Document:

EXHIBIT  10.14
                             NIGHTHAWK SYSTEMS, INC.
                            PLACEMENT AGENT AGREEMENT

Dated  as  of:  August  10,  2003.

The  undersigned, Nighthawk Systems, Inc., a Nevada corporation (the "COMPANY"),
hereby  agrees  with  U.S.  Euro  Securities,  Inc.  (the "PLACEMENT AGENT") and
Dutchess  Private  Equities  Fund, II, L.P., a Delaware Limited Partnership (the
"INVESTOR")  as  follows:

1.     OFFERING.  The  Company  hereby engages the Placement Agent to act as its
placement  agent  in  connection  with the Investment Agreement dated August 10,
2004  (the "INVESTMENT AGREEMENT") pursuant to which the Company shall issue and
sell  to  the  Investor, from time to time, and the Investor shall purchase from
the  Company  (the  "OFFERING")  up  to Ten Million Dollars ($10,000,000) of the
Company's  Common  Stock  (the  "COMMITMENT AMOUNT"), par value $0.001 per share
(the  "COMMON STOCK"), at a price per share equal to the Purchase Price, as that
term  is  defined in the Investment Agreement. Pursuant to the terms hereof, the
Placement  Agent shall render consulting services to the Company with respect to
the  Investment  Agreement and shall be available for consultation in connection
with  the  advances  to  be  requested by the Company pursuant to the Investment
Agreement.  All  capitalized  terms used herein and not otherwise defined herein
shall have the same meaning ascribed to them as in the Investment Agreement. The
Investor  will be granted certain registration rights with respect to the Common
Stock  as  more  fully  set forth in a Registration Rights Agreement between the
Company  and  the  Investor  dated  August  10,  2004  (the "REGISTRATION RIGHTS
AGREEMENT").  The  documents to be executed and delivered in connection with the
Offering,  including,  but  not  limited,  to  this  Agreement,  the  Investment
Agreement,  and  the  Registration Rights Agreement, and any Prospectus or other
disclosure  document  (including  all  amendments  and  supplements) utilized in
connection  with the Offering are referred to sometimes hereinafter collectively
as the "OFFERING MATERIALS." The Company's Common Stock is sometimes referred to
hereinafter  as  the "SECURITIES." The Placement Agent shall not be obligated to
sell  any Securities and this Offering by the Placement Agent shall be solely on
a  "best  efforts  basis."

2.     REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  OF  THE  PLACEMENT  AGENT.

     A.  The  Placement  Agent  represents,  warrants  and covenants as follows:

     (i)     The  Placement  Agent  has  the  necessary power to enter into this
Agreement  and  to  consummate  the  transactions  contemplated  hereby.

     (ii)     The  execution  and  delivery  by  the  Placement  Agent  of  this
Agreement  and the consummation of the transactions contemplated herein will not
result  in  any  violation  of,  or be in conflict with, or constitute a default
under, any agreement or instrument to which the Placement Agent is a party or by
which  the Placement Agent or its properties are bound, or any judgment, decree,
order  or,  to  the Placement Agent's knowledge, any statute, rule or regulation
applicable to the Placement Agent. This Agreement when executed and delivered by
the Placement Agent, will constitute the legal, valid and binding obligations of
the  Placement  Agent,  enforceable  in  accordance with their respective terms,
except  to  the

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extent  that  (a)  the  enforceability  hereof  or  thereof  may  be  limited by
bankruptcy,  insolvency, reorganization, moratorium or similar laws from time to
time  in  effect  and  affecting  the  rights  of  creditors  generally, (b) the
enforceability  hereof or thereof is subject to general principles of equity, or
(c)  the  indemnification  provisions  hereof  or  thereof  may be held to be in
violation  of  public  policy.

     (iii)     Upon  receipt and execution of this Agreement the Placement Agent
will promptly forward copies of this Agreement to the Company or its counsel and
the  Investor  or  its  counsel.

     (iv)     The  Placement  Agent  will not take any action that it reasonably
believes  would  cause  the Offering to violate the provisions of the Securities
Act  of  1933,  as amended (the "1933 ACT"), the Securities Exchange Act of 1934
(the  "1934  ACT"), the respective rules and regulations promulgated there under
(the  "RULES  AND  REGULATIONS")  or  applicable "Blue Sky" laws of any state or
jurisdiction.

     (v)     The  Placement  Agent  will use all reasonable efforts to determine
(a)  whether the Investor is an Accredited Investor and (b) that any information
furnished  by the Investor is true and accurate.  The Placement Agent shall have
no  obligation  to  insure  that  (x)  any  check, note, draft or other means of
payment  for  the  Common Stock will be honored, paid or enforceable against the
Investor  in accordance with its terms, or (y) subject to the performance of the
Placement  Agent's  obligations  and  the  accuracy  of  the  Placement  Agent's
representations  and  warranties  hereunder, (1) the Offering is exempt from the
registration requirements of the 1933 Act or any applicable state "Blue Sky" law
or  (2)  the  Investor  is  an  Accredited  Investor.

     (vi)     The  Placement  Agent  is  a member of the National Association of
Securities  Dealers,  Inc.,  and is a broker-dealer registered as such under the
1934  Act  and  under  the securities laws of the states in which the Securities
will  be  offered  or  sold  by the Placement Agent unless an exemption for such
state  registration  is available to the Placement Agent. The Placement Agent is
in  compliance  with  all  material  rules  and  regulations  applicable  to the
Placement  Agent generally and applicable to the Placement Agent's participation
in  the  Offering.

3.     REPRESENTATIONS  AND  WARRANTIES  OF  THE  COMPANY.

A.  The  Company  makes  to  the  Placement  Agent  all  the representations and
warranties  it  makes  to  the  Investor  in  the  Investment  Agreement and, in
addition,  represents  and  warrants  as  follows:

     (i)     The  execution, delivery and performance of each of this Agreement,
the  Investment Agreement and the Registration Rights Agreement has been or will
be  duly  and validly authorized by the Company and is, and with respect to this
Agreement,  the  Investment Agreement and the Registration Rights Agreement will
each be, a valid and binding agreement of the Company, enforceable in accordance
with  its  respective  terms,  except  to the extent that (a) the enforceability
hereof  or  thereof  may  be  limited by bankruptcy, insolvency, reorganization,
moratorium  or similar laws from time to time in effect and affecting the rights
of  creditors  generally, (b) the enforceability hereof or thereof is subject to
general  principles  of  equity  or (c) the indemnification provisions hereof or
thereof  may  be  held to be in violation of public policy. The Securities to be
issued  pursuant  to  the  transactions  contemplated  by this Agreement and the
Investment  Agreement  have  been

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duly  authorized  and,  when  issued  and  paid  for in accordance with (x) this
Agreement,  the  Investment  Agreement  and  the  certificates/instruments
representing  such  Securities, (y) will be valid and binding obligations of the
Company,  enforceable  in  accordance with their respective terms, except to the
extent  that  (1)  the  enforceability  thereof  may  be  limited by bankruptcy,
insolvency,  reorganization,  moratorium  or  similar  laws from time to time in
effect  and  affecting  the  rights  of  creditors  generally,  and  (2)  the
enforceability thereof is subject to general principles of equity. All corporate
action  required  to  be  taken  for the authorization, issuance and sale of the
Securities  has  been  duly  and  validly  taken  by  the  Company.

     (ii)     The  Company  has  a  duly  authorized,  issued  and  outstanding
capitalization  as set forth herein and in the Investment Agreement. The Company
is  not  a  party  to or bound by any instrument, agreement or other arrangement
providing  for it to issue any capital stock, rights, warrants, options or other
securities,  except  for  this Agreement, the agreements described herein and as
described  in the Investment Agreement, dated the date hereof and the agreements
described  therein.  All  issued and outstanding securities of the Company, have
been  duly  authorized and validly issued and are fully paid and non-assessable;
the  holders  thereof  have  no  rights  of rescission or preemptive rights with
respect  thereto  and  are not subject to personal liability solely by reason of
being  security holders; and none of such securities were issued in violation of
the  preemptive  rights of any holders of any security of the Company. As of the
date  hereof, the authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $0.001 per share of which 26,659,235 shares of
Common  Stock  are  issued  and  outstanding  and  5,000,000  shares  of Class A
Preferred  Common  Stock,  of  which  3,000  shares  are issued and outstanding.

     (iii)     The  Common  Stock to be issued in accordance with this Agreement
and  the  Investment Agreement has been duly authorized and when issued and paid
for  in  accordance  with  this  Agreement,  the  Investment  Agreement  and the
certificates/instruments representing such Common Stock, will be validly issued,
fully-paid  and  non-assessable;  the  holders  thereof  will  not be subject to
personal  liability  solely by reason of being such holders; such Securities are
not  and  will  not  be  subject  to  the preemptive rights of any holder of any
security  of  the  Company.

4.     REPRESENTATIONS,  WARRANTIES  AND  COVENANTS  OF  THE  INVESTOR.

A.     The  Investor  makes  to  the Placement Agent all the representations and
warranties  it makes to the Company in the Investment Agreement and, in addition
represents,  warrants  and  covenants  as  follows:

     (i)     The  Investor  has the necessary power to enter into this Agreement
and  to  consummate  the  transactions  contemplated  hereby.

