Exhibit 10.4
CONFIDENTIAL
AGREEMENT
THIS
AGREEMENT (this “Agreement”) is made and entered into
by and between Michael M. Searles, a resident of Minnesota
(“Executive”), and Wilsons The Leather Experts Inc., a
Minnesota corporation (the “Company”).
BACKGROUND
A. Executive
was employed by the Company as its Chief Executive Officer,
pursuant to an Employment Agreement dated November 22, 2004,
as modified and amended March 2, 2005, September 14, 2005
and December 21, 2006 (the “Employment
Agreement”).
B. The
parties have agreed that it is in their mutual interests that
Executive resign as an employee, officer, and director of the
Company effective at the end of the day on April 3, 2008 (the
“Separation Date”) and that the parties provide for a
smooth transition in connection with Executive’s
resignations.
C. The
Company desires to secure cooperation from Executive with the
transition of his duties, and to ensure Executive’s
availability to consult with the Company from time to time with
respect to the business and operations of the Company.
D. The
parties are concluding their relationship amicably, but mutually
recognize that such a relationship may give rise to potential
claims or liabilities. The parties desire to resolve all issues
Executive may have relating to the termination of Executive’s
relationship with the Company, as set forth in this
Agreement.
NOW
THEREFORE, in consideration of the mutual promises and provisions
contained in this Agreement and the Release referred to below, the
parties, intending to be legally bound, agree as follows:
CONFIDENTIAL
AGREEMENTS
1.
Resignation. By
signing this Agreement, Executive confirms his resignation as an
employee, officer and director of the Company, effective
April 3, 2008. Executive will sign such other documents as
deemed reasonably necessary to accurately reflect such resignations
in the Company’s corporate records.
2.
Final Pay/Benefits
Continuation. Executive confirms that he has been paid in
full for his base salary, compensation, and benefits owing to him
to date, and the Company will pay Executive’s final base
salary and accrued and unused vacation time in the amount of
$3,018.31 (10.46 hours), earned through the Separation Date, in
accordance with the regular payroll practices of the Company.
Executive acknowledges and agrees that he will not receive an
incentive bonus award under the Wilsons Leather Corporate
Leadership Team Incentive Plan for the fiscal year ending
February 2, 2008 or under any other annual incentive bonus
plan. Executive will have the right to continue his group health,
dental and/or vision insurance coverage after the Separation Date
under such terms as are made available to similarly-situated former
employees of the Company, pursuant to the terms of the applicable
plan documents and laws regarding continuation coverage. Except as
provided in subparagraph 5.b of this Agreement, such continuation
coverage will be at Executive’s own expense. To the extent
that Executive is currently a participant in any retirement,
pension, or profit sharing plans of the Company, Executive will be
entitled to his rights and benefits under these plans at the times
and under the terms and conditions set forth in any such
plan.
3.
Expense Reimbursement
. The Company will reimburse Executive for his regular and
necessary business expenses incurred through the Separation Date in
accordance
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CONFIDENTIAL
with
the Company’s regular policies and practices. Executive will
submit all requests for
reimbursement to the Company no later than April 30,
2008.
4.
Release by Executive.
At the same time that Executive executes this Agreement, he shall
execute a Release in the form attached to this Agreement as
Exhibit A (the “Release”). This Agreement will not
be interpreted or construed to limit the Release in any
manner.
5.
Severance Arrangements
. The Company will make the severance payments and other
consideration set forth in subparagraphs 5.a. and 5.b. below in
lieu of any further payments or compensation that Executive would
otherwise be entitled to receive under any agreement with the
Company or any affiliate or as an employee, officer or director of
the Company or any Affiliate. The Company will make such payments
and provide such consideration only if (i) Executive has
signed this Agreement and the Release and has not rescinded this
Agreement or the Release within the rescission period set forth in
paragraph 23 below (the “Rescission Period”), and
(ii) Executive has not breached his obligations pursuant to
this Agreement, the Release or the continuing provisions of the
Employment Agreement.
a. Salary
Continuation . The Company will pay Executive as
salary continuation an amount equal to Executive’s monthly
base salary as of the Separation Date for a period of six (6)
months. Payment will be made in accordance with the Company’s
regular payroll schedule for the pay period commencing after
expiration of the Rescission Period and continuing for six
(6) months thereafter.
b. Health
Insurance . If Executive elects to continue his
group health, dental and/or vision insurance under the terms of
paragraph 2 above and the terms of the applicable plans, Executive
will complete all paperwork necessary to carry out such
election
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CONFIDENTIAL
effective
April 30, 2008, as specified by the Company or its agents in
accordance with the applicable plans. Upon such election by
Executive, the Company will pay on Executive’s behalf a
portion of the cost of the premiums that he is required to pay to
maintain such continuation coverage for a period of up to six
(6) months following the Separation Date, or, if earlier,
until such continuation coverage ceases in accordance with the
terms and conditions of the applicable plans and laws. The premium
portion to be paid by the Company will be equal to the portion of
the health, dental and/or vision insurance premiums that would be
paid by the Company if Executive were an employee of the Company,
at the same level of coverage that was in effect on the Separation
Date. The Company will deduct Executive’s portion of such
premiums from payments to Executive pursuant to subparagraph 5.a.,
provided, however, if payments owed to Executive pursuant to
subparagraph 5.a. are not sufficient to cover Executive’s
portion of the premiums, Executive will pay such portion to the
Company in accordance with the requirements of continuation
coverage.
