STOCK OPTION AGREEMENT 
 
This Option Agreement (this “Agreement”) is made as of this 1st day of December,
2006 (the “Effective Date”) between Simmons Company, a Delaware corporation (the
“Company”), and the undersigned (the “Optionee”). Certain capitalized terms used
herein are defined in Section 8 hereof.
 
WHEREAS, the Company believes it to be in the best interests of the Company and
its shareholders to take action to promote work-force stability, to reward
performance and otherwise align the Optionee’s interests with those of the
Company; and
 
WHEREAS, accordingly, the Company desires to grant the Optionee a non-qualified
stock option under the Amended and Restated Simmons Company Equity Incentive
Plan (the “Plan”) to acquire shares of Class B Common Stock, par value $0.01 per
share, of the Company (the “Class B Common Stock”).
 
NOW, THEREFORE, in consideration of the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
 
1.  Grant of Option.
 
(a)  Grant. The Company hereby grants to the Optionee under the Plan and subject
to the terms and conditions of the Plan a non-qualified stock option (the
“Option”) to purchase all or any part of an aggregate number of shares set forth
below the Optionee’s name on the signature page attached hereto (the “Shares”).
 
(b)  Exercise Price. The per share exercise price (“Exercise Price”) for the
Shares covered by the Option shall be as set forth below the Optionee’s name on
the signature page attached hereto.
 
2.  Vesting and Exercisability of Option. The Option shall vest and only become
exercisable with respect to the Shares (the “Vested Shares”) as follows: none of
the Shares shall be Vested Shares prior to the second anniversary of the date
hereof; thirty-three and one-third percent (33-1/3%) of the Shares shall become
Vested Shares on the second anniversary of the date hereof; thirty-three and
one-third percent (33-1/3%) of the shares shall become Vested Shares on the
third anniversary of the date hereof and all remaining Shares shall become
Vested Shares on the fourth anniversary of the date hereof such that on the
fourth anniversary, one hundred percent (100%) of the Shares shall be Vested
Shares. Vesting and exercisability shall not accelerate upon a Change of Control
and any Shares that have not become Vested Shares as of the closing of the
Change of Control shall expire and terminate.
 
3.  Manner of Exercise of Option; Adjustments.
 
(a)  To the extent that the right to exercise the Option has vested in
accordance with the vesting schedule and such right is in effect, the Option may
be exercised in full or in part as to Vested Shares by giving written notice to
the Company stating the number of Shares exercised and accompanied by payment in
full for such Shares. Payment may be made (i) in cash or by certified check
payable to the order of the Company, (ii) in shares of the Class B Common Stock
of the Company legally and beneficially owned by the Optionee, fully vested and
free of all liens, claims and encumbrances of every kind and valued at Fair
Market Value on the date of delivery, (iii) in the Company’s discretion, by
reducing the number of Shares to be issued upon exercise by the number of Shares
having a Fair Market Value equal to the aggregate exercise price or (iv) any
combination of (i), (ii) and (iii); provided, however, that payment of the
exercise price by delivery of shares of Class B Common Stock of the Company
owned by such Optionee may be made only if such payment does not result in a
charge to earnings for financial accounting purposes as determined by the
Company. Upon such exercise, delivery of a certificate for paid-up,
non-assessable Shares shall be made at the principal office of the Company, not
more than thirty (30) days from the date of receipt of notice by the Company.
 
(b)  The Company shall at all times during the Term of the Option reserve and
keep available such number of Shares of Class B Common Stock as will be
sufficient to satisfy the requirements of this Option.
 
(c)  Except as expressly set forth herein, adjustments on changes in
recapitalization, reorganization and the like shall be made in accordance with
Section 13 of the Plan, as in effect on the date of this Agreement.
 
4.  Termination; Repurchase of Shares.
 
(a)  Expiration. The Option shall expire on the earliest of (i) the expiration
of the Term, (ii) the date that is twelve (12) months following the date on
which the Optionee’s Service terminates as a result of the Optionee’s death or
Disability, (iii) the date that is three (3) months following the Optionee’s
termination of Service without Cause or resignation for Good Reason or
Justifiable Cause or (iii) on the date of termination of Service if Service is
terminated with Cause or due to voluntary resignation by the Optionee without
Good Reason or Justifiable Cause (as applicable, the “Expiration Date”).
However, the Optionee (or in the case of the Optionee’s death or Disability, the
Optionee’s representative) may exercise all or a part of the Optionee’s Option
at any time before the Expiration Date of such Option only to the extent that
the Option has become exercisable for Vested Shares pursuant to this Agreement
on or before the date the Optionee’s Service terminates. The balance of the
Option (which is not exercisable for and vested on the date Optionee’s Service
terminates) shall lapse when the Optionee’s Service terminates.
 
