EMPLOYMENT AND NON-COMPETITION AGREEMENT

THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT (the “ Agreement ”) is executed as of this first day of June, 2009, and effective as of June 15, 2009 (the “ Date of Hire ”), by and between Tempur-Pedic International Inc., a Delaware corporation (the “ Company ”), and Lou Hedrick Jones, an individual (“ Employee ”).

In consideration of the premises and the mutual agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Company and Employee,

IT IS HEREBY AGREED AS FOLLOWS:

1.1   Term of Employment .  Effective as of the Date of Hire, the Company agrees to employ Employee, and Employee accepts employment by the Company, for the period commencing on the Date of Hire and ending on the first anniversary of the Date of Hire (the “ Initial Term ”), subject to earlier termination as hereinafter set forth in Article III.  Unless earlier terminated in accordance with Article III, following the expiration of the Initial Term, this Agreement shall be automatically renewed for successive one-year periods (collectively, the “ Renewal Terms ”; individually, a “ Renewal Term ”) unless, at least ninety (90) days prior to the expiration of the Initial Term or the then current Renewal Term, either party provides the other with a written notice of intention not to renew, in which case the Employee’s employment with the Company, and the Company’s obligations hereunder, shall terminate as of the end of the Initial Term or said Renewal Term, as applicable.  Except as otherwise expressly provided herein, the terms of this Agreement during any Renewal Term shall be the same as the terms in effect immediately prior to such renewal, subject to any such changes or modifications as mutually may be agreed between the parties as evidenced in a written instrument signed by both the Company and Employee.

1.2   Position and Duties .  Employee shall be employed in the position of Executive Vice President, General Counsel or such other executive position as may be assigned from time to time by the Company’s Chief Executive Officer; provided that any executive position that does not also include continuing in the role of General Counsel will require the consent of the Employee.  In such capacity, Employee shall be subject to the authority of, and shall report to, the Company’s Chief Executive Officer.  Employee’s duties and responsibilities shall include those customarily attendant to Employee’s position and such other duties and responsibilities as may be assigned from time to time by the Chief Executive Officer.  Employee shall devote Employee’s entire business time, loyalty, attention and energies exclusively to the business interests of the Company while employed by the Company, and shall perform her duties and responsibilities diligently and to the best of her ability.

1.3   Other Documents .  On or prior to the Date of Hire the Employee will execute and deliver to the Company the following:  Relocation Assistance Payback Agreement and Corporate Governance Handbook Acknowledgement, each in the form previously furnished by the Company.

2.1   Base Salary .  The Company shall pay Employee an initial annual salary of $330,000.00 (“ Base Salary ”), payable in accordance with the normal payroll practices of the Company.  The Employee’s Base Salary will be reviewed and be subject to adjustment from time to time by the Board of Directors or its Compensation Committee at their discretion in accordance with the Company’s annual review policy.  Based on the Company’s current policy, the Company expects Employee’s first annual review would be April 1, 2010.

2.2   Performance Bonus .

(a)           Employee will be eligible to earn an annual performance-based bonus based on performance criteria approved by the Company’s Board of Directors or its Compensation Committee for each full or pro rata portion of any fiscal year during which Employee is employed by the Company (each, a “ Bonus Year ”), the terms and conditions of which as well as Employee’s entitlement thereto being determined annually in the sole discretion of the Company’s Board of Directors or its Compensation Committee (the “ Performance Bonus ”).  The amount of the Performance Bonus will vary based on the achievement of Company and individual performance criteria established by the Company’s Board of Directors or its Compensation Committee, but the performance criteria will be set to target a Performance Bonus equal to a designated percentage of Base Salary as of December 31st of the applicable Bonus Year if the performance criteria are met (the “ Target Bonus ”).

(b)           For 2009, Employee will be entitled to a Performance Bonus that will be pro rated for 2009 based on the Date of Hire.  The performance criteria for Employee’s 2009 Performance Bonus will be determined by the Compensation Committee promptly after the date of this Agreement, in accordance with the Company’s Annual Incentive Bonus Plan For Senior Executives, and the performance criteria will be set to target a Performance Bonus equal to 55% of Employee’s Base Salary for 2009.

