TEMPUR-PEDIC INTERNATIONAL INC. AMENDED AND RESTATED 2003 EQUITY INCENTIVE PLAN LONG-TERM INCENTIVE PLAN Performance Restricted Stock Unit Award Agreement [Name]
TEMPUR-PEDIC
INTERNATIONAL INC.
AMENDED
AND RESTATED 2003 EQUITY INCENTIVE PLAN
LONG-TERM INCENTIVE
PLAN
[Name]
This Performance Restricted Stock Unit
Award Agreement (this “Agreement”), dated as
of [DATE], is between Tempur-Pedic International Inc., a corporation organized
under the laws of the State of Delaware (the “Company”), and the
individual identified below (the “Grantee”).
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Grantee:
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Number
of Target Shares in Award:
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Date
of Award:
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1. Award of Performance Restricted Stock
Units. Pursuant and subject to the Company’s Amended and
Restated 2003 Equity Incentive Plan, as amended (as the same may be amended from
time to time, the “2003 EIP”) and the
Company’s Long-Term Incentive Plan (the “LTI Plan”), the
Company grants the Grantee an award (the “Award”) for [NUMBER]
of performance restricted stock units (the “PRSUs”), each
constituting the right on the terms and conditions set forth herein to a share
of the Company’s common stock, par value $0.01 per share (the “Target Shares”),
subject to upward or downward adjustment upon the determination of a Final Award
(as defined in Section 3 below) (such Target Shares, as so adjusted, the “Shares”). This
Award is granted as of [DATE] (the "Grant Date") and is
intended to qualify as a Qualified Performance-Based Award.
2. Rights of the PRSUs and Target
Shares. The Grantee will receive no dividend equivalent
payments on the PRSUs or with respect to the Target Shares. Unless
and until a Final Award has been determined and the Grantee has received the
Shares in accordance with the terms and conditions described herein, the Grantee
shall have none of the attributes of ownership with respect to any
Shares.
3. Determination of Final
Award.
(a) The
Target Shares ultimately issued by the Company pursuant to the Award shall be
subject to adjustment according to the Company’s achievement (“Performance”) of the
Performance Metrics for the Award and compliance with the provisions and rules
set forth on Appendix
A attached hereto (the “Performance Metrics”)
and incorporated herein by this reference (the Award as so adjusted, “Final
Award”).
(b) As
provided in the LTI Plan, within sixty (60) days after the end of the Designated
Period, the Committee shall determine and certify in writing (y) whether and to
what extent the Performance Metrics have been achieved and (z) based on such
Performance, the number of Shares to be issued to Grantee as the Final Award
(with the date of such determination referred to as the “Determination
Date”).
(c) Not
later than the fifteen (15th) day
of the third month following the end of the Designated Period, the Company shall
issue the Shares, if any, to Grantee, subject to Section 7 of this Agreement
relating to tax withholding (the date of such issuance or the date of such
earlier issuance pursuant to Section 4(c)(i) or 5(e) being referred to herein as
the “Settlement
Date”).
4. Termination of
Employment. If the Grantee’s employment with the Company and
its Affiliates terminates prior to the end of the Designated Period, including
because the Grantee’s employer ceases to be an Affiliate, the Grantee's
rights to the
Shares and the Final Award shall be as follows:
(a) By the Company For Cause or
By the Grantee Without Good Reason. If the Grantee’s
employment with the Company or its Affiliates is terminated by the Company or
such Affiliate For Cause or the Grantee resigns without Good Reason, including
by Retirement that is not an Approved Retirement or the Grantee’s voluntary
departure, the Award will terminate immediately, no Shares shall be issued to
Grantee and all of the Grantee’s rights to the Shares and Final Award hereunder
shall be forfeited. The terms “For Cause”, “Good Reason”,
“Retirement” and “Approved Retirement” are defined below.
