exv10w34



 





Exhibit 10.34


NEITHER THIS AGREEMENT NOR THE SECURITIES ISSUED PURSUANT TO THIS AGREEMENT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND THEY MAY NOT BE OFFERED,
SOLD, PLEDGED, HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE
SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT,
BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE ISSUER,
OR OTHER COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER, THAT THE PROPOSED DISPOSITION IS CONSISTENT
WITH ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT AS WELL AS ANY APPLICABLE “BLUE SKY” OR OTHER
SIMILAR SECURITIES LAW.




EDDIE BAUER HOLDINGS, INC.

STOCK OPTION AGREEMENT

(Time Vested Inducement Award Issued Outside Plan)




     This Stock Option Agreement (this “Agreement”), is made and entered into as of the date
(the “Date of Grant”), by and between Eddie Bauer Holdings, Inc., a Delaware corporation (the
“Company”), and name (“Grantee”).



R E C I T A L S




     A. WHEREAS, pursuant to the terms of an offer letter dated date, Grantee has accepted an offer
to be employed by and render personal services to the Company as its position, commencing date; and



     B. WHEREAS, on date, pursuant to a duly noticed meeting of the Board of Directors of the
Company (the “Board”), the Board authorized the grant to Grantee on date of options to purchase
shares shares (“Total Option Shares”) of Company common stock (“Common Stock”) at an exercise price
equal to price per share (the “Exercise Price Per Share”) the closing price of such Common Stock on
date and to become exercisable on a time vested basis; and



     C. WHEREAS, the grant of time vested options are an inducement for Grantee to accept initial
employment with the Company and are not granted under the terms of the Eddie Bauer Holdings, Inc.
2005 Stock Incentive Plan, as amended or restated from time to time (the “Plan”), but are granted
outside the Plan under this individual Stock Option Agreement; and



     D. WHEREAS, the Company desires to grant to Grantee, and Grantee desires to accept, the option
to purchase shares of the Company’s Common Stock, on the terms and subject to the conditions set
forth herein.



A G R E E M E N T




     NOW, THEREFORE, in consideration of the premises and the benefits to be derived from the
mutual observance of the covenants and promises contained herein and other good and



 









 







valuable
consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:



     1. Grant of Option. The Company hereby grants to Grantee an option (this “Option”) to
purchase the total number of shares of Common Stock of the Company set forth above as Total Option
Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”),
subject to all of the terms and conditions of this Agreement. This Option is a nonstatutory option
and is not intended to qualify as an “incentive stock option” within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”).



     2. Exercise Period; Vesting. Unless expired as provided in Section 3 of this
Agreement, this Option may be exercised from time to time after the Date of Grant set forth above
to the extent the Option has vested in accordance with the vesting schedule set forth below. The
Shares issued upon exercise of the Option will be subject to the restrictions on transfer set forth
in Section 9 below. Provided Grantee continues to provide continuous services as an
employee, director or consultant (“Continuous Service”) to the Company or any affiliate, the Option
will become vested as follows:



	 	 	 	 	 
	 	 	Percentage of
	Vesting Date	 	Shares Vested
	1st Anniversary
	 	 	25	%
	2nd Anniversary
	 	 	50	%
	3rd Anniversary
	 	 	75	%
	4th Anniversary
	 	 	100	%





A vested Option may not be exercised for less than a full share. If application of the vesting
percentage causes a fractional Share to otherwise become exercisable, such Share shall be rounded
down to the nearest whole Share for each year except for the last year in such vesting period, at
the end of which vesting period this Option shall become exercisable for the full remainder of the
unexercised Shares subject to the Option. Upon the occurrence of a Change in Control, the Option
shall become 100% vested and exercisable on such event. Except as otherwise provided in this
Section, if the Grantee ceases Continuous Service for any other reason, the unvested portion of the
Option shall be forfeited immediately. For purposes of this Agreement, the term “Change in
Control” shall have the same meaning as such term is defined under the terms of the Plan or any
successor thereto, including any modification or amendment that may be adopted after the date of
this Agreement.




