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EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement (this “Agreement”) is made and entered
into as of April 25, 2004, by and among Wilsons The Leather Experts Inc., a
Minnesota corporation (the “Company”), and the investors signatory hereto
(each, including their respective successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

         This Agreement is made pursuant to the Common Stock and Warrant Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers
(the “Purchase Agreement”).

         The Company and the Purchasers hereby agree as follows:

     1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1:

         “Effectiveness Date” means the earlier of (i) the 120th day following the
Closing Date and (ii) the fifth Trading Day following the date on which the
Company is notified by the Commission that such Registration Statement will not
be reviewed or is no longer subject to further review and comments.

         “Effectiveness Period” shall have the meaning set forth in Section 2(a).

         “Filing Date” means the 30th day following the Closing Date.

         “Holder” or “Holders” means the holder or holders, as the case may be,
from time to time of Registrable Securities.

         “Indemnified Party” shall have the meaning set forth in Section 5(c).

         “Indemnifying Party” shall have the meaning set forth in Section 5(c).

         “Losses” shall have the meaning set forth in Section 5(a).

         “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened in writing.

         “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities
covered by the Registration Statement, and all other amendments and
supplements to the

 

 

Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

         “Registrable Securities” means the Shares and the Warrant Shares issued or
issuable under the Purchase Agreement.

         “Registration Statement” means the registration statement required to be
filed under this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

         “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

         “Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

         “Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

         “Shares” means all shares of Common Stock issued or issuable to the
Purchasers pursuant to the Purchase Agreement.

         “Special Counsel” means Seward & Kissel LLP.

         “Warrants” shall have the meaning set forth in the Purchase Agreement.

         “Warrant Shares” shall have the meaning set forth in the Purchase
Agreement.

     2. Registration.

         (a) On or prior to the Filing Date, the Company shall prepare and file
with the Commission a Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance herewith) and shall contain (except if otherwise
agreed by the Holders) the “Plan of Distribution” attached hereto as Annex A.
The Company shall use its reasonable best efforts to cause the Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the Effectiveness
Date, and shall use its reasonable best efforts to keep such Registration
Statement continuously effective under the Securities Act until the date which
is five years after the date that the Registration Statement is declared
effective by the Commission or such earlier date when
all Registrable Securities covered by the Registration Statement have been
sold or may be sold

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without volume restrictions pursuant to Rule 144(k) as
determined by the counsel to the Company pursuant to a written opinion letter
to such effect, addressed and acceptable to the Company’s transfer agent and
the affected Purchasers (the “Effectiveness Period”).

         (b) If: (i) the Registration Statement is not filed on or prior to the
Filing Date (if the Company files the Registration Statement without affording
the Holder the opportunity to review and comment on the same as required by
Section 3(a), the Company shall not be deemed to have satisfied clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration
in accordance with Rule 461 promulgated under the Securities Act within five
Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that the Registration Statement will
not be “reviewed,” or not subject to further review, or (iii) the Company fails
to respond to any comments made by the Commission within twenty Trading Days
after the receipt of such comments, or (iv) the Registration Statement filed
hereunder is not declared effective by the Commission by the Effectiveness
Date, or (v) after the Registration Statement is filed with and declared
effective by the Commission, the Registration Statement ceases to be effective
as to all Registrable Securities to which it is required to relate at any time
prior to the expiration of the Effectiveness Period without being succeeded
within twenty Trading Days by an amendment to the Registration Statement or by
a subsequent Registration Statement filed with the Commission, (vi) an
amendment to the Registration Statement is not filed by the Company with the
Commission within fifteen Trading Days of the Commission’s notifying the
Company that such amendment is required in order for the Registration Statement
to be declared effective, or (vii) the Company suspends the use of the
Registration Statement by the Holders for more than sixty consecutive days or
during any 365-day period suspends the use of the Registration Statement for
more than 120 days (any such failure or breach being referred to as an “Event,”
and for purposes of clause (i) or (iv) the date on which such Event occurs, or
for purposes of clause (ii) the date on which such five Trading Day-period is
exceeded, or for purposes of clauses (iii) or (vi) the date which such fifteen
Trading Day-period is exceeded, or for purposes of clauses (v) and (vii) the
date which such twenty Trading Day period is exceeded being referred to as an
“Event Date”) , then: (x) on each such Event Date the Company shall pay to each
Holder an amount in cash, as liquidated damages and not as a penalty, equal to
1.0% of the aggregate purchase price paid by such Holder pursuant to the
Purchase Agreement; and (y) on each monthly anniversary of each such Event Date
thereof (if the applicable Event shall not have been cured by such date) until
the applicable Event is cured, the Company shall pay to each Holder an amount
in cash, as liquidated damages and not as a penalty, equal to 1.0% of the
aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement. If the Company fails to pay any liquidated damages pursuant to this
Section in full within seven days after the date payable, the Company will pay
interest thereon at a rate of 8% per annum (or such lesser maximum amount that
is permitted to be paid by applicable law) to the Holder, accruing daily from
the date such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. Notwithstanding the foregoing, the maximum
liability of the Company after the date hereof pursuant to this Section 2(b)
shall not exceed $3,500,000 (and the Company shall have no obligation to make
any payments after the date hereof pursuant to this Section 2(b) to the extent
that the aggregate of all such payments would exceed $3,500,000).

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     3. Registration Procedures

         In connection with the Company’s registration obligations hereunder, the
Company shall:

         (a) Not less than five Trading Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto, the Company shall, (i) furnish to the Holders and their Special
Counsel copies of all such documents proposed to be filed (including documents
incorporated or deemed incorporated by reference) which documents will be
subject to the review of such Holders and their Special Counsel, and (ii) cause
its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act. The Company shall not file the
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable Securities and
their Special Counsel shall reasonably object in good faith.

