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                                                                    Exhibit 10.1


                             SIMMONS HOLDINGS, INC.

                             1999 STOCK OPTION PLAN


1.       PURPOSE.

         The purpose of this 1999 Stock Option Plan (the "Plan") is to advance
the interests of Simmons Holdings, Inc., a Delaware corporation (the "Company")
by enhancing the ability of the Company and its Subsidiaries (as defined below)
to attract and retain directors, employees, consultants or advisers who are in a
position to make significant contributions to the success of the Company, to
reward such individuals for their contributions and to encourage such
individuals to take into account the long-term interests of the Company and its
Subsidiaries. The Plan provides for the award of options to purchase shares of
the Company's Common Stock, par value $.01 per share (the "Shares").

         Options granted pursuant to the Plan may be incentive stock options as
defined in Section 422 of the Code (each such option that is intended to qualify
as an incentive stock option is referred to herein as an "incentive option") or
options that are not incentive options, or both. Options granted pursuant to the
Plan shall be presumed to be non-incentive options unless expressly designated
as incentive options.

2.       ELIGIBILITY FOR AWARDS.

         Persons (as defined below) eligible to receive awards under the Plan
shall be all directors (including directors who are not employees) of the
Company and all executive officers of the Company and its Subsidiaries and other
employees, consultants and advisers who, in the opinion of the Board, are in a
position to make a significant contribution to the success of the Company and
its Subsidiaries. Incentive options shall be granted only to "employees" as
defined in the provisions of the Code or the regulations thereunder applicable
to incentive stock options. Persons selected for awards under the Plan are
referred to herein as "participants."

3.       ADMINISTRATION.

         The Plan shall be administered by the Board of Directors (the "Board")
of the Company or, if applicable, the successors and assigns of the Company. The
Board shall have authority, not inconsistent with the express provisions of the
Plan: (a) to grant awards to such participants as the Board may select; (b) to
determine the time or times when awards shall be granted and the number and type
of Option Shares (as defined below) subject to each award; (c) to determine
which awards are, and which awards are not, incentive options; (d) to determine
the terms and conditions of each award; (e) to prescribe the form or forms of
any instruments evidencing awards and any other instruments required under the
Plan and to change such forms from time to time; (f) to adopt, amend and rescind
rules and regulations for the administration of the Plan; and (g) to interpret
the Plan and any award granted hereunder and to decide any questions and settle
all controversies and disputes that may arise in connection with the Plan or any
award granted hereunder. Such determinations of the Board shall be conclusive
and shall bind all Persons. Subject to Section 8, the Board also shall



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have the authority, both generally and in particular instances, to waive
compliance by any participant with any obligation to be performed by such
participant under any award, to waive any condition or provision of any award
and to amend or cancel any award (and if any award is canceled, to grant a new
award on such terms as the Board shall specify); provided, however, that except
as expressly provided in the Plan or in any award granted hereunder, the Board
may not take any action with respect to any outstanding award that would
adversely affect the rights of the participant under such award without such
participant's written consent. Nothing in the immediately preceding sentence
shall be construed as limiting the power of the Board to make adjustments
required by Section 5(c) or 6(k).

         The Board may, in its sole discretion, delegate some or all of its
powers with respect to the Plan to a committee (the "Committee"), in which event
all references in this Plan (as appropriate) to the Board shall be deemed to
refer to the Committee. The Committee, if one is appointed, shall consist of at
least two directors. A majority of the members of the Committee shall constitute
a quorum, and all determinations of the Committee shall be made by a majority of
its members. Any determination of the Committee under the Plan may be made
without notice or meeting of the Committee by a writing signed by a majority of
the Committee members.

4.       EFFECTIVE DATE AND TERM OF PLAN.

         The Plan shall become effective on the date on which it is approved by
the Board.

         Except as otherwise determined by the Board, no awards shall be granted
under the Plan after the completion of ten years from the date on which the Plan
was adopted by the Board, but awards previously granted may extend beyond such
date.

5.       SHARES SUBJECT TO THE PLAN.

         (a) Number of Shares. Subject to adjustment as provided in Section
5(c), the aggregate number of Shares that may be delivered upon the exercise of
awards granted under the Plan (the "Option Shares") shall be 3,456,000, of which
2,513,455 may be designated "Regular Option Shares", and of which 942,545 may be
designated "Superincentive Option Shares". If any award granted under the Plan
terminates without having been exercised in full, or upon exercise is satisfied
other than by delivery of Shares, the number of Shares as to which such award
was not exercised shall be available for future grants within the limits set
forth in this Section 5(a).

