EX10.6
FORM OF RESTRICTED STOCK UNIT AWARD AGREEMENT
THIS AGREEMENT is entered into and effective as of   , 20__ (the “Date of
Grant”), by and between Sleep Number Corporation (the “Company”) and    (the
“Grantee”).
Unless defined in this Agreement, capitalized terms used in this Agreement shall
have the meanings established in the Sleep Number Corporation 2020 Equity
Incentive Plan (the “Plan”).
The Company has adopted the Plan, which authorizes the grant of Restricted Stock
Unit Awards to Employees, Non-Employee Directors, and Consultants. The Company
desires to give the Grantee a proprietary interest in the Company and its
Subsidiaries in recognition of the Grantee’s contributions and as an added
incentive to advance the interests of the Company and its Subsidiaries by
granting to the Grantee a Restricted Stock Unit Award pursuant to the Plan.
Accordingly, the parties agree as follows:
1. Grant of Award Units. The Company hereby grants to the Grantee a Restricted
Stock Unit Award (the “Award”) consisting of      units (the “Award Units”) that
will be settled in shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), subject to the terms, conditions, and restrictions
set forth below and in the Plan. Reference in this Agreement to the Award Units
will be deemed to include the Dividend Proceeds (as defined in Section 3.3 of
this Agreement) with respect to such Award Units that are retained and held by
the Company as provided in Section 3.3 of this Agreement.
2. Grant Restriction.
2.1 Restriction and Forfeiture. The Grantee’s right to the Award Units and the
shares of Common Stock issuable under the Award Units will be fully vested at
the end of three (3) years from the Date of Grant (the “Vesting Period”),
subject to the Grantee remaining in continuous employment or service with the
Company or any Subsidiary during the Vesting Period; provided, however, that
such employment or service period restrictions (the “Restrictions”) will lapse
and terminate prior to end of the Vesting Period as set forth in Section 2.2
below (or as otherwise set forth in the Plan for any circumstance not
contemplated by the terms of Section 2.2).
2.2 Death, Disability, or other Termination of Employment or Service.
(a) Death or Disability. In the event that the Grantee’s employment or service
is terminated prior to the end of the Vesting Period due to the Grantee’s death
or Disability, the Restrictions applicable to the Award Units will immediately
lapse and terminate, and the shares of Common Stock to be issued in settlement
of the Award Units will be issued as soon as reasonably possible.
(b) Termination Due to Retirement.
(i) In the event that the Grantee’s employment or other service is terminated
prior to the end of the Vesting Period by reason of the Grantee’s retirement at
or beyond age fifty-five (55) and the Grantee has five (5) or more

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years of service with the Company prior to such retirement, the Grantee will
become vested in a pro rata portion of Award Units based on the number of
calendar days elapsed since the most recent anniversary of the Date of Grant as
of the date of retirement, divided by the total number of calendar days in the
Vesting Period (collectively, the “Pro Rata Award Units”). The remaining
unvested Award Units will immediately terminate and be forfeited without notice
of any kind.
For example, if the Grantee was granted 1,200 Award Units and retirement occurs
548 calendar days into the Vesting Period, assuming the Vesting Period contains
1,095 calendar days, the Grantee would have (i) 1,200/3 = 400 Award Units vested
pursuant to Section 2.1, plus (ii) 1,200 x (183/1095) = 201 Pro Rata Award
Units. The shares of Common Stock to be issued in settlement of the vested Award
Units will be issued as soon as reasonably possible after the Grantee’s
retirement.