         (b) (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to the Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep the Registration
Statement continuously effective as to the applicable Registrable Securities
for the Effectiveness Period and prepare and file with the Commission such
additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related
Prospectus to be amended or supplemented by any required Prospectus supplement,
and as so supplemented or amended to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible, and in any event within twenty
days, to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and, as promptly as reasonably
possible, provide the Holders true and complete copies of all correspondence
from and to the Commission relating to the Registration Statement; and (iv)
comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities
covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Holders thereof set
forth in the Registration Statement as so amended or in such Prospectus as so
supplemented.

         (c) Notify the Holders of Registrable Securities to be sold and their
Special Counsel as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than three Trading Days prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one Trading
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review”
of the Registration Statement and whenever the Commission comments in writing
on the Registration Statement (the Company shall provide true and complete
copies thereof and all written responses thereto to each of the Holders); and
(C) with respect to the Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or
any other Federal or state governmental authority for amendments or supplements
to the Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration

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Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale
in any jurisdiction, or the initiation or threatening of any Proceeding for
such purpose; and (v) of the occurrence of any event or passage of time that
makes the financial statements included in the Registration Statement
ineligible for inclusion therein or any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.

         (d) Use its reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

         (e) Furnish to each Holder and their Special Counsel to the extent
requested by such Person, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.

         (f) Promptly deliver to each Holder and their Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form
of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

         (g) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the selling
Holders and their Special Counsel in connection with the registration or
qualification (or exemption from such registration or qualification) of such
Registrable Securities for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any Holder requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or subject the Company to any material tax in any such jurisdiction where it is
not then so subject.

         (h) Cooperate with the Holders to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be delivered to
a transferee pursuant

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to the Registration Statement, which certificates shall be free, to the
extent permitted by law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such Holders may request.

         (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as
promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.

         (j) Comply with all applicable rules and regulations of the Commission.

         (k) The Company may require each selling Holder to furnish to the Company
a certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if requested by the Commission, the controlling
person thereof.

     4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company, other than
underwriting discounts and commissions, shall be borne by the Company whether
or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to
be made with the Trading Market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is reasonably requested by the holders of a
majority of the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses, (iv) Securities Act liability
insurance, if the Company so desires such insurance, and (v) fees and expenses
of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.

     5. Indemnification

         (a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, agents and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities,

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costs (including, without limitation, reasonable costs of preparation and
reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (1) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in the Registration Statement, such Prospectus or such form
of Prospectus or in any amendment or supplement thereto (it being understood
that the Holder has approved Annex A hereto for this purpose) or (2) in the
case of an occurrence of an event of the type specified in Section
3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus
after the Company has notified such Holder in writing that the Prospectus is
outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d). The Company shall notify the Holders promptly of
the institution, threat or assertion of any Proceeding of which the Company is
aware in connection with the transactions contemplated by this Agreement.

         (b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and
the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon: (x) such Holder’s failure
to comply with the prospectus delivery requirements of the Securities Act in
reselling Registrable Securities or (y) any untrue statement of a material fact
contained in the Registration Statement, any Prospectus, or any form of
prospectus, or in any amendment or supplement thereto, or arising solely out of
or based solely upon any omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company specifically for inclusion in the Registration Statement or such
Prospectus or to the extent that (1) such untrue statements or omissions are
based solely upon information regarding such Holder furnished in writing to the
Company by such Holder expressly for use therein, or to the extent that such
information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has approved Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated in Section 6(d). In no event shall the liability of
any selling Holder

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hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

         (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment
of counsel reasonably satisfactory to the Indemnified Party and the payment of
all fees and expenses incurred in connection with defense thereof; provided,
that the failure of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities pursuant to this
Agreement, except (and only) to the extent that it shall be finally determined
by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have proximately and
materially adversely prejudiced the Indemnifying Party.

         An Indemnified Party shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest is likely to
exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). In the event that the Indemnifying Party is liable to
the Indemnified Party for legal expenses, the liability of the Indemnifying
Party for such legal expenses shall be limited to the expenses of a single
counsel. The Indemnifying Party shall not be liable for any settlement of any
such Proceeding effected without its written consent, which consent shall not
be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

         All fees and expenses of the Indemnified Party (including reasonable fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten
Trading Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled
to indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder).

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         (d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 5(c), any reasonable attorneys’
or other reasonable fees or expenses incurred by such party in connection with
any Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 5(d), no Holder
shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the proceeds actually received by such Holder from the sale of
the Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

         The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

     6. Miscellaneous

         (a) Remedies. In the event of a breach by the Company or by a Holder of
any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted
by law and under this Agreement, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by them of any of
the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, they shall
waive the defense that a remedy at law would be adequate.

         (b) No Piggyback on Registrations. Except as and to the extent specified
in Schedule 6(b) hereto, neither the Company nor any of its security holders
(other than the Holders in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof

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enter into any agreement providing any such right to any of its security
holders. Except as and to the extent specified in Schedule 6(b) hereto, the
Company has not previously entered into any agreement granting any registration
rights with respect to any of its securities to any Person which have not been
fully satisfied.

         (c) Compliance. Each Holder covenants and agrees that it will comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration
Statement.

         (d) Discontinued Disposition. Each Holder agrees by its acquisition of
such Registrable Securities that, upon receipt of a notice from the Company of
the occurrence of any event of the kind described in Section 3(c), such Holder
will forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”) by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus or Registration Statement. The
Company may provide appropriate stop orders to enforce the provisions of this
paragraph.