         (b) Shares to Be Delivered. Shares delivered under the Plan shall be
authorized but unissued Shares or, if the Board in its sole discretion so
decides, previously issued Shares acquired by the Company and held in its
treasury. No fractional shares of Shares shall be delivered under the Plan.

         (c) Changes in Shares. In the event that the Company (i) pays a
dividend or makes a distribution on the Shares in Shares, (ii) subdivides its
outstanding Shares into a greater number of Shares, (iii) combines its
outstanding Shares into a smaller number of Shares, (iv) makes a distribution on
the Shares in shares of its capital stock other than Shares, (v) issues by
reclassification of its Shares any shares of its capital stock, (vi) changes its
capital stock, then the



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number and kind of shares of capital stock or other securities of the Company
subject to awards then outstanding or subsequently granted under the Plan, or
(vii) effects a recapitalization, the exercise price of any such awards affected
under (i) through (vii) and the maximum number of shares of capital stock or
other securities that may be delivered under the Plan and other relevant
provisions shall be appropriately adjusted by the Board in an equitable manner
which provides similar treatment to similarly situated participants, and the
Board's determination shall be binding on all Persons.

         The Board may also adjust the number of shares of capital stock or
other securities subject to outstanding awards and the exercise price and other
terms of outstanding awards, to take into consideration changes in accounting
practices or principles, extraordinary dividends, consolidations or mergers,
acquisitions, recapitalizations or dispositions of stock or property or any
other event, in each case if it is determined by the Board that such adjustment
is necessary, advisable or appropriate in an equitable manner which provides
similar treatment to similarly situated participants so that the options granted
hereunder constitute a continuing incentive; provided, however, that without the
consent of the participant, no such adjustment shall be made in the case of an
incentive option if it would constitute a modification, extension or renewal of
the option within the meaning of Section 424(h) of the Code.

6.       TERMS AND CONDITIONS OF OPTIONS.

         (a) Exercise Price of Options. The exercise price of each option shall
be determined by the Board, but in the case of an incentive option shall not be
less than 100% (110%, in the case of an incentive option granted to a
ten-percent stockholder) of the fair market value of the Shares at the time the
option is granted; nor shall the exercise price be less, in the case of an
original issue of authorized stock, than par value. For this purpose, "fair
market value" in the case of incentive options shall have the same meaning as it
does in the provisions of the Code and the regulations thereunder applicable to
incentive options; and "ten-percent stockholder" shall mean any participant who
at the time of grant owns directly, or by reason of the attribution rules set
forth in Section 424(d) of the Code is deemed to own, shares possessing more
than 10% of the total combined voting power of all classes of capital stock of
the Company, any of its parent corporations or any of its Subsidiaries.

         (b) Duration of Options. An option shall be exercisable ("Vested")
during such period or periods as the Board may specify. The latest date on which
an option may be exercised (the "Final Exercise Date") shall be the date which
is ten years (five years, in the case of an incentive option granted to a
"ten-percent stockholder" as defined Section 6(a)) from the date the option was
granted or such earlier date as the Board may specify at the time the option is
granted.

         (c) Exercise of Options.

                  (i) An option shall become Vested at such time or times and
         upon such conditions as the Board shall specify; provided, however,
         that the Board shall not change the vesting provisions set forth in any
         stock option certificate or grant following its issuance in a manner
         that adversely affects the holder thereof. Without limiting the
         generality of the foregoing, the Board may specify a different time or
         times and different conditions with respect to the exercisability of
         options, which shall be set forth in the stock option certificate,



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         for Regular Option Shares and for Superincentive Option Shares granted
         in the same stock option award. In the case of an option not
         immediately Vested in full, the Board may at any time accelerate the
         time at which all or any part of the option may become Vested.

                  (ii) During the participant's lifetime, an option may be
         exercised only by the participant (unless the participant is declared
         legally incompetent and a legal representative has been appointed for
         the participant, in which event the option may be exercised on the
         participant's behalf by such legal representative).