(b)  In the event that the Optionee’s Service terminates for any reason, then
all Shares purchased by the Optionee upon exercise of this Option (including any
capital stock issued with respect to such Shares by way of stock split, stock
dividend or other recapitalization and whether held by the Optionee or by one or
more of the Optionee’s transferees) will be subject to repurchase by the
Company, at its option (the “Repurchase Option”), for Fair Market Value as of
the date of repurchase.
 
(c)  The Repurchase Option shall be exercised by the Company, or its designee,
from time to time, by delivering to the Optionee a written notice of exercise
and a check in the amount of Fair Market Value. Upon delivery of such notice and
payment of the purchase price as described above, the Company, or its designee,
shall become the legal and beneficial owner of the Shares being repurchased and
all rights and interest therein or related thereto, and the Company, or its
designee, shall have the right to transfer to its own name the number of Shares
being repurchased without further action by the Optionee or any of his or her
transferees. If the Company or its designee elect to exercise the repurchase
rights pursuant to this Section 4 and the Optionee or his or her transferee
fails to deliver the Shares in accordance with the terms hereof, the Company, or
its designee, may, at its option, in addition to all other remedies it may have,
deposit the purchase price in an escrow account administered by an independent
third party (to be held for the benefit of and payment over to the Optionee or
his or her transferee in accordance herewith), whereupon the Company shall by
written notice to the Optionee cancel on its books the certificates(s)
representing such Shares registered in the name of the Optionee and all of the
Optionee’s or his or her transferee’s right, title, and interest in and to such
Shares shall terminate in all respects.
 
(d)  Notwithstanding the foregoing, if at any time the Company elects to
purchase any Shares pursuant to this Section 4, the Company shall pay the
purchase price for the Shares it purchases (i) first, by offsetting
indebtedness, if any, owing from such Optionee to the Company and (ii) then, by
the Company’s delivery of cash for the remainder of the purchase price, if any,
against delivery of the certificates or other instruments representing the
Shares so purchased, duly endorsed; provided that, if any such cash payment at
the time such payment is required to be made would result (A) in a violation of
any law, statute, rule, regulation, policy, order, writ, injunction, decree or
judgment promulgated or entered by any federal, state, local or foreign court or
governmental authority applicable to the Company or any of its Subsidiaries or
any of its or their property or (B) after giving effect thereto, a Financing
Default, or (C) if the Board determines in good faith that immediately prior to
such purchase there shall exist a Financing Default which prohibits such
purchase, dividend or distribution ((A) through (C) collectively the “Cash
Deferral Conditions”), the portion of the cash payment so affected may be made
by the Company’s delivery of a promissory note or senior preferred shares of the
Company with a liquidation preference equal to the balance of the purchase
price. The promissory note or senior preferred shares shall accrue interest or
yield, as the case may be, annually at the “prime rate” published in The Wall
Street Journal on the date of issuance, which interest or yield, as the case may
be, shall be payable at maturity or upon payment of distributions by the
Company. The value of each such senior preferred share shall as of its issuance
be deemed to equal (A) the portion of the cash payment paid by the issuance of
such preferred shares divided by (B) the number of senior preferred shares so
issued. Any senior preferred shares or the promissory note shall be redeemed or
payable when and to the extent the Cash Deferral Condition which prompted their
issuance no longer exists.
 
(e)  In the event that any Shares are repurchased pursuant to this Section 4,
the Optionee and his or her successors, assigns or Representatives shall take
(at the Company’s expense) all steps necessary and desirable to obtain all
required third-party, governmental and regulatory consents and approvals and
take all other actions necessary and desirable to facilitate consummation of
such repurchase in a timely manner.
 
5.  Restrictions on Transfer and Voting.
 
(a)  The right of the Optionee to exercise the Option shall not be assignable or
transferable by the Optionee other than (i) by will or the laws of descent and
distribution, and the Option may be exercised during the lifetime of the
Optionee only by him or her, and (ii) to a trust, partnership, limited liability
company or other similar vehicle established and maintained solely for the
benefit of the Optionee’s spouse and descendants (natural or adopted) provided
the Optionee controls such vehicle; provided that all terms regarding
termination of the Option and repurchase of the Shares issued upon exercise
shall continue to apply and shall be deemed to be with reference to the Service
of the original Optionee transferring the Option. The Option shall be null and
void and without effect upon the bankruptcy of the Optionee or upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.
 
