Document:

exv10w1

 

Exhibit 10.1

WILSONS THE LEATHER EXPERTS INC.

2000 LONG TERM INCENTIVE PLAN

Including August 24, 2000, March 21, 2002 and June 11, 2003 Amendments

     1.     Purpose. The purpose of this 2000 Long Term Incentive Plan (the
“Plan”) is to motivate key personnel to produce a superior return to the
shareholders of the Company and its Affiliates by offering such individuals an
opportunity to realize Stock appreciation, by facilitating Stock ownership, and
by rewarding them for achieving a high level of corporate performance. This
Plan is also intended to facilitate recruiting and retaining key personnel of
outstanding ability.

     2.     Definitions. The capitalized terms used in this Plan have the meanings
set forth below.

		
	 	     (a) “Affiliate” means any corporation that is a “parent corporation”
or “subsidiary corporation” of the Company, as those terms are defined in
Sections 424(e) and (f) of the Code, or any successor provision, and, for
purposes other than the grant of Incentive Stock Options, any joint
venture in which the Company or any such “parent corporation” or
“subsidiary corporation” owns an equity interest.
	 
	 	     (b) “Agreement” means a written contract entered into between the
Company or an Affiliate and a Participant containing the terms and
conditions of an Award in such form (not inconsistent with this Plan) as
the Committee approves from time to time, together with all amendments
thereof, which amendments may be unilaterally made by the Company (with
the approval of the Committee) unless such amendments are deemed by the
Committee to be materially adverse to the Participant and are not
required as a matter of law.
	 
	 	     (c) “Associate” means any full-time or part-time employee (including
an officer or director who is also an employee) of the Company or an
Affiliate. Except with respect to grants of Incentive Stock Options,
“Associate” shall also include any member of the Board or other
individual or entity who is not an “employee” of the Company or an
Affiliate but who provides services to the Company or an Affiliate as a
consultant or adviser. References in this Plan to “employment” and
related terms (except for references to “employee” in this definition of
“Associate” or in Section 7(a)(1)) shall include the providing of
services in any such capacity.
	 
	 	     (d) “Award” means a grant made under this Plan in the form of
Options, Stock Appreciation Rights, Restricted Stock, Performance Shares
or any Other Stock-Based Award, whether singly, in combination or in
tandem.
	 
	 	     (e) “Board” means the Board of Directors of the Company.
	 
	 	     (f) “Change in Control” means:

	 	(i)	 	a majority of the directors of the
Company shall be persons other than persons

 

 

	 	(A)	 	for whose election
proxies shall have been solicited by the Board or
	 
	 	(B)	 	who are then serving as
directors appointed by the Board to fill vacancies
on the Board caused by death or resignation (but
not by removal) or to fill newly-created
directorships,
	 

	 	(ii)	 	more than 33-1/3% of the (1) combined
voting power of the then outstanding voting securities
of the Company entitled to vote generally in the
election of directors (“Outstanding Company Voting
Securities”) or (2) the then outstanding Shares of Stock
(“Outstanding Company Common Stock”) is directly or
indirectly acquired or beneficially owned (as defined in
Rule 13d-3 under the Exchange Act, or any successor rule
thereto) by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange
Act), provided, however, that the following acquisitions
and beneficial ownership shall not constitute Changes in
Control pursuant to this paragraph 2(f)(ii):
	 

	 	(A)	 	any acquisition or
beneficial ownership by the Company or a
Subsidiary, or
	 
	 	(B)	 	any acquisition or
beneficial ownership by any employee benefit plan
(or related trust) sponsored or maintained by the
Company or one or more of its Subsidiaries, or
	 
	 	(C)	 	any acquisition or
beneficial ownership by a Parent or its
wholly-owned Subsidiaries, as long as they shall
remain wholly-owned Subsidiaries, of 100% of the
Outstanding Company Voting Securities as a result
of a merger or statutory share exchange which
complies with paragraph 2(f)(iii)(A)(2) or the
exception in paragraph 2(f)(iii)(B) hereof in all
respects,
	 

	 	(iii)	 	the shareholders of the Company
approve a definitive agreement or plan to
	 

	 	(A)	 	merge or consolidate the
Company with or into another corporation (other
than (1) a merger or consolidation with a
Subsidiary or (2) a merger in which
	 

	 	(a)	 	the Company is the surviving corporation,
	 
	 	(b)	 	no
Outstanding Company Voting Securities or
Outstanding Company Common Stock (other than
fractional shares) held by shareholders of
the Company immediately prior to the merger
is converted into cash, securities, or other
property (except (i) voting stock of a
Parent owning directly, or indirectly
through wholly-owned Subsidiaries, both
beneficially and of record 100% of the
Outstanding

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	 	 	 	Company Voting Securities immediately after
the Merger or (ii) cash upon the exercise
by holders of Outstanding Company Voting
Securities or Outstanding Company Common
Stock of statutory dissenters’ rights),
	 
	 	(c)	 	the persons
who were the beneficial owners,
respectively, of the Outstanding Company
Voting Securities and Outstanding Company
Common Stock immediately prior to such
merger beneficially own, directly or
indirectly, immediately after the merger,
66-2/3% or more of, respectively, the then
outstanding common stock and the voting
power of the then outstanding voting
securities of the surviving corporation or
its Parent entitled to vote generally in the
election of directors, and
	 
	 	(d)	 	if voting
securities of the Parent are exchanged for
Outstanding Company Voting Securities in the
merger, all holders of any class or series
of Outstanding Company Voting Securities
immediately prior to the merger have the
right to receive substantially the same per
share consideration in exchange for their
Outstanding Company Voting Securities as all
other holders of such class or series),
	 

	 	(B)	 	exchange, pursuant to a
statutory share exchange, Outstanding Company
Voting Securities of any one or more classes or
series held by shareholders of the Company
immediately prior to the exchange for cash,
securities or other property, except for (a)
voting stock of a Parent owning directly, or
indirectly through wholly-owned Subsidiaries, both
beneficially and of record 100% of the Outstanding
Company Voting Securities immediately after the
statutory share exchange if (i) the persons who
were the beneficial owners, respectively, of the
Outstanding Company Voting Securities and
Outstanding Company Common Stock immediately prior
to such statutory share exchange own, directly or
indirectly, immediately after the statutory share
exchange 66-2/3% or more of, respectively, the
then outstanding common stock and the voting power
of the then outstanding voting securities of such
Parent entitled to vote generally in the election
of directors, and (ii) all holders of any class or
series of Outstanding Company Voting Securities
immediately prior to the statutory share exchange
have the right to receive substantially the same
per share consideration in exchange for their
Outstanding Company Voting Securities as all other
holders of such class or series or (b) cash with
respect to fractional shares of Outstanding
Company Voting Securities

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	 	 	 	or payable as a result of the exercise by holders
of Outstanding Company Voting Securities of
statutory dissenters’ rights,
	 
	 	(C)	 	sell or otherwise dispose
of all or substantially all of the assets of the
Company (in one transaction or a series of
transactions), or
	 
	 	(D)	 	liquidate or dissolve the
Company.

		
	 	     (g) “Code” means the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any successor statute.
	 
	 	     (h) “Committee” means two or more Non-Employee Directors designated
by the Board to administer this Plan under Section 3 hereof and
constituted so as to permit this Plan to comply with Exchange Act Rule
16b-3; provided that if no Committee is designated by the Board, the
board shall constitute the Committee.
	 
	 	     (i) “Company” means Wilsons The Leather Experts Inc., a Minnesota
corporation, or any successor to all or substantially all of its
businesses by merger, consolidation, purchase of assets or otherwise.
	 
	 	     (j) “Disability” means any physical or mental incapacitation whereby
a Participant is unable for a period of twelve consecutive months or for
an aggregate of twelve months in any twenty-four consecutive month period
to perform his or her duties for the Company or any Affiliate.
“Disabled,” with respect to any Participant, shall mean that such
Participant has incurred a Disability.
	 