(b) By the Company Other Than
for Cause or By the Grantee for Good Reason. If the Grantee’s
employment with the Company or its Affiliates is terminated by the Company or an
Affiliate other than For Cause, by the Grantee’s resignation for Good Reason or
by reason of Grantee’s employer ceasing to be an Affiliate (in the absence of a
Change of Control), then this Award shall remain outstanding, and the Grantee
shall be entitled to receive a number of Shares he would have been entitled to
receive in a Final Award at the end of the Designated Period had his employment
not been so terminated based on the extent, if any, to which the Performance
Metrics for the Designated Period are achieved, except that in the event the
Grantee’s employment is terminated prior to the end of the first year of the
Designated Period, the number of such Shares, if any, shall be pro-rated
downward based on the actual number of calendar days that elapsed from the
beginning of such Designated Period to such termination of employment as
compared to the total number of days in the first year of the Designated Period
(with no such pro-ration occurring if such termination of employment occurs any
time after the first year of the Designated Period). For example, if
Grantee’s employment is terminated during the 300th day of the first year of the
Designated Period (and such year is not a leap year), the Final Award will be
based on the extent, if any, to which the Performance Metrics for the Designated
Period are achieved, and the Grantee would receive 300/365ths of the Shares he
would have been entitled to receive in the Final Award for the Designated Period
had his employment not been terminated. These Shares will be issued
at the same time as set forth in Section 3(c) above. Notwithstanding
anything herein to the contrary, no Shares shall be issued and all of the
Grantee’s rights to the Final Award and any Shares otherwise due shall be
forfeited, expire and terminate unless (i) the Company shall have received a
release of all claims from Grantee in a form reasonably acceptable to the
Company (and said release shall have become irrevocable in accordance with its
terms) prior to the end of the Designated Period (or, if earlier, the deadline
established in the form of release delivered by the Company to the Grantee for
execution) and (ii) the Grantee shall have complied with the covenants set forth
in Section 12 of this Agreement.
(c) Death or Long-Term
Disability.
(i) Death. If
the Grantee dies at any time during the Designated Period, then the Grantee
shall be entitled to receive Shares equal to the number of Target Shares granted
to him pursuant to this Award in lieu of any claim to the Final Shares (if
any). These Shares will be issued within sixty (60) days after the
date of death or termination of employment.
(ii) Long-Term
Disability. If Grantee’s employment ends due to Grantee’s
long-term disability (within the meaning of Section 409A of the Code) at any
time during the Designated Period, then the Award shall remain outstanding
through the end of the Designated Period and the Grantee shall be entitled to
receive a Final Award based on the extent, if any, to which the Performance
Metrics for the Designated Period are achieved. These Shares will be
issued at the same time as set forth in Section 3(c) above.
(d) Approved
Retirement. In the event of Grantee’s Retirement, the
Committee may in its sole discretion consent to the partial acceleration of
vesting of the Award so that the Award shall remain outstanding through the end
of the Designated Period and the Grantee shall be entitled to receive a pro-rata
Final Award based on the extent, if any, to which the Performance Metrics for
the Designated Period are achieved, pro-rated using the same methodology as set
forth in paragraph (b) above, substituting for the date of termination of
employment therein the date of Grantee’s Retirement (an “Approved
Retirement”); provided, however, that no
Shares shall be issued and all of the Grantee’s rights to the Final Award and
any Shares otherwise due shall be forfeited, expire and terminate unless (i) the
Company shall have received a release of all claims from Grantee in a form
reasonably acceptable to the Company (and said release shall have become
irrevocable in accordance with its terms) prior to the end of the Designated
Period (or, if earlier, the deadline established in the form of release
delivered by the Company to the Grantee for execution) and (ii) the Grantee
shall have complied with the covenants set forth in Section 12 of this
Agreement. These Shares will be issued at the same time as set forth
in Section 3(c) above.
