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                                                                   Exhibit 10.10

                             STOCK OPTION AGREEMENT

                  THIS STOCK OPTION AGREEMENT (this "Agreement") is made
effective as of October 29, 1998 (the "Effective Date"), between Simmons
Holdings, Inc., a Delaware corporation ("Issuer"), and ______________________
("Optionee").

                                    RECITALS

                  A. Issuer has adopted the Simmons 1996 Management Stock
Incentive Plan (the "Plan"), a copy of which is attached hereto as EXHIBIT 1.

                  B. In accordance with Section 14 of the Plan, Issuer has taken
all appropriate actions to make appropriate adjustments to the number and kind
of shares or other securities subject to the options issued pursuant to the
Prior Option Agreements (as defined herein).

                  C. Optionee hereby agrees that upon the Effective Date of this
Agreement, the Prior Option Agreements (as defined herein) shall automatically
be terminated and of no further force and effect and the parties to such Prior
Option Agreements shall have no further rights or obligations thereunder.

                  D. Issuer desires to grant Optionee the opportunity to acquire
a proprietary interest in Issuer to encourage Optionee's contribution to the
success and progress of Issuer and Simmons Company, a Delaware corporation
("Employer").

                  E. In accordance with the Plan, the Committee (as defined in
the Plan) has as of the Effective Date granted to Optionee certain non-qualified
stock options to purchase shares of Common Stock, $.01 par value, of Issuer (the
"Common Stock") subject to the terms and conditions of the Plan and this
Agreement.

                                   AGREEMENTS

                  1. DEFINITIONS. Capitalized terms used herein shall have the
following meanings:

                  "Act" is defined in Section 10.

                  "Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, is in control of, is controlled by, or is
under common control with such Person. For purposes of this definition,
"control" of a Person shall mean the power, directly or indirectly, (i) to vote
fifty percent (50%) or more of the securities having ordinary voting power for
the election of directors of such Person whether by ownership of securities,
contract, proxy or otherwise; or (ii) to direct or cause the direction of
management and policies of such person whether by ownership of securities,
contract, proxy or otherwise.

                  "Agreement" means this Stock Option Agreement.

                  "Anti Dilution Option Exercise Price" is defined in Section 2.




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                  "Anti Dilution Option Shares" is defined in Section 2.

                  "Approved Retirement" means the retirement of Optionee on or
after his sixty-fifth (65th) birthday or, if earlier, either for Good Reason or
approved by the Board of Directors of Issuer.

                  "Approved Sale" means a transaction or a series of related
transactions which results in a bona fide, unaffiliated change of beneficial
ownership of Employer or its business of greater than 50% (disregarding for this
purpose any disparate voting rights attributable to the outstanding stock of
Issuer), whether pursuant to the sale of the stock of Employer or Issuer, the
sale of the assets of Employer, or a merger or consolidation involving Employer
or Issuer; provided, however, that for purposes of this Agreement, an Approved
Sale shall not mean the transaction whereby REM Acquisition, Inc. ("MergerCo")
will merge with and into Holdings pursuant to the terms and conditions of the
Agreement and Plan of Merger dated as of July 16, 1998, as amended from time to
time, among the Company, the Holdings and MergerCo.

                  "Cause," when used in connection with the termination of
employment of Optionee, means (i) the conviction for the commission of, or a
plea of guilty or nolo contendere made by Optionee in response to a charge
involving, a felony or a crime involving moral turpitude, (ii) the embezzlement
or misappropriation of funds or property of Issuer, Employer or any Subsidiary,
(iii) the continued use of alcohol or drugs to an extent which, consistent with
the Substance Abuse Policy of Employer adopted October 14, 1994, would result in
Optionee's Termination, (iv) the intentional, unauthorized disclosure of
proprietary information or confidential records of Issuer, Employer or any
Subsidiary or (v) the willful failure or refusal to perform (unless for Good
Reason) those duties reasonably assigned or delegated to Optionee by the Board
of Directors of Employer which failure or refusal continues following (A) the
Board of Directors giving Optionee written notice setting forth the facts or
events constituting such failure or refusal and (B) a reasonable opportunity to
correct the deficiencies or other problems specified in such notice to the
reasonable satisfaction of such Board.