     3. Expiration. The Option shall expire on date (the “Expiration Date”) or earlier as provided
in Section 4 below.



     4. Termination of Continuous Service.



          4.1. Forfeiture of Unvested Options. If the Grantee’s Continuous Service is
terminated for any reason, the unvested portion of the Option shall terminate immediately and
the Grantee may exercise the vested portion as provided in this Section 4.
Outstanding Options that are not exercisable at the time the Grantee’s Continuous Service
terminates for any reason other than Cause (including upon the Grantee’s death or Disability) shall
be forfeited and expire



 









 






at the close of business on the date of such termination. Outstanding
Options at the time a Grantee’s Continuous Service terminates for Cause shall be forfeited and
expire at the beginning of business on the date of such termination.




          4.2. Termination for Any Reason Except Death, Disability or Cause. Unless otherwise
provided in an employment agreement the terms of which have been approved by the Administrator, if
Grantee’s Continuous Service is terminated for any reason, except death, Disability or Cause, the
Option, to the extent (and only to the extent) that it would have been exercisable by Grantee
immediately prior to termination of Continuous Service, may be exercised by Grantee until the
earlier of the Expiration Date or, except as set forth below, the date that is three (3) months
following the termination of the Grantee’s Continuous Service and the Option shall thereafter
terminate and cease to be exercisable.




          4.3. Termination Because of Death or Disability. If Grantee’s Continuous Service is
terminated because of death or Disability of Grantee (or Grantee dies within three (3) months of
the date of termination when such termination is for any reason other than Grantee’s Disability or
for Cause), the Option, to the extent that is exercisable by Grantee on the date of termination,
may be exercised by Grantee (or Grantee’s legal representative) no later than twelve (12) months
after the date of termination, but in any event no later than the Expiration Date.




          4.4. Termination for Cause. If the Grantee’s Continuous Service is terminated as a
result of the Grantee’s termination of Continuous Service for Cause, all outstanding Options
granted to such Grantee shall expire as of the commencement of business on the date of such
termination of Continuous Service. For purposes of this Agreement, the term “Cause” shall mean (a)
the commission of, or plea of guilty or no contest to, a felony or a crime involving moral
turpitude or the commission of any other act involving willful malfeasance or material fiduciary
breach with respect to the Company or an affiliate, (b) conduct tending to bring the Company into
substantial public disgrace, or disrepute, (c) gross negligence or willful misconduct with respect
to the Company or an affiliate or (d) material violation of state or federal securities laws. The
Administrator, in its absolute discretion, shall determine the effect of all matters and questions
relating to whether Grantee has been discharged for Cause.




          4.5. Extension of Termination Date. If the exercise of the Option following the
termination of the Grantee’s Continuous Service (other than upon the Grantee’s death or Disability)
would be prohibited at any time solely because the exercise of the Option or issuance of Shares of
Common Stock would violate the registration requirements under the Securities Act or any other
state or federal securities law requirement, then the Option shall terminate on the earlier of (a)
the expiration of the Expiration Date or (b) the expiration of a period after termination of the
Grantee’s Continuous Service that is three (3) months after the end of the period during which the
exercise of the Option would be in violation of such registration or other securities law
requirements.




          4.6. No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on
Grantee any right to continue in the employ of, or other relationship with, the
Company or any affiliate, or limit in any way the right of the Company or any affiliate to
terminate Grantee’s employment or other relationship at any time, with or without Cause.




 









 








     5. Manner of Exercise.



          5.1. Stock Option Exercise Agreement. To exercise this Option, Grantee (or in the
case of exercise after Grantee’s death or incapacity, Grantee’s executor, administrator, heir or
legatee, as the case may be) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit A, or in such other form as may be
approved by the Administrator from time to time (the “Exercise Agreement”), which shall set forth,
inter alia, (a) Grantee’s election to exercise the Option, (b) the number of Shares
being purchased, (c) any restrictions imposed on the Shares and (d) any representations warranties
and agreements regarding Grantee’s investment intent and access to information as may be required
by the Company to comply with applicable securities laws. If someone other than Grantee exercises
the Option, then such person must submit documentation reasonably acceptable to the Company
verifying that such person has the legal right to exercise the Option.




