Exhibit
10.12
SELECT COMFORT
CORPORATION
1999 EMPLOYEE STOCK PURCHASE
PLAN
(As Amended through February
2005)
The purpose of
this 1999 Employee Stock Purchase Plan (the “Plan”) is
to advance the interests of Select Comfort Corporation (the
"Company”) and its shareholders by allowing eligible
employees of the Company and its Participating Subsidiaries to use
payroll deductions to acquire shares of the Company’s Common
Stock on favorable terms. The Company intends that the Plan qualify
as an “employee stock purchase plan” under Section 423
of the Code. Accordingly, provisions of the Plan will be construed
so as to extend and limit participation in a manner consistent with
the requirements of Section 423 of the Code.
2.1 “ Board ” means the Board of
Directors of the Company.
2.2 “ Change in Control ” means
an event described in Section 9.1 of the Plan.
2.3 “ Code ” means the Internal
Revenue Code of 1986, as amended.
2.4 “ Committee ” means the group
of individuals administering the Plan, as provided in Section 3 of
the Plan.
2.5 “ Common Stock ” means the
common stock, par value $0.01 per share, of the Company, or the
number and kind of shares of stock or other securities into which
such common stock may be changed in accordance with Section 4.3 of
the Plan.
2.6 “ Compensation ” means all
gross cash compensation (including wage, salary, incentive, bonus
and overtime earnings) paid by the Company or any Participating
Subsidiary to a Participant, including amounts that would have
constituted compensation but for a Participant’s election to
defer or reduce compensation pursuant to any deferred compensation,
cafeteria, capital accumulation or any other similar plan of the
Company; provided, however, that the Committee, in its sole
discretion, may expand or limit the amounts that will be deemed
compensation for purposes of the Plan in such manner as it deems
appropriate.
2.7 “ Eligible Employee ” means
any employee of the Company or a Participating Subsidiary (other
than an employee whose customary employment with the Company or a
Participating Subsidiary is for five months or less per calendar
year) who, with respect to any Offering Period, is employed by the
Company or a Participating Subsidiary prior to the Offering
Commencement Date for such Offering Period.
2.8 “ Exchange Act ” means the
Securities Exchange Act of 1934, as amended.
2.9 “ Fair Market Value ” means,
with respect to the Common Stock, as of any date (or, if no shares
were traded or quoted on such date, as of the next preceding date
on which there was such a trade or quote) (a) the mean between the
reported high and low sale prices of the Common Stock if the Common
Stock is listed, admitted to unlisted trading privileges or
reported on any foreign or national securities exchange or on the
Nasdaq National Market or an equivalent foreign market on which
sale prices are reported; (b) if the Common Stock is not so listed,
admitted to unlisted trading privileges or reported, the closing
bid price as reported by the Nasdaq SmallCap Market, OTC Bulletin
Board, National Quotation Bureau, Inc. or other comparable service;
or (c) if the Common Stock is not so listed or reported, such price
as the Committee determines in good faith in the exercise of its
reasonable discretion.
2.10 “ Offering Commencement Date
” means the first day of an Offering Period.
2.11 “ Offering Period ” means any
of the offerings to Participants of Options under the Plan, each
continuing for three months, as described in Section 6 of the
Plan.
2.12 “ Offering Termination Date ”
means the last day of an Offering Period.
2.13 “ Option ” means a right to
purchase shares of Common Stock granted to a Participant in
connection with an Offering Period pursuant to Section 7 of
the Plan
2.14 “ Option Price ” means, with
respect to any Offering Period through the Offering Period
commencing as of April 1, 2005, eighty-five percent (85%) of the
Fair Market Value of one share of Common Stock on the Offering
Termination Date, and with respect to any Offering Period
commencing on or after July 1, 2005, ninety-five percent (95%) of
the Fair Market Value of one share of Common Stock on the Offering
Termination Date.
2.15 “ Participant ” means an
Eligible Employee who elects to participate in the Plan pursuant to
Section 5 of the Plan.
2.16 “ Participating Subsidiary ”
means a Subsidiary that has been designated by the Committee from
time to time, in its sole discretion, as a corporation whose
Eligible Employees may participate in the Plan.
2.17 “ Securities Act ” means the
Securities Act of 1933, as amended.
2.18 “ Subsidiary ” means any
subsidiary corporation of the Company within the meaning of Section
424(f) of the Code.
2.19 “ Termination of Employment ”
means a Participant’s complete termination of employment with
the Company and all Participating Subsidiaries for any reason,
including without limitation death, disability or retirement. In
the event that a Participant is in the employ of a Participating
Subsidiary and the Participating Subsidiary ceases to be a
Participating Subsidiary of the Company for any reason, such event
will be deemed a termination of employment unless the Participant
continues in the employ of the Company or another Participating
Subsidiary.