(b)  As a condition precedent to the Optionee’s exercise of any portion of the
Option, the Optionee will sign a joinder agreement to the Securityholders’
Agreement as an “Employee” or “Senior Manager,” as the case may be, in which the
Optionee agrees that such Shares will be subject to the restrictions in the
Securityholders’ Agreement.
 
6.  Representation Letter and Investment Legend.
 
(a)  In the event that for any reason the Shares to be issued upon exercise of
the Option shall not be effectively registered under the Securities Act of 1933,
upon any date on which the Option is exercised in whole or in part, the person
exercising the Option shall give a written representation to the Company in the
form attached hereto as Exhibit A and the Company shall place an “investment
legend” so-called, as described in Exhibit A, upon any certificate for the
Shares issued by reason of such exercise.
 
(b)  The Company shall be under no obligation to qualify Shares or cause a
registration statement or post-effective amendment to any registration statement
to be prepared for the purpose of covering the issue of Shares.
 
7.  Intentionally Omitted.
 
8.  Definitions.
 
The following terms shall have the meanings ascribed below:
 
“Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person or, with
respect to any individual, such individual’s spouse and descendants (whether
natural or adopted) and any trust, partnership, limited liability company or
similar vehicle established and maintained solely for the benefit of (or the
sole members or partners of which are) such individual, such individual’s spouse
and/or such individual’s descendants.
 
“Board” means the Board of Directors of the Company.
 
“Cause” shall mean (i) “Cause” as defined in any employment agreement between
the Optionee and the Company (or if applicable, the Subsidiary employing the
Optionee), or (ii) if the Optionee is not a party to an employment agreement or
“Cause” is not defined therein, any one or more of the following:
 
(a) The Optionee’ breach of any of his material obligations set forth in this
Agreement or the Optionee’s employment agreement (if any), which breach, if
capable of being cured, is not cured within fifteen (15) days after receipt by
the Optionee of written notice from the Board of such breach;
 
(b) The Optionee’s breach of his fiduciary duties involving a matter of material
consequence as an officer or director of the Company or any of its Subsidiaries
or Affiliates, or as an officer, trustee, director or other fiduciary of any
pension or employee benefit plan of the Company or any of its Subsidiaries or
Affiliates which breach, if capable of being cured, is not cured within fifteen
(15) days after receipt by the Optionee of written notice from the Board of such
breach; or
 
(c) the Optionee’s commission of a felony involving fraud, personal dishonesty
or moral turpitude (whether or not in connection with his employment).
 
“Change of Control” shall mean the consummation of a transaction, whether in a
single transaction or in a series of related transactions that are consummated
contemporaneously (or consummated pursuant to contemporaneous agreements), with
any other party or parties, other than an Affiliate of THL, on an arm's-length
basis, pursuant to which (a) a party or group (as defined under Rule 13d under
the Securities Exchange Act of 1934, as amended) who is not a stockholder of the
Company on the Effective Date, acquires, directly or indirectly (whether by
merger, stock purchase, recapitalization, reorganization, redemption, issuance
of capital stock or otherwise), more than 50% of the voting stock of the
Company, (b) such party or parties, directly or indirectly, acquire assets
constituting all or substantially all of the assets of the Company and its
Subsidiaries on a consolidated basis, or (c) prior to an initial public offering
of the Company common stock pursuant to an offering registered under the
Securities Act, Thomas H. Lee Equity Fund V, L.P., a Delaware limited
partnership, and its affiliates cease to have the ability to elect, directly or
indirectly, a majority of the Board.
 
“Class A Common Stock” means the Company’s Class A Common Stock, $0.01 par value
per share.
 
“Class B Common Stock” has the meaning set forth in the Preamble hereto.
 
“Credit Agreement” shall mean the Amended and Restated Credit and Guaranty
Agreement, dated as of August 27, 2004, among Simmons Bedding Company, as
Company, THL-SC Bedding Company and certain subsidiaries of the Company, as
Guarantors, the financial institutions listed therein, as Lenders, UBS
Securities LLC, as Joint Lead Arranger and as Co-Syndication Agent, Deutsche
Bank AG, New York Branch, as Administrative Agent and Collateral Agent, General
Electric Capital Corporation, as Co-Documentation Agent, CIT Lending Services
Corporation, as Co-Documentation Agent, and Goldman Sachs Credit Partners L.P.,
as Sole Bookrunner, a Joint Lead Arranger and as Co-Syndication Agent, as
amended and/or restated from time to time.
 