                  "Certificate of Incorporation" means the Amended and Restated
Certificate of Incorporation of Issuer setting forth, inter alia, the rights,
preferences and privileges of and restrictions on the Common Stock and Class B
Common Stock of Issuer.

                  "Common Stock" is defined in recital E.

                  "Disability" means that Optionee becomes physically or
mentally incapacitated or disabled so that he or she is unable to perform for
Employer or a Subsidiary substantially the same services as he or she performed
prior to incurring such incapacity or disability or to devote his or her full
working time or use his or her best efforts to advance the business and welfare
of Employer or a Subsidiary for an aggregate period of six months during any
12-month period.

                  "Effective Date" is defined in the preamble.

                  "Employer" is defined in recital D.


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                  "Endorsed Certificate" means a stock certificate evidencing
the shares properly endorsed for transfer, or, in the alternative, an
appropriate certification as to the lost, stolen, or missing status of such
stock certificate.

                  "Fair Market Value" means the value of a Share, as of the
Termination Date, calculated pursuant to Section 9(c).

                  "Fiscal Year" means the fiscal year of Issuer.

                  "Good Reason" means (i) the assignment to Optionee of any
duties inconsistent with Optionee's position (including status, offices, titles
and reporting requirements), (ii) a demotion in the job title of Optionee, (iii)
a reduction in the compensation paid to Optionee, unless such reduction is
comparable to an across-the-board reduction applicable to all senior management
employees of Employer due to adverse business circumstances, (iv) a request of
Optionee to relocate his office to a distance of greater than seventy-five (75)
miles from the present site of his office, or (v) any other action by Employer
which results in a material diminution in the position, authority, duties or
responsibilities of Optionee.

                  "Initial Public Offering" means the effectiveness of a
registration statement under the Act covering any of the capital stock of Issuer
or Employer (other than preferred stock that is not convertible into common
stock) and the completion of a sale of such stock thereunder, if as a result of
such sale (i) the issuer becomes a reporting company under Section 12(b) or
12(g) of the Securities Exchange Act of 1934, as amended, and (ii) such stock is
traded on the New York Stock Exchange or the American Stock Exchange, or is
quoted on the Nasdaq Stock Market or is traded or quoted on any other national
stock exchange or securities system.

                  "Issuer" is defined in the preamble.

                  "Issuer Note" is defined in Section 9(b).

                  "Lock-Up Period" means, in the case of an Initial Public
Offering, the 180-day period commencing on the effective date of the
registration statement covering capital stock of Issuer or Employer sold in such
Initial Public Offering, and, in the case of any subsequent registered offering,
the 90-day period commencing on the effective date of the registration statement
relating to such offering, or, in either case, such lesser period as may be
agreed upon with the underwriters of such offering.

                  "Option" and "Options" are defined in Section 2.

                  "Optionee" is defined in the preamble.

                  "Option Shares" is defined in Section 2.

                  "Performance Option Exercise Price" is defined in Section 2.

                  "Performance Option Shares" is defined in Section 2.



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                  "Permitted Transferee" is defined in Section 5.


                  "Person" means any natural person, partnership, corporation,
trust or incorporated organization.

                  "Plan" is defined in recital A.

                  "Purchase Date" is defined in Section 9(a).

                  "Put Date" is defined in Section 9(b).

                  "Repurchase Disability" is defined in Section 9(b)

                  "Repurchase Period" is defined in Section 9(a).

                  "Repurchase Price" is defined in Section 9(a).

                  "Second Repurchase Period" is defined in Section 9(a).

                  "Shareholder" means Simmons Holdings, LLC, and its successors
and assigns.

                  "Stock Purchase Agreement" is defined in Section 9(a).

                  "Subsidiary" means any joint venture, corporation, partnership
or other entity as to which Issuer or Employer, whether directly or indirectly,
has more than 50% of the (i) voting rights or (ii) rights to capital or profits.

