Document:

EX-4.1

PARK-OHIO INDUSTRIES, INC.

as Issuer,

91/4% SENIOR SUBORDINATED NOTES DUE 2007,

FIRST SUPPLEMENTAL INDENTURE

Dated as of November 19, 2004

WELLS FARGO BANK, N.A.

(as Successor by consolidation with Norwest Bank Minnesota, National Association),

as Trustee

1

FIRST SUPPLEMENTAL INDENTURE, dated as of November 19, 2004 (this “Supplemental
Indenture”), between PARK-OHIO INDUSTRIES, INC., an Ohio corporation (the “Issuer”) and WELLS FARGO
BANK, N.A. (as successor by consolidation with Norwest Bank Minnesota, National Association), as
trustee (the “Trustee”), to the indenture, dated as of June 2, 1999, between the Issuer and the
Trustee (the “Indenture”).

W I T N E S S E T H:

WHEREAS, the Issuer and the Trustee have heretofore executed and delivered the Indenture
providing for the issuance of 91/4% Senior Subordinated Notes due 2007 (the “Notes”) of the Issuer;

WHEREAS, there is currently outstanding under the Indenture $199,930,000 in aggregate
principal amount of the Notes;

WHEREAS, Section 8.02 of the Indenture provides that the Issuer and the Trustee may, with the
consent of the holders of at least a majority in principal amount of the Notes then outstanding
(the “Requisite Consents”), enter into a supplemental indenture for the purpose of amending the
Indenture;

WHEREAS, the Issuer has offered to purchase (the “Offer”) all of the outstanding Notes upon
the terms and subject to the conditions set forth in the Offer to Purchase and Consent Solicitation
Statement, dated November 9, 2004 (the “Offer to Purchase”), and the accompanying Consent and
Letter of Transmittal, as the same may be further amended, supplemented or modified;

WHEREAS, the Offer contemplates the proposed amendments to the Indenture (the “Proposed
Amendments”) set forth herein and a supplemental indenture in respect of the Proposed Amendments
being executed and delivered, with the operation of such Proposed Amendments being subject to,
among other things, the acceptance for payment by the Issuer of the Notes comprising the Requisite
Consents tendered pursuant to the Offer and the occurrence of the Settlement Date (as defined in
the Offer to Purchase) following the Consent Date (as defined in the Offer to Purchase);

WHEREAS, the Issuer has received and delivered to the Trustee the Requisite Consents to effect
the Proposed Amendments;

WHEREAS, the Issuer has been authorized by a resolution adopted by its Board of Directors to
enter into this Supplemental Indenture;

WHEREAS, all other acts and proceedings required by law, the Indenture and the articles of
incorporation and code of regulations of the Issuer to execute and deliver this Supplemental
Indenture, in accordance with its terms, have been duly done and performed;

NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained
herein, and for other good and valuable consideration the receipt of which is hereby acknowledged,
and for the equal and proportionate benefit of the holders of the Notes, the Issuer and the Trustee
hereby agree as follows:

2

Section 1. Deletion of Certain Provisions

The Indenture is hereby amended to delete the following sections in their entirety and, in the
case of each such section, insert in lieu thereof the phrase “Intentionally Omitted,” and any and
all references to such sections, any and all obligations thereunder and any Event of Default under
the Indenture related solely to the following sections are hereby deleted throughout the Indenture,
and such sections and references shall be of no further force or effect:

	 	•	 	Section 4.02 (SEC Reports);

	 	•	 	Section 4.04 (Compliance Certificate);

	 	•	 	Section 4.05 (Taxes);

	 	•	 	Section 4.06 (Limitation on Additional Indebtedness);

	 	•	 	Section 4.07 (Limitation on Preferred Stock of Subsidiaries);

	 	•	 	Section 4.09 (Limitation on Restricted Payments);

	 	•	 	Section 4.11 (Limitation on Transactions with Affiliates);

	 	•	 	Section 4.12 (Limitation on Liens);

	 	•	 	Section 4.13 (Limitation on Other Senior Subordinated Indebtedness);

	 	•	 	Section 4.14 (Limitation on Sale and Lease-back Transactions);

	 	•	 	Section 4.15 (Payment for Consents);

	 	•	 	Section 4.16 (Corporate Existence);

	 	•	 	Section 4.18 (Maintenance of Office or Agency);

	 	•	 	Section 4.19 (Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries); and

	 	•	 	Section 9.04 (Conditions to Legal Defeasance or Covenant Defeasance).
	 
	 	 	 	Section 2. Other Amendments to the Indenture
—

(a) All definitions in the Indenture which are used exclusively in the sections and clauses
deleted pursuant to Section 1 of this Supplemental Indenture are hereby deleted.

(b) The definition of any defined term used in the Indenture, where such definition is set
forth in any of the sections or subsections that are eliminated by this Supplemental Indenture and
the term it defines is still used in the Indenture after the amendments hereby become effective,
shall be deemed to become part of, and defined in, Section 1.01 of the Indenture. Such defined
terms are to be in alphanumeric order within Section 1.01 of the Indenture.

(c) Section 6.01 (Events of Default) shall be modified to reflect the deletion of the sections
and clauses referred to in Section 1 of this Supplemental Indenture.

(d) Section 3.03 of the Indenture is hereby amended and restated in its entirety as follows:

“Section 3.03. Notice of Redemption.

At least three Business Days, and no more than 60 days, before a Redemption Date, the
Company shall mail, or cause to be mailed, a notice of redemption by first-class mail to
each Holder of Notes to be redeemed at his or her last address as the same appears on the
registry books maintained by the Registrar pursuant to Section 2.03 hereof.

