<PAGE>
 
                                                                  EXHIBIT 10.55

                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS EMPLOYMENT AGREEMENT is entered into as of the 15th day of October,
1998, by and between SEALY CORPORATION, a Delaware corporation (the "Company"),
and RICHARD SOWERBY (the "Employee"), an individual residing at 3400 Downington
Court, Greensboro, NC 27307.

                              W I T N E S S E T H:

     WHEREAS, the Company and the Employee (collectively "the Parties") desire
to enter into this Employment Agreement (the "Agreement") as hereinafter set
forth;

     NOW, THEREFORE, the Company and Employee agree as follows:

     1.  EMPLOYMENT TERM.
         --------------- 

         (a)  During the period specified in Subsection l(b) hereof (the
              "Employment Term"), the Company shall employ the Employee, and the
              Employee shall serve the Company based on the terms and subject to
              the conditions set forth herein.

         (b)  The Employment Term shall:

              (i)  be for a rolling one (1) year term commencing on the date of
                   this Agreement, which term shall automatically be extended
                   one calendar day for each calendar day that the Employee is
                   employed by the Company after the date of this Agreement so
                   that the remaining Employment Term shall always be one (1)
                   year;

              (ii) provided that the Employment Term may terminate as provided
                   in Section 4 hereof prior to the date specified above in this
                   Subsection 1(b).

     2.  POSITION, DUTIES, AND RESPONSIBILITIES.  At all times during the
         --------------------------------------                          
Employment Term, the Employee shall:

         (a)  Hold the position of Corporate Vice President, Finance;

         (b)  Have the current job grade and generally the duties and
              responsibilities listed on the Company's current position
              description for the position indicated in Section 2(a) above, and
              such reduced or additional duties as may be assigned to the
              Employee from time to time by the Board of Directors of the
              Company (the "Board") or the Chief Executive Officer of the
              Company (the "Chief Executive Officer") which are generally
              consistent with the position indicated in Section 2(a) above;

         (c)  Adhere to such reasonable written policies and directives, and
              such reasonable unwritten policies and directives as are of common
              knowledge to 
<PAGE>
 
              executive officers of the Company, as may be promulgated from time
              to time by the Board or the Chief Executive Officer and which are
              applicable to executive officers of the Company;

          (d)  Invest in the Company only in accordance with any insider trading
               policy of the Company in effect at the time of the investment;
               and

          (e)  Devote the Employee's entire business time, energy, and talent to
               the business, and to the furtherance of the purposes and
               objectives, of the Company, and neither directly nor indirectly
               act as an employee of or render any business, commercial, or
               professional services to any other person, firm or organization
               for compensation, without the prior written approval of the Board
               or the Chief Executive Officer.

     Nothing in this Agreement shall preclude the Employee from devoting
reasonable periods of time to charitable and community activities or the
management of the Employee's investment assets, provided such activities do not
interfere with the performance by the Employee of the Employee's duties
hereunder.

     3.   SALARY, BONUS AND BENEFITS.  For services rendered by the Employee on
          --------------------------                                           
behalf of the Company during the Employment Term, the following salary, bonus
and benefits shall be provided to the Employee by the Company:

          (a)  The Company shall pay to the Employee, in equal installments,
               according to the Company's then current practice for paying its
               executive officers in effect from time to time during the
               Employment Term, an annual base salary at the initial rate of One
               Hundred Fifty Eight Thousand Dollars ($158,000).  This salary
               shall be subject to annual review by the Human Resources
               Committee of the Board (the "Committee") and may be increased,
               but not decreased, to the extent, if any, that the Committee may
               determine.

          (b)  The Employee shall participate in the Sealy Corporation Annual
               Bonus Plan (the "Bonus Plan") in accordance with the provisions
               of that Plan as in effect as of the date of this Agreement.  The
               Employee's Target annual bonus, as established by the Committee
               under the Bonus Plan as of the date of this Agreement, is thirty-
               five percent (35%) (his "Target Annual Bonus Percentage") of
               annual base salary, with a range of zero percent (0%) to seventy
               percent (70%) of annual base salary.