     (ii)     The  execution  and delivery by the Investor of this Agreement and
the  consummation of the transactions contemplated herein will not result in any
violation  of,  or  be  in  conflict

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with,  or  constitute  a default under, any agreement or instrument to which the
Investor is a party or by which the Investor or its properties are bound, or any
judgment,  decree,  order  or, to the Investor's knowledge, any statute, rule or
regulation  applicable  to  the  Investor.  This  Agreement  when  executed  and
delivered  by  the  Investor,  will  constitute  the  legal,  valid  and binding
obligations  of  the  Investor,  enforceable in accordance with their respective
terms, except to the extent that (a) the enforceability hereof or thereof may be
limited  by  bankruptcy,  insolvency, reorganization, moratorium or similar laws
from time to time in effect and affecting the rights of creditors generally, (b)
the enforceability hereof or thereof is subject to general principles of equity,
or  (c)  the  indemnification  provisions hereof or thereof may be held to be in
violation  of  public  policy.

         (iii)  the  Investor  is  not,  and  will  not  be,  as a result of the
transactions  contemplated  by  the  Offering  Materials  a  "dealer" within the
meaning  of the Securities Exchange Act of 1934 and applicable federal and state
securities  laws and regulations. The Investor covenants that in this respect it
is and will remain in compliance with the requirements of applicable "no action"
rulings  of  the  U.S.  Securities  Exchange  Commission.

     (iv)     The  Investor  will  promptly  forward  copies  of any and all due
diligence  questionnaires  compiled  by  the  Investor  to  the Placement Agent.

5.     CERTAIN  COVENANTS  AND  AGREEMENTS  OF  THE  COMPANY.

     The  Company covenants and agrees at its expense and without any expense to
the  Placement  Agent  as  follows:

A.     To  advise  the  Placement  Agent  of  any material adverse change in the
Company's  financial  condition,  prospects  or  business  or of any development
materially  affecting the Company or rendering untrue or misleading any material
statement in the Offering Materials occurring at any time as soon as the Company
is  either  informed  or  becomes  aware  thereof.

B.     To  use  its  commercially  reasonable  efforts to cause the Common Stock
issuable  in  connection  with  the  Equity  Line  of  Credit to be qualified or
registered  for  sale  on terms consistent with those stated in the Registration
Rights  Agreement  and  under  the  securities laws of such jurisdictions as the
Placement  Agent  and  the  Investor  shall  reasonably  request. Qualification,
registration  and  exemption  charges  and  fees  shall  be at the sole cost and
expense  of  the  Company.

C.     Upon  written  request,  to provide and continue to provide the Placement
Agent  and the Investor copies of all quarterly financial statements and audited
annual  financial  statements  prepared  by  or  on behalf of the Company, other
reports  prepared  by  or on behalf of the Company for public disclosure and all
documents  delivered  to  the  Company's  stockholders.

D.     To  deliver,  during the registration period of the Investment Agreement,
to  the  Placement  Agent  upon  the  Placement  Agent's  request,

     (i)     within  forty  five  (45)  days, a statement of its income for each
such  quarterly  period,  and  its  balance  sheet and a statement of changes in
stockholders'  equity  as of the end of such quarterly period, all in reasonable
detail,  certified  by  its  principal  financial  or  accounting  officer;

<PAGE>

     (ii)     within  ninety  (90) days after the close of each fiscal year, its
balance  sheet as of the close of such fiscal year, together with a statement of
income,  a  statement of changes in stockholders' equity and a statement of cash
flow for such fiscal year, such balance sheet, statement of income, statement of
changes  in  stockholders' equity and statement of cash flow to be in reasonable
detail  and  accompanied  by  a  copy  of  the  certificate or report thereon of
independent  auditors  if  audited  financial  statements  are  prepared;  and

     (iii)     a copy of all documents, reports and information furnished to its
stockholders  at  the  time  that  such  documents,  reports and information are
furnished  to  its  stockholders.

(iv)     a  copy  of  all  documents,  reports  and information furnished to the
Investor  at the time that such documents, reports and information are furnished
to  the  Investor.

E.     To  comply  with  the  terms  of  the  Offering  Materials.

F.     To  ensure  that any transactions between or among the Company, or any of
its  officers,  directors  and affiliates be on terms and conditions that are no
less  favorable  to  the  Company,  than  the terms and conditions that would be
available  in  an  "arm's  length"  transaction with an independent third party.

6.     INDEMNIFICATION.

A.     The  Company  hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent  and  each  person  controlling,  controlled by or under common
control  with  the  Placement Agent within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act or the SEC's Rules and Regulations promulgated
there under (the "Rules and Regulations"), harmless from and against any and all
loss,  claim,  damage, liability, cost or expense whatsoever (including, but not
limited  to,  any  and  all  reasonable  legal  fees  and  other  expenses  and
disbursements  incurred in connection with investigating, preparing to defend or
defending  any  action,  suit  or  proceeding,  including  any  inquiry  or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or  preparing  for  appearance  as  a witness in any action, suit or proceeding,
including  any  inquiry,  investigation  or  pretrial  proceeding  such  as  a
deposition)  to  which  the  Placement  Agent  or such indemnified person of the
Placement  Agent  may become subject under the 1933 Act, the 1934 Act, the Rules
and  Regulations, or any other federal or state law or regulation, common law or
otherwise,  arising  out  of  or  based upon (i) any untrue statement or alleged
untrue  statement  of  a  material  fact  contained  in  (a)  Section  4 of this
Agreement,  (b) the Offering Materials (except those written statements relating
to  the  Placement  Agent given by an indemnified person for inclusion therein),
(c)  any  application or other document or written communication executed by the
Company  or based upon written information furnished by the Company filed in any
jurisdiction  in  order  to  qualify  the Common Stock under the securities laws
thereof,  or  any  state  securities  commission or agency; (ii) the omission or
alleged  omission from documents described in clauses (a), (b) or (c) above of a
material  fact required to be stated therein or necessary to make the statements
therein  not  misleading;  or  (iii) the breach of any representation, warranty,
covenant or agreement made by the Company in this Agreement. The Company further
agrees  that  upon  demand by an indemnified person, at any time or from time to
time,  it  will  promptly reimburse such indemnified person for any loss, claim,
damage,  liability,  cost  or  expense  actually  and

<PAGE>
reasonably  paid  by  the  indemnified  person  as  to  which  the  Company  has
indemnified  such  person  pursuant  hereto.  Notwithstanding  the  foregoing
provisions  of  this  Paragraph  6(A),  any such payment or reimbursement by the
Company  of fees, expenses or disbursements incurred by an indemnified person in
any  proceeding  in  which a final judgment by a court of competent jurisdiction
(after  all  appeals or the expiration of time to appeal) is entered against the
Placement  Agent  or such indemnified person based upon specific finding of fact
as  to  the  Placement  Agent  or  such indemnified person's gross negligence or
willful  misfeasance  will  be  promptly  repaid  to  the  Company.

B.     The  Placement  Agent  hereby  agrees that it will indemnify and hold the
Company  and  each officer, director, shareholder, employee or representative of
the  Company, and each person controlling, controlled by or under common control
with  the Company within the meaning of Section 15 of the 1933 Act or Section 20
of  the 1934 Act or the Rules and Regulations, harmless from and against any and
all  loss,  claim, damage, liability, cost or expense whatsoever (including, but
not  limited  to,  any  and  all  reasonable  legal  fees and other expenses and
disbursements  incurred in connection with investigating, preparing to defend or
defending  any  action,  suit  or  proceeding,  including  any  inquiry  or
investigation,  commenced or threatened, or any claim whatsoever or in appearing
or  preparing  for  appearance  as  a witness in any action, suit or proceeding,
including  any  inquiry,  investigation  or  pretrial  proceeding  such  as  a
deposition)  to  which the Company or such indemnified person of the Company may
become  subject  under the 1933 Act, the 1934 Act, the Rules and Regulations, or
any  other  federal or state law or regulation, common law or otherwise, arising
out  of  or  based  upon (i) the conduct of the Placement Agent or its officers,
employees  or  representatives  in  willful  violation  of  any of such laws and
regulations  while  acting  as  Placement  Agent  for  the  Offering or (ii) the
material  breach  of any representation, warranty, covenant or agreement made by
the  Placement Agent in this Agreement (iii) any false or misleading information
provided  to  the  Company  by one of the Placement Agent's indemnified persons.

C.     The  Investor hereby agrees that it will indemnify and hold the Placement
Agent and each officer, director, shareholder, employee or representative of the
Placement  Agent,  and  each  person  controlling, controlled by or under common
control  with  the  Placement Agent within the meaning of Section 15 of the 1933
Act  or  Section  20 of the 1934 Act or the Rules and Regulations, harmless from
and  against  any  and  all  loss,  claim,  damage,  liability,  cost or expense
whatsoever (including, but not limited to, any and all reasonable legal fees and
other  expenses  and  disbursements  incurred  in connection with investigating,
preparing  to  defend or defending any action, suit or proceeding, including any
inquiry or investigation, commenced or threatened, or any claim whatsoever or in
appearing  or  preparing  for  appearance  as  a  witness in any action, suit or
proceeding,  including any inquiry, investigation or pretrial proceeding such as
a  deposition)  to  which  the Placement Agent or such indemnified person of the
Placement  Agent  may become subject under the 1933 Act, the 1934 Act, the Rules
and  Regulations, or any other federal or state law or regulation, common law or
otherwise,  arising  out of or based upon (i) the conduct of the Investor or its
officers,  employees  or  representatives  in its acting as the Investor for the
Offering  or  (ii) the material breach of any representation, warranty, covenant
or  agreement  made by the Investor in the Offering Materials (iii) any false or
misleading information provided to the Placement Agent by the Investor or one of
the  Investor's  indemnified  persons.

