Sealy (ZZ)

Item 1.01  Entry into a Material Definitive Agreement.

Amendment to Credit Agreement

On November 14, 2008, Sealy Mattress Company (the “Borrower”), Sealy Canada LTD./LTEE (the “Canadian Borrower”), Sealy Mattress Corporation (“Holdings”) and Sealy Corporation (“Parent”) entered into an amendment (the “Amendment”) to the Third Amended and Restated Credit Agreement dated as of August 25, 2006 (as previously amended, the “Credit Agreement”) among the Borrower, the Canadian Borrower, Holdings, Parent and certain subsidiaries of Borrower, as guarantors, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent.

The Amendment revises the Credit Agreement, among other modifications, to reflect: (i) an increase in the interest rate margin applicable to loans under the Credit Agreement to 3.75%, in the case of base rate loans, and 4.50%, in the case of Eurodollar loans; (ii) an increase in the maximum permitted ratio of total debt to EBITDA (“leverage ratio”) to 5.85x for any fiscal quarter ending after the date of the Amendment and prior to November 15, 2009, 5.50x for any fiscal quarter ending after November 15, 2009 and prior to June 15, 2010 and 4.00x for any fiscal quarter ending after June 15, 2010; (iii) a decrease in the minimum permitted ratio of EBITDA to interest expense to 2.00x for any fiscal quarter ending after the date of the Amendment and prior to February 15, 2010, 2.15x for any fiscal quarter ending after February 15, 2010 and prior to June 15, 2010 and 2.75x for any fiscal quarter ending after June 15, 2010; (iv) a decrease in the maximum permitted amount of capital expenditures to $35 million for the 2009 fiscal year and $40 million for each of the 2010 and 2011 fiscal years; (v) an increase in the percentage of excess cash flow that is required to be used to prepay the loans under the Credit Agreement beginning with the 2009 fiscal year to 75% if the leverage ratio is greater than 4.00x and 50% if the leverage ratio is less than or equal to 4.00x; and (vi) a revision to the definition of “Consolidated Total Debt” removing the ability to reduce the amount of debt used in the calculation of the leverage ratio by the amount of cash on hand.

In connection with the amendment, the Borrower paid to each consenting lender a fee equal to 0.75% of the outstanding loans and commitments held by such lender.

A copy of the Amendment is attached to this report as Exhibit 99.1 and is incorporated herein by reference as though it were fully set forth herein. The description above is a summary of the Amendment and is qualified in its entirety by the complete text of the Amendment itself.

Item 1.01     Entry into a Material Definitive Agreement.

On August 25, 2006, Sealy Mattress Company (“SMC”), a subsidiary of Sealy Corporation (the “Company”) entered into a refinancing of its $440 million senior secured credit facility to reduce the effective interest rate on its debt obligations.

The new credit facility consists of a five year Term Loan A in the amount of $300 million with a current interest rate of LIBOR plus 1.25% and a six year Term Loan E in the amount of $140 million with a current interest rate of LIBOR plus 1.50%.  This new credit facility replaces the current Term Loan which had an interest rate of LIBOR plus 1.75%.  The terms and conditions of SMC’s $125 million senior revolving credit facility are unchanged by the new credit facility.

The new credit facility is governed by the Third Amended and Restated Credit Agreement among SMC, Sealy Canada, Ltd./Ltee., the Guarantors named therein, Sealy Mattress Corporation, the Company, JPMorgan Chase Bank, N.A. as administrative agent, J.P. Morgan Securities Inc., as joint lead arranger, Citigroup Global Markets Inc., as joint lead arranger, Citibank, N.A., as syndication agent, General Electric Capital Corporation, as co-documentation agent, Wachovia Bank, National Association, as co-documentation agent, LaSalle Bank National Association, as co-documentation agent and other lenders from time to time parties thereto (the “New Credit Agreement”).

The foregoing description of the terms of the new credit facility does not purport to be complete and is qualified in its entirety by reference to the New Credit Agreement, which is filed as Exhibit 10.1 to this Current Report and is incorporated herein by reference. A copy of the press release announcing the refinancing is furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Item 1.01   Entry into a Material Definitive Agreement.

On May 25, 2006, Sealy Corporation (“Sealy”) entered into a supplemental indenture to unconditionally guarantee Sealy Mattress Company’s (“SMC”) obligations under the indenture governing SMC’s 8.25% Senior Subordinated Notes due 2014. SMC is a wholly-owned subsidiary of Sealy Mattress Corporation, which is a wholly-owned subsidiary of Sealy. A copy of the supplemental indenture is filed as an exhibit to this Current Report and is incorporated herein by reference.