Sharper Image
Corporation
350 The
Embarcadero
Sixth Floor
San Francisco,
California 94105
December 23, 2006
VIA FEDERAL EXPRESS & ELECTRONIC MAIL
Jeffrey P. Forgan
c/o Sharper Image Corporation
350 The Embarcadero, Sixth Floor
San Francisco, California 94105
Dear Jeff:
This will confirm the agreement (the "Agreement") that has been
reached with you in connection with your resignation of employment
from Sharper Image Corporation ("Sharper Image" or the "Company").
All capitalized terms not defined herein shall have the meaning
ascribed in the Employment Agreement dated as of May 10, 2006
between you and the Company (the "Employment Agreement).
1.
Termination Date : Effective as of
November 8, 2006 (the "Termination Date"), you have resigned from
all positions with the Company, including as Executive Vice
President and Chief Financial Officer as well as from any and all
other positions currently or previously held by you in the course
of your employment with the Company and any of its subsidiary or
affiliate entities, and your employment with the Company ceased as
of the Termination Date. A copy of your letter of resignation dated
November 8, 2006 is attached hereto as Exhibit A. You agree to
execute any additional documents necessary to effect such
resignation.
2.
Pay and Benefits Through Termination Date
: You acknowledge that you have been paid through the
Termination Date for all accrued salary together with accrued but
unused vacation pay, less all applicable Federal, state and local
withholding taxes and deductions. You hereby acknowledge and agree
that, other than as specifically set forth in this Agreement, you
are not due any compensation from the Company, including
compensation for unpaid salary, unpaid bonus, accrued or unused
vacation or other paid time off, or in connection with the exercise
of stock options. Other than as expressly set forth herein, your
eligibility to participate in the Company's benefit plans and
programs terminated as of November 8, 2006.
3.
Termination Benefits : In consideration of
your obligations set forth in this Agreement, including but not
limited to your consent to the General Release set forth in
paragraph 6 below, although you have resigned from employment with
the Company without Good Reason, you will be entitled to receive
the following termination benefits upon the Effective Date (defined
below):
a.
Severance : You acknowledge and agree that
you are not entitled to receive any severance payment under Section
4(b) of the Employment Agreement.
b.
Health Coverage : In the event that you
timely elect to receive continued health coverage in the Company's
group health plans pursuant to the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985 ("COBRA"), the Company
agrees to pay the premiums for the same coverage in effect
immediately prior to the Termination Date, from the Effective Date
of this Agreement until the earlier of (i) twelve (12) months after
the Termination Date, or (ii) you become eligible for coverage
under another employer's group health plan, if earlier, all subject
to the requirements, conditions and limitations of COBRA and such
plans, which may be amended from time to time. Thereafter, should
you choose to maintain continuation health coverage under COBRA, it
shall be at your own expense.
c.
Stock Options : All of your options to
purchase the Company's common shares ("Options") that are vested
and outstanding as of the Termination Date will remain outstanding
and shall have their exercise price adjusted as determined by the
Board of Directors (or a Committee of a Board of Directors) of the
Company (the "Board") in connection with the restatement of the
Company's financial statements. You acknowledge that as of the
Termination Date, you held 35,000 vested and outstanding Options
(the "Outstanding Options"). The Outstanding Options shall remain
exercisable for twelve (12) months following the Termination Date,
with or without the provision of services to the Company, at the
adjusted exercise price determined by the Board. You acknowledge
and agree that you may not exercise the Outstanding Options until
you have received written notification of the adjusted exercise
price. You further acknowledge that you are not entitled to any
award of any additional Options before or after the Effective
Date.
4.
Consulting Services : For a period of four
(4) months from the Termination Date (the "Consulting Period"), you
shall make yourself available for substantially all or your working
time (subject to any time used by you for job interviews or
otherwise obtaining employment), at mutually agreed times, to
provide advice, assistance, or information with respect to finance,
accounting and treasury, and such other areas as reasonably
requested by the Company (the "Consulting Services"), for which you
will be paid a consulting fee of $25,000.00 per month, in arrears.