          (c)  The Employee shall be eligible for participation in such other
               benefit plans, including, but not limited to, the Company's
               Profit Sharing Plan and Trust, Executive Severance Benefit Plan,
               Benefit Equalization Plan, Short-Term and Long Term Disability
               Plans, Group Term Life Insurance Plan, Medical Plan or PPO,
               Dental Plan, the 401(k) feature of the Profit Sharing Plan and
               the 1998 Stock Option Plan, as the Board may adopt from time to
               time and in which the Company's executive officers are eligible
               to participate.  Such participation shall be subject to the terms
               and conditions set forth in the 

                                       2
<PAGE>
 
               applicable plan documents. As is more fully set forth in Section
               7 hereof, the Employee shall not be entitled to duplicative
               payments under this Agreement and the Executive Severance Benefit
               Plan.

          (d)  Without limiting the generality of Subsection 3(c) above, for so
               long as such coverage shall be available to the executive
               officers of the Company, the Employee shall be eligible to
               participate in the Company's Group Term Life Insurance Plan with
               a death benefit to be provided at the level of one and one half
               (1 1/2) times annual base salary at Company expense, plus
               extended coverage with a death benefit to be provided of at least
               the level in effect on the date of this Agreement for the
               Employee under such Plan at the Employee's discretion and
               expense.

          (e)  The Employee shall be entitled to take, during each calendar year
               period of the Employment Term, commencing on the 1st of January
               after execution of this Agreement, vacation time equal to at
               least the greater of (i) the amount of vacation time to which the
               Employee is entitled per year as of the date of this Agreement,
               or (ii) the amount of vacation time to which the Employee would
               have become entitled if  the Company's vacation policy in effect
               as of the date of this Agreement and which is applicable to its
               executive officers remained in effect throughout the Employment
               Term.

          (f)  In addition, the Parties do hereby further confirm that any stock
               agreements, stock option agreements, or Stockholder Agreement
               previously entered into between the Parties (such agreements
               being hereinafter referred to collectively as the "Pre-existing
               Agreements"), all remain in full force and effect except as
               otherwise provided herein.  Notwithstanding the foregoing, to the
               extent that any provision contained herein is inconsistent with
               the terms of any of the Pre-existing Agreements, the terms of
               this Agreement shall be controlling.

     4.   TERMINATION OF EMPLOYMENT.  As indicated in Subsection 1(b)(ii), the
          -------------------------                                           
Employment Term may terminate prior to the date specified in Subsection 1(b)(i)
as follows:

          (a)  The Employee's employment hereunder will terminate without
               further notice upon the death of the Employee.

          (b)  The Company may terminate the Employee's employment hereunder
               effective immediately upon giving written notice of such
               termination for "Cause".  For these purposes, "Cause" shall mean
               the following:

               (i)  Commission by the Employee (evidenced by a conviction or
                    written, voluntary and freely given confession) of a
                    criminal act constituting a felony;

               (ii) Commission by the Employee of a material breach or material
                    default of any of the Employee's agreements or obligations
                    under any 

                                       3
<PAGE>
 
                     provision of this Agreement, including, without limitation,
                     the Employee's agreements and obligations under Subsections
                     2(a) through 2(e) and Sections 8 and 9 of this Agreement,
                     which is not cured in all material respects within thirty
                     (30) days after the Chief Executive Officer or the designee
                     thereof gives written notice thereof to the Employee; or

               (iii) Commission by the Employee, when carrying out the
                     Employee's duties under this Agreement, of acts or the
                     omission of any act, which both: (A) constitutes gross
                     negligence or willful misconduct and (B) results in
                     material economic harm to the Company or has a materially
                     adverse effect on the Company's operations, properties or
                     business relationships.

          (c)  The Employee's employment hereunder may be terminated by the
               Company upon the Employee's disability, if the Employee is
               prevented from performing the Employee's duties hereunder by
               reason of physical or mental incapacity for a period of one
               hundred eighty (180) consecutive days in any period of two
               consecutive fiscal years of the Company, but the Employee shall
               be entitled to full compensation and benefits hereunder until the
               close of such one hundred and eighty (180) day period.