                  "Termination Date" means the date on which Optionee ceases to
be employed by Employer or any Affiliate of Employer for any reason; provided,
however, that Optionee shall not be considered to have ceased to be employed by
Employer or any Affiliate of Employer if he or she continues to be employed by
Employer or any Subsidiary.

                  2. GRANT OF OPTIONS. Issuer grants to Optionee the rights and
options (the each an "Option," collectively, the "Options") to purchase, on the
terms and conditions hereinafter set forth,

                  (i) all or any part of an aggregate of ____________ shares of
Common Stock (the "Performance Option Shares"), at the purchase price of
$__________ per share (as such amount may be adjusted as herein provided, the
"Performance Option Exercise Price"), on the terms and conditions set forth
herein.

                  (ii) all or any part of an aggregate of ____________ shares of
Common Stock (as such number may be adjusted as herein provided) (the "Anti
Dilution Option Shares," and, together with the Performance Option Shares, the
"Option Shares"), at the purchase price of $______ per share (as such among may
be adjusted as herein provided, the "Anti Dilution Option Exercise Price"), on
the terms and conditions set forth herein.




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                  3. EXERCISABILITY. Optionee's right to exercise the Options
shall be immediately fully vested.

                  4. EXPIRATION. The Options shall expire upon the thirtieth
(30th) day following the tenth (10th) anniversary of the date of the Prior
Option Agreement unless (i) Optionee is terminated without Cause or ceases to be
employed by Employer or a Subsidiary due to death, Disability or Approved
Retirement, in which case the Option to purchase Performance Option Shares shall
expire 180 days following the Termination Date and the Option to purchase Anti
Dilution Option Shares shall expire 180 days following the end of the Fiscal
Year during which the Termination Date occurs, (ii) Optionee resigns or is
terminated for Cause from employment by Employer, in which case the vested
portion of the Options shall expire on the Termination Date, or (iii) Issuer,
Shareholder or Optionee exercises the purchase or put right pursuant to Section
9 hereof, in which case the Options shall expire on the business day immediately
preceding the Purchase Date or the Put Date, as the case may be.

                  5. NONTRANSFERABILITY. Subject to Section 9 hereof, the
Options shall not be transferable by Optionee otherwise than to his or her
spouse, child, estate, personal representative, heir or successor or to a trust
for the benefit of Optionee or his or her spouse, child or heir (a "Permitted
Transferee"), and the Options shall be exercisable, during Optionee's lifetime,
only by him or her or by any of the foregoing Permitted Transferees, or in the
event of Optionee's Disability, his or her guardian or legal representative.
More particularly (but without limiting the generality of the foregoing), the
Options may not be assigned, transferred (except as aforesaid), pledged or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment or similar process. Any assignment,
transfer, pledge, hypothecation or other disposition of the Options contrary to
the provisions, hereof, and the levy of any attachment or similar process upon
the Options that would otherwise effect a change in the ownership of the
Options, shall terminate the Options; provided, however, that in the case of the
involuntary levy of any attachment or similar involuntary process upon the
Options, Optionee shall have thirty (30) days after notice thereof to cure such
levy or process before the Options terminate. This Agreement shall be binding on
and enforceable against any person who is a Permitted Transferee of the Options
pursuant to the first sentence of this Section.

                  6. EFFECT OF MERGER; ADJUSTMENTS.

                  (a) In the event of an Approved Sale that is a merger or other
form of corporate reorganization and notwithstanding any other provisions of
this Agreement, the unexercised portion of the Options shall be subject to the
terms of the agreement or plan of merger or reorganization effecting such merger
or reorganization and shall be converted, redeemed, exchanged, canceled or
otherwise treated as provided in such agreement or plan of merger or
reorganization, provided that Optionee shall be given at least 20 days' prior
notice of the proposed merger or reorganization and shall (notwithstanding
anything else herein to the contrary) be entitled to exercise the vested portion
of the Options at any time during such 20-day period up to and until the close
of business on the day immediately preceding the date of consummation of such
merger or reorganization (which exercise may be expressly contingent upon
completion of the Approved Sale if the unexercised portion of the Options were
to vest as a result of such sale being a Qualifying Approved Sale) and upon
exercise of the Options the 



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Option Shares shall be treated in the same manner as the shares of any other
stockholder of Issuer.