“Disability” shall mean with respect to the Optionee, (i) disability or
incapacity as defined in any employment agreement between the Optionee and the
Company (or, if applicable, the Subsidiary employing the Optionee) or (ii) if
the Optionee is not party to an employment agreement or “disability” or
“incapacity” is not defined therein, the Optionee’s inability to perform his
duties by reason of physical or mental illness, injury or other incapacity
(a) for any period of sixty (60) consecutive days or (b) for a total of one
hundred twenty (120) days in any period of twelve (12) consecutive calendar
months, in the reasonable judgment of the Board, after consultation with such
experts, if any, the Board may deem necessary or advisable.
 
“Fair Market Value” shall be determined by the Board in good faith. Upon such
determination, the Company shall promptly provide the Optionee with notice of
the Fair Market Value so determined (the “Board Notice”). In the event of a
determination of Fair Market Value with respect to Class B Common Stock owned by
a Senior Manager, such Senior Manager shall have the right to contest such
determination in good faith, by delivery of written notice to the Company within
ten (10) days of delivery of the Board Notice. If the Senior Manager does not
notify the Company of any disagreement therewith, then the Fair Market Value
shall be as set forth in the Board Notice. If the Senior Manager does notify the
Company of his or her disagreement with the Fair Market Value set forth in the
Board Notice within such 10-day time period, then the Company must retain an
independent third party appraiser to make such Fair Market Value determination
(the “Final Determination”), and such Final Determination shall govern;
provided, however, that if the Final Determination of Fair Market Value equals
less than 110% of the Fair Market Value set forth in the Board Notice, then the
Senior Manager shall pay for all costs and expenses of the third party
appraiser.
 
“Financing Default” means any event of default or breach under (i) the Credit
Agreement, (ii) that certain senior unsecured floating rate loan facility by and
among THL-SC Bedding Company, certain of its subsidiaries, certain lenders,
party thereto and Deutsche Bank, A.G., Cayman Islands Branch, as administrative
agent, as amended, modified, restated or refinanced from time to time, (iii) the
covenant contained in any of the Indentures which permits repurchases by the
Company of employee stock not exceeding a specified amount in the aggregate, or
(iv) any other similar notes or instruments that the Company or its Subsidiaries
may issue from time to time.
 
“Fully Diluted Shares” means, as of any date of determination, the number of
shares of Class A Common Stock and Class B Common Stock outstanding, plus
(without duplication) shares of Class A Common Stock and Class B Common Stock
issuable, whether at such time or upon the passage of time or the occurrence of
future events, upon the exercise, conversion or exchange of all then-outstanding
rights, warrants, options, convertible securities, or exchangeable securities or
indebtedness, or other rights, exercisable for or convertible or exchangeable
into, directly or indirectly, Class A Common Stock or Class B Common Stock or
securities exercisable for or convertible or exchangeable into Class A Common
Stock or Class B Common Stock, as the case may be, whether at the time of
issuance or upon the passage of time or the occurrence of some future event.
 
“Good Reason” shall mean with respect to the Optionee, (i) “Good Reason” as
defined in any employment agreement between the Optionee and the Company (or, if
applicable, the Subsidiary employing the Optionee), or (ii) if the Optionee is
not a party to an employment agreement or “Good Reason” is not defined therein,
then “Good Reason” shall mean:
 
(a) a material diminution in the nature or scope of Optionee’s responsibilities,
duties or authority, in each case except in the event of termination of the
Optionee’s employment due to Cause, Disability, death or voluntary termination
without Good Reason; provided, however, that the Company’s failure to continue
Optionee’s appointment or election as a director or officer of any of its
Affiliates and any diminution of the business of the Company or any of its
Affiliates, including without limitation the sale or transfer of any or all of
the assets of the Company or any of its Affiliates, shall not constitute “Good
Reason”,
 
(b) the material failure of the Company to provide the Optionee’s base salary
and benefits which are offered as of the date hereof in accordance with these
terms, or
 
(c) the failure of the Company to indemnify the Optionee (or advance expenses in
connection with indemnification) in connection with the Optionee’s services
rendered to the Company or on its behalf as required by the Company under law or
pursuant to its charter, by-laws or other contractual arrangements with the
Optionee then in effect, which failure shall not have been cured within fifteen
(15) days after receipt by the Company of written notice from the Optionee of
such breach.
 
“Indentures” shall mean (i) that certain Indenture, dated as of December 19,
2003, governing the Senior Subordinated Notes of Simmons Bedding Company, a
Subsidiary of the Company, due 2013, as amended, modified, restated or
refinanced from time to time, and (ii) that certain Indenture, dated as of
December 15, 2004, governing the Company’s 10% Senior Discount Notes, due 2014,
as amended, modified, restated or refinanced from time to time.
 