	 	     (k) “Exchange Act” means the Securities Exchange Act of 1934, as
amended; “Exchange Act Rule 16b-3” means Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act as in effect
with respect to the Company or any successor regulation.
	 
	 	     (l) “Fair Market Value” as of any date means, unless otherwise
expressly provided in this Plan:

		
	 	     (i) (A) the closing sale price of a Share on the composite
tape for New York Stock Exchange (“NYSE”) listed shares, or if
Shares are not quoted on the composite tape for NYSE listed shares,
on the Nasdaq National Market or any similar system then in use or,
(B) if clause (i)(A) is not applicable, the mean between the
closing “bid” and the closing “asked” quotation of a Share on the
Nasdaq SmallCap Market or any similar system then in use, or (C) if
the Shares are not quoted on the NYSE composite tape or on the
Nasdaq National Market or the Nasdaq SmallCap Market or any similar
system then in use, the closing sale price of a Share on the
principal United States securities exchange registered under the
Exchange Act on which the Shares are listed, in any case on the
date immediately preceding that date, or, if no sale of Shares
shall have occurred on that date, on the next preceding day on
which a sale of Shares occurred, or
	 
	 	     (ii) if clause (i) is not applicable, what the Committee
determines in good faith to be 100% of the fair market value of a
Share on that date.

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	 	     However, if the applicable securities exchange or system has closed
for the day at the time the event occurs that triggers a determination of
Fair Market Value, all references in this paragraph to the “date
immediately preceding that date” shall be deemed to be references to
“that date.” In the case of an Incentive Stock Option, if such
determination of Fair Market Value is not consistent with the then
current regulations of the Secretary of the Treasury, Fair Market Value
shall be determined in accordance with said regulations. The
determination of Fair Market Value shall be subject to adjustment as
provided in Section 12(f) hereof.
	 
	 	     (m) “Fundamental Change” means a dissolution or liquidation of the
Company, a sale of substantially all of the assets of the Company, a
merger or consolidation of the Company with or into any other
corporation, regardless of whether the Company is the surviving
corporation, or a statutory share exchange involving capital stock of the
Company.
	 
	 	     (n) “Incentive Stock Option” means any Option designated as such and
granted in accordance with the requirements of Section 422 of the Code or
any successor to such section.
	 
	 	     (o) “Non-Employee Director” means a member of the Board who is
considered a non-employee director within the meaning of Exchange Act
Rule 16b-3.
	 
	 	     (p) “Non-Qualified Stock Option” means an Option other than an
Incentive Stock Option.
	 
	 	     (q) “Other Stock-Based Award” means an Award of Stock or an Award
based on Stock other than Options, Stock Appreciation Rights, Restricted
Stock or Performance Shares.
	 
	 	     (r) “Option” means a right to purchase Stock (or, if the Committee
so provides in an applicable Agreement, Restricted Stock), including both
Non-Qualified Stock Options and Incentive Stock Options.
	 
	 	     (s) “Parent” means a “parent corporation,” as that term is defined
in Section 424(e) of the Code, or any successor provision.
	 
	 	     (t) “Participant” means an Associate to whom an Award is made.
	 
	 	     (u) “Performance Period” means the period of time as specified in an
Agreement over which Performance Shares are to be earned.
	 
	 	     (v) “Performance Shares” means a contingent award of a specified
number of Performance Shares, with each Performance Share equivalent to
one or more Shares or a fractional Share or a Unit expressed in terms of
one or more Shares or a fractional Share, as specified in the applicable
Agreement, a variable percentage of which may vest depending upon the
extent of achievement of specified performance objectives during the
applicable Performance Period.
	 
	 	     (w) “Plan” means this 2000 Long Term Incentive Plan, as amended and
in effect from time to time.

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	 	     (x) “Restricted Stock” means Stock granted under Section 10 hereof
so long as such Stock remains subject to one or more restrictions.
	 
	 	     (y) “Share” means a share of Stock.
	 
	 	     (z) “Stock” means the Company’s common stock, $0.01 par value per
share (as such par value may be adjusted from time to time).
	 
	 	     (aa) “Stock Appreciation Right” means a right, the value of which is
determined relative to appreciation in value of Shares pursuant to an
Award granted under Section 8 hereof.
	 
	 	     (bb) “Subsidiary” means a “subsidiary corporation,” as that term is
defined in Section 424(f) of the Code, or any successor provision.
	 
	 	     (cc) “Successor” with respect to a Participant means the legal
representative of an incompetent Participant and, if the Participant is
deceased, the legal representative of the estate of the Participant or
the person or persons who may, by bequest or inheritance, or under the
terms of an Award or of forms submitted by the Participant to the
Committee under Section 12(i) hereof, acquire the right to exercise an
Option or Stock Appreciation Right or receive cash and/or Shares issuable
in satisfaction of an Award in the event of a Participant’s death.
	 
	 	     (dd) “Term” means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
restrictions placed on Restricted Stock or any other Award are in effect.
	 
	 	     (ee) “Unit” means a bookkeeping entry that may be used by the
Company to record and account for the grant of Stock, Stock Appreciation
Rights and Performance Shares expressed in terms of Units of Stock until
such time as the Award is paid, cancelled, forfeited or terminated.
	 
	 	     Except when otherwise indicated by the context, reference to the
masculine gender shall include, when used, the feminine gender and any
term used in the singular shall also include the plural.

     3.     Administration.

		
	 	     (a) Authority of Committee. The Committee shall administer this
Plan. The Committee shall have exclusive power, subject to the
limitations contained in this Plan, to make Awards and to determine when
and to whom Awards will be granted, and the form, amount and other terms
and conditions of each Award, subject to the provisions of this Plan.
The Committee, subject to the limitations contained in this Plan, may
determine whether, to what extent and under what circumstances Awards may
be settled, paid or exercised in cash, Shares or other Awards or other
property, or canceled, forfeited or suspended. The Committee shall have
the authority to interpret this Plan and any Award or Agreement made
under this Plan, to establish, amend, waive and rescind any rules and
regulations relating to the administration of this Plan, to determine the
terms and provisions of any Agreements entered into hereunder (not
inconsistent with this Plan), and to make all other determinations
necessary or advisable for the administration of this Plan. The
Committee may correct any defect, supply any omission or reconcile any

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	 	inconsistency in this Plan or in any Award in the manner and to the
extent it shall deem desirable. The determinations of the Committee in
the administration of this Plan, as described herein, shall be final,
binding and conclusive. A majority of the members of the Committee shall
constitute a quorum for any meeting of the Committee.
	 
	 	     (b) Delegation of Authority. The Committee may delegate all or any
part of its authority under this Plan to officers of the Company or other
persons who are not Non-Employee Directors for purposes of determining
and administering Awards solely to Associates who are not then subject to
the reporting requirements of Section 16 of the Exchange Act. Any
officer to whom the Committee delegates such authority may, in turn,
delegate such authority to such other officer of the Company as the
officer delegating such authority may determine.
	 
	 	     (c) Rule 16b-3 Compliance. It is intended that this Plan and all
Awards granted pursuant to it shall be administered by the Committee so
as to permit this Plan and Awards to comply with Exchange Act Rule 16b-3.
If any provision of this Plan or of any Award would otherwise frustrate
or conflict with the intent expressed in this Section 3(c), that
provision to the extent possible shall be interpreted and deemed amended
in the manner determined by the Committee so as to avoid such conflict.
To the extent of any remaining irreconcilable conflict with such intent,
the provision shall be deemed void as applicable to Participants who are
then subject to the reporting requirements of Section 16 of the Exchange
Act to the extent permitted by law and in the manner deemed advisable by
the Committee.
	 
	 	     (d) Indemnification. To the full extent permitted by law, (a) each
member and former member of the Committee and each person to whom the
Committee delegates or has delegated authority under this Plan shall be
entitled to indemnification by the Company against and from any loss,
liability, judgment, damage, cost and reasonable expense incurred by such
member, former member or other person by reason of any action taken,
failure to act or determination made in good faith under or with respect
to this Plan, and (b) no member or former member of the Committee or any
person to whom the Committee delegates or has delegated authority under
this Plan shall be liable for any act or determination made in good faith
under or with respect to this Plan.