                  (b) Subject to Section 6(a), in the event of any one or more
reorganizations, recapitalizations, mergers, acquisitions, stock splits, reverse
stock splits, stock dividends or similar events, an appropriate adjustment shall
be made in the number and kind of shares or other securities subject to the
Options, and the Performance Exercise Price or Anti Dilution Exercise Price, as
applicable, for each Option Share or other unit of any securities subject to
this Agreement, in accordance with Section 14 of the Plan. No fractional
interests shall be issued on account of any such adjustment unless the Committee
(as defined in the Plan) specifically determines to the contrary; provided,
however, that in lieu of fractional interests, Optionee, upon the exercise of
the Options in whole or in part, shall receive cash in an amount equal to the
amount by which the Fair Market Value of such fractional interests exceeds the
Performance Exercise Price or Anti Dilution Exercise Price, as applicable,
attributable to such fractional interests.

                  7. EXERCISE OF THE OPTIONS. Prior to the expiration thereof,
Optionee may exercise the vested portion of the Options from time to time in
whole or in part. Upon electing to exercise the Options, Optionee shall deliver
to the Secretary of Issuer a written and signed notice of such election setting
forth the number of Performance Option Shares or Anti Dilution Option Shares, as
applicable, that Optionee has elected to purchase and shall at the time of
delivery of such notice tender cash or a cashier's or certified bank check to
the order of Issuer for the full Performance Exercise Price or Anti Dilution
Exercise Price, as applicable, of such Performance Option Shares or Anti
Dilution Option Shares, as applicable, and any amount required pursuant to
Section 18 hereof. The Committee may, in its discretion, also permit payment of
the Performance Exercise Price or Anti Dilution Exercise Price, as applicable,
in such form or in such manner as may be permissible under the Plan and under
any applicable law.

                  8. RESTRICTIONS ON TRANSFERS OF OPTION SHARES. Subject to
Section 9 hereof, prior to the earlier of (a) the termination of the Lock-Up
Period following an Initial Public Offering or (b) an Approved Sale, the Option
Shares shall not be transferable or transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) except that
optionee may transfer the Option Shares to a Permitted Transferee. This
Agreement shall be binding on and enforceable against any person who is a
Permitted Transferee of the Option Shares. The stock certificates issued to
evidence Option Shares upon exercise of the Options hereunder shall bear legends
referring to this Agreement and the restrictions contained herein.

                  9. PURCHASE OF OPTION SHARES.

                  (a) In the event that the Termination Date occurs for any
reason prior to an Initial Public Offering or an Approved Sale, subject to
Section 9(b) below, the Option Shares shall be subject to repurchase as follows:

                                    (i) Issuer, during the sixty (60) days
                  following the Termination Date (the "Repurchase Period"),
                  shall have a one-time right to purchase all, but not less than
                  all, of the Option Shares.


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                                    (ii) If Issuer does not elect to purchase
                  the Option Shares during the Repurchase Period, then
                  Shareholder, during the thirty (30) days following the
                  expiration of the Repurchase Period (the "Second Repurchase
                  Period"), shall have a one-time right to purchase all, but not
                  less than all, of the Option Shares.

                                    (iii) In the event that Optionee does not
                  own any Option Shares on the Termination Date, Issuer or
                  Shareholder (as applicable) may notify Optionee that Issuer or
                  Shareholder (as applicable) will purchase any Option Shares
                  that Optionee may thereafter become entitled to acquire upon
                  the exercise of the Options and shall set the Purchase Date
                  and shall purchase such Option Shares, if any, pursuant to the
                  terms of this Agreement.