                  (iii) Any Person entitled to exercise any option in accordance
         with the terms of the option may exercise such option by delivering to
         the Company a written notice signed by such Person, which notice shall
         be accompanied by (A) such documents as may be required by the Board
         and (B) payment in full as specified in Section 6(d) for the number of
         Shares for which such option is exercised. Such notice shall state the
         number of Shares in respect of which such option is being exercised and
         shall contain the acknowledgment and agreement of the participant (or
         the participant's legal representative, executor, administrator or
         heirs, if applicable) that such Shares are subject to the Stockholders
         Agreement (as defined below). The Company shall not be obligated to
         deliver any certificates representing any Shares to be issued upon the
         exercise of such option until the Company receives a written
         acknowledgment and agreement in form and substance reasonably
         satisfactory to the Company that such Shares are subject to all the
         provisions of the Stockholders Agreement and that such Person is bound
         thereby as a holder of Shares.

                  (iv) In the case of any option that is not an incentive
         option, the Board shall have the right to require the participant
         exercising such option to remit to the Company an amount sufficient to
         satisfy any federal, state, or local withholding tax requirements (or
         make other arrangements satisfactory to the Company with regard to such
         taxes) prior to the delivery of any certificates representing any
         Shares to be issued upon the exercise of such option. If permitted by
         the Board, either at the time of the grant of such option or the time
         of exercise of such option, the participant may elect, at such time and
         in such manner as the Board may prescribe, to satisfy such withholding
         obligation by (A) delivering to the Company Shares owned by such
         participant having a fair market value equal to such withholding
         obligation or (B) requesting that the Company withhold from the Shares
         to be delivered upon the exercise of such option a number of Shares
         having a fair market value equal to such withholding obligation.

                  In the case of any incentive option, if at the time such
         option is exercised the Board determines that under applicable law and
         regulations the Company could be liable for the withholding of any
         federal or state tax with respect to a disposition of the Shares to be
         issued upon exercise of such option, the Board may require as a
         condition of exercise that the participant exercising such option agree
         (A) to satisfy any withholding obligations arising in connection with
         the exercise of such option in accordance with the rules described in
         the immediately preceding paragraph and (B) with respect to any
         withholding obligations that may arise in connection with a disposition
         of Shares to be issued upon exercise of such option, (1) to inform the
         Company promptly of any disposition (within the meaning of Section
         424(c) of the Code and the regulations thereunder) of Shares received
         upon exercise



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         of such option, (2) to give such security as the Board deems adequate
         to meet the potential liability of the Company for the withholding of
         tax and (3) to augment such security from time to time in any amount
         reasonably deemed necessary by the Board to preserve the adequacy of
         such security.

                  (v) If any Person other than the applicable participant
         attempts to exercise any option in accordance with this Section 6(c),
         the Company shall be under no obligation to deliver Shares pursuant to
         the exercise of such option until the Company is satisfied as to the
         authority of the Person exercising such option.

         (d) Payment for and Delivery of Shares. Shares purchased upon exercise
of an option under the Plan shall be paid for as follows: (i) in cash or by
certified check, bank draft or money order payable to the order of the Company;
(ii) if so permitted by the Board (which, in the case of any incentive option,
shall specify such method of payment at the time of grant), (A) through the
delivery of Shares (which, in the case of Shares acquired from the Company,
shall have been held for at least six months) having a fair market value on the
last business day preceding the date of exercise equal to the purchase price,
(B) by delivery of an unconditional and irrevocable undertaking by a broker to
deliver promptly to the Company sufficient funds to pay the exercise price or
(C) by any combination of the permissible forms of payment; or (iii) if so
permitted by the Board, by delivery of a promissory note in a form acceptable to
the Board, plus any consideration required by law to be paid in cash.

         (e) Rights as Stockholder, Delivery of Shares. A participant shall not
have the rights of a stockholder with regard to awards under the Plan unless and
until a certificate or certificates representing the purchased Shares are duly
issued and delivered to the participant. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date upon
which such stock certificate is issued.

         Upon exercise of any option, the Company shall not be obligated to
deliver any certificates representing the Shares to be issued delivered upon the
exercise of such option (i) until, in the opinion of the Company's counsel, the
Act and all other applicable federal, state and foreign laws and regulations
have been complied with, (ii) if the outstanding Shares are at the time listed
on any stock exchange, until the specific Shares to be issued have been listed
or authorized to be listed on such exchange upon official notice of issuance and
(iii) until all other legal matters in connection with the issuance and delivery
of such Shares have been approved by the Company's counsel. If the sale of
Shares has not been registered under the Act, the Company may require, as a
condition to exercise of such option, (A) such representations, warranties or
agreements as the Company may deem necessary or desirable in order to assure
compliance with the Act and all other applicable federal, state and foreign laws
and regulations or as may otherwise be reasonably requested by the Company and
(B) that the certificates evidencing the Shares to be issued upon the exercise
of such option bear an appropriate legend restricting transfer.