         (e) Piggy-Back Registrations. If at any time the Company shall determine
to prepare and file with the Commission a registration statement relating to an
offering for its own account or the account of others under the Securities Act
of any of its equity securities, other than on Form S-4 or Form S-8 (each as
promulgated under the Securities Act) or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock
option or other employee benefit plans, then the Company shall send to each
Holder written notice of such determination if at such time such Holder is
unable to sell its Registrable Securities without volume restrictions pursuant
to Rule 144(k) promulgated under the Securities Act and, if within fifteen days
after receipt of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such holder requests to be registered, subject to
customary underwriter cutbacks applicable to all holders of registration
rights.

         (f) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of the then outstanding Registrable Securities.

         (g) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 6:30 p.m. (New York City
time) on a Trading Day, (ii) the Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Agreement later than 6:30 p.m. (New York
City time) on any date and earlier

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than 11:59 p.m. (New York City time) on such date, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is required to be given. The address for such notices and communications shall
be as follows:

	 	 	 	 	 
	 
	 	If to the	 	Wilsons The Leather Experts Inc.
	 
	 	Company:	 	7401 Boone Avenue North
	 
	 	 	 	Brooklyn Park, Minnesota 55428
	 
	 	 	 	Attn: Chief Financial Officer
	 
	 	 	 	Fax No.: (763) 391-4000
	 
	 	 	 	 
	 
	 	With a copy to:	 	Faegre & Benson LLP
	 
	 	 	 	2200 Wells Fargo Center
	 
	 	 	 	90 South Street
	 
	 	 	 	Minneapolis, Minnesota 55420-1650
	 
	 	 	 	Attn: Wendy B. Mahling, Esq.
	 
	 	 	 	Fax No.: (612) 766-1600
	 
	 	 	 	 
	 
	 	If to a Purchaser:	 	To the address set forth under such Purchaser's name on the signature pages hereto.
	 
	 	 	 	 
	 
	 	With a copy to:	 	Seward & Kissel LLP
	 
	 	 	 	One Battery Park Plaza
	 
	 	 	 	New York, New York  10004
	 
	 	 	 	Attention:  Patricia A. Poglinco, Esq.
	 
	 	 	 	Telephone: (212) 574-1200
	 
	 	 	 	Telecopy: (212) 480-8421
	 
	 	 	 	 
	 	 	If to any other Person who is then the registered Holder:
	 
	 	 	 	 
	 
	 	 	 	To the address of such Holder as it appears in the stock transfer books of the Company
	 
	 	 	 	 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

         (h) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and permitted assigns of each of the parties
and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign their respective rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.

         (i) Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original, and all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding

-11-

 

obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.

         (j) Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Minnesota, without regard to the principles of conflicts of law thereof. Each
party agrees that all Proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state
and federal courts sitting in the State of Minnesota. Each party hereto hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of Minnesota for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of
this Agreement), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such Proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby. If either party
shall commence a Proceeding to enforce any provisions of this Agreement, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

         (k) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

         (l) Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser hereunder is several and not joint with the
obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at any closing, and no action taken by any Purchaser
pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not
be necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

-12-

 

     IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

	 	 	 	 	 
	 	

WILSONS THE LEATHER EXPERTS INC.

 	 
	 	By:  	/s/ Joel N. Waller
 	 
	 	 	Name:  	Joel N. Waller 	 
	 	 	Title:  	Chief Executive Officer 	 
	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF PURCHASER TO FOLLOW]

-13-

 

	 	 	 	 	 
	 	 	PENINSULA INVESTMENT PARTNERS, L.P.
	 
	 	 	 	 
	

	 	By:
	 	Peninsula Capital Appreciation, LLC,

its General Partner
	 
	 	 	 	 
	

	 	By:
	 	/s/ R. Ted Weschler

Name: R. Ted Weschler
	

	 	 	 	Title: Managing Member
	 
	 	 	 	 
	 	 	Address for Notices:
	 
	 	 	 	 
	 	 	404B East Main Street, 2nd Floor
	 	 	Charlottesville, Virginia 22902
	 	 	Attention: Mr. R. Ted Weschler
	 	 	Telephone: (434) 297-0811
	 	 	Telecopy: (434) 220-9321
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 	 	Seward & Kissel LLP
	 	 	One Battery Park Plaza
	 	 	New York, New York 10004
	 	 	Attention: Patricia A. Poglinco, Esq.
	 	 	Telephone: (212) 574-1200
	 	 	Telecopy:
(212) 480-8421

-14-

 

	 	 	 	 	 
	 	 	QUAKER CAPITAL PARTNERS I, LP

by Quaker Premier, L.P.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Mark G. Schoeppner

	

	 	 	 	Name: Mark G. Schoeppner
	

	 	 	 	Title: President
	 
	 	 	 	 
	 	 	Address for Notices:
	 
	 	 	 	 
	 	 	c/o Quaker Capital Management
	 	 	401 Wood Street, Suite 1300
	 	 	Pittsburgh, Pennsylvania 15222
	 	 	Attention: Mark Schoeppner
	 	 	Telephone: (412) 281-1948
	 	 	Telecopy: (412) 281-0323
	 
	 	 	 	 
	 	 	With a copy to:
	 
	 	 	 	 
	 	 	Seward & Kissel LLP
	 	 	One Battery Park Plaza
	 	 	New York, New York 10004
	 	 	Attention: Patricia A. Poglinco, Esq.
	 	 	Telephone: (212) 574-1200
	 	 	Telecopy: (212) 480-8421

-15-

 

	 	 	 	 	 
	 	 	QUAKER CAPITAL PARTNERS II LP

By Quaker Premier II, L.P.
	 