                                    (iv) The purchase price (the "Repurchase
                  Price") for each Option Share shall be the Fair Market Value.
                  If Issuer or Shareholder elects to purchase the Option Shares,
                  it shall notify Optionee at or before the end of the
                  Repurchase Period or, in the case of Shareholder, the Second
                  Repurchase Period, and the Repurchase Price shall be paid in
                  cash at a time set by Issuer or Shareholder, as the case may
                  be, which time shall be within thirty (30) days after the end
                  of the Repurchase Period or Second Repurchase Period, as the
                  case may be, provided that Optionee has presented to Issuer or
                  Shareholder an Endorsed Certificate.

                                    (v) The Option Shares shall be transferred
                  to Issuer or Shareholder, as applicable, free and clear of all
                  liens, encumbrances, mortgages, pledges, security interests,
                  restrictions, prior assignments and claims of any kind or
                  nature whatsoever except those created by the Certificate of
                  Incorporation or this Agreement. If Issuer or Shareholder does
                  not purchase the Option Shares, the restrictions on transfer
                  thereof contained in Sections 5 and 8 of this Agreement shall
                  terminate and be of no further force and effect.
                  Notwithstanding Optionee's failure to deliver the Endorsed
                  Certificate, the Option Shares represented thereby shall be
                  deemed to be owned by Issuer or Shareholder, as applicable,
                  upon (A) the payment by Issuer or Shareholder, as applicable,
                  of the purchase price to Optionee or his or her Permitted
                  Transferee or (B) notice to Optionee or such Permitted
                  Transferee that Issuer or Shareholder, as applicable, is
                  holding the purchase price in the United States for the
                  account of Optionee or such Permitted Transferee, and upon
                  such payment or notice (x) Optionee and such Permitted
                  Transferee will have no further rights in or to such Option
                  Shares, (y) Issuer or Shareholder, as applicable, shall be
                  entitled to specific performance of Optionee's or such
                  Permitted Transferee's obligation to deliver such Endorsed
                  Certificates, and (z) Optionee and his or her Permitted
                  Transferee shall be jointly and severally liable for all
                  reasonable attorneys' fees and other costs and expenses
                  incurred by Issuer or Shareholder, as applicable, in enforcing
                  its right to repurchase the Option Shares hereunder and shall
                  pay to Issuer or Shareholder, as applicable, promptly upon
                  demand the amount of all such fees and expenses.

                                    (vi) Optionee shall not be obligated to
                  transfer any Option Shares to Issuer or Shareholder, as
                  applicable, unless, concurrently with the repurchase of Option
                  Shares 


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                   hereunder, Issuer or Shareholder, as the case may be,
                   repurchases all of the Option Shares.