(e) Definitions. For
the purposes of this Agreement:
(i) “Employee”, “employment,” “termination of
employment” and “cease to be
employed,” and other words or phrases of similar import, shall mean the
continued provision of substantial services to the Company or any of its
Affiliates (or the cessation or termination of such services) whether as an
employee, consultant or director;
(ii) “Change of Control”
shall have the meaning set forth in the Plan, provided, that no
event or transaction shall constitute a Change of Control for purposes of this
Agreement unless it also qualifies as a change of control for purposes of
Section 409A of the Code;
(iii) “For Cause” shall mean
any of the following: (A) Grantee’s willful and continued failure to
substantially perform the reasonably assigned duties with the Company or any
Affiliate of the Company which are consistent with Grantee’s position and job
description, other than any such failure resulting from incapacity due to
physical or mental illness, after a written notice is delivered to Grantee by
the Chief Executive Officer or Global Vice President of Human
Resources of the Company, which specifically identifies the manner in which
Grantee has not substantially performed the assigned duties, (B) Grantee’s
willful engagement in illegal conduct which is materially and demonstrably
injurious to the Company or any Affiliate of the Company, (C) Grantee’s
conviction by a court of competent jurisdiction of, or pleading guilty or nolo
contendere to, any felony, or (D) Grantee’s commission of an act of fraud,
embezzlement, or misappropriation against the Company or any Affiliate of the
Company, including, but not limited to, the offer, payment, solicitation or
acceptance of any unlawful bribe or kickback with respect to the business of the
Company or any Affiliate of the Company;1
(iv) “Good Reason” shall
mean the relocation of Grantee’s principal workplace over sixty (60) miles from
the existing workplaces of the Company or any Affiliate of the Company without
the consent of Grantee (which consent shall not be unreasonably withheld,
delayed or conditioned);2 and
(v) “Retirement” shall
have the meaning assigned to such term in the applicable retirement policy of
the Company or its Affiliates as in effect at such time.
5. Change of Control
Provisions. In lieu of Section 9 of the 2003 EIP, immediately
upon the occurrence of a Change of Control, all of the PRSUs subject to this
Award shall convert to time-based vesting restricted stock units (“RSUs”, with the
shares of the Company’s common stock issuable thereunder referred to as “RSU Shares”), without
any pro-ration, as follows:
(a) If
the Change of Control occurs at any time during the Designated Period, the
Grantee shall be entitled to receive RSUs equal to the number of Target Shares
in lieu of any claim to a Final Award.
(b) None
of the RSUs issued to Grantee in connection with a Change of Control pursuant to
this Section 5 shall be immediately vested as of the date of such Change of
Control (unless otherwise provided below). All of such RSUs shall
vest on December 31, 2012 (for purposes of this Section 5, the “Vesting Date”),
regardless of whether the Company has then achieved any of the Performance
Metrics if the Grantee's employment with the Company and its Affiliates
continues through the period commencing on the date of the Change of Control and
ending on the Vesting Date (the “Vesting
Period”).
1 Award agreement
for each CEO and EVP will, if applicable, define such term as it is defined in
his or her employment agreement.
2 Award agreement for each CEO and EVP
will, if applicable, define such term as it is defined in his or her employment
agreement.
(c) If
the Grantee’s employment with the Company and its Affiliates terminates during
the Vesting Period, the right to the RSUs shall be
as follows:
(i) If
the Grantee’s employment with the Company or its Affiliates is terminated by the
Company For Cause or the Grantee resigns without Good Reason, including by
Retirement that is not an Approved Retirement or the Grantee’s voluntary
departure, the RSUs will terminate immediately, no RSU Shares shall be issued to
Grantee and all of the Grantee’s rights to the RSUs and the RSU Shares hereunder
shall be forfeited.
(ii) If
the Grantee’s employment with the Company or its Affiliates is terminated by the
Company or an Affiliate other than For Cause, by the Grantee’s resignation for
Good Reason or by reason of Grantee’s employer ceasing to be an Affiliate
following a Change of Control at any time following the Change of Control, then
all of the RSUs shall vest immediately, and the Grantee shall be entitled to
receive all of the RSU Shares he would have been entitled to receive on the
Vesting Date with respect thereto.
(iii) If
the Grantee dies or the Company or an Affiliate of the Company terminates
Grantee’s employment due to Grantee’s long-term disability (within the meaning
of Section 409A of the Code), then all of the RSUs shall vest and the Grantee
shall be entitled to receive all of the RSU Shares with respect
thereto.