         (f) Nontransferability of Awards; Transfer of Shares. Except as
otherwise set forth in a stock option award, no award may be transferred other
than by will or by the laws of descent and distribution.



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         In the absence of an effective registration statement under the Act
relating to a transfer of Shares purchased upon the exercise of an award
hereunder, the Company shall not be required to register such transfer of Shares
on its books unless the Company shall have been provided with a legal opinion
satisfactory to the Company in form and substance from counsel reasonably
satisfactory to the Company prior to such transfer that registration under the
Act is not required in connection with the transaction resulting in such
transfer. Each certificate evidencing such Shares or issued upon any transfer of
such Shares shall bear an appropriate restrictive legend, except that such
certificate shall not bear such a restrictive legend if the opinion of counsel
referred to above is to the further effect that such legend is not required in
order to establish compliance with the provisions of the Act. Nothing in this
paragraph shall modify or otherwise affect the provisions applicable to the
Option Shares under, or the obligations of the participants pursuant to, the
Stockholders Agreement.

         (g) Death. Except as otherwise set forth in a stock option award, if a
participant dies, each award held by such participant immediately prior to his
death may be exercised, to the extent it was Vested immediately prior to such
participant's death, by his executor or administrator, or by the Person or
Persons to whom the award is transferred by will or the applicable laws of
descent and distribution, at any time on or prior to the earlier of (i) the date
which is 180 days after such participant's death or (ii) the Final Exercise
Date. Except as otherwise set forth in a stock option award, all awards held by
a participant immediately prior to his death that are not then Vested shall
terminate on the date of such participant's death.

         (h) Termination for Cause. Except as otherwise set forth in a stock
option award, if any employee's employment with the Company or any of its
Subsidiaries is terminated for Cause (as defined below), all Vested and
unexercisable awards held by such employee shall terminate immediately upon such
employee's discharge.

         Except as otherwise set forth in a stock option award, the following
events or conditions, as determined by the Board in its reasonable judgment,
shall constitute "Cause" for termination: (i) participant's willful failure to
perform the duties of his employment in any material respect, which willful
failure is not remedied within thirty (30) days after receipt of written notice
from the Company, (ii) malfeasance or gross negligence in the performance of the
participant's duties of employment, which malfeasance or gross negligence is not
remedied within thirty (30) days after receipt of written notice from the
Company, (iii) the participant's conviction of a felony under the laws of the
United States or any state thereof (whether or not in connection with his
employment), or (iv) the participant's disclosure of confidential information
respecting the Company's business to any individual or entity which is not in
the performance of the duties of his employment.

         (i) Other Termination. Except as otherwise set forth in a stock option
award, if any employee's employment with the Company and its Subsidiaries
terminates for any reason other than death or termination for Cause, then (A)
any award held by such employee that is not Vested prior to the date of such
termination of employment shall immediately terminate and (B) any award held by
such employee that is Vested prior to the date of such termination of employment
shall continue to be Vested at any time on or prior to the earlier of (1) the
date that is 90 days after the date of such termination of employment (or such
later date as the Board may determine or as may be set forth in such award) or
(2) the Final Exercise Date.


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         After completion of the 90-day period referred to in clause (B) above
(or any applicable longer period), each such award shall terminate to the extent
not previously exercised, expired or terminated, unless otherwise specified in
the stock option award. For purposes of this Section 6(i), employment shall not
be considered terminated (1) in the case of sick leave or other bona fide leave
of absence approved for purposes of the Plan by the Board, so long as the
employee's right to reemployment is guaranteed either by statute or by contract,
or (2) in the case of a transfer of employment between the Company and any of
its Subsidiaries or between any of its Subsidiaries, or to the employment of a
corporation (or a parent or subsidiary corporation of such corporation) issuing
or assuming an award in a transaction to which Section 424(a) of the Code
applies.

         (j) Termination of Service of Non-Employees. In the case of any
participant who is not an employee of the Company or any of its Subsidiaries,
provisions relating to the exercisability of awards following termination of
service shall be specified in the stock option award; provided, however, that if
such provisions are not so specified, then upon the termination of service of
such participant, all awards held by such participant shall be subject to the
provisions of Sections 6(h) and 6(i).