                  (b) If Optionee's Termination Date occurs prior to an Initial
Public Offering or an Approved Sale due to Optionee's death, Disability or
Approved Retirement, or in the event of an Approved Sale (substituting 75% for
50% in such definition) in which substantially all of the proceeds of such
Approved Sale are not reinvested in a similar or like business to the
manufacturing of bedding products within one (1) year of such Approved Sale,
Optionee or his or her representative shall have a one-time right to require
Issuer to purchase all, but not less than all, of the Option Shares at Fair
Market Value, provided, that such right must be exercised within
one-hundred-eighty (180) days after the Termination Date, or, in the case of an
Approved Sale, the first anniversary of such Approved Sale. The Repurchase Price
shall be paid on the Put Date, which date shall be the later of (i) the
thirtieth (30th) day after Issuer has received notice of Optionee's election to
exercise his or her put right, or (ii) the day that Optionee presents to Issuer
the endorsed Certificate, and shall be paid in the form of cash or, at the
option of Issuer in the event the purchase is following Optionee's death,
disability or Approved Retirement, a combination of an amount of cash equal to
the Cost of the repurchased Shares and the issuance of an Issuer Note ("Issuer
Note") the principal amount of which is equal to the difference between the
Repurchase Price for the Shares and the cost of the Shares, bearing interest at
a rate equal to the rate at which interest is calculated at such time pursuant
to the then-current senior credit facility of the Employer or Issuer, as
appropriate, provided that such rate shall in no event exceed ten percent (10%)
per annum, provided further that up to fifty percent (50%) of any interest
payment shall, at the option of the Issuer, be payable in additional Issuer
Notes of like tenor. All Issuer Notes shall mature on the earliest to occur of
(x) the third anniversary of the date on which the Issuer Note is issued, (y)
the sale of stock of the Issuer pursuant to an Initial Public Offering, or (z)
an Approved Sale. The Option Shares shall be transferred to Issuer free and
clear of all liens, encumbrances, mortgages, pledges, security interests,
restrictions, prior assignments and claims of any kind or nature whatsoever
except those created by the Certificate of Incorporation or this Agreement.
Notwithstanding anything to the contrary in the foregoing, the Issuer's
obligation to repurchase any of the Option Shares shall be suspended if (i) such
repurchase would render the Issuer unable to meet its obligations in the
ordinary course of business; (ii) the Issuer is prohibited from doing so by
applicable law restricting the purchase by a corporation of its own shares; or
(iii) such repurchase would constitute a breach of or default or event of
default under, or is otherwise prohibited by, the terms of any loan agreement or
other agreement or instrument to which the Issuer or any of its Subsidiaries is
a party, any of such events constituting a "Repurchase Disability." In the event
of a Repurchase Disability, the Issuer shall repurchase the Option Shares as
soon as reasonably practicable after all Repurchase Disabilities cease to exist
(and the Issuer may also elect, but shall have no obligation, to cause its
nominee to repurchase such shares while any Repurchase Disabilities continue to
exist). In the event that the Issuer suspends its obligation to repurchase
Option Shares pursuant to a Repurchase Disability, then, upon repurchase of the
shares, the Issuer shall pay to Optionee or his or her representative (as
applicable) an additional amount equal to interest on the original repurchase
price calculated at the Applicable Federal Rate (as set forth in Section 1274 of
the Code or the Treasury Regulations promulgated thereunder) from the date the
repurchase would have occurred but for such Repurchase Disability to (but not
including) the date such repurchase actually occurs.

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                  (c) The Fair Market Value shall be determined in good faith by
Issuer's Board of Directors. If the Board determination is challenged by
Optionee, a mutually acceptable investment banker or appraiser shall establish
the Fair Market Value. If Optionee and Issuer cannot agree upon an investment
banker or appraiser each shall choose an investment banker or appraiser and the
two investment bankers or appraisers shall choose a third investment banker or
appraiser who alone shall establish the Fair Market Value. The Fair Market Value
shall be based on an assumed sale of 100% of the outstanding capital stock of
Issuer (without reduction for minority discount or lack of liquidity of the
Option Shares) and shall be determined using customary criteria generally
employed within the investment banking community at the time such determination
is made for valuing an entity similar to Issuer. The investment banker's or
appraiser's determination shall be conclusive and binding on Shareholder, Issuer
and Optionee. Issuer shall bear all costs incurred in connection with the
services of such investment banker or appraiser unless the Fair Market Value
established by the investment banker or appraiser is (i) less than or equal to
110% of the Board of Directors' determination, in which case Optionee shall
promptly pay or reimburse Issuer for such costs or (ii) greater than 110% but
less than 125% of the Board of Directors' determination, in which case Optionee
shall promptly pay or reimburse Issuer for 50% of such costs.

                  (d) For so long as Optionee or his or her Permitted Transferee
owns the Option Shares, Issuer agrees that it shall, upon the written request of
Optionee, provide Optionee with annual financial statements of Issuer promptly
upon the completion of the preparation of such statements. The annual financial
statements shall be accompanied by an audit report by Issuer's independent
accountants.

                  10. COMPLIANCE WITH LEGAL REQUIREMENTS.

                  (a) No Option Shares shall be issued or transferred pursuant
to this Agreement unless and until all legal requirements applicable to such
issuance or transfer have, in the opinion of counsel to Issuer, been satisfied.
Such requirements may include, but are not limited to, registering or qualifying
such Shares under any state or federal law, satisfying any applicable law
relating to the transfer of unregistered securities or demonstrating the
availability of an exemption from applicable laws, placing a legend on the
Option Shares to the effect that they were issued in reliance upon an exemption
from registration under the Securities Act of 1933, as amended (the "Act"), and
may not be transferred other than in reliance upon Rule 144 or Rule 701
promulgated under the Act, if available, or upon another exemption from the Act,
or obtaining the consent or approval of any governmental regulatory body. Issuer
shall use its best efforts to comply with all legal requirements applicable to
the issuance or transfer of Option Shares.