          (d)  The Company may terminate the Employee's employment hereunder
               without Cause at any time upon thirty (30) days written notice.

          (e)  The Employee may terminate employment hereunder effective
               immediately upon giving written notice of such termination for
               "Good Reason", as defined in Subsection 4(g) below.

          (f)  The Employee may terminate employment hereunder without Good
               Reason at any time upon thirty (30) days written notice.

          (g)  For purposes of this Agreement, "Good Reason" means the
               occurrence of (i) any reduction in either the annual base salary
               of the Employee or the Target Annual Bonus Percentage or maximum
               annual bonus percentage applicable to the Employee under the
               Bonus Plan, (ii) any material reduction in the position,
               authority or office of the Employee, (iii) any material reduction
               in the Employee's responsibilities or duties for the Company,
               (iv) any material adverse change or reduction in the aggregate
               "Minimum Benefits," as hereinafter defined, provided to the
               Employee as of the date of this Agreement (provided that any
               material reduction in such aggregate Minimum Benefits that is
               required by law or applies generally to all employees of the
               Company shall not constitute "Good Reason" as defined hereunder),
               (v) any relocation of the Employee's principal place of work with
               the Company to a place more than twenty-five (25) miles from the
               geographical center of Greensboro, North Carolina, or (vi) the
               material breach or material default by the Company of any of its
               agreements or 

                                       4
<PAGE>
 
               obligations under any provision of this Agreement. As used in
               this Subsection 4(g), an "adverse change or material reduction"
               in the aggregate Minimum Benefits shall be deemed to result from
               any reduction or any series of reductions which, in the
               aggregate, exceeds five percent (5%) of the value of such
               aggregate Minimum Benefits determined as of the date of this
               Agreement. As used in this Subsection 4(g), Minimum Benefits are
               life insurance, accidental death, long term disability, short
               term disability, medical, dental, and vision benefits and the
               Company's expense reimbursement policy. The Employee shall give
               written notice to the Company on or before the date of
               termination of employment for Good Reason stating that the
               Employee is terminating employment with the Company and
               specifying in detail the reasons for such termination. If the
               Company does not object to such notice by notifying the Employee
               in writing within five (5) days following the date of the
               Company's receipt of the Employee's notice of termination, the
               Company shall be deemed to have agreed that such termination was
               for Good Reason. The parties agree that "Good Reason" will not be
               deemed to have occurred merely because the Company becomes a
               subsidiary or division of another entity provided the Employee
               continues to serve in the position set forth in Section 2 above
               of such subsidiary or division and such subsidiary or division is
               comparable in size to the organization consisting of the Company
               and its subsidiaries. The parties further agree that "Good
               Reason" will be deemed to have occurred if the purchaser, in
               connection with the sale or transfer of all or substantially all
               of the assets of the Company, does not assume this Agreement in
               accordance with Section 11 hereof.

     5.  SEVERANCE COMPENSATION.  If the Employee's employment is terminated,
         ----------------------                                              
the following severance provisions will apply:

         (a)  If the Employee's employment is terminated by the Company other
              than for Cause or is terminated by the Employee for Good Reason,
              then, through the remaining Employment Term as specified in
              Subsection 1(b) hereof, determined without regard to Subsection
              1(b)(ii) hereof, (such remaining Employment Term calculated
              without regard to Subsection 1(b)(ii), and without regard to
              whether the Employee elects accelerated payments of the Employee's
              annual base salary and bonus in accordance with Subsection
              5(a)(v), is hereinafter referred to as the "Payment Term") the
              Company shall:

              (i) continue to pay the Employee's annual base salary in the then
                  prevailing amount and at the times specified in Subsection
                  3(a) hereof, or if such annual base salary has decreased
                  during the one year period ending on the Employee's
                  termination of employment, at the highest rate in effect
                  during such one year period;

                                       5
<PAGE>
 
              (ii)  continue the Employee's participation in the Bonus Plan
                    as provided in Subsection 3(b) hereof provided that the
                    Company will:

                    (A)  pay the Employee a bonus under the Bonus Plan for the
                         partial year period ending on the date of the
                         Employee's termination of employment calculated as if
                         the Employee had continued to be employed for the
                         entire year except that the Employee's bonus percentage
                         (calculated at the time and in the manner customary as
                         of the date of this Agreement, but disregarding the
                         termination of employment of the Employee) shall be
                         applied to the Employee's annual base salary payable in
                         accordance with Subsection 3(a) hereof for the partial
                         year period ending on the Employee's termination of
                         employment; and

                    (B)  thereafter, during the remainder of the Payment Term, a
                         bonus equal to the Employee's Target Annual Bonus
                         Percentage, multiplied by the Employee's annual base
                         salary in the amount specified in Subsection 5(a)(i)
                         payable during the year (or portion thereof) for which
                         the bonus is being calculated; with such amounts being
                         payable when bonuses under the Bonus Plan are
                         customarily payable, except that the final bonus shall
                         be payable with the final payment of the annual base
                         salary under Subsection 5(a)(i) hereof;

              (iii) continue in effect the medical and dental coverage, long and
                    short-term disability protection, and any life insurance
                    protection (including life insurance protection being paid
                    for by the Employee), being provided to the Employee
                    immediately prior to the Employee's termination of
                    employment, or if any of such benefits have decreased during
                    the one year period ending on the Employee's termination of
                    employment, at the highest level in effect during such one
                    year period;

              (iv)  pay for executive outplacement services for the Employee
                    from a nationally recognized executive outplacement firm at
                    the level provided for vice-presidents of major
                    corporations, provided that such outplacement services will
                    be provided for a one year period commencing on the date of
                    termination of employment regardless of the Payment Term;
                    and

              (v)   In lieu of the payments described in Subsections 5(a)(i)
                    and 5(a)(ii) hereof, at the Employee's request, submitted in
                    writing to the Company within five (5) business days after
                    the date of the Employee's termination of employment:

                                       6
<PAGE>
 
                     (A) the Company will pay the total of the Employee's annual
                         base salary payments described in Subsection 5(a)(i) in
                         a single sum within thirty (30) days following the
                         Employee's termination of employment; and

                    (B)  his Bonus Plan payments described in Subsection
                         5(a)(ii) shall be made at the same time as the
                         Employee's payment under Subsection 5(a)(vi)(A) but
                         shall be calculated using the Employee's Target Annual
                         Bonus Percentage for all calculation purposes.

          (b)  If the Employee's employment hereunder terminates due to the
               Employee's death, disability, termination by the Company for
               Cause or termination by the Employee other than for Good Reason,
               then no further compensation or benefits will be provided to the
               Employee by the Company under this Agreement following the date
               of such termination of employment other than payment of
               compensation earned to the date of termination of employment but
               not yet paid.   As more fully and generally provided in Section
               15 hereof, this Subsection 5(b) shall not be interpreted to deny
               the Employee any benefits to which he may be entitled under any
               plan or arrangement of the Company applicable to the Employee.
               Likewise, this Subsection 5(b) shall not be interpreted to
               entitle the Employee to a bonus under the Bonus Plan following
               his termination of employment except as provided in the Bonus
               Plan which requires employment on the last day of the Company's
               taxable year as a condition to receipt of a bonus thereunder for
               such year except in the cases of death, disability or retirement
               at or after either age 62 with ten years of service or age 65.

          (c)  Notwithstanding anything contained in this Agreement to the
               contrary, other than Section 15 hereof, if the Employee breaches
               any of the Employee's obligations under Section 8 or 9 hereof, no
               further severance payments or other benefits will be payable to
               the Employee under this Section 5.