The notice shall identify the Notes to be redeemed (including the CUSIP number(s)
thereof) and shall state:

(1) the Redemption Date;

(2) the redemption price;

(3) if any Note is being redeemed in part, the portion of the principal amount of such
Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a
new Note or Notes in principal amount equal to the unredeemed portion will be issued;

(4) the name and address of the Paying Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect
the redemption price;

(6) that unless the Company defaults in making the redemption payment, interest on
Notes called for redemption ceases to accrue on and after the Redemption Date;

(7) the paragraph of Section 3.07 hereof pursuant to which the Notes called for
redemption are being redeemed; and

(8) the aggregate principal amount of Notes that are being redeemed.

At the Company’s request, the Trustee shall give the notice of redemption in the
Company’s name and at the Company’s sole expense.”

Section 3. Effect and Operation of Supplemental Indenture

This Supplemental Indenture shall be effective and binding immediately upon its execution and
thereupon this Supplemental Indenture shall form a part of the Indenture for all purposes, and
every Note heretofore or hereafter authenticated and delivered under the Indenture shall be bound
hereby, but, notwithstanding anything in the Indenture or this Supplemental Indenture to the
contrary, this Supplemental Indenture shall not be operative until the Company has accepted for
payment all of the Notes validly tendered pursuant to the Offer on the Settlement Date following
the Consent Date. If the Offer is terminated or withdrawn, or the Notes are not accepted for
payment for any reason, this Supplemental Indenture will not become operative.

Section 4. Reference to and Effect on the Indenture

(a) On and after the effective date of this Supplemental Indenture, each reference in the
Indenture to “this Indenture,” “hereunder,” “hereof,” or “herein” shall mean and be a reference to
the Indenture as supplemented by this Supplemental Indenture unless the context otherwise requires.

(b) Except as specifically amended above, the Indenture shall remain in full force and effect
and is hereby ratified and confirmed.

Section 5. Governing Law

This Supplemental Indenture shall be construed and enforced in accordance with the laws of the
State of New York, including without limitation Section 5-1401 of the New York General Obligation
Law, without regard to the conflicts of laws principles thereof.

Section 6. Trust Indenture Act Controls

If any provision of this Supplemental Indenture limits, qualifies or conflicts with another
provision of this Supplemental Indenture or the Indenture that is required to be included by the
Trust Indenture Act of 1939, as amended (the “Act”), as in force at the date this Supplemental
Indenture is executed, the provision required by the Act shall control.

Section 7. Trustee Disclaimer

The recitals contained in this Supplemental Indenture shall be taken as the statements of the
Issuer, and the Trustee assumes no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Supplemental Indenture.

Section 8. Counterparts and Method of Execution

This Supplemental Indenture may be executed in several counterparts, all of which together
shall constitute one agreement binding on all parties hereto, notwithstanding that all the parties
have not signed the same counterpart.

Section 9. Titles

Section titles are for descriptive purposes only and shall not control or alter the meaning of
this Supplemental Indenture as set forth in the text.

Section 10. Severability

In case any provision of this Supplemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

Section 11. Benefits of Supplemental Indenture

Nothing in this Supplemental Indenture, express or implied, shall give to any person, other
than the parties hereto and their successors and other than the Noteholders, any benefit of any
legal or equitable right, remedy or claim.

Section 12. Successors

All agreements of the Company in this Supplemental Indenture shall bind its successors. All
agreements of the Trustee in this Supplemental Indenture shall bind its successors.

[Signatures are on the following page.]

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IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be
executed as of the day and year first above written.

PARK-OHIO INDUSTRIES, INC.

By: /s/ Robert D. Vilsack

	 	 	 	Name: Robert D. Vilsack

Title: Secretary and General Counsel

WELLS FARGO BANK, N.A.

By: /s/ Timothy P. Mowdy

	 	 	 	Name: Timothy P. Mowdy

Title: Assistant Vice President

4EX-10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into on November 22, 2004 by and
between Wilsons The Leather Experts Inc., a Minnesota corporation (the “Company”), and Michael M.
Searles, a resident of California (“Executive”).

RECITALS

A. The Company is a leading retailer and designer of leather outerwear, apparel, and
accessories, with retail outlets throughout North America and a global sourcing network.

B. Executive is an experienced Executive in the retail industry.

C. The Company desires to employ Executive and Executive wishes to provide his services to the
Company, subject to the terms and conditions set forth in this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of
the Company and Executive set forth below, the Company and Executive, intending to be legally
bound, agree as follows:

1. Employment. Subject to all terms and conditions hereof, effective December 1, 2004
the Company shall employ Executive, and Executive shall accept such employment and perform services
for the Company, upon the terms and conditions set forth in this Agreement.

2. Term of Employment. Unless terminated at an earlier date in accordance with
Section 10 hereof, the term of Executive’s employment with the Company shall be for the period
commencing on December 1, 2004 and ending on January 31, 2007 (the “Term”). In the event that
Executive’s employment with the Company continues after expiration of the Term, employment shall be
on such terms and conditions determined by the Company from time to time.

3. Position and Duties.

(a) Position with the Company. Commencing on December 15, 2004 and continuing for the
duration of Executive’s employment with the Company during the Term, Executive shall serve as the
Chief Executive Officer of the Company and shall report to the Board of Directors of the Company
(the “Board”). As Chief Executive Officer, Executive shall have primary management responsibility
for the Company, shall have all duties and powers customarily associated with the office of chief
executive officer of a significant business enterprise, and shall perform such responsibilities as
the Board may assign to him from time to time consistent with his position.

(b) Performance of Duties and Responsibilities. While Executive is employed by the
Company hereunder, Executive shall serve the Company faithfully and to the best of his ability and
shall devote his full time, attention and efforts to the business of the Company. Executive shall
not accept other employment or engage in other material business activity, except as approved in
writing by the Board, but may participate in charitable and personal investment activities to a
reasonable extent, so long as such activities do not interfere with the performance of his duties
and responsibilities hereunder. Executive hereby represents and confirms that he is under no
contractual or legal commitments that would prevent him from fulfilling his duties and
responsibilities as set forth in this Agreement.