	 	 	 	 
	

	 	By:
	 	/s/ Mark G. Schoeppner

	

	 	 	 	Name: Mark G. Schoeppner
	

	 	 	 	Title: President

Address for Notices:

c/o Quaker Capital Management

401 Wood Street, Suite 1300

Pittsburgh, Pennsylvania 15222

Attention: Mark Schoeppner

Telephone: (412) 281-1948

Telecopy: (412) 281-0323

With a copy to:

Seward & Kissel LLP

One Battery Park Plaza

New York, New York 10004

Attention: Patricia A. Poglinco, Esq.

Telephone: (212) 574-1200

Telecopy: (212) 480-8421

-16-

 

Annex A

Plan of Distribution

     The Selling Shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions through one or more underwriters,
broker-dealers or agents. If the shares of Common Stock are sold through
underwriters or broker-dealers, the selling shareholders will be responsible
for underwriting discounts on commissions or agent’s commissions. These sales
may be at fixed or negotiated prices. The Selling Shareholders may use any one
or more of the following methods when selling shares:

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	 
	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
	 
	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	 
	•	 	an exchange distribution in accordance with the rules of the applicable exchange;
	 
	•	 	privately negotiated transactions;
	 
	•	 	short sales;
	 
	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per
share;
	 
	•	 	a combination of any such methods of sale; and
	 
	•	 	any other method permitted pursuant to applicable law.

     The Selling Shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

     Broker-dealers engaged by the Selling Shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Shareholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The Selling Shareholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.

     The Selling Shareholder may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if
they default in the performance of their secured obligations, the pledgees or
secured parties may offer and sell the shares of common stock from time to time
under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933

-17-

 

amending the list of Selling Shareholders to include the pledgee,
transferee or other successors in interest as Selling Stockholders under this
prospectus.

     The Selling Shareholders also may transfer and donate the shares of common
stock in other circumstances, in which case the transferees, donees, pledgees
or other successors in interest will be the selling beneficial owners for
purposes of this prospectus.

     The Selling Shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be “underwriters” within the
meaning of the Securities Act in connection with such sales. In such event,
any commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Selling Shareholders
have informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute any of the shares subject
to this Registration Statement.

     The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Shareholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.

-18-exv4w3

 

Exhibit 4.3

FORM OF WARRANT

To Subscribe for and Purchase Common Stock of

Wilsons The Leather Experts Inc.

     THIS WARRANT CERTIFIES THAT, for value received,                    , a                     (herein called “Purchaser”) or registered assigns is entitled
to subscribe for and purchase from Wilsons The Leather Experts Inc. (herein
called the “Company”), a corporation organized and existing under the laws of
the State of Minnesota, at the price specified below (subject to adjustment as
noted below) at any time from and after                    , 2004 to and including                    ,
2009, **[                    Million (                   )] fully paid and nonassessable
shares of the Company’s Common Stock, $.01 par value per share (“Common Stock”)
(subject to adjustment as noted below).

     The Exercise Price shall be $3.00 per share (subject to adjustment as
noted below).

     This Warrant is subject to the following provisions, terms and conditions:

     1. The rights represented by this Warrant may be exercised by the holder
hereof, in whole or in part, by written notice of exercise, in the form
attached hereto, delivered to the Company by the surrender of this Warrant
(properly endorsed if required) at the principal office of the Company and upon
payment to it by check of the Exercise Price in lawful money of the United
States. The Company agrees that the shares so purchased shall be and are
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding l0 days, after the rights represented by this Warrant shall
have been so exercised, and, unless this Warrant has expired, a new Warrant
representing the number of shares, if any, with respect to which this Warrant
shall not then have been exercised shall also be delivered to the holder hereof
within such time.

     2. Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificate for shares of stock upon exercise of this
Warrant except in accordance with the provisions, and subject to the
limitations, of paragraphs 7 and 8 hereof.

     3. The Company covenants and agrees that all shares which may be issued
upon the exercise of the rights represented by this Warrant will, upon
issuance, be duly authorized and issued, fully paid and nonassessable and free
of preemptive rights. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose of
issue or transfer upon exercise of the subscription rights evidenced by this
Warrant, a sufficient number of shares of its Common Stock to provide for the
exercise of the rights represented by this Warrant.

     4. The above provisions are, however, subject to the following:

         (a) The Exercise Price shall, from and after the date of issuance of this
Warrant, be subject to adjustment from time to time as hereinafter provided.
Upon each adjustment of the

1

 

Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
shares obtained by multiplying the Exercise Price in effect immediately prior
to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment.

         (b) In case the Company shall (i) declare a dividend upon the Common Stock
payable in Common Stock (other than a dividend declared to effect a subdivision
of the outstanding shares of Common Stock, as described in paragraph (c) below)
or any obligations or any shares of stock of the Company that are convertible
into or exchangeable for Common Stock (any of such obligations or shares of
stock being hereinafter called “Convertible Securities”), or in any rights or
options to purchase Common Stock or Convertible Securities, or (ii) declare any
other dividend or make any other distribution upon the Common Stock payable
otherwise than out of earnings or earned surplus, then thereafter the holder of
this Warrant upon the exercise hereof will be entitled to receive the number of
shares of Common Stock to which such holder shall be entitled upon such
exercise, and, in addition and without further payment therefor, each dividend
described in clause (i) above and each dividend or distribution described in
clause (ii) above which such holder would have received by way of dividends or
distributions if continuously since such holder became the record holder of
this Warrant such holder (x) had been the record holder of the number of shares
of Common Stock then received, and (y) had retained all dividends or
distributions in stock or securities (including Common Stock or Convertible
Securities, and any rights or options to purchase any Common Stock or
Convertible Securities) payable in respect of such Common Stock or in respect
of any stock or securities paid as dividends or distributions and originating
directly or indirectly from such Common Stock. For the purposes of the
foregoing, a dividend or distribution other than in cash shall be considered
payable out of earnings or earned surplus only to the extent that such earnings
or earned surplus are charged an amount equal to the fair value of such
dividend or distribution as determined by the Board of Directors of the Company
in good faith.

