Item 1.01 Entry Into Material Agreement.

Dreams, Inc. (the "Company") has announced that it and certain of its subsidiaries (collectively the "Debtors") have entered into an agreement with Comerica Bank modifying the terms of the Company's credit facilities with Comerica Bank (the "Modification"). Pursuant to the Modification: (i) the facilities will remain outstanding until June 30, 2010; (ii) the interest rate on the revolving facility has changed to the greater of the prime rate plus 3.25% and the bank's daily adjusting one month LIBOR rate plus 2.5%, and the interest rate on the term loan has changed to the prime rate plus 3.25%; (iii) a restructuring fee of $270,000 is due and payable on the earlier of January 1, 2010 and occurrence of an event of default; (iv) the borrowing base on the revolving facility has been modified; and (v) certain financial covenants have been modified. The Debtors are currently in compliance with the covenants and other provisions of the credit facilities.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1 Press Release

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