     4.     Shares Available; Maximum Payouts.

		
	 	     (a) Shares Available. The number of Shares available for
distribution under this Plan is 1,250,000 (subject to adjustment under
Section 12(f) hereof).
	 
	 	     (b) Shares Again Available. Any Shares subject to an Award under
this Plan which are not used because the Award expires without all Shares
subject to such Award having been issued or because the terms and
conditions of the Award are not met may again be used for an Award under
this Plan. Any Shares that are the subject of Awards which are
subsequently forfeited to the Company pursuant to the restrictions
applicable to such Award may again be used for an Award under this Plan.
If a Participant exercises a Stock Appreciation Right, any Shares covered
by the Stock Appreciation Right in excess of the number of Shares issued
(or, in the case of a settlement in cash or any other form of property,
in excess of the number of Shares equal in value to the amount of such
settlement, based on the Fair Market Value of such Shares on the date of
such exercise) may again be used for an Award under this Plan. If, in
accordance with the Plan, a Participant uses Shares to (i) pay a purchase
or exercise price, including an Option

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	 	exercise price, or (ii) satisfy tax withholdings, such Shares may
again be used for an Award under this Plan.
	 
	 	     (c) Unexercised Awards. Any unexercised or undistributed portion of
any terminated, expired, exchanged, or forfeited Award or any Award
settled in cash in lieu of Shares (except as provided in Section 4(b)
hereof) shall be available for further Awards.
	 
	 	     (d) No Fractional Shares. No fractional Shares may be issued under
this Plan; fractional Shares will be rounded to the nearest whole Share,
for which purpose a one-half Share shall be rounded to up the next
highest whole Share.
	 
	 	     (e) Maximum Payouts. No more than 600,000 Shares subject to this
Plan (subject to adjustment under Section 12(f) hereof) may be granted in
the aggregate pursuant to Restricted Stock (if vesting is based on a
period of time without regard to the attainment of specified performance
conditions) and Other Stock-Based Awards.

     5.     Eligibility. Awards may be granted under this Plan to any Associate
at the discretion of the Committee.

     6.     General Terms of Awards.

		
	 	     (a) Awards. Awards under this Plan may consist of Options (either
Incentive Stock Options or Non-Qualified Stock Options), Stock
Appreciation Rights, Performance Shares, Restricted Stock and Other
Stock-Based Awards. Awards of Restricted Stock may, in the discretion of
the Committee, provide the Participant with dividends or dividend
equivalents and voting rights prior to vesting (whether vesting is based
on a period of time, the attainment of specified performance conditions
or otherwise).
	 
	 	     (b) Amount of Awards. Each Agreement shall set forth the number of
Shares of Restricted Stock, Stock or Performance Shares subject to such
Agreement, or the number of Shares to which the Option applies or with
respect to which payment upon the exercise of the Stock Appreciation
Right is to be determined, as the case may be, together with such other
terms and conditions applicable to the Award (not inconsistent with this
Plan) as determined by the Committee in its sole discretion.
	 
	 	     (c) Term. Each Agreement, other than those relating solely to
Awards of Stock without restrictions, shall set forth the Term of the
Award and any applicable Performance Period for Performance Shares, as
the case may be, but in no event shall the Term of an Award or the
Performance Period be longer than ten years after the date of grant. An
Agreement with a Participant may permit acceleration of vesting
requirements and of the expiration of the applicable Term upon such terms
and conditions as shall be set forth in the Agreement, which may, but,
unless otherwise specifically provided in this Plan, need not, include,
without limitation, acceleration resulting from the occurrence of a
Change in Control, a Fundamental Change, or the Participant’s death or
Disability. Acceleration of the Performance Period of Performance Shares
shall be subject to Section 9(b) hereof.
	 
	 	     (d) Agreements. Each Award under this Plan shall be evidenced by an
Agreement setting forth the terms and conditions, as determined by the
Committee, that shall apply to such Award, in addition to the terms and
conditions specified in this Plan.

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	 	     (e) Transferability. During the lifetime of a Participant to whom
an Award is granted, only such Participant (or such Participant’s legal
representative or, if so provided in the applicable Agreement in the case
of a Non-Qualified Stock Option, a permitted transferee as hereafter
described) may exercise an Option or Stock Appreciation Right or receive
payment with respect to Performance Shares or any other Award. No Award
of Restricted Stock (prior to the expiration of the restrictions),
Options, Stock Appreciation Rights, Performance Shares or other Award
(other than an award of Stock without restrictions) may be sold,
assigned, transferred, exchanged, or otherwise encumbered, and any
attempt to do so shall be of no effect. Notwithstanding the immediately
preceding sentence, (i) an Agreement may provide that an Award shall be
transferable to a Successor in the event of a Participant’s death and,
(ii) an Agreement may provide that a Non-Qualified Stock Option shall be
transferable to any member of a Participant’s “immediate family” (as such
term is defined in Rule 16a-1(e) promulgated under the Exchange Act, or
any successor rule or regulation) or to one or more trusts whose
beneficiaries are members of such Participant’s “immediate family” or
partnerships in which such family members are the only partners and (iii)
an Agreement may provide that a Non-Qualified Stock Option shall be
transferable pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employee Retirement Income Security Act, or
the rules thereunder; provided, however, that the Participant receives no
consideration for the transfer. Any Non-Qualified Stock Option held by a
permitted transferee shall continue to be subject to the same terms and
conditions that were applicable to such Non-Qualified Stock Option
immediately prior to its transfer and may be exercised by such permitted
transferee as and to the extent that such Non-Qualified Stock Option has
become exercisable and has not terminated in accordance with the
provisions of this Plan and the applicable Agreement. For purposes of
any provision of this Plan relating to notice to a Participant or to
vesting or termination of a Non-Qualified Stock Option upon the
termination of employment of a Participant, the references to
“Participant” shall mean the original grantee of the Non-Qualified Stock
Option and not any permitted transferee.
	 
	 	     (f) Termination of Employment. Except as otherwise determined by
the Committee or provided by the Committee in an applicable Agreement
(which may, without limitation, in the sole discretion of the Committee,
provide for an extension of the exercisability of Options and Stock
Appreciation Rights beyond the periods set forth in paragraphs 1(i)
through (iii) below, subject in all events to paragraph 1(iv) below), in
case of a Participant’s termination of employment, the following
provisions shall apply:

		
	 	     (1) Options and Stock Appreciation Rights.

		
	 	     (i) Death. If a Participant’s employment terminates
because of his or her death, then any Option or Stock
Appreciation Right that has not expired or been terminated
shall become exercisable in full, and may be exercised by the
Participant’s Successor at any time, or from time to time,
within one year after the date of the Participant’s death.
	 
	 	     (ii) Disability. If a Participant’s employment
terminates because of Disability, then any Option or Stock
Appreciation Right that has not expired or been terminated
shall become exercisable in full, and the Participant or the
Participant’s Successor may exercise such Option or

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	 	Stock Appreciation Right at any time, or from time to
time, within one year after the date of the Participant’s
Disability.
	 
	 	     (iii) Reasons other than Death or Disability. If a
Participant’s employment terminates for any reason other than
death or Disability, then any Option or Stock Appreciation
Right that has not expired or been terminated shall remain
exercisable for three months after termination of the
Participant’s employment, but only to the extent that such
Option or Stock Appreciation Right was exercisable
immediately prior to such Participant’s termination of
employment.
	 
	 	     (iv) Expiration of Term. Notwithstanding the foregoing
paragraphs (i)-(iii), in no event shall an Option or a Stock
Appreciation Right be exercisable after expiration of the
Term of such Award. Any Option or Stock Appreciation Right
that is not exercised within the periods set forth in the
foregoing paragraphs (i)-(iii), except as otherwise provided
by the Company in the applicable Agreement, shall terminate
as of the end of the periods described in such paragraphs.

