EMPLOYMENT AGREEMENT

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Exhibit 10.1

EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT is entered into as of the 1 ^st  day of August, 2009, by and between SEALY CORPORATION, a Delaware corporation (the "Company"), and the Employee (as defined below).

W I T N E S S E T H:

        WHEREAS, the Company and the Employee (collectively "the Parties") desire to enter into this Employment Agreement (the "Agreement") as hereinafter set forth;

        NOW, THEREFORE, the Company and Employee agree as follows:

        1.     MAJOR DEFINED TERMS.     

(a)

"Annual Base Salary" shall be Two Hundred Twenty-One Thousand Two Hundred Sixty dollars ($221,260) , subject to annual review by the Human Resources Committee of the Board and may during the Employment Term be increased, but not decreased, to the extent, if any, that said Committee may determine.

(b)

"Cause" shall be as defined in Subsection 4(b) below.

(c)

"Good Reason" shall be as defined in Subsection 4(g) below.

(d)

"Employee" shall mean: Michael Q. Murray .

(e)

"Employee Address" is: 1911 Milan Road
                                       Greensboro, North Carolina 27410 .

(f)

"Employment Term" shall:

(i)

be for an initial one (1) year term commencing on the date of this Agreement, which term shall automatically be extended one calendar day for each calendar day that the Employee is employed by the Company after the date of this Agreement so that the remaining Employment Term shall always be one (1) year;

(ii)

provided that the Employment Term, as provided in Section 4 hereof, may be terminated prior to the date specified above in this Subsection 1(f).

(g)

"Position" shall mean: Senior Vice Presidaent, General Counsel & Secretary

(h)

"Separation from Service" shall be as defined in Subsection 4(h) below.

(i)

"Specified Employee" shall mean a specified employee within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended, and lawful guidance thereunder (such Code and guidance collectively the "Code") and the Company's specified employee policy.

(j)

"Target Annual Bonus Percentage" shall be thirty-five percent ( 35% ) of Employee's Annual Base Salary with a range of zero percent (0%) to seventy percent ( 70% ) of Annual Base Salary.

        2.     POSITION, DUTIES, AND RESPONSIBILITIES.     Subject to the conditions set forth herein, at all times during the Employment Term, the Employee shall:

(a)

Hold the Position reporting to the Chief Executive Officer, President or Chief Operating Officer of the Company (the "Chief Executive Officer");

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(b)

Have those duties and responsibilities, and the authority, customarily possessed by the Position at comparable size corporations and such additional duties as may be assigned to the Employee from time to time by the Board of Directors of the Company (the "Board") or the Chief Executive Officer which are consistent with the Position at a major corporation;

(c)

Adhere to such reasonable written policies and directives, and such reasonable unwritten policies and directives as are of common knowledge to executive officers of the Company, as may be promulgated from time to time by the Board or the Chief Executive Officer and which are applicable to executive officers of the Company;

(d)

Invest in the Company only in accordance with any insider trading policy of the Company in effect at the time of the investment; and

(e)

Devote the Employee's entire business time, energy, and talent to the business, and to the furtherance of the purposes and objectives, of the Company, and neither directly nor indirectly act as an employee of or render any business, commercial, or professional services to any other person, firm or organization for compensation, without the prior written approval of the Board or the Chief Executive Officer.

        Nothing in this Agreement shall preclude the Employee from devoting reasonable periods of time to charitable and community activities or the management of the Employee's investment assets, provided such activities do not interfere with the performance by the Employee of the Employee's duties hereunder.

        3.     SALARY, BONUS AND BENEFITS.     For services rendered by the Employee on behalf of the Company during the Employment Term, the following salary, bonus and benefits shall be provided to the Employee by the Company:

(a)

The Company shall pay to the Employee, in equal installments, according to the Company's then current practice for paying its executive officers in effect from time to time during the Employment Term, the Annual Base Salary.

(b)

The Employee shall participate in the Sealy Corporation Annual Bonus Plan (the "Bonus Plan") in accordance with the provisions of that Plan substantially as in effect as of the date of this Agreement based on the Target Annual Bonus Percentage.

(c)

The Employee shall be eligible for participation in such other benefit plans, including, but not limited to, the Company's Profit Sharing Plan and Trust, Executive Severance Benefit Plan, Benefit Equalization Plan, Short-Term and Long Term Disability Plans, Group Term Life Insurance Plan, Medical Plan or PPO, Dental Plan, the 401(k) feature of the Profit Sharing Plan and the 1998 and 2004 Stock Option Plans, as the Board may adopt from time to time and in which the Company's executive officers are eligible to participate. Such participation shall be subject to the terms and conditions set forth in the applicable plan documents. As is more fully set forth in Section 6 hereof, the Employee shall not be entitled to duplicative payments under this Agreement and the Executive Severance Benefit Plan.

