exhibit103.htm


     

    TEMPUR-PEDIC
INTERNATIONAL INC.

    AMENDED AND RESTATED 2003
EQUITY INCENTIVE PLAN

    


    Restricted
Stock Unit Award Agreement

    [Insert
Employee Name]

    


    This Restricted Stock Unit Award
Agreement (this “Agreement”), dated as
of _______ __, 20--, is between Tempur-Pedic International Inc., a corporation
organized under the laws of the State of Delaware (the “Company”), and the
individual identified below, residing at the address there set out (the “Recipient”).

    


    1.           Award of 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 “Plan”), the Company
grants the Recipient an award (the “Award”) for
____________ restricted stock units (“Restricted Stock Units”), each
representing the right to a share of the common stock, par value $0.01 per
share, of the Company (the “Stock”) on and
subject to the terms and conditions of this Agreement.  This Award is
granted as of _______ __, 20-- (the “Grant
Date”).

    


    2.           Rights of Restricted Stock
Units.  The Recipient will receive no dividend equivalent
payments on the Restricted Stock Units or with respect to the
Stock.  Unless and until the vesting conditions of the Award have been
satisfied and the Recipient has received the shares of Stock in accordance with
the terms and conditions described herein, the Recipient shall  have
none of the attributes of ownership with respect to such shares of
Stock.

    


    3.           Vesting
Period and Rights; Taxes; and Filings.

    


    (a)           Vesting Period and
Rights.  The Award will vest in full on ___________, 20__
(i.e., the date that is
the three (3) year anniversary of the date of grant) (the “Vesting Date”),
unless the Award terminates or vests earlier in accordance with Section 4 or 5
hereof.  Subject to the provisions of Sections 4 and 5 below, any
vesting is subject to the Recipient continuing to be employed by the Company or
an Affiliate of the Company on the Vesting Date.

    


    (b)           Taxes.  The
Recipient is required to provide sufficient funds to pay all withholding
taxes.  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 Award
awarded under this Agreement, including without limitation, the award or lapsing
of stock restrictions on the 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 Recipient.  However, in such cases Recipient 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 of
Stock to be issued under the Award to satisfy the Recipient’s tax
obligations.  The Recipient may only elect to have shares of Stock
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 the
Award.  All elections shall be irrevocable, made in writing, signed by
the Recipient, and shall be subject to any restrictions or limitations that the
Committee deems appropriate.

    


    (c)           Filings.  The
Recipient is responsible for any filings required under Section 16 of the
Securities Exchange Act of 1934 and the rules thereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.           Termination of
Employment.  If the Recipient’s employment with the Company or
an Affiliate of the Company terminates prior to the Vesting Date, including
because the Recipient’s employer ceases to be an Affiliate, the right to the Restricted Stock
Units and the Stock shall be as follows:

    


    (a)           Death.  If
the Recipient dies, the Restricted Stock Units granted hereunder will vest
immediately and the person or persons to whom the Recipient’s rights shall pass
by will or the laws of descent and distribution shall be entitled to receive all
of the Stock with respect thereto.

    


    (b)           Long-Term
Disability.  If the Company or an Affiliate of the Company
terminates the Recipient’s employment for long-term disability (within the
meaning of Section 409A of the Code), the Restricted Stock Units granted
hereunder will vest immediately and Recipient shall be entitled to receive all
of the Stock with respect thereto.

    


    (c)           By the Company For Cause or
By the Recipient Without Good Reason.  If the Recipient ceases
to be an employee of the Company or an Affiliate of the Company due to the
Recipient’s termination by the Company or such Affiliate For Cause or if the
Recipient resigns or otherwise terminates his employment without Good Reason,
including by any Retirement that is not an Approved Retirement or the
Recipient’s voluntary departure, the Recipient’s right to such Restricted Stock
Units and the Stock granted hereunder shall be forfeited, no Stock shall be
issued and the Restricted Stock Units shall be cancelled.  The terms
“For Cause”, “Good Reason”, “Retirement” and “Approved Retirement” are defined
below.

    


    (d)           By the Company Other Than
For Cause or By the Recipient for Good Reason.  If the
Recipient ceases to be an employee of the Company or an Affiliate of the Company
due to the Recipient’s termination by the Company or such Affiliate other than
For Cause, by his resignation for Good Reason, or due to Recipient’s employer
ceasing to be an Affiliate (in the absence of a Change of Control), only a
pro-rata portion of the Restricted Stock Units granted hereunder shall continue
to vest on the Vesting Date and the balance shall be cancelled and no Stock
issued therefor.  For this purpose, “pro-rata portion”
means the number of Restricted Stock Units subject to the Award immediately
prior to termination multiplied by the actual number of calendar months that
elapsed from the Grant Date and prior to such termination of employment and then
divided by 36 (representing the number of months the Restricted Stock Units were
to be unvested prior to the Vesting Date).  Notwithstanding the
foregoing, no Stock shall be issued and all of Recipient’s rights to the
Restricted Stock Units and Stock hereunder shall be forfeited, expire and
terminate unless (i) the Company shall have received a release of all claims
from the Recipient in a form reasonably acceptable to the Company (and said
release shall have become irrevocable in accordances with its terms) prior to
the Vesting Date (or if earlier, the deadline established in the form of release
delivered by the Company to Recipient for execution) and (ii) the Recipient
shall have complied with the covenants set forth in Section 10 of this
Agreement.