(c) Place of Employment. Executive’s primary place of employment with the Company
shall be at the Company’s headquarters located in the Minneapolis-St. Paul metropolitan area and
Executive shall perform his duties primarily from such location subject to business travel in the
ordinary course of Executive’s performance of his duties.

4. Compensation.

(a) Base Salary. While Executive is employed by the Company hereunder during the
Term, the Company shall pay to Executive an annual base salary of $580,000, less deductions and
withholdings, which base salary shall be paid in accordance with the Company’s normal payroll
policies and procedures. Commencing after Executive’s first full fiscal year of employment with
the Company, the Compensation Committee of the Board shall review and may increase (but not reduce)
Executive’s base salary in its sole discretion; provided, however, that the Compensation Committee
may reduce Executive’s base salary if (i) such reduction is part of a general, pro-rata reduction
in the base salaries of all executives of the Company implemented by the Board as a result of
financial problems experienced by the Company, and (ii) Executive’s base salary is returned to its
unreduced level on a prospective basis commencing upon the cessation of such financial problems, as
determined by the Board.

(b) Signing Bonus. The Company shall pay to Executive a one-time signing bonus in the
amount of $100,000, less deductions and withholdings, on the first regular payroll date of the
Company following the commencement of Executive’s employment hereunder.

(c) Incentive Award. Commencing on January 30, 2005, Executive shall participate in
the Company’s Executive and Key Management Incentive Plan as adopted effective May 26, 1996 and
amended from time to time, or such other incentive plan as may be established by the Board from
time to time for executive officers of the Company. (“Incentive Plan”). For each Plan Year (as
defined in the Incentive Plan) during which Executive is employed hereunder during the Term,
Executive’s target award under the Incentive Plan shall be 100% of Executive’s base salary, and the
maximum incentive opportunity shall be 200% of Executive’s base salary.

(d) Stock Options. The Company shall grant to Executive on December 1, 2004, an
option to purchase 350,000 shares of the common stock of the Company at an exercise price per share
equal to 100% of the Fair Market Value (as defined in the Company’s 2000 Long Term Incentive Plan
(“2000 Plan”)) on the date of grant (which, pursuant to the 2000 Plan, shall be the closing sale
price per share on November 30, 2004), subject to the terms of the 2000 Plan and a stock option
agreement in the form attached to this Agreement as Exhibit A, to be entered into by the Company
and Executive.

(e) Employee Benefits. While Executive is employed by the Company hereunder,
Executive shall be entitled to participate in all such employee benefit plans and programs of the
Company as are provided from time to time by the Company or its subsidiaries to senior executives
of the Company, to the extent that Executive meets the eligibility requirements for each individual
plan or program. The Company provides no assurance as to the adoption or continuance of any
particular employee benefit plan or program, and Executive’s participation in any such plan or
program shall be subject to the provisions, rules and regulations applicable thereto.

(f) Expenses. While Executive is employed by the Company hereunder, the Company shall
reimburse Executive for all reasonable and necessary out-of-pocket business, travel and
entertainment expenses incurred by Executive in the performance of the duties and responsibilities
hereunder, subject to the Company’s normal policies and procedures for expense verification and
documentation.

(g) Vacation. While Executive is employed by the Company hereunder, Executive shall
receive not less than four (4) weeks per year of paid vacation time off in accordance with the
Company’s policies for executives, to be taken at such times so as not to disrupt the operations of
the Company.

(h) Relocation. Until such time that Executive relocates his residence to the
Minneapolis-St. Paul metropolitan area, but not longer than 12 months following the commencement of
Executive’s employment with the Company, the Company shall (i) provide suitable temporary furnished
housing for Executive in the Minneapolis-St. Paul metropolitan area, including lease, utility, and
other regular monthly housing-related costs, and (ii) reimburse Executive for the cost of coach
class airfare for roundtrip travel by Executive from the Minneapolis-St. Paul metropolitan area to
his home residence in California on an average frequency of once every two weeks (26 roundtrips
during a 12-month period). Executive shall endeavor to schedule such home travel in a manner that
does not unduly disrupt the operations of the Company. In addition, Executive shall be eligible
for house hunting trips and relocation assistance in accordance with the Company’s relocation
policy as currently in effect. To the extent that any benefits provided under this Section 4(h)
are taxable to Executive, the Company shall provide Executive with a tax gross-up on such terms as
set forth in the Company’s relocation policy as currently in effect.

5. Affiliated Entities. As used in this Agreement, “Affiliates” shall include the
Company and each corporation, partnership, or other entity which controls the Company, is
controlled by the Company, or is under common control with the Company (in each case “control”
meaning the direct or indirect ownership of 50% or more of all outstanding equity interests).

6. Confidential Information. Except as permitted by the Board, Executive shall not at
any time divulge, furnish or make accessible to anyone or use in any way other than in the ordinary
course of the business of the Company or its Affiliates, any confidential, proprietary or secret
knowledge or information of the Company or its Affiliates that Executive has acquired or shall
acquire about the Company or its Affiliates, whether developed by himself or by others, concerning
(i) any trade secrets, (ii) any confidential, proprietary or secret designs, programs, processes,
formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly
useful in any aspect of the business of the Company or of its Affiliates, (iii) any customer or
supplier lists, (iv) any confidential, proprietary or secret development or research work, (v) any
strategic or other business, marketing or sales plans, (vi) any financial data or plans, or (viii)
any other confidential or proprietary information or secret aspects of the business of the Company
or of its Affiliates. Executive acknowledges that the above-described knowledge and information
constitutes a unique and valuable asset of the Company and represents a substantial investment of
time and expense by the Company, and that any disclosure or other use of such knowledge or
information other than for the sole benefit of the Company or its Affiliates would be wrongful and
would cause irreparable harm to the Company. Executive shall refrain from intentionally
committing, and will take reasonable steps to avoid, any acts that would materially reduce the
value of such knowledge or information to the Company or its Affiliates. The foregoing obligations
of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently
becomes generally publicly known, other than as a direct or indirect result of the breach of this
Agreement, (ii) is independently made available to Executive in good faith by a third party who has
not violated a confidential relationship with the Company or its Affiliates, or (iii) is required
to be disclosed by law or legal process. Executive understands and agrees that his obligations
under this Agreement to maintain the confidentiality of the Company’s confidential information are
in addition to any obligations of Executive under applicable statutory or common law.