         (c) In case the Company shall at any time subdivide its outstanding shares
of Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and
conversely, in case the outstanding shares of Common Stock of the Company shall
be combined into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased.

     (d) (1) In case of any consolidation with or merger of the Company
with or into another corporation, or in case of any sale, lease, or
conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety,
such successor, leasing, or purchasing corporation, as the case may be,
shall (i) execute with the holder hereof an agreement providing that the
holder hereof shall have the right thereafter to receive upon exercise of
this Warrant solely the kind and amount of shares of stock and other
securities, property, cash, or any combination thereof receivable upon
such consolidation, merger, sale, lease, or conveyance by a holder of the
number of shares of Common Stock for which this Warrant might have been
exercised immediately prior to such consolidation, merger, sale, lease,
or conveyance, except that in a merger or consolidation in which all
holders of Common Stock receive cash for their shares of Common Stock,
the Company may instead at the time of the merger or consolidation pay
the holder of this Warrant in cash

2

 

an amount equal to the amount by which the cash that would have been
received by the holder of this Warrant had it exercised this Warrant
immediately prior to the merger exceeds the aggregate Exercise Price that
would have been paid to exercise this Warrant and (ii) make effective
provision in its articles of incorporation or otherwise, if necessary, to
effect such agreement. Such agreement shall provide for adjustments
which shall be as nearly equivalent as practicable to the adjustments in
this Warrant.

         (2) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change
in par value or from no par value to a specified par value, or as a
result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), or in case of any
consolidation or merger of another corporation into the Company in which
the Company is the continuing corporation and in which there is a
reclassification or change (including a change to the right to receive
cash or other property) of the shares of Common Stock (other than a
change in par value, or from no par value to a specified par value, or as
a result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), the holder hereof
shall have the right thereafter to receive upon exercise of this Warrant
solely the kind and amount of shares of stock and other securities,
property, cash, or any combination thereof receivable upon such
reclassification, change, consolidation, or merger by a holder of the
number of shares of Common Stock for which this Warrant might have been
exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be
made for adjustments which shall be as nearly equivalent as practicable
to the adjustments in this Warrant.

     (e) (1) If, at any time or from time to time after the Company
issues or sells, or is deemed by the express provisions of this paragraph
4(e) to have issued or sold, Additional Shares of Common Stock (as
defined below), other than as a dividend or other distribution on any
class of stock, and other than a subdivision or combination of shares of
Common Stock, for an Effective Price (as defined below) less than the
then effective Exercise Price, then and in each such case, the then
existing Exercise Price will be reduced, as of the opening of business on
the date of such issue or sale, to a price determined by multiplying the
Exercise Price in effect immediately prior to such issuance or sale by a
fraction:

      (A) the numerator of which will be (1) the number of shares of
Common Stock deemed outstanding (as defined below) immediately
prior to such issue or sale, plus (2) the number of shares of
Common Stock which the Aggregate Consideration (as defined below)
received by the Company for the total number of Additional Shares
of Common Stock so issued would purchase at the Exercise Price, and

      (B) the denominator of which will be the number of shares of
Common Stock deemed outstanding immediately prior to such issue or
sale plus the total number of Additional Shares of Common Stock so
issued.

3

 

         For the purposes of this paragraph 4(e), the number of shares of
Common Stock deemed outstanding as of a given date will be the sum of (1)
the number of shares of Common Stock then outstanding, and (2) the number
of shares of Common Stock into which any other outstanding securities of
the Company are then issuable upon conversion, exercise or exchange of
such securities.

         (2) No adjustment will be made to the Exercise Price in an amount
less than one cent per share. Any adjustment otherwise required by this
paragraph 4(e) that is not required to be made due to the preceding
sentence will be included in any subsequent adjustment to the Exercise
Price.

         (3) For the purpose of making any adjustment required under this
paragraph 4(e), the aggregate consideration received by the Company for
any issue or sale of securities (the “Aggregate Consideration”) will be
defined as: (A) to the extent it consists of cash, the net amount of cash
received by the Company after deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company
in connection with such issue or sale but without deduction of any
expenses payable by the Company, (B) to the extent it consists of
property other than cash, the fair value of that property as determined
in good faith by the Board of Directors, and (C) if Additional Shares of
Common Stock, Additional Convertible Securities (as defined below) or
rights or options to purchase either Additional Shares of Common Stock or
Additional Convertible Securities are issued or sold together with other
stock or securities or other assets of the Company for a consideration
which covers both, be computed as the portion of the consideration so
received that may be reasonably determined in good faith by the Board of
Directors to be allocable to such Additional Shares of Common Stock,
Additional Convertible Securities or rights or options.

         (4) For the purpose of the adjustment required under this paragraph
4(e), if the Company issues or sells (x) stock or other securities
convertible into, Additional Shares of Common Stock (such convertible
stock or securities being herein referred to as “Additional Convertible
Securities”) or (y) rights or options for the purchase of Additional
Shares of Common Stock or Additional Convertible Securities, and if the
Effective Price (as defined below) of such Additional Shares of Common
Stock is less than the Exercise Price, in each case the Company will be
deemed to have issued at the time of the issuance of such rights or
options or Additional Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or conversion
thereof and to have received as consideration for the issuance of such
shares an amount equal to the total amount of the consideration, if any,
received by the Company for the issuance of such rights or options or
Additional Convertible Securities plus:

         (A) in the case of such rights or options, the minimum amounts
of consideration, if any, payable to the Company upon the exercise
of such rights or options; and

         (B) in the case of Additional Convertible Securities, the
minimum amounts of consideration, if any, payable to the Company
upon the

4

 

conversion thereof (other than by cancellation of liabilities or
obligations evidenced by such Additional Convertible Securities);
provided that if the minimum amounts of such consideration cannot
be ascertained, but are a function of antidilution or similar
protective clauses, the Company will be deemed to have received the
minimum amounts of consideration without reference to such clauses.

