Exhibit 10.4
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (this "Agreement") is made this 25th day of May,
1996, by and between WILSONS THE LEATHER EXPERTS INC., a Minnesota Corporation
(the "Company"), and ▇▇▇▇ ▇▇▇▇▇▇, a resident of Minnesota (the "Executive").
WHEREAS, the Company wishes to secure the Executive's services as Chairman
and Chief Executive Officer of the Company under the terms hereof; and
WHEREAS, the Executive wishes to provide such services to the Company.
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and undertakings stated herein, the Executive and the Company hereby agree as
follows:
1. EMPLOYMENT. Subject to all terms and conditions hereof, the Company
shall employ the Executive as, and the Executive shall serve the Company as,
Chairman and Chief Executive Officer of the Company during the period commencing
on the date hereof and ending on the fourth anniversary of the date hereof (such
period, as the same may be extended by written agreement of the Executive and
the Company, being herein called the "Employment Period"), unless the
Executive's employment hereunder terminates earlier in accordance with Section 5
hereof. If at any time after the second anniversary of the date hereof, either
the Company or the Executive desires to negotiate an extension of the Employment
Period beyond the date specified above, such party may notify the other party in
writing of such desire. The Company and the Executive agree to meet with one
another at a mutually acceptable time and place within thirty days after any
such notice is given and thereafter as often as either party reasonably deems
necessary to attempt in good faith to negotiate such extension and the terms and
conditions thereof.
2. DUTIES AND POWERS OF THE EXECUTIVE. As Chairman and Chief Executive
Officer of the Company, the Executive shall have all duties customarily
associated with the offices of chairman and chief executive officer of a
significant business enterprise, shall have primary management responsibility
for the Company, shall chair the governing board of the Company, and shall
perform such other duties consistent with the offices of Chairman and Chief
Executive Officer as may be specified by the Board of Directors of the Company,
to whom the Executive shall report. While the Executive is employed by the
Company hereunder, the Executive shall devote substantially all of his business
time and energy to the performance of his duties hereunder and shall not accept
other employment with or engage in or render services to any other business or
enterprise; provided, however, that nothing in this Agreement shall preclude the
Executive from serving as, and receiving compensation for serving as, a director
or member of a committee of any corporation or other business
organization involving no conflict of interest with the interests of the Company
and its Subsidiaries (as defined in Section 9 hereof), engaging in charitable
and community activities, or managing his personal investments as long as such
activities do not materially interfere with the regular performance of his
duties under this Agreement. Notwithstanding anything to the contrary stated
herein, in no event shall the Executive be required to be based in a location
which would require him to change his residence to a location outside of the
Minneapolis, Minnesota metropolitan area.
3. COMPENSATION.
(a) Subject to all terms and conditions hereof, while the Executive is
employed by the Company hereunder, the Company shall pay, or cause one or more
of its Subsidiaries to pay, to the Executive a base salary ("Base Salary") of
$380,000 per Employment Year, as defined in Section 9 hereof (prorated for any
partial Employment Year) or such higher amount as is from time to time hereafter
established by the Board of Directors of the Company. The Executive's annual
Base Salary shall be payable in substantially equal installments once every two
weeks. The Board of Directors of the Company will review the Executive's Base
Salary at the beginning of each Employment Year, commencing with the Employment
Year ending on the second anniversary of the date hereof, to determine whether
an increase in the annual amount thereof is merited. In no event shall the
Board of Directors reduce the Executive's Base Salary for any Employment Year
below the greater of $380,000 or the amount of Base Salary paid by the Company
to the Executive for the immediately preceding Employment Year.
(b) Subject to all terms and conditions hereof, while the Executive is
employed by the Company hereunder, the Executive shall participate in the
Incentive Plan of the Company and its Subsidiaries (the "Incentive Plan"), and
the Executive's Normal Award for each Plan Year (as each such term is defined in
Section 9 hereof) shall be no less than 35% of the Executive's annual Base
Salary in effect on the last day of such Plan Year. Except as modified by the
provisions of this Section 3(b) and Section 6 hereof, payments by the Company of
Incentive Plan awards to the Executive shall be governed by the terms of the
Incentive Plan as in effect from time to time, provided that in no event shall
the Incentive Plan be modified in any manner adverse to the Executive or
terminated without the prior written consent of the Executive.
4. FRINGE BENEFITS.
(a) While the Executive is employed by the Company hereunder, the Company
shall provide, or cause one or more of its Subsidiaries to provide, to the
Executive and his dependents such medical, dental, life insurance, disability,
retirement savings, vacation, sick leave and other employee and fringe benefits
as are provided from time to time by the Company or any of its Subsidiaries to
its senior executives and their dependents, in accordance with the general
benefits practices of the Company or such Subsidiary then in
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effect; provided, however, that the benefits provided to the Executive and his
dependents hereunder shall in no event be less favorable to them, on a benefit-
by-benefit basis, than the benefits provided by the Company or any of its
Subsidiaries to its senior executives and their dependents on the date hereof, a
listing of which appears on Attachment 1 hereto.
(b) The Company shall promptly reimburse, or cause one or more of its
Subsidiaries to promptly reimburse, the Executive for all reasonable travel and
other expenses which are incurred by him in connection with the conduct of the
business of the Company or any of its Subsidiaries while he is employed by the
Company hereunder and for which he furnishes appropriate documentation in
accordance with the Company's general expense reimbursement practices then in
effect.
5. TERMINATION. The Executive's employment by the Company hereunder shall
end immediately upon:
(i) receipt by the Company of the Executive's written resignation
from the Company (which resignation shall specify whether it is
with or without Good Reason (as defined in Section 9 hereof)
and, if with Good Reason, shall set forth in reasonable detail
the basis therefor);
(ii) receipt by the Executive of written notice from the Company of
termination of the Executive's employment (which notice shall
specify whether such termination is with or without Cause (as
defined in Section 9 hereof) and, if with Cause, shall set
forth in reasonable detail the basis therefor);
(iii) the Executive's death or Disability (as defined in Section 9
hereof); or
(iv) expiration of the Employment Period,
and the date on which termination of the Executive's employment by the Company
hereunder occurs shall be the "Termination Date".
6. PAYMENTS UPON TERMINATION.
(a) If the Executive's employment by the Company hereunder ends by reason
of resignation by the Executive without Good Reason or termination by the
Company for Cause, then:
(i) the Company shall pay, or cause one or more of its Subsidiaries
to pay, to the Executive, in accordance with Section 3(a)
hereof, the Executive's Base Salary through and including the
Termination Date;
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(ii) if the Termination Date occurs on or after the last day of any
Plan Year but prior to the date payment of the Executive's
award, if any, under the Incentive Plan for such Plan Year has
been made, the Company shall pay, or cause one or more of its
Subsidiaries to pay, the full amount of such award to the
Executive on the same date awards under the Incentive Plan for
such Plan Year are paid to the other participants in the
Incentive Plan; and
(iii) the Company shall pay, or cause one or more of its Subsidiaries
to pay, to the Executive, in accordance with Section 4(b)
hereof, all amounts due thereunder for reimbursement of
expenses.
(b) If the Executive's employment hereunder ends by reason of the
Executive's death or Disability or the expiration of the Employment Period,
then:
(i) the Company shall pay, or cause one or more of its Subsidiaries
to pay, to the Executive (or, in the event of the Executive's
death, to his estate), in accordance with Section 3(a) hereof,
the Executive's Base Salary through and including the last day
of the month in which the Termination Date occurs (in the event
employment hereunder ends by reason of death or Disability) or
through and including the Termination Date (in the event
employment hereunder ends by reason of the expiration of the
Employment Period);
(ii) if the Termination Date occurs on or after the last day of any
Plan Year but prior to the date payment of the Executive's
award, if any, under the Incentive Plan for such Plan Year has
been made, the Company shall pay, or cause one or more of its
Subsidiaries to pay, the full amount of such award to the
Executive (or, in the event of the Executive's death, to his
estate) no later than the date awards under the Incentive Plan
for such Plan Year are paid to the other participants in the
Incentive Plan;
(iii) if the Termination Date occurs on any day of a Plan Year other
than the last day, the Company shall pay, or cause one or more
of its Subsidiaries to pay, to the Executive (or, in the event
of the Executive's death, to his estate) a pro rata portion of
the award which would have been payable to the Executive under
the Incentive Plan for such Plan Year had the Executive
remained employed by the Company hereunder for the duration of
such Plan Year, which payment shall be made no later than the
date awards under the Incentive Plan for such Plan Year are
paid to the other participants in the Incentive Plan; and
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(iv) the Company shall pay, or cause one or more of its Subsidiaries
to pay, to the Executive (or, in the event of the Executive's
death, to his estate), in accordance with Section 4(b) hereof,
all amounts due thereunder for reimbursement of expenses.
(c) If the Executive's employment hereunder ends by reason of resignation
by the Executive for Good Reason or termination by the Company without Cause,
then:
(i) the Company shall continue to pay, or cause one or more of its
Subsidiaries to continue to pay, to the Executive, in
accordance with, and at the times provided in, Section 3(a)
hereof, the Executive's Base Salary through and including the
last day of the Employment Period;
(ii) if the Termination Date occurs on or after the last day of any
Plan Year but prior to the date payment of the Executive's
award, if any, under the Incentive Plan for such Plan Year has
been made, the Company shall pay, or cause one or more of its
Subsidiaries to pay, the full amount of such award to the
Executive on the same date awards under the Incentive Plan for
such Plan Year are paid to the other participants in the
Incentive Plan;
(iii) if the Termination Date occurs on any day during the last six
months of a Plan Year other than the last day, the Company
shall pay, or cause one or more of its Subsidiaries to pay, to
the Executive a pro rata portion of the award which would have
been payable to the Executive under the Incentive Plan for such
Plan Year had the Executive remained employed by the Company
hereunder for the duration of such Plan Year, which payment
shall be made no later than the date awards under the Incentive
Plan for such Plan Year are paid to the other participants in
the Incentive Plan;
(iv) the Executive and his dependents shall continue for the
remainder of the Employment Period to be entitled to all
medical, dental, life insurance and disability benefits they
would have received under Section 4(a) hereof had the Executive
remained employed by the Company hereunder for the duration of
such period (or, in the event their participation in a plan
pursuant to which any such benefits are provided is barred by
the terms of such plan, benefits which are no less favorable to
them than the benefits under such plan), except to the extent
essentially equivalent and no less favorable benefits are
provided to them by a subsequent employer; and
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(v) the Company shall pay, or cause one or more of its Subsidiaries
to pay, to the Executive, in accordance with Section 4(b)
hereof, all amounts due thereunder for reimbursement of
expenses.
(d) For purposes of determining any amounts payable under this Section 6,
the Executive's Base Salary at any time after the Termination Date shall be
deemed to equal his Base Salary as in effect on the Termination Date.
(e) In the event the Executive's employment hereunder is terminated on any
day of an Employment Year or a Plan Year other than the last day and payment is
required hereunder of a pro rata portion of any sum due with respect to such
Employment Year or Plan Year, such pro rata portion shall be determined based on
the number of days in such Employment Year or Plan Year occurring on or before,
and after, the Termination Date.
(f) Nothing in this Section 6 shall limit any obligations the Company or
any of its Subsidiaries may have to the Executive or his dependents upon
termination of the Executive's employment hereunder (i) as a matter of law, (ii)
under any other provision of this Agreement, (iii) under that certain
Shareholder Agreement dated as of the date hereof among the Executive, the
Company, the other shareholders of the Company and certain other persons, (iv)
under that certain Restricted Stock Agreement dated as of the date hereof among
the Executive, the Company and certain other employees of the Company or one or
more of its Subsidiaries, or (v) in the event of termination by reason of the
Executive's death or Disability, under insurance policies then in effect.
(g) The Executive shall not be required to mitigate the amount of any
payment or other benefit provided for in this Section 6 by seeking employment
with another employer or otherwise; nor shall the amount of any payment or other
benefit provided for in this Section 6 be reduced by any compensation earned by
the Executive as the result of his subsequent employment by another employer,
except as otherwise provided in Section 6(c)(iv) hereof.
7. DIRECTORS' AND OFFICERS' INDEMNIFICATION. While the Executive is
employed by the Company hereunder, the Company shall not, without the prior
written consent of the Executive, amend or permit any of the Subsidiaries to
amend its articles of incorporation or by-laws to prohibit or limit the
indemnification of, or advances of expenses to, its directors and officers or to
impose conditions on such indemnification or advances of expenses in addition to
those provided by law.
8. CONFIDENTIAL INFORMATION.
(a) The Executive shall not at any time disclose or use any Trade Secrets
(as defined in Section 9 hereof) of which the Executive has become informed
during his employment by the Company or any of its Subsidiaries, except as
required in the performance of his duties to the Company or any of its
Subsidiaries, except for disclosures required by law
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or administrative process or in the defense of any claim against the Executive
or in the prosecution of any claim by the Executive against the Company or any
of its Subsidiaries, and except for information which is publicly known on the
date hereof or hereafter becomes publicly known other than as a result of a
breach by the Executive of this Section 8(a).
(b) Upon termination of his employment with the Company, the Executive
agrees to deliver to the Company all materials under his control that include
Trade Secrets or otherwise relate to the business of the Company or any of its
Subsidiaries.
9. CERTAIN DEFINITIONS. As used in this Agreement, the following defined
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terms have the meanings indicated below:
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(a) "Cause" shall mean:
(i) the commission by the Executive of any act of embezzlement
against the Company or any of its Subsidiaries;
(ii) the conviction of the Executive for, or entry by the Executive
of a guilty plea to, any felony which has a material adverse
effect upon the business, operating results, financial
condition or employee, supplier or customer relations generally
of the Company and its Subsidiaries, taken as a whole, or which
precludes the Executive from performing his duties under this
Agreement for 90 days during any 12-month period;
(iii) the conviction of the Executive for any crime involving
dishonesty with respect to the Company (A) intended by the
Executive to result in personal enrichment of the Executive at
the expense of the Company or its Subsidiaries or (B) which has
a material adverse effect upon the business, operating results,
financial condition or employee, supplier or customer relations
generally of the Company and its Subsidiaries, taken as a
whole;
(iv) the absence by the Executive from employment with the Company
for a period of more than 90 days during any 12-month period
without the approval of the Board of Directors of the Company
other than for vacations, illness, injury or disability; or
(v) willful misconduct by the Executive in breach of the terms of
this Agreement, which misconduct has not been cured within 20
days following notification thereof to the Executive (or if
such misconduct is cured within 20 days after such notice of
misconduct is received, but the same misconduct occurs again at
any time thereafter).
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For purposes hereof, no act or omission of the Executive shall be deemed to be
"willful" unless done, or omitted, by him in bad faith without the belief his
action or omission was in the best interests of the Company or a Subsidiary.
(b) "Disability" shall mean any physical or mental incapacitation whereby
the Executive is therefore unable for a period of 12 consecutive months or for
an aggregate of 12 months in any 24 consecutive month period to perform his
duties hereunder.
(c) "Employment Year" shall mean the 12-month period ending on each
anniversary of the date hereof.
(d) "Good Reason" shall mean (i) a breach by the Company of any of its
obligations hereunder to pay or provide to the Executive and/or his dependents,
as the case may be, any installment of Base Salary, any Incentive Plan awards or
any employee or fringe benefits, which breach has not been cured within 20 days
after notice thereof shall have been given by the Executive to the Company, or
(ii) the removal of the Executive from the office of Chairman of the Board or
Chief Executive Officer of the Company or any material diminution of the duties
of the Executive from those specified in Section 2 hereof or any assignment to
the Executive of duties materially inconsistent with the offices of Chairman and
Chief Executive Officer.
(e) "Normal Award" shall mean the award under the Incentive Plan which
would be earned with respect to any Plan Year if the budgeted or target
performance measures under the Incentive Plan for such Plan Year were met but
not exceeded.
(f) "Plan Year" shall mean the plan year with respect to which awards are
determined under the Incentive Plan.
(g) "Subsidiary" shall mean any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other individuals performing similar functions are at the
time directly or indirectly owned by the Company.
(h) "Trade Secrets" shall mean information that has been created,
discovered or developed by, or otherwise become known to, the Company or any of
its Subsidiaries, including without limitation any formula, pattern,
compilation, program, device, method, technique or process, and that (i) derives
independent economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons or
entities who can obtain economic value from its disclosure or use, and (ii) is
the subject of efforts by the Company or a Subsidiary that are reasonable under
the circumstances to maintain its secrecy. The existence of a Trade Secret is
not negated merely because the Executive has acquired the Trade Secret without
express or specific notice that it is a Trade Secret if, under all the
circumstances, the Executive knows or has reason to know
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that the Company or a Subsidiary intends or expects the secrecy of the type of
information comprising the Trade Secret to be maintained.
10. OFFICE FURNITURE. If the Executive's employment with the Company ends
for any reason, or if the Company intends at any time while the Executive is
employed by the Company to dispose of any of the office furniture or accessories
located in the Executive's office on the date of this Agreement, the Executive
shall be entitled to take, without payment of any consideration, all of such
office furniture and accessories.
11. NO SOLICITATION OF EMPLOYEES. The Executive hereby agrees that, for a
period of one year after the Termination Date, he will not, directly or
indirectly, solicit any person who is then employed at a manager or higher level
by the Company or any of its Subsidiaries to become an employee of any business
or entity of which the Executive is a shareholder, investor, partner, joint
venturer, sole proprietor, director, officer or employee (provided that nothing
herein shall prohibit the solicitation by the Executive, directly or indirectly,
of employees by general advertisement).
12. SUCCESSORS AND ASSIGNS. This Agreement is binding on and inures to
the benefit of the Executive and his heirs, personal representatives and
permitted assigns, and on the Company and its successors and permitted assigns.
No rights or obligations of the Executive or the Company hereunder may be
assigned by such party to any other person or entity without the prior written
consent of the other party.
13. SEPARATE REPRESENTATION. The Executive hereby acknowledges that he
has sought and received independent advice from counsel of his own selection in
connection with this Agreement and has not relied to any extent on any officer,
director or shareholder of, or counsel to, the Company in deciding to enter into
this Agreement.
14. GOVERNING LAW. This Agreement shall be construed under and governed
by the laws of the State of Minnesota.
15. SEVERABILITY. Each section and provision of this Agreement shall be
considered severable and any invalidity of any provision shall not render
invalid or impair to any extent any other section or provision hereof.
16. WITHHOLDING OF TAXES, ETC. All payments to the Executive hereunder
are subject to withholding of income and employment taxes and all other amounts
required by law.
17. SPECIFIC PERFORMANCE. Each of the parties acknowledges and agrees
that the other party would be damaged irreparably in the event any of the
covenants contained in this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the parties
agrees that the other party shall be entitled to an
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injunction or injunctions to prevent breaches of such covenants and to enforce
specifically such covenants in any action instituted before a proper forum in
addition to any other remedy to which such other party may be entitled under
this Agreement or at law or in equity.
18. ARBITRATION. If any dispute arises between the parties with respect
to the application, interpretation or termination of this Agreement, then such
dispute shall be submitted to arbitration for resolution. The arbitrator shall
be selected and the arbitration shall be conducted pursuant to the Employment
Dispute Resolution Rules of the American Arbitration Association ("AAA")
(effective January 1, 1993). Any request for arbitration must be made in
writing by the party seeking arbitration and must be delivered by hand or sent
by registered or certified mail, return receipt requested, postage prepaid, to
both the other party and the AAA. The decision of the arbitrator regarding any
such dispute shall be final and binding on both parties, and any court of
competent jurisdiction may enter judgment upon the award. Notwithstanding
anything to the contrary provided in this Section 18 and without prejudice to
the above procedures, either party may apply to any court of competent
jurisdiction for temporary injunctive or other provisional judicial relief if in
such party's sole judgment such action is necessary to avoid irreparable damage
or to preserve the status quo until such time as the arbitration award is
rendered or the controversy is otherwise resolved.
19. NOTICES. All notices hereunder shall be delivered by hand or sent by
registered or certified mail, return receipt requested, postage prepaid, to the
party to receive the same at the address set forth with the signature of such
party hereto or at such other address as may have been furnished to the sender
by notice hereunder.
20. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which when so executed shall be deemed to be an original, and such counterparts
shall together constitute but one and the same instrument.
21. ENTIRE AGREEMENT. This Agreement and the documents and instruments
referred to herein contain the entire understanding of the parties hereto with
respect to the employment of the Executive by the Company.
22. AMENDMENTS AND WAIVERS. No provision hereof may be altered, amended,
modified, waived or discharged in any way whatsoever except by written agreement
executed by both parties. No delay or failure of either party to insist, in any
one or more instances, upon performance of any of the terms and conditions of
this Agreement or to exercise any rights or remedies hereunder shall constitute
a waiver or a relinquishment of such rights or remedies or any other rights or
remedies hereunder.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date and year first above written.
WILSONS THE LEATHER EXPERTS
INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, #▇▇▇▇ Title: President
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned hereby unconditionally jointly and severally guaranty
the payment and performance when due of all obligations of the Company to the
Executive under the terms of the foregoing Employment Agreement.
WILSONS CENTER, INC.
WILSONS LEATHER HOLDINGS INC.
ROSEDALE WILSONS, INC.
RIVER HILLS WILSONS, INC.
BERMANS THE LEATHER EXPERTS INC.
WILSONS HOUSE OF SUEDE, INC.
WILSONS TANNERY WEST, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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