(d)

Without limiting the generality of Subsection 3(c) above, for so long as such coverage shall be available to the executive officers of the Company, the Employee shall be eligible to participate in the Company's Group Term Life Insurance Plan with a death benefit to be provided at the level of one and one half (1 ¹ / 2 ) times annual base salary at Company expense, plus extended coverage with a death benefit to be provided of at least the level in effect on the date of this Agreement for the Employee under such Plan at the Employee's discretion and expense.

(e)

The Employee shall be entitled to take, during each calendar year period during the Employment Term, vacation time equal to four (4) weeks per year.

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(f)

In addition, the Parties do hereby further confirm that any shares of Class A Common Stock of the Company ("Class A Shares"), and any options to purchase additional Class A Shares previously granted to Employee are in addition to, and not in lieu of, any shares or options which may be granted under any other plan or arrangement of the Company after the date of this Agreement, and (b) the various stock agreements and stock option agreements, and any related Stockholder Agreement (the "Stockholder Agreement") between the Parties (such agreements being hereinafter referred to collectively as the "Pre-existing Agreements"), all remain in full force and effect except as otherwise provided herein. Notwithstanding the foregoing, to the extent that any provision contained herein is inconsistent with the terms of any of the Pre-existing Agreements, the terms of this Agreement shall be controlling.

        4.     SEPARATION FROM SERVICE.     As indicated in Subsection 1(f)(ii), the Employment Term may terminate prior to the date specified in Subsection 1(f)(i) as follows:

(a)

The Employee's employment hereunder will terminate without further notice upon the death of the Employee.

(b)

The Company may terminate the Employee's employment hereunder effective immediately upon giving written notice of such termination for "Cause". For these purposes, "Cause" shall mean the following:

(i)

Commission by the Employee (evidenced by a conviction or written, voluntary and freely given confession) of a criminal act constituting a felony;

(ii)

Commission by the Employee of a material breach or material default of any of the Employee's agreements or obligations under any provision of this Agreement, including, without limitation, the Employee's agreements and obligations under Subsections 2(a) through 2(e) and Sections 8 and 9 of this Agreement, which is not cured in all material respects within thirty (30) days after the Chief Executive Officer or the designee thereof gives written notice thereof to the Employee; or

(iii)

Commission by the Employee, when carrying out the Employee's duties under this Agreement, of acts or the omission of any act, which both: (A) constitutes gross negligence or willful misconduct and (B) results in material economic harm to the Company or has a materially adverse effect on the Company's operations, properties or business relationships.

(c)

The Employee's employment hereunder may be terminated by the Company upon the Employee's disability, if the Employee is prevented from performing the Employee's duties hereunder by reason of physical or mental incapacity for a period of one hundred eighty (180) consecutive days in any period of two consecutive fiscal years of the Company, but the Employee shall be entitled to full compensation and benefits hereunder until the close of such one hundred and eighty (180) day period.

(d)

The Company may terminate the Employee's employment hereunder without Cause at any time upon thirty (30) days written notice.

(e)

The Employee may terminate employment hereunder effective immediately upon giving written notice of such termination for "Good Reason", as defined in Subsection 4(g) below.

(f)

The Employee may terminate employment hereunder without Good Reason at any time upon thirty (30) days written notice.

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(g)

For purposes of this Agreement, "Good Reason" means, and related procedural rules are:

(i)

any material reduction in either the Annual Base Salary of the Employee or the Target Annual Bonus Percentage or maximum annual bonus percentage applicable to the Employee under the Bonus Plan,

(ii)

any material reduction in the position, authority or office of the Employee,

(iii)

any material reduction in the Employee's responsibilities or duties for the Company,

(iv)

any material adverse change or reduction in the aggregate "Minimum Benefits," as hereinafter defined, provided to the Employee as of the date of this Agreement (provided that any material reduction in such aggregate Minimum Benefits that is required by law or applies generally to all Employees of the Company shall not constitute "Good Reason" as defined hereunder),

(v)

any relocation of the Employee's principal place of work with the Company to a place which reasonably would necessitate the Employee's relocation of his principal residence,

(vi)

the material breach or material default by the Company of any of its agreements or obligations under any provision of this Agreement, or

(vii)

failure of the purchaser, in connection with a sale or transfer of all or substantially all of the assets of the Company, to assume this Agreement in accordance with the provisions of this Agreement.