(iv) In
the event of Grantee’s Approved Retirement, then the number of RSUs that will
vest and Shares issued in connection therewith shall be pro-rated downward based
on the actual number of calendar days that elapsed from the date the Award was
initially granted under this Agreement to the date of such Approved Retirement,
versus the total number of calendar days in the Designated Period; provided, however, that no RSU
Shares shall be issued and all of the Grantee’s rights to the RSUs and any
Shares otherwise due shall be forfeited, expire and terminate unless (i) the
Company shall have received a release of all claims from Grantee in a form
reasonably acceptable to the Company (and said release shall have become
irrevocable in accordance with its terms) prior to the 50th day following
Grantee's termination of employment and (ii) the Grantee shall have complied
with the covenants set forth in Section 12 of this Agreement.
(v) In
the event that, immediately following a Change of Control, a successor
organization does not convert, replace or assume the RSUs, all of the RSUs shall
immediately vest and the Grantee shall be entitled to receive all of the RSU
Shares represented thereby.
(d) In all
cases, any issuance of RSU Shares upon vesting of the RSUs in accordance with
this Section 5 shall be made promptly and, in any event, within twenty (20) days
following the date such RSUs shall become vested. For this purpose,
RSUs vesting on account of (w) a termination by the Company other than For
Cause, (x) resignation by the Grantee for Good Reason, (y) Grantee’s employer
ceasing to be an Affiliate following a Change of Control at any time following
the Change of Control, or (z) an Approved Retirement, shall be treated as
vesting on the Company's receipt of the required release of claims but delivery
of the RSU Shares at that time shall not obviate the need to comply with the
covenants contained in Section 12 until the Covenant Termination Date (as
defined in Section 12) in order to retain the RSU Shares then
delivered.
6. Settlement. The
Final Award shall be settled by the issuance of Shares and not by payment of any
cash, notwithstanding Section 6.3 of the LTI Plan or Section 7.7(e) of the 2003
EIP.
7. Withholding. Pursuant
to the 2003 EIP, the Company shall have the right to require the recipient to
remit to the Company an amount sufficient to satisfy federal, state, local or
other withholding tax requirements if, when, and to the extent required by law
(whether so required to secure for the Company an otherwise available tax
deduction or otherwise) attributable to the Final Award awarded under this
Agreement, including without limitation, the award or lapsing of stock
restrictions on the Final Award. The obligations of the Company under
this Agreement shall be conditional on satisfaction of all such withholding
obligations and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Grantee. However, in such cases Grantee may elect, subject to any
reasonable administrative procedures for timely compliance established by the
Committee, to satisfy an applicable withholding requirement, in whole or in
part, by having the Company withhold a portion of the Shares or RSU Shares to be
issued under this Award to satisfy the Grantee’s tax obligations. The
Grantee may only elect to have Shares or RSU Shares withheld having a Market
Value on the date the tax is to be determined equal to the minimum statutory
total withholding taxes arising upon the vesting of any Shares or RSU
Shares. All elections shall be irrevocable, made in writing, signed
by the Grantee, and shall be subject to any restrictions or limitations that the
Committee deems appropriate.
8. Other
Provisions.
(a) This
Award does not give the Grantee any right to continue to be employed by the
Company or any of its Affiliates, or limit, in any way, the right of the Company
or any of its Affiliates to terminate the Grantee’s employment, at any time, for
any reason not specifically prohibited by law.
(b) The
Company is not liable for the non-issuance or non-transfer, nor for any delay in
the issuance or transfer of any Shares or RSU Shares due to the Grantee upon the
Settlement Date with respect to Final Award which results from the inability of
the Company to obtain, from each regulatory body having jurisdiction, all
requisite authority to issue or transfer shares of common stock of the Company
if counsel for the Company deems such authority necessary for the lawful
issuance or transfer of any such Shares or RSU Shares. Acceptance of this Award
constitutes the Grantee’s agreement that the Shares or RSU Shares subsequently
acquired hereunder, if any, will not be sold or otherwise disposed of by the
Grantee in violation of any applicable securities laws or
regulations.
