock held by Executive
after the Effective Date.

         (c) This Separation Agreement shall be binding upon and inure to the
benefits of the parties hereto and their respective heirs, representatives,
successors, transferees and assigns forever. This Separation Agreement shall not
be assignable by Executive but shall be freely assignable by Simmons.

         (d) Simmons and Executive intend for every provision of the Separation
Agreement to be fully enforceable. If a court with jurisdiction of this
Separation Agreement determines that all or part of any provision of this
Separation Agreement is unenforceable for any reason, Simmons and Executive
intend for each remaining provision and part to be fully enforceable as though
the unenforceable provision or part had not been included in this Separation
Agreement.

         (e) This Separation Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without regard to the conflict
of laws principles thereof.

         (f) This Separation Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.

12. EXECUTIVE'S FULL REVIEW. Executive acknowledges that Executive has read this
entire Separation Agreement, that Executive fully understands its meaning and
effect, that Executive's counsel has answered any questions Executive may have
and that Executive has voluntarily signed this Separation Agreement.

                       [SIGNATURES ON THE FOLLOWING PAGE]

                                       5

<PAGE>

         IN WITNESS WHEREOF, Executive and a duly authorized representative of
Company and Holdings have signed this Separation Agreement to be effective as
provided herein.

                          Simmons Bedding Company

                          By:  /s/ Rhonda C. Rousch        Date:  August 9, 2005
                               ---------------------              --------------
                               Rhonda C. Rousch
                               Executive V.P. Human Resources

                          Simmons Company:

                          By:  /s/ Rhonda C. Rousch        Date:  August 9, 2005
                               ---------------------              --------------
                               Rhonda C. Rousch
                               Executive V.P. Human Resources

                          Executive:

                               /s/ Robert W. Hellyer       Date:  August 9, 2005
                               ----------------------             --------------
                               Robert W. Hellyer

                                       6

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