During the Consulting Period, you shall serve as an independent
contractor and not an employee of the Company. The Company and you
shall treat your consulting engagement as that of an independent
contractor, and not an employee, for all purposes, including (i)
Federal, state, and local income and employment taxes, (ii)
benefits and (iii) insurance. As a consultant, you shall not have
any right or authority to assume or create any obligation or
responsibility, express or implied, on behalf of or in the name of
the Company, or to bind the Company in any manner, except as may be
authorized in writing by an officer of the Company, and shall not
make any contrary representation to any third party. Without in any
way limiting the generality of the foregoing, you shall have no
right or authority to accept service of legal process on behalf of
the Company. Should you breach this paragraph 4, in addition to any
and all other remedies available to the Company, you shall have no
right to any further payments under this paragraph and the General
Release set forth in paragraph 6 below shall remain in full force
and effect. If requested by the Company, you will provide to the
Company a representation on the Company's restated financials
similar to the representations required under Sections 302 and 906
of the Sarbanes-Oxley Act of 2002, or if you are unable to provide
such representation, an explanation to the Company's Chief
Executive Officer or Chief Financial Officer or the Chairman of the
Audit Committee of the Board as to why such representation cannot
be provided.
5.
409A Issues and Taxes : Notwithstanding
anything in this Agreement to the contrary, if required by section
409A of the Internal Revenue Code of 1986, as amended, to avoid the
imposition of additional taxes, the amounts described in paragraphs
3 and 4 hereof, to the extent required to be paid but not yet paid,
shall upon your request be modified to the extent reasonably
practicable and necessary to resolve any section 409A issues,
provided that there is no increased cost to the Company. Any and
all tax liabilities incurred by you as a result of the payments
made or benefits provided under this Agreement, however, shall be
your sole responsibility.
6.
General Release and Waiver; Company Limited
Release :
a.
In consideration of the Company's obligations hereunder
and acceptance of your resignation, you, your heirs, successors,
and assigns, hereby knowingly and voluntarily release and forever
discharge the Company and its subsidiaries and affiliates, together
with all of their respective current and former officers,
directors, consultants, agents, representatives and employees, and
each of their predecessors, successors and assigns (collectively,
the "Releasees"), from any and all debts, demands, actions, causes
of actions, accounts, covenants, contracts, agreements, claims,
damages, omissions, promises, and any and all claims and
liabilities whatsoever, of every name and nature, known or unknown,
suspected or unsuspected, both in law and equity ("Claims"), which
you ever had, now have, or may hereafter claim to have against the
Releasees by reason of any matter, cause or thing whatsoever
arising from the beginning of time to the time you sign this
Agreement (the "General Release"). This General Release of Claims
shall apply to any Claim of any type, including, without
limitation, any and all Claims of any type that you may have
arising under the common law, under Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination
in Employment Act ("ADEA"), the Older Workers Benefit Protection
Act, the Americans With Disabilities Act, the Family and Medical
Leave Act, the Employee Retirement Income Security Act ("ERISA"),
the Sarbanes-Oxley Act of 2002 or the California Fair Employment
and Housing Act, the California Family Rights Act, or the
California Labor Code section 1400 et seq ., each as
amended, and any other Federal, state or local statutes,
regulations, ordinances or common law, or under any policy,
agreement, contract, understanding or promise, written or oral,
formal or informal, between any of the Releasees and you, and shall
further apply, without limitation, to any and all Claims in
connection with, related to or arising out of your employment, or
the termination of your employment, with the Company;
provided , however , that this General Release shall
not apply to or impair (i) any rights you may have arising under or
in connection with any stock option plan adopted by the Company, as
amended and restated, that governs the Options specifically
described in paragraph 3(c) of this Agreement; (ii) claims for
vested benefits pursuant to any other Company employee benefit
plan, as defined in ERISA, in which you were a participant before
the Termination Date; (iii) any indemnification rights you may have
under the Indemnification Agreement dated March 18, 2003 between
you and the Company, (the "2003 Indemnification Agreement") and the
Indemnification Agreement dated August 25, 2005 between you and the
Company (the "2005 Indemnification Agreement"), the by-laws of the
Company, or applicable law including California Labor Code section
2802; or (iv) claims for unemployment insurance benefits or
workers' compensation benefits applicable to the period through the
Termination Date; or (v) any claims that
