Nonstatutory Stock Option Award Agreement
Exhibit
10.28
______________________,
2006
[Name]
Re:
Nonstatutory Options to Purchase Shares of Common Stock of Select Comfort
Corporation
In
recognition of your contributions to the ultimate success of our Company,
and to
enable you to share in that success, the Board of Directors has approved
the
grant to you of nonstatutory stock options under the Company’s 2004 Stock
Incentive Plan (the “Plan”). This letter serves as formal documentation of these
stock options, giving you the right to purchase up to _________ (
)
shares of the Company’s Common Stock at a price of $XX.XX per share, subject to
the vesting provisions and other terms and conditions of this letter and
the
Plan.
The
options granted under this letter will become exercisable, or “vest,” in
installments of one-fourth (1/4th)
of the
total number of option shares as of each of the first four (4) anniversaries
of
the date of this letter, so long as you remain continuously employed by the
Company, except as otherwise set forth below. Your rights to exercise these
options will terminate as to all unexercised options at 5:00 p.m. (Minneapolis,
Minnesota time) on ___________,
2016
(the “Expiration Date”), subject to earlier termination as described below or in
the Plan.
The
vesting and termination provisions of the options granted hereby will be
impacted by the termination of your employment, depending on the reason for
termination of your employment, as described below:
Retirement.
If your
employment is terminated upon your retirement, then:
(a) If
your
retirement is at or beyond normal retirement age (60) and you have ten (10)
or
more years of service with the Company prior to retirement, then the options
will continue to vest following retirement in accordance with the schedule
described above. Options that are vested will remain exercisable for up to
three
(3) years after retirement, but not beyond the Expiration Date.
(b) If
your
retirement is at or beyond normal retirement age (60) and you have less than
ten
(10) years of service with the Company prior to retirement, then the options
will be vested pro rata based on the number of months elapsed in the four-year
vesting period as of the date of retirement (e.g., if retirement occurs 32
months into the 48 month vesting period, then 2/3rds of the options will
be
vested). Options that are vested will remain exercisable for up to three
(3)
years after retirement, but not beyond the Expiration Date.
(c) If
your
retirement is at or beyond early retirement age (55) and you have five (5)
or
more years of service with the Company prior to retirement, then the options
will be vested pro rata
1
based
on
the number of months elapsed in the four-year vesting period as of the date
of
retirement (e.g., if retirement occurs 32 months into the 48 month vesting
period, then 2/3rds of the options will be vested). Options that are vested
will
remain exercisable for up to one (1) year after retirement, but not beyond
the
Expiration Date.
(d) Any
retirement from the Company that does not meet any of the requirements above
will be considered a voluntary termination other than upon retirement as
described below.
Voluntary
Termination other than upon Retirement.
If your
employment is terminated voluntarily by you (other than upon retirement meeting
the requirements described above), options that are vested as of the date
of
termination of employment will remain exercisable for up to three (3) months
after your employment ends, but not beyond the Expiration Date.
Termination
by the Company other than for Cause.
If your
employment is terminated by the Company (other than for “cause,” as defined in
the Plan), options that are vested as of the date of termination of employment
will remain exercisable for up to three (3) months after your employment
ends,
but not beyond the Expiration Date.
Termination
by the Company for Cause.
If your
employment is terminated by the Company for “cause,” as defined in the Plan, all
of your rights under this letter agreement and the options granted hereby
will
immediately terminate without notice of any kind.
Termination
due to Death or Disability.
If your
employment is terminated due to death or “disability,” as defined in the Plan,
all of the options will become immediately exercisable in full and will remain
exercisable for up to two (2) years after termination of employment, but
not
beyond the Expiration Date.
The
Company is not required to give you notice of the termination of your options
under any of the foregoing circumstances.
Following
the exercise by you of your rights to purchase shares under these stock options,
the shares purchased by you will be freely tradable, subject to the Company’s
policies and SEC rules regarding xxxxxxx xxxxxxx. Executive officers and
members
of the Board of Directors are required to comply with SEC Rule 144 in connection
with any sale of shares received upon the exercise of any stock
options.
Withholding
Taxes.
The
Company is entitled to (a) withhold and deduct from your future wages (or
from
other amounts that may be due and owing to you from the Company), or make
other
arrangements for the collection of all legally required amounts necessary
to
satisfy any federal, state or local withholding and employment-related tax
requirements attributable to the exercise of the options, or (b) require
you to
promptly remit the amount of such withholding to the Company. In the event
that
the Company is unable to withhold such amounts, for whatever reason, you
agree
to pay to the Company an amount equal to the amount the Company would otherwise
be required to withhold under federal, state or local law.
There
may
be income tax consequences resulting from the exercise of the stock options
or
sale of the shares received upon the exercise of the stock options. You are
urged to consult with your individual tax advisor regarding any tax
consequences.
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These
options are granted under the Company’s 2004 Stock Incentive Plan, and are
subject to all of the terms and conditions applicable to stock options granted
under the Plan. We have enclosed, for your records, a copy of the Plan, the
Prospectus for the Plan, the Company’s most recent Annual Report and the
Company’s most recent Proxy Statement.
Please
note that your rights to exercise your options will become void and will
expire
as to all unexercised options at 5:00 p.m. (Minneapolis, Minnesota time)
on
______________,
2016,
subject to earlier termination as set forth above or in the Plan.
Please
sign the copy of this letter and return it to Xxxxx Xxxxx for the Company’s
records. You should retain this letter, the Plan, Prospectus, Annual Report
and
Proxy Statement in your records. If you have any questions about these options,
please call Xxxxx Xxxxx at (000) 000-0000.
Very
truly yours,
/s/
Xxxxxxx X. XxXxxxxxxx
Xxxxxxx
X. XxXxxxxxxx
Chairman
& CEO
By
signing this letter, I acknowledge the terms of the stock options granted
under
this letter, and acknowledge receipt of a copy of the Company’s 2004 Stock
Incentive Plan and the other documents referred to above.
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(Signature)
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