The Plan will
be administered by the Board or by a committee of the Board. So
long as the Company has a class of its equity securities registered
under Section 12 of the Exchange Act, any committee administering
the Plan will consist solely of two or more members of the Board
who are “non-employee directors” within the meaning of
Rule 16b-3 under the Exchange Act. Such a committee, if
established, will act by majority approval of the members (at a
meeting in person or by telephone conference or by written
consent), and a majority of the members of such a committee will
constitute a quorum. As used in the Plan, “Committee”
will refer to the Board or to such a committee, if established. To
the extent consistent with corporate law, the Committee may
delegate to any officers of the Company the duties, power and
authority of the Committee under the Plan pursuant to such
conditions or limitations as the Committee may establish; provided,
however, that only the Committee may exercise such duties, power
and authority with respect to Participants who are subject to
Section 16 of the Exchange Act. The Committee may exercise its
duties, power and authority under the Plan in its sole discretion
without the consent of any Participant or other party, unless the
Plan specifically provides otherwise. Each determination,
interpretation or other action made or taken by the Committee
pursuant to the provisions of the Plan will be final, conclusive
and binding for all purposes and on all persons, including, without
limitation, the Company, the shareholders of the Company, the
participants and their respective successors-in-interest. No member
of the Committee will be liable for any action or determination
made in good faith with respect to the Plan or any Option granted
under the Plan.
4.
Shares Available for Issuance;
Adjustments for Certain Events .
4.1
Maximum Number of Shares
Available . Subject to
adjustment as provided in Section 4.3 of the Plan, the maximum
number of shares of Common Stock available for issuance under the
Plan will be 1,500,000 shares of Common Stock. If the total number
of shares of Common Stock that would otherwise be issuable upon the
exercise of Options granted pursuant to Section 7 of the Plan on
any Offering Termination Date exceeds the number of shares then
available for issuance under the Plan, the Committee will make a
pro rata allocation of the shares of Common Stock remaining
available for issuance under the Plan in as uniform and equitable a
manner as it deems appropriate.
4.2
Accounting for Options
. Shares of Common Stock that are
issued under the Plan or that are subject to outstanding Options
will be applied to reduce the maximum number of shares of Common
Stock remaining available for issuance under the Plan. Any shares
of Common Stock that are subject to an Option that is terminated
unexercised will automatically again become available for issuance
under the Plan.
4.3
Adjustments to Shares and
Options . In the event of
any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split,
combination of shares, rights offering, divestiture or
extraordinary dividend (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)
will make appropriate adjustment (which determination will
be
conclusive) as
to the number and kind of securities or other property (including
cash) available for issuance or payment under the Plan and, in
order to prevent dilution or enlargement of the rights of
Participants, the number and kind of securities or other property
(including cash) subject to, and the exercise price of, outstanding
Options.
5.
Participation; Payroll
Deductions .
5.1
Participation
. Participation in the Plan is
voluntary and is not a condition of employment. Eligible Employees
may elect to participate in the Plan, beginning with the first
Offering Period to commence after such person becomes an Eligible
Employee, by properly completing an enrollment form in the form
provided by the Company and filing the enrollment form with the
Company's Human Resources Department not later than the 15th day of
the month immediately preceding the Offering Commencement Date of
the first Offering Period in which the Participant wishes to
participate (or on such later date prior to the first Offering
Period after adoption of the Plan as may be reasonably necessary to
enable Eligible Employees to participate in such first Offering
Period). An Eligible Employee who elects to participate with
respect to an Offering Period will be deemed to have elected to
participate in each subsequent Offering Period, unless such
Participant properly withdraws from participation on a timely
basis. An Eligible Employee may withdraw from participation as to
any subsequent Offering Period by properly completing a notice of
withdrawal in the form provided by the Company and filing the
notice of withdrawal with the Company's Human Resources Department
not later than 4:30 p.m., Minneapolis, Minnesota time on the 15th
day of the last month of an Offering Period. Any such notice of
withdrawal will be effective for the next Offering Period
commencing after the Offering Period in which such notice of
withdrawal is given, all as further described in Section 8.1 of the
Plan.
5.2
Limitation on
Participation .
Notwithstanding any provisions of the Plan to the contrary, an
Eligible Employee may not participate in the Plan and will not be
granted an Option under the Plan if, immediately after the grant of
such Option, such Eligible Employee (or any other person whose
stock ownership would be attributed to such Eligible Employee
pursuant to Section 424(d) of the Code) would own stock or options
possessing 5% or more of the total combined voting power or value
of all classes of stock of the Company or of its
“parent” or “subsidiary” corporations
(within the meaning of Section 424 of the Code).
(a) By completing and filing an enrollment form, a
Participant will elect to have payroll deductions made from such
Participant’s total Compensation in whole percentages from a
minimum of 1% to a maximum of 15%, (or such other minimum or
maximum percentages as the Committee may from time to time
establish).
(b) All payroll deductions authorized by a
Participant will be credited as of each payday to an account
established under the Plan for the Participant. Such account will
be solely for bookkeeping purposes, no separate fund, trust or
other segregation of such amounts will be established or made and
the amounts represented by such account will be held as part of the
Company's general assets, usable for any corporate purpose.
A
Participant may
not make any separate cash payment or contribution to such
Participant’s account. No interest will accrue on amounts
held in such accounts under the Plan.
(c) No increases or decreases in the amount of
payroll deductions for a Participant may be made during an Offering
Period. A Participant may increase or decrease the amount of his or
her payroll deductions under the Plan for subsequent Offering
Periods by properly completing an amended enrollment form and
filing it with the Com
