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                                                                   EXHIBIT 10.11

                                                  Amended and Restated 12/8/2005

                           EDDIE BAUER HOLDINGS, INC.
                            2005 STOCK INCENTIVE PLAN

     1. PURPOSE; ELIGIBILITY.

          1.1 General Purpose. The name of this plan is the Eddie Bauer
Holdings, Inc. 2005 Stock Incentive Plan (the "PLAN"). The purpose of the Plan
is to enable Eddie Bauer Holdings, Inc., a Delaware corporation (the "Company"),
and any Affiliate to obtain and retain the services of the types of Employees,
Consultants and Directors who will contribute to the Company's long range
success and to provide incentives that are linked directly to increases in share
value which will inure to the benefit of all stockholders of the Company. This
is an amendment and restatement of the Plan originally adopted August 3, 2005.

          1.2 Eligible Award Recipients. The persons eligible to receive Awards
are the Employees, Consultants and Directors of the Company and its Affiliates.

          1.3 Available Awards. The purpose of the Plan is to provide a means by
which eligible recipients of Awards may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of one or more of
the following Awards: (a) Incentive Stock Options, (b) Nonstatutory Stock
Options, (c) Restricted Awards, (d) Performance Awards and (e) Stock
Appreciation Rights.

     2. DEFINITIONS.

          2.1 "409A AWARD" means an Award that is considered "nonqualified
deferred compensation" within the meaning of Section 409A of the Code and
Section 8 of this Plan.

          2.2 "ADMINISTRATOR" means the Board or the Committee appointed by the
Board in accordance with Section 3.5.

          2.3 "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

          2.4 "AWARD" means any right granted under the Plan, including an
Incentive Stock Option, a Nonstatutory Stock Option, a Restricted Award, a
Performance Award, a Stock Appreciation Right and a 409A Award.

          2.5 "AWARD AGREEMENT" means a written agreement between the Company
and a holder of an Award evidencing the terms and conditions of an individual
Award grant. Each Award Agreement shall be subject to the terms and conditions
of the Plan.

          2.6 "BENEFICIAL OWNER" has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as that term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has


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the right to acquire by conversion or exercise of other securities, whether such
right is currently exercisable or is exercisable only after the passage of time.
The terms "Beneficially Owns" and "Beneficially Owned" have a corresponding
meaning.

          2.7 "BOARD" means the Board of Directors of the Company.

          2.8 "CASHLESS EXERCISE" has the meaning set forth in Section 6.4.

          2.9 "CAUSE" means, (a) with respect to any Participant who is a party
to an employment or service agreement or employment policy manual with the
Company or its Affiliates and such agreement or policy manual provides for a
definition of Cause, as defined therein and (b) with respect to all other
Participants, (i) 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, (ii) conduct tending to bring the Company into
substantial public disgrace, or disrepute, (iii) gross negligence or willful
misconduct with respect to the Company or an Affiliate or (iv) 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 a Participant has been discharged for Cause.

          2.10 "CHANGE IN CONTROL" shall mean:

               (a) The direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the properties or assets
of the Company to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act);

               (b) The Incumbent Directors cease for any reason to constitute at
least a majority of the Board;

               (c) The adoption of a plan relating to the liquidation or
dissolution of the Company; or

               (d) Any "person" or "group" (as such terms are used in Section
13(d) and 14(d) of the Exchange Act) becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing more than 35% of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of the Board (the "Company Voting Securities"); or

               (e) The consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company or any
of its Subsidiaries that requires the approval of the Company's stockholders,
whether for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(1) 65% or more of the total voting power of (i) the Surviving Corporation, or
(ii) if applicable, the ultimate Parent Corporation that directly or indirectly
has beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Corporation, is represented by Company Voting
Securities that were outstanding immediately prior to such Business Combination
(or, if applicable, is represented by shares into


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which such Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Combination, (2) no person (other than any employee benefit plan (or related
trust) sponsored or maintained by the Surviving Corporation or the Parent
Corporation), is or becomes the beneficial owner, directly or indirectly, of
more than 35% of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (3) at least a majority of the
members of the board of directors of the Parent Corporation (or if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Combination were Incumbent Directors at the time of the Board's
approval of the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (1), (2) and (3) above shall be deemed to be a "Non-Qualifying
Transaction").

The foregoing notwithstanding, a transaction shall not constitute a Change in
Control if (i) its sole purpose is to change the state of the Company's
incorporation or to create a holding company that will be owned in substantially
the same proportions by the persons who held the Company's securities
immediately before such transaction; (ii) it constitutes a secondary public
offering that results in any security of the Company being listed (or approved
for listing) on any securities exchange or designated (or approved for
designation) as a national market security on an interdealer quotation system;
(iii) it constitutes a change in Beneficial Ownership that results from a change
in ownership of an existing stockholder; or (iv) solely because 35% or more of
the total voting power of the Company's then outstanding securities is acquired
by (A) a trustee or other fiduciary holding securities under one or more
employee benefit Plans of the Company or any Affiliate, or (B) any company
which, immediately prior to such Business Combination, is owned directly or
indirectly by the stockholders of the Company in substantially the same
proportion as their ownership of stock in the Company immediately prior to such
acquisition.

          2.11 "CODE" means the Internal Revenue Code of 1986, as amended.

          2.12 "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board to administer the Plan in accordance with Section 3.5.

          2.13 "COMMON STOCK" means the common stock, $0.01 par value per share
of the Company.

          2.14 "COMPANY" means Eddie Bauer Holdings, Inc., a Delaware
corporation.

          2.15 "CONSULTANT" means any person, including an advisor, (a) engaged
by the Company or an Affiliate to render consulting or advisory services and who
is compensated for such services or who provides bona fide services to the
Company or an Affiliate pursuant to a written agreement or (b) who is a member
of the Board of Directors of an Affiliate; provided that, except as otherwise
permitted in Section 5.4(b) hereof, such person is a natural person and such
services are not in connection with the offer or sale of securities in a capital
raising transaction and do not directly or indirectly promote or maintain a
market for the Company's securities.


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          2.16 "CONTINUOUS SERVICE" means that the Participant's service with
the Company or an Affiliate, whether as an Employee, Director or Consultant, is
not interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Administrator or its
delegate, in its sole discretion, may determine whether Continuous Service shall
be considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal or family
leave of absence.

          2.17 "COVERED EMPLOYEE" means the chief executive officer and the four
other highest compensated officers of the Company for whom total compensation is
or would be required to be reported to stockholders under the Exchange Act, as
determined for purposes of Section 162(m) of the Code.

          2.18 "DATE OF GRANT" means the date on which the Administrator adopts
a resolution, or takes other appropriate action, expressly granting an Award to
a Participant that specifies the key terms and conditions of the Award and from
which the Participant begins to benefit from or be adversely affected by
subsequent changes in the Fair Market Value of the Company Common Stock or, if a
different date is set forth in such resolution, or determined by the
Administrator, as the Date of Grant, then such date as is set forth in such
resolution.

          2.19 "DETRIMENTAL ACTIVITY" means: (a) violation of the terms of any
agreement with the Company concerning non-disclosure, confidentiality,
intellectual property, privacy or exclusivity; (b) disclosure of the Company's
confidential information to anyone outside the Company, without prior written
authorization from the Company, or in conflict with the interests of the
Company, whether the confidential information was acquired or disclosed by the
Participant during or after employment by the Company; (c) failure or refusal to
disclose promptly or assign to the Company all right, title and interest in any
invention, work product or idea, patentable or not, made or conceived by the
Participant during employment by the Company, relating in any manner to the
interests of the Company or, the failure or refusal to do anything reasonably
necessary to enable the Company to secure a patent where appropriate in the
United States and in other countries; (d) activity that is discovered to be
grounds for or results in termination of the Participant's employment for Cause;
(e) any breach of a restrictive covenant contained in any employment agreement,
Award Agreement or other agreement between the Participant and the Company,
during any period for which a restrictive covenant prohibiting Detrimental
Activity, or other similar conduct or act, is applicable to the Participant
during or after employment by the Company; (f) any attempt directly or
indirectly to induce any Employee of the Company to be employed or perform
services or acts in conflict with the interests of the Company; (g) any attempt,
in conflict with the interests of the Company, directly or indirectly, to
solicit the trade or business of any current or prospective customer, client,
supplier or partner of the Company; (h) the conviction of, or guilty plea
entered by, the Participant for any felony or a crime involving moral turpitude
whether or not connected with the Company; or (i) the


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commission of any other act involving willful malfeasance or material fiduciary
breach with respect to the Company.

          2.20 "DIRECTOR" means a member of the Board.

          2.21 "DISABILITY" means that the Optionholder is unable to engage in
any substantial gainful activity by reason of any medically determinable
physical or mental impairment; provided, however, for purposes of determining
the term of an Incentive Stock Option pursuant to Section 6.10 hereof, the term
Disability shall have the meaning ascribed to it under Code Section 22(e)(3).
The determination of whether an individual has a Disability shall be determined
under procedures established by the Administrator. Except in situations where
the Administrator is determining Disability for purposes of the term of an
Incentive Stock Option pursuant to Section 6.10 hereof within the meaning of
Code Section 22(e)(3), the Administrator may rely on any determination that a
Participant is disabled for purposes of benefits under any long-term disability
plan maintained by the Company or any Affiliate in which a Participant
participates.

          2.22 "EFFECTIVE DATE" shall mean August 3, 2005, the date the Board
originally adopted the Plan. This amendment and restatement of the Plan is
effective October 24, 2005.

          2.23 "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

          2.24 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

          2.25 "FAIR MARKET VALUE" means, as of any date, the value of the
Common Stock as determined in good faith by the Administrator; provided,
however, that the Fair Market Value on the date on which the Company's shares of
Common Stock are registered under Section 12 of the Exchange Act and listed on
Nasdaq shall be the closing price of a share of Common Stock on Nasdaq on such
date, and thereafter (a) if the Common Stock is admitted to quotation on the
over the counter market or any interdealer quotation system, the Fair Market
Value on any given date shall not be less than the average of the highest bid
and lowest asked prices of the Common Stock reported for such date or, if no bid
and asked prices were reported for such date, for the last day preceding such
date for which such prices were reported, (b) if the Common Stock is admitted to
trading on a national securities exchange or the Nasdaq National Market or
Nasdaq Small Cap Market, the Fair Market Value on any date shall not be less
than the closing price reported for the Common Stock on such exchange or system
for such date or, if no sales were reported for such date, for the last date
preceding the date on which such a sale was reported or (c) in the absence of an
established market for the Common Stock, the Fair Market Value determined in
good faith by the Administrator and such determination shall be conclusive and
binding on all persons.

          2.26 "FORM S-8" has the meaning set forth in Section 5.4(b).

          2.27 "FREE STANDING RIGHTS" has the meaning set forth in Section
7.3(a).


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          2.28 "INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          2.29 "INCUMBENT DIRECTORS" means individuals who, on the Effective
Date, constitute the Board, provided that any individual becoming a Director
subsequent to the Effective Date whose election or nomination for election to
the Board was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
Director without objection to such nomination) shall be an Incumbent Director.
No individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to Directors or
as a result of any other actual or threatened solicitation of proxies by or on
behalf of any person other than the Board shall be an Incumbent Director.


          2.30  "INDUCEMENT AWARD" means the grant of an Award as a material
inducement to a person or persons being hired by the Company or any of its
Affiliates, or being rehired following a bona fide period of interruption of
employment. Inducement Awards include grants to new Employees in connection with
a merger or acquisition. Promptly following the grant of any Inducement Award,
the Company must disclose in a press release the material terms of the Award,
including the recipient of the Award and the number shares of Common Stock
involved.


          2.31 "LISTING DATE" means the first date upon which any security of
the Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system.

          2.32 "MARKET STAND-OFF" has the meaning set forth in Section 15.

          2.33 "NASDAQ" means the National Association of Securities Dealers
Automated Quotation System.

          2.34 "NON-EMPLOYEE DIRECTOR" means a Director who is a "non-employee
director" within the meaning of Rule 16b-3.

          2.35 "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.

          2.36 "OFFICER" means (a) before the Listing Date, any person
designated by the Company as an officer and (b) on and after the Listing Date, a
person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.

          2.37 "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

          2.38 "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan and need not be identical.

          2.39 "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.


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          2.40 "OUTSIDE DIRECTOR" means a Director who is an "outside director"
within the meaning of Section 162(m) of the Code and Treasury Regulations
Section 1.162-27(e)(3).

          2.41 "PARTICIPANT" means a person to whom an Award is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding Award.

          2.42 "PERFORMANCE AWARD" means Awards granted pursuant to Section 7.2
which may be share- or cash-denominated.

          2.43 "PERMITTED TRANSFEREE" means (a) any spouse, parents, siblings
(by blood, marriage or adoption) or lineal descendants (by blood, marriage or
adoption) of a Participant; (b) any trust or other similar entity for the
benefit of a Participant or the Participant's spouse, parents, siblings or
lineal descendants; provided, however, that any transfer made by a Participant
to a Permitted Transferee may only be made if the Permitted Transferee, prior to
the time of transfer of stock, agrees in writing to be bound by the terms of
this Plan and provides written notice to the Company of such transfer.

          2.44 "PLAN" means this Eddie Bauer Holdings, Inc. 2005 Stock Incentive
Plan.

          2.45 "RELATED RIGHTS" has the meaning set forth in Section 7.3(a).

          2.46 "RESTRICTED AWARD" means any Award granted pursuant to Section
7.1.

          2.47 "RESTRICTED PERIOD" has the meaning set forth in Section 7.1.

          2.48 "RIGHT OF FIRST REFUSAL" means the right to purchase Common Stock
obtained under the Plan pursuant to Section 11.8.

          2.49 "RIGHT OF REPURCHASE" means the Company's option to repurchase
Common Stock acquired under the Plan upon the Participant's termination of
Continuous Service pursuant to Section 11.9.

          2.50 "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

          2.51 "RULE 701" has the meaning set forth in Section 5.4(a).

          2.52 "SAR AMOUNT" has the meaning set forth in Section 7.3(h).

          2.53 "SAR EXERCISE PRICE" has the meaning set forth in Section 7.3(b).

          2.54 "SECURITIES ACT" means the Securities Act of 1933, as amended.

          2.55 "SIX MONTHS HOLDING PERIOD" has the meaning set forth in Section
11.7.

          2.56 "STOCK APPRECIATION RIGHT" means the right pursuant to an award
granted under Section 7.3 to receive an amount equal to the excess, if any, of
(A) the Fair Market Value, as of the date such Stock Appreciation Right or
portion thereof is surrendered, of the shares of


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stock covered by such right or such portion thereof, over (B) the aggregate SAR
exercise price of such right or such portion thereof.

          2.57 "STOCK FOR STOCK EXCHANGE" has the meaning set forth in Section
6.4.

          2.58 "SURVIVING ENTITY" means the Company if immediately following any
merger, consolidation or similar transaction, the holders of outstanding voting
securities of the Company immediately prior to the merger or consolidation own
equity securities possessing more than 50% of the voting power of the entity
existing following the merger, consolidation or similar transaction. In all
other cases, the other entity to the transaction and not the Company shall be
the Surviving Entity. In making the determination of ownership by the
stockholders of an entity immediately after the merger, consolidation or similar
transaction, equity securities which the stockholders owned immediately before
the merger, consolidation or similar transaction as stockholders of another
party to the transaction shall be disregarded. Further, outstanding voting
securities of an entity shall be calculated by assuming the conversion of all
equity securities convertible (immediately or at some future time) into shares
entitled to vote.

          2.59 "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates.

     3. ADMINISTRATION.

          3.1 Administration by Board. The Plan shall be administered by the
Board unless and until the Board delegates administration to a Committee, as
provided in Section 3.5.

          3.2 Powers of Administrator. The Administrator shall have the power
and authority to select and grant to Participants, Awards pursuant to the terms
of the Plan.

          3.3 Specific Powers. In particular, the Administrator shall have the
authority: (a) to construe and interpret the Plan and apply its provisions; (b)
to promulgate, amend, and rescind rules and regulations relating to the
administration of the Plan; (c) to authorize any person to execute, on behalf of
the Company, any instrument required to carry out the purposes of the Plan; (d)
to delegate its authority to one or more Officers of the Company with respect to
awards that do not involve Covered Employees or "insiders" within the meaning of
Section 16 of the Exchange Act; (e) to determine when Awards are to be granted
under the Plan; (f) from time to time to select, subject to the limitations set
forth in this Plan, those Participants to whom Awards shall be granted; (g) to
determine the number of shares of Common Stock to be made subject to each Award;
(h) to determine whether each Option is to be an Incentive Stock Option or a
Nonstatutory Stock Option; (i) to prescribe the terms and conditions of each
Award, including, without limitation, the exercise price and medium of payment,
vesting provisions and Right of Repurchase provisions, and to specify the
provisions of the Award Agreement relating to such grant or sale; (j) to amend
any outstanding Awards, including for the purpose of modifying the time or
manner of vesting, the purchase price or exercise price, or the term of any
outstanding Award; provided, however, that if any such amendment impairs a
Participant's rights or increases a Participant's obligations under his or her
Award or creates or increases a Participant's federal income tax liability with
respect to an Award, such amendment shall also be


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subject to the Participant's consent (provided, however, a cancellation of an
Award where the Participant receives a payment equal in value to the Fair Market
Value of the vested Award or, in the case of vested Options, the difference
between the Fair Market Value of the Common Stock subject to an Option and the
exercise price, shall not constitute an impairment of the Participant's rights
that requires consent); (k) to determine the duration and purpose of leaves of
absences which may be granted to a Participant without constituting termination
of their employment for purposes of the Plan, which periods shall be no shorter
than the periods generally applicable to Employees under the Company's
employment policies; (l) to make decisions with respect to outstanding Options
that may become necessary upon a change in corporate control or an event that
triggers anti-dilution adjustments; and (m) to exercise discretion to make any
and all other determinations which it determines to be necessary or advisable
for administration of the Plan.

          3.4 Decisions Final. All decisions made by the Administrator pursuant
to the provisions of the Plan shall be final and binding on the Company and the
Participants, unless such decisions are determined by a court having
jurisdiction to be arbitrary and capricious.

          3.5 The Committee.

               (a) General. The Board may delegate administration of the Plan to
a Committee or Committees of one or more members of the Board, and the term
"COMMITTEE" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board or the Administrator shall thereafter be to
the Committee or subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. The members of the Committee shall be
appointed by and serve at the pleasure of the Board. From time to time, the
Board may increase or decrease the size of the Committee, add additional members
to, remove members (with or without cause) from, appoint new members in
substitution therefor, and fill vacancies, however caused, in the Committee. The
Committee shall act pursuant to a vote of the majority of its members or, in the
case of a committee comprised of only two members, the unanimous consent of its
members, whether present or not, or by the written consent of the majority of
its members and minutes shall be kept of all of its meetings and copies thereof
shall be provided to the Board. Subject to the limitations prescribed by the
Plan and the Board, the Committee may establish and follow such rules and
regulations for the conduct of its business as it may determine to be advisable.

               (b) Committee Composition when Common Stock is Registered. At
such time as the Common Stock is required to be registered under Section 12 of
the Exchange Act, in the discretion of the Board, a Committee may consist solely
of two or more Non-Employee Directors who are also Outside Directors. The Board
shall have discretion to determine whether or not it intends to comply with the
exemption requirements of Rule 16b-3 and/or Section 162(m) of the Code. However,
if the Board intends to satisfy such exemption requirements, with respect to
Awards to any Covered Employee and with respect to any insider subject to
Section 16 of the Exchange Act, the Committee shall be a compensation committee
of


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the Board that at all times consists solely of two or more Non-Employee
Directors who are also Outside Directors. Within the scope of such authority,
the Board or the Committee may (i) delegate to a committee of one or more
members of the Board who are not Outside Directors the authority to grant Awards
to eligible persons who are either (A) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Award or (B) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code or (ii) delegate to a committee of one or
more members of the Board who are not Non-Employee Directors the authority to
grant Awards to eligible persons who are not then subject to Section 16 of the
Exchange Act.

          3.6 Indemnification. In addition to such other rights of
indemnification as they may have as Directors or members of the Committee, and
to the extent allowed by applicable law, the Administrator shall be indemnified
by the Company against the reasonable expenses, including attorney's fees,
actually incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which the Administrator may be party by
reason of any action taken or failure to act under or in connection with the
Plan or any option granted under the Plan, and against all amounts paid by the
Administrator in settlement thereof (provided, however, that the settlement has
been approved by the Company, which approval shall not be unreasonably withheld)
or paid by the Administrator in satisfaction of a judgment in any such action,
suit or proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Administrator did not act
in good faith and in a manner which such person reasonably believed to be in the
best interests of the Company, and in the case of a criminal proceeding, had no
reason to believe that the conduct complained of was unlawful; provided,
however, that within 60 days after institution of any such action, suit or
proceeding, such Administrator shall, in writing, offer the Company the
opportunity at its own expense to handle and defend such action, suit or
proceeding.

     4. SHARES SUBJECT TO THE PLAN.

          4.1 Share Reserve. Subject to the provisions of Section 12.1 relating
to adjustments upon changes in Common Stock, the shares that may be issued
pursuant to Awards shall consist of the Company's authorized but unissued Common
Stock, and the maximum aggregate amount of such Common Stock which may be issued
upon exercise of all Awards under the Plan shall not exceed 2,100,000 shares,
all of which may be used for Incentive Stock Options.

          4.2 Reversion of Shares to the Share Reserve. If any Award shall for
any reason expire or otherwise terminate, in whole or in part, the shares of
Common Stock not acquired under such Award shall revert to and again become
available for issuance under the Plan. If shares of Common Stock issued under
the Plan are reacquired by the Company pursuant to the terms of any forfeiture
provision, including the Right of Repurchase of unvested Common Stock under
Section 11.9(a), such shares shall again be available for purposes of the Plan.

          4.3 Source of Shares. The shares of Common Stock subject to the Plan
may be authorized but unissued Common Stock or reacquired Common Stock, bought
on the market, pursuant to any forfeiture provision or otherwise.


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     5. ELIGIBILITY.

          5.1 Eligibility for Specific Awards. Incentive Stock Options may be
granted only to Employees. Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants.

          5.2 Ten Percent Stockholders. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least 110% of the Fair Market Value of the Common Stock at the Date of Grant and
the Option is not exercisable after the expiration of five years from the Date
of Grant.

          5.3 Section 162(m) Limitation. Subject to the provisions of Section
12.1 relating to adjustments upon changes in the shares of Common Stock, no
Employee shall be eligible to be granted Options or Stock Appreciation Rights
covering more than 750,000 shares during any fiscal year, or Performance Awards
which could result in such Employee receiving more than 500,000 shares of Common
Stock in the case of share-denominated Performance Awards or $10,000,000 in the
case of cash-denominated Performance Awards for each full or partial fiscal year
of the Company contained in the performance period of a particular Performance
Award. This Section 5.3 shall not apply prior to the Listing Date and, following
the Listing Date, this Section 5.3 shall not apply until (a) the earliest of:
(i) the first material modification of the Plan (including any increase in the
number of shares of Common Stock reserved for issuance under the Plan in
accordance with Section 4.1); (ii) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (iii) the expiration of the Plan; or
(iv) the first meeting of stockholders at which Directors are to be elected that
occurs after the close of the third calendar year following the calendar year in
which occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (b) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.

          5.4 Consultants.

               (a) Prior to the Listing Date, a Consultant shall not be eligible
for the grant of an Award if, at the time of grant, either the offer or the sale
of the Company's securities to such Consultant is not exempt under Rule 701 of
the Securities Act ("RULE 701") because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a
natural person, or as otherwise provided by Rule 701, unless the Company
determines that such grant need not comply with the requirements of Rule 701 and
will satisfy another exemption under the Securities Act as well as comply with
the securities laws of all other relevant jurisdictions.

               (b) From and after the Listing Date, a Consultant shall not be
eligible for the grant of an Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act ("FORM S-8") is not available to
register either the offer or the sale of the Company's securities to such
Consultant because of the nature of the services that the Consultant is
providing to the Company (i.e., capital raising), or because the Consultant is
not a natural person, or as otherwise provided by the rules governing the use of
Form S-8, unless the Company determines both (i) that such grant (A) shall be
registered in another manner under the Securities Act (e.g., on a Form S-3
Registration Statement) or (B) does not require registration


                                       11

<PAGE>

under the Securities Act in order to comply with the requirements of the
Securities Act, if applicable, and (ii) that such grant complies with the
securities laws of all other relevant jurisdictions.

          5.5 Directors. Each Director of the Company shall be eligible to
receive discretionary grants of Awards under the Plan.

     6. OPTION PROVISIONS.

          Each Option shall be in such form and shall contain such terms and
conditions as the Administrator shall deem appropriate. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and, if certificates are issued, a separate certificate or
certificates will be issued for shares of Common Stock purchased on exercise of
each type of Option. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an
Incentive Stock Option fails to qualify as such at any time or 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. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

          6.1 Term. Subject to the provisions of Section 5.2 regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of 10 years from the date it was granted.

          6.2 Exercise Price of an Incentive Stock Option. Subject to the
provisions of Section 5.2 regarding Ten Percent Stockholders, the exercise price
of each Incentive Stock Option shall be not less than 100% of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.

          6.3 Exercise Price of a Nonstatutory Stock Option. The exercise price
of each Nonstatutory Stock Option shall be not less than 35% of the Fair Market
Value of the Common Stock subject to the Option on the date the Option is
granted; provided, however, any Nonstatutory Stock Option granted with an
exercise price less than 100% of the Fair Market Value of the Common Stock
subject to the Option on the date the Option is granted shall satisfy the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 6.15 and Section 8 hereof.
Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with
an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.


                                       12

<PAGE>

          6.4 Consideration. The exercise price of Common Stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (a) in cash or by certified or bank check at
the time the Option is exercised or (b) in the discretion of the Administrator,
upon such terms as the Administrator shall approve, the exercise price may be
paid: (i) by delivery to the Company of other 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 Participant identifies for
delivery specific shares of Common Stock that have been held for more than six
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes) that have a Fair Market Value on the
date of attestation equal to the exercise price (or portion thereof) and
receives a number of shares of Common Stock equal to the difference between the
number of shares thereby purchased and the number of identified attestation
shares of Common Stock (a "STOCK FOR STOCK EXCHANGE"); (ii) 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), by a copy of instructions to a broker
directing such broker to sell the Common Stock for which such Option is
exercised, and to remit to the Company the aggregate Exercise Price of such
Options (a "CASHLESS EXERCISE"); (iii) in any other form of legal consideration
that may be acceptable to the Administrator, including without limitation with a
full-recourse promissory note; provided, however, if applicable law requires,
the par value (if any) of Common Stock, if newly issued, shall be paid in cash
or cash equivalents. Any Common Stock acquired upon exercise with a promissory
note 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 any such
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. Unless otherwise
specifically provided in the Option, the purchase price of Common Stock acquired
pursuant to an Option that is paid by delivery (or attestation) to the Company
of other Common Stock acquired, directly or indirectly from the Company, shall
be paid only by shares of the Common Stock of the Company that have been held
for more than six months (or such longer or shorter period of time required to
avoid a charge to earnings for financial accounting purposes). Notwithstanding
the foregoing, 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


                                       13

<PAGE>

not reported), a Cashless Exercise, 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 Exchange Act) shall be
prohibited with respect to any Award under this Plan. Unless otherwise provided
in the terms of an Option Agreement, payment of the exercise price by a
Participant 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 Exchange is subject
to pre-approval by the Administrator, in its sole discretion. Any such
pre-approval shall be documented in a manner that complies with the specificity
requirements of Rule 16b-3, including the name of the Participant involved in
the transaction, the nature of the transaction, the number of shares to be
acquired or disposed of by the Participant and the material terms of the Options
involved in the transaction.

          6.5 Transferability of an Incentive Stock Option. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

          6.6 Transferability of a Nonstatutory Stock Option. A Nonstatutory
Stock Option may, in the sole discretion of the Administrator, be transferable
to a Permitted Transferee upon written approval by the Administrator to the
extent provided in the Option Agreement. A Permitted Transferee includes: (a) a
transfer by gift or domestic relations order to a member of the Optionholder'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 Optionholder'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
Optionholder) control the management of assets, and any other entity in which
these persons (or the Optionholder) own more than 50% of the voting interests;
(b) third parties designated by the Administrator in connection with a program
established and approved by the Administrator pursuant to which Participants may
receive a cash payment or other consideration in consideration for the transfer
of such Nonstatutory Stock Option; and (c) such other transferees as may be
permitted by the Administrator in its sole discretion. If the Nonstatutory Stock
Option does not provide for transferability, then the Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

          6.7 Vesting Generally. The Option may, but need not, vest and
therefore become exercisable in periodic installments that may, but need not, be
equal. The Option may be subject to such other terms and conditions on the time
or times when it may be exercised (which may be based on performance or other
criteria) as the Administrator may deem appropriate. The vesting provisions of
individual Options may vary. No Option may be exercised for a fraction of


                                       14

<PAGE>

a share of Common Stock. The Administrator may, but shall not be required to,
provide for an acceleration of vesting and exercisability in the terms of any
Option Agreement upon the occurrence of a specified event. Unless otherwise
specified in the terms of any Option Agreement, each Option granted pursuant to
the terms of the Plan shall become exercisable at a rate of 20% per year over
the five year period commencing on the date the Option is granted.

          6.8 Termination of Continuous Service. Unless otherwise provided in an
Option Agreement or in an employment agreement the terms of which have been
approved by the Administrator, in the event an Optionholder's Continuous Service
terminates (other than upon the Optionholder's death or Disability or
termination by the Company for Cause), the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to exercise such Option
as of the date of termination) but only within such period of time ending on the
earlier of (a) the date three months following the termination of the
Optionholder's Continuous Service, or (b) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate. Unless otherwise provided in
an Option Agreement or in an employment agreement the terms of which have been
approved by the Administrator, or as otherwise provided in Sections 6.10 and
6.11 of this Plan, outstanding Options that are not exercisable at the time an
Optionholder's Continuous Service terminates for any reason other than for Cause
(including an Optionholder's death or Disability) shall be forfeited and expire
at the close of business on the date of such termination. If the Optionholder's
Continuous Service terminates for Cause, all outstanding Options shall be
forfeited (whether or not vested) and expire as of the beginning of business on
the date of such termination for Cause.

          6.9 Extension of Termination Date. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service for any reason other than Cause (other
than upon the Optionholder's death or Disability) would be prohibited at any
time because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act or any other state or federal
securities law or the rules of any securities exchange or interdealer quotation
system, then the Option shall terminate on the earlier of (a) the expiration of
the term of the Option in accordance with Section 6.1 or (b) the expiration of a
period after termination of the Participant's Continuous Service that is three
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.

          6.10 Disability of Optionholder. Unless otherwise provided in an
Option Agreement, in the event that an Optionholder's Continuous Service
terminates as a result of the Optionholder's Disability, the Optionholder may
exercise his or her Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination), but only within such period
of time ending on the earlier of (a) the date 12 months following such
termination or (b) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified herein, the Option shall terminate.


                                       15

<PAGE>

          6.11 Death of Optionholder. Unless otherwise provided in an Option
Agreement, in the event an Optionholder's Continuous Service terminates as a
result of the Optionholder's death, then the Option may be exercised (to the
extent the Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance or by a person designated to
exercise the Option upon the Optionholder's death, but only within the period
ending on the earlier of (a) the date 12 months following the date of death or
(b) the expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate.

          6.12 Incentive Stock Option $100,000 Limitation. To the extent that
the aggregate Fair Market Value (determined at the time of grant) of Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds $100,000, the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.

          6.13 Early Exercise. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. In such case, the shares of Common Stock acquired on exercise shall
be subject to the vesting schedule that otherwise would apply to determine the
exercisability of the Option. Any unvested shares of Common Stock so purchased
may be subject to any other restriction the Administrator determines to be
appropriate.

          6.14 Reload Options. At the discretion of the Administrator, the
Option may include a "reload" feature pursuant to which an Optionholder
exercising an option by the delivery of a number of shares of Common Stock in
accordance with Section 6.4(b)(i) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Common Stock on the date the additional Option is granted and with the same
expiration date as the original Option being exercised, and with such other
terms as the Administrator may provide) to purchase that number of shares of
Common Stock equal to the number delivered in a Stock for Stock Exchange of the
original Option.

          6.15 Additional Requirements Under Section 409A. Each Option Agreement
shall include a provision whereby, notwithstanding any provision of the Plan or
the 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 hereof, in the event any Option under
this Plan is granted with an exercise price less than Fair Market Value of the
Common Stock 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.


                                       16

<PAGE>

     7.   PROVISIONS OF AWARDS OTHER THAN OPTIONS.

          7.1 Restricted Awards. A Restricted Award is an Award of actual shares
of Common Stock ("RESTRICTED STOCK") or hypothetical Common Stock units
("RESTRICTED STOCK UNITS") having a value equal to the Fair Market Value of an
identical number of shares of Common Stock, which may, but need not, provide
that such Restricted Award may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for
the performance of any obligation or for any other purpose for such period (the
"RESTRICTED PERIOD") as the Administrator shall determine. Each Restricted Award
shall be in such form and shall contain such terms, conditions and Restricted
Periods as the Administrator shall deem appropriate, including the treatment of
dividends or dividend equivalents, as the case may be. The Administrator in its
discretion may provide for an acceleration of the end of the Restricted Period
in the terms of any Restricted Award, at any time, including in the event a
Change in Control occurs. The terms and conditions of the Restricted Award may
change from time to time, and the terms and conditions of separate Restricted
Awards need not be identical, but each Restricted Award shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions:

               (a) Purchase Price. The purchase price of Restricted Awards, if
any, shall be determined by the Administrator, and may be stated as cash,
property or prior services.

               (b) Consideration. The consideration for Common Stock acquired
pursuant to the Restricted Award shall be paid either: (i) in cash at the time
of purchase; or (ii) in any other form of legal consideration that may be
acceptable to the Administrator in its discretion including, without limitation,
a recourse promissory note, property or a Stock for Stock Exchange, or prior
services that the Administrator determines have a value at least equal to the
Fair Market Value of such Common Stock.

               (c) Vesting. Shares of Common Stock acquired under the Restricted
Award may, but need not, be subject to a Restricted Period that specifies a
Right of Repurchase in favor of the Company in accordance with a vesting
schedule to be determined by the Administrator, or forfeiture in the event the
consideration was in the form of services. The Administrator in its discretion
may provide for an acceleration of vesting in the terms of any Restricted Award,
at any time, including in the event a Change in Control occurs.

               (d) Termination of Participant's Continuous Service. Unless
otherwise provided in a Restricted Award or in an employment agreement the terms
of which have been approved by the Administrator, in the event a Participant's
Continuous Service terminates for any reason, the Company may exercise its Right
of Repurchase or otherwise reacquire, or the Participant shall forfeit the
unvested portion of a Restricted Award acquired in consideration of prior or
future services, and any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the Restricted Award shall be forfeited and the Participant shall have no
rights with respect to the Award.

               (e) Transferability. Rights to acquire shares of Common Stock
under the Restricted Award shall be transferable by the Participant only upon
such terms and conditions as are set forth in the Award Agreement, as the
Administrator shall determine in its discretion, so


                                       17

<PAGE>

long as Common Stock awarded under the Restricted Award remains subject to the
terms of the Award Agreement.

               (f) Concurrent Tax Payment. The Administrator, in its sole
discretion, may (but shall not be required to) provide for payment of a
concurrent cash award in an amount equal, in whole or in part, to the estimated
after tax amount required to satisfy applicable federal, state or local tax
withholding obligations arising from the receipt and deemed vesting of
restricted stock for which an election under Section 83(b) of the Code may be
required.

               (g) Lapse of Restrictions. Upon the expiration or termination of
the Restricted Period and the satisfaction of any other conditions prescribed by
the Administrator, the restrictions applicable to the Restricted Award shall
lapse and a stock certificate for the number of shares of Common Stock with
respect to which the restrictions have lapsed shall be delivered, free of any
restrictions except those that may be imposed by law, the terms of the Plan or
the terms of a Restricted Award, to the Participant or the Participant's
beneficiary or estate, as the case may be, unless such Restricted Award is
subject to a deferral condition that complies with the 409A Award requirements
that may be allowed or required by the Administrator in its sole discretion. The
Company shall not be required to deliver any fractional share of Common Stock
but will pay, in lieu thereof, the Fair Market Value of such fractional share in
cash to the Participant or the Participant's beneficiary or estate, as the case
may be. Unless otherwise subject to a deferral condition that complies with the
409A Award requirements, the Common Stock certificate shall be issued and
delivered and the Participant shall be entitled to the beneficial ownership
rights of such Common Stock not later than (i) the date that is 2-1/2 months
after the end of the Participant's taxable year for which the Restricted Period
ends and the Participant has a legally binding right to such amounts; (ii) the
date that is 2-1/2 months after the end of the Company's taxable year for which
the Restricted Period ends and the Participant has a legally binding right to
such amounts, whichever is later; or (iii) such earlier date as may be necessary
to avoid application of Code Section 409A to such Award.

          7.2 Performance Awards.

               (a) Nature of Performance Awards. A Performance Award is an Award
entitling the recipient to acquire cash, actual shares of Common Stock or
hypothetical Common Stock units having a value equal to the Fair Market Value of
an identical number of shares of Common Stock upon the attainment of specified
performance goals. The Administrator may make Performance Awards independent of
or in connection with the granting of any other Award under the Plan.
Performance Awards may be granted under the Plan to any Participant, including
those who qualify for awards under other performance plans of the Company. The
Administrator in its sole discretion shall determine whether and to whom
Performance Awards shall be made, the performance goals applicable under each
Award, the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded cash or shares; provided,
however, that the Administrator may rely on the performance goals and other
standards applicable to other performance plans of the Company in setting the
standards for Performance Awards under the Plan. Performance goals shall be
based on a pre-established objective formula or standard that specifies the
manner of determining the amount of cash or the number of shares under the
Performance Award that will be granted or will vest if the performance goal is
attained. Performance goals will be determined by the Administrator prior to the
time 25% of


                                       18

<PAGE>

the service period has elapsed and may be based on one or more business criteria
that apply to a Participant, a business unit or the Company and its Affiliates.
Such business criteria may include, by way of example and without limitation,
revenue, earnings before interest, taxes, depreciation and amortization
(EBITDA), funds from operations, funds from operations per share, operating
income, pre-tax or after-tax income, cash available for distribution, cash
available for distribution per share, net earnings, earnings per share, return
on equity, return on assets, return on capital, economic value added, share
price performance, improvements in the Company's attainment of expense levels,
and implementing or completion of critical projects, or improvement in cash-flow
(before or after tax). A performance goal may be measured over a performance
period on a periodic, annual, cumulative or average basis and may be established
on a corporate-wide basis or established with respect to one or more operating
units, divisions, subsidiaries, acquired businesses, minority investments,
partnerships or joint ventures. More than one performance goal may be
incorporated in a performance objective, in which case achievement with respect
to each performance goal may be assessed individually or in combination with
each other. The Administrator may, in connection with the establishment of
performance goals for a performance period, establish a matrix setting forth the
relationship between performance on two or more performance goals and the amount
of the Performance Award payable for that performance period. The level or
levels of performance specified with respect to a performance goal may be
established in absolute terms, as objectives relative to performance in prior
periods, as an objective compared to the performance of one or more comparable
companies or an index covering multiple companies, or otherwise as the
Administrator may determine. Performance goals shall be objective and, if the
Company is publicly traded, shall otherwise meet the requirements of Section
162(m) of the Code. Performance goals may differ for Performance Awards granted
to any one Participant or to different Participants. A Performance Award to a
Participant who is a Covered Employee shall (unless the Administrator determines
otherwise) provide that in the event of the Participant's termination of
Continuous Service prior to the end of the performance period for any reason,
such Award will be payable only (i) if the applicable performance objectives are
achieved and (ii) to the extent, if any, the Administrator shall determine. Such
objective performance goals are not required to be based on increases in a
specific business criteria, but may be based on maintaining the status quo or
limiting economic losses.

               (b) Restrictions on Transfer. Performance Awards and all rights
with respect to such Performance Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered.

               (c) Rights as a Stockholder. A Participant receiving a
Performance Award that is denominated in shares of Common Stock or hypothetical
Common Stock units shall have the rights of a stockholder only as to shares
actually received by the Participant under the Plan and not with respect to
shares subject to the Award but not actually received by the Participant. A
Participant shall be entitled to receive a stock certificate evidencing the
acquisition of shares of Common Stock under a Performance Award only upon
satisfaction of all conditions specified in the written instrument evidencing
the Performance Award (or in a performance plan adopted by the Administrator).
The Common Stock certificate shall be issued and delivered and the Participant
shall be entitled to the beneficial ownership rights of such Common Stock not
later than (i) the date that is 2-1/2 months after the end of the Participant's
taxable year for which the Administrator certifies that the Performance Award
conditions have


                                       19

<PAGE>

been satisfied and the Participant has a legally binding right to such amounts;
(ii) the date that is 2-1/2 months after the end of the Company's taxable year
for which the Administrator certifies that the Performance Award conditions have
been satisfied and the Participant has a legally binding right to such amounts,
whichever is later; or (iii) such other date as may be necessary to avoid
application of Section 409A to such Awards.

               (d) Termination. Except as may otherwise be provided by the
Administrator at any time, a Participant's rights in all Performance Awards
shall automatically terminate upon the Participant's termination of employment
(or business relationship) with the Company and its Affiliates for any reason.

               (e) Acceleration, Waiver, Etc. At any time prior to the
Participant's termination of employment (or other business relationship) by the
Company and its Affiliates, the Administrator may in its sole discretion
accelerate, waive or, subject to Section 13, amend any or all of the goals,
restrictions or conditions imposed under any Performance Award. The
Administrator in its discretion may provide for an acceleration of vesting in
the terms of any Performance Award at any time, including in the event a Change
in Control occurs.

               (f) Certification. Following the completion of each performance
period, the Administrator shall certify in writing, in accordance with the
requirements of Section 162(m) of the Code, whether the performance objectives
and other material terms of a Performance Award have been achieved or met.
Unless the Administrator determines otherwise, Performance Awards shall not be
settled until the Administrator has made the certification specified under this
Section 7.2(f).

          7.3 Stock Appreciation Rights.

               (a) General. Stock Appreciation Rights may be granted either
alone ("FREE STANDING RIGHTS") or, provided the requirements of Section 7.3(b)
are satisfied, in tandem with all or part of any Option granted under the Plan
("RELATED RIGHTS"). In the case of a Nonstatutory Stock Option, Related Rights
may be granted either at or after the time of the grant of such Option. In the
case of an Incentive Stock Option, Related Rights may be granted only at the
time of the grant of the Incentive Stock Option.

               (b) Grant Requirements. A Stock Appreciation Right may only be
granted if the Stock Appreciation Right: (i) does not provide for the deferral
of compensation within the meaning of Section 409A of the Code; or (ii)
satisfies the requirements of Section 7.3(h) and Section 8 hereof. A Stock
Appreciation Right does not provide for a deferral of compensation if: (A) the
value of the Common Stock the excess over which the right provides for payment
upon exercise (the "SAR EXERCISE PRICE") may never be less than the Fair Market
Value of the underlying Common Stock on the date the right is granted, (B) the
compensation payable under the Stock Appreciation Right can never be greater
than the difference between the SAR exercise price and the Fair Market Value of
the Common Stock on the date the Stock Appreciation Right is exercised, (C) the
number of shares of Common Stock subject to the Stock Appreciation Right must be
fixed on the date of grant of the Stock Appreciation Right, and (D) the right
does not include any feature for the deferral of compensation other than the
deferral of recognition of income until the exercise of the right.


                                       20

<PAGE>

               (c) Exercise and Payment. Upon exercise thereof, the holder of a
Stock Appreciation Right shall be entitled to receive from the Company, an
amount equal to the product of (i) the excess of the Fair Market Value, on the
date of such written request, of one share of Common Stock over the SAR exercise
price per share specified in such Stock Appreciation Right or its related
Option, multiplied by (ii) the number of shares for which such Stock
Appreciation Right shall be exercised. Payment with respect to the exercise of a
Stock Appreciation Right that satisfies the requirements of Section 7.3(b)(i)
shall be paid on the date of exercise and made in shares of Common Stock (with
or without restrictions as to substantial risk of forfeiture and
transferability, as determined by the Administrator in its sole discretion),
valued at Fair Market Value on the date of exercise. Payment with respect to the
exercise of a Stock Appreciation Right that does not satisfy the requirements of
Section 7.3(b)(i) shall be paid at the time specified in the Award in accordance
with the provisions of Section 7.3(h) and Section 8. Payment may be made in the
form of shares of Common Stock (with or without restrictions as to substantial
risk of forfeiture and transferability, as determined by the Administrator in
its sole discretion), cash or a combination thereof, as determined by the
Administrator.

               (d) Exercise Price. The exercise price of a Free Standing Stock
Appreciation Right shall be determined by the Administrator, but shall not be
less than 100% of the Fair Market Value of one share of Common Stock on the Date
of Grant of such Stock Appreciation Right. A Related Right granted
simultaneously with or subsequent to the grant of an Option and in conjunction
therewith or in the alternative thereto shall have the same exercise price as
the related Option, shall be transferable only upon the same terms and
conditions as the related Option, and shall be exercisable only to the same
extent as the related Option; provided, however, that a Stock Appreciation
Right, by its terms, shall be exercisable only when the Fair Market Value per
share of Common Stock subject to the Stock Appreciation Right and related Option
exceeds the exercise price per share thereof and no Stock Appreciation Rights
may be granted in tandem with an Option unless the Administrator determines that
the requirements of Section 7.3(b)(i) are satisfied.

               (e) Reduction in the Underlying Option Shares. Upon any exercise
of a Stock Appreciation Right, the number of shares of Common Stock for which
any related Option shall be exercisable shall be reduced by the number of shares
for which the Stock Appreciation Right shall have been exercised. The number of
shares of Common Stock for which a Stock Appreciation Right shall be exercisable
shall be reduced upon any exercise of any related Option by the number of shares
of Common Stock for which such Option shall have been exercised.

               (f) Written Request. Unless otherwise determined by the
Administrator in its sole discretion and only if permitted in the Stock
Appreciation Right's Award Agreement, any exercise of a Stock Appreciation Right
for cash, may be made only by a written request filed with the Corporate
Secretary of the Company during the period beginning on the third business day
following the date of release for publication by the Company of quarterly or
annual summary statements of earnings and ending on the twelfth business day
following such date. Within 30 days of the receipt by the Company of a written
request to receive cash in full or partial settlement of a Stock Appreciation
Right or to exercise such Stock Appreciation Right for cash, the Administrator
shall, in its sole discretion, either consent to or disapprove, in whole or in
part, such written request. A written request to receive cash in full or partial
settlement of a


                                       21

<PAGE>

Stock Appreciation Right or to exercise a Stock Appreciation Right for cash may
provide that, in the event the Administrator shall disapprove such written
request, such written request shall be deemed to be an exercise of such Stock
Appreciation Right for shares of Common Stock.

               (g) Disapproval by Administrator. If the Administrator
disapproves in whole or in part any election by a Participant to receive cash in
full or partial settlement of a Stock Appreciation Right or to exercise such
Stock Appreciation Right for cash, such disapproval shall not affect such
Participant's right to exercise such Stock Appreciation Right at a later date,
to the extent that such Stock Appreciation Right shall be otherwise exercisable,
or to elect the form of payment at a later date, provided that an election to
receive cash upon such later exercise shall be subject to the approval of the
Administrator. Additionally, such disapproval shall not affect such
Participant's right to exercise any related Option.

               (h) Additional Requirements under Section 409A. A Stock
Appreciation Right that is not intended to or fails to satisfy the requirements
of Section 7.3(b)(i) shall satisfy the requirements of this Section 7.3(h) and
the additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 8 hereof. The requirements
herein shall apply in the event any Stock Appreciation Right under this Plan is
granted with an SAR exercise price less than Fair Market Value of the Common
Stock underlying the Award on the date the Stock Appreciation Right is granted
(regardless of whether or not such SAR 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 SAR exercise price), provides
that it is settled in cash, or is otherwise determined to constitute
"nonqualified deferred compensation" within the meaning of Section 409A of the
Code. Any such Stock Appreciation Right may provide that it is exercisable at
any time permitted under the governing written instrument, but such exercise
shall be limited to fixing the measurement of the amount, if any, by which the
Fair Market Value of a share of Common Stock on the date of exercise exceeds the
SAR exercise price (the "SAR AMOUNT"). However, once the Stock Appreciation
Right is exercised, the SAR Amount may only be paid on the fixed time, payment
schedule or other event specified in the governing written instrument or in
Section 8.1 hereof.

     8.   ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION
          UNDER SECTION 409A OF THE CODE.

          In the event any Award under this Plan is granted with an exercise
price less than Fair Market Value of the Common Stock subject to the Award on
the Date of Grant (regardless of whether or not such exercise price is
intentionally or unintentionally priced at less than Fair Market Value, or such
Award is materially modified and deemed a new Award at a time when the Fair
Market Value exceeds the exercise price), or is otherwise determined to
constitute a 409A Award, the following additional conditions shall apply and
shall supersede any contrary provisions of this Plan or the terms of any 409A
Award agreement.

          8.1 Exercise and Distribution. No 409A Award shall be exercisable or
distributable earlier than upon one of the following:


                                       22

<PAGE>

               (a) Specified Time. A specified time or a fixed schedule set
forth in the written instrument evidencing the 409A Award, but not later than
after the expiration of 10 years from the Date of Grant. If the written grant
instrument does not specify a fixed time or schedule, such time shall be the
date that is the fifth anniversary of the Date of Grant.

               (b) Separation from Service. Separation from service (within the
meaning of Section 409A of the Code) by the 409A Award recipient; provided,
however, if the 409A Award recipient is a "key employee" (as defined in Section
416(i) of the Code without regard to paragraph (5) thereof) and any of the
Company's stock is publicly traded on an established securities market or
otherwise, exercise or distribution under this Section 8.1(b) may not be made
before the date which is six months after the date of separation from service.

               (c) Death. The date of death of the 409A Award recipient.

               (d) Disability. The date the 409A Award recipient becomes
disabled (within the meaning of Section 8.4(b) hereof).

               (e) Unforeseeable Emergency. The occurrence of an unforeseeable
emergency (within the meaning of Section 8.4(c) hereof), but only if the net
value (after payment of the exercise price) of the number of shares of Common
Stock that become issuable does not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result
of the exercise, after taking into account the extent to which the emergency is
or may be relieved through reimbursement or compensation by insurance or
otherwise or by liquidation of the Participant's other assets (to the extent
such liquidation would not itself cause severe financial hardship).

               (f) Change in Control Event. The occurrence of a Change in
Control Event (within the meaning of Section 8.4(a) hereof), including the
Company's discretionary exercise of the right to accelerate vesting of such
Award upon a Change in Control Event or to terminate the Plan or any 409A Award
granted hereunder within 12 months of the Change in Control Event.

          8.2 Term. Notwithstanding anything to the contrary in this Plan or the
terms of any 409A Award agreement, the term of any 409A Award shall expire and
such Award shall no longer be exercisable on the date that is the later of: (a)
2-1/2 months after the end of the Company's taxable year in which the 409A Award
first becomes exercisable or distributable pursuant to Section 8 hereof and is
not subject to a substantial risk of forfeiture; or (b) 2-1/2 months after the
end of the 409A Award recipient's taxable year in which the 409A Award first
becomes exercisable or distributable pursuant to Section 8 hereof and is not
subject to a substantial risk of forfeiture, but not later than the earlier of
(i) the expiration of 10 years from the date the 409A Award was granted, or (ii)
the term specified in the 409A Award agreement.

          8.3 No Acceleration. A 409A Award may not be accelerated or exercised
prior to the time specified in Section 8 hereof, except in the case of one of
the following events:

               (a) Domestic Relations Order. The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an individual
other than the


                                       23

<PAGE>

Participant as may be necessary to comply with the terms of a domestic relations
order (as defined in Section 414(p)(1)(B) of the Code).

               (b) Conflicts of Interest. The 409A Award may permit the
acceleration of the exercise or distribution time or schedule as may be
necessary to comply with the terms of a certificate of divestiture (as defined
in Section 1043(b)(2) of the Code).

               (c) Change in Control Event. The Administrator may exercise the
discretionary right to accelerate the vesting of such 409A Award upon a Change
in Control Event or to terminate the Plan or any 409A Award granted thereunder
within 12 months of the Change in Control Event and cancel the 409A Award for
compensation. In addition, the Administrator may exercise the discretionary
right to accelerate the vesting of such 409A Award provided that such
acceleration does not change the time or schedule of payment of such Award and
otherwise satisfies the requirements of this Section 8 and the requirements of
Section 409A of the Code.

          8.4 Definitions. Solely for purposes of this Section 8 and not for
other purposes of the Plan, the following terms shall be defined as set forth
below:

               (a) "CHANGE IN CONTROL EVENT" means the occurrence of a change in
the ownership of the Company, a change in effective control of the Company, or a
change in the ownership of a substantial portion of the assets of the Company
(as defined in Proposed Regulations Section 1.409A-3(g)(5) and any subsequent
guidance interpreting Code Section 409A). For example, a Change in Control Event
will occur if:

                    (i) a person or more than one person acting as a group:

                         (A) acquires ownership of stock that brings such
                    person's or group's total ownership in excess of 50% of the
                    outstanding stock of the Company; or

                         (B) acquires ownership of 35% or more of the total
                    voting power of the Company within a 12 month period; or

                    (ii) acquires ownership of assets from the Company equal to
               40% or more of the total value of the Company within a 12 month
               period.

               (b) "DISABLED" means a Participant (i) is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (ii) is, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than three months under an accident and health plan covering
Employees.

               (c) "UNFORESEEABLE EMERGENCY" means a severe financial hardship
to the Participant resulting from an illness or accident of the Participant, the
Participant's spouse, or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participant's


                                       24

<PAGE>

property due to casualty, or similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.

     9.   COVENANTS OF THE COMPANY.

          9.1 Availability of Shares. During the terms of the Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Awards.

          9.2 Securities Law Compliance. Each Option Agreement and Award
Agreement shall provide that no shares of Common Stock shall be purchased or
sold thereunder unless and until (a) any then applicable requirements of state
or federal laws and regulatory agencies shall have been fully complied with to
the satisfaction of the Company and its counsel and (b) if required to do so by
the Company, the Participant shall have executed and delivered to the Company a
letter of investment intent in such form and containing such provisions as the
Administrator may require. The Company shall use reasonable efforts to seek to
obtain from each regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to grant Awards and to issue and sell
shares of Common Stock upon exercise of the Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Award or any Common Stock issued or issuable pursuant to any such
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of Common Stock under the Plan,
the Company shall be relieved from any liability for failure to issue and sell
Common Stock upon exercise of such Awards unless and until such authority is
obtained. During any period prior to the time the Company's Common Stock is
registered under Section 12 of the Exchange Act and is listed on a national
securities exchange or on the Nasdaq National Market System, the grant or Award
to any person who is a resident of the state of California shall be subject to
the additional provisions set forth in Addendum "1" attached to this Plan.

     10.  USE OF PROCEEDS FROM STOCK.

          Proceeds from the sale of Common Stock pursuant to Awards shall
constitute general funds of the Company.

     11.  MISCELLANEOUS.

          11.1 Acceleration of Exercisability and Vesting. The Administrator
shall have the power to accelerate the time at which an Award may first be
exercised or the time during which an Award or any part thereof will vest in
accordance with the Plan, notwithstanding the provisions in the Award stating
the time at which it may first be exercised or the time during which it will
vest.

          11.2 Stockholder Rights. No Participant shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
of Common Stock subject to such Award unless and until such Participant has
satisfied all requirements for exercise of the Award pursuant to its terms and
no adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions of other rights for which
the record


                                       25

<PAGE>

date is prior to the date such Common Stock certificate is issued, except as
provided in Section 12.1 hereof.

          11.3 No Employment or Other Service Rights. Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of an Employee
with or without notice and with or without Cause, (b) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (c) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

          11.4 Transfer, Approved Leave of Absence. For purposes of the Plan, no
termination of employment by an Employee shall be deemed to result from either
(a) a transfer to the employment of the Company from an Affiliate or from the
Company to an Affiliate, or from one Affiliate to another; or (b) an approved
leave of absence for military service or sickness, or for any other purpose
approved by the Company, if the Employee's right to re-employment is guaranteed
either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Administrator otherwise so provides in
writing.

          11.5 Investment Assurances. The Company may require a Participant, as
a condition of exercising or acquiring Common Stock under any Award, (a) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Award; and (b) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to
the Award for the Participant's own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (i) the issuance of the shares of Common Stock upon the exercise
or acquisition of Common Stock under the Award has been registered under a then
currently effective registration statement under the Securities Act or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the Common Stock.

          11.6 Withholding Obligations. To the extent provided by the terms of
an Award Agreement and subject to the discretion of the Administrator, the
Participant may satisfy any federal, state or local tax withholding obligation
relating to the exercise or acquisition of Common Stock under an Award by any of
the following means (in addition to the Company's right to withhold from any
compensation paid to the Participant by the Company) or by a combination of such
means: (a) tendering a cash payment; (b) authorizing the Company to


                                       26

<PAGE>

withhold shares of Common Stock from the shares of Common Stock otherwise
issuable to the Participant as a result of the exercise or acquisition of Common
Stock under the Award, provided, however, that no shares of Common Stock are
withheld with a value exceeding the minimum amount of tax required to be
withheld by law; (c) delivering to the Company previously owned and unencumbered
shares of Common Stock of the Company or (d) by execution of a recourse
promissory note by a Participant who is not a Director or executive officer.
Unless otherwise provided in the terms of an Option Agreement, payment of the
tax withholding by a Participant who is an officer, director or other "insider"
subject to Section 16(b) of the Exchange Act by delivering previously owned and
unencumbered shares of Common Stock of the Company or in the form of share
withholding is subject to pre-approval by the Administrator, in its sole
discretion. Any such pre-approval shall be documented in a manner that complies
with the specificity requirements of Rule 16b-3, including the name of the
Participant involved in the transaction, the nature of the transaction, the
number of shares to be acquired or disposed of by the Participant and the
material terms of the Options involved in the transaction.

          11.7 Transfer of Stock Acquired Under Plan. Notwithstanding anything
to the contrary herein, if the Common Stock is not readily tradable on an
established securities market, a Participant may not transfer Common Stock
acquired under this Plan within six months after the purchase of such Common
Stock (the "SIX MONTHS HOLDING Period"), other than, if permitted by the
Administrator in its discretion: (a) to satisfy minimum tax withholding
requirements, or (b) to a Permitted Transferee.

          11.8 Right of First Refusal. Each Award Agreement may provide that, if
the Common Stock is not readily tradable on an established securities market,
the Company shall have a right of first refusal (the "RIGHT OF FIRST REFUSAL").
The Right of First Refusal may be exercisable in connection with any proposed
sale, hypothecation, gift or other disposition of Common Stock with respect to
which the Six Months Holding Period has expired, if purchased by the Participant
pursuant to an Award Agreement other than transfers to a Permitted Transferee.
If the holder of such Common Stock desires to accept a bona fide third-party
offer to purchase any or all of such Common Stock, the Common Stock shall first
be offered to the Company upon the same terms and conditions as are set forth in
the bona fide offer. In the case of a proposed gift or other non-compensatory
transfer of Common Stock, the purchase price per share of such Common Stock
under the Right of First Refusal shall be the Fair Market Value determined at
the time of the proposed gift or other transfer.

          11.9 Right of Repurchase. Each Award Agreement may provide that,
following a termination of the Participant's Continuous Service, the Company may
repurchase the Participant's Common Stock acquired under the Plan as provided in
this Section 11.9 (the "RIGHT OF REPURCHASE"). The Right of Repurchase shall be
exercisable at a price equal to (a) the Fair Market Value of vested Common Stock
or, in the case of exercisable options, the Fair Market Value of the Stock
underlying such unexercised options less the exercise price or (b) in the case
of unvested Stock, the lesser of the purchase price at which such Common Stock
was acquired under the Plan or the Fair Market Value of such Common Stock. The
Award Agreement may specify the period of time following a termination of the
Participant's Continuous Service during which the Right of Repurchase may be
exercised, provided that such exercise may in any event


                                       27

<PAGE>

be extended to a date that is within 60 days after the date the Six Months
Holding Period has been satisfied.

          11.10 Termination of Repurchase and First Refusal Rights. Each Award
Agreement shall provide that the Right of Repurchase with respect to vested
Stock and the Right of First Refusal shall have no effect with respect to, or
shall lapse and cease to have effect when the issuer's securities become
publicly traded or a determination is made by counsel for the Company that such
Rights of First Refusal and Rights of Repurchase are not permitted under
applicable federal or state securities laws.

     12.  ADJUSTMENTS UPON CHANGES IN STOCK.

          12.1 Capitalization Adjustments. If any change is made in the Common
Stock subject to the Plan, or subject to any Award, 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 (a) the aggregate number of
shares of Common Stock or class of shares which may be purchased pursuant to
Awards granted hereunder; (b) the aggregate number of shares of Common Stock or
class of shares which may be purchased pursuant to Incentive Stock Options
granted hereunder; (c) the number and/or class of shares of Common Stock covered
by outstanding Options and Awards; (d) the maximum number of shares of Common
Stock with respect to which Options may be granted to any single Optionholder
during any calendar year; and (e) the exercise price of any Option 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 shall be eliminated. The Administrator shall make such adjustments,
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.

          12.2 Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then all outstanding Awards shall terminate
immediately prior to such event.

          12.3 Change in Control - Asset Sale, Merger, Consolidation or Reverse
Merger. In the event of a dissolution or liquidation of the Company, or any
corporate separation or division, including, but not limited to, a split-up, a
split-off or a spin-off, or a sale of substantially all of the assets of the
Company; a merger or consolidation in which the Company is not the Surviving
Entity; or a reverse merger in which the Company is the Surviving Entity, but
the shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then the Company, to the extent permitted by
applicable law, but otherwise in the sole discretion of the Administrator may
provide for: (a) the continuation of outstanding Awards by the Company (if the
Company is the Surviving Entity); (b) the assumption of the Plan and such
outstanding Awards by the Surviving Entity or its parent; (c) the substitution
by the Surviving Entity or its parent of Awards with substantially the same
terms (including an award to acquire the same


                                       28

<PAGE>

consideration paid to the stockholders in the transaction described in this
Section 12.3) for such outstanding Awards and, if appropriate, subject to the
equitable adjustment provisions of Section 12.1 hereof; (d) the cancellation of
such outstanding Awards in consideration for a payment equal in value to the
Fair Market Value of vested Awards, or in the case of an Option, the difference
between the Fair Market Value and the exercise price for all shares of Common
Stock subject to exercise (i.e., to the extent vested) under any outstanding
Option; or (e) the cancellation of such outstanding Awards without payment of
any consideration. If such Awards would be canceled without consideration for
vested Awards, the Participant shall have the right, exercisable during the
later of the 10-day period ending on the fifth day prior to such merger or
consolidation or 10 days after the Administrator provides the Award holder a
notice of cancellation, to exercise such Awards in whole or in part without
regard to any installment exercise provisions in the Option Agreement.

     13.  AMENDMENT OF THE PLAN AND AWARDS.

          13.1 Amendment of Plan. The Board at any time, and from time to time,
may amend or terminate the Plan. However, except as provided in Section 12.1
relating to adjustments upon changes in Common Stock, no amendment shall be
effective unless approved by the stockholders of the Company to the extent
stockholder approval is necessary to satisfy any applicable law or any Nasdaq or
securities exchange listing requirements. At the time of such amendment, the
Board shall determine, upon advice from counsel, whether such amendment will be
contingent on stockholder approval.

          13.2 Stockholder Approval. The Board may, in its sole discretion,
submit any other amendment to the Plan for stockholder approval, including, but
not limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

          13.3 Contemplated Amendments. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options or to the nonqualified deferred
compensation provisions of Section 409A of the Code and/or to bring the Plan
and/or Awards granted under it into compliance therewith.

          13.4 No Impairment of Rights. Rights under any Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(a) the Company requests the consent of the Participant and (b) the Participant
consents in writing. However, a cancellation of an Award where the Participant
receives a payment equal in value to the Fair Market Value of the vested Award
or, in the case of vested Options, the difference between the Fair Market Value
and the exercise price, shall not be an impairment of the Participant's rights
that requires consent of the Participant.

          13.5 Amendment of Awards. The Administrator at any time, and from time
to time, may amend the terms of any one or more Awards; provided, however, that
the Administrator may not effect any amendment which would otherwise constitute
an impairment


                                       29

<PAGE>

of the rights under any Award unless (a) the Company requests the consent of the
Participant and (b) the Participant consents in writing. For the avoidance of
doubt, the cancellation of a vested Award where the Participant receives a
payment equal in value to the Fair Market Value of the vested Award or, in the
case of vested Options, the difference between the Fair Market Value of the
Common Stock underlying the Option and the aggregate exercise price, shall not
be an impairment of the Participant's rights that requires consent of the
Participant.

     14.  GENERAL PROVISIONS.

          14.1 Other Compensation Arrangements. Nothing contained in this Plan
shall prevent the Board from adopting other or additional compensation
arrangements, subject to stockholder approval if such approval is required; and
such arrangements may be either generally applicable or applicable only in
specific cases.

          14.2 Recapitalizations. Each Option Agreement and Award Agreement
shall contain provisions required to reflect the provisions of Section 12.1.

          14.3 Delivery. Upon exercise of a right granted under this Plan, the
Company shall issue Common Stock or pay any amounts due within a reasonable
period of time thereafter. Subject to any statutory or regulatory obligations
the Company may otherwise have, for purposes of this Plan, 30 days shall be
considered a reasonable period of time.

          14.4 Other Provisions. The Option Agreements and Award Agreements
authorized under the Plan may contain such other provisions not inconsistent
with this Plan, including, without limitation, restrictions upon the exercise of
the Awards, as the Administrator may deem advisable.

          14.5 Cancellation and Rescission of Awards for Detrimental Activity.

               (a) Upon exercise, payment or delivery pursuant to an Award, the
Participant shall certify in a manner acceptable to the Company that the
Participant has not engaged in any Detrimental Activity described in Section
2.19.

               (b) Unless the Award Agreement specifies otherwise, the
Administrator may cancel, rescind, suspend, withhold or otherwise limit or
restrict any unexpired, unpaid or deferred Awards at any time if the Participant
engages in any Detrimental Activity described in Section 2.19.

               (c) In the event a Participant engages in Detrimental Activity
described in Section 2.19 after any exercise, payment or delivery pursuant to an
Award, during any period for which any restrictive covenant prohibiting such
activity is applicable to the Participant, such exercise, payment or delivery
may be rescinded within one year thereafter. In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the exercise, payment or delivery,
in such manner and on such terms and conditions as may be required by the
Company. The Company shall be entitled to set-off against the amount of any such
gain any amount owed to the Participant by the Company.


                                       30

<PAGE>

          14.6 Disqualifying Dispositions. Any Participant who shall make a
"disposition" (as defined in Section 424 of the Code) of all or any portion of
shares of Common Stock acquired upon exercise of an Incentive Stock Option
within two years from the Date of Grant of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired upon exercise
of such Incentive Stock Option shall be required to immediately advise the
Company in writing as to the occurrence of the sale and the price realized upon
the sale of such shares of Common Stock.

     15.  MARKET STAND-OFF.

          Each Option Agreement and Award Agreement shall provide that, in
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, the Participant shall agree not to 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 Common Stock 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 of Common Stock
acquired under this Plan 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 of Common
Stock subject to the Market Stand-Off, or into which such shares of Common Stock
thereby become convertible, shall immediately be subject to the Market
Stand-Off.

     16.  EFFECTIVE DATE OF PLAN.

          The Plan shall become effective as of the Effective Date. However, no
Incentive Stock Option shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within 12
months before or after the date the Plan is adopted by the Board.  On or after
December 9, 2005, except in the case of an Inducement Award, no Option or Stock
Appreciation Right may be exercised and no other Award may be granted under the
terms of the Plan unless and until the Plan has been approved by the
stockholders of the Company, which approval shall be within 12 months before or
after the Effective Date on which the Plan was adopted by the Board. If the
stockholders fail to approve the Plan within 12 months after the Effective Date
on which the Plan was adopted by the Board, any Awards that were contingent on
stockholder approval (excluding Awards made prior to December 9, 2005 and
Inducement Awards made on or after December 9, 2005) shall be rescinded and no
additional Awards shall be made thereafter under the Plan.

     17.  TERMINATION OR SUSPENSION OF THE PLAN.

          The Plan shall terminate automatically on the day before the 10th
anniversary of the Effective Date. No Award shall be granted pursuant to the
Plan after such date, but Awards theretofore granted may extend beyond that
date. The Board may suspend or terminate the Plan at any earlier date pursuant
to Section 13.1 hereof. No Awards may be granted under the Plan while the Plan
is suspended or after it is terminated.


                                       31

<PAGE>

     18.  CHOICE OF LAW.

          The law of the State of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of law rules.

     19.  EXECUTION.

          To record the adoption of the Plan by the Board, the Company has
caused its authorized officer to execute the Plan as of the date specified
below.

                            [SIGNATURE PAGE FOLLOWS]


                                       32

<PAGE>

          IN WITNESS WHEREOF, upon authorization of the Board of Directors, the
undersigned has caused the Eddie Bauer Holdings, Inc. 2005 Stock Incentive Plan
to be executed effective as of the 8th day of December, 2005.

                                     EDDIE BAUER HOLDINGS, INC.


                                     By: /s/ Fabian Mansson
                                         ---------------------------------------
                                         Fabian Mansson, Chief Executive Officer


                                       33

<PAGE>

                                                                      ADDENDUM 1

      ADDENDUM TO EDDIE BAUER HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN FOR
                       AWARDS MADE TO CALIFORNIA RESIDENTS

     Securities sold and Awards granted in California to Employees, Directors or
Consultants of Eddie Bauer Holdings, Inc. or any of its Affiliates shall be
subject to the following additional provisions, which shall be part of the Eddie
Bauer Holdings, Inc. 2005 Stock Incentive Plan. Notwithstanding anything to the
contrary herein, the additional provisions and conditions set forth in this
Addendum shall not be required if a determination is made by counsel for the
Company that such provisions and conditions are not required in the
circumstances under applicable California securities laws.

1.   EXERCISE AND PURCHASE PRICE

     1.1 Exercise Price Restrictions Applicable to Nonstatutory Stock Options.

          (a)  In the case of Nonstatutory Stock Options, the Exercise Price
               shall be determined in the sole discretion of the Administrator;
               provided, however, that the Exercise Price shall be no less than
               85% of the Fair Market Value of the shares of Common Stock on the
               Date of Grant of the Nonstatutory Stock Option.

          (b)  A Ten Percent Shareholder shall not be eligible for designation
               as an Optionholder, unless (i) the Exercise Price of a
               Nonstatutory Stock Option is at least 110% of the Fair Market
               Value of a share on the Date of Grant.

     1.2 Purchase Price Restrictions Applicable to Restricted Awards.

          (a)  Each Restricted Award shall state the price at which the Common
               Stock subject to such Restricted Award may be purchased (the
               "PURCHASE PRICE"), which, with respect to Restricted Awards,
               shall be determined in the sole discretion of the Administrator;
               provided, however, that the Purchase Price shall be no less than
               85% of the Fair Market Value of the shares of Common Stock on the
               Award date of the Restricted Award subject to the Award
               Agreement.

          (b)  A Ten Percent Shareholder shall not be eligible for a Restricted
               Award unless the Purchase Price (if any) is at least 100% of the
               Fair Market Value of a share of Common Stock.

          (c)  At the discretion of the Administrator, Restricted Awards may be
               awarded under the Plan in consideration of services rendered to
               the Company, a parent or a subsidiary prior to the Award.

     1.3 Non-Applicability. The Exercise Price restrictions applicable to
Nonstatutory Stock Options required by Section 1.1 hereof and the Purchase Price
restrictions applicable to Restricted Awards required by Section 1.2 hereof
shall be inoperative if (a) the shares of Common Stock to be issued upon payment
of the Purchase Price have been registered under a then currently effective
registration statement under applicable federal securities laws and the

<PAGE>

Company (i) is subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act or becomes an investment company registered or required to be
registered under the Investment Company Act of 1940, and (ii) the Company's
Stock is listed or approved for listing upon notice of issuance on a national
securities exchange or on the National Market System of the Nasdaq Stock Market
(or any successor to that entity), if the exchange or Nasdaq Stock Market (or
its successor) has been certified by rule or order of the California
Commissioner of Corporations; or (b) a determination is made by counsel for the
Company that such Exercise Price restrictions are not required in the
circumstances under applicable federal or state securities laws.

2.   EXERCISABILITY AND VESTING

     2.1 Options. Each Stock Option Agreement shall specify the date when all or
any installment of the Option becomes exercisable. Unless a determination is
made by counsel for the Company that Section 25102(o) of the California
Corporations Code no longer requires and another exemption from qualification
under the California Corporations Code applies which does not require, an Option
granted to an Optionholder who is not an officer of the Company, a Director or a
Consultant shall become exercisable at least as rapidly as 20% per year over the
five-year period commencing on the Date of Grant. Subject to the preceding
sentence, the exercise provisions of any Stock Option Agreement shall be
determined by the Administrator, in its sole discretion.

     2.2 Restricted Awards. The Restricted Awards will be forfeited immediately
upon termination of Participant's employment with the Company or one of its
Subsidiaries, unless otherwise expressly provided herein or in the Award
Agreement pursuant to which such Restricted Awards were granted. Unless a
determination is made by counsel for the Company that Section 25102(o) of the
California Corporations Code no longer requires and another exemption from
qualification under the California Corporations Code applies which does not
require, a Restricted Award granted to an employee who is not an officer of the
Company, a Director, a manager or a Consultant shall provide that the risk of
forfeiture and any right to repurchase unvested Common Stock at less than Fair
Market Value shall lapse at a rate of at least 20% per year over five years from
the date the Restricted Award is granted. Subject to the preceding sentence, the
vesting and forfeiture provisions of any Restricted Award shall be determined by
the Administrator, in its sole discretion.

3.   TERM

     3.1 Term of Option. Unless Optionholder's Continuous Service with the
Company, a parent, or subsidiaries is terminated for Cause, in no event may the
right to exercise any Option in the event of termination of Continuous Service
(to the extent that the Optionholder is entitled to exercise on the date of
termination of Continuous Service) be (i) less than six months from the date of
termination if termination was caused by death or Disability and (ii) less than
30 days from the date of termination if termination was caused by other than
death, Disability or Cause.

     3.2 Limits on Post Termination Exercise. The provisions of Section 3.1 may
not (i) allow any Option to be exercised after the expiration of 10 years after
the date the Option is granted or (ii) preclude a Ten Percent Shareholder from
receiving an Incentive Stock Option satisfying the requirements of Section
422(c)(5) of the Code, including without limitation, that


                                        2

<PAGE>

such Incentive Stock Option by its terms not be exercisable after the expiration
of five years from the Date of Grant.

4.   REPURCHASE RIGHTS

     4.1 Lapse of Repurchase Rights. For purposes of the Repurchase Right under
Section 9.3 of the Plan upon termination of Service, the Repurchase Price shall
be presumptively reasonable if:

          (a)  In the case of vested Common Stock, it is not less than the Fair
               Market Value of the Common Stock to be repurchased on the date of
               termination of Service, and the Repurchase Right must be
               exercised for cash or cancellation of purchase money indebtedness
               for the Common Stock within 90 days of termination of Service (or
               in the case of Common Stock issued upon exercise of Options after
               the date of termination, within 90 days after the date of
               exercise), and the Repurchase Right terminates when the Company's
               securities become publicly traded.

          (b)  In the case of unvested Common Stock, it is at the lesser of the
               original purchase price or Fair Market Value, provided the
               Repurchase Right at the original purchase price lapses at the
               rate of at least 20% per year over five years from the date the
               Option Agreement or Award Agreement for Restricted Shares is
               granted (without respect to the date the Option or Award
               Agreement was exercised or became exercisable) and the Repurchase
               Right must be exercised for cash or cancellation of purchase
               money indebtedness for the Common Stock within 90 days of
               termination of Service (or in the case of Common Stock issued
               upon exercise of Options after the date of termination, within 90
               days after the date of exercise).

     4.2 Additional Restrictions Permitted. In addition to the restrictions set
forth in clauses (a) and (b) of Section 4.1, the Common Stock held by an
officer, a Director, a manager or a Consultant of the Company or an Affiliate
may be subject to additional or greater restrictions.

5.   ADDITIONAL COMPLIANCE PROVISIONS

     5.1 Voting Rights. Notwithstanding anything to the contrary in the Plan,
Common Stock issued pursuant to the Plan shall carry equal voting rights on all
matters where such vote is required by applicable law.

     5.2 Financial Information. To the extent necessary to comply with
California law, the Company each year shall furnish to Participants its balance
sheet and income statement, unless such Participants are limited to key
Employees whose duties with the Company assure them access to equivalent
information.

     5.3 Stockholder Approval. The Plan or the Award Agreement must be approved
by a majority of the outstanding securities entitled to vote within 12 months
before or after the date the Plan is adopted or the date the Award Agreement is
granted. The total number of shares of


                                        3

<PAGE>

Common Stock reserved for issuance pursuant to Awards under this Plan shall not
exceed 30% of then outstanding Common Stock of the Company (determined by
counting any convertible securities on an as if converted basis) unless a
percentage higher than 30% is approved by at least two thirds of the outstanding
voting securities.

     5.4 Voting Rights. Common Stock purchased pursuant to the Plan should
normally carry equal voting rights on all matters where such vote is permitted
by applicable law.


                                        4