(ii) In the event that the Grantee’s employment or other service with the
Company and all Subsidiaries is terminated prior to the end of the Vesting
Period by reason of the Grantee’s retirement prior to age fifty-five (55) or the
Grantee has fewer than five (5) years of service with the Company prior to
retirement, all rights of the Grantee under the Plan and this Agreement relating
to all Award Units with respect to which the Restrictions have not lapsed will
immediately terminate and be forfeited without notice of any kind.
(c) Termination for Reasons other than Death, Disability, or Retirement. In the
event that the Grantee’s employment or other service with the Company and all
Subsidiaries is terminated prior to the end of the Vesting Period for any reason
other than death, Disability, or retirement as provided above, or if the Grantee
is in the employ or service of a Subsidiary and the Subsidiary ceases to be a
Subsidiary of the Company (unless the Grantee continues in the employ or service
of the Company or another Subsidiary), all rights of the Grantee under this
Agreement relating to Award Units with respect to which the Restrictions have
not lapsed will immediately terminate and be forfeited without notice of any
kind.
3. Issuance of Shares.
3.1 Timing. Vested Award Units shall be converted to shares of Common Stock on a
one-for-one basis, and such shares shall be issued as soon as reasonably
possible after the end of the Vesting Period, subject to the provisions set
forth above applicable to vesting events that occur prior to the end of the
Vesting Period.
3.2 Limitations on Transfer. Award Units will not be assignable or transferable
by the Grantee, either voluntarily or involuntarily, and may not be subjected to
any lien, directly or indirectly, by operation of law or otherwise. Any attempt
to transfer, assign, or encumber the Award Units, other than in accordance with
this Agreement and the Plan, will be null and void and will void the Award, and
all Award Units for which the Restrictions have not lapsed will be forfeited and
immediately returned to the Company.
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3.3 Dividends and Other Distributions. The Award Units are being granted with an
equal number of dividend equivalents. Accordingly, the Grantee is entitled to
receive an additional award unit with a value equal to any dividends or
distributions (including, without limitation, any cash dividends, stock
dividends or dividends in kind, the proceeds of any stock split, or the proceeds
resulting from any changes or exchanges described in Section 6 of this
Agreement, all of which are referred to herein collectively as the “Dividend
Proceeds”) that are paid or payable with respect to one share of Common Stock
for each Award Unit, which will be subject to the same rights, restrictions, and
performance conditions under this Agreement as the Award Units to which such
dividends or distributions relate. The number of additional award units to be
received as dividend equivalents for each Award Unit shall be determined by
dividing the cash dividend per share by the Fair Market Value of one share of
Common Stock on the dividend or distribution payment date. All such additional
award units received as dividend equivalents will be subject to the same
restrictions and performance conditions as the Award Units to which such
Dividend Proceeds relate.
3.4 Fractional Shares. The Grantee acknowledges that the Company will not issue
or deliver fractional shares of Common Stock under this Agreement. All
fractional shares will be rounded up to the nearest whole share.
4. Rights of Grantee.
4.1 Employment or Service. Nothing in this Agreement will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of the Grantee at any time, nor confer upon the Grantee
any right to continue in the employment or service with the Company or any
Subsidiary at any particular position or rate of pay or for any particular
period of time.
4.2 Rights as a Shareholder. The Grantee will have no rights as a shareholder
until the Grantee becomes the holder of record of shares of Common Stock issued
in settlement of the Award Units. As soon as reasonably possible after the
satisfaction of any conditions to the effective issuance of shares of Common
Stock in settlement of the Award Units, the shares will be issued by the
Company.
5. Withholding Taxes. The Company is entitled to (i) withhold and deduct from
future wages of the Grantee (or from other amounts that may be due and owing to
the Grantee from the Company), or to withhold from the shares of Common Stock
that would otherwise be determined to be paid to the Company out of Dividend
Proceeds, or make other arrangements for the collection of all amounts the
Company determines are legally required to satisfy any federal, state, or local
withholding and employment-related tax requirements attributable to the receipt
of the Award, the receipt of dividends or distributions on Award Units, or the
lapse or termination of the Restrictions applicable to Award Units, or (ii)
require the Grantee promptly to remit the amount of such withholding to the
Company. In the event that the Company is unable to withhold such amounts, for
whatever reason, the Grantee agrees 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.
6. Adjustments. In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, or
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divestiture (including a spin-off), or any other change in the corporate
structure or shares of the Company, the Committee (or, if the Company is not the
surviving corporation in any such transaction, the board of directors of the
surviving corporation), in order to prevent dilution or enlargement of the
rights of the Grantee, will make appropriate adjustment (which determination
will be conclusive) as to the number and kind of securities or other property
(including cash) subject to this Award.
7. Subject to Plan. The Award and the Award Units granted pursuant to this
Agreement have been granted under the Plan and, except as otherwise expressly
provided in this Agreement, are subject to all of the terms and conditions of
the Plan. In addition, the Grantee, by execution hereof, acknowledges having
received a copy of the Plan and acknowledges that the Company, or a third party
vendor designated by the Company, may deliver to the Grantee any documents
related to the Grantee’s participation in the Plan by electronic means,
including through email, the Company’s website, and through the website of the
third party vendor designated by the Company.  The provisions of this Agreement
will be interpreted as to be consistent with the Plan, and any ambiguities in
this Agreement will be interpreted by reference to the Plan. In the event that
any provision of this Agreement is not authorized under the Plan, the terms of
the Plan will prevail.
8. Forfeiture, Clawback or Recoupment. This Award is subject to the forfeiture
and clawback provisions pursuant to the Plan. Additionally, the Grantee may be
subject to the Company’s policy regarding clawback and forfeiture of certain
compensation, as in effect at such time.
9. Miscellaneous.
9.1 Binding Effect. This Agreement will be binding upon the heirs, executors,
administrators, and successors of the parties to this Agreement.
9.2 Governing Law. This Agreement and all rights and obligations under this
Agreement will be construed in accordance with the Plan and governed by the laws
of the State of Minnesota, without regard to conflicts of laws provisions. Any
legal proceeding related to this Agreement will be brought in an appropriate
Minnesota court, and the parties to this Agreement consent to the exclusive
jurisdiction of the court for this purpose.
9.3 Entire Agreement. This Agreement and the Plan set forth the entire agreement
and understanding of the parties to this Agreement with respect to the grant and
vesting of this Award and the administration of the Plan and supersede all prior
agreements, arrangements, plans, and understandings relating to the grant and
vesting of this Award and the administration of the Plan.
9.4 Amendment and Waiver. Other than as provided in the Plan, this Agreement may
be amended, waived, modified, or canceled only by a written instrument executed
by the parties to this Agreement or, in the case of a waiver, by the party
waiving compliance.
        9.5 Code Section 409A. Payments of amounts under this Agreement are
intended to be exempt from the requirements of Code section 409A, except for a
Grantee who becomes eligible for partial vesting following eligibility for
retirement under Section 2(c), in which case
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payment of amounts under the Agreement are intended, and this Agreement shall in
all respects be administered and construed to give effect to such intent. A
payment on account of a termination of employment by reason of the Grantee’s
retirement under Section 2(c) shall only be made if such termination is a
“separation from service” under Code section 409A, and if payment is made as a
result of such “separation from service” at such time the Grantee is a
“specified employee” within the meaning of Code section 409A, then no shares
shall be issued prior to the first business day after the earlier of (i) the
date that is six months after the Grantee’s separation from service, or (ii) the
date of the Grantee’s death.
The parties hereto have executed this Agreement effective the day and year first
above written.
SLEEP NUMBER CORPORATION
        image01.jpg [image01.jpg]
        Shelly Ibach
        President and CEO

By execution of this Agreement,  GRANTEE
the Grantee acknowledges having
received a copy of the Plan.       
(Signature)

             (Name and Address)

             

____________________________________

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