Sharper Image Corporation
350 The Embarcadero
Sixth Floor
San Francisco, California 94105
December 22, 2006
VIA FEDERAL EXPRESS & ELECTRONIC
MAIL
Tracy Wan
38 Denise Drive
Hillsborough, CA 94010
Dear Tracy:
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 President and Chief
Operating 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 shall be entitled to
receive a severance payment of $32,251.00, payable in a lump sum,
less applicable tax withholding and deductions, within thirty (30)
days from the Effective Date, but in no event later than January
31, 2007. This payment is in lieu of any severance payment under
Section 4(b) of the Employment Agreement and in full satisfaction
of any severance obligation to you by the Company.
b.
Stock Options : All of your options to
purchase the Company's common shares (the "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 373,000 vested and
outstanding Options (the "Outstanding Options"). The Outstanding
Options are set out in detail on Exhibit B hereto. The Outstanding
Options shall remain exercisable until the later of the date that
is (i) twelve (12) months following the Termination Date or (ii)
thirty (30) days following the date on which the Company first
determines that the exercise of the Outstanding Options would no
longer violate applicable securities laws (which determination
shall be communicated to you in writing by 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. In addition, you acknowledge that as of the Termination
Date, you held 5,000 unvested Options, all of which terminated and
ceased to be exercisable immediately upon the Termination Date. You
further acknowledge that you are not entitled to any award of any
additional Options before or after the Effective Date.
4.
Health Coverage : The Company agrees that
it shall continue your health coverage in accordance with the
letter agreement dated October 20, 2003 between you and the Company
(the "Medical Plan Letter"), incorporated herein by this reference,
whether or not you sign this Agreement. A copy of the letter from
Aetna Insurance dated October 9, 2006 confirming health coverage is
attached hereto as Exhibit C. Nothing herein shall limit the
Company's ability to change health insurance providers in it sole
discretion.
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 :
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 any stock option plan adopted by the
Company, as amended and restated, that governs the Options
specifically described in paragraph 3 (b) 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) claims
for unemployment insurance benefits or workers' compensation
benefits applicable to the period through the Termination Date;
(iv) any rights to indemnification you may have arising under or in
connection with the Indemnification Agreement between you and the
Company dated March 18, 2003 (the "Indemnification Agreement"), or
any rights to indemnification you may have under the by-laws of the
Company or applicable law including California Labor Code Section
2802; or (v) any claims that may arise from any violation of this
Agreement.
b.
For the purpose of implementing a full and complete
release, you understand and agree that this Agreement is intended
to include all claims, if any, which you may have and which you do
not now know or suspect to exist in your favor against the Company
or any of the Releasees and that this Agreement extinguishes those
claims. Accordingly, you expressly waive all rights afforded by
section 1542 of the Civil Code of the State of California ("Section
1542"). Section 1542 states as follows:
A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
c.
You represent and warrant that you have not filed any
complaints or charges with any court or administrative agency
against the Company or any of the Rele