     6.   SEVERANCE PLAN. It is the intention of the Parties that this Agreement
          --------------  
provide special benefits to the Employee.  If at any time the Company's
Executive Severance Benefit Plan would provide better cash severance benefits to
the Employee than this Agreement, the Employee may elect to receive such better
cash severance benefits in lieu of the cash severance benefits provided under
Subsections 5(a)(i) and 5(a)(ii), or Subsection 5(a)(v), of this Agreement,
whichever is applicable, while continuing to receive any other benefits or
coverages available under this Agreement.  If this Agreement would provide
better cash severance benefits to the Employee than the Company's Executive
Severance Benefit Plan, the Employee shall receive the cash severance benefits
under this Agreement, as well as any other benefits or coverages available under
this Agreement.  In such case, the cash severance benefits under this Agreement
shall be in lieu of the cash severance benefits payable under the Company's
Executive Severance Benefit Plan.

                                       7
<PAGE>
 
     7.  PLAN AMENDMENTS.  To the extent any provisions of this Agreement modify
         ---------------                                                        
the terms of any existing plan, policy or arrangement affecting the compensation
or benefits of the Employee, as appropriate, (a) such modification as set forth
herein shall be deemed an amendment to such plan, policy or arrangement as to
the Employee, and both the Company and the Employee hereby consent to such
amendment, (b) the Company will appropriately modify such plan, policy or
arrangement to correspond to this Agreement with respect to the Employee, or (c)
the Company will provide an "Alternative Benefit," as defined in Section 13
hereof, to or on behalf of the Employee in accordance with the provisions of
such Section 13.

     8.  CONFIDENTIAL INFORMATION.  The Employee agrees that the Employee will
         ------------------------                                             
not, during the Employment Term or at any time thereafter, either directly or
indirectly, disclose or make known to any other person, firm, or corporation any
confidential information, trade secret or proprietary information of the Company
that the Employee may acquire in the performance of the Employee's duties
hereunder (except in good faith in the ordinary course of business for the
Company to a person who will be advised by the Employee to keep such information
confidential) or make use of any of such confidential information except in the
performance of the Employee's duties or when required to do so by legal process,
by any governmental agency having supervisory authority over the business of the
Company or by any administrative or legislative body (including a committee
thereof) that requires the Employee to divulge, disclose or make accessible such
information.  In the event that the Employee is so ordered, the Employee shall
so advise the Company in order to allow the Company the opportunity to object to
or otherwise resist such order.  Upon the termination of the Employee's
employment with the Company, the Employee agrees to deliver forthwith to the
Company any and all proprietary literature, documents, correspondence, and other
proprietary materials and records furnished to or acquired by the Employee
during the course of such employment. In the event of a breach or threatened
breach of this Section 8 by the Employee, the Company will be entitled to
preliminary and permanent injunctive relief, without bond or security,
sufficient to enforce the provisions hereof and the Company will be entitled to
pursue such other remedies at law or in equity which it deems appropriate.

     9.  NON-COMPETITION.   In consideration of this Agreement, the Employee
         ---------------                                                    
agrees that, during the Employment Term, and for one year thereafter, the
Employee shall not act as a proprietor, investor, director, officer, employee,
substantial stockholder, consultant, or partner in any business engaged to a
material extent in the manufacture or sale of (a) mattresses or other bedding
products or (b) any other products which constitute more than ten percent (10%)
of the Company's revenues at the time in direct competition with the Company in
any market. The Employee understands that the foregoing restrictions may limit
the Employee's ability to engage in certain business pursuits during the period
provided for above, but acknowledges that the Employee will receive sufficiently
higher remuneration and other benefits from the Company hereunder than the
Employee would otherwise receive to justify such restriction.  The Employee
acknowledges that the Employee understands the effect of the provisions of this
Section 9, and that the Employee has had reasonable time to consider the effect
of these provisions, and that the Employee was encouraged to and had an
opportunity to consult an attorney with respect to these provisions.  The
Company and the Employee consider the restrictions contained in this Section 9
to be reasonable and necessary.  Nevertheless, if any aspect of these
restrictions is found to be unreasonable or otherwise unenforceable by a court
of competent jurisdiction, the Parties intend for such restrictions to be
modified by such court so as to be reasonable and enforceable and, as so
modified by the court, to 

                                       8
<PAGE>
 
be fully enforced. In the event of a breach or threatened breach of this Section
9 by the Employee, the Company will be entitled to preliminary and permanent
injunctive relief, without bond or security, sufficient to enforce the
provisions hereof and the Company will be entitled to pursue such other remedies
at law or in equity which it deems appropriate.

