February 1, 2002
Mr. Keith C. Spurgeon
100 Charles Drive, No. B3
Bryn Mawr, PA 19010
Dear Keith:
It is with great pleasure that we extend you the following offer to join Select
Comfort Corporation:
Position: Senior Vice President of Sales
Start Date: February 18, 2002 or as soon as practical thereafter.
Salary: $250,000
Bonus Eligibility: 45% of the base salary paid to you during the fiscal year
in accordance with the terms of our bonus plan. For the
2002 fiscal year, this amount will be guaranteed to you.
Stock Options: Options to purchase 100,000 shares of our common stock, of
which 75,000 will vest in equal monthly increments over 36
months of employment, and 25,000 will vest upon the
earlier of completion of 5 years of employment o r such
time as the stock price has exceeded $12 per share for 30
consecutive trading days. The exercise price of the stock
options will be the average of the high and low trading
prices of the Company's common stock on the date of grant
of the options, which will be on or near your first day of
employment.
Severance: If your employment is terminated by the Company within one
(1) year following a change in control of the Company, or
if you are subject at any time to a termination without
cause, or to a constructive dismissal due to significant
diminution in your responsibilities, 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.
Benefits: You will be eligible for the following Company benefits as
of the first of the month following 30 days of employment:
medical, dental, vision, flex account, life and AD&D
insurance, supplemental life and AD&D insurance, long-term
disability, travel accident insurance and employee
assistance program. You will be eligible to participate in
the Company's 401(k) plan as of the first of the month
following your start date, and in the Company's Employee
Stock Purchase Plan as of the first quarterly offering
period commencing after your start date. You will be
eligible for product discounts under the Company's
Employee Purchase Plan 30 days from your start date. You
will be covered under the Company's short-term disability
plan after six months of employment. You will be eligible
for Select Comfort's Education Assistance Program after
you have completed one year of full-time employment.
Further detail regarding our benefits package is enclosed
for your review.
Paid Time Off: You will accrue Paid Time Off (PTO) at a rate of 3.69
hours per week per calendar year up to a maximum of 24
days per year. Additionally, you will be given time off
for Company holidays. You will also be eligible to
participate in possible further future incentive programs
and awards commensurate with your senior management
position.
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Relocation: The Company will pay directly or reimburse you for your
reasonable and documented actual relocation expenses,
including real estate brokerage commissions, moving
expenses, temporary living expenses, house hunting trips
and other ordinary and customary relocation expenses. You
have estimated such expenses at $60,000 to $80,000.
Employment would be conditioned upon your signing our standard form of Employee
Inventions, Confidentiality and Non-Compete Agreement.
You should understand that this letter 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 any time and
for any reason and, similarly, we reserve the right to alter, modify or
terminate the relationship at any time and for any reason.
We are very excited about your joining our management team.
Please contact me at (763) 551-7007 with any questions you may have.
Sincerely,
/s/William R. McLaughlin
William R. McLaughlin
President & CEO
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