D.     The  Placement  Agent  hereby  agrees that it will indemnify and hold the
Investor  and each officer, director, shareholder, employee or representative of
the  Investor,  and  each  person

<PAGE>
controlling,  controlled by or under common control with the Investor within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act or the Rules
and  Regulations,  harmless  from  and  against any and all loss, claim, damage,
liability,  cost  or  expense whatsoever (including, but not limited to, any and
all  reasonable  legal  fees  and  other  expenses and disbursements incurred in
connection with investigating, preparing to defend or defending any action, suit
or  proceeding, including any inquiry or investigation, commenced or threatened,
or any claim whatsoever or in appearing or preparing for appearance as a witness
in  any  action,  suit  or  proceeding,  including any inquiry, investigation or
pretrial  proceeding  such  as  a  deposition)  to  which  the  Investor or such
indemnified  person  of  the Investor may become subject under the 1933 Act, the
1934  Act,  the  Rules  and  Regulations,  or  any other federal or state law or
regulation,  common  law  or  otherwise,  arising  out  of or based upon (i) the
conduct  of the Placement Agent or its officers, employees or representatives in
willful  violation  of  any  of  such  laws and regulations while  acting as the
Placement  Agent  for  the  Offering  or  (ii)  the  material  breach  of  any
representation,  warranty,  covenant or agreement made by the Placement Agent in
this  Agreement  (iii)  any  false  or  misleading  information  provided to the
Investor  by  one  of  the  Placement  Agent's  indemnified  persons.

E.     Promptly  after receipt by an indemnified party of notice of commencement
of  any  action  covered  by  Section  6(A),  (B),  (C)  or (D), the party to be
indemnified  shall, within five (5) business days, notify the indemnifying party
of  the  commencement  thereof;  the omission by one (1) indemnified party to so
notify  the  indemnifying  party shall not relieve the indemnifying party of its
obligation  to  indemnify any other indemnified party that has given such notice
and  shall  not  relieve the indemnifying party of any liability outside of this
indemnification  if  not  materially  prejudiced  thereby. In the event that any
action  is brought against the indemnified party, the indemnifying party will be
entitled  to participate therein and, to the extent it may desire, to assume and
control  the  defense  thereof  with  counsel  chosen by it, which is reasonably
acceptable to the indemnified party. After notice from the indemnifying party to
such  indemnified  party  of  its election to so assume the defense thereof, the
indemnifying  party  will  not  be  liable  to such indemnified party under such
Section  6(A),  (B),  (C),  or  (D) for any legal or other expenses subsequently
incurred  by  such indemnified party in connection with the defense thereof, but
the  indemnified  party  may, at its own expense, participate in such defense by
counsel  chosen  by  it,  without,  however,  impairing the indemnifying party's
control  of  the  defense.  Subject  to  the  proviso  of  this  sentence  and
notwithstanding  any  other  statement  to  the  contrary  contained herein, the
indemnified  party  or  parties  shall have the right to choose its or their own
counsel  and  control  the  defense  of  any  action,  all at the expense of the
indemnifying  party  if,  (i)  the  employment  of  such counsel shall have been
authorized  in  writing by the indemnifying party in connection with the defense
of  such  action  at  the  expense  of  the  indemnifying  party,  or  (ii)  the
indemnifying  party  shall  not have employed counsel reasonably satisfactory to
such  indemnified  party  to  have charge of the defense of such action within a
reasonable  time  after  notice  of  commencement  of  the action, or (iii) such
indemnified  party  or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available  to  one  or  all  of  the  indemnifying  parties  (in  which case the
indemnifying  parties  shall  not  have  the right to direct the defense of such
action  on  behalf  of the indemnified party or parties), in any of which events
such  fees  and  expenses  of  one  additional  counsel  shall  be  borne by the
indemnifying party; provided, however, that the indemnifying party shall not, in
connection  with any one action or separate but substantially similar or related
actions  in the same jurisdiction arising out of the same general allegations or
circumstance,  be  liable  for the reasonable fees and expenses of more than one
separate  firm  of  attorneys  at  any  time  for  all

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such  indemnified  parties. No settlement of any action or proceeding against an
indemnified  party  shall be made without the consent of the indemnifying party.

F.     In  order to provide for just and equitable contribution in circumstances
in which the indemnification provided for in Section 6 is due in accordance with
its  terms but is for any reason held by a court to be unavailable on grounds of
policy  or otherwise, the Company and the Placement Agent and the Investor shall
contribute  to  the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with the investigation
or  defense  of  same)  which the other may incur in such proportion so that the
Company,  the  Placement  Agent  and  the Investor shall be responsible for such
percent  of  the  aggregate  of  such losses, claims, damages and liabilities as
shall  equal  the  percentage  of  the  gross  proceeds  paid  to each of them.;
provided,  however, that no person guilty of fraudulent misrepresentation within
the  meaning  of Section 11(f) of the 1933 Act shall be entitled to contribution
from  any  person  who  was not guilty of such fraudulent misrepresentation. For
purposes  of  this  Section 6(F), any person controlling, controlled by or under
common  control  with  the  Placement  Agent, or any partner, director, officer,
employee, representative or any agent of any thereof, shall have the same rights
to  contribution  as the Placement Agent and each person controlling, controlled
by  or under common control with the Company within the meaning of Section 15 of
the  1933  Act or Section 20 of the 1934 Act and each officer of the Company and
each  director  of the Company shall have the same rights to contribution as the
Company  and each person controlling, controlled by or under common control with
the  Investor  within the meaning of Section 15 of the 1933 Act or Section 20 of
the  1934 Act and each member of the general partner of the Investor  shall have
the  same  rights  to  contribution  as  the  Company.  Any  party  entitled  to
contribution  will,  promptly  after  receipt  of  notice of commencement of any
action,  suit  or  proceeding against such party in respect of which a claim for
contribution may be made against the other party under this Section 6(F), notify
such  party  from whom contribution may be sought, but the omission to so notify
such party shall not relieve the party from whom contribution may be sought from
any  obligation  they  may  have  hereunder  or otherwise if the party from whom
contribution  may  be sought is not materially prejudiced thereby. The indemnity
and  contribution  agreements contained in this Section 6 shall remain operative
and  in  full  force  and  effect  regardless of any investigation made by or on
behalf  of  any  indemnified  person  or  any  termination  of  this  Agreement.

7.     FEES.  The  Company  hereby  agrees to pay the Placement Agent a cash fee
equal  to  five percent (5%) of the gross proceeds from each Put and one or more
restricted  stock  certificates  in  an  amount  not to exceed 315,000 shares of
common  stock  of the Company ("Restricted Shares").  The Placement Agent agrees
to  the  following  schedule  for  the  sale  of  Restricted  Shares:

a.     Days  1  through  60  following  the  effectiveness  of  the registration
statement  as  defined  by  the  U.S.  Securities  and  Exchange  Commission
("Effectiveness"),  the  Placement  Agent  shall  not  be  entitled  to sell any
Restricted  Shares;
b.     Days  61 through 90 following Effectiveness, the Placement Agent shall be
limited  to  selling  four  percent  (4%)  of the total amount of the Restricted
Shares;
c.     Days  91  through  120  following  Effectiveness,  the Placement shall be
limited  to  selling  eight  percent  (8%) of the total amount of the Restricted
Shares;
d.     After  the  120th day following Effectiveness, the Agent shall be limited
to  selling  eight percent (8%) of the total amount of Restricted Shares in each
30  calendar  day  period.

8.     PAYMENT  OF  EXPENSES.  The  Company  hereby  agrees  to  bear all of the
expenses  in  connection  with  the  Offering, including, but not limited to the
following:  filing fees, printing and duplicating costs, advertisements, postage
and  mailing  expenses  with  respect to the transmission of Offering Materials,
registrar  and  transfer agent fees, and expenses, fees of the Company's counsel
and  accountants,  issue  and transfer taxes, if any. The Company agrees to bear
all  the  reasonable  expenses of the Placement Agent in performing its services
under  this  Agreement  including  but  not  limited to the fees and expenses of
counsel.

9.     CONDITIONS  OF  CLOSING.  The Closing shall be held at the offices of the
Investor  or its counsel. The obligations of the Placement Agent hereunder shall
be  subject  to the continuing accuracy of the representations and warranties of
the  Company  herein  as  of  the date hereof and as of the Date of Closing (the
"Closing  Date") with respect to the Company as if it had been made on and as of
such  Closing  Date;  the  accuracy  on  and  as  of  the
Closing  Date  of the statements of the officers of the Company made pursuant to
the  provisions  hereof;  and  the  performance  by the Company on and as of the
Closing  Date  of  its  covenants and obligations hereunder and to the following
further  conditions:

A.     Upon the effectiveness of a registration statement in accordance with the
Investment  Agreement, the Placement Agent shall receive the opinions of Counsel
to  the Company and of the Investor, dated as of the date thereof, which opinion
shall  be  in  form  and  substance reasonably satisfactory to the Investor, the
Company,  their  counsel  and  the  Placement  Agent.