    


    (e)           Approved
Retirement.  In the event of the Recipient’s Retirement, the
Committee may consent to the continued vesting of a pro-rata portion of the
Restricted Stock Units on the Vesting Date (an “Approved Retirement”)
and the balance shall be cancelled and no Stock issued therefor.  For
this purpose, “pro-rata portion”
means the number of Restricted Stock Units multiplied by the actual number of
calendar months that elapsed from the Grant Date and prior to such Approved
Retirement and then divided by 36 (representing the number of months the
Restricted Stock Units were to be unvested prior to the Vesting
Date).  Notwithstanding the foregoing, no Stock shall be issued and
all of Recipient’s rights to the Restricted Stock Units and Stock hereunder
shall be forfeited, expire and terminate unless (i) the Company shall have
received a release of all claims from the Recipient in a form reasonably
acceptable to the Company (and said release shall have become irrevocable in
accordances with its terms) prior to the Vesting Date (or if earlier, the
deadline established in the form of release delivered by the Company to
Recipient for execution) and (ii) the Recipient shall have complied with the
covenants set forth in Section 10 of this Agreement.  If the Committee
shall for any reason decline to consent to continued vesting on the Recipient’s
Retirement, then the provisions of subsection (c) above shall instead
apply.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (f)           Definitions.  As
used in this Agreement:

    


    (i)           “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;

    


    (ii)           “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.

    


    (iii)           “For Cause” shall mean
any of the following: (A) Recipient’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 Recipient’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 Recipient by
the Chief Executive Officer or Global Vice President of  Human
Resources of the Company, which specifically identifies the manner in which
Recipient has not substantially performed the assigned duties, (B) Recipient’s
willful engagement in illegal conduct which is materially and demonstrably
injurious to the Company or any Affiliate of the Company, (C) Recipient’s
conviction by a court of competent jurisdiction of, or pleading guilty or nolo
contendere to, any felony, or (D) Recipient’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 Recipient’s principal workplace over 60 miles from the
existing workplaces of the Company or any Affiliate of the Company without the
consent of Recipient (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.

    


    (g)           Payment.  In
all cases, payment (i.e., issuance of the Stock) with respect to any vested
Restricted Stock Units shall be made promptly and, in any event, within twenty
(20) days following the earlier of (y) the Vesting Date, and (z) the date of any
accelerated vesting as described in Section 4(a) or Section 4(b)
above.  For this purpose, Restricted Stock Units vesting on account of
(i) a termination of employment by the Company or its Affiliates other than For
Cause, (ii) Recipient’s resignation for Good Reason, (iii) Recipient’s employer
ceasing to be an Affiliate (in the absence of a Change of Control) or (iv) an
Approved Retirement, shall be treated as vesting on the Company's receipt of the
required release of claims but delivery of the Stock on or after the Vesting
Date pursuant to this paragraph (g) shall not obviate the need to comply with
the covenants contained in Section 10 until the Covenant Termination Date in
order to retain the Stock then delivered.

    


    5.           Change of Control Provisions.
In lieu of the Change of Control provisions of Section 9(b) of the Plan
and notwithstanding anything herein to the contrary if a Change of Control
occurs, this Agreement shall remain in full force and effect in accordance with
its terms subject to the following.  In the event of such Change of
Control:

    


    (a)           if
the Recipient’s employment is terminated by the Company or an Affiliate of the
Company other than For Cause or if the Recipient resigns for Good Reason within
twelve (12) months after the occurrence of a Change of Control, all of the
Recipient’s Restricted Stock Units shall immediately vest as of such date and
Recipient shall be entitled to receive all of the Stock promptly and, in any
event, within twenty (20) days after the date of such termination of employment;
and

    


    (b)           if
the Restricted Stock Units are not assumed, converted or replaced by a successor
organization following such Change of Control, all of the Recipient’s’
Restricted Stock Units shall immediately vest as of such date and Recipient
shall be entitled to receive all of the Stock promptly and, in any event, within
twenty (20) days after the date of the Change of Control.

     

    
          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.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.           Other
Provisions.

     

    (a)           This
Award of Restricted Stock Units does not give the Recipient 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 its Affiliates to terminate the Recipient’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 of Stock due to the Recipient upon the
Vesting Date (or, if vesting of the Restricted Stock Units is accelerated
pursuant to Section 4 or 5, such earlier date) with respect to vested Restricted
Stock Units 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.
Acceptance of this Award constitutes the Recipient’s agreement that the shares
of Stock subsequently acquired hereunder, if any, will not be sold or otherwise
disposed of by the Recipient in violation of any applicable securities laws or
regulations.