“Justifiable Cause” shall have the meaning set forth in the Employment Agreement
of even date between the Optionee and the Company.
 
“Person” shall be construed broadly and shall include, without limitation, an
individual, a partnership, an investment fund, a limited liability company, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a governmental entity or any department, agency
or political subdivision thereof.
 
“Plan” has the meaning set forth in the Preamble hereto.
 
“Registration Rights Agreement” means the Registration Rights Agreement dated
December 19, 2003 among the Company and certain stockholders of the Company, as
amended, modified or supplemented from time to time.
 
“Representative” means, with respect to the deceased Optionee, the duly
appointed, qualified and acting personal representative (or personal
representatives collectively) of the estate of the deceased Optionee (or portion
of such estate that includes Optionee Stock), whether such personal
representative holds the position of executor, administrator or other similar
position qualified to act on behalf of such estate.
 
“Securities Act” means the Securities Act of 1933, as amended, or any successor
federal law then in force.
 
“Securityholders’ Agreement” means the Securityholders’ Agreement dated December
19, 2003 between the Company and certain stockholders of the Company, as
amended, modified or supplemented from time to time.
 
“Senior Manager” shall mean each of Charles Roy Eitel, William S. Creekmuir and
Gary Matthews and/or any other Persons designated by the Board as Senior
Managers (collectively, the “Senior Managers”).
 
“Service” shall mean service as a full-time employee or director of or
consultant to the Company or any of its Subsidiaries.
 
“Subsidiary” means any Person of which (i) a majority of the outstanding share
capital, voting securities or other equity interests are owned, directly or
indirectly, by the Company or (ii) the Company is entitled, directly or
indirectly, to appoint a majority of the board of directors or managers or
comparable supervisory body of such Person.
 
“Term” means the period starting on the date of this Agreement and expiring 10
years from the date of this Agreement.
 
“THL” means Thomas H. Lee Equity Fund V, L.P., a Delaware limited partnership,
Thomas H. Lee Parallel Fund V, L.P., Thomas H. Lee Cayman Fund V, L.P., 1997
Thomas H. Lee Nominee Trust, Thomas H. Lee Investors Limited Partnership, Putnam
Investments Holdings, LLC, Putnam Investments Employees’ Securities Company I
LLC, and Putnam Investments Employees’ Securities Company II, LLC.
 
9.  General Provisions.
 
(a)  Severability. It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
 
(b)  Entire Agreement. This Agreement embodies the complete agreement and
understanding among the parties hereto with respect to the subject matter hereof
and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related
to the subject matter hereof in any way.
 
(c)  Counterparts. This Agreement may be executed in separate counterparts, each
of which is deemed to be an original and all of which taken together constitute
one and the same agreement.
 
(d)  Successors and Assigns. Except as otherwise provided herein, this Agreement
shall bind and inure to the benefit of and be enforceable by the Optionee, the
Company, and their respective successors, assigns, heirs, representative and
estate, as the case may be (including subsequent holders of Restricted
Shareholder Stock); provided that the rights and obligations of the Optionee
under this Agreement shall not be assignable except as permitted under Section 5
hereunder.
 
(e)  Governing Law and Remedies. The parties acknowledge and agree that they are
bound by their arbitration obligations under Exhibit B attached hereto, which
the parties also hereby agree to execute contemporaneously and is an integral
part of this Agreement. The parties agree and acknowledge that all provisions of
this Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware exclusively and without reference to principles of
conflict of laws. The Federal Arbitration Act (“FAA”) will supersede state laws
to the extent inconsistent. The Arbitrator(s) shall have no authority to apply
the law of any other jurisdiction.
 
/s/ GSM
_______ Optionee’s initials to acknowledge agreement to Governing Law and
Remedies provision in Section 9(e).
 
(f)  Remedies. Each of the parties to this Agreement and any such Person granted
rights hereunder whether or not such Person is a signatory hereto shall be
entitled to enforce its rights under this Agreement specifically to recover
damages and costs (including reasonable attorney’s fees) for any breach of any
provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages may not be an
adequate remedy for any breach of the provisions of this Agreement and that any
party and any such Person granted rights hereunder whether or not such Person is
a signatory hereto may in its sole discretion submit the matter to arbitration
for specific performance and/or other injunctive relief (without posting any
bond or deposit) in order to enforce or prevent any violations of the provisions
of this Agreement.
 