7. Ventures. If, during Executive’s employment with the Company, Executive is engaged
in or provides input into the planning or implementing of any project, program or venture involving
the Company, all rights in such project, program or venture shall belong to the Company. Except as
approved in writing by the Board, Executive shall not be entitled to any interest in any such
project, program or venture or to any commission, finder’s fee or other compensation in connection
therewith. Executive shall have no interest, direct or indirect, in any customer or supplier that
conducts business with the Company.

8. Noncompetition and Nonsolicitation Covenants.

(a) Agreement Not to Compete. During Executive’s employment with the Company or any
Affiliates and for a period of 24 consecutive months from and after the termination of Executive’s
employment, whether such termination is with or without Cause, or whether such termination is
initiated by Executive or the Company, Executive will not, without the express written
authorization of the Board, directly or indirectly (including without limitation as a proprietor,
owner, principal, agent, partner, officer, director, stockholder, employee, member, consultant or
otherwise) in North America or any other location in which the Company is then doing business, (i)
provide services for or hold any interest in any person or entity primarily engaged in or planning
to enter into the business of manufacturing, designing, marketing, distributing, or selling leather
outerwear, leather apparel, or leather accessories (collectively “Leather Products”); or (ii)
provide any services relating to the manufacturing, designing, marketing, distributing, or selling
of Leather Products for any person or entity. Ownership by Executive, as a passive investment, of
less than 1.0% of the outstanding shares of capital stock of any corporation listed on a national
securities exchange or publicly traded on NASDAQ will not itself constitute a breach of this
Section 8. Notwithstanding the foregoing, this Section 8(a) shall not be construed to prevent
Executive, after the termination of Executive’s employment with the Company, from performing
services for, or having any interest in, a general retail department store or other diversified
retail business with a broad and diverse product mix that does not derive the majority of its
revenues from Leather Products, so long as Executive’s primary responsibilities are not directly
related to Leather Products and Executive is in compliance with his other obligations under
Sections 6, 8(b) and 8(c) of this Agreement.

(b) Agreement Not to Hire. During Executive’s employment with the Company or any
Affiliates and for a period of 24 consecutive months from and after the termination of Executive’s
employment, whether such termination is with or without Cause, or whether such termination is
initiated by Executive or the Company, Executive shall not, directly or indirectly, in any manner
or capacity (including without limitation as a proprietor, principal, agent, partner, officer,
director, stockholder, employee, member of any association, consultant or otherwise) hire, engage
or solicit any person who is then an employee or contractor of the Company or who was an employee
or contractor of the Company at any time during the six-month period immediately preceding
Executive’s termination of employment.

(c) Agreement Not to Solicit. During Executive’s employment with the Company or any
Affiliates and for a period of 24 consecutive months from and after the termination of executive’s
employment, whether such termination is with or without Cause, or whether such termination is
initiated by Executive or the Company, Executive shall not, directly or indirectly in any manner or
capacity (including without limitation as a proprietor, principal, agent, partner, officer,
director, stockholder, employee, member of any association, consultant or otherwise) solicit,
request, advise or induce any then current customer, supplier or other business contact of the
Company to cancel, curtail or otherwise adversely change its relationship with the Company.

(d) Acknowledgment. Executive hereby acknowledges that the provisions of this Section
8 are reasonable and necessary to protect the legitimate interests of the Company, including but
not limited to the Company’s trade secrets, confidential information, substantial relationships
with existing or prospective customers, or customer goodwill. Executive hereby acknowledges that
any violation of this Section 8 by Executive shall cause substantial and irreparable harm to the
Company to such an extent that monetary damages alone would be an inadequate remedy therefor.
Therefore, in the event that Executive violates any provision of this Section 8, the Company shall
be entitled to an injunction, in addition to all the other remedies it may have, restraining
Executive from violation or continuing to violate such provision.

(e) Blue Pencil Doctrine. If the duration of, the scope of or any business activity
covered by any provision of this Section 8 is in excess of what is determined to be valid and
enforceable under applicable law, such provision shall be construed to cover only that duration,
scope or activity that is determined to be valid and enforceable. Executive hereby acknowledges
that this Section 8 shall be given the construction which renders its provisions valid and
enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

9. Patents, Copyrights and Related Matters.

(a) Disclosure and Assignment. Executive shall immediately disclose to the Company
any and all improvements and inventions that Executive may conceive and/or reduce to practice
individually or jointly or commonly with others while he is employed with the Company or any of its
Affiliates with respect to (i) any methods, processes or apparatus concerned with the development,
use or production of any type of products, goods or services sold or used by the Company or its
Affiliates, and (ii) any type of products, goods or services sold or used by the Company or its
Affiliates. Any such improvements and inventions shall be the sole and exclusive property of the
Company and executive shall immediately assign, transfer and set over to the Company his entire
right, title and interest in and to any and all of such improvement and inventions as are specified
in this Section 9(a), and in and to any and all applications for letters patent that may be filed
on such inventions, and in and to any and all letters patent that may issue, or be issued, upon
such applications. In connection therewith and for no additional compensation therefor, but at no
expense to Executive, Executive shall sign any and all instruments deemed necessary by the Company
for:

	 	(i)	 	the filing and prosecution of any
applications for letters patent of the United States or of any
foreign country that the Company may desire to file upon such
inventions as are specified in this Section 9(a);

	 	(ii)	 	the filing and prosecution of any
divisional, continuation, continuation-in-part or reissue
applications that the Company may desire to file upon such
applications for letters patent; and

	 	(iii)	 	the reviving, re-examining or
renewing of any of such applications for letters patent.