     10.  NOTICES.  For purposes of this Agreement, all communications provided
          -------                                                              
for herein shall be in writing and shall be deemed to have been duly given when
hand delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

          (a)  If the notice is to the Company:

               Mr. Ronald L. Jones
               Chief Executive Officer
               Sealy Corporation
               P.O. Box 2806
               High Point, NC   27261

               With a copy to:

               Kenneth Walker, Esq.
               Vice President and General Counsel
               Sealy Corporation
               P.O. Box 2806
               High Point, NC   27261

          (b)  If the notice is to the Employee at the Employee's residence
               address as listed in the first paragraph above

or to such other address as either party may have furnished to the other in
writing and in accordance herewith; except that notices of change of address
shall be effective only upon receipt.

     11.  ASSIGNMENT; BINDING EFFECT.  This Agreement shall be binding upon and
          --------------------------                                           
inure to the benefit of the parties to this Agreement and their respective
successors, heirs (in the case of the Employee) and permitted assigns.  No
rights or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be
assigned or transferred in connection with the sale or transfer of all or
substantially all of the assets of the Company, provided that the assignee or
transferee is the successor to all or substantially all of the assets of the
Company and such assignee or transferee expressly assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law.  The Company further agrees that, in the
event of a sale or transfer of assets as described in the preceding sentence, it
shall be a condition precedent to the consummation of any such transaction that
the assignee or transferee expressly assumes the liabilities, obligations and
duties of the Company hereunder.  No rights or obligations of the Employee under
this Agreement may be assigned or transferred by the Employee other than the
Employee's rights to compensation and benefits, which may be transferred only by
will or operation of law, except as provided in this Section 11.

                                       9
<PAGE>
 
     The Employee shall be entitled, to the extent permitted under any
applicable law, to select and change a beneficiary or beneficiaries to receive
any compensation or benefits payable hereunder following the Employee's death by
giving the Company written notice thereof.  In the absence of such a selection,
any compensation or benefit payable under this Agreement following the death of
the Employee shall be payable to the Employee's spouse, or if such spouse shall
not survive the Employee, to the Employee's estate.  In the event of the
Employee's death or a judicial determination of his incompetence, reference in
this Agreement to the Employee shall be deemed, where appropriate, to refer to
the Employee's beneficiary, estate or other legal representative.

     12.  INVALID PROVISIONS.  Any provision of this Agreement that is
          ------------------                                          
prohibited or unenforceable shall be ineffective to the extent, but only to the
extent, of such prohibition or unenforceability without invalidating the
remaining portions hereof and such remaining portions of this Agreement shall
continue to be in full force and effect.  In the event that any provision of
this Agreement shall be determined to be invalid or unenforceable, the Parties
will negotiate in good faith to replace such provision with another provision
that will be valid or enforceable and that is as close as practicable to the
provisions held invalid or unenforceable.

     13.  ALTERNATIVE SATISFACTION OF COMPANY'S OBLIGATIONS.  In the event this
          -------------------------------------------------                    
Agreement provides for payments or benefits to or on behalf of the Employee
which cannot be provided under the Company's benefit plans, policies or
arrangements either because such plans, policies or arrangements no longer exist
or no longer provide such benefits or because provision of such benefits to the
Employee would adversely affect the tax qualified or tax advantaged status of
such plans, policies or arrangements for the Employee or other participants
therein, the Company may provide the Employee with an "Alternative Benefit," as
defined in this Section 13, in lieu thereof.  The Alternative Benefit is a
benefit or payment which places the Employee and the Employee's dependents in at
least as good of an economic position as if the benefit promised by this
Agreement (a) were provided exactly as called for by this Agreement, and (b) had
the favorable economic, tax and legal characteristics customary for plans,
policies or arrangements of that type.  Furthermore, if such adverse consequence
would affect the Employee or the Employee's dependents, the Employee shall have
the right to require that the Company provide such an Alternative Benefit.