6.
Stock Options .
Executive acknowledges and agrees that the options listed in this
paragraph below are Executive’s only options to purchase
shares of the common stock of the Company, and that such options
are exercisable only to the extent reflected in the “Amount
Exercisable” column below. All such options were granted
pursuant to the Company’s 2000 Long Term Incentive Plan, as
amended and restated (the “Plan”). Executive further
agrees and acknowledges that all of the options to purchase common
stock of the Company will expire and cease to be outstanding in
accordance with the terms of the applicable Stock Option Agreements
and the Plan.
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| Date of |
|
Exercise |
|
Number of |
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Amount |
|
Grant |
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Price |
|
Shares |
|
Exercisable |
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12/01/04
|
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$ |
5.00 |
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350,000 |
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350,000 |
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06/02/05
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$ |
5.88 |
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450,000 |
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300,000 |
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12/13/07
|
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$ |
1.10 |
|
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100,000 |
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0 |
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CONFIDENTIAL
b. Restricted
Stock . Executive acknowledges and agrees that he
owns no restricted stock of the Company.
7.
Confidential Information and
Restrictive Covenants. Executive acknowledges and confirms
his continuing obligations following the Separation Date to comply
with the provisions of the Employment Agreement that continue and
survive after termination of his employment, including without
limitation the obligations set forth in Sections 6, 8, 9, 12
and 13 of the Employment Agreement, except that Executive and the
Company agree that the obligations of Executive under Section 8(a)
of the Employment Agreement shall end six (6) months following
the Separation Date and the obligations of Executive under Sections
8(b) and 8(c) of the Employment Agreement shall end twelve
(12) months following the Separation Date.
8.
Cooperation; Consulting
Services . At any time upon reasonable request and
notice from the Company, Executive will, without further
consideration but at no expense to Executive, (a) timely execute
and deliver such acknowledgements, instruments, certificates, and
other ministerial documents (including without limitation,
certification as to specific actions performed by Executive in his
capacity for the Company or any of its affiliates) as may be
necessary or appropriate to formalize and complete the
Company’s or any affiliate’s corporate records;
provided, however, that nothing in this paragraph 8 will require
Executive to take any action that he reasonably believes to be
unlawful or unethical or to make any inaccurate statement of actual
facts, and (b) provide complete and truthful information to,
and otherwise cooperate fully with, the Company, any of its
affiliates, and any of its or their legal counsel, agents, insurers
and representatives in connection with any investigations,
litigation or other matters relating to the Company or any of its
affiliates in which the
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CONFIDENTIAL
Company
determines that Executive may have relevant information. In
addition, at the Company’s reasonable request and upon
reasonable notice, for a period of six (6) months following
the Separation Date, Executive will make himself reasonably
available, without further consideration, to discuss and consult
with the Company regarding business matters, including without
limitation matters with which he was directly and substantially
involved while employed by the Company, and to assist in
transitioning his duties as Chief Executive Officer.
9.
Claims Involving the
Company . Executive will not recommend or suggest to
any potential claimants or plaintiffs or their attorneys or agents
that they initiate claims or lawsuits against the Company, any of
its affiliates, or any of its or their directors, officers,
employees, or agents, nor will Executive voluntarily aid, assist,
or cooperate with any claimants or plaintiffs or their attorneys or
agents in any claims or lawsuits now pending or commenced in the
future against the Company, any of its affiliates, or any of its or
their directors, officers, employees, or agents; provided, however,
that this paragraph 9 will not be interpreted or construed to
prevent Executive from providing information to any governmental or
law enforcement agency or from giving testimony in response to
questions asked pursuant to a legally enforceable subpoena,
deposition notice or other legal process.
10.
Records, Documents, and Property . Executive
confirms that he has delivered to the Company any and all Company
or affiliate records and any and all Company or affiliate property
in his possession or under his control, including without
limitation, manuals, books, blank forms, documents, letters,
memoranda, notes, notebooks, reports, printouts, computer disks,
computer tapes, digital storage media, data, tables, or
calculations and all copies thereof, documents that in whole or in
part contain any trade secrets or confidential, proprietary, or
other secret information of the Company or of any of its
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CONFIDENTIAL
affiliates,
and all copies thereof, and keys, access cards, access codes,
source codes, passwords, raw materials, products, product samples,
credit cards, personal computers, telephones, and other electronic
equipment belonging to the Company or any of its affiliates;
provided, however, that Executive may retain the laptop computer
and BlackBerry he used in connection with his employment but prior
to the Separation Date will allow the Company to inspe
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