2.3   Grant of Stock Option .

(a)           Pursuant to the Tempur-Pedic International Inc. 2003 Equity Incentive Plan, as amended, effective as of the Date of Hire the Employee shall be granted an option to purchase eighty thousand (80,000) shares of the common stock of  the Company (the “ Optioned Shares ”) at a purchase price per Optioned Share equal to the closing price on the New York Stock Exchange of the Company’s common stock on the Date of Hire. This grant shall vest in four installments over four years and shall be made pursuant to a stock option agreement between the Company and Employee in the form attached hereto as Exhibit A .

(b)           The Company expects that Employee will be considered for an additional stock option grant in April 2011, and annually thereafter, but the timing, amount and terms of any future grants will be subject to the discretion of the Board of Directors or the Compensation Committee.

2.4   Hiring Bonus . As additional consideration for Employee’s agreement to accept employment with the Company, the Company will pay to Employee a one-time bonus of $50,000. This bonus is payable ninety (90) days after the Date of Hire, provided that , as of the date payment would otherwise be made, the Employee is considered an employee of the Company in good standing; and provided further that in the event that, within twelve months of the Date of Hire, Employee is terminated For Cause pursuant to paragraph 3(c) below, or resigns her employment with the Company other than for Good Reason, Employee shall repay to the Company the entire amount of the bonus described above within thirty (30) days of the termination of Employee's employment.

2.5   Benefit Plans .  Employee will be eligible to participate in the Company’s retirement plans that are qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and in the Company’s welfare benefit plans that are generally applicable to all executive employees of the Company (the “ Plans ”), in accordance with the terms and conditions thereof.  A brief description of the Company’s current benefits is contained in Exhibit B hereto.

2.6   Automobile Allowance .  The Company shall pay to Employee an automobile allowance of $600.00 per month.

2.7   Vacation .  Employee shall be entitled to three weeks (fifteen (15) days) vacation days in the calendar year after the Date of Hire and three weeks (fifteen days) at Employee’s one-year anniversary and each year thereafter, subject to and to be taken in accordance with the Company’s general vacation policies for similarly situated executive employees.

2.8   Relocation Benefits .  The Company will provide Employee with relocation assistance in accordance with the policy and other provisions set forth in Exhibit C .

2.9   Expenses .  The Company shall reimburse Employee for all authorized and approved expenses incurred in the course of the performance of Employee’s duties and responsibilities pursuant to this Agreement and consistent with the Company’s policies with respect to travel, entertainment and miscellaneous expenses, and the requirements with respect to the reporting of such expenses.

2.10   Withholdings .  All payments to be made by the Company hereunder will be subject to any withholding requirements.

3.1   Right to Terminate; Automatic Termination .

(a)   Termination by Company Without Cause .  Subject to Section 3.2, the Company may terminate Employee’s employment and all of the Company’s obligations under this Agreement at any time and for any reason.

(b)   Termination by Employee for Good Reason .  Subject to Section 3.2, Employee may terminate her employment obligation hereunder (but not her obligations under Article IV hereof) for “Good Reason” (as hereinafter defined) if Employee gives written notice thereof to the Company within thirty (30) days of the event she deems to constitute Good Reason (which notice shall specify the grounds upon which such notice is given) and the Company fails, within thirty (30) days of receipt of such notice, to cure or rectify the grounds for such Good Reason termination set forth in such notice.  “Good Reason” shall mean any of the following:  (i) relocation of Employee’s principal workplace over sixty (60) miles from the Company’s existing workplaces without the consent of Employee (which consent shall not be unreasonably   withheld, delayed or conditioned), or (ii) the Company’s material breach of this Agreement or any other written agreement between Employee and the Company which is not cured within thirty (30) days after receipt by the Company from Employee of written notice of such breach.