This Section 9(a) shall not apply to any invention for which no equipment, supplies, facilities,
confidential, proprietary or secret knowledge or information, or other trade secret information of
the Company was used and that was developed entirely on Executive’s own time, and (i) that does not
relate (A) directly to the business of the Company, or (B) to the Company’s actual or demonstrably
anticipated research or development, or (ii) that does not result from any work performed by
Executive for the Company.

(b) Copyrightable Material. All right, title and interest in all copyrightable
material that Executive shall conceive or originate individually or jointly or commonly with
others, and that arise in connection with Executive’s services hereunder or knowledge of
confidential and proprietary information of the Company, shall be the property of the Company and
are hereby assigned by Executive to the Company of its Affiliates, along with ownership of any and
all copyrights in the copyrightable material. Where applicable, works of authorship created by
Executive relating to the Company or its Affiliates and arising out of Executive’s knowledge of
confidential and proprietary information of the Company shall be considered “works made for hire,”
as defined in the U.S. Copyright Act, as amended.

10. Termination of Employment.

(a) The Executive’s employment with the Company shall terminate immediately upon:

	 	(i)	 	Executive’s receipt of written
notice from the Company of the termination of his employment,
effective as of the date indicated in such notice;

	 	(ii)	 	Executive’s abandonment of his
employment or his resignation;

	 	(iii)	 	Executive’s Disability (as
defined below); or

(iv) Executive’s death.

(b) The date upon which Executive’s termination of employment with the Company occurs shall be
the “Termination Date.”

(c) Upon termination of Executive’s employment with the Company for any reason, Executive
shall resign from all positions held as officer or director of the Company or its Affiliates
effective on the Termination Date.

11. Payments upon Termination of Employment.

(a) If, prior to the end of the Term, (i) Executive’s employment with the Company is
terminated by the Company for any reason other than for Cause (as defined below), or (ii) Executive
resigns his employment for Good Reason (as defined below), then the Company shall, in addition to
payment to Executive of his then current base salary and any incentive award earned by Executive
pursuant to the terms and conditions of the Incentive Plan through the Termination Date, and
subject to the conditions in Section 11(g):

	 	(i)	 	pay to Executive as severance pay
an amount equal to his then current base salary for a period of
12 consecutive months after the Termination Date;

	 	(ii)	 	if Executive elects to continue
for himself and his eligible dependents group health, dental and
life insurance coverage with the Company following the
Termination Date, pay the full cost of such coverage at the same
level of coverage that was in effect as of the Termination Date
for a period of 18 consecutive months after the Termination
Date; and

	 	(iii)	 	if Executive has been employed
by the Company as of the Termination Date for at least six (6)
months of the fiscal year in which the Termination Date occurs,
pay to Executive any annual incentive award that would have been
payable to him pursuant to Section 4(c) of this Agreement for
such fiscal year as if Executive had been in the employ of the
Company for the full fiscal year, based on actual Company
performance for such fiscal year.

Any amount payable to Executive or for the benefit of Executive and his eligible dependents shall
be subject to applicable deductions and withholdings. Severance pay pursuant to Section 11(a)(i)
shall be paid to Executive by the Company in equal installments in accordance with the Company’s
regular payroll schedule, commencing on the first normal payroll date of the Company following the
expiration of the applicable rescission periods provided by law and continuing for twelve months
thereafter. Any incentive award payable pursuant to Section 11(a)(iii) shall be paid to Executive
at the same time as incentive awards for such fiscal year are paid to other executives of the
Company.

(b) If Executive’s employment with the Company is terminated by reason of:

	 	(i)	 	Executive’s abandonment of his
employment or Executive’s resignation without Good Reason (as
defined below);

	 	(ii)	 	termination of Executive’s
employment by the Company for Cause (as defined below);

	 	(iii)	 	Executive’s Disability or death;
or

	 	(iv)	 	expiration of the Term of
Executive’s employment with the Company, as specified in Section
2 hereof,

the Company shall pay to Executive or his beneficiary or his estate, as the case may be, his then
current base salary and any incentive award earned by Executive pursuant to the terms and
conditions of the Incentive Plan through the Termination Date.

(c) “Cause” hereunder shall mean:

	 	(i)	 	an act or acts of dishonesty
undertaken by Executive and intended to result in material
personal gain or enrichment of Executive or others at the
expense of the Company;

	 	(ii)	 	unlawful conduct or gross
misconduct that is willful and deliberate on Executive’s part
and that, in either event, is materially injurious to the
business or reputation of the Company;

	 	(iii)	 	the conviction of Executive of a
felony;

	 	(iv)	 	failure of Executive to comply
with the policies of the Company in effect from time to time
relating to conflicts of interest, ethics, codes of conduct,
insider trading, or discrimination and harassment, or other
breach of Executive’s fiduciary duties to the Company, which
failure or breach is materially injurious to the business or
reputation of the Company; or

	 	(v)	 	material breach of any terms and
conditions of this Agreement by Executive, which breach has not
been cured by Executive within 30 days after written notice
thereof to Exeuctive from the Company.