(c) The
Final Award and entitlement to the Shares or RSU Shares are subject to this
Agreement and Grantee’s acceptance hereof shall constitute the Grantee’s
agreement to any administrative regulations of the Committee.
(d) All
decisions of the Committee upon any questions arising under the 2003 EIP and LTI
Plan or under these terms and conditions shall be conclusive and binding,
including, without limitation, those decisions and determinations to adjust the
Award made by the Committee pursuant to the authority granted under Section 8.5
of the 2003 EIP.
(e) No
rights hereunder related to this Award or the Final Award shall be transferable,
voluntarily or otherwise and no rights hereunder related to the underlying
Target Shares or RSU Shares shall be transferable until such time, if ever, the
Shares or RSU Shares are earned and delivered.
9. Incorporation of 2003 EIP and LTI
Plan Terms. This Award is granted
subject to all of the applicable terms and provisions of the 2003 EIP and the
LTI Plan, including without limitation, the provisions of Section 7.7(f) and
Section 8 of the 2003 EIP. Capitalized terms used but not defined
herein shall have the meaning assigned under the 2003 EIP and the LTI
Plan. In the event of any conflict between the terms of this
Agreement and the terms of the 2003 EIP and LTI Plan, the provisions of the 2003
EIP and LTI Plan shall control.
10. Miscellaneous. This
Agreement shall be construed and enforced in accordance with the laws of the
State of Delaware, without regard to the conflict of laws principles thereof and
shall be binding upon and inure to the benefit of any successor or assign of the
Company and any
executor, administrator, trustee, guardian, or other legal representative of the
Grantee. This Agreement may be executed in one or more counterparts
all of which together shall constitute one instrument.
11. Tax Consequences.
(a) The
Company makes no representation or warranty as to the tax treatment of this
Award or the Final Award, including upon the issuance of the Shares or RSU
Shares or upon the Grantee’s sale or other disposition of the Shares or RSU
Shares. The Grantee should rely on his own tax advisors for such
advice.
(b) All
amounts earned and paid pursuant to this Agreement are intended to be paid
in compliance with, or on a basis exempt from, Section 409A of
the Code. This Agreement, and all terms and conditions used herein, shall
be interpreted and construed consistent with that intent. However, the
Company does not warrant all such payments will be exempt from, or paid in
compliance with, Section 409A. The Grantee bears the entire risk of any
adverse federal, state or local tax consequences and penalty taxes which may
result from payments made on a basis contrary to the provisions of Section 409A
or comparable provisions of any applicable state or local income tax
laws.
12. Certain Remedies.
(a) If at any
time prior to the later of (y) the last day of the two (2) year period after
termination of the Grantee’s employment with the Company and its Affiliates, and
(z) as and if applicable, the expiration of the Designated Period or the Vesting
Date, in either case, that occurs after the date of termination of Grantee’s
employment with the Company and its Affiliates, pursuant to Section 4(b), 4(d)
or 5(c)(iv) (the later of such days being the “Covenant Termination
Date”), any of the following occur :
(i) the
Grantee unreasonably refuses to comply with lawful requests for cooperation made
by the Company, its Board, or its Affiliates;
(ii) the
Grantee accepts employment or a consulting or advisory engagement with any
Competitive Enterprise of the Company or its Affiliates or the Grantee otherwise
engages in competition with the Company or its Affiliates;
(iii) the
Grantee acts against the interests of the Company and its Affiliates, including
recruiting or employing, or encouraging or assisting the Grantee’s new employer
to recruit or employ an employee of the Company or any Affiliate without the
Company’s written consent;
(iv) the
Grantee fails to protect and safeguard while in his possession or control, or
surrender to the Company upon termination of the Grantee’s employment with the
Company or any Affiliate or such earlier time or times as the Company or its
board of directors or any Affiliate may specify, all documents, records, tapes,
disks and other media of every kind and description relating to the business,
present or otherwise, of the Company and its Affiliates and any copies, in whole
or in part thereof, whether or not prepared by the Grantee;
(v) the
Grantee solicits or encourages any person or enterprise with which the Grantee
has had business-related contact, who has been a customer of the Company or any
of its Affiliates, to terminate its relationship with any of them;
