Management Services Agreement Dated 12/18/97

EXHIBIT 10.50


EXECUTION COPY


MANAGEMENT SERVICES AGREEMENT
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THIS AGREEMENT dated as of December 18, 1997 between Sealy Corporation, a Delaware corporation ("Sealy Corporation") and Sealy Mattress
----------------- Company, an Ohio corporation ("Sealy Mattress"; and together with Sealy
-------------- Corporation, the "Companies"), and Bain Capital, Inc. ("Bain").
--------- ----


WHEREAS, the Companies desire to retain Bain and Bain desires to perform for the Companies certain services;


NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows:


1. Term. This Agreement shall be in effect for an initial term of
---- five (5) years commencing on the date hereof (the "Term"), and shall be
---- automatically extended thereafter on a year to year basis unless Sealy Corporation or Bain provides written notice of its desire to terminate this Agreement to the other party 90 days prior to the expiration of the Term or any extension thereof.


2. Services. Bain shall perform or cause to be performed such
-------- services for Sealy Corporation and its direct and indirect subsidiaries (including Sealy Mattress) as directed by Sealy Corporation's board of directors, which may include, without limitation, the following:


(a) general management services;


(b) identification, support, negotiation and analysis of acquisitions and dispositions;


(c) support, negotiation and analysis of financing alternatives, including, without limitation, in connection with acquisitions, capital expenditures and refinancing of existing indebtedness;


(d) finance functions, including assistance in the preparation of financial projections, and monitoring of compliance with financing agreements;


(e) strategic planning functions, including evaluating major strategic alternatives; and


(f) other services for Sealy Corporation and its subsidiaries (including Sealy Mattress) upon which Sealy Corporation's board of directors and Bain agree.


3. Advisory Fees and Transaction Fees.
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(a) Payment to Bain for services rendered in connection with the performance of services pursuant to this Agreement shall be $2,000,000 per year or such other amount as the parties hereto shall agree ("Advisory Fees") plus
------------- reasonable out-of-pocket expenses of Bain. The


Advisory Fees shall be payable quarterly in advance by the Companies in immediately available funds, the first such payment to be made promptly after the date hereof.


(b) During the term of this Agreement, Bain shall be entitled to receive from the Companies a transaction fee in connection with the consummation by Sealy Corporation or any of its subsidiaries (including Sealy Mattress) of (i) each material acquisition of an additional business (ii) each material divestiture and (iii) each material financing or refinancing, in each case, in an amount equal to 1% of the aggregate value of such t ...