(d) “Good Reason” hereunder shall mean:

	 	(i)	 	material breach of any terms and
conditions of this Agreement by the Company not caused by
Executive, which breach has not been cured by the Company within
ten days after written notice thereof to the Company from
Executive;

	 	(ii)	 	the assignment after December 15,
2004 of Executive without his consent to a position or material
responsibilities or duties of a lesser status or degree than the
position of Chief Executive Officer;

	 	(iii)	 	relocation of Executive’s
principal office for Company business, without Executive’s
consent, to a location more than 30 miles outside the
Minneapolis-St. Paul metropolitan area; or

	 	(iv)	 	failure of any successor entity,
by merger or purchase of all or substantially all of the assets
of the Company, to assume the obligations of the Company
hereunder as a result of the merger or by agreement.

(e) “Disability” hereunder shall mean a continuing condition of Executive that has been
determined to meet the criteria set forth in the Long Term Disability Benefits component of the
Wilsons The Leather Experts Welfare Benefit Plan, or similar successor long-term disability
insurance plan, to render a participant eligible for long-term disability benefits under such plan,
whether or not Executive is in fact covered by such plan. The determination shall be made by the
insurer or third-party administrator of the plan or, if Executive is not covered by the plan, by
the Company in its sole discretion.

(f) In the event of termination of Executive’s employment, the sole obligation of the Company
hereunder shall be its obligation to make the payments called for by Sections 11(a) or 11(b)
hereof, as the case may be, and the Company shall have no other obligation to Executive or to his
beneficiary or his estate, except as otherwise provided by law, under the terms of any other
applicable written agreement between Executive and the Company, or under the terms of any employee
benefit plans or programs then maintained by the Company in which Executive participates.

(g) Notwithstanding the foregoing provisions of this Section 11, the Company shall not be
obligated to make any payments to or for the benefit of Executive and his eligible dependents under
Section 11(a) hereof unless: (i) Executive shall, if reasonably requested by the Board, remain
employed by the Company for a transition period and complete such transitional duties as the Board
may assign; (ii) Executive shall have signed a release of claims in favor of the Company and its
Affiliates substantially in the form attached hereto as Exhibit B, and all applicable consideration
and rescission periods provided by law shall have expired; and (iii) Executive is in strict
compliance with the terms of this Agreement as of the dates of such payments. If pursuant to
Section 11(a) and this Section 11(g), Executive signs and does not rescind the release in
accordance with its terms, then the Company will agree not to authorize any of its officers,
directors, employees or agents acting on its behalf to malign, defame or disparage the reputation
or character of Executive. Notwithstanding the foregoing, nothing in this Section 11(g) will be
interpreted to limit in any manner the good faith exercise of fiduciary responsibilities of any
person as an officer or director of the Company, or to prohibit any person from cooperating with
any civil or criminal investigation or giving truthful information in response to a valid subpoena
or court order.

12. Return of Records and Property. Upon termination of Executive’s employment or at
any time upon the Company’s request, Executive shall promptly deliver to the Company any and all
Company and Affiliate records and any and all Company and 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, source codes,
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 its
Affiliates and all copies thereof, and keys, access cards, access codes, passwords, credit cards,
personal computers, telephones and other electronic equipment belonging to the Company or its
Affiliates.

13. Remedies.

(a) Remedies. Executive acknowledges that it would be difficult to fully compensate
the Company for monetary damages resulting from any breach by him of the provisions of Sections 6,
8 or 9 hereof. Accordingly, in the event of any actual or threatened breach of any such
provisions, the Company shall, in addition to any other remedies it may have, be entitled to
injunctive and other equitable relief to enforce such provisions, and such relief may be granted
without the necessity of proving actual monetary damages.

(b) Arbitration. Except for disputes arising under Sections 6, 8 or 9 hereof, all
disputes involving the interpretation, construction, application or alleged breach of this
Agreement and all disputes relating to the termination of Executive’s employment with the Company
shall be submitted to final and binding arbitration in Minneapolis, Minnesota. The arbitrator
shall be selected and the arbitration shall be conducted pursuant to the then most recent
Employment Dispute Resolution Rules of the American Arbitration Association. The decision of the
arbitrator shall be final and binding, and any court of competent jurisdiction may enter judgment
upon the award. All fees and expenses of the arbitrator shall be paid by the Company. The
arbitrator shall have jurisdiction and authority to interpret and apply the provisions of this
Agreement and relevant federal, state and local laws, rules and regulations insofar as necessary to
the determination of the dispute and to remedy any breaches of the Agreement and/or violations of
applicable laws, but shall not have jurisdiction or authority to alter in any way the provisions of
this Agreement. The arbitrator shall have the authority to award attorneys’ fees and costs to the
prevailing party. The parties hereby agree that this arbitration provision shall be in lieu of any
requirement that either party exhaust such party’s administrative remedies under federal, state or
local law.

14. Legal Expenses. Following commencement of Executive’s employment hereunder, the
Company shall reimburse Executive for legal expenses incurred by Executive for the negotiation of
this Agreement and the attached exhibits, up to a maximum amount of $12,000. Such reimbursement
shall be paid to Executive on the next regular payroll date following receipt by the Company of
appropriate documentation of such expenses and shall be subject to applicable tax withholdings.

15. Miscellaneous.

(a) Governing Law. All matters relating to the interpretation, construction,
application, validity and enforcement of this Agreement shall be governed by the laws of the State
of Minnesota without giving effect to any choice or conflict of law provision or rule, whether of
the State of Minnesota or any other jurisdiction, that would cause the application of laws of any
jurisdiction other than the State of Minnesota.