		
	 	     (2) Performance Shares. If a Participant’s employment with
the Company or any of its Affiliates terminates during a
Performance Period because of death or Disability, or under other
circumstances provided by the Committee in its discretion in the
applicable Agreement or otherwise, the Participant, unless the
Committee shall otherwise provide in the applicable Agreement,
shall be entitled to a payment of Performance Shares at the end of
the Performance Period based upon the extent to which achievement
of performance targets was satisfied at the end of such period (as
determined at the end of the Performance Period) and prorated for
the portion of the Performance Period during which the Participant
was employed by the Company or any Affiliate. Except as provided
in this Section 6(f)(2) or in the applicable Agreement, if a
Participant’s employment with the Company or any of its Affiliates
terminates during a Performance Period, then such Participant shall
not be entitled to any payment with respect to that Performance
Period.
	 
	 	     (3) Restricted Stock. Unless otherwise provided in the
applicable Agreement, in case of a Participant’s death or
Disability, the Participant shall be entitled to receive a number
of shares of Restricted Stock under outstanding Awards that has
been pro rated for the portion of the Term of the Awards during
which the Participant was employed by the Company or any Affiliate,
and with respect to such Shares all restrictions shall lapse. Any
shares of Restricted Stock as to which restrictions do not lapse
under the preceding sentence shall terminate at the date of the
Participant’s termination of employment and such shares of
Restricted Stock shall be forfeited to the Company.

		
	 	     (g) Rights as Shareholder. A Participant shall have no rights as a
shareholder with respect to any securities covered by an Award until the
date the Participant becomes the holder of record.

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     7.     Stock Options.

		
	 	     (a) Terms of All Options.

		
	 	     (1) Grants. Each Option shall be granted pursuant to an
Agreement as either an Incentive Stock Option or a Non-Qualified
Stock Option. Only Non-Qualified Stock Options may be granted to
Associates who are not employees of the Company or an Affiliate.
	 
	 	     (2) Purchase Price. The purchase price of each Share subject
to an Option shall be determined by the Committee and set forth in
the applicable Agreement, but shall not be less than 85% of the
Fair Market Value of a Share as of the date the Option is granted;
provided that with respect to Incentive Stock Options, the purchase
price of each Share subject to such an Option shall not be less
than 100% of the Fair Market Value of a Share as of the date the
Option is granted. The purchase price of the Shares with respect
to which an Option is exercised shall be payable in full at the
time of exercise, provided that, to the extent permitted by law,
Participants may simultaneously exercise Options and sell the
Shares thereby acquired pursuant to a brokerage or similar
relationship and use the proceeds from such sale to pay the
purchase price of such Shares. The purchase price may be paid in
cash or, if the Committee so permits, through a reduction of the
number of Shares delivered to the Participant upon exercise of the
Option or delivery or tender to the Company of Shares held by such
Participant (in each case, such Shares having a Fair Market Value
as of the date the Option is exercised equal to the purchase price
of the Shares being purchased pursuant to the Option), or a
combination thereof, unless otherwise provided in the Agreement.
	 
	 	     (3) Reload Options. If the Committee so determines, the
Agreement relating to any Option may provide for the issuance of
“reload” Options pursuant to which, subject to the terms and
conditions established by the Committee and any applicable
requirements of Exchange Act Rule 16b-3 or any other applicable
law, the Participant will, either automatically or subject to
subsequent Committee approval, be granted a new Option when the
payment of the exercise price of the original Option, or the
payment of tax withholdings pursuant to Section 12(d) hereof, is
made through the delivery or tender to the Company of Shares held
by such Participant, such new “reload” Option (i) being an Option
to purchase the number of Shares provided as consideration for the
exercise price and in payment of taxes in connection with the
exercise of the original Option, and (ii) having a per Share
exercise price equal to the Fair Market Value as of the date of
exercise of the original Option.
	 
	 	     (4) Exercisability. Each Option shall be exercisable in whole
or in part on the terms provided in the Agreement, provided that if
a Change in Control shall occur, then any Option that has not
expired or been terminated shall become exercisable in full. In no
event shall any Option be exercisable at any time after its Term.
When an Option is no longer exercisable, it shall be deemed to have
lapsed or terminated.
	 
	 	     (5) Maximum Annual Options Per Participant. No Participant
may receive any combination of Options and Stock Appreciation
Rights relating to more

11

 

		
	 	     than 350,000 Shares in the aggregate pursuant to Awards in any
fiscal year of the Company under this Plan (subject to adjustment
under Section 12(f) hereof).

		
	 	     (b) Incentive Stock Options. In addition to the other terms and
conditions applicable to all Options:

		
	 	     (i) the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which
Incentive Stock Options held by an individual first become
exercisable in any calendar year (under this Plan and all other
incentive stock option plans of the Company and its Affiliates)
shall not exceed $100,000 (or such other limit as may be required
by the Code), if such limitation is necessary to qualify the Option
as an Incentive Stock Option, and to the extent an Option or
Options granted to a Participant exceed such limit, such Option or
Options shall be treated as a Non-Qualified Stock Option;
	 
	 	     (ii) an Incentive Stock Option shall not be exercisable and
the Term of the Award shall not be more than ten years after the
date of grant (or such other limit as may be required by the Code)
if such limitation is necessary to qualify the Option as an
Incentive Stock Option;
	 
	 	     (iii) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions which the Committee
determines necessary to qualify such Option as an Incentive Stock
Option; and
	 
	 	     (iv) notwithstanding any other provision of this Plan to the
contrary, no Participant may receive an Incentive Stock Option
under this Plan if, at the time the Award is granted, the
Participant owns (after application of the rules contained in
Section 424(d) of the Code, or its successor provision) Shares
possessing more than ten percent of the total combined voting power
of all classes of stock of the Company or its subsidiaries, unless
(A) the option price for such Incentive Stock Option is at least
110% of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the date of grant and (B) such Option is
not exercisable after the date five years from the date such
Incentive Stock Option is granted.

     8.     Stock Appreciation Rights. An Award of a Stock Appreciation Right
shall entitle the Participant, subject to terms and conditions determined by
the Committee, to receive upon exercise of the Stock Appreciation Right all or
a portion of the excess of (i) the Fair Market Value of a specified number of
Shares as of the date of exercise of the Stock Appreciation Right over (ii) a
specified price which shall not be less than 50% of the Fair Market Value of
such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with a previously or
contemporaneously granted Option, or independent of any Option. If issued in
connection with an Option, the Committee may impose a condition that exercise
of a Stock Appreciation Right cancels the Option with which it is connected and
exercise of the connected Option cancels the Stock Appreciation Right. Each
Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the applicable Agreement, provided that if a Change in Control
shall occur, then any Stock Appreciation Right that has not expired or been
terminated shall become exercisable in full. No Stock Appreciation Right shall
be exercisable at any time after its Term. When a Stock Appreciation Right is
no longer exercisable, it shall be deemed to have lapsed or terminated. Except
as otherwise provided in the applicable Agreement, upon exercise of a Stock
Appreciation Right, payment to the Participant (or to his or her Successor)
shall be made in the form of cash, Stock or a combination of cash and Stock as

12

 

 promptly as practicable after such exercise. The Agreement may provide
for a limitation upon the amount or percentage of the total appreciation on
which payment (whether in cash and/or Stock) may be made in the event of the
exercise of a Stock Appreciation Right. As specified in Section 7(a) hereof,
no Participant may receive any combination of Options and Stock Appreciation
Rights relating to more than 350,000 Shares in the aggregate pursuant to Awards
in any fiscal year of the Company under this Plan (subject to adjustment under
Section 12(f) hereof).

     9.     Performance Shares.

		
	 	     (a) Initial Award. An Award of Performance Shares shall entitle a
Participant (or a Successor) to future payments based upon the
achievement of performance targets established in writing by the
Committee. Payment shall be made in Stock, or a combination of cash and
Stock, as determined by the Committee. With respect to those
Participants who are “covered employees” within the meaning of Section
162(m) of the Code and the regulations thereunder, such performance
targets shall consist of one or any combination of two or more of
earnings or earnings per share before income tax (profit before taxes),
net earnings or net earnings per share (profit after tax), inventory,
total, or net operating asset turnover, operating income, total
shareholder return, return on equity, pre-tax and pre-interest expense
return on average invested capital, which may be expressed on a current
value basis, or sales growth, and any such targets may relate to one or
any combination of two or more of corporate, group, unit, division,
Affiliate or individual performance. The Agreement may establish that a
portion of the maximum amount of a Participant’s Award will be paid for
performance which exceeds the minimum target but falls below the maximum
target applicable to such Award. The Agreement shall also provide for
the timing of such payment. Following the conclusion or acceleration of
each Performance Period, the Committee shall determine the extent to
which (i) performance targets have been attained, (ii) any other terms
and conditions with respect to an Award relating to such Performance
Period have been satisfied, and (iii) payment is due with respect to a
Performance Share Award. No Participant may receive Performance Shares
relating to more than 200,000 Shares (or cash equivalents), or receive
more than 200,000 Shares (or cash equivalents) pursuant to Awards of
Performance Shares in any fiscal year of the Company under this Plan
(subject to adjustment under Section 12(f) hereof).
	 
	 	     (b) Acceleration and Adjustment. The applicable Agreement may
permit an acceleration of the Performance Period and an adjustment of
performance targets and payments with respect to some or all of the
Performance Shares awarded to a Participant, upon such terms and
conditions as shall be set forth in the Agreement, upon the occurrence of
certain events, which may, but, unless otherwise specifically provided in
this Plan, need not, include, without limitation, a Change in Control, a
Fundamental Change, the Participant’s death or Disability, a change in
accounting practices of the Company or its Affiliates, or, with respect
to payments in Stock for Performance Share Awards, a reclassification,
stock dividend, stock split or stock combination as provided in Section
12(f) hereof.
	 
	 	     (c) Valuation. To the extent that payment of a Performance Share is
made in cash, a Performance Share earned after conclusion of a
Performance Period shall have a value equal to the Fair Market Value of a
Share on the last day of such Performance Period.

13

 

     10.     Restricted Stock. Subject to Section 4(e), Restricted Stock may be
granted in the form of Shares registered in the name of the Participant but
held by the Company until the restrictions on the Restricted Stock Award lapse,
subject to forfeiture as provided in the applicable Agreement. Any employment
conditions, performance conditions, restrictions on transferability and the
Term of the Award shall be established by the Committee in its discretion and
included in the applicable Agreement. The Committee may provide in the
applicable Agreement for the lapse or waiver of any such restriction or
condition based on such factors or criteria as the Committee, in its sole
discretion, may determine, which may, but need not, include without limitation
a Change in Control, a Fundamental Change or the Participant’s death or
Disability. The Committee, in the applicable Agreement, may, in its sole
discretion, award all or any of the rights of a shareholder with respect to the
Shares of Restricted Stock during the period that they remain subject to
restrictions, including, without limitation, the right to vote the Shares and
receive dividends. With respect to those Participants who are “covered
employees” within the meaning of Section 162(m) of the Code and the regulations
thereunder, any performance conditions to the lapse of restrictions on
restricted stock shall be based on performance targets that consist of one or
any combination of two or more of earnings or earnings per share before income
tax (profit before taxes), net earnings or net earnings per share (profit after
tax), inventory, total, or net operating asset turnover, operating income,
total shareholder return, return on equity, pre-tax and pre-interest expense
return on average invested capital, which may be expressed on a current value
basis, or sales growth, and any such targets may relate to one or any
combination of two or more of corporate, group, unit, division, Affiliate or
individual performance. No participant may receive more than 200,000 Shares of
Restricted Stock subject to performance conditions or be entitled to have
restrictions lapse with respect to more than 200,000 Shares of Restricted Stock
subject to performance conditions in any fiscal year of the Company under this
Plan (subject to adjustment under Section 12(f) hereof).

     11.     Other Stock-Based Awards. Subject to Section 4(e), the Committee may
from time to time grant Awards of Stock, and other Awards under this Plan
(collectively herein defined as “Other Stock-Based Awards”), including without
limitation those Awards pursuant to which Shares may be acquired in the future,
such as Awards denominated in Stock, Stock Units, securities convertible into
Stock and phantom securities. The Committee, in its sole discretion, shall
determine, and provide in the applicable Agreement for, the terms and
conditions of such Awards provided that such Awards shall not be inconsistent
with the terms and purposes of this Plan. The Committee may, in its sole
discretion, direct the Company to issue Shares subject to restrictive legends
and/or stop transfer instructions which are consistent with the terms and
conditions of the Award to which such Shares relate.

     12.     General Provisions.

		
	 	     (a) Effective Date of this Plan. This Plan shall become effective
as of March 23, 2000, provided that this Plan is approved and ratified by
the affirmative vote of the holders of a majority of the outstanding
Shares of Stock present or represented and entitled to vote in person or
by proxy at a meeting of the shareholders of the Company held no later
than June 30, 2000. If this Plan is not so approved, any Award granted
under this Plan subject to such approval shall be cancelled and be null
and void.
	 
	 	     (b) Duration of this Plan; Date of Grant. This Plan shall remain in
effect until all Stock subject to it shall be distributed or all Awards
have expired or lapsed, whichever is latest to occur, or this Plan is
terminated pursuant to Section 12(e) hereof. No Award of an Incentive
Stock Option shall be made more than ten years after the effective date

14

 

		
	 	provided in Section 12(a) hereof (or such other limit as may be
required by the Code) if such limitation is necessary to qualify the
Option as an Incentive Stock Option. The date and time of approval by
the Committee of the granting of an Award shall be considered the date
and time at which such Award is made or granted, notwithstanding the date
of any Agreement with respect to such Award; provided, however, that the
Committee may grant Awards other than Incentive Stock Options to
Associates or to persons who are about to become Associates, to be
effective and deemed to be granted on the occurrence of certain specified
contingencies, provided that if the Award is granted to a non-Associate
who is about to become an Associate, such specified contingencies shall
include, without limitation, that such person becomes an Associate.
	 
	 	     (c) Right to Terminate Employment. Nothing in this Plan or in any
Agreement shall confer upon any Participant who is an employee of the
Company the right to continue in the employment of the Company or any
Affiliate or affect any right which the Company or any Affiliate may have
to terminate or modify the employment of the Participant with or without
cause.
	 
	 	     (d) Tax Withholding. The Company may withhold from any payment of
cash or Stock to a Participant or other person under this Plan an amount
sufficient to cover any required withholding taxes, including the
Participant’s social security and Medicare taxes (FICA) and federal,
state and local income tax with respect to income arising from payment of
the Award. The Company shall have the right to require the payment of
any such taxes before issuing any Stock pursuant to the Award. In lieu
of all or any part of a cash payment from a person receiving Stock under
this Plan, the Committee may, in the applicable Agreement or otherwise,
permit a person to cover all or any part of the required withholdings,
and to cover any additional withholdings up to the amount needed to cover
the person’s full FICA and federal, state and local income tax with
respect to income arising from payment of the Award, through a reduction
of the number of Shares delivered to such person or a delivery or tender
to the Company of Shares held by such person, in each case valued in the
same manner as used in computing the withholding taxes under applicable
laws.
	 
	 	     (e) Amendment, Modification and Termination of this Plan. Except as
provided in this Section 12(e), the Board may at any time amend, modify,
terminate or suspend this Plan. Except as provided in this Section
12(e), the Committee may at any time alter or amend any or all Agreements
under this Plan to the extent permitted by law, in which event, as
provided in Section 2(b), the term “Agreement” shall mean the Agreement
as so amended. Amendments are subject to approval of the shareholders of
the Company only if such approval is necessary to maintain this Plan in
compliance with the requirements of Exchange Act Rule 16b-3, Section 422
of the Code, their successor provisions, or any other applicable law or
regulation. No termination, suspension or modification of this Plan may
materially and adversely affect any right acquired by any Participant (or
a Participant’s legal representative) or any Successor or permitted
transferee under an Award granted before the date of termination,
suspension or modification, unless otherwise provided in an Agreement or
otherwise or required as a matter of law. It is conclusively presumed
that any adjustment for changes in capitalization provided for in Section
9(b) or 12(f) hereof does not adversely affect any right of a Participant
or other person under an Award.
	 
	 	     (f) Adjustment for Changes in Capitalization. Appropriate
adjustments in the aggregate number and type of securities available for
Awards under this Plan, in the

15

 

		
	 	limitations on the number and type of securities that may be issued
to an individual Participant, in the number and type of securities and
amount of cash subject to Awards then outstanding, in the Option exercise
price as to any outstanding Options and, subject to Section 9(b) hereof,
in outstanding Performance Shares and payments with respect to
outstanding Performance Shares may be made by the Committee in its sole
discretion to give effect to adjustments made in the number or type of
Shares through a Fundamental Change (subject to Section 12(g) hereof),
recapitalization, reclassification, stock dividend, stock split, stock
combination, spin-off or other relevant change, provided that fractional
Shares shall be rounded to the nearest whole Share, for which purpose a
one-half Share shall be rounded to the next highest whole Share.
	 
	 	     (g) Fundamental Change. In the event of a proposed Fundamental
Change, the Committee may, but shall not be obligated to:

		
	 	     (i) with respect to a Fundamental Change that involves a
merger, consolidation or statutory share exchange, make appropriate
provision for the protection of the outstanding Options and Stock
Appreciation Rights by the substitution of options, stock
appreciation rights and appropriate voting common stock of the
corporation surviving any such merger or consolidation or, if
appropriate, the Parent of such surviving corporation, in lieu of
Options, Stock Appreciation Rights and capital stock of the
Company, or
	 
	 	     (ii) with respect to any Fundamental Change, including,
without limitation, a merger, consolidation or statutory share
exchange,

		
	 	declare, at least twenty days prior to the occurrence of the Fundamental
Change, and provide written notice to each holder of an Option or Stock
Appreciation Right of the declaration, that each outstanding Option and
Stock Appreciation Right, whether or not then exercisable, shall be
canceled at the time of, or immediately prior to the occurrence of, the
Fundamental Change in exchange for payment to each holder of an Option or
Stock Appreciation Right, within 20 days after the Fundamental Change, of
cash (or with respect to an Option, if the Committee so elects in lieu of
solely cash, of such form(s) of consideration, including cash and/or
property, singly or in such combination as the Committee shall determine,
that such holder of an Option would have received as a result of the
Fundamental Change if such holder had exercised such holder’s Option
immediately prior to the Fundamental Change) equal to (i) for each Share
covered by the canceled Option, the amount, if any, by which the Fair
Market Value (as defined in this Section 12(g)) per Share exceeds the
exercise price per Share covered by such Option or (ii) for each Stock
Appreciation Right, the price determined pursuant to Section 8 hereof,
except that Fair Market Value of the Shares as of the date of exercise of
the Stock Appreciation Right, as used in clause (i) of Section 8, shall
be deemed to mean Fair Market Value for each Share with respect to which
the Stock Appreciation Right is calculated determined in the manner
hereinafter referred to in this Section 12(g). At the time of the
declaration provided for in the immediately preceding sentence, each
Stock Appreciation Right and each Option shall immediately become
exercisable in full and each person holding an Option or a Stock
Appreciation Right shall have the right, during the period preceding the
time of cancellation of the Option or Stock Appreciation Right, to
exercise the Option as to all or any part of the Shares covered thereby
or the Stock Appreciation Right in whole or in part, as the case may be.
In the event of a declaration pursuant to this Section 12(g), each
outstanding Option and Stock Appreciation Right that shall not have been
exercised prior to the Fundamental Change shall be canceled at the

16

 

		
	 	time of, or immediately prior to, the Fundamental Change, as provided in
the declaration. Notwithstanding the foregoing, no person holding an
Option or Stock Appreciation Right shall be entitled to the payment
provided for in this Section 12(g) if such Option or Stock Appreciation
Right shall have terminated, expired or been cancelled. For purposes of
this Section 12(g) only, “Fair Market Value” per Share means the cash
plus the fair market value, as determined in good faith by the Committee,
of the non-cash consideration to be received per Share by the
shareholders of the Company upon the occurrence of the Fundamental
Change, notwithstanding anything to the contrary provided in this Plan.
	 
	 	     (h) Other Benefit and Compensation Programs. Payments and other
benefits received by a Participant under an Award shall not be deemed a
part of a Participant’s regular, recurring compensation for purposes of
any termination, indemnity or severance pay laws and shall not be
included in, nor have any effect on, the determination of benefits under
any other employee benefit plan, contract or similar arrangement provided
by the Company or an Affiliate, unless expressly so provided by such
other plan, contract or arrangement or the Committee determines that an
Award or portion of an Award should be included to reflect competitive
compensation practices or to recognize that an Award has been made in
lieu of a portion of competitive cash compensation.
	 
	 	     (i) Beneficiary Upon Participant’s Death. To the extent that the
transfer of a Participant’s Award at death is permitted by this Plan or
under an Agreement, (i) a Participant’s Award shall be transferable to
the beneficiary, if any, designated on forms prescribed by and filed with
the Committee and (ii) upon the death of the Participant, such
beneficiary shall succeed to the rights of the Participant to the extent
permitted by law and this Plan. If no such designation of a beneficiary
has been made, the Participant’s legal representative shall succeed to
the Awards, which shall be transferable by will or pursuant to laws of
descent and distribution to the extent permitted by this Plan or under an
Agreement.
	 
	 	     (j) Unfunded Plan. This Plan shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under this Plan. Neither the Company, its
Affiliates, the Committee, nor the Board shall be deemed to be a trustee
of any amounts to be paid under this Plan nor shall anything contained in
this Plan or any action taken pursuant to its provisions create or be
construed to create a fiduciary relationship between the Company and/or
its Affiliates, and a Participant or Successor. To the extent any person
acquires a right to receive an Award under this Plan, such right shall be
no greater than the right of an unsecured general creditor of the
Company.
	 
	 	     (k) Limits of Liability.

		
	 	     (i) Any liability of the Company to any Participant with
respect to an Award shall be based solely upon contractual
obligations created by this Plan and the Agreement.
	 
	 	     (ii) Except as may be required by law, neither the Company nor
any member or former member of the Board or of the Committee, nor
any other person participating (including participation pursuant to
a delegation of authority under Section 3(b) hereof) in any
determination of any question under this Plan, or in the
interpretation, administration or application of this Plan, shall
have any liability to any party for any action taken, or not taken,
in good faith under this Plan.

17

 

		
	 	     (l) Compliance with Applicable Legal Requirements. No certificate
for Shares distributable pursuant to this Plan shall be issued and
delivered unless the issuance of such certificate complies with all
applicable legal requirements including, without limitation, compliance
with the provisions of applicable state securities laws, the Securities
Act of 1933, as amended and in effect from time to time or any successor
statute, the Exchange Act and the requirements of the exchanges, if any,
on which the Company’s Shares may, at the time, be listed.
	 
	 	     (m) Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement
of Awards in cash under such rules and procedures as it may establish
under this Plan. It may also provide that deferred settlements include
the payment or crediting of interest on the deferral amounts.

     13.     Substitute Awards. Awards may be granted under this Plan from time to
time in substitution for Awards held by employees of other corporations who are
about to become Associates, or whose employer is about to become a Subsidiary
of the Company, as the result of a merger or consolidation of the Company or a
Subsidiary of the Company with another corporation, the acquisition by the
Company or a Subsidiary of the Company of all or substantially all the assets
of another corporation or the acquisition by the Company or a Subsidiary of the
Company of at least 50% of the issued and outstanding stock of another
corporation. The terms and conditions of the substitute Awards so granted may
vary from the terms and conditions set forth in this Plan to such extent as the
Board at the time of the grant may deemed appropriate to conform, in whole or
in part, to the provisions of the Awards in substitution for which they are
granted, but with respect to Awards which are Incentive Stock Options, no such
variation shall be permitted which affects the status of any such substitute
option as an Incentive Stock Option.

     14.     Governing Law. To the extent that federal laws do not otherwise
control, this Plan and all determinations made and actions taken pursuant to
this Plan shall be governed by the laws of Minnesota and construed accordingly.

     15.     Severability. In the event any provision of this Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of this Plan, and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

     16.     Prior Plans. Notwithstanding the adoption of this Plan by the Board
and approval of this Plan by the Company’s shareholders as provided by Section
12(a) hereof, the Company’s 1996 Stock Option Plan and 1998 Stock Option Plan,
as the same may have been amended from time to time (the “Prior Plans”), shall
remain in effect and the Committee may continue to make grants of stock options
pursuant to and subject to the limitations of the Prior Plans. All grants and
awards heretofore or hereafter made under the Prior Plans shall be governed by
the terms of the Prior Plans.

18exv10w2

 

Exhibit 10.2

WILSONS THE LEATHER EXPERTS INC.

EMPLOYEE STOCK PURCHASE PLAN

Including June 11, 2003 Amendment

     1.     Purpose and Scope of Plan. The purpose of this Wilsons The Leather
Experts Inc. Employee Stock Purchase Plan (the “Plan”) is to provide the
employees of Wilsons The Leather Experts Inc. (the “Company”) and its
subsidiaries with an opportunity to acquire a proprietary interest in the
Company through the purchase of its common stock and, thus, to develop a
stronger incentive to work for the continued success of the Company. The Plan
is intended to be an “employee stock purchase plan” within the meaning of
Section 423(b) of the Internal Revenue Code of 1986, as amended, and shall be
interpreted and administered in a manner consistent with such intent.

     2.     Definitions.

		
	 	     2.1. The terms defined in this section are used (and capitalized)
elsewhere in this Plan:

		
	 	(a) “Affiliate” means each domestic or foreign corporation that is
a “parent corporation” or “subsidiary corporation” of the Company,
as defined in Sections 424(e) and 424(f) of the Code or any
successor provision and whose participation in the Plan the Board
of Directors has expressly approved.

		
	 	(b) “Board of Directors” means the Board of Directors of the
Company.

		
	 	(c) “Code” means the Internal Revenue Code of 1986, as amended from
time to time.

		
	 	(d) “Committee” means two or more Disinterested Persons designated
by the Board of Directors to administer the Plan under Section 13.

		
	 	(e) “Common Stock” means the $.01 par value common stock of the
Company.

		
	 	(f) “Company” means Wilsons The Leather Experts Inc., a Minnesota
corporation.

-1-

 

		
	 	(g) “Compensation” means the gross cash compensation (including
wage, salary, commission, bonus, and overtime earnings) paid by the
Company or any Affiliate to a Participant in accordance with the
terms of employment.

		
	 	(h) “Disinterested Persons” means a member of the Board of
Directors who is considered a disinterested person within the
meaning of Exchange Act Rule 16b-3 or any successor definition.

		
	 	(i) “Eligible Associate” means any employee of the Company or an
Affiliate whose customary employment is at least 20 hours per week
and who has been employed by the Company or an Affiliate for at
least 90 consecutive days prior to the first day of the relevant
Purchase Period; provided, however, that “Eligible Associate” shall
not include any person who would be deemed, for purposes of Section
423(b)(3) of the Code, to own stock possessing 5% or more of the
total combined voting power or value of all classes of stock of the
Company.

		
	 	(j) “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time.

		
	 	(k) “Fair Market Value” of a share of Common Stock as of any date
means, if the Company’s Common Stock is listed on a national
securities exchange or quoted on the NASDAQ National Market, the
mean between the high and low sale prices for such Common Stock on
such exchange or National Market on said date, or, if no sale has
been made on such exchange or National Market on said date, on the
last preceding day on which any sale shall have been made. If such
determination of Fair Market Value is not consistent with the then
current regulations of the Secretary of the Treasury applicable to
plans intended to qualify as an “employee stock purchase plan”
within the meaning of Section 423(b) of the Code, however, Fair
Market Value shall be determined in accordance with such
regulations. The determination of Fair Market Value shall be
subject to adjustment as provided in Section 14.

		
	 	(l) “Participant” means an Eligible Associate who has elected to
participate in the Plan in the manner set forth in Section 4.

		
	 	(m) “Plan” means this Wilsons The Leather Experts Inc. Employee
Stock Purchase Plan, as amended from time to time.

		
	 	(n) “Purchase Period” means a calendar quarter or such other period
of time as may be adopted by the Committee.

		
	 	(o) “Recordkeeping Account” means the account maintained in the
books and records of the Company recording the amount withheld from
each Participant through payroll deductions made under the Plan.

-2-

 

     3.     Scope of the Plan. The total number of shares of Common Stock
available for sale under this Plan shall not exceed 625,000 (subject to
adjustment as provided in Section 14). All sales of shares of Common Stock
pursuant to this Plan shall be subject to the same terms, conditions, rights
and privileges. These shares may consist, in whole or in part, of authorized
but unissued Common Stock not reserved for any other purpose.

     4.     Eligibility and Participation. To be eligible to participate in the
Plan for a given Purchase Period, an employee must be an Eligible Associate on
the first day of such Purchase Period. An Eligible Associate may elect to
participate in the Plan by filing an enrollment form with the Company before
the first day of such Purchase Period that authorizes regular payroll
deductions from Compensation beginning with the first payday in the Purchase
Period and continuing until the Eligible Associate withdraws from the Plan,
modifies his or her authorization, or ceases to be an Eligible Associate, as
hereinafter provided.

     5.     Amount of Common Stock Each Eligible Associate May Purchase.

		
	 	     5.1. Subject to the provisions of this Plan, each Eligible Associate
shall be offered the right to purchase on the last day of the Purchase
Period the maximum number of shares of Common Stock (including fractional
shares) that can be purchased at the price specified in Section 5.2 with
the entire credit balance in the Participant’s Recordkeeping Account;
provided, however, that (i) no more than 750(1) shares of Common Stock may
be purchased under the Plan by any Participant for a given Purchase
Period and (ii) no more than $25,000 in Fair Market Value (determined at
the beginning of each Purchase Period) of shares of Common Stock may be
purchased under the Plan and all other employee stock purchase plans, if
any, of the Company and the Affiliates by any Participant for each
calendar year. If the purchases by all Participants would otherwise
cause the aggregate number of shares of Common Stock to be sold under the
Plan to exceed the number specified in Section 3, however, each
Participant shall be allocated a ratable portion of the maximum number of
shares of Common Stock which may be sold.

		
	 	     5.2. The purchase price of each share of Common Stock sold pursuant
to this Plan will be the lesser of (a) or (b) below:

	 	(a)	 	85% of the Fair Market Value of such share on the
first day of the Purchase Period.
	 
	 	(b)	 	85% of the Fair Market Value of such share on the
last day of the Purchase Period.

     6.     Method of Participation.

			
	 	  (1) 	
    Adjusted as a result of the Company's
three-for-two stock split on March 15, 2000.
    

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	 	     6.1. The Company shall give notice to each Eligible Associate of the
opportunity to purchase shares of Common Stock pursuant to this Plan and
the terms and conditions for such offering. Such notice is subject to
revision by the Company at any time prior to the date of purchase of such
shares. The Company contemplates that for tax purposes the first day of
a Purchase Period will be the date of the offering of such shares.

		
	 	     6.2. Each Eligible Associate who desires to participate in the Plan
for a Purchase Period shall signify his or her election to do so by
signing an election form developed by the Committee. Such election form
will authorize the Company to withhold a portion of the Eligible
Associate’s Compensation paid for a regular pay period. The minimum and
maximum amount that may be withheld for any week during a pay period
shall be $10 and $100, respectively (e.g., $20 and $200, respectively,
for a two-week pay period). An election to participate in the Plan and
to authorize payroll deductions as described herein must be made before
the first day of a Purchase Period. The election shall be effective for
the first pay period in the Purchase Period immediately following the
filing of such election form and shall remain in effect unless and until
the Plan is terminated or such Participant withdraws from the Plan,
modifies his or her authorization, or ceases to be an Eligible Associate,
as hereinafter provided.

     7.     Recordkeeping Account.

		
	 	     7.1. The Company shall maintain a Recordkeeping Account for each
Participant. Payroll deductions pursuant to Section 6 will be credited
to such Recordkeeping Accounts on each payday.

		
	 	     7.2. No interest will be credited to a Participant’s Recordkeeping
Account.

		
	 	     7.3. The Recordkeeping Account is established solely for accounting
purposes, and all amounts credited to the Recordkeeping Account will
remain part of the general assets of the Company.

		
	 	     7.4. A Participant may not make any separate cash payment into the
Recordkeeping Account.

     8.     Right to Adjust Participation or to Withdraw.

		
	 	     8.1. A Participant may, at any time during a Purchase Period, direct
the Company to make no further deductions from his or her Compensation.
Upon such action, future payroll deductions with respect to such
Participant shall cease. Any Participant who stops payroll deductions
during a Purchase Period may not thereafter resume payroll deductions
during such Purchase Period.

-4-

 

		
	 	     8.2 Except as otherwise provided in Section 8.1 with respect to
cessation of deductions, any Participant who wishes to increase or
decrease the deductions from his or her Compensation may do so only as of
the first pay period in a Purchase Period.

		
	 	     8.3. At any time before the end of a Purchase Period, any
Participant may withdraw from the Plan. In such event, all future
payroll deductions shall cease and the entire credit balance in the
Participant’s Recordkeeping Account will be paid to the Participant,
without interest, in cash within 30 days. A Participant who withdraws
from the Plan will not be eligible to reenter the Plan until the next
succeeding Purchase Period.

		
	 	     8.4. Notification of a Participant’s election to increase, decrease,
or terminate deductions, or to withdraw from the Plan, shall be made by
filing an appropriate form with the Company.

     9.     Termination of Employment. If the employment of a Participant is
terminated for any reason, including without limitation death, disability, or
retirement, the entire balance in the Participant’s Recordkeeping Account will
be applied to the purchase of shares as provided in Section 10.1 as of the last
day of the Purchase Period in which the Participant’s employment terminated.

     10.     Purchase of Shares.

		
	 	     10.1. As of the last day of the Purchase Period, the entire credit
balance in each Participant’s Recordkeeping Account will be used to
purchase shares (including fractional shares) of Common Stock (subject to
the limitations of Section 5) unless the Participant has filed an
appropriate form with the Company in advance of that date (which either
elects to purchase a specified number of shares which is less than the
number described above or elects to receive the entire credit balance in
cash). Any amount in a Participant’s Recordkeeping Account that is not
used to purchase shares pursuant to this Section 10.1 will be refunded to
the Participant.

		
	 	     10.2. Promptly after the end of each Purchase Period, a certificate
for the number of shares of Common Stock purchased by all Participants
shall be issued and delivered to an agent selected by the Company. The
agent will hold such certificate for the benefit of all Participants who
have purchased shares of Common Stock and will maintain an account for
each Participant reflecting the number of shares (including fractional
shares) credited to the account of each Participant. Each Participant
will be entitled to direct the voting of all shares credited to such
Participant’s account by the agent. At any time, a Participant may
request from the agent a certificate representing the shares of Common
Stock credited to the Participant’s account, in which case the agent
shall transfer a certificate for such shares directly to the Participant;
provided, however, that the agent shall not be required to issue a
certificate representing a

-5-

 

		
	 	fractional share and may instead pay the Participant a cash amount
representing the fair market value of such fractional share.

     11.     Rights as a Shareholder. A Participant shall not be entitled to any
of the rights or privileges of a shareholder of the Company with respect to
such shares, including the right to vote or direct the voting or to receive any
dividends that may be declared by the Company, until (i) the Participant
actually has paid the purchase price for such shares and (ii) certificates for
such shares have been issued either to the agent or to the Participant, both as
provided in Section 10.

     12.     Rights Not Transferable. A Participant’s rights under this Plan are
exercisable only by the Participant during his or her lifetime, and may not be
sold, pledged, assigned or transferred in any manner other than by will or the
laws of descent and distribution. Any attempt to sell, pledge, assign or
transfer the same shall be null and void and without effect. The amounts
credited to a Recordkeeping Account may not be assigned, transferred, pledged
or hypothecated in any way, and any attempted assignment, transfer, pledge,
hypothecation or other disposition of such amounts will be null and void and
without effect.

     13.     Administration of the Plan. This Plan shall be administered by the
Committee, which is authorized to make such uniform rules as may be necessary
to carry out its provisions. The Committee shall determine any questions
arising in the administration, interpretation and application of this Plan, and
all such determinations shall be conclusive and binding on all parties.

     14.     Adjustment upon Changes in Capitalization. In the event of any change
in the Common Stock of the Company by reason of stock dividends, split-ups,
corporate separations, recapitalizations, mergers, consolidations,
combinations, exchanges of shares and the like, the aggregate number and class
of shares available under this Plan and the number, class and purchase price of
shares available but not yet purchased under this Plan may be adjusted
appropriately by the Committee.

     15.     Amendment of Plan. The Board of Directors may at any time amend this
Plan in any respect which shall not adversely affect the rights of Participants
pursuant to shares previously acquired under the Plan, except that, without
shareholder approval no amendment shall be made to (a) increase the number of
shares reserved under this Plan or (b) change the designation of corporations
whose employees may be eligible to participate in the Plan.

     16.     Effective Date of Plan. This Plan shall be effective upon approval
thereof by the shareholders of the Company. All rights of Participants in any
offering hereunder shall terminate at the earlier of (i) the day that
Participants become entitled to purchase a number of shares of Common Stock
equal to or greater than the number of shares remaining available for purchase
or (ii) at the discretion of the Board of Directors at any time following seven
days’ notice to Participants. Upon termination of this Plan, shares of Common
Stock shall be issued to Participants in accordance with Section 10, and cash,
if any, remaining in the Participants’

-6-

 

Recordkeeping Accounts shall be refunded to them, as if the Plan were
terminated at the end of a Purchase Period.

     17.     Governmental Regulations and Listing. All rights granted or to be
granted to Eligible Associates under this Plan are expressly subject to all
applicable laws and regulations and to the approval of all governmental
authorities required in connection with the authorization, issuance, sale or
transfer of the shares of Common Stock reserved for this Plan, including,
without limitation, there being a current registration statement of the Company
under the Securities Act of 1933, as amended, covering the shares of Common
Stock purchasable on the last day of the Purchase Period applicable to such
shares, and if such a registration statement shall not then be effective, the
term of such Purchase Period shall be extended until the first business day
after the effective date of such a registration statement, or post-effective
amendment thereto. If applicable, all such rights hereunder are also similarly
subject to effectiveness of an appropriate listing application to a national
securities exchange or a national market system, covering the shares of Common
Stock under the Plan upon official notice of issuance.

     18.     Miscellaneous.

		
	 	     18.1. This Plan shall not be deemed to constitute a contract of
employment between the Company and any Participant, nor shall it
interfere with the right of the Company to terminate any Participant and
treat him or her without regard to the effect which such treatment might
have upon him or her under this Plan.

		
	 	     18.2. Wherever appropriate as used herein, the masculine gender may
be read as the feminine gender, the feminine gender may be read as the
masculine gender, the singular may be read as the plural and the plural
may be read as the singular.

		
	 	     18.3. This Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Minnesota.

-7-

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