    


    (c)           The
Award, the Restricted Stock Units and entitlement to the Stock are subject to
this Agreement and Recipient’s acceptance hereof shall constitute the
Recipient’s agreement to any administrative regulations of the Committee of the
Board.  In the
event of any inconsistency between this Agreement and the provisions of the
Plan, the provisions of the Plan shall prevail.

    


    (d)           All
decisions of the Committee upon any questions arising under the Plan or under
these terms and conditions shall be conclusive and binding, including, without
limitation, those decisions and determinations to adjust the Restricted Stock
Units made by the Committee pursuant to the authority granted under Section 8.5
of the Plan.

    


    (e)           Except
as provided in Section 6.4 of the Plan, no right hereunder related to the Award
or these Restricted Stock Units and no rights hereunder to the underlying Stock
shall be transferable (except by will or the laws of descent and distribution)
until such time, if ever, the Stock is earned and delivered.

    


    7.         Incorporation of Plan
Terms.  This Award is granted
subject to all of the applicable terms and provisions of the Plan, including but
not limited to Section 8 of the Plan, “Adjustment Provisions”, and the
limitations on the Company's obligation to
deliver Stock upon vesting set forth in Section 10 of the Plan, “Settlement
of Awards”.  Capitalized terms used but not defined herein shall have
the meaning assigned under the Plan.

     

    8.         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
Recipient.  This Agreement may be executed in one or more counterparts
all of which together shall constitute one instrument.

     

    9.           Tax Consequences.

     

    (a)           The
Company makes no representation or warranty as to the tax treatment of this
Award, including upon the issuance of the Stock or upon the Recipient’s sale or
other disposition of the Stock.  The Recipient 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 Recipient 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.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

          
10.           Certain Remedies.

     

    (a) If at any
time prior to the later of (y) the last day of the two (2) year period beginning
on the termination of the Recipient’s employment with the Company and its
Affiliates and (z) the Vesting Date (the later of such days being the “Covenant Termination
Date”), any of the following occur:

     

    (i) the
Recipient unreasonably refuses to comply with lawful requests for cooperation
made by the Company, its board of directors, or its Affiliates;

     

    (ii) the
Recipient accepts employment or a consulting or advisory engagement with any
Competitive Enterprise (as defined in Section 10(c)) of the Company or its
Affiliates or the Recipient otherwise engages in competition with the Company or
its Affiliates;

     

    (iii) the
Recipient acts against the interests of the Company and its Affiliates,
including recruiting or employing, or encouraging or assisting the Recipient’s
new employer to recruit or employ an employee of the Company or any Affiliate
without the Company’s written consent;

     

    (iv) the
Recipient fails to protect and safeguard while in his possession or control, or
surrender to the Company upon termination of the Recipient’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 Recipient;

     

    (v) the
Recipient solicits or encourages any person or enterprise with which the
Recipient 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
Recipient 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 Recipient 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
Recipient breaches any confidentiality obligations the Recipient has to the
Company or an Affiliate, the Recipient fails to comply with the policies and
procedures of the Company or its Affiliates for protecting confidential
information, the Recipient uses confidential information of the Company or its
Affiliates for his own benefit or gain, or the Recipient 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
Recipient entered into such activity, unless terminated or cancelled sooner by
operation of another term or condition of this Agreement or the
Plan;

     

    (2) any Stock
acquired and held by the Recipient 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 gain
realized by the Recipient from the sale of Stock acquired through the Award
during the Applicable Period shall be paid by the Recipient 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 Recipient’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 A hereto,
which may be amended by the Company from time to time upon notice to the
Recipient.  At any time the Recipient 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 Recipient about the
enterprise, and the determination will be valid for a period of ninety (90) days
from the date of determination.

     

    11.           Right of Set
Off.  By executing this Agreement, the Recipient consents to a
deduction from any amounts the Company or any Affiliate owes the Recipient from
time to time, to the extent of the amounts the Recipient owes the Company under
Section 10 above, provided that this
set-off right may not be applied against wages, salary or other amounts payable
to the Recipient 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 Recipient owes the Company, calculated as set
forth above, the Recipient agrees to pay immediately the unpaid balance to the
Company upon the Company’s demand.

     

    12.           Nature of
Remedies.

     

    (a)           The
remedies set forth in Sections 10 and 11 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
Stock acquired upon vesting of this Award referring to the repurchase right set
forth in Section 10(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 10(a) has
occurred or is reasonably likely to occur.

     

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    In
Witness Whereof, the parties have executed this Restricted Stock Unit Award
Agreement as a sealed instrument as of the date first above
written.

     

    TEMPUR-PEDIC
INTERNATIONAL INC.

    


    


    


    By:       ___________________________                                                                   

    Title:___________________________                                                                           [Name
of Recipient]

    


    


    Recipient's Address:

    ________________________________

    ________________________________________________________________