(b) Jurisdiction and Venue. Executive and the Company consent to jurisdiction of the
courts of the State of Minnesota and/or the federal district courts, District of Minnesota, for the
purpose of resolving all issues of law, equity, or fact, arising out of or in connection with this
Agreement. Any action involving claims of a breach of this Agreement shall be brought in such
courts. Each party consents to personal jurisdiction over such party in the state and/or federal
courts of Minnesota and hereby waives any defense of lack of personal jurisdiction. Venue, for the
purpose of all such suits, shall be in Hennepin County, State of Minnesota.

(c) Entire Agreement. This Agreement and the stock option agreement referenced in
Section 4(d) contain the entire agreement of the parties relating to Executive’s employment with
the Company and supersedes all prior agreements and understandings with respect to such subject
matter, and the parties hereto have made no agreements, representations or warranties relating to
the subject matter of this Agreement that are not set forth herein.

(d) No Violation of Other Agreements or Obligations. Executive hereby represents and
agrees that neither (i) Executive’s entering into this Agreement nor (ii) Executive’s carrying out
the provisions of this Agreement, will violate any other agreement (oral, written or other) to
which Executive is a party or by which Executive is bound, including without limitation any
agreement to keep in confidence proprietary information, knowledge or data acquired by Executive in
confidence or in trust prior to his employment with the Company. Executive will not disclose to
the Company or induce the Company to use any confidential or proprietary information or material
belonging to any previous employer or others and agrees not to enter into any agreement either
written or oral in conflict with this Agreement.

(e) Amendments. No amendment or modification of this Agreement shall be deemed
effective unless made in writing and signed by the parties hereto.

(f) No Waiver. No term or condition of this Agreement shall be deemed to have been
waived, except by a statement in writing signed by the party against whom enforcement of the waiver
is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated,
shall operate only as to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future or as to any act other than that specifically waived.

(g) Assignment. This Agreement shall not be assignable, in whole or in part, by
either party without the prior written consent of the other party, except that the Company may,
without the consent of Executive, assign its rights and obligations under this Agreement (i) to an
Affiliate or (ii) to any corporation or other person or business entity to which the Company may
sell or transfer all or substantially all of its assets. After any such assignment by the Company,
the Company shall be discharged from all further liability hereunder and such assignee shall
thereafter be deemed to be “the Company” for purposes of all terms and conditions of this
Agreement, including this Section 15(g).

(h) Notices. Notices required to be given under this Agreement must be in writing and
will be deemed to have been given when notice is personally served, one business day after notice
is sent by reliable overnight courier, or three business days after notice is mailed by United
States registered or certified mail, return receipt requested, postage prepaid, to the last known
residence address of Executive or, in the case of the Company, to its principal office, to the
attention of the Board, or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notice of change of address will be effective only upon
receipt by the other party.

(i) Taxes. The Company shall deduct from any payments made and benefits provided to
Executive hereunder any withholding or other taxes which the Company is required or authorized to
deduct under applicable law.

(j) Counterparts. This Agreement may be executed in any number of counterparts, and
such counterparts executed and delivered, each as an original, shall constitute but one and the
same instrument.

(k) Severability. Subject to Section 8 hereof, to the extent that any portion of any
provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall
continue in full force and effect.

(l) Captions and Headings. The captions and paragraph headings used in this Agreement
are for convenience of reference only and shall not affect the construction or interpretation of
this Agreement or any of the provisions hereof.

(m) Survival. The parties acknowledge and agree that certain provisions of this
Agreement, including but not limited to Sections 6, 8, 9, 11, 13 and 15 hereof, impose obligations
that according to their terms survive termination of Executive’s employment or expiration of the
Term. All such provisions shall survive termination of Executive’s employment and expiration of
the Term.

Signature page to follow

1

IN WITNESS WHEREOF, Executive and the Company have executed this Agreement as of the date set
forth in the first paragraph.

WILSONS THE LEATHER EXPERTS INC.

By /s/ Michael T. Cowhig

	 	 	 	Its Chair, Compensation Committee

/s/ Michael M. Searles

	 	 	 	MICHAEL M. SEARLES

2

Exhibit B to Employment Agreement

RELEASE BY MICHAEL M. SEARLES

Definitions. I intend all words used in this Release to have their plain meanings in
ordinary English. Specific terms that I use in this Release have the following meanings:

	 	A.	 	I, me, and my include both me and anyone who has or
obtains any legal rights or claims through me.

	 	B.	 	Wilsons means Wilsons The Leather Experts Inc., any company related to
Wilsons The Leather Experts Inc. in the present or past (including without limitation
its predecessors, parents, subsidiaries, affiliates, and joint venture partners), and
any successors of Wilsons The Leather Experts Inc.

	 	C.	 	Company means Wilsons; the present and past officers, directors,
committees, and employees of Wilsons; any company providing insurance to Wilsons in the
present or past; the present and past fiduciaries of any employee benefit plan
sponsored or maintained by Wilsons (other than multiemployer plans); the attorneys for
Wilsons; and anyone who acted on behalf of Wilsons or on instructions from Wilsons.

	 	D.	 	Employment Agreement means the Employment Agreement between Wilsons and
me that I executed on November 22, 2004, including all of the documents attached to the
Employment Agreement.