                  (b) Optionee understands that Issuer intends for the offering
and sale of Option Shares to be effected in reliance upon Rule 701 or another
available exemption from registration under the Act, and that Issuer is under no
obligation to register for resale the Option Shares issued upon exercise of the
Options. In connection with any such issuance or transfer, the person acquiring
the Option Shares shall, if requested by Issuer, provide information and
assurances satisfactory to counsel to Issuer with respect to such matters as
Issuer reasonably may deem 


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desirable to assure compliance with all applicable legal requirements. Issuer
hereby covenants and agrees to register all of the Option Shares on a Form S-8
(or any successor form thereto) following the Initial Public Offering.

                  11. CAPITALIZATION, EXCHANGES ETC. AFFECTING SHARES; DILUTION.

                  (a) The provisions of this Agreement shall apply to any and
all shares of capital stock of Issuer or any successor or assign of Issuer that
may be issued in respect of, in exchange for, or in substitution of, the Option
Shares by reason of any stock dividend, stock split, stock issuance, reverse
stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise, other than an Approved Sale.

                  (b) Except as may be specifically provided herein or in the
Certificate of Incorporation, nothing herein shall prohibit or restrict Issuer
from taking any corporate action or engaging in any corporate transaction of any
kind, including, without limitation, the issuance and sale of additional shares
of capital stock of Issuer, any merger, consolidation, liquidation or sale of
assets, or create in Optionee or his or her Permitted Transferee any rights to
acquire or receive additional shares of capital stock of Issuer or otherwise to
be protected against dilution.

                  12. SUBJECT TO CERTIFICATE OF INCORPORATION. Optionee
acknowledges that the Option Shares are subject to the terms of the Certificate
of Incorporation.

                  13. NO INTEREST IN SHARES SUBJECT TO OPTIONS. Neither Optionee
(individually or as a member of a group) nor any beneficiary or other person
claiming under or through Optionee shall have any right, title, interest, or
privilege in or to any shares allocated or reserved for the purpose of the Plan
or subject to this Agreement except as to such Option Shares, if any, as shall
have been issued to such person upon exercise of these Options or any part of
it.

                  14. PLAN CONTROLS. The Options hereby granted are subject to,
and Issuer and Optionee agree to be bound by, all of the terms and conditions of
the Plan as the same may be amended from time to time in accordance with the
terms thereof, but no such amendment shall be effective as to the Options
without Optionee's consent insofar as it may adversely affect Optionee's rights
under this Agreement.

                  15. TERMINATION OF PRIOR OPTION AGREEMENT. Upon the
effectiveness of this Agreement, any option agreement between the Issuer and the
Optionee granted pursuant to the Plan and entered into prior to the Effective
Date (collectively, (the "Prior Option Agreement") shall automatically be
terminated and of no further force and effect and the parties to such Prior
Option Agreement shall have no further rights or obligations thereunder.

                  16. NOT AN EMPLOYMENT CONTRACT. Nothing in the Plan, in this
Agreement or any other instrument executed pursuant thereto shall confer upon
Optionee any right to continue in the employ of Employer or any Subsidiary or
shall affect the right of Employer or any Subsidiary to terminate the employment
of Optionee with or without Cause.


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                  17. GOVERNING LAW. All terms of and rights under this
Agreement shall be governed by and construed in accordance with the internal law
of the State of New York, without giving effect to principles of conflicts of
law.

