<PAGE>
                                                                   EXHIBIT 10.12

                           EDDIE BAUER HOLDINGS, INC.
                            2005 STOCK INCENTIVE PLAN
                             STOCK OPTION AGREEMENT

     This Stock Option Agreement (the "AGREEMENT") is made and entered into as
of the date of grant set forth below (the "DATE OF GRANT") by and between Eddie
Bauer Holdings, Inc., a Delaware corporation (the "COMPANY"), and the
participant named below (the "PARTICIPANT"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 2005 Stock
Incentive Plan (the "PLAN").

          Participant:
                                      ------------------------------------------
          Social Security Number:
                                      ------------------------------------------
          Address:
                                      ------------------------------------------

                                      ------------------------------------------
          Total Option Shares:
                                      ------------------------------------------
          Exercise Price Per Share:
                                      ------------------------------------------
          Date of Grant:
                                      ------------------------------------------
          Expiration Date:
                                      ------------------------------------------
          Type of Stock Option:       [ ] Incentive Stock Option

                                      [ ] Nonqualified Stock Option

     1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (the "SHARES") at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"), subject to all of the
terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, the Option is intended to qualify as an "incentive
stock option" (an "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "CODE"), although the Company makes no
representation or guarantee that such Option will qualify as an ISO.

     2. EXERCISE PERIOD; VESTING. Unless expired as provided in Section 3 of
this Agreement, this Option may be exercised from time to time after the Date of
Grant set forth above (the "DATE OF GRANT") to the extent the Option has vested
in accordance with the vesting schedule set forth below. The Shares issued upon
exercise of the Option will be subject to the restrictions on transfer set forth
in Section 11 below. Provided Participant continues to provide Continuous
Service to the Company or any Affiliate, the Option will become vested as
follows:

<PAGE>

<TABLE>
<CAPTION>
               PERCENTAGE OF
VESTING DATE   VESTED SHARES
------------   -------------
<S>            <C>
                     %
                     %
                     %
</TABLE>

A vested Option may not be exercised for less than a full share. If application
of the vesting percentage causes a fractional Share to otherwise become
exercisable, such Share shall be rounded down to the nearest whole Share for
each year except for the last year in such vesting period, at the end of which
vesting period this Option shall become exercisable for the full remainder of
the unexercised Shares subject to the Option. Upon the occurrence of a Change in
Control, the Option shall become 100% vested and exercisable on such event.

     3. EXPIRATION. The Option shall expire on the Expiration Date set forth
above or earlier as provided in Section 4 below.

     4. TERMINATION OF CONTINUOUS SERVICE.

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

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

          4.3. Termination Because of Death or Disability. If Participant's
Continuous Service is terminated because of death or Disability of Participant
(or Participant dies within three (3) months of the date of termination when
such termination is for any reason other than Participant's Disability or for
Cause), the Option, to the extent that is exercisable by Participant on the date
of termination, may be exercised by Participant (or Participant's legal
representative) no later than twelve (12) months after the date of termination,
but in any event no later than the Expiration Date. If permitted by this
Agreement, any exercise beyond (a) three (3) months after the date of
termination when the termination is for any reason other than the Participant's
death or Disability or (b) twelve (12) months after the date of termination when
the termination is for Participant's Disability is deemed to be a Nonqualified
Stock Option (an "NQSO") and not an ISO.


                                                                          Page 2

<PAGE>

          4.4. Termination for Cause. If the Participant's Continuous Service is
terminated as a result of the Participant's termination of Continuous Service
for Cause, all outstanding Options granted to such Participant shall expire as
of the commencement of business on the date of such termination of Continuous
Service.

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

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

     5. MANNER OF EXERCISE.

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

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

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


                                                                          Page 3

<PAGE>

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

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

               (c) by any other form of legal consideration that may be
acceptable to the Administrator, including without limitation with a
full-recourse promissory note. However, if there is a stated par value of the
shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The shares shall be pledged
as security for payment of the principal amount of the promissory note and
interest thereon. The interest


                                                                          Page 4

<PAGE>

rate payable under the terms of the promissory note shall not be less than the
minimum rate (if any) required to avoid the imputation of additional interest
under the Code. Subject to the foregoing, the Administrator (in its sole
discretion) shall specify the term, interest rate, amortization requirements (if
any) and other provisions of such note. Unless the Administrator determines
otherwise, shares of Common Stock having a Fair Market Value at least equal to
the principal amount of the loan shall be pledged by the holder to the Company
as security for payment of the unpaid balance of the loan and such pledge shall
be evidenced by a pledge agreement, the terms of which shall be determined by
the Administrator, in its discretion; provided, however, that each loan shall
comply with all applicable laws, regulations and rules of the Board of Governors
of the Federal Reserve System and any other governmental agency having
jurisdiction. Exercise with a promissory note or other transaction by a Director
or executive officer that involves or may involve a direct or indirect extension
of credit or arrangement of an extension of credit by the Company, or an
Affiliate in violation of section 402(a) of the Sarbanes-Oxley Act (codified as
Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C. Section 78m(k))
shall be prohibited; or

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

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

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

     6. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option is an
ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year


                                                                          Page 5

<PAGE>

after transfer of such Shares to Participant upon exercise of the Option,
Participant shall immediately notify the Company in writing of such disposition.
Participant agrees that Participant will satisfy any obligation in the event any
such disposition causes Participant to be subject to income tax withholding by
the Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other compensation
payable to Participant.

     7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and the
issuance and transfer of Shares shall be subject to compliance by the Company
and Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Company's Common Stock may be listed at the time of such issuance or transfer.
Participant understands that the Company is under no obligation to register or
qualify the Shares with the SEC, any state securities commission or any stock
exchange to effect such compliance.

     8. NONTRANSFERABILITY OF OPTION. If the Option is an ISO, the Option may
not be transferred in any manner other than by will or by the laws of descent
and distribution and may be exercised during the lifetime of Participant only by
Participant or in the event of Participant's incapacity, by Participant's legal
representative. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant. If the Option is not an
ISO, upon written approval by the Administrator, it may be transferred by gift
or domestic relations order to a member of the Participant'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 Participant'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 Participant)
control the management of assets, and any other entity in which these persons
(or the Participant) own more than 50% of the voting interests.

     9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a Stockholder with respect to any Shares until the Shares are issued
to Participant.

     10. OBLIGATION TO SELL. Notwithstanding anything herein to the contrary, if
at any time following Optionee's acquisition of shares of Stock hereunder,
stockholders of the Company owning 51% or more of the shares of the Company (on
a fully diluted basis) (the "CONTROL SELLERS") enter into an agreement
(including any agreement in principal) to transfer all of their shares to any
person or group of persons who are not affiliated with the Control Sellers, such
Control Sellers may require each stockholder who is not a Control Seller (a
"NON-CONTROL SELLER") to sell all of their shares to such person or group of
persons at a price and on terms and conditions the same as those on which such
Control Sellers have agreed to sell their shares, other than terms and
conditions relating to the performance or non-performance of services. For the
purposes of the preceding sentence, an affiliate of a Control Seller is a person
who controls, which is controlled by, or which is under common control with, the
Control Seller.


                                                                          Page 6

<PAGE>

     11. RESTRICTIONS ON TRANSFER.

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

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

          11.3. Administration. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Section 11 shall be
conclusive and binding on the Optionee and all other persons.

     12. GENERAL.

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

          12.2. Entire Agreement. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties and
supersede all prior undertakings and agreements with respect to the subject
matter hereof. If any inconsistency should exit between the nondiscretionary
terms and conditions of this Agreement and the Plan, the Plan shall govern and
control.


                                                                          Page 7

<PAGE>

          12.3. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: (a) personal
delivery; (b) five (5) days after deposit in the United States mail by certified
or registered mail (return receipt requested); (c) two (2) business day after
deposit with any return receipt express courier (prepaid); or (d) one (1)
business day after transmission by facsimile.

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

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

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

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

                            [SIGNATURE PAGE FOLLOWS]


                                                                          Page 8

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized representative and Participant has executed this Agreement,
effective as of the Date of Grant.

                                        EDDIE BAUER HOLDINGS, INC.


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


                                        PARTICIPANT


                                        ----------------------------------------
                                        (Signature)

                                        Printed Name:
                                                      --------------------------


                                                                          Page 9

<PAGE>

                                    EXHIBIT A

                     FORM OF STOCK OPTION EXERCISE AGREEMENT

[ ] Incentive Stock Option      Optionee:
                                          --------------------------------------

[ ] Nonstatutory Stock Option   Date:
                                      ------------------------------

                          STOCK OPTION EXERCISE NOTICE

Eddie Bauer Holdings, Inc.
15010 NE 36th Street
Redmond, WA 98052
Attention: Chief Financial Officer

Ladies and Gentlemen:

     1. OPTION. I was granted an option (the "OPTION") to purchase shares of the
common stock (the "SHARES") of Eddie Bauer Holdings, Inc., a Delaware
corporation (the "COMPANY"), pursuant to the Company's 2005 Stock Incentive Plan
(the "PLAN"), my Notice of Grant of Stock Option (the "NOTICE") and my Stock
Option Agreement (the "OPTION AGREEMENT") as follows:

          Grant Number:
                                      ----------------
          Date of Option Grant:
                                      ----------------
          Number of Option Shares:
                                      ----------------
          Exercise Price per Share:   $
                                       ----------------

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

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

<PAGE>

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

          Cash:                      $
                                      ----------------
          Check:                     $
                                      ----------------

          Tender of Company Stock:   Contact Plan Administrator

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

     5. OPTIONEE INFORMATION.

          My address is:
                         -------------------------------------------------------

                         -------------------------------------------------------

          My Social Security Number is:
                                        ----------------------------------------

     6. NOTICE OF DISQUALIFYING DISPOSITION. If the Option is an Incentive Stock
Option, I agree that I will promptly notify the Treasurer of the Company if I
transfer any of the Shares within one (1) year from the date I exercise all or
part of the Option or within two (2) years of the Date of Option Grant.

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

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


                                                                          Page 2

<PAGE>

made in limited amounts in accordance with the terms and conditions of such rule
and that a copy of Rule 144 will be delivered to me upon request.

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

                                        Very truly yours,


                                        ----------------------------------------
                                        (Signature)


Receipt of the above is hereby acknowledged.

EDDIE BAUER HOLDINGS, INC.


By:
    ---------------------------------
Title:
       ------------------------------
Dated:
       ------------------------------


                                                                          Page 3