     14.  ENTIRE AGREEMENT, MODIFICATION.  Subject to the provisions of Section
          ------------------------------                                       
15 hereof, this Agreement contains the entire agreement between the Parties with
respect to the employment of the Employee by the Company and supersedes all
prior and contemporaneous agreements, representations, and understandings of the
Parties, whether oral or written.  No modification, amendment, or waiver of any
of the provisions of this Agreement shall be effective unless in writing,
specifically referring hereto, and signed by both Parties.

     15.  NON-EXCLUSIVITY OF RIGHTS.  Notwithstanding the foregoing provisions
          -------------------------                                           
of Section 14, nothing in this Agreement shall prevent or limit the Employee's
continuing or future participation in any benefit, bonus, incentive or other
plan, program, policy or practice provided by the Company for its executive
officers, nor shall anything herein limit or otherwise affect such rights as the
Employee has or may have under any stock option, restricted stock or other
agreements with the Company or any of its subsidiaries.  Amounts which the
Employee or the Employee's dependents or beneficiaries are otherwise entitled to
receive under any such plan, policy, practice 

                                       10
<PAGE>
 
or program shall not be reduced by this Agreement except as provided in Section
6 hereof with respect to payments under the Executive Severance Benefit Plan if
cash payments of annual base salary are made hereunder.

     16.  WAIVER OF BREACH.  The failure at any time to enforce any of the
          ----------------                                                
provisions of this Agreement or to require performance by the other party of any
of the provisions of this Agreement shall in no way be construed to be a waiver
of such provisions or to affect either the validity of this Agreement or any
part of this Agreement or the right of either party thereafter to enforce each
and every provision of this Agreement in accordance with the terms of this
Agreement.

     17.  GOVERNING LAW.  This Agreement has been made in, and shall be governed
          -------------                                                         
and construed in accordance with the laws of, the State of Ohio.  The Parties
agree that this Agreement is not an "employee benefit plan" or part of an
"employee benefit plan" which is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.

     18.  TAX WITHHOLDING.  The Company may withhold from any amounts payable
          ---------------                                                    
under this Agreement such federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.  Where withholding
applies to Class A Shares, the Company shall make cashless withholding available
to the Employee.

     19.  EXPENSE OF ENFORCEMENT.  The Company shall reimburse reasonable
          ----------------------                                         
attorney fees and expenses incurred by the Employee to enforce the provisions of
this Agreement, even if his claims are not successful, provided they are not
ultimately determined by the court to be frivolous.

     20.  REPRESENTATION.  The Company represents and warrants that it is fully
          --------------                                                       
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement between
it and any other person, firm or organization.

     21.  SUBSIDIARIES AND AFFILIATES.  Notwithstanding any contrary provision
          ---------------------------                                         
of this Agreement, to the extent it does not adversely affect the Employee, the
Company may provide the compensation and benefits to which the Employee is
entitled hereunder through one or more subsidiaries or affiliates, including,
without limitation, Sealy, Inc.

     22.  NO MITIGATION OR OFFSET.   In the event of any termination of
          -----------------------                                      
employment, the Employee shall be under no obligation to seek other employment.
Amounts due the Employee under this Agreement shall not be offset by any
remuneration attributable to any subsequent employment he may obtain.

     23.  SOLE REMEDY.  The Parties agree that the remedies of each against the
          -----------                                                          
other for breach of this Agreement shall be limited to enforcement of this
Agreement and recovery of the amounts and remedies provided for herein.  The
Parties, however, further agree that such limitation shall not prevent either
Party from proceeding against the other to recover for a claim other than under
this Agreement.

                                       11
<PAGE>
 
     IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement as of the day and year first above written.

                              SEALY CORPORATION

                              By: /s/ Richard Sowerby 
                                 ----------------------------------

                              _____________________________________

                              EMPLOYEE:

                              /s/ Kenneth L. Walker   
                              -------------------------------------

                              _____________________________________

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