                  18. TAXES. The Committee may, in its discretion, make such
provisions and take such steps as it may deem necessary or appropriate for the
withholding of all federal, state, local and other taxes required by law to be
withheld with respect to the issuance or exercise of the Options including, but
not limited to, deducting the amount of any such withholding taxes from any
other amount then or thereafter payable to Optionee, requiring Optionee to pay
to Issuer the amount required to be withheld or to execute such documents as the
Committee deems necessary or desirable to enable it to satisfy its withholding
obligations, or any other means provided in the Plan. Optionee shall have the
right to satisfy the withholding obligation in whole or in part by the delivery
of shares of the Issuer previously issued to Optionee or by the withholding of
the delivery of Option Shares otherwise to be received upon the exercise of the
Options.

                  19. NOTICES. All notices, requests, demands and other
communications pursuant to this Agreement shall be in writing and shall be
deemed to have been duly given if personally delivered, telexed or telecopied
to, or, if mailed, when received by, the other party, if to Issuer at its
principal executive offices addressed to the attention of Issuer's Secretary,
and if to Optionee at his or her address as it appears on the books of his or
her employer (or at such other address as shall be given in writing by Optionee
or his or her Permitted Transferee to Issuer).

                  20. AMENDMENTS AND WAIVERS. This Agreement may be amended and
any provision hereof may be waived, only by a writing signed by the party to be
charged.

                  21. ENTIRE AGREEMENT. This Agreement, together with the Plan,
sets forth the entire agreement and understanding between the parties as to the
subject matter hereof and supersedes all prior oral and written and all
contemporaneous oral discussions, agreements and understandings of any kind or
nature.

                  22. HEADINGS. The headings preceding the text of the sections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.

                  23. FURTHER ASSURANCES. Each party shall cooperate and take
such action as may be reasonably requested by another party in order to carry
out the provisions and purposes of this Agreement.

                  24. ARBITRATION. The parties shall endeavor to settle all
disputes by amicable negotiations. Except as otherwise provided in Section 9(c)
hereof, any claim, dispute, disagreement or controversy that arises among the
parties relating to this Agreement that is not amicably settled shall be
resolved by arbitration, as follows:

                  (a) Any such arbitration shall be heard in The City of New
York, New York, before a panel consisting of one (1) to three (3) arbitrators,
each of whom shall be impartial. Upon the written Request for Arbitration by
either party hereto to commerce arbitration hereunder, the 

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<PAGE>   12

parties shall attempt to mutually agree as to the number and identity of the
arbitrators within thirty (30) days of such Request. Except as the parties may
otherwise agree, all arbitrators (if not selected by the parties hereto within
thirty (30) days of a written Request for Arbitration) shall be appointed
pursuant to the commercial arbitration rules of the American Arbitration
Association. In determining the number and appropriate background of the
arbitrators, the appointing authority shall give due consideration to the issues
to be resolved, but his or her decision as to the number of arbitrators and
their identity shall be final.

                  (b) An arbitration may be commenced by any party to this
Agreement by the service of a written request for arbitration upon the other
affected parties. Such request for arbitration shall summarize the controversy
or claim to be arbitrated.

                  (c) All attorneys' fees and costs of the arbitration shall in
the first instance be borne by the respective party incurring such costs and
fees, but the arbitrators shall award costs and attorneys' fees to the
prevailing party. The parties hereby expressly waive punitive damages, and under
no circumstances shall an award contain any amount that in any way reflects
punitive damages.

                  (d) Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof.

                  (e) It is intended that controversies or claims submitted to
arbitration under this Section 24 shall remain confidential, and to that end it
is agreed by the parties that neither the facts disclosed in the arbitration,
the issues arbitrated, nor the views or opinions of any persons concerning them,
shall be disclosed to third persons at any time, except to the extent necessary
to enforce an award or judgment or as required by law or in response to legal
process or in connection with such arbitration.

                  (f) Any arbitration under this Section 24 shall be conducted
pursuant to the commercial arbitration rules of the American Arbitration
Association.

                  25. BINDING EFFECT. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective permitted
successors and assigns.


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<PAGE>   13


                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the Effective Date.

                                           SIMMONS HOLDINGS, INC.

                                           By:
                                              ---------------------------------
                                                 Name:
                                                 Title:


                                           ------------------------------------
                                           Name of Optionee:

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