As used in this Subsection 4(g), a "material adverse change or reduction" in the aggregate Minimum Benefits shall be deemed to result from any reduction or any series of reductions which, in the aggregate, exceeds five percent (5%) (or such other minimum required percentage reduction in excess of five percent (5%) which is deemed to be material under Section 409A of the Code ("Section 409A") of the value of such aggregate Minimum Benefits determined as of the date of this Agreement. As used in this Subsection 4(g), Minimum Benefits are life insurance, accidental death, long term disability, short term disability, medical, dental, and vision benefits and the Company's expense reimbursement policy.

The Employee, within ninety (90) days following the existence of a condition which constitutes a Good Reason, shall give written notice to the Company of such Good Reason describing such Good Reason in detail and giving the Company thirty (30) days to cure the condition. The Company may indicate in writing that it acknowledges that the condition constitutes a Good Reason and that it is waiving its right to cure the condition. Such a waiver closes the cure period upon receipt by the Employee. Unless otherwise required by Section 409A, a Good Reason condition will not be considered to come into existence until the later of the actual existence of the condition or the date the Employee knew or should have known of the existence of the condition. If the Company does not waive the right to cure the condition and does in fact cure the condition within thirty (30) days following receipt of such notice, then such condition shall no longer provide a basis for the Employee's Separation from Service to be deemed for Good Reason. If the Company does not cure the condition causing such Good Reason within the cure period, the Employee must resign within thirty (30) days following the close of such cure period (as such close may be accelerated by the Company's waiver) in order for such resignation to be deemed to be for such Good Reason. If the Employee does not give the written notice of Good Reason described above to the Company within ninety (90) days following the existence of a condition which constitutes a Good Reason, then such Good Reason shall no longer provide a basis for the Employee's Separation from Service with the Company for Good Reason.

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(h)

For purposes of this Agreement, "Separation from Service" means a "separation from service" as defined for purposes of Section 409A for purposes of determining when a distribution may be made under the terms of a nonqualified deferred compensation plan or arrangement. In general, a Separation from Service for purposes of this Agreement occurs when there is a good faith severance of the employment relationship between the Company and its Affiliates and the Employee due to the Employee's death, retirement or other "termination of employment" (as that term is defined for purposes of identifying a Separation from Service for purposes of Section 409A). Specifically, the following shall apply:

(i)

The Employee will not be deemed to have a Separation from Service while on military leave, sick leave, or other bona fide (i.e., where there is a reasonable expectation that the Employee will return) leave of absence if the period of such leave does not exceed six (6) months, or, if longer, so long as the Employee retains a right to reemployment with the Company or an Affiliate by law or contract. If the leave exceeds six (6) months and the Employee does not retain such a reemployment right, the Separation from Service occurs on the first day following such six (6) months. However, where the leave is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six (6) months, where such impairment causes the employee to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, twenty-nine (29) months will be substituted for six (6) months for purposes of this Subsection 4(h)(i);

(ii)

The Employee will not be considered to have a Separation from Service merely due to transfer between employee and independent contractor status (including status as a director of the Company);

(iii)

Whether a "termination of employment," as defined for purposes of the definition of Separation from Service under Section 409A, has occurred is determined based on whether the facts and circumstances indicate that the Company or Affiliate and the Employee reasonably anticipated that:

(A)

no further services would be performed after a certain date; or

(B)

that the level of bona fide services the Employee would perform after such date (whether as an employee or independent contractor, including as a director) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services provided in the immediately preceding thirty-six (36) months.

For purposes of determining whether a Separation from Service has occurred, the word "Affiliate" shall mean any corporation which would be defined as a member of a controlled group of corporations which includes the Company or any business organization which would be defined as a trade or business (whether or not incorporated) which is under "common control" with the Company within the meaning of Sections 414(b) and (c) of the Code but, in each case, only during the periods any such corporation or business organization would be so defined.

        5.     SEVERANCE COMPENSATION.     If the Employee incurs a Separation from Service, the following severance provisions will apply:

(a)

Protected Separation.     If the Employee's Separation from Service is initiated by the Company other than for Cause or is initiated by the Employee for Good Reason, then, through the

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remaining Employment Term as specified in Subsection 1(f) hereof, (such remaining Employment Term is hereinafter referred to as the "Payment Term") the Company shall:

(i)

continue to pay the Employee's Annual Base salary in the then prevailing amount specified in Subsection 3(a) hereof but in installments at the times specified in the Company's Executive Severance Benefit Plan, or if such Annual Base Salary has decreased during the one year period ending on the Employee's Separation from Service, at the highest rate in effect during such one year period;

(ii)

continue the Employee's participation in the Bonus Plan as provided in Subsec