         (k) Mergers, etc. Except as otherwise set forth in any stock option
award, in the event of a consolidation or merger in which the Company is not the
surviving corporation, or a sale of all or substantially all of the assets of
the Company, all outstanding awards shall thereupon terminate; PROVIDED,
HOWEVER, that at least 20 days prior to the effective date of any such merger or
consolidation, the Board, in its sole discretion, may either (i) make all
outstanding awards Vested immediately prior to consummation of such merger,
consolidation or sale of assets or (ii) if there is a surviving or acquiring
corporation or other related entity, arrange, subject to consummation of such
merger or consolidation, to have such corporation or related entity or an
affiliate of such corporation or related entity grant to participants
replacement awards which provide similar treatment and comparable value to
similarly situated participants and which, in the case of incentive options,
satisfy, in the determination of the Board, the requirements of Section 424(a)
of the Code.

         The Board may grant awards under the Plan in substitution for awards
held by employees, consultants or advisers of another corporation who
concurrently become employees, consultants or advisers of the Company or any of
its Subsidiaries as the result of a merger or consolidation of such other
corporation with the Company or any of its Subsidiaries, or as the result of the
acquisition by the Company or any of its Subsidiaries of property or stock of
such other corporation. The Company may direct that substitute awards be granted
on such terms and conditions as the Board considers appropriate in the
circumstances.

7.       CERTAIN RIGHTS.

         Neither the adoption of the Plan nor the grant of awards shall confer
upon any participant any right to continue as a director of, an employee of, or
consultant or adviser to, the Company, any parent of the Company or any
Subsidiary or affect in any way the right of the Company, any of its parents or
any of its Subsidiaries to terminate such participant at any time. Except as
specifically provided by the Board in any particular case, the loss of existing
or potential profit in awards granted under this Plan shall not constitute an
element of damages in the event of any termination of the


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relationship of any participant, even if such termination is in violation of any
obligation of the Company to such participant by contract or otherwise.

8.       EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION.

         Neither the adoption of the Plan nor the grant of awards to a
participant shall affect the Company's right to make awards to such participant
that are not subject to the Plan, to issue to such participant Shares as a bonus
or otherwise or to adopt other plans or arrangements under which Shares may be
issued.

         The Board may at any time discontinue granting awards under the Plan.
With the written consent of any participant, the Board may at any time cancel in
whole or in part any existing award held by such participant and grant another
award for such number of Shares as the Board specifies. The Board may at any
time or times amend the Plan or any outstanding award for the purpose of
satisfying the requirements of Section 422 of the Code or of any changes in
applicable laws or regulations or for any other purpose that may at the time be
permitted by law, or may at any time terminate the Plan as to any further grants
of awards; provided, however, that except as expressly provided in the Plan or
in any award granted hereunder, no such amendment shall adversely affect the
rights of any participant (without the written consent of such participant)
under such award.

9.       DEFINITIONS.

         "Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

         "Board" has the meaning set forth in Section 3.

         "Cause" has the meaning set forth in Section 6(h).

         "Code" means the Internal Revenue Code of 1986, as amended.

         "Committee" has the meaning set forth in Section 3.

         "Company" has the meaning set forth in Section 1.

         "Final Exercise Date" has the meaning set forth in Section 6(b).

         "Incentive Option" has the meaning set forth in Section 1.

         "Option Shares" has the meaning set forth in Section 5(a).

         "Participants" has the meaning set forth in Section 2.

         "Person" means any individual, partnership, joint venture, corporation,
trust, unincorporated organization or entity, or any government, or department
or agency thereof, or any other similar entity.



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         "Plan" has the meaning set forth in Section 1.

         "Regular Option Shares" has the meaning set forth in Section 5(a).

         "Shares" has the meaning set forth in Section 1.

         "Stockholders Agreement" means the 1999 Stockholders' Agreement dated
as of September 23, 1999, as amended and in effect from time to time, among the
Company and the other parties named therein.

         "Subsidiary" means any Person of which the Company at the time (a)
shall own, directly or indirectly through a Subsidiary, at least a majority of
the outstanding capital stock (or other shares of beneficial interest) entitled
to vote generally or (b) shall control the board of directors of such Person.

         "Superincentive Option Shares" has the meaning set forth in Section
5(a).

         "Vested" has the meaning set forth in Section 6(b).



As of September 23, 1999



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