	 	E.	 	My Claims mean all of my rights that I now have to any relief of any
kind from the Company, whether or not I now know about those rights, including without
limitation:

	 	1.	 	all claims arising out of or relating to my employment with
Wilsons or the termination of that employment;

	 	2.	 	all claims arising out of or relating to the statements,
actions, or omissions of the Company;

	 	3.	 	all claims for any alleged unlawful discrimination, harassment,
retaliation or reprisal, or other alleged unlawful practices arising under any
federal, state, or local statute, ordinance, or regulation, including without
limitation, claims under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, 42
U.S.C. § 1981, the Employee Retirement Income Security Act, the Equal Pay Act,
the Worker Adjustment and Retraining Notification Act, the Minnesota Human
Rights Act, the Fair Credit Reporting Act, and workers’ compensation
non-interference or non-retaliation statutes (such as Minn. Stat. § 176.82);

	 	4.	 	all claims for alleged wrongful discharge; breach of contract;
breach of implied contract; failure to keep any promise; breach of a covenant
of good faith and fair dealing; breach of fiduciary duty; estoppel; my
activities, if any, as a “whistleblower”; defamation; infliction of emotional
distress; fraud; misrepresentation; negligence; harassment; retaliation or
reprisal; constructive discharge; assault; battery; false imprisonment;
invasion of privacy; interference with contractual or business relationships;
any other wrongful employment practices; and violation of any other principle
of common law;

	 	5.	 	all claims for compensation of any kind, including without
limitation, bonuses, commissions, stock-based compensation or stock options,
vacation pay, and expense reimbursements;

	 	6.	 	all claims for back pay, front pay, reinstatement, other
equitable relief, compensatory damages, damages for alleged personal injury,
liquidated damages, and punitive damages; and

7. all claims for attorneys’ fees, costs, and interest.

However, My Claims do not include any claims that the law does not allow to
be waived; any claims that may arise after the date on which I sign this Release;
any claims for benefits under the terms and conditions of any retirement, pension,
profit sharing, welfare benefit or other employee benefit plan of the Company in
which I am a participant as of the termination of my employment; any claims for
breach of Section 11 of the Employment Agreement; or any claims that I may have to
indemnification from Wilsons as provided under the charter documents of Wilsons, any
general liability or officers’ and directors’ liability insurance policies
maintained by Wilsons, or applicable law.

Agreement to Release My Claims. I will receive consideration from Wilsons as set forth in
the Employment Agreement if I sign and do not rescind this Release as provided below. I understand
and acknowledge that that consideration is in addition to anything of value that I would be
entitled to receive from Wilsons if I did not sign this Release or if I rescinded this Release. In
exchange for that consideration I give up and release all of My Claims. I will not make any
demands or claims against the Company for compensation or damages relating to My Claims. The
consideration that I am receiving is a fair compromise for the release of My Claims.

Additional Agreements and Understandings. Even though Wilsons will provide consideration
for me to settle and release My Claims, the Company does not admit that it is responsible or
legally obligated to me. In fact, the Company denies that it is responsible or legally obligated
to me for My Claims, denies that it engaged in any unlawful or improper conduct toward me, and
denies that it treated me unfairly.

Cooperation/Non-Disparagement. At the Company’s reasonable request and upon reasonable
notice, I will, from time to time and without further consideration, timely execute and deliver
such acknowledgements, instruments, certificates, and other ministerial documents as may be
necessary or appropriate to formalize and complete the Company’s corporate records and, for up to
five (5) hours in any calendar month (on a non-cumulative basis) for one year following the
termination of my employment, discuss and consult with the Company regarding other matters relating
to my responsibilities while employed by the Company. I will not malign, defame, or disparage the
reputation, character, image, products, or services of the Company, or the reputation or character
of the Company’s directors, officers, employees, or agents.

Acknowledgement of Continuing Obligations. I acknowledge and agree that certain of my
obligations under the Employment Agreement, including but not limited my obligations under Sections
6, 8, 9, 11, 13, and 15 of the Employment Agreement, survive the termination of my employment with
the Company. I represent that I am in compliance, and shall continue to comply, with all such
continuing obligations under the Employment Agreement.

Advice to Consult with an Attorney. I understand and acknowledge that I am hereby being
advised by the Company to consult with an attorney prior to signing this Release and I have done
so. My decision whether to sign this Release is my own voluntary decision made with full knowledge
that the Company has advised me to consult with an attorney.

Period to Consider the Release. I acknowledge that I may take up to 21 days to consider
whether I wish to sign this Release. If I sign this Release before the end of the 21-day period,
it will be my voluntary decision to do so because I have decided that I do not need any additional
time to decide whether to sign this Release.

My Right to Rescind this Release. I understand that I may rescind this Release at any time
within 15 days after I sign it, not counting the day upon which I sign it. This Release will not
become effective or enforceable unless and until the 15-day rescission period has expired without
my rescinding it.

Procedure for Accepting or Rescinding the Release. To accept the terms of this Release, I
must deliver the Release, after I have signed and dated it, to Wilsons by hand or by mail within
the 21-day period that I have to consider this Release. To rescind my acceptance, I must deliver a
written, signed statement that I rescind my acceptance to Wilsons by hand or by mail within the
15-day rescission period. All deliveries must be made to Wilsons at the following address:

Vice President – Human Resources

Wilsons The Leather Experts Inc.

7401 Boone Avenue North

Brooklyn Park, Minnesota 55428

If I choose to deliver my acceptance or the rescission of my acceptance by mail, it must be
postmarked within the period stated above and properly addressed to Wilsons at the address stated
above.

Interpretation of the Release. This Release should be interpreted as broadly as possible
to achieve my intention to resolve all of My Claims against the Company. If this Release is held
by a court to be inadequate to release a particular claim encompassed within My Claims, this
Release will remain in full force and effect with respect to all the rest of My Claims.

My Representations. I am legally able and entitled to receive the consideration being
provided to me in settlement of My Claims. I have not been involved in any personal bankruptcy or
other insolvency proceedings at any time since I began my employment with Wilsons. No child
support orders, garnishment orders, or other orders requiring that money owed to me by Wilsons be
paid to any other person are now in effect.

I have read this Release carefully. I understand all of its terms. In signing this Release, I
have not relied on any statements or explanations made by the Company except as specifically set
forth in the Agreement and the Release signed by Wilsons. I am voluntarily releasing My Claims
against the Company. I intend this Release to be legally binding.

	 	 	 
	Dated:    

	 	   

Michael M. Searles
	 
	 	 

3

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