B.     At or prior to the Closing, the Placement Agent shall have been furnished
such  documents,  certificates and opinions as it may reasonably require for the
purpose  of enabling them to review or pass upon the matters referred to in this
Agreement  and  the  Offering  Materials,  or in order to evidence the accuracy,
completeness  or  satisfaction  of  any  of  the  representations, warranties or
conditions  herein  contained.

C.     At  and  prior  to  the  Closing,  (i)  there shall have been no material
adverse  change  nor development involving a prospective change in the condition
or  prospects or the business activities, financial or otherwise, of the Company
from  the  latest  dates as of which such condition is set forth in the Offering
Materials; (ii) there shall have been no transaction, not in the ordinary course
of business except the transactions pursuant to the Investment Agreement entered
into by the Company which has not been disclosed in the Offering Materials or to
the  Placement  Agent  in  writing;  (iii)  except  as set forth in the Offering
Materials,  the  Company  shall  not  be  in  default under any provision of any
instrument  relating  to  any  outstanding  indebtedness  for  which a waiver or
extension  has  not  been  otherwise  received;  (iv) except as set forth in the
Offering Materials, the Company shall not have issued any securities (other than
those  to  be  issued as provided in the Offering Materials) or declared or paid
any  dividend  or  made  any  distribution of its capital stock of any class and
there shall not have been any change in the indebtedness (long or short term) or
liabilities  or  obligations  of the Company (contingent or otherwise) and trade
payable  debt;  (v)  no  material amount of the assets of the Company shall have
been  pledged  or  mortgaged, except as indicated in the Offering Materials; and
(v)  no  action, suit or proceeding, at law or in equity, against the Company or
affecting  any  of  its  properties or businesses shall be pending or threatened
before  or  by  any  court  or  federal  or  state  commission,  board  or other
administrative  agency,  domestic  or  foreign, wherein an unfavorable decision,
ruling or finding could materially adversely affect the businesses, prospects or
financial  condition  or  income  of  the  Company,  except  as set forth in the
Offering  Materials.

D.     At  Closing,  the  Placement  Agent  shall  receive  a certificate of the
Company  signed by an executive officer and chief financial officer, dated as of
the  applicable  Closing,  to  the  effect  that  the  conditions  set  forth in
subparagraph  (C)  above  have  been  satisfied  and  that, as of the applicable
closing,  the representations and warranties of the Company set forth herein are
true  and  correct.

10.     TERMINATION.  This  Agreement  shall  be co-terminus with, and terminate
upon  the  same  terms  and  conditions  as  those  set forth in, the Investment
Agreement.  The  rights of the Investor and the obligations of the Company under
the Registration Rights Agreement, and the rights of the Placement Agent and the
obligations  of  the  Company  shall  survive  the termination of this Agreement
unabridged  for  a  period  of  twenty-four  (24) months after the Closing Date.

11.     MISCELLANEOUS.
A.  This  Agreement may be executed in any number of counterparts, each of which
shall  be  deemed to be an original, but all which shall be deemed to be one and
the  same  instrument.

B.  Any  notice  required  or  permitted to be given hereunder shall be given in
writing  and shall be deemed effective when deposited in the United States mail,
postage  prepaid,  or  when  received  if  personally  delivered  or faxed (upon
confirmation  of  receipt  received by the sending party), addressed as follows:

     If  to  Placement  Agent,  to:

     Ron  Russo
     U.  S.  Euro  Securities
     330  Washington  Blvd.  Ste.  706
     Marina  del  Rey,  CA  90292

     With  a  copy  to:

     If  to  the  Company,  to:

     H.  Douglas  Saathoff
     Nighthawk  Systems,  Inc.
     10715  Gulfdale,  Suite  200
     San  Antonio,  TX  78258

     With  a  copy  to:

Trombly  Business  Law
          Attn:  Amy  Trombly
          80  Dorcar  Road
          Newton,  MA  02459
          Telephone:  617-243-0850
          Facsimile:  309-406-1426

     If  to  the  Investor:

     Dutchess  Private  Equities  fund,  LP
     312  Stuart  St.
     Boston,  MA  02116
     Tel:     (617)  960-3582
     Fax:     (617)  960-3772

     or  to  such  other address of which written notice is given to the others.

C.     This  Agreement  shall be governed by and construed in all respects under
the  laws  of  the  State of Delaware, without reference to its conflict of laws
rules  or  principles. Any suit, action, proceeding or litigation arising out of
or relating to this Agreement shall be brought and prosecuted in such federal or
state  court  or  courts  located  within  the  Commonwealth of Massachusetts as
provided  by  law. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the Commonwealth of
Massachusetts  and to service of process by registered or certified mail, return
receipt requested, or by any other manner provided by applicable law, and hereby
irrevocably  and unconditionally waive any right to claim that any suit, action,
proceeding  or  litigation  so  commenced  has been commenced in an inconvenient
forum.

D.     This  Agreement  and  the  other agreements referenced herein contain the
entire  understanding  between  the  parties  hereto  and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the  modification  or  amendment  is  sought.

E.     If  any  provision  of  this  Agreement  shall  be  held to be invalid or
unenforceable,  such  invalidity  or unenforceability shall not affect any other
provision  of  this  Agreement.

     [REMAINDER  OF  PAGE  INTENTIONALLY  LEFT  BLANK]

<PAGE>
IN  WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of the
date  first  written  above.

COMPANY:     NIGHTHAWK  SYSTEMS,  INC.

By:         /s/   Douglas  Saathoff
                  -----------------
Name:  H.  Douglas  Saathoff
Title:  President  and  CEO

PLACEMENT  AGENT:     U.S.  EURO  SECURITIES

By:         /s/ Michael Fugler
             -----------------
Name:      Michael Fugler
Title:  Managing  Director

INVESTOR:

DUTCHESS  PRIVATE  EQUITIES  FUND,  L.P.
BY  ITS  GENERAL  PARTNER  DUTCHESS
CAPITAL  MANAGEMENT,  LLC

By:/s/  Douglas  Leighton
        -----------------
Name:  Douglas  H.  Leighton
Title:  A  Managing  MemberEX-10.1

Exhibit 10.1

AGREEMENT

THIS AGREEMENT (“Agreement”) is made and entered into on this 28th day of October,
2004 by and between Joel N. Waller, a Minnesota resident (“Waller”), and Wilsons The Leather
Experts Inc., a Minnesota corporation (the “Company”).

BACKGROUND

A. Waller has been employed by the Company as its Chairman and Chief Executive Officer and
currently serves as a director of the Company.

B. Waller has been employed under the terms and conditions of an Employment Agreement dated
May 25, 1996 between Waller and the Company, as amended by the First Amendment to Employment
Agreement, dated April 1, 2000, and the Second Amendment to Employment Agreement, dated April 19,
2004 (collectively the “Amended Employment Agreement”). During his employment, Waller also was
eligible to participate in other plans and programs of the Company, including but not limited to
the Executive and Key Management Incentive Plan (“Incentive Plan”), the 1996 Stock Option Plan, as
amended (“1996 Plan”), and the 2000 Long Term Incentive Plan, as amended (“2000 Plan”).

C. Waller and the Company are parties to certain stock option agreements (the “Option
Agreements”), which grant to Waller certain options to purchase shares of the Company’s common
stock (the “Options”) under circumstances specified in the Option Agreements and the 1996 Plan or
the 2000 Plan, as applicable, including without limitation the Non-Statutory Stock Option Agreement
dated as of July 30, 2004 (the “2004 Option”). Waller and the Company are also parties to certain
restricted stock agreements (“Restricted Stock Agreements”), which grant to Waller certain shares
of restricted stock (“Restricted Stock”) under circumstances and subject to restrictions described
in the Restricted Stock Agreements and the 2000 Plan.

D. The parties have agreed that it is in their mutual interests that Waller resign as an
employee, officer, and director of the Company effective at the end of the day on January 31, 2005
(the “Separation Time”) and that the parties provide for a smooth transition in connection with
Waller’s resignations.

E. The parties are concluding their employment relationship amicably, but mutually recognize
that such a relationship may give rise to potential claims or liabilities.

F. The parties expressly deny that they may be liable to each other on any basis or that they
have engaged in any unlawful or improper conduct toward each other or treated each other unfairly.

G. The parties have agreed to a full settlement of all issues potentially in dispute between
them.

NOW THEREFORE, in consideration of the mutual promises and provisions contained in this
Agreement and in the Releases referred to below, the parties, intending to be legally bound, agree
as follows:

AGREEMENTS

1. Transition Period/Status of Amended Employment Agreement. The Amended Employment
Agreement shall remain in effect according to its terms except to the extent inconsistent with this
Agreement. In partial consideration of the provisions and benefits of this Agreement, Waller’s
duties from the date of this Agreement until the Separation Time (the “Transition Period”) shall
consist of completing such transitional matters as may be assigned to Waller by the Company’s Board
of Directors (the “Board”) from time to time. The Board may assign to Waller any and all duties
and responsibilities that the Board may determine, in its discretion, are necessary to facilitate a
smooth transition in connection with Waller’s resignation and the engagement of a new chief
executive officer, or may relieve Waller of any or all duties during the Transition Period. Unless
otherwise authorized in writing by the Board, during the Transition Period Waller will continue to
devote substantially all of his business time and energy to the performance of his duties hereunder
and shall not accept other employment with or engage in or render service to any other business or
enterprise. The Company acknowledges that Waller may investigate other employment opportunities
during January 2005 so long as such activities do not materially interfere with Waller’s duties to
the Company under this Agreement. It is presently contemplated that Waller will not be Chief
Executive Officer of the Company during the entire Transition Period, that a new chief executive
officer of the Company will be appointed during the Transition Period, and that Waller will
continue on as executive Chairman of the Company throughout the Transition Period following the
appointment of a new chief executive officer. In the event that Waller’s employment terminates
prior to the Separation Time by reason of Waller’s earlier resignation or abandonment of his duties
or a termination by the Company for Cause (as defined in the Amended Employment Agreement), the
obligations of the parties under this Agreement shall cease as of the effective date of such
termination and the parties’ obligations shall be determined by the Amended Employment Agreement.
The existence of any dispute respecting the interpretation of this Agreement or the Releases (as
defined below), the alleged breach of this Agreement or the Releases, or the rescission by Waller
of any of the Releases will not nullify or otherwise affect the parties’ obligations under the
Amended Employment Agreement.

2. Resignation/Final Pay. By executing this Agreement, Waller confirms his
resignation of all positions held by Waller as an employee, officer, and director of the Company
and as a director and officer of all subsidiaries of the Company, and the Company confirms its
acceptance of Waller’ resignations, effective as of the Separation Time. Waller shall be paid his
base salary through the Separation Time, in bi-weekly installments, at the rate in effect as of the
date of this Agreement. Following the Separation Time, the Company will pay, or will cause one or
more of its subsidiaries to pay, Waller: (i) any accrued and unused paid time off, payable in
accordance with the regular payroll practices of the Company; and (ii) the full amount of the
incentive award for the Incentive Plan period ending on the Separation Time, payable on the same
date and in the same manner that awards under the Incentive Plan for such year are paid to the
other participants in the Incentive Plan.

3. First Releases of Claims.

a. By Waller. At the same time that he executes this Agreement, Waller will execute a
Release, in the form attached to this Agreement as Exhibit A (the “First Waller Release”),
releasing claims as specified therein through the date of this Agreement.

b. By the Company. At the same time that it executes this Agreement, the Company will
execute a Release, in the form attached to this Agreement as Exhibit B (the “First Company
Release”), releasing claims as specified therein through the date of this Agreement. The First
Company Release shall not become effective or enforceable unless and until Waller signs and does
not revoke or rescind the First Waller Release pursuant to its terms.

4. Implementation of Benefits Under the Amended Employment Agreement. If (i) Waller
signs and does not rescind the First Waller Release and (ii) Waller’s employment does not end prior
to the Separation Time by reason of Waller’s earlier resignation or abandonment of his duties
(including any resignation by Waller for Good Reason pursuant to the Amended Employment Agreement)
or by reason of a termination by the Company for Cause (as defined in the Amended Employment
Agreement), then the Company shall provide to Waller the pay and benefits specified in Sections
3(b), 6(c), 6(d), 6(e), 6(f), and 6(g) of the Amended Employment Agreement as if Waller’s
resignation as of the Separation Time constituted a resignation by Waller for Good Reason or a
termination by the Company without Cause (as such terms are defined in the Amended Employment
Agreement) and shall implement such pay and benefits as follows:

a. Severance Pay. The payment of Waller’s base salary pursuant to Section 6(c)(i) of
the Amended Employment Agreement shall be made on the schedule set forth in this paragraph below,
unless the Company determines in good faith that this paragraph 4 would result in the application
of the American Jobs Creation Act of 2004 (the “Act”) to such payments as “nonqualified deferred
compensation”, in which case any payments would be made on the schedule provided for in the Amended
Employment Agreement.

	 	 	 	 	 
	Date of Payment	 	Gross Amount
	02/11/05

	 	$	505,576.92	 
	 
	 	 	 	 
	01/13/06

	 	$	550,000.00	 
	 
	 	 	 	 
	01/12/07

	 	$	44,423.08	 

b. Employee Benefits. Any benefits to be provided to Waller under Section 6(c)(iv) of
the Amended Employment Agreement shall be implemented as follows:

	 	i.	 	In the event that the Company is not permitted
by its medical, dental and life insurance plans, or any of them, to
continue coverage of Waller and his dependents in the same manner as an
employee and dependents during the period from the Separation Time
through January 31, 2007 (“the Severance Period”), such coverage shall
be provided instead pursuant to the Company’s obligations under state
and federal law to offer continuation of such coverage for the longest
period required by such laws, as applicable, and Waller hereby elects
to accept each such offer. To the extent any such period required by
law is shorter than the Severance Period, the Company shall cause an
individual conversion insurance policy or policies (with benefits
comparable to the benefits under the Company’s plans in effect as of
the last day of Waller’s employment with the Company) to be offered to
Waller and his dependents under the applicable medical, dental or life
insurance plan for the balance of the Severance Period, in the same
manner that would be available to them if they were eligible for such a
conversion policy on the date of this Agreement, without requiring
either of them to provide any evidence of insurability.

	 	ii.	 	In the event that the Company is not permitted
by its long-term disability insurance plan to continue coverage of
Waller in the same manner as an employee during the entire Severance
Period, the Company shall provide such coverage through a new
individual policy covering him with substantially the same benefits, or
may elect to self-insure such benefits.

	 	iii.	 	In the event that, during the Severance Period,
Waller and his dependents, or any of them, are able to obtain any
individual insurance coverage similar to any coverage that is required
to be provided by or through the Company under Section 6(c)(iv) of the
Amended Employment Agreement, he may elect to substitute such
individual coverage for any coverage required to be provided by the
Company during the Severance Period; and the Company shall pay its
share of the cost for such substitute coverage pursuant to the
following subparagraph 4(b)(iv) of this Agreement.

	 	iv.	 	The Company shall pay for the cost of any and
all medical, dental and life insurance and disability benefits required
to be provided under Section 6(c)(iv) of the Amended Employment
Agreement during the Severance Period, except to the extent of any
portion of such cost that was payable by Waller’ contributions (on an
after-tax or pre-tax basis) as an employee of the Company as of the
date of this Agreement, which contributions Waller shall continue to
pay as a condition of continuing such coverage.

5. Amendment of 2004 Option. If Waller signs and does not rescind the First Waller
Release, then the Company and Waller shall enter into an amendment to the Option Agreement for the
2004 Option, in the form attached to this Agreement as Exhibit C (“Acceleration Amendment”),
providing for accelerated vesting of the 2004 Option as of the Separation Time and extending the
time for Waller to exercise the 2004 Option after termination of Waller’s employment with the
Company, subject to Waller’s continued employment with the Company through the Separation Time and
subject to the Company meeting its net sales objective of $420,474,000 for the fiscal year ending
January 29, 2005 and its earnings before taxes objective of $2.8 million (before payment of awards
under the Incentive Plan) for the fiscal year ended January 29, 2005, each as determined by the
Board following completion of the Company’s audited financial statements for such fiscal year.
Pursuant to the terms and conditions of the Acceleration Amendment, if Waller’s employment is
terminated by the Company without Cause (as defined in the Amended Employment Agreement) prior to
the Separation Time, the 2004 Option shall fully vest and the exercise period shall be extended as
of the effective date of such termination whether or not the net sales and earnings before taxes
objectives are met for the fiscal year ended January 29, 2005.

6. Second Release of Claims.

a. By Waller. It is the intention of the parties that, at or within twenty-one (21)
days after the Separation Time, Waller will execute a second Release, in the form attached to this
Agreement as Exhibit A (the “Second Waller Release”), releasing claims as specified therein through
the Separation Time.

b. By the Company. Promptly upon receipt by the Company of the Second Waller Release
signed by Waller, the Company will execute a second Release, in the form attached to this Agreement
as Exhibit B (the “Second Company Release”), releasing claims as specified therein through the
Separation Time. The Second Company Release shall not become effective or enforceable unless and
until Waller signs and does not revoke or rescind the Second Waller Release pursuant to its terms.

c. Releases Definition. Collectively, the First Waller Release, the First Company
Release, the Second Waller Release, and the Second Company Release shall be referred to herein as
the “Releases”.

7. Additional Benefits. The Company and Waller agree that it is in their mutual
interests that they provide for a smooth transition in connection with Waller’s resignation from
the Company. Accordingly, the Company shall provide to Waller the additional benefits set forth in
this paragraph 7 if: (i) Waller remains employed with the Company through the Separation Time or
if Waller’s employment is terminated effective before the Separation Time by the Company without
Cause; (ii) Waller is in compliance with the Amended Employment Agreement and this Agreement; (iii)
Waller signs the Second Waller Release as provided in paragraph 6 above and does not revoke or
rescind the Second Waller Release within the applicable period; and (iv) the Company has received
written confirmation from Waller, in the form attached to this Agreement as Exhibit D, dated not
earlier than the day after the expiration of the rescission period with respect to the Second
Waller Release, that Waller has not rescinded and will not rescind the Second Waller Release.

a. Extension of Option Exercise Period. Provided that the Company receives Exhibit D
signed by Waller, and provided further that the Company meets its net sales objective of
$420,474,000 for the fiscal year ending January 29, 2005 and its earnings before taxes objective of
$2.8 million (before payment of awards under the Incentive Plan) for the fiscal year ended January
29, 2005, each as determined by the Board following completion of the Company’s audited financial
statements for such fiscal year, the Company and Waller shall, promptly after such determination,
enter into amendments to the Option Agreements, in the forms attached to this Agreement as Exhibits
E-1 and E-2, extending the time for Waller to exercise the Options granted prior to 2004 following
termination of his employment with the Company.

b. Attorneys’ Fees. The Company will reimburse Waller for the reasonable attorneys’
fees and expenses he incurs in conjunction with the negotiation and review of this Agreement and
the attached exhibits, up to a maximum of $20,000, provided that Waller submits a request for
reimbursement, and applicable statements and receipts, on or before March 31, 2005.

c. Special Bonus. Following the Separation Time, the Board shall evaluate Waller’s
performance during the Transition Period and may, in its sole discretion and based on Waller’s
performance (as evaluated by the Board) during such Transition Period, pay Waller a special cash
bonus in recognition of Waller’s performance (“Special Bonus”). The amount and timing of any
Special Bonus payable to Waller hereunder shall be determined by the Board, in its sole discretion.

8. Restricted Stock. The Company and Waller acknowledge and agree that the grants of
Restricted Stock listed in this paragraph below are Waller’s only holdings of restricted stock of
the Company and that all shares of the Restricted Stock have fully vested:

	 	 	 	 	 
	Date of Grant	 	Number of Shares
	03/29/2001

	 	 	17,000	 
	 
	 	 	 	 
	03/19/2003

	 	 	33,000	 

9. Stock Options. The Company and Waller acknowledge and agree that the Options
listed in this paragraph below are Waller’s only Options to purchase shares of the Company’s common
stock:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Option	 	Date	 	Exercise	 	Number	 	 
	Plan	 	of Grant	 	Price	 	of Shares	 	 
	1996 Plan	 	01/28/1998	 	 	 	 	 	$5.8333	 	 	148,500	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	08/24/2000	 	 	 	 	 	$20.6875	 	 	21,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	03/29/2001	 	 	 	 	 	$18.9375	 	 	27,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	09/20/2001	 	 	 	 	 	$11.2000	 	 	150,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	06/25/2002	 	 	 	 	 	$13.7100	 	 	99,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	03/19/2003	 	 	 	 	 	$4.0000	 	 	66,000	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2000 Plan	 	07/30/2004
	 	 	 	$	4.9500	 	 	 	200,000	 	 	 	 	 	 	 

The Company and Waller further acknowledge and agree that all of the Options, other than the 2004
Option, have fully vested and that the 2004 Option shall vest on an accelerated basis in accordance
with paragraph 5 and Exhibit C of this Agreement if the conditions to vesting set forth in
paragraph 5 and Exhibit C shall occur.

10. Retirement Plans. To the extent that Waller is currently a participant in any
retirement, pension, or profit sharing plans of the Company, Waller will be entitled to his rights
and benefits under these plans at the times and under the terms and conditions set forth in any
such plan.

11. Payments/Benefits in Event of Death. In the event of Waller’s death, the payments
to Waller pursuant to Section 6(c) of the Amended Employment Agreement and paragraph 4 of this
Agreement shall be payable pursuant to a beneficiary designation form to be filed by Waller with
the Company or, if no such designation is filed, to Waller’s estate, and the health and dental
benefits provided pursuant to Section 6(c) of the Amended Employment Agreement and paragraph 4 of
this Agreement shall be continued for Waller’s dependents.

12. Public Announcement. A public announcement of Waller’s resignation as Chairman
and Chief Executive Officer of the Company shall be made at a time and in a manner determined by
the Company in consultation with Waller and shall be limited to the text mutually agreed upon for
such announcement by the Company and Waller.

13. Indemnification. Notwithstanding Waller’s separation from the Company, with
respect to events that occurred during his tenure as an employee, officer or director of the
Company, Waller will be entitled, as a former employee, officer or director of the Company, to the
same rights that are afforded to other current or former employees, officers, or directors of the
Company, now or in the future, to indemnification and advancement of expenses as provided in the
charter documents of the Company and under applicable law, and to indemnification and a legal
defense to the extent provided from time to time to current officers and directors by any
applicable general liability and/or directors’ and officers’ liability insurance policies
maintained by the Company.

14. Cooperation. At the Company’s reasonable request and upon reasonable notice,
Waller will, from time to time and without further consideration: (a) 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 (b) for up
to five (5) hours in any calendar month (on a non-cumulative basis) until January 31, 2006, at such
times as shall be convenient for Waller, discuss and consult with the Company regarding other
matters relating to his responsibilities while employed by the Company.

15. Mutual Confidentiality.

a. General Standard. It is the intent of the parties that the terms of Waller’s
separation from the Company, including the provisions of this Agreement and the Releases
(collectively “Confidential Separation Information”), will be forever treated as confidential.
Accordingly, Waller and the Company will not disclose Confidential Separation Information to anyone
at any time, except as provided in subparagraph 15(b) below. Confidential Separation Information
does not include the fact that Waller resigned his employment with the Company or the compensation
and benefits he was receiving in connection with his employment with the Company immediately prior
to the Separation Time.

b. Exceptions.

	 	i.	 	It will not be a violation of this Agreement
for the parties to disclose Confidential Separation Information in
reports to governmental agencies as required by law, including but not
limited to disclosure as required by federal securities laws and
regulations or to any federal or state tax authority. It is understood
and agreed that this Agreement and summaries thereof will be disclosed
in filings with the Securities and Exchange Commission and summarized
in proxy statements disseminated to shareholders of the Company.

	 	ii.	 	It will not be a violation of this Agreement
for Waller to disclose Confidential Separation Information to his wife,
his immediate family, his attorneys, his accountants or tax advisors.

	 	iii.	 	It will not be a violation of this Agreement
for Waller to disclose to employers and/or prospective employers that
he is constrained from certain activities as a result of the terms of
Section 11 of the Amended Employment Agreement.

	 	iv.	 	It will not be a violation of this Agreement
for either party to disclose Confidential Separation Information to the
Company’s auditors, its attorneys, or its directors, officers,
employees, and agents who have a legitimate reason to obtain the
Confidential Separation Information in the course of performing their
duties or responsibilities for the Company.

	 	v.	 	It will not be a violation of this Agreement
for either party to disclose Confidential Separation Information in
connection with any litigation or arbitration proceeding involving the
parties’ rights or obligations under this Agreement or the Waller
Release or the Company Release.

	 	vi.	 	It will not be a violation of this Agreement
for either party to make statements consistent with the public
announcement referenced in paragraph 12 of this Agreement.

16. Full Compensation. Waller and the Company understand and agree that the payments
made and other consideration provided to such party under this Agreement in excess of the benefits
of the Amended Employment Agreement will fully compensate such party for and extinguish any and all
of the potential claims Waller and the Company are releasing in the Releases, including, but not
limited to, claims for attorneys’ fees and costs and any and all claims for any type of legal or
equitable relief.

17. Withholding of Taxes, Etc. The Company shall withhold from payments and benefits
hereunder income and employment taxes and other amounts to the extent required by law. If there is
any dispute over the taxation of any such payment or benefit, the Company and Waller will cause
their respective tax advisors to cooperate in an effort to resolve such dispute.

18. No Admission of Wrongdoing. Waller and the Company understand that this Agreement
does not constitute an admission by either of them that he or it has violated any local ordinance,
state or federal statute, or principle of common law, that either has engaged in any unlawful or
improper conduct toward the other, or that either has treated the other unfairly. Neither will
characterize this Agreement or the payment of any money or furnishing of other consideration in
accordance with this Agreement as an admission that either party has engaged in any unlawful or
improper conduct toward the other or treated the other unfairly.

19. Authority. Waller represents and warrants that he has the authority to enter into
this Agreement and the Releases, and that no causes of action, claims, or demands released pursuant
to this Agreement and the Releases have been assigned by Waller to any person or entity not a party
to this Agreement and the Releases. The Company represents and warrants that it has the authority
to enter into this Agreement, and that no causes of action, claims, or demands released pursuant to
this Agreement and the Releases have been assigned by the Company to any person or entity not a
party to this Agreement and the Releases.

20. Representation. Waller hereby acknowledges that he has been advised by the
Company to consult with his own attorney before executing this Agreement and the Releases. The
parties each acknowledge that they have had the opportunity to be represented by their own counsel
in this matter, that each has had a full opportunity to consider this Agreement and the
attachments, that each has had a full opportunity to ask any questions that they may have
concerning this Agreement, the Releases, or the settlement of potential claims against the other,
and that neither has relied upon any statements or representations made by the other or their
respective attorneys, written or oral, other than the statements and representations that are
explicitly set forth in this Agreement, the Releases, and any other employee benefit plans or
programs sponsored by the Company in which Waller is a participant.

21. Successors and Assigns. This Agreement will be binding upon and inure to the
benefit of the parties and their respective heirs, administrators, representatives, successors, and
assigns, including, but not limited to, a purchaser of substantially all the business or assets of
the Company, but will not be assignable by either party (except by the Company to a purchaser of
substantially all the business or assets of the Company) without the prior written consent of the
other party. No assignment by either party will relieve the assigning party of any of his or its
obligations under this Agreement.

22. Invalidity. In the event that any provision of this Agreement or any of the
Releases is determined by an arbitrator or a court of competent jurisdiction to be invalid,
illegal, or unenforceable in any respect, such a determination will not affect the validity,
legality, or enforceability of the remaining provisions of this Agreement or the Releases, and the
remaining provisions of this Agreement and the Releases will continue to be valid and enforceable,
and any arbitrator or court of competent jurisdiction may modify the objectionable provision so as
to make it valid and enforceable.

23. Entire Agreement. Before signing this Agreement and the Releases, the parties
engaged in discussions and generated certain documents, in which the parties considered the matters
that are the subject of this Agreement and the Releases. In such discussions and documents, the
parties may have expressed their judgments and beliefs concerning the intentions, capabilities, and
practices of the parties, and may have forecast future events. The parties recognize, however,
that all business transactions, including the transactions upon which the parties’ judgments,
beliefs, and forecasts are based, contain an element of risk, and that it is normal business
practice to limit the legal obligations of contracting parties only to those promises and
representations that are essential to the transaction so as to provide certainty as to their
respective future rights and remedies. Accordingly, this Agreement, the Releases, the Option
Agreements (as amended), the Restricted Stock Agreements, the Amended Employment Agreement (to the
extent not inconsistent with this Agreement), and any employee benefit plans or programs sponsored
by the Company in which Waller is a participant are intended to define the full extent of the
legally enforceable contractual undertakings of the parties, and no promises or representations,
written or oral, that are not set forth explicitly in this Agreement, the Releases, the Option
Agreements (as amended), the Restricted Stock Agreements, the Amended Employment Agreement (to the
extent not inconsistent with this Agreement), or any employee benefit plans or programs sponsored
by the Company in which Waller is a participant are intended by either party to be legally binding,
and all other agreements and understandings between the parties are hereby superseded.

24. Arbitration. If any dispute arises between the parties with respect to the
application, interpretation or termination of this Agreement, then such dispute shall be submitted
to arbitration for resolution. The arbitrator shall be selected and the arbitration shall be
conducted pursuant to the Employment Dispute Resolution Rules of the American Arbitration
Association (“AAA”) (effective January 1, 1993). All fees and expenses of the arbitrator will be
shared equally by Waller and the Company. Any request for arbitration must be made in writing by
the party seeking arbitration and must be delivered by hand or sent by registered or certified
mail, return receipt requested, postage prepaid, to both the other party and the AAA. Any
arbitration shall be held in Hennepin County, State of Minnesota. The decision of the arbitrator
regarding any such dispute shall be final and binding on both parties, and any court of the
competent jurisdiction may enter judgment upon the award. Notwithstanding anything to the contrary
in this paragraph 24, and without prejudice to the above procedures, either party may apply to any
court of competent jurisdiction for temporary injunctive relief or other provisional judicial
relief if in such party’s sole judgment such action is necessary to avoid irreparable damage or to
preserve the status quo until such time as the arbitration award is rendered or the controversy is
otherwise resolved.

25. Headings. The descriptive headings of the paragraphs and subparagraphs of this
Agreement are inserted for convenience only and do not constitute a part of this Agreement.

26. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original, but all of which together will constitute
one and the same instrument.

27. Governing Law. This Agreement, the Releases, and the other exhibits to this
Agreement will be interpreted and construed in accordance with, and any dispute or controversy
arising from any breach or asserted breach of this Agreement, the Releases, or the other exhibits
to this Agreement will be governed by, the laws of the State of Minnesota.

IN WITNESS WHEREOF, the parties have executed this Agreement on the date stated above.

/s/ Joel N. Waller

	 	 	 	Joel N. Waller

WILSONS THE LEATHER EXPERTS INC.

BY /s/ Michael Cowhig

	 	 	 	Michael Cowhig

Its Chairman, Compensation Committee

1

EXHIBIT A

RELEASE BY JOEL N. WALLER

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.	 	Agreement means the Agreement between Wilsons and me that I executed on
October 28, 2004, including all of the documents attached to the 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,
or profit sharing plan of the Company in which Waller is a participant as of the
Separation Time, or any claims for breach of the Agreement.

Agreement to Release My Claims. I will receive consideration from Wilsons as set forth in
the 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.

Confidentiality. I understand that the terms of this Release are confidential and that I
may not disclose those terms to any person except under the circumstances described in the
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:

Betty Goff

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:

Joel N. Waller

2

EXHIBIT B

RELEASE BY WILSONS THE LEATHER EXPERTS INC.

Definitions. All words used in this Release have their plain meanings in ordinary English.
Specific terms used in this Release have the following meanings:

	 	A.	 	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.

	 	B.	 	Waller means Joel N. Waller and anyone who has or
obtains any legal rights or claims through Joel Waller.

	 	C.	 	Agreement means the Agreement between Wilsons and
Waller that Wilsons executed on October 28, 2004, including all of the
documents attached to the Agreement.

	 	D.	 	Wilsons’ Claims mean all of Wilsons’ rights that
Wilsons has to any relief of any kind from Waller, whether or not Wilsons now
knows about those rights, including without limitation:

	 	1.	 	all claims arising out of or that relate to
Waller’s employment with Wilsons or the termination of that employment;

	 	2.	 	all claims arising out of or that relate to the
statements, actions, or omissions of Waller;

	 	3.	 	all claims for 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;
defamation; misrepresentation; negligence; interference with
contractual or business relationship; violation of any other principle
of common law; or breach of any other contract or agreement of any kind
between Waller and Wilsons;

	 	4.	 	all claims Wilsons could have made in response
to any claims that Waller could have asserted against Wilsons; and

	 	5.	 	all claims for damages of any kind, attorneys’
fees, costs, disbursements, and interest.

However, Wilsons 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
Wilsons signs this Release, any claims for breach of the Agreement,
any claims for breach of Sections 8, 11, or 18 of the Amended Employment
Agreement (as defined in the Agreement), or any claims arising from
intentional actionable conduct by Waller (provided that Wilsons first gives
Waller written notice of and at least ten (10) calendar days to respond to
any allegation that Waller engaged in such intentional actionable conduct).

Agreement to Release Wilsons’ Claims. Wilsons will receive consideration from Waller as
set forth in the Agreement if Waller does not rescind the corresponding Release signed by him.
Wilsons understands and acknowledges that that consideration is in addition to anything of value
that it would be entitled to receive from Waller if it did not sign this Release. In exchange for
that consideration Wilsons gives up all of Wilsons’ Claims. Wilsons will not bring any lawsuits or
make any other demands against Waller for compensation of damages relating to Wilsons’ Claims. The
consideration that Wilsons is receiving is a fair compromise for the release of Wilsons’ Claims.

Additional Agreements and Understandings. Even though Waller will provide consideration
for Wilsons to settle and release Wilsons’ Claims, Waller does not admit that he is responsible or
legally obligated to Wilsons. In fact, Waller denies that he is responsible or legally obligated
to Wilsons for Wilsons’ Claims or that he engaged in any unlawful or improper conduct toward
Wilsons.

Confidentiality. Wilsons understands that the terms of this Release are confidential and
that Wilsons may not disclose those terms to any person except under the circumstances described in
the Agreement.

Waller’s Right to Rescind the Release Executed by Him. This Release will not become
effective or enforceable unless and until Waller signs the corresponding Release as provided under
the Agreement and until the rescission period set forth in the corresponding Release of even date
herewith has expired and Waller has not rescinded it.

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

Wilsons’ Representations. Wilsons through its undersigned officer has read this Release
carefully and understands all of its terms. Wilsons has had the opportunity to consult with its
own attorney prior to signing this Release. In signing this Release, Wilsons has not relied on any
statements or explanations made by Waller except as specifically set forth in the Agreement and the
Release signed by Waller. Wilsons is voluntarily releasing Wilsons’ Claims against Waller.

The undersigned officer of Wilsons has the authority to legally bind Wilsons by the agreements that
Wilsons is making in this Release and represents that there is nothing to prevent Wilsons from
being legally bound by the agreements that Wilsons is making in this Release. Wilsons intends this
Release to be legally binding.

	 	 	 
	Dated

	 	WILSONS THE LEATHER EXPERTS INC.

By:
	
 
	 	 
	
 
	 	Its:
	
 
	 	 

3

EXHIBIT C

FIRST AMENDMENT TO STOCK OPTION AGREEMENT

THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT (this “Amendment”) is entered into as of this
    day of November, 2004, by and between Joel N. Waller (the “Optionee”), and Wilsons
The Leather Experts Inc., a Minnesota corporation (the “Company”).

WHEREAS, the Company and the Optionee entered into the Non-Statutory Stock Option
Agreement effective as of the date specified below (the “Option Agreement”), under the Wilsons The
Leather Experts Inc. 2000 Long Term Incentive Plan, as amended (the “2000 Plan”):

	 	 	 	 	 	 	 	 	 
	Date of Agreement

	 	Shares Exercisable
	 	Price

	 

	 	 	 	 	 	 	 	 
	July 30, 2004

	 	 	200,000	 	 	$	4.95	 

WHEREAS, the Optionee and the Company have entered into an Agreement dated October 28,
2004 (the “October Agreement”), approved by the Compensation Committee and the Board of Directors
of the Company, which provides, among other things, that the Optionee and the Company shall amend
the Option Agreement to provide for the vesting of the Option and the extension of the period of
time that the Option may be exercised following the Optionee’s termination of employment if certain
conditions are met.

WHEREAS, pursuant to Sections 6(f) and 7(e) of the 2000 Plan, the Compensation Committee of
the Company may extend the period of time that the Option granted pursuant to the Option Agreement
may be exercised following the Optionee’s termination of employment and may set the terms under
which the Option shall be exercisable.

NOW, THEREFORE, in consideration of the parties’ undertakings and covenants contained in the
October Agreement and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged by each party), the parties hereby agree as follows:

1. Unless otherwise defined herein, each capitalized term used herein shall have the meaning
provided therefor in the Option Agreement.

2. Section 4 of the Option Agreement is hereby amended and restated in its entirety as
follows:

“4. Exercise Schedule. This Option shall vest as of January 31, 2005 as to all of the
Shares covered hereby if (i) the Optionee continues to be employed by the Company through the
Separation Time (as defined in the October Agreement), and (ii) the Company meets its net sales
objective of $420,474,000 for the fiscal year ending January 29, 2005 and the earnings before taxes
objective of $2.8 million (before payment of awards under the Executive and Key Management
Incentive Plan) for the fiscal year ending January 29, 2005 (each as determined by the Board
of Directors following completion of the Company’s audited financial statements for the fiscal year
ending January 29, 2005); provided, however, that if the Optionee’s employment is terminated by the
Company without Cause (as defined in the Employment Agreement dated May 25, 1996 between the
Optionee and the Company, as amended) prior to the Separation Time, the Option shall fully vest as
of the effective date of such termination whether or not the net sales and earnings before taxes
objectives are met for the fiscal year ended January 29, 2005.

This Option may be exercised in full under the circumstances described in Section 8 of this
Agreement if it has not expired prior thereto.”

2. Section 7(a) of the Option Agreement is hereby amended and restated in its entirety as
follows:

“(a) This Option, if vested pursuant to Section 4 hereof, may be exercised for three months
following the day the Optionee’s employment by the Company ceases if cessation of employment is for
a reason other than death or Disability, but only to the extent that it was exercisable immediately
prior to termination of employment; provided that, subject to Section 7(c), this Option, if vested
pursuant to Section 4 hereof, may be exercised by the Optionee or, in the event of the Optionee’s
death or Disability, by his legal representative within two years after the Optionee’s employment
by the Company ceases if the Optionee (or his legal representative, if applicable) signs and does
not rescind the Second Waller Release (as defined in the October Agreement).”

3. Section 7(b) of the Option Agreement is hereby amended and restated in its entirety as
follows:

“(a) This Option may be exercised within two years after the Optionee’s employment by the
Company ceases if such cessation of employment is because of death or Disability.

4. Except as amended by the foregoing, the Option Agreement and each provision thereof shall
remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment, effective on the date first
above written.

WILSONS THE LEATHER EXPERTS INC.

	 	 	 
	By:

	 	

	 

	 	 
	Its:

	 	Optionee

4

EXHIBIT D

, 2005

Ms. Betty Goff

Vice President – Human Resources

Wilsons The Leather Experts Inc.

7401 Boone Avenue North

Brooklyn Park, MN 55428

Dear Betty:

This is to confirm that I have not rescinded and will not take action to rescind the Second
Waller Release I signed on [DATE] as provided in the , 2004 Agreement between me and Wilsons The
Leather Experts Inc.

Very truly yours,

Joel N. Waller

5

EXHIBIT E-1

FIRST AMENDMENT TO STOCK OPTION AGREEMENTS

THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENTS (this “Amendment”) is entered into as of this
    day of    , 2005, by and between Joel N. Waller (the “Optionee”), and
Wilsons The Leather Experts Inc., a Minnesota corporation (the “Company”).

WHEREAS, the Company and the Optionee entered into the Non-Statutory Stock Option
Agreements specified below, effective as of the dates specified below (each an “Option Agreement”),
under the Wilsons The Leather Experts Inc. 2000 Long Term Incentive Plan, as amended (the “2000
Plan”):

	 	 	 	 	 
	Date of Agreement

	 	Shares Exercisable
	 	Price
	 

	 	 
	 	 
	August 24, 2000

March 29, 2001

September 20, 2001

June 25, 2002

March 19, 2003

	 	21,000

27,000

150,000

99,000

66,000
	 	$20.6875

$18.9375

$11.20

$13.71

$4.00

WHEREAS, pursuant to Section 6(f) of the 2000 Plan, the Compensation Committee of the
Company may extend the period of time that the Options granted pursuant to the Option Agreements
may be exercised following the Optionee’s termination of employment.

WHEREAS, the Optionee and the Company have entered into an Agreement dated October 28, 2004
(the “October Agreement”), approved by the Compensation Committee and the Board of Directors of the
Company, which provides, among other things, that the Optionee and the Company shall amend the
Option Agreements to extend the period of time that the Options granted pursuant to the Option
Agreements may be exercised following the Optionee’s termination of employment.

NOW, THEREFORE, in consideration of the parties’ undertakings and covenants contained in the
October Agreement and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged by each party), the parties hereby agree as follows:

1. Unless otherwise defined herein, each capitalized term used herein shall have the meaning
provided therefor in the applicable Option Agreement.

2. Section 7(a) of each Option Agreement is hereby amended and restated in its entirety as
follows:

“(a) Subject to Section 7(b), this Option may be exercised by the Optionee or, in the event of
the Optionee’s death or Disability, by his legal representative until January 31, 2007.”

3. Section 7(b) of each Option Agreement is hereby deleted and Section 7(c) of each Option
Agreement is hereby renumbered Section 7(b).

4. Except as amended by the foregoing, each Option Agreement and each provision thereof shall
remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment, effective on the date first
above written.

WILSONS THE LEATHER EXPERTS INC.

	 	 	 
	By:

	 	

	 

	 	 
	Its:

	 	Optionee

6

EXHIBIT E-2

FIRST AMENDMENT TO STOCK OPTION AGREEMENT

THIS FIRST AMENDMENT TO STOCK OPTION AGREEMENT (this “Amendment”) is entered into as of this
    day of    , 2005, by and between Joel N. Waller (the “Optionee”), and
Wilsons The Leather Experts Inc., a Minnesota corporation (the “Company”).

WHEREAS, the Company and the Optionee entered into the Non-Statutory Stock Option
Agreement specified below, effective as of the date specified below (the “Option Agreement”), under
the Wilsons The Leather Experts Inc. 1996 Stock Option Plan, as amended (the “1996 Plan”):

	 	 	 	 	 	 	 	 	 
	Date of Agreement

	 	Shares Exercisable
	 	Price

	 

	 	 	 	 	 	 	 	 
	January 28, 1998

	 	 	148,500	 	 	$	5.8333	 

WHEREAS, pursuant to Section 5(d)(ii) of the 1996 Plan, the Compensation Committee of
the Company may extend the period of time that the Options granted pursuant to the Option Agreement
may be extended following the Optionee’s termination of employment.

WHEREAS, the Optionee and the Company have entered into an Agreement dated October 28, 2004
(the “October Agreement”), approved by the Compensation Committee and the Board of Directors of the
Company, which provides, among other things, that the Optionee and the Company shall amend the
Option Agreement to extend the period of time that the Options granted pursuant to the Option
Agreement may be exercised following the Optionee’s termination of employment.

NOW, THEREFORE, in consideration of the parties’ undertakings and covenants contained in the
October Agreement and other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged by each party), the parties hereby agree as follows:

1. Unless otherwise defined herein, each capitalized term used herein shall have the meaning
provided therefor in the Option Agreement.

2. Section 7(a) of the Option Agreement is hereby amended and restated in its entirety as
follows:

“(a) Subject to Section 7(b), this Option may be exercised by the Optionee or, in the event of
the Optionee’s death or Disability, by his legal representative until January 31, 2007.”

3. Section 7(b) of the Option Agreement is hereby deleted and Section 7(c) of the Option
Agreement is hereby renumbered Section 7(b).

4. Except as amended by the foregoing, the Option Agreement and each provision thereof shall
remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment, effective on the date first
above written.

WILSONS THE LEATHER EXPERTS INC.

	 	 	 
	By:

	 	

	 

	 	 
	Its:

	 	Optionee
	 
	 	 

7

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