(c)   Termination by Company For Cause .  Subject to Section 3.2, the Company may terminate Employee’s employment and all of the Company’s obligations under this Agreement at any time “For Cause” (as defined below) by giving notice to Employee stating the basis for such termination, effective immediately upon giving such notice or at such other time thereafter as the Company may designate.  “For Cause” shall mean any of the following:  (i) Employee’s willful and continued failure to substantially perform the reasonably assigned duties with the Company which are consistent with Employee’s position and job description referred to in this Agreement, other than any such failure resulting from incapacity due to physical or mental illness, after a written notice is delivered to Employee by the Board of Directors of the Company which specifically identifies the manner in which Employee has not substantially performed the assigned duties and allowing Employee thirty (30) days after receipt by Employee of such notice to cure such failure to perform, (ii) material breach of this or any other written agreement between Employee and the Company which is not cured within thirty (30) days after receipt by the Employee from the Company of written notice of such breach, (iii) any material violation of any written policy of the Company which is not cured within thirty (30) days after receipt by Employee from the Company of written notice of such violation, (iv) Employee’s willful misconduct which is materially and demonstrably injurious to the Company, (v) Employee’s conviction by a court of competent jurisdiction of, or her pleading guilty or nolo contendere to, any felony, or (vi) Employee’s commission of an act of fraud, embezzlement, or misappropriation against the Company or any breach of fiduciary duty or breach of the duty of loyalty, including, but not limited to, the offer, payment, solicitation or acceptance of any unlawful bribe or kickback with respect to the Company’s business.  For purposes of this paragraph, no act, or failure to act, on Employee’s part shall be considered “willful” unless done, or omitted to be done, in knowing bad faith and without reasonable belief that the action or omission was in, or not opposed to, the best interests of the Company.  Any act, or failure to act, expressly authorized by a resolution duly adopted by the Board of Directors or based upon the written advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of the Company.  Notwithstanding the foregoing, Employee shall not be deemed to have been terminated For Cause unless and until there shall have been delivered to Employee a copy of a resolution, duly adopted by the Board of Directors at a meeting of the Board called and held for such purpose (after reasonable notice to Employee and an opportunity for Employee, together with Employee’s counsel, to be heard before the Board), finding that in the good faith opinion of the Board of Directors Employee committed the conduct set forth above in (i), (ii), (iii), (iv), (v) or (vi) of this Section and specifying the particulars thereof in detail.

(d)   Termination Upon Death or Disability .  Subject to Section 3.2, Employee’s employment and the Company’s obligations under this Agreement shall terminate:  (i) automatically, effective immediately and without any notice being necessary, upon Employee’s death; and (ii) in the event of the disability of Employee, by the Company giving notice of termination to Employee.  For purposes of this Agreement, “disability” means the inability of Employee, due to a physical or mental impairment, for ninety (90) days (whether or not consecutive) during any period of 360 days, to perform, with reasonable accommodation, the essential functions of the work contemplated by this Agreement.  In the event of any dispute as to whether Employee is disabled, the matter shall be determined by the Company’s Board of Directors in consultation with a physician selected by the Company’s health or disability insurer or another physician mutually satisfactory to the Company and the Employee.  The Employee shall cooperate with the efforts to make such determination or be subject to immediate discharge.  Any such determination shall be conclusive and binding on the parties.  Any determination of disability under this Section 3.1 is not intended to alter any benefits any party may be entitled to receive under any long-term disability insurance policy carried by either the Company or Employee with respect to Employee, which benefits shall be governed solely by the terms of any such insurance policy.  Nothing in this subsection shall be construed as limiting or altering any of Employee’s rights under State workers compensation laws or State or federal Family and Medical Leave laws.

3.2   Rights Upon Termination .

(a)   Section 3.1(a) and 3.1(b) Termination .  If Employee’s employment terminates pursuant to Section 3.1(a) or 3.1(b) hereof, Employee shall have no further rights against the Company hereunder, except for the right to receive, following execution of a release and waiver in form satisfactory to the Company in the case of clauses (ii), (iii) and (v) b