(g)  Amendment and Waiver. The provisions of this Agreement may be amended and
waived only with the prior written consent of the Company and the Optionee and
no course of conduct or failure or delay in enforcing the provisions of this
Agreement shall be construed as a waiver of such provisions or affect the
validity, binding effect or enforceability of this Agreement or any provision
hereof.
 
(h)  Notices. Any notice provided for in this Agreement must be in writing and
must be either personally delivered, transmitted via facsimile, mailed by first
class mail (postage prepaid and return receipt requested) or sent by reputable
overnight courier service (charges prepaid) to the recipient at the address
below indicated or at such other address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party. Notices will be deemed to have been given hereunder and received
when delivered personally, when received if transmitted via facsimile, five (5)
days after deposit in the U.S. mail and one (1) day after deposit with a
reputable overnight courier service.
 
If to the Company, to:
 
Simmons Company
One Concourse Parkway, Suite 800
Atlanta, GA 30328
Attention: Chief Financial Officer and General Counsel

 
With a copy to:
 
Thomas H. Lee Partners, L.P.
100 Federal Street, 35th Floor
Boston, MA 02110
Attention: Scott A. Schoen
Todd M. Abbrecht
George Taylor
 
If to the Optionee, to the address set forth underneath the Optionee’s name on
the signature pages hereto.
 
(i)  Business Days. If any time period for giving notice or taking action
hereunder expires on a day which is a Saturday, Sunday or holiday in the state
in which the Company’s chief executive office is located, the time period for
giving notice or taking action shall be automatically extended to the business
day immediately following such Saturday, Sunday or holiday.
 
(j)  Survival of Representations, Warranties and Agreements. All
representations, warranties and agreements contained herein and in the Exhibits
hereto shall survive the consummation of the transactions contemplated hereby
and the termination of this Agreement indefinitely.
 
(k)  Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
 
(l)  Construction. Where specific language is used to clarify by example a
general statement contained herein, such specific language shall not be deemed
to modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
 
(m)  WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
 
(n)  Nouns and Pronouns. Whenever the context may require, any pronouns used
herein shall include the corresponding masculine, feminine or neuter forms, and
the singular form of nouns and pronouns shall include the plural and vice versa.
 
(o)  Acknowledgement and Waiver. The Optionee hereby represents and warrants
that he or she has access to adequate information regarding the terms of this
Agreement, the scope and effect of the provisions set forth herein and all other
matters encompassed by this Agreement, to make an informed and knowledgeable
decision with regard to enter into this Agreement. The Optionee acknowledges
that he or she has received a copy of the Plan. The Optionee further represents
and warrants that he or she has not relied on the Company in deciding to enter
into this Agreement and has instead made his or her own independent analysis and
decision to enter into this Agreement.
 
(p)  Rights as a Shareholder. The Optionee shall have no rights as a shareholder
with respect to any Shares that may be purchased by exercise of this Option
unless and until a certificate or certificates representing such Shares are duly
issued and delivered to the Optionee. Any such issuance is expressly conditioned
upon the Optionee’s prior execution of a joinder agreement to the
Securityholders’ Agreement and the Registration Rights Agreement. Except as
otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
 
(q)  Withholding Taxes. Whenever Shares are to be issued upon exercise of this
Option, the Company shall have the right to require the Optionee (or his or her
successor, assign or Representatives) to remit to the Company an amount
sufficient to satisfy all federal, state and local withholding tax requirements
prior to issuance of the Shares and the delivery of any certificate or
certificates for such Shares.
 
[Remainder of Page Intentionally Left Blank]
 

 
 

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IN WITNESS WHEREOF, the parties hereto have executed this Restricted Stock
Agreement as of the date first written above.
 
SIMMONS COMPANY

    /s/ William S. Creekmuir

By: __________________________
William S. Creekmuir
Executive Vice President and
Chief Financial Officer

 
 

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OPTIONEE:

Gary S. Matthews
                        /s/ Gary S. Matthews
______________________________
Signature

 
Address: 130 Lower Cross Road
Greenwich, CT 06831

Social Security Number: _____________
 
Number of Shares: 30,000
 
Per Share Exercise Price: $5.91
 
Grant Date: December 1, 2006
 

 
 
 

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EXHIBIT A
TO STOCK OPTION AGREEMENT

Simmons Company
One Concourse Parkway, Suite 800
Atlanta, GA 30328

 
Ladies and Gentlemen:
 
In connection with the acquisition by me of _____ shares of Class B Common
Stock, par value $0.01 per share (the “Shares”) of Simmons Company, a Delaware
corporation (the “Company”), pursuant to the exercise of an Option dated as of
________, 2006, I hereby represent to the Company as follows:
 
(a) I hereby confirm that: (i) the Shares to be received by me will be acquired
for investment only, for my own account, not as a nominee or agent and not with
a view to the sale or distribution of any part thereof; and (ii) I have no
current intention of selling, granting participation in or otherwise
distributing the Shares. I further represent that I do not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person, or to any third person, with respect to any of the
Shares.
 