(vi) the
Grantee takes any action or makes any statement, written or oral, that
disparages the business, products, services or management of Company or its
Affiliates, or any of their respective directors, officers, agents, or
employees, or the Grantee takes any action that is intended to, or that does in
fact, damage the business or reputation of the Company or its Affiliates, or the
personal or business reputations of any of their respective directors, officers,
agents, or employees, or that interferes with, impairs or disrupts the normal
operations of the Company or its Affiliates; or
(vii) the
Grantee breaches any confidentiality obligations the Grantee has to the Company
or an Affiliate, the Grantee fails to comply with the policies and procedures of
the Company or its Affiliates for protecting confidential information, the
Grantee uses confidential information of the Company or its Affiliates for his
own benefit or gain, or the Grantee discloses or otherwise misuses confidential
information or materials of the Company or its Affiliates (except as required by
applicable law); then
(1) this
Award shall terminate and be cancelled effective as of the date on which the
Grantee entered into such activity, unless terminated or cancelled sooner by
operation of another term or condition of this Agreement, the 2003 EIP or the
LTI Plan;
(2) any
Shares or RSU Shares acquired and held by the Grantee pursuant to the Award
during the Applicable Period (as defined below) may be repurchased by the
Company at a purchase price of $0.01 per share; and
(3) any
after-tax proceeds realized by the Grantee from the sale of Shares or RSU Shares
acquired through the Award during the Applicable Period shall be paid by the
Grantee to the Company.
(b) The term
“Applicable
Period” shall
mean the period commencing on the later of the date of this Agreement or the
date which is one (1) year prior to the Grantee’s termination of employment with
the Company or any Affiliate and ending on the Covenant Termination
Date.
(c) The term
“Competitive
Enterprise”
shall mean a business enterprise that engages in, or owns or controls a
significant interest in, any entity that engages in, the manufacture, sale or
distribution of mattresses or pillows or other bedding products or other
products competitive with the Company’s products. Competitive
Enterprise shall include, but not be limited to, the entities set forth on Appendix B hereto,
which may be amended by the Company from time to time upon notice to the
Grantee. At any time the Grantee may request in writing that the
Company make a determination whether a particular enterprise is a Competitive
Enterprise. Such determination will be made within fourteen (14) days
after the receipt of sufficient information from the Grantee about the
enterprise, and the determination will be valid for a period of ninety (90) days
commencing on the date of determination.
13. Right of Set
Off. By executing this Agreement, the Grantee consents to a
deduction from any amounts the Company or any Affiliate owes the Grantee from
time to time, to the extent of the amounts the Grantee owes the Company under
Section 12 above, provided that this
set-off right may not be applied against wages, salary or other amounts payable
to the Grantee to the extent that the exercise of such set-off right would
violate any applicable law. If the Company does not recover by means
of set-off the full amount the Grantee owes the Company, calculated as set forth
above, the Grantee agrees to pay immediately the unpaid balance to the Company
upon the Company’s demand.
14. Nature of
Remedies.
(a) The
remedies set forth in Sections 12 and 13 above are in addition to any
remedies available to the Company and its Affiliates in any non-competition,
employment, confidentiality or other agreement, and all such rights are
cumulative. The exercise of any rights hereunder or under any such
other agreement shall not constitute an election of remedies.
(b) The Company
shall be entitled to place a legend on any certificate evidencing any Shares
acquired upon vesting of this Award referring to the repurchase right set forth
in Section 12(a) above. The Company shall also be entitled to
issue stop transfer instructions to the Company’s stock transfer agent in the
event the Company believes that any event referred to in Section 12(a) has
occurred or is reasonably likely to occur.
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In
Witness Whereof, the parties have executed this Performance Restricted Stock
Unit Award Agreement as a sealed instrument as of the date first above
written.
TEMPUR-PEDIC
INTERNATIONAL INC.
By: ___________________________
Title:___________________________
GRANTEE
___________________________
Grantee
signature
___________________________
Name of
Grantee