          5.2. Limitations on Exercise. The Option may not be exercised unless such exercise is
in compliance with all applicable federal and state securities laws, as they are in effect on the
date of exercise. The Option may not be exercised for fewer than one (1) Share or for a fractional
Share. If a fractional Share would otherwise become exercisable, such Share shall be rounded down
to the nearest whole Share for each year except for the last year of the applicable vesting period,
at the end of which vesting period this Option shall become exercisable for the full remainder of
the unexercised Shares subject to the Option.




          5.3. Payment. The entire Exercise Price of this Option to purchase Shares issued
under the Plan shall be payable in full by cash or check for an amount equal to the aggregate
Exercise Price Per Share for the number of Shares being purchased. Alternatively, in the sole
discretion of the Plan Administrator and upon such terms as the Plan Administrator shall approve,
the Exercise Price may be paid by:




               (a) paying all or a portion of the aggregate Exercise Price Per Share for the number of Shares
being purchased by delivery to the Company of other shares of Common Stock, duly endorsed for
transfer to the Company, with a Fair Market Value on the date of delivery equal to the exercise
price (or portion thereof) due for the number of Shares being acquired, or by means of attestation
whereby the Grantee identifies for delivery specific shares of Common Stock where such shares have
a Fair Market Value on the date of attestation equal to the exercise price (or portion thereof) and
receives a number of Shares equal to the difference between the number of Shares thereby purchased
and the number of identified attestation shares of Common Stock (collectively a “Stock For Stock
Exercise”); provided, however, that the shares of Common Stock used in such Stock for Stock
Exercise (i) have either (1) been held for more than six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) and have
been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the
Company by use of a promissory note, such note has been fully paid with respect to such shares); or
(2) were obtained by Grantee in the open public market; and (ii) are clear of all liens, claims,
encumbrances or security interests. Payment of the Exercise Price by a Grantee who is an officer,
director or other “insider” subject
to Section 16(b) of the Exchange Act in the form of a Stock for Stock Exercise is subject to
pre-approval by the Administrator, in its sole discretion, in a manner that complies with the
specificity requirements of Rule 16b-3 under the Exchange Act, including the name of the



 









 







Grantee
involved in the transaction, the nature of the transaction, the number of shares to be acquired or
disposed of by the Grantee and the material terms of the Options involved in the transaction.



               (b) during any period for which the Common Stock is publicly traded (i.e., the Common Stock is
listed on any established stock exchange or a national market system, including without limitation
the Nasdaq National Market, or if the Common Stock is quoted on the Nasdaq System (but not on the
Nasdaq National Market) or any similar system whereby the Common Stock is regularly quoted by a
recognized securities dealer but closing sale prices are not reported) and the shares to be
acquired under this Agreement are either registered or an exemption from registration that would
permit resale is available, (i) by a copy of instructions to a broker-dealer that is a member of
the National Association of Securities Dealers (an “NASD Dealer”) directing such broker to sell the
Shares for which this Option is exercised, and to remit to the Company the aggregate Exercise Price
of such Option or (ii) through a “margin” commitment from Grantee and an NASD Dealer whereby
Grantee irrevocably elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from NASD Dealer in the amount of the total
Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the total Exercise Price directly to the Company (collectively referred to as a “Cashless
Exercise”); provided, however, a Cashless Exercise by a Director or executive officer that involves
or may involve a direct or indirect extension of credit or arrangement of an extension of credit by
the Company, a Parent or Subsidiary in violation of Section 402(a) of the Sarbanes-Oxley Act
(codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be
prohibited;



               (c) by any other form of legal consideration that may be acceptable to the Administrator,
including without limitation with a full-recourse promissory note. However, if there is a stated
par value of the shares and applicable law requires, the par value of the shares, if newly issued,
shall be paid in cash or cash equivalents. The shares shall be pledged as security for payment of
the principal amount of the promissory note and interest thereon. The interest rate payable under
the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid
the imputation of additional interest under the Code. Subject to the foregoing, the Administrator
(in its sole discretion) shall specify the term, interest rate, amortization requirements (if any)
and other provisions of such note. Unless the Administrator determines otherwise, shares of Common
Stock having a Fair Market Value at least equal to the principal amount of the loan shall be
pledged by the holder to the Company as security for payment of the unpaid balance of the loan and
such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the
Administrator, in its discretion; provided, however, that each loan shall comply with all
applicable laws, regulations and rules of the Board of Governors of the Federal Reserve System and
any other governmental agency having jurisdiction. Exercise with a promissory note or other
transaction by a Director or executive officer that involves or may involve a direct or indirect
extension of credit or arrangement of an extension of credit by the Company, or an affiliate in
violation of section 402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of the Securities
Exchange Act of 1934, 15 U.S.C. § 78m(k)) shall be prohibited; or



               (d) by any combination of the foregoing that may be acceptable to the Administrator.