(b) I understand that the Shares have not been registered under the Securities
Act of 1933, as amended (the “1933 Act”) on the basis that the acquisition of
the Shares by me and the issuance of securities by the Company to me is exempt
from registration under the 1933 Act and that the Company’s reliance on such
exemption is predicated on my representations set forth herein.
 
(c) I represent that I have, either alone or together with the assistance of a
“purchaser representative” (as the term is defined in Regulation D promulgated
under the 1933 Act), such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of my investment in
the Company. I further represent that I am familiar with the business and
financial condition, properties, operations and prospects of the Company. I
further represent that I have had, prior to my acquisition of the Shares, the
opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the issuance and to obtain information
(to the extent the Company possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to me or to which I have had access. I am satisfied that
there is no material information concerning the condition, properties,
operations and prospects of the Company of which I am unaware. I have made,
either alone or together with my advisors, such independent investigation of the
Company as I deem to be, or my advisors deem to be, necessary or advisable in
connection with this investment.
 
(d) I understand that the Shares may not be sold, transferred or otherwise
disposed of without registration under the 1933 Act and applicable state
securities laws, or an exemption therefrom, and that in the absence of an
effective registration statement covering the Shares or an available exemption
from registration under the 1933 Act or applicable state securities laws, the
Shares must be held indefinitely. In particular, I acknowledge that I am aware
that the Shares may not be sold pursuant to Rule 144 promulgated under the 1933
Act unless all of the conditions of that Rule are met. I represent that, in the
absence of an effective registration statement covering the Shares, I will not
sell, transfer or otherwise dispose of the Shares.
 
(e) I represent that I (i) am capable of bearing the economic risk of holding
the unregistered Shares for an indefinite period of time and have adequate means
for providing for my current needs and contingencies, (ii) can afford to suffer
a complete loss of my investment in the Shares, and (iii) understand and have
taken cognizance of all risk factors related to the acquisition of the Shares.
 
(f) I understand that the acquisition of the Shares involves a high degree of
risk and there will be no established market for the Company’s capital stock and
it is not likely that any public market for such stock will develop in the near
future.
 
(g) I represent that neither I nor anyone acting on my behalf has paid any
commission or other remuneration to any person in connection with the
acquisition of the Shares.
 
(h) Independent of the additional restrictions on the transfer of the Shares
contained herein, I agree that I will not make a transfer, disposition or pledge
of any of the Shares other than pursuant to an effective registration statement
under the 1933 Act and applicable state securities laws, unless and until: (i) I
shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the
disposition and (ii) if requested by the Company and at my expense or at the
expense of my transferee, I shall have furnished to the Company an opinion of
counsel, reasonably satisfactory (as to counsel and as to substance) to the
Company and its counsel, to the effect that such transfer may be made without
registration of the Shares under the 1933 Act, and applicable state securities
laws.
 
(i) I acknowledge that all certificates evidencing the Shares shall bear the
following legend:
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE AND
CERTAIN OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT DATED AS OF
DECEMBER 1, 2006 BETWEEN THE COMPANY AND THE OTHER SIGNATORY THERETO. A COPY OF
SUCH AGREEMENT MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL
PLACE OF BUSINESS WITHOUT CHARGE.
 
THE SALE, TRANSFER, ASSIGNMENT, PLEDGE, OR ENCUMBRANCE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF THE HOLDER OF SUCH SECURITIES
IN RESPECT OF THE ELECTION OF DIRECTORS ARE SUBJECT TO A SECURITYHOLDERS’
AGREEMENT DATED DECEMBER 19, 2003 AMONG THL BEDDING HOLDING COMPANY AND CERTAIN
HOLDERS OF ITS OUTSTANDING CAPITAL STOCK. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THL BEDDING HOLDING COMPANY.
 
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES OR BLUE SKY LAWS. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT OR LAWS.”
 
(j) The certificates evidencing the Shares shall also bear any legend required
by any applicable state securities law.
 
(k) In addition, the Company shall make a notation regarding the restrictions on
transfer of the Shares in its stock books, and the Shares shall be transferred
on the books of the Company only if transferred or sold pursuant to an effective
registration statement under the 1933 Act and applicable state securities laws
covering such Shares or pursuant to and in compliance with the provisions of the
Securityholders’ Agreement, as amended.
 
