Document:

Exhibit 10.22 Employment Letter from the Company to J. Douglas Collier

    
      

      

    

    Exhibit
      10.22

     

     

    
       

      June
        7,
        2005

      

      J.
        Douglas Collier

      

      

      Dear
        Doug, 

      

      On
        behalf
        of Select Comfort Corporation, I am pleased to offer you a position as the
        Senior Vice President, Marketing for Select Comfort. Your anticipated start
        date
        is to-be-determined. You will be based in our Plymouth, MN location.

      

      The
        agreed upon terms of this exempt, full-time position are as
        follows:

      	·  	
              Starting
                bi-weekly salary of $10,192.30. ($265,000 annualized). You
                will also be eligible for your next salary review in February, 2006.
                

            

      	·  	
              You
                will be eligible to receive a one-time lump sum sign on bonus of
                $20,000
                (less applicable withholdings) within your first 30 days of
                employment.

            

      

      	·  	
              You
                will be eligible to participate in the company’s management bonus
                plan.
                Under the plan as established for 2005, you will be eligible for
                a
                targeted bonus of 55% of base compensation actually paid for the
                year. The
                actual bonus payment may range from 0% to 250% of the targeted bonus
                level, depending on the performance of the Company. Your minimum
                2005
                bonus payment will be paid at target (pro-rated based on base salary
                received during 2005), with upside if the company exceeds plan.
                

            

      

      	·  	
              You
                will be granted options to purchase 75,000 shares of the Company’s common
                stock at a fixed exercise price. The exercise price of these options
                will
                be the average of the high and low trading prices of the Company’s common
                stock on the date of grant, which we expect to be the first day of
                employment. These options will vest 25% per year on each of the first
                4
                anniversaries of the date of grant. You will be eligible for annual
                equity
                grants as part of our annual long-term incentive
                plan.

            

      

      	·  	
              You
                will also be granted 5000 restricted shares which will vest after
                4
                completed years of service. The grant price of these shares will
                be the
                average of the high and low trading prices of the Company’s common stock
                on the day your employment begins.

            

      

      	·  	
              You
                will be eligible for the company’s director level & above benefits as
                part of your total compensation package. Please refer to the attached
                summary of benefits for details. 

            

      

      Actual
        benefits are defined in the individual plan documents. You will be eligible
        for
        20 days paid time off annually, plus 10 holidays.

      

      You
        will
        be eligible for relocation benefits as part of your compensation package.
        Select
        Comfort will cover reimbursable relocation expenses to include:

      	·  	
              Reasonable
                costs (travel, food, lodging, car rental, etc.) for the purpose of
                finalizing a home purchase. We would expect this to include the cost
                of a
                pre-employment house hunting trip for you and your spouse; and an
                additional house hunting trip for your spouse/family if necessary.
                

            

      	·  	
              Interim
                temporary living for a period of up to 60 days if permanent residence
                is
                not available.

            

      	·  	
              Reasonable
                number of trips back home while/if you are in interim
                living.

            

      	·  	
              The
                moving of your household goods and personal effects through a moving
                company set up by Select Comfort.

            

      	·  	
              Real
                estate fees associated with the sale of your home and other reimbursable
                closing costs. 

            

      

      In
        the
        event that you voluntarily leave Select Comfort during the first twelve months
        of employment, you agree to re-pay to Select Comfort the reimbursed relocation
        expenses.  

      

      If
        your
        employment is terminated by the Company within one (1) year following a change
        of control of the Company, or if you are subject at any time to a termination
        without cause, upon the termination of your employment under such circumstances,
        and subject to the execution and delivery to the Company of a standard release
        of claims, you will be entitled to receive one (1) year’s base salary as
        severance compensation, and the portion of the stock
        options referred to above which have not previously been vested, will vest
        immediately and remain exercisable for a period not to exceed ninety (90)
        days
        following termination of employment. At your option, the severance compensation
        described above will be payable (a) over a period of one (1) year following
        termination of employment in accordance with the Company’s normal payroll
        schedule, or (b) in a lump sum equal to the present value of such stream
        of
        payments discounted at a capitalization rate of 10%. In addition, if such
        termination occurs more than half-way through a fiscal year of the Company,
        and
        subject to the execution and delivery to the Company of a standard release
        of
        claims, you will be entitled to receive a pro rata portion of any bonus payment
        that is ultimately earned for such fiscal year, payable at the time such
        bonus
        payments are paid to other eligible employees.

      

      This
        offer is contingent upon successful completion of your reference, education
        and
        background investigation, and compliance with the Immigration Reform Control
        Act
        of 1986 (IRCA). Furthermore, this offer is conditional upon your signing
        our
        Employee Inventions, Confidentiality and Non-Compete Agreement, a copy of
        which
        will be sent under separate cover. In addition, you will need to sign the
        attached release authorizing a background
        check. Please complete and sign the background check release and fax to Kevin
        Gunn’s attention at 763.694.3305

      

      You
        should understand that this offer of employment does not constitute a contract
        of employment, nor is it to be construed as a
        guarantee of continuing employment for any period of time. Employment
        with Select Comfort is “at will”. We recognize your right to terminate the
        employment relationship at anytime and for any reason, and, similarly, we
        reserve the right to alter, modify or terminate the relationship at any time
        and
        for any reason.

      

      This
        written offer of employment constitutes the entire understanding of the parties
        regarding your hiring and employment, and supersedes and replaces any and
        all
        oral or written statements made by Select Comfort relating to your hiring
        and
        employment that are inconsistent with its terms. Upon commencement of
        employment, you will be subject to all policies and procedures of Select
        Comfort.

      

      Select
        Comfort is rapidly transforming the industry, and dramatically improving
        people’s lives through better sleep! I look forward to you joining the Select
        Comfort team! Should you have any questions, please contact me directly at
        (763)
        551-7007.

      

      Sincerely,

      

      /s/
        William R. McLaughlin

      

      William
        R. McLaughlin

      Chairman,
        President & CEO

      

      

      

      Accepted:
        /s/
        J.
        Douglas CollierExhibit 10.28 Form of Stock Option Award Agreement under the Select Comfort
      Corporation 2004 Stock Incentive Plan

    
      

      

    

    
      Exhibit
        10.28

      

      Nonstatutory
        Stock Option Award Agreement

      

       

      ______________________,
        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 insider trading. 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.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      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 Becky Moody 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 Becky Moody at (763) 551-7712.

      

      

      Very
        truly yours,

       

      /s/
        William R. McLaughlin

      William
        R. McLaughlin

      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.

      

      

      
        
          	 	 
	
                  (Signature)

                	 

        

      

       

      
        
          
          

        

        
          3

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