 









 





          5.4. Tax Withholding. Prior to the issuance of the Shares upon exercise of the
Option, Grantee must pay or provide for any applicable federal, state and local withholding
obligations of the Company. If the Administrator permits, Grantee also may provide for payment of
withholding taxes upon exercise of the Option by one or more of the following means: (a) tendering
a cash payment; (b) a broker assisted Cashless Exercise, (c) tendering previously acquired shares
of Common Stock with a Fair Market Value equal to or less than the minimum statutory amount of
taxes required to be withheld by law, or (d) by requesting that the Company retain Shares from the
Shares otherwise issuable to the Grantee as a result of the exercise of this Option, provided that
no Shares are withheld with a Fair Market Value exceeding the minimum statutory amount of taxes
required to be withheld by law (“Share Withholding”). In such case, the Company shall issue the
net number of Shares to the Grantee by deducting the Shares retained from the Shares issuable upon
exercise. Payment of the tax withholding by a Grantee who is an officer, director or other
“insider” subject to Section 16(b) of the Exchange Act by a tender of Common Stock or in the form
of Share Withholding is subject to pre-approval by the Administrator, in its sole discretion, in a
manner that complies with the specificity requirements of Rule 16b-3 under the Exchange Act,
including the name of the Grantee involved in the transaction, the nature of the transaction, the
number of shares to be acquired or disposed of by the Grantee and the material terms of the Options
involved in the transaction.




          5.5. Issuance of Shares. Provided that the Exercise Agreement and payment are in form
and substance satisfactory to counsel for the Company, the Company shall issue the Shares
registered in the name of Grantee, Grantee’s authorized assignee, or Grantee’s legal
representative, and shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.




     6. Compliance with Laws and Regulations. The issuance of Common Stock upon exercise of the
Option shall be subject to compliance by the Company and the Grantee with all applicable
requirements of securities laws, other applicable laws and regulations of any stock exchange or
interdealer quotation system on which the Common Stock may be listed at the time of such issuance
or transfer. The Grantee understands that the Company is under no obligation to register or
qualify the Common Stock with the Securities and Exchange Commission, any state securities
commission or any stock exchange to effect such compliance. Regardless of whether the shares of
Common Stock that may be issued pursuant to this Agreement have been registered under the
Securities Act or have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other transfer of such
Common Stock (including the placement of appropriate legends on stock certificates or the
imposition of stop-transfer instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Securities Act, the securities laws
of any state or any other law. In connection with the grant or vesting of the Option or the
issuance of Common Stock on exercise of such Grant, the Grantee will make or enter into such
written representations, warranties and agreements as the Administrator may reasonably request in
order to comply with applicable securities laws or with this Agreement.



     7. Nontransferability of Option. Except as provided herein, this Option may not be
transferred in any manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Grantee only by Grantee or in the event of Grantee’s incapacity,
by Grantee’s legal representative. The terms of the Option shall be binding upon the



 









 







executors,
administrators, successors and assigns of Grantee. Upon written approval by the Administrator,
this Option may be transferred by gift or domestic relations order to a member of the Grantee’s
immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the
Grantee’s household (other than a tenant or employee), a trust in which these persons have more
than 50% of the beneficial interest, a foundation in which these persons (or the Grantee) control
the management of assets, and any other entity in which these persons (or the Grantee) own more
than 50% of the voting interests.



     8. Privileges of Stock Ownership. Grantee shall not have any of the rights of a Stockholder
with respect to any Shares until the Shares are issued to Grantee.