Very truly yours,

 
 
 

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EXHIBIT B - ARBITRATION CLAUSE
 
(1)  In consideration of the benefits described in the Restricted Stock
Agreement executed by GARY S. MATTHEWS (the “Optionee” or “you”) and SIMMONS
COMPANY, a Delaware corporation (the “Company”), on the same date hereto and
into which this Exhibit A is incorporated, (“Agreement”), the Company and you
hereby agree that any controversy or claim arising under federal, state and
local statutory or common or contract law between the Company and you involving
the construction or application of any of the terms, provisions, or conditions
of the Agreement, including, but not limited to, breach of contract, tort,
and/or fraud, must be submitted to arbitration on the written request of either
party served on the other. Arbitration shall be the exclusive forum for any such
controversy. For example, if the Company and you have a dispute concerning the
interpretation or enforceability of one or more restrictive covenants, the
parties will resolve the dispute exclusively through arbitration. The
Arbitrator’s decision shall be final and binding on both parties.
 
(2)  If any claim or cause of action at law or in equity is filed by either
party in any state or federal court which results in arbitration being compelled
and/or the claim or cause of action being dismissed, stayed, and/or removed to
arbitration pursuant to this Agreement, the party who instituted the claim or
cause of action in state or federal court, either wholly or in substantial part,
shall, at the discretion of the Arbitrator(s), reimburse the respondent for its
reasonable attorneys’ fees, costs, and necessary disbursements to the extent
permitted by law, in addition to any other relief to which it may be entitled,
related to the state or federal court claim or action.
 
(3)  Excluding the initial filing fee, which shall be borne by the claimant, the
cost of arbitration shall be borne by the Company, unless the Arbitrator
determines that any claim(s) brought by you was/were wholly frivolous or
fraudulent. If an arbitration or any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party, either
wholly or in substantial part, shall, at the discretion of the Arbitrator, be
entitled to its reasonable attorneys’ fees, costs, and necessary disbursements
to the extent permitted by law, in addition to any other relief to which it may
be entitled.
 
(4)  If the Optionee submits any controversy or claim to arbitration, the
arbitration will be conducted in Atlanta, Georgia and all claims shall be
submitted to and administered by the American Arbitration Association’s
Southeast Case Management Center in Atlanta, Georgia. If the Company submits any
controversy or claim to arbitration, the arbitration shall be conducted at the
American Arbitration Association’s Local or Regional Office that is
geographically closest to the Optionee’s place of residence and all claims shall
be submitted to and administered by the American Arbitration Association’s
corresponding Case Management Center.
 
(5)  The arbitration shall comply with and be governed by the American
Arbitration Association’s Commercial Arbitration Rules (“Rules”) effective as of
the execution date below, to the extent such Rules are not contrary to the
express provisions of this Agreement. The parties also agree that the American
Arbitration Association Optional Rules for Emergency Measures of Protection
(“Emergency Rules”) shall apply to proceedings brought by either party. The
above Rules and Emergency Rules can be found at the following page of the
American Arbitration Association’s website, : . You acknowledge that you should
read these Rules and Emergency Rules and that it is your responsibility to be
familiar with them prior to signing the Agreement. If you are unable to access
the Rules and/or Emergency Rules at the above website, you can request a copy of
them from a Company official prior to signing the Agreement.
 
(6)  The parties agree and acknowledge that all provisions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware exclusively and without reference to principles of conflict of laws.
The Federal Arbitration Act (“FAA”) will supersede state laws to the extent
inconsistent. Any claim(s) involving the construction or application of this
Agreement must be submitted to arbitration within the statute of limitations
period for such claim(s) under Delaware state law and shall be dismissed if the
statute of limitations period is not met. The Arbitrator(s) shall have no
authority to apply the law of any other jurisdiction.
 
(7)  The dispute shall be heard and determined by one Arbitrator, unless both
parties mutually consent in writing signed by you and an authorized
representative of Company to a panel of three (3) Arbitrators. Unless both
parties mutually consent otherwise, the parties agree and request that the
Arbitrator(s) issue a reasoned award in accordance with Commercial Arbitration
Rule R-42(b).
 
I UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY
TRIAL.

Executed effective as of this 1st day of December, 2006.
 

 
 
/s/ Gary S. Matthews
__________________________________
Gary S. Matthews
Social Security #: __________________
Simmons Company
 
    /s/William S. Creekmuir
By: __________________________________
William S. Creekmuir
Executive Vice President and Chief Financial Officer