         If the minimum amount of consideration payable to the Company upon
the exercise or conversion of rights, options or Additional Convertible
Securities is reduced over time or on the occurrence or non-occurrence of
specified events other than by reason of antidilution adjustments, the
Effective Price will be recalculated using the figure to which such
minimum amount of consideration is reduced; provided, that if the minimum
amount of consideration payable to the Company upon the exercise or
conversion of such rights, options or Additional Convertible Securities
is subsequently increased, the Effective Price will be again recalculated
using the increased minimum amount of consideration payable to the
Company upon the exercise or conversion of such rights, options or
Additional Convertible Securities.

         No further adjustment of the Exercise Price, as adjusted upon the
issuance of such rights, options or Additional Convertible Securities,
will be made as a result of the actual issuance of Additional Shares of
Common Stock or the exercise of any such rights or options or the
conversion of any such Additional Convertible Securities. If any such
rights or options or the conversion privilege represented by any such
Additional Convertible Securities will expire without having been
exercised, the Exercise Price as adjusted upon the issuance of such
rights, options or Additional Convertible Securities will be readjusted
to the Exercise Price which would have been in effect had an adjustment
been made on the basis that the only Additional Shares of Common Stock so
issued were the Additional Shares of Common Stock, if any, actually
issued or sold on the exercise of such rights or options or rights of
conversion of such Additional Convertible Securities, and such Additional
Shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, plus the
consideration, if any, actually received by the Company for the granting
of all such rights or options, whether or not exercised, plus the
consideration received for issuing or selling the Additional Convertible
Securities actually converted, plus the consideration, if any, actually
received by the Company (other than by cancellation of liabilities or
obligations evidenced by such Additional Convertible Securities) on the
conversion of such Additional Convertible Securities.

         (5) For the purpose of making any adjustment to the Exercise Price
required under this paragraph 4(e), “Additional Shares of Common Stock”
will mean all shares of Common Stock issued by the Company or deemed to
be issued pursuant to this paragraph 4(e) (including shares of Common
Stock subsequently reacquired or retired by the Company), other than (A)
shares of Common Stock and options, warrants or other Common Stock
purchase rights and the Common Stock issued pursuant to such options,
warrants or other purchase rights (as adjusted for any stock dividends,
combinations, splits, recapitalizations and the like after the filing
date hereof) to employees, officers or directors of, or consultants or
advisors to, the Company or any subsidiary pursuant to

5

 

stock purchase or stock incentive plans or other arrangements that are
approved by the Board of Directors; and (B) shares of Common Stock and
options, warrants or other Common Stock purchase rights, and the Common
Stock issued pursuant to such options, warrants or other rights issued
for consideration other than cash pursuant to a merger, consolidation,
acquisition, or similar business combination approved by the Board of
Directors.

         The “Effective Price” of Additional Shares of Common Stock will mean
the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold by
the Company under this Section 4(e), into the Aggregate Consideration
received, or deemed to have been received by the Company for such issue
under this paragraph 4(e), for such Additional Shares of Common Stock.

         (f) Upon any adjustment of the Exercise Price, then and in each such case
the Company shall give written notice thereof, by first-class mail, postage
prepaid, addressed to the registered holder of this Warrant at the address of
such holder as shown on the books of the Company, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of
this Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based.

         (g) In case any time:

         (1) the Company shall pay any dividend or make any distribution on
shares of Common Stock in shares of common Stock or make any other
distribution (other than regularly scheduled cash dividends which are not
in a greater amount per share than the most recent such cash dividend) to
all holders of Common Stock;

         (2) the Company shall pay any dividend payable in stock upon Common
Stock or make any distribution (other than regular cash dividends) to the
holders of Common Stock;

         (3) the Company shall offer for subscription pro rata to the holders
of Common Stock any additional shares of stock of any class or other
rights, or shall issue any rights, warrants or other securities to all
holders of Common Stock entitling them to purchase any additional shares
of Common Stock or any other rights, warrants or other securities;

         (4) there shall be any capital reorganization, or reclassification
of the capital stock of the Company, or consolidation or merger of the
Company with, or sale of all or substantially all of its assets to,
another corporation; or

         (5) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;

then, in any one or more of said cases, the Company shall give written notice,
by first-class mail, postage prepaid, addressed to the registered holder of
this Warrant at the address of such holder as

6

 

shown on the books of the Company, of the date on which (aa) the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights, or (bb) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up shall take
place, as the case may be. Such notice shall also specify the date as of which
the holders of Common Stock of record shall participate in such dividend,
distribution or subscription rights, or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
given at least 10 days prior to the action in question and not less than 3 days
prior to the record date or the date on which the Company’s transfer books are
closed in respect thereto.

         (h) If any event occurs as to which in the opinion of the Board of
Directors of the Company the other provisions of this paragraph 4 are not
strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant or of Common Stock in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid; provided, however, that the members of the Board
of Directors of the Company shall not be liable to the holders hereof for any
such determination made in good faith.

         (i) No fractional shares of Common Stock shall be issued upon the exercise
of this Warrant, but, instead the Company shall pay round such fraction of a
share of Common Stock to the nearest whole share, except that if the fraction
is one-half or greater, the Company shall round the fraction up to the nearest
whole share.

     5. As used herein, the term “Common Stock” shall mean and include the
Company’s presently authorized Common Stock and shall also include any capital
stock of any class of the Company hereafter authorized which shall not be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the Company;
provided that the shares purchasable pursuant to this Warrant shall include
shares designated as Common Stock of the Company on the date of original issue
of this Warrant or, in the case of any reclassification of the outstanding
shares thereof, the stock, securities, cash or assets provided for in paragraph
4(d) above.

     6. This Warrant shall not entitle the holder hereof to any voting rights
or other rights as a stockholder of the Company.

     7. (a) The holder of this Warrant acknowledges that neither this Warrant
nor, as of the date of the original issuance of this Warrant, any of the shares
of Common Stock issuable upon exercise hereof have been registered under the
Securities Act of 1933, as amended (the “Act”), or any state securities laws
and that this Warrant or such shares of Common Stock may only be transferred in
accordance with this paragraph 7. The holder of this Warrant, by acceptance
hereof, represents that it has acquired this Warrant for investment and not
with a view to distribution of this Warrant or the shares of Common Stock
issuable upon exercise hereof within the meaning of the Act and the rules and
regulations thereunder.

7

 

         (b) The holder realizes that the purchase of this Warrant is a speculative
investment, and that the economic benefits which may be derived therefrom are
uncertain. In determining whether or not to purchase the Warrant, the holder
has relied solely upon the publicly-available materials filed by the Company
with the Securities and Exchange Commission, copies of which have been reviewed
by the Purchaser, and upon independent investigations made by the holder and
its representatives.

         (c) The holder of this Warrant, by acceptance hereof, agrees to give
written notice to the Company before exercising or transferring this Warrant,
in whole or in part, or transferring any shares of Common Stock issuable or
issued upon the exercise hereof, if at the time of such transfer the shares of
Common Stock are not covered by an effective registration statement under the
Act, of such holder’s intention to do so. Such holder shall also provide the
Company with an opinion of counsel reasonably satisfactory to the Company to
the effect that the proposed exercise or transfer of this Warrant or transfer
of shares, if at the time of such transfer the shares are not covered by an
effective registration statement under the Act, may be effected without
registration or qualification under the Act and any applicable state securities
laws. Upon receipt of such written notice and opinion by the Company, such
holder shall be entitled to exercise this Warrant in accordance with its terms,
or to transfer this Warrant, or to transfer shares of Common Stock issuable or
issued upon the exercise of this Warrant, all in accordance with the terms of
the notice delivered by such holder to the Company, provided that an
appropriate legend respecting the aforesaid restrictions on transfer may be
endorsed on this Warrant, if at the time of such transfer the shares are not
covered by an effective registration statement under the Act, or the
certificates for such shares. In the event of a proposed transfer of this
Warrant, prior to the transfer the proposed transferee shall execute and
deliver to the Company a warrant transfer letter in the form attached hereto.

     8. Subject to the provisions of paragraph 7 hereof, this Warrant and all
rights hereunder are transferable, without the prior approval of the Company,
in whole or in part, at the principal office of the Company by the holder
hereof in person or by duly authorized attorney, upon surrender of this Warrant
properly endorsed. Each taker and holder of this Warrant, by taking or holding
the same, consents and agrees that the bearer of this Warrant, when endorsed,
may be treated by the Company and all other persons dealing with this Warrant
as the absolute owner hereof for any purpose and as the person entitled to
exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered holder hereof
as the owner for all purposes.

     9. This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.

     10. The Company covenants and agrees that the holder shall have the rights
of a Purchaser under the Registration Rights Agreement dated April 25, 2004
among the Company and the Purchasers set forth in such agreement.

8

 

     11. (a) In addition to and without limiting the rights of the holder of
this Warrant under the terms of this Warrant, the holder of this Warrant shall
have the right (the “Conversion Right”) to convert this Warrant or any portion
thereof into shares of Common Stock as provided in this paragraph 11 at any
time or from time to time prior to its expiration. Upon exercise of the
Conversion Right with respect to a particular number of shares subject to this
Warrant (the “Converted Warrant Shares”), the Company shall deliver to the
holder of this Warrant, without payment by the holder of any exercise price or
any cash or other consideration, that number of shares of Common Stock equal to
the quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Warrant Shares by the market price (calculated pursuant to paragraph
11(c)) of a single share of Common Stock, determined in each case as of the
Conversion Date (as hereinafter defined). The “Net Value” of the Converted
Warrant Shares shall be determined by subtracting the aggregate Exercise Price
of the Converted Warrant Shares from the aggregate market price of the
Converted Warrant Shares. Notwithstanding anything in this paragraph 11 to the
contrary, the Conversion Right cannot be exercised with respect to a number of
Converted Warrant Shares having a Net Value below $100. No fractional shares
shall be issuable upon exercise of the Conversion Right, and if the number of
shares to be issued in accordance with the foregoing formula is other than a
whole number, the Company shall round such fraction of a share of Common Stock
to the nearest whole share, except that if the fraction is one-half, the
Company shall round the fraction up to the nearest whole share.

         (b) The Conversion Right may be exercised by the holder of this Warrant by
the surrender of this Warrant at the principal office of the Company together
with a written statement specifying that the holder thereby intends to exercise
the Conversion Right and indicating the number of shares subject to this
Warrant which are being surrendered (referred to in paragraph (a) above as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with
the aforesaid written statement, or on such later date as is specified therein
(the “Conversion Date”), but not later than the expiration date of this
Warrant. Certificates for the shares of Common Stock issuable upon exercise of
the Conversion Right, together with a check in payment of any fractional share
and, in the case of a partial exercise, a new warrant evidencing the shares
remaining subject to this Warrant, shall be issued as of the Conversion Date
and shall be delivered to the holder of this Warrant within 15 days following
the Conversion Date.

         (c) “Market price” for purposes of this paragraph 11 shall mean, if the
Common Stock is traded on a securities exchange or on The Nasdaq National
Market or The Nasdaq SmallCap Market, the closing price of the Common Stock on
such exchange or The Nasdaq National Market or the Nasdaq SmallCap Market, or,
if the Common Stock is otherwise traded in the over-the-counter market, the
closing bid price, in each case averaged over a period of 20 consecutive
business days prior to the Conversion Date. If at any time the Common Stock is
not traded on an exchange or The Nasdaq National Market or the Nasdaq SmallCap
Market, or otherwise traded in the over-the-counter market, the “market price”
shall be deemed to be the higher of (i) the book value thereof as determined by
any firm of independent public accountants of recognized standing selected by
the Board of Directors of the Company as of the last day of any month ending
within 60 days preceding the Conversion Date, or (ii) the fair value thereof
determined in good faith by the Board of Directors of the Company as of a date
which is within l5 days of the Conversion Date.

9

 

     12. The issuance of any shares or other securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the holder hereof for any tax or other charge in respect of such issuance. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of any certificate
in a name other than that of the holder hereof and the Company shall not be
required to issue or deliver any such certificate unless and until the person
or persons requesting the issue thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

     13. All questions concerning this Warrant will be governed and interpreted
and enforced in accordance with the internal law, not the law of conflicts, of
the State of Minnesota.

10

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and this Warrant to be dated as of                    , 2004.

	 	 	 	 	 	 	 
	 	 	WILSONS THE LEATHER EXPERTS INC.
	 
	 	 	 	 	 	 
	

	 	By	 	 	 	 
	 	 	 	 	
 
	 
	 	 	 	 	 	 
	

	 	 	 	Its	 	 
	

	 	 	 	 	 	
 

RESTRICTION ON TRANSFER

     The securities evidenced hereby may not be transferred without (i) the
opinion of counsel satisfactory to the Company that such transfer may be
lawfully made without registration under the Securities Act of 1933, as
amended, and all applicable state securities laws or (ii) such registration.

11

 

ASSIGNMENT

(To Be Signed Only Upon Assignment)

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto                                                                              this

Warrant, and appoints                                                                              

to transfer this Warrant on the books of Wilsons The Leather Experts Inc. with the
full power of substitution in the premises.

	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 
	 	 	
 	 	 	 	 
	

	 	 	 	 	 	 
	 	 
	In the presence of:	 	 	 	 	 	 
	 	 	 	 	
 	 	 

     (Signature must conform in all
respects to the name of the holder
as specified on the face of this
Warrant without any alteration or
change whatsoever, and the signature
must be guaranteed in the usual
manner)

12

 

FORM OF WARRANT TRANSFER LETTER

To: Wilsons The Leather Experts Inc.

Ladies and Gentlemen:

     The undersigned is a proposed transferee of the warrant (the “Warrant”) to
purchase                     shares

of Common Stock, par value $.01 (“Common
Stock”), of Wilsons The Leather Experts Inc., a Minnesota corporation (the
“Company”), currently registered in the name of                     .
In order
to induce the Company to consent to the transfer of the Warrant, the
undersigned hereby represents, warrants and agrees as follows:

     1. The undersigned acknowledges that neither the Warrant nor **[any of the
shares of Common Stock issuable upon exercise thereof] have been registered
under the Securities Act of 1933, as amended (the “Act”), or any state
securities laws and that, accordingly, the Warrant **[and such shares of Common
Stock] may only be transferred in accordance with the terms of paragraphs 7 and
8 of the Warrant.

     2. The undersigned is an “accredited investor” as defined in Rule 501(a)
of Regulation D promulgated under the Act.

	 	 	 	 	 
	

	 	Signature	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Address	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	Date	 	 
	

	 	 	 	
 

13

 

FORM OF EXERCISE NOTICE

To be Executed by the Holder of this Warrant if such Holder

Desires to Exercise this Warrant in Whole or in Part:

To: Wilsons The Leather Experts Inc. (the “Company”)

	 	 	 
	The undersigned	 	 
	
	 	
 

Please insert Social Security or other

identifying number of Purchaser:

hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder,                     shares
of the
Common Stock provided for therein and tenders payment herewith to the order of
the Company in the amount of $                   , such payment being made
as provided on the face of this Warrant.

     In order to induce the Company to consent to the exercise of this Warrant,
the undersigned hereby represents, warrants and agrees that neither this
Warrant **[nor any of the shares of Common Stock issuable upon exercise hereof]
have been registered under the Securities Act of 1933, as amended (the “Act”),
or any state securities laws and that, accordingly, this Warrant may be
exercised [and the shares of Common Stock issued pursuant to this exercise] may
only be transferred in accordance with the terms of paragraphs 7 and 8 of this
Warrant.

14

 

     The undersigned requests that certificates for such shares of Common Stock
be issued as follows:

	 	 	 	 	 
	Name:
	 	 	 	 
	

	 	
 	 	 
	

	 	 	 	 
	Address:
	 	 	 	 
	

	 	
 	 	 
	 
	 	 	 	 
	Deliver to:
	 	 	 	 
	

	 	
 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	

	 	
 	 	 

and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance
remaining of the shares of Common Stock purchasable under this Warrant be
registered in the name of, and delivered to, the undersigned at the address
stated below.

	 	 	 	 	 
	Address:

	 	 	 	 
	

	 	
 	 	 

	 	 	 	 	 	 	 
	

	 	 	 	Signature	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	 	 	     (Signature must conform in all
respects to the name of the holder
as written specified on the face of
this Warrant without any alteration
or change whatsoever)
	Dated:
	 	 	 	 	 	 
	

	 	
 	 	 	 	 

15

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