     9. Restrictions On Transfer.



          9.1. Securities Law Restrictions. Regardless of whether the offering and sale of
Shares under the Plan have been registered under the Securities Act or have been registered or
qualified under the securities laws of any state, the Company at its discretion may impose
restrictions upon the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer instructions) if, in
the judgment of the Company, such restrictions are necessary or desirable in order to achieve
compliance with the Securities Act, the securities laws of any state or any other law.




          9.2. Market Stand-Off. If an underwritten public offering by the Company of its
equity securities occurs pursuant to an effective registration statement filed under the Securities
Act, including a secondary public offering by the Company, the Grantee shall not sell, make any
short sale of, loan, hypothecate, pledge, grant any option for the repurchase of, transfer the
economic consequences of ownership or otherwise dispose or transfer for value or otherwise agree to
engage in any of the foregoing transactions with respect to any Shares without the prior written
consent of the Company or its underwriters, for such period of time from and after the effective
date of such registration statement as may be requested by the Company or such underwriters (the
“Market Stand-Off”). In order to enforce the Market Stand-Off, the Company may impose
stop-transfer instructions with respect to the Shares acquired under this Agreement until the end
of the applicable stand-off period. If there is any change in the number of outstanding shares of
Common Stock by reason of a stock split, reverse stock split, stock dividend, recapitalization,
combination, reclassification, dissolution or liquidation of the Company, any corporate separation
or division (including, but not limited to, a split-up, a split-off or a spin-off), a merger or
consolidation; a reverse merger or similar transaction, then any new, substituted or additional
securities which are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be
subject to the Market Stand-Off.




     10. Administration. The Compensation Committee of the Board or its duly authorized delegate
(the “Administrator”) shall have discretionary authority to administer and interpret the terms of
this Agreement. Any dispute regarding the interpretation of this Agreement shall be submitted by
Grantee or the Company to the Administrator for review. The



 









 







resolution of such a dispute by the
Administrator shall be final and binding on the Company and Grantee and all other persons.



     11. Acceptance. Grantee hereby acknowledges receipt of a copy of this Agreement. Grantee has
read and understands the terms and provisions thereof, and accepts the Option subject to all the
terms and conditions of this Agreement. Grantee acknowledges that there may be adverse tax
consequences upon exercise of the Option or disposition of the Shares and that Grantee should
consult a tax advisor prior to such exercise or disposition.



     12. Section 409A Limitation. In the event the Administrator determines at any time that this
Option has been granted with an exercise price less than Fair Market Value of the Shares subject to
the Option on the date the Option is granted (regardless of whether or not such exercise price is
intentionally or unintentionally priced at less than Fair Market Value, or is materially modified
at a time when the Fair Market Value exceeds the exercise price), or is otherwise determined to
constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code,
notwithstanding any provision of the Plan or this Option Agreement to the contrary, the Option
shall satisfy the additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 8 of the Plan. The specified exercise date
and term shall be the default date and term specified in Section 8 of the Plan. Notwithstanding
the foregoing, the Company shall have no liability to Grantee or any other person if an Option is
determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of
the Code and the terms of such Option do not satisfy the additional conditions applicable to
nonqualified deferred compensation under Section 409A of the Code and Section 8 of the Plan.



     13. No Right to Future Awards. This Option grant is discretionary. This Agreement does not
confer on Grantee any right or entitlement to receive another Option grant or any other
equity-based award at any time in the future or in respect of any future period.



     14. Representations and Warranties of Grantee. The Grantee represents and warrants to the
Company that:



          14.1. Agreement to Terms. The Grantee has received a copy of this Agreement and has
read and understands the terms of this Agreement, and agrees to be bound by the terms and
conditions. The Grantee acknowledges that there may be adverse tax consequences upon the vesting
of Restricted Stock Units or thereafter if the Common Stock is paid and if the Grantee later
disposes of the Common Stock, and that the Grantee should consult a tax advisor prior to such time.




          14.2. Cooperation. The Grantee agrees to sign such additional documentation as may
reasonably be required from time to time by the Company.




          14.3. Securities Representations. In addition, the Grantee hereby makes the following
additional representations:




               (a) The Grantee is acquiring the shares of Common Stock for his own account for investment
purposes only and not with a view towards distribution.



