**Exhibit 10.4**
**STAY BONUS AGREEMENT**
     This Agreement is made as of April 5, 2004 by and between Wilsons TheLeather Experts Inc., a Minnesota corporation (hereinafter, “Wilsons”) andArthur J. Padovese (hereinafter, the “Executive”).
**RECITALS**
          A. Wilsons has determined that it is in the best interests of Wilsons toretain the services of the Executive, and
          B. Wilsons has determined to increase the likelihood of retaining theExecutive and to provide further incentives for the Executive to assist Wilsonsin achieving its objectives by agreeing to make certain bonus payments to theExecutive if certain conditions are satisfied, and
          C. Wilsons desires to set out in writing the terms and conditions underwhich those bonuses will be paid, and
          D. By signing this Agreement, the Executive is accepting the terms andconditions of those bonuses.
          **NOW, THEREFORE**, the parties agree as follows:
1. Total Bonus Payment. The total amount of bonuses that are potentiallypayable to the Executive under this Agreement is $123,000 (hereinafter,the “Bonus Amount”). Each payment of any portion of the Bonus Amountunder this Agreement will be reduced by applicable withholdings for taxesand other legally required items. 2. Payment of Bonuses. The Executive will receive the following paymentswith respect to the Bonus Amount, provided the conditions specified foreach payment are satisfied.
 a. The Executive will be entitled to payment of $30,000 if (i)the Chief Executive Officer and President of Wilsons determine thatsatisfactory progress has been made by the Executive as of October1, 2004 (the “October Measurement Date”) with respect to theperformance criteria contained in subparagraph 2(c)(i) below (the“Performance Criteria”) and the specific position performancecriteria contained in subparagraph 2(c)(ii) (the “PositionCriteria”) and Executive is employed by Wilsons on October 1, 2004or (ii) the Executive is terminated by Wilsons without Cause priorto October 1, 2004.    Any payment due to the Executive under the provisions of thissubparagraph 2(a) will be made as soon as administratively feasiblefollowing October 1, 2004.  b. The Executive will be entitled to payment of $93,000 if (i)the Performance Criteria and the Position Criteria are achieved onor before January 29, 2005, as determined by the Chief ExecutiveOfficer and President of Wilsons, (the “Year-End Measurement Date”)and Executive is employed by Wilsons on January 29, 2005 or (ii) theExecutive is terminated by Wilsons without Cause prior to January29, 2005.    Any payment due to Executive under the provisions of thissubparagraph 2(b) will be made as soon as administratively feasiblefollowing January 29, 2005.
 

 

 c. As used in this paragraph 2, the following defined terms havethe meanings indicated below:
 (i) Performance Criteria shall mean:
 (a) Executive shall demonstrate effectiveleadership in a difficult environment;  (b) Executive shall collaborateeffectively with others on the leadership team;  (c) Executive shall proactively engage inthe strategies and tactical plans to deliver results;  (d) Executive shall model appropriatebehavior and require the same of direct reports; and  (e) Executive shall prepare regularstatus reports identifying progress toward goals andobjectives.
 (ii) Position Criteria shall mean:
 (a) Executive shall increase UPTs by 5%over the fiscal year ending January 31, 2004;  (b) Executive shall create and implementtraining to increase associates’ knowledge directlyfocused on accessories; and  (c) Executive shall build and train asales staff that is female friendly.
 d. If the Executive becomes disabled while employed by Wilsonsafter the date hereof and remains so disabled until the date a bonusis payable under either subparagraph 2(a) or 2(b), the Executivewill be deemed to be employed by Wilsons on the applicable datesolely for purposes of applying subparagraph(s) 2(a) and/or 2(b), asthe case may be, and the Performance Criteria and Position Criteriashall be deemed to have been achieved on the October MeasurementDate or the Year-End Measurement Date, as the case may be. To be“disabled” for purposes of this subparagraph 2(c), the Executivemust be prevented from engaging in active employment by an illnessor injury that meets the requirements for receiving benefits underthe short term disability program sponsored by Wilsons during theperiod that program applies, and thereafter must meet therequirements for receiving disability benefits under the SocialSecurity Act.  e. If the Executive dies while employed by Wilsons during theperiod commencing on the date hereof through and including January29, 2005, the Executive will be deemed to have survived andcontinued in the employ of Wilsons solely for purposes of applyingsubparagraph 2(a) and/or 2(b), as the case may be, and thePerformance Criteria and Position Criteria shall be deemed to havebeen achieved on the October Measurement Date or the Year-EndMeasurement Date, as the case may be, but any bonus payable undersuch subparagraphs shall be paid to the Executive’s estate.
3. Incentive Plan. Any Bonus Amount payable to Executive pursuant to thisAgreement shall be in addition to, and not in lieu of, any incentive awardpayable to Executive under Wilsons’ Executive and Key Management IncentivePlan.
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     4. Not an Employment Contract. This Agreement does not constitute acontract of employment with Wilsons or guarantee that the Executive willremain employed by Wilsons for any particular period of time. Nothing inthis Agreement changes the Executive’s status as an “at will” employee ofWilsons or interferes in any way with the right of Wilsons to terminatethe Executive’s employment at any time, with or without Cause and with orwithout notice.
     5. Cause Definition. “Cause” shall mean:
 a. the commission by the Executive of any act of embezzlementagainst Wilsons or any of its subsidiaries;  b. the conviction of the Executive for, or entry by theExecutive of a guilty plea to, any felony which has a materialadverse effect upon the business, operating results, financialcondition or employee, supplier or customer relations generally ofWilsons and its subsidiaries, taken as a whole, or which precludesthe Executive from performing her duties for at least 90 days;  c. the conviction of the Executive for any crime involvingdishonesty with respect to Wilsons (i) intended by the Executive toresult in personal enrichment of the Executive at the expense ofWilsons or its subsidiaries or (ii) which has a material adverseeffect upon the business, operating results, financial condition oremployee, supplier or customer relations generally of Wilsons andits subsidiaries, taken as a whole;  d. the absence by the Executive from employment with Wilsons fora period of more than 90 days after the date of this Agreementwithout the approval of the Board of Directors of Wilsons other thanfor vacations, illness, injury or disability; or  e. willful misconduct by the Executive, which misconduct has notbeen cured within 20 days following notification thereof to theExecutive (or if such misconduct is cured within 20 days after suchnotice of misconduct is received, but the same misconduct occursagain at any time thereafter).
6. Assignment. Wilsons may in its sole discretion assign this Agreement toany entity or individual which succeeds to some or all of the business ofWilsons through merger, consolidation, a sale of some or all of the assetsof Wilsons, or any similar transaction. The Executive acknowledges thatthe services to be rendered by Executive to Wilsons are unique andpersonal, and that the Executive therefore may not assign any ofExecutive’s rights or obligations under this Agreement to anyone. 7. Successors. Subject to Paragraph 6, the provisions of this Agreementshall be binding on the parties hereto, on any successor or assign ofWilsons, and on Executive’s heirs or any personal representative of theExecutive or the Executive’s estate. 8. Governing Law. This Agreement shall be interpreted and enforced inaccordance with the laws of the State of Minnesota, without giving effectto conflict of law principles. 9. Amendment. This Agreement may be amended only in writing, signed by bothparties.
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          **IN WITNESS HEREOF**, the parties have executed this Agreement effective asof the date set forth above.         EXECUTIVE WILSONS THE LEATHER EXPERTS INC. /s/ Arthur J. Padovese By /s/ David L. Rogers     Arthur J. Padovese    Its President       
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