Exhibit 4.7
RESTRICTED STOCK AGREEMENT
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RESTRICTED STOCK AGREEMENT dated as of May 25, 1996, by and among Wilsons
The Leather Experts Inc., a Minnesota corporation (the "Company"), and the
individuals named on the signature pages hereto, each of whom is an employee of
the Company or a direct or indirect subsidiary of the Company (collectively, the
"Employees" and individually, an "Employee").
WHEREAS, pursuant to that certain Manager Stock Purchase Agreement dated as
of the date hereof among the Company and the Employees (the "Manager Stock
Purchase Agreement"), the Employees have this day purchased from the Company an
aggregate of 3,700,000 shares of common stock, par value $.01 per share, of the
Company ("Common Stock"), consisting of 3,250,000 shares of Class B Common Stock
("Class B Common Stock") and 450,000 shares of Class C Common Stock, for a
purchase price of $.5406 per share; and
WHEREAS, of the total number of shares of Class B Common Stock so purchased
by the Employees, the parties have determined that an aggregate of 1,200,000
shares shall be subject to vesting over a period of time, and to forfeiture by
the Employees to the extent unvested at the end of such period.
NOW, THEREFORE, the parties hereto, desiring to provide for such vesting
and forfeiture, hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings:
(a) "Actual Annual EBITDA" at any Measuring Date shall mean, subject to
the provisions of paragraph 3(a)(ii) hereof, consolidated net income (or net
loss) of the Company and its Subsidiaries for the Measuring Period ending on
such Measuring Date, plus any interest expense, income taxes, depreciation,
amortization, compensation expense related to the Restricted Shares or the
issuance, holding or vesting thereof constituting non-cash accounting charges,
and extraordinary expenses or losses deducted in determining the same, all
computed in accordance with generally accepted accounting principles consistent
with those applied in the preparation of the certified consolidated financial
statements of the Company and its Subsidiaries.
(b) "Board" or "Board of Directors" shall mean the board of directors of
the Company.
(c) "Business Day" shall mean any day, other than a day which is a
Saturday, Sunday or legal holiday in the City of Minneapolis or the City of New
York or a day on which banking institutions are authorized by law or other
governmental actions to close.
(d) "Cause", with respect to Xxxxxx or Xxxxxx, shall mean:
(i) the commission by such Employee of any act of embezzlement
against the Company or any of its Subsidiaries;
(ii) the conviction of such Employee for, or entry by such Employee
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 such Employee from performing his duties under his
Employment Agreement for 90 days during any 12-month period;
(iii) the conviction of such Employee for any crime involving
dishonesty with respect to the Company (A) intended by such
Employee to result in personal enrichment of such Employee 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 such Employee 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 other than for
vacations, illness, injury or disability; or
(v) willful misconduct by such Employee in breach of the terms of
his Employment Agreement, which misconduct has not been cured
within 20 days following notification thereof to such Employee
(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).
For purposes hereof, no act or omission of Xxxxxx or Xxxxxx 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
thereof.
(e) A "Change in Control" shall be deemed to have occurred if:
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(i) a majority of the directors of the Company shall be Persons other
than Persons:
(A) who are named as directors in the Company's articles of
incorporation or who are nominated by, or for whose election
proxies shall have been solicited by, the Board of
Directors, or
(B) who are then serving as directors appointed by the Board of
Directors to fill vacancies on the Board of Directors caused
by death or resignation (but not by removal) or to fill
newly-created directorships; or
(ii) more than 33 1/3% of the voting power of the outstanding voting
stock of the Company is acquired or beneficially owned (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or any successor rule thereto)
by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act), or any general
partnership interests in the First Limited Partnership (as
defined in the Shareholder Agreement) become held by any Person
that, as of the date hereof, does not have a general partnership
interest in the First Limited Partnership; provided, however,
that the following acquisitions and beneficial ownership shall
not constitute a Change in Control pursuant to this clause (ii):
(A) any acquisition or beneficial ownership by the Company or a
Subsidiary of the Company, or
(B) any acquisition or beneficial ownership by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or one or more of its Subsidiaries, or
(C) any acquisition or beneficial ownership of voting stock of
the Company or general partnership interests in the First
Limited Partnership by Xxxxxx or Xxxxxx or any Person that,
as of the date of this Agreement, is a general partner in
the First Limited Partnership, or
(D) any acquisition or beneficial ownership by a parent
corporation or its wholly-owned subsidiaries, as long as
they shall remain wholly-owned subsidiaries, of 100% of the
outstanding voting
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stock of the Company as a result of a merger or statutory
share exchange which complies with clause (iii)(A)(2)
hereof or the exception in clause (iii)(B) hereof in all
respects; or
(iii) the shareholders of the Company approve a definitive agreement
or plan to:
(A) merge or consolidate the Company with or into another
corporation (other than (1) a merger or consolidation with
a Subsidiary of the Company or (2) a merger in which:
(aa) the Company is the surviving corporation, and
(bb) no outstanding voting stock of the Company (other
than fractional shares) held by shareholders
immediately prior to the merger is converted into
cash, securities or other property (except (I)
voting stock of a parent corporation owning
directly, or indirectly through wholly-owned
subsidiaries, both beneficially and of record 100%
of the voting stock of the Company immediately after
the merger or (II) cash upon the exercise by holders
of voting stock of the Company of statutory
dissenters' rights), and
(cc) the Persons who were the beneficial owners,
respectively, of the outstanding Common Stock and
outstanding voting stock of the Company immediately
prior to such merger beneficially own, directly or
indirectly, immediately after the merger, 66 2/3% or
more of, respectively, the then outstanding common
stock and the voting power of the then outstanding
voting stock of the surviving corporation or its
parent corporation, and
(dd) if voting stock of the parent corporation is
exchanged for voting stock of the Company in the
merger, all holders of any class or series of voting
stock of the Company immediately prior to the merger
have the right to receive substantially the same per
share consideration in exchange for their voting
stock of the Company as all other holders of such
class or series), or
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(B) exchange, pursuant to a statutory exchange of shares of
voting stock of the Company held by shareholders of the
Company immediately prior to the exchange, shares of one or
more classes or series of voting stock of the Company for
cash, securities or other property, except for (1) voting
stock of a parent corporation of the Company owning
directly, or indirectly through wholly-owned subsidiaries,
both beneficially and of record 100% of the voting stock of
the Company immediately after the statutory share exchange
if (aa) the Persons who were the beneficial owners,
respectively, of the outstanding Common Stock and
outstanding voting stock of the Company immediately prior to
such statutory share exchange own, directly or indirectly,
immediately after the statutory share exchange 66 2/3% or
more of, respectively, the then outstanding common stock and
the voting power of the then outstanding voting stock of
such parent corporation, and (bb) all holders of any class
or series of voting stock of the Company immediately prior
to the statutory share exchange have the right to receive
substantially the same per share consideration in exchange
for their voting stock of the Company as all other holders
of such class or series, or (2) cash with respect to
fractional shares of voting stock of the Company or payable
as a result of the exercise by holders of voting stock of
the Company of statutory dissenters' rights, or
(C) sell or otherwise dispose of all or substantially all of the
assets of the Company (in one transaction or a series of
transactions), or
(D) liquidate or dissolve the Company.
(f) "Disability" of any Employee shall mean any physical or mental
incapacitation whereby such Employee 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 or her duties to the Company and its Subsidiaries.
(g) "Employment Agreement", with respect to Xxxxxx or Xxxxxx, shall mean
the Employment Agreement between the Company and such Employee dated the date
hereof, as the same may be amended from time to time in accordance with the
terms thereof.
(h) "Forfeited Restricted Share(s)" shall have the meaning set forth in
paragraph 4(a) hereof.
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(i) "Measuring Date" shall mean the last day of each Measuring Period,
commencing with the Measuring Period ending on February 1, 1997 and continuing
through and including the Measuring Period ending on February 3, 2001.
(j) "Measuring Period" shall mean each of the periods (i) from but not
including the date hereof through and including February 1, 1997, (ii) from and
including February 2, 1997 through and including January 31, 1998, (iii) from
and including February 1, 1998 through and including January 30, 1999, (iv) from
and including January 31, 1999 through and including January 29, 2000, and (v)
from and including January 30, 2000 through and including February 3, 2001.
(k) "Melville" shall mean Melville Corporation, a New York corporation.
(l) "Minimum Annual EBITDA" at any Measuring Date shall mean 50% of Target
Annual EBITDA at such Measuring Date.
(m) "Note" shall mean that certain Subordinated Note of the Company dated
the date hereof payable to Melville or registered assigns in the original
principal amount of $55,811,000.
(n) "Original Cost", with respect to any Restricted Shares held by an
Employee and his or her Permitted Transferees (under and as defined in the
Shareholder Agreement), shall mean $.5406 per share (appropriately adjusted to
reflect stock splits, reverse stock splits, stock dividends, conversions and
other recapitalizations).
(o) "Person" shall mean an individual, corporation, partnership,
association, trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
(p) "Restricted Share(s)" shall mean the shares of Class B Common Stock
purchased by the Employees under the Manager Stock Purchase Agreement and
designated therein as "Restricted Common Stock", together with any shares of
Common Stock of the Company issued in exchange for or in respect of such shares
pursuant to any stock split, reverse stock split, stock dividend, conversion or
other recapitalization. The number of Restricted Shares purchased by each
Employee under the Manager Stock Purchase Agreement is set forth in a
subscription agreement delivered by such Employee to the Company pursuant to the
Manager Stock Purchase Agreement.
(q) "Retirement" of any Employee shall mean the retirement at age 65 or
older of such Employee from his or her employment with the Company and its
Subsidiaries.
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(r) "Xxxxxx" shall mean Xxxxx Xxxxxx.
(s) "Shareholder Agreement" shall mean that certain Shareholder Agreement
dated as of the date hereof among Leather Investors Limited Partnership I,
Leather Investors Limited Partnership II, Xxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxx X.
Sell, Ercu Ucan, Xxxxxx Xxxxx, the Employees and the Company, as the same may be
amended from time to time in accordance with the terms thereof.
(t) "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 persons performing similar functions are at the time
directly or indirectly owned by the Company.
(u) "Target Annual EBITDA" at any Measuring Date shall mean, in the case of
the Measuring Date occurring on February 1, 1997, $50,690,000 and, in the case
of each subsequent Measuring Date, the amount determined by the Board of
Directors as Target Annual EBITDA at such Measuring Date in accordance with
paragraph 2(a) hereof (provided that, if one or more notices of an adjustment in
Target Annual EBITDA at any Measuring Date shall have been delivered pursuant to
paragraph 2(b) hereof, "Target Annual EBITDA" at such Measuring Date shall be as
shown on the most recent such notice).
(v) "Tender Date" shall have the meaning set forth in paragraph 4(b)
hereof.
(w) "Xxxxxx" shall mean Xxxx Xxxxxx.
2. Determination of Target Annual EBITDA.
(a) No later than the beginning of each Measuring Period, commencing with
the Measuring Period ending on January 31, 1998, the Board of Directors shall
determine Target Annual EBITDA at the Measuring Date occurring on the last day
of such Measuring Period. Target Annual EBITDA at any such Measuring Date as so
determined by the Board shall be at least $1 more than Target Annual EBITDA at
the immediately preceding Measuring Date (as adjusted in any manner determined
by the Board in good faith to be equitable in the event of an intervening
acquisition or disposition of any business operations by the Company or any of
its Subsidiaries (through stock purchase, asset acquisition or disposition,
merger or otherwise) other than in the ordinary course of business). The
Company shall notify each Employee and Melville in writing of the Board's
determination of Target Annual EBITDA at any Measuring Date promptly after
making the same, provided that failure to give such notice on a timely basis
shall not effect the vesting of the Restricted Shares hereunder.
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(b) In the event an acquisition or disposition of any business operations
by the Company or any of its Subsidiaries (through stock purchase, asset
acquisition or disposition, merger or otherwise) other than in the ordinary
course of business occurs prior to any Measuring Date but after Target Annual
EBITDA at such Measuring Date has been fixed in this Agreement or determined by
the Board in accordance herewith, such Target Annual EBITDA shall be adjusted in
a manner which the Board determines in good faith to be equitable. The Board
shall notify each Employee and Melville in writing of any such adjustments
promptly after making the same, provided that failure to give such notice on a
timely basis shall not effect the vesting of the Restricted Shares hereunder.
3. Vesting of Restricted Shares. The Restricted Shares held by the
Employees and their Permitted Transferees shall vest only under the
circumstances specified in this paragraph 3.
(a) With respect to each of the Measuring Dates, the Restricted Shares held
by the Employees and their Permitted Transferees shall vest as provided in
clauses (i) and (ii) below.
(i) Subject to the vesting of additional Restricted Shares pursuant to
clause (ii) below, with respect to each Measuring Date:
(A) if Actual Annual EBITDA at such Measuring Date equals or
exceeds Target Annual EBITDA at such Measuring Date, then a number of
Restricted Shares held by each Employee and his or her Permitted
Transferees shall vest pursuant to this clause (i) with respect to
such Measuring Date equal to the sum of (1) 20% of the total number of
Restricted Shares purchased by such Employee from the Company under
the Manager Stock Purchase Agreement (appropriately adjusted to
reflect stock splits, reverse stock splits, stock dividends,
conversions and other recapitalizations), plus (2) the total number of
Restricted Shares acquired by such Employee from any other Employee or
Permitted Transferee thereof pursuant to the Shareholder Agreement
that would have vested pursuant to this clause (i) with respect to
such Measuring Date if the transferring Employee or Permitted
Transferee still owned such Restricted Shares;
(B) if Actual Annual EBITDA at such Measuring Date exceeds
Minimum Annual EBITDA at such Measuring Date, but is less than Target
Annual EBITDA at such Measuring Date, then a number of Restricted
Shares held by each Employee and his or her Permitted Transferees
shall vest pursuant to this clause (i) with respect to such Measuring
Date equal to the sum of (1) a percentage between 10% and 20%,
determined in the manner provided below, of the total number of
Restricted Shares purchased by such Employee from the
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Company under the Manager Stock Purchase Agreement (appropriately
adjusted to reflect stock splits, reverse stock splits, stock
dividends, conversions and other recapitalizations), plus (2) the
total number of Restricted Shares acquired by such Employee from any
other Employee or Permitted Transferee thereof pursuant to the
Shareholder Agreement that would have vested pursuant to this clause
(i) with respect to such Measuring Date if the transferring Employee
or Permitted Transferee still owned such Restricted Shares;
(C) if Actual Annual EBITDA at such Measuring Date equals Minimum
Annual EBITDA at such Measuring Date, then a number of Restricted
Shares held by each Employee and his or her Permitted Transferees
shall vest pursuant to this clause (i) with respect to such Measuring
Date equal to the sum of (1) 10% of the total number of Restricted
Shares purchased by such Employee from the Company under the Manager
Stock Purchase Agreement (appropriately adjusted to reflect stock
splits, reverse stock splits, stock dividends, conversions and other
recapitalizations), plus (2) the total number of Restricted Shares
acquired by such Employee from any other Employee or Permitted
Transferee thereof pursuant to the Shareholder Agreement that would
have vested pursuant to this clause (i) with respect to such Measuring
Date if the transferring Employee or Permitted Transferee still owned
such Restricted Shares; and
(D) if Actual Annual EBITDA at such Measuring Date is less than
Minimum Annual EBITDA at such Measuring Date, then no portion of the
Restricted Shares held by any Employee or his or her Permitted
Transferees shall vest pursuant to this clause (i) with respect to
such Measuring Date.
Whenever, with respect to any Measuring Date, a percentage of Restricted
Shares between 10% and 20% is required to be determined pursuant to clause
(B) above, such percentage (expressed as a decimal) shall equal the sum of
(aa) .10, plus (bb) the product of (II) .10, times (II) a fraction, the
numerator of which is the amount by which Actual Annual EBITDA at such
Measuring Date exceeds Minimum Annual EBITDA at such Measuring Date, and
the denominator of which is the amount by which Target Annual EBITDA at
such Measuring Date exceeds Minimum Annual EBITDA at such Measuring Date.
(ii) If Actual Annual EBITDA at any Measuring Date (the "Current
Measuring Date") exceeds Target Annual EBITDA at such Current Measuring
Date, then (A) that portion of such Actual Annual EBITDA which is in excess
of such Target Annual EBITDA (the "Carry Over EBITDA") shall be carried
back to each Measuring Date occurring prior to the Current Measuring Date
(a "Preceding
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Measuring Date"), in inverse order of occurrence until no further excess
remains, and applied to the computation of Actual Annual EBITDA at such
Preceding Measuring Date, as if earned in the Measuring Period ended on
such Preceding Measuring Date, to the extent necessary to achieve Target
Annual EBITDA at such Preceding Measuring Date, (B) the total number of
Restricted Shares held by each Employee and his or her Permitted
Transferees which would have vested under clause (i) above with respect to
all Preceding Measuring Dates had such application of the Carry Over EBITDA
been given effect at the time of the original computation thereof shall be
recomputed (the aggregate number of such Restricted Shares vested in
accordance with such recomputation being herein called the "Recomputed
Vested Restricted Shares"), and (C) in addition to the Restricted Shares
vested in accordance with clause (i) above with respect to the Current
Measuring Date, a number of Restricted Shares held by each Employee and his
or her Permitted Transferees shall vest pursuant to this clause (ii) with
respect to the Current Measuring Date equal to the amount by which (1) the
Recomputed Vested Restricted Shares, exceeds (2) the aggregate number of
Restricted Shares held by such Employee and his or her Permitted
Transferees which actually vested pursuant to this paragraph 3(a) prior to
the Current Measuring Date. Any portion of the Carry Over EBITDA which is
not applied to the computation of Actual Annual EBITDA at any Preceding
Measuring Date as provided above shall be carried forward to each Measuring
Date occurring after the Current Measuring Date (a "Subsequent Measuring
Date"), in order of occurrence until no further excess remains, and applied
to the computation of Actual Annual EBITDA at such Subsequent Measuring
Date, as if earned in the Measuring Period ended on such Subsequent
Measuring Date, to the extent necessary to achieve Target Annual EBITDA at
such Subsequent Measuring Date.
(iii) The Board shall notify each Employee and Melville in writing of
the number of Restricted Shares held by such Employee and his or her
Permitted Transferees which shall have vested pursuant to this paragraph
3(a) with respect to a Measuring Date as soon as practicable and in no
event later than 90 days after such Measuring Date (which notice shall set
forth in reasonable detail the computations on which the determination of
such number was based), provided that failure to give such notice on a
timely basis shall not effect the vesting of the Restricted Shares
hereunder. The number of Restricted Shares set forth in such notice shall
thereupon be deemed to have vested as of the close of business on such
Measuring Date.
(iv) All Restricted Shares held by an Employee and his or her
Permitted Transferees which would otherwise vest with respect to a
Measuring Date shall vest even if a Restricted Stock Event under and as
defined in the Shareholder Agreement occurs with respect to such Employee
after the close of business on such Measuring
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Date but prior to the date the Board notifies the Employee and Melville of
the number of Restricted Shares vested with respect to such Measuring Date.
(b) Immediately upon payment or prepayment in full of the Note in
accordance with its terms at any time on or prior to December 31, 2000, all
Restricted Shares then held by any Employee or his or her Permitted Transferees
that remain unvested immediately prior to such payment or prepayment shall vest.
Immediately upon any partial prepayment of the Note in accordance with its terms
at any time prior to December 31, 2000, a number of Restricted Shares held by
each Employee and his or her Permitted Transferees shall vest equal to the sum
of (i) the product of (A) the total number of Restricted Shares purchased by
such Employee from the Company under the Manager Stock Purchase Agreement
(appropriately adjusted to reflect stock splits, reverse stock splits, stock
dividends, conversions and other recapitalizations), times (B) a fraction, the
numerator of which is the principal amount of the Note so prepaid, and the
denominator of which is the sum of (1) the original principal amount of the
Note, plus (2) the aggregate amount of capitalized interest that shall have been
added to the principal amount of the Note through the date of such prepayment,
plus (ii) the total number of Restricted Shares acquired by such Employee from
any other Employee or Permitted Transferee thereof pursuant to the Shareholder
Agreement that would have vested pursuant to this paragraph 3(b) immediately
upon such prepayment if the transferring Employee or Permitted Transferee still
owned such Restricted Shares.
(c) Immediately upon the death, Disability or Retirement of an Employee at
any time prior to the close of business on the last Measuring Date, all
Restricted Shares then held by such Employee (or, in the event of such
Employee's death, his or her estate) and his or her Permitted Transferees that
remain unvested immediately prior to such death, Disability or Retirement shall
vest.
(d) Immediately upon (i) termination by the Company of Xxxxxx'x or Xxxxxx'
employment with the Company other than for Cause or (ii) termination by Xxxxxx
or Xxxxxx of his employment with the Company as a result of a breach by the
Company of any of the terms of such Employee's Employment Agreement which has
not been cured within ten days after notice thereof has been given by such
Employee to the Company, in each case at any time prior to the close of business
on the last Measuring Date, all Restricted Shares then held by such Employee and
his Permitted Transferees that remain unvested immediately prior to such
termination shall vest.
(e) Subject to the written consent of Melville to such Change in Control as
long as the Note shall remain outstanding, immediately prior to the occurrence
of a Change in Control at any time before the close of business on the last
Measuring Date, all Restricted Shares then held by any Employee or his or her
Permitted Transferees that remain unvested at such time shall vest.
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(f) If any Restricted Shares shall have vested as of the close of business
on a Measuring Date or upon the occurrence of any other event, they shall at no
time thereafter cease to be vested by reason of the Company's failure to achieve
with respect to any subsequent Measuring Date all or any percentage of Target
Annual EBITDA at such Measuring Date or failure to pay or prepay the Note in
full in accordance with its terms on or prior to December 31, 2000 or for any
other reason.
(g) If any shares of Common Stock are issued in exchange for or in respect
of any Restricted Shares pursuant to a stock split, reverse stock split, stock
dividend, conversion or other recapitalization, such securities shall at the
time of issuance be vested hereunder if issued in exchange for or in respect of
vested Restricted Shares, and unvested hereunder if issued in exchange for or in
respect of unvested Restricted Shares.
(h) Notwithstanding anything to the contrary provided in paragraph 3(a) or
3(b) above, (i) in no event shall there vest with respect to any Measuring Date
or upon any partial prepayment of the Note a number of Restricted Shares held by
an Employee and his or her Permitted Transferees which is greater than the total
number of Restricted Shares held by such Employee and his or her Permitted
Transferees that remain unvested immediately prior to the close of business on
such Measuring Date or immediately prior to such partial prepayment, as the case
may be, and (ii) any Restricted Shares acquired by any Person or Persons from an
Employee or Permitted Transferee thereof pursuant to the Shareholder Agreement
which vest (or, in the event the acquiring Person is the Company, would have
vested had such Person been an Employee) with respect to any Measuring Date or
upon any partial prepayment of the Note pursuant to clause (i)(A)(2), (i)(B)(2)
or (i)(C)(2) of paragraph 3(a) or pursuant to clause (ii) of paragraph 3(b),
shall reduce, on a share-for-share basis, the number of Restricted Shares, if
any, that continue to be held by the transferring Employee or Permitted
Transferee which would have otherwise vested under such paragraphs with respect
to such Measuring Date or upon such partial prepayment.
4. Forfeiture of Unvested Restricted Shares.
(a) Each Employee and his or her Permitted Transferees shall sell to the
Company, and the Company shall purchase from such Employee and his or her
Permitted Transferees, all of the Restricted Shares, if any, held by such
Employee and his or her Permitted Transferees that remain unvested after the
close of business on the last Measuring Date (the "Forfeited Restricted
Share(s)"), at a price per Forfeited Restricted Share, payable in cash, equal to
the Original Cost thereof.
(b) Subject to the provisions of paragraph 4(c) hereof, the Company shall
tender to each Employee and his or her Permitted Transferees the purchase price
for the Forfeited
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Restricted Shares held by such Employee and his or her Permitted Transferees on
the first Business Day to occur at least 20 days after each of the Employees and
Melville has been given written notice by the Board of the number of Restricted
Shares which have vested pursuant to paragraph 3(a) hereof with respect to the
last Measuring Date (the "Tender Date"). Coincident with the payment of said
purchase price, such Employee and his or her Permitted Transferees shall deliver
the certificate or certificates representing such Forfeited Restricted Shares to
the Company, duly endorsed in blank for transfer of record upon the books of the
Company. The Company shall be entitled to require from each Employee and his or
her Permitted Transferees such additional evidence of good title and right and
power to transfer good title to the Forfeited Restricted Shares held by such
Employee and his or her Permitted Transferees free and clear of all liens,
adverse claims and other encumbrances, as it shall reasonably request.
(c) Notwithstanding the foregoing, if, on the Tender Date, the Company does
not have funds legally available to purchase all of the Forfeited Restricted
Shares held by each Employee and his or her Permitted Transferees, the Company
shall purchase from the Employees and their Permitted Transferees, pro rata in
accordance with the respective number of Forfeited Restricted Shares held by
each, on the Tender Date, the number of Forfeited Restricted Shares, if any, for
which it has funds legally available. Thereafter, as and to the extent funds
legally available therefor exist from time to time, the Company shall purchase
from the Employees and their Permitted Transferees additional Forfeited
Restricted Shares, pro rata in accordance with the respective number of
Forfeited Restricted Shares held by each, until all of the Forfeited Restricted
Shares have been purchased.
(d) Upon tender by the Company to an Employee and his or her Permitted
Transferees of the purchase price for any Forfeited Restricted Shares held by
such Employee and his or her Permitted Transferees in accordance with this
paragraph 4, such Forfeited Restricted Shares, regardless of whether the
certificate or certificates evidencing the same are delivered by such Employee
and his or her Permitted Transferees to the Company as required by paragraph
4(b), shall no longer be deemed to be outstanding, and all voting, dividend and
other rights of such Employee and his or her Permitted Transferees in respect of
such Forfeited Restricted Shares shall cease, except the right to receive from
the Company payment for such Forfeited Restricted Shares as provided in this
paragraph 4 upon compliance by such Employee and his or her Permitted
Transferees with the requirements of paragraph 4(b).
5. Shareholder Agreement. All Restricted Shares, whether vested or
unvested, shall be subject to the terms of the Shareholder Agreement, which,
among other things, governs the transfer of the Restricted Shares and gives the
Company and certain other Persons the right or obligation to purchase the
Restricted Shares in certain events.
13
6. Rights Incident to Restricted Shares. Subject to the restrictions on
transfer expressly set forth in the Shareholder Agreement and to the provisions
of paragraph 4(d) hereof, each Employee and his or her Permitted Transferees
shall at all times have all rights of a shareholder and record owner with
respect to the Restricted Shares held thereby, regardless of whether or not such
Restricted Shares have vested, including without limitation all rights to vote
such Restricted Shares and to receive dividends or other distributions thereon.
7. Tax Withholding. Each Employee shall pay to the Company, promptly upon
request therefor, an amount in cash equal to the amount, if any, of all taxes
and other sums required by law to be withheld by the Company in respect of the
issuance of any Restricted Shares to such Employee or in respect of the vesting
of, or lapse of restrictions with respect to, any Restricted Shares held by such
Employee or any Permitted Transferee thereof.
8. Endorsement and Consent to Agreement.
(a) All certificates representing Restricted Shares issued by the Company
shall have endorsed thereon a legend in substantially the following form:
The shares evidenced by this certificate are subject to the terms and
conditions (including vesting and forfeiture conditions) contained in that
certain Restricted Stock Agreement among the Company and certain employees
of the Company and its direct and indirect subsidiaries dated as of May 25,
1996, a copy of which is on file at the principal executive office of the
Company.
Upon the vesting of any Restricted Shares and receipt by the Company of the
certificate or certificates representing such Restricted Shares, duly and
properly endorsed, the Company shall issue to the Employee or Permitted
Transferee holding the same a new certificate evidencing such Restricted Shares
without the foregoing legend.
(b) An executed counterpart of this Agreement shall be put and remain on
file at the principal executive office of the Company.
(c) No sale, transfer, assignment, exchange or other disposition of any
unvested Restricted Shares shall be made by an Employee to any Person other than
the Company or another Employee unless and until such Person shall agree in
writing to take such Restricted Shares subject to, and shall subscribe in
writing to the terms and conditions of, this Agreement. Any Person, other than a
Permitted Transferee, who so agrees in writing to take unvested Restricted
Shares subject to, and subscribes in writing to the terms and conditions of,
this Agreement shall be and become an Employee as that term is used in this
Agreement (except that the provisions of paragraphs 3(c) and 3(d) hereof shall
not be applicable to the
14
Restricted Shares held by such Person). Nothing stated herein shall permit any
sale, transfer, assignment, exchange or other disposition of Restricted Shares
that is not permitted under the Shareholder Agreement.
9. Notices. All notices to any party hereunder shall be in writing and
shall be given in the manner and with the effect provided in the Shareholder
Agreement (or, in the case of notices to Melville, in the Management Warrant
referred to in the Shareholder Agreement).
10. Equitable Remedies. The parties hereto agree that the failure of any
party to perform any obligation or duty under this Agreement will cause
irreparable harm to the parties willing to perform their obligations and duties
herein, which harm cannot be adequately compensated by money damages. It is
further agreed by the parties hereto that an order of specific performance or
for injunctive relief against a party or parties in default under the terms of
this Agreement would be equitable and would not work a hardship on the
defaulting party or parties. Accordingly, in the event of a default by any party
hereto, a non-defaulting party, in addition to whatever other remedies are or
might be available at law or in equity, shall have the right to compel specific
performance by (or to obtain injunctive relief against) the defaulting party or
parties as to any obligation or duty created by this Agreement or any breach
thereof.
11. Complete Agreement. This Agreement, the Shareholder Agreement and all
other instruments and documents referred to herein or therein constitute the
entire understanding and agreement among the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
among the parties with respect to such subject matter. There are no agreements,
understandings, restrictions, representations or warranties among the parties
relating to the subject matter hereof, except for those expressly set forth in
this Agreement, the Shareholder Agreement or any other instruments or documents
referred to herein or therein.
12. Amendment. This Agreement may be altered, amended or terminated by a
writing signed by the Company and the Employees who, together with their
Permitted Transferees, hold at least 80% of the unvested Restricted Shares that
are then outstanding.
13. Benefit and Assignment. This Agreement shall bind and inure to the
benefit of the parties hereto and their personal representatives, heirs,
successors and assigns. Melville and its successors and assigns shall be third
party beneficiaries of this Agreement as long as the Note or the Management
Warrant shall remain outstanding.
14. Severability. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other
15
provisions or applications which can be given effect, and this Agreement shall
be construed as if the unlawful or unenforceable provision or application had
never been contained herein or prescribed hereby.
15. Governing Law. This Agreement shall be construed and governed by and
according to the laws of the State of Minnesota.
16. 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.
17. Captions. The captions preceding the paragraphs of this Agreement are
for convenience only, and shall not affect the interpretation of this Agreement.
18. Termination. At such time as all Restricted Shares shall have vested in
accordance with paragraph 3 hereof, this Agreement shall be of no further force
or effect, provided that the Shareholder Agreement shall remain in full force
and effect until terminated in accordance with its terms.
16
IN WITNESS WHEREOF the Employees and the Company have executed this
Agreement as of the day and year first above written.
WILSONS THE LEATHER EXPERTS
INC.
By /s/ XXXXX XXXXXX
--------------------
Its President
---------------
17
EMPLOYEES:
Name and Signature
------------------
XXX XXXXXX XXXXXXX XXXXXXXX
/s/ XXX XXXXXX /s/ XXXXXXX XXXXXXXX
--------------- --------------------
XXXXX XXXXXXXX XXXXX XXXXXXXXX
/s/ XXXXX XXXXXXXX /s/ XXXXX XXXXXXXXX
------------------ -------------------
XXXXX XXXXXXXX XXXXXXX XXXXX
/s/ XXXXX XXXXXXXX /s/ XXXXXXX XXXXX
------------------ -----------------
WM XXXXXXX XXXX XXXXXX XXXXXX
/s/ WM XXXXXXX XXXX /s/ XXXXXX XXXXXX
------------------- -----------------
XXXXXX XXXXX XXXXXX XXXXXX
/s/ XXXXXX XXXXX /s/ XXXXXX XXXXXX
------------------- -----------------
18
XXXXXXX XXXXXXX-XXXXXXX XXXXX XXX
/s/ XXXXXXX XXXXXXX XXXXXXX /s/ XXXXX XXX
--------------------------- -------------
XXXXXXXX XXXXXXX XXXXXX XXXXX
/s/ XXXXXXXX XXXXXXX /s/ XXXXXX XXXXX
-------------------- ----------------
XXXX XXXXXX XXX XXXXX
/s/ XXXX XXXXXX /s/ XXX XXXXX
---------------- -------------
XXXXXXX XXXXX XXXX XXXXXX
/s/ XXXXXXX XXXXX /s/ XXXX XXXXXX
--------------------- ---------------
XXXXX XXXX XXXXX XXXXXX
/s/ XXXXX XXXX /s/ XXXXX XXXXXX
----------------- ----------------
XXXXX XXXXXX XXXXXXX XXXXXXXX
/s/ XXXXX XXXXXX /s/ XXXXXXX XXXXXXXX
-------------------- --------------------
00
XXXXXXX XXXXXXXX XXXXXXX XXXXXXX
/s/ XXXXXXX XXXXXXXX /s/ XXXXXXX XXXXXXX
-------------------- -------------------
XXXXX XXXX XXXXXXX XXXXX
/s/ XXXXX XXXX /s/ XXXXXXX XXXXX
-------------- -----------------
XXXXX XXXXXXXXX XXXXX XXXX
/s/ XXXXX XXXXXXXXX /s/ XXXXX XXXX
------------------- --------------
XXXX XXXXX XXXX XXXXXXXX
/s/ XXXX XXXXX /s/ XXXX XXXXXXXX
-------------- -----------------
XXXXXX XXXXXXX XXXXXX XXXXXXX
/s/ XXXXXXX /s/ XXXXXX XXXXXXX
----------- ------------------
XXXXXXX XXXXXXX XXXXX XXXXX
/s/ XXXXXXX XXXXXXX /s/ XXXXX XXXXX
------------------- ---------------
20
XXXXX XXXXXX XXXXXXX XXXXX
/s/ XXXXX XXXXXX /s/ XXXXXXX XXXXX
---------------------- -----------------------
XXXX XXXXXXXX XXXXXX XXXXXXX
/s/ XXXX XXXXXXXX /s/ XXXXXX XXXXXXX
---------------------- -----------------------
XXXX XXXXXXXX XXXXX XXXXXXXX
/s/ XXXX XXXXXXXX /s/ XXXXX XXXXXXXX
---------------------- ----------------------
XXXX XXXXXXX XXXXXXX XXXXX
/s/ XXXX XXXXXXX /s/ XXXXXXX XXXXX
---------------------- -----------------------
XXXXX XXXXX XXXX XXXXXX
/s/ XXXXX XXXXX /s/ XXXX XXXXXX
---------------------- -----------------------
XXXXX XXXXXXX XXXXX XXXXXXXXX
/s/ XXXXX XXXXXXX /s/ XXXXX XXXXXXXXX
---------------------- -----------------------
21
XXXXXXXX XXXXXXXX
/s/ XXXXXXXX XXXXXXXX
----------------------
XXXXXX XXXXXXXXXX
/s/ XXXXXX XXXXXXXXXX
----------------------
XXXXXXXXX XXXXXX
/s/ XXXXXXXXX XXXXXX
----------------------
22