 









 





               (b) The Grantee understands that the shares of Common Stock to be issued under this Agreement
may not be registered under the Securities Act or under any state securities laws and therefore
Grantee may not be able to dispose of any of the Common Stock unless and until such shares are
subsequently registered under the Securities Act and applicable state securities laws or exemptions
from such registration are available.



               (c) The Grantee understands that Rule 144 promulgated under the Securities Act may
indefinitely restrict transfer of the Common Stock so long as the Grantee remains an “affiliate” of
the Company or if “current public information” about the Company (as defined in Rule 144) is not
publicly available.



          14.4. Obligation To Sell. Notwithstanding anything herein to the contrary, if at any
time following Grantee’s acquisition of shares of Common Stock hereunder, stockholders of the
Company owning 51% or more of the shares of the Company (on a fully diluted basis) (the “Control
Sellers”) enter into an agreement (including any agreement in principal) to transfer all of their
shares to any person or group of persons who are not affiliated with the Control Sellers, such
Control Sellers may require each stockholder who is not a Control Seller (a “Non-Control Seller”)
to sell all of their shares to such person or group of persons at a price and on terms and
conditions the same as those on which such Control Sellers have agreed to sell their shares, other
than terms and conditions relating to the performance or non-performance of services. For the
purposes of the preceding sentence, an affiliate of a Control Seller is a person who controls,
which is controlled by, or which is under common control with, the Control Seller. Grantee agrees
to honor any obligations Grantee may have as a Non-Control Seller.




     15. Adjustment Upon Changes in Capitalization. If any change is made in the Common Stock
subject to the Grant, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the receipt of
consideration by the Company), then the number and class of shares relating to the Restricted Stock
Units in effect prior to such change shall be proportionately adjusted by the Administrator to
reflect any increase or decrease in the number of issued shares of Common Stock or change in the
Fair Market Value of such Common Stock resulting from such transaction; provided, however, that any
fractional shares resulting from the adjustment may be eliminated by a cash payment. The
Administrator shall make such adjustments in a manner that is intended to provide an appropriate
adjustment that neither increases nor decreases the value of such Award as in effect immediately
prior to such corporate change, and its determination shall be final, binding and conclusive. The
conversion of any securities of the Company that are by their terms convertible shall not be
treated as a transaction “without receipt of consideration” by the Company. The Administrator’s
adjustment shall be effective, final, binding and conclusive for all purposes of this Agreement.



     16. Defined Terms. Except as otherwise provided herein, or unless the context clearly
indicates otherwise, capitalized terms used herein shall have the definitions as provided herein.
The masculine pronoun shall be deemed to include the feminine, and the singular number shall be
deemed to include the plural unless a different meaning is plainly required by the context.



 









 





     17. Miscellaneous Terms.



          17.1. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its General Counsel at the principal executive office of the Company at 10401 NE
8th Street, Bellevue, WA 98004 and to the Grantee at the address appearing in the records of the
Company for the Grantee or to either party at such other address as either party hereto may
hereafter designate in writing to the other. All notices shall be deemed to have been given or
delivered upon: (a) personal delivery; (b) five (5) days after deposit in the United States mail
by certified or registered mail (return receipt requested); (c) two (2) business day after deposit
with any return receipt express courier (prepaid); or (d) one (1) business day after transmission
by facsimile.




          17.2. Headings. The headings of sections and subsections are included solely for
convenience of reference and shall not affect the meaning of the provisions of this Agreement.




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




          17.4. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto with regard to the subject matter hereof. It supersedes all other agreements,
representations or understandings (whether oral or written and whether express or implied) that
relate to the subject matter hereof.




          17.5. Interpretation. Any dispute regarding the interpretation of this Agreement
shall be submitted by Grantee or the Company to the Administrator for review. The resolution of
such a dispute by the Administrator shall be final and binding on the Company and Grantee.




          17.6. Successors and Assigns. The Company may assign any of its rights under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement
shall be binding upon Grantee and Grantee’s heirs, executors, administrators, legal
representatives, successors and assigns.




          17.7. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to such state’s conflict of law
principles. If any provision of this Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent possible and the other
provisions will remain fully effective and enforceable.





 









 








     18. Amendment. The terms of this Agreement may not be altered or amended in any manner that
would impair the rights of the Grantee hereunder except by a written instrument signed by the
Company and the Grantee. Notwithstanding the foregoing, if any provision of the Agreement
contravenes Section 409A of the Code, the Company may reform the Agreement or any provision hereof
to maintain to the maximum extent practicable the original intent of the provision without
violating the provisions of Section 409A.



[SIGNATURE PAGE FOLLOWS]




 









 








     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized representative and Grantee has executed this Agreement, on the dates indicated opposite
their respective signatures, effective as of the Date of Grant.



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	EDDIE BAUER HOLDINGS, INC.
	 
	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	GRANTEE
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	name, in his individual capacity







 









 










EXHIBIT A

FORM OF STOCK OPTION EXERCISE AGREEMENT




	 	 	 	 	 
	o Nonstatutory Stock Option

	 	Grantee:	 	 
	 

	 	 	 	 
	 

	 	Date:	 	 
	 

	 	 	 	 





STOCK OPTION EXERCISE NOTICE




Eddie Bauer Holdings, Inc.

10401 NE 8th Street

Bellevue, WA 98004

Attention: General Counsel




Ladies and Gentlemen:




     1. Option. I was granted an option (the “Option”) to purchase shares of the common
stock (the “Shares”) of Eddie Bauer Holdings, Inc., a Delaware corporation (the “Company”),
pursuant to the terms of my individual inducement Stock Option Agreement (the “Option Agreement”)
as follows:



	 	 	 
	Date of Option Grant:
	 	 
	 

	 	 
	 
	 	 
	Number of Option Shares:
	 	 
	 

	 	 
	 
	 	 
	Exercise Price per Share:
	 	 
	 

	 	 





     2. Exercise of Option. I hereby elect to exercise the Option to purchase the
following number of Shares, all of which are Vested Shares in accordance with the Notice and the
Option Agreement:



	 	 	 	 	 
	Total Shares Purchased:
	 	 	 	 
	 	 	 
	 	 	 	 
	Total Exercise Price
	 	 	 	 
	(Total Shares X Price per Share)

	 	$	 	 
	 	 	 	 





     3. Payments. I enclose payment in full of the total exercise price for the Shares in
the following form(s), as authorized by my Option Agreement:



	 	 	 	 	 
	Cash:

	 	$	 	 
	 	 	 	 
	 
	 	 	 	 
	Check:

	 	$	 	 
	 	 	 	 
	 
	 	 	 	 
	Tender of Company Stock:

	 	Contact Administrator

	 
	 	 	 	 
	Broker assisted cashless exercise

	 	Contact Administrator







 









 





     4. Tax Withholding. I authorize payroll withholding and otherwise will make adequate
provision for the federal, state, local and foreign tax withholding obligations of the Company, if
any, in connection with the Option.



     5. Grantee Information.



	 	 	 	 	 
	My address is:
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	My Social Security Number is:	 	 
	 

	 	 	 	 





     6. Binding Effect. I agree that the Shares are being acquired in accordance with and
subject to the terms, provisions and conditions of the Option Agreement set forth therein, to all
of which I hereby expressly assent. This Agreement shall inure to the benefit of and be binding
upon my heirs, executors, administrators, successors and assigns.



     7. Transfer. I understand and acknowledge that the Shares have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), and that consequently the
Shares must be held indefinitely unless they are subsequently registered under the Securities Act,
an exemption from such registration is available, or they are sold in accordance with Rule 144
under the Securities Act. I further understand and acknowledge that the Company is under no
obligation to register the Shares. I understand that the certificate or certificates evidencing
the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are
registered or such registration is not required in the opinion of legal counsel satisfactory to the
Company. I am aware that Rule 144 under the Securities Act, which permits limited public resale of
securities acquired in a nonpublic offering, is not currently available with respect to the Shares
and, in any event, is available only if certain conditions are satisfied. I understand that any
sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts
in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be
delivered to me upon request.



     I understand that I am purchasing the Shares pursuant to the terms of my Option Agreement,
copies of which I have received and carefully read and understand.



	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	 
	 

	 	(Signature)






[Acknowledgement on next page]




 









 








Receipt of the above is hereby acknowledged.




Eddie Bauer Holdings, Inc.




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Dated: